Batt O'Keeffe (Cork North West, Fianna Fail)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"— welcomes, in particular, the Government's five year integrated trade, tourism and investment plan, Trading and Investing in a Smart Economy, designed to help all Irish businesses compete on global markets and create 300,000 jobs across the Irish economy in both exporting and locally trading firms;

— notes the intensive work underway within the Government in relation to further small and medium enterprises, SMEs, credit initiatives while at the same time ensuring that banks fulfil their commitments given to Government to lend to this sector; and

— recognising the important contribution which small and medium enterprises make to economic growth and employment creation, commends the Government for the priority it has given to introducing new and specific initiatives aimed at improving the business environment and supporting directly the further development of the SME sector. In particular:

— the measures taken to ensure the continued operation of a sustainable banking sector as a provider of credit to viable enterprises in the State, including:

— the introduction in 2009 by the Financial Regulator of a statutory code of conduct for business lending to SMEs;

— securing a commitment by both AIB and Bank Of Ireland to make available not less than €3 billion each for new or increased credit facilities to SMEs in both 2010 and 2011, including funds for working capital; and

— the establishment of the Credit Review Office to measure compliance with the banks' lending commitments, to examine the lending practices of the recapitalised banks and to review refusals of bank credit;

— providing continued capital funding of €15 million in 2010 to the county and city enterprise boards to assist micro enterprises and promote entrepreneurship and recently providing an additional capital funding of €3.3 million to the county enterprise boards, CEBs, creating more than 450 jobs;

— providing financial support to almost 2,000 companies through the employment subsidy scheme and the enterprise stabilisation fund;

— improving the cash flow of SMEs by requiring Departments to pay their business suppliers within 15 days of receipt of a valid invoice;

— the provision of €278 million to Enterprise Ireland in 2010, representing a 26% increase on the outturn for 2009, to stimulate the development of new businesses and facilitate the expansion of existing companies through a broad range of initiatives including direct financial and non-financial supports;

— the commitment through Enterprise Ireland to invest €175 million through the seed and venture capital programme 2007-12 for companies at the early and growth stages of development;

— establishing the €500 million Innovation Fund Ireland to support entrepreneurs so that they can create jobs;

— establishing the employer job (PRSI) incentive scheme to reduce business costs associated with hiring new employees;

— the provision of €425 million for the implementation of the LEADER rural development programme 2007-13 to promote sustainable employment creation in

the rural economy; and

— preserving a low tax regime for business."

The Fine Gael motion opens with a recognition of the importance that small firms play in Ireland's economy. This is reflected in the fact that small firms across the country support over 700,000 jobs. They play an important part in supporting all firms in all sectors, as suppliers of the goods and services on which larger companies rely. It is because of the important role small firms play and the recognition of the challenging environment they have operated in.

In the last two years the Government has placed support for this sector at the heart of its strategy for economic recovery. I have already addressed the issue of the Government's jobs strategy in the House recently. I set out that the best way to support businesses and create jobs was to fix the banks, address the deficit and improve our national competitiveness. These actions are not aimed at firms of any particular size, in any particular sector or particular ownership. They are aimed at improving the overall business environment in this country so that all firms can survive and grow.

Central to this has been the repair of our banks which are the key facilitator of business transactions in the economy on a daily basis. Specifically, the provision of credit to our enterprise sector, especially SMEs, should primarily come from a properly functioning banking sector. I want to take this opportunity to again acknowledge the extraordinary work done by the Minister for Finance to address the banking problem. The code of conduct, the bank guarantee scheme, the recapitalisation scheme, the nationalisation of Anglo Irish Bank and the establishment of the National Asset Management Agency have all contributed to the stabilisation of the banking sector with a view to facilitating the flow of credit.

The primary objective of the code of conduct for SME lending is to facilitate access to credit for sustainable and productive businesses. The code promotes fairness and transparency in the treatment of SMEs by all regulated entities. It applies to areas of banking that are key to small firms such as overdrafts and term loans. It is specifically aimed at regulating the relationship between small firms and financial institutions. This is not optional. Regulated institutions must comply as a matter of law. Not only have we addressed how banks lend to small firms, but as I mentioned already, the Government has also secured commitments on the actual levels of credit that these banks must extend to the SME sector.

The House will be aware that the Government secured a commitment from the main lenders, AIB and Bank of Ireland, to make available not less than €3 billion each for new or increased credit facilities to SMEs in both 2010 and 2011, including funds for working capital. When it comes to honouring these commitments, the Government is not prepared to simply take the banks' word for it. The Credit Review Office is making a major contribution to dealing with the outflow of credit, not only in reviewing cases where credit has been refused but in reviewing bank lending policies and in driving the process of providing our businesses with a proper, professional banking service.

I have made it a priority to regularly meet with the banks to discuss the availability of bank credit for businesses, especially SMEs. I have also travelled around the country to meet with businesses to hear their experiences at first hand and ensure that Government hears both sides of the story. I have conveyed the concerns of business regarding credit availability to the banks. I have also reminded the banks of their obligations under the recapitalisation package and of the huge investment of taxpayers' money into the banks aimed at getting our economy moving again. The fact that we have someone of Mr. John Trethowan's calibre monitoring the banks and assessing their policies is having a positive and meaningful impact on this aspect of banking performance. Mr. Trethowan said this month that the "worst is over" for small business borrowers, and that the situation was much more positive for bank customers than it was six to nine months ago. This echoes the view of business representative groups that there has been a recent improvement in the level of bank credit to small companies.

While fixing the banks has been a key element of our recovery, the Government has in parallel focused on maximising direct and indirect supports to enterprise with a specific emphasis on SMEs. Remember, SMEs in Ireland benefit not only from the direct financial supports available through the CEBs and Enterprise Ireland but also from the FDI activity supported by the IDA, up to the multi-billion, multi-annual capital investment programme. The Government has targeted interventions and supports for small firms but they also benefit from our initiatives in the wider economy.

Regarding targeted support for entrepreneurs, I was pleased to be able to provide additional capital funding of €3.3 million to the CEBs last week, supporting more than 450 new jobs in small firms. This is in addition to capital funding of €15 million already provided in 2010 to the county and city enterprise boards.

The Government also responded quickly to the rapid economic downturn by providing financial support to almost 2,000 companies through the employment subsidy scheme and the enterprise stabilisation fund. The public sector, as a large procurer of goods and services provided by small firms must do what it can to improve the cash flow of SMEs.

That is why we have required all Departments to pay their business suppliers within 15 days of receipt of a valid invoice. I am anxious to see this approach extended as widely as possible. Small firms in existence today are the product of the creativity and effort of an entrepreneur who believed in their idea and worked to make it a reality. The Government assists these risk-takers in particular through the programmes provided by Enterprise Ireland.

In 2010, the Government increased the funding available to Enterprise Ireland by 26% on the outturn for 2009. We did this to stimulate the development of new businesses and facilitate the expansion of existing companies through a broad range of initiatives including direct financial and non-financial supports. We are also investing in small firms in the earliest stages of development via El's €175 million seed and venture capital programme. We are committed to developing the venture capital landscape further and we are doing this through the €500 million Innovation Fund Ireland.

SMEs benefit from our targeted investments but also from initiatives in the wider economy. The Government's new integrated strategy for trade, tourism and investment creates a platform for small firms to maximise their potential either as suppliers to exporting firms or as exporters themselves. The strategy sets a number of priorities and targets to be achieved by 2015. These include increasing the number of new export focused jobs by over 150,000 in manufacturing,

tourism and traded services, with a similar number of indirect jobs also being created; increasing the value of exports by indigenous companies by 33%; diversifying the destination of indigenous exports; increasing overseas visitors to 8 million; and by securing an additional 780 inward investment projects through IDA Ireland.

The UK market, which is key to many small indigenous firms will, along with the US, continue to be a key market for Ireland. However, there is also considerable potential to expand business with our eurozone partners and the new and high potential growth markets such as Brazil, China, India, Russia, Japan and the Gulf States. Our small firms will face obvious barriers such as language and cultural attributes as well as different business practices and regulation. The co-ordinated effort of all agencies will be focused on helping our small firms overcome these barriers, win new business, succeed in new markets and reach their potential. In doing this, the Government is providing leadership and taking action in support of small firms. These facts are absent from the Opposition's analysis of the Government's economic strategy.

One thing that has come across strongly in my dealings with small business owners is that they thrive on confidence. They need consumers to have confidence and they too must have confidence to invest in the knowledge that the Government is doing what it can to provide the best possible operating environment. There have been positive signs in recent weeks. Redundancy claims are down and recruitment agencies inform me that there has been a healthy increase in the number of jobs advertised. Three quarters of jobs advertised are for newly created positions. Even more importantly, there has been a 55% increase in job placements in the third quarter of this year compared with the third quarter last year. This is on the back of Ireland's improved trading performance. The value of exports in July was up by 12% compared with the previous July. Enterprise Ireland says its firms will recover about 70% of the export earnings that were lost last year. These are the messages that will encourage small business owners and consumers and engender the confidence we need to get the economy growing again. Let us compare this to the uninspiring and negative sentiment that emanates daily from the benches opposite. The rhetoric of those Members does a disservice to small businesses that are succeeding every day and discourages potential entrepreneurs and consumers.

I will now deal with some of the more puzzling aspects of the Fine Gael motion. Fine Gael has been known to complain about a lack of information from the Government on economic policy. It also claims that the Government has broken a promise to introduce a loan guarantee scheme. This is quite bizarre, given the information I provided on the floor of this House less than a week ago. I will refresh the Deputies' memories. My officials are working with their colleagues in the Department of Finance, the Credit Review Office, Enterprise Ireland and Forfás to address issues regarding access to credit for viable SMEs, including the option of a targeted loan guarantee scheme. The most recent meeting was held on Monday of last week. A range of issues regarding SME credit were discussed and follow-up action is under way. These meetings are aimed at building on the already substantial progress made in identifying critical elements for further initiatives. It is important that any initiatives complement rather than provide a substitute for the lending commitments and activities of the main banks under the recapitalisation package and that they represent value for money from the taxpayer's perspective. This activity can hardly be described as equating to a broken promise on the part of the Government. On the contrary, it is evidence that the Government will take every step necessary to ensure that small firms have access to the credit they require, while ensuring that banks meet their obligations and taxpayers are spared undue risk.

I am concerned at the implication in the Fine Gael motion that initiatives should be implemented in haste and a blind eye turned to the outcomes expected from the banks in light of measures already taken. Even more worrying is Fine Gael's pursuit of a strategy that overlooks the potential exposure to the taxpayer. The main source of credit for viable businesses is a functioning banking system - in this case, one which has been well supported by the taxpayer. The Fine Gael motion implies that it is willing to put taxpayers' money at risk by promoting an all-pervasive loan guarantee scheme and allowing the banks off the hook. It would redirect responsibility from the banks to the taxpayer. We, on the other hand, focus on targeted measures for businesses that are critical to our economy and indigenous export growth.

It is clear that the Government has a multi-faceted approach to supporting small firms. Our strategy includes the provision of one-to-one advice and grants by county enterprise boards and a range of supports from Enterprise Ireland, the delivery of spin-off benefits from IDA Ireland and Science Foundation Ireland activities, our multi-billion euro stimulus programme and our ambitious strategy for international trade and investment. Government is a complex business. The idea of a silver bullet, to which the Opposition seems to turn to mask the absence of a proper economic strategy, is disingenuous and dangerous. The Government will not be distracted from implementing its wide-ranging strategy for economic recovery. This motion is just one more example of the Opposition taking a populist and narrow stance rather than demonstrating an understanding of the complexity of the broader business environment. For that reason, I recommend the Government's amendment to the House.

See this speech in context