Credit Union Bill, 1996: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

I welcome the Bill, which is much needed. Certain aspects of it were sought for many years and I agree with the provision which will allow a longer period for loans. This is most important because a five year period was not long enough. I also welcome the provision which will allow young people under the age of 16 to deal with credit unions. It is most important to give young people an opportunity to save for particular items. The need to train them in the discipline of saving money is most important.

No organisation or movement since Sir Horace Plunkett founded the co-operative movement has contributed so much to the economy and the financial well being of so many families, particularly those which do not have disposal incomes. We should be eternally grateful to credit unions, large and small, in towns and rural areas. However, I have a difficulty with the proposal to cap loans at £20,000. I agree that the level of deposits should be increased from £6,000 to £20,000 but I have a problem with the cap on loans. Under the old regime the cap on shares was £6,000 and most credit unions used a rule of thumb to gear the amount of loans against the amount of shares at a ratio of three or four to one. This meant many credit unions could have provided loans in excess of £20,000.

There is no need for the cap because one of the great characteristics of the credit union movement is that unless a member first saves with the credit union, he or she is not entitled to a loan. The regulatory regime of credit unions is strictly applied and all the members at supervisory level are trained. That will still be the case and there is no reason the cap should not be raised to a much higher level. A clause should be inserted in the legislation to allow a percentage of the total assets of a credit union to be used. Some people might glibly state that, if that was allowed, a member could get a huge loan like that from a large building society. However, that is not the case because the credit union movement is so regulated that the amount of a loan is always related to the amount of shares held, the ability to repay, family circumstances and many other aspects. There is no danger that somebody could buck the system and get a much bigger loan. There should be flexibility in this area.

This matter and other small points should be considered in terms of the record of building societies over many years. There have never been scandals in building societies despite the fact that they deal with millions of pounds every year. The operation of that system seems a miracle, but it is because its regulatory system works so well. The cap on loans should be raised. The Bill is good and I have no problem supporting it but goodwill should ensure the cap on loans is raised.

I thank Deputy Connaughton for sharing his time. I am glad at last to have the opportunity to contribute to the debate on this legislation. In common with most public representatives in my area I was invited last autumn to emergency meetings of the Irish League of Credit Unions. The representatives outlined their great anxiety about the delay in the introduction of the legislation and their concerns for their 1.6 million members. They said they urgently needed a legislative framework under which they could serve the current and future needs of the members of credit unions. We were asked to expedite the legislation and the Minister of State, Deputy Rabbitte, should be congratulated on introducing the Bill for consideration before the House moves on to other business.

A primary objective of the credit unions was the introduction of this legislation. Once introduced it can be debated and further changes can be made sought. I have files dating back a few years on constituents, members of credit unions in semi-State companies, who held off moving house in the hope that this legislation would allow them borrow money through their credit union, with which they have a record of saving and a strong relationship. The Minister has done good work in this legislation, the introduction of which was delayed because of a change of Government. It is important it is passed while there are a number of months left to debate it in this Dáil.

Members attended briefing sessions with officials of credit unions with a positive sense of their contribution to their constituencies. I certainly had that positive sense in regard to the credit unions in my constituency. I have been most intimately involved with the Ballymun credit union which has developed and expanded during my time as a public representative. Most of the other credit unions in my constituency, of which there are eight, were long established. However, the Ballymun credit union developed at a time of crisis in Ballymun when one of the main banks made a high profile withdrawal from the area at a time of fairly difficult social pressure. A crisis often provides an opportunity to review the position and people often discover resources they did not know they had. A good development that resulted from the withdrawal of that bank was a decision by the people to stand on their own feet and develop their own credit union. It is extremely successful now and has a fine premises in the local shopping centre and a significant membership.

I was amazed at the profile of the activities of the credit unions in my area. For large tracts of working class Dublin credit unions provide credit and a relationship with a financial institution that is particularly attractive to their members and sensitive to their needs. Latterly credit unions have become involved in advising people on coping with debt and their existence ensures their members do not need to avail of the more expensive services offered by loan sharks. Credit unions assist people socially and financially.

I was amazed that the eight credit unions in my area have almost 33,000 members whose savings and borrowings are substantial. The premises in which they conduct their business have been upgraded, opening hours have been extended and they have recruited full-time staff. I was amazed that 30 people, including part-time and full-time staff, are working in credit unions in my area. There are more than 1,300 to 1,400 employed in the movement nationally. They provide a great voluntary service and that element will remain. The major source of the strength of the movement is the voluntary element and that accounts for much of its central labour, but the growth in associated full-time and part-time employment is to be welcomed.

Credit union members were anxious that this legislation should be introduced because they were frustrated at the limit applying to the level of loans available and they wanted some certainty as to their future. Members were anxious to borrow more and to introduce new technologies to enable credit unions to provide a facility that has become an accepted feature of banking and a major convenience, a cash dispensing machine, which is desirable and economic in terms of the utilisation of staff.

I accept eaten bread is soon forgotten. The Minister of State has got less of the credit for introducing the legislation and more of the criticism for what might or might not be in it. I am encouraged by the fact that he indicated his openness to meet with all interested groups to consider substantial amendments and to address some of the remaining issues. The only factor that needs to be protected in this legislation is the voluntary and personal nature of the movement which should be allowed to expand naturally without losing its essential voluntary and personal quality, a one to one relationship which is special to credit unions and fundamental to the manner in which they know their members and operate their credit facilities. Subject to protecting that special ethos, I urge the Minister in this historic legislation to go as far as possible in freeing the credit unions to develop their businesses to the extent they wish for the benefit of their members and society in general.

I wish to share my time with Deputy McDaid.

That is agreed.

Some great developments, such as rural electrification, group water schemes and movements like the agricultural co-operatives established by Horace Plunkett and the credit unions, have brought social and economic prosperity to this country. There are 550 credit unions on this island with a membership of 1.5 million, approximately 30 per cent of the population. It is a substantial movement that has brought great prosperity and social and economic development.

Credit unions, and I include those in my constituency, have fulfilled their vision and commitment. A report of the Irish League of Credit Unions states that its vision is that credit unions will satisfy the social and economic needs of their members with dignity and integrity by offering, in a co-operative manner and on a not for profit-making basis, full financial service for everyone in the community who wishes to join. As the credit unions have fulfilled their vision and commitment, will the Minister take account of the Irish League of Credit Unions' reservations about this Bill? It is too restrictive, particularly in that the maximum loan available is £20,000. A credit union could grant a loan of £20,000 in 1996. From my experience of credit unions I consider they are objective in their decisions to grant loans. They have not lost shareholders' or members' money since their establishment.

I ask the Minister to consider raising the maximum loan available to at least £30,000 and to take account of the reservations of credit unions about the size of deposits. Rather than treating all credit unions the same, the Minister should take account of the size of individual credit unions. Rather than imposing ceilings on savings, he should consider the percentage of savings in individual credit unions. I appreciate what he is trying to achieve in the legislation, but as the amount of money at the disposal of credit unions varies considerably, he should ensure that each credit union is able to operate to the best of its ability.

Another of my reservations about this Bill relates to the right of credit unions to invest in property. It must be remembered that the credit union movement has done a very good job and made a major contribution to economic development, some of which related to its investment in property. In the town of Ballybay the movement is currently involved in providing new credit union premises and a health board facility to be leased to the regional health board. That is desirable. But for the credit union movement having engaged in a number of such worthwhile projects similar facilities would not be available in other areas much to the disadvantage of the communities they serve.

I want the Minister to review that restriction on the movement's investment in property. Since the credit union movement generally is expanding very rapidly, it should be permitted to buy appropriate premises for future use when they become available. From my understanding of the Bill it will be unable to do so unless it has immediate use for them. That certainly does not make good economic sense.

Section 43 imposes a restriction on what credit unions can do with their surplus funds. Will the Minister review that restriction, examine what they have been doing and not introduce more restrictive practices? The town of Clones has been devastated by partition and is surrounded on three sides by the Border. Many of its roads were blocked for 25 years. When they were reopened the townspeople decided they would like to regenerate their town. Moneys available through the European Union had to be matched. The credit unions provided a sum of £100,000 for that purpose. Surely nobody would suggest that was an undesirable thing to do? I appeal to the Minister not to make their rules any more restrictive. Good legislation should contain the minimum of rules and regulations in the case of the credit union movement which has such a good track record.

I appeal to the Minister also to give the Irish League of Credit Unions a major role. I am surprised it has not been included in the Bill since it too has a very good track record in regulating the movement. I understand members of that league pay anything up to 3,000 visits annually to credit union premises. The Registrar of Friendly Societies will be unable to perform the functions vested in him by the Bill without some assistance. There is a precedent in section 94 of the Central Bank Bill, 1989 which would permit such a role for the Irish League of Credit Unions.

I have referred already to the contribution of the credit union movement to social and economic development. Another advantage which must be recognised is the movement's association with the Department of Social Welfare through the MABS, representing a substantial contribution to those dependent on social welfare assistance who encounter all sorts of difficulties in meeting their financial commitments. It is to the credit of the movement that it is involved with the Department of Social Welfare in alleviating that burden for many people.

I want the Minister to re-examine the time-consuming, expensive right of appeal to the High Court and ascertain whether most appeals could not be conducted through the District Court. While there may be instances when it will be necessary to resort to the High Court, I anticipate that many others could well be dealt with by the District Court. I want the Minister to examine those issues of concern to credit unions, perhaps tabling amendments on Committee Stage.

Most issues have been dealt with already.

A series of meetings was held nationwide on the provisions of this Bill, one in Limerick at which I understand a motion was passed to the effect that the Bill, as published, was unacceptable. It is necessary that we table amendments to it. I understand the Minister will table amendments in accordance with the views expressed by the credit movement generally. That Limerick meeting was concerned particularly with the restrictions being imposed on the additional services of credit unions under section 48.

The credit unions have played a major part in the lives of thousands of families. There are more than 400 credit union branches with in excess of 1.5 million members, the large percentage of whom are small depositors with savings of less than £5,000. The credit unions have provided a lifeline to many people who were unable to avail of the services of the other, larger financial institutions. More than half of its borrowers have availed of the services provided by more than 10,000 voluntary workers who have helped families overcome difficulties they encountervis-á-vis health, education and farming.

In Donegal there are in excess of 14 branches, with 38,000 members, which have helped approximately 11,000 people to borrow in the region of £20 million. They are manned by 240 voluntary workers, 25 full-time and 17 part-time based in the county.

The advantage of the credit union movement is that its services are available to all and permeates every facet of life, political, social and religious. The movement has lifted the spirits of the poor and unemployed and, in larger cities, has kept people out of the hands of moneylenders. It has given many people hope by providing a no fuss, friendly service.

My local branch in Letterkenny is innovative and manned by friendly voluntary workers. It is to the credit of the movement that it had the foresight to open on Saturdays recognising that business continues throughout the weekend. It is to its eternal credit that not one penny has been mislaid throughout its many years of operation. Why should we drastically change the grass roots culture of the movement? Why must somebody else take its decisions? Why terminate its right to self-regulation? I hope I will be proved wrong but I predict it will be practically impossible for the Minister to guarantee that its membership will not drop over the next five years: that will be the determinant of the success of this Bill and its ability to reflect the proper culture of the credit union movement. It will be that aspect and his handling of it for which the Minister will be remembered. For everybody's sake I hope he has got it right.

The Minister has been given due credit for saving the pint. I hope that in his last few months in office he will not be responsible for the demise of the credit union movement.

The objectives of the Bill are two-fold, to develop credit unions and to increasingly regulate them. Whenever I hear of increased regulation I become concerned, even in regard to equality legislation as too much can have the opposite effect to that intended. Employers, for example, may run scared from too much unnecessary legislation and regulation. At present each credit union regulates its own affairs. In this country we tend to go overboard with regulation; in the United States there is little regulation and we can see their success. Who would want to work voluntarily if they are subject to various regulations from high-powered sources, imposed by faceless people in a different area of the country who are far removed from their way of life and have little or no knowledge of local interests? It may well be a blow to the small entrepreneurial culture we are anxious to promote. Some 80 per cent of our small businesses employ fewer than 50 people, so this sector will be the first to feel the pinch.

Why must the Bill restrict the amount of savings a member can have in a credit union? There is no reason for such a restriction and speaker after speaker has asked the Minister to reconsider this section. Why should savings on deposits be restricted to £20,000? What could one do with such money today, considering how much house improvements cost? In my area credit unions have provided a lifeline to another sector, cross-Border workers. During the recent Donegal by-election the Government promised to solve their problems but that promise was broken. The cap or loan restriction is ludicrous and should be scrapped or replaced by a much larger figure, nearer £50,000.

The Minister will also take away the power of credit unions to invest. Under the Bill credit unions would be unable to invest funds over 0.25 per cent of surplus funds. Such money was usually invested in the local community, cultural projects and society in general. This is what I mean by saying the Minister is killing local community enterprise culture. He should consider amendments to this section if he has not already done so.

There should be a limit on loans but it should be on a percentage basis and take into account the population of the surrounding area, not necessarily just the town. Members of the credit union should have the right to decide what to do with the surplus. Some credit unions in Donegal have a small membership of about 200 while others have 25,000 members. It is not logical to apply the same limit in all cases. Lending by credit unions should be based on their membership and asset value. Larger population areas will be the major losers under this legislation.

Directors of larger financial institutions receive astronomical salaries, some as high as £500,000 per year. That is based on clauses in their contracts which give them the incentive to achieve. I have no problem with such people — they can turn companies around and their skills can save the jobs of thousands of people. Success does not come cheap, Bord na Móna being an example. However, why should double standards be applied? Why are we restricting credit unions in this Bill?

Overall it is somewhat offensive, despite the Minister's best efforts. A regulatory authority is to be set up to take over the entire movement. It will dictate who signs the cheques, who shall be paid, where a credit union may borrow, how much it may lend to an individual and for what duration. As Deputy O'Hanlon said, if a board member fails to comply with the provisions, even if he does so in the interests of the community, he is guilty of an offence and his only right of appeal is to the High Court. That provision must be changed. The Bill will frighten off volunteers, the autonomy which was the strength of credit unions will be undermined and the ethos of the movement will die.

A number of Deputies on the opposite benches have said they take off their caps to salute the credit union movement. If they are serious they should also take off the caps proposed in the legislation.

The Credit Union Bill, if suitably amended, can be a monumental milestone in the further development of the credit union movement, which is the success story of community service in our times. All sides of the House have paid tribute to its development over the past 40 years. No one has criticised it because it is not possible to do so. It is worthy of the highest praise. The service to the community which has resulted from the flowering of the credit union movement is obvious all over the country.

In an economy where profit taking is the motivating factor credit unions are the exception. They are driven by service rather than profit which makes them unique in the delivery of their services. It is necessary to look at the background of the movement to plot its course ahead. The extension of the range of services it provides is based on the express needs of its members, not on making a profit or competing with financial institutions. In another sense it is also a full expression of the principle of subsidiarity. Individual credit unions supply services to cope with the needs of an area, urban or rural.

As a result credit unions have earned the respect of the communities in which they operate. They have an enviable record of customer awareness and of the ultimate in consumer friendliness. The value of credit unions is measured by the fact that people need them, use them, own them and have a strong sense of belonging to them. In good times and bad they offered a range of financial services tailored to their members' needs. That is a co-operative movement at its best — people working together to build a better life for themselves, their families and their community.

We come to the Bill against that background, in which the movement has the full trust of all its 1.5 million members — there is no instance to date of any member having lost a penny as a result of the activities of a credit union — and the movement itself has sought the updating of the legislation. This Bill should be considered on that basis, not in terms of Government versus Opposition or party against party. This House should ensure that the framework being put together for the future development of the movement will provide whatever minimum regulation is necessary — all such institutions require some regulation — and allows that marvellous success story to continue to develop. That is obvious all over the country.

I should declare an interest, as one must. I am a founder member of Skibbereen Credit Union, one of the first credit unions in west Cork. There are now seven such bodies in the area — Skibbereen, Bantry, Bandon, Clonakilty, Berehaven, Kinsale and Dunmanway — all are successful. They have assets of upwards of £40 million and their combined membership is about 29,000. The overall vote in the next general election will not be much higher than that, which is an indication of how widespread the movement is, permeating every town, village, street and townland, fully owned and supported by virtually the entire population. The same applies throughout the country.

The cornerstone of the movement is its volunteer aspect, whose unquantifiable benefits may be a cause of jealousy among other financial institutions. There are approximately 12,000 members around the country, including a couple of hundred in my constituency, who are directors, supervisors and volunteers. None of them are paid for their services; it is the epitome of a community-based institution. Given this, we must be cognisant of the views of the membership.

The movement has worked well to date and it could be argued that if it works, do not fix it. While it seeks a new statutory framework, any changes must be made with caution. The onus of proof is on those who propose major change to show how it can help to achieve their objectives. Nevertheless, while we do not want to interfere with the formula of success of the movement, it has become so big that changes are necessary, including the creation of a regulatory framework.

I favour a light regulatory framework because I am aware of the benefits of self-discipline from the many bodies in which I am involved. A successful self-regulatory regime has operated in the movement, and while it should not continue to operate alone with the registrar, we should not cast aside the benefits of self-regulation nor interfere unduly with the formula for success.

We should be also aware of difficulties that have arisen in other countries. For example, the saving and loans institutions in the USA have been a cause of trauma and trouble in recent years. While there is no question of the movement proceeding down that road, we would be wise to consider international experience and contain any adventurism.

There is no suggestion that the movement has been anything other than above board, properly managed at local level with mechanisms for internal discipline and self-regulation and cooperating fully with the registrar and the Department. It is a perfect success story. The Bill must be judged and amendments suggested against that background. If properly amended this can be a great Bill which will help the development of the movement.

The Bill must reflect the philosophy and ethos of the movement, which is all Ireland in scope, with the league covering a wide range of 550 credit unions in terms of diversity and size, both north and south. For example, in my own area, one union has assets of £12 million and another has assets of £2 million, while one union elsewhere has assets of £55 million with another holding assets of £500,000. The framework to be put in place must take account of this diversity, which is representative of the strength and character of the movement. It should not be threatened.

The basic investment in a credit union is by way of shares. At present there is a limit of £6,000. The Bill proposes a limit of £20,000. This is too low; the limit should be approximately £30,000. Those who invest beyond the shares make deposits, where essentially no monetary limits apply. While there should be some limit, it must be set to ensure that unions will not be restricted in attracting the necessary funds to enable them continue with the fine service they provide. It should be relatively high and should, because of the diversity within the movement, relate also to the total shareholding within the union. A sum of £50,000 or 2 per cent of the total shares, whichever is the greater, is reasonable.

While approximately 90 per cent of shareholders are within the share limit, the credit unions need the investment of depositors to enable them provide their range of services. It is also important to ensure that shareholders at the upper end of the savings bracket should continue to be restricted to one vote and that the limit set on deposits should reflect a percentage of the credit unions shares, not simply a monetary limit.

There is no monetary limit on loans, which has never been a problem. The onus must be on those proposing monetary limits to explain why they are necessary. While a limit of 10 per cent of assets applies, this has never been reached. The proposed limit of £20,000 in the Bill is far too low. It should be approximately £30,000 and should also be fixed as a percentage of the total assets, although a limit of 10 per cent is probably too high given the growth in the movement. A percentage of this kind would reflect the involvement by members in something substantial in the context of their areas.

The vast majority of credit unions loans are for small amounts over a short duration. At present only 132 credit unions have loans in excess of £20,000. However, given the surge in growth of the economy, the demand for loans in excess of £20,000 will increase. The absolute limit could seriously impede the development of the potential of credit unions, especially the larger unions. It could serve to discourage investment if the facility for members to borrow to even the level of their own savings is not available. Given the diversity in size and the lending capacity of the unions, it is logical to set the limit as a percentage of total assets.

To a large extent, self-regulation has worked well to date with the savings protection scheme having funds of £28 million or £29 million which represents over 1 per cent of total savings. Self-regulation has never been a problem. Fidelity bonding is available for all employees and volunteers. I am not saying we should focus exclusively on self-regulation but we should make the best use of it, working in consort with the Registrar. That type of control is what is needed rather than anything that would stifle the growth of the credit union.

Many Deputies referred to the question of new services. Why not have new services if they are of benefit to members? The existing additional services have a proven track record and should continue. Why would the movement not offer new services, for example VHI group schemes, on an agency basis at no risk to the credit union? An open, encouraging approach is needed in relation to new services, one that is not affected by unnecessary bureaucratic delays.

The restriction on the ownership of property seems odd. Why is there a need for this restriction? Section 41 (4) states:

If the whole of a building held by a credit union ceases to be occupied for the purposes of the business of the credit union, the credit union shall dispose of its interest in that building as soon as it is practicable to do so.

Surely it is a matter for the credit unions who have managed their affairs responsibly so far to make decisions concerning their property. If nothing else, this would seem to be a constitutional right. Why should there be such a restriction? If restrictions are being imposed, the onus is on those seeking them to give the reason for them. I see no reason for such restrictions. I do not agree with the suggestion that buildings could be leased in certain circumstances. That is not my reading of the provision.

We have a wonderful credit union movement that has captured the support of a huge proportion of the population. It has proved itself in towns and villages in urban and rural areas. It has been the outstanding success story of the second half of this century so far as community driven enterprise is concerned. We salute that success and want to support the movement. That is why the final shape of this Bill is so important as we head into the next millennium. We want to see that success story continued in the coming years and to ensure that the framework being put in place will be such as to allow that movement to flourish.

The basic framework of the Bill is good. It has the potential to be a great Bill and a monumental milestone in the further development of the credit union movement. The Minister has had consultations with the Irish League of Credit Unions which has made certain proposals. Deputies on all sides have made proposals as to how the Bill could be improved. The Minister has been open in his consultations both inside and outside the House. It is a big Bill and many Deputies wish to contribute. Unlike other Ministers he has taken the trouble to sit in and listen to virtually the entire proceedings. I compliment him on that and I have every expectation he will take on board many of the suggestions made on all sides and that on Committee Stage various amendments will be made, the consequence of which will be that this Bill, as amended, will be an enormous success in the years ahead.

I welcome this long awaited important Bill and congratulate the Minister of State, Deputy Rabbitte, on its introduction following a long period of gestation. During the years many inquiries were made on the Order of Business and elsewhere as to its whereabouts and when it would be introduced.

The Bill has been welcomed by practically all Deputies who have contributed and by the credit unions who have waited for it for such a long time. It impacts greatly on the future development of the credit union movement and while it welcomes the Bill, the movement has some reservations about its operation.

The purpose of the Bill is to update the legislative framework within which credit unions operate in Ireland and enhance the range of services which they can offer their members. The Bill is concerned to maintain the special ethos of the credit union movement. The Minister consulted extensively with the Irish League of Credit Unions and, to his credit, he has promised to maintain contact with the League as the Bill progresses through the Dáil. In its final form I hope the Bill will meet all the concerns that have been highlighted such as the recognition of the role of the Irish League of Credit Unions; the proposed regulatory regime which is regarded as excessively intrusive and incapable of implementation; the proposed limits on shares, deposits and loans; the proposed limitation on the right of the credit union to own property and the proposed system of approval of new and existing services which is viewed as both unrealistic and unwieldy.

Since its foundation over 40 years ago the credit union movement here has an enviable history. Since then it has grown from one to over 430 units and has over 1.5 million members. Savings have grown to £2 million and loans amount to approximately £1.5 million. There are 600,000 borrowers and 10,200 people work on a voluntary basis in the credit union movement. It is a cross-Border, all-Ireland movement.

The effect of the credit union movement for good on rural and urban life, since its foundation, has been unmatched. It set out to foster the idea of self-help. As it grew and developed so did confidence and belief in the community in its ability to work together to improve its lot.

The credit union movement has lifted many local communities, individuals and families out of a state of no hope and poverty and in some cases out of the hands of moneylenders and given them hope, dignity and faith in themselves and their future. When they first came into contact with the credit union their future seemed bleak.

Credit unions are very different from other financial institutions in that they do not make a profit and are owned and run by members for their own good. The credit union movement has regulated itself over the years and has established a savings protection scheme which is run by the Irish League of Credit Unions on behalf of affiliated unions. It is mandatory for all personnel, voluntary or paid, to be fidelity bonded. It provides loan protection insurance and has established rules covering all aspects of credit union business which are approved by the registrar. However, the Bill gives no recognition to this and instead proposes a system of regulation by the Registrar of Friendly Societies which appears to be too intrusive and to undermine the ethos of the movement as a self-motivated, self-regulated and self-determining private mutual organisation. This appears to be justifiably unacceptable to the Irish League of Credit Unions which has a long and honourable history. The Minister and the league have been having discussions and I am sure they will be able to agree a system of regulation which will give more recognition to the historical role played by the league in this aspect of its business.

I have grave reservations about the proposal to restrict the amount which can be borrowed to £20,000. This sum is relatively small nowadays and the proposal seems to be unduly restrictive. It is very difficult to understand the reasoning behind this restriction, and perhaps the banks, building societies and Department of Finance had a strong input. I understand the desire of these organisations to look after their interests and to protect themselves but, given the ethos of the credit union movement and the broad range of people with which it deals, the figure of £20,000 is much too low.

People who wish to purchase a car or farm equipment or to build an extension to their house will often need to borrow more than £20,000. If a cap has to be put on the amount which can be borrowed then the criteria should take account of individuals who may wish to borrow money to improve their home or extend the family business, without moving into the wider commercial or corporate business field. If this factor was taken into account the limit of £20,000 would be increased significantly. Restricting the amount which can be borrowed to £20,000 will severely handicap the development of the credit union movement. I am sure the Minister will take this point into account in his discussions with the Irish League of Credit Unions.

The restriction on the ownership of property by credit unions is totally unjustifiable. Most small towns have derelict sites and property in need of development and the credit union movement could provide a great service to the community in the wider hinterland by developing such property for commercial purposes. There should be no restriction on credit unions carrying out such work. I am not saying they should become involved in development in the wider commercial field where they would have to invest millions of pounds. This restriction is unjustifiable and I ask the Minister to reconsider it.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

The restriction on credit unions owning property is unjustified. I am sure the Minister of State and the Irish League of Credit Unions will find a solution to that undesirable element in the Bill during their discussions. The restriction on new services is also unwarranted. I am sure that, in consultations with the league of credit unions, the Minister of State will find a satisfactory outcome to that aspect also.

There are credit unions in all the towns in my constituency. I pay tribute to the membership of those credit unions, especially the people who run them. They do trojan work and, in keeping with the ethos and tradition of the credit union movement, they give their time on a voluntary basis. They are to be commended. They stay in the background and the great service they provide for the whole community often goes unheralded and unrewarded. I compliment the people in my community who provide that leadership under the aegis of the credit union movement.

I am glad of the opportunity to speak on this Bill, which has been long sought. From small beginnings almost 40 years ago, the credit union movement has blossomed into one of the most commonly used financial facilities in practically every town and village and in many rural areas. It is a striking example, in the best possible sense, of self help. It has a large voluntary workforce of about 12,000 people, who ensure the availability of funding and services for their members.

It is in the same vein as other community self help groups, the most recently talked about of which are the group water schemes. They are a striking example of what can be done on a community basis in regions where the local authorities are unable to provide facilities. The co-operative movement is a similar organisation. I was involved with a co-op for half my working life before I entered politics. I saw the facilities which co-operatives made available to their members in times when money was not as easily available as it is now. Somebody once remarked to me that the credit union was the poor man's bank.

I have witnessed the growth of the credit union movement in my constituency, which was at the forefront of the development of the credit union concept. One of the prime movers was a Donegal priest, Fr. Gallagher, who taught in Clones. He was very deeply involved in the local credit union and the wider credit union movement. He went on to assist in the formation of the Irish League of Credit Unions and was its first president. The area, therefore, has a claim to fame as far the credit union movement is concerned.

It is important that the Bill supports and protects the essential ethos of the credit union movement. It has a proud tradition which is well worth preserving. The Bill allows credit unions to develop additional services, which is as it should be. Given the evident enthusiasm and work ethos in credit unions, I expect they will develop a wider range of services.

Credit unions make a great contribution by employing 1,500 people. I expect their growth rate will increase with these new extended measures under the legislation. With total savings of £2 billion, the credit unions have put in a very fine performance.

There has been criticism of the £20,000 loan ceiling. The credit unions would like the loan level to be related to the percentage of savings. The Minister of State will have an opportunity on Committee Stage to give further consideration to a number of such proposals.

Credit unions have fine premises in every town and many villages. They also have links with groups in villages and rural areas. The credit union movement covers almost every region in the country.

While the credit unions are not deeply involved in new housing loans because of the loan cap of £20,000, they play a very important role in house building and reconstruction. Local authority loans have a ceiling of £33,000 which is inadequate to erect a four bedroomed house if the builder has to purchase a site and pay for the connection of water and electricity services. Those costs could run to £12,000 or £13,000 before any building takes place. The credit unions are used for second loans in these cases to complete and furnish houses.

There might be a slight restriction in future on credit unions developing outside their office structure. That would be a pity because they have used their profits to very good advantage, not alone to erect their own buildings but also in their generosity to projects and developments in their regions. I never like to use names because that means telling business to which I have no entitlement. However, there was a major development in my constituency, one of the most significant developments in the region, for which funding was available under the Border areas programme but it required matching funds. The credit union provided a six figure sum which, with local contributions, meant the funds could be matched. Otherwise, the development could not have proceeded.

Similarly, in my constituency, with the assistance of the credit union the health board rented a building for use as a day centre. Health boards never have enough money for capital projects, so it makes economic sense for them to utilise credit union funding to ensure such facilities are provided. Restrictions should not be imposed on credit unions when they provide funding for those types of facilities, which is outside their remit.

People use credit unions when they need money for weddings, funerals, confirmations, etc. Many parents would find it difficult to keep their children in second and third level education without the assistance of the credit unions. I know of a person who purchased land many years ago with the help of the local credit union — land was not expensive then — and who is now a large farmer. Many farmers use the facilities of credit unions on an ongoing basis to buy replacement stock, farm machinery and buildings. Many people in my constituency who are no longer in full-time employment borrow money from the credit union to, say, develop a farm or go into some other small area of production.

I welcome the provision in the Bill to allow people under the age of 16 to become members of credit unions. Parents try to persuade their children, not always with success, to save their pennies. It is important that they are encouraged to save money from an early age, and now that they can join credit unions parents should guide them in that direction.

There is an argument for increasing the ceiling of £20,000 on the amount members can borrow from credit unions, although I welcome the relaxation in regard to the maximum loan period of five years.

The measures in the Bill will greatly facilitate people who want to improve their standard of living, although I am sure the Bill will be subject to amendment on Committee Stage. I wish the credit unions continued success.

I wish to share my time with Deputy Connor.

Is that agreed? Agreed.

I congratulate the Minister of State on introducing the Bill which was called for on many occasions in the House over the past two years. I compliment him on the tolerance he displayed over the past two days in listening to the contribution of Members, which may have been slightly repetitive in some cases. The fact that so many Members wanted to contribute to the debate is an indication of the respect they have for credit unions. Public representatives are well aware of the role played by credit unions in local communities. We have all been lobbied by the credit unions in our areas and the concerns they expressed have been elaborated by Members in the debate. I am sure the Minister of State is well aware of those concerns.

Despite the fact that this is major legislation there are probably only two small areas remaining in terms of satisfying the Minister of State, the Irish League of Credit Unions and its members. The Minister has fostered a spirit of harmony in regard to the legislation and he appears to be in tune with what is required of credit unions as they face into the future.

The Minister of State met the Irish League of Credit Unions in Limerick last month and I know from speaking to members that they appreciated his contribution and the fact that he listened to their concerns. The Minister has displayed those good listening skills over the past two days during this debate.

The Bill recognises the role of credit unions and their importance in the community. Other financial institutions indicated they would have an input into this legislation, but I was glad to hear the Minister of State say that their concern for credit unions was coming a bit late in the day. Were it not for credit unions, people living in rural communities would not have survived because financial institutions would have been unable to cope with their demands.

I have enormous respect for the 12,000 people who volunteer to work in credit unions. I compliment them on the valuable role they play in enhancing the profile of credit union boards. They are the unsung heroes in our community. They respect the confidentiality aspect of credit unions and tend to adopt a tolerant attitude towards people who owe considerable amounts of money. They assist them in getting out of their difficulties. The role played by these people is not sufficiently highlighted.

The people who volunteer to work for credit unions have enormous responsibility having regard to the dynamics of a credit union. Some credit unions have assets of between £500,000 and £55 million, with a total savings base of over £2 billion. The reason credit unions gained the respect of local communities was the principle of self-help which was evident from the time of their foundation.

I welcome the provision to allow people under the age of 16 become members of credit unions because it is important to ensure the saving ethic is developed at an early age. One of the most favourable aspects of credit unions is that people can continue to save while paying off a loan. They know they must visit the credit union on a weekly basis to pay off their borrowings, and that is a good habit. On the basis of their unique role credit unions are not liable to corporation tax, and I welcome that.

The issue of shares has been elaborated on by many speakers. The difference between the limit credit unions are seeking and that proposed is very small. It should be possible to find a formula which would be compatible with the requirements of the Irish League of Credit Unions. On loans, the Minister has made some concession in terms of the five year stipulation. Again, the difference between the limit sought by the Irish League of Credit Unions and the proposal in the Bill is very small. I hope those matters will be dealt with on Committee Stage.

As the Minister said, there was misinterpretation of the role of credit unions in terms of their right to own property. If credit unions became involved in buying derelict sites and building property they could be seen as becoming involved in property speculation, and I understand that certain protection mechanisms are necessary in that regard. The Minister has clarified that there is no restriction on credit unions that wish to lease part of their premises to other institutions.

The credit union in my area has contacted me about this legislation which it welcomes. The concern in recent times related to when the legislation would be introduced, whether it would be during the lifetime of this Government. I am glad it has been introduced and I look forward to teasing out the various issues on Committee Stage. I have no doubt the legislation will be implemented during the lifetime of this Government. Recognition is due to the Minister on bringing in a measure which will ensure a bright dawn for credit unions in that it will enhance their profile and help them to expand. Because many commercial banks operate ATM machines on the basis of throughput of people, some areas do not have access to that service. I look forward to the provision of such a desirable service by credit unions to people within their community. I compliment the Minister on the legislation.

Given that credit unions operate in almost every town and village of reasonable size, this legislation affects nearly everybody in the community. I congratulate the Minister — I am not joining in the mantra, I say this sincerely — on bringing forward this long promised legislation. Although some small changes were made in this area in 1978, it is 31 years since legislation dealing with credit unions was introduced. The whole co-operative movement, including credit unions, has changed in the past 30 years, but the legislative framework under which credit unions operate has not. Tribute must be paid to the credit union movement on its ethos and the basis on which it is founded. We live in a society in which lending institutions are not very popular — they are often associated with greed, high profits and so on — and a major savings-loan institution based on co-operation and operating on a non-profit basis is to be complimented.

I welcome that credit unions will remain free from corporation tax. Some years ago the co-operative movement objected to becoming liable for corporation tax. I supported that tax because businesses, including co-operatives, trading in goods and services and making a profit should pay tax. Credit unions are, however, different in that they operate on a non-profit basis and provide the essential wherewithal for small savers. This applies particularly to small borrowers who may not have access to credit from other lending institutions, many of which are unpopular because they do not provide for those people.

I also welcome that interest on loans from credit unions will not be liable to DIRT. There must have been a temptation to make them liable because there are substantial sums of money by way of savings in credit unions. The Minister said that people are obliged to reveal in their income tax returns profits accrued by interest on credit union savings. With tongue in cheek, he said that he was not sure how many people obeyed that rule, but given the average savings in credit unions — £1,300 per individual — many people would not be liable for DIRT.

The Irish League of Credit Unions lobbied Members in regard to this legislation, and backbenchers must make up their minds on the matter. There is much merit in the league's proposals regarding the limit on savings. The 1966 Act imposed a limit of £6,000 while this Bill proposes a limit of £20,000. I welcome that people with savings of £20,000 will still be entitled to only one vote. In that way a person may not buy votes by buying extra shares. Under the 1966 Act there was no monetary limit on deposits while this Bill proposes a limit of £20,000. The league proposes that the limit on savings should be 2 per cent of total shares or £50,000, whichever is the greater. There is much reason in that argument. Perhaps the Minister may not wish to set the limit as high as £50,000, but many people have savings in excess of £40,000 — there are 68 credit unions where individuals have savings in excess of £40,000 while there are 178 credit unions where individuals have savings in excess of £20,000. A sum of £50,000 is not an enormous amount in savings, and credit unions need such investments to increase their strength. That proposal should be considered on Committee Stage.

There is a great deal of competition between financial institutions. It is important, therefore, that credit unions are able to take reasonable sums of money on deposit from those who want to invest it in them. Building societies, banks and insurance companies take deposits on a long-term basis, the return on which is much greater. Most people invest in credit unions because they want to invest in their communities. As credit unions operate in a free market we must enable them to develop with the times. Money is rapidly losing its value as a result of consumerism rather than inflation. As the Minister of State comes from a rural community, I am sure he will take account of these considerations.

The Irish League of Credit Unions is also concerned about the imposition of a limit on loans. Under the 1966 Act the terms of a loan could not exceed five years. I welcome the provision whereby 20 per cent of a loan may be for a period not exceeding five years and 10 per cent for a period not exceeding ten years. Under the 1966 Act there was no limit on the loan a person could get, but under current legislation loans are limited to a sum of £20,000. The Irish League of Credit Unions want that limit increased to £30,000, or 5 per cent of the total assets of the union, whichever is the greater. A sum of £20,000 is no longer a major loan. The league's request is not unreasonable when one considers that 20 per cent of a loan can be for a period not exceeding five years and 10 per cent for a period not exceeding ten years. As stated in an article inThe Irish Times many second hand tractors cost more than £20,000. Most people borrow from credit unions to buy additional equipment for their businesses or farms or to improve the quality of their homes. While the majority of people may require less than £20,000, a loan of £30,000 might be a more realistic figure for others. Perhaps the Minister of State will reconsider the provision and go some way towards meeting the league's request.

(Wexford): I welcome this long overdue Bill. I hope the Minister of State noted the worthwhile suggestions made by Members on all sides on how the Bill could be improved before being passed into law.

As I was a member of the board of the Enniscorthy Credit Union for a number of years I am aware of the role credit unions play in the economic and social fabric of our society. When I was elected to the House I had to resign from the board because politicians are not allowed to act as board members. One would have to deal with all types of representations if one were a member of a credit union board and a Member of this House.

The credit union movement was set up to assist the working class and the less well off and to allow people to borrow at reasonable interest rates. Credit unions have assisted many people who were in the clutches of moneylenders and hire purchase companies who charged exorbitant interest rates. The Department of Social Welfare and others have availed of the assistance of credit unions to help people who borrowed from moneylenders. Great credit is due to those in the credit union movement who have always been willing to help people in need.

The buildings from which credit unions operate have improved substantially. Most of them operate from excellent modern buildings where people can discuss their business in private. Enniscorthy Credit Union operates from one of the most modern buildings in the country and is the envy of many other financial institutions. Its membership has increased substantially since that building opened in 1995. Most credit unions provide first class facilities for their members.

I compliment the voluntary aspect of the credit union movement. Many people give of their time and energy on a voluntary basis to provide a service for the community. As Deputy Finucane stated, they are sensitive to the needs of people who find it difficult to make repayments and they operate on a strictly confidential basis. I never heard a person who works in a credit union talk about people who have run into difficulty in paying back loans. Great credit is due to credit unions for the confidential manner in which they operate.

Many ordinary credit union members are concerned that too much regulation may stifle the flexibility and common sense approach that has existed in the credit union movement. It is important that this should not happen. Many new services have been initiated by credit unions for the benefit of their members, such as loan protection and life savings insurance schemes — which cost nothing for members — as well as death benefit insurance. These were introduced by members at local level and were then taken up at national meetings. That is the essence of democracy and some credit union members feel that the new legislation may not allow them to do that in future as the registrar will have to approve schemes. They are concerned that if something is passed this year, the registrar may take a year or 18 months to make a decision on it. The Minister of State should give a definitive date for decisions to be made on new credit union systems so there will not be an undue delay because of bureaucracy.

Unlike the banks, credit unions do not make a profit and surplus money goes back to their members. The banks make exorbitant profits which are increasing annually but the credit union is far more flexible. Those who use a credit union are often people the bank would not want to know — workers, the unemployed and old age pensioners. Loans are made available to them for house repairs, Christmas, first communion, confirmation and weddings. When Wexford won the all-Ireland last year, most credit unions found there was a dramatic increase in loan applications. There were top-ups after the Leinster final, all-Ireland semi-final and the all-Ireland final. That is when the credit union is seen in the best light. Imagine going into a bank and attempting to borrow £1,000 to follow Wexford. One would be laughed out of the place. For special occasions, the credit union reaches out to help the community and to improve the quality of life for families. The legislation must therefore be flexible enough to allow the credit union to continue catering for its members, regardless of what type of member is seeking a loan. There should be no restrictive practices in this area.

The Irish League of Credit Unions has proven to be a very responsible body and its role must be enshrined in the Bill. That organisation has its finger on the pulse as it has a full-time field staff inspecting credit unions, ensuring they are well-run and viable. I remember those inspectors coming to the Enniscorthy credit union when I was on its board of directors. This self-regulatory approach has proven very successful for the last 40 years and should be recognised in the Bill. Over the 40 years of the credit unions' operations, no member has ever lost all or part of his or her savings. The same cannot be said of any of the big financial institutions making millions of pounds annually, where savers have lost some substantial investments. No credit union members have lost their investments. The role of the Irish League of Credit Unions should therefore be recognised in this Bill and it should continue in its self-regulatory role.

Credit unions must also be allowed to introduce new systems to cater for the future needs of members. Technology progresses daily and we must look at ATM services and an electronic fund transfer system for State payments such as social welfare payments, old age pension or unemployment assistance for the credit unions. The Minister of State should consider how this can be facilitated, given the number of members that credit unions have. Those members should be able to avail of any new systems. A type of chequebook facility should be considered, though it need not be the same as the chequebooks banks use. A debit card system should be considered also.

It is 30 years since we had any legislation that dealt with credit unions and credit is due to the Minister of State for introducing this Bill. Given the growth of modern technology, the credit unions should not have to wait five years, let alone 30, while we look at the changing nature of cash transactions. The Bill should ensure that credit unions are allowed the flexibility to adapt to new systems and I hope the Minister of State will accept amendments on this matter.

We have approximately 430 credit unions with 1.6 million members. Credit union savings amount to almost £2 billion and loans amount to approximately £1.5 billion. There are approximately 600,000 borrowers and 10,000 volunteers working in the credit unions. The movement is mainly voluntary in operation and that is an important aspect that should be allowed to continue. The Minister of State is ensuring that in the Bill. There are 172 full-time and over 500 part-time employees working in this area.

As a credit union develops, particularly in a large urban centre, more and more people are employed there, thus promoting employment in that area. The Bill should not stifle the initiatives taken by credit unions over the years. In my area they have become involved in partnership arrangements with local communities to develop employment or community services. They are also involved in the sponsorship of local sporting groups and in helping organisations to develop. It is most important that this involvement continues. There is much talk about the urban rural rift which exists in farming and other areas but the credit union movement has been a shining example in terms of closing that divide. I am aware of cases where urban and rural areas have come together to develop schemes of mutual benefit.

The credit union movement is held in high esteem by the public. It is most important that is is viewed as a help to people because it reaches out to communities. It is often the case that other financial institutions shy away from supporting worthwhile causes or job creating projects which people wish to develop and the credit union steps in. Credit unions do not just look after unemployed people in housing estates. They have broadened their base and many farmers and small business people, who are unable to get funds from other financial institutions, are increasingly turning to credit unions for help.

Much credit is due to the boards and committees of credit unions because they examine each case on its merits before deciding whether to give a loan. However, more often than not, they take a risk and work closely with the people involved. If difficulties arise, they discuss them with those involved and come to an immediate arrangement. This facility is not available in large financial institutions which usually send a solicitor's or debt collector's letter. People in credit unions, who are aware of the position on the ground, talk to those involved and try to help them. More importantly, they make funds available to enable the project to develop and create jobs.

The Bill is a broad one and contains 188 sections. In common with other Deputies, I ask the Minister to consider increasing the cap on shares, deposits and loans. A good car costs almost £20,000 and a bedroom or bathroom extension costs more than that amount. Regarding shares and deposits, many workers in the ESB, the Army and Telecom Éireann, who are members of credit unions, are receiving large redundancy payments. If they already have shares or deposits, they will not be in a position to invest their redundancy or other payments. Some people are receiving substantial sums and I ask the Minister to re-examine the limits in the Bill and to consider the representations made by the Irish League of Credit Unions in that regard. These people are aware of the position on the ground and what individuals are capable of borrowing and repaying. I ask the Minister to consider the points made on all sides about this matter but more importantly the genuine representations made by the credit unions for an increase in the limits.

I wish to share my time with Deputy Costello.

Carlow-Kilkenny): Is that agreed? Agreed.

I congratulate the Minister of State, Deputy Rabbitte, on introducing this long awaited legislation, not before time. Work began on the Bill in conjunction with the Government of the day in 1989 but it was left in the wilderness for eight years. At long last it has reached the House. I was amazed to hear Opposition Deputies calling for speedier legislation. It took eight years to introduce this Bill, which is much needed, and somebody must have been at fault along the way. We know where the blame lies.

It is a lengthy, detailed and complicated Bill. In common with most legislation, it does not make easy reading. It runs to 145 pages and includes 14 Parts, 188 sections and five Schedules. The significance of this weighty Bill is that it is the first consolidated legislation for credit unions since the State was founded. It repeals all the existing Acts relating to credit unions and when it is enacted, it will have major implications for the future of the credit union movement.

According to the Minister, the Bill is designed to maintain the special ethos of the movement and will allow credit unions to increase the scope of the service they can offer to members. However, I am not 100 per cent happy with the extent of some of the restrictions. The regulatory requirements appear unnecessary, intrusive and occasionally at odds with the ethos of the credit union movement. I welcome the Minister's intention to increase the limit on shares from the current rate of £6,000 to £20,000 but what is the rationale behind the new caps of £20,000 on loans and deposits?

The Minister must remember that the sum of £20,000 in current monetary terms is not a large amount. It would do little in terms of carrying out structural repairs to homes or reconstruction development. It is evident that if a house requires major structural renovations and modernisation, such as new furniture, a loan of £40,000 rather than £20,000, the maximum amount contained in the Bill, would be more appropriate. When the previous maximum of £6,000 for loans was introduced, there were 240d to the pound. After decimalisation, there were 100p and the purchasing power of money eroded considerably.

The cap of £20,000 on loans must be considered and an effort should be made to increase it if possible. If the Minister is insisting on a cap on shares and loans, he should consider doubling the figure, which would be more realistic. The cap on loans appears to contradict the view of many Ministers that credit unions should be a source of funds for small businesses and agriculture. A maximum loan of £20,000 would limit the development of such a role, which would help to make the market for loans for small businesses more competitive. A cap of £20,000 in this day and age is unrealistic. As it took over eight years to introduce the legislation, I hope the Minister will accede to my request on Committee Stage to either remove the cap or double the limits for loans, shares and deposits.

I am not happy with the provision of the Bill under which a credit union will be required to sell off property, the whole of which is not occupied for the purposes of the business of the credit union. As everybody knows, credit unions throughout the country provide office space and accommodation for other agencies and services of value to the community. While I accept that the credit unions are not and do not want to be involved in property speculation, preventing them from providing accommodation surplus to requirements for community services does not sit easily with the ethos of the credit union movement. I, therefore, ask the Minister of State to again look at this clause.

I welcome the provisions of the Bill under which credit union members will be allowed to nominate in writing the person who will be entitled to inherit their property. The property of members who have less than £5,000 in a credit union and who fail to make nominations may be distributed by the board of directors without the need to issue letters of administration or to take out probate. The figure of £5,000 should be increased to at least £10,000. That would be a step in the right direction.

The credit union movement is not opposed to prudential regulation. It has exercised self-regulation to a high degree. I understand that not one penny has been lost by its members in 35 years and that the credit unions have been highly responsible in making their own insurance and bonding arrangements. Unlike banks and building societies, their operations are not centralised, they do not operate through a branch network. Most of them are small community based mutual organisations. They have 1.6 million members, total savings of approximately £2 billion, a loan book valued at approximately £1.5 billion and 750,000 borrowers. This is a unique record for a voluntary organisation.

There are nine credit unions in my constituency of Cork South West, each of which is providing a trojan service to the people of the area. Their staff are prepared to discuss the needs of their clients privately and in a friendly manner. The developments undertaken and the improvements effected in the area during the past three decades would not have been possible without the confidence the credit unions instilled in their clients in seeking to make improvements to their homes, expand small country businesses or purchase a new car.

The Minister of State mentioned that he expects to bring forward amendments on Committee Stage following consultation with the offices of the parliamentary draftsman and the Attorney General and that he will consider all the views expressed. I thank him for the hard work he put into the Bill's formulation and adopting a common sense approach. It is 30 years since the first legislation relating to the credit unions was introduced. The legislation should be updated at least once every decade to keep pace with the rate of change in the financial world. I have no doubt that the Minister of State will introduce any amendments necessary on Committee Stage for the betterment of those reliant on the credit unions for their survival.

I was not aware that this legislation has been in gestation since 1989. Deputy Sheehan pointed the finger at those responsible.

I welcome the Bill. It is a substantial document comprising 188 sections and a number of Schedules. I congratulate the Minister of State on his hard work in its formulation in recent months to ensure that it would be presented by this Government. He expressed a willingness to listen and consult. He met the Irish League of Credit Unions which, in turn, forwarded a vast quantity of documentation to all Deputies in which it highlights its concerns about this legislation. I compliment credit unions on organising meetings for public representatives to highlight the reasons the legislation is needed and the specific issues they wish to see addressed within it. They are concerned that it is enacted as quickly as possible. Representatives of the credit unions also addressed the Labour parliamentary party.

Most Members are probably a member of a credit union. I have been a member of the Association of Secondary Teachers of Ireland Credit Union since its establishment about ten years ago. This is a feature of the entire credit union movement which was founded in 1958. One would have thought a co-operative movement such as this would have been in existence during the lifetime of Horace Plunkett. Creamery and rural co-operatives were established successfully at the end of the last century and at the beginning of this century. One would have thought the concept of self-help in the financial area would have been part and parcel of this development.

The credit union of which I am a member has gone from strength to strength. The Department of Education acceded to its request that deductions be made from salaries. Not alone does this make it easier for members to acquire share-holdings and build up savings and deposits, it is also cheaper. This facility should be available to all PAYE taxpayers who would nominate the amounts to be deducted on a regular basis. That system of saving is a major boost to credit unions as it ensures members make regular payments and are likely to continue to do so. Savings in credit unions now amount to many millions of pounds.

The credit union movement was founded relatively recently, but it has experienced phenomenal growth from its early days in 1966 when there were three credit unions to the current number which have 1.6 million members and £2 billion in savings. The fact that the movement in the first three years of its establishment acquired 169,000 members highlights the potential that existed for that type of institution and the attractiveness of a co-operative self-help community-based development.

As many speakers pointed out, credit unions have provided great benefits to communities. It is essentially a small person's bank, a savings union, that enables people to make small deposits on a regular basis which accumulate until they require the money for a particular purpose. Deposits are made and loans are granted. The average deposit is £100 and the average loan is £1,000. The credit union is still very much a localised community-based operation and it is extremely active in deprived and disadvantaged areas, where a national bank often will not locate because it does not consider there is sufficient business.

Credit union loans have resulted in home ownership and in many houses being restored and refurbished. There is scope for credit unions to become involved in the social housing programme, particularly in regard to shared ownership. Will the Minister of State consider the scope that exists for credit unions to provide a combined mortgage and rental arrangement for people with limited resources? In the Dublin Corporation area the limits that apply to the shared ownership scheme are £14,000 in respect of shared ownership borrowings and an income of £14,000 which facilitates people on low incomes to buy a house. This legislation does not permit credit unions to provide house mortgages, but they could provide assistance in the area of shared ownership and there is scope for credit unions to co-operate with local authorities which operate the scheme. Will the Minister explore that area in the context of credit union loans and the period that applies to them?

The competition element is also important. It is generally accepted that the banking system requires large deposits, but banks operate on the basis of profit. However, small deposits can be attractive and effective. We have seen the success of the TSB, the ACC, the ICC and credit unions, all of which have a healthy profit. As to whether the maximum loan granted by credit unions, which has increased from £6,000 to £20,000, should be capped at £20,000 or £30,000, I believe the Minister has got the limit right in the context of corporation tax, DIRT and so on. We do not want credit union loans to be a means by which people can avoid paying their due tax. However, there are two types of credit union, small ones like Sheriff Street and Halston Street and larger ones like mine which is virtually an industrial union. Those credit unions have a very large level of deposits and they can provide a different type of service. They could provide facilities, like the Telecom Éireann credit union, which enabled a leisure centre be built for its members. I ask the Minister of State to consider those points.

I welcome the legislation. By and large the Minister has got it right. I note the concerns expressed by the Irish League of Credit Unions, but I would not put as much store in them as some Members have. It is appropriate that this area should be strongly regulated after the Taylor Investments debacle. These provisions will not be unduly intrusive. I look forward to the credit unions expanding and retaining their ethos and role into the next century.

It is clear that there is general support on all sides of the House for the work of credit unions. I add my voice in support of their work for our society over the past decades. The fact that they have more than 1.6 million members is indicative of their standing in the community. The ethos and co-operative nature of their business has been a great success, as it has been in the area of agriculture with the success of the co-operatives.

While we on this side of the House welcome this legislation, we have some reservations about the limits applying to shares, loans and deposits. I hope the Minister of State in his wisdom will consider those restrictions during the passage of this Bill through the Dáil.

I commend the credit unions for their involvement in supporting schools, sporting organisations and particularly the community games, of which they are a major financial supporter. That is in line with the ethos of the credit union movement. They work with the people and that is readily appreciated by all their members.

There are 427 credit unions affiliated to the Irish League of Credit Unions in the Republic. As previous speakers said, the Irish League of Credit Unions forcefully and effectively lobbied all the political parties about their concerns and outlined their plight at the delay in enacting this legislation. However, the responsibility for the delay does not lie with any side of the House. In January 1996 the Taoiseach said the Bill was at an advanced stage and would be introduced shortly and when the Dáil resumed in October he was forced to confess this was difficult and technical legislation and the Government had to be careful to get it right. Eventually it was published and it is now before us. It has taken a long time to progress the Bill, but I hope it will have a speedy passage before the election.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.