Dáil Éireann Debate, Thursday - 18 May 2017
71. Deputy Joan Burton asked the Minister for Finance the position regarding the EUROSTAT investigation into the establishment by the Government of a bond to finance social housing investment suitable for credit unions to invest their surplus funds in; and if he will make a statement on the matter. [23603/17]
Amharc ar fhreagraAs previously referred to in Parliamentary Question numbers 191 of 4 April 2017 and 208 of 28 February 2017, the Government has been exploring potential mechanisms that would facilitate investment in social housing, including the off-balance sheet potential of private institutional investment. Ireland Strategic Investment Fund (ISIF) led engagement on the Housing Fund mentioned in Rebuilding Ireland is currently ongoing, with a number of actors including both the Central Statistics Office (CSO) and Eurostat.
The agreed Programme for a Partnership Government recognises the potential role that credit unions can play in housing finance. Officials from both my Department and the Department of Housing, Planning, Community and Local Government have met with credit union representative bodies on a number of occasions to examine how credit unions can assist in the area of social housing. Officials from both Departments have also met with the Central Bank. Separately, communication is ongoing between the Department of Housing, Planning, Community and Local Government and my Department.
On 1 January 2016, I commenced the final sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 (2012 Act) following discussions with credit union representative bodies. Following this commencement the Central Bank introduced the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, regarding a number of areas including savings, borrowing, lending, investments and liquidity.
The Central Bank has informed me that it has received information regarding proposals for credit unions to provide funding for social housing and is currently engaging with the sector on those proposals. It further stated that while it does not comment on specific proposals, such investments could be facilitated by future regulations made by the Central Bank, where appropriate. Ultimately, any funding mechanisms will have to be put in place in the first instance by the credit unions themselves, with the support of their members, and with agreement of the Central Bank. The Central Bank also stated that it is willing to consider the type of regulations that would be required to facilitate such proposals. However, the Central Bank's key consideration in evaluating such proposals is its statutory mandate to ensure the protection of members' savings by credit unions and to ensure the wellbeing of the sector generally.
Investment regulations made specific reference to section 43 of the Act and to further classes of investments in which a credit union may invest its funds. The regulations provide that investments in projects of a public nature include, but are not limited to, investments in social housing projects. The Central Bank is currently reviewing the investment regulations for credit unions and have published a consultation paper CP109 – Consultation on Potential Changes to the Investment Framework for Credit Unions on 11 May 2017. This consultation paper sets out potential additional investment classes that credit unions may be permitted to invest in, including certain investments in social housing. The Central Bank welcomes views on the appropriateness of these potential investment classes for credit unions and whether there may be additional investment classes which would fit within the appropriate risk profile for credit union investments. The consultation will close on 28 June 2017.
Notwithstanding any potential changes that may be made to the regulations, the legislative requirement for credit unions to ensure investments do not involve undue risk to members' savings will remain the overriding factor which must inform all credit union investment decisions.
