Louise O'Reilly (Dublin Fingal, Sinn Fein) | Oireachtas source

I will be sharing time with Deputies Pa Daly and Pearse Doherty. I will take this opportunity to wish An Tánaiste all the best and good luck in his new role.

I welcome the Bill that is before us. I have spoken to people such as hairdressers, mechanics, tattoo artists and others who run microenterprises in my area. I know that those people are going to be eagerly watching proceedings here this evening. They face, and have faced, unprecedented challenges as a result of Covid-19 and the extraordinary public health measures that were undertaken to protect us from the virus. As a result, microenterprises have experienced losses which threaten their very survival. Those losses, in conjunction with domestic and European economic contraction, have created a daunting and almost insurmountable challenge for these businesses. As a result, firms have faced substantial cash flow problems, the resolution of which will determine their capacity to withstand the current crisis and operate successfully as they reopen. Liquidity supports and access to credit lines are essential in assisting microbusinesses and SMEs in the coming months.

In the weeks and months since Covid-19 brought society and the economy to a standstill, attempts were made by the caretaker Government to provide liquidity supports and credit lines. Unfortunately, those supports have proven to be generally inaccessible and ineffective to microenterprises and SMEs. The supports did not meet their needs. It is incredibly important that credit and working capital are made available to SMEs but it is equally important that such supports are accessible. While a significant amount of money has been made available, and more will be available if this Bill is passed, the application of commercial level interest rates to Government loans has made many of the loan schemes unattractive to microenterprises and SMEs.

I have submitted an amendment to ensure that moneys loaned to microenterprises will be interest free and with zero repayments for the first 12 months of the loan, and that interest rates on such loans be capped at 2%, with interest only being applied to cover the overheads of administering the scheme. Obviously, there is a provision of limitation on time there as well, which is important. However, the Tánaiste can change this through secondary legislation and deliver lower interest rates. The page regarding interest rates for Covid-19 business loans on the Microfinance Ireland website has today been taken down. I hope that is an indication that the Tánaiste is going to lower those interest rates.

If we look across the sea to Britain, we can see positive elements of their loan schemes. There are no repayments for the first 12 months under the British scheme, not six months as is the case in Ireland. Additionally, the British Government covers interest payable to the lender for the first 12 months, not six months as is the case here. Interest rates in the UK are set at 2.5% per annum, not the 4.5% to 5.5% that is charged on loans under the Government loan scheme in Ireland. It is little wonder that data published today show that more than 1 million bounce back loans, worth £30.9 billion, were released to microenterprises and small businesses in Britain. There is no doubt that aspects of it could be improved but the positive aspects of the British scheme should be replicated for schemes in Ireland.

Mr. Frank O'Connor, director of funding and debt management at the National Treasury Management Agency, NTMA, was before the Special Committee on Covid-19 Response this morning. He stated that his belief and that of the NTMA is that borrowing rates for sovereign nations in the eurozone area will remain low for the foreseeable future and that he is comfortable with the outlook over the coming years. Therefore, I call on the Tánaiste to pass the low interest rates at which we can borrow on to microenterprises and SMEs.

The eurozone area has had an interest rate of 1% or lower since around 2012, moving towards 0% interest rates and negative interest since around 2014. Surely, these low interest rates can be passed on to those accessing Government-backed loans through the variety of available schemes.

Furthermore, microenterprises and SMEs have stated that there are significant issues surrounding banks using the same risk assessment for loans as if the Government was not guaranteeing those loans, thus leaving thousands of SMEs unable to access loans or credit. These stories have tallied with work carried out by Mr. Sean Pollock in the Sunday Independent. The newspaper spoke to several businesses and advisers who shared concerns over the State's Strategic Banking Corporation of Ireland scheme. A litany of problems were listed, including long processing times for applications, an overly complicated process, repayment terms charged by the banks, some companies being rejected and some being told that the scheme was already fully allocated.

There is no doubt that these issues are a result of the Department that funds the scheme playing no role in the application or decision-making process which is fully delegated to the participating lenders. As the Unite union outlined in its paper Hope or Austerity, we have a situation where the banks that administer the scheme also make the decisions as to whether to issue loans based on their own criteria for loan issuance and not those of a Department trying to keep microenterprises and SMEs afloat during a global pandemic. Therefore, there is little wonder that microenterprises and SMEs have accused these schemes of having been designed with the interests of banks in mind and not those of the wider economy and its employment levels.

There is significant disquiet among microbusinesses and SMEs over the early stages of the response by the State to the challenges that they face. They feel that their voices are not being heard. They feel that the Department is not listening to them or responding to their needs. They want to be able to reopen and restart their businesses. They want to be able to plan for the future but they need the assistance of the Department to be able to do that. All the indicators we have and the research from the representative bodies of microbusinesses and SMEs suggest that if the response by the State and Department does not pick up, there will be significant implications for employment levels now and into the short, medium and long term. This is worrying, given the enormous challenges that lie ahead as the country emerges from the shutdown.

These and many other issues surrounding the working of different Government schemes have been pointed out by Sinn Féin, SMEs and their representative groups. The longer the issues go unaddressed, the more it looks as if it is Government policy to state that it is providing funding for microenterprises and SMEs while making that funding almost impossible to access.

Sinn Féin welcomes this Bill to expand the Microfinance Ireland Covid-19 loan scheme and the future growth loan scheme. We will work to ensure that the Bill is passed quickly. I know that the Tánaiste will tomorrow meet with his colleagues on the Cabinet committee on economic recovery and investment. I reiterate that rectifying the issues with Government schemes that microenterprises and SMEs have outlined, streamlining access to working capital and delivering a fair and sustainable economic recovery for workers and SMEs must be top of the agenda for that Cabinet committee meeting tomorrow.

The Tánaiste mentioned the issue of youth unemployment. In the immediate aftermath of the most recent recession, we saw that as people went back to work, youth unemployment remained persistently high. Very often, what was on offer for young people were jobs at very low rates of pay, on precarious contracts or in the so-called gig economy. That is a term I cannot abide. The gig economy sounds like the kind of place one would love to be but it is an awful place to work. It is awful for people to be in that precarious situation, and as everyone emerges from the shutdown, there will be people with significant debt who have just about managed to maintain themselves. When we talk about job creation and investment, we must invest in decent jobs that are sustainable and will provide futures for those young people to be able to build, grow and plan for a sustainable future.

They cannot do that on week-to-week contracts. They cannot do that when they are on precarious, hour-to-hour or if-and-when-required contracts. They need decent contracts and to be able to plan. As we emerge, this is not just about supporting business but has to be also about supporting decent work that young people can access. While young people are not the only people going to be impacted by this, we need to be mindful of the lessons from the previous recession and to know that youth unemployment remained stubbornly high. That cannot happen this time around. We have to be able to ensure that we can do better than that. When we talk about investment, it must be investment in decent work, decent jobs and a proper, decent future for these young people.

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