Brendan Smith (Cavan-Monaghan, Fianna Fail)

I compliment my colleague, Deputy Michael McGrath, on the very constructive motion he put before the House yesterday dealing with mortgage difficulties and access to credit. As has been mentioned by previous speakers on this side of the House, access to credit is important for the economy, job creation and every household.

Public representatives are all very conscious that throughout the country businesses are finding it extremely difficult to access loans or maintain adequate credit facilities on an ongoing basis. Such credit facilities are essential to protect existing jobs and, in many instances, to help create much-needed new employment. The credit situation is, in many cases, preventing the creation of much-needed jobs and the lack of access to credit for many SMEs has caused some enterprises to reduce their workforce and, sadly, close.

Sole traders and people employing six, 50, 100 or more people want decisions and action to deal with this intolerable situation. They do not want to hear about reviews or reports, rather they want decisions from Government. The provision of adequate credit to businesses of all sizes is necessary and has to be addressed. The absence of credit is not hearsay and has not been exaggerated by the business community, householders or anybody else.

Such difficulties have been highlighted by the Governor of the Central Bank, Mr. Honohan, when he said that credit conditions for SMEs are tougher in Ireland than anywhere else, both in terms of cost and availability. The difficulties facing SMEs and the impact on the national economy is clear when one considers over 655,000 people are employed in over 200,000 small businesses. Those businesses are involved in all types of enterprise and a significant proportion of firms employ fewer than 12 people. Fortunately, they are spread throughout the country.

Such enterprises are very varied and include those involved in manufacturing and the provision of services. They employ people with varied skills, experience and educational attainment. A recent report from the Central Bank highlighted the difficulties in achieving the right credit conditions, the right credit climate and the subsequent difficulties facing businesses. The survey was referred to earlier in the debate and is worthy of note. It reported that more than one third of SMEs sought loans in the past three months, compared to one quarter of companies in the same period a year ago. The Central Bank report is in a similar vein in that it demonstrates an increase in demand for trade credit and overdrafts over last year. The Irish Banking Federation claimed that the drop in credit to SMEs is due to depressed demand. That simply does not add up. ISME, a representative organisation for a very important sector of our economy, continuously highlights the lack of progress in addressing the credit deficit. A Central Bank report demonstrates that the issuing of new loans to the SME sector falls far short of the quantum lost through the closure of credit facilities.

Last night, my colleague Deputy McGrath outlined again the unacceptable imposition on people due to the standard variable interest rate charged on mortgages by State-owned Permanent TSB. The interest rate being charged can only be described as exorbitant and the Government ought to exert the necessary pressure on the institution to achieve a just and fair result for the mortgage holders.

I hope the partial credit guarantee scheme that the Government proposes to launch and which we heard about so often will be successful. It was promised that it would be in place by the end of the first quarter of this year but this promise will not be honoured. I understand that, to bring in the scheme quickly, one must opt for the de minimis State aid rule, but this would be very constricting. I understand that if an enterprise has accumulated grant aid totalling up to €200,000 over the preceding three years, it would be excluded. Who decides on the viability of the enterprise? We do not want our banking sector deciding on the viability of businesses in the country. It is very important that the scheme be brought forward as soon as possible and that it not be as constricting as would appear to be the case from what we have heard to date.

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