Dara Calleary (Mayo, Fianna Fail)

I, too, appreciate the efforts made by Deputy Varadkar in introducing the proposal. Within the House, we all acknowledge that small and medium enterprises are the backbone of the economy, representing 97% of all businesses, and employing 800,000. We share a pro-business policy environment which has been in place for many years. Our enterprise development agencies and our tax system offer strong support to enterprise, especially to SMEs, and that system is shared and supported by all parties in this House.

Despite the constraints on public finances this year, our Department's Vote provides more than €500 million for the support of enterprise, innovation and research and development. We are also investing more than €1 billion of the budget to support a range of labour force measures which will assist those who have lost their jobs. We have launched the enterprise stabilisation fund with additional funding of €100 million to support enterprises through their current severe difficulties and SMEs will benefit from much of this funding.

The Government's focus in dealing with the crisis in our banking system has been to introduce measures to maintain a properly functioning and well-regulated banking infrastructure to support the wider economy and to restore confidence and credibility in this country. The importance of SMEs has been acknowledged and supported in these measures. The banks' recapitalisation package contains a range of initiatives to assist the enterprise sector directly. The recapitalised banks have committed to increasing their lending capacity to SMEs by 10% over 2008 and I reiterate previous calls on them to make that funding available as soon as possible. I heard the Minister of State, Deputy Moloney, refer to the case of the small printing company. We all have those cases and those stories. I ask the banks to start assisting those companies. In addition, a €100 million environmental and clean energy innovation fund is being established by each bank as well as a further €15 million from each to new or existing seed capital funds.

Irish SMEs are covered by the code of conduct on business lending to SMEs. This code was published by the Financial Regulator and came into effect from 13 March 2009. Lenders covered by the code are required to offer their customers an option for an annual review meeting, to include all credit facilities and security, including collateral. Banks are also required to treat all credit applications on their merits, to inform customers of the basis for decisions made and to have written procedures for the proper handling of complaints.

As previously mentioned by the Minister of State, Deputy Moloney, the main Irish banks have also agreed to pay for and co-operate with the carrying out of an independent review of bank lending to SMEs. The purpose of the review is to ascertain the position on credit availability to Irish SMEs and to recommend appropriate action to improve credit availability. The report will be available by the end of the month. SME representative bodies, including the Small Firms Association, SFA, Irish Small and Medium Enterprises, ISME, and Chambers Ireland are actively participating in this project. Three banks, Allied Irish Banks, Bank of Ireland and Ulster Bank, are providing funding for SMEs on foot of €300 million facilities provided by the European Investment Bank to assist developing SMEs.

The Tánaiste and the Minister for Finance have also established a credit supply clearing group with bank, business and State representation. Formal terms of reference and membership were announced for this group on 19 May. The SFA, ISME, Chambers Ireland, Fáilte Ireland and the IFA are the business representatives on the group which held its first meeting on 28 May. The credit supply clearing group will identify patterns of events where the flow of credit to viable businesses appears to be blocked and will seek to identify credit supply solutions relating to these patterns. However, the group will not be an appeals mechanism for cases where credit has been refused by the banks.

As a further measure to assist SMEs, the Government approved formal arrangements on 19 May to reduce, from 30 to 15 days, the payment period by central Departments to their business suppliers. This is an issue that Deputies Varadkar and Penrose have been pursuing for some time. This commitment will have effect from 15 June 2009. Reducing payment periods to 15 days for Departments should help ease cash flow difficulties for small businesses operating in the current economic climate and should set an example for businesses in the private sector to improve their payment records and pay each other more promptly. As part of the new arrangements, Departments will be required to report quarterly to my Department on the manner in which they have complied with the Government commitment. They will also include information on the implementation of the measures in subsequent annual reports.

Late payment in commercial transactions is addressed by the European Communities (Late Payment in Commercial Transactions) Regulations 2002. The 2002 regulations transposed EU Directive 2000/3 5/EC on late payment in commercial transactions into Irish law. Under these regulations, it is an implied term of every commercial transaction that where a purchaser does not pay for goods or services by the relevant payment date, the supplier shall be entitled to interest, namely, late payment interest, on the amount outstanding. Interest shall apply until such time as payment is made by the purchaser. The current interest rate applicable since 1 January 2009 is 9.50% per annum or 0.026% per day. This rate is set as of 1 January and 1 July each year at a rate of 7 percentage points above the European Central Bank interest rate on its most recent main re-financing operation. In the absence of any agreed payment date between the parties, late payment interest falls due after 30 days. Departments automatically include late payment interest where late payments are being made after the 30 day period. The European Commission has launched a review of the Late Payments Directive 2000/35/35/EC. This proposal was launched by the Commission on 8 April 2009, and will be discussed in detail in the Competitiveness and Growth Council Working Group in the coming months.

Public procurement represents a key opportunity for our SMEs. Within the past few weeks, the Tánaiste and my colleagues in the Department commenced work on a project aimed at improving access for small and medium enterprises to public procurement opportunities. I wish to acknowledge the work done by Deputies Varadkar, Penrose and Morgan, my former colleagues on the Joint Committee on Enterprise, Trade and Employment. We had an eye-opening meeting at this time last year with the print forum with regard to the difficulties its members were experiencing. However, the project now underway will implement a number of actions aimed at breaking down barriers to access by SMEs to public contracts. These will include measures to ensure minimisation of the transaction costs of preparing and submitting tenders, including for example, maximising the application of the national public procurement website and electronic procurement opportunities. They will include breaking down contracts into lots, encouraging partnering among SMEs and encouraging larger companies to sub-contract. Small enterprises are in a position to provide more innovative and flexible solutions in response to Government needs than many of their larger corporate competitors. As a result of the initiative now underway, small enterprises should not find the requirements to enter that competitive process too high or too complicated.

At EU level, the annual SME performance review was launched by the Commission in 2008. This review represents a comprehensive source of information on the performance of SMEs across Europe. It also serves as a useful tool in the context of the Lisbon agenda process and the follow-up implementation of the Commission's Small Business Act for Europe, published in June 2008. The SME performance review is complemented by the Small Business Act fact sheets, with more precise information on each member state and a set of studies providing more in-depth information on specific issues particularly important for SMEs in Europe.

The Commission's so-called SBA policy radar for Ireland yields a remarkably positive picture in comparison with other countries, according to the 2008 report. Particular strengths in 2008 were the Irish public's attitude towards entrepreneurs. Some 85% of our citizens agree that persons growing a successful and new business receive high status, while the EU average is only 69%. In the areas of skills and innovation, Ireland, once again, out-performed the EU average by a considerable margin.

It is clear from the range of issues outlined that the Government has been proactive and positive, and continues to be so, in addressing the concerns of business, in dealing with access to bank credit and assisting SMEs at this very difficult time. We will continue to consult with the SME representative bodies to include them in the relevant groups and to respond to their concerns. My colleague, the Minister of State, Deputy Moloney, has proposed formally that the Second Reading of the Bill be postponed for six months in order to consider the issues in detail and to ensure it does not have any adverse effect on the operation of the current small claims procedure. We and the Department will work actively with members of the Joint Oireachtas Committee on Enterprise, Trade and Employment and with Deputy Varadkar and his colleagues in our endeavours to pursue this issue. We will also involve the SME representative bodies.

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