Before we take up consideration of Report Stage I should like to indicate that amendment No. 3, standing in the name of Senators Lenihan and Eoin Ryan, is out of order on the grounds that it involves a new matter of substance which was not effectively before the Committee on the Bill. The Senators have been notified accordingly.
Building Societies Bill, 1975: Report and Final Stages.
An Leas-Chathaoirleach
Was there not some agreement about grouping?
An Leas-Chathaoirleach
Yes, it has been agreed that amendments Nos. 4, 5, 6 and 7 are related and could be discussed together. There is a second grouping of amendments Nos. 8, 9, 10 and 11, which are related and could be discussed together. Is that agreed?
I think amendments Nos. 16 and 17 are not really connected. I suggest that we take them separately.
An Leas-Chathaoirleach
Yes.
I should like to get the position clear. A Member of the House is allowed to speak only once on an amendment on the Report Stage. Does that mean that where four amendments are grouped together a Member can speak only once?
An Leas-Chathaoirleach
The proposer would have the right to reply so to that extent he can speak twice as a proposer.
Government amendment No. 1:
In page 12, line 8, to delete "these" and insert "those".
This is a drafting amendment.
Amendment agreed to.
Government amendment No. 2:
In page 15, line 2, to delete "the total value of shares and deposits" and insert "the total amount due to shareholders and depositors".
This is a minor drafting amendment. The reference to the total amount due to shareholders and depositors is more correct in this context than the expression "the total value of shares and deposits".
Amendment agreed to.
Amendment No. 3 ruled out of order.
An Leas-Chathaoirleach
Amendments Nos. 4 to 7, inclusive, are related and may be debated together.
I move amendment No. 4:
In page 27 to delete lines 40, 41 and 42 and substitute "(1) The Registrar may, after consultation with the Minister for Finance, require a society to maintain——".
These four amendments are all designed to achieve the same effect. The effect is what has already been discussed on earlier Stages of this Bill. The effect is to give more power to the registrar and to diminish to some extent the power of the Minister or of the various Ministers. I do not think there is any real or important power taken from the Minister, because in all important instances the Minister must be consulted. What is important is that the registrar, who, after all, will be the person in day-to-day contact with the building societies, the person who in the course of time is going to build up expertise with regard to the needs and problems of building societies, should have the initiative in controlling societies and in introducing regulations and so on.
Consequently, the purpose of these amendments is to give the registrar the initiative and to provide as in section 37 that in regard to the control of ratios between assets and liabilities it is he who will propose the requisitions, the controls, but of course he will have to consult the Minister and the Minister will have full power to discuss the matter with him. I have not the slightest doubt that if the Minister takes a strong line and disapproves the suggestions made by the registrar then of course the registrar would not proceed. However, he would have the initiative in these matters.
The important part of section 37 is, of course, subsection (1) and I am proposing in amendment No. 4 the words "The Minister for Finance may after consultation with the Minister"—that is the Minister for Local Government —"the Minister, the Registrar and the Central Bank, require a society to maintain"—certain ratios. That should read, "The Registrar may after consultation with the Minister for Finance require the society to maintain"—certain ratios.
Whatever may be said about the advantages, disadvantages and merits of substituting "the Registrar" for "the Minister" in subsection (1) it seems to me that there is certainly a very strong case to be made for substituting "the Registrar" in subsection (2) (b), because, although there may be certain principles involved under subsection (1), what is happening in subsection (2) (b) is merely an administrative act. Having decided on the principles involved and what the ratios should be, then subsection (2) provides that:
"A requisition under this section may be expressed to apply in relation to ..."
and then it goes on: "all societies, specified classes or classes" and so on. In my submission it is quite unnecessary for the Minister for Finance to be brought into this detailed implementation of a principle that has already been agreed upon. Certainly in regard to subsection (2) (b), and (d) which is the subject of amendment No. 6 these are administrative functions which could be readily performed by the registrar. It seems quite unnecessary to drag the Minister for Finance into each of these operations which could clearly be carried out by the registrar.
Amendment No. 7 refers to subsection (3):
A requisition under this section shall have effect in accordance with its terms and may be varied or revoked by the Minister for Finance, after consultation with the Minister, the Registrar and the Central Bank.
Surely this is a situation where, the original requisitions having been discussed or decided upon in principle, if they have to be varied or revoked later on it is a matter that could be carried out by the registrar merely after consultation with the Minister for Finance. Again this seems to be using a sledge-hammer to crack a nut, or whatever the phrase is, and it shows an extraordinary—obsession is perhaps too strong a word—an extraordinary determination to keep the various Ministers involved in even the most detailed action which is prescribed by this Bill. Therefore, my reason for proposing these amendments is once again to ask the Minister to reconsider the unnecessarily complicated, unnecessarily top-level approach, not only in deciding the principles involved in this Bill, but in regard to even the implementation of the detailed work that is necessary as a result of decisions made at a higher level.
I would urge the Minister to accept all the amendments that have been put down here, but if he is not prepared to go the whole way with these I urge him at least to accept amendments Nos. 5, 6 and 7 which deal merely with the detailed implementation of decisions in principle made under section 37 (1). I think that in practice what will happen is that the registrar will do nearly all the work, that he will take the initiative and will put forward the necessary amendments, and all the details of the requisitions and so on. He is the person who will know what is going on, what is necessary, what amendments need to be made, and it is he in fact who is going to bring up the draft to the Minister and merely ask for his approval.
What I am proposing here in effect is to face up to the facts of what is going to happen in due time, and to give the registrar the satisfaction and the status in this Bill of being responsible for and doing what in fact he will be doing when the Bill becomes an Act and is being implemented over the years. I am quite certain that if this is accepted it will be a more commonsense and practical way of dealing with what is provided for under section 37 and that it can be done in this way without the Minister for Finance or the Minister losing any real control of the situation. He will always be able to step in, but he will be stepping in when necessary and not being, in theory at any rate, involved in the day-to-day administration of the Act.
I would like to express agreement with the points made by Senator Eoin Ryan in relation to this and very briefly to state that implicit in what he says is that the spirit of this Bill and the spirit with which the Minister has accepted amendment after amendment up to now has leaned in the direction of setting up this office or registrar and, in a sense, of letting it take care of the whole operation of building societies while maintaining a top-level and overseeing sense of accountability on the part of the Minister. That is why I find it a bit puzzling that over and over again in each of the sections the involvement of the Minister is constantly stressed. Indeed, in this regard section 76 in a sense seems to contradict the entire spirit of the Bill because there is a sense in which the Minister is transferring these powers to the registrar and at the same time constantly involving himself in day-to-day operations. Therefore it seems to me that the amendments suggested, Nos. 4, 5 and 6, would ease the situation and would tidy the Bill considerably, thereby inspiring confidence in the registrar and his office and in the building societies themselves while at the same time in no way prejudicing the overall authority of the Minister.
May I, too, express agreement with the views that have already been made? The purpose of these amendments is to give more power to the registrar rather than less to the Minister. These amendments cover that situation in as much as the Minister is still very much in control, but the day-to-day activity will be the responsibility of the registrar as he is naturally more familiar with what is suitable for the building societies and their subscribers. I was somewhat encouraged by the fact that the Minister did say, in his speech to the Senate on the 25th February, 1976, at column 849, Vol. 83, of the Official Report:
Perhaps it is not the best thing to have a Minister looking over the shoulders of what any society or organisation is doing.
He also said under the same reference:
In section 76 I am considering a proposal to give the initiative in relation to management controls to the registrar rather than to the Minister for either Local Government or Finance.
Many times during Committee Stage and Second Stage we have stated our views regarding this and we are hoping that even at this late stage the Minister might be influenced by what we have to say. I feel that there are too many Departments involved. Any detailed action that is required from the registrar and anything that needs to be done where it is necessary for the Minister to become involved is covered in these amendments.
It appears that Senators Hanafin and Martin were dealing more with section 76 than the one we are at present discussing. Perhaps we could have a further discussion on that when we reach section 76, but that does not mean that I am going to change my mind. I said at the start of the discussion in this House that I believe that when Bills come before the Seanad or the Dáil they should be fully discussed and any worthwhile amendments should be accepted from whichever side of the House they come. This is the spirit in which this Bill has been put before the House and I hope that is appreciated by the Opposition.
During Committee Stage there was a very lengthy discussion on the position of the registrar in relation to a number of sections, including section 37 with which we are now dealing. The purpose of section 37 is to enable the Minister for Finance, after consultation with the Minister for Local Government, the registrar and the Central Bank, to require the societies to maintain specified ratios between assets and liabilities. The power is similar to one contained in the Central Bank Act in so far as licensed banks are concerned. It is a prudent requirement for all financial institutions to maintain adequate ratios of this nature. Most building societies maintain adequate ratios but this is not to say that there is not a need for the power in the Bill. I would not like in discussion in this House a distinction between one side arguing in favour of what the building societies themselves want in the way of absolute control and the other side arguing in favour of a Bill which covers both sides because we do tend to forget that there are more people involved in this matter than those who run the building societies and who invest their money in them. The people who borrow money are very much involved and so is the State. Therefore, we would want to be very careful to ensure that there is a fair deal given to everybody, and that is why the matter is being dealt with as it is in the Bill.
The amendment before the House seeks to transfer the power from the Minister for Finance to the registrar after consultation with the Minister for Finance leaving out any statutory requirement for consultation with the Minister for Local Government or the Central Bank. The section was drafted quite deliberately in its present form for the following reasons. Building societies are major financial institutions whose operations form a significant part of national financial business. Furthermore, their operations are wholly in the area of private housing where they constitute the largest providers of house purchase finance. Thus in devising ratios all aspects of the societies' activities would be taken into consideration. The Minister for Finance and the Central Bank would have regard to financial developments, the registrar would have regard to the exercise of his responsibilities for the orderly and proper regulation of building society business, and the Minister for Local Government would have an interest as the promoter of this legislation and as the Minister responsible for the housing programme. The aim of the section was to ensure that a fair balance would be achieved; it is not considered that this would be the case if we were to adopt the proposal in this amendment.
The most important aspect of it all is that the enactment of the Bill will finally clear the way for the grant of trustee status on deposits with societies which will be able to meet the appropriate conditions. This grant of trustee status will be made under the Trustee (Authorised Investments) Act, 1958, and it is the Minister for Finance who exercises all the functions under that Act. Among the basic requirements which the societies must meet in order to qualify for trustee status will be those related to liquidity and reserve ratios, and it is the Minister for Finance who will prescribe those ratios. If the amendment were accepted there would be a duplication of controls in relation to ratios since the registrar would be specifying ratios for the purpose of section 37 and the Minister for Finance would be doing it for the purpose of trustee status. For the foregoing reasons I could not agree to accept the proposed amendment of section 37.
From the point of view of the building societies this Bill basically is a necessary one, because building societies are now so big and there are so many people concerned, as shareholders, depositors and so on, that it is a matter of public interest that they should be controlled, generally speaking, in the way that this Bill as drafted provides. On the other hand, we must be very careful when we concede that it is necessary for building societies, which are private institutions and which were formed without any help from the State, to have certain controls imposed on them by the State and to restrict them in certain ways, that the State should not take more control than is necessary. This is why I put down amendments while agreeing with the Bill generally. It will certainly restrict the activities of the building societies. It may restrict them in their perfectly legitimate commercial activities if the State takes too much control, or even if the State appears to take too much control.
It could be said that the main difference between the sections which the Minister has and the amendments which I am proposing, is that the Bill as it stands seems to be overloaded with Ministers, not merely one Minister but Ministers, Central Banks and so many different State bodies, breathing down the necks of the building societies and looking not only at the principles involved but looking at the minute details of how requisitions should be drafted and so on. That is why I am suggesting that the registrar in this case should be the person who should take the initiative, implement the detailed drafting, amendment and so on of requisitions and that certainly he should do that after consultation with the Minister to ensure that what he is doing is in accordance with the principles of this Bill and with what the Minister thinks is appropriate in certain circumstances in regard to the principles. But in regard to the detailed carrying out of the purposes of this Bill I think the emphasis should be on the registrar, the initiative should be the registrar's and there should be no suggestion that this is in any way interference from a political point of view. That aspect of it should be played down in every way possible.
Consequently, I am urging the Minister to do this not because I think the building societies should have it all their own way, not because they are the only people who should be considered—in fact it is quite clear that the Bill is necessary and we accept that —but because of the way in which it is proposed to be done. I can do no more than urge the Minister to reconsider the matter between the time the Bill goes through all the Stages here and in the other House. He should think again about the amendments that have been put down and consider whether he should not make some concessions in the direction of these amendments.
Question "That the words proposed to be deleted stand part of the Bill" put and declared carried.
Amendment declared lost.
Amendments Nos. 5 to 7, inclusive, not moved.
I move amendment No. 8:
In page 28, lines 8 and 9, to delete "The Minister for Finance after consultation with the Minister and the Central Bank", and substitute "The Registrar, after consultation with the Minister for Finance"
This section is a less important one in the sense that the principles involved, the dangers involved, are not as great as in section 37. Consequently, when I ask the Minister to do much the same thing in section 38, I think the arguments which I can put forward are even stronger than they were on the previous section. The question of the control of ratios between assets and liabilities is a very important one. It is one which needs expert advice and it is one in which certainly I can see that the Minister for Finance and the Minister would want to take a hand. The question of investment of surplus funds is certainly a much less important one, in the sense that there is not as strong a case for the State to step in and tell the building societies how they may and may not invest their surplus funds. Investment of funds is something which many hundreds of companies in this country have to do all the time. Many thousands and thousands of individuals have to do it all the time and it is not unreasonable to expect that the building societies would be able to do this satisfactorily and have been doing it satisfactorily. It is something in which it is debatable whether the State should feel it necessary to intervene at all. Nevertheless, the case can be made for it and it may be that certain societies might be inclined to invest in something that could be considered speculative. For these reasons I concede that a case certainly can be made for controlling the way in which surplus funds are invested. But again, and even more so, it is the kind of thing which the registrar should be quite capable of doing without assistance, without the initiative of the Minister for Finance.
As section 38 stands, the Minister for Finance, after consultation with the Minister and the Central Bank, may prescribe the investments in which a society may invest such a proportion of its funds as are not immediately required by it for the purpose of the society. What I am suggesting in this amendment is that the registrar, after consultation with the Minister for Finance should prescribe the investments which a society may make.
It seems to me that this is a relatively simple operation, something in which the registrar, in the course of time, at a very early stage would become expert. Certainly, he should consult the Minister for Finance from time to time but generally it is a thing which he should be well able to do and it should not be necessary for the Minister for Finance and the Central Bank to go into conference every time they want to decide whether the building societies may or may not invest in a particular company, make a particular investment. Again, it seems to be quite unnecessarily cumbersome, quite unnecessarily complicated and something which could easily be done by the registrar without consultation with the Minister from time to time.
In subsection (3) of section 38 the registrar is given pride of place. It is stated that the registrar, after consultation with the Minister for Finance and the Central Bank, may fix limits and so on. He does at least get the top billing in this subsection and I think, although it is an isolated instance, it is a step in the right direction and one which the Minister should have followed in many other parts of this Bill.
Subsection (3) and subsection (4) are purely administrative. There is no principle involved. It is a matter of forming a judgment as to whether certain investments are appropriate ones and something which the registrar would be fully capable of doing after consultation. Again, from the point of view of the appearance of this Bill the Minister's proposals are unsatisfactory. If it appears that every time a building society wants to invest money in a particular investment, the Minister, the Central Bank and the society must get into a huddle to decide whether they may do it or not, it is not reasonable. Surely this is a matter which should be dealt with by the registrar who, of course, will use his discretion in consulting the authorities from time to time where there is any doubt about the particular investment. Again, whatever views the Minister may have expressed in regard to the amendments under section 37 where the principles and the decisions involved are perhaps more complex, more important than in the case, certainly in regard to the investment of surplus funds, I can see no reason for the topheavy combination meeting that is necessary before a simple operation of this kind is approved by the authorities. Without any great optimism I would ask the Minister to consider whether these amendments under section 38 could not be accepted. The Minister may have a view that it is better as it is but I do not think he can really feel that anything would be lost, that any real control would be lost, that any real damage to the depositors, to any member of the public would be done by accepting these amendments.
On the other hand, from the point of view of how this will be administered, and in which the registrar will do the job and from the point of view of what the building societies must feel, and what the public must feel, if they go to the trouble of looking at this Bill and seeing that the building societies are not allowed to stir a finger to invest a couple of thousand pounds without consulting two or three Ministers and the Central Bank, it is unnecessarily topheavy. It does not achieve any purpose. I believe that the section would be a much better one if the Minister would accept the amendments as they have been put down. I say that from the point of view of having a proper balance between controls that are necessary and not stifling all initiative and almost all action by the building societies.
I was missing from the Committee Stage debate on this Bill. I regretted that very much because I had wanted to participate in it. I think it is possible for me to incorporate comment on the proposed Report Stage amendment which is now being dealt with with my general comments which arise directly from this.
We have a situation here in which we have had a highly successful movement with some of those elements in it which were permitted to exist because we did not have this code. Therefore, it is very welcome as a code. In looking at these amendments that Senator Ryan has been moving and bearing in mind what he said with regard to the amendments to the earlier sections of this part of the Bill, I must say that I have a very great deal of sympathy with his position and in saying that perhaps it is no harm to observe that I presume all Senators—certainly I have been— have been circulated with literature from the Building Societies' Association and very helpful commentaries by the highly respected secretary of that body. Personally I am influenced and affected in my reaction to these amendments proposed in the names of Senators Lenihan and Ryan by the views expressed by that association. I would like to say, because I think it is important to say, that this association is not to be seen in quite the same sense as the ordinary self-interested body which is like any public company engaged in making profit and you might be suspicious of its criticism of a particular section or its recommendation of an amendment.
After all, the body which has expressed views which have at least inspired the amendment which is proposed at this Report Stage is a body which without dispute represents about 98 per cent of the building societies. Perhaps that is the quantity of money which they look after. Let us not get lost in detailed figures. At any rate, whatever the figure is, it is 600 times what it was when this State was founded and I do not know how many other things are 600 times what they were then. The secretary is a most respected figure, a chartered accountant of distinction and wisdom who would not express views with which he did not himself agree.
The emphasis of their argument has always been that the Bill as proposed in general is good in so far as the roads that are required to be covered are going to be covered. In general they are concerned that this successful movement might in any way be impeded by law which comes in to catch the delinquents by creating impediments to success.
The Minister has properly said— indeed I said it myself on the Second Reading but the Minister is not expected to recollect that—that there were two interests involved in this whole matter, the interests of the depositors, the safety of their funds, and the interests of the borrowers of these funds, the purposes for which they need them. I do not know whether behind the Building Societies' Association, with the success of their members, is an unnecessary fear of what they call political interference. They are not thinking at all of the Minister and the Minister knows that. They are thinking of the general opportunity of the State to come in and say: "You cannot do this" or "You cannot do that". There may be an unnecessary fear here, but it may prove to be a reality for them.
The second element which makes me invite the Minister to consider carefully what is being said by Senator Ryan in a very reasonable speech is that the objection to too much formalisation of consultations and the involvement from the State's point of view and the Minister involved as a member of an Executive which is concerned to reduce the deficit. The Minister must be concerned to prevent a proliferation of bureaucratic work. The Minister must be concerned to see that too many people have not to be consulted to reach decisions that could be reached by one man. Perhaps it is too much to have one man: he should be, as he is under the UK code, under the supervision of one authority. It may not be as appropriate to this section as to the previous one, but I am not so satisfied that merely because of the provisions of the Central Bank Act the Central Bank have got to be involved in this. Anyone who has had to deal with the Central Bank knows perfectly well that without having to get through formal meetings which have to be carefully minuted and recorded by bureaucratic apparatus and exchanged from department to department, you can get the view of the Central Bank by taking up the telephone and finding out what they thing about it. If it is thought of as a practical matter by the Minister for Finance who has to be the "big brother" as the Minister called him, I do not see how the registrar can be left totally unrestricted in relation to what they think about it. If it is thought matters of this kind if there is to be any sort of control—and he is not so left as I understand the UK code—I do not see why the Minister for Finance will not find out what the Central Bank's thinking is when they are giving their reaction to the proposal.
With regard to the trustee status matter, I do not find this convincing at all. Who is controlling the Allied Irish Investment Bank? For example, is the trustee status now in the Bank of Ireland? Various other things are on the way to having trustee status and under the Charities Act many things have trustee status and it is good for the country that they have because they encourage Irish savings into investable funds. I should have thought that there are enough general controls in the rest of this proposed legislation to ensure proper performance with rectitude, without creating impediments that would be felt by responsible people. They are responsible people. They would not be entrusted to look after the very substantial sums that are deposited with them if they were not and let me say to the Minister that in our present situation we may be concerned to see that all these institutions are given opportunities of involving themselves in investments that will be to the national advantage. I think they should be left free to make these decisions, as free as is possible under an overall structure that is designed to prevent the rogues. After all, the whole idea of the joint corporate company worked because it was a delegation of authority to the people who gather the funds and they used them—they were judged by the market as to whether they were using them properly or not—and they got lost if they did not use them properly. In general over the years it was found that over this aspect or that of the particular problems that arose there had to be certain general controls. These general controls were spelled out in a very exact way to these people so that they could construe section this and subsection that and knew what they were entitled to do and were not entitled to do. This is very important, and in general, while the Minister is not to be expected to be particularly persuaded by anything I may say, I would advise him on his way to Dáil Éireann to give thought to the sort of view I am expressing on this matter.
I feel somehow that while the two Senators who have spoken have been trying to be reasonable in their approach they have missed out some important points. I would be as surprised as they if I saw two Ministers and the registrar parading up to the Central Bank every day in the week finding out whether or not it would be right that certain investments should be made. I am surprised that it has not been realised that this sort of thing would be dealt with under general resolutions. They would be told what type of investment they could make. This would be done long beforehand and it would not be necessary, therefore, to do it more than once at the start and later if something might crop up in the normal way. I think it is a little ridiculous to labour the point that it would mean numerous visits. As regards Senator Fitzgerald's comments about the reasonable men who are perfectly reputable and able to handle large sums of money, of course they are, but the trouble is that, like politicians and those in any other walk of life, occasionally one comes along who does not live up to the standard and it is our job to ensure that if this happens—as it has happened before—he or she will not be able to do the things which we feel should not be done. There would be no point in bringing in a Bill after 103 years and leaving a gap wide open for somebody to walk through.
I would remind Senator Ryan that on Committee Stage I already moved an amendment to deal with reservations expressed by him and by some other people on the Second Reading. The present position of the registrar vis-a-vis the Minister for Finance and the Minister for Local Government and the Central Bank is the result and I would expect that amendment to meet their point. I thought in fact that it was meeting most of the arguments which were expressed on Second Reading because Senator Ryan will remember that he did make most of those points on Second Reading. I am still of the opinion that it has done that.
There is no suggestion of a special separate decision each time a society wants to invest surplus funds. That would be an impossible way of conducting public business. If the Senator will read it he will realise that it does not say that. It says that there must be consultation but it does not say a consultation every time a suggestion is made. Senator Ryan is too much a man of the world and a man of Finance not to understand that what is intended is that it will be dealt with in the way I am suggesting. The intention is that the general guidelines will be laid down by the registrar from time to time. We heard a lot of praise for the arrangements which operate in the United Kingdom when the Bill was in Second Reading and I might mention in this regard that in Britain societies investing surplus funds must do so in accordance with an order made by the registrar with the consent of the Treasury. Here, the initiative is being given to the registrar. So, it seems we would like to have it both ways. I think that is not a good way to frame legislation. If we think that Britain is so good and if we are giving even better than what Britain is giving, then I think it should be accepted as such.
The thread running through amendments to sections 37 and 38 seems to be that action by the Minister for Finance would somehow have a malign influence on the societies. I have already explained why the Minister for Finance figures in section 37. Senator FitzGerald said he was not prepared to accept that it was a good reason. He is entitled to disagree but I still think it is a good reason. There is an equally valid reason for his position in section 38.
I do not think I said that. I did not intend to say it.
But the Senator did say it. Sometimes people do not listen to what they are saying. Under the 1874 and 1894 Acts, a society, if its rules so permitted, could only invest its surplus funds in trustee securities. The range of authorised trustee securities is set out in section 1 of the Trustee (Authorised Investments) Act, 1958 and in amending regulations made under that Act by the Minister for Finance. Subsection (1) of section 38 of the Bill, instead of simply re-enacting the existing provisions, thereby limiting the societies as before, empowers the Minister for Finance, after he has consulted with the Minister for Local Government and the Central Bank, to prescribe the investments in which a society may invest its surplus funds. The intention is that in addition to specifying trustee securities, the Minister for Finance will be able to give the societies greater freedom of investment of their surplus funds by specifying a wider range of securities, thus breaking away from total dependence on the list of trustee authorised investments. It is felt that the present position, where the societies may invest only in trustee securities, unduly inhibits their freedom to invest to the best advantage of their members.
It will be clear from what I have said that the purpose of subsection (1) is to liberalise rather than restrict the field of investment open to societies. It is particularly appropriate that the Minister for Finance, who is in closest touch with all the financial institutions and who will have the advice of the General Bank, should be the person nominated in the Bill to prescribe this field of investment.
I draw particular attention to subsection (4). Under this subsection, the Minister for Finance is empowered with the consent of the Central Bank, to include Central Bank reserve bonds among the investments which he can specify under subsection (1). The issue of these bonds is provided for in section 48 of the Central Bank Act, 1971. Subsection 3 of that Act lays down that they may be issued only to licensed banks and may be disposed of only to another licensed bank or the Central Bank. Generally the bonds are issued with a maturity of up to three years, which would make them very suitable for building societies. Subsection 4 of the Bill, therefore, opens up another and significant area in which societies may invest with advantage to their members.
It would be totally inappropriate to empower the registrar to specify this type of investment. The powers conferred on the registrar are contained in subsection (3). After consultation with the Ministers for Local Government, Finance and with the Central Bank he will fix the limits on the proproportion of the surplus funds held in the various types of investment. The object is to ensure the best balance in the portfolio of securities held by the societies within the confines of a list of securities which the Minister for Finance will have specified under subsection (1). It may appear to the House that the powers conferred in this section under discussion are appropriate and there is absolutely no advantage to be gained —rather the reverse—by accepting the amendments proposed. It would make the position stricter rather than the other way round. Therefore I would suggest that Senator Ryan might, on reconsideration, be prepared to withdraw the amendments.
With the greatest respect I have to disagree with the Minister about the interpretation of subsection (1) of section 38. The Minister says what is the intention. Of course the road to the Supreme Court is paved with good intentions. Whatever the intention was, my view is that subsection (1) of section 38 permits the Minister to go to every single society and say, in individual cases what they may and may not invest in. It says that the Minister may prescribe the investments in which a society may invest such portion of its funds as are not immediately required by it for the purpose of the society. That certainly means the Minister could, whether or not it is the intention. It does mean that the Minister may say to one society: "You can invest this particular——"
May I interrupt the Senator. "Prescribed" means prescribed by regulation. It is in the definitions section.
It could be particular kinds of societies in a particular situation. It is conceivable, and I would hate to put dangerous thoughts into the head of the Minister for Finance or of the Minister for Local Government. It could mean that the Minister could say: "This particular society is too heavily invested in one way or the other and for them we are permitting this kind of investment but not for another one". If it was intended to apply to all societies then it should have read "may prescribe the investments in which societies may invest such portion of their funds". But this subsection talks about a society. It does seem to me that this could permit individual direction to individual societies as to what they could invest.
Would the Senator not agree that that might be a good idea in certain circumstances?
It might, but according to the Minister that is not what is intended.
Of course it is intended. There are two things—one, the general prescription which must be laid before both Houses of the Oireachtas. Secondly, it specifically says that if they are over subscribed in one or other the Minister might. That would be one special occasion, which would not be occurring every day. Special circumstances may arise and I mention this specifically.
This point arises because the Minister said that there would be no question of individual examination of societies and individual restrictions and approvals for societies. If that is permissible then it seems to me that I am not exaggerating in saying that this may be quite a frequent control, quite a frequent prescription by the Minister. If it is merely a question of saying: "The following companies are acceptable" then I agree with the Minister that these kinds of lists would only be drawn up every year or two and that would not be quite so objectionable. But, as the subsection reads, it does seem to me that the Minister may say different things to different societies, may consider what would be appropriate to every single society and, if that is going to happen, certainly it could be almost a day-to-day operation. It is most unnecessary and inappropriate that building societies, who have been carrying on their activities by and large very successfully and efficiently over the years, should be subjected to that kind of control. However, I am sure the Minister is not going to change his mind.
To get back to a point which Senator FitzGerald made, from the Minister's point of view it is inadvisable to prescribe in virtually every subsection the kind of consultation and the people who must be consulted. If the Minister for Finance wants to control what investments may be made he should be able to get advice and to consult people without necessarily having it in the Bill. I am quite sure in certain circumstances he would consult the Central Bank, another Minister and so on. But it is a great mistake to have specified in the Bill the people whom he must consult. He may find himself at some time in the future in some kind of legal proceedings where he will run into a lot of trouble because he will not be able to prove that he did consult the Central Bank before issuing a direction, some kind of regulation or approving or disapproving a particular investment.
Does the Senator mean that the Minister for Finance, without consulting, should be entitled to do these things?
I think he should. I think it should be left to the discretion of the Minister for Finance. When he is advising or when he is issuing this kind of prescription or restriction it should be left to his discretion whom he need consult without having it spelled out in the Bill. If he wants to consult the Central Bank, let him do so. It does not have to be specified in the Bill that he must do it. I am sure he will do it if it is necessary. That is something which is not really my concern and is not something which is going to worry the building societies. It will be a bit of an irritation and an impediment for the Minister if he has in all cases to go around to the various people concerned and formally consult them, even though in many cases he will know the answer before he goes through that formality.
Senator Ryan will remember that it was suggested from this side of the House that this should be done, that there should be consultation with the registrar, for instance; that that should be included in the Bill.
Certainly the registrar, yes. The registrar should take the initiative. The registrar should consult the Minister for Finance or the Minister for Local Government, whichever seems appropriate, and let that Minister consult whoever he think is necessary without having it incorporated or specified in the Bill. It is going to be a minor headache for the Minister and not for the building societies. To that extent it is going to be of concern to the public generally—that all this statutory consultation with all these people, which in many cases will not really be necessary, is going to lead to waste of time, delays, and that will not be in the interests of any of the people concerned in this Bill.
Amendment, by leave, withdrawn.
Amendments Nos. 9 to 11, inclusive, not moved.
Amendments Nos. 12, 13, 14 and 15 are related and it is suggested that they be discussed together.
Yes. I move amendment No. 12:
In page 45, line 51, after "may," to insert "on the recommendation of the Registrar and".
The amendments for which Senator Lenihan and I are responsible are endeavouring to give more power to the registrar. This time it is the Minister for Local Government who is involved rather than the Minister for Finance. The intention of amendment No. 12 is to give the registrar initiative, to say that the Minister may make regulations—because there is a difficulty there about making regulations—and that the Minister may, on the recommendation of the registrar, make certain regulations. This is a matter where, in fact, this is what will be done. The registrar, almost certainly, is the person who will consider what is necessary in regard to the management of societies. The registrar is going to be in touch with the problems, with the needs, and he will draft these regulations. For the various reasons to which I have already referred, the way it should be done is that the registrar should draft the regulations and bring them forward as a recommendation. Of course, the Minister then will have power of approval, will consult the Minister for Finance if he thinks it necessary—of course under this section he will have to do it—and then the regulations will be made.
The Minister will in no way lose control of the situation and there is no question of any regulation being put through with which he does not agree. To get back to a fear that has been expressed, possibly one without foundation, the fear that the Minister, not the present but any Minister, may make a regulation which has a political short-term value and possibly may be something that the Minister of that time will feel of great importance but, from the long-term interest of the building societies, would not be really a valid or good one. This leaves the initiative in the hands of the registrar and he will be the person who will bring forward the suggestions. This is the proper way, the more objective way to leave the drafting of regulations to the registrar but allows the Minister, if he does not approve of the regulations, to say he does not approve and send the registrar back to make further recommendations.
This is a better way to approach this. It is a less heavy-handed way of approaching it and is one which will give better results. It will be less objectionable to the building societies and from the public point of view will lessen the impression that the building societies are under pressure, are constantly being dictated to by the various Ministers concerned.
In amendment No. 13 the Minister has provided for consultation with the registrar and the Building Societies' Advisory Committee. Certainly this is a step in the right direction. Although I would prefer the wording as in amendment No. 12, the inclusion of the Building Societies' Advisory Committee, if combined with the wording in amendment No. 12, would be a very good combination of amendments No. 12 and 13.
I see the Senator's point and can meet him on it, so perhaps——
I will certainly bear with the Minister in these circumstances.
In the course of my Second Reading speech I mentioned that I would consider sympathetically any amendments to the Bill. Following discussions with the societies, I tabled a very large number of amendments for Committee Stage and those were accepted. I indicated at that stage that I would consider the question of amending section 76. Accordingly, I tabled amendments Nos. 13 and 15. In a spirit of compromise— in order to underline the fact that I am not at all at variance with the view that the registrar should be in a strong position—I am prepared to withdraw amendments Nos. 13 and 15 and accept amendments Nos. 12 and 14 in the names of Senators Lenihan and Ryan. One is as good as the other. If it makes the Senator any happier that his is a better amendment—I am not prepared to say whether it is or not—I am prepared to withdraw mine. I do not think it matters very much. I think we are both trying to do the same thing. Therefore, I will withdraw amendments Nos. 13 and 15.
As regards amendment No. 13, I think that would be an improvement but I do not see any reason why the Minister should withdraw amendment No. 15. Regulations are going to be made whether they are on the initiative of the registrar or the Minister and I think these regulations should be made. After all, if the Minister concedes that the regulations he makes could be mistaken and need the attention of this House, I am sure he will not disagree with the possibility that the registrar might make a mistake too.
I did not think the registrar could make a mistake. That was the point Senator Ryan was making for the last hour—that the registrar could not make a mistake.
Oh no, I never said the registrar was infallible by any means.
I think he suggested it. If the Senator wants amendment No. 15 to remain, I will withdraw amendment No. 13.
I would prefer the wording in amendment No. 12 but I would ask the Minister if he would involve the Building Societies' Advisory Committee.
Leaving amendment No. 12 in?
In other words, I would ask the Minister to amalgamate amendments Nos. 12 and 13.
I am somewhat addled as to what stage we are at. What is precisely happening at present?
We are on Report Stage.
I do not want to burden the Chair with a statement on the amendments that we are debating but the state of the debate seemed to have got to a sort of Committee Stage.
No. The Chair is quite happy that Senator Eoin Ryan is moving amendment No. 12, that he yielded temporarily to the Minister because the Minister had important information to give him in regard to what he was saying. Senator Ryan is now resuming the opening speech on amendment No. 12, from the group of amendments.
I thank the Chair for the clarification.
I would be very glad if the Minister would accept amendment No. 12. The Minister, having accepted amendment No. 12, would have to vary amendment No. 13 because it would not make sense. But I would ask him not to remove it entirely but to leave in the part which provides for consultation with the Building Societies' Advisory Committee. The wording of the subsection then would be that the Minister may, on the recommendation of the registrar and after consultation with the Minister for Finance and the Building Societies' Advisory Committee, make such regulations, and so on. If that could be accepted, I would be as happy as I have been at any stage in this Bill.
While the Minister is considering whether——
I have my mind made up. However, if the Senator wants to say something, far be it from me to stop him.
The Minister is proposing to recommend to the House the acceptance of amendment No. 12 combined with No. 13—is that correct?
All I can deal with is what is before the House.
This I understand. The Minister will probably find he has some influence in the House. There is a reference here to the Building Societies' Advisory Committee which forced me, having been away for the Committee Stage, to look at it. It has popped up in section 96. In so far as we are now considering the incorporation of the performance of a statutory function, the Minister may have a look at section 96 because in that section it is said that the committee may advise the Minister. But under amendment No. 13 it has to consult with him. It may advise him in general but it is obliged to consult with him under his own amendment to section 76.
Surely "may" means "must".
Maybe it does not; maybe it must not. In so far as we are looking at a proposed statutory function which would only arise if it is "must", subsection (3) of section 96 says the committee shall consist of various people, not more than nine. I notice they are all representative of different bodies. One body whom we are all supposed to know— we in this House know who they are— is the Irish Building Societies' Association. But, come the year 2000, or the year the Minister and I will be debating the next amendment to this Bill, who will know what was the Irish Building Societies' Association? It would seem to me that if a representative of that body is to be given a duty of participating in a statutory function it ought to have some definition somewhere. They must not consist of more than nine people. They are all to be representative. There is to be one representative from the Department of Local Government, another from the Department of Finance—that is two; thirdly, the registrar; fourthly, the Central Bank; fifthly, the Irish Building Societies' Association and then it says that such other bodies as he may from time to time consider appropriate. That is to say, presumably the Minister is now limited to considering, "as appropriate", because all have to be representatives of only four more bodies and each of those must be representative. It is an oddly-composed section. If the Minister is serious about giving this gumless animal some teeth, perhaps he would have another look at it overall.
The debate on this series of amendments has been interesting in the sense that the Minister has offered the concession and the Opposition have asked for the amalgamation of two amendments at the same time. It is very difficult to know who is going to out-do the other in terms of generosity. It draws attention to whether or not the section itself is necessary at all. It seems to me that, in terms of these amendments, what they are doing is limiting the powers of the Minister within the section; in other words, giving a far larger profile and function to the registrar and the Building Societies Advisory Committee. Obviously, the purpose of the amendments is to limit the powers of the Minister in the matter. Having consulted does one have to take the advice of these officers? That is one aspect that strikes me. If not, you are back in the position of having a section of the Bill which is, in itself, a Bill. In other words, the power which the Minister retains, if he does not have to take the advice having had the consultation, is such, in a way, as to set at naught all the very generous concessions that he has already made in one amendment after another. He is almost like a man who decides to disarm himself and very graciously hands in his shotgun, his air pistol and Indian clubs while retaining a machine-gun under the floorboards. It seems to me that if he does not have to accept the advice, after consultation here, he has a section which would allow him to set at naught all the concessions he has already made. I would urge the Minister to look again at this section between now and the time the Bill goes to the Dáil. I wonder whether that section is necessary at all.
Of course the section is necessary because there is the requirement there that the Minister may consult with certain people. I assume the subsection, when finalised, will read:
(1) The Minister may, on the recommendation of the Registrar and after consultation with the Minister for Finance and the Building Societies Advisory Committee, make such regulations....
That is fair enough.
I think that is clear and we should leave it at that.
Senators
Hear, hear.
An Leas-Chathaoirleach
I understand the proposal is that amendment No. 12 be amended by the addition to it of: "and in line 52 after ‘Finance' to insert ‘and the Building Societies Advisory Committee'".
Amendment amended by leave.
Amendment, as amended, agreed to.
Amendment No. 13 not moved.
I move amendment No. 14:
In page 46, line 15, after "Minister" to insert ", on the recommendation of the Registrar,".
Amendment agreed to.
Government amendment No. 15:
In page 46, between lines 15 and 16, to insert the following subsection:
"(4) Where regulations are proposed to be made under this section, a draft of the proposed regulations shall be laid before each House of the Oireachtas and the regulations shall not be made until a resolution approving of the draft has been passed by each such House."
Amendment agreed to.
I move amendment No. 16:
In page 46, line 21, after "may," to insert "on the recommendation of the Registrar and"; and in line 22 to delete "and after consultation with the Registrar".
This amendment is in regard to the amount and purpose of loans. Section 77 (1) reads:
Whenever the Minister considers it expedient, in the interests of the orderly and proper regulation of building sociey business and having regard to the demand for loans for house purchase, he may, subject to the consent of the Minister for Finance and after consultation with the Registrar, make regulations in relation to the purposes and amounts of loans by societies.
What I am suggesting there is almost the same as amendment No. 12, that it should read that he may, on the recommendation of the registrar and subject to the consent of the Minister for Finance, make regulations. The arguments I used in regard to amendment No. 12 are exactly the same here. Even if the Minister saw it a little bit objectionable, he was prepared to agree to the change in section 76. I was hoping he might do the same with regard to this one.
This, of course, is an Executive function. Therefore, it is in an entirely different category from the other. Perhaps this has passed unnoticed by Senator Eoin Ryan. Section 77 empowers the Minister, in certain circumstances, to control the amount and purpose of loans made by societies. It is not envisaged that these controls should be a permanent feature. Where, for instance, the funds available for loans exceed the demand, there will, of course, be no need for this type of control. But circumstances could arise where control would be necessary. The controls are spelled out in detail in subsection (2) of section 77:
(a) the maximum amount of a loan that a society may make;
(b) the purposes for which loans may or may not be made by a society; and
(c) the maximum amount that a society may lend to a body corporate and the total amount of such loans.
The exercise of these powers by the Minister would, in no conceivable circumstances, have the dire consequence which Senator Lenihan forecast in the course of a lengthy contribution during the Committee Stage debate. These controls were operated by the Minister for Local Government all the time the special subsidy was being paid, with no dire consequences whatever. The building societies were quite happy with the operation of it.
The purpose of the controls, if and when put into operation, would be related to the demand for loans for house purchase. The Minister for Local Government is the person charged with the responsibility for organising finance for all the sections of the housing programme. He is the person who has, not alone the responsibility but also the information regarding the expected output of the various sources of finance contributing to the total of the resources on which the housing programme depends at any given time. It is clearly reasonable to propose that he is the person who should make the regulations under the Section.
The amendment proposed by Senator Lenihan and Senator Eoin Ryan would ensure that regulations about the amounts and purposes of loans could be made only on the recommendation of the registrar. The registrar could not be expected to be in a position, in making recommendations, to have the full picture as regards housing. The section as it stands provides that the regulation will be made by the Minister for Local Government with the consent of the Minister for Finance after consultation with the registrar. I have already referred to the responsibility of the Minister for Local Government in relation to the provision of finance for housing. The Minister for Finance has responsibility for the supply of funds for all services including housing and so it is natural that his consent be obtained in making regulations under the section.
Provision is made for consultation with the registrar because of his responsibility for securing the orderly and proper regulation of building societies business. In addition, the registrar would be in constant touch with the societies, would be able to identify the pattern of their lending and would be in a position to advise on the likely effect which any proposed regulations relating to loans would have on other aspects of building societies' business. Throughout the Bill the aim has been to achieve a reasonable balance in the level of the controls proposed and I am sure that the Members of the House are in agreement that this will be achieved and that the arrangements which will operate under the section as it stands will provide this balance and secure that the interests of all concerned will be taken into account if and when regulations are made. For these reasons I must oppose the amendment.
I think there is a stronger case to be made for retaining this than there was in some of the earlier sections and although I am not convinced that the amendment would not improve the section nevertheless I think the Minister has a stronger case and I do not propose to press the amendment.
Amendment, by leave, withdrawn.
I move amendment No. 17:
In page 46, between lines 44 and 45, to insert the following subsection:
"(5) Where regulations are proposed to be made under this section, a draft of the proposed regulations shall be laid before each House of the Oireachtas and the regulations shall not be made until a resolution approving of the draft has been passed by each such House."
This amendment is to introduce the same provision for section 77 as now exists for section 76, that is to provide that where regulations are proposed a draft of the regulations should be laid before each House of the Oireachtas. If it is agreed that regulations under section 76 should be laid before both Houses the arguments for doing the same under section 77 are equally valid and I would ask the Minister to accept this amendment.
Generally speaking the submission to each House of the Oireachtas of draft regulations is provided for only where the matter contained in the regulations is of special public importance or where the regulations would have the effect of altering a provision in existing legislation where, for instance, amounts, percentages or periods of time specified in legislation, may be altered in regulations. In such circumstances it would be normal to seek the approval of each House for the draft of such regulations as they would have the same effect as an amendment to the Act itself. In the case of regulations made under section 77 no such situation would arise. The section sets out precisely the powers being conferred on the Minister for Local Government and the contents of the regulations would be a matter of detail rather than of principle. May I say at this point that in proposing that draft regulations under section 76 be submitted I was conscious of the fact that such regulations would be so framed that they would last for many years. Regulations under section 77 would be concerned only with the amounts and purposes of loans. While the special subsidy was being paid to these societies there was a requirement that all loans should be for housing purposes and the maximum amount of a loan was varied from time to time. The amount had to be varied in the light of the demand for loans, the cost of housing and the effect of inflation. In a short space of 30 months the controls exercised were altered about six times to meet changing circumstances and in many instances to meet representations from the societies.
As I have already indicated, I do not visualise that regulations under this section would be a permanent feature. On the contrary, regulations would be made only in the circumstances set out in subsection (1). However, as those circumstances arise it would be quite unworkable to have to present a draft to each House providing perhaps for a minor amendment, the effect of which might be merely to make an adjustment to compensate for a rise in the cost of living. No question of principle would be involved. It would be quite unwarranted to have to take up the time of both Houses every three or four months to seek approval for the making of minor changes in regulations. The making of regulations is in itself a reasonably slow process. If, in addition, it became necessary to submit drafts of amending legislations to each House of the Oireachtas the process would become too inflexible and might even work to the disadvantage of societies if they happened to require an urgent review of the positions. Accordingly I would not be prepared to accept the amendment.
Most of what the Minister has said in reply to this is valid. But I do not agree that it is not a matter of principle. It could be a matter of principle. This gives the Minister very wide power to decide the purposes and amounts of loans by societies and although this will probably be always used in a perfectly legitimate way and in a manner to which there could be no objection whatever, it seems to provide a way in which a Minister could direct the building societies in a very positive way, a way which while in their interest might not be in the interest of their depositors and so on, and might not be in the public interest. This seems to give the Minister a very great power which he is going to exercise without the Houses of the Oireachtas being ever aware of what is in these regulations.
Of course it would be laid before each House in draft and it could be annulled within 21 days, in the normal way.
So the Minister is objecting merely to having the proposed regulations laid before both Houses?
The objection is that they would have to be debated whether this was necessary or not, whereas in the other case the House could object if they wanted to.
So there are regulations which in any event have to go before the House anyhow.
Yes.
In view of what the Minister has said about the difficulty and the time element involved, that provided they are capable of being amended or looked at later on, that is not quite as satisfactory but in all the circumstances I think there is an argument for accepting that way of doing it.
Amendment, by leave, withdrawn.
Government amendment No. 18:
In page 50, line 40, to delete "disposed or" and insert "disposed of ".
This amendment is to correct an error in the text.
Amendment agreed to.
Government amendment No. 19:
In page 52, line 11, to delete "thereof" and insert "therefor".
This, too, is to correct an error in the text.
Amendment agreed to.
Government amendment No. 20:
In page 54, line 41, to delete "affected" and insert "effected".
This amendment also is to correct an error in the text.
Amendment agreed to.
Bill, as amended, received for final consideration.
Question proposed: "That the Bill do now pass."
Looking through the amendments proposed by Senator Ryan and supported by other Senators there would appear to be concern expressed in Senator Ryan's amendments, which voiced I would think the concern of the Building Societies' Association that there might be a possible conflict of interests between the Minister's position in regard to the building societies' interests. I think that the Minister will be the first to agree that the building societies should have freedom to operate their societies in the best possible way in the interests of both their depositors and their borrowers and I would like to think that that indeed is the purpose of the Bill and at the same time it will safeguard the depositor and the borrower against rogue societies.
I should like to make just one comment here. In section 96 the Minister refers to certain organisations which may be consulted in connection with the proposed building societies advisory committee and he refers specifically to the Irish Building Societies' Association and such other bodies that he may from time to time consider appropriate. The Minister is aware that although the building societies association generally voices the feelings of the building societies' industry, it does not represent all the building societies in the country; in fact it is a very confined association. I would like to think that smaller societies and, perhaps, new societies would find some place for consultation within the ambit of this Bill as they have an important part to play in the building societies' interest as well as the larger societies and I hope that the Minister will keep this in mind when he is setting up the building societies advisory committee. I would like to reiterate this because the Minister would be the last person who would like to see any restriction both on the development of the society or even the starting up of societies. It is essential in this business as with any other business that there should be effective and efficient competition.
The object of the Bill was to up-date legislation in the best interests of all concerned. That is not alone the two bodies referred to by Senator Russell, but a number of other interests, and it is the object of the Bill to ensure that this matter is regularised. It improves the position for the interests concerned including the building societies. The association represents 98 per cent of the assets but only five of the 28 societies are registered. That is a rather peculiar position and I would not at this stage suggest what bodies should make up the other four which are not mentioned. We would have to ensure that the right ones are represented because it would look a bit odd if the building societies with 98 per cent of the assets had one representative and the remainder with only 2 per cent also had a representative. In such circumstances somebody might consider it better to be outside. I would not like to give any guarantee on that part of it except to say that there will be representatives of organisations who will have in mind how best the societies should be operated. I would like finally to thank the House for the speedy and reasonable way in which they have allowed this Bill to go through.
Question put and agreed to.