Damien English (Meath West, Fine Gael) | Oireachtas source

I thank all the Members for their contributions. I think everybody has contributed now and has shown great understanding and knowledge of the importance of helping the SME sector, as well as that SMEs are all of us and are right at the heart of our communities. They are in every town and village that we represent and everywhere we go and because of that knock-on effect, it is important to support those businesses and jobs as in so doing, we also support all our communities. Those aspects have been mentioned and well understood by everybody here, which shows the importance of responding to this situation in any way we can. We are only discussing one area of the microfinance loan and the microfinance fund today. This is only one intervention of many and we will continue to bring forward new ideas, including the jobs stimulus plan, in the weeks ahead. I thank all the Members for their ideas and interventions.

A key aspect also highlighted by Members involves communicating what we have in place now. Up to €12 billion in supports have been announced in recent months by the Government for all businesses, small, medium and large, in loans, grants or equity. It is correct to state, however, that many businesses are not aware of those supports. We will, therefore, have to continue the communication efforts. I ask all public representatives, including Deputies, Senators and councillors, to help get that message out. Naturally, we are trying to beef up staff numbers in all the organisations involved to get the message out about supports and to process applications.

The LEOs were mentioned by many Members. Senator Wall, and others, highlighted the pressure being put on them. Our Department and other Departments are putting the LEOs under pressure to get the applications processed. It is nearly an impossible task because the number of applications coming in is now so high compared to the past. We must increase our staff numbers and expand the process of reaching out regarding these schemes.

Many Members also mentioned the online trading voucher scheme. It has been a great success. It has been a slow burner since 2014, when I was last in this Department. We were then trying to push the scheme and encourage people to take it up but not enough people wanted to do so at that time. In recent months, however, demand for the scheme has been phenomenal. That is important and we must respond to that demand. The first part of that response was to issue more money, and that has happened. Almost €14 million or €15 million in additional money has been put into the scheme. However, then one must find a process to get that money out, get people onto the course and get the grants approved. As all that also means more work, this is not just a matter of allocating money but involves addressing the process to make that possible. I am aware that is something we must do and lead. The scheme crosses several Departments, but our Department certainly hopes to take a leading role in pushing it, together with the Department responsible for communications. Another point is that some LEOs have expended their allocation and have no money left, while others have the opposite problem of spare money and not enough applications. We need to match up that disparity. It also is our intention to try to put more money into this scheme in the July stimulus. I wanted to address that issue because many Members have it mentioned it.

The issue of the interest rate was also raised by many Members. I want to be clear about this issue because in the debate yesterday in the other House, there was definitely a misunderstanding of the different types of loan products. This is a State-backed product. It is not one backed by the traditional banking sector and this is a not-for-profit product. When people say that the interest rate is too high at 4.5% or 5%, I recognise that it may be too high for many businesses. Nobody wants high interest rates - although I would not call a rate of 4% high - and none of us wants to pay interest on money. We all want grants and many businesses need grants but they also need access to funding. It has been proven in research that the interest rate is not always the barrier. It is accessing funding, getting the money and working out a repayment plan that is the barrier, and not always the interest rate. Naturally, however, every effort will be made to bring the interest rate down as low as is possible.

Traditionally, this type of funding would have a high interest rate. Microfinance loans are for new ideas, new companies with no track records or companies that would not be able to succeed in getting money from the banks. In normal trading conditions, therefore, the interest rate for this kind of money would be 14% to 15%. Microfinance Ireland has managed to issue these funds at 7% or 8% in the last three or four years. This year, we have committed to bringing that rate down to 4.5% when applicants work through the LEOs. Many Members referred in their contributions to the importance of working with the LEOs. It is certainly important, because those offices help with applications, guide applicants through the process and help with the forms, but it is also possible to get a lower interest rate when going directly through the LEOs. It will be 4.5%, whereas the interest rate is 5% when applicants go directly to Microfinance Ireland.

Some of the amendments in the Dáil yesterday also focused on the interest rate. We committed, as soon as this legislation is passed today and we bring forward a scheme, to doing our best to bring the interest rate down as low as we possibly can. The Sinn Féin amendment suggested bringing the interest rate down to 2% permanently, to have no charges for 12 months but to cover all the costs.Even at a rate of 4.5%, it does not cover the costs, because it very often involves subsidising loans that do not get repaid in some cases or that have a negative outcome. We are trying to be quite flexible in granting this facility in the first place to give the opportunity to people who might not always get money. Quite a lot of losses are associated with this kind of lending but the State is prepared to do that to give people the chance to either start a new business or save an existing business and create those jobs. That is what the microfinancing loan is about and that is what the Government is trying to do.

The interest rate as it is does not cover the costs but we will make efforts to adjust it as we bring the scheme forward. I cannot say how low we will go but to be clear, as of this year, in response to the outbreak of Covid-19 there is a six-month payment break during which one does not pay any repayments or any interest. That is effectively a 0% rate for the first six months but over three years - the majority of loans under MFI are for three years - it is an effective rate of 3%. To me, that is quite good value reflecting the scenario we are investing in. While I totally understand that anybody in business today needs practically free money or grants, we also must try to stretch the taxpayers' purse as far as we possibly can with all the different supports to all the different sectors. Every effort will be made to make it as cheap as possible but that does not mean we can do it for free because we are trying to manage the taxpayers' money here as best we can to reach as many as we possibly can and to spread that out. I hear what everybody is saying and the Government will try to do that.

At the moment, there is a six-month break and we will, of course, look to see if we can make that longer. Some of the suggestions yesterday and today were to have a longer extension during which one does not have to repay any money. Again, we will look at that to see if we can increase the break after the legislation is passed and when we bring the scheme forward. It would not be right and proper to write into legislation what the interest rate might be or what the repayment plan would be and so on. We will look at that as well.

There has been much talk here about the application process and of simplifying it. When one is committing taxpayers' money to anything, there must be a process. That should not lead to unnecessary red tape but it does lead to form-filling, which none of us like, but it is a fact of life. We try to put in place a team of people to assist those who need the extra help to do that, or perhaps to help a business that has not applied for a loan in the past or that might have a different kind of history. There are teams of people in the LEOs who help people with their application. Microfinance Ireland has its own staff who help people with that process and guide them through it as well. They will get a second or third attempt. It is not as ruthless as other cases might be where a person fills in a form wrongly and they are gone. We try to work with people to fix the form or address and change something that might be in it. There is very much a hand-holding process there. That can be slow in some cases and if one hears complaints that someone's application took more than a few days, that is why. There might be a little bit of complication around the process that we try to work with.

On the issue of timelines in this regard, LEOs are fairly effective in reaching a six-day turnaround. I know one can see advertisements of banks that will do this within a day or in 24 hours. This is a bank that is lending in a particular sector and in the current climate, a six-day turnaround is quite good. That is what we try to do and, of course, we will try to beat that if we can. That is roughly the position at the moment.

Again, people might hear complaints that a person's application has been made but the person has heard nothing in a few weeks and it is taking too long. That is because, technically, Microfinance Ireland has no money at the moment. There are applications that have been stuck in the system for the past few weeks because this process is coming close to having no money. People will have heard of situations where there were delays. We hope to get that up and running quite quickly. We will try to send a message out to all those involved in the processing and preparing of applications to carry on with that work, provided this House passes this legislation today and lets it out the door. We can send the message out that this provision is coming down the line and that as the money will be increased, one can carry on with the applications. That is something we will try to encourage because there is a nervousness with anybody processing an application if there is no money at the end of it. The money will be at the end of it once we pass the legislation here today. I appeal for support and while I think that all speakers are in support of it I would not like to take anything for granted.

A couple of Senators raised the issue of youth unemployment. That reminds me of where we were back in 2013, 2014 and 2015 during the early stages of the recovery from the last great crash. Youth unemployment was persistently high and it was hard to get it back down. We committed then that we would not leave young people behind, and we did not, but it has taken a few years to bring that unemployment rate down. We probably only got there in the past year or two, having really intervened, so here we are again. The Tánaiste and the Taoiseach have said they are committed to making sure we do not leave young people behind in this situation. They are a major focus of the July stimulus plan but also the long-term economic plan due in October. People often talk about the Youth Guarantee at a European level but it involves trying to work with young people to make sure they are either in employment or in training, but certainly close to a job and a pathway to a job as quickly as they possibly can.It is a sector that will need particular attention and I will work on that. It reflects the views here and the Tánaiste has been very loud and clear on that. It is something we have to do because we cannot have a persistently high rate of unemployment for young people.

Community supports and getting the word out were mentioned. We try to reach out as much as we possibly can but, like everything else, good news does not always travel as quickly as bad news. If there is a problem with a loan we will certainly hear about it, but businesses do not often talk about good news. Everyone can play a role in that. We try to advertise as much as we possibly can.

As I said, our Department has been involved in bringing forward supports worth over €12 billion. We know that is not enough and that is why billions more euro will have to be spent in support of businesses and jobs in the months ahead. Other Departments have been involved in that and have been name checked. Local authorities are also involved, as are Údarás na Gaeltachta and other representative bodies, LEOs, enterprise agencies in local authorities, chambers and so on. Someone made a point yesterday that about 135 agencies are involved in job creation and supports. Included in that are local authorities and LEOs, but 35 agencies involved in this space are linked to our Department. We need to ensure everybody is equipped so they can do their jobs.

I was in this Department a couple of years ago and then disappeared into the Department of Housing, Planning and Local Government for four years. I thought I would never come out of it, but we will come back to that. They were difficult Departments to work in, but the Department of Housing, Planning and Local Government responded to the crisis over the past four or five years and is still responding. Likewise, the Department of Business, Enterprise and Innovation had to beef up its supports and efforts in 2008 until 2011 following the last crash, but responded and drove jobs recovery in this country. That Department can repeat that work and respond because the work in the intervening good years focused on innovation, research and development and future job creation. We are well equipped to respond to the current crisis and help many businesses survive Covid-19 and thrive, and also to look to future jobs.

As I said yesterday, people who had jobs in February and March might not get back to the same jobs, and that will be an awful pity and shame. We will do what we can to get them back to work, but it might not be possible in every sector. We have to hone in quite quickly on the reskilling agenda and encourage people to tap into their entrepreneurship and other skills. They could consider starting a company or join another start-up and work on a new project. We will create new jobs with new ideas and people. It is very often during tough times that ideas come forward and people take a risk.

Senator Seery mentioned risk taking, which is something we want to encourage. These loans are about backing risky businesses and providing risky loans. That is important. A Senator asked why refusal rates have been as low as 44% to 50% on average since 2012. Every year is different, but for the past seven or eight months about 80% of applications have been successful because we have encouraged our teams to take on more risky projects and adjusted the criteria to reflect what is going on now. A lot of companies now applying for these loans were not risky in February, but because of Covid they now face a different scenario. They have good business models and need to be helped through a period of difficulty over the next six months or a year. We need to guide them through that and get them going again, and that is what we are trying to do. We will respond to that and encourage others to do so.

I referred to the cost of running this kind of loan scheme. There are some losses which are subsidised by the State, and it is important we do that because if we did not have failures or losses we would be doing something wrong and not giving people a chance. I like to see failure rates as well as successes in LEOs, and very often people are obsessed with having a 100% success rate. That is a bad place to be when one is trying to support businesses, because we have to support businesses that might fail and out of that might come some other positive elements. I am not trying to encourage failure, but we have to recognise that some businesses will fail because otherwise we are being too strict with our criteria.

I hope I have covered everything. I will come back to some questions. Most people referred to the wage subsidy scheme and asked for it to be extended and made permanent. I heard what they said and everyone understands their point. We need to determine how best we can respond. The Taoiseach, Tánaiste and others said the wage subsidy scheme will be examined in order to determine how best we can continue with it, how long it should last and where we go with it.It has been an immense support to businesses, saved jobs and kept businesses open or allowed them to reopen. Naturally we will consider the matter.

Members made some suggestions to improve the restart grant. Again, the grant will be considered as part of the jobs stimulus plan. A sum of €130 million has been applied for as part of the grant. To be honest, I thought there would be more applications so it is probably true to say that some businesses do not know the grant exists or whether they can make an application. I encourage more people to consider applying for the restart grant and we will try to tweak same. A sum of €130 million has been applied of which €71 million has been paid out, although I could be slightly wrong on that. A sum of €17 million has been signed-off and is on its way out the door this week. Therefore, a total of €88 million has been paid out and more will be paid out in the weeks ahead.

A question was raised about the business owners who did not pay themselves in February. That is the first time I heard that and I am glad it was brought to my attention. Perhaps I should have heard sooner about the issue. Others may have worked on it already but I shall certainly examine the matter because that it is an anomaly we would try to close. In fairness to the Minister for Finance, he has tweaked the scheme on a couple of occasions to accommodate genuine cases that had been omitted. We have already responded to other areas such as maternity cover and parental leave. We are trying to adapt these schemes as we go along.

Senator Higgins stated that she was glad we have a stimulus plan and not what was seen in the past. I remind Senators that in the past there was also a stimulus package but the conversation focused on austerity. The austerity measures were more related to public expenditure and a readjustment of public spend which, in my view, had got out of control and was not structurally sound before the last recession, and then did not help us get out of it. There was stimulus for jobs and business. I know because I was involved in creating the Action Plan for Jobs. There were hundreds of actions every year, by all Departments, that involved expending money and that worked. The Senator is right that we need to do more of that again and have more stimulus. This time around we will not need, and should not need, austerity measures because the public finances are in good order, and the Departments and schemes are well run. There is a lot of accountability following every bit of taxpayers' money so there is not the wastage that might have existed in the past. This time around we, as a country, are in a good place to respond. I am quite confident, and certainly back in my Department now, that we can turn the economy around quite quickly because we have the focus and skills. However, a turnaround will not happen in six months and will probably take a lot longer than a year. If we commit ourselves for a year or two then there is no reason we cannot turn the economy around quickly. It is quite possible to do so over the next two years unlike 2011-12 when we faced a long ten-year project. Recovery happened quicker than first thought yet not every part of the country recovered. This time around we need to provide regionally balanced recovery as quick as possible.

I thank Senator Boyhan for complimenting me on my role in the Department of Housing, Planning and Local Government. I will make sure that we find money for any projects that he puts forward. Joking aside, I am glad to be back in my current Department at this busy time when there will be a great focus on jobs. However, I regret leaving my last Department as the work was unfinished. The Seanad played a great role in scrutinising a lot of legislation that we brought forward and improved it in many cases. The Seanad also highlighted many issues concerning planning, housing and homelessness. It also played a pivotal role in some of the changes that were made in the Department. My former Department was very focused and I am glad that its reach has now been extended. It made a lot of efforts in the last four years and turned the situation around. I acknowledge it orchestrated the building of a lot of houses through local authorities but its work is not finished. Senator Conway said that over 150,000 houses were built and he is right. Over 100,000 families have been helped but that is not enough and many people still need help, and more so due to Covid-19. I was glad to work in the Department of Housing, Planning and Local Government and would have preferred to finish my work but that is the way things work with Departments. However, that work will continue and I thank this House for its support.

The focus is again on jobs and the economy. Earlier speakers commented that the recovery is all about jobs. It is to an extent because if one does not get people back into jobs and employed so they can make money and pay their taxes, then we will not have enough taxes to fix other areas be it housing, community services, health and so on. These things are interlinked. We all felt at the start of 2020 that the jobs situation was in a good place and there would be a nice amount of regular taxes generated to fund everything else but that situation has changed. Our focus is on jobs again but it does not mean that the work will stop in other Departments. There is an opportunity to borrow money and keep everything going, and certainly when it comes to housing as well. Likewise, we must encourage jobs recovery unlike seven or eight years ago when we did not have access to capital to create jobs. Thankfully, this time we have access to capital and over €120 billion has been committed in Project 2040, which is supported and in the programme for Government.We will review that to ensure money can be spent, which will create jobs in all parts of the country in and of itself as well. As that work started two or three years ago, those projects are being worked on, money is being spent on them and they are creating jobs. We are in a good place for many reasons, so we should be able to drive on with jobs recovery quite quickly.

It will not be easy or nice and I understand many business owners are in a precarious state and they are worried and concerned. They do not know if they should open or not and if they should reapply or not. They are resilient but they will need Government supports and support from all of us to really make it happen and to give them the confidence that they can do this because it takes bravery to go back in, which I would have seen in the construction sector ten years ago. It took a long number of years to get people to put their toes back into the water and re-employ their teams, not necessarily only builders but anybody associated with any housing authority and with housing bodies even. There was a nervousness for a couple of years. We have to make sure that by bringing in legislation such as this, we give people the confidence to go back in there and open that door again as quickly as possible and to re-employ people and grow. That is what we are trying to do.

I probably missed some points but I will come back to Members individually on the issues they raised.