Éamon Ó Cuív (Galway West, Fianna Fail)

I believe there is an urgent need for the Minister to make a very strong case in Brussels for an increase in the de minimis provision to which I referred earlier. I suggest that he might consider a figure which I tried to have agreed the last time this issue was under discussion, namely, a minimum provision of €500,000. If such freedom was given we would be able to make companies grow more rapidly than is possible at the moment.

The Minister announced this initiative in May 2011 and when this Bill is passed there will still be considerable work to be done before the scheme becomes operable. I would be interested to hear how, despite all the promises given over the past year and a half, when this would all happen. Members of the public will want to know when they can they apply for and receive microfinance for their business. The Minister will also decide how much money can be borrowed by an individual. Many a person has set up a business only to realise when the business was operational that they had not provided for all the necessary equipment or costs in their set-up plan. Whether one is building a house or setting up a business, it is common to find that people have not provided for every contingency. The ability to get a second loan to allow a person to correct deficiencies in the original plan is very important. We have to take some risks, and I will discuss that later.

A micro enterprise is defined as an enterprise with less than ten employees and a turnover of less than €2 million per annum. There is a huge discrepancy between that definition, particularly with regard to turnover, and the idea that average loans of €16,000 and a total loan fund of €10 million per year will be sufficient. I doubt that €16,000, €20,000 or even more will be adequate for setting up a company with a turnover of €2 million. We must be concerned about a much wider issue here. If the banks were functioning properly, the need for micro finance would not be so acute. There would be a one-stop-shop called the bank, whose job is to lend money to people who have a reasonable proposition with a reasonable chance of success. We established the Credit Review Office and I would be interested to find out from that office, where it has overturned the decisions of banks, how successful the businesses concerned were, in other words, whose was the right call.

One experience which I found frustrating when I was looking for money from the banks in the past, and I do not know if matters have changed dramatically since, was that they could be quite slow before making a decision not to lend the money. No detailed explanation was given about where they saw a deficiency in one's plan. In hindsight, they were sometimes probably right to turn down applications I sent to them on behalf of the business for which I was working. Perhaps we had not figured things out, but if they had explained the deficiencies or weaknesses and why they were not giving the loan, we might have been able to address those weaknesses and we might have had a better business plan as a result. It is important that there is real dialogue and debate between lenders and borrowers.

Sometimes in life one is told things one does not like. When that happens one might say: "You are wrong and I am right", but many people will, on reflection, see the merit of a valid point that is made. Many times in my life somebody might have given me advice that I was not expecting and perhaps I was not initially enamoured with it but, when I reflected on the issue, I saw validity in the point being made and I came back with a better plan. It is not only a question of the banks giving out money but also a question of whether there is real interaction between lending agencies and borrowers and whether they explain the reasons they do not lend money.

On the other hand, at the time when I was dealing with the banks, bridging loans against Government grants and so forth were never a difficulty. As long as one instructed the person giving the grant to pay the money directly to the bank, the bridging loan was given as a matter of routine. In recent years however, even before the credit crunch, I have seen people, be they in community bodies or in small businesses, find it incredibly difficult to get what should be the most simple form of credit, a bridging loan against a grant that is due to be paid. There should be a checklist of required documentation and so forth and the bridging loans should be given quickly.

As in the 1980s, unemployment is probably the biggest challenge facing this society. The number of people who are unemployed has consequences both socially and from the point of view of health, as well as for the feeling of worth within our community. Work is about more than money. Money is important but work is also about social standing. I am not one of those who believe there are too many people who are in receipt of unemployment assistance who would prefer not to be at work. The cost of spending one's day without anything to do is enormous, because one must amuse oneself all day. The total effect on one's well-being is serious. All the professional evidence shows that people who are unemployed visit the doctor more often, take more medicines, attend hospital more often and, if they are long-term unemployed, they die younger. We talk continuously about the health system but, in fact, this is one matter that would have a huge effect on that system, according to all the available professional evidence. It is one of the really curable conditions. I also understand from the literature provided to me by experts in the field that there is a 99% cure of all these symptoms when people secure employment. We must, therefore, concentrate on creating employment.

What is the yardstick one should use when one attempts to set up a project? I recall encouraging various people to set up businesses when I was the co-operative manager and we started divesting ourselves of some of our activities. The first obvious requirement is a diversity of projects. When a person makes a success of something in this country we have a habit of saying everybody in the country can make a success of the same business. We saw it happen in the construction sector and in other areas. We glut the market. We even managed to do it with the Connemara ponies in recent years when they were making money. Everybody got into Connemara ponies. We must be very careful to ensure that where sectors are successful we do not try to push everybody into them, because that will also create a problem.

I have always believed that the second requirement for a project is that before one looks at the finances or the details, one must ask if the proposal makes sense. In other words, when one stands back and looks at it, is it a sensible thing? Has one some natural advantage, be it of knowledge or access to raw material, that makes the proposal sensible? I have seen proposals come forward and it did not make sense that they could ever be sustainable.

Finally, the ultimate test I always had was the person. Two people could be given the same conditions and one will make a go of it but the other will not. We must consider whether we are doing enough to attract the people with that magic ability to run a business. They are few and far between. It is the native skill of how to run a business. Sometimes it is not a matter of education. these issues come before finance. Finance is the last issue because if one does not have a good business there is no point in talking about finance. However, when it comes to finance, I believe it should be a mixture of equity finance, grants and loans, and there must be a proper proportion between the three.

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