Alice-Mary Higgins (Independent) | Oireachtas source

I welcome the Minister of State to the House. This is another piece of legislation in the context of stimulus, which is badly needed for society and the economy in Ireland, across Europe and across the world in the aftermath of the Covid crisis. As we identified many years ago, stimulus is the best response to a period of potential recession, rather than the austerity that was chosen in the past. In that context, it is important to note that yesterday the European fund was put in place. There were some disappointments in the decisions made about the EU recovery deal yesterday. It is important and good that a deal was struck. That is something everybody welcomes. It was disappointing, however, to see that the portion that was grants rather than loans was reduced. Many people in the House today have spoken about the fact that there are times when grants, rather than loans, are the right tools. The portion that was grants was reduced from €500 billion to €390 billion.

With regard to that portion of the €390 billion that is for the recovery and resilience fund, each country will put in place a national plan. It seems likely that the portion Ireland will get in the national plan for grant money - not for loans - may be €3 billion to €4 billion. I hope that money is given to public expenditure. This is a chance to have public expenditure, public employment, capital schemes and national infrastructure. There will be many parts of all the schemes. We heard all the measures today and they are appropriate for SMEs of the private sector but it is vital we invest in the public sector and in public jobs. As described earlier, we have huge youth unemployment and it may have to be, in some cases, the State employing people to do important work. The State may have to build and buy things. That is part of the economy. That is a crucial part of keeping our economy vibrant. It is something we have control over and can actually do. We have heard lots of measures in relation to some parts of the economy but we need to hear the Government's plan on public spending, services, infrastructure and employment. How will we increase that and make sure that creates the jobs, stimulus, dynamic change and new public goods that we will have for generations into the future and that the State needs? Will the national plan under the recovery and resilience fund be one of those instruments?

In relation to the legislation before us today, everybody supports the need for loans to the SME sector, especially with regard to some of the smaller businesses, as has been talked about here. I welcome, as everybody has, the idea that was spoken about of primary producers. We know many primary producers during the period of Covid have had to become their own retail. It has been interesting to see many primary producers going directly into communication, sales and relationships with customers. That is cutting out the middleman, which sometimes has to be done and it was put eloquently by Senator Keogan. The issue with this Bill and the concerns around it relate to the banks and the fact the banks have not been lending and are not taking risks. We have businesses that are taking risks. We have workers who are turning up and standing behind counters, taking real personal risks to keep businesses afloat and keep their families provided for. Businesses, workers and the State are taking risks and banks are still not taking risks of any kind. However, when they make profits, they also do not contribute.We have a situation with the credit guarantee whereby the State underwrites 80% of the risk. Many of these loans may allow businesses to succeed and thrive if they are managed right, with long-term vision and the 12-month suspension as recommended by Sinn Féin. If the banks make profit from those loans, they are going to keep all of that. This is because the banks in Ireland have been using the deferred taxation asset scheme to write off all their taxes and effectively pay zero taxes for a long time. They have been using the losses of the last crisis as an excuse to not pay tax on very large profits they have been making for many years. Now we have a new crisis and the banks have an opportunity to be part of the stepping up and the taking of risks to contribute and help support the society and economy in which they exist. Once again however, they are not doing so. We as a State, every citizen, took a risk for them but they will not take one for us. Despite this they want to keep every penny of their profits.

I have tabled two amendments but as one is going to be ruled out of order, I will mention it now. It was a simple thing. It provided that if the State is taking 80% of the risk and the banks are taking only 20%, then they should only be able to write off 20% of the profit. That is very reasonable. If we are basically putting up the stakes then why should everything go back to the banks when something is profitable? Again, my suggestion in this regard will not be taken up but I am seeking a report on this. We are going to have a chance to discuss that with the amendments. We need to have a conversation on the direct economic, moral, political policy link between the State guaranteeing the banks and the banks not contributing to the State. Those two things are not compatible.

I am suggesting a report which will look at this guarantee and at the previous guarantees. In the past, Fianna Fáil very reasonably had it at 50% at one point, in that deferred taxation could only be used for the write-off of 50% of the profit. That is a reasonable measure compared to using it for 100% of the profit. Apparently it is estimated that the deferred taxation asset scheme will be used to ensure that Permanent TSB does not pay tax until 2038 and AIB will not pay any tax until 2037. The overall loss in forgone tax revenue from the financial sector is €12 billion, which is substantial. That money coming into the State could be used for direct State loans. It could be used, for example, to make the State a major customer of small businesses through public procurement. It could be used for State-supported and subsidised employment. It could be used to cut out the middleman and have direct State support for enterprise, business, SMEs and primary producers. It is one thing for us to protect them from the risk associated with the loans they give out but it cannot be both things. If we are giving with one hand, the State needs to be able and willing to take with other hand when it comes to taxation and to make sure that whatever revenue is available in this State is directed where it should be, namely, into our society and into our economy.