John Perry (Sligo-North Leitrim, Fine Gael)

Job creation is central to our economic recovery, and the programme for Government has job creation at its core. That is why the Government set the jobs initiative as a key high-priority deliverable within our first hundred days in office.

Small businesses are the backbone of our economy. We currently have some 250,000 such small businesses, employing approximately 700,000 workers. By appointing a Minister with specific responsibility for small business, the Government is clearly signalling to the business community and to the public at large that small businesses are and will continue to be central to economic recovery.

My Department's roll is to ensure that we have the right policies in place to support and enlarge our enterprise base to facilitate job creation and retention. It is only by creating the right environment for businesses to expand that we will see the creation of new jobs. We must champion the cause of businesses, particularly small businesses, which can create good jobs in sustainable activities.

The jobs initiative is part of a strategy by Government to kick-start economic activity. The intention of the measures announced yesterday by my colleague Deputy Michael Noonan, the Minister for Finance, is to target our limited resources at key sectors of the economy that can assist in getting people back to work, provide opportunities for those who have lost their jobs to acquire new skills, and build the confidence that will encourage consumers to spend. In particular, the jobs initiative focuses our limited resources on measures that offer the greatest potential for expansion and employment creation in the domestic economy. It focuses on labour-intensive areas that will generate jobs quickly, which is important.

One of the key issues that affects the ability of viable small business to create jobs is access to credit. This is a challenge the Government is determined to address. The recently announced plan to restructure and recapitalise the banking system is the principal response to this challenge. These plans are designed to secure an adequate flow of credit into the economy to support economic recovery, even as the banking system is down-sized.

The banking system must provide substantial new lending into the economy. The business plans submitted by the pillar banks provide for more than €30 billion of new lending over the next three years across their core business areas. Up to €20 billion of this figure will go to small and medium-sized businesses which, as I mentioned earlier, are the backbone of our economic recovery. The financial authorities will rigorously monitor the banks' activities to ensure that credit is available for borrowers who meet reasonable credit standard requirements. This will be reviewed by Mr. John Trethowan of the Credit Review Office.

Notwithstanding this, there remains an issue, predating the recent banking crisis, whereby new companies or expanding companies trying to develop new products or markets struggle to secure finance. This can be due to a lack of familiarity or understanding of the new industry or product concerned or the potential of new markets. This market failure in the provision of credit to viable businesses became particularly acute in Ireland during the property bubble, during which time Irish banks lost the capacity to assess credit risk in companies that were unable to offer property-related collateral. That is why my Department will work with the Department of Finance over the coming weeks to flesh out the lending targets of the two pillar banks, agreed as part of the bank restructuring plans, and develop a package of additional targeted initiatives designed to address specific market failures in the provision of credit for viable businesses. These measures will be subject to EU state aid approval where necessary.

As part of this package of initiatives, and in accordance with the commitment given in the programme for Government, we will also initiate a tendering process for the development of a temporary partial credit guarantee scheme. The design of this scheme will draw on international experience to support new lending that would not otherwise have been extended by the banks. In this way, the scheme will complement, rather than be a substitute for, existing lending activities by the main financial institutions. It will be designed to encourage banks to lend to new or expanding commercially viable SMEs so that they can enlarge their companies, develop new products and expand into new markets. The Government's commitment will be for an initial period of one year. Specific performance criteria will be set down that will allow for review and revision of the scheme at the end of that initial period before committing to a roll-over of the scheme for subsequent years. There will be a modest, and known, level of exposure to the taxpayer when the scheme is launched, but I expect it will have a significant positive knock-on benefit for the economy in terms of job creation, welfare savings and returns to the Exchequer by way of tax revenue generated. With my colleague, the Minister, Deputy Bruton, we will work with the Minister, Deputy Noonan, to develop this proposal further. The details of the scheme will be announced in June with a view to having a targeted scheme in place by the autumn.

The proposed partial credit guarantee scheme has the potential to support 25,000 jobs directly and indirectly; contribute an estimated €300 million to the Exchequer from increased tax and PRSI receipts and decreased social welfare costs; and to have a positive impact on exports, contributing to further jobs in the medium-term.

The microfinance start-up fund is an important initiative. The Government also recognises the importance of supporting business start-ups if we are to encourage entrepreneurship and create more jobs. We acknowledge the difficulties which can be experienced by micro-enterprises, in getting access to finance at such an early stage of business development, which is critical. Therefore, the Government is committed to developing a suitable micro-finance fund for micro-enterprises, drawing on funding from the National Pensions Reserve Fund and other sources. Arrangements for the establishment and operation of such a fund will be developed in consultation with the relevant stakeholders, with a view to formalising proposals in the context of budget 2012. This commitment on a micro-finance fund is the Government's contribution to filling this gap in the area of financing enterprise.

Another important initiative is ensuring that there is 15-day prompt payment across the public sector to improve the cash flow of businesses, particularly small businesses. The Government will require the HSE and the local authorities, excluding commercial semi-State bodies, to pay suppliers within 15 days. Ensuring payment is made within 15 days is an important measure.

With regard to SME procurement, public procurement in Ireland is worth approximately €15 billion per annum. It is a critical area for small companies and it will also foster greater SME engagement. The Government will build on existing initiatives to promote greater access to procurement opportunities for small companies. It is important that there is greater access to procurement opportunities for SMEs within EU public procurement and such greater access can generate increased businesses. As well as being an important source of income, winning public sector contracts can have a very positive impact when companies are seeking to win contracts abroad.

The Government has undertaken, in the jobs initiative, to build on existing initiatives to promote greater access to procurement opportunities for the SME sector. Enterprise Ireland will assist its client companies to build capability in responding to tenders, will also foster greater SME engagement in developing innovative products and services to meet the needs of public bodies and will explore similar schemes along the lines of the small business innovation research fund. Enterprise Ireland will be very much involved in this respect.

The State provides a range of supports to help enterprises run their businesses better, reduce costs and help job creation. Take-up of some of these schemes by business has been less than optimal. For example, Revenue's job assist scheme, which allows employers generous tax deductions if they employ a person who has been unemployed for 12 months or more, has been taken up by only a few hundred people, even though in excess of 153,000 people have been unemployed for 12 months. In the past 18 months, neither the employer's PRSI incentive scheme, nor the FÁS work placement programme reached their targets. The Government believes that a higher rate of take-up can be secured on these schemes and on the new initiatives being published today. The Government will work with business representatives to encourage better take-up of these schemes.

The Government will also redouble its efforts to promote other supports to businesses, such as those provided by the Sustainable Energy Authority of Ireland. The employers' PRSI reduction is very much welcomed and will encourage job creation. Reducing business costs and burdens is important. The Government is committed to keeping all costs which impact on business as low as possible. This will require a joined-up effort across all Departments, and I will work to ensure this.

Small businesses are the backbone of the economy. As Minister of State with responsibility for small businesses, I will ensure that the concerns of small businesses continue to be to the fore in Government initiatives that harness the growth and job creation potential of this critical sector. This jobs initiative represents the first steps of this new Government on the road to improving the economy's international competitiveness and promoting job creation.

I recognise the contribution of small companies to the economy and their potential for job creation and job retention. This jobs initiative is a first step. The reduction in VAT for the hotel sector, the removal of the travel tax and so on will encourage confidence. The role banks will play in creating credit in the economy and the€20 million that has been ring-fenced for small companies will encourage the entrepreneurial spirit in the country and create jobs. If only 100,000 of the 270,000 small companies were to employ one extra person, great progress would be made. The announcement of the jobs initiative yesterday will encourage the potential to create jobs. I compliment the Minister, Deputy Noonan and the Government on a very worthy document that will connect with the Irish people, employers and small companies and will result in the potential for this economy to expand in the not too distant future.

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