Marc MacSharry (Sligo-Leitrim, Fianna Fail) | Oireachtas source

I am grateful for the opportunity to make a few points about finance initiatives that are needed to support business. There has been much talk over the past number of months about the need to support small business in particular and the talk has been encouraging from all sides. We now have a Government in place. Indeed, it was remiss of me not to wish the Government well and wish the Minister of State, Deputy English, who is with us this morning, and all his colleagues well and Godspeed in their very difficult job in the months ahead.

I have concerns about the finance initiatives. Indeed, the Minister of State will have seen the various business organisations, in particular ISME, Chambers Ireland, IBEC and others, state that it encourages borrowing that is arguably extremely dangerous at this time. There is no question but that many businesses have been effectively wiped out and have their doors closed throughout this period. That has had an enormous impact on our society and economy and on employment and so on. However, when we say to people who are already on the rack that we are going to enable them to borrow, that is not a good precedent to set. The other aspect of this is that the way we underwrite these loans and the way the SBCI money in particular is distributed is through our existing bank base. As we learned to our expense and to much frustration across political parties and indeed society, the banks' focus is on the bottom line. They must be profitable.

We have moneys being made available to us at, I think, a minus percentage rate but by the time that gets to an SME farmer, shopkeeper, fisherman or carpenter, quite a number of percentage points have been added on, effectively to give profits to banks which are already profitable. It is sort of a three-card trick to say "live horse and you will get grass". We know businesses have been wiped out this year. In particular in the tourism and hospitality world, even if everything was opened up, consumer sentiment is not such that those businesses would be in a position to recoup the losses they have had or to make their business model work with lowered capacity and turnover levels and the reduction in profitability that is going result from that.

I would have much preferred Ireland, as a State, replicate the proven models that were introduced in the past, such as the Agricultural Credit Corporation, ACC, for funding agriculture and farming activity and the Industrial Credit Corporation, ICC, for funding industrial and commercial activity. Instead we have allowed the pillar banks to do this. As I said, the pillar banks, even when we had public interest directors on their boards, were in a position to serve only their shareholders whose only modus operandi, MO, is profitability. That is good for them but, as a State, it is wrong that we are facilitating that. What would have been much better is 20 to 25 good underwriters with a State institution lending to them. Instead we have this bureaucratic group of levels, through Microfinance Ireland, SBCI, the Department, the pillar banks and the underwriters. Eventually the punter gets to borrow money at 4% or 5%, which carries a very substantial premium over the amount we, as a country, are getting the money for. What we are doing is getting peace of mind politically by thinking we are facilitating and supporting small enterprise when the truth is that all this is really doing is enabling the better-heeled to get on while ensuring those who genuinely need support hit the wall. This is a big concern for me because we are encouraging people to strangle themselves with debt in what is already a desperate situation for most.

I represent the constituency of Sligo-North Leitrim. We are responsible for parts of south County Donegal and north County Roscommon. It is a part of the country where only two sectors really contribute in a major way to our society. That is not to take away from all the others, but obviously tourism and hospitality and agriculture are our two major pursuits. While wishing the Minister of State and all of our colleagues well and Godspeed in the months ahead, I hope their focus can be on that. It is a little bit disheartening that tourism, for example, is buried in a Department with other things. Many tourism operators have reached out and made contact with, I am sure, all Members in constituencies where it is a vital component of economic activity to protest that no measures have come forward, other than to strangle themselves with debt while we make the banks more profitable. Other than that they are on their own. Through media briefings it is becoming evident from officials, politicians, Ministers or whoever that some businesses may not survive, so in many ways we are throwing in the towel already.

If one looks at the measures introduced to support business in France, on commercial rents it has what I think is called the 40:40:20 scheme where the state picked up around 40% of the commercial rent.

The landlord would take a 20% reduction and the tenant would pay 40%. We did not nothing like that. Many people are already strangled by having to pay commercial rents to landlords with mortgage commitments and they have found themselves in a position where they just cannot afford to reopen. The business models of cafés, restaurants, bars and hotels operated based on 60% to 80% occupancy and they are now operating at 25% with social distancing rules and so on. We use terminology such as "helicopter money" or "direct financing" and the €1 trillion in loans and direct grants announced at a higher level in Brussels was welcome, but we are not seeing that in the direct grants here. People can borrow and we are adding a number of percentage points for handling fees or whatever we are calling them in order to be profitable, but the reality is we are not getting the hard cash to the people who need it to help them survive this. That is what is needed.

Covid is probably going to be around for many years and a loan is not going to cut it. We are going to have to directly finance and support businesses. While I will obviously not be voting against the legislation, if this is the whole picture we are going nowhere. It is designed to facilitate the better heeled to borrow and expand but the average Joe SME does not have a prayer of getting this kind of money. In order to get the Brexit loan, which is more or less what the Covid one was based on, the Strategic Banking Corporation of Ireland, SBCI, was asked to define a business plan that was visionary and reinvented the wheel, for want of a better expression. That is just not acceptable because before Covid all or many of these businesses were profitable and were in a position to make money. More importantly, they were in a position to create employment. We had high employment numbers and while many of us would like to see those people being paid more, they were nevertheless employed. I appreciate that this is part of a picture. However, I would much prefer if the State moved back to the ACC Bank and ICC Bank model where we had direct control, were not looking at profitability and were supporting the sectors and industries that required it. This is a start but it is not remotely the sort of start I would have hoped for. I hope we start stripping out all the bureaucracy, the handling fees and the need to make our pillar banks more profitable than they already are and get with the programme. We need to simplify this and ask how to get money to the people who need it fast, in order to that they can generate economic activity and create jobs. Please God, there might be a little bit of profitability for those people in due course, although that is not a word many businesses will be able to countenance in the year or two ahead.

While this is not directly related to microfinance, it relates to having the financial resources to support businesses in other ways. The Dáil sitting here in the Convention Centre is an abject waste of taxpayers' money. In Leinster House, each of us has our self-incubation unit with a monitor in front of us to watch proceedings and with some will and just a pinch of imagination, we could have a fully functional Oireachtas on the campus where it was intended to be rather than needlessly wasting €25,000 a day down here. We have all the facilities required and if we just employed that pinch of imagination, we could all be back up on Kildare Street doing our work as people expect.

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