Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity to contribute to this debate. Everyone in the country is aware of the major problem of the level of mortgage repayments, negative equity and mortgage arrears that is imposing a significant burden on thousands of Irish families. It is, generally, people under the age of 50 who are experiencing severe difficulties because they, by and large, are the people who have big mortgages and are raising families. If one partner in a household has lost his or her job or if the family income has been reduced, the first priority of people who are in financial difficult is to make sure the mortgage is paid and that the family keeps a roof over its head. Even those who are keeping mortgage payments up to date are incurring enormous financial difficulty and hardship in order to achieve that. The cost of food, transport and household bills such as heating and gas, is becoming increasingly difficult for most families. Raising young children and sending them to school is a major cost. A family may also be faced with repayments on a credit card or car loan. People are in severe difficulty and the mortgage repayment is the one they do their level best to maintain.

The motion deals specifically with the State owned Permanent TSB bank, whose variable mortgage interest rate is substantially out of line with other banks. Approximately 80,000 Permanent TSB customers throughout the country are suffering as a result of this excessive interest rate, which is more than sub-prime lenders were charging in recent years. I am a Permanent TSB variable rate customers, so I will desist from speaking too much on this topic. I say this merely to highlight the fact that the bank's customers are spread far and wide across the country.

I will deal with the lack of credit for small and medium sized enterprises, which is causing a major impediment to job retention and job creation. The Governor of the Central Bank, Professor Patrick Honohan, recently commented that credit conditions in Ireland are by far the worst in the European Union. It is important to stress that when we are asking for credit to be made available to small businesses we are talking about viable businesses. No one is suggesting that businesses that are not credit worthy and are not in a position to repay their loans should be given taxpayers' money. Most of the banks are majority owned by the State. We are saying there are many viable businesses that have cash-flow difficulties at different times of the year, depending on the cycle of their business. They are viable in the short term and long term and they need to be supported.

The majority of people I know in my constituency work in small companies with fewer than ten employees. Almost half the private sector workforce work in small businesses. These are the people who are keeping the country going. They are not getting high wages. Their incomes have been cut. Yet, their businesses are being threatened by the severe credit policy of the banks. I was struck by Professor Honohan saying credit conditions in Ireland were tougher than anywhere else in the euro area, in terms of interest rates and the possibility of getting a loan. However, Professor Honohan has a responsibility in this area because he is responsible for the overall banking situation in the country. It is not enough for Europe to advance funding to Irish banks to make sure they are solvent. They must be working and functioning as banks. A functioning bank is one that assesses loans, gives out loans, takes in deposits and makes a profit in that way. Most of the Irish banks are availing of credit from the European Central Bank and taking the easy option of investing that money in government bonds at a safe interest rate, in Germany France or even Ireland, and not passing the credit on to small businesses. This is causing a major restriction on small businesses and on their owners' ability to continue in business. If a small business person is about to get a new contract or to start a new job and must pay people but will not be paid for the work for a couple of months, he or she should be facilitated with a loan or overdraft. However, the banks are very restrictive in this regard. Public representatives are meeting examples of this every day in our clinics and in our daily lives. I hope the motion will persuade the Government to ensure that small viable businesses that are in a position to repay loans receive funding to create economic activity in their own areas. That would be the best stimulus the economy could get in terms of job retention and job creation. That is the main call I make on the Government this evening. It must be ensured that the credit drawn down on a quarterly basis by the small business customers is not an artificial figure.

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