Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Acting Chairman. As I said already, on Tuesday evening I was contributing to the Second Stage debate as a Government backbencher. Some 36 hours later I am here. I thank the Members for the goodwill and good wishes that have been expressed in the House today. I really appreciate that.

I want to respond as quickly as I can to the various comments. I might not pick up on everything, but everything that has been said has been taken care of. The Senators here know the detail but I want the people watching to understand. The legislation is very technical. Reading it, one gets lost in EU directives from 1949 and things like that. To put it simply, there are two main elements to this legislation. One is support to mitigate unemployment risks in an emergency, SURE, which will cover the exceptional costs that Ireland and other EU countries incurred as a specific result of Covid-19. It is very unusual, and it is good to see such a fund being set up. The money we have already spent on the Covid-19 pandemic unemployment payment, the temporary Covid-19 wage subsidy scheme and healthcare costs can be recouped by way of borrowing. It is not the case that we can only borrow from the point when the fund is set up. We can borrow to meet the costs that Ireland incurred in recent months. Everyone knows that when one applies for a grant or a loan, it is usually for future expenditure and previous expenditure cannot be brought forward. This is exceptional, however, and it is good that this has happened. The legislation is following the spending, but it will cover spending that has already happened to date.

We will contribute €483 million. The total EU fund is €100 billion, about 200 times that figure. This instrument only allows the Government to borrow. There is nothing in it about a jobs initiative. This is to cover the employment support we have been providing in recent months and will continue to provide. The new fund gives the Government the option, if the conditions are favourable at EU level, to use the EU's AAA rating to borrow funds at a very cheap rate. Ireland has been doing that in its own right up to now. We may choose to spread the risk and borrow through the European borrowing mechanism. This is essentially enabling legislation. It does not require us to borrow any money from that fund. We may decide to borrow on our own, as was noted when this was mentioned. If we do want to spread the risk, we can use this mechanism to draw down funds. This will help the national finances.

The second half of the Bill provides for the European Investment Bank, EIB, pan-European guarantee fund. That is dedicated to protecting jobs and restarting businesses.We have all said we are contributing €167 million into that. The total contribution by EU states is €25 billion, but that allows that fund to borrow up to €200 billion. That €200 billion can be borrowed for investment in jobs and getting the economy kick-started again in the future. That is borrowing by businesses directly through the banks not through the Government. That comes to Ireland through the Strategic Banking Corporation of Ireland. The key banks get their funding from SBCI and lend to their customers.

A business does not have to be a current customer of a bank to avail of this fund; a business can make its application to whatever bank it chooses. This separate fund is the one that is dedicated primarily to kick-starting the economy. It is to get companies that are viable and struggling with cashflow difficulties up and running straightaway. That will really help to kick-start the economy from here on in.

I sat down this morning for the briefing from the officials. I have one important message I want Irish businesses and the banks to pick up from this. The banks are the key link in the chain. This is European money coming through the State body, SBCI, but the lending is done by the main pillar banks. I ask the banks to ensure they do not put any unreasonable obstacles in the way of customers who choose to take this route because they have their own products to sell. They will want to make some profit out of this scheme and we have to prevent the banks from making too much profit. We also have to ensure they allow the funds to get out the other side.

The fund comes into being when we all sign up. The 60% threshold has been reached in the past few days so the fund can be set up immediately. Borrowing can start early in the autumn as quickly as possible once that funding is there or once the guarantee to the states to provide the funding is there. We only have to provide the fund if somebody starts defaulting on loans in due course and the funds will be called upon at that stage, but we have to give the guarantee here now.

One of the reasons it is so urgent from the Irish point of view is that it took us so long to form a Government. Other countries have done this in recent weeks and may not have had to pass it through their parliaments. Different governments may have had different ways of doing it, but it has to come through the Oireachtas because Bunreacht na hÉireann requires that expenditure from State coffers must be approved by legislation and there was no legislation governing this before now. That is why we are here today and that is why it is urgent. We are catching up on most of the other countries which have done their work in this area in recent weeks. That does not mean the fund has not really kick-started at all yet.

My main message to Irish businesses is to get in there quickly. The fund is limited to €200 billion. I think the three big countries are limited to borrowing €60 billion out of the fund. If we look back at this in 18 months time and find that Ireland had one of the smallest uptakes for this funding which is available at a very good rate, that would be our fault. The job of the Government after this legislation passes today and is signed by the President is to promote this to Irish businesses as a very important initiative. If we do not, other countries will mop the €200 billion. If we come looking for money next January or February, we could be told we are too late because the fund has been exhausted. I say this to Irish businesses. This is practical; it is not politics. They need to go into their banks as soon as possible and draw down those funds. They should not let other countries steal a march and then we are left fighting for the last element in the fund. That covers points people have mentioned here.

A number of speakers contributed. Senator Casey asked about member states that have signed up to the scheme. I will give some information on this shortly. He mentioned the issue of insurance. In his time as Minister of State, Senator D'Arcy worked very hard on that in recent times. We have commenced on that road, but as the famous phrase goes, there is a lot done, but a lot more to do. Everybody will agree on that. It is a very difficult situation. Following his work, the Government continues to have ongoing contact with the insurance companies to ensure we have a cost-effective insurance industry here.

On the EIB, as I said, the 60% figure has been reached. Twenty member states have signed the SURE instrument and a number of others will do so in the coming days.A small number, including Ireland I would hope, are expected to sign next week. The legislation is urgent. The Minister will sign the necessary documentation and we will be in at that stage. As I said earlier, most other countries have actually signed up. The funding is just about ready to get up and running.

Senator Higgins referred to public service companies being allowed to draw funds under this legislation. There is a figure for some of this to be used for healthcare. This scheme can evolve and the Senator spoke of the committee. It is not just a one off. They can nuance it as it goes along. There is provision and it is a kind of living scheme. I hope the points that have been made will be taken into account, including the Minister's and our representatives on that committee, to monitor the use of the fund, not only for Covid-19 but also for issues that will emerge such as climate and sustainable development goals so they can be taken into account.

On the issue of health services, the European Stability Mechanism, ESM, pandemic crisis support was introduced earlier this year. This is another element to assist businesses. No legislation was required for that support but there was a specific facility for some of it to be used for health-related activities. While this is just one mechanism there have been other specific measures like the ESM support that did not require to come before us, and it includes healthcare. Iarnród Éireann, Bus Éireann and other public companies can apply for funding under this provision. It is not strictly for the private sector. It is also for anyone providing a public service. We will continue to watch to make sure the limit of 5%, which might be a limit for this particular fund for now, can be looked at. There are other funds such as the ESM through which other companies in the healthcare sector can borrow with regard to those variants.

A report will be presented each time a payment is made into the fund or a withdrawal is made. Within a month of that happening the Minister will lay a short report before the Houses showing the activities within the fund from an Irish perspective, almost on a real-time basis. Those figures will also be included in the annual report we will present.

Senator Boyhan asked about numbers. I have indicated how many other countries have signed up to date, and it is well known that most have done so. This is why the legislation is urgent. Ireland does not want to be accused of being the people who hold it up and this is why the timing is tight here too. It is voluntary, but there is an obligation and we expect everyone to comply. Whether it is mandatory or whatever, it is voluntary but we expect all to comply. I will just put it that way. It is a phrase we could apply to other situations too.

The payments under the temporary wage subsidy scheme incurred to date can be borrowed by the State to help to recoup that pay. I stress that with everything discussed here no free money is being mentioned. I want to be clear for the public watching that money borrowed by the Government under the SURE fund is repayable with interest in due course. Every loan that is taken out with the banks through the pan-European guarantee fund is money to be paid back with interest. I just want to be real about it. This fund will allow people to borrow. It is enabling legislation so the Government and businesses can borrow. There is no requirement for anyone to borrow anything if they choose not to. If they do borrow, however, it has to be paid back in due course. I say this in case some people think it is all money from the EU that did not have to be paid back. I need to state this. When one gets into detail people may ask if it is a grant or if they have to pay it back, and I am just putting this on the record.

Reference was made to Border counties and those companies that operate close to the Border. It is very clear. If the business or company is located in the EU, which means in this State, then it is covered. If the company or business has employees who work across the Border in Northern Ireland the business is covered, once it is based in the State. This fund is for the businesses to borrow. If the business is based on the other side of the Border it is outside the EU. If it is based here but with employees who cross the Border it comes in under this scheme.The whole insurance issue is a big factor for small businesses. Several Senators have alluded to that. I now have responsibility in that area. Insurance is being brought into the remit of the Government group looking at the recovery. People are aware that it is a particular issue in different sectors as we go along.

Senator McGahon mentioned the anomaly with the stimulus package in that when it came out, people who missed the date of 29 February because they were not on payroll or were changing an accounting or a payroll system were not deemed eligible. I will highlight this with the Minister. While I am making no commitment, it may be possible to address those issues with tweaks in the system in the context of the July stimulus package that will come out in a week or so. A company that was genuinely changing its accounting package during that period should not be penalised. Common sense tells us that. The scheme as drafted did not facilitate it and we will highlight the issue to the Minister before the July stimulus package is completed.

The banks profiteering and cherry-picking customers are key issues. When all is said and done, this is about companies going in to their banks to borrow funds through this special scheme and we encourage them to do so.

I think I have covered most of the points made. I thank everybody for their contributions. We look forward to this legislation being passed in the Seanad as it has been in the Dáil in recent days. My final word to Irish businesses is that they should get in there quickly while the fund is available. They should not leave it for two, three or four months before they start the process. If funding is available at a good rate, they should get in there. Historically, Ireland has been good for getting into schemes early and we want to do so on this occasion.

I do not know the formalities of closing up the debate but I have said what I have to say. I thank Members and look forward to the Bill passing all Stages.