Jonathan O'Brien (Cork North Central, Sinn Fein) | Oireachtas source

Since my election, there has been much talk about those high-technology jobs for which multinationals are crying out. One should remember the economy and jobs across this island are predominantly to be found in the SME sector. I understand that 99% of all companies registered and approximately 78% of all employment can be found within the SME sector. In essence, this is a nation of small businesses and sole traders. If one looks back at the economic collapse in 2007 and 2008, the policy and political decisions by the previous Government and its successor have prolonged that recession and have undermined the environment in which the SME sector must recover. That sector faced what one might call the perfect storm, in that there was a lack of credit, a recession and a stagnating domestic economy. If one looks back over the past five or six years, it is clear there was some collateral fallout as a result of the policies that were implemented. Nothing was done to harness those sections of enterprise that were productive, such as the entrepreneurs and the manufacturing sector and as a result, the number of business closures increased, as did the rate of unemployment.

We would agree that credit is the lifeblood of the small and medium enterprise sector, SME. It provides working capital, finances to get over lean periods in businesses and a stimulus to enable the SME sector to grow. The drying up of credit due to the banking collapse a number of years ago placed an immediate pressure on the SME sector. Scores of viable businesses went to the wall as a result of the economic collapse. No capital was available, there was no lending and no credit was being made available for small businesses and sole traders to help navigate their way through the economic collapse. In the lead-up to the banking collapse and consequent economic collapse many small businesses were advised to diversify into new areas and expand their businesses. When the collapse occurred, many of those companies were faced with huge property debts and, as a result, some of them went to the wall.

The over-reliance by the previous Government and this Government on export-driven recovery ignores the reality that the majority of SMEs rely on the domestic economy to survive and flourish. The continuing policy of austerity in terms of not stimulating the domestic economy is one of the reasons the sector is still in trouble and needs a helping hand. It is poisoning the very environment the SME sector needs to help drive economic recovery.

The Government is in denial having regard to the some of the announcements it has made. I am sure the Minister can point to some of the targets he has set out and say we are meeting them, but much of the funding that has been made available is roll-over funding. The Credit Review Office found that in 55% of the cases where credit was refused, it was wrongly refused. It is clear that the banks are still refusing to give credit.

We had the establishment of Microfinance Ireland and it was claimed that it would deliver a loans programme of approximately €90 million in addition to creating 7,700 jobs over the next ten years. In the first year alone its set-up and running costs have been in excess of €1.1 million and it has only delivered €1.6 million in loans to 107 enterprises throughout the State. If one considers those enterprises that have been lent money, there are great geographical differences in terms of where the money is being spent. Donegal has not received any funds despite a number of companies there having applied for funding. The Government needs to focus on the geographic spread in this respect.

It was promised that the loan guarantee scheme would provide lending of up to €150 million per year. To date, the lending figure has been in the region of €6 million, most of which has been for working capital therefore has not been invested in growth. Much assistance and many policy and political decisions need to be made in the short term to help our economic recovery in terms of the SME sector.

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