Catherine Murphy (Kildare North, Independent)

This Bill is overdue, but it is also necessary and I welcome it. A public representative very quickly becomes a one-stop shop and I am sure we all have the experience of people calling to our offices every week with ideas. People come to us asking us to whom they should go because they have a very good idea but they do not have the funding to get it off the ground. One can send them to a body like a county enterprise board, where mentoring and funding for a business plan or feasibility study are available, but they will run into the difficulty at the next point after that if the option of bank finance is not available to them.

Many people laugh when it is suggested to them that they could ask a bank for finance. It is the last place where many people would think of going, unfortunately. Many of those who have good ideas are depending on social welfare. In some cases, they have been unemployed for a long time. Their reluctance to approach the banks might be understandable because they do not have the kind of profile that is normally associated with those who are thinking of starting new businesses. I appreciate that this fund is not for the exclusive use of start-up companies. It will also be used to help existing enterprises to grow, which is just as important. The micro-enterprise sector is central to the generation of sustainable growth. This country is not short on ideas. We need to focus on exploiting, or taking further, the great creative ability that exists here. It is clear that as long as the means of entry are right, there is potential to take businesses beyond the micro-enterprise sector. That will continue to be important. When I learned that over 90% of the businesses in the European Union are categorised as being in the micro-enterprise sector, I was surprised and I thought it was very high. I was under the impression that most employment is based in large enterprises. It is an interesting statistic.

If we are to build a strong indigenous base, we have to harness the creativity that exists. This is an element of what is definitely needed. One gets a better return into one's economy on the purchase of raw materials from the indigenous sector than one does from foreign companies, welcome as they are. Seed capital of €25 million will continue to be supplied to the banks, which will comprise the primary supplier of finance to the micro-enterprise sector. The availability of another fund cannot be an excuse for the banks to reject applications or fail to take risks. I am worried that is what will happen. I would like to hear what the Minister has to say about the sanctions that will be open to him if the banks behave in such a manner when the fund that is being set up is available. The banks, particularly those into which we have pumped enormous sums of money, cannot be allowed to evade their responsibility to this sector. No one is saying there should be irresponsible lending, or there should not be a return on lending. However, it should not be so cautious that the development of an entire sector is impeded. Similarly, established companies that would be viable if they had the funding to keep going should not be hindered. I wonder if the banks know how to lend to business. The conventional criteria for lending that they have used have involved things like a return on bricks and mortar. I do not think they have got their heads around the need for a change in their culture that involves looking at how returns can be made from investment in businesses.

I would like to speak about the county enterprise boards, which are still in place but are about to come under the umbrella of the local authority sector. I understand the local authorities will receive applications in the first instance. They will process them and make recommendations on them to the Social Finance Foundation, which is a non-profit company. The foundation has had some success in awarding or approving loans. There has been a reasonable level of take-up. One would not expect everything that is awarded to be taken up. The foundation has demonstrated that it can achieve a reasonable level of success. Considerable funds continue to be available to it. While is obvious that some risk is associated with the establishment of this fund, I suggest there is a real possibility of a return from it. This has to be viewed in the context of the totality of the experience of the person who will come in to start an enterprise. Much of it will depend on whether good-quality training is provided to ensure proper business plans and feasibility studies are conducted. Some of the businesses which have been through this approach have availed of the mentoring that is available, for example. Many people say that although they got nothing other than mentoring from the county enterprise boards, it was more valuable than funding. It is important that we do not lose much of the valuable work that has been done by the boards.

I am concerned that the county enterprise boards will become a little more anonymous when they are no longer out there on their own. When they are subsumed into the local government system, I do not think they will have the kind of visibility they had before now. It is obvious that a cost will be associated with making sure the transition is smooth. We will have to ensure the boards' valuable visibility, which took time to develop, is not lost. That reputation was built through the power of word of mouth among people who had successful experiences with county enterprise boards. If the boards were funded in a slightly different way, it would complement the work they do. At present, they are funded on an annual basis. I suggest there is an absolute need to consider the possibility of providing roll-over funding, perhaps over three years. I appreciate that moneys can be redistributed. I have some experience of the board in Kildare, which ran out of money in February of last year only for some money to be returned later in the year. Viable proposals that were made during the valuable months after February could not be progressed because the board did not have sufficient funding until the moneys in question were recycled to it in October of last year. When a board receives money late in the year, as happened in Kildare in October 2011, it has to return it if it does not spend it by December and look for it to be drawn down again. A different way of doing things needs to be found to give some certainty to this sector. Given that people will be dealing with this organisation in the first instance, it is important for us to get this right. Having said that, I do not think we should be afraid of institutional change. We should wait to see how this works.

Some things could have been done to save money. Each of the 35 county and city enterprise boards had to pay audit fees of between €7,000 and €8,000. That comes to approximately €250,000, which is a waste of funds. If a single organisation had been involved, it could have been done in a much more cost-efficient way. A decision has been made on how to save money in that respect. The main thing is that we ensure the new system functions as optimally as possible. Not only will legal arrangements need to be put it in place, but there will also have to be a publicity campaign to heighten awareness of it. We have to let people know how this process will work. Although risk is always associated with a loan fund, there is also the potential for huge reward. This is the least expensive level at which to create jobs. It is clear that if people are taken off social welfare, the demand on the Department of Social Protection is reduced. If people are successful in finding work, there is a return in the form of taxation. It is a no-brainer. We will not know what the take-up of the fund will be until it is rolled out. That is why it is important for the fund to be visible out there. There should be flexibility with regard to how people can access the fund. I know they have to go through the banks in the first instance.

I have made the point that I am concerned that the banks might be too ready to refuse other funding in favour of this funding. It should be there as a secondary source. It is intended that this fund should go live by September. Does the Minister believe that target will be met? At what stage would he see funding for this year coming through? The banks must consider this. Will it be available for people immediately so that if, for example, there was a refusal in August a person could apply in September? Will the Social Finance Foundation have any criteria other than the viability of the enterprise it is considering, for example, the geography involved?

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