Dáil Éireann Debate, Wednesday - 18 May 2016
9. Deputy Thomas Pringle asked the Minister for Finance the status of his engagement with the Central Bank in relation to the Irish League of Credit Unions' social housing proposal; and if he will make a statement on the matter. [10198/16]
Amharc ar fhreagraThe Department of the Environment, Community and Local Government is the Department primarily responsible for the formulation and implementation of policy and the preparation of legislation on housing.
My Department has received a number of different proposals from the Credit Union Development Association, CUDA, and Irish League of Credit Unions, ILCU. Proposals from both representative bodies on the funding of social housing are at various stages of development. In respect of the ILCU proposal, I have been informed that the Department of the Environment, Community and Local Government met representatives of the Irish League of Credit Unions in December 2015 to discuss its proposal to fund social housing developments. There have been a number of follow-up meetings between officials from my Department and the Department of Environment, Community and Local Government to consider any potential regulatory or legislative implications of credit unions becoming involved in social housing funding. In addition, a meeting was held between the Central Bank and the Departments of Environment, Community and Local Government and Finance on 21 April 2016 to provide information of a technical nature on social housing funding arrangements. This was done with a view to assisting the Central Bank in understanding how these arrangements operate, as it is the body which deals with issues arising from proposals put forward for credit union investment in social housing.
Two alternative models of funding were proposed by the Irish League of Credit Unions in respect of social housing and it was determined that the second of the two models would be best placed to achieve the objective of providing a mechanism for investment in social housing without negatively impacting on the general Government balance and keeping the funding off balance sheet. It was agreed that ILCU would progress the preferred model, with both Departments indicating their availability should any assistance be required regarding technical advice or further information. Officials from my Department also met representatives of CUDA on 8 April 2016 to assist in progressing its proposal on social housing.
The Registrar of Credit Unions at the Central Bank is the independent regulator of credit unions. Any decision regarding credit unions providing such funding would ultimately require regulatory approval prior to implementation.
The Minister indicated the Department favoured the second of two models proposed by the Irish League of Credit Unions. I did not catch the details of this model but perhaps the Minister will expand a little on it.
The Registrar of Credit Unions is responsible for the regulation of credit unions. The issue, however, is whether the Government views the proposals from the credit unions as a desirable policy direction, as this would significantly influence the level of engagement by the Registrar of Credit Unions with the credit union sector in advancing the proposal. Is the onus for developing a vehicle for funding the delivery of social housing on the credit union sector or would it work in partnership with the Departments of Finance and Environment, Community and Local Government to develop its proposed model?
I do not have a note on the alternative models. I will communicate directly with the Deputy by letter if that is acceptable.
I also asked about the direction of Government policy and its engagement on this matter and whether the onus will be on the credit unions to devise the logistics of the proposed model or whether this would be done in partnership with the two relevant Departments. I asked these questions because partnership will be key to having the Registrar of Credit Unions determine whether regulation is required to allow the proposal to proceed.
I would like to see a wider role for the credit union movement and there is certainly some potential for it to take a greater role in the housing area. While credit unions have significant funds on hand, we should remember that these funds are their members' savings. The regulator in the Central Bank would be averse to the credit union movement putting these savings at risk and would clearly assess any proposal from credit unions to fund housing against the potential risk to savings. This does not mean the proposal would have to be ruled out. Other lenders can manage risk and credit unions would have to do likewise.
I am actively encouraging the proposal and my officials have held meetings with representatives of the credit union movement and Central Bank of Ireland. The onus is now on the two credit union representative organisations to produce proposals. These will then be assessed and my Department will co-operate with them in every way. However, the final call will be made by the Central Bank because the supervisor of credit unions is located in the Central Bank.
The Minister indicated that the onus is on the Irish League of Credit Unions to develop its model and make proposals on how it would operate. Is this the most desirable approach to this process? If the Department considers credit union involvement in social housing desirable, why should the onus be placed on the Irish League of Credit Unions to develop the model and the logistics for implementing it? Surely this could be done in partnership with those who have expertise in this area, for example, the Central Bank or Department of Finance.
We will assist the credit unions in any way we can, as will the Department of the Environment, Community and Local Government. However, as the holders of the money, the credit unions must take the lead role, although we will certainly assist them in that regard.
