Tommy Broughan (Dublin North East, Labour)

Yes. I am delighted to have the opportunity to speak on the Fine Gael Private Members' motion on small and medium enterprises and small businesses and I commend Fine Gael for tabling this critical motion given the profound crisis situation in which many such companies find themselves.

As the motion indicates, 1,132 businesses have been declared insolvent since the beginning of 2010, an incredible loss rate. It is astonishing that with so many critical businesses going to the wall, with 800,000 jobs involved and the job losses that accompany each closure, the Fianna Fáil-Green Party Government has been largely silent on supports for promoting SMEs.

This haemorrhaging of small business jobs can be clearly seen across my own constituency of Dublin North East. If one walks through estates such as Clonshaugh Industrial Estate, Baldoyle Industrial Estate and the various industrial estates around Dublin Airport, for example, one will find that numerous local small and medium business people, from printers to creche owners and small shopkeepers are in difficulty. They have been in touch because they fear they will lose their business or the tragic day will come where people will be made redundant. The scale of retail closures is also shockingly obvious if one walks into the shopping centres in Dublin North East, a constituency I am proud to represent. For example, in Northside, Clare Hall, Donaghmede and Sutton shopping centres and on the high streets in Sutton Cross, Howth, Artane and Coolock one can see the very debilitating situation for the business and wider community. Retail outlets and businesses close down with no sign of any succeeding business. If one walks down any street in Dublin city centre or through any of the cities or towns in the country one will see boarded up windows where once there were thriving businesses. This contributes to a spiral of degradation when one should be trying to promote thriving commercial and shopping activities.

We constantly hear the mantra from the Fianna Fáil-Green Party Government and their senior banker associates pals that credit is flowing to small businesses and entrepreneurs. Many businesses have had overdrafts slashed or cut back completely. What is worse is that many of these firms are stable, viable businesses employing people but given the severity of the current recession they cannot operate wages and stock outgoings, for example, on a severely reduced credit line. Other self-employed people such as taxi drivers are being told by banks they will not qualify for new financing arrangements because the outlook for that industry is so dismal.

A survey by ISME in September found that 42% of companies were refused credit in the third quarter of 2010 and an incredible 55% were refused in the second quarter. ISME has flagged major concerns that nearly half of businesses over the past three months who applied for credit have been turned down, a measure that may result in even more job losses. There is a crisis in the sector.

NAMA simply has not worked in freeing up credit. This significant flaw with the NAMA construct was highlighted at the time by economists such as Dr. Karl Whelan of UCD who cogently argued there was no evidence to believe that NAMA would get credit flowing to the people in our economy who need it most, the entrepreneurs. Of course, the NAMA legislation contained no provision to allow credit to move after the banks had been changed substantially by the NAMA procedure. Under the Labour Party's nationalisation plan, banks would have been mandated with this key responsibility.

I note and warmly commend the proposal in the motion for a loan guarantee scheme for small and medium-size businesses. Fine Gael colleagues will remember that my own colleague, Deputy Joan Burton, originally proposed an SME working capital guarantee scheme. It is good to see Fine Gael taking up long-established Labour Party policies. I look forward to our Fine Gael colleagues being able to support a future Labour Government.

Deputy Burton has outlined a co-guaranteed, risk-sharing scheme whereby the banks would make the lending decision but the Government would step in to guarantee 50% to 75% of the loan which aligns the interests of the loan originator and the guarantor. This guarantee would reduce the level of the risk-weighted assets and reduce the recapitalisation requirements of the banks. It has been estimated that the expected loss on these loans, through bad loans, would be less than 5%, ensuring a significant volume of loans being advanced through the scheme. There are similar schemes in operation in the UK, Japan and Hong Kong, for example, and I urge the Minister and his colleagues, as a matter of urgency, to implement the Labour Party's SME working capital guarantee scheme. I again welcome that Fine Gael has adopted this policy.

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