Dara Calleary (Mayo, Fianna Fail)

I welcome the publication of this Bill and pay tribute to the Minister and his Ministers of State for their persistence in bringing it to the floor of the House. Work on the legislation began under a former Minister, Batt O'Keeffe, but the persistent blockage to which it was subjected came, as with so many other measures, not from the sponsoring Department but from the Department of Finance. The latter simply does not comprehend the real world and how serious the situation is, not only for small businesses but for everybody in this country. Its stake in the so-called rescue of our banks and their return to a feasible situation means the Department of Finance is blind to the reality of our domestic economy. By focusing on restoring our banking system at all costs, it will continue to be blind. Against that opposition, credit must be given to the ministerial team at the Department of Jobs, Enterprise and Innovation for bringing the legislation thus far. However, I remain sceptical, in view of that opposition, as to whether this scheme will see the light of day. I am concerned that it will end up, like other schemes, choked by administrative and other obstructions. It will be a good day for business when we see people actually receiving money under the scheme.

It is important to note the finding - provided not by the Fianna Fáil research office but by the Central Bank - that in the first nine months of 2011, €1.6 billion was issued in new loans to the small and medium-sized enterprise sector. The banks have pointed to this headline sum as evidence of the great job they are doing in regard to new lending. What they are not telling us, however, is that in the same period, they withdrew €2.4 billion in funding by closing existing credit facilities. For example, a business owner who seeks to renew his or her overdraft is informed that it is being converted into a term loan. Likewise, cashflow loans, stocking loans and so on, facilities that were always previously available to businesses, are instead offered as term loans, if at all, and overdraft limits are halved. This is not the fault of local branches whose staff are familiar with their customers' needs. Instead we now have a bizarre, Russian politburo-style central decision-making process whereby everything is done on a form. In contrast to the madness in lending that went on for many years, we are now at the other extreme where the lack of lending and withdrawal of credit facilities are bringing businesses throughout the State to the brink of closure.

I do not doubt the Government's good intentions in bringing forward this Bill, but the reality is that it is too late for the tens of thousands of SMEs which, in the two years it has taken the Department of Finance to get its act together and provide funding for these provisions, have had to shut up shop for want of credit. Many of these were solid businesses that were operating for generations and had already come through very difficult economic times. Their failure in recent months and years is a consequence of the inability to access the traditional forms of bank lending that are the oil of any economy. Against this background these provisions are to be welcomed, but we must wait to see what happens after they get through the House and past the great purveyors on Merrion Street.

As other speakers observed, we have no problem talking the talk in regard to SMEs. There is no doubt that we are having a very good year in terms of foreign direct investment, with several excellent announcements in recent months, to be followed, we all hope, by more. However, the real powerhouse of this economy is the small business sector. It is the companies throughout the State which employ as few as five, three or even one member of staff that are keeping the country going. Yet there is no trumpeting of their achievement in managing to keep their doors open despite the bizarre odds stacked against them. Some, for example, are faced with rents that were negotiated back in 2005 or 2006. As a consequence of the ancient property law enshrined in our Constitution, we are afraid to take on that situation. The proposed constitutional convention will discuss a range of important social issues, but here is an issue that is closing businesses down and leading to job losses. Once again, it comes back to the Department of Finance and its mother ship, the National Asset Management Agency, which tells us nothing can be done on upward-only rent reviews.

We all, Government and Opposition, must start walking the walk when it comes to providing support to SMEs. It is not good enough to participate in a debate on this issue every few months in which we merely outline our concerns and then return to our constituency offices to pull our hair out in an effort to deal with the problems facing small businesses. One of these problems is rates. The basis of the rating system in this country is to be found in pre-independence times. The Government has indicated its intention to undertake a re-rating of every property in the country. That will take ten years to complete and, knowing how these matters proceed, will probably be based on 2005 or 2006 values which are entirely unrealistic. Local authorities do not have the capacity to offer flexibility in the form, for instance, of offering new businesses a rate remission for one or two years and attaching that remission to employment targets. As a result, many businesses are not even getting off the ground. The working capital is there to get them through but because of these rates, for which they receive nothing in return, they cannot get up and running.

Will the Minister of State indicate who will be responsible for running the scheme? Will it be the banks or will there be some type of independent mechanism for that purpose? With all due respect to the Credit Review Office, it is simply not hitting the target because it is not taken seriously by the banks. One is put in mind of the teacher who puts on a good show on the day of the school inspector's visit before reverting top type the following day. The Credit Review Office says its targets are being met, but its calculations are based on credit approvals. As Deputy McGuinness observed, it is all very well for banks to say they sanctioned such and such a credit facility but, in reality, they are demanding as security an applicant's left arm, right leg and, for good measure, the family home if it has not been taken already. There is an enormous difference between credit approval and credit draw-down, a difference which is found in the comparison between the €1.6 billion issued in new loans and the withdrawal of €2.4 billion in existing credit facilities.

If the Credit Review Office is to be taken seriously by the banks and the SME sector it must change how it does it business, part of which is to report what is actually happening as opposed to accepting the pronouncements of mission control at bank headquarters. If the banks have control of the day-to-day running of this scheme they will simply reassure us, a year or so after it is established, that they are lending the amount they undertook to provide, but they will not tell us the conditions attaching to that lending. They will not tell us how much money they have withdrawn from other business facilities as a result of being able to hide behind the funding allocated under this initiative. Whatever authority is charged with arbitrating the scheme must have robust powers, the necessary resources and staff who know what it is like to work in the private sector, who understand the pressures of having to keep one's door open and pay one's staff while forgoing one's own salary because there is no money left. Those charged with rolling out the scheme must have experience at the coalface of the small business sector. Only then will there be the possibility of it having the impact that is required in terms of job creation. Only in those circumstances can the initiative have a chance of instilling a culture of respect for the endeavours of small business.

SMEs fail for many reasons. We must ensure the supports are in place to get them back on the horse. Government policy - not just party policy - must change in order to take the small business sector seriously and give small business owners the break they need. This legislation represents a small start in that direction, but I am concerned that it will be mangled by the system before it can be put into operation. The scheme includes several restrictions which are unfriendly to some sectors. For instance, the agricultural sector is being talked up as the great saviour of the economy, yet these proposals do very little for small food businesses. I genuinely hope to be surprised by how this scheme works out in practice. Until then, however, I am obliged to be sceptical.

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