Noel Harrington (Cork South West, Fine Gael)

I welcome the Bill as another small step in the programme of recovery for the country and another commitment in the programme for Government that has been achieved. In a recent speech the Governor of the Central Bank of Ireland, Professor Patrick Honohan, highlighted the fact that credit conditions for SMEs were tougher in Ireland than anywhere else in the eurozone, in terms of both cost and availability.

It is welcome that we are designing this scheme with a considerable amount of hindsight. According to a World Bank study in 2008, there were 76 similar schemes operating in 46 countries which were obviously developed or OECD countries. Thus, in many respects, we are behind the curve in introducing a credit guarantee scheme.

I hope this scheme will encourage growth in our enterprise culture. We must recognise that some of these enterprises may fail or have a need for further capital.

I would like to see reporting or reviewing of the results of this scheme. I encourage the Minister to stipulate, as a fundamental part of the Bill, that he must present, before the summer recess next year and in the following two years, a short and comprehensive report to the Oireachtas enterprise committee outlining the loans advanced, the enterprises and jobs involved and the cost to the State.

We must remember the banks are the main beneficiaries of the State guarantee scheme and the citizens have invested billions of euro in equity and capital to guarantee their commercial viability and future. We now need to encourage the banks to extend the scheme to the SME sector, which is struggling the most and which is of such benefit to the economy. In doing so, we need to examine the role banks will play not only today but also in five, ten and 20 years. We must have a cultural change in our banks and learn the lessons we have not learned to date. We did not reform the banks after the ICI debacle, the DIRT inquiry or the Rusnak affair. I remind Members that Munster Bank failed due to fraud and mismanagement and was liquidated in 1885. It was taken over and became the Munster and Leinster Bank, which eventually became AIB. We must not return to the old ways or we will be in the same position again before we know it.

The main purpose of this legislation is to encourage the banks to provide credit to small and medium sized viable businesses to encourage growth. We need to create a new enterprise culture in our banks which are risk averse due to their recent history. We must recognise those who are prepared to put their heart, soul, hard labour, time and money into their businesses. I am well aware the banks are suffering from what could be described as excessive analysis or, to put it another way, paralysis by analysis. We need to see a seismic shift in the role banks play in society. With the State's equity investment in our pillar banks, we are in a unique position to reform the banking system. Too often, bank branches are becoming administrative rather than decisive, especially in small provincial towns. This is leading to a stasis in lending which needs to be addressed.

I would like to see the banks taking in personnel from the business and commercial sector and sending their personnel to that sector on three or five year contracts to create a greater understanding of what occurs on both sides of the financial divide. The funding should be invested in a wide variety of industries, thus lowering the risk involved. Bearing that in mind, I hope a wide variety of enterprises will be capitalised.

I am aware agriculture is not directly included in the scheme but I hope potential products linked to the sector will not be excluded. The experience of the agriculture sector of a small engineering company in my constituency which has created a number of jobs and successful products, particularly in regard to health and safety around the farm, is invaluable. It would welcome increased access to capital. Will somebody who develops a new cheese product, for example, and who needs new machinery to expand production be able to avail of the credit or will he be disadvantaged because he will not be able to obtain a loan guaranteed by the State in the order of 75%?

I am very concerned about the attitudes in banks with regard to assessing projects that are typically outside the building sector. Banks had ready access over the past decade or so to quantity and property surveyors who told them the costs, potential liabilities and risks associated with construction projects. The financial institutions are lacking in expertise to assess other ventures. This is a fast-moving world and entrepreneurs are coming up with new ideas every day. There are new technologies and I am not sure the banks have the expertise to assess projects that could be very beneficial to the economy. These are cast aside because the banks are unable or unwilling to deal with them. They just do not know how to do so.

Let me address the 2% fee involved in the scheme. I ask that it be centred around the cost of administration such that lenders are borrowers will not be inhibited solely on the basis of the fee.

Ireland is not short of initiative, entrepreneurship, guts or hard work. It is very short of capital, however, and the Bill is an effort to address this. Perhaps, through thinking outside the box, the Department will take on board a proposal for concessions. There are tax concessions for employee share options. It would be interesting to see the Government offering tax concessions or reliefs to employees of small and medium enterprises who want to invest in the companies in which they work. Very often, an employee who inherits cash or obtains money from selling property might want to invest in a scheme that would offer benefits, such as a pension fund. Could such an employee not invest in the company in which he works while availing of a tax benefit as if he were investing in a pension scheme? This would make for a better employer and employee. It would, perhaps, free up capital in regard to a manufacturing or working base.

The Government is drafting new personal insolvency legislation. I would like to see the end of the guarantee of the family home as part of the lending process. It is simply not on any more that entrepreneurs who approach a bank are asked to put up their family homes as collateral. This dates from the bricks and mortar mentality in which the banks are stuck. They are in a rut and cannot see beyond the value of the family home. I would like to see legislation passed that would exclude the family home from consideration as collateral. The entrepreneurship, initiative, hard work and track record of those seeking a loan should be used as the collateral required by the banks. Too often, the family home is used and, too often, it is decimated as a consequence. That is wrong and I would like to see an end to it. The courts recognise the right of the wife and mother to half the value of the home. Let us complete the circle by recognising the rights of the husband and father. Let us take the family home out of the lending arrangements for commercial finance.

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