Darragh O'Brien (Fianna Fail)

I welcome the Minister of State and congratulate him on his appointment. I thank him for his kind words. This is an extremely important portfolio and I am glad the Government established a separate portfolio for the SME sector to facilitate a specific focus on it.

Many elements of the jobs initiative are welcome. I will not cover all of them as some of my colleagues have mentioned them. I would like to get more details about the partial loan guarantee scheme, although I am aware it has not been finalised. The Minister of State said it would involve minimum exposure for the taxpayer. Obviously, we will have to be careful about how it will be structured. The 15-day prompt payment plan is crucial and I wish the Minister well with it. I know how difficult it will be to attain that objective. There will probably have to be a diktat from the Minister and the Cabinet that it must happen because it is not happening at present. The previous Government endeavoured to attain it but without much success. I wish the Minister well with it.

With regard to public procurement and the SME sector, a report on public procurement was produced in late 2010 by me, former Deputy Bernard Allen and other members of the then Committee of Public Accounts. The Minister of State has correctly pointed out that public procurement is worth €15 billion per year. A minimum of 17% of our public procurement occurs outside the Republic. As the European average is 2%, we are way out of kilter. I welcome the Minister's initiative in this regard. However, the matter will have to be watched very closely because there is resistance within Departments to it. The unbundling of tenders is also crucial. I welcome that initiative because it could create many jobs and support the SME sector.

The strategic investment bank was not mentioned, although it was a cornerstone of Fine Gael's policy prior to the general election. The Government has decided to take the two pillar banks approach. I will offer a word of caution about this from experience. The Government is allocating €10 billion per year to Bank of Ireland and AIB in the next three years to lend to the business sector, with €20 billion of this sum to go to the SME sector. Targets were set for these banks previously and while they showed us how they had met them, one could not see or feel it on the ground. Perhaps I could receive an update from Mr. John Trethowan of the Credit Review Office through the Minister's office. Has there been an increase in the number going to that office? We will have to watch the two banks very closely to ensure they are lending money and that it is new lending.

I turn to how the scheme is being funded. I have a fundamental issue with the levy on private pension plans. The average growth in private pension schemes over ten years has been 1.5% in total because returns in the past four years have been very negative, particularly in equity and bond markets. To fund this programme we will take half of that growth from pension funds. The major problem with this is that it is only happening to private pension funds. I am fundamentally opposed to it being funded in this way. We are penalising those who are doing what all previous Governments have asked them to do - make provision for their own retirement. In a situation where only the private sector is picking up the tab, and when the longest serving members of pension schemes will be penalised more, we are saying that those who decided in their early 20s to provide for retirement who are now in their 50s will have significant funds taken from them. A medium-sized company pension scheme with 100 employers will have average assets in the fund of €50 million. The pension fund trustees, because the schemes are not owned by the company, will have to come with an average of €250,000. These funds are under ferocious pressure as it is.

The Government is also under pressure to find funding for many of the welcome measures in this strategy but if we are to levy pension schemes, approved retirement funds and annuities cannot be left out. The idea that these funds are not pension products, as the Taoiseach claimed, is simply splitting hairs. The funds are derived from pension funds. If the Government must levy pensions, a levy should be applied to the tax-free lump sums of both private and public pensions, regardless of the fund being from self-employment and an approved retirement fund, public sector or private sector. That would be a much more equitable way to do this because this singles out private sector pensions but not proprietary directors, who are the only people who will be able to save for large approved retirement funds. The PAYE worker can only fund a small amount for approved retirement funds.

We are going after the wrong people and I would like to see more equity. I welcome much that is in the jobs initiative and I wish the Minister of State the best of luck in his portfolio but the Government did not consult the Pensions Board, the statutory body for pension funds, prior to the announcement of the decision. The Government must go back and talk to the industry because this could have catastrophic effects. Companies might not be able to employ people because they might have to increase pension fund contributions to pay the levy.