Dara Calleary (Mayo, Fianna Fail) | Oireachtas source

I welcome the chance to discuss Deputy Donnelly's Bill, which we will support if only to allow it proceed to Committee Stage, where many of the concerns expressed by previous speakers could be discussed, rather than at a working group immediately outside the House.

Bringing it to Committee Stage points to a problem. We have a very good jobs committee, chaired by Deputy English, and party jerseys are left outside the door. For whatever reason, however, the Technical Group does not participate and we do not have the benefit of this type of discussion at committee meetings. If we did, perhaps we would be able to make progress on some of these issues. This could be reviewed as a consequence of this debate in the interest of the Bill.

It is to the Minister's credit that he introduced what we know as the mini-companies Bill immediately prior to Christmas. This opens up the examinership process but it is still ludicrously expensive and time-consuming. Considering the pressure placed on companies, many will shy away from the process.

A number of the costs to which Deputy Donnelly referred are legal costs. We are three years into the life of the Government. Within a number of months it introduced the Legal Services Regulation Bill, but it is still parked. It is discussed by the committee every so often in terms of the transformative effect on legal costs. Invariably, legal fees are associated with examinership and company restructuring. However, until the Government takes firm action and stops kicking the can down the road regarding the legal services legislation, and while there is some sort of tug-of-war between the two Government parties, legal costs will still be too high for small companies, including the types of company that this legislation affects. This is unfortunate. While I acknowledge it is outside the jurisdiction of the Minister for Jobs, Enterprise and Innovation, action needs to be taken.

The examinership process is particularly intensive. The new Bill opens up all sorts of possibilities for it. However, there has to be a discussion in this House and broader society on helping SMEs to move away from legacy debt. They should be able grow their businesses on the tide of a recovering economy and deal with the debt when they have an ability to do so. Too many jobs and successful businesses are being lost on the back of legacy debt. Viable businesses that are providing a service and employment are being lost. Their day-to-day operations may be healthy and viable, yet they have little alternative but to proceed to liquidation or receivership. It is too early to determine the impact of the Companies Bill 2013. Immediately prior to Christmas, some very high-profile large companies did a deal with their banks and had considerable debts written down. However, this is not the preserve of many SMEs. One will not read about many SMEs who have faced this situation in the business pages of any of our national newspapers. They close and leave debt and unemployment behind them. We need to have a realistic discussion and arrive at a solution quickly in this regard.

The key issue for any business in terms of expansion and getting out of financial difficulty is access to credit and finance for working capital to allow it to grow, take advantage of opportunities that may arise and create employment. The Minister and I have discussed already my inability, as an Opposition spokesperson, to call the effectiveness or otherwise of his plans. For instance, when we put a question to the Minister for Finance, Deputy Noonan, on the €2.5 billion that the two pillar banks have loaned to SMEs, he says they have loaned on target. I do not doubt him, but when I ask whether this involves new lending or restructuring of existing lending, and when I ask about the sectors of the economy that are benefiting, I do not get a breakdown. I understand much of the money has been loaned to those in the agriculture and food sectors. This is fine as it is creating employment. However, we cannot get a breakdown because of commercial sensitivity. Microfinance Ireland and the credit guarantee scheme are way below target. There is now a lacuna in Microfinance Ireland as it recruits a new chief executive. I do not know what happened in this regard because the chief executive that was in place and the current chairman are two very impressive people. When they appeared before the committee, they were very focused. I fear we will lose that focus. It is still very hard to call the effectiveness or otherwise of lending to SMEs. We are supposed to believe the Department of Finance's contention that we have met the targets, that €2.5 billion has been lent and that we will do more. We are supposed to believe the CRO without being given the empirical evidence to study. I ask the Minister to provide the relevant information to allow us to have a proper discussion on SME financing.

Since the examinership process began in 1990, it has served a purpose. Until now, however, small companies have been absolutely excluded because of the cost. From January 2012 to November 2012, there were 26 examinerships. There were 19 in 2013, representing a decrease of 27%. The inability to pay for examinership was the difference between surviving and failing for many companies.

There has been much discussion on upward-only rent reviews this evening. The difficulty for Government Deputies in advocating discussion on this or criticising or wringing their hands over upward-only rent reviews is that they made it an issue. Both of the parties in government made promises before the last general election that they would resolve the problem in spite of their being in possession of the legal opinion of the then Attorney General. The Government - the Labour Party, in particular - then maintained there was eminent legal advice to the effect that the problem could be solved. It said it would address the matter in the programme for Government and votes were won as a consequence. The problem was not addressed, however, because it cannot be addressed constitutionally. This was known to the Government. All the wringing of hands we will witness tonight and tomorrow on the other side of the House over upward-only rent reviews should be put in that context. It will be very difficult to get around it except through some sort of examinership process. Until now, this has been the preserve of the large chain companies as they have been able to renegotiate rents and use their clout to maintain rents. This facility is not open to the small operator. A property solution for SMEs is essential to allow them to recover.

Business costs in general are not decreasing as they should. Energy costs are still higher than they should be. I acknowledge that this is an island country, which results in extra costs, but energy costs for businesses are not moving in the way they should. Labour costs have decreased considerably but they are beginning to creep up again. We are beginning to see skills shortages in the economy and we need to address that. The notion that we can suddenly start lobbing in claims for huge pay increases because some green shoots are beginning to appear is absolutely crazy in the context of the current business climate. It is a very fragile recovery and the notion of making pay increase claims as soon as there is some sort of recovery is unfair on businesses. Businesses that can afford to pay should do so. The majority of businesses cannot do so as they are struggling to get by in this the recovery. One is completely excluded from dealing with labour costs in the examinership process, apart from making people redundant.

What Deputy Donnelly has done in terms of putting this matter on the agenda is such that we must, in the context of the Companies Bill, Report Stage of which will be considered next week, apply a test or standard to determine whether it will help companies to maintain and create employment. Second, we must question the cost test involved in terms of the services a company needs. Everybody accepts that legal costs are too high. Urgency is needed from the Department. Accountancy costs and costs associated with examinership are generally too high. We tabled a number of amendments to the companies legislation of 2013 which would require those seeking to serve companies going into examinership to be up-front about their costs and publish them. They were turned down. I ask the Minister to pursue this with the agencies in his Department. This Bill or the companies legislation of 2013 should have some sort of mechanism whereby people can investigate prices in advance. There are some companies moving into this market for the sake of making a quick buck and they are using the stress small companies are under to increase legal, accountancy and consultancy fees in the context of the new markers available to them. There needs to be considerable transparency regarding the process and its cost.

While I am concerned about elements of Deputy Donnelly's Bill, such as the lack of any kind of court protection or supervision, and the associated weakness, it could be addressed during a proper Committee Stage debate rather than parking it with a working group in the hope that we will not return to it. We will return to it because the recovery for small and medium-sized companies will not be real until the €50 billion in outstanding loans to SMEs are dealt with. Half of these loans are non-performing. Until we deal with this issue, we cannot begin to expect the SME sector to increase employment. We cannot expect them to expand during the recovery until that elephant in the room is dealt with.

We are beginning to deal with it for mortgages and other arrears, although far too slowly. Until we deal with this issue, how can we expect the sector to create and grow employment? How can we expect those who own businesses, people such as Deputy Barry, to look forward to a time when they might be able to grow out of their debts if we do not give them the mechanisms to do so? The Companies (Miscellaneous Provisions) Bill 2013, the so-called baby Bill, does not do it for a lot of businesses. It is unfortunate that the Minister has decided to oppose this Bill rather than allow it to progress to Committee Stage to see how we could improve it.

See this speech in context