Untapped potential of Credit Unions for Irish mortgage market should be examined

Untapped potential of Credit Unions for Irish mortgage market should be examined – Fine Gael

A new approach to Ireland’s banking and mortgage market should be examined using the large untapped potential of credit unions across the country, Fine Gael TD Michael Creed has said.

Deputy Creed made his comments following the announcement this morning that KBC Group is exiting the Irish market, which he described as a further blow to competition just eight weeks after the departure of UK lender NatWest and its Ulster Bank unit.

Deputy Creed said: “Whilst the immediate issue should be on assurances for bank staff and customers, there is a broader strategic concern for competition in the Irish financial services market, which includes the mortgage market. This exodus leaves just three retail banks in the country, narrowing the choices for consumers and detrimentally effecting the functioning of the financial system.”

Deputy Creed is calling for the Department of Finance and Central Bank of Ireland to examine regulations that restrict credit unions’ ability to participate fully in the Irish mortgage market.

“I believe our credit unions are a sleeping giant with the potential to overhaul the Irish mortgage market. With 326 branches and 3.6 million members across the country, Ireland has one of the highest numbers of credit union members per head of population. Yet there is untapped potential. There is a total of circa €14.8bn savings in our credit unions, but just circa €4.9 bn in loans.[1]

Deputy Creed pointed out that integrating credit unions into the mortgage market could also allow a community banking sector to flourish.

“In addition to the competition benefits it brings, examining how we could expand credit unions lending opportunities would act as a cushion against the drawbacks of more footloose international banks.

“Being imbedded in our communities, credit unions offer a more secure alternative of reward, flexibility, and employment for savers, prospective homeowners and employees.”

[1] Statistics relate to North and South, per ILCU: https://www.creditunion.ie/about-credit-unions/key-statistics/.

Dáil Speech – Private Members Debate – Corporation Tax 06/10/2015.

Base erosion and profit-shifting is a global phenomenon that requires a global policy response. In that context, I welcome the publication yesterday of the OECD report in the matter. Indeed, I would have welcomed a debate on the issue tonight, but it is clear from the content of the contributions made by the proponents of the motion and in the motion itself that there has been a reversion to type and a debate about Ireland’s corporation profits tax rate. That is not an issue being considered at all in the OECD report. We reverted to name calling of multinationals. We would do well to remember in the context of the debate that we are a small, open trading economy. We have an indigenous sector which, fortunately, is getting back on its feet and playing a role in the domestic and exporting economy, but equally a critical element of our economic recovery involves foreign direct investment. One of the things that foreign direct investors value is political and economic stability. I shudder to think of the message they would take from the proponents of the motion as to how safe and secure their investments would be were some of those proponents sitting on the front benches on this side of the House.

Deputy Joan Collins would do well to remember that foreign direct investment is, above all else, highly mobile. She would do well to remember that we take in approximately €2.8 billion in tax revenue under corporation profits tax. We are a peripheral economy. We are peripheral economically and geographically and one of the tools we have to use to our advantage is our corporation profits tax rate which, fortunately, is still a national competence. It is not something that can be imposed or dictated from outside. Long may that be the case and long should the Members of the House protect our economic sovereignty in that regard rather than cede it to the OECD, EU or anybody else. We would also do well to remember that the 1,000 companies involved, some of which Deputy Collins and others name-called and some of which give very valuable employment in my constituency, include Alps, VMware, EMC, Stryker, Boston Scientific, Google, Apple and Facebook.

They contribute more than 161,000 direct jobs and 274,000 indirect jobs to this economy. We would do well to remember that, per annum, they pay approximately €8 billion and account for exports of approximately €122 billion, all of which adds to the sum of economic activity. Without them, this country would be in a poorer place.

The Deputies’ message is that we are hostile. In a different debate, Deputy Pringle could excoriate the Minister of State over the lack of foreign direct investment, FDI, in the former’s part of the constituency when, without any shred of embarrassment, he saw no contradiction with that in his diatribe tonight against FDI and Ireland’s corporate tax rate. We cannot have it both ways. We need a mature debate on base erosion and profit shifting, BEPS, but that is a different matter from our sovereign entitlement to establish a 12.5% corporate tax rate. I accept that the effective rate is less, but some countries that have substantially higher headline rates have lower effective tax rates. We are competing for FDI. I salute IDA Ireland and the political support that facilitates it in promoting Ireland as the number one location of choice for FDI. This is down to myriad factors that we handle well, for example, our education system, tax system and political stability, and our position as an English-speaking eurozone member. We must be careful in what will be a necessary debate not to send the wrong signals to those with investments to make.

Recently, I accepted an invitation from a foreign direct investor, Pfizer in Cork, which provides much employment in the pharmaceutical sector. It has some operations in the Minister of State’s constituency. It made the point that, when facing significant challenges a number of years ago, it considered closing one of its plants. Companies close when they do not make profit. “Profit” is not a dirty word. Without profit, businesses close and people lose their jobs. We would do well to remember that because Deputies Joan Collins and Boyd Barrett would be the first to jump up and down if a significant foreign direct investor in their constituencies was about to leaveon the grounds that it could not make a profit in Ireland.

“Profit” is not a dirty word for large or small business.  It is what keeps business and jobs alive. We would do well to remember this simple economic message. People on the far side of the House seem to have a difficulty grasping it.

In the context of the OECD’s report, I urge the Minister of State to be extremely careful as regards unilateral action and the choreographing of the requisite changes. We do not need to make martyrs of ourselves on the international altar. We need to address the issues that have been raised, but we must ensure that the choreography around minimum standards and common approaches does not disadvantage us. As with a phrase coined during the Northern Ireland peace process, we must ensure that people “jump together” at EU and OECD level on tax treaties and so on and that we are not disadvantaged by the legislation that will be necessary to underpin the report’s recommendations. We have not been dragged kicking and screaming. Rather, we have been an active participant in this process. Our economy and people who gain valuable employment in the FDI sector should not be disadvantaged. We should send the signal that their employment is welcome and that we intend to protect and attract inward investment.


Cork North West TD Michael Creed has reminded residents in Ballincollig and Carrigrohane of the availability of tax relief for householders who make rental accommodation available. Outlining details of the relief Deputy Creed said:
“This may be of significant benefit to householders in the immediate vicinity of UCC, CIT and third level colleges in Cork City. There is increased demand for affordable student accommodation and the rent a room scheme could prove mutually beneficial for home owners with vacant rooms and students alike.

“Section 216A of the Taxes Consolidation Act 1997 provides for the rent-a-room scheme. This scheme was introduced in Finance Act 2001 as an incentive to encourage individuals to let rooms in their principal private residence in order to bring about an increase in the availability of rental accommodation, particularly for the student sector.

“The scheme provides an exemption from Income Tax, PRSI and USC on rent received where a person rents out a room or rooms in his or her principal private residence and the rent received does not exceed €10,000 per year.

“In order to qualify for the exemption, it is necessary for the residential premises to be situated in the State and occupied by the individual as his or her sole or main residence during the tax year. The relief only applies to individuals. It does not apply to companies or partnerships. In addition, an individual cannot avail of the relief in respect of payments for accommodation in the family home by a child of the individual. There is no restriction where rent is paid by other family members, for example, nieces or nephews.

Cork North West sports clubs to benefit from extension of rate exemptions

Fine Gael Cork North West TD Michael Creed has today (Wednesday) welcomed the announcement by Minister of State at the Department of Finance, Simon Harris TD,that an amendment is to be made to ease the rates burden on many local sports clubs. Commenting on the amendment Deputy Creed said:

“An amendment to the Valuation (Amendment)(No.2) Bill 2012 will mean sports clubs that previously paid rates on its bar and on sporting buildings, will now only pay rates for the part of the building that generates income i.e. the bar in most cases. In practical terms this will reduce significantly the size of the building for which sports clubs must pay rates and it will provide a welcome boost for clubs provided by volunteers for volunteers.
“Local sports clubs are the backbone of the community in this constituency. These clubs are run by people giving freely of their time and many are largely financed from fundraising in the local community.
“Buildings that are used for the sale of alcohol or food, retail outlets etc. will be rated but buildings that are used for community sport will be exempt. If a sports club’s only commercial facility is the bar then it is only the bar and ancillary facilities that will be rated.

“This is an example of a piece of legislation that will have a very real impact on local communities. The Government is committed to improving facilities and services in all regions of the country. The economy is improving because the policies pursued are working and changes such as the amendment announced today are another indication of our dedication to supporting local communities across the country.”


Cork North West TD Michael Creed has called on the Minister for Finance and his Cabinet colleagues to prioritize a staged reduction in the USC over the coming years. Commenting on the publication of the latest Exchequer figures Deputy Creed said:

“While it is crucial that we continue to meet our targets in terms of reducing the deficit, it is now clear that there is a real recovery taking hold in our economy. The forthcoming budget must map out a strategy for bringing this recovery to every household in the Country between now and the end of this Governments term. Laying out a timeline for the reduction of the USC is one clear initiative which can spread the rewards of recovery wider and farther than other measures such as public pay increases”.

“The USC has been the tangible burden of the economic crisis visible in all pay packets over the past number of years. It is important that Government can signal a return to ‘normal’ economic circumstances by reducing the burden of the USC which was first introduced as a solidarity contribution to the economic recovery. Reducing the USC would be a positive initiative that would put money back in the pockets of hard pressed families. This in turn can lead to increased consumption in the domestic economy and act as an economic stimulus”.

“Calls from some quarters to consider increasing public sector pay are premature at this juncture. As an economy we must remain competitive and attractive to investment. A push to inflate wage demands does not help. Cutting the punitive USC goes further in increasing everybody’s wages without placing an extra burden on employers”.


Cork North West TD and member of the Oireachtas Finance Committee Michael Creed T.D. reiterated his call for a solution to the conflict being experienced between tracker and variable mortgages. Commenting after yesterday’s Joint Oireachtas Committee meeting with the Fiscal Council, Deputy Creed said:

“I was keen to seek the views of the council on the ongoing increases being experienced by those with variable mortgages despite the ECB dropping interest rates to record lows. On the other hand tracker mortgage holders continue to benefit from these record low interest rates while the banks continue to pass the burden to other mortgage holders”

“I recently called on the Minister for Finance and the Taoiseach to re-double their efforts to see the Eurozone decision of June 2012 implemented and suggested the prospect of the ESM or the ECB refinancing the tracker mortgage loan books of our banks.”

“I am pleased that Professor John McHale, Chairman of the Fiscal Council shared some of my concerns with regard the plight of variable mortgage holders. It is important that the Council exert their influence to ensure this matter is monitored and acted upon”.


I welcome the opportunity to speak on what I think is one of the most significant motions to come before the House. If the loss of our sovereignty in 2010 was such a significant event, it is important that the Dáil has its say on the matter, and I welcome the fact that the Government Chief Whip acceded to my request for a debate on it.
It is important to put the debate in some sort of context. When the troika came to town in 2010, our banks were bust, the number of unemployed people had trebled to 450,000 from 150,000 in 2008, our tax receipts had collapsed from approximately €50 billion to €30 billion, and our international reputation was in tatters. All of those issues combined led to a loss of market confidence in the Irish economy, and in order to maintain some degree of normality, we sought outside assistance through the troika’s programme. Three years later, in a tribute to the resilience and forbearance of the Irish public, whose sacrifices have ensured the progress that has been made, our international reputation has been re-established, and I commend Deputy Costello and the Tánaiste in the Department of Foreign Affairs and Trade on the leading role they have played in that respect. All of our Cabinet representatives have equally been responsible for that restoration of our reputation, which has enabled us to renegotiate with credibility some of the worst excesses of the bailout agreement as originally foisted on us by the outgoing Government of Fianna Fáil and the Green Party.
The exit from the bailout is a red-letter day, but in early 2013 we had a renegotiation of the promissory note. That represented significant progress on the liability that the Irish citizen carries as a result of this collapse. Market confidence has been restored. How else would we have accumulated a domestic backstop of around €20 billion to give us some comfort as we put our toe back in the money markets and try to fund ourselves? Of significance in the context of the sacrifices that the public have made, we have reduced the gap between what we spend on a daily basis and what we raise in taxes, and we are committed to reaching the 3% deficit target by 2015. That is the backdrop to all of this.
I am reminded of the line that the moment of absolute certainty never arrives. To be honest, I was a bit taken aback by Deputy Martin’s response last week when the Taoiseach announced the Cabinet’s decision. It seemed to me as though he were suffering from Stockholm syndrome, surrounded by former Cabinet colleagues Deputies Smith, Ó Cuív and O’Dea, as he was less than gracious about the efforts and the endeavour by ordinary citizens to get us to a stage at which we can exit the bailout. I listened this morning to Deputy Michael McGrath’s contribution – it is noticeable that not a single Member of the Opposition is in the Chamber for the debate at the moment – and while I agreed with many of his observations in respect of the context within which this exit from the bailout is taking place, there was an element of political cute-hoorism and having an each-way bet regarding the Government’s decision.
When faced with such a decision one must make it as wisely as possible. The moment of absolute certainty never arrives. Deputy Martin’s approach to this is regrettable.

In the context of this debate and as we contemplate the sustainability of our economic model, it is an appropriate time to raise the EU Summit of 29 June 2012 and ask where we are in breaking the vicious link between sovereign and bank debt. The Minister, his Cabinet colleagues, the Minister for Finance Deputy Noonan and the Taoiseach are as anxious as everybody else to build on that. However, to call a spade a spade, we have run into a cul-de-sac in our efforts to build on that. It is worth recalling that the summit statement stated:
We affirm that it is imperative to break the vicious circle between banks and sovereigns.
The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme.

We are some 18 months on from that and, unfortunately, we have seen practically no tangible progress on that matter. Is it any wonder that politics stretches credulity on occasions with the public when we see that lack of progress on an issue of such enormous significance? We have pumped €64 billion into our domestic banks in an effort, originally, to stop the contagion. “Contagion” was the buzzword in 2009 and 2010 when they were fears across Europe. We were asked to take a hit for the team and we did so. It is a reasonable conclusion that we are having difficulty getting retrospective recapitalisation, although I do not want to make that conclusion. There is another way to skin the cat in respect of getting back that money for the Irish Exchequer. Our level of indebtedness is unsustainable and we need a game changer on this matter.

AIB and PTSB are State-owned and we have a 15% stake in Bank of Ireland. The Irish banks have a €70 billion tracker mortgage book on which all those banks are losing their shirts. That is somewhat akin to the €64 billion we put into our banks to comply with the terms of our bailout. It is good news for 400,000 tracker mortgage holders that last week the ECB sought to reduce its lending rate by 0.25%. That has been passed on to those 400,000 tracker mortgage holders, but at whose cost? There are reports that the 300,000 variable mortgage holders will see a commensurate increase in their repayments. That is grossly unfair.

As a way of dealing with the capital we put into our banks, is it possible to take the tracker loan book out of the three banks I mentioned by virtue of the ESM, ECB or however? PTSB has a survival strategy with the Commission. Because of the significant drain those tracker mortgages are on our banks, could we financially engineer a solution to the tracker mortgages that takes pressure off our banks and allows them to get on to the normal business of banking? It could allow the State to extricate itself from the banking business by selling its stake in banks that would be then viable and get something back for the money we have put into these banks in recent years, particularly the three I mentioned. It is grossly unsatisfactory that this issue has not been resolved yet. However, I commend the Minister and Government on their efforts in getting us to this situation where we are exiting. We have a backstop and market confidence, and we can go back to the market early next year to further build on that backstop. On balance, it is the right decision.


Watch the debate: http://media.heanet.ie/oireachtas/asx.php?Channel=Dail&Date=20131107&StartTime=05:38:26.000&Duration=01:00:00.000

The debate on the annual Finance Bill is an opportune time to reflect on the state of the economy and how it has progressed or otherwise over the preceding 12 months. A statistic that should bring some comfort, albeit not sufficient comfort for those who are unemployed, is that 30,000 more people are at work today than on the same day last year. The scale of the task this Government faces is put into context by the fact that between 2008 and 2010 more than 200,000 people lost their jobs. We are slowly making progress. Some of the debates in this Chamber on this and other matters are too sterile and predictable. We need to acknowledge what has been achieved and face up to the scale of the problem. In regard to the predictable claptrap about the sixth or seventh austerity budget, the budgets are austere because it is difficult to return to a situation where we are cutting our cloth according to our measure. The Government has made some progress in satisfying the markets, which is necessary before it begins to filter down. One of the other significant issues, apart from the number of people back at work compared to last year, is that the markets are showing some confidence in us now. If we had been able to go to the markets when the Government came into office, the cost of borrowing would have been approximately 15%; it is now approximately 5% or less. That is significant progress and, although it does not mean a lot to people out there still searching for jobs, it is a necessary staging post on the road to recovery. The Government is travelling, although perhaps not fast enough, along the road to recovery to meet the needs of many thousands who are still unemployed. It is making progress.

I caution the Government against raising the bar of expectation on the basis of leaving the bailout in December of this year. That does not mean a lot to the individual who finds himself unemployed because we will still not have an enormous amount of money. As we see the troika members booking their flights leaving Ireland, which is welcome, and we regain our economic sovereignty, we will continue to be in a delicate position for many years to come as we struggle to generate wealth and distribute wealth in a fair and equitable way. I agree with Deputy McHugh. The opportunity is now to plan for a balanced, regionally sustainable recovery. That is not always evident. The overwhelming objective of Government is to get the economy right along broad principles but it cannot lose sight of the objective of having it regionally sustainable.

I welcome the provision in the budget to introduce a new suckler cow welfare scheme or something of a similar nature. I would like the Minister for Agriculture, Food and the Marine to consider a commission of inquiry into the beef industry. It is profitable for factories, retailers and everyone in the industry except the farmer. It is a multibillion euro industry earning us enormous sums of money in exports, with over 100,000 people involved at farm gate level. However, very few of them make a living and most suckler cow farmers die in debt. We must look at a way to ensure the farmers who are the foundation of the industry can make a reasonable living. I welcome the Minister’s initiative but a more fundamental appraisal of the industry is necessary.

The Minister for Finance is not known for his timidity but the Government measures on alcohol are timid in the extreme. We have a serious societal problem with alcohol abuse. The stock response is to raise excise duties but we fail to grasp the real problem, which is the imbalance between consumption on licensed premises and through off-licences. That is the real societal problem and we wake up on Saturday, Sunday and Monday mornings hearing on the radio about someone being stabbed in a domestic setting because of excess alcohol, perhaps fuelled also by drugs. We must ensure that we encourage alcohol consumption on licensed premises rather than through off-licences. In the former, there is peer group interaction, supervision and intergenerational solidarity. There is a real weakness. I have heard reference to the idea that minimum pricing is not possible because of some issue in Scotland and a review of Scottish legislation. We are a sovereign nation and the only law that has been interpreted in respect of this area upholds the right of states to introduce a minimum price for alcohol. The Minister needs to do so.

The single parent tax credit is the issue on which I have received most representations. We must acknowledge that while some parents may wish to abscond from their parental duties, the majority of people take their parenting responsibilities exceptionally seriously even if their marital circumstances have broken down. It is unfortunate that the Government falls into the response of assuming that most men walk away from parental duties; they do not. The Minister has sent a signal that he will deal with this in some way by apportioning the tax credit to one party or the other where either party may not have a taxable income. Where there is a court agreed apportionment of custody in light of financial circumstances, the credit should also be apportioned on that basis. If there is a 50-50 agreement on parenting, the credit should be apportioned 50-50. It is a significant asset, amounting to approximately €1,600 a year. Hitting someone unilaterally overnight by taking it away is a financial blow that many cannot survive. I welcome the signal sent by the Minister for Finance of some movement but more needs to be done to achieve equity.


Dáil Speech on European Banking crisis and Mortgage arrears

Fine Gael European Affairs Spokesperson Michael Creed has called on the Government to protect those in difficulty with sub-prime mortgages by ensuring they’re interest rates are brought in line with those on more competitive established bank rates.  Speaking during a debate on the recent European Council, Deputy Creed said;

“We have a serious problem, namely, a European banking crisis which will manifest nationally. Now that the big issues such as cleansing of developer loan books and recapitalisation of the banks have been dealt, the banks will go after Joe and Joan in terms of their mortgage, which is the real problem for 2011. The State needs to get its act together and to assist in an innovative way people with mortgages, in particular those on sub-prime mortgages, getting onto high street variable rates”.

“Europe has a banking crisis. It has not gone away. Irish and other banks here were recently stress tested. We now find those stress tests were not worth the paper they were written on and there are to be new stress tests. There is a beginning of a realisation that this problem is only in its infancy. It is a much bigger problem than Europe has been prepared to confront to date. The public manifestations of this in, for example, a country like Ireland will become apparent in 2011 when the moratorium on mortgages expires and the 35,000 people in mortgage arrears of more than three months and the 12,000 people who have made no payments for more than 12 months will be in the firing line. That is the reality of the banking crisis facing Europe”.