Eamon Gilmore (Dún Laoghaire, Labour)

It is not a mentor that small businesses are looking for now. It is money and credit. It is a means by which they can keep going for another period of time. Incidentally, the Minister, in responding to this motion yesterday was also wrong when he gave the impression that the EIB funds could not be used for working capital. In fact, they can be used by way of a two-year loan, which is very much at variance with what the Minister had to say.

This Labour Party motion is a call to action to help small businesses weather the worst economic climate for a generation and to save jobs which our economy is haemorrhaging every week. There is a real crisis and it requires real, practical solutions. While members of the Government spent the last two months clapping themselves on the back for giving a blanket guarantee worth €500 billion to the banks, thousands of people lost their jobs. Almost 12,000 were added to the live register in October alone. While the Government was congratulating itself for its quick thinking in saving overstretched big property developers, hundreds of small businesses were going to the wall for want of modest credit from the bank. It has not stopped since. The Government is still congratulating itself in its response to our motion. The response commends the Government for promoting, "through the realisation of the objectives of the scheme sustainable lending practices and the appropriate availability of credit for the enterprise sector of the economy". That is fantasy. Where are the facts? A total of 100,000 people have joined the live register in the past 12 months, the sharpest rise since records began. Buried in that figure is the story of small businesses having to shut up shop in every community, town and city in Ireland. In the absence of official data from the Central Bank, the best available information comes from ISME. In a recent survey, it found that 54% of companies surveyed had been refused applications for new finance or the extension of existing credit lines. These were not new companies, but businesses of long standing. Small businesses employ one in every four industrial workers and one in every two employees in the services sector. In all, almost two thirds of the entire workforce are employed in small businesses, the majority of which are Irish-owned. They are the backbone of our economy, and they are feeling the strain. They are feeling the strain because consumer confidence is low and nothing has been done to rally it, and because there is less money in people's pockets and so many households in which someone has lost his or her job. Most of all, they are feeling the strain because the very banks which got a no-questions-asked bailout from this Government are now withholding normal lines of credit.

Big developers who cannot pay the interest on their massive loans are having that interest rolled onto their debt. Is that what the Government means by "sustainable lending practices"? If that is the case, where is the "appropriate availability of credit" that will sustain our small businesses and save jobs? It appears that instead of saving our economy, the banks are strangling it. It is clear the guarantee devised by the Government gave it no power to influence what the banks did with it. It can request that the banks avail of the European Investment Bank's facility for long-term lending to SMEs, but it cannot require them to. In addition — surprise, surprise — the banks have so far refused to access it.

The likely consequences of any deal the Government strikes with the vulture capitalists currently circling our banks pose an enormous risk to our economy. Private equity is only being considered as an option because the Government has lost its nerve. Why would Ireland consider private equity investment — the ultimate in quick buck capitalism — when governments elsewhere have refused to deal with this sector? A private equity deal might address the immediate problem, and doubtless there would be another blizzard of spin about decisive action, but how are the Irish economy and the banking system to deliver the returns that private equity demands? How many jobs will be lost? How much value destroyed?

What the Irish economy needs now is a long-term view. How can the Government be assured that the public interest — that of having a bank system that serves households and businesses — will not be squeezed out by the private interest of these private equity groups? What about the effect on this country's reputation abroad? If the Government does this deal, how can any other Irish company raise money through the Irish Stock Exchange? The word will be out that when the going got tough the Government brought in private equity.

We are in the middle of a national crisis. The rate at which jobs have been lost over the past 12 months is unprecedented, and there is evidence that it is getting worse. What we need is practical action now and practical solutions that will make a difference to small businesses, which are on the brink of letting people go. The motion put down by the Labour Party calls on the Government to do a number of simple things of which it is perfectly capable. Frankly, I do not understand why it has refused to accept these. We want to establish a small business operational fund, drawing on the €15 billion made available by the EIB for lending to small businesses. If the banks will not access the fund, the State should establish some mechanism by which small businesses can access it.

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