Martin Heydon (Kildare South, Fine Gael)

The Microenterprise Loan Fund Bill gives us the opportunity to discuss the importance of small business to the Irish economy. Compared with the multinationals and the headline news when big job announcements are made, small businesses and microenterprises might not appear as sexy and do not grab the headlines but I believe they are more important to, and have a far bigger impact on, our economy. They are of equal importance, at the very least.

I have huge regard and respect for those who display entrepreneurial spirit and take a chance with a business idea. In a way, they take on the system and confront all the challenges. When one employs somebody, Friday tends to come around very quickly when one must have the person's wages. Whether one has two, three or ten staff, it is a huge and constant pressure. The point is that the Government must encourage these people and give them every support. The phrase often used is that this Government, and governments in general, do not create jobs but the environment in which jobs can be created. That is what we are examining here.

Leaving aside the Bill briefly, there are other points it is crucial for us to address for business and the way business operates. One of those challenges is the PRSI system. We need a review to examine how those who are self-employed can be given a mechanism that would allow them contribute more to PRSI in good times and therefore claim social welfare benefits in the event of their company folding. In terms of somebody who took a chance, set up a business and employed people and that business goes to the wall, it is an unfair system that they are not entitled to social welfare yet the people they employed, who took the weekly wage job and did not take the same level of risk, are entitled to social welfare. That discourages people from taking a chance, and it needs urgent review.

Rates is another issue. When I was a councillor in my county of Kildare we examined the possibility of trying to get a reduction in rates. In real terms we got a 1% reduction but it made no difference to the small business, the person who employed a few people. The hairdresser, the shopkeeper or the publican did not notice the difference yet to the big industries in Kildare, the multinational companies - we are lucky to have them - a 1% reduction meant a huge decrease in the amount of income Kildare County Council was getting from them. We must examine introducing a mechanism whereby those rates can be separated to make bigger reductions for smaller companies which will have a real impact and help them free up some of their funding.

On the issue of redundancy, I understand the need for the changes recently to the redundancy measures under the Minister, Deputy Burton. However, we cannot have a system that encourages a company like TalkTalk in Waterford, for example, to up sticks and close overnight when we are paying 60% of the redundancy payments. It could be argued that is almost an encouragement for it to do that.

The knock-on implications of the change in the redundancy measures down to 15% has been colossal for the small enterprises that employ just a few people. I am aware of business people at home who inherited the business from their parents or started it themselves who have one or two members of staff who have been with them 15 or 20 years. The business is struggling and they are terrified of the implications of having to pay 85% of the redundancy.

The other impact is not on the company that goes to the wall and loses all ten staff but the company with 15 staff which must lose five to keep safe the other ten jobs. They need that level of support. I have raised that issue with the Minister, Deputy Burton. The status quo in terms of the old system of redundancy should be retained for small businesses with a turnover of between €800,000 to €1 million. Those businesses are not employing people currently because of fear of the redundancy knock-on implications.

On the loan fund, I am concerned that the money is not sufficient but the system is crucial. If we get the system right the rest will fall into place. Every person who is taken off the social welfare system and gets back to work benefits the State to the tune of €20,000. A total of €9 million a year is small money but if we get the system right and the model is proven to work, which I believe will be the case, it will strengthen the Minister's hand in Cabinet to seek more money.

Cash is king, and the lack of credit is a major issue for businesses. It has been proven by the Central Bank, ISME and the CRO that the banks are not lending in the way they should do. Start-up companies and small businesses are always viewed as slightly risky by the banks, and in the recession it appears they are not lending in those circumstances. That is the reason this Bill is badly needed. The figures by the European Central Bank that Irish firms are 15% to 18% more likely to be rejected for credit than comparable eurozone small and medium enterprises speak volumes. I welcome the publication of the Bill and commend it to the House.

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