Willie O'Dea (Limerick City, Fianna Fail)

Jonathan Swift said "Blessed it is he who expects nothing for he shall never be disappointed". The Bill has been a long time in gestation. If I regale the House with the occasions on which the measure was promised, we would sit well into August and would have time for nothing else. I will provide a few brief examples. In May 2011 a statement emanating from the Department said, "a workable scheme and optimum delivery mechanisms are now being considered and this work will be brought to fruition for the December Budget". In November 2011, the Government press office stated that the"Government announced details of a €100 million Micro Finance Loan Fund which impact 5,000 businesses and will be in place in the first quarter of 2012". In budget 2012, the Minister for Finance stated that the loan fund was agreed and about to come into existence. In February 2012, accompanying the Government action plan on jobs, there was a statement to the effect that the €100 million microfinance loan scheme will go live shortly.

Like the Credit Guarantee Bill, the legislation is an enabling Bill and provides that the Minister, with the consent of the Minister for Finance and the Minister for Public Expenditure and Reform, has been given the right to devise a scheme. The scheme it is not incorporated into the Bill and we have no idea what is in the scheme. We are totally in the dark about such vital elements as the classes of enterprises covered, the activities covered by the loans and whether any restrictions apply, what accounts will be kept by the enterprises, the amount of bureaucracy involved in impeding the scheme, the rate of interest and where people apply. If we tell people the scheme will be in operation by the autumn, the first question they will ask is where they should go. I will return to that point. We do know, however, from the terms of the Government's press release - it is not in the Bill but in the press briefing - that it will only apply to applicants who have first been refused by the banks. I take the Minister's point about not complementing or overlapping with the banks in terms of lending. Nevertheless, the requirement to establish that a refusal has issued from the bank could potentially make the scheme very restrictive. We will deal with that on Committee Stage.

The Minister mentioned in his speech and in the various press releases that the Government is allocating a particular sum under the scheme and that another amount will be leverage against that. Will he outline exactly how this will work? It is not immediately clear to me.

The scheme is being introduced against the backdrop of record unemployment. As we speak, a meeting I organised to discuss youth unemployment is taking place elsewhere in Leinster House. I hope to make an appearance before it is finished. Youth unemployment is currently running at 30%. According to the International Labour Organisation, ILO, report issued in October 2011, the real figure is probably more than 50%, with only Spain and Greece in a worse position. The ILO is of the view that the extent of youth unemployment in this country is significantly understated, with a huge cohort of young people "hiding out" in the education system and in training schemes. It is not just the level of youth unemployment or the overall unemployment figures that are a cause for concern - in fact, the pattern that is emerging is extremely disconcerting. Of the huge numbers of unemployed, more than half have been out of work for more than a year and more than one third for more than two years. That is a very serious situation.

We must also build into these statistics the figures in regard to emigration. The official data, in so far as they can gauge, indicate that 75,000 people have left the country in the past 12 months. Simple mathematics will show that this equates to more than 200 per day. While the initial wave of emigration consisted largely of foreigners who had come to the country in recent years either as asylum seekers or in possession of work permits, an increasing proportion is made up of well educated Irish nationals. EUROSTAT figures show that Ireland's emigration rate is by far the highest in the European Union and double that of our nearest competitor, Lithuania. The Minister for Finance expressed the view some time ago that people were leaving in order to see Ayers Rock, Niagara Falls and the other wonders of the world. I know many families who have been affected by emigration and, in every case, the reason for leaving was the person's inability to secure employment in this country.

The most significant difference between the emigration that is happening now and that of the early 1980s is the volume of skilled workers leaving our shores on a daily basis. In addition to the social upheaval emigration causes, the loss of so many skilled individuals has consequences for the long-term productive capacity of the economy and the dependency ratio. Social Justice Ireland has correctly noted that, "The emigration 'brain drain' which in some quarters is being heralded perversely as a 'safety valve' is in fact a serious problem for Ireland and may well lead to a skills deficit in the long term". That would have serious negative implications for this country, including in the matter of attracting foreign direct investment. We remain marooned in a crisis of unemployment and emigration. Everybody in this House, regardless of political ideology, knows the effects of unemployment. It corrodes social cohesion, shatters communities, destroys relationships, crushes hope and engenders despair. It has driven many people, both young and old, up to and beyond the limits of their endurance.

I concede that the Government has made some efforts to deal with the crisis, but there is a certain incoherence to its approach. I am reminded of the dog who, when he eventually caught up with the car he was chasing. did not know what to do with it. There is also a remarkable media phenomenon to contend with. Unemployment is the greatest scourge and social evil confronting this country, but there is a distinct lack of media coverage of that reality. Deputy Mick Wallace's tax affairs generated far more acres of media coverage than the unemployment crisis that is tearing away at the very heart of this country. The people who cut turf in the west and are represented by Deputy Luke 'Ming' Flanagan are very important people and undoubtedly an important part of their local economy. It beggars belief, however, that their plight has attracted more media coverage than that of the 500,000 unemployed and the 200 leaving every day. The entire agenda is tilted in favour of covering the travails of the turf cutters.

One of the most respected young economists writing in the media today is Stephen Kinsella, a lecturer at the University of Limerick. I am not being partisan in stating my great admiration for him. He summed up this phenomenon very well in a recent article in the Irish Independent:

Journalists respond to sharp changes in data series. A sharp tick up, a sharp tick down would get this story on the news. Or a major jobs announcement or the withdrawal of a large number of jobs. But that's it. The persistence of the problem is what is being lost.

Recent research collected for the European Parliament has shown [the] costs [of unemployment] include shame and stigma, increased social isolation, crime, erosion of confidence and of self-esteem, the atrophying of vital work skills, and potentially ill-health, financial hardship and poverty, increases in personal debt, homelessness and housing stress, family tensions and marital breakdown, boredom and alienation,

Most of these problems increase markedly with the duration of unemployment, and in Ireland there are an estimated 182,000 people [this figure is slightly out of date] unemployed for more than 12 months. Unemployed people report that being unemployed was one of the worst things that has happened to them in their lives. And yet this isn't news.

This is the backdrop to the legislation we are debating. Ours is not a centrally planned economy and we depend on business, large and small, to generate jobs. Vital to the proper working of that system is an adequate provision of credit. Credit is the lifeblood of business, without which it cannot operate. When he recapitalised the banks, the Minister for Finance observed that he had stuffed them with capital. That was done not because they are venerable institutions or national monuments or because they deserve to be preserved for themselves. They were stuffed with capital in order to ensure their survival and thus their capacity to lend into the productive economy and facilitate the creation of jobs for the people of this country. They have failed abysmally to keep their side of the bargain.

As a result, the Government is reduced to introducing fairly minor, minimalist and targeted gestures to relieve the situation. We have had a series of Orwellian announcements from the banks, including statements, reports, studies, dispatches and miscellaneous other propaganda, all seeking to compel us to ignore the evidence before us. They keep telling us that lending is normal and there is no credit flow problem. The net effect of all this propaganda is, as Orwell put it, to "give an appearance of solidity to pure wind". Apart from the anecdotal evidence, the official evidence is unusually compelling.

For example, on 5 June last, the head of the Credit Review Office, Mr. John Trethowan, eventually had to admit he was disappointed that there was not more support for enterprise and risk taking, as a result of new and increased lending by banks. William Butler Yeats used the phrase "peace comes dropping slow", but for some people in the public sector reality seems to come dropping even slower. I am glad, however, that the head of the Credit Review Office has at last recognised the daily reality before our eyes.

Professor Patrick Honohan, the Governor of the Central Bank was far less circumspect. On 1 March this year, he said Ireland was the most difficult country in the eurozone for small businesses to access credit. He stated bluntly that credit was not flowing as freely in Ireland as in other EU countries. He said, "Credit conditions for SMEs are tougher in Ireland than anywhere else in the euro area, both in terms of cost and availability". That is a pretty stark judgment from the Governor of the Central Bank .

A recent EU survey on access to finance in the euro area, found that Irish SMEs were the second least successful in obtaining credit, after Greece. It examined factors such as the likelihood of being rejected for a loan, the size of loans, the level of collateral required to secure loans, commissions and fees, and the interest rate charged. All of those factors were found to be "substantially less favourable in Ireland than in the euro area generally".

A recent survey by ISME published on 12 March, found that 91% of firms felt banks were making it more difficult, rather than easier, to access credit.

A Central Bank paper by Dr. Fergal McCann, which studied and analysed bank lending for the first nine months of 2011, found that while an extra €1.6 billion was loaned into the SME sector of the economy, during the same period the banks removed €2.4 billion credit by closing credit facilities. Therefore, real lending to SMEs in this period was minus €800 million.

Together with those in Greece, Irish SMEs are the least successful in obtaining credit according to the EU survey on access to finance in the euro area. The Government has responded on a number of fronts. A small amount of money was allocated to the development fund for medium-sized and larger companies. A relatively small amount of money was dedicated to the innovation fund, and in addition there is the credit guarantee scheme and the microenterprise loan fund scheme. However, if the banks do not lend properly into the economy all of this will not begin to scratch the surface. Let me put it in context. The total amount of outstanding credit to SMEs is about €60 billion. The target for the two recapitalised pillar banks, AIB and Bank of Ireland, for a two-year period was €3 billion per annum each. That is €12 billion extra funding over a two-year period. We are talking here about €10 million over a number of years, which is like the little Dutch boy with his finger in the dyke.

In the Government's press release and again in the Minister's speech, it is claimed that this will create 7,700 jobs over a ten-year period. What is the basis for that claim and how has that figure been measured? Was it just picked from the air or is there any logical, scientific explanation? If so, how has it been calculated? I know those matters are, to a certain extent, dependent on opinion but what analysis has been done?

Even if we assume that it achieves its target of 8,000 jobs over ten years, to be generous, that is 800 per year. I have already made the point that emigration is running at over 200 per day, so the yearly target for the amount of jobs to be created here will cover about 3.5 days' emigration. The ten-year target figure will cover about one month's emigration at current rates. I am not saying this in order to belittle the Government's efforts but just to put the matter in context; we are not even beginning to scratch the surface.

I would like the Minister to address a number of questions in his reply. First, is it intended that the Joint Committee on Jobs, Enterprise and Innovation will be able to debate this scheme before it comes into effect? I have no intention of delaying it.

Second, when does the Minister envisage that it will come into effect?

Third, to whom must one apply in order to avail of the scheme? Will it be some central agency in Dublin or will it be done locally? Can it be done through county enterprise boards or the new one-stop-shops as they will become? If the administrative costs are not too high, this should be done locally or at a very minimum regionally. Many people are interested in this scheme and they have asked me how it will be administered. We do not have a clue so all I can tell them is that the legislation is going through the Dáil, which will give the Minister the right to set up a scheme.

I wish to raise a technical point with the Minister. What are the civil consequences for directors of the lending company who fail to disclose a material interest? They are obligated to disclose a material interest and there are certain statutory consequences set out in the Bill, but what will the civil consequences be? For example, will they be liable for damages and, if so, how will those damages be measured?

Section 18 prohibits disclosure of confidential information by directors and staff of the lending agency, but the section does not seem to contain any sanction to be applied when people disclose such information. Where is the sanction therefore?

Section 22 provides for a review of the operation of the scheme within two years of its commencement. However, there is no time limit for this review and there is no obligation for the review to be placed before both Houses of the Oireachtas for the purposes of debate.

Those are a small number of queries I had for the Minister, but I will turn to more detailed matters on Committee Stage. I welcome anything that gets €1 of extra credit into the economy. While the potato famine destroyed the social and economic fabric of this country 170 years ago, it is now being destroyed by a credit famine. I will therefore support anything that tends to get extra credit into the economy. I am not opposing the Bill but I deeply regret its shortcomings and limitations.

See this speech in context