Michael Collins (Cork South West, Independent) | Oireachtas source

The objective of the Bill is to provide the necessary powers to the Ministers for Enterprise, Trade and Employment and Agriculture, Food and the Marine to enter an agreement with the Strategic Banking Corporation of Ireland to implement loan guarantee schemes for small and medium enterprises and small mid-caps, including many primary producers. Will the Minister of State advise the House of the interest rate on the loans being promoted under the new scheme? I understand the €150 million cash flow support loan scheme for the agricultural sector had a rate of 2.95% and was oversubscribed. This week, the eurozone base rate of interest is at an all-time low of -1%. However, Irish people are not feeling the benefit and the Government is entirely to blame. Will this scheme operate, as it should, at a 0% rate? If so, there would still be room for profit for the lenders given the margin of 1% between the European Central Bank, ECB, rate and 0%. Otherwise, if the scheme operates at a similar interest rate to the previous scheme, it will be a complete rip-off. It will allow the banks to garner huge levels of interest in a scheme underwritten by the State.

We need new solutions and imaginative thinking to help our SME sector in Ireland. The German and Danish Governments are providing loans at 0.3% and 0% over ten and 20 years to support their citizens. Why would the Irish Government introduce a State-backed scheme and charge a high interest rate when the source of all this money is the ECB? It makes no sense whatsoever. Why are Irish people at every level, from mortgages to SMEs to farmers, being completely ripped off every day by banks and financial institutions? Will the Minister of State advise on what are the benefits to the banks that will operate under the SBCI scheme? We know they make lots of money from these schemes. Will the Minister of State provide figures? It appears the only logical reason is that the SBCI scheme is not being advanced at a 0% interest rate, or at least a rate lower than 2.95% is to ensure the banking lobby is kept happy. This shows how the banking elites are being protected. It is in stark contrast to what is happening in Germany and Denmark.

The €2 billion Covid-19 credit guarantee scheme is operated by the SBCI and delivered through participating finance providers. These providers are the banks. We know that the banks are not, in practical terms, lending in Ireland today. We also know the banks are leaving Ireland today. Look at the appalling way KBC is treating its staff and customers who trusted it and put their faith in it. Look at Bank of Ireland closing branches in Bantry and Dunmanway, again showing shocking disrespect to their loyal customers in west Cork. Look at Permanent TSB, which is now in Bandon and Skibbereen but it has been reported it will close its counter services. Again, who will suffer? It is the customer. Ulster Bank is also on the way out of the country.

We know the banks are not lending in practical terms. However, they can participate in this scheme, which is underwritten by the EU and the Government, and make substantial margins in the process. The banks should have nothing whatsoever to do with lending under this scheme. They are not neutral players. They have a vested interest which does not align with the best interests of farmers, SMEs and ordinary householders.

To look at the numbers, if the full €2 billion under the Covid-19 credit guarantee scheme were allocated to Irish SMEs it would allow banks to make €40 million in interest income every year. We know the interest these lenders can charge is 4% despite no risk to the lender. Banks stand to make up to €160 million from that scheme alone every year. This is a scandalous amount of money. The big question is why the Government would allow this to happen. This is why we are so frustrated at how the legislation is being rushed through the House. Clearly, the Government tabled the Bill at the eleventh hour to minimise scrutiny of these issues.

It is clear, following what I have highlighted in the short time available to me, that the banks are making tens of millions of euro from the Government's schemes. This money should instead be going to the small businesses and farmers who need the funds. I know of many small businesses that are seriously struggling in west Cork at present and are desperate for a scheme whereby they could avail of money in the short term. Most of them are very successful businesses in Clonakilty, Bantry, Skibbereen, Castletownbere, Goleen or way out east as far as Innishannon but they are struggling at present and they do not need a scheme that means paying a high rate of interest, especially when in the first place it is being borrowed by the State at a low rate of interest. I ask the Minister of State to make sure this does not happen and that these business people do not have further pressure heaped on them and that the Government is seen to support them. It is not good enough to say they are being given a scheme if it will punish them in the long term. I would appreciate it if this is the first thing the Minister of State looks into.

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