Neale Richmond (Dublin Rathdown, Fine Gael)
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I move: "That the Bill be now read a Second Time."

I am pleased to introduce the Microenterprise Loan Fund (Amendment) Bill 2024 here today. Essentially, the Bill will provide a statutory basis for the transfer of Microfinance Ireland into State ownership, under the remit of the Minister for Enterprise, Trade and Employment.

Before commenting on the specifics of the Bill, I wish to give some background on and context to, as well as an update on, the work of Microfinance Ireland. Microfinance Ireland was established in 2012 under the Microenterprise Loan Fund Act 2012. It provides unsecured business loans to viable small businesses that have both fewer than ten employees and an annual turnover of less than €2 million. It fills a gap in the market by lending to businesses that cannot obtain loans from other commercial lenders.

Microfinance Ireland makes its loans available to both start-ups and established businesses, across sectors. The amount of any one loan ranges from €2,000 up to €25,000. The loan term is typically three years for working capital purposes and can be extended to five years for capital expenditures. Interest rates range from between 5.5% for clients of local enterprise offices and other partners, going up to 6.5% for direct applications. These rates are well below what the market would charge for the level of risk involved.

Microfinance Ireland has also proved itself to be agile to meet the needs of small businesses facing unexpected events, responding quickly to those developments. For example, in the early days of the pandemic, it immediately pivoted to providing Covid-19 loans, providing vital liquidity before many of the State supports were in place. I myself saw that deftness and responsiveness at first hand. Last year, I requested Microfinance Ireland to offer loans for microenterprises impacted by the flood and other extreme weather conditions in October and November and it rose to that challenge within days. In addition to lending, Microfinance Ireland offers post-approval mentoring services free of charge to its lenders. These are delivered through the network of local enterprise offices.

Since its establishment in 2012, Microfinance Ireland has been a great success, fulfilling a unique role for microenterprises that are unable to secure finance from other sources. As of December 2023, it has approved a total of 5,052 loans to the value of €83 million, supporting over 10,000 jobs. These loans represent a wide geographical spread across the country, with 78% of those approved last year going to microenterprises outside of Dublin.

In light of that success and due to the importance of Microfinance Ireland in the financing ecosystem for small businesses around the country, the Government committed in its programme for Government to scaling up the organisation in order that it can support greater numbers of microenterprises and start-ups in future. As a first step to implementing that commitment, it was necessary to review the existing structures to ensure they could support such a scaling up.

Originally, the Microenterprise Loan Fund Act 2012 established Microfinance Ireland as a wholly owned subsidiary of Social Finance Foundation, SFF, which is a body that was set up in 2007 at the request of the Government, with funding from the Irish banking sector. SFF was created to address the needs of community organisations and social enterprises for loan funding that was otherwise unavailable from mainstream lenders and was set up as a body under the aegis of the Department of Finance.

Since then, there have been important changes to Microfinance Ireland’s working environment arising from changes at SFF and a substantial increase in its lending over the last few years. For example, since 2019, SFF is no longer under the remit of the Department of Finance, having become a private company limited by guarantee. In September 2021, the Strategic Banking Corporation of Ireland took over Microfinance Ireland’s debt funding from SFF, committing €30 million to increase Microfinance Ireland’s lending capacity and ability to assist more microenterprises. Moreover, the Microenterprise Loan Fund (Amendment) Act 2020 increased Microfinance Ireland’s limit of debt funding from €25 million to €100 million and the permitted Exchequer funding went up from €25 million to €95 million. The Minister for Enterprise, Trade and Employment is accountable for any Exchequer funding to Microfinance Ireland.

Given all this, our Department conducted a review of Microfinance Ireland’s governance structures to assess if amendments were needed to support the Government’s ambitions for Microfinance Ireland. That review recommended that Microfinance Ireland come into State ownership to provide greater alignment between the ownership and the funding arrangements of the organisation. In the context of plans for expansion, it makes sense to have a direct link between the Minister who is accountable for the public funding and the organisation in receipt of that funding, namely, Microfinance Ireland. State ownership will also give improved security about the future of Microfinance Ireland as it was originally established in the legislation with a sunset clause. The Government has accepted that recommendation and SFF, which participated in the departmental review, has agreed to relinquish ownership to the State. The Bill before the House today gives effect to that change.

Turning then to the main provisions of the Bill, it amends the Microenterprise Loan Fund Act 2012 by amending existing sections in that Act and inserting some new provisions. In the first instance, it provides for the authorised share capital of Microfinance Ireland to be transferred from Social Finance Foundation to the Minister for Enterprise, Trade and Employment. As mentioned earlier, the 2012 Act created Microfinance Ireland as a subsidiary of SFF. A consequence of the transfer of the authorised share capital to the Minister is that Microfinance Ireland will no longer be a subsidiary of SFF. Accordingly, several of the provisions in the Bill delete references to “subsidiary” from the 2012 Act and replace them with Microfinance Ireland’s full name. These are technical changes to the 2012 Act.

The Bill inserts, in section 9, new governance structures. Although the current structures in Microfinance Ireland already have many of the features of the governance that applies to State bodies, it is necessary to make some changes as a consequence of the change of ownership. As things stand, SFF appoints the board of directors of Microfinance Ireland. This Bill provides that the Minister for Enterprise, Trade and Employment will appoint the directors, including the chairperson, following the change in ownership. The Bill requires that the maximum number of directors be ten, with a quorum being six. There are standard provisions with respect to the payment of allowances, the resignation and the removal of a director, and there are continuity provisions for directors before and after the change of ownership. The Bill goes on to provide that the board will appoint a chief executive officer with the consent of the Minister. Here, there are provisions on the role, terms, conditions, remuneration, and removal, of the CEO. Section 9 also states that the CEO will be accountable to the Committee of Public Accounts and to the Oireachtas Committee on Enterprise, Trade and Employment.

Section 13 of the Bill introduces superannuation arrangements for the staff of Microfinance Ireland. This requires Microfinance Ireland to prepare and submit a superannuation scheme to the Minister and for it to be approved by the Minister with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform.

In conclusion, the Bill will provide for greater security for Microfinance Ireland and a more efficient governance structure for the organisation. As the senior Minister, Deputy Coveney, has responsibility for other agencies such as the local enterprise network, with which Microfinance Ireland does so much work, I also see opportunities as a result of this Bill for greater cohesion between those bodies on whom so many microenterprises depend for support and assistance. I therefore commend the Bill to the House.

Ruairi Ó Murchú (Louth, Sinn Fein)
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We will support this Bill. It is a strange day and who knows what the future holds now? Others have said - and I wish to make sure my voice is noted on this - that if we are going to have a change of Taoiseach, the people should be asked about it. I do not have control over that, though, and who knows-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Well, I do have control as regards what we discuss-----

Ruairi Ó Murchú (Louth, Sinn Fein)
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I was only going to say we do not necessarily know that this is the-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Would you kindly stick with the Bill, Deputy?

Ruairi Ó Murchú (Louth, Sinn Fein)
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I will, but we do not necessarily know that Deputy Richmond is the Minister of State who will be dealing with this into the near future. We do not know what-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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With respect to him, whether he is or not, this is the Bill we are discussing.

Ruairi Ó Murchú (Louth, Sinn Fein)
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It is, and, as I said, we are supportive-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I know your eloquence knows no bounds, Deputy, but could you apply it to the subject matter?

Ruairi Ó Murchú (Louth, Sinn Fein)
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Go raibh maith agat. I do apologise. Occasionally-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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You get carried away.

Ruairi Ó Murchú (Louth, Sinn Fein)
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-----I go off at a tangent.

I do not think anyone will be against the idea of Microfinance Ireland coming under State control. I do not think anybody will have any difficulty with any streamlining. It is exactly as Deputy Quinlivan says. It is a fact, though, that we need to look at the relationship between some of these smaller enterprises and the banking and lending sector. We know the issues that arose during austerity. We need to make sure not only that we streamline the system but also that credit is actually available. It is exactly as Deputy Quinlivan said. In an awful lot of cases, capital outlay and so on is about putting moneys into a business from a point of view of expansion. We have had a number of interactions in the past while and they have not all necessarily been positive. We talk about the tech sector and the fact that 6,000 jobs have been lost. I have spoken before about the necessary Government and IDA engagement and everything that is required as regards PayPal and others. I do think there will be a need, as I have said to the Minister of State previously, to look at the tech sector as to how exactly this is impacting us and what exactly we can do about this sort of interaction. While credit access is obviously vital, we need to make sure that everybody, from the local enterprise offices, which do spectacular work, right through to Enterprise Ireland, InterTradeIreland and the IDA, is doing all that is necessary.

I think I have spoken previously about some of the spectacular work I have seen done by the regional development centre in DkIT. That is the idea of putting the correct people together from a point of view of expanding businesses and business ideas. Some of those have gone on to huge success. I am talking about the med-tech sector, the tech sector, pharmaceuticals and all the rest. That is what we have to do.

We have an issue, as has been said previously, in that we have seen a number of added costs to business. Many of them are improvements in workers' conditions that needed to happen. I know that the Minister, Deputy Coveney, had spoken previously about some highly directed supports he was looking at as regards particular businesses, particularly with regard to the hospitality sector. I would be interested to know what exactly those will look like. Deputy Quinlivan spoke about the report and the review as regards these particular changes, and on some level this is just pointing out what we already know, that is, that there are businesses that are under severe pressure. Some of them are businesses with really good operating models that have operated for years. We need to make sure we can provide those adequate and sustainable supports. I would like to think the Minister of State will address that when he comes back to answer.

I have spoken to the Minister of State about a number of particular businesses. I will not get into naming them. I am talking about what would fall into this particular bracket of people who could avail of microfinance. There is a need for certain businesses to be provided with those supports and know-how. There is a particular business I have spoken about previously that is probably constrained, and we need to look at possible solutions. Maybe they will require legislation, but I do appreciate that the Minister has said he is open to that conversation happening between his Department, the necessary agency and this particular firm in Dundalk. That is all positive.

We all know the huge issues we face. As regards another thing that has been in the public domain in the past while, I have said before that there was a time when people would have brought up the issues as regards housing - not only politicians, obviously, but also advocacy groups and the local authorities, particularly the homelessness sections. Now, however, we are in a different world, where it is an issue that impacts the IDA and all these other agencies. I think it was the US Chamber of Commerce that spoke about the particular issue of prices. That is everything from rents to house prices right through, so this is impacting our sustainability. The one thing that is operating at this point in time is the fact that there is high employment in this State. While there may be issues with low pay in particular sectors, we really need to make sure we keep the ship afloat so we can on some level deal with those particular issues that exist right across society, whether we are talking about the disability sector, education, healthcare or anything else. The problem is - it is like when we talk about the cost-of-living crisis - that everything comes back in Ireland and-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Yes, but we are talking only about Microfinance Ireland.

Ruairi Ó Murchú (Louth, Sinn Fein)
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But I think house prices are impacting businesses.

As I have said previously, we support this Bill. We need to look at the wider issue of making sure that we can provide the proper credit and that we provide those additional supports as regards those companies. I welcome, as I said, the positive interactions I have had with the Minister of State, but who knows what the future holds? I hope we can get a couple of these things across the line before there is change. I would like to think that change would be a change of government and an election, but this would probably be the wrong time to talk about that, a Cheann Comhairle.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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It is.

Ruairi Ó Murchú (Louth, Sinn Fein)
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Go raibh maith agat.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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You cannot be terribly optimistic, though, if you are hoping to get them done before the change happens. That would not suggest a great optimism on your part.

Ruairi Ó Murchú (Louth, Sinn Fein)
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The Minister of State is pretty fast.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Deputy Ged Nash, please.

Gerald Nash (Louth, Labour)
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As always, I seem to find myself following my constituency colleague, Deputy Ó Murchú-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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You could not follow a better man.

Gerald Nash (Louth, Labour)
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-----whose contributions are always enlightening, as I think you will agree, a Cheann Comhairle, and I know the Minister of State will agree.

As a former Minister of State with responsibility for business and employment from 2014 to 2016, I took a huge interest in the development of Microfinance Ireland and the various schemes it operated. I recall making some significant changes back in 2015 - for example, the removal of the impediment that lay in the way of lots of microenterprises that required funding from MFI. That was the obligation to receive a formal refusal from a bank before seeking a loan from Microfinance Ireland. I think and I hope that that measure worked and removed some obstacles for microenterprises that required funding when they could not obtain that funding from funders in the market.

I and my party are broadly supportive of this Bill, which will bring further reform to the scheme. I do wish, before I proceed, to place on the record my thanks to the Social Finance Foundation and successive boards of Microfinance Ireland, and indeed successive Ministers, who have done an excellent job working together to administer the scheme up to this point. Social Finance Foundation was established in 2007 and has managed to do what few organisations have managed to do in this country, that is, to use the profits and resources from the major retail banks for the common and wider public good. Social Finance Foundation has been funded by the Irish banks with an initial grant of €25 million in 2007, followed by €72 million in low-interest loans from 2009 to 2020 and further low-interest loans totalling €44 million from 2021 to 2025. It makes sense at this time for overall responsibility for the scheme to pass to the Minister for Enterprise, Trade and Employment, in my view. That would give the scheme further layers of accountability and bring it within the purview of the Committee of Public Accounts and, therefore, the Comptroller and Auditor General, and that can only be a good thing.

Thousands of small companies have benefited from the scheme and the work of Microfinance Ireland since its establishment in 2012. It has supported thousands of jobs working closely, as Microfinance Ireland does, with our local enterprise office network. The microenterprise loan scheme provides loans ranging from €2,000 to €25,000 to microenterprises whether they be startups or existing small businesses unable, for a variety of reasons, to source funding through the traditional sources. We knew many years ago that there were blockages and issues in accessing finance. Microfinance Ireland has helped to address that market failure, if I can describe it as such. These small businesses employing fewer than ten people are in many ways, as we all know, the backbone of our economy and the lifeblood of every community. The small loans Microfinance Ireland has been enabled to help those businesses to keep their heads above water through choppy economic times such as during the pandemic and beyond to the current cost-of-living crisis, from which I hope we are emerging. These small loans have helped businesses to start up and expand, to manage dips in cash flow and have even helped them to get back on their feet after flood damage. On many occasions, I worked with local businesses to assist them to access funding through Microfinance Ireland, often via the local enterprise office. The success of those businesses has proven the value of Microfinance Ireland over the years. The fund has proven to be a success, broadly speaking, with well over 10,000 applications for funding and some €82 million in loans approved, supporting more than 10,000 jobs in almost 5,000 microenterprises. A great thing about Microfinance Ireland and how the funds have been managed is that there is a really good geographic spread around the country, with only 22% going to businesses in Dublin and the remaining 78% spread around the country, including my own county, Louth.

A concern I have about the performance of the scheme is that about half of the applications fail. There is a multiplicity of reasons for that. Approved applications hovered around the 50% mark over the past three years but fell to just 39% in quarter 3 of last year, according to the figures we have seen. I would like to see more detail on why so many applications are failing and what supports might be needed to ensure more businesses can successfully access this vital funding, which is available. A wide range of businesses are accessing the funding, however, with the wholesale and retail trade, as well as motor mechanic repair businesses, being the most common beneficiaries of the scheme. It is your local shop, garage, which might struggle to put together a business case to access funding from the big banks that are being kept alive and, in some cases, allowed to thrive and survive thanks to the fund. The funding has proved particularly important for startup microenterprises, which make up about 40% of the approved applications for the scheme. Women business owners make up about 36% of the approved funds, which is a really good thing, and was something Microfinance Ireland has been focusing on for some time. I would like in the future to see a greater emphasis on the funding of and support for applications by members of migrant communities. We know those who move to Ireland are enterprising in nature. It would be a good day's work if we could look at what Microfinance Ireland and our local enterprise offices can do better to help support those who are relatively recent arrivals to our country and have business ideas they wish to develop and help them to become employers.

I am surprised, given the level of funding won by startups, that so few young people have had successful loan applications under the scheme. Only nine applications appear to have been approved from 18-25 year-olds in 2022. That can perhaps be looked at in the future to ensure that bright, ambitious young people who want to get their own small business off the ground are supported by the scheme. Close to 30% of our workforce is employed by microenterprises, according to census figures. Towns and villages simply could not function without this sector. It needs our continued support. Microfinance Ireland allows the State to support these small but vital cogs in our local communities. From MFI's reporting, it appears that the scheme is growing in popularity with microenterprises. Loan applications were up 5% in 2023 compared with the year before. The Labour Party supports the continuation of the fund and the small businesses, jobs and communities it helps to support. It is important the scheme is administered fairly and openly and observes best practice in its governance. Bringing the scheme under the auspices of a Department will ensure that happens and that the scheme is subject to all of the rigours that offices like the Comptroller and Auditor General and committees such as the Committee of Public Accounts bring to bear. From now on, when this legislation is enacted, the chief executive of Microfinance Ireland will be accountable to the line committee in the Oireachtas, which is an important accountability measure. I supported it in the past and continue to support it now. I hope the new structures for its future governance facilitated by this Bill will allow it to support even more small businesses and jobs as we move forward.

Neale Richmond (Dublin Rathdown, Fine Gael)
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I thank the three Deputies for their contributions. I would like to particularly thank Deputy Quinlivan for his chairing of the Oireachtas joint committee and its proactive work in the pre-legislative scrutiny of this Bill. As ever, it is really appreciated in relation to parliamentary work. Perhaps the Ceann Comhairle can clarify - is "rascal" an allowed word in this Chamber? I am not too sure.

Ruairi Ó Murchú (Louth, Sinn Fein)
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It is unacceptable language.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Is there anybody in particular the Minister of State had in mind?

Gerald Nash (Louth, Labour)
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I think it is parliamentary.

Neale Richmond (Dublin Rathdown, Fine Gael)
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I do not think Deputy Ó Murchú will take umbrage if I describe him as being a bit of a rascal in some of his line of questioning but he raised serious points concerning businesses, if perhaps a little bit more philosophical when it comes to the politics of today.

Gerald Nash (Louth, Labour)
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He has been called worse.

Neale Richmond (Dublin Rathdown, Fine Gael)
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On supports, two areas are receiving immediate response because of the report by the Department of Trade, Enterprise and Employment, referenced by Deputy Quinlivan. It is extremely important to show how tough it is for many businesses in general but also because of many of the legislative and policy changes introduced in this House, supported by all parties present, particularly in sectors such as retail and hospitality but also the fact that the majority of them are small if not microenterprises. The increased cost of business scheme is open for applications now. It is not an onerous application. It is not like TBESS; it is simply confirming that your bank account details are in order and that you are still trading and that funding will be paid out by local authorities imminently. The week before last, the Minister, Deputy Coveney, also announced another package worth about €20 million. The increased cost of business scheme is worth about €257 million but there is another immediate package of about €20 million in energy supports, while he works with colleagues in the Department as well as other Departments on an options paper for measures the Government can take. There need to be supports for business to allow us to continue these important changes to workers' rights and entitlements, which we also want to build upon. We realise and acknowledge that comes with a cost to many businesses, particularly small businesses. They need supports. I welcome Deputy Nash's contribution but I also genuinely welcome his queries, questions and the need for clarification. As we go through the Stages, I hope we will be able to go through that. He was very involved with this as a Minister of State who sat in this seat - literally sat in the chair I sit in now. His work is greatly appreciated, as is his ongoing input.

On Microfinance Ireland, it is an excellent organisation providing a vital service for our smallest businesses and startups. It fulfils a unique role providing finance to microenterprises that simply cannot secure it from other sources, ensuring that funds are available consistently, not just cyclically. It is great to see appreciation for its work this evening. The changes in today's Bill will secure its future by bringing it into State ownership and streamlining the administration of its oversight. By strengthening Microfinance Ireland's connection to our Department, it should also support further deepening of the existing working relationship between Microfinance Ireland and the local enterprise offices, as well as Enterprise Ireland, which also falls under the remit of the Department of Enterprise, Trade and Employment. By bringing it into this family, we can better nurture these networks and pursue practical synergies. I am sure there is genuine joined-up thinking across our Department's work. For these reasons, the Bill is an important step in paving the way for scaling up the organisation so it can help even more of our enterprises. I look forward to engaging with all Members in more detail on Committee Stage in due course. I thank them for their support.