Mr. Seán Murphy:

I will begin by responding to the Deputy's question about the low level of take-up. As I said earlier, the vast majority of SMEs in Ireland are trending towards being micro-businesses rather than being medium-sized businesses. As they operate in the domestic market, their customers are mostly domestic consumers whose pockets have been raided significantly over the last eight years as we have sought to balance the national finances. That is not leading to a great deal of expenditure. It is striking to examine the statistics showing how many car sales are still paid for in cash, as opposed to debt finance. It was clear to anyone who listened to "Morning Ireland" this morning that consumers have taken a major shock and are now saving before they spend.

The other unquantifiable is the rhetoric about raising the retirement age, which is probably endorsed by all of us. If that happens, consumers will have to fund their pensions for longer than they did before now. If people have to do more precautionary saving, this will have a direct effect on local domestic expenditure. The low level of take-up is intimately related to the low level of demand, which is intimately built on confidence. As confidence is finally improving, thankfully, we will see further demand in that area in the future.

We have welcomed the arrival of the local enterprise offices. Many chambers worked very closely with the city and county enterprise boards. We look forward to that practice continuing in the future. We believe the local enterprise offices should work very closely with the local business representative organisations that have the necessary links. That would be better than the offices doing this work directly themselves.

The big challenge for the owners and managers of SMEs is to decide whether to trust local enterprise office employees, who work for the local authority, with their accounts, given that their businesses will be taxed by that local authority next December. That is a perennial challenge that we are going to face. How open will the officials be when businesses want to talk about these things? I have to say that is a big question.

Our view is that if businesses are paying €350 million into the national training fund, some of that funding should be ring-fenced for them to access and they should be able to choose what is best for them in securing training. They do not want somebody in a local enterprise office who might not have ever run a business to tell them how to best improve their cash flows. Our view is that the real issue is the need for a fund that businesses can access to be put in place.

The big issue with regard to cash flow is how it is funded. If one encounters an uptake in demand, one will have to order more stock so that it can be sold. That is where cash flow becomes a little more strained. As the demand for one's product increases, one has to wait for payments. It might seem paradoxical to suggest that part of the reason cash flow is more constrained might relate to the upturn. That is where working cash flow becomes a challenge.

I guess the real way to look at the issue of debt distress is to examine the official reports the banks have produced setting out the levels of SME debt distress they have on their accounts. It is a big challenge. I hope the position in this regard will improve as asset values increase. They are increasing at present, particularly in the Dublin and east coast region, in parts of Cork and in other strategic parts of the country.

Those statistics are out there and are equally a big challenge. Equally, the banks will tell us that given that their operations are predominantly domestic-focused, they have a vested interest in keeping these businesses going. We need further consumer confidence and consistent consumer spending, as well as fewer raids on consumers’ pockets through more taxes. With growth and employment, we will start to get a more balanced economy.