Paul Gavan (Sinn Fein) | Oireachtas source

Six and two, yes. I congratulate the Minister of State. I welcome the introduction of the Bill, which speaks to the broader European response to this crisis. The economic fallout of this health crisis is a European problem requiring a European response. The level of debt refinancing necessary to deal with this crisis requires a radical departure from the past. As the European Commissioner for the Economy, Paolo Gentiloni, stated, we need to face an extraordinary crisis with extraordinary tools.An essential tool in the kit is in the hands of the European Central Bank, ECB, in the form of its bond purchasing programme. I am pleased to note that judging by its pandemic emergency purchase programme, the ECB appears to have learned some of the lessons of the past and acted to ensure affordable levels of debt financing for member states such as our own. It is now crucial that the fiscal response at the European level is adequate to the challenge we face. I will return to that point later. The Minister for Finance, Deputy Paschal Donohoe, will play a crucial part in that response in his new role as president of the Eurogroup, and I congratulate him on his appointment to that role. I urge the Minister to ensure that the interests of Ireland are represented and delivered upon in this new role.

The Bill before us concerns access to capital to support workers and businesses that have been impacted by the economic fallout of Covid-19. In particular, it will enable the State to participate in two instruments designed at European level, temporary support to mitigate unemployment risks in an emergency, SURE, and the European Investment Bank, EIB, pan-European guarantee fund. On 9 April the Eurogroup agreed a €540 billion fund to tackle the social and economic impacts of Covid-19. This fund and the measures it provided for were endorsed by the European Council on 23 April. SURE was among these measures. This instrument will provide up to €100 billion, with funding raised on capital markets by the Commission. This will allow member states to benefit from low borrowing costs due to the strength of Europe's collective credit rating.

I wish to put on record that previous schemes financed by the Commission borrowing on capital markets came with damaging conditions attached. We know the Commission has form in this area. It has insisted on increases to the pension age or cuts to public spending. One of the strings attached the last time was the European Financial Stabilisation Mechanism. We must ensure that we never return to the austerity policies of the past. I welcome Fine Gael's apparent conversion to Keynesian economics.

Section 3 of the Bill allows the State to enter the SURE guarantee, with the Minister granted any powers required to perform the State's obligations under the scheme. Under the agreement provided for in Schedule 1, the State will contribute more than €483 million to avail of loans under SURE. These loans are targeted to assist member states in financing sudden increases in spending caused by the pandemic, in particular spending on short-time work schemes such as the temporary Covid-19 wage subsidy scheme. I ask the Minister of State to clarify the total value of the loans our contribution would entitle us to access and the exact criteria for use of funds accessed under the loans.

Under section 4, contributions in excess of €483 million will be paid out of the Central Fund under the terms of the SURE agreement. I would ask the Minister of State to address a number of issues in this regard in due course. I ask him to outline the expected schedule of payments, their value, when they will be made under the provisions of the agreement and the expected schedule of loans to be drawn down under the scheme.

The other instrument to which this legislation will provide access is the EIB pan-European guarantee fund, which formed a part of the fund agreed by the Eurogroup on 9 April. This fund will amount to €25 billion and will mobilise up to €200 billion, with a guarantee provided by each member state forming a condition for access to the fund. As section 7 sets out, our liability for this fund will be capped at €168 million. The fund will provide working capital to small and medium-sized enterprises, SMEs, mid-caps and corporates that have been impacted by Covid-19. While this is welcome, several issues require clarification. Up to 23% of credit under the scheme will be earmarked for companies with more than 250 employees and up to 7% for venture and growth capital funds. While at least 65% of the financing is earmarked for SMEs, what clarification can be given that this credit will be accessible to small businesses that to date have been unable to access credit from banks that refuse to lend? Moreover, I would appreciate if the Minister of State could provide clarity as to how financing under the scheme and its associated agreements can be incorporated into our own loan schemes and business supports. Measures taken at the European level benefit from our own contributions and from a lower cost of financing. This in turn will benefit those businesses that are able to avail of financing under the EIB pan-European guarantee fund. It is therefore essential that the benefits of this scheme are open to Irish small and medium-sized businesses, not just big business.

Concerns have been raised as to the adequacy of the European response to this crisis. Senator D'Arcy has called for more to be done and I support that call. There are queries relating to the accuracy of the figures in the proposed package. The European Commission has headlined its proposed first recovery package as having a value to the tune of €540 billion, but upon closer inspection there is potential for the package to be significantly more limited in its value, as highlighted by the economist Emma Clancy.For example, it includes €240 billion in potential loans - "potential" being the operative word - from the ESM bailout fund, which has so far been left untouched because it is politically toxic due to its association in the minds of the public with the hated troika. We will be supporting the Bill.