Fergus O'Dowd (Louth, Fine Gael) | Oireachtas source

The Government acknowledges that SMEs are the lifeblood of the Irish economy and play a crucial role in employment growth in our country. Since March 2011 Government policy has concentrated on ensuring that viable micro, small and medium sized enterprises have access to capital, equity and debt funding from a more diverse range of sources. Experience has shown us that not only do SMEs need credit from banks but some SMEs have an appetite to take equity and other investments from market-based funders. The NPRF has committed to using its funds to help the flow of credit to the SME sector through the SME equity fund, the SME credit fund, the SME turnabout fund and the innovation fund, all of which are up and running.

In budget 2014, the Minister for Finance introduced a number of measures for funding growth in the SME sector including enhancing the Credit Review Office, devising a comprehensive communication strategy on Government supports for SMEs, improving the financial education of SMEs and measures to help SMEs to export. The Government supports seed and venture capital directly through Enterprise Ireland and has established a credit guarantee scheme. Microfinance Ireland can also help smaller SMEs and Senators and Deputies can help us to spread that message in their constituency clinics. The launch of the development capital scheme will help firms with high growth and job creation potential. The actions outlined above show that the Government is fully committed to maximising the potential of the SME sector in any way it possibly can so that the people will benefit from a thriving domestic economy.

The Senator should note that it is unlikely that the Central Bank would refuse a license to an SME-focused bank provided such an application complied with all relevant laws and procedures. As this House will no doubt be aware, the Taoiseach mentioned in the Dáil at the time of the exit from the troika programme that he had held discussions with Chancellor Merkel on ways in which Germany could actively support our efforts to foster economic recovery. The discussions included a specific focus on finding ways to reinforce Ireland's economic recovery by improving funding mechanisms for the real economy, including access to finance for Irish SMEs. In that context the German Government has asked KfW, the German development bank, to work with the German and Irish authorities in order to deliver on this initiative at the earliest possible date. Officials of the Department of Finance have already exchanged working papers on this subject with KfW and the German Ministry of Finance. There have been meetings on this matter in Berlin, Frankfurt and Dublin as well as numerous teleconferences, including two last week.

The NTMA and the Department of Finance are currently working on the details of the debt products to be offered to the SME sector with a view to making them attractive in terms of both cash flow and accessibility. As we are trying to ensure that any initiative that comes out of this process is as effective as it can be, we will be discussing approaches that meet the strategic objectives of all stakeholders and ultimately facilitate lending to the real economy, in particular to SMEs in Ireland. In addition, the medium-term economic strategy and in turn, the action plan for jobs, commits the Government to working with multilateral development and national development banks to develop new sources of finance for SMEs. In this context we will also be exploring how the European Investment Bank's assistance can continue to be leveraged to the maximum benefit of the Irish economy.

Experience in other countries suggests that any lending facilitated by a national development bank like KfW or a strategic investment bank is generally complementary to lending already taking place in an economy and can assist commercial banks with access to cheaper credit lines such as from the European Investment Bank. Additionally, the Government has decided to establish the Ireland Strategic Investment Fund, ISIF which will absorb the National Pensions Reserve Fund, NPRF. Using the ISIF, we will further maximise our resources to enhance growth in the Irish economy and improve key infrastructure to maintain Ireland's attractiveness as a place to do business and to create employment. As announced, the legislation for ISIF will be introduced in the Oireachtas shortly.