Peadar Tóibín (Meath West, Aontú) | Oireachtas source

Bhí mé chun mo chomhghairdeas a ghabháil don Taoiseach, ach tá sé imithe anois is trua.

An economic tidal wave is starting to hit the State. There is likely to be a budget deficit of approximately €30 billion this year and a continuing deficit over the coming years. Tens of thousands of individual businesses are in significant danger of closing. Hundreds of thousands of jobs could be lost over the next few years. We have an opportunity to prevent that happening. Currently in the State, foreign direct investment, FDI, is the glamorous domain of State enterprise policy. Unfortunately, SMEs throughout the country have in recent decades, from Fianna Fáil's and Fine Gael's perspective, been the poor relative in enterprise terms but they should not be. The SME sector is the bedrock and backbone of Irish enterprises. It is where most jobs are located and most taxes paid, yet it does not receive any of the same focus or help that the FDI sector does. The FDI sector is very welcome but it cannot be the primary objective of the Government.

SMEs are at the sharp end of this crisis, and most at risk in this crisis are the businesses that have been shuttered the longest. I refer to hands-on businesses, such as hospitality businesses, hairdressers' businesses, dentists' clinics and so on. Such businesses need direct liquidity support now - plain and simple. If direct liquidity support is not provided now, a chain of debt will simply crystallise. If a business needs €70,000 today, it needs that €70,000 because it owes it to another business. There will be a debt domino effect unless these companies and small businesses receive funding now. The average small business, according to current estimates, owes €75,000 in trade credit. Microfinance Ireland will not solve this debt and most businesses will not be able to trade out of that debt any time soon.

From what I have heard, I understand that credit lines to businesses from suppliers are starting to dry up. Suppliers are saying that rather than have a 30, 60 or 90-day credit line, they want cash on delivery. That means that businesses need that money now. The Government needs to do far more than the Bill provides for, and we need to go back to the idea of examining all the tools we have for getting cash into businesses. Our constituency offices throughout the country have been inundated with appeals from small businesses that are having problems with the Covid-19 working capital lending that the State has provided. These businesses have applied for that working capital scheme but many of them have been refused, albeit in some cases because of long processing times.

I have called the Department of Business, Enterprise and Innovation and the Central Bank to discuss the matter. One reason that money is not being lent on that provision is that the Central Bank is still using normal SME regulations to determine how banks can lend. If banks are being told they can lend only on the basis of pre-Covid SME regulations, that is akin to a doctor saying a patient can have the medicine only if he or she is healthy. What we need is to change those regulations to reflect the fact that we live in completely different circumstances where businesses are not able to show the same balance sheets or the same level of working capital that they were previously. It is absolutely bonkers.

Months after that scheme was announced, only €70 million of the fund, or about 15%, has been lent. Having spoken to those in the industry and even those in the banks, I know that that money will stay in the banks until the Central Bank SME regulation is changed to take consideration of the new reality. These loans, like the Microfinance Ireland loans, are too dear. There is a significant differential between the lending rates in Ireland and the rest of the EU. The issue has raised its head politically a number of times with regard to mortgage rates but it is also the case for small businesses. That banks are making a profit from emergency lending to be given due to Covid simply does not make sense at this stage, especially given that they are Government-guaranteed loans. The State is guaranteeing these loans for 85% of their worth, as far as I understand, and yet the banks are making a profit as a result of that.

I would like to see in the Bill a focus on the Central Bank and its regulations, but I also believe that the Government needs to talk about grant funding. It needs to find a process by which significant grants can be given to businesses so they can function. In the US, there are soft loans, whereby loans are given out and, if the business maintains its payroll for a couple of years, the loan disappears. It simply turns into a grant if the business fulfils its responsibility. The Netherlands and Germany, the so-called fiscal hawks of the EU, are pumping money into businesses to keep them afloat because they know there is a debt chain and that once debt is crystallised somewhere in that chain, it has a domino effect on the rest of the economy. The failure to provide grant funding will have a significant effect, not just on jobs and the closure of businesses but also on end-of-year VAT returns, income tax returns and PRSI returns.

While the Bill should address the differential between Irish and European rates, it should also be a little more ambitious and examine the whole credit system for the SME sector. A predecessor to the Tánaiste's Ministry, Michael Noonan, created a two-pillar banking system. Anyone who has studied leaving certificate economics will know that is a duopoly, where two large firms control virtually all aspects of the market, from where business is done to the terms and the cost of the credit. If the Government really wanted to allow for a better stream of credit into SMEs, it should have done what I would have thought was the Fine Gael instinct, namely, to create a functioning market with real competition. As for how that can be done, it would involve starting to free up the credit union system, which has access to significant chunks of money and to which the State has for years paid platitudes, saying that while it is a great organisation, the State does not really trust it when it comes to lending to the business sector.

The Government could also have taken a leaf out of Germany's book in respect of public banking. With the Sparkasse system, smaller banks, which are not systemically important if one of them does not survive, pour money back into their local enterprise system. I can never understand why such a successful banking and credit model as exists in Germany is such an anathema to Fine Gael's economic policy and why it does not allow that at least to become a component in getting credit into the system.

The Tánaiste mentioned online vouchers. Ireland is one of the highest online spending nations on the planet. Much more money has migrated online in just the past few months than ever existed before. Much of that money leaves and is lost to the country. The Tánaiste needs to be far more aggressive and ambitious about getting SMEs online, either in a marketing or e-commerce fashion. Whole towns and villages should be online so that when a person wants to buy a book, he or she does not go to Amazon but rather to a small to medium-sized bookseller in the local town.

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