Verona Murphy (Wexford, Independent) | Oireachtas source

I congratulate the Minister of State, Deputy Jack Chambers. He is probably the youngest Minister of State in the Government. I hope he does well. Is he not the youngest? There you go. I will not ask who is, but I congratulate him and hope it works out well for him.

I welcome the Bill as it stands, and the Regional Group certainly will support it. I get very concerned, though, when I look at Covid from day to day, everything that is happening, whether we go up or down and the increasing numbers. I really worry about the fallout we face as an economy, particularly for our SME sector. For its staff and customers, Covid is a huge concern. There are 250,000 SMEs in the country, providing 1.2 million jobs, and 68% of those jobs are outside of Dublin. We are therefore very much reliant on the SME sector, particularly tourism and hospitality, in the country. The tourism and hospitality sector accounts for 266,000 jobs, 9,300 of which are in Wexford. A large number of the businesses have already closed and others do not know where they are. They all have similar challenges when I speak to them. Many of the SME sectors have three things in common at the moment. One is the lack of cash flow, the second is short-term working capital and the third is liquidity. Those are their major concerns when I discuss any type of financing with them. They all say similar things about Covid finance, whether it be the restart package, the microenterprise Bill or this Bill which, being 142 pages long, I did not exactly get to look at in depth. Their fear, and what they all say in commonality, is that the interest rates for all the finance packages are too high. They cannot afford or are not able to meet the loan requirements and do not have enough business to generate the repayments even if they could get the loans. We must be mindful that the interest rate on the money being provided through microenterprise financing is above 4%. It might sound cheap and we might say interest rates are low, but that is not cheap for a struggling business that is probably at the bare minimum of 30% of its pre-Covid footfall, depending on cash flow. That is not cheap finance. As the Minister of State will have heard me say previously in the House, insolvency experts have said that the restart package should have been ten times what it was. My concern is that while we will have provision within this legislation to look after the 1.2 million workers, we need to look after the SMEs that provide those jobs and to do so in the context of being in the middle of the worst health crisis that this country, in my living memory, has even seen.

We are about to get into what will be a catastrophe of equal scale called Brexit. We are going from one to the other, from Covid to Brexit. I am concerned as to whether this type of financing we are now doing for Covid will impinge on our ability to finance Brexit. I see Covid as a trial run for Brexit. I anticipate it in the logistics sector, having dealt with many of the SMEs involved for the past 30 years in business, drawing all types of goods. I anticipate Brexit to be a bigger calamity, or equally as big as Covid has been. People might find that hard to believe, but on top of Covid the potential crisis is very real.

I think the mixed messages going out every day, as I said, are that interest rates are low but everybody says that is not a practical measure or application of finance interest rates on loan supports for struggling businesses. Often they say they are far too complicated and seem to be more of a benefit to the financial institution than of assistance to them as SMEs. I think this has been alluded to by many colleagues today, that often the benefit from financial loans of this nature does not actually come down to the SME or the businesses for which they are being provided.

While the Bill contains supports to mitigate unemployment risks in an emergency - which is what we call scalability, usability, reliability and economy, SURE - these loans are being underpinned by a system of voluntary guarantee by member states. On that basis I would add a word of caution and I have stated previously in the House that our first support must be to the SMEs to keep them in business rather than the short-term work schemes. We need to support the self-employed to stay self-employed and to sustain that position. If we do not ensure affordable and meaningful supports for our SMEs through Covid and Brexit, they will not survive. We are on a fool's errand passing legislation that will not support that position because our loan guarantees will be called in. I am asking for the Minister of State to ensure 0% rates for government loans at a minimum for the future.

I also ask - these are just points to note from my interaction with businesses and their understanding of smaller financial institutions - that the ECB actively support its member states immediately in these unprecedented times. The Central Bank needs to continue to modify its rules on pillar banks immediately to allow them the flexibility that is essential to support businesses, which rely on cash flow. If there is more money coming in than going out in any business, that is a positive situation but it is an unlikely situation for many in the near future. We therefore need extremely low interest rates and need to ensure that the pillar banks are making businesses aware of the SBCI supports because many of them are just not aware of them.

I ask the Minister of State to ensure the pillar banks make the SMEs aware of their eligibility and do everything possible to allow them to apply for these loans to sustain them in the future.

See this speech in context