Ciarán Cannon (Galway East, Fine Gael)
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I move: "That the Bill be now read a Second Time."

I am pleased to present the Strategic Banking Corporation of Ireland Bill to the House. This is a significant Bill, providing for the establishment of the Strategic Banking Corporation of Ireland, or the SBCI. By increasing the availability of longer term flexible debt finance, which is appropriately priced, the establishment of the SBCI will provide SMEs with access to the type of patient intelligent capital that will increase productive investment, encourage growth and generate additional employment opportunities. In this way the SBCI will play a key role in reinforcing Ireland's economic recovery.

As a wholesale lender, providing funds to on-lending institutions, the SBCI will enhance the supply of funding by both using existing channels and encouraging new entrants into the market. The provision of loans that are designed to meet the customised needs of SMEs should incentivise demand and build confidence in the SME sector, thereby encouraging investment in growth and employment.

The Government recognises that SMEs are the backbone of the economy employing nearly 70% of the total labour force.

Stephen Donnelly (Wicklow, Independent)
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On a point of order, the Minister of State's speech contains a great deal of important detail. Will copies be supplied to Members?

Ciarán Cannon (Galway East, Fine Gael)
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Yes.

Stephen Donnelly (Wicklow, Independent)
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Are they available now?

Ciarán Cannon (Galway East, Fine Gael)
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Yes.

Stephen Donnelly (Wicklow, Independent)
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I thank the Minister of State and apologise for interrupting.

Ciarán Cannon (Galway East, Fine Gael)
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That is not a problem.

A stable and appropriate supply of credit to the SME sector promotes growth, encourages start-ups and enables incumbent firms to grow by taking advantage of trade and investment opportunities. It is accepted that regardless of the economic and financial cycle, there always will be structural problems in the market that constrain SMEs in accessing credit. This is a feature of SME funding across the OECD. In particular, innovative firms, small firms and firms early in their life-cycle would appear to be more affected by such market imperfections. These imperfections or constraints also tend to be exacerbated by financial crises, as was the case with the impact of the international financial crisis which began in 2008. Furthermore, crisis-enhanced constraints may also persist beyond the return of broader financial stability. In the years since the outbreak of the international financial crisis, Irish SMEs, like their counterparts across Europe, have been obliged to operate in a more challenging and difficult environment.

In light of the importance of the SME sector, the Government has responded to this challenge by articulating a clear vision that SMEs should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that enables them to fulfil their growth potential, thereby supporting growth and employment in the economy. In particular, Government policy has focused on ensuring that micro, small and medium-sized enterprises have access to capital, equity and debt funding from a more diverse range of bank and non-bank sources.

The Government's medium-term economic strategy, MTES, sets out the ambition of developing a more diversified, competitive and responsive financial infrastructure that can finance growth in the SME sector as we move into a new phase of economic recovery and growth. The Action Plan for Jobs 2014 builds on the previous plan and contains an integrated suite of measures and initiatives that are designed to enhance access to finance for micro, small and medium sized enterprises. The establishment of the SBCI will be a key element in this new and evolving financial architecture and will build on and reinforce the concrete measures that the Government has already put in place to support employment and growth in the SME sector. This active policy intervention in the credit market for SMEs is justified not only by the importance of the sector but also by the fact research demonstrates that enterprises, including export-orientated firms, which face real or perceived credit constraints are less likely to participate in growth-enhancing activities such as investment, recruitment, exporting, importing and marketing.

The establishment of the SBCI follows directly from the announcement by the Taoiseach in November 2013, when we successfully exited the EU-IMF programme, that he had held discussions with Chancellor Merkel to specifically find ways to reinforce Ireland's economic recovery by improving funding mechanisms in the real economy, including access to finance for Irish SMEs. This announcement followed early discussions during the summer of 2013 between officials of the Department of Finance and the German state's promotional bank, Kreditanstalt fur Wiederaufbau, KfW. The German Government asked KfW to work with the German and Irish authorities to deliver on this initiative at the earliest possible date. Officials at the Department of Finance, with the assistance from staff of the National Treasury Management Agency, NTMA,, have worked quickly to establish the most appropriate way to maximize and sustain the benefits to Irish SMEs of this enhanced co-operation.

The SBCI will be established as a private company in the first instance. Shares in the corporation will be owned by the Minister for Finance who will be empowered to change the ownership structure if it is deemed appropriate or necessary to enable the intended expansion of the SBCI. Although the initial operations of the SBCI will focus on supporting SMEs, other strategic sectors could be also supported in the future. With this possible expansion in mind, the corporation is being structured so that it is as flexible as possible. The SBCI will be a for-profit company but will not aim to maximise its profits at the expense of passing benefits to the SME sector. Rather, it will cover its own costs while ensuring that it maximises its economic impact for SMEs. The objective of the SBCI will be to increase the availability of loans of greater duration, with enhanced terms and potentially at a lower cost to the SME sector. To achieve this objective the SBCI will operate as a wholesale lender and will provide funds to on-lending institutions, which will be required to transmit the benefits of the more favourable funding terms to their customers - the SMEs. On-lenders will include not only the Irish commercial banks but also foreign banks, specialist funds or other qualifying providers of finance. The tangible benefits to the SMEs will be additional availability of funds, with improved and flexible terms that are more tailored to their ongoing business needs.

The SBCI will be financed from the outset by a mix of funding from KfW, the European Investment Bank, EIB, and the directed portfolio of the National Pension Reserve Fund, NPRF. The NPRF will provide €10 million in equity capital and a loan facility of up to €240 million, which can be converted to equity if necessary. KfW and the EIB combined will more than match that amount and, therefore, the combination of the three initial sources of funding will provide a pool of more than €500 million for the SBCI to use in its start-up phase. Further details will be released as and when the funding contracts with the EIB and KfW are finalised. This can only occur once the SBCI has been established as a company.

Both KfW and the EIB have indicated that they are willing to provide low-cost funding to the SBCI for up to a ten-year term. The locking in of this lower cost supply of funds for this extended period is a major benefit for Irish SMEs because it can mitigate the disproportionate funding risks that SMEs face. It will ensure that they will have access to a steady and secure supply of lower cost funding, which is a major competitive advantage. Another key advantage of the SBCI will be its capacity to extend to SMEs loans of longer duration and with enhanced and more flexible terms and conditions attached than are typically available in the market at present. Specifically, the SBCI will provide funding to on-lending institutions that will enable them to offer SME loans of a longer tenure, for example, five to ten years, and with more flexible conditions attached, for example, capital repayment breaks or interest holidays.

This combination of longer tenure and customised conditions and potentially lower cost pricing will provide SMEs with access to patient intelligent capital that will support their long-term development, stimulate increased investment in growth and generate additional employment opportunities. SMEs will have a greater capacity and incentive to make investments on the basis of improved cash flow that is more tailored and customised to their business needs. This type of financing is an integral feature of countries with robust and dynamic SME sectors and it is essential, from both a growth and employment perspective, that the development of the Irish SME sector is supported in a similar manner. Facilitating access to funding with more attractive terms and conditions will also assist in enhancing the competitiveness of SMEs in a context where Irish SMEs have been, since the onset of the financial crisis, disadvantaged by the increased fragmentation within the Single European Market.

In the initial phase, loans from the SBCI will fund loans to SMEs for investment purposes. The range of financial products available to the SME sector will grow during the first year of the SBCI's operations and we will be working with the European Commission's Directorate General for Competition on this matter. To date, the directorate has been very supportive of this innovative initiative and we will continue our proactive engagement with it. Similar to how KfW operates in Germany, the SBCI, acting primarily as a wholesale lender, will lend to on-lenders who will then on-lend to SMEs. That will enable SMEs to access finance facilitated through regulated providers from the earliest possible date. This indirect approach will not inhibit the SBCI's ability to enhance the provision of credit in the marketplace and improve the funding environment for SMEs. The strategic role of on-lending development institutions is a well-established model that is both effective and successful in other markets such as Germany, Spain and France. It is also the operational model that is traditionally used by Europe's development bank, the EIB. Experience in other countries indicates that any on-lending facilitated by a state-sponsored financial institution such as the SBCI is generally complementary to the SME lending that is offered directly by private financial institutions.

The challenges facing SMEs in Ireland accessing credit are the product of a complex interplay of demand and supply side factors. Significantly, the SBCI has been designed in a manner that will assist in improving both the supply and demand side elements of SME access to finance. As already outlined, on-lending institutions will include not only the Irish commercial banks but can also include foreign banks, specialist funds or other providers of credit in the market. The provision of a steady supply of low cost funding from the SBCI should lower the barriers to entry for any new providers of funding and, therefore, has the potential to increase competition in the provision of finance to SMEs and other strategic areas of the economy.

Existing or new entrant market participants will be required to meet prescribed criteria which will be set by the SBCI to ensure the on-lender can lend prudently to the targeted market. Less concentration and increased competition in the provision of financing clearly will be beneficial to not only SMEs but also to the wider economy, and accords with the overall Government policy objective of creating more diversified and balanced sources of financing for the real economy.

The SBCI also has the potential to incentivise demand for credit from the SME sector. As the Department of Finance's credit and demand surveys demonstrate, despite tangible improvements in business performance, demand for credit from the SME sector remains somewhat muted. By ensuring financing of a longer tenure and with more flexible conditions attached and potentially at a lower cost, the SBCI will provide an important signalling effect on releasing any latent or pent-up demand for finance from the SME sector. The expanded pool of lending products from a potentially broader range of credit providers could also serve the needs of a wider cohort of SME customers than is served at present by lending institutions.

A more stable supply of lower-cost funding from the SBCI will also assist in building confidence within the SME sector as it increases the certainty of financing to that sector, even in adverse financial market conditions. An institution with a clear SME lending focus will also serve to raise awareness levels regarding the availability of financing, which could also encourage more would-be borrowers to apply for funds.

The SBCI will, at one level, operate in a counter-cyclical manner in seeking to compensate for any constraints in the provision of financing to enterprises and in particular SMEs. It will also, however, operate with a broader developmental mandate that will enable it to channel investment towards key strategic sectors of the economy.

That many states, for example Germany, France, Spain and Canada, have long-standing national development or promotional banks, highlights the role such state-sponsored financial institutions play in pursuing broader public policy objectives, such as enhancing access to finance for SMEs or for particular strategic sectors. In the aftermath of the financial crisis, it is evident that a growing number of governments have sought to use national development or promotional banks to support the SME sector in particular. Countries where such institutions were already in place, such as Germany, France and Spain, have expanded their roles and remits to address cyclical financing constraints, while in other countries, such as Portugal and the UK, new financial institutions have been or are being established. At the same time, these national development and promotional banks have continued to undertake their broader developmental role of channelling investment towards specific sectors that are considered to be of particular strategic importance to the economy and broader society. KfW, for example, has implemented promotional programmes to support SMEs in the renewable energy, energy efficiency and wind energy sectors.

The Finance for Growth report of the European Council's Economic and Financial Committee's high level expert group, which was co-chaired by the Secretary General of the Department of Finance, clearly identified that national development or promotional institutions should play an increased role in providing finance for SMEs within their own countries and in other jurisdictions. The SBCI's support from the EIB also shows that Europe's investment bank has taken a more proactive role than in the recent past. This approach has been championed by officials from the Department of Finance in its engagement with the EIB. Given this evolving financial architecture throughout the EU, it is important that SMEs in Ireland have access to financial products similar to those available to comparative enterprises in competitor states. Otherwise they will operate at a serious competitive disadvantage that will constrain their capacity to take advantage of broader economic recovery. The SBCI, with its concentrated focus on improving the supply and availability of financing to the SME sector, will ensure that Ireland will have in place a State-sponsored financial institution capable of supporting long-term investment in the SME sector.

The establishment of the SBCI entity will also mean that Ireland will have in place an institution that can serve to facilitate direct EU financing from multilateral bodies, such as the EIB and the European Investment Fund. The nature and remit of the SBCI will also enable greater co-operation by the Irish State with other European national and multilateral development financial institutions.

I will now turn to the detail of the main provisions of the Bill, which has seven parts. Part 1 of the Bill, containing sections 1 to 4 sets out the preliminary and general provisions. Section 1 merely provides for the short title of the Bill and allows the Minister for Finance to commence the Bill or particular parts of the Bill at different dates. Section 2 sets out the purposes of the Strategic Banking Corporation Bill. The main purpose of the Bill is to improve the availability of credit to enterprises and other persons in a manner that benefits the economy and the economic well-being of the State. This will be achieved by the establishment of a new company, the strategic banking corporation of Ireland, SBCI, which will avail of credit and make credit available through on-lending to enterprises, in particular SMEs. The Bill empowers the Minister to guarantee the borrowings of the SBCI and to provide funding to it, although it is hoped that in time the SBCI will be able to fund itself without the need for either further loans from the Government or the need to guarantee all of its borrowings.

Section 3 is a standard provision providing definitions for certain words and terms used in the Bill. Section 4 provides that expenses incurred by the Minister in the administration of the Act will be sanctioned by the Minister for Public Expenditure and Reform and paid out of the moneys provided by the Oireachtas. Essentially, this covers the expenses of the Department of Finance in working to establish the SBCI rather than the operating costs of the SBCI. Costs directly attributable to the SBCI will be the liabilities of the SBCI and not the Minister or the Department of Finance.

Part 2 of the Bill, containing sections 5 to 10, provides for the establishment of the strategic banking corporation of Ireland, SBCI. It provides for the formation of the SBCI and group entities. It sets out the functions of the SBCI and outlines the composition of the SBCI board and the SBCI's relationship with the NTMA.

Section 5 enables the formation of a private company under the Companies Act, called the strategic banking corporation of Ireland, SBCI. The SBCI will be independent in carrying out its functions under this Act. This section allows the company to use the word "banking" in its name by disapplying sections 7(1), 8 and 15 of the Central Bank Act 1971 and exempts the SBCI's name from having to end in the suffix "Limited".

Section 6 provides for the SBCI to be able to form, promote or take shareholding in various types of subsidiaries, such as companies or joint ventures, and sets out the terms on which this can be done. These will be known collectively as SBCI group entities. The SBCI is not permitted to guarantee the borrowings or liabilities of any of its subsidiaries without the approval of the Minister. A definition of the SBCI's group entities is given in section 3.

Section 7 provides that the memorandum and articles of association of the SBCI will be consistent with provisions of the legislation. It establishes that no alterations to the documents will be valid without the prior approval of the Minister.

Section 8 sets out the functions of the SBCI. The main functions of the SBCI will be to provide and promote, in a prudent manner, the availability of additional credit in the State suitable to the needs of borrowers, in particular SMEs. The SBCI will encourage more competition in the provision of credit in the State and greater diversity in the types of finance available. The functions of the SBCI will also include sourcing international and domestic funding to facilitate lending and providing finance to projects that contribute to national economic development.

Section 9 provides for the SBCI to have a board of not more than nine members including its chairperson. It sets out that the first directors on incorporation will be appointed by the Minister and that subsequent boards and the position of company secretary will be appointed by the SBCI in accordance with the terms and conditions of appointment set out in the memorandum and articles of association of the SBCI. The Minister will continue to appoint a chairperson from within the board.

Section 10 provides for the SBCI's relationship with the NTMA. It sets out that the NTMA will provide the SBCI and any of its subsidiaries with business and support services and systems that are considered necessary for the SBCI to perform its functions. It will allow these services to be provided either directly or indirectly. The section also provides for the NTMA to assign staff to the SBCI to enable it perform its functions under the Bill. Under this section the NTMA may also supply the SBCI with treasury services and advice in connection with debt securities and borrowings of the SBCI. The NTMA may also enter into transactions of a normal banking nature as an agent of the SBCI. The NTMA will be reimbursed by the SBCI for the costs incurred under this section. The NTMA will be also able to perform similar functions for subsidiaries of the SBCI.

Part 3 sets out the funding arrangements of the SBCI. Section 11 provides for the determination of the authorised share capital of SBCI by the Minister for Finance, and for the initial issue of shares in the new company to the Minister. It also provides that the SBCI will issue shares to the value of €10 million to the Minister. This €10 million of equity capital will come from the NPRF.

The authorised share capital will be €250 million or a higher amount as the Minister may decide. However, the authorised share capital may never go above €1 billion. If the strategic banking corporation of Ireland, SBCI, determines that further equity is required to meet its financial obligations as they fall due, it may issue further share capital to the Minister in exchange for the conversion of the outstanding loans from the NPRF, the Central Fund or a combination of both. Any change to the share capital will be laid before the Oireachtas. It is not intended that all borrowings of the SBCI will need to be guaranteed by the State.

The Bill provides flexibility around the value of the SBCI's share capital and gives the Minister the power to pay in authorised share capital at the request of the SBCI. This is being done to facilitate a flexible capital structure known as callable capital. It is used by the European Investment Bank, EIB, among others to facilitate funding of an institution without the need to guarantee all borrowings. This model will be beneficial in the medium term but will not be used in the initial year of the SBCI. Callable capital involves an agreement with the lenders to a company that, should a certain balance sheet position be reached, the borrowing company will increase the amount of its issued and paid-in capital to a pre-agreed level. In the interim, the lender will lend to the borrower on the basis that the authorised share capital has been set to at least that level, and it is usually happy to lend even if the paid-in capital is a fraction of the authorised capital. This has a potential benefit in that there is no need to issue a guarantee for further borrowings.

Section 12 provides that the Minister can dispose of shares in the SBCI as he sees fit. Any fund received in respect of the shares will go to the Exchequer - for example, proceeds of sales or redemptions of shares. If the Minister is disposing of shares in the SBCI, the reasons for the disposal must be given to the Oireachtas. It is not intended that the Minister for Finance will sell shares, but flexibility to do so has been included.

Section 13 provides that the SBCI may borrow money in any currency through any type of debt it sees as appropriate. This section limits the amount of borrowings that the SBCI can have outstanding at any particular time to €4 billion. If the SBCI were to borrow in a foreign currency, those borrowings would be valued using the European Central Bank's published exchange rates. This section also allows the SBCI to engage in transactions of a normal banking nature for the purposes of carrying out its functions.

Section 14 provides for an amendment to section 54 of the Finance Act 1970. This amendment allows the Minister to engage in normal banking transactions with the SBCI. Under this section, he may issue funds from the Exchequer for the purposes of those transactions and any associated cost arising out of same. Broadly speaking, this is an enabling provision and is common when introducing a State entity that involves borrowing.

Section 15 provides for the Minister to give directions to the National Pensions Reserve Fund Commission with which the commission must comply. This section provides the Minister with the power to direct the commission to provide credit to the SBCI and to provide funding to same to fund the subscription of the Minister's shares in the company. The Minister may also exercise any right based on a direction or terminate the terms of a direction.

Section 16 sets out the maximum amount of funding that the SBCI can be given by the State, which is €5 billion. It explains that the funding of the SBCI includes any loan, investment, exchange of assets, subscription for securities, debt securities, issued share capital and callable capital.

Section 17 allows for the SBCI board to decide what dividends are to be paid to the Minister. It also provides that any money received by the Minister in respect of his share in the company, including dividends, shall be paid into the Exchequer in such a manner as the Minister directs.

Part 4 provides for the issuance of guarantees by the Minister. Section 18 gives him the authority to guarantee any money borrowed by the SBCI up to a maximum of €4 billion aggregate of all guarantees outstanding. Accrued interest does not count towards this maximum amount. The details of any guarantee provided for by this section shall be laid before the Houses of the Oireachtas as soon as may be after it is given. Guarantees would only be used when specifically required to enable borrowings from external providers of loans to the SBCI.

Part 5 sets out the procedures for ensuring the public accountability of the SBCI. Section 19 provides that the SBCI must submit its accounts to the Comptroller and Auditor General for audit within two months of the financial year to which they relate. The audited consolidated accounts will also be presented to the Minister and laid before each House of the Oireachtas.

Section 20 provides that a senior member of the staff of the SBCI nominated by its chairperson will, whenever required by the Committee of Public Accounts, give evidence to that committee on the accounts and reports of the Comptroller and Auditor General into the SBCI.

Part 6 sets out two miscellaneous provisions. Section 21 provides that the Minister, the National Treasury Management Agency, NTMA, and the latter's employees and staff are not to be considered either shadow directors under section 27(1) of the Companies Act 1990 or de factodirectors of the SBCI. It is intended that the board of the NTMA be covered in this respect, ensuring that the Minister and the NTMA can carry out their various other functions without their involvement with the SBCI being a block on that work.

Section 22 provides that certain provisions of the Companies Acts will not apply to the SBCI. These provisions ensure that the Minister's relationship with the SBCI does not prevent him from carrying out any of his other functions and avoids redundant reporting requirements in the administration of the SBCI.

Part 7 contains one section, section 23, which sets out a number of tax exemptions that will apply to the SBCI and any subsidiary wholly owned by same. This section is a standard provision for all companies and subsidiaries wholly owned by the Minister for Finance. It is valid as long as the Minister remains the sole shareholder and, therefore, is the sole beneficiary of such tax exemptions. This section also provides that income and gains arising to the SBCI or a wholly owned subsidiary of same will be exempt from dividend withholding tax, corporation tax, DIRT, interest withholding tax, capital gains tax and stamp duty.

A robust, dynamic and innovative indigenous small to medium-sized enterprise, SME, sector is key to ensuring sustained economic recovery and employment growth. Micro, small and medium-sized enterprises need access to a steady and secure supply of credit if they are to fulfil their growth potential, take advantage of business and investment opportunities at home and abroad and create employment for our citizens. The proposed establishment of the SBCI builds on the measures and initiatives that have already been put in place by the Government to enhance SME access to finance and can be considered to be a major milestone in our continued economic recovery. By ensuring the provision of improved credit that is tailored to the business needs of enterprises, particularly SMEs, the SBCI will make an important contribution to stimulating economic activity, enhancing competitiveness and generating employment across the State. I commend the Bill to the House.

Liam Twomey (Wexford, Fine Gael)
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I call Deputy Michael McGrath, who I understand is sharing time with Deputy Calleary.

Michael McGrath (Cork South Central, Fianna Fail)
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I will take up to 15 minutes and he will take the balance.

I welcome the publication of the Strategic Banking Corporation of Ireland Bill. It is long overdue legislation, as a State enterprise bank was promised as far back as February 2011 in the programme for Government. However, it is somewhat ironic that, having waited three years for the Bill, we are being given little more than three hours to debate All Stages. I can only conclude that the announcement of the SBCI in May was dictated by the political calendar and not the economic needs of the country. At the time, we were being hit by a veritable barrage of announcements about grants and all sorts of goodies. Curiously, the flow of press releases seems to have dried up since polling day.

We know from the history of the local property legislation that, when a Bill is rushed through the House with limited time for scrutiny, there is a considerably heightened risk of error. It is regrettable that the much-vaunted pre-legislative scrutiny at committee is not taking place this time. It would have given us the opportunity to invite the various industry groups and representative bodies that will be the customers of the SBCI to test whether the legislation was fit for purpose.

While I welcome any initiative that may be of assistance to the credit-starved SME sector, the SBCI as planned is an inadequate response to the sector's crisis with regard to access to credit. In simple terms, this initiative can be described as all sizzle and no steak. Even though it is called the Strategic Banking Corporation of Ireland Bill, it will not actually have a banking licence. In fact, the legislation must contain a special provision to allow it to use the word "Banking" in its name - the Minister has confirmed this - when it is not actually a bank at all.

When the Government sat down to design a mechanism to increase the flow of credit, it had three options. It could have set up a full-service, State-backed bank along the lines of the Industrial Credit Corporation, ICC, which operated successfully in the economy for many years. Alternatively, the Government could have opted for a mechanism in which the existing banks referred customers to the SBCI, which then made the lending decision. The new entity could also have gone down the route of simply providing a line of credit to the banks, which would then make decisions on SME lending.

This is undoubtedly the weakest version and while I can understand some reluctance on the Government's part to set up a brand new bank given the range of banking assets the State already owns it is difficult to understand why it is leaving the credit decisions about SMEs entirely in the hands of those who have over the last five years starved the economy of the essential new lending that it requires.

We know from the manner in which banks have hoarded capital that it is likely that they will continue to take a very risk-averse approach to lending. This means that many firms with viable business propositions will continue to be denied the capital they need to invest and grow their business. Cheap funding from the Strategic Banking Corporation of Ireland may help the banks' profitability without improving credit flow in the economy.

I note the comments of Mark Fielding of ISME, someone who very much has his finger on the pulse on these matters, who said:

... the fear among credit squeezed SMEs is that the bailed-out banks will revert to form and divert these loan funds to "safer" large businesses. Our banks have 'form' in this area and previous European low-interest loans found their way to less risky larger businesses, making a killing for the banks, while starving SMEs of much needed finance.

The Governor of the Central Bank has acknowledged that, compared with virtually all other eurozone countries, SMEs in Ireland face even more acute difficulties in terms of access to, and pricing of, credit. In that context, I believe the key failure in this Bill is that it will not result in any change in the lending standards that are applied by banks. We are likely to continue to see the same very high rate of refusal that comes up regularly in ISME and Central Bank surveys.

I am not asking for a loosening of credit standards to start some form of new credit boom but merely to correct the problem that all of us as practising TDs encounter regularly in our constituency offices, namely, good businesses with the potential to expand and grow not being able to get a loan that they need. In fact, in many instances it is not even investment capital to expand that firms are looking for, it is short-term working capital to survive. A simple overdraft can be a life saver for many businesses. We are all well aware of the problems that firms face in getting paid, sometimes even the State is a slow payer. It is a crushing blow for a company to go out of business when short-term credit could have allowed it the breathing space to trade its way out of difficulties. As it stands, the banks are often only interested in lending to the most gilt-edged of customers. A new source of credit for the banks which reduces their costs of funds but does nothing to change the ultra risk-averse lending culture, which pertains at the pillar banks at present and beyond, will be good news only for the banks' shareholders. It will be nothing more than a drop in the ocean in terms of the real world economic impact.

What I am calling for is for the Government to go back to the drawing board and give consideration to one of the two options to which I alluded, namely, a full service State enterprise bank or some form of hybrid model whereby the bank does not seek to compete directly with the existing banks but potential clients are referred to it and it makes the ultimate credit decision. A properly constituted enterprise bank could be a permanent solution to the lending gap which clearly exists in Irish banking and would ensure lending was available to any business that can demonstrate its creditworthiness.

It is somewhat of a well worn cliché at this stage to state that SMEs are the lifeblood of the economy, representing 70% of all employment in the private sector. Their well-being is vital to economic recovery. The domestic SME sector is diverse in nature and employs workers with a much wider range of skills than the multinational sector. SMEs can range from a small welding business to a local supermarket employing 100 people. The jobs crisis cannot be solved by focusing on foreign direct investment alone and by supporting the SME sector we are ensuring job opportunities for those with traditional skills as well as people with technical qualifications. It is in all our interests that the sector is supported. The number one issues cited in every survey of small business owners is access to credit. This was a golden opportunity to put in place a mechanism which would support SMEs not just during the current economic crisis but one that would stand the test of time. Unfortunately, at this point I do not believe we have got the formula right.

As well as problems with access to credit, SMEs report bank fees and charges are rising and that trend is likely to continue. To the best of my knowledge, no institution has applied for a banking licence to the Central Bank since 2012. The existing banks are fixated with the upcoming stress tests and are unlikely to change course and begin lending to SMEs in the manner required at least in the short term. The arrival of a number of international lenders in the early 2000s brought greater competition between banks. While some product innovation, including 100% mortgages in the personal banking sector, could rightly be criticised, competition ensured customers were offered a wider range of banking services at a lower cost. As the banking market has contracted, the dominance of two pillar banks, Bank of Ireland and Allied Irish Banks, is returning to levels last seen in the 1980s. Lack of competition leads to higher fees and charges, lower interest rates on deposit, high borrowing costs and a lack of product choice. The SBCI is its current format is unlikely to change that stark reality for bank customers.

Efforts to encourage non-bank funding have been completely inadequate to date. High profile announcements around seed capital, loan guarantees and microfinance have not been matched by delivery of funding. It is imperative that the SBCI does not go the way of Microfinance Ireland and the credit guarantee scheme which have, after less than two years in existence, required major examination and overhaul. It would be far better to get the SBCI right from day one.

I have suggested in the past that the Government bring forward a White Paper on the banking sector. Five years since the onset of the crisis the Irish banking sector is still not fit for purpose. It is imperative that the Government has a strategy for competition and regulation and that it does not simply react to each development. What we are seeing is a piecemeal approach to the many problems in the banking sector, including dealing with legacy debt, ensuring competition in the sector and preventing a recurrence of the mistakes of the past.

I have no doubt that the SBCI will be staffed by very able and diligent people who will work tirelessly to fulfil the mandate given to them. However, my contention is that the architecture in which they will operate is not fit for purpose and needs to be looked at in a comprehensive overall manner. We believe that this is better than nothing, but it could be a far more productive and efficient use of resources if the Minister adopted the model we have advocated.

Dara Calleary (Mayo, Fianna Fail)
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I thank Deputy Michael McGrath for sharing his time with me. I take the opportunity of the debate on this finance issue to wish Derek Moran every success and congratulate him on his selection as Secretary General of the Department of Finance, although it is a position though that should have been advertised. When we consider the level of coverage being given to the so-called - on-off or whenever it will be - reshuffle this week and that Mr. Moran will be far more powerful than most of those even in Cabinet who will get positions this week, the level of scrutiny around the appointment needs to be improved. If we are serious about public service reform, every position at that level should be advertised publicly and expressions of interest sought from all over.

This Bill, I regret, represents another false dawn for Irish business and for Irish SME in particular. The kind of bumf that has come with it, is reminicent of some of the worst marketing skills of banks in the so-called boom times. Letting out and giving this kind of information, that this Bill and this organisation could make a substantial business difference to small business, is false and wrong. This is the kind of thing that would have been exposed if there was a proper scrutiny of this legislation, rather than rushing it through in the last week of this Dáil session. This is the kind of thing that would have been exposed and teased out in a pre-legislative stage where groups and organisations, on whom this is supposed to impact, could have come into the committee and given their views on it, but we will be deprived of that.

The model we are being asked to support here is the model that underpins the credit guarantee scheme, where the State acts as an overarching guide, as it were, for the pillar banks and they are then left to operate the scheme on the ground. The credit guarantee scheme has not worked. It has been an absolute disaster so much so that the Minister, Deputy Bruton, is due to come back into the House with legislation to change it, yet we are doing the same thing here with the Strategic Banking Corporation of Ireland. We are taking extra money into the market, investing it through the existing banks and expressing a hope that other banks might come and break up the cosy monopoly that exists and make a real difference to Irish business.

That probably will not happen. Deputy Michael McGrath has outlined the way in which the banks are operating and how they will use this cash to balance their books and the additional lending power to save steady businesses. This legislation will result in no changes in the practices that are frustrating businesses and their ability to grow and, more importantly, create employment. It will also not do anything for businesses in substantial arrears. According to the Central Bank, 41% of SME loans are in arrears. This debt is choking the ability of businesses to grow and create employment. It is not possible for them to do so while there is overhanging debt. There is a need to put in place a solution that will allow them to rest some of this debt until such time as they are in a position to start repaying it again. We are not asking for massive debt write-offs. Many viable businesses are being constrained by the debt overhang which is choking their ability to grow and actually pulling some of them down. There are so many examples of businesses affected in this way and this legislation will do nothing for them. It will do nothing to change or improve the lending practices in banks. We all know about the current turnaround time in dealing with bank applications for restructuring and so on. I am dealing with the case of a person whose application for a €500,000 loan has been in the system for 16 months. That is typical of what is happening. However, because of the informality of the system this will not be included in data for bank lending. The banks know that the status of an application is not recorded until such time as it has been refused. The applicant then has the option of appealing the decision to the Credit Review Office or seeking finance under the credit guarantee scheme or from the microfinance fund. However, the Bill will not change the position on banks continuing to stretch out this process.

Another critical issue is that of new products and new ways of lending which facilitate business needs. There is an over-reliance on old traditional banking products such as overdraft facilities. Some 60% of Irish SMEs have access to and use an overdraft facility as their primary source of financing. The European average in this regard is 30%. On the personal guarantee, Mr. Sean O'Sullivan was scathing in his remarks about it in the entrepreneurship report. The Bill will not change that practice. It will not force the banks to recognise that we are living in the 21st century and that they need to offer banking products that are of the 21st century, flexible and respect businesses as customers as opposed to profit-centres for the rebuilding of their profits. Banks have increased fees for business by up to 60% and are being paid ridiculous fees in dealing with loan applications. Presumably, when a particular SME wants to purchase new machinery, it will be faced with huge fees in this regard and a process that may take up to 15 months to complete. There is nothing in the legislation that will stop any of this from happening.

The difficulty is that this has to go through the existing bank structure, in which there is no confidence among Irish SMEs. What is needed is a State enterprise bank in the form of the former ICC or ACC - that is the space we are in - a bank with ambition to assist and grow businesses and go on a journey and walk the walk with Irish business owners in growing their businesses. What is proposed falls short of that requirement. I am at a loss to understand why the legislation is being rushed through when even this model could be improved with a pre-legislative input and an input from business people whom it is supposed to benefit. Those operating SMEs are the ones who need to be involved in this process.

The credit guarantee scheme was launched in October 2012. We were told €400 million in guaranteed lending would arise from the scheme, but nowhere near that amount has been provided. We were also guaranteed funding of approximately €25 million per annum from the microfinance fund, but thus far only approximately €8.5 million has been provided. The decline in lending in the Irish market continues. While businesses are deleveraging less and paying down loans, if, as the Government states, we are in a business development stage, they should be in a position to start growing again, but they are not because the perception among Irish businesses is that Irish banks are not lending. That is the perception of every business organisation and the legislation will not change it. What we need is something that will shake up the cosy consensus in this regard. We need a new type of operation to shake up the banking sector, its product offering, business practices and fee charging structures. That would make a difference and force the existing banks to cop-on and move into the 21st century, thus ensuring the investment in the SBCI might make a difference on the street and to those who want to create additional employment. It will also provide SMEs with the capital they need to grow their businesses. As I stated at the beginning, this is another false dawn, which is regrettable. For the many SME owners looking in who had hoped the legislation would assist them, it will not.

Liam Twomey (Wexford, Fine Gael)
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I understand Deputy Pearse Doherty is sharing time with Deputy Peadar Tóibín.

Pearse Doherty (Donegal South West, Sinn Fein)
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Ba mhaith liom tagairt a dhéanamh don cheapachán sa Roinn Airgeadais a luaigh an cainteoir a chuaigh romhaim. Guím gach rath pé duine ar bith a bheidh ag stiúradh an Roinn sin mar go bhfuil amanna crua romhainn agus cinnithe iontacha tábhachtacha le glacadh. Caithfidh mé a rá go sílim gur chóir scrúdú mar is ceart a bheith déanta, ní hamháin ar an té seo ach ar achan duine atá ag lorg áit sinsearach taobh istigh den Roinn. Má tá ceapachán nua le déanamh, ba chóir scrúdú mar is ceart a dhéanamh. Tá faitíos orm níos mó a rá sa chomhthéacs seo ós rud é go gcuireadh as an Dáil mé don chéad uair riamh agus bhí orm an Teach a fhágáil an t-am deireanach a chuir mé ceist fá choinne an ábhair seo. Nuair atá na meáin ag déanamh scrúdú ar an té seo - níl mé ag rá an bhfuil sé oiriúnach le bheith os cionn an Roinn Airgeadais nó nach bhfuil - sílim go bhfuil sé ceart agus cóir go mbeadh deis ag an gcoiste an scrúdú céanna a dhéanamh. Ciallaíonn sé sin go mbeadh athrú intinne agus athrú meoin ann ó thaobh an Rialtais de. B'fhéidir gurb é an deacracht atá ag an Rialtas le próiseas ceapacháin trédhearcach ná go dtabharfadh sé deis do dhaoine eile taobh amuigh den Aire ceisteanna a chur agus tuairimí a nochtadh ó thaobh an cheapacháin de. Agus é sin ráite, guím gach rath ar an té a bheidh i gceannas ar an Roinn. Guím gach rath fosta ar John Moran, atá ag fágáil na Roinne, i gcomhthéacs cibé rud a dhéanfaidh sé san am atá amach romhainn.

Mar a dúirt mé anseo inné, níl dabht ar bith ná go bhfuil an méid atá ag tarlú sa Dáil inniu scannallach. Caithfimid an Bille seo a chur tríd roimh 4.42 i.n. inniu. Bhí orainn ár gcuid leasuithe ar an mBille a chur síos sular chuir an tAire tuairimí an Rialtais agus tuairimí na Roinne ó thaobh an Bhille chun cinn. Ní bheidh deis againn leasú ar bith a chur síos ar Chéim na Tuarascála. Tá sé seo mar cheann de na dóigheanna is measa le reachtaíocht a láimhseáil sa Dáil.

Sinn Féin has previously objected to the manner in which this legislation is being dealt with today. It is important that I again stress our dissatisfaction with the manner in which the legislation is being dealt with by the Government. It shows contempt for democracy and debate. It is clear that no amendments will be accepted on Committee Stage and that there will not be an opportunity to table amendments on Report Stage, as Members who wished to table amendments were required to do so within hours of publication of the Bill and prior to hearing the Minister's contribution on Second Stage.

Nobody in the House has been arguing for a stimulus more than Sinn Féin.

It has been a central part of our policy for many years to contend there are other ways of reducing the deficit and getting people back to work. That part of the jigsaw was the need to stimulate the economy and ensure the banks were lending to SMEs and also in other areas. We highlighted the need to use resources we had at our disposal to ensure that would happen. Three years on, we finally see some movement on the part of the Government.

The Minister for Finance spoke about the agreement secured last year between KfW and the State to inject money into an entity such as that being established. I do not understand why the Government waited until the end of this parliamentary session to introduce this legislation. Our views mean nothing because the Bill will go through. The Government has made it very clear that it will be passed tonight; the use of the guillotine is to be imposed. The Taoiseach tells us it is the first time the guillotine has been used this year. One could argue that a Bill such as this does not have major significance, but we should delve into it and ask whether this is true. When I read the legislation, I note that it stipulates the State can fund the new company to the tune of €5 billion and that the Minister can guarantee loans issued by it to the tune of €4 billion. Perhaps it is regarded as a Bill that does not require proper parliamentary scrutiny and proper consideration, with sufficient time allowed between Second Stage, Committee Stage and Report Stage to ensure we get it right.

When considering amending the Companies Act such as section 60, phrases such as "the normal course of lending" might mean nothing to us, but if we had paid attention to the courts and the protracted Anglo Irish Bank trial in recent weeks, we would know that that term was at the very core of the trial and prosecution of those found guilty of breaches of the Companies Act. Let us not debate the sections of the Bill in a proper, meaningful way: that is what the Government has suggested to us. This is not a Bill about investing a couple of hundred million euro of taxpayers' money in an area of the economy; rather it is a Bill that contains potential liabilities in the order of billions of euro. I refer to the figure of €4 billion for loans and a maximum of €5 billion that can be injected into the company. Therefore, it goes without saying this is the wrong way to deal with the matter. The debate on the Bill should not be guillotined today and proper respect should be accorded to the people and the Houses of the Oireachtas.

The programme for Government made a clear commitment to establish a strategic investment bank. Where stands that commitment? What we have is a very poor substitute for a State bank investing in the economy. It is very clear that the body is not a bank because banks have licences. If one wants to set up a bank, one must have a banking licence. The Government went to extreme lengths to try to appease the Labour Party, in particular, which argued that a strategic investment bank would be central to its platform. It went to extreme lengths to change the law, not once but twice. On one occasion, it changed the law to use the word "bank" in the name of the company. That would probably not fool people sufficiently to have them believe the body is a bank; therefore, it also had to change the law to remove the word "limited". If we were to use the word "limited", people would understand it was not a bank but a company. The Government made two changes to the law to try to dress up the company as a bank. There is a saying in Irish, “Cuir síoda ar ghabhar agus is gabhar i cgónaí é.” The Americans refer to putting lipstick on a pig. No matter how one dresses up the entity, it is not a bank. That is a major problem I envisage with the legislation. The entity should be set up as a strategic investment bank that would lends to the real economy. The lending brief should be broader than SME lending.

The company on which the entity is very much styled, KfW, provides in a very meaningful way loans for SMEs. That is but one part of its structure. The other parts involve investing in housing, the environment and other areas with an economic benefit. The Germans used the bank to create the stimulus package the German economy needed at the time in question, while keeping the arrangement off the balance sheet. It seems clear that the Government intends to have the entity focus solely on SMEs which are very much starved of and require funding. However, the scope should be wider. We should be ambitious for a State bank if it is to receive a banking licence. Then again, we probably will not have time to dip into the real meaning of the legislation. It refers to lending to enterprises and "other persons in the State". What does the phrase "other persons in the State" mean? It is referred to time and again. Section 2 refers to the purpose of encouraging “the giving of credit in a prudent manner to enterprises and other persons in the State, in particular SMEs...”. Since it is not just SMEs, what does the phrase “other persons in the State” mean? What limitations are being set for the fund? Are there limitations? Can anybody legally avail of it, although the direction of the fund is to provide for SMEs, in particular? These are the points I would like to tease out in a proper debate on the issue.

The proposed structure of the company represents a half-hearted attempt to do what is required. The record of the Government in gaining access to European Investment Bank funding is not good. Unless the commercial agreements of KfW are made public, we will be in the dark on whether it is a good way to fund the new body. We need to consider in detail the question of whether we are sure the funding mechanism proposed is the best one. I refer to having one of the top ten German banks provide loans for this company which it will lend on to others. What guarantee is there that the banks will pass on funding to SMEs to which they would not otherwise make credit available? The statement from the Government makes it very clear that the banks will have to ensure the money is passed on to SMEs that comply with rigorous state aid rules, but the legislation contains no provision in this regard. A major problem with it is that it is very bare; it does not have much detail and only creates the skeleton of the company. Actually, the detail is utterly absent. There is a sense of déjà vuand we are being asked again to trust the Government regarding what it claims it will do. We are asked not to worry about the fact that it is asking us to guarantee €4 billion in loans and support its commitment to inject €5 billion into the fund. We are asked not to worry that there is nothing in the legislation that can actually ensure the banks will pass on the funding to those most in need of credit in the SME sector and that there is no supervisory mechanism or hard and fast rule in the legislation that will force the banks to pass on the money or punish them if they do not do so.

I have made it very clear to the Minister that I do not trust the Government. The vast majority of the people do not trust it either, which is no revelation. I did not trust the last Government and the people were rightly shown that this was justified. The Government came into office with the promise that it would do things differently. One of its first decisions was to proceed in exactly the same way as its predecessor and invest our money in broken banks. I have extreme concerns about the Bill. I do not see enough in the legislation, even if it establishes the bare bones of a new body that will guarantee extra support for SMEs on the ground. There is nothing in it that will stop the banks that have been bailed out from simply soaking up extra cheaper funds. They received enough public funds to waste on salaries and in other areas.

Under the mortgage arrears resolution targets, the Central Bank had the stick of being able to inflict capital penalties, and that should be available in respect of banks and other bodies that access funding under the SBCI if they do not pass it on to the real economy. There should be extra provisions in this Bill that would allow the Central Bank to use its powers to ensure the funding that comes from this company to the banks is not just soaked up in the normal course of the bank's lending, which the bank would lend anyway. It must be additional. I also believe we should closely examine allowing the company to directly fund SMEs. Sinn Féin strongly believes in a State bank investing in the economy. That means investing in our physical, social and environmental infrastructure.

Unfortunately, the Bill falls short, and we do not have a sufficient amount of time to scrutinise it. It is envisaged that the fund will be financed by a German bank, presumably at a profit to that bank, and the European Investment Bank. It is an example of how broken our system is, six years later, that we are relying on a German bank to fund a company that is not a bank to fund the banks, some of which we own, to fund small and medium enterprises that are starved of funding. The craziness of the type of structure we are trying to create, six years later, in order that State-owned banks can lend to businesses demonstrates the failure in the past three years of the Government's policies on banks and lending to small and medium enterprises.

Peadar Tóibín (Meath West, Sinn Fein)
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One of the most significant outputs of the economic crisis has been the collapse of private and public investment, and that has become one of the major causes of the length of time of the economic crisis. From the outset, Sinn Féin has argued for stimulus. In our response to the Fianna Fáil emergency budget of 2008 we published alternative revenue and expenditure proposals and a jobs plan which set out a range of measures that could be used to ensure the SME sector received the supports it needed. We have repeatedly stated one cannot cut one's way out of recession and our analysis has been supported by accomplished economists around the globe.

Our society is firmly ensconced in the latter half of a lost economic decade. The lost economic decade is the result of the Government's refusal, until now, to deal with the issue of stimulus and its refusal to plug the investment chasm in the economy. Sinn Féin's economic stimulus has been proved to be correct and the Government is now finally acknowledging that it is necessary. I spoke to one of my colleagues about 18 months ago and told them that the Government would simply have no choice but to turn around and start to take on board some of Sinn Féin's economic policies. The Bill is a half step towards this.

The real recovery will be delivered through the SME sector, which employs up to 70% of the Iworkforce. However, that recovery will not happen until the challenges it faces are addressed. So far, this Government has put all its eggs in one basket, the foreign direct investment basket. We have said foreign direct investment is good and necessary and that we must pursue it. However, there is an imbalance in the Government's economic policy and the domestic sector has been ignored as a result. The domestic sector is the lifeblood of the economy, but the Government has failed to deliver many of its commitments in the programme for Government to SMEs. The promised reform of procurement has not happened. In fact, the opposite has taken place. The roll-up of procurement contracts has further prevented SMEs from getting involved. The Government did not listen to us when we put forward legislation to end upward only rent reviews and commitments with regard to co-operatives have been anaemic, at best. It has also dragged its heels on progressing the potential social enterprise centre. A social enterprise centre offers a massive alternative economic system, as is seen throughout Europe and in many progressive and successful economies.

The SME sector is hamstrung by debt. Two weeks ago we heard about the situation in Morrisseys in Carlow, a firm with €8 million worth of business on its books. It is a functioning firm but has legacy debt and the State's bank, AIB, is seeking to close down that business with the potential loss of 130 jobs. In my county, Meath, we have lost Spicers Bakery, which had been in business since the 1830s. The business was closed due to legacy debt. There are thousands of businesses throughout the State in that limbo of not being able either to function properly or to take the next step of investing in the economy. That 41% of SME loans are still in this type of distress is an example of the Government's ineffectiveness. The Government's policy on SME credit is a dog's dinner, and it is a disgrace that it is continuing.

Construction remains one of the sectors most exposed to loan defaults. That the Government is now tackling the housing crisis on the demand side while the construction industry is still hamstrung by debt shows the problems in the Government's thinking. The Government has also slashed capital expenditure, one of the worst decisions a government can make in a time of recession. The meagre jobs growth that occurred has ground to a halt in the last quarter. When consumers face another round of flat stealth taxes they realise that their disposable income will shrink so their expenditure patterns change and they withdraw from spending in the domestic market.

Sinn Féin's ambitious stimulus proposals would get people back to work, create competitive advantages, create efficiencies and increase productivity and revenue. My colleague, Deputy Pearse Doherty, has stated our party's major objection to the manner in which this legislation is being rammed through the Dáil in the week before the summer recess. The Deputies elected by the people will be unable to have a proper input into an issue of such importance. The Government has had more than three years to examine this issue. It is incredible that it has waited until the last week of this Dáil session to ram it through. Deputies should be given adequate time to consult on and debate the legislation, particularly in view of the failings of the Government so far in respect of SME credit. The microfinance system, which was supposed to put €90 million into the hands of SMEs, has had a minuscule drawdown and all of the other ecosystems of credit facilities have had the same experience.

In the programme for Government, the Government committed to delivering a strategic investment bank, yet neither the SBCI nor the Ireland Strategic Investment Fund, ISIF, is a bank. Deputy Pearse Doherty spoke about the convoluted system being put in place, rather than simply creating a State investment bank which would be able to inject the necessary funds into the economy and the SME sector. We know from the Central Bank that gross lending by bailed-out banks to SMEs remains static after three years. The Minister said the SBCI will seek to address this uneven flow of credit to enterprises. Obviously, there are concerns regarding the existing banks' buy-in and whether the low cost of the source of the funds will be passed on to SMEs. The Minister has reassured us that this will be the case, but we have not seen the detail in black and white and what mechanisms will be used to achieve this objective. The Minister is also unable to provide clarity on who the new entrants to the SME lending market are or how the specific lending needs of micro-businesses will be provided for.

Sinn Féin has called for the establishment of a strategic investment bank and there are elements of the Bill that we would support. Marginally lower lending rates, encouraging increased competition in the SME lending market and repayment holiday periods for businesses are welcome. An enhanced role for the Credit Review Office will be also particularly welcome. Sinn Féin has been calling for this for a long time. However, there also must be publicity, awareness and education for SMEs to ensure they can use these facilities.

We have called on the Government to consider making the Credit Review Office findings binding on banks and that all banks be brought into the scheme. We also demand that the Credit Review Office cover all banks within the system.

Encouraging SMEs to look beyond traditional retail banks will require a cultural shift.

Liam Twomey (Wexford, Fine Gael)
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I must ask the Deputy to conclude as it is time for the next business.

Timmy Dooley (Clare, Fianna Fail)
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As it is Deputy Burton's first opportunity to take Leaders' Questions in her new role as Tánaiste, on behalf of our party, I wish her well in the work ahead as Tánaiste and look forward to continued robust interaction with her here.

The decision seven days ago to prevent two of the five Garth Brooks concerts going ahead should have signalled to the Tánaiste and the Government that this was a serious issue that had arisen. When it was announced that the remaining three concerts were to be cancelled, it was clear to all concerned that a crisis was looming-----

Derek Nolan (Galway West, Labour)
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Crisis?

Gerald Nash (Louth, Labour)
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Deputy Timmy Dooley would know all about a crisis.

Timmy Dooley (Clare, Fianna Fail)
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-----that had the potential to strike an economic blow to the city of Dublin and tarnish the international reputation of Ireland from a tourism perspective.

Unlike the backbenchers in the Labour Party, I do not believe this is about a particular genre of entertainment. It is about the loss of €50 million in revenue to the hotel and catering sector of this city and the surrounding area. It is about upsetting the travel plans of 70,000 inbound tourists at a time when we are trying to re-establish Ireland as a great place to visit. It is about disappointing 400,000 ticket holders who have purchased and paid for their tickets and are looking forward to the event that they had expected to attend. It is about the reputational damage to Ireland as a destination for international entertainment events on a large scale at a time when we are trying to attract the Rugby World Cup in 2023. It is about the employment of a few thousand casual workers in the hotels, bars and catering outlets around this city, and, indeed, many bus drivers and bus owners around Ireland.

Aodhán Ó Ríordáin (Dublin North Central, Labour)
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Aiken Promotions is having a laugh.

Timmy Dooley (Clare, Fianna Fail)
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A week ago I published a short Bill to bring about a constructive outcome to this fiasco. The Taoiseach sat on his hands for a week. On Tuesday, on the Order of Business, I made it clear to him that, based on the contacts I had made, it was still possible to bring about a resolution to this issue.

Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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It was Fianna Fáil that introduced the legislation with no right of appeal. Come on, Timmy, you were in government.

Timmy Dooley (Clare, Fianna Fail)
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However, the Taoiseach said it was too late because the artist had made his decision. By so doing, the Taoiseach allowed the reputation of Ireland to be sullied by the hundreds of thousands of media clips of a negative connotation that appeared.

John Lyons (Dublin North West, Labour)
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Come on; this is the Parliament.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will Deputy Timmy Dooley put his question, please?

Timmy Dooley (Clare, Fianna Fail)
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It is embarrassing and it should not have happened. The Tánaiste's backbenchers laughed at us and they are continuing to do it, yet the Labour Party's own Minister of State at the Department of Foreign Affairs wanted the Taoiseach to contact Garth Brooks-----

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will the Deputy put his question? He is over time.

Timmy Dooley (Clare, Fianna Fail)
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I am trying to. With respect, I am being prevented from doing so by the heckles.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Please put the question.

Finian McGrath (Dublin North Central, Independent)
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He is being heckled by the Labour Party.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will the Deputy stay quiet also?

Finian McGrath (Dublin North Central, Independent)
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If that was Leonard Cohen, they would be jumping up and down.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Do not make a farce out of the whole thing.

Finian McGrath (Dublin North Central, Independent)
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Or probably Bob Dylan.

Finian McGrath (Dublin North Central, Independent)
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Intellectual snobs.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will Deputy Timmy Dooley put his question?

Timmy Dooley (Clare, Fianna Fail)
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I am attempting to. I need a bit of ciúnas.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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What is the question?

Timmy Dooley (Clare, Fianna Fail)
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My question is very clear. I said at the outset it was not about the genre of entertainment or even-----

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Just put the question.

Timmy Dooley (Clare, Fianna Fail)
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It is very clear now, and the Tánaiste's backbenchers are adding to it, that the issue has gone from fiasco to farce.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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We know all of that. Will the Deputy put his question?

Timmy Dooley (Clare, Fianna Fail)
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The Tánaiste and the Government bear considerable responsibility in that regard.

Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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Why is there no right of appeal?

Timmy Dooley (Clare, Fianna Fail)
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The questions I put to the Tánaiste are these. Why did the Taoiseach sit on his hands for a week? Why did the Government sit back for a week, when even the Mexicans and the Moneygall native, Barack Obama, are getting involved, yet neither the Taoiseach nor the Government was prepared to do it?

Timmy Dooley (Clare, Fianna Fail)
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Will the Tánaiste tell us, now that the penny has dropped with the Taoiseach that this is an important issue, what options are being addressed or discussed by the Government and what direction will issue to the city manager?

Tom Hayes (Tipperary South, Fine Gael)
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Have you a ticket bought, Timmy?

A Deputy:

It is all planning law.

Gerald Nash (Louth, Labour)
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I thought you guys did not direct city managers.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will Members, please, refrain from making a joke out of the whole thing?

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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I am sorry. It is a Leaders' Question and it is within the rules set down by this House. The Deputy is entitled to ask the question. Equally, the Tánaiste is entitled to give an answer. Will Deputies, please, stay quiet in order that we can hear it?

Eamon Gilmore (Dún Laoghaire, Labour)
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First, I thank Deputy Timmy Dooley for his good wishes for my new role. Second, I thought the only people he left out were possibly the Brazilians, who might be free to be involved at this point in time.

Eamon Gilmore (Dún Laoghaire, Labour)
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This is a really important issue.

Robert Troy (Longford-Westmeath, Fianna Fail)
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The backbenchers do not think so.

Timmy Dooley (Clare, Fianna Fail)
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That is why they are at 7%.

Eamon Gilmore (Dún Laoghaire, Labour)
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The critical thing is that 400,000 people have bought tickets for a concert. It is about people having a summer celebration. The Government is absolutely interested in seeing how best it can assist the process. I want to make it clear that I want the issues resolved. It is a significant economic boost to the economy - I see people have indicated in the region of €50 million.

Finian McGrath (Dublin North Central, Independent)
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It is actually higher.

Eamon Gilmore (Dún Laoghaire, Labour)
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It also involves 70,000 to 80,000 people coming to Ireland, and that is important. The way that this can be resolved, as Deputy Timmy Dooley is well aware, is through discussion among the parties. I want to encourage the parties to engage in all of the discussions that are necessary to resolve this issue.

With regard to Deputy Timmy Dooley's suggestion in regard to the city manager or, under his new title, the chief executive officer of Dublin, his is a statutory authority, as the Deputy is well aware.

Mattie McGrath (Tipperary South, Independent)
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It is all about titles.

Eamon Gilmore (Dún Laoghaire, Labour)
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He is a person of integrity and he has come to a particular decision. However, in the light of the facts that have come to attention in regard to the process, particularly in the last few days, I believe and certainly hope that, through discussion, it will be possible to resolve this issue.

I am aware as well that Garth Brooks intends to have a press conference or television conference sometime around 5 p.m. today. It sends a very important message-----

Mattie McGrath (Tipperary South, Independent)
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We will see that first.

Eamon Gilmore (Dún Laoghaire, Labour)
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Sorry, I thought the Deputy was only-----

John Deasy (Waterford, Fine Gael)
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Give Garth a call yourself, Mattie. He probably knows who you are.

Mattie McGrath (Tipperary South, Independent)
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I know him.

Eric Byrne (Dublin South Central, Labour)
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What about the country and western wing of Fianna Fáil? Would they not sort it out?

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will the Tánaiste, please, ignore this and proceed to make her point?

Eamon Gilmore (Dún Laoghaire, Labour)
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I understand he is interested in using Ireland as the launch pad for his world tour and to make a music video. That is obviously very important and of potential benefit. I also want to say, in regard to Mr. Brooks, that if the concerts do get under way successfully, we should invite him to perhaps complete the world tour in Dublin, probably some time after the two years of the world tour.

The Government is positively disposed to doing all it can to assist the process but the decision maker in law at this point is the city manager. I do think, though, that events and facts have come to light which were perhaps not in the public domain at the time he made his decision. I certainly feel that through discussions between the parties it may be possible to achieve a resolution. I hope it will be achieved.

Timmy Dooley (Clare, Fianna Fail)
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It is welcome that the Tánaiste treated the issue with the seriousness it deserves and based on the economic criteria I have set out.

It seems that there is something of a disconnect between the Tánaiste and her backbenchers. Clearly, the members of her party sought to ensure she was elected. If Garth Brooks is tuning in on the web, as I understood he did to some of Dublin City Council's deliberations, he would be somewhat confused by the Tánaiste's response and her request to him to finish up his world tour here in Dublin at a time when there seems to be no co-ordination-----

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will the Deputy, please, put his supplementary question?

Timmy Dooley (Clare, Fianna Fail)
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With the greatest respect, I have been heckled from the time I stood up.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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I will protect the Deputy's rights. Will the Deputy put his supplementary question and I will protect his rights?

Timmy Dooley (Clare, Fianna Fail)
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I dare say Garth Brooks will be somewhat confused by the Tánaiste's request to finish up his tour here when she has not outlined a mechanism by which it can happen. She talks about process and facts coming to light.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will the Deputy, please, put his supplementary question?

Timmy Dooley (Clare, Fianna Fail)
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Can she tell us the facts that have come to light that would raise question marks over the process undertaken? What measures can be put in place in the absence of an appropriate appeals mechanism to try to resolve the issue?

Eamon Gilmore (Dún Laoghaire, Labour)
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I assume that the Deputy is absolutely sincere in his request to see these concerts successfully take place in Ireland. I, therefore, suggest the floor of the Dáil is not the place to engage in very detailed discussion. There has been ample coverage in great detail of everything that has emerged in respect of this issue in all of the media, particularly the newspapers, in the past week. If the Deputy wants a successful outcome, as opposed to simply a heated debate, I would put my confidence in negotiations among the parties who are affected. I want to see a successful outcome and honestly do not propose to be involved in any detailed discussion of the matter. However, the Government and I would like to see a successful outcome. Like others, I have lots of family and friends who are committed to having an enjoyable evening out in Dublin coming from all parts of Ireland. We all know that it has the capacity to be a fantastic event which will also showcase Ireland. The Government is prepared to assist.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I also warmly congratulate the Tánaiste on her new position. I welcome the clear and measured response she has given on the previous issue. Like others, I hope for a successful outcome.

I want to raise the conflict in the Middle East which is, once again, spiralling out of control. In the past two days, the Israeli Defence Forces have killed 50 people and wounded more than 500 in the relentless shelling of Gaza. Their claim that they are attacking Palestinian military targets is a lie. They are attacking family homes and refugee camps and killing women and children. As if this brutality is not enough, they are now threatening a full-scale military invasion of Gaza. We all know that for years the people of Gaza have been subjected to an illegal and brutal blockade. They are now being subjected to collective punishment by the Israeli Government. It is targeting women and children, and this is not acceptable. It is not acceptable either to kidnap and kill Israeli teenagers, it is not acceptable to kidnap and kill Palestinian children, and it is not acceptable for the Israeli Government to pound Gaza, one of the most densely populated places in the world, with hundreds of tonnes of explosives in a matter of days. The firing of rockets from Gaza into Israel should end immediately, but these actions cannot excuse the brutal and overwhelming military force used by the Israeli Government against what is, I repeat, a civilian population. Diplomatic pressure must be brought to bear to bring this violence to an end and to open the way for talks. What has the Irish Government done in recent days to help bring this violence to an end? Has the Taoiseach, the Minister for Foreign Affairs and Trade or any Minister picked up the phone to contact the Israeli ambassador or the Israeli Prime Minister directly to express the Government's outrage at the use of collective punishment against the people of Gaza?

Eamon Gilmore (Dún Laoghaire, Labour)
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I thank the Deputy for her congratulations. The Government is gravely concerned about the escalating violence and the civilian casualties we are now witnessing on the ground in Gaza and Israel following Israel's launch of a major air offensive against Hamas targets in Gaza in response to the continued large-scale firing of rockets by Hamas and other Islamic militants into Israel. The Minister for Foreign Affairs and Trade issued a statement yesterday in which he condemned unreservedly the indiscriminate firing of rockets into Israel, which, as the Deputy said, poses a grave threat to the population. Equally, his statement condemned the mounting civilian casualties, including reportedly women and children, resulting from Israeli air strikes against Gaza. The latest estimates are that more than 70 Palestinians have been killed since the launch of the Israeli operation earlier this week.

Both the people of Gaza and the people of Israel have the right to live in peace and security without the threat of indiscriminate violence being visited upon them. The Department of Foreign Affairs and Trade is closely monitoring the situation and is keeping in contact with our missions in Tel Aviv and Ramallah. It is recommended that Irish citizens who are currently in the region or travelling there register with the Department on its website. Those considering travelling should check the travel advice on the website which is updated regularly and Irish citizens in Israel or the occupied territories should exercise extreme caution and closely monitor developments via local media outlets.

It is vital that all efforts are now made to de-escalate the current situation and bring the current wave of violence and military action to an end. On behalf of the Government, I appeal to all sides to exercise the utmost restraint, avoid all civilian casualties and negotiate the earliest possible ceasefire. Obviously, the past four weeks following the deaths of the four young people have been extraordinarily difficult.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I am sure the Tánaiste's advice for Irish citizens is necessary and instructive, but I put it to her that by far the greater concern at this time is for the men, women and children of Gaza. I have no doubt that the Tánaiste is gravely concerned by this turn of events, which amounts to more than a threat to the people of Gaza. This is a catastrophe in motion. Whereas the Tánaiste itemised a statement made by the Minister for Foreign Affairs and Trade, I put it to her that it is gravely insufficient given the seriousness of the situation and the real possibility that Israeli aggression against the Palestinian population will escalate. It is now time for more than statements, advice to Irish citizens or indeed advice to anyone else.

I again ask the Tánaiste whether there has been contact with the Israeli ambassador in the State. Has there been government-to-government contact with the Israeli Administration? The Tánaiste knows that the EU head of mission in Jerusalem correctly accused the Israeli government in March 2013 of deliberately flouting international law. This accusation has been made time and again. Time and again, we have seen the population of Gaza pummelled and we are literally only given diplomatic rhetoric. We need more than this. If there has been no contact with the Israeli ambassador, when is that going to happen? If there has been no contact with the Israeli Administration, when is that going to happen?

Eamon Gilmore (Dún Laoghaire, Labour)
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I met the Palestinian representative to Ireland a couple of months to talk about the issues the Deputy raised and the difficulties for the populations of Gaza and the occupied territories.

I agree with her that what is happening is exceptionally difficult for them. Much has been done to build up and develop the area, including significant support from the Irish development aid programme via the Minister for Foreign Affairs and Trade. Much of that, as well as the contributions from other EU member states, may well be undone and set at nought by the developments of which we are aware. The Department of Foreign Affairs and Trade is closely monitoring the situation. Officials are keeping in contact with our missions in Tel Aviv and Ramallah, which is important, and, through them, with the administrations in both Israel and Palestine.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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Therefore, the answer is that there has been no direct contact.

Eamon Gilmore (Dún Laoghaire, Labour)
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I reiterate that Ireland's objective in foreign policy terms is, and has always been, to ensure that the people of both Gaza and Israel have the right to live in peace.

Finian McGrath (Dublin North Central, Independent)
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No contact. The Government does not want to upset the Yanks.

Eamon Gilmore (Dún Laoghaire, Labour)
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As Deputy Mary Lou McDonald will be aware, from a diplomatic point of view, we have for many years advocated a two-state policy.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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But the ambassador or the Administration have not been contacted directly. That was my question.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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We are over time.

Eamon Gilmore (Dún Laoghaire, Labour)
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I said the Minister for Foreign Affairs and Trade issued a statement yesterday. He is closely monitoring the situation through-----

Mary Lou McDonald (Dublin Central, Sinn Fein)
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That is not good enough.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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I am sorry, but we have to finish.

Eamon Gilmore (Dún Laoghaire, Labour)
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We want peace restored for the people of both Israel and Gaza.

Peadar Tóibín (Meath West, Sinn Fein)
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Statements will not achieve that.

Finian McGrath (Dublin North Central, Independent)
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Call in the ambassador.

Maureen O'Sullivan (Dublin Central, Independent)
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I wonder what it is doing for our international reputation that the national Parliament on several days this week has discussed Garth Brooks at a time when there is a homelessness crisis in the country and there are international incidents such as that referred to in Gaza and the abduction of hundreds of girls by Boko Haram in Nigeria because they want an education.

Ba mhaith liom chomhgairdeachas a gabháíl leis an Tánaiste agus tá súil agam go n-éireoidh leí san obair, go h-áirithe san obair ar son daoine ar an imeall.

I have used Leaders' Questions on two occasions to deal with community issues, and I am glad the Tánaiste is present because these will be familiar to her. Initially, I raised the issue of community development projects and programmes and the tendering process that could lead to privatisation, which would mean that many years of experience and insight among people and providers living in the communities and making decisions on their behalf will be undermined. Last week, I raised issues with regard to drugs. At the Taoiseach's request, I forwarded to him the details that I brought to the House's attention and hope they have not been lost in the various power struggles this week for positions.

The common denominator in both issues is the disproportionate cuts that have been suffered in both areas. Cumulatively, community, youth and drugs projects have been cut by 38%. The third area affecting vulnerable communities is community education. Such education services are provided for those who have been most disconnected from the system in their lives, perhaps through leaving school early, being long-term unemployed or being lone parents. Community education is a powerful informal educational tool which is replicated throughout the country. For example, in my constituency, between January and June this year, 430 people participated in accredited programmes with a community education provider. The programmes were child care levels 4 to 6, horticulture level 5, and IT levels 3 and 4. These areas offer great employment opportunities. People are also enabled to progress further.

Community organisations that are FETAC-accredited are legacy providers, and if they want to continue to provide accredited programmes they must engage with the Quality and Qualifications Authority of Ireland which could mean a fee of €5,000 for each participant. They do not have that money. Will there be a fee waiver for community education providers that are doing this valuable work, as opposed to private educators that can afford to charge people?

Eamon Gilmore (Dún Laoghaire, Labour)
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I thank the Deputy for her good wishes.

With regard to the concerns about ongoing changes in community development, I agree with her that community development, whether in urban or rural areas, is tremendously important to every community in Ireland, and valuable services are provided. Two years ago, after I became Minister, FÁS, which dealt with community development, was taken into my Department and there was a great deal of fear, with many people suggesting this could be the end of public funding of community centres, the end of community employment and so on. I gave an undertaking in the House at the time that not only would it not be under threat but it was my intention, as resources permitted, to expand community development because of the significant role it plays, including in allowing people to return to education and training who may for a variety of reasons have not been employed for a time. Some time after that, we had a debate during which concern was particularly expressed by the Opposition. More than €1 billion is spent by the Department of Social Protection on initiatives such as community employment and the roll-out of new community programmes such as Tús, which have been successful. I understand there has been a great deal of concern about funding for the past seven years among all the organisations involved since the time of the financial collapse of the country. During the seven years prior to that, a great deal of additional funding was available because of the boom, but following the review of the various elements, including the educational elements, and the development of SOLAS, I am convinced that what will emerge is a community education personal development pattern which will focus on people getting involved and, as the Deputy, who has great experience in this area, said, attaining serous qualifications such as FETAC levels 4 and 5 which will enable them to approach employers, whether in the pubic, community or private sectors. Rather than simply saying they have been on a course, they can show they have acquired a qualification that will assist them in securing well-paid employment or progressing further to second or third level education. I understand the concerns of the Deputy, and the Government is committed to emphasising and prioritising community investment, which is so important to communities right around the country.

Maureen O'Sullivan (Dublin Central, Independent)
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I hope the Government will take it further and provide the €5,000 waiver I mentioned, because, as the Minister said, community education is working. I refer to two providers in Dublin Central, HACE on Henrietta Street and the Larkin Centre for the Unemployed on the North Strand. There were 20 participants on a community employment scheme, five of whom had to drop out for various reasons. Twelve of the participants achieved distinctions, of whom eight are going on to further education. This is working. Community education providers are being monitored and are engaging with everything that is required of them. However, they feel threatened, and when I questioned the Minister for the Environment, Community and Local Government about this, he was unable to reassure them that they would not have to pay a €5,000 fee. They do not have that money and that is the bottom line. If such a fee is imposed, they will have to opt out of community education. Because the providers know their communities, they know what is working and the methodologies to use. That is what they have used to ensure people return to full-time employment instead of having to take on part-time manual work.

The providers are engaging but they are asking whether there is a cull in community education. I take it from what the Tánaiste said that she will look into this. The providers cannot afford the €5,000 fee. Many participants do not even have the money to travel to their training. Significant opportunities exist in child care because those who have completed FETAC level 6 are moving on. There is nobody coming in to take those places because there is no incentive and, therefore, the child care facilities are also under threat.

Eamon Gilmore (Dún Laoghaire, Labour)
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I acknowledge the Deputy's commitment to community development, which is very important. Regarding SOLAS and the new structure under construction, it is very important we have a quality qualifications network. I have worked very hard with officials from my Department to improve the qualifications structure in order that when people go on a community employment scheme for a prolonged period of time, the have an opportunity to get FETAC level 5 and, in some cases, FETAC level 6 qualifications and, as the Deputy said, progress further. I have discussed these issues with people from the Larkin Unemployed Centre and other community groups and organisations. The Department of Social Protection has developed a model of talking to stakeholders and groups and we meet them regularly, for example we had a five-hour session in Dublin Castle last Friday. SOLAS may undertake similar stakeholder meetings and the model might be useful to other Departments. I will examine this very important matter and return to the Deputy.