John McGuinness (Carlow-Kilkenny, Fianna Fail)

I welcome the opportunity to discuss the Bill and associated issues, including small businesses in this country. I welcome the Bill and what it sets out to do. It has been a long time in the making. While the Bill will assist with the provision of finance to small businesses in this country, it is not necessarily the answer to all their problems. We must reflect on what is happening currently and focus on the ISME research into the feelings of business people throughout the country and the actions of banks in regard to those businesses.

The issue was raised today and yesterday with the Taoiseach on the Order of Business. We have been talking about it since the crisis began a number of years ago. Nothing has been sorted out with the banks. The Minister made the point that this is no substitute for the regular business of lending by the banks, but there is no regular lending going on from banks to the small businesses of this country. That is the problem.

Regardless of what the previous Government did and, in particular, what the Government is doing in the current year, small businesses are not being approved for loans. That is what is happening. It is not just I who is saying it; it is the result of the quarterly banking watch conducted by a national business representative organisation in this country. We must ask what exactly the banks are doing with the €3.5 billion they are supposed to lend to small businesses. We must ask what they were doing last year and the previous year. They have been calling in businesses throughout the country, restructuring their overdrafts into loans and describing it as new business. That is not new business. They have been grabbing lodgements made to businesses and offsetting them against loans rather than putting them into a current account and holding businesses to account in that way. That is not necessarily doing business as the Government set down for the banks in this House in terms of the money they received to fund the small businesses of this country. We should not tolerate it. Somebody must call in the banks. I am regularly told the Government calls in the banks and sets down the reasons they should lend. The Government gives the banks the money but small businesses are not getting it. One could ask how the economy could function properly and how jobs could be sustained or created on the basis of banks simply not banking. They are not acting as bankers to businesses in this country.

In the survey to which I referred, 92% of those surveyed said the Government action was having a negative impact, or no impact, on banks and their relationship with banks. We must understand that because by announcing the Bill and the money associated with it or the announcement again by the Taoiseach of the €3.5 billion for the two pillar banks, one is creating an expectation that in some way the problem will be solved when it is not being solved. Until the attitude of the banks is changed, they will not lend money to SMEs. What they are doing is correcting their own balance sheets, doing their own business and not lending money. That cannot continue. Everyone on all sides of the House has articulated that point of view. We are not making up the stories. We are giving the facts in the course of many debates in the House, yet nothing has happened. There is a great deal of activity but no action. That is not a political point. It is what is being said by small businesses throughout the country. They are looking for real action and real banking. Until they get that, this economy will perform poorly or not as well as it should and is not going anywhere in terms of job creation. We continuously await a new direction from Government or a new direction from the banks.

The Governor of the Central Bank, Mr. Honohan, has said the same thing, that this country is the most difficult place within Europe to get credit. The Central Bank is concerned there is very little competition in this country and that foreign banks have left the marketplace, which essentially leaves people to deal with AIB and Bank of Ireland. I do not know what they are telling the Minister but it cannot be the complete truth about small businesses because what small businesses are telling their business organisations, representative groups and Members of the House, and what the Taoiseach said today, is that banks simply are not lending. One could ask how long more this can go on.

A total of 700,000 people rely on jobs created by small businesses in this country. Small businesses include single entrepreneurs, families and businesses that are central to every community and parish in this country. They are telling us they cannot function because of the banks. Currently, most people involved in conducting a business – if they are lucky enough – are transacting in cash, not because they are avoiding tax, but because they are avoiding the banks. The banks in turn are getting substantial sums of taxpayers' money and are not doing what they were told to do with the money. They are not supporting businesses.

I dispute the policy the Government is now to undertake on county enterprise boards. Bringing them under the remit of local authorities is the wrong step. There is no culture of entrepreneurship in local authorities. Let us examine what they have done. They privatised waste disposal because they could not do it themselves.

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