Peter Fitzpatrick (Louth, Independent) | Oireachtas source

I welcome the opportunity to speak on this important Bill and will support its progress on Second Stage. Irish businesses are facing into energy price increases on top of supply chain problems in the middle of another significant jump in the official inflation rate. There are incredible challenges right across the business and SME sectors, particularly for companies such as leisure centres, call centres and food processors, which use large amounts of gas or electricity and whose business model has been completely destroyed.

For example, Ireland Active, the representative body for leisure centres, gyms, swimming pools and commercial sports facilities, has stated that the cost of heating pools is resulting in extraordinary bills. In Dundalk alone there are three leisure centres. Additionally, businesses that during Covid complied with the remote working model now have many employees who have been working from home since the pandemic and who are weighing up their options coming into the winter. Many consider it more costly to work from home, with heat, gas, electricity and Wi-Fi costs on the rise and are returning to the office. Businesses will therefore bear the brunt of these price hikes, with some experiencing a 300% to 400% increase in utility costs. These price hikes could result in layoffs or business closures when the temporary business energy support scheme payment does not even pinch the surface.

This emergency response credit guarantee scheme will help. It will be a loan guarantee scheme, similar to the Covid-19 credit guarantee scheme, and will provide confidence to Irish businesses that lending is available for working capital and short-term to medium-term investment purposes. It is expected that winter and early spring will see increased funding pressures on SMEs. The Ukraine credit guarantee scheme will provide €1.2 billion in low-cost lending to business and will work alongside other measures announced in the budget, such as the temporary business energy support scheme, in supporting businesses through this energy crisis.

In order to qualify for the scheme, borrowers will have to declare that their costs have increased by a minimum of 10% on their 2020 figures and that the loan is being sought specifically as a result of difficulties experienced due to the Ukraine crisis. Therefore, it is required to prove an increase in input costs, disruption to supply chains or the move to new suppliers. The scheme will operate under two streams and will provide between €20,000 and €500,000 per firm to ensure there is sufficient liquidity available in the markets, thereby reducing additional costs for firms. For energy-intensive companies impacted by exceptionally severe increases in gas or electricity costs, the scheme will provide for a minimum of €20,000 and a maximum of €2 million per firm.

In my speech on budget day I acknowledged the Government's efforts to improve the circumstances of the business community, and I agree that the amendments to the Credit Guarantee Act are necessary in order to provide for this scheme. No additional delays should be imposed. We need to ensure that this legislation is fit for purpose, successfully progresses through the next Stages and is enacted as quickly as possible to facilitate this scheme being available to business for liquidity purposes.

Under the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021, it is imperative to provide prudent legislative scope, via the Credit Guarantee (Amendment) Bill 2022, to acquire an appropriate share of European Investment Bank funding. Currently, €50 million is available to Ireland for SME loan guarantee schemes. This amendment will increase the limit of the aggregate liability in respect of contributions committed from €50 million to €180 million while also providing the option for relevant Ministers to engage in further agreements regarding loan guarantee schemes with the Strategic Banking Corporation of Ireland. Therefore, the legislative amendment of the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021 is particularly important as social and economic conditions remain uncertain, and given our pressing needs to assist resilience, investment and recovery within the business sector.

I wish to raise a few different points about the Bill itself.

With regard to section 3, I welcome the amendment of section 3 of the Credit Guarantee Act 2012, which makes provision to extend the scope of eligibility to cover additional classes of enterprise to include SMEs, small mid-caps and primary producers, that is, businesses with up to 499 employees. I agree with this change, which will set limitations to eligibility. For the most part, the flexibility will significantly assist a lot of businesses.

Section 4 of the Bill will amend section 4 of the Act of 2012 to include this new credit scheme within certain subsections of this section. I welcome the removal of a portfolio cap from the current 13% and the increase in the maximum yearly credit amount which can be guaranteed from €150 million to €1.2 billion.

Additionally, a new section 4B is introduced by section 5, which disallows subsections (3) and (4) of section 4 of the Act of 2012, including different provisions for the Ukraine credit guarantee scheme. These amendments, as well as giving the Minister the power to give guarantees, will provide for significant reliefs and guarantees for businesses until 31 December 2024. As such, I agree with the amendments, which will set guarantee limitations which will not extend beyond six years and will not exceed €1.2 billion. I acknowledge that the Minister's liability in respect of those guarantees will not exceed €960 million. Additionally, section 12 of the Credit Guarantee (Amendment) Act 2016 is amended by section 6 to ensure that the maximum liability of the Minister in respect of the existing credit guarantee scheme shall remain as not exceeding €15.6 million and that there will be a separate provision for a maximum liability in respect of the Ukraine scheme. Again, I agree with those changes.

With regard to section 7, amendments to the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021 will increase the aggregate liability limit to €180 million in respect of contributions committed under all agreements between the Minister for Enterprise, Trade and Employment and the Minister for Agriculture, Food and Marine, and the Strategic Banking Corporation of Ireland. These increases to the ceiling of funding under the Ukraine credit guarantee scheme to €1.2 billion are required and provide that the Minister may work with the Strategic Banking Corporation of Ireland in making new loans available to SMEs. This is significant for the SMEs as the objective is to maximise the impact of the scheme for borrowers in the short to medium term and address their liquidity requirements.

It will assist viable but vulnerable firms of all sizes in the manufacturing and international trade services sectors that are suffering liquidity problems or are affected by the severe rise in energy costs as a result of Russia's invasion of Ukraine. However, it must be noted that in order to qualify as viable, it must be a new loan with no refinancing.

I fundamentally agree with these criteria and, as such, I agree with the amendment. I acknowledge that the scheme will therefore assist in the absorption of the cost of disruption to supply chains and the evolution of businesses in becoming more resilient in the face of business shock.

In line with Government policy, section 8 contains the Short Title and commencement arrangements. I have spoken to many businesspeople in Dundalk over recent months and have been flabbergasted at the cost increases they are facing. Not all businesses will be able to sustain these increases in costs and they will eventually have to be passed on to the end users. These amendments incorporate provisions to provide up to €500,000 per firm to ensure there is sufficient liquidity available in the markets and up to €2 million per firm for energy-intensive business.

Overall, the Government has made significant strides in aiding businesses in Ireland. While I accept, as I am sure every other Member does, that we cannot save every business, we need to have a serious look at the businesses that can be saved, particularly those that contribute to tourism and our tourism offerings. In the budget, we delivered significant funding in the form of the temporary business energy support scheme and today, with these amendments to the Bill, we hope to make an additional improvement to businesses, specifically SMEs, small mid-caps and primary producers. We must ensure these businesses have the capacity and supports to survive. I hope the amendments announced in this Bill will make a significant impact for the better.

We need to have a clear strategy in what we are trying to do. I acknowledge the measures introduced by the Government. However, costs in this country are starting to spiral. This legislation incorporated in these amendments ensures there is sufficient liquidity available in the markets and up to €2 million per firm for energy-intensive business. No additional delays should be imposed. We need to ensure this legislation is fit for purpose, successfully progresses through the next Stages and is enacted as quickly as possible to facilitate this scheme being available to business for liquidity purposes. This is an unprecedented crisis and more needs to be done to ensure that as many businesses as possible are protected.

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