Louise O'Reilly (Dublin Fingal, Sinn Fein) | Oireachtas source

I will be shocked if I take 15 minutes, as will everybody else in the Chamber. I promise I will not try to do so.

I welcome the opportunity to speak in this debate. The Bill is short and fairly technical but, as the Minister of State outlined, it will, when passed, have significant ramifications for business. Its purpose is to make certain amendments to the Credit Guarantee Act 2012 to support the needs of business to access additional finance in response to the economic challenges resulting from Russia's illegal invasion of Ukraine. It does so by creating a specific Ukraine credit guarantee scheme. The development of such a scheme is very welcome, especially given that the Covid-19 credit guarantee scheme ceased to operate on 30 June, albeit there was a roll-over of some loans under the scheme. Given the cost-of-doing-business crisis, the impact of inflation and the war in Ukraine, there certainly is a need for another scheme to go live.

The Ukraine credit guarantee scheme will provide funding to assist businesses that are viable but vulnerable in manufacturing and internationally traded sectors impacted by the fallout of the war. The focus on viable firms is important as there is an opportunity cost in regard to State moneys. The focus must be on saving jobs as well as supporting businesses. The €1.2 billion State backing of the Ukraine credit guarantee scheme is broadly in keeping with the Covid-19 credit guarantee scheme when we factor in that less than half of the €2 billion allocated for the latter was drawn down.

The focus on providing low-cost working capital to SMEs, primary producers and small mid-caps of up to €1 million on a six-year term, with no collateral requirements for loans up to €250,000, is welcome. The 80:20 guarantee rate split between the State and the lending financial institution is welcome but I ask that it be kept under review. If there is an unwillingness on the part of financial institutions to lend moneys as a result of the guarantee rate split, the Minister of State might be in a position to revisit this.

While more than €750 million was lent out through the Covid-19 credit guarantee scheme, that represents only 35% of a €2 billion scheme. When we drill down more deeply into the numbers, we see that as of September 2022, 9,848 micro-SMEs and mid-caps received loans under the scheme. However, there are 248,344 SMEs in the State, according to the latest figures from the CSO. Given the level of need of businesses due to the Covid crisis and Brexit for liquidity, working capital, purchase of equipment, new products or processes, fitting out of premises and moves towards energy efficiency, the causes of the low level of take-up of the Covid-19 credit guarantee scheme should be addressed to ensure the same barriers do not exist in regard to the Ukraine scheme.

I welcome that there is no portfolio cap under the scheme. The original decision by the Government to include a 50% portfolio cap in the Covid-19 credit guarantee scheme was a mistake, which was rectified only under pressure from Sinn Féin, particularly my colleague, Deputy Doherty. The removal of a portfolio cap negates a problem whereby banks refused to lend to small businesses in dire need of affordable credit. Portfolio caps usually mean banks see it as unattractive to lend money through schemes to SMEs and, where they do lend moneys, it usually results in extremely high interest rates. Not having a portfolio cap should make it easier and more attractive for banks to lend to SMEs through this scheme. Furthermore, the permitting of moratoriums on capital and-or interest for certain periods of time, specifically up to one year, is also welcome. However, the decision to leave this choice up to the individual lender, based on its assessment of the customer, must be kept under strict review. Businesses have a fear lenders will automatically refuse such a moratorium.

Given that the Joint Committee on Enterprise, Trade and Employment waived its right to engage in pre-legislative scrutiny of the Bill, as acknowledged by the Minister of State, and that we have committed to working with him, the Tánaiste and the Department on the Bill, it is important that the scheme goes live before the end of the year. Businesses need access to low-cost working capital to help them to spread increased input costs and to limit disruption to supply chains. There is a similar need for urgency in regard to the temporary business energy support scheme as many businesses are averse to taking on additional debt through loans.

We are all well aware that the current difficulties being experienced by Irish businesses, especially SMEs and family businesses, are significant and many. Costs have risen across the board for a variety for reasons but, in the main, due to the increase in energy prices and the all-encompassing effect of inflation. The horrible war waged by Russia against Ukraine has also caused significant disruption and prices increases for businesses. Businesses have tried to remain agile to adapt to these changes through absorbing the increased costs in an attempt to remain competitive. Naturally, this has an impact on the margins of SMEs, micro-businesses and family businesses in the immediate term. In the long run, this might prove to be unsustainable.

Sinn Féin is acutely aware of these difficulties, especially the impact of increased energy costs for businesses. We have previously met with officials in the Department of Enterprise, Trade and Employment on these matters. We have proposed solutions such as the business energy support scheme and called for the creation of a new SBCI-led and State-backed credit guarantee loan scheme in our alternative budget to help energy-intensive sectors, especially SMEs, micro-businesses and family businesses that are facing the brunt of these increased costs, particularly energy costs. Sinn Féin has also lobbied hard over the past year for other measures to address the increasing cost of doing business. In April, an Teachta Doherty brought amendments to financial motions to reduce the cost of home heating oil, petrol and diesel in response to the cost-of-living crisis. That move by Sinn Féin forced the Government's hand in response. Similarly, we have been consistent in our efforts to see insurance premiums reduced for businesses. There is a cost-of-doing-business crisis, not just a cost-of-energy crisis, and the Government must remain agile to respond to all aspects of these crises.

I want to put on the record that the supports the Government is introducing are very welcome. We will work with the Minister of State to ensure this Bill is passed. However, he needs to take a long, hard look at how some businesses are treating their workers. It is all very well to have welfare for businesses. I do not suggest for a moment, although it has been suggested by others here, that workers' rights can or should be bought. They should not and cannot be bought because the price of doing so eventually becomes too high. However, we need to have a conversation about low pay and poor working conditions. The Minister of State will be aware that following the receipt of a phenomenal amount of State support in some circumstances and a small amount in others, some companies paid out dividends to their shareholders, having been in receipt of supports during the pandemic. That made people very angry. While we all want to see businesses that are viable but vulnerable supported to remain in operation, there are some businesses that may not need those supports and will be in a position to absorb some of the costs. I urge those business owners and employers to have a think about applying for supports when they may not, in fact, need them.

I welcome the Ukraine credit guarantee scheme but I hope the Government pays close attention to the performance reports from the SBCI and stands ready to make changes or adjustments to the scheme as needs be.

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