Speech by the Taoiseach, M. Brian Cowen, TD, to the Annual Conference of the Credit Union Development Association (CUDA), Tullamore, Saturday 30 January 2010 at 2.30pm

Conference Theme - 'Making a better future together!'

A dhaoine Uaisle;

Tá áthas orm a bheith i bhur measc inniu ag bhur gComhdháil bhliantúil seo. Cuireann Ghluaiseacht an Chomhair Chreidmheasa go mór leis an éarnáil airgeadais in Éirinn. Ta áthas orm an deis seo a bheith agam a chinntiú daoibhse a oibríonn go dian agus go deonach - tacaíocht leanúnach an Rialtais chuig na Comhair Chreidmheasa ionas go mbeidh siad ar a gcumas freastal ar riachtanais an duine agus an phobail anois agus sa todhchaí.

I am delighted to have the opportunity to be with you here today. I want to thank your National Council, Management Committee and Chief Executive of the Credit Union Development Association for inviting me here to address your Annual Conference.

Credit Union is a 'national brand', owned by the people for the people. I am delighted to have this opportunity to assure you, and in particular, the volunteers who give so enthusiastically and generously of their time, of the Government's continued support for credit unions to enable them to continue serving people and their communities.

Ireland and its Credit Unions - Quo Vadis?
It is refreshing that CUDA has chosen a positive and optimistic conference theme 'Making a better future together!' Your theme for today, which will carry you through 2010, defines what credit unions are all about - self-help and cooperation in providing financial services within the community. You have asked me to address the topic - Ireland and its Credit Unions - Quo Vadis? - or, in other words - "Where are you going?" The Minister for Finance informed me that we have some very positive developments to report on the credit union front and I will come to these later. Firstly, I would like to say a few words on the economy and our priorities on that front for the year ahead.

The Economy
We have come through a very difficult period, a global financial and economic crisis that we have not seen for many decades. I believe that, while the worst is in fact over, there is still some way to go. During 2009, the Government has demonstrated strength and resolve to continue along the path of restoring sustainability to the public finances.

While our budgetary position still remains challenging, the public finances are stabilising, demonstrating that the decisive action taken by the Government is showing results. The Central Bank's latest forecast, published yesterday, supports this view and the likelihood of a return to growth later this year and into 2011.

Looking at our economy from a medium to longer term perspective, our future pattern of growth will, by necessity, be based on a more sustainable export-led economic model. This will require a continued focus on improving our competitiveness and continued reductions in our cost base. Price levels, wages and asset prices are all adjusting rapidly to the new circumstances - improving Ireland's competitiveness. Our economy is flexible and resilient with evidence that the necessary adjustment is underway. Once the necessary adjustments are made, the medium term outlook is relatively favourable.

Our key efforts in the next year will be on identifying and supporting sectors where we can attract new investment and create jobs. The steps we have and are taking in stabilising the budget deficit, in establishing NAMA, in re-capitalising the banks -- along with the Independent Credit Review system announced in the Budget - will all help. As part of our strategy to get growth back into the economy as quickly as we can, promoting Exports, Enterprise and Employment will be a fundamental objective across all Government actions in 2010.

Exports
Our export sector is absolutely essential to our economic recovery.

In a small open, economy like ours, we must trade to thrive. And the underlying strength of our exports sector means that we can feel positive about the future, especially as growth begins to return to our main trading partners.

The adjustments we have made in the Budget provide further sound basis for export-led recovery. And it stands to reason that by intensifying our exports to markets that have moved beyond recession, we can fast-track our own return to growth.

To do this, the Government is actively keeping pace with the changes in international trade patterns and aggressively following the growth of the future. The projected growth in the Chinese economy is, perhaps, the most obvious example of this.

But there are other countries, such as Brazil and India, whose economies are projected to grow rapidly in the years ahead. We must be active in seeking out opportunities and consistently strive to diversify our export markets. We must avoid over-dependence on any specific country or region. This involves breaking free of traditional patterns and comfort zones.

It is also vital that we prepare our exporters, particularly in the Small and Medium Size Enterprise sector, for what they can expect when they go abroad, and that we provide them with support when they are out there doing business for Ireland. It is in these areas that Government, through the State agencies, can best provide support.

In the crucial period ahead, the Government over a whole range of areas will being doing our very utmost to facilitate Irish companies in expanding abroad, whether through overseas investment or through exporting; to create the climate and to provide the support in which our exporters can thrive. We see this as a key driver of economic recovery and that means continuing to promote international trade and to create the optimum framework in which our international trade can grow.

Enterprise
We will also continue to place a strong emphasis on recasting enterprise policy. When this global recession passes, Irish businesses must be well positioned to take full advantage of the opportunities that will be presented.
The lesson from severe global recessions in the past is that as well as weathering the economic storm, countries need to restructure their economies to target the next wave of economic growth.

That is why the Irish Government was one of the first countries out of the blocks to devise a blueprint for repositioning our economy -- the Smart Economy framework.

We already have one of the best concentrations of high-tech multinationals in Ireland. Our plan is to encourage them to invest further in the high-value research and development areas that provide secure employment and increase exports.

We are already investing billions in research and we need to get the best possible return on that investment. We will now move this to a new level and create an exemplary research, innovation and commercialisation ecosystem - we will become an Innovation Hub in Europe.

We need thousands of thriving Irish companies creating high-value products and services that will provide well-paid, quality employment.

We must foster pro-enterprise culture. We will retain and enhance the significant incentives we introduced over the last two years in relation to R&D and the intellectual property environment.

We have committed to retaining the 12.5% Corporation Tax rate and we are extending, to new company start-ups in 2010, the three-year corporate and capital tax exemption.

The Innovation Taskforce which will report soon will be crucial in helping us make the step-change required to replicate the success of our existing global companies such as CRH, Ryanair, Glanbia and Glen Dimplex with many more fast-growing Irish-owned companies.

Employment
Employment is at the top of this Government agenda and we are determined to ensure that there is no lost generation. Every decision Government takes will be informed by our overriding priority to protect jobs to the greatest possible extent in the economy, and help those who do lose their jobs back to work as quick as we possibly can.

That is why we will continue in 2010 to invest heavily in additional training and education supports for people who have lost their jobs.

The Department of Enterprise, Trade & Employment will spend over €900 million this year protecting jobs and providing training and activation supports, and over €200m in enterprise supports through IDA, Enterprise Ireland and other agencies, making a total package of €1.1 billion.

We will directly and indirectly support approximately 80,000 jobs through the Employment Subsidy Scheme.

Through the Social Welfare system we are helping more than 73,000 people, to maintain part-time jobs or casual work - at a cost of well over €600m.

180,000 people will receive training or supports in 2010.

These measures will help in the short-term. But they can't substitute for a return to competitiveness based on lower costs and higher productivity.

Recent figures show the rate of increase in unemployment has slowed down significantly. But we need to do more.

We can't be complacent and it is an economic and social imperative to get people off the dole and back to work. There is a double bonus to the exchequer in every person returning to employment because the cost of welfare goes down and tax revenues go up.

The priority for the Government in the year ahead is to drive this return to employment.

Inquiry into the Banking Crisis and Reforms to financial regulatory structures
As you know the Government has, in the last couple of weeks, decided to take steps to establish an inquiry into the crisis in our banking system.

The Government's position is clear: a full examination and explanation of the causes of the problems in our banking system is required in light of the exceptional support that is being provided by the taxpayer. More than that, we need an inquiry in order to restore international and domestic confidence in our banks. We need, as a country, to get a better understanding of where the crisis in the banking system originated and assess whether lessons can be learned to inform our future management of the sector. The Government will then take the necessary steps to prevent such situations arising in the future.

You will also be aware that the Government has agreed a range of reforms to financial regulatory structures. The aim is that the associated legislation will be put before the Oireachtas for consideration as soon as possible. The key aspects of the changes to the regulatory framework announced are:
- The establishment of a single fully integrated regulatory institution, the Central Bank of Ireland Commission, with responsibility for both the supervision of individual firms and the stability of the financial system generally.
- The reassignment of the consumer information and education role, currently carried out within the Consumer Directorate in the Financial Regulator, to the National Consumer Agency. Responsibility for codes will remain with the Central Bank of Ireland; and

- A significant expansion of regulatory capacity within the new structure through the appointment of substantial additional staff with the skills, experience and market-based expertise needed to meet the objectives of the new structures.
The recent appointment of a new Governor, Professor Patrick Honohan, and an international expert, Mr. Matthew Elderfield, as Head of Financial Supervision shows that we mean to make the required changes quickly.

Developments in Credit Unions
While Credit Unions are very different to banks, they and their members are not immune from the global financial crisis. It is essential that we have the appropriate frameworks in place to oversee the risk profile of Credit Unions and support its development. The regulatory regime must have the ability and flexibility to adjust itself to cater for and support risks in the sector. It is our duty, collectively, to get it right, ensuring that existing and future members, and their Credit Unions, are comprehensively supported, reflecting our unified desire to see the movement grow and prosper.

The Credit Union Act 1997 has served credit unions well, providing stability and legal certainty during a period of substantial growth and development of the movement. As a result of this development and changes in the financial environment generally, the need for modernisation of the legislative and regulatory framework for credit unions has become evident. There is consensus among all stakeholders that the current legislative framework needs to be reviewed.

It is, therefore, appropriate that the Minister for Finance has directed the Financial Regulator to carry out a Strategic Review of the Credit Union Sector in Ireland, at this time. This is an important development. It will involve an examination of the structure, operation, regulation and legislation of the credit union sector. The objective is to provide a report with recommendations and an implementation plan that will include specific proposals to strengthen prudential soundness. The report will outline the future strategic direction of credit unions and feed into a review of our credit union legislation.

This review process will be an independent one and will consult closely will all stakeholders in the movement. I am happy to see that CUDA has welcomed this review and am confident that you will contribute constructively to this process.

I would like to thank you again for the invitation to be with you today, and to wish all in CUDA continued success. The Credit Union Movement makes a unique contribution to the financial sector in Ireland and I assure you that the Government will play its part in supporting you as you face your current challenges and in preparing and planning for the future development and prosperity of the Movement.

ENDS.