Finian McGrath (Dublin North Central, Independent) | Oireachtas source

I welcome the opportunity to speak on this radical new Bill and commend Deputy Donnelly on his magnificent work and attention to detail in preparing it. The Bill will help real people, real small businesses and, above all, real jobs. It will reduce the cost and time involved in the examinership process and make it more accessible to businesses while retaining all of its current advantages.

At all times, we must maintain our focus on jobs and youth unemployment, which is currently running at 28%. This is an issue that is often ignored in this House. It is unacceptable that so many talented young people are unemployed. This pool of talent should not be ignored because they are the future for our country. It is time we got them back to work and paying their taxes. Many of them have new ideas, like Deputy Donnelly's Bill, and we need to encourage and support them. They are also an important part of the SME sector. Our future lies with firms that employ fewer than 50 people. This Bill could make a major contribution to the examinership process and job creation. I regularly engage with people working in the SME sector in parts of my constituency such as Artane, Donnycarney, Howth, Sutton, Clontarf, Baldoyle, Marino, Drumcondra and Coolock. I listen to them when they come to me with their problems. On behalf of these people I urge the Government to accept this Bill and support small firms on the northside of Dublin. We will not be able to solve the the jobs crisis or support SMEs unless we deal with the debt issue. This is why I agree with Deputy Mathews that we need strong voices in Europe who will say that we do not accept somebody's else debts. If we do that, we will no longer be choking economic development and the SME sector.

Last week a young business woman discussed the problems facing her small company, which specialised in dog grooming, with me in my clinic in Donnycarney. She is facing an increase of 177% on her commercial rates. How in God's name can a small business get off the ground with rates of that level? Professional dog groomers are calling for VAT fairness. The unfairness of the VAT code as it is currently applied is a disincentive to competition in the dog grooming profession. They want to encourage the cottage industry of dog groomers to leave the grey economy for the legitimate sector, thus increasing tax yield. These young people have ideas and they want to come into the formal sector but they are being undercut by those who work in the black economy. It might cost €50 to have a dog groomed by a tax compliant business but others can do it for €25 because they are not paying rates or taxes.

I noted earlier that young people and SMEs are the future of our country. Mark Little is a former RTE journalist who set up a company that contributed €8 million to the Exchequer when it was sold recently. The company retained its 35 employees following the sale. People who want to expand their companies are saying that the Government needs to wake up, smell the coffee and help them. This Bill is an example of Independent Deputies putting forward positive ideas aimed at resolving the problems that face this State. The cynics who claim that Independent Members do not make a difference are wrong. This Friday I will be putting the Down's Syndrome (Equality of Access) Bill 2013 before the House. Independent Members are not simply lashing out at everybody; we are coming up with constructive solutions.

The Bill provides for a system of examinership in respect of small firms with fewer than 50 employers and a turnover of less than €10 million. Our economic recovery is entirely dependent on employment, which in turn depends on the success of our small firms. I remind the House that 99% of the companies in this State are small businesses. These businesses provide 70% of employment in the country. I acknowledge that we need to attract companies from abroad but we cannot take our eye off the ball in respect of the SME sector. The biggest issue facing small businesses is debt. The examinership process was designed to deal with debt but it has become inaccessible to all but the biggest businesses. When smaller entities avail of the process, the expense involved makes it less likely that they will survive. SMEs are the backbone of the economy. The investments that a company makes in premises, fittings and stock are immediately lost in the event of insolvency. The smallest insolvency means that the promoters are financially wiped out and the employees lose their jobs. The goodwill for the business is lost at a stroke. There is, therefore, a significant financial cost when an entrepreneur tries to revive the business. The absence of credit means that the money required to create jobs is not available. These are issues for the real economy.

The Bill provides that where two independent financial experts assess a company as having a prospect of survival, it can enter a rescue process designed to play to the financial expertise of those charged with its rescue. The courts will oversee every step in this process. The resulting savings will make the process affordable to many companies, including many that would go into liquidation under the current system.

The company can have certainty regarding its costs into the future. The framework for investment is such that costs of the process are not disproportionate to the investment, which is currently the case. These are the important points on which to focus.

On the proposed changes, the examinership model makes three main changes to the system currently available under the Companies (Amendment) Act 1990. These are: the removal of adversarial court involvement - say, where creditors or contributories require court oversight or where a creditor appeals to the Circuit Court on the ground of unfair prejudice; the ability of the examiner to impose lending conditions on secured lenders over a period of five years based on a minimum altered lending amount to the value of the underlying security plus 7%; and the ability of the examiner to impose changes to leases over a period of five years based on a minimum term of the market plus 7%.

Currently, examinership is an expensive process, running, even in simple cases, to many tens of thousands of euro. Most of the expense is not required as it relates to legal fees and fees incurred by the examiner in preparing for court. The Bill seeks to greatly reduce the costs - we estimate by more than half. This money is then available to be invested in the business.

I welcome the Bill and I commend Deputy Donnelly on its introduction. This is offering a solution. It is helping us in a time of crisis. I urge the Minister, Deputy Bruton, to look at the detail of the legislation.

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