Mick Wallace (Wexford, Independent) | Oireachtas source

I draw the Minister's attention to comments about the proposed banking corporation by the director of the Nevin Economic Research Institute, Mr. Tom Healy, to the effect that a proper State development bank needs to be able to deal with and lend directly to small and medium enterprises and that the existing banks constitute a significant part of the problem which SMEs face seeking to access credit. What guarantee is there that those banks will play ball on this occasion? We know from research carried out by the Central Bank that the loan rejection rate relating to SMEs in Ireland is one of the highest in the eurozone. In 2012 - the year in which this research was carried out - the rejection rate for SME loans and overdraft applications in Ireland was second only to that which obtained in Greece. I know many people involved in the SME sector. The general experience of those individuals in the past five years has been that when they rang the pillar banks to discuss asset financing, on many occasions their calls were not even returned. This is because the banks in question lack the appetite for what is required.

The difficulty is that the pillar banks are interested only in maximising their profits, where possible. They are not about providing a service. A State investment bank would provide such a service. It is crucial, therefore, that we should have a serious State investment bank which will be independent of the pillar banks and which will have a genuine appetite for assisting SMEs that are really struggling. It is bad enough that it is extremely difficult for SMEs to borrow money, it is also the case that the fees charged by the main banks are actually rising. In the past year alone, cash-handling fees have tripled from 17 cent to 45 cent per €100. That is crazy because it is giving rise to major problems. The fees in question are a huge drag on small businesses. The fees relating to debit cards have been increased, with 28 cent being charged irrespective of whether the transaction involves €1 or €1,000. That is draconian. A State-led bank could deal with these issues in a fair way in respect of people who are trying to keep their small businesses in operation.

Most of the discussion about jobs in recent years has focused on foreign direct investment and multinationals. We have not afforded the same priority to SMEs, which comprise 99.8% of all businesses in the country and which employ seven out of every ten people. It is imperative that the Government should afford a much greater priority to taking care of SMEs and ensuring they remain in existence.

It was good to hear the Minister of State say that in addition to SMEs, other strategic sectors could be also supported in the future. However, it is disappointing that no detail has been provided with regard to the other areas in which the strategic banking corporation might operate. How long will it be before it will be in a position to operate in other areas? The lack of information does not inspire confidence in the context of the Government being really serious about establishing a proper State investment bank. As the Nevin Economic Research Institute points out, "Consideration of the role of a new state development bank takes place within a much wider debate not only about what type of banking system is needed for the future but what sort of society we seek to create from the recent economic conflagration." Has consideration been given to allowing the new corporation to lend to not-for-profit organisations such as those which operate in the housing sector? In the light of the State's failure thus far to roll out a comprehensive social housing construction programme, surely it would make sense to allow a strategic bank to lend to housing associations that are ready and willing to deliver affordable homes to the many who need them. Only 283 local authority houses were built last year and this did not even put a dent in the waiting list. It is extremely important that the State should commence a real social housing programme but it should also try to facilitate access to funding for the organisations that want to assist in filling the gap.

What is the position with regard to the State's responsibility for child care? Is there not a role for a proper State development bank to play in supporting the development of a high-quality system of child care? Last night I reminded the Tánaiste and Minister for Social Protection of her promise not to cut the one-parent family payment until she obtained a credible, bankable commitment to a Scandinavian-style system of child care. For young parents, this is both a serious issue and a key factor in deciding whether they can take up work. Dr. Michéal Collins of the Nevin Economic Research Institute is on record as stating, "For all households with children, the additional costs associated with childcare represent the largest additional household cost associated with taking up either part-time or full-time employment." The lack of State-supported child care is preventing some people from participating in the labour market.

If the State had direct control in respect of giving small businesses access to credit, it would lead to a massive improvement in the way we operate in this country. I fear, however, that this new venture will not go far enough in that regard.

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