The Bill is one of a number of Bills which have formed, by way of series, a constitution for our Central Bank. It is significant in some respects and insignificant in others.
The Progressive Democrats accept that there is need for a major reform to repair and augment the powers and functions of the Central Bank. We make one preliminary objection to this Bill, that is that it seems to lack a comprehensive character. Ireland is now entering into a single European market for capital and it is noteworthy that this Bill does not put Ireland in a position to operate as a jurisdiction in which financial services are controlled by comprehensive legislative measures. In Britain there is a comprehensive financial services code which covers everything from the point of view of investment advisers, assurance, investment companies and the like. Here we are doing a stitching and darning job and we are giving all these extra powers to the Central Bank to deal with a restricted number of areas of expansion in the financial services market. One power relates to the international Financial Services Centre on the docks. Another relates to the futures and options exchange which is about to be opened in Dublin. Another power relates to the question of control of the moneybroking business in Dublin in so far as that requires control. These are three small elements in a large financial market.
So far as I am concerned the difficulty that this Bill poses for anybody interested in legislation is that it shows we are playing with fire. This House has the advantage of seeing how legislation has been introduced in the UK to bring order and accountability into the financial service sector but there is no indication of any urgency on the part of the Government to deal with the same issues in an Irish context. What protection has an Irish investor against the occurrence in Ireland of an incident equivalent to the Barlow Clowes incident in the UK financial context? What protection has the average Irish investor in respect of representations made in advertisements and the advice given by financial advisers in respect of deployment and investment capital? We have virtually no legislation and a free for all. Although this Bill seeks to bring some coherent control to the banking sector, to moneybrokers, to the financial futures and options exchanges, there is a gaping hole in financial protection for the consumer, the investor. This measure does nothing to close that loophole. A piecemeal approach to the supervisory functions of the Central Bank will lead to a major investment scandal here from which many ordinary people both Irish and foreign will suffer substantial losses. Then the question as to why there was not in place financial services legislation will be asked. We will then want to know why there was not comprehensive legislation giving a controlling and supervisory role to a capable and competent authority to ensure that there was not an abuse of the kind which has caused so much loss to so many innocent people in a much more legislatively alert and controlled environment such as Britain.
This measure is inadequate. It is a partial solution to an obvious and growing financial danger in an integrated economic capital market. It appears that comprehensive legislation in the financial services sector will only come about in the wake of a major and costly financial collapse. The Minister should say what are his long term views in relation to total protection for the investor by way of financial services protective legislation for the consumer in the Irish context. I do not want to hear about the little bits and pieces of the jigsaw that are filled in by this legislation. I want to know what is there to protect the investor from abuse, from misleading advertisements and from the participation in the market of people whose record or propensities are so obviously unattractive as to demand protection for the innocent investor. About a year-and-a-half ago, for example, I read in The Economist magazine about a firm in Dublin offering extra-ordinarily attractive interest rates to investors in the UK. I remember at the time thinking that I had never heard of this body nor had I seen any mention of it in any economic journal in Ireland. I remember wondering why it was that such a body could come into existence and advertise from an Irish base to an English market and yet never have come to the attention of somebody who was showing active interest in the Irish financial market as I was then. Time went by. I made inquiries in the Dublin money market as to whether they had ever heard of such an organisation and they had not. Three or four months later news came through that this organisation had gone to ground and had collapsed. There was no legislative framework in Ireland to stop it, to inquire into it and to find out what it was about. In the absence of comprehensive financial services legislation which investigates competence and the capacity of individuals to handle money and their probity as far as honesty and capacity are concerned, Ireland is, in economic and capital terms, an open season for the worst elements in the European capital market to come here and advertise seeking investment funds from abroad. There is nothing in this legislation to seal that hole or to offer any protection to Irish or foreign investors from the use of Ireland as a haven for people of that kind. Anybody who sees an advertisement in a newspaper offering any particular rate of return on investments is entitled to assume that there is some regulatory agency taking an active interest in that kind of advertising and which will offer protection against abuse. There is no such jurisdiction, no such agency in Ireland. There is nobody seeking out such companies so as to protect people from abuse. There is protection in relation to the taking of deposits but in relation to advisory services and to channelling investment funds, which is an extension of the same business, there is no protection for the investor. This gap in our law is an unacceptable loophole which benefits those who are willing to exploit it and there are plenty who will do that.
On several occasions, most recently on 31 January this year, I raised in the Dáil the refusal of the Minister and his predecessor to answer questions relative to the operations of the Central Bank. On every occasion I have either had a blank refusal or an anodyne and totally bland response to the effect that the Central Bank is an independent financial institution for which the Minister is not accountable to this body and in respect of which he will not give any detailed replies. That is entirely unacceptable and I have said so as volubly as I can without causing disruption in this House. I fully accept the requirement for independence for the Central Bank. I fully accept that the Central Bank should, as the Minister suggested, be afforded a large degree of autonomy. However — and this is a point I want to reiterate as I made it on 31 January in hurried circumstances — independence and autonomy do not exclude responsibility and a measure of accountability.
Because Dáil Éireann has no worthwhile budgetary, fiscal or financial committee — which it ought to have — there is no basis for this House, which is given the role of budgetary and fiscal control watchdog, to come to grips with the policies pursued by the Central Bank or to form any real judgments about the policy options open to that bank and the implications of the choices that the board of that bank make. On the last occasion the Minister pointed out to me that, in the context of this debate, I would have an opportunity to raise many of the issues I raised in the question to him. If every ten years a Member of this House is entitled to raise in this House what policies the Central Bank are pursuing or to question the circumstances in which they carry out their various duties, or to raise the procedures whereby they are given what I believe amount to immunity from scrutiny by this Chamber, all I can say is that that is inadequate scrutiny and does not amount to an ample vindication of the people's right to know what public institutions are doing on their behalf. Were there a committee of this House which met regularly with the members of the board of the Central Bank, and kept up to date with the thinking of the Central Bank on policy issues, the policies they are following and the plans the Central Bank were making to discharge their duties, there would be an effective channel of communication without, in any sense, compromising the independence of the bank or the integrity of their decision-making powers.
I have had the opportunity over the last few days to look at the book by Moynihan on the history of the Central Bank, the book by Dr. Ronan Fanning on the history of the Department of Finance and a few other texts on the control of banking in Ireland and the history of the evolution of the Central Bank, as an institution, based on the Currency Commission established in 1927. Having looked at them as far as I can see there has never been — despite complex debates on occasion as to the possible role and the possible benefits of having a central bank — an adequate debate in this House on the accountability of the Central Bank for the discharging of its functions. I believe it is possible to have an independent institution which is entitled to look at the Oireachtas and the Government of the day, eye to eye, level pupil to level pupil, and say: we are independent; we have our own view; we will not bow the knee to you. I believe it is possible to have such a relationship based on some communication of information of an adequate nature between the two bodies, some capacity, especially on the part of this institution, to question what goes on there. It is entirely wrong that Members of this House should be left in the position, as they are very frequently, that whenever they tender any questions to any Minister arising out of the circumstances in which the Central Bank is run, they are told that this is not a matter for the Minister for Finance who, by the way, appoints and will, under this legislation, appoint the entirety of the membership of the board of the Central Bank. We are told that it is not a matter for him to account to this House for its policies. All right, I accept that it may not be his particular duty but, if it is not his duty to account for the policies of that bank, it is the bank's duty to account for its own stewardship. If this House cannot, by its laws and procedures, require an account of stewardship of an adequate kind, then there is a deficiency in our level of control.
It may be argued that the annual reports and accounts that the Central Bank furnish are an adequate response to any interest on the part of any Member of this House as to how the Central Bank is run. Frankly, that is a bogus argument. Anyone who takes a look at the Central Bank's reports will immediately recognise that they give an anodyne and completely transparent account of what has happened in the Central Bank during the year. All crises are brushed under the carpet, all thorny issues are ignored. Effectively what is told to this House is that there is nothing but good news in the accounts of the Central Bank. Those reports amount to an unilateral statement on the part of the bank which leaves Members of this House entirely in the dark on many sectoral issues affecting the bank. For instance, the annual accounts of the bank furnish this House with two figures in terms of expenditure. They tell us what is the total amount of expenditure which is divided into two categories, wage and remuneration, and total other expenditures.
No Member of this House is entitled to know, apart from that, how the moneys of the Central Bank have been expended during the year and to what extent there is good value for money in respect of those expenditures. It is simply entirely wrong that a major financial institution should be entitled to say that it has specified its own expenditure at a certain level, it has categorised it into two areas, wage and non-wage expenditure, and say to this House: that is the entirety of the information you will have as to the way in which we have expended our moneys during the year and the value the public will receive for that expenditure. That form of accounting is virtually useless.
It is a sad fact that the form of accounts which the Central Bank are obliged by statute to render to this House is prescribed by regulations of this House and that those regulations do not actually require the Central Bank to set out, in intelligible and reasonable form, a breakdown of their expenditures with a view to establishing, in the public mind, that that bank are getting good value for money.
Another example is that it was the habit of the Central Bank until, I think, about three of four years ago, to say in their annual reports how their staff were deployed. Now we are given only the aggregate number of staff employed which hovers around the 750 mark. The fact is that, up to about five years ago at any rate, it was the habit of the Central Bank to tell this House where they were deploying their staff for example, how many people were involved in the currency production unit in Sandyford; how many were involved in exchange control; how many were involved in the supervision of banking and how many were involved in other specific areas. That breakdown has ceased to be given. Why has it stopped? It was stopped because it was not statutorily prescribed for the Central Bank to tell us this information, because it became uncomfortable for the bank to continue to reveal that information to us.
I have here the latest three annual reports of the Central Bank. Anyone reading those will note that there are somewhere between 720 and 760 employees but what they are doing is entirely obscure from that report, even though five years ago at least the Central Bank did this House the courtesy of telling us how many of their complement of staff were engaged in various tasks ascribed to the particular functions this House has set for the bank.
It is a matter of importance that we should know whether the bank is over-staffing or under-staffing in specific areas. For instance, if we insist on maintaining exchange control — which is now slowly ebbing away — it is a matter of importance that we know how many people are supposed to be charged with the duty of carrying out the delegated powers of the Minister for Finance to the Central Bank in respect of exchange control. It is worth while noting that this House has not been told for three, four or five years how many people are carrying out that function at present and, in view of recent developments in relation to Central Bank policy and Government exchange control regulations, how many people will be released from that area to work in others, such as supervision of the building societies, supervision of the International Financial Services Centre in the Custom House Docks area, and control of the moneybroking business and the futures and options exchanges. We simply do not know.
We have delegated all these functions, at arms length, to an institution. We are not even in a position to ask to what extent and in what way that institution is complying with the duty we have laid on them. That is completely wrong. For some unknown reason that information has been excised from recent reports so that no one on the outside is aware of the way in which the bank's staff are deployed among the various duties required to be performed by the bank. As a result, no one can form any judgment as to the efficiency and performance of each aspect of the bank's duties. We must be satisfied with a global, utterly uninformative, assurance from the board of the bank that all is well every year. I am not prepared to accept that and I do not think I would be correct in doing so.
With the scaling down of exchange control one might well ask how the resource of the bank should be redeployed to take account of their new duties, especially vis-á-vis the building societies, companies in the International Financial Services Centre, moneybrokers and the control and supervision of futures and options exchanges. One might ask these questions but the simple fact is that, as long as ministerial policy continues as it is now, no answer is forthcoming either in the bank reports or from the Minister who, though he appoints the entire board, refuses to answer to this House for any of their detailed policy decisions or for their performance.
A recent example which caused me some considerable disquiet is the operation of the bank's currency centre in Sandyford. The bank has a large facility there with industrial relations problems relating to the redeployment of new technology. I am left with no answer when I ask the Minister's predecessor about the costs of currency production at Sandyford. Is that facility necessary? Is it necessary that Ireland should produce its own coins and notes? What is the vital national interest that that be carried on in this country? Or is that facility carrying our work for any foreign countries? Is it possible that if we have a secure institution of that kind, and it is necessary for our own interests to have it here in this country, that it could carry out for international bodies, foreign countries and the like, the same functions in relation to security printing? Are we getting value for money? Who knows? Who in this House knows what the industrial relations problems which have come to the fore recently in the newspapers in relation to new technology actually mask? Is this the tip of an iceberg? Are we actually running a mint in circumstances where the same could have been done, as it was at one stage by Thomas De La Rue and Company, for much smaller outlay in terms of capital on the basis that their facilities were available to a number of individual countries and not simply to Ireland? Could that institution be earning us valuable foreign export orders?
All these are questions which arise but what is known is that upwards of 100 staff — when we last found out how many people were up there it was somewhere between 100 and 150 people — are engaged in the production of currency in Sandyford and its checking and so on, and we do not know to this day whether they are necessary, how much they cost us as an economy, whether this work could be done more efficiently by others and whether they could be working for foreign banks which do not have their own currency production units. We simply do not know any of these things because the Minister and his predecessor have refused to answer any detailed questions on the activities of the Central Bank.
I can appreciate that there may be good reasons security matters should not be discussed in this House but I do want to know why it is necessary that this country should engage in what is, on the face of it, a difficult area of technology, fraught with industrial relations problems, and does so without any indication as to whether it is necessary or good value for money so far as our taxpayers are concerned. So far as this House is concerned the Members simply do not know and, what is more, nobody will tell them the answers to these questions.
The upshot of all this lack of accountability and obscurity in relation to the activities of the bank is that it is not merely given autonomy and independence but immunity from examination. On 31 January the Minister, somewhat disingenuously I have to suggest to him, suggested that because the accounts of the Central Bank are examined by the Comptroller and Auditor General nobody should suggest that there is anything amiss. Of course he is right in the sense that there is an audit in process which is supposed to uncover any misappropriation of funds but let us stitch this into the record with the greatest of respect to the Minister: his answer shows just how little real accountability and responsibility there is. The Comptroller and Auditor General has many functions but he has no function in reporting to this House as to whether he believes that the staff costs in the Central Bank are excessive or that the staff is badly deployed, and still less has he any function in determining whether the bank's reserves are adequate, inadequate or more than adequate to carry out its duties. If, as I suspect, the bank's reserves are greatly in excess of the actual need for such reserves, there is a strong argument to be made for the liquidating of some of those reserves and their restoration to the Exchequer for the purpose of reducing national indebtedness and consequently reducing interest liability on the part of the Exchequer.
Nobody explains to this House the policies by which the level of Central Bank reserves is determined. There is an independent board who at the end of any given year, having decided on what the bank's operating costs are, including staff and non staff items, and having decided what amount it wants to put into its reserves, decide by a process of elimination, what is its surplus that is available to the Exchequer. We rely on their good faith, and perhaps rightly so in some respect, that that is the best value the Exchequer can receive from the Central Bank but I doubt it. In any institution which has as long a history as that, unless there is strong parliamentary pressure to indicate performance ratios, to indicate targets, to indicate a justification for every reserve that is built up and the level of such reserves, there is bound to be a laxity to the disfavour and to the detriment of the ordinary taxpayer as proprietors of the Exchequer of this country.
Again, there is no basis on which the amount of the reserve is explained or the policy decisions which underlie the maintenance of reserves are examined with a view to determining whether they are correct or incorrect. Nobody knows why the levels of reserves are fixed as they are and nobody who cares to look at any of the reports and accounts which are furnished to the Members of this House can divine precisely what process of intellectual rationalisation has led to the particular level of reserves which have been fixed for the year in question.
All of this is of significance to the taxpayer because the amount of money which the bank each year gives back to the Exchequer by way of Central Bank surplus varies directly in accordance with certain decisions made by the board of the bank in relation first to the expenditure of the bank on its staff, second to the expenditure of the bank on other matters, and third on the provision for reserves. Every Central Bank decision affects the taxpayer directly and whereas no one is suggesting that the Central Bank should become the pawn of Government or the Department of Finance, or be directly controlled by the Government of the day in respect of the funds at its disposal, there is a halfway house which is not only reasonable but, I would argue, essential. That is, the position of accountability and consultation among equals, not domination by one body of the State over the other but a relationship of equals and understanding. That is a principle which is entirely lacking in the practice and legislation which governs the activities of the Central Bank at this time.
I notice, looking back over the records of the Central Bank's history, that the Labour Party have on occasion demanded Government control over the bank in terms of policy. That is a view with which I disagree. I must say also that I think the present situation of immunity, which is not independence, autonomy, responsibility or accountability, but is simply immunity from challenge, is indefensible and wrong in principle and probably is working to the detriment of the Irish taxpayer and the economy in general.
All of that feature of the Central Bank would be bad enough were it not that the Government now plans to worsen considerably the situation because it is noteworthy that section 1 of the Central Bank Act, 1942 required the Governor, every director and every officer of the bank to take an oath before a peace commissioner before taking office or on doing so, swearing not to disclose any information relative to the business or records or books of any bank which might come into their possession in their capacity as a Governor, director or officer, as the case might be, save in circumstances where such disclosure was authorised by Statute. That is a very simple thing. Here is a regulatory agency which had an investigative function. It had the right to ask any bank to disclose to them their records, to require of any bank a considerable degree of information and the State, as a compensatory safeguard for those individual banks, required each and every person who came into possession of that information to take an oath of secrecy in relation to it on the basis that the Central Bank was a regulatory agency and that such information was only available to it by virtue of its regulatory function. Unfortunately, this Bill has a dramatically different approach to the same issue. The new Bill proposed to fundamentally alter the manner in which the Central Bank operates as regards disclosure.
The 1942 Act applied only to information relating to other banks. Section 15 (1) of this Bill creates a prohibition of a very wide-reaching and deep kind on the disclosure of any information relative to the business of the bank which comes to the knowledge of not only the directors, the governor or the officers but also the servants or agents of the bank in relation to any matter concerning the business of the bank. A criminal offence is now being created for disclosure of such information to any third party. I ask why this is needed. Why is there suddenly a requirement that any information, no matter how trivial, which comes into the knowledge of any servant, officer, director or governor of the Central Bank, may not be disclosed except in the circumstances set out in section 15 (2) of the proposed Bill?
Section 15 (2) does not allow, for instance, a governor, a director or an officer of the Central Bank to come to any Member of this House and disclose information relating to the business of the Central Bank which might reveal, for instance, gross inefficiencies, errors of judgment or the like. None of the circumstances set out in section 15 (2) permits a person in the Central Bank who is privy to information which could greatly affect the future running of the bank to come to a person such as a Member of this House with that information with a view to improving the way the bank is run. The exceptional circumstances surrounding the absolute ban on disclosure of any information are set out in section 15 (1).
The ban on the disclosure of information set out in section 15(2) relates to information comprising the disclosure "required by the Court"; "with the consent" of the person to whom the information relates"— which probably would not affect a major blunder in the Central Bank; "where the bank is acting... in the capacity of an agent for a person, made to the person in respect of that capacity"— that is irrelevant too; "where the bank considers it necessary for the common good"— that is a laugh, because if the bank has made a colossal blunder and the majority of the board are responsible for that blunder, we will not hear about it because they will not consider it necessary for the common good and it has to be the bank rather than the individual person in question which is at stake; where the disclosure is "made to an authority in a foreign jurisdiction duly authorised to exercise functions in that jurisdiction"— that is irrelevant; where it is "made to any institution of the European Communities for the purpose of the State's membership of any of those Communities," or, lastly, "which in the opinion of the Bank, is necessary for the protection of depositors." If this Bill is passed in its present form in no circumstances can a director of the bank come to a Member of this House and say: "Are you aware that the bank has been pursuing an erroneous, loss-making or damaging policy for the last three months and has suffered badly as a consequence? I want to reveal that to you so that you will raise this matter in public and something will be done about it".
This Bill makes such a person not simply a person who must lose his job, not simply a person who may be criminally liable, but a person who is a traitor to his institution. That is wrong. There is no basis why it should be so. Why should there be a cloak of secrecy around the Central Bank with a view to deciding that information in the hands of officers, governors, directors or servants of that bank should never be disclosed except in the entirely restrictive set of circumstances set out in section 15 (2) of this Bill? That is wrong. It is not merely a replacement for the provision that was set out in the 1942 Act which related to disclosing information which was got from subordinate bodies and which they were only entitled to in that capacity; it is trying to drag around the Central Bank a new cloak of secrecy, an Official Secrets Act, which will make the bank more impenetrable.
For instance, I will not be able, on any financial occasion such as the launch of the new magazine, to talk to any officer, director, servant, agent or the governor of the Central Bank in manner that will allow him to disclose any information about the business of the bank. For my sins, I am Finance spokesman of one of the parties in this House. If I and Deputy Noonan are to be excluded from hearing, bona fide from the lips of a director of the Central Bank about any matters dealing with the business of that bank on pain of him and us committing a criminal offence, there is something seriously wrong with the legislation. It should not be accepted in its present form and it is probably unconstitutional. Why should there be such a cloak of secrecy dragged around the operations of the Central Bank, around policy issues and errors that are made inside the Central Bank? It is wrong in principle; it would be wrong in practice and it would only compound the problem which I have spoken about earlier, that is, the lack of accountability of the Central Bank.
As I have said, this measure will apply in particular to a director who believes there is something of importance which ought to be disclosed to Members of this House in relation to the bank's affairs or to the policies being pursued by the bank. To say he is prohibited from disclosing such information unless the majority of the board agree, is a gross invasion of his dignity as a member of the board of the bank and goes too far in creating an unnecessary aura of secrecy about this institution. I can see good reasons why there should be, in certain respects, an obligation of secrecy — there could be profits to be made or information which is sensitive and damaging to institutions would come to the knowledge of such people — but section 15 as drafted at present is absolutely excessive and wrong in principle.
As I have said before and I repeat, the accounts of the bank which are regularly put before this House and whose contents are regulated by statutory instrument are completely inadequate. You could study those accounts until you are blue in the face but you could form no judgment as to whether the taxpayer is getting value for money from that institution. There is no performance target information available in those accounts. There is no basis on which anybody, no matter how clever, who examines those accounts could arrive at the view that the Central Bank is delivering value to the consumer. The mere fact that the form of the accounts is decided by this institution is a slight indictment of the Dáil because it is done by statutory instrument and this House is entitled only to such accounts as it is willing to accept. The Minister should require the bank to give full and proper accounts from which any interested and intelligent Member of this House could deduce whether the bank is being properly, adequately, efficiently and tightly run — I use the phrase "tightly run" because, like any other institution, it is not immune from the winds of change or from the economies which the rest of us have had to make in our various capacities. The Central Bank must be subject to the same controls and the same ethics that it seems so often to preach in its financial commentaries to the rest of the economy.
Would the Central Bank accept for one minute that there should be a Department of State whose affairs and expenditure are not subject to any scrutiny? It would not. What is sauce for the goose is sauce for the gander. If the Central Bank wants to remain independent, the very least it can do is to demonstrate by way of proof positive that it is doing a good job with the resources and the moneys over which it has control and, moreover, that it is doing an economical job in relation to the reserves that are given to it. So long as the Central Bank purports to lecture others on what they must do in relation to belt tightening controls and at the same time insist that its own independence requires not merely that it not be questioned but that it be entirely immune from any investigative procedure, apart from the Comptroller and Auditor General's cursory but detailed examination for the purposes of seeing that there was no misappropriation, its position is untenable and indefensible in many respects. Such an approach would not compromise the independence of the bank but on the contrary would ensure that the ordinary citizen and the taxpayer would have protection for his ultimate interests, both in the way the bank is run and as to what happens to the funds at the Bank's disposal.
There are many detailed provisions in this Bill in respect of which we have queries and in respect of which we intend to table amendments. The Progressive Democrats are determined to ensure that this opportunity, which is a ten yearly opportunity at best, will not pass without using the legislative process to the full to ensure that the public's right to know, that the principle of value for money and the principles of accountability are firmly entrenched in the legislation relating to the Central Bank and that the ethics which that institution preaches to others apply equally, and by operation of law, to itself.
A number of points arise out of the text of the Bill. I do not want, because this is only the Second Stage, to go into the detail of the Bill. One point that occurs to me in the context of the Building Societies Bill is that since 1981 the Central Bank has held unto itself the right to determine, by way of veto, the number of branches that any individual bank can operate. At that stage it was the view of the Central Bank that there was an over-emphasis on branches, on the structures of the various associated banks, and that as a consequence the consumer was losing out.
If the Central Bank purports to take on a supervisory role in relation to building societies I want that clearly entrenched either in this Bill or in the Building Societies Bill. Since both Bills are being debated at the same time I hope I am not straying from one to the other illicitly so far as the procedure of this House is concerned. I want it clearly stated that the Central Bank can say to any building society: "You may not spend more than a certain percentage or your funds or a certain ratio of your assets or whatever —however it is determined, I do not care —on advertising. You may not fly people in jumbo jets to Las Vegas to see boxing matches which you have sponsored. You may not erect, at any expense, branch offices where you want them and as you want them in every rural town and every urban suburb".
If there is any good reason for the 1981 stricture on the Associated Banks in relation to their expenditure on the opening of branches and the problems that creates from the point of view of keeping costs down, the same applies a thousand-fold to the building societies. It applies especially to building societies because the shares, to a large extent, in the Associated Banks are owned by financial institutions who look to those shares and the money they get out of them with a view to seeing what dividend they get in return. I am sure that 95 per cent of the Members of this House are shareholders in building societies in one way or another. How many of us exercise any function whatsoever or have any interest in the amount of money that is spent by the board of that building society on promotional activities, advertising activities, management expenses, administration, buildings and the appurtenances of those building societies? I believe there is no pressure from within those building societies for control in those areas. Although the Central Bank has functions of this kind in relation to ordinary associated banks it should be explicitly stated in the legislation that it has the same functions in relation to the building societies. It may be implicit and the Minister may be so advised but I have grave doubts as to whether it is. When I look at the legislation that existed in 1981 I have grave doubts as to whether it was open to the Central Bank to start directing the banks under its control at that time that they must apply for permission before opening an extra branch. I have doubts as to whether such general prohibitions or regulations were intra vires the Central Bank then. I would want explicit authority in that regard if such proposals were to be included in future legislation.
I have objected as strongly as I can to the terms of section 15 because I think it is a mistake. Section 18 will require substantial amendment. For instance, the Minister the other day was telling me about his shared misgivings with me about the Revenue Commissioners' failure to furnish adequate reports within an adequate time for their annual doings on our behalf. Section 18 gives the Central Bank six months to prepare its annual report. Why should we put up with this sloppy, laid back attitude to reporting requirements? If there is something wrong let us find out two months after the year is ended. Why should section 18 give them six months in which to dilly and dally and procrastinate in relation to telling us the bad news or the mistakes they have made in the previous year? Section 18 should be amended to provide that the accounts and records of the bank and the annual reports furnished by the bank should have specific items: (i) clear indications as to how staff are deployed and (ii) clear indications of the relative costs of each of the bank's activities. I refer in particular to the cost of currency production so that we can see what that particular enterprise in Sandyford is costing the taxpayer and can make our judgment as to whether it is necessary or desirable to maintain it on foot of such information.
I welcome the winding up of the legal tender note fund and the transfer of its assets to the general fund of the bank. It is about time we left the era of the currency commission and came into the 20th century.
Section 26 is doubtful in that it requires the holder of licences — in other words licensed banks — to notify the bank of all charges imposed by such holder in relation to the provision of any service to the public or any class of the public. I know that is intended in good faith but a requirement and notification of that kind will lead to an approximation rather than price competition among the various licensed banks in relation to the services they provide.
In relation to section 28 I note that investment trust companies are not included and I would ask the Minister to explain the reason for that.
I agree with the proposition that auditors appointed to a licensed bank should have an obligation to the world at large as opposed to their individual client and should have the duties and immunities conferred on them by the sections of the Bill up to 44. There should be a method of excluding certain persons from acting as auditors in the company. In relation to section 82, I would ask the Minister to accept that that section is very restrictive. It allows only for an appeal to the courts against a refusal of the Bank of its consent to a particular set of circumstances on the basis of a point of law. A reasonableness criterion should be entered into also. It should not be simply on the basis that something was not legally capable of being done by the Central Bank but also that in arriving at its decision the bank had acted unreasonably.
I do not see the necessity for section 82 (6) which prohibits any appeal from the decision of the High Court, in relation to a point of law on the part of an application dealt with under section 82 to the Supreme Court. I am against any restriction on a right to appeal from one judge to five judges unless there is a clear, coherent and necessary reason for so doing. If I appealed to the High Court on a point of law and felt I got a raw deal, I would look askance at a statute which said: "there is a Supreme Court there to deal with errors of law by the High Court, consisting of five members, whose function is to reconsider decisions of law by the High Court but you, by statute, have been precluded from appealing to it for no reason whatever". I should like to know why there should be no appeal to the Supreme Court under that section.