I thank the Chairman for her remarks. I will depart from form and will not read out the opening statement. I know that members are only back after their holidays and they have had it so I will not repeat it word for word but I will reformulate some of the key issues and highlight what we are here for. It is important for us that this Bill would move forward to Committee Stage and we appreciate the committee scheduling time today to carry out this scrutiny.
The context of the debate is that support of legislation and public policy is precisely what creates an environment conducive to the development of co-operatives. We have given many examples in the opening statement of how the co-operative movement has been developed in Spain and Italy. For example, in Spain 275,000 people are members of co-operatives. During the last economic crisis there, 24% of Spanish companies closed but only 6% of co-operatives suffered the same fate. We point to the Nuttall review of employee ownership carried out by the British Government. This report had a comprehensive body of evidence which demonstrated how the co-operative model derives economic benefits for society and so on. That is the context in which this is framed.
Ireland is out of sync with the European trend and this legislation, small as it is, is important in putting the co-operative movement on the map because in contrast to the rest of Europe, the co-operative sector in Ireland has not experienced similar growth in recent times. Between 2008 and 2015, the co-operative model in Europe experienced an overall increase of approximately 12% but in Ireland it declined. The introduction of supportive policies and legislative structures played a positive role in other countries and that is what we are trying to replicate here. It is interesting that when this issue was formulated before, and when we made our points on Second Stage, the Department said it is against a piecemeal approach but in 2014 the Department rejected the option of waiting for a full review, saying it preferred to amend the existing legislation to achieve policy change in a short timeframe to reduce the unnecessary regulatory burdens on co-operatives.
It is important to put these measures in place now, particularly in a context where, whether we like it, economic fortunes are unlikely to continue to be so good. We agree with what the Department stated before. We need legislative changes now. The Bill is quite short. Its main provisions are to reduce the membership requirement for the establishment of a co-operative from seven members to three, to allow for electronic filing and registration and to allow audit exemptions. I will deal briefly with each of these provisions.
The provisions for electronic communications are the easiest to deal with. Events have overtaken us and this issue has been dealt with to a great extent. It probably does not need to be written into legislation, but there is no harm in doing so. It is neither here nor there. It has been accommodated.
The provision that provoked the most discussion on Second Stage was the reduction of the membership requirement from seven members to three. We were a little surprised by it because international thinking is more supportive of a requirement to have three. In some jurisdictions that number is moving to one. The numbers were challenged in a submission from the Irish Co-operative Organisation Society, ICOS, which argued that a minimum of seven was required for a viable democratic organisation and that three was not enough. That has not been that organisation's case when challenged in other environments. We question whether it is necessary at all. The majority of European jurisdictions require a membership of three. France requires two, while Finland requires only one. The British Labour Party supports reducing the requirement in Britain from three to one. Given that the requirement to have three members is in place in Britain and both jurisdictions operate on the island of Ireland, requiring three members in the Republic would be far more conducive to ensuring better co-operative practice, particularly in the Brexit era. This is very important to allowing a resilient model that can save jobs and services, assist in rural Ireland and so on. It seems to be the practice in other jurisdictions. Moreover, the intention of the Bill is to allow for a level playing field. As it stands, if two young entrepreneurs want to start an IT company, there is no rule stating they need seven people. The rule applies if they want to opt for a co-operative model. We do not think there is any basis for it. We want to level the playing field in that regard. The idea that a smaller membership somehow undermines the model and makes it non-viable is not plausible either. Ghost members could also undermine it. Co-operatives would be better off engaging with people who want to be engaged with. Ownership is what co-operatives are all about.
The last issue which is critically important to us is audit exemptions. The original draft of our points included a complex explanation of annual returns by the Office of the Parliamentary Legal Advisers, OPLA. We welcome the Oireachtas Library and Research Service paper which has clarified our point on this matter. We are looking for an exemption from audits which are very cumbersome for new and small companies. The Companies Act 2014 provides for an exemption for small and medium-sized enterprises. We are just asking for the same for co-operatives. The Bill will have to be amended from its current formulation, but they are technical concerns. However, it can be done. Audit exemptions are critically important in allowing the co-operative movement to free capacity.
The Bill is very straightforward and we see it as positive. We are pushing it forward to the next Stage because we believe it can be easily implemented. I have seen Bills which have taken years to pass through all Stages. We do not have years. We want to have a model in place now which can allow us to tap into a model of ownership that is working very well in the rest of Europe. Again, I am very grateful to the committee for allowing us to speak. As Ms McCord knows much more about the issue than I do, she will answer all of the hard questions. I thank the committee for the time it has given to us.
