Credit Guarantee Bill 2012: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

I wish to share my time with Deputy Paul Connaughton.

It is not just with pleasure that I welcome the opportunity to discuss the Credit Guarantee Bill but also with sheer elation. On a daily basis in my constituency office in Dundalk I meet people who are distraught about the lack of credit opportunities for their businesses which are usually small, with ten or fewer employees. Quite often they are labour-intensive and located in the lesser urban areas. In addition, they are often family-run and have employees who have been with the business for more than ten years. These business owners are not charlatans or property speculators or operating in the black economy. Most often they are the family-focused, pint-drinking, GAA-following people of Ireland every one of us in this House knows. They are part of the fabric of our society. They create jobs in their local communities and add value by spending their profits and wages on other local services and in supporting local business providers. This Bill may not be the complete solution, but it is certainly a step in the right direction.

I have met constituents who operate in business parks such as those in Tenure and Ardee, as well as Quayside Business Park in Dundalk. They may be seeking to expand their businesses, with resulting employment creation, but their efforts are being stifled by a lack of credit in the banking sector. Some industries are more reliant on credit than others. More importantly, some high potential start-ups are in greater need of lenient credit terms, as they are not in the same bargaining position as some of their more established, bigger and often international competitors.

By our very nature, Irish people are entrepreneurial. We have come from the land and if agricultural people are not entrepreneurial, I do not know who is. Throughout the expanse of north County Louth, particularly the Cooley Peninsula, there is business acumen and entrepreneurial spirit in abundance. It needs an outlet to thrive and there are supports available. One has only to visit the Regional Development Centre on the campus of Dundalk Institute of Technology to be inspired. The centre houses some of the brightest and highest potential businesses in the country. They may only be in incubation, but they will need capital and credit to expand and deliver their world-class offerings to the market. The Bill will help to ease the way for companies such as these to grow, expand, create wealth and, ultimately, sustainable jobs.

I will recount a small lesson I learned from a Dunleer constituent when he called to my office recently. When he left university in the late 1990s, the country was totally focused on the SME sector. Small businesses were cherished and valued, their proprietors were held in esteem and the banks were understanding in their dealings with these companies. Somehow, in the next ten years and under previous Administrations, the focus was changed and the emphasis was placed on multinationals and international companies. Welcoming and encouraging international companies to locate in Ireland was certainly no bad thing, but by completely ignoring the indigenous SME sector, previous Administrations did a disservice to the lifeline for Irish society and communities throughout the land.

I welcome the Bill wholeheartedly, as it is a step in the right direction. If implemented correctly and the banks adopt it in the spirit in which it was designed, it could prevent the litany of queries I receive on a weekly basis from constituents in places such as Laytown, Collon and Termonfeckin. The message is always the same: "If we can't get credit, the business will fold." This means three or five jobs will be lost. In one case two weeks ago eleven jobs were on the line. I applaud the Minister for introducing this legislation which I commend to the House.

I welcome the opportunity to speak to this extremely important Bill. In the current difficult financial climate access to credit for small and medium sized businesses is crucial. The Bill is an important step in providing a platform that businesses can use to drive their enterprises forward.

Small and medium businesses are the lifeblood of the economy. Job creation by large multinationals investing in Ireland is most welcome, but it is the small and medium business sector that is the real barometer of commercial life in Ireland. That barometer is indicating stormy weather. Businesses which are still standing after the economic tornado of recent years are operating because of canny management, courage and determination. Now they need to plan for an expanded future and credit is the key to putting these plans into action.

The Bill provides for a three year partial credit guarantee scheme which will see the State providing a 75% guarantee to banks on loans that qualify for the scheme. It is envisaged that the scheme will facilitate the injection of €140 million into the small and medium business sector for each of the three years. It is important to note that the lending that will take place as a result of this mechanism will be in addition to, rather than instead of, normal day-to-day bank lending to enterprises.

The cost of lending during the three year lifetime of the Bill will be €19 million. This will be money well spent. The size and nature of the guarantee involved and the sums of money to be lent are dwarfed by some of the guarantee facilities available in other EU countries. For example, Italy's largest public guarantee fund, SGS, guaranteed €4.6 billion worth of loans in the first six years of operation. Many OECD countries have similar programmes. For example, the guarantee in the Netherlands is up to 50%, with up to 75% available for start-ups and innovative companies; Belgium and the United Kingdom offer 75%, the same guarantee provided for in the Bill; and in Germany up to 80% is guaranteed, with the average being between 50% and 80%. It is worth noting that the Bill provides a guarantee for a duration of three years, as opposed to the lifetime of the loan. This is somewhat shorter than those on offer elsewhere: in the Netherlands the guarantee is for a maximum of six years, or 12 if real estate is involved; in Denmark and Belgium it is up to ten years; and in Germany it is up to 15 years.

The Bill is just one part of a suite of supports the Government is establishing to help small and medium enterprises. I am glad to note that it takes a common-sense approach to the matter, simply removing some of the risk for banks contemplating loans to small businesses. Further supports must also be established and further efforts made to drive down the costs faced by small and medium businesses, including costs imposed by central and local government. Rates are a major issue for many small and medium businesses. The upward spiral in rates went somewhat under the radar in the distant days of the Celtic tiger, but in these days of extremely tight margins, they are causing difficulties. The Minister for the Environment, Community and Local Government has taken some commendable steps, including amalgamating councils, in an effort to drive down costs, but it is time to have a national conversation about the nature and extent of local government and the level to which small and medium businesses can be expected to contribute.

Given the well publicised events of recent years in the banking sector, when calamitous and imprudent lending decisions were made, the pendulum appears to have swung to the other extreme, with banks proving to be positively risk-averse and turning off the flow of credit to small businesses. The Bill will do much to address this issue in the next three years. It will, I hope, allow small and medium enterprises across the country to access the credit needed to put their plans into action - plans that are the key to Ireland's economic future and a healthy and thriving commercial sector.

I welcome the Bill as another small step in the programme of recovery for the country and another commitment in the programme for Government that has been achieved. In a recent speech the Governor of the Central Bank of Ireland, Professor Patrick Honohan, highlighted the fact that credit conditions for SMEs were tougher in Ireland than anywhere else in the eurozone, in terms of both cost and availability.

It is welcome that we are designing this scheme with a considerable amount of hindsight. According to a World Bank study in 2008, there were 76 similar schemes operating in 46 countries which were obviously developed or OECD countries. Thus, in many respects, we are behind the curve in introducing a credit guarantee scheme.

I hope this scheme will encourage growth in our enterprise culture. We must recognise that some of these enterprises may fail or have a need for further capital.

I would like to see reporting or reviewing of the results of this scheme. I encourage the Minister to stipulate, as a fundamental part of the Bill, that he must present, before the summer recess next year and in the following two years, a short and comprehensive report to the Oireachtas enterprise committee outlining the loans advanced, the enterprises and jobs involved and the cost to the State.

We must remember the banks are the main beneficiaries of the State guarantee scheme and the citizens have invested billions of euro in equity and capital to guarantee their commercial viability and future. We now need to encourage the banks to extend the scheme to the SME sector, which is struggling the most and which is of such benefit to the economy. In doing so, we need to examine the role banks will play not only today but also in five, ten and 20 years. We must have a cultural change in our banks and learn the lessons we have not learned to date. We did not reform the banks after the ICI debacle, the DIRT inquiry or the Rusnak affair. I remind Members that Munster Bank failed due to fraud and mismanagement and was liquidated in 1885. It was taken over and became the Munster and Leinster Bank, which eventually became AIB. We must not return to the old ways or we will be in the same position again before we know it.

The main purpose of this legislation is to encourage the banks to provide credit to small and medium sized viable businesses to encourage growth. We need to create a new enterprise culture in our banks which are risk averse due to their recent history. We must recognise those who are prepared to put their heart, soul, hard labour, time and money into their businesses. I am well aware the banks are suffering from what could be described as excessive analysis or, to put it another way, paralysis by analysis. We need to see a seismic shift in the role banks play in society. With the State's equity investment in our pillar banks, we are in a unique position to reform the banking system. Too often, bank branches are becoming administrative rather than decisive, especially in small provincial towns. This is leading to a stasis in lending which needs to be addressed.

I would like to see the banks taking in personnel from the business and commercial sector and sending their personnel to that sector on three or five year contracts to create a greater understanding of what occurs on both sides of the financial divide. The funding should be invested in a wide variety of industries, thus lowering the risk involved. Bearing that in mind, I hope a wide variety of enterprises will be capitalised.

I am aware agriculture is not directly included in the scheme but I hope potential products linked to the sector will not be excluded. The experience of the agriculture sector of a small engineering company in my constituency which has created a number of jobs and successful products, particularly in regard to health and safety around the farm, is invaluable. It would welcome increased access to capital. Will somebody who develops a new cheese product, for example, and who needs new machinery to expand production be able to avail of the credit or will he be disadvantaged because he will not be able to obtain a loan guaranteed by the State in the order of 75%?

I am very concerned about the attitudes in banks with regard to assessing projects that are typically outside the building sector. Banks had ready access over the past decade or so to quantity and property surveyors who told them the costs, potential liabilities and risks associated with construction projects. The financial institutions are lacking in expertise to assess other ventures. This is a fast-moving world and entrepreneurs are coming up with new ideas every day. There are new technologies and I am not sure the banks have the expertise to assess projects that could be very beneficial to the economy. These are cast aside because the banks are unable or unwilling to deal with them. They just do not know how to do so.

Let me address the 2% fee involved in the scheme. I ask that it be centred around the cost of administration such that lenders are borrowers will not be inhibited solely on the basis of the fee.

Ireland is not short of initiative, entrepreneurship, guts or hard work. It is very short of capital, however, and the Bill is an effort to address this. Perhaps, through thinking outside the box, the Department will take on board a proposal for concessions. There are tax concessions for employee share options. It would be interesting to see the Government offering tax concessions or reliefs to employees of small and medium enterprises who want to invest in the companies in which they work. Very often, an employee who inherits cash or obtains money from selling property might want to invest in a scheme that would offer benefits, such as a pension fund. Could such an employee not invest in the company in which he works while availing of a tax benefit as if he were investing in a pension scheme? This would make for a better employer and employee. It would, perhaps, free up capital in regard to a manufacturing or working base.

The Government is drafting new personal insolvency legislation. I would like to see the end of the guarantee of the family home as part of the lending process. It is simply not on any more that entrepreneurs who approach a bank are asked to put up their family homes as collateral. This dates from the bricks and mortar mentality in which the banks are stuck. They are in a rut and cannot see beyond the value of the family home. I would like to see legislation passed that would exclude the family home from consideration as collateral. The entrepreneurship, initiative, hard work and track record of those seeking a loan should be used as the collateral required by the banks. Too often, the family home is used and, too often, it is decimated as a consequence. That is wrong and I would like to see an end to it. The courts recognise the right of the wife and mother to half the value of the home. Let us complete the circle by recognising the rights of the husband and father. Let us take the family home out of the lending arrangements for commercial finance.

I wish to share my time with Deputy Luke ‘Ming' Flanagan.

I welcome the opportunity to contribute to this debate. The Bill is being considered in the context of the crisis we have been enduring for the past four or five years. It attempts, in a small way, to address some of the deficits indigenous SMEs have had to encounter in recent years. I am led to believe over 60% of SMEs are refused funding by their banks when they approach them. The proportion is probably much higher because small businesses are deciding not to bother even applying for funding from their financial institutions because they believe they will not obtain any and that the banks are not open business.

The Bill is being considered in the context of our owning 98% of one of the pillar banks. In effect, we own it. The Government has made much play about the fact that there has been €5 billion extra made available for lending in the economy this year. If this is the case and if funding is being made available to the small and medium enterprises, one wonders why there is a need for a credit guarantee Bill to kick-start lending to small businesses. The €150 million guaranteed under the scheme is very small by comparison with the €5 billion that is supposed to have been loaned already through the pillar banks. Although we own 98% of one of the banks and have a large shareholding in another, we still cannot get the banks to lend to the domestic economy, which is carrying the brunt of the recession.

When one is told daily in the Chamber about job announcements, it is interesting to note they are all a result of foreign direct investment. The Government is pinning its hopes on foreign direct investment alone as a means of job creation. Last week, the Taoiseach, responding during Leaders' Questions, spoke about how people will in future work for four years for multinationals and then move on, probably, I believe, because the multinationals will move on from Ireland, thus making the employees redundant. The Taoiseach stated the nature of work is changing. I do not believe we should be setting up our economy to be a feeder for multinational companies and foreign direct investment and that people can only hope to get work in those sectors. We should be targeting the domestic economy in various ways, for example, the potential within aquaculture which can create thousands of jobs if the blockages in the system being maintained by Departments can be got through. That needs leadership. It needs somebody within the Department or a Minister to take hold of and drive that process. That is not happening. Such actions are what can make real differences in the economy.

There is also the potential for the creative sector. In the north west, as I outlined in the House previously, there is potential to create up to 18,000 jobs simply by being assisted to export and being taken in together into mentoring groups. That is not about guaranteeing credit to the banks. It is about the Government taking a lead and taking ownership of the issues, removing the blockages that exist for those small and medium sized enterprises, and allowing them to grow and develop themselves.

It is startling, when one looks at it, that the Western Development Commission, itself a statutory agency, can produce a report that shows the potential to do this exists. Even if only 50% of it were achieved, one would create more than 10,000 jobs in the domestic economy. It is unbelievable that not one Department looked at the report, contacted the commission and asked for the basis of it, or checked the report to see whether it was credible. There was nothing at all. Apart from assistance through one or two local authorities, which themselves are pinned for cash and unable to help in a real way, that is the only interest in it from officialdom and from the Government.

I met the Western Development Commission in my office. I just want to correct the record.

It is good the Minister of State met them but they need more than meetings. They need somebody to take ownership of these issues and take a lead on them.

The Taoiseach stated he met them but there is no point in meeting them if one will not take up these issues and run with them. This is a statutory agency that should be supported and listened to because the measures to which I referred are those we need to drive this economy. Those are what we need to stem the tide of emigration that is rampant throughout the country. Foreign direct investment will not bridge that gap and will not provide the jobs people need in order that they do not have to go to Australia, Canada and the four corners of the earth to find employment for themselves.

The Bill, as I stated earlier, comes in the context of 1,200 businesses having closed in the past year throughout the State. It is a small step. Unfortunately, I believe, it is probably too small a step. The €150 million limit on the guarantee lacks imagination and a number of criteria within the guarantee itself, specifically the length of time of the guarantee of three years, is on the lower end of the scale across all the international examples. One could see a situation after three years, especially where we will not be in the position of growth in which the Government states we will be, - at this stage, nobody believes that - that the banks would be cutting off small and medium sized enterprises again and they would be back to struggling hard. The three year term of the guarantee should be extended, either to ten years or to the lifetime of the loans, to ensure businesses can enjoy some certainty and security if they are lucky enough to get into this scheme.

I would also be concerned about the banks' attitude to the scheme, whether they will participate actively in it or engage fully with it, and the restrictions they will place on small businesses to avail of the scheme and make the best use of it in the future. The Department and the Government need to take that issue on strongly to ensure the banks play the role they are supposed to play of servicing and assisting the economy, not the State servicing the banks and keeping them in business, which has been the situation over recent years.

As has been mentioned by other Members, the 2% annual fee that will apply for qualifying loans under the scheme could place an onerous burden on businesses. In the case of a business that borrows €1 million, it is looking at having to pay €20,000 upfront for the administration of the scheme. That could place a burden on businesses. Can borrow that amount of money as part of the loan or must they have it upfront? If many business had that amount of cash flow, they probably would not be looking for a guarantee under the Bill. The Department must look seriously at how that will operate to ensure qualifying businesses do not encounter barriers to their participation arising from the administration of the scheme.

Overall, the credit guarantee scheme must be welcomed because anything that gets business going and helps the domestic economy, sustain jobs and job creation must be welcomed. Unfortunately, the €150 million limit is probably too low and the three-year term is probably too short. Through amendments on Committee Stage, the Minister might consider adjusting those figures and ensure the administrative element of the scheme, the 2% fee, would not be a barrier to companies which wish to participate.

The sole purpose of the Credit Guarantee Bill 2012 is optics and making it look like the Government will do something for the economy. The Government can state this was in its programme for Government and now that it has done it, one should shut up, whatever about the detail. We are talking about €150 million, less than one sixth of €1 billion that will solve all the problems that taking billions of euro out of the economy is causing. I cannot see how this will solve the problem. For a start, how does the Government guarantee the banks will not pull back to the tune of €150 million from their current lending levels and decide they will get the State to underwrite for them? There is nothing, as far as I can see, to guarantee that will not happen.

The simple facts are that 50% of small and medium sized enterprises have had credit refused in the past year and this scheme would provide finance for only 2% to 4% of those. What about the rest? What exactly are the rest to do? When one considers that leaves up to 98% of them out, what sort of an impact will this have other than the banks pulling back on lending by €150 million and now lending it out under this scheme where they get more out of it and the Government covers their rear ends? That does not make much sense. When one looks at it in the context of what will be taken out of the economy through the fiscal compact which we say will run into tens of billions of euro by the time all of this is finished, how will €150 million make a massive difference?

In a way, looking at this and looking at all of the other stuff the Government has not done, it suggests the Government's understanding of how a business works is purely on access to credit and has nothing to do with the costs of running a business when it comes to rent. The Government claimed it would do something about upward-only rent reviews and nothing has happened. If the Government wants businesses to work, it must do more than provide them with credit, which this will not do anyway. We are told there is nothing the Government can do about upward-only rent reviews. The Government should try to say that to those who own property who try to stick by this clause. In the case of buildings owned by the Department of Agriculture, Food and the Marine, tenants are being told their rent cannot be reduced because of some rule on upward-only rent reviews. If the State were really serious about helping businesses, then surely it would take the lead in respect of this matter and reduce the cost of rents. That might make life a little easier for those to whom I refer.

Another issue which arises in the context of costs is that relating to rates. Regardless of the amount of credit advanced to businesses, as long as the situation whereby local authorities can waste money left, right and centre and not be held accountable for doing so continues to hold sway, it will never be possible to take action in respect of reducing rates. The latter are crippling businesses. When I have commented on this matter previously, Fine Gael has responded by saying it has instructed the councils it controls not to increase rates. This matter is much more complicated than that. It will take a great deal more than just telling councillors not to vote in favour of an increase in rates if we are to solve the problem that exists. There is a need to introduce accountability at local government level because this will bring about a reduction in rates.

I spoke to a member of the fire brigade yesterday in respect of how the money people pay in rates is spent. He informed me that one third of the overall cost of running the fire service relates to the money paid to the four people who are meant to be running it and who have never fought a fire in their lives. Deputies might wonder what this matter has to do with the Bill. I can inform them that what I am referring to is the type of waste of money which has a direct impact on people who are trying to run businesses. It is this waste which leads to their being obliged to pay high rates. Until this problem is solved, any moves in respect of credit will simply involve throwing good money after bad. There is absolutely and utterly no way that people in business can succeed if they are obliged to pay such high rates.

The next issue that arises is competition. Until there is real competition in this country, any steps taken to provide credit to businesses will not work. The Government had the opportunity to deal with this matter in the context of the Competition (Amendment) Bill 2011 but it did not do so. Instead, it has proceeded with a watered-down version of what is my concept of competition. There is proof that the Government is not really serious about this matter. Last week, for example, four members of the Garda Síochána were present in a bog in County Roscommon to ensure that we turf-cutters were not intent on killing everyone in the country or whatever the hell else it is we are accused of doing. There were twice as many gardaí in a bog on the Roscommon-Mayo border last week than there are to work with the Competition Authority in the context of investigating breaches of competition law.

If there is no real competition in this country, how are businesses meant to survive? If there is nothing in place to ensure there is real competition, how will such businesses survive? If there is no accountability at local government level and if rates are not reduced, how will businesses survive? If the Government does not follow through on its promise in respect of upward-only rent review and if it does not assist those who are struggling to pay rents which are completely out of kilter with what should be the case, businesses will not survive. When it comes to business, everything in this country is out of kilter. This means that when tourists come to Ireland, they are obliged to pay twice as much to stay in a hostel as they would be expected to pay at a hostel in the centre of Berlin. If a hostel needs additional credit in order to remain in operation, what is the point in providing it with such credit if everything else relating to how one runs a business has gone haywire?

In the context of the Credit Guarantee Bill, who could have a problem with €150 million being provided to businesses. It would be very easy for people to put a negative spin on matters and state that I do not want businesses to succeed. My difficulty relates to the perception that the provision of €150 million alone can solve the problem. This sum is not adequate and there is no guarantee that the banks will not abuse the scheme and try to make more money for themselves, while business people will be left with nothing.

On "Tonight with Vincent Browne" last evening, I saw a lady discussing the issue of business. Apparently, if one is a politician, one knows nothing about business. One has to be a business person to understand business. Regardless of the nature of the points politicians make about business, apparently they are all rubbish. I was previously in business. I actually sacrificed my business to become involved in politics for the greater good of people. I might return to business in the future but just because I am not involved in it now does not mean that I do not understand the concept. The same is true of anyone else in the Houses who has previously been involved in business. Just because one is not involved in business does not mean one cannot understand the Credit Guarantee Bill. I am a former businessman, I am currently involved in politics and I will most likely return to business in the future. In that context, I am in a position to state that other than indicating that additional credit will be provided there is little substance to the legislation before the House. I accept that more than the €150 million to which I refer could be provided but there are no safeguards in place to stop the banks from abusing the scheme. That is all I have to say.

I wish to share time with Deputies Jim Daly.

I welcome the Bill, which represents another step in the right direction. As a politician, as an employer and as someone who created his own business 20 years ago, I really do not need to be told what is required in order to create or run a business. Many people tend to expel a great deal of hot air about business. One must be right in the thick of it, however, in order to understand the problems, fears and other issues involved. Running a business is difficult because one never knows from where the next challenge will come. There is no doubt that plenty of challenges exist.

Most of them are being created by the Government.

Even though I am tempted to do so, I will not become involved in a slagging match.

The Bill is part of a suite of measures - this also comprises the Protection of Employees (Temporary Agency Work) Bill 2011, which was recently passed by both Houses, the Industrial Relations (Amendment) Bill 2011 and the Competition (Amendment) Bill 2011 - designed to bring about legislative change. The Bill is certainly a step in the right direction for business.

The Government has placed jobs at the centre of what it is attempting to do. The action plan for jobs, which was published a in recent times, refers to the partial credit guarantee provided for in the Bill and states that for every €100 million extra in loans guaranteed under this demand‐led scheme, more than 1,200 small businesses will benefit. That is good news for everyone. The action plan also states that access to finance, credit and cash flow remain crucial for small businesses. I am of the view that the action plan for jobs will in time come to be seen as a seminal document. In that context, it is similar to the Food Harvest 2020, which applies in the area of agriculture.

There are three main aspects to the action plan for jobs. The first of these relates to the establishment of a potential exporters division within Enterprise Ireland. The second involves the establishment of a one-stop-shop, a development which is essential for those who are new to business and who require some direction. That the action plan will be measured and monitored by the Department of the Taoiseach is crucial. We should not establish anything that is not going to be policed. Every three months, the Department will evaluate whether the targets relating to the plan have been achieved. If they are achieved, that will be great. If they are not, however, we must ask why that is the case.

I am aware of the work done by the Minister of State, Deputy Perry, in publishing a 70-page report - I hope other Deputies have taken the opportunity to peruse this - entitled "The Voice of Small Business: A Plan for Action". Some key individuals who are involved in the area of business in which I am involved, namely, the SME sector, in which there are over 200,000 firms which employ approximately 655,000 people. Like my business, many of these concerns employ ten people or fewer but they are crucial to the economy. The big ticket items referred to in the Minister of State's report are access to credit, labour market costs and flexibility and local authority structures. The short-term priorities to which the report refers are the cost of doing business, access to public procurement, the hidden economy - which is a problem - and competition. No one is walking away from these difficult issues; they are, in fact, being examined.

I am an employer and I have my own business. In that context, I am aware that one is only as good as one's next year in business. Even though someone may have been in business for the past 20 years, he or she cannot definitely state that he or she will remain in business for the next ten years. There are no longer any guarantees. The introduction of the Credit Guarantee Bill means the Government is formally stating that even if a bank is not fully confident with regard to one's business idea, one will still have access to credit.

The banks will have a guarantee, although I admit the guarantee is limited at 75% of the amount loaned. The Government is not going to give a blanket guarantee and it will be 10% of the aggregate of all the loans handed out up to a total of €150 million. I am sure there will be improvements to this scheme, like in any business process where modifications are made, to ensure we get it right and working for everybody.

AIB's David Duffy and Bank of Ireland's Richie Boucher have explained to Members where the banks are at. They have recognised the mess they created but there is certainly a mood for change with them. I, along with others, have explained to them that small businesses have been starved of cash flow for the past several years which has been crippling. Small businesses do not want to stay in limbo for ever and want to move on. With the engagement of the banks and positive legislative changes such as this Bill, we will see more positive times for business.

I hate to shout it too loudly but in my area the rural economy is starting to pick up and not before time. While there are pressures, it is good to see a move in a positive direction such as this measure. I welcome this legislation but we are mindful there are many other aspects that need to be tackled.

Cuirim fáilte roimh deis labhatha ar an ábhar tábhachtach seo. An article in last week's edition ofThe Economist stated the desire for economic growth is a little bit like the desire for world peace in that it is universally accepted. To get economic growth, we have to do more than pay lip-service. We need to focus and target how we are going to achieve growth to do the heavy lifting and pay off our debt. Over the past 12 months I have visited many schools in my constituency and tried to explain to students why the economy crashed. I have pointed out how before the crash we spent our time buying and selling property from each other instead of looking outward as a trading nation, producing goods and selling them abroad. I have used the analogy of two people behind the counter in a sweetshop buying from and selling to each other but no one coming into the shop to buy sweets.

My emphasis as a public representative is on supporting the real engine of this economy. Members from all sides of the House have answers for everything but few solutions. The answers are the easy bit; the solutions, tougher. Much time is wasted creating pie-in-the-sky wish lists of improved services, supports and payments. We must examine what can drive and support this. These wish lists are worth nothing unless we have an engine to drive and create the finance to fund them.

Recent debates have been dominated by the need for a stimulus in the economy. Stimulus will stand on its own merits in some circumstances. However, there is a significant danger that as Ireland is an exposed island economy with a debt overhang, any stimulus of the billions spoken about could leak back out of the economy. Many economists have recognised this. On this side of the House we have to be responsible before we bring anything to fruition.

This Bill represents a real and productive stimulus as it supports the heart of our economy and the engine that drives it, that being the small to medium sized enterprise, SME, sector. While there are, unfortunately, 23 million people unemployed across Europe, there are also 23 million registered SMEs. If each of these SMEs created one solitary job, it would wipe out the unemployment nightmare that blights society here, in the EU and across the world. While this may seem an ideal, we have to do our bit as an island economy to work towards that and look further at job creation. The idea of job creation for many previous Governments was, unfortunately, through creating a bloated and inflated public sector with increased layers of bureaucracy and management. We have to go back to basics. We are an island economy which needs to trade its products outwards, get growth and pay off our debts.

Of the 1.8 million working in the economy, more than 900,000 work in the SME sector, one in very two persons employed. The SME sector is a significant contributor to public sector employment through the taxes and revenue it raises. No one claims this Bill is a panacea. I cannot share the negativity from the other side of the House because any step, however small or big, is welcome towards supporting the SME sector. I wholeheartedly and unequivocally welcome this legislation.

The credit guarantee scheme was a commitment in the programme for Government and I am glad to see we are now delivering it. We know it is not the silver bullet to fix all the problems faced by SMEs nor are we claiming it is. However, we are trying to make it easier for SMEs to survive and grow. Early this year, we introduced the action plan for jobs knowing one initiative is not enough. As Deputy Barry said, it takes more than just one measure to get the economy back on track. Our action plan for jobs listed 250 different actions which we are taking to improve the lot of small businesses. We have introduced in the first three months of this year 96% of the action points that we planned, and we are continuing to deliver on them. There will be another quarterly review by the end of June which I hope will show further progress has been made. The action plan is not sitting on a shelf gathering dust like many plans from previous Administrations.

We have all heard the stories of businesses trying to access credit and being refused. They are trying their hardest to make their business grow but are turned down by the banks. In 2010, one in every two applications for credit was turned down by the banks. It is more difficult to access credit in Ireland than in any other eurozone member state. We must make it easier for our businesses to get credit. I know how important access to credit is for a small business having started my small business in the 1990s. There are times when one needs a ready line of credit supply to enable the business grow, invest in new facilities or machinery and hire new staff. People with the drive and ambition to start a small business must be supported. A thriving small business in a community can make all the difference about how a community feels about itself. We have all seen towns where businesses have closed down, leaving buildings derelict, a reminder of previous Government policies which have not supported SMEs. In County Meath, where over 90% of businesses are SMEs employing up to nine people, this new credit scheme will be warmly welcomed and give many businesses the opportunity to develop and grow. I am very glad an Irish business won the tender for the oversight, management and operation of the scheme. When I was in Duleek recently, the issue of Irish companies getting Irish contracts came up; it was raised by a small business owner who was extremely concerned about the lack of Irish companies winning Government and council tenders. He was under the impression that this work was being given solely to companies outside the State. I know we are taking the issue seriously and I am glad the tendering process has made it easy for Irish companies to win contracts.

I look forward to the speedy passage of the Bill through the Houses in order that we can get the scheme working to assist small businesses and help people get back to work.

I, too, welcome the Bill. It is good that we can speak in such a positive manner about the actions of the Government in delivering on the action plan for jobs. It is a credible plan which will prove to be another step in creating the right conditions for job creation, which it is important to facilitate.

Deputy Thomas Pringle mentioned foreign direct investment and commented on the thousands of jobs being created. We must concentrate on small and medium businesses and help them to develop and access the funding that will aid this process. Earlier in the year we saw the introduction of the jobs initiative and the reduction in the rate of VAT which drew some negative comments, but the thousands working in the tourism industry have welcomed it. I constantly hear positive feedback about these efforts, including the intern programme. I spoke to one young person yesterday evening who had gained the necessary experience in the market to land a job.

I note that I am speaking to the converted in the House. The parties represented in it at this time are urging a "Yes" vote in the referendum on the stability treaty, which will bring certainty. There is no big bang solution in addressing unemployment and the economic crisis, but small and considered changes or initiatives are required to progress our people towards work. I listened to the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, speak on "Morning Ireland" about the assistance provided from European Investment Bank funds which will be an important aid in getting people back to work. We must also be honest about the problems arising from the large deficit. The funding the Government can put into the sector is limited, although very important.

The credit scheme is welcome. As I mentioned, it will allow small and medium businesses to secure the loans required to create jobs. I have seen new businesses being set up, but there is no real experience in banks to allow entrepreneurs to access funding through business plans, especially in the high technology sector. Before their collapse, the banks were lending with the family home, as mentioned, as well as other property being used as collateral. If the banks ever had the required expertise, they seemed unable to assess proper business plans when produced.

The 75% guarantee figure is right and the provision of €150 million in funding is very positive, as it may benefit up to 2,000 businesses. Nevertheless, I ask the Minister to consider carefully the element of the Bill which details the 2% annual charge to be paid in advance. When businesses are seeking funding, paying such a charge up-front will be difficult. It is almost contradictory that money must be paid in advance; therefore, the Minister should consider this element again carefully. On the positive side, pumping that amount of money into the economy will help to increase tax receipts by as much as €25 million. Therefore, there may be a balanced approach that could help to reduce the up-front charge or phase it in over the course of the scheme. In this regard, it is very welcome that there will be a review after one year. Looking back at a number of initiatives in the past decade, there has never really been an in-depth review to see if processes are operating correctly. It is important that there be such a review.

I live in the south-east inner city and represent Dublin South-East. In recent years I have seen the likes of Google and Facebook being set up, leading to spin-off businesses, some of which are running into severe difficulties. I have seen very good business plans, but the banks are unable to assess them properly because there is no ingrained experience in the system to allow this to happen. There will be growth in the economy in this area and the necessary expertise must be spread across the banking sector. As mentioned, the practice of using the family home as security in giving loans is nonsense. The giving of loans should be assessed on the basis of business plans and there should be further training providing in the banking sector in order to allow proper assessment.

Tá áthas orm deis a bheith agam labhairt ar an mBille seo. Like motherhood, it would be very hard to oppose the Bill, as anything that will help business is to be welcomed. I agree somewhat with Deputy Kevin Humphreys that life is a series of small steps and that rarely are problems, even major examples, solved using a big bang approach. This is a very small step and I will watch with interest to see how the scheme works in practice.

The Government is putting in place a guarantee scheme, but the banks are already required to lend considerable sums of money - €3.5 billion this year and €4 billion next year. This scheme has the potential to add €150 million which, and in the light of the other lending figures mentioned, is very small. How can the State be sure the banks will not use this money to guarantee loans they would have given, thus deleveraging risk to the State? If we are honest, a properly functioning bank would have the majority of its loans repaid, but there is always has an element of risk involved. It is written into a business plan that some businesses will fail.

During the years I have seen schemes getting bogged down in endless bureaucracy. I have the same fear for this scheme. For many, this might just bring about more forms and plans. By the time some people avail of the guarantee, the good will have gone out of it. I have stuck to the view that for most businesses, a grant of €5,000 or €10,000 is normally next to useless, as it may cost €15,000 or €20,000 to access it. The Minister of State is probably familiar with this syndrome. I have advised people where very small grants are available to not bother looking for them if they will distort their plans considerably. They would be better off taking the straight commercial way. Many are tempted by the availability of money through a grant or a loan, but rather than tailoring their plans around it, they should avail of if only if it fits the plans. Therefore, we should be careful about this aspect.

The sample figures tell us much about the scheme. There are 1,800 businesses, with the average loan being €76,000. According to this we are talking about businesses with up to 250 employees. A loan of €76,000 is a very small for an expanding business. In many cases, it would be a drop in the ocean. This, therefore, is a micro scheme. I know many businesses, urban and rural, that are not huge businesses or multinationals for which such a loan would be very small. It is a lot less than the loan for a single house.

It is estimated the cost of the scheme is €19 million over three years. That is a very small commitment on the part of the State. A sizeable amount of the money for the scheme will come from the people who are going to benefit. Effectively, there is a 2% penalty on their interest in return for the loan. That is a significant cost for small businesses. The idea the State is paying for the guarantee is wrong. It is paying partially for the guarantee but in no way is it covering the guarantee.

Then we come to the endless conundrum of the Department of Finance. The Government is facing the challenges we faced. The net Exchequer benefit from this is supposed to be €25.5 million. Is that correct?

Will someone - perhaps the great Deputy Mathews - explain to me why, if a scheme is giving a net Exchequer gain of €25.5 million, would it not follow that if we invest five times as much in the scheme, given there are potentially five times that number of viable businesses that cannot get money, and I do not believe the difficulties of getting money in this country will be solved with €150 million, would the Exchequer not gain €127.5 million if the scheme was five times bigger?

It can be reviewed.

Why not review it now? This goes back to a core principle in the Department of Finance that is a result of Merkel-thought: the State cannot invest money and make money on it, even though the State gets all the taxes from activity. A huge proportion of the decrease in taxation is a result of the lack of activity in the economy. Why when the scheme was being drawn up, if it was going to save so much money for the Exchequer, was it not done at a much greater level?

The previous Government was looking at this for two years and did nothing.

I accept the Department of Finance has not changed and is giving the same advice it gave us when we were in government.

Deputy Ó Cuív was in Cabinet at the time.

Of course I was. We were investing significant sums in bodies such as Science Foundation Ireland, the IDA and Údarás na Gaeltachta.

There was a lack of regulation though.

It is a valid question and I will go further with this theory. I had this argument many times with the Department of Finance when I was a Minister and all I am doing is encouraging the Minister of State to follow in my path and continue the argument.

People talk about investment to stimulate activity and mention building schools or roads. If these are built with 100% Exchequer funding, there must be a cost to the Exchequer, no matter how much tax it gets back. I have always agreed with that; it is a rational position. I have never said the State should spend €5 billion in this time of hardship on 100% State-funded activities because there is no way to get all the money back. On the other hand, and this is a lesson we must learn, if €2 billion is cut from State expenditure, on a good day the improvement in the net Exchequer position is probably only 50% of that when extra social welfare costs and tax losses are included.

If, however, there is a 35% grant for something that would do long-term good in the economy, such as improving the thermal quality of private buildings, residential or commercial, to reduce heating bills and oil imports into the long distant future, it would give long-term savings. There was talk earlier about the real economy but there can be an absolute real economy in a closed circuit if it is not necessary to import goods. The idea of exporting allows us to buy in services but if we can eliminate the need to buy some of those services, we do not need to export as much to have a trade balance.

Presuming we gave a 35% grant to improve the thermal quality of buildings, there would be a long-term gain but what are the short-term economics? If the grant is only paid to those who are legally registered and pay taxes, when the sums are done, the savings in social welfare, and gains from PRSI, VAT, income tax and universal social charge, USC, payments, never mind the builder spending money, give a net gain in cash. The Department of Finance is caught in a mathematical corner on this and will always say it is dead weight. That would be a fair argument if people were going to do these things anyway but we know people are not doing things, that things are paralysed. There are many people who would take up these incentives if they were provided but we do not make them available.

It is important we look at this question and see how we can break out of the vicious circle we are in. We must recognise that focused grants can give a good return on expenditure. There is a fundamental difference between a grant that stimulates activity or gives other ancillary benefits and paying 100% of an investment.

A Deputy mentioned the fiscal treaty and the referendum. One positive thing that has happened, and I publicly thank the people of France for it, is that they effectively voted "No" to the Sarkozy-Merkel paradigm of cutback, cutback, cutback. As I keep saying, every €1 billion in cutbacks takes €500 million out of the tax base, meaning we are constantly chasing our tails. I am delighted that already there has been a change of attitude in Europe and that investment in jobs and job creation and economic stimulus has now come into vogue. I wish the Taoiseach well next week. I hope he comes back with a great heap of Structural Funds, which appear to be waved everywhere, and money from the European Investment Bank and so on. However, when he comes back with all this money and the big purse next week, the next question is how we spend it. Do we spend it in a way that stimulates extra activity, draws in other money and draws out a good portion of savings, or do we spend it in a way such that we do not maximise the multiplier effect? We must be careful about this.

I hold considerable reservations about the wholesale sale of State assets. I do not go along with the philosophy of some of those who believe they have a monopoly on proper thought in Europe. They seem to have an ideological hang-up about the State owning essential services and they believe these services should be privatised. I do not share their philosophy. Let us consider the sugar company. Where is it? It is gone.

Who let it be gone?

That is a good question.

Deputy Ó Cuív was in government for 14 years.

Does Deputy Buttimer agree it was wrong to sell it?

Deputy Ó Cuív was part of the Government which sold it.

Through the Chair, please.

The difference between me and Deputy Buttimer is that if Deputy Buttimer believes we were wrong, why are those in his Government selling State assets, including Bord Gáis Éireann?

Deputy, please.

The Government announced it in the Dáil. Deputy Buttimer might not remember it.

Yes, they are. They are part-selling Bord Gáis Éireann.

Part-selling? That is different.

Will Deputies please speak through the Chair?

I apologise, a Cheann Comhairle.

Does Deputy Buttimer agree with that? Naturally, he agrees with it. I was not in Government and was instead a Senator at the time of the sale of Cómhlucht Siúicre Éireann but I do not believe it was a good idea in hindsight. We believed we had put in place the protection of the golden share, but it was not very golden when it came to the point. Having learned my lesson, I am not keen for the Deputy to sell more State assets. It seems to me a foolish idea. I do not agree that selling the retail side of Bord Gáis Éireann is a good idea. It is somewhat strange to be selling the company to which the Government has just given the contract for water. Perhaps that can be explained to us someday. Can the Government explain how it is no cause for concern or grief that it might sell the water services?

I welcome the efforts of the Minister, Deputy Howlin, to ensure the proceeds of the sale of State assets would be invested rather than going straight into debt reduction. If we are to proceed in this way, my remarks about the multiplier effort should be considered.

We should consider the long term. We need to get the economy going and this, in turn, will give the Government the money to provide basic services. As I stated at the beginning, I believe this scheme is microscopic. No one could argue against it as far as it goes and I hope it works. I will be watching with interest to see whether it gets bogged down in a plethora of bureaucracy, whether it adds extra lending or whether it is simply used as a way for the banks to hedge their bets and ensure they are not exposed. However, it is all on a micro scale. Where has the €20 billion investment bank gone? Where has the bank gone that the Labour Party was to set up with €20 billion from God knows where?

Deputy Ó Cuív's party put €20 billion into Anglo Irish Bank.

That decision was made before the election. Those in the current Government knew all about it when they promised the €20 billion. I am simply asking where it has gone. The idea was good but the figure was outrageous. I do not know where we were supposed to get €20 billion from. Under this scheme the banks will run rings around the Government. Perhaps the old idea of the Agricultural Credit Corporation, ACC, or the Industrial Credit Corporation, ICC, would be better. They were modest State banks. It is fair to say many businesses received money from them when the ordinary banks would not lend it, and those banks worked profitably. They also had a significant stimulation effect. If a person approached one of the regular banks looking for money and they had no wish to do business, that person could always go to the ICC or the ACC. Given all the traumas that have taken place with the banks, it would be a good idea for us to hive off some institution as a business bank. It need not be exactly the same as the ACC or the ICC. It could be an agricultural and industrial credit corporation that would not get involved in property. It could have a remit limited to agriculture and industrial development. It could be a modest bank rather than the €20 billion bank referred to. That could be enough to stimulate the market and ensure the other banks were made aware that if they did not lend money to potentially good businesses, there were other firms watching which might be able to fill the gap.

Deputy Peter Mathews is next and has five minutes to speak. I understand he is sharing time with Deputy John Paul Phelan and Deputy Jerry Buttimer.

Five minutes is tight. It is barely time to make two lightly boiled eggs or to get across some points which I believe are important. I refer to Deputy Ó Cuív's closing comments. A bank balance sheet of €20 billion would require capital of no more than €2 billion because there is a multiplier effect when one takes into account capital, good management and the direction of a bank. One expands the capital by taking deposits and with those deposits one can expand one's lending activities and investments. That is what may have been intended in the programme for Government. Anyway, I will not get distracted because we are discussing the Credit Guarantee Bill.

Deputy Mathews should read the documentation.

The sentiment, objectives and aspirations of the Credit Guarantee Bill are worthy, of that there is no doubt. It attempts to focus on the small and medium sized enterprise sector in our economy. It is the largest employer in the economy and it is starved of cash and credit at the moment because banks have been in a terrible, unattractive haste to correct their balance sheets since the collapse. By correcting their balance sheets they have, wherever possible, drawn in loans and tightened credit. This has been at the expense of many indigenous businesses in the country. Effectively, there have been two distinct economies in recently years: the multinational corporation and foreign direct investment funded economy on the one hand and the home grown national enterprises, the target of this Bill, on the other. The Bill is relevant for firms with employment levels up to 250, turnover and sales revenues of up to €50 million and a balance sheet size of €43 million.

A total of €150 million of loan guarantees could be provided in what is termed a portfolio arrangement whereby, for example, the two remaining banks could divide the annual portfolio of €150 million equally between them, each taking €75 million. Effectively, the Government would be exposed for 75% of that €75 million per bank and the claims in any one year would be restricted to 10% of that 75% of the loan exposure.

The Bill does not refer to three year lending, portfolios or an annual review. It refers to a review on two months notice. The Bills digest contains worked examples and demonstrations of what is in mind, what it could cost and the benefits that might follow in terms of employment generated by businesses that would benefit from having their loan liabilities guaranteed to the extent of 75%, subject to the cap of 10% of claims.

Working through the demonstrative models the Department of Finance has provided in pages 19 to 22 of the explanatory memorandum, it is worthy to see that, based on certain assumptions, the hope is that 1,800 jobs would be provided. If that happened, there would be further spin-off effects because there would be income taxes from those earnings, VAT on the expenditures of those net earnings and so on. It is that fan effect that is good for the indigenous economy because the indigenous economy, unlike the multinational corporation, MNC, economy which is currently earning export surpluses, has been contracting. That is the one that employs about 1.5 million people whereas the MNC economy employs up to 250,000 people depending on one's measurements.

Deputy Ó Cuív also mentioned the ICC and the ACC. I worked in the ICC for 20 years. The target objectives of bringing credit into Irish owned businesses was achieved over a 70 year period where every year from 1933 until the time I left in 1988 there were steady, increasing profits. It was an academy of hallmark banking where the structure of the balance sheet was maturity balanced in a proper fashion in terms of the maturity of the funds that were invested in the assets.

There was a venture capital side too, and some of the venture capital companies that the ICC supported are massive successes on the world stage, Tullow Oil being an example. Tullow Oil has a market capitalisation of approximately €6 billion. That started in a small way, promoted by Aidan Heavey and his colleagues. Two former ICC colleagues of mine joined that board. There are many other examples of companies across all sectors of the economy that have done extremely well.

Let us hope there is not too much bureaucracy in this credit guarantee scheme and that it encourages a return by our main banks to proper appraisal of businesses and cash flow lending where executives and managers understand the customers, products, suppliers, all those balances and the management of the companies they support. The sentiment, aspirations and objectives underlying this Bill are good, although it needs to be tightened up. I suggest in a memorandum form attached to the Bill there should be worked examples to ensure people can understand it, as has been shown in the worked, demonstrative example on pages 19 to 22 of the explanatory memorandum.

I refer to the contribution of the previous speaker, Deputy Mathews. As someone who was involved in banking for many years I always welcome his contributions on matters such as this one. He represents the very best of the old style banking that may have become unfashionable in the time of the Celtic tiger but which we need more of now.

I welcome the Credit Guarantee Bill. It is important promised legislation to help release vital credit for small and medium enterprises throughout the country. While I disagreed with most of what Deputy Ó Cuív said in his contribution, he raised an issue on which it is worth having some clarification, that is, the potential for this scheme to displace lending that existing financial institutions might already be in a position to give. I hope there will be some comfort in that regard for the Deputy and me in the Minister's closing remarks.

I express some concern about the prospect this scheme might put extra administrative burdens on businesses. It is important it would be timely in that when people apply for credit, the existence of this new scheme would not delay the process of administration.

I fundamentally disagree with Deputy Ó Cuív's comments on €70,000 to €80,000 of a loan being insignificant. For a small enterprise employing five or six people that can be the difference between surviving and not surviving. The Government is correct in ensuring that if there is full uptake of the scheme, which may be modest at the outset, it can be expanded in the future. That is logical. There is no point in announcing a grandiose scheme, and Deputy Ó Cuív and his colleagues did a good deal of that in their 14 years in Government, if it will not be acted upon.

Deputy Mathews is correct in his view on the current position of the economy in terms of the foreign direct investment sector and our exports being buoyant, but it is accurate to state the domestic economy has contracted considerably in recent years. This scheme is directly targeted at improving the domestic economy where most of the people who work in the economy are employed and where most of the room for potential expansion within the economy exists.

In announcing the legislation the Minister, Deputy Bruton, spoke of the potential for these measures to have a beneficial effect for 1,800 small and medium enterprises throughout the country. That are many small and medium enterprises with huge potential for job expansion, and if we are to come out of our current economic difficulties, it is those small and medium enterprises in each small and large community throughout the country that are most likely to generate employment in those communities. Anything that will assist them in that regard is to be greatly welcomed.

In his concluding remarks I ask the Minister to address the concerns raised about the potential extra administrative burden that might be created and to address the concern with regard to the possible displacement of loans which might already be granted by the financial institutions as a result of this legislation.

I welcome the opportunity to speak on the Bill. I welcome the Minister of State, Deputy Perry, to the House. Undoubtedly, the Minister of State, in his role as Minister with responsibility for business, and I use that word deliberately because he is a pro-business person, will have been informed by many businesses, as have many of us, that they are having difficulty accessing credit and that our banks are risk averse. In his contribution Deputy Ó Cuív referred to small steps. This is a significant step in that we are saying to people in business involved in creating employment that this Government is listening and wants to encourage and help the creation of access to credit and liquidity.

The language on the AIB small and medium enterprise business lending application form has changed in that it refers to three easy steps to applying for business lending which include arranging a meeting with one's relationship manager, completing the enclosed application form, and gathering any additional supporting documentation or information that may be required by the bank.

Our banks must work with employers. Deputy Mathews is correct. There are two sides to the economy. There is foreign direct investment and the indigenous economy. We must assist our local economy and our local employers.

This is a three year partial credit guarantee scheme providing €150 million, which is in addition to what the pillar banks supposedly will lend. It is a continuation of the programme for Government commitment, the action plan for jobs, the Minister's own proposals and the Voice of Small Business. Through his actions, words and office the Minister of State has lived up to his commitments. He is doing what it says on the tin and trying to deliver in a proactive manner. I wish him success because we need him to succeed.

Access to finance presents a major problem. The Irish Small and Medium Enterprises Association, ISME, has provided figures from an internal survey which indicate that 50% of companies which had made applications for credit to banks in the previous three months were refused, that 91% of firms which had applied for funding believed the banks were making it more difficult to access finance and that 92% of respondents believed the Government was having either a negative or neutral effect on the availability of finance. I regret this is the case as businesses must have working capital and overdraft facilities to allow them to restructure and continue to trade and provide employment.

Many business people are afraid to apply for credit. People I meet in my clinics, while canvassing or at social occasions have told me they have returned home from their bank with a loan application form only to decide later not to bother submitting an application as they believed their bank would refuse them credit. When large numbers are deciding not to make loan applications, we must ask what we want the banks to do and what position should they be in five to ten years from now. According to a EUROSTAT survey, Ireland had the second largest decrease in the success rate of loan applications.

Deputy Eamon Ó Cúiv spoke about providing a stimulus for job creation. Long before President Hollande arrived on the scene, the Taoiseach spoke in this House and elsewhere about a stimulus, investment in job creation and making Ireland the best country in the world for small business. He has taken a consistent approach to this issue.

The Ceann Comhairle probably despairs with me at times but having listened to Deputies opposite refer to a stimulus and the sale of State assets, I must point out that they were absent without leave for 14 years, during which time they abandoned all regulation and principle. Some of them appear to have forgotten that the principle of collective responsibility applies to the Cabinet. While I share their concerns about the sale of State assets, it was the Fianna Fáil Party which sold off Telecom Éireann with wild abandon and to great glee, as most of us recall to our cost. They need only consider the position of Eircom now.

As someone who is concerned that we must not rush into a fire sale of State assets, I welcome the approach taken by the Ministers for Finance and Public Expenditure and Reform, Deputies Michael Noonan and Brendan Howlin, respectively. The latter made it clear on "Morning Ireland" earlier that we needed a stimulus and investment. Deputy Peter Mathews is correct that we must create jobs in the domestic economy and focus on indigenous employers and markets.

Foreign direct investors are awaiting the outcome of the referendum. I hope we will vote "Yes" in two weeks, as it would send a message to the world that we are open for business, in charge of our destiny, confident about restructuring and in a position to redeem ourselves across the world. If one contrasts Greece and Ireland, one finds that we are taking bold and imaginative initiatives, although I accept that people are paying a price for our efforts and there is, unfortunately, pain involved.

This morning the Select Committee on Health and Children, of which I am Chairman, approved an Estimate of €14 billion for the health service. Someone needs to explain to me how a country with a population of 4.5 million can spend €14 billion and end up with what some consider to be an inadequate health service.

It is imperative that a stimulus programme be introduced. Rather than frightening people, the banks must work with them and encourage and inculcate an entrepreneurial attitude. Having been a public servant for my entire working life, I have only lately converted to the view that entrepreneurs are vital to the development of the economy. The Bill is a small and important step that seeks to get credit moving in the economy and ensure the banks are open to working with people. As someone who has been critical of the banks, I was heartened by remarks made by the AIB chief executive at a briefing yesterday. Banks cannot operate in an ivory tower or expect people to flip-flop whenever they jump. Working with people does not only mean offering loans. They must do so in a spirit of partnership and provide rewards and encouragement.

While I am aware that the scheme provided for in the Bill will be subject to annual review, it would be preferable if it were assessed on an ongoing basis to allow us to tweak it, where necessary. We must get the domestic economy moving to allow businesses to develop. The credit guarantee scheme is necessary because the banks became dysfunctional when they failed to maintain a diverse business base and put all their eggs in one basket. I hope the legislation will help to develop a small and medium enterprise sector that will deliver a significant number of long-term sustainable jobs and become the lifeblood of the domestic economy as we face into a new type of economy.

Instead of the banks and the Government standing in the way of doing business and economic growth, they need collectively to change their behaviour and culture to facilitate expansion and growth. I welcome the Bill and commend the Minister of State, Deputy John Perry, for his approach. He may be quiet, but he is also a man of steel who will, in time, be seen to have played a key role in turning around the economy.

I concur with many of the sentiments expressed by previous speakers. I am pleased to have an opportunity to speak to the Bill and note its interesting Title. As a businessman, the Minister of State understands business. Deputy Peter Mathews worked in banking for years. Earlier in the week in Private Members' time we discussed legislation introduced by Deputy Michael McGrath which sought to introduce important measures to remove from society vultures who were demonising people and driving them to despair and, in some cases, suicide. I hope this Bill, with its simple Title, will do what it says on the tin. I know it has been drawn up in the correct spirit.

As a Deputy who supported the previous Government, I voted for the banking guarantee in the belief there was no other way. I have regretted that decision ever since because the banks fooled us and tricked the then Minister for Finance, the late Brian Lenihan, and his officials. They have also tricked his successor, Deputy Michael Noonan, and his officials.

Last week the Secretary General of the Department stated he did not have enough staff. He certainly does not have enough staff who understand what makes businesses tick. While I am not being critical of the officials present or other departmental staff, the Department needs new thinking. For this reason, all new staff should come from the private sector and have stood behind counters or machines, built their premises, paid tax, insurance and VAT and dealt with all the regulations some of the officials in the Department love to dish out. We need a sea change in how small indigenous businesses are dealt with because they must be nurtured. They are smothered with regulation after regulation and will not be able to survive. I am not arguing against the Bill, but as I stated last week, for every new regulation that comes from Brussels we add at least nine or ten more besides.

The industry that gets most support from all of this is the printing industry, and much of this business goes abroad because of ineptitude in our procurement procedures. We cannot be imaginative as other countries are and divide large contracts into several parcels so they do not have to be tendered throughout the EU. Paperwork is arriving every morning in the letterboxes of small businesses. The postmen are weighed down with it.

I listened with interest to Deputy Peter Mathews. We should all listen to him. He has experience of banking, and not with the banks I call the magnificent seven who threw credit at everyone and almost forced us to take money. Deputy Mathews worked for the Industrial Credit Corporation, ICC, which was a brilliant bank when I was a young fellow. The Agricultural Credit Corporation, which the farming community set up, was also a good bank. Those banks were restricted in who they could lend to and chose to be that way. They served the country well. They gave to businesses and had a rapport with their borrowers. A small amount of credit can stimulate a lot and will bring returns to the Exchequer in PRSI and VAT as well as creating customers for insurance, fuel, printing and other services. This all turns over the economy and gets it going. That is how it got going. We can never forget that.

We welcome multinational companies and foreign direct investment and want more of them but the cost of bringing them into the country is considerable. They are welcome and we must nurture them and attract more of them. However, we must go back to recognising and believing in indigenous businesses, whether consisting of one self-employed person, a family, or five, ten, 20 or 100 employees. What has happened in recent times is not helping these businesses. We have a difficulty at present in my county where a new company is taking over from Bord Gáis and wants to tear up the contracts its customers had with Bord Gáis. The existing contracts are not being respected and standards are not being applied. I have a similar concern about the company that will be given the water franchise. I will elaborate on that issue at another time, with the permission of the Ceann Comhairle. Today, we are talking about banking.

The two pillar banks did not provide the €3 billion in lending. They were expected to present a business plan to the previous Government, of which I was a supporter, but extensions and further extensions were granted. The plans, when they were eventually presented, were rejected by the Minister and they went back to the drawing board. The banks led us on a merry dance and never loaned the money. They told blatant untruths and said they were lending the money but did not do so.

At present, I am in the process of changing from being a sole trader to forming a limited company. I had an overdraft as a sole trader but my bank told me I could not transfer the overdraft to the limited company. My good name should be sufficient to bring the overdraft across. I have been in business for 30 years. A bank will seek any way it can to turn off the tap. As Deputy Mathews said, they are interested only in increasing their own balance sheets and not in the good of the country or in helping business people. Senior bank management, not the ordinary bank staff, are determined to make themselves look good and prove they can do enough to be promoted to the top jobs where they can be great boys and be paid more than €500,000. It is all fundamentally flawed and wrong. It cannot work, it will not work, it did not work and it will never work. We must change tack completely.

I welcome the Credit Guarantee Bill, but I hope the €150 million it provides will not be sucked in by the banks and used to avoid lending the money they are supposed to lend. Banks are overstretched. One does not need to be a genius to know that. Half the money we owe to banks, including the former Anglo Irish Bank, should be written off. This is the message the Taoiseach must bring to Angela Merkel next week. The European project could be unfolding on its feet. This is worrying. The Taoiseach must bring the message to her good self that it was mainly her own banks, and the French, who pushed money in here when our own banks were broke. They continued to fire money into Ireland and now the Irish taxpayer is having to pay back this money. This must stop. We must cut off at least half that money. Last night, I discussed this matter and the promissory notes with Deputy Mathews. We must print more money and park this debt. It is not within the energy or ability of the Irish people, now and for generations to come, to repay that kind of money. It is just not possible. We have to do what the Americans and British did. I do not know how many trillions of dollars the Americans printed. We must do that and remove this huge legacy debt. It was not created by the taxpayers or ordinary people but by speculators and banks who were allowed to do so by the regulators, who were well paid but did not do their job. The same is true of Ministers and officials of the previous Government, of which I was a supporter.

A crazy situation took place. Banks used to ring us up, tormenting us. In my business, if I was considering buying a machine, the company would tell the banks about it, or they had some way of finding out. On the following morning, I would find four cars in my yard, with one bank competing with another to give me a loan. If two small farmers wanted to buy the same 30 acres, a bank would finance both of them unknown to each other up to a crazy amount of money. That should never be allowed. I know that safeguards against such practices are built into the Bill, and I welcome that.

The Minister of State is a business man and knows all about this. He must do so, to have been so long in business. I know he is doing his best, but his best is not good enough because these people do not care about the Oireachtas or the law. Bankers have gone abroad, having broken the country. One banker in Bray was invited to the Garda station in Bray for questioning. We did not see any paddywagons pulling up at his door to take him away. On the other hand we saw five detectives coming in three cars to the house of the former Deputy, Ned O'Keeffe, in connection with an alleged misdemeanour amounting to a couple of thousand euro. What is wrong with the country? We cannot deal with the big bad fellows but we can deal with a former Member who gave good service to this House as a Minister of State and Deputy for decades, as did his family before him. He suffered humiliation and trauma. His wife had gone shopping when he was arrested. He is recovering from medical treatment. The detective gardaí did not want to give him time to change from casual clothes into the more formal attire he always wears in public.

This is what the public find so horrible. Ordinary politicians and ordinary people of every hue can be hauled before the courts and made a show of. Of course, everyone is innocent until proven guilty, but if one throws enough muck it will stick and if a dog gets a bad name it will never go away. The big fellows receive a telephone call and are asked if they are available to come to the Garda station. What is worse, who informed the media that three Garda cars from Cobh - and what did that cost - were on their way to Ned O'Keeffe's home? Who alerted the media to be waiting at the Garda station? It was disgusting. I accept the media must do their job, but who informed them on that occasion? Why should they be informed? The man is innocent until proven guilty. If he has to be brought in for questioning, that is fine. I do not say anyone should be above the law but there should be fair play. That was not good enough, it is not good enough and it is going on wholesale.

Ordinary business people are being driven to distraction by bankers, the Revenue and all the agencies of the State. I compliment the south Tipperary coroner who spoke at the inquest of a good friend of mine who had a business of long standing. Revenue officials came to him at one o'clock one day and said they would be back at three o'clock to collect X number of euro, which he did not have. A customer came in at twenty minutes to two and found him dead, by his own hand, in his shop. That kind of bullying is going on and it is all because we are trying to pay back this bank debt, which we cannot. We did not accrue this debt. We do not owe it. We could pay back half of it, or thereabouts. I am not an expert in figures. We should pay back a manageable amount.

Every country is in the same boat. That is why people are rebelling in Greece and elsewhere. In next month's election we might see the hard left gaining support in Greece. I am not against the left but I have worries about the hard left and where it might bring us. If this spreads, what kind of Europe will we have? It might come here too. I was a supporter of the previous Government. The present Government promised to do so much. It promised to burn the bondholders but burned no one except the people. Will the people accept that the next time? I would be fearful they would not and of where they might go with their votes. We have a democracy and we must respect that. The people are entitled to vote for whoever they wish. However, we must show the cause. We cannot trick the people. They are too sensible for that and too hard-hit in their pockets and their hearts.

Perhaps the Deputy could return to the Credit Guarantee Bill.

I am speaking to the Credit Guarantee Bill. Go raibh maith agat, a Cheann Comhairle. This is all relevant to the money we do not have. We are passing the Bill, and I welcome it, but I do not want to see it hijacked by the banks. They have hijacked everything else. That is why what I am saying is relevant. Instead of the €6 billion the two pillar banks are supposed to provide annually, they are not putting in even €1 billion between them. I cannot prove that but I know from the evidence I gather from meetings in my clinics, in my social life and in my discussions with farm organisations and agricultural contractors that it is not happening. People are not going into banks because when they ring up about loans they are told to just forget it. Many people who go into banks do not get past the counter. The banks are manipulating the figures to say they have lent to so many people. Less than 40% of those who make inquiries about loans in banks get to meet the manager and discuss their business plan. The majority of those who want loans are rejected. The figure we get is not accurate.

I am pleased with the safeguards included in the Bill. I worry about who will be the contractor. One could ask why the apparatus of the State is no longer able to do such things. Is it the case that we will have to resort to a consulting company again or will we have to put it out to tender? What is wrong with us at county council level and elsewhere that we cannot do anything ourselves any longer but we have to seek outside help? I do not say outside help is bad but consultants are consuming too much energy, time and money in the State. The money must be put where it is needed, namely, to put small businesses back on the road.

I welcome the reference to qualifying enterprises. I know who they are. Anyone with any nous for business knows who they are. It is important that the fund is not hijacked and that it is guaranteed. I worry about the 2% surcharge. I accept there are no free lunches but small businesses need a clean start. In the first instance, indigenous businesses need the money to get going. They could perhaps be charged at a later date. I do not say live horse and you will get grass but small businesses are downtrodden and on their knees at the moment. They are bursting with ideas and energy but they just cannot get beyond the red tape. They cannot get loans to get up and going. We must devise a way to allow them to put their worries about paying the banks to one side and let them act as job creators and innovators which they can be and will be. The longer that is going on, the more they are being downtrodden. That is a problem. Small businesses are losing the will to carry on and they are throwing in the towel. If they do that they do not get a shilling in social welfare. I accept the Minister for Social Protection, Deputy Burton, is examining the issue. We must reward those people, encourage them and above all we must allow them to stimulate the economy and get us back on the road to recovery. We must do that at all costs.

A total of €20 billion is available in an investment bank. Deputy Mathews referred to that also. The sum of €2 billion would probably be enough given that the money would trickle down. The bank would attract deposits according as people saw it as an attractive business venture. There is money out there. People have it in all kinds of places. I would not like to see anything happen similar to what happened in Greece this week, namely, a run on our money. There is money out there and people will invest in a proper investment tool to make reasonable and modest profits. A smaller sum such as €2 billion would stimulate much activity. The money should be lent to the agriculture and commercial sector but not for property. We got badly burned with property. I know people from my class at school who are my age who were led astray. They did not have expertise but they were doing well and had a good job. Not only do they have one house but they have 20. It is a pity because a small bit of greed was involved. One has to put one's hand on one's heart and ask what they need them for. I have eight children, thank God, and we have only one house. We could not afford to buy a second house and we did not want one anyway. My daughter has built a house now and my son is in the process of buying a house. That is the way it always was. We did our best to grow.

Anyone with experience of business is aware that we all get knocks. Anyone who is in business for 30 years knows that we have had a number of recessions and we came out of them but this one is severe because of the bad banks. There is no point in codding ourselves in this House, year in and year out. We just have to deal with the issue and not have the bondholders laughing at us. They are laughing all the way to the bank because they are not affected. I am afraid that there could be trouble on the streets because people cannot take it, will not take it and should not be asked to take it. We should change our ways.

Deputies on all sides hear about what is happening. Deputy Mathews knows about banks. I had discussions with him about what we can do and what the ICC Bank did. The Minister of State is aware of that as well. We could do that again. The policy of the two pillar banks is flawed. They have had long enough since we voted on that night in September in 2008 but we have not seen any return for our vote. If I had a chance again I would vote the opposite way. Time is a great educator. It is easy to be wise after the event. The pillar banks are not fit for purpose. They are not doing the work they are supposed to do. I welcome the inclusion of the review process in the Bill and the guidelines on the type of lending, which I hope is confined to agriculture, small industry and commercial business.

I got a taxi this morning to the House from TV3. It was a 2004 vehicle and the driver was 25 years in the business. His vehicle is at the end of its life but it is going perfectly. Vehicles have to undergo all kinds of tests nowadays - rightly so. The taxi driver no longer has enthusiasm for the business. He is afraid. He has to work six and a half days a week and longer days to try to make ends meet. He does not know whether he can replace his car. He knows that if he goes to the bank for a loan he will probably be told at the front door or the counter not even to come in. That is what the banks are doing. In my county at the moment the banks are advertising on radio and in the newspapers that they are open for business. I hope they are. However, I will believe it when I see it and when I meet the people after mass, at social events or matches. There is no place we can hide from them, unless we want to hide. We cannot hide from them because there are so many people who cannot obtain finances. I refer to people of good standing who are not fly-by-nights. They were never people who did not repay what they owed, but now they are stifled. What is worse is that in recent years they have used up their pension reserves. Some of them are in their 60s now and they are really at the end of the road. This time next year they will not have any recourse. The footfall is not there and people are not spending.

I do not agree with much of what those on the left advocate. I could call them comrades. I suppose they would like to call me comrade. However, I can see that austerity is dragging people down. It is dragging us all down. It is too much. We cannot have austerity without stimulus. I hope the Taoiseach will inform us when he comes back from Brussels next week that he asked Mrs. Merkel whether she wants the same thing to happen in Ireland as happened in Greece, France and other countries. I refer to contagion among the electorate. People are sick of austerity and cannot cope with it. It is being said that people who want to vote "Yes" in the referendum on the treaty do not have the heart to go to the polling station. They voted "Yes" so many times and they voted Governments in and out but they do not have the heart or the energy anymore. They have just thrown in the towel. I am confident the Minister of State will take those views back to Government. I thank the Ceann Comhairle for his forbearance.

I congratulate the Minister, Deputy Bruton, and the Minister of State, Deputy Perry, for introducing the Credit Guarantee Bill. Deputy Perry knows at first hand the lack of credit that exists for small and medium enterprises. The Government is determined to address the issue, to allow businesses to expand, to operate on a day-to-day basis and to face the difficult economic challenges that exist, as well as to protect and create jobs in the process. The Bill is important because it provides for the much-needed introduction of a temporary partial credit guarantee scheme. The scheme will ensure there will be an adequate flow of credit in the economy to support economic recovery. Even though the banking industry has been recapitalised and restructured there is an issue with small business, in particular specialist businesses, that are not getting an adequate supply of credit.

We are aware that 96% of the goals have been achieved in the Government's action plan for jobs. That reinforces the Government's determination to encourage job creation and job retention and to help rebuild the economy. The temporary partial credit guarantee scheme will provide vital support and assistance to businesses in my constituency in Dublin North-East which are finding it very difficult to secure credit from banks.

SMEs are the backbone of the economy. It is vital that they are allowed to survive through this difficult economic climate. They are significant employers. SMEs throughout the country are struggling. The scheme will provide a lifeline to businesses which operate in sectors where banks are not particularly friendly, do not have experience and are not currently providing credit. The scheme will provide a Government guarantee for lender banks in the order of 75% on eligible individual loans to viable companies. The guarantee will only be paid where an SME defaults and will apply to the unrecovered outstanding balance. A crucial component of the scheme is its focus on viable businesses. None of us wants a situation where scarce resources are applied to enterprises which have little chance of survival in the long term. There was too much of that in the past. An annual premium of 2% on outstanding loan balances will be paid to the Department of Jobs, Enterprise and Innovation. The State will enter into an agreement with the lender and a guarantee will be given to the latter based on its portfolio of loans rather than on a loan-by-loan basis. I welcome the appointment of Capita Asset Services, a subsidiary of Capita PLC, to manage the operation of the scheme. The 800 businesses expected to benefit immediately from the rolling out of this initiative will be in a position to contribute to the recovery of the domestic economy by paying taxes and providing jobs for people currently claiming social welfare payments.

The problem of lack of credit for business was raised by almost every speaker. This time last year I was approached by a businessman who was seeking to set up a pizza business in my constituency. This individual had encountered difficulties with every bank he had approached, before one of them finally offered him a partial loan. Fortunately, he was able to proceed on that basis and the business finally got up and running some months ago. He would be much further down the road if this scheme had been available previously. By facilitating the provision of credit that is vital to every small business, it will have a positive effect on the sector and improve the competitiveness of Irish SMEs. Ireland is one of only a small number of European Union countries that do not have a credit guarantee scheme in place. By introducing these provisions the Government is ensuring Irish businesses can compete with their counterparts elsewhere on the Continent.

This is a constructive and welcome initiative for the SME sector. It has been widely welcomed, including by Chambers Ireland and the Irish Small and Medium Enterprises Association, as the beginning of a process of investment that will lead to job creation and retention. Its introduction was signalled by previous Administrations and the Government is now delivering on that undertaking. It will offer comfort to business people and help viable small businesses to get trading, employ people and contribute to the economy.

I welcome the opportunity to contribute to this important debate. I commend the Minister for bringing forward this very positive legislation which represents a small step forward in our collective endeavours to restore economic growth and create jobs. On 3 May I submitted a parliamentary question on the progress of the Bill and I am very pleased to see it finally being brought forward. Ensuring small businesses can thrive in a small open economy such as ours is crucial to our economic welfare. There are some 200,000 small and medium-sized enterprises in the State which between them employ approximately 650,000 people. With more than 400,000 on the live register, the important role played by the small business sector in the economy is clear to see. Foreign direct investment is vital to our long-term economic prospects, but promoting ingenuity and creativity within the indigenous SME sector is of equal importance.

The maximum of €150 million to be allocated annually under the credit guarantee scheme represents a moderate but concrete step in our efforts to support the small business sector. However, given that it includes no element of compulsion, the question must arise as to whether it will be sufficient to encourage our dysfunctional banking system to recommence normal lending. The data for 2011 which allow for a comparison between credit facilities withdrawn as against new lending sanctioned show that support from the banking system to the small business sector contracted by some €800 million in that year. There is a major problem with the banking system, as Deputy Peter Mathews and others eloquently outlined. As such, the credit guarantee scheme is merely a small part of what is required to drive the economy forward and encourage growth and job creation.

Deputy Mattie McGrath referred to the bank guarantee scheme introduced in 2008. I was not a Member of the House at that time, but it is clear in my mind that this was the most disastrous decision ever made by an Irish Government and the Oireachtas. It has decimated the economy. I am 29 years old and I see thousands of my generation facing negative equity and mass emigration. The bank guarantee is a crucial factor in the situation in which we find ourselves. I hope that in time those who voted for it will acknowledge that they were mistaken. My own party stood alone in opposing it and was absolutely correct in doing so. The State now controls Allied Irish Banks and has a majority stake in Bank of Ireland. As such, it must flex its muscles in an effort to ensure they return to normal banking practices. That is not, of course, to say they should return to the rampant financial speculation of the middle years of the last decade but rather that they resume their function of lending to people with viable business proposals that will lead to the creation of jobs. I hope the credit guarantee scheme will encourage them to do so. The State has pumped some €64 billion into the banks and ordinary people face the consequences of the bailout every day of their lives. It is about time the banking sector showed some semblance of interest in the future economic well-being of the country.

Before the election the Labour Party called for the establishment of a strategic investment bank and such an undertaking was included in the programme for Government. Will the Minister of State indicate when there will be progress in this regard? It is the type of economic stimulus the country needs, given that the existing pillar banks are not functioning. There is nothing new in the concept of strategic or sovereign investment which is commonplace in other countries. In France, for example, a strategic investment fund was established in 2008 in order to enhance the supply of equity to the business sector. It was endowed with an allocation of €20 billion, with the French Government, with a 49% stake, and a state-owned bank, with a 51% stake, each contributing €7 billion and the remaining €6 billion being raised by other means. For example, Renault-Nissan, which produces electric car batteries, is investing in information technology companies and electrical companies. The aim of the FSI was to stop the asset-stripping and buying out of French companies at discount prices by foreign companies - vulture investments, if you like. It also plays a role in supporting the development of small and medium-sized enterprises.

I am glad to be able to say in the House that Nicolas Sarkozy is the former French President. He did untold damage to the entire Continent through his approach to austerity and by driving vicious spending cuts and tax increases for people on very low and moderate incomes. This has had a disastrous impact, and I hope history judges him with the contempt in which I hold him and his right-wing politics. Even Mr. Sarkozy acknowledged, on 20 November 2008, that an austerity plan does nothing except depress further an economy that is already depressed. If this acknowledgment by the very architect of austerity is not a damning indictment, I do not know what is. In this country we have had swingeing spending cuts of about €12 billion. In an economy such as Ireland's, austerity is like quicksand: the harder we push, the further we sink. It is quite simply not working. All Deputies who speak to small business owners, people who are struggling on social welfare payments or PAYE workers who are struggling to get by must know that instinctively.

In Britain, for example, a strategic investment fund of €750 million was established in April 2009 by the Labour Party. It invested in UK emerging industries including low-carbon vehicles, wind and wave power and renewable chemicals. It provided seed capital for the roll-out of swift broadband to almost every home and business, and for high-tech companies and advanced manufacturing, including printable electronics, industrial biotechnology and low-carbon aircraft engine technology. It was a limited fund which was essentially designed to assist and speed along new developments and innovations in technology. It is clear that such funds can play a major role. That investment fund, which was established by our sister party, the Labour Party in Britain, played a major role in supporting new and environmentally friendly technologies. It was, if you like, a green stimulus plan. There is much potential for a similar fund in Ireland. For example, my Labour Party colleague Senator John Kelly has introduced a Bill dealing with wind energy, which I welcome. That is the type of innovative proposal this country needs if we are to recover.

I welcome and support the Bill, but if we continue to strangle domestic demand in our economy, it is small business that will be hit hardest. Such businesses will have to lay off or reduce the hours of their workers. That is a damning indictment of the politics and policies of austerity, which do not work. I have heard this time and again in public debate, but I do not think it can be said enough. What everyone in this House wants is to create jobs and build a society in which everyone has equality and in which wealth is redistributed from those who have significant amounts of private wealth and shared with people who are struggling. I am sure Deputies see in their advice clinics week after week people who cannot pay their rent at the end of the month, who cannot heat their homes or who cannot give their kids a packed lunch for school. This is a reality for tens of thousands of people the length and breadth of the country. Some of them are self-employed. Some may have a car in the drive, but they cannot afford to put petrol in it. We must be cognisant of what is happening in the real economy. In fairness, this Bill recognises that in its own moderate way.

I agree with comments made recently, on May Day, by the general secretary of the European Trade Union Confederation, Bernadette Ségol, who said:

Making jobs insecure, and especially jobs for young people, is not a solution to the crisis. Flexible employment contracts and low salaries do not pave the way to growth. The ETUC recommends an economic recovery plan that supports quality employment. In the face of populism, it is vital to build a Europe of solidarity.

This is important for small businesses that are under pressure to ensure they do not succumb to the drive to lower the wages and conditions of their own employees. Ultimately, if a company is making products or selling goods or services, it simply will not thrive if there is no one there to purchase them. It is absolutely critical that we institute a change in how we deal with the economic crisis. Unfortunately, that has not happened to date, although there have been some welcome steps forward, including this Bill.

Other contributors touched on the broader economic context, and so will I, if I may. In the 1980s, we had a significant revisionist phase which played a role in reassessing the history and future of our island. I fear that at the moment we are encountering a revisionist phase with regard to the economic crisis. We are being told that Ireland's economic problems are a consequence of public spending gone wild and lavish expenditure on health, education and social welfare. That is absolute nonsense which bears no resemblance to the facts. In 2010, Government revenue was 34% of GDP. The only countries with a lower proportion were Bulgaria, Romania, Lithuania and Slovakia. Certainly, it was not investment in health, education and transport that created our economic crisis. Incidentally, the Irish Congress of Trade Unions estimates that by 2015, Ireland will be bottom of the league in terms of investment and public expenditure. I hope that in his earlier contribution Deputy McGrath was not being flippant about ethics in public office. The cause of our economic crisis was threefold. First, we had a completely deregulated banking system which invested irresponsibly and was purely driven by greed and corruption. The second reason was a planning system in which county councillors, particularly those from Fianna Fáil and Fine Gael although I do not include all councillors of those parties, participated in massive rezoning of land. My area of Dublin West saw land rezoned day in and day out, purely to inflate its price. We debated the Mahon report recently in the House. The third reason for our economic crisis was right-wing, Fianna Fáil economics which resulted in the provision of tax breaks to very wealthy developers for projects such as hotels, when that money should have been used to invest in social infrastructure such as child care and education facilities, or in our health service. If that money had been used correctly, we would now have a much firmer base on which to make adjustments. I accept that adjustments must be made and that we must meet our international obligations, but the way in which we do that is a political choice. We need to choose options that will create growth and stimulate our economy. If we listen to economists from the Nevin Economic Research Institute and TASC, we will find that the balance between the types of taxation and the spending cuts we are implementing, as against what we should be doing such as closing off property-based tax loopholes, is wrong. I hope we will move towards an evidence-based approach to economic recovery. As far as I understand it, the EU-IMF troika has always been crystal clear that budgetary policy and the balance between tax and spending are matters for the Government.

It is clear that as a country we have choices. The credit guarantee scheme does provide some options for us in terms of supporting small businesses, but how can we compel the banks to lend?

Commercial rates are crippling small businesses and many are struggling to pay them. In addressing the problem of upward-only rent reviews we would have dealt with this issue. The Government considered it very closely. It was given advice that addressing upward-only rent reviews was not possible in the current constitutional and legal framework. Surely there will be an opportunity at the constitutional convention the Government has established to determine whether a referendum or other mechanism is necessary to tackle the issue of upward-only rent reviews. In my constituency of Dublin West retailers in the Blanchardstown Centre tell me every day that a review of the issue would have a significant impact on them, their workers' job security and, most important, the local economy.

If the country is to recover, it is critical that we examine the relationship between the economy, the dysfunctional banking system and generating jobs and growth. In that context, the Government must return to the promissory notes issue.

Debate adjourned.