Billy Kelleher (Cork North Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to speak on the motion, which is timely for many reasons. Given that we talk about small and medium-sized businesses being the engine of the economy and one of the main drivers of economic growth in all regions, it is correct to consistently put down motions to encourage and support them. We need to highlight the inadequacies of various policies from whatever agency or section of Government, or from the Government itself. That is something that should be done constantly, regardless of who is in government.

The SME sector is clearly the powerhouse of economic growth, very often without the same regard and acknowledgement that is paid to announcements of job creation by foreign direct investment. Of course, foreign direct investment is critical for many reasons, and we all know why it is so important to the economy. There have been spin-offs from foreign direct investment in small and medium-sized businesses and startups, which are a critical component of the evolving and developing enterprise culture in the high-tech area and many other areas. However, in terms of what one might call genuine indigenous small business - be it somebody with an idea, be it the welder in west Cork making and fixing trailers or be it the shopkeeper on the high street in any regional town throughout the country - the picture is diverse and varied. There are a few common threads, the most obvious being the innate enterprise culture, whereby some people just get up and get on with it even though they sometimes face a daunting challenge in starting up their own businesses. Of course there are risks involved, which is why we should be encouraging and rewarding people. We need a paradigm shift, not only in the thinking of State agencies but in society in general, in regard to how we view a person who fails. There have been many failures in recent times because of the downturn in the economy, but the one thing that should not be done is to vilify these people or to point the finger with some sort of view that they failed. Any person who is willing to start a business and take that risk should be encouraged. Yes, many will fail, but the real definition of failure is not to learn from it or not to try again. The State should also be of that view in its interaction with people who are establishing a business, and there should be supports in place for the times when they fail.

The idea that a self-employed person whose business has failed has to become a pauper before he or she qualifies for jobseeker's assistance is unacceptable. We have to be more humane and understanding of the pressures a self-employed person is under in terms of the risk to his or her investment. If things do go wrong, there is nothing, not even a parachute or blanket, available to soften the fall. That has to be addressed. It is not an attack on the Government, but there seems to be a blockage in our attitude to people who take risks and are almost vilified not just conceptually, but also financially by the State, when the rewards do not come. We need a paradigm shift in that area.

There is no point in continuing with the pretence that the banks are lending to small and medium-sized businesses. They are pretending to the Government that they are lending to small and medium-sized business. When I was in government, they pretended the same to me. We received reports from the banks every month with sheets on new lending, which actually involved pretending that regurgitated lending, overdrafts which had been changed to term loans and restructuring loans was new lending. We know from the figures available that the pretence is continuing and we need to examine the impact the squeeze on credit is having on many micro, small and medium-sized businesses. We also need to consider the impact of the squeeze on seed and venture capital on start-ups. The money is not available to accommodate the significant potential of the people in terms of entrepreneurship and risk.

Seed capital, venture capital and access to credit needs to be set free. The credit guarantees and supports for small and medium start-ups are welcome, but the one major issue is the lack of credit. Enterprise Ireland put people with some competence and expertise into the banks so that they could assist in training their business lenders in the process of examining profit and loss, balance sheets and business plans, and making assessments accordingly. The banks did not have the capacity to do that themselves. There are still major deficiencies in the banks and all they are trying to do is to keep their capital tied up. They do not want to lend or take any risks. All they want to do is to keep improving their balance sheets for one purpose only, that is, profit and sell off. There are constant conflicts. We need to get our house in order in that regard.

Another glaringly obvious obstacle is broadband availability. If we are to encourage regional development, the self-employed and those who work from home, a basic essential tool of any modern economy in the developed world is access to broadband. There are doctors in some parts of the country who still have to drive up hills with their mobile phones to receive information because they do not have access to broadband or 4G. We have to accept that this is a glaring omission in the infrastructure of small and medium-sized businesses.

One of the most feared sentences in the world, and definitely in Ireland, for any small or medium-sized business owner is: "I am from the Government and I am here to help." There is no doubt there is still an element of that. We have ten regulatory bodies to oversee small and medium-sized businesses. If a person wants to start a small or medium-sized business, he or she has to have a business plan and try to access credit. Another problem is like the grand national with the chair in front of the horse. There are many hurdles in terms of meeting regulatory requirements.

I am all for standards and regulation, but they must be done in the right way. They must not burden businesses, but rather ensure there is a level playing pitch and standards. Businesses should be encouraged and allowed to flourish, but when we introduce legislation we have an innate ability to penalise small and medium-sized businesses. With wild abandon, our banks can do what they like without regulation. We need to have some rebalancing.

Small and medium-sized businesses are under major pressure and strain and are facing the loss of businesses and the possibility of houses being taken away because of personal guarantees when businesses go wrong. When they see the situation regarding Siteserv, it sends out a very distasteful message. That a company can get a write-off of €100 million that the taxpayer must fund and that shareholders in the company can receive €5 million to accept the sale of the company beggars belief. It is the same as someone who owes €1 million when his or her small business goes belly up. Would he or she expect the State to take €600,000, the people who sold the company to get €400,000 and to walk away with €50,000 in his or her back pocket? What are we trying to say to people? Is there one rule for an invisible group?

Some people are under threat of their homes being taken from them by the same banks that have run roughshod over regulation. The continual view that there is a group out there which, because it is large enough, can get a significant debt write-down wears people down. We are flogging people through courts in order to take houses from them because their businesses went wrong. It is wrong and must be addressed.

This motion was tabled for the right reasons, namely, to highlight some of the difficulties and inequities in our taxation and social welfare systems. We are raising these issues because we support small business as much as the Government does.

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