John Gilroy (Labour) | Oireachtas source

The Minister of State is very welcome to the Chamber. I read the address on stability through good governance that he delivered to the OSCE Economic and Environmental Forum some time ago and I was very impressed by it. Most of the points made were very good. The importance of good governance cannot be overstated. While we have made good strides in this area recently, we still have some way to go. Perhaps that is a conversation for another day.

I want to clarify a point Senator Mary White made. She said one in four young people in Ireland is unemployed. That is not quite true. Some 60% of people are in employment, which means one in four, or 10%, of the remaining 40% is a young unemployed person. It is very important that the message go out that it is not true that one in four people under the age of 25 is unemployed.

As the European Union becomes more important, there is a greater need for non-governmental organisations to have their voices heard. It is often felt there is a disconnect between the EU institutions and national populations. We hear this when canvassing for the European Parliament elections. The SME envoy — the Minister of State is our national envoy — represents a good idea and it will help address the problem for certain sections of the community. We should seek to extend the envoy role into other areas. It certainly offers great potential. A channel of communication between the SME sector and the Commission is vital. It is vital that our SMEs exploit the opportunity the envoy mechanism affords to them. Traditionally, Irish Governments, groups and organisations have been very good at taking advantage of opportunities afforded to them by the European Union but, as Senator Feargal Quinn stated, not all SMEs may be aware of the initiative. Perhaps we could do a little more to promote it.

We need to embrace the initiative and encourage participation. I cannot overstate the importance of the initiative for the SME sector. The most important means of making it work involves ensuring everyone in the sector embraces it. The promotion of SMEs' interests in this area is the key to success.

There are a couple points I wish to speak about today. The importance of the SME sector is demonstrated by the fact that over 50% of the wealth created in Ireland is created by it. The criterion associated with the envoy stipulates the employment of under 250 people. By that definition, seven out of every ten workers in Ireland are employed in the SME sector. The sector has a central role to play in our economic recovery but there are significant challenges. A report produced by ISME only yesterday states retail sales for last month were down by 1.5%, which is very disappointing. It is hardly surprising because when we drive down the high streets of any of our towns or villages we see the number of shops that have closed. This is real evidence of the destruction wrought by the downturn.

Cashflow is one of the main problems facing the SME sector. I was talking to an ISME representative in recent days in preparation for this debate and was informed that the organisation estimates the rate of refusal to lend to the SME sector is 54%. This is sometimes described as constructive refusal and it has a camouflaging effect in the same way as constructive dismissal does. Thus, the prospective borrower is blamed rather than the banks. The Central Bank of Ireland reports that the banks' lending targets are being met so there seems to be a real disconnect between what those involved in business are saying and what the Central Bank is saying. Perhaps the Minister of State could comment on this.

Professor Morgan Kelly, the economist, spoke rather gloomily recently about the level of debt being carried by the SME sector. He estimates that property-related debt amounts to approximately €30 billion, and that 60% of this might not be performing as well as it could be. This is a very substantial percentage. A resolution is very much required. The banks are taking a piecemeal approach to this and would prefer to do deals with individual SMEs rather than take a strategic view and proceed on that basis.

Senator D'Arcy made a very good point on the saving of 450 jobs in Elverys by using the examinership process. For SMEs employing fewer than 250 people, this process is very expensive. It might not be the most appropriate.

I am glad to say it was at the instigation of the Minister of State that we introduced the Companies (Miscellaneous Provisions) Bill 2013. It has been said it offers examinership-lite and represents a much more cost-effective resolution than might otherwise obtain. Perhaps that is one of the routes SMEs could usefully go down in regard to this matter.

If Professor Morgan Kelly's figures and prognosis are correct they present a vista which, if not appalling, is not far from it. Could we have the Minister of State's view on this? We will certainly require the assistance of the European Union again in this matter. The voices of the SME sector can be heard through the envoy system and network, and they will play a very important role. We must listen to the views of those in the sector and take them on board.

While I have much more to say, I will leave it at that for the time being. I look forward to hearing the Minister of State's views on some of the points I have raised.