Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I am pointing to a trend where senior Ministers have failed to turn up to deal with legislation and what was unprecedented where a senior Minister left after half an hour of a 90-minute slot for questions to him. That has not happened in the past. It is a trend that needs to stop right now. The Government needs to respect this House and respect the representatives of the people who are sent here to ask questions and participate in the passage of the legislation.

I welcome the introduction of the Bill before us. Before discussing the provisions of the Bill, I wish to comment on the circumstances in which it has been brought before us and the challenges faced by our small businesses as a result of this crisis. It should always be borne in mind that many of the challenges workers and SMEs face are a direct result of the public health measures implemented by Government. That places a responsibility on Government to act to protect these jobs and support these businesses. Public health measures have forced businesses to close throughout the State. It has required them to implement measures that have significantly reduced their capacity to operate. The losses experienced by SMEs now threaten their very survival and the jobs they provide. Employing more than a million people with extensive linkages throughout their domestic supply chain, their very success is key to our economic recovery. That means the recovery will depend on the Government's support.

Ní bheidh athshlánú eacnamaíochta gan athshlánú dár gnóanna beaga. Seo iad na gnóanna agus a gcuid oibrithe a d'fhulaing mar gheall ar Covid-19 agus mar gheall ar na beartaithe agus na srianta a chur an Rialtas i gcrích. Mar gheall ar sin, tá sé riachtanach anois go dtugfadh an Rialtas an tacaíocht dóibh.

In the financial stability update published by the Central Bank in April, it was estimated that SMEs would require between €2.4 billion and €5.7 billion in additional liquidity and support to cover non-payroll expenses in the three months alone. It cannot be denied at this stage that the supports provided by Government so far have fallen far below these needs. The numbers speak for themselves. Since 23 March, four months into the crisis, less than €300 million has been provided to businesses across all 15 schemes. That is only a fraction of the liquidity support that the Central Bank had estimated our SMEs needed. The restart grant has approved less than 75% of applications with an average grant of less than €4,200. This stands in stark contrast with what is happening in other jurisdictions. Just up the road in the North, grants of £10,000 and £25,000 have been provided to SMEs depending on their size. These grants, with a total value of more than £300 million, were disbursed to SMEs by the end of March, providing rapid liquidity to businesses that needed it and the jobs they supported to help them survive. In contrast, the Government's grant scheme here has been slow and inadequate and this must change. Similarly, the Government's credit guarantee scheme, which we are discussing today in this legislation, has so far been an abject failure. In reply to a parliamentary question of mine on 7 July, the Minister confirmed that since 23 March, a total of five loans have been approved with a combined value of €1.6 million.

The Bill seeks to address this failure. It is clear that among the supports provided to our SMEs during the crisis, affordable credit must play a part. The credit guarantee scheme was established in 2012 and amended in 2016 to facilitate lending and make credit accessible to small and medium-sized enterprises, businesses that typically struggle to access credit from bank and non-bank lenders. Under the scheme as it currently stands, the Government would provide an 80% guarantee of loans made to eligible businesses from a number of lenders. The purpose of the State guarantee was to cover the cost of the loans that may default under the scheme, thereby increasing the bank's willingness to lend and to provide credit to SMEs. However, with a portfolio cap of 13% in place, the effective guarantee provided on these loans has been reduced to 10.4%. This has significantly reduced the willingness of banks to lend to SMEs. It is why the Government's credit guarantee scheme has performed so badly so far, with negligible take-up from businesses and lending from banks involved.

I understand that the Minister, Deputy Varadkar, has a difficulty understanding what he has called regulatory gobbledegook from the banks, but it is important that the Minister makes an effort to understand how they operate. Thaispeáin an Tánaiste dúinn le cupla seachtain anuas nach bhfuil mórán tuiscint aige ar ghnóthaí na mbanc agus ar ghnóthaí airgeadais. Caithfidh sé déanamh cinnte de go dtagann feabhas ar an tuiscint seo go gasta má tá rath le bheith ar an scéim seo.

Section 4 of the Bill amends section 4 of the 2012 Act to give the Minister the powers to give guarantees in the context of the credit guarantee scheme. It also removes the portfolio cap from the scheme. This is welcome. On 13 May I wrote to the Minister for Finance and the then Minister for Business, Enterprise and Innovation, Deputy Humphreys, proposing a suite of measures to support SMEs during the crisis. Among them was to amend the credit guarantee scheme to facilitate lending to our SMEs. I proposed that the portfolio cap be removed to facilitate lending and improve SME access to credit. In his response on 29 May, the Minister for Finance reiterated Government policy of maintaining the portfolio cap of 50%, creating an effective guarantee of only 40%. As I made clear, such a low level of guarantee would fail to address the fundamental issue, the unwillingness of lenders to provide credit to our SMEs. The only way to address this issue was to remove the portfolio cap and I welcome the fact that the Minister and the Government have changed their position and adopted Sinn Féin's proposals in this regard.

Section 6 ensures that the maximum liability of the Minister in respect of the credit guarantee scheme will be €1.6 billion. This relates to the 80% guarantee the State will provide to the €2 billion in lending under the scheme. It should be borne in mind that the cost to the State of this guarantee is likely to be much less. With a guarantee of 80% and the default rate likely to be about 20% on loans provided through the scheme, the cost to the State and the taxpayers would be about €320 million.

I know the Minister has found it difficult in the past to understand how banks operate, but the following fact is worth bearing in mind when we consider this legislation. The cost to the State is likely to be much less than the €2 billion it would facilitate in lending, which is a good thing for this reason. Sinn Féin believes that the level of the guarantee should be increased to 90% with a view to increasing it to 100% depending on the performance, or underperformance, of the scheme. This would mirror other guarantee schemes established in the EU such as in Germany. Assuming a default rate of 20%, it would cost the State €360 million but increase the likelihood that banks would lend and credit would be provided to small businesses which need it, supporting and retaining jobs and getting people back to work.

Sinn Féin will not oppose this legislation. Indeed it adopts proposals submitted by Sinn Féin to the Ministers for Finance, and Business, Enterprise, and Innovation in May, but it can and must be strengthened by increasing the level of the guarantee and, crucially, by ensuring zero interest with no repayments for the first 12 months for borrowers and capping interest rates at a maximum of 2.5% thereafter. What guarantees can the Minister give that these proposals will be incorporated into the credit guarantee scheme?

The Government's response to this crisis as it effects SMEs throughout the State has been slow and totally inadequate. I fear, and unfortunately it has come to pass, that the Government's lacklustre approach to date has cost jobs. For that, the Government will be held to account.

Ní thiocfaidh feabhas ar bith ar rudaí muna dtagann feabhas ar rudaí do chomhlachtaí beaga. Bhí an Rialtas mall ag déileáil leis an gceist seo, agus nuair a dhéileáil sé léi, ní raibh an fís mar is ceart. Má tá na comhlachtaí beaga agus na poist seo chun maireachtáil, caithfidh meon agus freagra an Rialtas seo athrú, agus athrú go gasta.

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