Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I am unclear on how the corporation will interact with Microfinance Ireland. The Minister said there would be engagement, but let us consider Microfinance Ireland. It is a stop-gap option for companies that have been refused by commercial banks. They go to this State-funded entity where the rate is 9.5%. Now we are setting up a vehicle that will provide funding at cheaper credit rates over a longer period and offer different products that it will design over time. The real question is whether it can fund Microfinance Ireland. Will we see Microfinance Ireland's interest rate drop substantially from 9.5% to a reasonable rate? Given the way it is structured as a company, will it be allowed to access the funds available from this corporation through on-lending arrangements?

Forgive me if I have missed it, but I have not heard an argument against the possibility of direct lending. The Minister has indicated that this has been modelled on the on-lending concept or practice used by successful operations in Spain and Germany. He has said KfW will fund the company. KfW also allows for direct lending and has several associated proposals. It has been heavily engaged in direct lending to the wind farm industry. A direct lending option could and should be available. I am not suggesting it should be for wind farm energy projects but in any given area in which direct lending could be of help. It would be of benefit to allow this to take place from the start.

On Second Stage I mentioned that one of the major problems with the Bill was the lack of clarity on how it would work. We are putting infrastructure in place without real knowledge of how it will work from the consumer's point of view. Deputy Michael McGrath raised this point also. If a person from an SME goes to the bank, how does he or she access SBCI loans instead of those of Bank of Ireland, AIB and so on? What are the sureties required? The Minister has indicated that the banks will have to assure the SBCI that the money will be lent to small and medium-sized enterprises. We have been there and done it. The Minister has laid down targets for lending into the economy from the pillar banks. We have had representatives from the banks before the committee and they have told us they reached the targets set. However, they did it by removing overdraft facilities from small and medium-sized enterprises and turning them into loans. Let us consider the targets laid down by the Minister in mortgage resolutions. The banks abused the system of allowing legal letters to be issued and then counted them in meeting the targets.

There is not enough in the Bill to ensure lending into the economy and to SMEs. Will what is envisaged enhance the credit facilities available to SMEs? I simply do not understand why the concept of direct lending should be ruled out completely at this point. How will Microfinance Ireland interact with the organisation? Will the corporation be able to lend at low rates to Microfinance Ireland, a company owned by the State?

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