A recommittal is necessary in respect of amendment No. 1, which is in the name of the Minister, and the other related amendments as they relate to the motion on the instruction to the committee. Amendments Nos. 1 to 3, inclusive, are consequential on amendments Nos. 6 to 9, inclusive.
Credit Guarantee (Amendment) Bill 2015: Report and Final Stages
Bill recommitted in respect of amendments Nos. 1 to 3, inclusive.
I move amendment No. 1:
In page 3, line 12, after “together;” to insert the following:
“to amend the Employment Equality Act 1998, the National Minimum Wage Act 2000, the Workplace Relations Act 2015 and the Companies Act 2014;”.
Amendment No. 1 is required to amend the Long Title of the Credit Guarantee (Amendment) Bill 2015 to reflect amendments to the Workplace Relations Act 2015 and certain other enactments.
Amendment No. 6 is required to insert a new section 101(4A) into the Employment Equality Act 1998. As I said earlier, this amendment was initially provided for in section 83(1)(m)(iii) of the Workplace Relations Act 2015; however, this provision was inadvertently deleted by section 20(n)(i) of the National Minimum Wage (Low Pay Commission) Act 2015 with a number of other amendments to the Workplace Relations Act that were being effected. This amendment is necessary and ensures, in the new workplace relations adjudication framework, that a complainant cannot recover both under the Unfair Dismissals Act and the Employment Equality Act in respect of the same dismissal. The new section 101(4A) provides that a person who has referred a dismissal complaint under both the Unfair Dismissals Act and the Employment Equality Act has to elect between one or the other by a prescribed date or date to be inferred from regulations by the Minister. If the person fails to elect by this date, the discriminatory dismissal complaint will be deemed to have been withdrawn. It is therefore necessary to make provision for section 101(4A) to be reinserted into the Employment Equality Act 1998.
Amendment No. 7 is required to correct a typographical error in section 34 of the National Minimum Wage Act 2000. Paragraph 13 in Part 1 of Schedule 7 of the Workplace Relations Act 2015 amended section 34 of the National Minimum Wage Act 2000. However, as a result of a typographical error, there are currently two subsections (6) in section 34 of the National Minimum Wage Act 2000. The proposed amendment to section 34 will correct this error.
On amendment No. 8, the amendment in paragraph (a) relates to section 37 of the Workplace Relations Act 2015. Section 37 of the 2015 Act makes provision for the transfer of the power to prosecute for employment-related summary offences under relevant enactments from the Minister for Jobs, Enterprise and Innovation to the Workplace Relations Commission. This amendment is required to make provision for the transitional arrangements that will apply for the transfer of this power from the Minister to the WRC. The amendment will have the effect that the new arrangements for the prosecution of offences, as provided for in section 37, will only apply in respect of offences committed or alleged to have been committed after the commencement of section 37.
The amendment in paragraph (b) relates to an amendment to paragraph 5, Part 2 of Schedule 1 of the Workplace Relations Act 2015. This amendment is necessary to amend an incorrect reference to the Employment Permits Act 2003, which should have read the Employment Permits Act 2006.
On amendment No. 9, the Companies Act 2014 was enacted on 23 December 2014 and commenced on 1 June 2015. The Act consolidated the previously existing 17 Companies Acts into one Act. One of the Acts which the 2014 Act repealed and replaced was the Companies (Auditing and Accounting) Act 2003. The 2003 Act established the Irish Auditing and Accounting Supervisory Authority, IAASA and, in section 14, it provided that this authority could levy prescribed accountancy bodies for the purposes of meeting expenses properly incurred by it in performing its functions. Section 916 of the Companies Act 2014 re-enacted section 14 of the 2003 Act, but inadvertently limited the application of moneys from the levy. This amendment will ensure that the IAASA can levy the prescribed accountancy bodies for the purposes of meeting expenses properly incurred by it in performing its functions as was intended.
Amendment agreed to.
I move amendment No. 2:
In page 3, line 18, after “Act” to insert “(other than Part 4)”.
Amendment agreed to.
I move amendment No. 3:
In page 3, line 22, to delete “This Act” and substitute “Parts 1 to 3”.
Amendment agreed to.
Bill reported with amendments.
I move amendment No. 4:
In page 7, between lines 34 and 35, to insert the following:
“(5) The Minister will commission a report within 3 months of the Act becoming operational outlining how the Credit Guarantee Scheme can help make it easier for businesses that owe money to banks exiting the Irish SME market to refinance those debts with domestic institutions.”.
This is a repeat of amendments I proposed earlier. The original intention of the credit guarantee scheme when it was introduced in 2012 was never met. It was very clear from early in the scheme's life that it was not going to work. In particular, through no fault of the Minister of State's Department, we were left waiting for this legislation. In the meantime, a serious problem arose for businesses that were being forced to refinance their debts because their financial institution was exiting the market. They were being thrown to the pillar banks with little opportunity, or were being sold off to various vulture funds.
While the Minister of State has extended the provisions of the scheme to allow for that, I am anxious that this particular cohort would be the focus of some attention by those institutions promoting the credit guarantee scheme. I would like to get a sense of the scheme helping those businesses, and to see that they are actually left to the responsibility of one of the pillar banks as opposed to one of these funds that are entering this space. Commissioning this report and putting this provision into the Bill will allow us to assess that.
I thank Deputy Calleary for raising this proposed amendment, which he also tabled on Committee Stage. As I indicated then, I am not accepting it because this specific area is not appropriate for such legislation. The Strategic Banking Corporation of Ireland Act 2014 does not empower the corporation to provide for loans direct to SMEs, as the Deputy knows, and any change to this is a matter for the Minister for Finance. It is achieved through on-lenders. The approach of the Bill will work to broaden out the attraction of the scheme and the type of financiers that could be involved in the credit guarantee scheme.
More generally, I assure Deputy Calleary that my Department, the banks and other finance providers and the SBCI will actively promote the revised system and ensure that businesses are aware of the possibilities available under the new enhanced schemes, and that the Department will report publicly and transparently on progress in this regard on a quarterly basis.
Amendment put and declared lost.
I move amendment No. 5:
In page 7, between lines 34 and 35, to insert the following:
“(5) (a) The Minister shall work with his colleague in the Department of Finance to facilitate a role for State promotional financial institutions such as the Strategic Banking Corporation of Ireland in the scheme in order to enhance the provision of credit to SMEs directly.
(b) The Minister shall be empowered to give counter-guarantees designed to enable State promotional financial institutions access to match guarantee facilities from EU funding sources such as Horizon 2020 funds earmarked for SMEs and the European Fund for Strategic Investments.”.
This amendment is similar but slightly different. Picking up on the Minister of State's comments about the strategic banking corporation, the commitment he gave as a member of the Labour Party and that was given in the programme for Government - remember that - was that a State bank would be established which would be a separately functioning business bank to lend directly to enterprise. Instead, we got the SBCI which is a far fluffier version of what was proposed.
What we need is something to challenge the very cosy consensus that now exists between our remaining banks around business services. That cosy consensus has resulted in business banking fees being the highest in the eurozone, and in services being withdrawn. Those in the service or retail sectors in towns across the country are being told on what days they can and cannot lodge coin. That has knock-on consequences for security. The price of lending and asset financing in this jurisdiction is far higher than in other eurozone countries, and this is directly because of a lack of competition. What the SBCI should be doing is challenging that lack and breaking the situation up. What it is actually doing is making the situation even cosier by lending through the existing pillar banks and directing businesses to go to those banks that have let them down in the way that they have.
The SBCI needs more teeth. It is certainly beginning to have an impact and I give it credit for that. However, its role as an agent of the existing pillar banks is hampering its standing and its ability to do what we want. We need the commitment in the programme for Government to be honoured in the form of a separate, State backed enterprise bank out there fighting on the streets.
One of the great failures of this Government concerns credit to small business and the debt distress that exists among thousands of small business owners. It is a fact that, in creating two pillar banks, the Government created an oligopoly. It should be no surprise that those pillar banks display oligopolistic behaviour. In other words, they have great supplier power while customers right through the State have very weak purchaser power. That is the nature of the market. Sometimes it is hard for governments to do things, but one thing they can do is structure the market. A very simple way of breaking down that oligopolistic power would be for the Government to allow the credit union system to function properly as regards SMEs.
From what I can see, the credit union sector is being held back and run down instead of being strengthened.
We launched a detailed public banking system document based on the public banking system that exists in Germany. This would allow for more suppliers in the market and reduce the powers of the two pillar banks, which I believe would change the behaviour of the two pillar banks enormously. We see the behaviour of those banks as they withdraw from small towns and stop the credit flow to small businesses. This is why the Government has had to create the whole ecosystem of funding models, none of which, unfortunately, has worked satisfactorily. That is not by accident, given there were certain constraints that prevented them from acting properly.
Across the State many small businesses are either at the edge of a debt cliff or seriously hampered from development because of excess debt. During the week a small but well-known business, McElhinneys of Athboy, County Meath, was in court with Bank of Ireland in regard to a major debt. Receivers moved into the company's building last week, which led to altercations in which people were injured. Allegations have been made and people have gone to the Garda, which is in the middle of this process.
I have stated from the start of all of this, five years ago, that the Minister should have Enterprise Ireland create a small department of individuals who would go into small businesses that are in debt distress and help them to function. They should identify what element of the business is functional and separate it from its toxic debt, so the business and jobs could be saved. The Minister of State will know of another business in Meath, Spicer's, which was on the go since the 1830s. It survived famines and wars but did not survive this credit crunch.
I want the Minister to consider ways of improving the credit guarantees but also to make sure that the whole banking market is increased in size and is moved towards perfect competition and away from oligopoly.
In regard to Deputy Calleary's amendment No. 5, we debated the role of the SBCI on Second Stage and Committee Stage. In the course of the latter, I introduced a comprehensive new Part 3 to the Bill. This contains provision for the SBCI to work with the Minister through this legislation to continue to enhance the provision of credit to SMEs and to provide a role for the Minister to be able to give counter-guarantees intended to enable the SBCI to unlock funds from EU sources in order to share the risks across the banks, the SBCI, the Minister and the potential EU sources. I believe this is an important new function which will leverage considerable resources from EU programmes, such as the COSME and Horizon 2020 funding that has been earmarked for SMEs, as well as the European Fund for Strategic Investment administered by the European Investment Bank and the European Investment Fund, probably better known as the Juncker plan.
Opportunities exist and we are providing for those within this legislation in order to leverage and unlock funds from EU sources and share the risk across the system. Those innovations have gone a large way towards addressing our shared view for an active role for the SBCI in this area and ensuring that greater access to EU funding for SMEs is provided in an imaginative and innovative way. I hope the Deputy would agree with me on this.
The credit situation for small businesses is improving. The Department monitors this very closely and works with the business representative organisations, the Department of Finance, the SBCI and others to make sure we can achieve our ambitions in terms of finance for growth for the SME sector. Nobody needs to be reminded why we have two pillar banks in this country. That aside, I expect we will see very innovative forms of competition emerging over the next period of time. Just after its establishment, the SBCI is playing a very significant role in terms of providing new sources of funding and new opportunities for SMEs, including lower cost funding to financial institutions being passed on to SMEs and market access for new entrants to the SME lending market, thereby creating real competition. I believe this is creating a much more dynamic environment than was hitherto the case.
I look forward to reviewing figures from the SBCI over the next period as I believe it will be a very significant success. However, it is also important that we reflect on the success of the credit guarantee scheme, notwithstanding the fact that we have reviewed the scheme and taken on board the points made in that review to make sure the scheme achieves its objective. By and large, it has worked. A considerable number of jobs would not have been maintained or created if it was not for the fact we have this credit guarantee scheme, through which some €16 million in funding has been unlocked, supporting a considerable number of jobs across the country.
I share the Minister of State's wish that the SBCI would unlock any funds that are available and that we would get those funds to business. However, the difficulty is how we get them to business, given we are getting them through the existing pillar banks, which are not competitive. An Irish-based business will pay more for EU funding through COSME than a UK, Spain or Germany-based business because of the structure we have. If we instead had the SBCI operating in its own right, using those funds to lend directly to business, all of our shared wishes in regard to SME finance would be met far more quickly. I would also highlight that the latest ISME report on SME finance showed a weakening of access in the last quarter of 2015, a point we also need to be aware of. To have an institution that lends directly to business as opposed to lending in a wholesale manner is only fulfilling the commitment the Minister of State signed up to in the 2011 programme for Government.
Amendment put:
The Dáil divided: Tá, 25; Níl, 52.
Tá
- Aylward, Bobby.
- Calleary, Dara.
- Collins, Joan.
- Colreavy, Michael.
- Crowe, Seán.
- Dooley, Timmy.
- Fitzmaurice, Michael.
- Flanagan, Terence.
- Fleming, Sean.
- Grealish, Noel.
- Halligan, John.
- Healy-Rae, Michael.
- McGrath, Finian.
- Moynihan, Michael.
- Naughten, Denis.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Smith, Brendan.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Níl
- Barry, Tom.
- Breen, Pat.
- Bruton, Richard.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Carey, Joe.
- Conaghan, Michael.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Creed, Michael.
- Daly, Jim.
- Deenihan, Jimmy.
- Deering, Pat.
- Donohoe, Paschal.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- Ferris, Anne.
- Flanagan, Charles.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Heydon, Martin.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kenny, Seán.
- Kyne, Seán.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Lyons, John.
- McCarthy, Michael.
- McEntee, Helen.
- McFadden, Gabrielle.
- McGinley, Dinny.
- Mulherin, Michelle.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Mahony, John.
- O'Reilly, Joe.
- Phelan, John Paul.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ring, Michael.
- Shatter, Alan.
- Stagg, Emmet.
- Twomey, Liam.
- Wall, Jack.
Tellers: Tá, Deputies Dara Calleary and Seán Ó Fearghaíl; Níl, Deputies Emmet Stagg and Paul Kehoe.
Amendment declared lost.
Bill recommitted in respect of amendments Nos. 6 to 9, inclusive.
I move amendment No. 6:
In page 19, after line 28, to insert the following:
"PART 4
UNRELATED MISCELLANEOUS AMENDMENTS TO OTHER ENACTMENTS
Amendment of section 101 of Employment Equality Act 1998
17. Section 101 of the Employment Equality Act 1998 is amended by the insertion of the following subsection:
“(4A) (a) Where an employee refers—
(i) a case or claim under section 77, and
(ii) a claim for redress under the Act of 1977, to the Director General of the Workplace Relations Commission in respect of a dismissal, then, from the relevant date, the case or claim referred to in subparagraph (i) shall, in so far only as it relates to such dismissal, be deemed to have been withdrawn unless, before the relevant date, the employee withdraws the claim under the Act of 1977.
(b) In this subsection—
‘Act of 1977’ means the Unfair Dismissals Act 1977;
‘dismissal’ has the same meaning as it has in the Act of 1977;
‘relevant date’ means such date as may be prescribed by, or determined in accordance with, regulations made by the Minister for Jobs, Enterprise and Innovation".".
Amendment agreed to.
I move amendment No. 7:
In page 19, after line 28, to insert the following:
“Amendment of section 34 of National Minimum Wage Act 2000
18. Section 34 of the National Minimum Wage Act 2000 is amended, in subsection (6) (inserted by section 52(1) of, and Part 1 of Schedule 7 to, the Workplace Relations Act 2015), by renumbering that subsection as subsection (7).".
Amendment agreed to.
I move amendment No. 8:
In page 19, after line 28, to insert the following:
“Amendment of Workplace Relations Act 2015
19. The Workplace Relations Act 2015 is amended—
(a) in section 37, by the insertion of the following subsection:
“(3) This section shall not apply in relation to an offence committed, or alleged to have been committed, before the commencement of this section.”,
and
(b) in Part 2 of Schedule 1, by the substitution of the following paragraph for paragraph 5:
"5. Section 26(3) of the Employment Permits Act 2006".".
Amendment agreed to.
I move amendment No. 9:
In page 19, after line 28, to insert the following:
“Amendment of section 916 of Companies Act 2014
20. Section 916 of the Companies Act 2014 is amended, in subsection (1), by the substitution of "section 915(1)" for "section 915(2)".".
Amendment agreed to.
Bill reported with amendments.
Bill, as amended, received for final consideration.
Question proposed: "That the Bill do now pass."
In the House last November I stated the Government's view that finance was the lifeblood of every business and, in particular, was essential for working capital and in feeding investment, expansion, growth and job creation. The Government has focused on all of these elements in the past five years and the results are now being seen the length and breadth of the country. In 2012 the Government introduced legislation dealing with credit guarantees to free up access to finance at a very difficult time for small and medium enterprises, SMEs. It kept the operation of the scheme under review. The review process pointed to the need for reform and to expand the scheme. The Bill will do this by extending credit guarantees to govern non-traditional or non-bank sources of finance such as lessors, factors, invoice discounters and others. There will also be a rebalancing of the risk elements between the State and the extended pool of finance providers to make the scheme a more attractive proposition for the latter. The Minister will be empowered to give new counter-guarantees to promotional financial institutions such as the Strategic Banking Corporation of Ireland designed to facilitate and enhance risk sharing between all finance providers and access to available EU funding.
This legislation, particularly those aspects which facilitate the leveraging of EU funding, will significantly benefit firms, employees, SMEs and the economy at large. It will lead to the generation of jobs and the achievement of the targets we set out in our ten-year enterprise strategy, Enterprise 2025, and the Action Plan for Jobs 2016 which we launched this week. This will help us to achieve our objectives for jobs growth and exports.
I thank all Members for their help in passing the Bill and their contributions during its passage. It is a major contribution to the well-being of citizens and the economy.
I welcome the review of the scheme and commend the officials involved and the Minister of State, in particular, for the energy he brings to dealing with the issue. The legislation is a snapshot of much of the Government's spin and waffle on job creation and support for SMEs. The scheme was launched in 2012 by the Taoiseach, the then Tánaiste, about whom I had forgotten, and the Minister, Deputy Richard Bruton. It was indicated that there would be lending of €100 million, but it has struggled consistently to do this. As I have stated previously, our ability to respond as a Parliament when something is not working must be enhanced. That is a cross-party issue. The scheme could have done much more had it been changed quickly, although I know that is not the fault of the Department. We must look at staffing in the Office of the Attorney General with respect to the availability of legislative legal skills in order that the process can be much quicker. The scheme should have had such a role to play, particularly in the refinancing of debts for exiting financial institutions. Unfortunately, I fear that opportunity may have been lost. We called a vote earlier to emphasise that a commitment had been made in the programme for Government to set up a separate State enterprise bank rather than a wholesaler of EU funding to be provided for existing State banks. Between the pillar banks, when it comes to servicing business, there is a cosy consensus which leads to a lack of services for business. That consensus must be challenged and broken. There should be a separate Strategic Banking Corporation of Ireland with the ability to get out on the street.
I say, "Well done," to the Minister of State and his officials, but we must ensure the next Dáil will be empowered in order that changes may be made and our legislative response to bad or weak legislation will be quicker than it has been on this occasion.
Gabhaim buíochas leis an Aire agus le foireann na Roinne mar gheall ar an mBille seo. Is trua é go mbíonn meon an Rialtais maidir le tuairimí an Fhreasúra dúnta i gcónaí. Rinneamar a lán iarrachta feabhas a chur ar an mBille seo, ar feadh trí uair a' chloig, agus níor éist an Rialtas linn ag an am. Chuir sé bac ar ár gcuid tuairimí. Is trua é sin. Ní bheadh muid anseo inniu ag plé an Bhille seo dá mbeadh meon níos oscailte ag an Rialtas maidir leis seo.
There are thousands of businesses around the country that have invested everything they have to keep them open. People have remortgaged their houses and sold any asset they had. They have not taken a wage from their business for perhaps a year or two in order that their business can struggle through this process. They have had this difficulty because the Government, in a pig-headed fashion, decided there should only be two pillar banks in the State.
It decided that 85% of the banking market will be in their hands. The Minister of State said he expects to see the other options I put to him earlier arrive in the market in the future. Those other options should be proactively encouraged and developed and we should ensure there is space within the market. These options are the credit union sector, the public banking sector and the crowd-funding sector, which is at a very low level of development in this State compared to other countries.
Every day, there will be businesses like McElhinneys in Athboy with 30 staff which will be teetering on the edge of existence, which will be battling their way through the courts, which will be seeking to negotiate with the banks and which will, in many cases, be turned down and close. The Government will persist in running most of the credit facilities it has created through those same banks. It is time we radically changed the banking market into a much healthier one. When people measure and analyse this Government on this issue in years to come, the failed and broken nature of the banking system will be seen as one of its major outputs.
Question put and agreed to.