Peadar Tóibín (Meath West, Sinn Fein) | Oireachtas source

One of the most significant outputs of the economic crisis has been the collapse of private and public investment, and that has become one of the major causes of the length of time of the economic crisis. From the outset, Sinn Féin has argued for stimulus. In our response to the Fianna Fáil emergency budget of 2008 we published alternative revenue and expenditure proposals and a jobs plan which set out a range of measures that could be used to ensure the SME sector received the supports it needed. We have repeatedly stated one cannot cut one's way out of recession and our analysis has been supported by accomplished economists around the globe.

Our society is firmly ensconced in the latter half of a lost economic decade. The lost economic decade is the result of the Government's refusal, until now, to deal with the issue of stimulus and its refusal to plug the investment chasm in the economy. Sinn Féin's economic stimulus has been proved to be correct and the Government is now finally acknowledging that it is necessary. I spoke to one of my colleagues about 18 months ago and told them that the Government would simply have no choice but to turn around and start to take on board some of Sinn Féin's economic policies. The Bill is a half step towards this.

The real recovery will be delivered through the SME sector, which employs up to 70% of the Iworkforce. However, that recovery will not happen until the challenges it faces are addressed. So far, this Government has put all its eggs in one basket, the foreign direct investment basket. We have said foreign direct investment is good and necessary and that we must pursue it. However, there is an imbalance in the Government's economic policy and the domestic sector has been ignored as a result. The domestic sector is the lifeblood of the economy, but the Government has failed to deliver many of its commitments in the programme for Government to SMEs. The promised reform of procurement has not happened. In fact, the opposite has taken place. The roll-up of procurement contracts has further prevented SMEs from getting involved. The Government did not listen to us when we put forward legislation to end upward only rent reviews and commitments with regard to co-operatives have been anaemic, at best. It has also dragged its heels on progressing the potential social enterprise centre. A social enterprise centre offers a massive alternative economic system, as is seen throughout Europe and in many progressive and successful economies.

The SME sector is hamstrung by debt. Two weeks ago we heard about the situation in Morrisseys in Carlow, a firm with €8 million worth of business on its books. It is a functioning firm but has legacy debt and the State's bank, AIB, is seeking to close down that business with the potential loss of 130 jobs. In my county, Meath, we have lost Spicers Bakery, which had been in business since the 1830s. The business was closed due to legacy debt. There are thousands of businesses throughout the State in that limbo of not being able either to function properly or to take the next step of investing in the economy. That 41% of SME loans are still in this type of distress is an example of the Government's ineffectiveness. The Government's policy on SME credit is a dog's dinner, and it is a disgrace that it is continuing.

Construction remains one of the sectors most exposed to loan defaults. That the Government is now tackling the housing crisis on the demand side while the construction industry is still hamstrung by debt shows the problems in the Government's thinking. The Government has also slashed capital expenditure, one of the worst decisions a government can make in a time of recession. The meagre jobs growth that occurred has ground to a halt in the last quarter. When consumers face another round of flat stealth taxes they realise that their disposable income will shrink so their expenditure patterns change and they withdraw from spending in the domestic market.

Sinn Féin's ambitious stimulus proposals would get people back to work, create competitive advantages, create efficiencies and increase productivity and revenue. My colleague, Deputy Pearse Doherty, has stated our party's major objection to the manner in which this legislation is being rammed through the Dáil in the week before the summer recess. The Deputies elected by the people will be unable to have a proper input into an issue of such importance. The Government has had more than three years to examine this issue. It is incredible that it has waited until the last week of this Dáil session to ram it through. Deputies should be given adequate time to consult on and debate the legislation, particularly in view of the failings of the Government so far in respect of SME credit. The microfinance system, which was supposed to put €90 million into the hands of SMEs, has had a minuscule drawdown and all of the other ecosystems of credit facilities have had the same experience.

In the programme for Government, the Government committed to delivering a strategic investment bank, yet neither the SBCI nor the Ireland Strategic Investment Fund, ISIF, is a bank. Deputy Pearse Doherty spoke about the convoluted system being put in place, rather than simply creating a State investment bank which would be able to inject the necessary funds into the economy and the SME sector. We know from the Central Bank that gross lending by bailed-out banks to SMEs remains static after three years. The Minister said the SBCI will seek to address this uneven flow of credit to enterprises. Obviously, there are concerns regarding the existing banks' buy-in and whether the low cost of the source of the funds will be passed on to SMEs. The Minister has reassured us that this will be the case, but we have not seen the detail in black and white and what mechanisms will be used to achieve this objective. The Minister is also unable to provide clarity on who the new entrants to the SME lending market are or how the specific lending needs of micro-businesses will be provided for.

Sinn Féin has called for the establishment of a strategic investment bank and there are elements of the Bill that we would support. Marginally lower lending rates, encouraging increased competition in the SME lending market and repayment holiday periods for businesses are welcome. An enhanced role for the Credit Review Office will be also particularly welcome. Sinn Féin has been calling for this for a long time. However, there also must be publicity, awareness and education for SMEs to ensure they can use these facilities.

We have called on the Government to consider making the Credit Review Office findings binding on banks and that all banks be brought into the scheme. We also demand that the Credit Review Office cover all banks within the system.

Encouraging SMEs to look beyond traditional retail banks will require a cultural shift.

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