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Banking Sector

Dáil Éireann Debate, Tuesday - 16 January 2018

Tuesday, 16 January 2018

Ceisteanna (45)

Willie Penrose

Ceist:

45. Deputy Willie Penrose asked the Minister for Rural and Community Development if he will report on the outcome of the public banking investigation; when it will be published; and if he will make a statement on the matter. [1843/18]

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Freagraí ó Béal (6 píosaí cainte)

For the past 18 months or thereabouts, I have been a strong advocate of a public banking model along the lines of the German Sparkassen model which has been in place for approximately 200 years. Under this model, public banks would be municipally owned, rather than being nationalised entities. They would be not-for-profit and restricted to lending into the regional economy for the promotion of businesses. They would fill the gap left by the demise of building societies, including the ICS. Post offices and credit unions could earn additional income from providing public bank services across the counter at their branches. The introduction of a public banking model would deliver multiple benefits. I would be grateful if the Minister would outline the current position in this regard.

A Programme for a Partnership Government envisaged that An Post, the Irish League of Credit Unions and other interested stakeholders would be asked to investigate and propose a new model of community banking, similar to the Kiwibank model in New Zealand. The programme for Government also includes a commitment to investigate the German Sparkassen model for the development of local public banks.

A project team comprising officials from my Department and the Department of Finance was established last year to progress this commitment. The team carried out detailed research into the concept of a public banking model, with a particular focus on the Sparkassen model. In addition, a public consultation process seeking views on the concept of a community banking model ran for four weeks. A total of 16 replies from a range of stakeholders were received.

As part of their research, officials from both Departments met representatives from the Savings Banks Foundation for International Co-operation and Irish Rural Link. These organisations put forward a proposal as to how a local public bank, based on the Sparkassen model, could work in Ireland. Departmental officials have finalised their report and submitted their findings to the Minister for Finance and me. The report will be brought to Government shortly for consideration.

I thank the Minister for his reply. I am glad he is in the Chamber to answer questions. I have no doubt he is a fearless advocate for rural Ireland.

I also welcome the progress made in the investigation into a new model of public banking. The development of a network of regionally based public banks could be a game changer for small and medium enterprises, agribusiness and the regions.

IDA Ireland's efforts in the midlands, especially counties Westmeath and Longford, have been abysmal, shambolic and disappointing, to say the least. In 2017, only 2% of jobs related to foreign direct investment were located in the midlands, which also experienced the smallest increase in IDA Ireland supported jobs in the year. Of 210,000 IDA supported jobs nationwide, only 4,327 are in the midlands. This equates to 2% of total jobs and the figure appears to worsen every year. It is time the Government took urgent corrective action, particularly in the midlands region, including my constituency of Longford Westmeath. The proposal to establish a midlands public bank in Mullingar as a pilot for a national network of regional public banks would go a considerable way towards making up for the failures of IDA Ireland. As I stated, a regional public bank is not a nationalised bank like Allied Irish Banks.

I understand the Deputy's frustration and that of many individuals and businesses who are trying to secure loans from and work with the banks. The programme for Government included a commitment to investigate what could be done to provide community banking. I am pleased a report on the issue has been completed. I received a copy of the report and the Minister for Finance and I will bring it to Government, after which it will be published. I will ensure this is done as quickly as possible. The good news is that the consultation has taken place, the report has been completed and the Minister for Finance and I will bring the report to Government, after which it will be published.

I thank the Minister for that, and I have no doubt about his commitment. This project for a public banking model is a no-brainer. What concerns me is that the dead hand of the bureaucrats at the Department of Finance will scuttle it. I know what they were like when we brought forward the Bankruptcy (Amendment) Bill. By hell, they resisted it. I am afraid they will resist anything new or novel or anything that represents something away from their cosy arrangements. They got their hands and fingers burned following the economic collapse and the crisis, when they took their eyes off of the ball together with the regulators. I am concerned that they are afraid or are reticent in this regard and that they will kill this before it gets out of the traps. I am keen to give the Minister 150% support. The Minister should shake them up in the way he always shakes people up. He should not be afraid to take on the mandarins, who will try to kill this before it gets out of the traps.

I might want to bring Deputy Penrose into the Cabinet meeting with me. Certainly, this will be brought to the Cabinet as quickly as possible. I do not disagree with what Deputy Penrose has said, but at the same time we gave a commitment and I was given the responsibility to put the matter out for consultation. I did my part of the job. It is now a matter for the Department of Finance and myself. We will bring this to Government. There will be a discussion at Government. As soon as we bring this to Government, I will ensure that the report is published. We will do that as quickly as it can be done.

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