Éamon Ó Cuív (Galway West, Fianna Fail)

Tá áthas orm deis a bheith agam labhairt ar an mBille seo. Like motherhood, it would be very hard to oppose the Bill, as anything that will help business is to be welcomed. I agree somewhat with Deputy Kevin Humphreys that life is a series of small steps and that rarely are problems, even major examples, solved using a big bang approach. This is a very small step and I will watch with interest to see how the scheme works in practice.

The Government is putting in place a guarantee scheme, but the banks are already required to lend considerable sums of money - €3.5 billion this year and €4 billion next year. This scheme has the potential to add €150 million which, and in the light of the other lending figures mentioned, is very small. How can the State be sure the banks will not use this money to guarantee loans they would have given, thus deleveraging risk to the State? If we are honest, a properly functioning bank would have the majority of its loans repaid, but there is always has an element of risk involved. It is written into a business plan that some businesses will fail.

During the years I have seen schemes getting bogged down in endless bureaucracy. I have the same fear for this scheme. For many, this might just bring about more forms and plans. By the time some people avail of the guarantee, the good will have gone out of it. I have stuck to the view that for most businesses, a grant of €5,000 or €10,000 is normally next to useless, as it may cost €15,000 or €20,000 to access it. The Minister of State is probably familiar with this syndrome. I have advised people where very small grants are available to not bother looking for them if they will distort their plans considerably. They would be better off taking the straight commercial way. Many are tempted by the availability of money through a grant or a loan, but rather than tailoring their plans around it, they should avail of if only if it fits the plans. Therefore, we should be careful about this aspect.

The sample figures tell us much about the scheme. There are 1,800 businesses, with the average loan being €76,000. According to this we are talking about businesses with up to 250 employees. A loan of €76,000 is a very small for an expanding business. In many cases, it would be a drop in the ocean. This, therefore, is a micro scheme. I know many businesses, urban and rural, that are not huge businesses or multinationals for which such a loan would be very small. It is a lot less than the loan for a single house.

It is estimated the cost of the scheme is €19 million over three years. That is a very small commitment on the part of the State. A sizeable amount of the money for the scheme will come from the people who are going to benefit. Effectively, there is a 2% penalty on their interest in return for the loan. That is a significant cost for small businesses. The idea the State is paying for the guarantee is wrong. It is paying partially for the guarantee but in no way is it covering the guarantee.

Then we come to the endless conundrum of the Department of Finance. The Government is facing the challenges we faced. The net Exchequer benefit from this is supposed to be €25.5 million. Is that correct?

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