Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I thank the Acting Chairman for facilitating the brief adjournment during which we could speak to the Minister of State and the officials. I thank the officials for their engagement with myself and others on this Bill, and for any notes that were sent to us.

On section 2, I will focus, particularly at this point, on the EIB guarantee fund. I understand the total amount we are likely to be able to draw down from that fund is €1.4 billion to €1.5 billion. We have concerns in Sinn Féin about what is being earmarked in the Schedule to the legislation. It provides a breakdown of the fund across Europe, 65% is for SMEs, 23% is for companies with more than 250 employees, 5% is for public sector companies and entities active in health and health-related research, and up to 7% for venture and growth capital and venture debt. I understand those are European-wide targets as opposed to member state specific targets, but can the Minister confirm those are not the targets this member state will be chasing because, in my view, that would be completely out of kilter with the number of SMEs in this State? The most affected sector within the State is the SME sector. It is to this sector we need this type of funding to flow as opposed to venture capital and venture debt, which is what some of this will be targeted towards at a pan-European level. The Minister of State might comment on that.

My understanding of the scheme is that this funding will be raised by EIB. It will leverage up to €200 billion. As I said, up to €1.5 billion could be drawn down by the State and will be channelled through the Strategic Banking Corporation of Ireland. While it may have the word "bank" in its name, that issue comes back to haunt us, as the former Governor of the Central Bank, Professor Patrick Honohan, pointed out at the time when he argued with the previous Minister for Finance that that company should get a banking licence. We have a situation where Strategic Banking Corporation of Ireland, SBCI, will not be able to lend to SMEs because it is not a bank. It is a company. It is a non-lender. Therefore, it will lend to AIB, Bank of Ireland and other banks operating in the State providing the low interest rate from EIB. I must say the SBCI's operational costs are extremely low, with a small number of staff. Its additional costs are likely to be quite restrained.

I have absolutely no trust in the Irish banks given what they have done during this pandemic in terms of profiteering from payment breaks, what they have done in terms of the tracker mortgage scandal and the litany of other issues I could rehearse. What guarantee do we have on triple-star rated institutions such as the EIB which will lend, probably at negative interest rates, passing that on to SBCI, which will then pass it on to AIB and Bank of Ireland? What guarantee is there that they will not lump on a couple of extra percentage points to feather their own nests using this 100% guaranteed lending, which is guaranteed by the member state, basically the taxpayers of this country?

Given that the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Varadkar, is bringing forward a credit guarantee scheme which fails to hit the target because of the low level of 80% guarantee being provided, this guarantee fund we are talking about, which has us on the hook for €164 million potentially, is guaranteed at 100%. How will the banks operate this because they will have potentially two different funds - one fund that is guaranteed at 80% and the other fund that is guaranteed at 100% - and the same SME looking for credit? Both funds would be available to the same SME. What is likely to happen? In the case of AIB, for example, will it be that the bank will exhaust the 100% guarantee fund to make sure it is taking no risk whatsoever and then start lending under the other scheme? I am interested to hear if any consideration has been given to that in the credit guarantee scheme that is to be legislated for soon.

The last point I want to make on this section is that while my party supports this legislation and I have been extremely critical in the past in terms of European member states, on this occasion what we are seeing before us is the harnessing of the credit rating of Europe to assist member states and that is beneficial. That should have happened a long time ago. There is more that needs to be done, but we are entering these schemes without any understanding of the interest rates that will be charged and the duration or maturity of the instruments. We are acting blind in what is before us.

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