Kathryn Reilly (Sinn Fein) | Oireachtas source

I hope not to take up that much time. I welcome the Minister of State to the House. He is a regular visitor here and we are discussing an important topic. As many other Senators have said, small and medium businesses, SMEs, are the lifeblood of the economy and upon them hinge jobs and the fate of the local economy. That is an interlinked cycle in that when one suffers, everyone suffers and it is important, therefore, that we facilitate and foster their growth as much as possible.

We frequently hear reports that paint a clear picture of banks not lending to SMEs. That must change because the SME sector will be allowed play its part fully in restarting economic growth here, especially when we consider that the State owns most of the banks in the State. As the major shareholder in those banks we must try to do more to compel them to start engaging in greater lending to SMEs not just in theory but on paper because that is not trickling down to the people affected. The soft approach to date has not worked. We must take a harder approach and make sure that for SMEs the Government is seen to be fighting their corner because local economies and job creation hinge upon their success.

Another critical issue that has been raised with me is the vacuum and the uncertainty around county enterprise boards. SMEs, and smaller businesses in particular, do not know where to go for advice and assistance. We need more clarity on local enterprise offices, LEOs, their budget and the scope of their field of activity.

At the joint committee on jobs recently, Bernard Coyle of the Irish Exporters Association raised the issue that plans to close the county enterprise boards without having a replacement in place was causing considerable inertia in the system and companies were paying for that. That legislation must be prioritised and put in place as soon as possible, particularly when we consider the fourth guiding principle of the EU Act noted by the Minister in his contribution.

We have heard the mantra that the Government does not create jobs. Over 33,000 jobs have been lost in the economy. The vast majority of work found is in the SME sector, and Central Statistics Office figures demonstrate that 80% of all employment is within the SME sector. A Government sponsored report found that 2,200 new businesses start up every month, and we know that at the same time there are approximately 1,400 business closures every month based on current trends. The start-up phase is when companies need the greatest levels of support, and that is the reason the county enterprise boards and bank lending are important.

I commend entrepreneurs and start-up companies who take the plunge and set up their own business, especially in this economic climate. I was fortunate to meet a start-up entrepreneur on Monday who set up the Blackbird café in Derrylin, County Fermanagh, which is doing very well so far. I hope that trend continues. I commend people who take that plunge in this climate because it is a very brave move.

A host of specific issues arise upon which the Government must act if it is to play its role in facilitating SMEs in helping to get Ireland back to work.

On Friday I was fortunate enough, as a Border county representative, to attend a conference that was jointly hosted by the Oireachtas Joint Committee on the Environment, Culture and the Gaeltacht and its corresponding committee in the Assembly. The debate was on difficulties with planning issues in Border towns and town centres. The main issue was the displacement by multinational corporations of town centre businesses which are largely SMEs. The question asked was how they can be sanctioned when there is no demonstrable need for developments of such scale, especially when there are large vacancy rates in towns because SMEs are going out of business. In a large number of cases planning is granted for commercial reasons and for the immediate bounty that they bring to cash-strapped local authorities. The point was raised that every ¤100 spent locally injects ¤250 into the local economy whereas the same amount spent in a multiple only injects ¤140 into the local economy. Can the Minister of State tell me if he or his Department plan to enhance and support the town centre experience where many SMEs are based? For example, if footfall is diverted from a town centre it removes a lot of business from SMEs, and that is across the spectrum whether that is retail or any kind of sector. How can we collectively enhance the retail and social experience of towns? Will the Government develop a plan similar to the Northern Ireland Independent Retail Trade Association, NIIRTA, which produced a 50-point plan for redeveloping or regenerating town centres?

We need to have a greater conversation with the Minister and his Department on SMEs and town centres and how to support SMEs in a dwindling town centre environment. Such a debate would naturally follow the work done by the Oireachtas Joint Committee on the Environment, Culture and the Gaeltacht.

I cannot talk about the local domestic economy and SMEs without mentioning shrinking domestic demand and the effects of austerity policies. A reduction in incomes, flat taxes such as household taxes and VAT hikes have led to a decreased domestic demand among consumers because people are afraid to spend their money. That correlates with SMEs struggling to survive because some of the Government's policies have mitigated against them. To return to what I said at the beginning, job creation hinges on SMEs, the domestic economy and a consumer's willingness to spend. In a previous Private Members' motion, the Sinn Féin Party tabled changes that should be implemented and that we think could help SMEs in the current economic climate. One example is ending an upwards-only rent regime for existing contracts. The Government gave such a commitment in the programme for Government and there were problems with existing contracts. We need to ensure that such contracts do not hinder SMEs.

We should also address the difficulties caused by late payment for those contracted to provide goods and services to the public sector, including NAMA. We should also open up the rules on tendering and procurement and develop clauses in public procurement contracts to promote the sourcing of local goods and services and provide training.

Another important measure would be the provision of greater levels of social protection, including protection in the case of illness for those who are self-employed. Entrepreneurs have taken the plunge but they are afraid of what will happen if their business fails and worry whether they will be adequately protected by the social protection system. We do not want them to suffer a collapse in income because they tried to create jobs in their local economy. We need to ensure that there is a safety net for them.

With regard to local authority rates, we should introduce of a more progressive rates system whereby a larger and more profitable - typically a multinational business - pay a fairer portion of rates to alleviate the burden placed on mainly indigenous SMEs. We should also enable company directors to invest money from their private pension funds in their businesses.

I have a brief question on the Minister of State's speech when he mentioned the second guiding principle which states: "Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance." What is the definition of "honest entrepreneurs"? How is the measure governed and monitored? How will the measure be applied in reality? I ask him to make sure that people do get a second chance.