Paschal Mooney (Fianna Fail)
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I welcome the Minister of State, Deputy John Perry.

Paschal Mooney (Fianna Fail)
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Amendments Nos. 1 and 2 are related and may be discussed together, by agreement. Is that agreed? Agreed.

David Cullinane (Sinn Fein)
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I move amendment No. 1:

In page 8, subsection (1), lines 33 and 34, to delete all words from and including "2 per cent" in line 33 down to and including "agreement." in line 34 and substitute the following:

"the administration costs of the loan to which the agreement relates and not less than 0.8 per cent of the principal of the loan.".

I welcome the Minister of State. On Second Stage my party gave the Bill a cautious welcome, as we must do whatever we can to help struggling small to medium-sized enterprises, SMEs, and support entrepreneurs and those with job creation ideas. Six businesses close everyday, which is far more than the number which open. Any help that can be given to new and existing enterprises to create jobs and support local economies will receive our backing.

This debate is occurring in the context of there being 440,000 people out of work. Not only will the Bill benefit businesses, it will also help those who will be employed on the back of this initiative. In our view, it does not go far enough. Sinn Féin would like a great deal more to be done in this area. A number of Senators, including the Leader, referred on the Order of Business this morning to the fact that the south east has been disproportionately hit in terms of job losses and a lack of supports for SMEs and business generally from enterprise agencies, including visits by them to the region, all of which have resulted in an almost 20% level of unemployment in the area. I am sure the Minister of State would agree that level of unemployment in any region is bad for its local economy.

I welcome that access to funds will be limited to small businesses which employ fewer than 250 employees. This makes perfect sense. I read the transcript of the Committee Stage debate on the Bill. While I am not a member of that committee, I know from reading the transcript that some sensible arguments were put forward on Committee Stage, including that bigger enterprises would, if included, soak up much of the money. That this measure is targeted at SMEs is in Sinn Féin's view a positive.

Sinn Féin also stated on Second Stage that the 2% charge on the borrower, as provided for in section 8, has the potential to undermine many of the other positive aspects of the Bill. We are seeking to have that charge removed but only in the context of what is possible. The Minister for Jobs, Enterprise and Innovation, Deputy Bruton, said on Committee Stage that a charge of 0.8% was necessary to ensure that it was within the bounds of State funding. We accept that. If that is the minimum percentage that needs to be set, we have no difficulty with it. Sinn Féin's amendment is in keeping with the Minister's statement on Committee Stage. We want to keep the charge on small businesses to the bare minimum. Any charge that would be seen as disproportionate or making it difficult for business to access the credit would not achieve what we are hoping the fund will achieve.

There is no legal imperative on the Government to impose a 2% charge. From where did that figure come and what criteria was used to determine it? If 0.8% is the minimum, why was it not set at that amount? Is 2% just an arbitrary figure? Perhaps the Minister of State will explain from where the 2% figure came. This percentage was chosen by the Government and it needs to spell out the reason for it. Sinn Féin believes that percentage is over and above necessary administration costs. We accept that there are administrative costs associated with the overall running of this fund. However, we believe this matter can be properly dealt with in the context of the 0.8% charge which we are proposing.

In essence, Sinn Féin believes that the 2% is too high. Unless the Minister can provide evidence to the contrary, we do not see any logic in setting it at that level. As I stated earlier, it is an arbitrary figure, one that will be a cost on small businesses, many of which are finding it difficult to survive. I accept what the Minister said on Second and Committee Stages, namely, that we need to ensure that this fund is targeted at viable businesses. That is crucially important. Perhaps it is one of the reasons the Minister is offering up the 2% charge. However, even viable businesses starting out need support. We must do all we can to keep costs down to a minimum. A Member from the Government side of this House called yesterday for a more flexible approach to local authority rates for businesses. It is important a single rate is not set for businesses, with no wriggle room for local authorities to show flexibility, in particular for those businesses that are suffering. Members of the Minister of State's party have previously been vocal on the need for a more flexible position in regard to rates. I ask that the Minister follow the logic of that in respect of this Bill and the amendment which are proposing to it which seeks a reduction of the charge from 2% to 0.8%.

I await the Minister of State's response. However, if he is not minded to accept the amendments, Sinn Féin will be forced to push them to a vote.

Mary White (Fianna Fail)
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I support what Senator Cullinane had to say. Yesterday, I attended the AGM of Lir Chocolates in Navan which employs 200 people at which I was told by my colleagues that there is a serious cash flow crisis in the business system. While previously suppliers allowed 60 days in respect of payment, they are now seeking payment within 30 days. As such, there is no cash movement within the system.

The €150 million being provided under this legislation is a small amount in terms of the economic and jobs crisis in this country. The two pillar banks were supposed to lend €3 billion in 2011 and €3.5 billion this year but this has not happened. We own 99% of one of those banks and more than 16% in the other. Where is that money? Is it being loaned to businesses? This is a serious issue. While we are protected in this House from what is happening, the reality on the ground is that there is a crisis in terms of a lack of credit to allow people to continue in business.

Senator Cullinane referred earlier to a company which employs 200 people as a small business. A company which employs 200 people is a substantial business. I would consider a small business to be one which employes up to ten people. Small companies are critical to our economy. A company which employs 200 people in any community is a large business in the scheme of things. This additional 2% charge on business is another prohibition on people. The requirement to pay this 2% annually in advance on the outstanding balance of the loan will pose more cash flow problems for small businesses and should be reviewed. The Small Firms Association has stated that it believes this should be paid in instalments at the same time loan repayments are being made.

The Minister of State, Deputy Perry, is a businessman and he knows as well as I do that the situation is worsening. Something needs to be done to address unemployment levels. There is also a crisis in terms of the number of people not willing to take up employment. It has been suggested that a cap should be placed on the amount payable to people who are long-term unemployed. Business people are totally frustrated by the non-productive sector in this country which is stifling the economy. One half of the working population is killing themselves working 24-7 while the other half is not producing. I do not have to state precisely who these people are. Everyone here knows who they are. If they do not, they should not be here.

Fianna Fáil will be supporting Sinn Féin if it calls a vote on these amendments. I know that the Minister of State understands, perhaps more than do 90% of people in this building, the strains on businesses in the community.

Marie Moloney (Labour)
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I welcome the Minister of State to the House. Like other speakers, I know we are very much aware of the small and medium enterprise issue. When we had the debate in the Seanad on job creation, everybody spoke about the flow of credit to small and medium enterprises. The days of the big multinational companies coming to this country are gone, unfortunately, at least for the time being. We may not see them return for a while. If we can protect the businesses with one, two or three jobs, it would be great. I know the Minister, Deputy Bruton, wrote to us and thanked us for our contributions in the Seanad that day, and he indicated he would take up many of the suggestions.

I said on the day that the rates are crippling small and medium employers. For example, one of the oldest furniture shops in the Killarney has, unfortunately, closed after many years. It is sad to see a family business like it go. Those types of shops need large units and are rated on them, despite the fact that their turnover may be quite small. We must consider such matters. The Minister of State has put much work into this issue and has spent time going around the country meeting people. Is the 2% rate cast in stone or is there any leeway with the issue?

John Perry (Sligo-North Leitrim, Fine Gael)
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I attended the launch yesterday of the Enterprise Ireland report and it is encouraging to see that indigenous Irish exports are up to €18 billion. I strongly recommend a debate on the report, which is an outstanding document. I was very encouraged at the level of the high potential start-up companies, the extraordinary opportunities that exist and the exploitation of €1 billion of new markets in Asia. Enterprise Ireland will energise 1,800 new companies and get them exporting. We must be positive in this respect, and the issue is very much about confidence and credit.

There are challenges in business and the availability of credit in business is paramount but we must also consider management skills and the mentoring of a company. I have no doubt that Senators White, Cullinane and Moloney know that due diligence in respect of a company, including profitability, make it viable. It is not just about getting a loan.

Mary White (Fianna Fail)
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Those businesses would not survive if they were not profitable.

John Perry (Sligo-North Leitrim, Fine Gael)
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Survival may be the new success. People may be preoccupied with this issue. It is far more difficult to get money from banks in recessionary times and there is more risk in our current recession. We must be clear about that.

I recommend that Senators go through the Enterprise Ireland annual report, which is an extraordinary document. I compliment that body on the document, detailing high potential start-up companies and the plan of services that will be initiated shortly. There will be local enterprise offices in every county, centralisation of business supports and collaboration of services. That will be a significant facility. The Minister, Deputy Bruton, has initiated a loan guarantee scheme, which is a major initiative.

Senator White mentioned companies employing up to 250 people, which would be the upper end of the scale. I do not see such firms going into this borrowing sphere, which is aimed at companies employing fewer people. There is a facility within Enterprise Ireland that includes experts working on behalf of companies that can work with banks. Since being appointed I have toured the country and although I have seen challenges and job losses, there are also extraordinary success stories involving companies endeavouring to survive. Those companies may be making an application through Enterprise Ireland and proceeding through due diligence, exploring viability of loans and return on investment.

The pillar banks have informed the Minister for Finance, Deputy Noonan, that the lending targets for 2011 have been met. This year the lending target is €7 billion. I have said time and again that people are not going through the proper process. If a business is refused a loan facility in a bank, it has 15 days to make an appeal, and that process should be taken up. There is an obligation within the banking code of conduct for a reply to be given within 15 days. If that option is exhausted, there can be an appeal to Mr. Trethowan's Credit Review Office for a simple fee, and every second application decision has been overturned in that process.

I have heard people complaining about banks when they have not even made an application. There is a simplified application procedure involving Bank of Ireland, Ulster Bank and Allied Irish Banks. It is a simple form and people can now apply to all these institutions to see whether they can avail of facilities, even outside the loan guarantee scheme. People say if there is no problem, there is no business, and there will always be problems in business. Even in the good times it was difficult to avail of money.

I thank the Senator for raising the points in amendments Nos. 1 and 2. Section 8 provides that the borrower shall pay to the Minister an amount equal to 2% of the principal of the loan to which the agreement relates. The Senators would prefer a provision allowing the Minister to vary the rate of the levy depending on the administration costs relating to the loan application. Such a provision would allow the bank to decide what each borrower would pay.

It must be emphasised that the 2% premium is not a charge from the bank for administration costs but rather a payment to the Minister in exchange for receiving a guarantee from the State. The premium receipts will be treated as income to the State and will offset against the cost of settling guarantee claims, which are inevitable. There is a big difference between requiring borrowers to pay a level equal to 2% of the outstanding principal and allowing banks to decide what the levy should be in respect of different applications. The proposal is too vague and would confer far too much discretion on the Minister - which is important - as well as the banks. It could also present constitutional problems under Article 15.2.1° of the Constitution as being an excessive delegation of legislative power to the Minister.

The lower the premium, the greater the proportion of the cost of claims that would be borne by the State. For example, if the 2% were reduced to 1%, the cost to the State would increase by approximately €5.5 million per €100 million of lending. Senator White mentioned that this €150 million is just the start. The de minimis state aid regulations provide two alternative approaches to premium pricing in respect of loan guarantees, with guarantees allowed to be priced individually or on a scheme-wide basis. For simplicity, the latter was recommended and chosen.

The minimum premium levels related to the credit quality of the borrower proposed in the state aid regulations are as follows. The option of adequate payment capacity is 0.8% and the option of payment capacity likely to be vulnerable to adverse conditions is between 2% and 3.8%. The option of payment capacity likely to be impaired by adverse conditions is in the range of 3.8% to 6.3%. In consideration of these categories and recognising the current state of the small and medium enterprise lending market in Ireland, it is difficult to justify making the case for a premium rate any lower than 2%, and the Minister has therefore decided to apply that rate. In light of those reasons, I cannot accept the amendments.

David Cullinane (Sinn Fein)
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I have a number of points in response to the clarifications. I agree with Senator White's comment that the €150 million figure is too small. We would all like the pot to be bigger, although we recognise that we are in straitened economic circumstances. I spoke earlier of the problems we have in the south east, with almost 20% unemployment and many businesses closing. Many businesses are closing and there is clear evidence of it in any village, town or city in the south east. I contend that the €150 million could be easily absorbed by the south east alone.

Deirdre Clune (Fine Gael)
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Hear, hear.

David Cullinane (Sinn Fein)
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One could make the same argument for the north west or north east of the country

Deirdre Clune (Fine Gael)
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Well said.

David Cullinane (Sinn Fein)
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That may be part of the problem. We cannot allow the fund to be a sticking plaster solution for the even larger problem of the banks not lending to businesses, especially to viable ones. The legislation is seen as a reasonable attempt by the Government to deal with the problem. We, as taxpayers, own some of the banks and we must ensure that the banks are doing what is in the best interest of the country. At the moment that interest is best served by lending to the economy and lending to businesses and individuals that need the money.

We will support whatever initiatives are put forward, including this initiative. Steps need to be taken to provide aid and support to SMEs and we would support such a move. I agree with the Minister of State, and my party has consistently said it, that SMEs must be the bedrock of our economy, especially local economies. As Senator Moloney has said, the days of large numbers of multinationals coming here are passed. Perhaps they are still coming but not in the numbers that they did.

I would welcome a debate on the Enterprise Ireland report that the Minister of State mentioned earlier. He gave the figures for the rise in exports. There is also a clear view that many SMEs, especially small ones, struggle when it comes to accessing markets and exporting. Larger companies can employ people to help them to work on a system. Enterprise Ireland needs to focus on the area. Perhaps it could help in a reorientation of policy and focus on the area. It is important that we help as many SMEs as possible to access markets. There is massive unemployment in the south east and it is difficult for us to see so many SMEs struggling. The south-east region is simply not performing and many people living locally and in the region are asking why. We have access to markets. We have two ports, one in Wexford and one in Waterford, yet the region is still not performing. I hope that a wider discussion on the issue will take place and that my questions will be answered then.

I welcome the Minister of State's clarification of the 2% figure. He said that section 8 provides that "the borrower shall pay to the Minister" the loan at a rate of 2%. It is a loan guarantee that the State gave to these companies for when they experience difficulties. I cannot remember the exact figure that he stated earlier when he talked about the cost to the State if the figure was 1%.

John Perry (Sligo-North Leitrim, Fine Gael)
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It was just 1% and it would cost the State €5.5 million per €100 million.

David Cullinane (Sinn Fein)
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There must be an element of risk taken by the State to ensure that companies in need of support receive it. I know that we must cover costs. I also know that there are administration costs and that the State bears a cost by giving the guarantee and we genuinely accept that. All Senators must also ensure that we protect the State from any liability. Given what the scheme is obliged to do and the logic behind it is to assist companies that need support, and in some cases they will be able to expand and employ people, then every available support should be given.

I welcome the clarifications given by the Minister of State but I do not see that they would prevent us from accepting the amendment. It is in the nature of businesses to take risks and he knows that because he was a businessman. There are a number of business people in the House. Entrepreneurs and business people take risks and sometimes the State must take a risk with them. If it did it would enable more viable and sustainable companies to be created and more jobs would be sustained. While I accept his clarifications I still do not see them as justification for not accepting the amendments and I outlined my reasons. It is for that reason, and I will not comment again on the amendment, that I will press the amendments.

Mary White (Fianna Fail)
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The Minister of State has been here on a number of occasions and he has always pointed out and emphasised the contribution made by small businesses. We know, and he has said it on numerous occasions, that 200,000 small businesses involve over 655,000 people and a significant proportion of the firms employ fewer than ten people. He also said that credit was available and he was circumspect when he said that it was not quite true that people could not access credit. For the first time Mr. John Trethowan, in his seventh quarterly report, was realistic about the availability of credit. He criticised the banks for their lack of, as Senator Cullinane has said, an entrepreneurial spirit and said that they only lend to safe and existing companies.

I agree with the Minister of State that the €150 million should be geared towards smaller companies but it is just not happening. It is the first time that Mr. Trethowan has agreed with all of the business people who said that credit is not flowing freely. At long last he has made that admission. On 1 March Professor Patrick Honohan, the Governor of the Central Bank, said, "Ireland is the most difficult country in the eurozone for small business to access credit." He continued, "Credit conditions for SMEs were tougher in Ireland than anywhere else in the euro area both in terms of cost and availability." The amendment tabled by Senator Cullinane refers to costs. If the Government took 0.8% then it would be superior to the 2% proposal.

I agree with the Minister of State's suggestion that we seek a discussion on Enterprise Ireland next week. He also mentioned Mr. Frank Ryan whom I know for almost 40 years. He is a missionary and unselfishly works for his organisation and country. He does not work for his own aggrandisement. He is an exemplary public servant and the State is lucky to have him. We will arrange that debate shortly.

I agree with the analysis of what is happening in the south east and it has been happening for a long time. It is appalling that the last Government did not support the Waterford Glass company. As far as I can remember, the firm needed €3.5 million to keep it going but the then Government did not support it. I was also amazed that the Waterford Institute of Technology was not converted into a sophisticated technological university either. I criticise the previous Government for that too. The problems in the south-east region must be addressed and the Government must play its role. We failed to convert the Waterford Institute of Technology into a serious technological centre. Dr. Ed Walsh founded the University of Limerick which allowed the south-west region to come alive and become dynamic. The problems in the south east must be addressed.

Deirdre Clune (Fine Gael)
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I thank the Minister of State for clarifying his approach to the amendment. I have listened to some of the comments made and I agree that the Bill shows that the State is taking a risk with taxpayers' money. We would all love to see more money made available to businesses. People can demonstrate that their businesses are viable but they do not meet the lending criteria of the banks. John Trethowan's report deals with a different type of business that has an historical relationship with a bank and can secure a loan. The legislation deals with new businesses and provides a sum of €150 million.

Mary White (Fianna Fail)
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It was John Trethowan that criticised the Government for not helping new businesses.

Deirdre Clune (Fine Gael)
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The scheme will be reviewed. It is taxpayers' money. Inevitably, some businesses will not succeed. That is the nature of business - one must take a risk. However, we are dealing with money that has been paid by taxpayers, and the Minister of State has explained how this is to be funded. The 2% is important to fund the scheme. It is an important first step. We are dealing with businesses that do not have collateral for banks and do not meet the banks' lending criteria, so the State is stepping in and taking a big risk. That is important and I sincerely welcome it.

On the Enterprise Ireland issue, I note Senator Cullinane's comments. The new local enterprise offices, LEOs, that will be in place in local authorities are geared towards the smaller types of business the Senator was referring to and under the new arrangement they will have the expertise and support of Enterprise Ireland that previously was not available to them. They will also have the benefit of the corporate knowledge of the county enterprise boards within the local authority structure. The issue of commercial rates will feed into that as well. It is a very important step for the small businesses mentioned by the Senator.

I welcome the Minister of State's clarification of the thinking behind this proposal in the Bill.

Colm Burke (Fine Gael)
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I welcome the Minister of State. It is very important that this support mechanism is put in place. I have been involved in the private sector for more than 30 years and one of my concerns about the banking industry is the lack of insight it has into providing funding. The best example I can give relates to leasing companies. The banks are giving money to these companies across the board, even in the agricultural sector, but they are not doing any analysis of what local competition is already in place. One finds them giving money to competitors who are living less than a mile from each other and who are competing for a limited amount of business.

Another example is in the retail sector. I understand Ireland now has enough shopping space for a population of 13 million. We are now getting a very distorted view of the way the economy has gone downhill. We created such a huge amount of shopping space over recent years that there are idle units throughout the country. When finance houses and banks are giving out money, they should examine the requirements in the local area. That is one issue.

The other issue is that we have had a tendency in this country to loan money where there is a property asset. We never look at the real asset, which is the job creation, as that helps the local economy. One of the things about this Bill is that it gives that security, not only to the banks who are giving out the money but also to the people who are providing and creating the jobs. They are taking the risk. They might not have the asset or property to give as security to the financial institution, but they are creating something positive for the country in terms of creating jobs. There is a need for a complete change of focus by the financial institutions in how they assess applications. First, there is a need to assess competition in the local area and whether there is a need for the service of the company being set up or the expansion of its services. Second is the issue of the potential for creating downstream jobs by giving money to a company starting up. We are not giving that enough attention. The financial institutions must take an overall look at how they are giving out finance.

I welcome this Bill. It is extremely helpful and it will make a very good contribution to supporting the Government's policy on the creation of jobs.

John Perry (Sligo-North Leitrim, Fine Gael)
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On Senator Burke's last point, we have 13,000 sq. ft. of retail space per head of population compared to 1,000 sq. ft. per head of population in the UK. That certainly shows the scale of retail over-capacity in the State.

With regard to Senator Cullinane's point about the south east, I have visited the area on several occasions. I met the new Enterprise Ireland official there and I visited the Waterford college as well. There is a major plan of action by the Government, and the Senators and Deputies in the region will be conscious of the focus of Enterprise Ireland and the IDA on getting investment there.

This fund is not to substitute bank lending. The State has recapitalised the banks and they have €7 billion available for viable companies, although there is also the issue of the definition of "viable". I have toured the country with John Moran, Secretary General of the Department of Finance, and we met many representative bodies and business people and heard about the difficulties. We had an in camera meeting about the pressure on people when accessing money from the banks. Clearly, it is about having a business plan, sitting down with the bank personnel and simplifying the process. Many people ring up looking for money but do not make the application. There is a new simplified application. I am not saying the banks are dishing money out but it is about engaging with them with the application and going through it in detail. There is a simplified application in all three banks. All have the same application.

The county enterprise boards are very effective but, as Senator Clune pointed out, there is a new configuration of services through the local enterprise offices, along with mentoring and supports. It has been very effective in other jurisdictions. There is a determination to work with the lender. It should be remembered that the banks are domestic banks and they are there to make money. They need SMEs and the SMEs need a bank. The banks need business people to make money to ensure their long-term viability.

Mary White (Fianna Fail)
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They blew it.

John Perry (Sligo-North Leitrim, Fine Gael)
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They are now back in domestic banking and all have been substantially recapitalised by the State. The Minister for Finance, Deputy Noonan, is watching this very closely.

The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, is dealing with the micro-finance fund in the Dáil, which will be a unique opportunity for companies. It will be rolled out by the local enterprise offices. It has been a difficulty in the past that somebody with a brilliant idea has not been able to get funding of up to €25,000. I was at a launch with the Minister, Deputy Bruton, last week where somebody started an enterprise with a small amount of money and they now have ten staff. The first step was through the very effective Norma Smurfit Foundation which provides first step funding. That can be replicated throughout the country. The backbone of this economy is the 200,000 companies employing 700,000 people and the State has a huge understanding of and concern and respect for that. We very much welcome foreign direct investment, which is at a fantastic level. Exports from Ireland are at an unprecedented level and indigenous Irish companies are doing very well. The real challenge is the domestic economy.

With regard to the 2% charge, Senator Cullinane must realise that this does not cover all of the costs. That is an important point. There is a net cost to the State of approximately €6.34 million, even with the 2% charge. The take-up of the scheme will be closely monitored and if the demand is higher than the €150 million, we will have no difficulty with that. If this fund is creating jobs, the Government will consider increasing the amount to meet the demand. The large oak grows from the small acorn. This is about starting the scheme and about talking to business people. It is not the case that it will dish out money. The biggest mistake in some cases can be when people get money. It is not always the touchline of success in a business. What is important is the management capabilities, the product range, knowing the marketplace and opening a business that will be viable. People might be in enough trouble and being refused money might be the best decision ever. It is not just a case of giving money as a panacea, as if it is a button to be pushed that will make the business successful. It is one part of dealing with a problem. The initiative by the Government on the partial loan is not the big solution, it is just part of the solution. The micro-finance fund, which is being discussed in the Dáil at present, will also help.

I rest my case.

Paddy Burke (Fine Gael)
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Amendment No. 2 has already been discussed with amendment No. 1.

David Cullinane (Sinn Fein)
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I move amendment No. 2:

In page 8, subsection (2), line 39, to delete "2 per cent of the principal of the money" and substitute the following:

"the administration costs of the loan to which the agreement relates and not less than 0.8 per cent of the principal of the loan".

David Cullinane (Sinn Fein)
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I move amendment No. 3:

In page 9, before section 11, to insert the following new section:

11.—The Minister shall within 12 months and every 12 months thereafter, from the passing of this Act prepare and lay before Dáil Éireann a report detailing the impact of all measures contained in this Act on the availability of credit to SMEs, rates of bank lending to SMEs, levels of lending under the scheme and relevant default.".

I welcome the announcement by the Minister during previous debates in both Houses that he intended to review the legislation after one year. The amendment would give expression to this commitment by including a provision requiring that an annual review of the scheme be carried out. This would be a positive measure in terms of the accountability of the scheme which has the potential to create a large liability on public funds. For this reason, the scheme needs to be closely monitored.

We must also ensure the legislation is effective and fit for purpose and will do what it says on the tin. In that context, it is important that legislators impose conditionality when passing legislation establishing schemes that will cost money. In this case, we should impose conditionality on businesses which will benefit from the loan guarantee. The stated purpose of the Bill is to sustain jobs and businesses. In such circumstances, we must ensure the Government carries out reviews which analyse whether the outworkings of legislation correspond to its objectives. The Minister of State should not have a difficulty accepting the amendment.

The explanatory memorandum states the Minister shall have the power to review and revoke the scheme and assign a contract or oversee its operation. In that context, it would be useful to receive a report from the Minister setting out the success or otherwise of the scheme to be established once the Bill has been enacted. On that basis, this is a straightforward amendment, on which I do not propose to delay the House any longer. Its purpose is purely to ensure sufficient accountability in the operation of the scheme. I hope the Minister of State will accept it in the spirit in which it is proposed. It would give Members an opportunity to require the Minister to produce an annual report evaluating the effectiveness and operation of the scheme which enjoys the support of all Senators.

John Perry (Sligo-North Leitrim, Fine Gael)
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The Minister gave a strong commitment in the Dáil to review the scheme after one year of operation. It is not envisaged that sufficient data, patterns or trends will emerge before a period of 12 months to conduct a worthwhile review. The review will be broad, comprehensive and not be restrictive as per the proposed amendment. The policy commitment is to conduct a review and lay it before both Houses. This is adequately addressed in section 10. For this reason, I cannot accept the amendment.

While due diligence on the proposed scheme is important and the Government is determined to ensure all schemes it establishes to support job creation and retention will be activated in every sense, it should be noted that the scheme will come within the scope of the auditing activity of the Comptroller of Auditor General. I am confident the commitment given by the Minister will be sufficient. As he noted, it will not be possible to identify trends in the scheme within the first 12 months of its operation.

The success of the scheme will be determined by the participation of agencies such as IDA Ireland, Enterprise Ireland and the reconfigurated enterprises offices in every county working alongside business people. The best adjudication of any scheme is how it interacts with business people. Oireachtas Members will discuss with business people how they are embarking on a loan application. In my 14 months in this job it has been a revelation to discover the number of opportunities available and wealth of creativity. It is clear from my visits to businesses that many of them are experiencing challenging times.

The Government is determined to make a success of the scheme. The initial allocation of €150 million will be increased subject to the success of and demand for the scheme. Previous Administrations were noted for the number of reports they published. The Government is focused on straight talking, action and results. While we accept the need for reviews, we do not want glossy reports. The action we want is to have businesses avail of the scheme to create jobs.

David Cullinane (Sinn Fein)
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We do not seek reports for their own sake. As I noted previously, while we would prefer the scheme to be bigger and bolder, it is nonetheless significant. It is interesting to note the Minister of State's comment that the trends or data required to compile a report of any value may not be available after 12 months.

John Perry (Sligo-North Leitrim, Fine Gael)
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Before a period of 12 months is what I said.

David Cullinane (Sinn Fein)
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That is somewhat at odds with the Minister's statement that the legislation would be reviewed after one year. On what basis will it be reviewed after one year, if not on trends and data that become available? Why can a report not be published? Reports will only be as significant as the information available and I accept the first report may not be as significant as subsequent reports. The amendment would require that we do not walk away once we pass this legislation. We must not wait for the Minister to decide at some point in the future to publish a report. We do not know whether he will publish a report or what will be the nature of any review carried out, nor do we know the timescales involved. We seek only the publication of an annual report on the effectiveness of the scheme or otherwise. If it is successful and the costs incurred by the State are minimised, it may be possible to expand it.

As I noted, the explanatory memorandum states the Minister will have the power to review and revoke the scheme. We all hope it will not be necessary to revoke it. Information is important if the Minister is to determine whether the scheme should be built on. For Senators to decide whether they should support a ministerial decision to revoke or amend the scheme, they will need evidence, information and reports on its operation. It is useful and a move we have to make in the State. We appear to fear accountability and publishing reports. It is a case of when a Minister is ready, he or she will come back and report to us. There should be a standard practice for reports. For a scheme of this scale which has cost the State money, there should be an annual report indicating its effectiveness. On that basis, I will press the amendment.

Mary White (Fianna Fail)
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When the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, was in opposition, he was always keen that the performance of schemes would be measured to ensure their effectiveness. It appears, however, that any review is undertaken entirely at the discretion of a Minister. In these days of Government reform, in the interests of accountability, there should be a mandatory review. Section 10 provides that the Minister may conduct a review of a credit guarantee scheme and make a report on his or her findings and conclusions resulting from the review. It would be useful if we could see how the Bill was working in general as this could help to inform any subsequent debate on whether changes to it were necessary. A year is a long time to wait if there is a crisis, as I have said many times. Every time I speak I say there is a crisis.

The managing director of Allied Irish Banks attended a private meeting here last week. He means business in sorting out Allied Irish Banks. What is needed is a person who means business to drive this scheme. Money is filtering down and it would be appropriate to have a review within one year.

I refer to the 2% error rate. The Department of Finance officials do not have a notion of what it is like to operate in the business world. It is easy for them to say what they have said, as they are not trying to survive in it. Why should the 2% error rate not be reviewed? If the error was made in a private company, the position would be reviewed on a monthly basis. The Minister said companies were efficient. They would not be in business if they were not.

Marie Moloney (Labour)
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What the amendment and the Minister are proposing is the same, except that the amendment includes a timescale. The scheme is new and will take time to get off the ground. Twelve months is relatively short time when looking for trends. The Minister has promised to undertake a review and I hope that as a result of it he will invest more money in the scheme.

Mary White (Fianna Fail)
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It will be at his discretion.

Marie Moloney (Labour)
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He has committed to undertaking a review and in 12 months he will be back here roaring and screaming if the report is not ready.

Mary White (Fianna Fail)
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It is provided for in the Bill.

Marie Moloney (Labour)
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Except that he has not provided for a timescale. We can hold him to account in the matter; that is our job.

David Cullinane (Sinn Fein)
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If it is not provided for in the Bill, we cannot hold him to account.

Mary White (Fianna Fail)
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It will be at his discretion.

Marie Moloney (Labour)
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As an honourable man, I am sure he will come back and let us know the outcome of the review, as promised.

John Perry (Sligo-North Leitrim, Fine Gael)
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We are giving a commitment that a review will take place after one year of operation. Capita Asset Services has been appointed to run the scheme. There will be accountability in government for the operation of the scheme during that period. The Taoiseach is determined and has said clearly that by 2016 Ireland will be one of the best economies in which to establish, grow and develop a business. A report will be laid before the House after 12 months. That is the commitment that has been given. After that date, following a process of due diligence, Members of both Houses can determine what is required, whether the fund should be increased and how successful it has been. Capita Asset Services, a fantastic company, will operate the scheme and will work with business people. It will be easy for the Department to embark on a review because we will know if the scheme has been successful from the reports of the appointed provider. This is a Government which works closely with all agencies to ensure we are delivering.

I said yesterday that Enterprise Ireland had launched a very detailed document. I suggest that document be debated here and Members will see that there is positivity in the economy, not pessimism, about which we hear constantly. There are some great companies. If we are to raise confidence levels, we should speak with confidence where there are challenges and difficulties. We are anxious to deal with the issue of the credit deficit in the economy and doing everything possible in this regard. The banks have been recapitalised. The Taoiseach and the Minister for Finance, Deputy Michael Noonan, are meeting the banks and have given a commitment to deliver for viable companies. Let nobody assume that banks will give money to a company which will not pay it back. That will not happen. They will give it only to companies which are viable. Certain segments of the economy, in the light of the changes in business in the past ten years, have changed fundamentally. Companies will have to reconfigurate or enter a new line of business. There are some extraordinary companies with great potential. Unfortunately, this not reported in the national media or the local press. Small enterprises are the backbone of the economy and the Government is determined to provide them with the service and respect they deserve. The scheme is a start. In 12 months we will have a review and there will be interim reports during the year. Given the flexibility provided for in the Bill, the Minister may review the scheme at any time.

Mary White (Fianna Fail)
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That is not good enough; it is not businesslike.

Paddy Burke (Fine Gael)
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The Minister of State to continue, without interruption.

John Perry (Sligo-North Leitrim, Fine Gael)
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It is important that the Minister has given a clear commitment that the Department will review the scheme. It will be reviewed after 12 months. Members will be able to use several mechanisms to ask for reports and updates.

Mary White (Fianna Fail)
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The Taoiseach has never come to the House.

John Perry (Sligo-North Leitrim, Fine Gael)
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I have no difficulty with the scheme because it is a good news story. I look forward to returning to the House in 12 months to say it has been an outstanding success and that we want to increase the capital investment. I ask that the scheme be given an opportunity to commence, Members not to be pessimistic before it commences and let us see how it operates. I am confident it will be successful and provide a new suite of services which the previous Administration promised for many years but did not deliver. It talked about the partial loan guarantee scheme and microfinance, but it did nothing. At least, we have them on the drawing board. I thank the officials behind the scenes for producing the legislative format. The sooner the scheme is included in the Statute Book the sooner business people will be able to avail of it. There is a sense of urgency to make the Bill available.

David Cullinane (Sinn Fein)
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There is no pessimism. If anything, we want the Bill to be more ambitious and I have no doubt the scheme will be a success. I have made the point several times that we want to build on it. However, we also want the State to deal with the even bigger problem that the banks, for whatever reason, are not lending to businesses to the extent that they should. I remind the Minister of State that this is what the amendment calls for. There is no mistrust of the company which will oversee the scheme. All we are seeking is a detailed report indicating the effectiveness of the scheme.

John Perry (Sligo-North Leitrim, Fine Gael)
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That has been provided for.

David Cullinane (Sinn Fein)
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The amendment reads:

The Minister shall ... lay before Dáil Éireann a report detailing the impact of all measures contained in this Act on the availability of credit to SMEs, rates of bank lending to SMEs, levels of lending under the scheme and relevant default.

If we had that information, it would be of value in dealing with the broader point of the difficulties experienced by SMEs in gaining access to credit.

John Perry (Sligo-North Leitrim, Fine Gael)
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The Minister has said clearly that a report will be presented every year. If the Senator wants to provide for an interim review during the year, he can table a motion to that effect.

David Cullinane (Sinn Fein)
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With respect, what we are calling for is an annual report. Unfortunately, what the Bill provides for is the production of a report at the Minister's discretion.

John Perry (Sligo-North Leitrim, Fine Gael)
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After one year of operation.

David Cullinane (Sinn Fein)
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A few minutes ago the Minister of State was saying one year was not long enough because data and trends would not be available. He cannot have it every way. The reality is that we want an annual report. I fail to see why people read something into an amendment which is simply not there. There is no pessimism behind the amendment and no trap has been set for the Government. It simply asks that when we set up a fund such as this, especially when it is managed by a private company, a report be made available. I have no doubt that if Fine Gael and Labour Party Members were in opposition, they would call for a similar report to be made available because this is about spending and accounting for taxpayers' money. More importantly, we need reports that give us an opportunity to determine whether a scheme is working.

The Minister of State is right to say there will be continuous assessment of the scheme by the Department and the Minister. However, we want a report at the end of each year to allow us to be part of the process also. Oireachtas Members are elected in order that they can receive reports, not just on this issue. No more than Fine Gael and the Labour Party demanded when in opposition, all we want is greater accountability and transparency. We are not casting aspersions that there will be a lack of transparency or that there will be no accountability; we are just looking for greater levels of accountability. That is all the amendment seeks to do. I do not believe the Minister of State is reading too much into it, but I hope others do not. It is a very simple amendment that calls for annual reports on the scheme that we believe would help all of us. It would not set any trap but support us in order that we could evaluate the scheme properly.

Mary White (Fianna Fail)
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The Minister of State spoke about confidence and said there were many super companies. I completely agree with him, but the Government is not helping to give confidence to the people who are afraid to spend whatever money they have because they have no confidence. There are many leaks from the Government. Among the Government parties there are PR events taking place, to which there is no substance. This and the previous Government have leaked stories about what cuts might be made in the budget. If people are frightened that there are going to be such serious cuts in the budget, they will continue not to spend. Members of the Government should discipline themselves about how they do this.

Paddy Burke (Fine Gael)
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The Senator is moving away from the amendment.

Mary White (Fianna Fail)
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The Minister of State spoke about confidence and I agree with him, but the Government is frightening the people about what cuts are to be made. That is completely wrong. I know the Minister of State's heart is in the right place, but this is the Government's responsibility.

Colm Burke (Fine Gael)
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One of the things the Government is doing is achieving efficiencies in the public sector, which is long overdue. We have been spending money where we have not been achieving value for money, but the Government is seeking to change this and will continue to do so.

The amendment would require the Minister to produce a report every 12 months, but it would not give him the flexibility he requires. If a report is produced and the Minister becomes concerned about something six months later, it appears the amendment would not give him the flexibility he would need to deal with the matter.

David Cullinane (Sinn Fein)
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It would not prevent him from acting.

Paddy Burke (Fine Gael)
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Senator Colm Burke to continue, without interruption.

David Cullinane (Sinn Fein)
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At a minimum, we would have an annual report.

Colm Burke (Fine Gael)
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The amendment reads "every 12 months". The provision included in the Bill is adequate. It gives an undertaking, whereby the Minister will produce a report. There are also procedures in this House and the Dáil, whereby Members can request information from the Minister if they are not satisfied with a report. The Bill deals with this issue adequately. There is a need for flexibility for the Minister and that is what he has provided for in drafting the Bill, which is the way it should be left.

Deirdre Clune (Fine Gael)
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The Minister and the Minister of State both recognise that it is important to report on the operation of the scheme, but it is also important to have flexibility in the way it operates. The Minister may want to look at it on a more regular basis. Twelve months is a short time; it is a new scheme. The Bill provides for the Minister to prepare a report and lay it before both Houses of the Oireachtas, but Senator David Cullinane's amendment refers to laying a report before the Dáil only. Will the Senator clarify that aspect? A report should be laid before both Houses.

John Perry (Sligo-North Leitrim, Fine Gael)
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Senator Colm Burke's point is very relevant. He has said a report can be published at any time. The Minister and the Department will be watching the scheme closely. It is important that there be accountability and that a report laid before the Houses. Senator David Cullinane is entitled to seek reports on a quarterly basis from the Department. As Senator Colm Burke said, the Bill provides for flexibility by allowing the Minister to check on the scheme and engage in a process of due diligence at any time.

The point about confidence is very important. The business people I meet are confident about the opportunities available in indigenous companies, even though there are many challenges to be faced. When it comes to responsibility, it is about getting a business going, getting people to buy Irish, spend locally and so on. Whether it be a social enterprise or economic regeneration, we all have a role to play in lifting the cloud of community participation. The Government has been very positive since it took office in raising the confidence of the people. There are 1.8 million people working and 100,000 more will be working by 2016. There are great opportunities for SMEs. In the past 14 months I have travelled to smaller towns and villages to meet company representatives. They are not------

Mary White (Fianna Fail)
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Why then is there a 14.5% unemployment rate?

Paddy Burke (Fine Gael)
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The Minister of State to continue, without interruption.

John Perry (Sligo-North Leitrim, Fine Gael)
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The job of the Government is to get 100,000 more people working. This is an initiative that will help us to achieve that objective and reducing the regulatory burden. The legacy of the last Administration was that the cost of doing business was prohibitively high.

Mary White (Fianna Fail)
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Fine Gael did not any objections. They went along with it.

Paddy Burke (Fine Gael)
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We are straying from the amendment.

John Perry (Sligo-North Leitrim, Fine Gael)
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The consumer has not been seen. We inherited the legacy of the last Administration. Miracles take a little longer, which is why we are working on this issue in the best way possible.

David Cullinane (Sinn Fein)
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There is not a huge difference between what the Minister of State has said and what we are seeking. When reports are published, a commitment should be given that we can discuss them in the Dáil and this House.

Paddy Burke (Fine Gael)
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When is it proposed to take Report Stage?

Deirdre Clune (Fine Gael)
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Next Tuesday.