Tony Mulcahy (Fine Gael)

The Minister of State is welcome to the House. I agree with Senator Byrne because I have many friends in that scenario. He is right to say the situation has improved but it should not regress to where it was.

It would be wrong of me not to reply to Senator White, for whom I have the greatest respect. The business model that was applied here from 1997 to 2010 certainly did not leave much money in the country or in the banks. It is very difficult trying to sort that all out at the moment.

I have been self-employed for 26 years, have been at the coalface and know exactly what it is like. Nobody can lecture me on what it is like in the small business sector because many of my friends and colleagues have been in the same situation.

I am glad to have the opportunity to speak on this important matter, the role small businesses can play in our economic recovery. The ability of small businesses to succeed and grow will underpin our potential for job creation and prosperity, particularly as they are embedded in local communities. The Government's recent action plan for jobs and the comprehensive report, entitled The Rise of Small Business and published this year by the Minister, outline the Government's commitment to ensuring the SME sector is supported and allowed to develop in order that it would realise its full potential.

In excess of 200,000 small businesses employ an estimated 650,000 people. Small businesses have always been the backbone of our communities and I welcome the spotlight that has been shone on them by the Government's programme, starting with the appointment of the Minister of State, Deputy John Perry.

Those involved in the small business sector are willing to take risks and to commit themselves. They are willing to put in their own funds, take on a lease, and seek bank funding. They also recognise that there will be local authority charges in the form of rates and water services. They know there are certain costs associated with taking on one or more employees, but they take the risk. It is because they want to make money but also because they want to play their part in providing services and employment in their own villages, towns and cities.

We have all spoken to small business owners who talk of the job that runs for 24 hours a day, seven days a week. That is because they take the job home with them. In the current economic climate the focus is on encouraging people to become entrepreneurs by starting their own businesses or supporting existing small businesses. This Government has given them a voice.

I agree with Senator Mary White on the need for credit. A number of elements are covered in the motion and I will address some of them, particularly the need to access credit and finance facilities for small businesses which continues to be a major obstacle for existing businesses and those who want to start their own business. It is welcome that Mr. John Trethowan who is fronting the Credit Review Office is on the board responsible for the action plan for small business established by the Minister of State, Deputy John Perry. It is important that he hear at first hand about the difficulties people involved in business are experiencing in negotiating funding from their bank. The Credit Review Office was established to provide an effective review process with an independent opinion if and when credit applications are refused by banks. The review process will review banks' decisions to review, reduce or withdraw credit facilities. The process is initiated by the borrower and it is important to note that there is no other authorised channel where anyone can intervene with a bank and in its relationship with its client. I see from the latest review from Mr. Trethowan's office, published last month, that in 54% of cases in which the Credit Review Office adjudicated on a decision of a bank not to lend or to withdraw credit, the bank's decision was reversed; therefore, there is a positive outcome. The services of the office are available to customers and it is certainly putting itself out there and making its services known. It is important to note that the two pillar banks are also obliged to inform customers about the services of the office.

I acknowledge that not all small businesses are viable and that not all credit applications can be met. All requests need to viewed against a backdrop of the economic feasibility of a particular business. However, it is encouraging to read in Mr. Trethowan's report that he is determined to ensure a business with potential gains access to credit. He has consistently pointed out that overly rigid lending policies continue to be a source of concern for him and this continues to be the case, according to the latest review. We all agree with this. I certainly agree with Senator Mary White in this regard.

In its recent action plan for jobs the Government committed to developing a temporary targeted partial credit guarantee scheme and a micro-finance fund which would have a positive impact on small business. The partial credit guarantee scheme will place Irish small and medium enterprises on a competitive footing, relative to their international competitors who often have the opportunity to avail of loan guarantees in their own countries. I look forward to publication of the legislation surrounding the partial credit guarantee scheme which is being designed.

I note in the action plan for jobs that the partial credit guarantee scheme will be reviewed at the end of the year. This is important, because often such schemes are established and set out without ensuring a follow-up to see how they are operating. In a recent submission to the Joint Committee on Jobs, Social Protection and Education, Enterprise Ireland spoke about the support it was providing for SMEs. It was heartening to hear its officials speak about the work they were doing with the banks. Staff of Enterprise Ireland have been seconded to the banks to inform credit decisions in the modern sectors and markets because we hear, anecdotally and factually, that the banks do not have the necessary expertise, as they focused their energies in the past ten years on making profit from property, which is no longer sustainable. These staff can inform those who are lending to businesses such as those involved in food technology, medi-services, green technology and many more about the value of these businesses and how they can operate in European and international markets.

The motion also notes the need to address the high level of rates payable to local authorities. Anyone who has ever been a member of a local authority knows the valuable role of commercial rates in balancing the budgets of local authorities. However, it is important that local representatives and managers of authorities are aware of the difficulties small businesses face. There is a point beyond which a small business cannot operate. I was pleased to note that the action plan for jobs stressed the need for local authorities to exercise restraint in this regard. A commitment was given to accelerate the programme for the re-evaluation of commercial premises. I have come across a couple of such cases myself. This would provide a basis to adjust the burden of commercial rates in many local authorities. Local authorities are always encouraged to exercise restraint in setting the level of commercial rates. I look forward to the contribution that will be made to local authorities by the household charge and from the, soon to be introduced, property tax. No one is happy about paying the charge, but income will be gathered and delivered to spend on local facilities and services, which must be welcomed. The charge has been particularly welcomed by Chambers Ireland which represents small businesses, as it recognises the need to ensure the financial burden is shared in communities.

The plan also mentions the need to ensure local authorities consider the impact of development contributions on small business and competitiveness in general. This is something I brought to the attention of previous Ministers. Development charges set at the height of the boom are no longer viable for many small developments. In many cases, the high levels set have discouraged businesses from proceeding with extensions or similar works.

Local businesses also welcome investment in the development of water services throughout the country and the proposed establishment of the national water authority. This will lead to greater transparency. For too long, businesses have suspected that they have been sharing the cost of domestic water services and moves to assist them, whereby one will pay for water on the basis of usage, will be more accountable. The Minister for the Environment, Community and Local Government has stated all houses will have a certain generous amount of water for which they will not be charged.

The issue of procurement and the facility of SMEs competing for procurement has always been to the forefront of small business associations and the people they represent in their communities. The Government has given a commitment to work to ensure small businesses are assisted. Advisers and mentors with specific public sector knowledge will advise and help firms to win more sales and procure contracts. Enterprise Ireland and the local authorities will highlight the opportunities for businesses and local SMEs and ensure more local businesses and SMEs register on the eTenders website to enable opportunities to be created for them.

I travelled the hills in February 2011 with a Fine Gael colleague, as we canvassed in the general election. He remarked, "There is a lot of negativity in Fine Gael." There is negativity everywhere, but we might just get it right as a Government. I firmly believe we will.