Credit Guarantee (Amendment) Bill 2020: Second Stage

I move: "That the Bill be now read a Second Time."

I am pleased to bring forward the Credit Guarantee (Amendment) Bill 2020. This is another important piece of legislation that is part of the Government's efforts to help the wider enterprise sector meet the enormous challenges presented by Covid-19. I thank our colleagues for their co-operation in helping to bring the Bill to the House this week so that we can get through it as quickly as we possibly can. We have discussed this as part of the debate on the Microenterprise Loan Fund (Amendment) Act 2020. I thank colleagues for their co-operation on that measure too. It is important we respond as quickly as we possibly can to the needs of businesses and employees who want to get up and running and sustain their jobs.

The purpose of this Bill is to make certain amendments to the Credit Guarantee Act 2012, as amended, in order to help businesses access essential finance through their banks and other financial institutions. Finance is needed as a result of the Covid-19 crisis, which as we all know is having a devastating effect on communities, villages and towns in every county. It is having an impact on jobs and businesses and we are responding in numerous ways with many interventions. The Credit Guarantee (Amendment) Bill 2020 will really help us to facilitate that response and help us to help those businesses that need our help.

I will start by explaining why this Bill is so necessary. Covid-19 has had a devastating impact on all parts of our society and our economy since early this year. Our enterprise sector has been dealt a severe blow. Many businesses have had to close their doors for months, with revenues drying up overnight. Hundreds of thousands of people are out of work and many are seeing their wages reduced. We continue to introduce measures to avoid mass unemployment and a wave of insolvencies.

Due the unprecedented nature of the shock to the business environment caused by the outbreak of Covid-19, my Department and its agencies have worked hard to help businesses in meeting the enormous challenges presented by the pandemic both locally and globally. Apart from my own Department and all the other Departments that have come together, I want to thank all the business organisations and business representative bodies across many sectors that have worked with our Departments in recent months. They have suggested ideas and interventions and worked with us on how to manage the back-to-work protocols and get their doors open again. These bodies have been around the table from a very early stage, helping our Department and other Departments. I thank the various organisations for their effort. It is in the nature of business that we will not agree on everything that comes forward, but the co-operation and the response in all sectors has been immense.

All our Departments and agencies have been focused on various initiatives that were announced by the last Government. The credit guarantee was one of those announcements, along with legislation we are bringing forward this week. All of those Departments and agencies have also been contributing to the July stimulus plan, which will hopefully be announced in the next couple of days.

The work has so far included the roll-out wide range of measures and advice for businesses, engagement with stakeholders, economic analysis and the provision of evidence to the Government on the needs of business and the impacts in the wider economy, while also continuing with our regulatory and governance functions. While the number of people on the Covid-19 pandemic unemployment payment thankfully continues to fall week on week, the scale of the crisis is unprecedented. Despite the challenges we have faced to date and those yet to come, with returning customers comes renewed hope for our businesses and their staff. Different towns and villages have given varying feedback on the rate of return, but we know that many sectors are still under immense pressure and will be for the foreseeable future.

As society and the economy start to prudently reopen, businesses need support to restart. Initially they may have to operate at lower levels of activity than before but hopefully over time they will be able to increase activity again and ultimately expand. As was said in the previous debate, this is about trying to survive and to be in a position to grow and thrive as we recover from Covid-19. There are already some welcome signs of improvement in business activity and the economy. However, sectors that employ many people, such as tourism, hospitality, the leisure industry, arts, entertainment and other services that rely on social interaction, remain in serious difficulty and their recovery prospects are uncertain.

Getting smaller businesses like hairdressers, barbers, cafés, play centres and restaurants back open is not just vital for our economy. It is also important to the emotional well-being of our people. The impact on small and medium-sized enterprises, SMEs, has been enormous. SMEs are the backbone of Ireland's economy, representing 99.8% of business activities in Ireland. In May 2019 there were 238,000 SMEs in our economy, employing more than 1.3 million workers at a time when overall employment stood at 2.3 million. These enterprises are spread throughout the country, in both urban and rural areas, and represent a vibrant and diverse range of economic activity. Our SMEs have already faced huge challenges in dealing with previous economic difficulties and more recently in preparing for Brexit. They have shown that they are adaptable, innovative and agile in their responses to many challenges, but they also have specific needs when compared with other areas of the economy. These needs are what we are trying to address.

The Economic and Social Research Institute, ESRI, recently published new analysis of data from the Central Statistics Office, CSO, which shows the vital importance to the economy of the domestically-owned sector as a whole. We have touched on this in recent debates in both Houses of the Oireachtas. The contribution from all sides recognised the importance of SMEs to our economies, communities, towns and villages. Members noted the effort they put in on a daily basis not only to provide goods and services, but to respond to our community needs. The overall contribution of the domestically-owned sector to net national product, NNP, in 2018 was just under €117 billion, accounting for 79% of total NNP, with foreign-owned enterprises contributing €31 billion, or 21% of the overall total NNP when repatriation of profits to their foreign owners is taken into account.

In the three weeks since we took up our new roles in the Department with responsibility for enterprise, trade and employment, the Tánaiste, Deputy Troy and I have mainly focused on preparing the July stimulus package along with other Departments. As the Government has previously said, it will be radical, of scale and far-reaching. It is part of a package, building on supports that have already been announced in recent months. More long-term interventions will be introduced as we develop the three-year economic plan along with the budget in October of this year.

Before I move on, I would like to thank those Deputies and Senators who offered their ideas on the July stimulus plan in writing, in conversation and during the debate in both Houses on the Microenterprise Loan Fund (Amendment) Act 2020, which was held two weeks ago. As I noted at the time, they may not all be workable and some may take more funding than is available or may take a long time to put into motion. However, all were noted and reviewed to see what additional steps we could take together. If suggestions do not feature in the July plan, we can work on them as part of the budget or the three-year plan in October.

In considering the various analyses, we see five areas in which we should focus on in helping our enterprises in the future: income support; direct grants for businesses; cheaper finance; new opportunities for future job growth; and support for the hardest-hit sectors. This will include a specific focus on youth unemployment. It was said in previous debates, predominantly in the Seanad, that we have to focus on getting our young people back to work and ensuring they are not left behind.

I recognise that many of the Members in the House today were here when we brought forward plans in the period from 2008 to 2011, when it was very difficult to get young people back into work and education and keep them close to the system. It took longer than it should have done to address those issues, and that cannot happen again. This time, we are very clear on the need to make sure that our response deals with potential youth unemployment.

My Department and its agencies have worked hard since the arrival of Covid-19 to help businesses overcome the challenge presented by the pandemic. The impact on SMEs in particular has been enormous. We have, in effect, had an economic pandemic following on the heels of a health pandemic. So far, the Government has introduced, on behalf of the taxpayer, a €12 billion package for firms of all sizes. We have already implemented a range of measures and schemes, including wage supports, advice, grants and loans for enterprise. We recognise that this is not enough. Groups representing the SME sector and businesses in general explained the need for assistance early in the Covid-19 crisis, with a particular focus from an early stage on liquidity. Today, we are debating legislation that will make the amendments required to implement part of that liquidity approach by way of implementing a specific Covid-19 credit guarantee scheme. This will help many more SMEs than the existing scheme because it is much larger and because the State is guaranteeing 80% of the loans included in the scheme.

The Covid-19 credit guarantee scheme will expand the cohort of eligible businesses to include primary producers, namely, farmers and fishers, located throughout the country. It predates my time in this Department but food producers and farmers in my own area, in counties Meath and Westmeath, were always saying they would like to have access to this type of support if they ever needed it. We recognise that there was not such a big call on the existing credit guarantee scheme over recent years. The scheme was there if it was needed and there was always a demand from other sectors to be able to avail of it. They wanted to be able to access it if they ever needed something to fall back on. I am glad that this legislation is responding to that request for inclusion.

The new scheme will also include small mid-cap companies with up to 499 employees. This is something which we can do under flexibilities available from the European Commission under its temporary framework on state aid, which was introduced to respond to the Covid-19 pandemic. The Microenterprise Loan Fund (Amendment) Act 2020, which was debated and passed by both Houses two weeks ago, was introduced to increase lending to the very smallest enterprises, coming directly from the Slate through Microfinance Ireland. I noted during that debate that we were effectively discussing a State-owned bank, because that money is channelled through Microfinance Ireland and the local enterprise office, LEO, system, whereas the credit guarantee scheme applies to all retailers, which are on every street in the country, enabling them to reach out to the different companies and access the different loans once the guarantee is behind them.

The Bill before us today is aimed at putting in place a State-backed guarantee so that businesses which employ up to 499 people can go to the banks and other participating financial institutions that are lending across a range of financial products. As part of state aid requirements, the businesses will pay a fee to the State for a guarantee related to their borrowing. If a business defaults in its repayment of those loans or overdrafts, the lender can then call in the guarantee from the State, which will cover 80% of the outstanding debt. The lender will still have to carry 20% of the default itself. The State is providing significant certainty to the banks with this guarantee as we also propose to remove the portfolio cap for the financial institutions, which will see the removal of what was previously seen as a barrier and enable the banks to put more money through the system.

Given these measures, the Tánaiste has been clear in recent meetings with the chief executive officers of the three main banks, namely, Allied Irish Banks, Bank of Ireland and Ulster Bank, that the Government expects a significant reduction in the interest rate charged to enterprises for the loans and other financial products covered by the scheme. As I indicated, a range of products will be covered. At the moment, only those offered by the three main banks come under the scheme, but it will be available to all other lenders. We have focused at the start on the three main banks because they cater for approximately 90% of all lending to SMEs.

I will go through the Bill quickly section by section. Section 1 provides that the Act of 2012 refers to the Credit Guarantee Act 2012. Section 2 amends section 2(1) of the 2012 Act to provide for the inclusion of a new definition of a Covid-19 credit guarantee scheme in that Act, which is required in respect of changes made elsewhere in this Bill.

Section 3 amends section 3 of the 2012 Act to allow for the extension of classes of enterprises which can qualify for the Covid-19 credit guarantee scheme to include small mid-cap companies. Primary producers - farmers and fishers - are also to be included in the scheme, but this will be done through the extension of classes of SMEs which qualify for the scheme through the statutory instrument establishing the Covid-19 credit guarantee scheme

Section 4 amends section 4 of the 2012 Act to include the new credit guarantee scheme within subsections (1) and (2) of that section, thus giving the Minister the power to give guarantees. This section also disallows subsections (3) and (4) of section 4 of the 2012 Act for the purposes of the Covid-19 credit guarantee scheme, as different provisions are being made for those aspects through the new section 4A which is being inserted by section 5 of this Bill. The existing scheme is subject to a portfolio cap of 13% under the current legislation, but there is no portfolio cap for the Covid-19 scheme. I understand this change is of great significance for a lot of my colleagues in the House. The existing scheme also has a maximum yearly credit amount which can be guaranteed of €150 million, whereas the Covid-19 scheme has an overall maximum credit amount of €2 billion. This is a major increase in the amount of funding being put behind the new scheme. While it is important to create as much flexibility as we can for the Covid-19 scheme, we do not want to interfere with the terms and conditions of the existing scheme as it will continue once the new scheme has expired and must continue to comply with the normal EU state aid rules.

Section 5 introduces a new Section 4A into the Act of 2012 which gives power to the Minister to give guarantees in accordance with the Covid-19 credit guarantee scheme. The new scheme will be open for guarantees to be put in place until 31 December 2020 or a later date, not later than 31 December 2021, as ordered by the Minister with the consent of the Minister for Finance and the Minister for Public Expenditure and Reform. This allows for flexibility if the European Commission extends its temporary framework on state aid, allowing us to extend the scheme as required. The temporary framework is in situ until the end of this year, but we will monitor it carefully and react if needs be. The guarantees will not extend beyond six years in duration, which is a requirement of the state aid rules. The maximum amount of credit to be covered by the guarantees will not exceed €2 billion and the Minister's liability in respect of those guarantees will not exceed €1.6 billion, in line with the 80:20 risk share.

Subsection (5) includes definitions relevant to the scheme. I understand colleagues have submitted amendments in respect of the six-year limit, but to be clear, that limit is a requirement under the scheme as it stands. That is what we have to work with under the state aid rules. There are other schemes, such as the future growth loan scheme, which allow for longer term loans, and they have been quite popular. As I mentioned earlier, the Government is working on making sure there are a range of different measures available to help businesses according to their different needs. I am conscious of the case being put forward to have a longer term than six years. We are trying to make sure there are different products on the market which will cater for that. We recognise that for many businesses, there will be a need for finance beyond the six-year mark and we will tweak the different schemes to respond to that need. Where there is demand in certain areas, we will try to respond to that as well.

Section 6 amends section 12 of the Credit Guarantee (Amendment) Act 2016 to ensure that the maximum liability of the Minister in regard to the existing credit guarantee scheme will remain as not exceeding €15.6 million and for a separate provision for a maximum liability of €1.6 billion in regard to the Covid-19 scheme. Again, we need to differentiate clearly between the two different schemes. The Covid-19 scheme is temporary in terms of its ability to respond.

Section 6 is the final section and deals with technical matters concerning the Short Title, commencement arrangements and citation.

As businesses reopen, we need a plan of sufficient speed and scale to repair some of the damage that has been done and to restore confidence. Businesses need to know that the Government and this House have their backs and that we are there to help them through this process. The Government asked businesses to close in response to Covid-19. Many of them could have continued to trade very well and might have expanded only for the intervention of the pandemic. We are trying to respond to the challenge they face through a range of different measures, such as the wage subsidy scheme, the rates rebate and the enhanced guarantee scheme, which will make money available more cheaply through loans and so on. We recognise that there is a demand for different types of finance and different combinations of grants, and we will try as best we possibly can to get the money into businesses to enable them to continue to flourish.

The July stimulus package will be the next element of our response, as promised in the programme for Government, and we hope it will be announced later this week. That job stimulus plan, building on previous announcements, will help to save jobs and create new ones and will, we hope, get the majority of our people back to work. It is a matter of enabling our SMEs to return to capacity where possible and, more broadly, strengthening the resilience, productivity and innovation of SMEs. As we adapt to this pandemic, any future pandemics and other challenges that may face businesses in this country, we will see a lot of them show their innovative streak and the particular Irish quality of being able to change and survive.

We wish to build on that resilience and strengthen the position of companies. It is about getting through this period. It is also about building on the lessons from Covid-19 in order to be in a stronger position to allow companies to continue to prosper into the future.

All Members recognise that SMEs are the backbone of our economy and of communities across the country. Large numbers of people are employed in small firms in all parts of Ireland. We must appreciate that SMEs account for more than 1 million employees or slightly more than 68% of total employment in the Irish business economy.

A Deputy stated earlier today in the House that all the Government is doing is responding to the needs of business. That is not the case. When we support business, we support jobs, and that affects everybody. It is not just money for businesses, it is money to save and create jobs and to support the economy. That, in turn, provides the taxes we need to run all the other services.

It is important that we respond to the needs of businesses and, most important, our SME sector. Through enacting the Bill, we will ensure that financial institutions can provide these businesses with access to liquidity at more affordable rates and, more important, that firms can access funding. Those working in small firms in the private sector have borne the brunt of the pandemic and that is why we need to focus our efforts on them. The Government will continue to do so.

The Bill is one of a suite of measures the Government has implemented and will implement to help SMEs in their recovery. I look forward to hearing the views of Members on the Bill and hope that we can work together to get it through the Houses this week if possible.

I am sharing time with Teachta Doherty, who is on his way to the Chamber. I welcome the opportunity to speak on the Bill, which Sinn Féin will not oppose.

The legislation is quite technical in nature and makes significant changes to the Covid-19 credit guarantee scheme. It is an important scheme and the changes to its workings are to be welcomed. I know from speaking to many businesses and various representative groups that there are issues with regard to the structure and workings of the loan scheme.

The creation of the scheme on 1 May to facilitate bank lending of up to €2 billion to SMEs, primary producers and small mid-cap companies was a welcome development. A figure of €2 billion for SMEs was reported in the media. SMEs and other businesses saw the scheme as a significant development in the context of measures to help them to bounce back from the challenge of Covid-19. However, as time went on the difficulties and flaws in the scheme became apparent to businesses and politicians. The proof of its limitations is evidenced in the amount of money that has been loaned. According to the reply I received last week to a parliamentary question, only €1,606,000 in loans has been approved and sanctioned to date for successful applicants under the scheme. If just €1.6 million in loans has been issued under a scheme with funding of €2 billion, there is clearly a problem. In contrast, in Britain £30.9 billion has been approved through the bounce back loan scheme which is widely regarded as being much easier and significantly less risky to access than the Irish scheme.

Sinn Féin has spoken to SMEs and others on the issue. They immediately pinpointed the limitations of the scheme and identified what needs to be done to address them. The first difficulty they identified was the portfolio cap. The removal of the cap is very welcome. On 13 May, Sinn Féin wrote to the previous Minister for Business, Enterprise and Innovation, Deputy Humphreys, and the Minister for Finance, Deputy Donohoe, calling for its removal. We stated that the removal of the cap would remedy a problem in the scheme as a result of which banks were refusing to lend to small businesses in dire need of affordable credit. The portfolio cap meant that banks saw it as unattractive to loan moneys through the scheme to SME. It also resulted in extremely high interest rates being charged on loans that were issued. The removal of the cap should make it easier and more attractive for banks to lend to SMEs. However, its removal alone will not improve the loan scheme.

The interest rates charged on the loans are the normal business loan rates charged by the respective banks with an additional 0.5% charge as a result of the Government guarantee. Furthermore, the Department with responsibility for enterprise, trade, and employment, which funds the scheme through the guarantee, plays no role in the application or decision-making process which is fully delegated to the participating lenders. As a result, the loans that are issued are subject to the respective banks' market interest rate. In other words, as pointed out by Unite the Union, the banks that administer the scheme decide whether to issue loans based on their own for-profit criteria for loan issuance, rather than the priorities of a Department that is trying to keep companies afloat during a global pandemic.

Nothing in the scheme speaks to the pressures that thousands of businesses across the State are under as a result of Covid-19. Businesses have pointed out these flaws in the scheme, as have organisations such as Chartered Accountants Ireland. It has highlighted the problems inherent in businesses accessing loans at high interest rates such as those charged under the scheme. It stated in its document The Next Financial Year: Making Irish Business More Competitive that the Covid-19 credit guarantee scheme is too onerous and complex to administer and that the interest rates charged are prohibitive. It stated that the interest rates need to be closer to ECB rates than to commercial rates.

For several months, Sinn Féin has been calling for similarly low interest rates. We raised the issue in the letter to which I referred which was sent on 13 May. We have been calling for interest rates that are capped at 2.5%. Preferably, the interest rate applied should only be sufficient to cover the overheads of administering the loan scheme. Low interest rates would encourage SMEs to take up the available loans. We have heard that first-hand from businesses and their representatives. They further stated that it would be a significant incentive and help if the loans were interest-free and there were no repayments for the first 12 months of the loan, as is standard practice for many Covid-19 credit guarantee loan schemes across the EU. It would make a significant difference to the loan scheme here. The Government should really be considering providing 90% to 100% State-guaranteed loans with no repayments for the first 12 months, the State covering the cost of interest over that period and significantly reduced interest rates thereafter. The implementation of such measures would make the credit guarantee loan scheme much more attractive to businesses in this unprecedented and extremely difficult period. The scheme would also be significantly improved if the Government guarantee of the loans was increased to 90%, with a review of its effectiveness to see if further increase was needed. The trajectory of the loan scheme in Germany went from a Government guarantee of 80% to 90% on review and, eventually, to 100%.

Reviewing the effectiveness of the scheme and enacting the necessary changes if it is not working is the only way we can be sure that it is meeting the needs of SMEs, microbusinesses and family businesses. Sinn Féin has proposed a loan scheme with these features. It has been shaped for SMEs and microbusiness by SMEs, small family-run businesses and microbusiness. It draws on the best aspects of European and international loan schemes. If the Government persists with the current scheme minus the portfolio cap, its uptake will not going to increase in any significant way. The failure of the loan scheme would mean the failure of our SMEs.

In advance of the July stimulus, I wish to raise the issue of debt through loans. Thus far, supports for SMEs have largely involved their taking on further debt in the form of loans, but that is precisely what small and medium businesses are saying they do not want. Increased debt will not help SMEs and microbusinesses to get back to work or drive economic recovery. The Taoiseach spent the recent days in Brussels, warning against pouring further debt onto European states. He has instead called for the use of grants to help economies to recover from Covid-19. It is essential that the Government take that approach in the July stimulus and include a comprehensive scheme of grants for SMEs, microbusinesses, the self-employed and sole traders. In its Supporting SMEs and Protecting Jobs plan, Sinn Féin has called for grants ranging from €12,000 to €25,000 to be given to affected SMEs and microbusinesses. In addition to this grant system, we outlined the need for a €5,000 grant scheme for the self-employed and sole traders who have been adversely affected by Covid-19. Such grant schemes have been successfully rolled out across the EU and beyond. The policy of preferring grants to loans which the Taoiseach advocated in Brussels must be reflected in the Government’s July stimulus package. Loans are essential, especially in the longer term, but affected SMEs, microbusinesses and family businesses need significant liquidity injections.

In addition to injecting significant liquidity into SMEs and microbusinesses, the July stimulus must also reduce businesses' non-pay expenses. A rates wavier and a cut in the VAT rate for the tourism and hospitality sector until the end of the year, with built-in extension review mechanisms, would suppress non-payroll expenses and allow some breathing space for affected SMEs and microbusinesses.

The central plank of economic recovery from Covid-19 must be a real commitment to microbusinesses, the SME sector and family businesses, as well as a steadfast commitment to workers’ rights embedded in legislation and the creation of decent jobs with decent pay and conditions. Some people have argued that every shilling of Government support should be linked to workers' rights. I point out to those making such arguments that workers' rights cannot be bought and there should be no attempt to buy them in that way. If an employer is allocated €2,000 on the basis of such an understanding but the grant is not renewed, would it be acceptable for the employer to then cease recognising its workers' union?

Workers' rights need to be legislated for - absolutely - but they cannot just be linked to schemes in this way because it is not going to work. In the long run, it is not going to help workers.

Some of the most negatively impacted sectors of our economy are also some of those with the lowest pay and worst conditions for workers. Therefore, the recovery for affected sectors cannot be a reconstitution of the past. As we try to help SMEs and microbusinesses recover from Covid-19, we must also try to rebuild our economy in a different way. The vast majority of our economic base is low wage, low growth, and low value added. We have to change that, and the Government has to be central in changing it. We must progress to build an economy that is robust, diverse, decent wage, high growth, and high value added. We cannot enviously look at the economic bases of Germany or Denmark as a pipe dream that we could never have here. We need to strive for the best aspects of such economies and try to replicate them here on a domestic level.

We must also reject the negative aspects of such economies. We must reject the negative economic policies which exploit workers, stifle growth and deprive Governments of tax revenue. Worker and community-owned co-operatives offer new ways forward for businesses; so too does investment in social enterprises. These are the areas which should be focused on and encouraged as we move through the Covid-19 recovery. The difficulties our economy and SMEs face are unprecedented, and grant schemes and loans will provide much-needed corporate welfare to businesses. However, it is imperative that as a State we have a much broader plan for our economy. We need an economy that works for the people. That can be done, and it should be a priority.

We will not be opposing this Bill as we support the general thrust of it. However, we would prefer if the scheme had a greater Government-backed guarantee and lower interest rates as well as a number of other changes. We can of course thrash that out on Committee Stage.

I am surprised the Minister is not here in the Chamber as we deal with this legislation. It seems to be a trend. We had the Minister for Public Expenditure and Reform who left a session of questions to him with an hour left. Last week, the Minister for Finance refused to turn up for any of the Stages of a serious piece of legislation. He sent a Minister of State who was not able to deal with Committee Stage. Now the senior Minister is not here in respect of this issue.

Just to point out, the Tánaiste wanted to be able to debate this legislation but the Cabinet meetings were changed because of the European Council meetings. I think the Deputy is aware of that.

I appreciate that.

It is a silly issue to be bringing up. It is irresponsible.

It is not a silly issue. With respect-----

The schedule was set last week and the Deputy knows it.

The Minister for Public Expenditure and Reform left the questions to him about 30 minutes into an hour and a half.

Cabinet changed.

The Minister for Finance did not turn up for Second, Committee or Report Stages of legislation and sent in a Minister of State. We had to suspend the Dáil to get answers from an official. One does not treat the House like this. If the Taoiseach is calling Cabinet meetings, then he needs to look at the schedule of the House.

With respect, it is an unfair accusation. The Deputy knows that the Tánaiste has to attend Cabinet meetings which should have been on yesterday but were moved in response to the European Council.

I am pointing to a trend.

The Deputy should act in a businesslike manner.

I am pointing to a trend where senior Ministers have failed to turn up to deal with legislation and what was unprecedented where a senior Minister left after half an hour of a 90-minute slot for questions to him. That has not happened in the past. It is a trend that needs to stop right now. The Government needs to respect this House and respect the representatives of the people who are sent here to ask questions and participate in the passage of the legislation.

I welcome the introduction of the Bill before us. Before discussing the provisions of the Bill, I wish to comment on the circumstances in which it has been brought before us and the challenges faced by our small businesses as a result of this crisis. It should always be borne in mind that many of the challenges workers and SMEs face are a direct result of the public health measures implemented by Government. That places a responsibility on Government to act to protect these jobs and support these businesses. Public health measures have forced businesses to close throughout the State. It has required them to implement measures that have significantly reduced their capacity to operate. The losses experienced by SMEs now threaten their very survival and the jobs they provide. Employing more than a million people with extensive linkages throughout their domestic supply chain, their very success is key to our economic recovery. That means the recovery will depend on the Government's support.

Ní bheidh athshlánú eacnamaíochta gan athshlánú dár gnóanna beaga. Seo iad na gnóanna agus a gcuid oibrithe a d'fhulaing mar gheall ar Covid-19 agus mar gheall ar na beartaithe agus na srianta a chur an Rialtas i gcrích. Mar gheall ar sin, tá sé riachtanach anois go dtugfadh an Rialtas an tacaíocht dóibh.

In the financial stability update published by the Central Bank in April, it was estimated that SMEs would require between €2.4 billion and €5.7 billion in additional liquidity and support to cover non-payroll expenses in the three months alone. It cannot be denied at this stage that the supports provided by Government so far have fallen far below these needs. The numbers speak for themselves. Since 23 March, four months into the crisis, less than €300 million has been provided to businesses across all 15 schemes. That is only a fraction of the liquidity support that the Central Bank had estimated our SMEs needed. The restart grant has approved less than 75% of applications with an average grant of less than €4,200. This stands in stark contrast with what is happening in other jurisdictions. Just up the road in the North, grants of £10,000 and £25,000 have been provided to SMEs depending on their size. These grants, with a total value of more than £300 million, were disbursed to SMEs by the end of March, providing rapid liquidity to businesses that needed it and the jobs they supported to help them survive. In contrast, the Government's grant scheme here has been slow and inadequate and this must change. Similarly, the Government's credit guarantee scheme, which we are discussing today in this legislation, has so far been an abject failure. In reply to a parliamentary question of mine on 7 July, the Minister confirmed that since 23 March, a total of five loans have been approved with a combined value of €1.6 million.

The Bill seeks to address this failure. It is clear that among the supports provided to our SMEs during the crisis, affordable credit must play a part. The credit guarantee scheme was established in 2012 and amended in 2016 to facilitate lending and make credit accessible to small and medium-sized enterprises, businesses that typically struggle to access credit from bank and non-bank lenders. Under the scheme as it currently stands, the Government would provide an 80% guarantee of loans made to eligible businesses from a number of lenders. The purpose of the State guarantee was to cover the cost of the loans that may default under the scheme, thereby increasing the bank's willingness to lend and to provide credit to SMEs. However, with a portfolio cap of 13% in place, the effective guarantee provided on these loans has been reduced to 10.4%. This has significantly reduced the willingness of banks to lend to SMEs. It is why the Government's credit guarantee scheme has performed so badly so far, with negligible take-up from businesses and lending from banks involved.

I understand that the Minister, Deputy Varadkar, has a difficulty understanding what he has called regulatory gobbledegook from the banks, but it is important that the Minister makes an effort to understand how they operate. Thaispeáin an Tánaiste dúinn le cupla seachtain anuas nach bhfuil mórán tuiscint aige ar ghnóthaí na mbanc agus ar ghnóthaí airgeadais. Caithfidh sé déanamh cinnte de go dtagann feabhas ar an tuiscint seo go gasta má tá rath le bheith ar an scéim seo.

Section 4 of the Bill amends section 4 of the 2012 Act to give the Minister the powers to give guarantees in the context of the credit guarantee scheme. It also removes the portfolio cap from the scheme. This is welcome. On 13 May I wrote to the Minister for Finance and the then Minister for Business, Enterprise and Innovation, Deputy Humphreys, proposing a suite of measures to support SMEs during the crisis. Among them was to amend the credit guarantee scheme to facilitate lending to our SMEs. I proposed that the portfolio cap be removed to facilitate lending and improve SME access to credit. In his response on 29 May, the Minister for Finance reiterated Government policy of maintaining the portfolio cap of 50%, creating an effective guarantee of only 40%. As I made clear, such a low level of guarantee would fail to address the fundamental issue, the unwillingness of lenders to provide credit to our SMEs. The only way to address this issue was to remove the portfolio cap and I welcome the fact that the Minister and the Government have changed their position and adopted Sinn Féin's proposals in this regard.

Section 6 ensures that the maximum liability of the Minister in respect of the credit guarantee scheme will be €1.6 billion. This relates to the 80% guarantee the State will provide to the €2 billion in lending under the scheme. It should be borne in mind that the cost to the State of this guarantee is likely to be much less. With a guarantee of 80% and the default rate likely to be about 20% on loans provided through the scheme, the cost to the State and the taxpayers would be about €320 million.

I know the Minister has found it difficult in the past to understand how banks operate, but the following fact is worth bearing in mind when we consider this legislation. The cost to the State is likely to be much less than the €2 billion it would facilitate in lending, which is a good thing for this reason. Sinn Féin believes that the level of the guarantee should be increased to 90% with a view to increasing it to 100% depending on the performance, or underperformance, of the scheme. This would mirror other guarantee schemes established in the EU such as in Germany. Assuming a default rate of 20%, it would cost the State €360 million but increase the likelihood that banks would lend and credit would be provided to small businesses which need it, supporting and retaining jobs and getting people back to work.

Sinn Féin will not oppose this legislation. Indeed it adopts proposals submitted by Sinn Féin to the Ministers for Finance, and Business, Enterprise, and Innovation in May, but it can and must be strengthened by increasing the level of the guarantee and, crucially, by ensuring zero interest with no repayments for the first 12 months for borrowers and capping interest rates at a maximum of 2.5% thereafter. What guarantees can the Minister give that these proposals will be incorporated into the credit guarantee scheme?

The Government's response to this crisis as it effects SMEs throughout the State has been slow and totally inadequate. I fear, and unfortunately it has come to pass, that the Government's lacklustre approach to date has cost jobs. For that, the Government will be held to account.

Ní thiocfaidh feabhas ar bith ar rudaí muna dtagann feabhas ar rudaí do chomhlachtaí beaga. Bhí an Rialtas mall ag déileáil leis an gceist seo, agus nuair a dhéileáil sé léi, ní raibh an fís mar is ceart. Má tá na comhlachtaí beaga agus na poist seo chun maireachtáil, caithfidh meon agus freagra an Rialtas seo athrú, agus athrú go gasta.

Many of my comments on this will repeat what I have said on the microfinance Bill and the Private Members' motion on workers' rights last week. The Labour Party will support this Bill. We appreciate the necessity for it and where the Minister is coming from in bringing it to the House. We agree with some of the comments made by previous speakers, particularly on the lifting of the portfolio cap.

The Minister of State's opening remarks placed a heavy emphasis on the July stimulus package. The Labour Party published its own draft stimulus proposals last week. We have tests for every piece of legislation which comes to either House in trying to deal with the massive impact which Covid-19 has had on our country and our economy. We all appreciate the economy has fallen off a cliff. In many respects it is different from what happened ten years ago in that there will still be a capacity issue regardless of how much we can reopen and how much people are able to spend again. Many small and medium-sized enterprises will have capacity issues around the number of customers they can cater for. We know that it is easier to retain a job than create one, so whatever we try to do, whether in microfinancing or credit guarantees, the goal is to maintain jobs that already exist.

All measures that we take must be big enough to counteract the impact not only of Covid-19 but also of Brexit. I wonder if Members of this House or people around the country are as cognisant of the impact of Brexit as they are of Covid-19, which is something that we are living with and thinking about. It is creating a huge mental health issue for the whole country, but had it not arrived, we would absolutely be talking about Brexit instead, its impact and the actions of the UK Government around it. The potential for job losses in Border counties and the south east is huge in the event of a no-deal Brexit. The impact on jobs, businesses and household finances will be huge. The Labour Party recommended a package of about €10 billion. If reports are to be believed, the Government is suggesting a package of €7 billion, so there is a gap between the two proposed figures, but the hole in the public finances must be bridged somewhere, which is why we believe that any stimulus, legislation or initiative must be big and bold to recognise the magnitude of what we are dealing with.

The stimulus must be directed at the creation of good quality jobs, especially for younger workers. We believe there must be conditionality with all these measures. I recognise what the previous speaker said about workers' rights, that it must be based in legislation and trade union recognition, and that it cannot be based on a quid pro quo, which I accept. At the same time, it is important that we do not return to the old economic model which failed so many people. I will keep using these statistics as long as I have a platform to speak about them, which are that 23% of Irish workers are on low pay and 40% of young people are in insecure work. The old model was not working for many young people. Now 45% of young people are unemployed. We have one of the highest youth unemployment rates in Europe. That must be recognised in any stimulus package, legislation or measures to build up the economy again. We need good quality jobs that will last and not ones that are insecure. Insecure employment leads to insecure accommodation and insecurities in many life choices. We need a new economic model based on lifelong learning, caring and sustainability. These measures must be aimed at reducing economic inequality which must be an overarching aim.

During a crisis, crisis measures are taken without thinking long term. Many of us fear that we might support this legislation, but many Bills or packages and announcements are made in the white heat of the crisis. We appreciate that and governments have to respond, but there are massive long-term impacts from the short-term measures that are taken or the big announcements that are made. If whatever announcement is made adds to economic inequality, it must be resisted and rethought. None of us on this side of the House are trying to be difficult or not help do whatever we can to get the country out of the difficulty we find ourselves in, but we cannot then return to an unfair and unequal economic model based on low tax and low pay. That is not something we should stand over.

We should not be shy about demanding the strengthening of our public services. Many business leaders speak about the challenges they have with rents, rates and so on, which is all understandable. However, when we talk about rate cuts or holidays, we must remember that rates are vital funding streams to local authorities. I am in no way suggesting that there should not be movement on rates - there should and there has been, which is welcome - but those funds needs to be replaced because local councils depend on them. The Minister of State might suggest that local councils are overdependent on ratepayers and business, which is arguable, but the funding must be replaced because there must be funding for services to provide public housing, parks, playgrounds, libraries and the other council services that everyone depends on so much. While we are trying to reboot the economy and ensure that businesses can survive, it will be challenging for local councils to survive if the rates they are used to obtaining from business to fund their services are no longer available.

Those are The Labour Party's five tests on the July stimulus: that it is big enough to make an impact - we suggest €10 billion; that it creates good quality jobs for young workers, because 45% are unemployed and a huge proportion of them were in insecure work prior to the Covid crash; that it should be based on a new economic model of decent and secure jobs; that it reduces economic inequality; and that it improves public services.

Having said all of that, the Labour Party will be supporting this Bill. We have a strong track record in producing legislation that can be practical and that can work. However, we constantly make the point to the Minister of State and the senior Minister, when he takes legislation through the House, that we are long-standing critics of any economic model which lets employers, a Government or an economy get away with exploiting people or that allows an economy or a Government to build a recovery on the backs of those who cannot stand up for themselves. It is younger people, women and migrants, disproportionately, who are in these low-paid insecure jobs. These people are also disproportionately affected by the rent issue. All of these matters overlap and are interconnected. The people I speak of do not have access to mainstream media or to powerful lobby groups that can speak on their behalf. If they happen to join a union, the union has a veto. The thing about industrial relations in Ireland is that it has been described as similar to joining a golf club. One can join the golf club but one does not necessarily get to play. That is the reality of the volunteerist model of industrial relations that exists here and that we will be challenging over for the next number of years in order to ensure that workers have a chance to recover as the economy recovers.

We want to see businesses recover and enterprises survive and to see the development of an Ireland that can get out of these dark days. We fully understand that many businesses were only beginning to turn the corner in the wake of the previous crash and believe in themselves again, and were, perhaps, taking on additional employees, building extensions or opening new outlets. We completely understand that many people have been devastated not just by the collapse of the economy caused by Covid-19 but also by the fact that the dreams that they had up until Christmas have been destroyed. Many feel that they may not open their doors again.

We want to support the Bill and what the Government is trying to achieve but we cannot – we will be consistent on this - say that if we go back to the way matters were before Christmas, everything will be fine. That will not be the case. A great number of people are suffering in desperate conditions. These are people who are working. That is what is so this disappointing when one hears statistics regarding the level of unemployment being down and full employment being achieved in the country. It is the type of employment that exists and the desperation in which people can live which is clouded by these unemployment figures.

Those are my comments on the Bill, which we are not opposing. I look forward to engaging with the Minister of State further on it.

I welcome the opportunity to speak on this Bill and on the credit guarantee scheme. It sounds almost trite to say that we are living in unprecedented times. The only way we will emerge from this crisis will be by marshalling and investing an unprecedented amount of State resources. In doing so, it is important that we ensure that the State response is targeted, ambitious and evidence-based. In that context, there is a role for a State-backed loan scheme but it should only be one aspect of a much larger suite of measures. These loans may be suitable for a number of companies but others may require additional supports, and yet still others may require grant aid. The aim should be to achieve a job-rich growth whereby there will be good quality, secure employment. While I see the potential in what is being proposed, there are still a number of important issues and details that are outstanding and that have not been fully provided for. I would like these to be teased out, if not this evening then over the next day or so before the fate of this Bill is finally decided.

While the wider economy and access to credit for small and medium-size businesses is extremely important, it should never be the limit of our concern. For me, the benchmark by which we must judge all economic responses to the Covid-19 pandemic is our ability to protect people's jobs and livelihoods. I certainly do not want a situation whereby the stimulus will be spent on, for example, paying rents, and inflated rents at that. It has to be a stimulus and that means money in cash registers and in people’s pockets that actually gets spent.

According to the Department’s report on the final quarter of last year, only 64 loans were drawn down. The total value of these loans was just under €15 million. The Department estimates that this resulted in 1,057 jobs being maintained and an additional 274 being created, or a total of 1,331. This was an increase in shared liability of just over €11,000 for every job that was either created or maintained. These figures also serve to demonstrate the major issue with the current scheme that I fear may be carried over into this one. Since its inception, the level of take-up relating to the credit guarantee scheme has been constantly sluggish. The 2013 independent review of the scheme noted that the numbers of jobs created and maintained were significantly below the target of 1,000 per annum. This figure was disproportionately high given the generally low level of take-up relating to the scheme. It would be very interesting and important that we know what the target is for jobs. There has to be some link between both.

In light of the new and uncharted waters in which businesses find themselves, it is hard to see how the current proposal goes far enough to address the issues that exist and to bring uptake in respect of the scheme to the levels envisaged. Can the Minister of State outline what the ambition is? It is possible that the removal of the portfolio cap may be a positive step toward addressing this. The current scheme has a portfolio cap in place which limits the State’s exposure to 13% of the loan facilities. The Department has indicated that the removal of the cap is necessary to ensure that lenders provide the necessary liquidity. There is also evidence that this aspect of the existing scheme has given rise to the banks refusing to lend to some small businesses and applying unsustainable rates of interest to others. This aspect is going to be very important.

One of the aspects of the microfinance scheme, for example, when one looks at trends, is how difficult it was for young people in circumstances where they did not have the collateral. These well-educated people with good ideas should not be prevented from taking a risk to create new jobs. The attitude of the banks in taking a conservative approach could be very problematic particularly when these young people do not have the safety valve of immigration. This is a cohort of individuals of whom we should be very conscious.

Reading the quarterly reports, it is difficult to see how this alone could be the root cause of the low level of loans granted under the scheme. Between the beginning of the operation of the scheme in 2012 and the end of last year, only 730 loans were sanctioned. These had a cumulative value of €122 million, meaning that the average amount involved was just under €170,000. Even with the removal of the portfolio cap, I do not see any evidence that the Minister of State will be delivering a scheme that will be so attractive to businesses that the level of funding he is proposing is warranted. Can he provide details of the business case for the level of funding that he is proposing to attach to the scheme and the expected number of loans his Department is estimating will be sought and delivered under the scheme before the end of the year. There is no point in having something that is really ambitious in theory if the reality is very different for people who may well want to take it up.

For me, the crux of the matter is whether the scheme is fit for purpose. It is all well and good to throw potential liabilities on the balance sheet if one knows that they will never become real. We have to look at what is being offered and ask what is the real potential liability of approving this scheme.

If, for example, one is the manager of a struggling business, will it meet one's needs? That is where we will need to have ongoing input about how it is working, because it is only one of a number of initiatives. It ties up a significant amount of money. I must be clear that I am not opposed to the 80-20 split, with the banks taking some of the risk. I understand the arguments for the 100% State-backed loans but I also see where the Tánaiste is coming from with regard to the shared risk being a disincentive to reckless lending. However, I do not think the trust-but-verify approach in respect of the banks is good enough. We all have strong memories of how the banks conducted themselves in the past and none of us feel any great confidence in how they will treat this scheme. We are asking the same people to be involved even though we can see that there has not been a change in culture over the years. I would be surprised if everybody does not make the same point. Maybe the banks will surprise us - I hope that they do - but we have to be concerned about this aspect.

Last week, we heard the statement from the chief executive of the Irish SME Association that he believes this scheme will be the subject of a limited take-up because the targeted businesses were understandably completely debt averse. I have heard repeatedly that people are concerned about not having the capacity to take on more debt. The Tánaiste told RTÉ that the loans provided under the scheme will be on much better terms and conditions than those currently available. With the global pandemic and economic crisis, however, any level of uncertainty is too much for businesses and we should be concerned about this lack of clarity. I am of the opinion that the interest rate should be as low as 0% for at least the first year, regardless of whether we take on 100% of the liability or split it with the lender, with the State still shouldering the majority of the risk. Citizens should reap the major part of the reward.

The purpose for which the money is loaned is also important. The objective is to end up with good-quality jobs being either created or maintained. That is, after all, the basic foundation of banking. Banks take on risk with a view to receiving reward. It is a calculated gamble whereby the deck is entirely stacked in favour of the lender. With this in mind, I am concerned that the scheme does not go far enough to ensure ongoing lending by the banks. I understand that they will continue to apply their normal underwriting decision-making processes to the applications regardless of the reduced risks they are taking on. Perhaps the Minister of State will address that point.

In normal times, this would be a challenge to businesses. In the midst of a potential global credit crunch, it may be an insurmountable barrier for struggling businesses. I have friends who have small businesses and they are wondering, in light of some of the challenges they face, if they will be able to stay open. There have been occasions when businesses have felt that their applications have been unfairly treated. This scheme will be time-bound and available on 31 December of this year, yet the Tánaiste does not expect it to be up and running until September or October. This leaves a very small window for businesses to make their applications. Maybe I am wrong but that is my understanding of the position.

It is not clear if there is an appeals process or if one will be put in place. Under the current scheme, if an applicant is unhappy with a decision, he or she must follow the vendor's normal appeal procedure and have the option to escalate the matter to the credit review office. The office's average processing time to deliver an opinion is four weeks. We have tight timeframes here. I am concerned that the lack of a speedy external appeals process will leave applicants highly vulnerable to unfair lending practices. I point to younger people in particular in this regard.

The level of uncertainty surrounding the operation of the scheme is a cause of great concern. The interest rate and approval criteria are not set in stone and fully negotiated. The scheme is set out but there is much uncertainty about how it will operate.

In addition to the unspecified level of interest, there is a guaranteed premium attached to each loan. I am glad to see that this will be paid to the State at a reduced rate compared with the one currently in place. Under the proposals as they stand, the rate for SMEs will be 0.25% in the first year and 0.5% in the second and third years, then 1% for the remainder of the loan. The Department's information on the current credit guarantee scheme states that the existing premium is paid by businesses as a contribution towards the costs of the State providing the scheme. Even at the lowest cost proposed by the Government, this premium could serve to generate significant income for the State if anything approaching the full value of the scheme is drawn down. There is a doubt about whether this will happen but it is a matter to keep in mind. Is it the Minister's intention that moneys generated from the premium will serve any specific purpose? Will it be ring-fenced? Will it go back into the scheme? Will it cover administrative costs? If there is a business case available, I would appreciate seeing how this scheme was worked up.

The Minister of State dealt with the issues of fisheries, aquaculture and agriculture. Is there a prohibition in the current scheme for purchasing freight transport vehicles or in respect of other matters? He might address the areas that will be included under the new scheme that are not contemplated in the one we are debating.

I have some concerns about how we are handling all of this. I understand that we are in unprecedented times and that there are time limits. However, it should not go unsaid that there is a degree of speed involved in this that should cause some concern. The time available from when the Bill was published to table amendments is not the norm and it is important to put that on the record. At the same time, I accept that speed is needed. Businesses and their workers need help and support to make it through this crisis.

The full scale of the economic impact of the pandemic has yet to become clear but we know that we need to act now, taking bold steps to protect jobs and support indigenous industries. State-backed loans have a part to play in achieving this but we have a responsibility to make sure that it is done in the right way. The proposed scheme has the potential to help some businesses but it carries many of the hallmarks that held its previous incarnation back. The reforms which are being proposed to the existing scheme would have been welcomed in a period of normal economic growth. However, they do not appear to fully recognise the unprecedented situation that many businesses find themselves in due to circumstances completely beyond their control. In saying that, I recognise that this is just one of a number of measures.

The fact is that many businesses have racked up significant debts while trying to stay afloat during the lockdown. Taking on additional debt regardless of whether they are State-backed is just not viable at the current rates of interest.

I am concerned that the proposed scheme will not attract that level of uptake necessary to warrant tying up €1.6 billion. This will prevent us from doing other things if that proves to be the case. Will the Government be looking at the drawdown and timing in order that it may intervene at an early stage if it is clear that this is not going to be fit for purpose?

We cannot, however, make an accurate assessment of the scheme's potential effectiveness in the absence of that kind of information. We do not know the rate of interest that will be charged and we do not know the terms or the conduct of the banks. Would it be possible, for example, for some of the State agencies such as IDA Ireland or Enterprise Ireland to involve themselves more directly in that, to deal with it directly as opposed to the banks having that responsibility? I am sure it might have been possible. Those agencies have a jobs focus and they know what it takes to create and maintain jobs. The bank has a different remit and looks at risk.

I am not opposed to the scheme in principle but I cannot stand over any measure where the main beneficiary is the bank profiteering. This cannot be allowed to happen and it must be monitored very carefully. A more ambitious approach would be to build an element of social value into the application criteria of the scheme. I would like to have seen that done. If the scheme is to be reviewed, this should happen. If the State was willing to take on a more active role in assessing applications it could prioritise loans that would create jobs, or those that protect jobs that already exist in vulnerable communities or sectors. There is more than one way to achieve the goals of this scheme and I wonder what, if any, consideration was given to alternatives to the scheme. Was time an aspect of this?

I urge the Minister to present the business case for this scheme, alongside the full details of the terms and conditions he is seeking to agree with the banks. It is essential that this is done before the House votes on this Bill so that Members can be fully informed on how the scheme will play out.

People Before Profit fully supports the objective of the Bill, which is to try to protect and support employment in the SME sector. We are fully aware that small businesses are responsible for more than 1 million jobs. It is absolutely right that the Government takes the necessary measures to protect and sustain the jobs in that sector. While supporting the objective, we have a number of concerns about the approach being taken in the Bill and in the part it plays in the overall July stimulus measures, which we understand the Minister is planning. In some ways it repeats the mistakes of the past pursued by the Minister of State and his coalition partners Fianna Fáil in trying to deal with economic crises. Even more so, there has been a failure in the Government's overall approach to register just how the world has changed as a result of Covid-19, the challenges it poses and the need for an absolutely radical shift in the way we run our society and to try to construct a sustainable economy in the post-Covid-19 era.

What do I mean by that? First, there is a sort of narrative, which I would call an ideology, that pervades the Government's approach in this Bill, and more broadly in the stimulus. It has really pervaded the Government's approach for the last decade. It is the view that the core of the economy is private enterprise. In the last few months we have learnt that quite literally our health is our wealth, but I do not know if the Minister of State has learnt this. It is not just a nice idea. We have suddenly learnt that this is a fact: our health is our wealth. When a pandemic as vicious and as virulent as Covid-19 arrives and public health is threatened in a fundamental way, and when this public health emergency threatens to overwhelm the ability of our under-resourced health system to cope, then the entire economy shuts down. All of the SMEs pretty much shut down and quite a lot, if not most, of big business shuts down. The economy shuts down. It is essential: our health is our wealth. If we cannot deal with the ongoing threat of Covid-19, all of these other measures are a waste of time. I do not believe that this understanding has penetrated the heads of the two major parties. They just imagine that if we nurse the system back to roughly where it was and hope that Covid-19 goes away then everything will be okay. This is a fundamental mistake. There is a failure to recognise this to the level of having systems in place necessary to cope with Covid-19 in the form of a health service that can deal with surges, an education system that has to function but which does not have the capacity, and a childcare system that has to function in order for the rest of the economy to operate. These are absolute preconditions for the rest of the economy to function. If they do not function then forget all the stimulus to SMEs, which would be irrelevant. If we do not have an education system that is capable of operating, if we do not have a health system that is capable of dealing with surges, and if we do not have childcare that can allow parents to go to work then forget the rest. This understanding has not permeated what will come out from the July stimulus. There is no radical programme to recruit the 5,000 healthcare workers we need. This is not just a health prerequisite, it is also an economic stimulus. It is a sustainable one because, Covid or no Covid, we need those healthcare workers. Those jobs will sustain the economy and sustain the ability of our health service to underpin our entire society and economy. Exactly the same point can be made for our chronically understaffed education system and our chronically under-resourced and fragmented national childcare system. I say this first as a key point.

My second point concerns the Bill itself. As I said earlier, of course we need to support the small and medium enterprises. Extending credit to them is probably, for some at least, important to do. Yes, we should do it. As other speakers have said, however, it is telling that the previous scheme, which this expands in the light of Covid-19, is questionable in its success and effectiveness with regard to its take-up. It is highly debatable whether the SMEs that really need the help will take on debts from banks that are, let us face it, not the most helpful people in the world to SMEs or to anybody else. This is the bit that really gets me about not learning lessons. Yes we need to extend supports and credit to the SMEs and it is right the State takes on the responsibility for doing it.

The mechanism through which one plans to do this is by privatising the profits, if it succeeds, and socialising the costs or the debts if it fails. Where have we heard this before? The proposal is that if the banks lend a lot and if it works, they will profit from it. We will get a tiny 0.25% premium but the profits will flow to the banks. However, if it goes belly up, because the Government has not done the other things it needed to do in terms of the health service, education and dealing with Covid, and there are a load of the defaults, the people pay the bill. It is a win-win for the banks. When we need to deal with a big economic problem, we come up with a proposal that is a win-win situation for the banks. They cannot lose. Where did we hear that before? How did that work out the last time around? Not very well.

The banks will be the arbiters of who gets loans, if the SMEs even want credit from them which, as we said, is debatable. Why on earth would the Government not cut out the middleman in this situation? I do not understand it if we are going to pay the bill. The potential for massive defaults is very real if the pandemic continues to impact and we are forced back into further lockdowns. Why on earth would we go through the middleman of the banks and tell them they can have the profits if everything goes well but we will pick up the bill if it goes really badly? That is just madness.

It will also be more expensive in interest terms, plus the premium, to go through the banks rather than for the State to do it directly itself. I do not see how that can be the case. The State can borrow money cheaper. It can, by the way, have a more hands-on and human approach to support businesses as opposed to banks which have an utterly inhuman approach. That is generally how most SMEs to which I talk see the banks. They do not see them as helpful or particularly human or looking at the specifics of their business. They see them instead as utterly ruthless.

One argument the Government will come back with is that we cannot interfere with the commercial approach of the banks. That would be completely wrong for the Government to do. Instead, the Government will argue that we have to let the banks operate on a sound commercial basis except if the banks lose. Then all the sound commercial stuff goes out the window and we will underwrite them. That is the way it works for the banks. It is one law for the banks and another for the SMEs and everybody else with whom the banks deal. The only people who do not have to operate on a sound commercial basis, because they will be underwritten by the State, in other words, the people, are the banks. That is not an approach I favour.

I do not want to stop any flow of credit which might be beneficial to SMEs in this dire situation. However, I have to seriously question whether this is effective and sensible as the way to do that. It is not about the objective of doing it but the way of doing it. It is about making it effective to actually help the SMEs. It is about ensuring that if the State, the people, takes the risk and if the enterprise goes well, then the benefits will flow back to the people, not to the shareholders of the banks. The latter is what the Government's proposal is offering.

On the double standards involved, this is part of the wider stimulus package. This is a scheme which the banks will love but which is of questionable value to SMEs. If the leaks are to be believed, the Government is going to increase the possibility that this scheme will fail by cutting the income of those who have lost their jobs through no fault of their own as a result of the pandemic. If it is true that the Government is going to cut the pandemic payment from €350 to €300, how will this help the high street and SMEs. I do not see how it will. It is counterintuitive, unless I am missing something, that the Government is planning to cut the income of the hundreds of thousands of people who have lost their jobs through no fault of their own, as well as further tapering the wage subsidy scheme. This will mean they will have less money in their pockets which, in turn, will mean they will be spending less money in SMEs. How is that sensible?

The only people who are being nicely insulated from any of the problems and risks are the banks. Where did we hear that story before? These are the banks we bailed out to a far bigger tune the last time around but still do not pay any taxes and are making hundreds of millions of euro in profits. The Government, however, wants to make sure they do not have to take any risks. It makes a joke even of capitalism, not that I am a fan of capitalism. This is capitalism with no risk for capitalists. In the enterprise economy, the pioneers of enterprise do not take risks because the chumps representing the people will underwrite the risk for them and make sure that we pay. That does not seem very sensible.

Our alternative is to nationalise the banks. They would not be here without the bailout we have given them. They have not treated the mortgage holders very well and are not treating the SMEs very well. We are underwriting their losses anyway. We cannot trust them to lend to the people who really need it but we are actually enabling them. Why on earth would we not be running them and dictating their priorities? Why can we not ensure that if they do profit, that those very profits come back to the people? Some 30 or 40 years ago, even in capitalist countries, that would not have been seen as a completely radical idea. Apparently, it is off the charts now. We will learn eventually about the folly of socialism for the banks and capitalism for the people. However, we continue to go round the hamster wheel of making the same mistake over and over again.

As I said in the Chamber recently, I find myself in agreement but Deputy Boyd Barrett at times. I certainly could not disagree with much of what he said just there, particularly in respect of the banking sector.

The credit guarantee scheme of €2 billion, based on the relaxation of state aid rules for a limited time, will be given primarily to primary producers, SMEs and mid-caps. This is to be welcomed. It is to secure employment and, in doing so, it will, hopefully, secure the future of our youth, our culture and our society. These are not small things to be considered. We are at a very difficult juncture in our State.

I want to address the history of the guarantee scheme which is not too rosy. The previous one was initiated in 2012 with more than €1.2 billion made available over an eight-year period. Only €152 million of it, 13%, was drawn down in the eight years. If the same drawdown was to occur with this scheme, it would represent an injection of €260 million. SMEs have been told they need liquidity. One has to ask if the scheme is properly constructed. Ireland is facing tremendous challenges and some earlier speakers referred to Brexit. Again, society will be challenged by Covid and we will have to do more to keep this disease at bay. What has happened in the economic environment is demand has fallen off a cliff. That is a difficult place for businesses. Sometimes, when one is in business, it can be hard to know how to stimulate demand. Demand is often not stimulated but taken advantage of.

Liquidity schemes are needed to support businesses, but some of the narrative, mostly in the public sphere, has been about giving out free money. Some people do not understand what money is needed for. I have a background in business. Were I in business today, I might be using that money to clear creditors, buy stock, pay write-downs on existing stock or pay for utilities, bills for which I would probably have amassed over three, four or five months. If I wanted to reinvent my business, I would have to look into new products and service development. That would take time and money. I would have to pay the annual fees my business incurred - utilities, rents and, if I had registered technology, patents. I would also need something to support the losses incurred in returning to non-profitable work. As many businesses have already seen, once they return to work, they find that demand and revenue are down and they have opened into markets where they are losing money every month. They are hoping to climb, climb and climb, but they need this money to support them on the way.

I will provide some examples of companies that might need significant funding currently. There are pharmaceutical wholesalers that have to buy products with a one- or two-year lifespan. They must be able to hold those products in the marketplace for a year. They have potentially lost six to eight months in their supply chains, which means that products they bought for their stock will have to be destroyed, representing a loss on their books. People involved in the large capital equipment business have lost orders after having bought machines on lease purchase schemes in the hope of selling them on. They cannot sell that stock and will have to continue funding it in the hope the economy improves and some of their customers return. Motor retailers are in a similar situation. Consider the amount of stock write-off that was done by food manufacturers. I will not mention the company's name, but a large yoghurt manufacturer in this country had stock primarily for a market outside Europe. That trade stopped and all of the stock had to be destroyed. These are the types of situation for which money is needed.

A credit guarantee scheme is needed, but is this scheme the correct one? Like others, I welcome the lifting of the portfolio cap. It was necessary. Compare this scheme with the most recent working capital scheme, though. To date, it has seen a drawdown of €86 million, 3,376 applications and only 705 loans sanctioned, or 21% of the total. The Department tells us that the remainder are still under consideration. I believe the Tánaiste recently spoke about delays to stimulation and an interest coupon of 4% to cover defaults. The SME restart grant has been more successful with €128 million drawn down. This grant through local authorities is for between €2,000 and €10,000, which is far more manageable for smaller businesses and is popular. It lacks funding breadth, though, and as the Minister of State knows, it has run out. It needs to be replenished. Businesses needed that money as soon as it became available to them, given that they had been waiting.

There are microfinance loans of up to €50,000. Some €18 million has been drawn down to date, with 1,015 applications and 665 approvals, representing a 65% successful drawdown rate for a loan with an APR of 4.5%. Germany and France are charging 1.4% interest to their microenterprises. We are charging ours 4.5%, are passing on a relatively high interest rate to companies that are already facing challenges, operating at a loss and in debt, yet we somehow think we are helping them.

I will reference another matter that has been mentioned, that being, the risk to banks. It is as if small business people do not have skin in the game because they only need 80% backing. There is the concept of moral hazard, but everyone involved in small business has a great deal of skin in the game. Most people have spent lifetimes wrapped up in their businesses, their employment and their pensions. There is no sense that they will take off into the sunset with money supplied by the State. Rather, this money is to resuscitate them and, I hope, get them back into business.

A number of business groups have appeared before the Covid committee. They told us that they needed a quantum of money with few strings attached. They primarily asked for grants to stimulate and recover the business lost and to protect employment.

What are the implications of a fund that does not work at the level required? First and foremost, there will be SME losses. The smallest businesses and those in the regions will go the fastest. There is internal demand in Dublin, but there is less demand in Waterford and far less in Cahersiveen. These businesses must be protected. We will have closures, unemployment and rural stagnation. Many of us outside of Dublin know what that feels like. How can we ask pillar banks to fund tourism-related businesses through loans when business plans are shot to ribbons? Has the Minister of State ever tried to sit down with a bank manager and give him or her his projections when his turnover is down 50% and likely to stay that way for the next 12 or 18 months? See how sympathetic the manager will be and how willing to jump on board to help the business.

Debt is toxic, but that message is not getting through. Grants are needed to shore up balance sheets, particularly of small businesses. Loans on tops of previous debts make business recovery far more difficult, if not impossible. This message must get through.

What must we implement within this credit guarantee scheme? All Covid loans being given by the commercial banks, which Deputy Boyd Barrett pointed out have been backed by socialised debt for a number of years, need to be extended to five years. People cannot be asked to start repaying money after one, two or three years when they are incurring losses during the first 12 months they spend back in operation. The credit guarantee scheme loans up to €1 million. Its terms should be extended to seven years, given that it is a different quantum of money. Repayments pose an issue in light of the coupon the Government is proposing to attach to it. Loan repayments should be deferred for the first 12 months. This would allow companies to get working capital back into their business. Instead, we are asking them to give that capital up in order to repay a loan that the State is backing. If the loans go bad, the State would lose on them anyway. It makes no sense to me.

Debt is toxic whenever turnover is non-existent. That is a fundamental in business. Repayment holidays would inject some capital into every business. Interest rates should be as close to the ECB wholesale margin as possible. As other Deputies have pointed out, it makes no sense to transfer money, put it back in our business case and then have the State try to add a coupon of its own to try to make something out of the transaction.

Why is the Strategic Banking Corporation of Ireland, SBCI, the right vehicle for this purpose? Why have a banking vehicle that lends to the pillar banks? It makes no sense to me at all and I have never understood it. It is time to view the SBCI as a separate bank. Maybe it is time to change its articles of association and allow it to become a commercial bank. Why not use it as a vehicle for lending alongside credit unions and post offices? Can we not be more radical in our thinking and dynamic in the way we view these problems? There is quite an amount of money in credit unions that is earning no interest. It could be put into bonds and funds, people could get some return on it and it could be put to work in our communities. This would be a way of invigorating people's sense of ownership in their areas.

I wish to discuss how the finances of our country are measured and GNI* versus GDP. We moved away from speaking about GDP a while ago, yet when it comes to Europe, we still look at ourselves in GDP terms. This sometimes leaves us at a significant disadvantage. In 2019, GDP was €356 billion whereas GNI* was €214 billion, a 40% discrepancy. This is what happens when we take out the moneys from aircraft leasing, off-balance sheet transactions, the knowledge box and so on, yet we count all of that as if we have created economic value. It is a myth. It is ethereal. It does not exist. We need to get back to quantifying what we do and what we do not do.

Turning to the €750 billion EU package, we are 1% of the European project's population, but I do not believe we are getting €7.5 billion from the EU in rescue funding. I might be wrong on that.

Regarding the July stimulus, it has been said a number of times that we have to revisit VAT rates, in particular for the tourism sector. We cannot go to 0%, but we can certainly go to 5%. It might have to return to 9%, but there has to be a VAT holiday for a significant time. People say that a VAT reduction does not stimulate demand, but it certainly does not hurt demand when prices drop.

The Government must examine the issue of rents and utilities.

There are significant problems for people who are caught up in upward only rent agreements. The Government has spoken about this on a number of occasions but it has done nothing about it. We also need to identify the landlords who are profiteering at a high rate. There are a number of private companies providing student accommodation in this country that have not returned moneys to hard-pressed families and students who paid in advance for student accommodation. The Government has done nothing about this as of yet. I refer to a particular accommodation attached to University College Cork. I would appreciate if the Minister of State's officials could make inquiries into what is happening in that regard. A commitment was given through the university that moneys would be returned.

On insurance, the reform of this sector has been under way since 2016. The Minister of State needs to find a means to get behind the significant problem in the sector. There are industries that are completely monopolised by one insurer such that companies have to take or leave it. We need to get on top of this issue.

Another issue is administration light, in respect of which I am sure the Minister of State is aware of the issues. If a company is not turning over in excess of €1 million it cannot afford to seek administrative assistance for its business. Essentially, it goes under and the liquidators call-in its debts. Larger companies can turnover that but small companies that are challenged, particularly in these times, need to be protected. There are plenty of provocative people in the administration area. The Government needs to consider the introduction of legislation, perhaps emergency legislation, to protect companies that are having their debts called in and being forced into liquidation.

On public sector procurement and the reference earlier to turbo charging a public procurement fund, the Government needs to review and radically reform public procurement, particularly within local authorities and the wider public sector. There are people in the local authorities who are drafting and awarding tenders every week. The manner in which the tenders are drafted and grouped does not favour local business. It makes no sense to me to send Government income into an area and to have people then draft tenders to send it back out again. The small business people find it too difficult to meet the tender criteria. This needs to be raised with the people who are giving out money. People working in procurement for the local authority are like customer services. They have money to give out to hard pressed businesses and we need that money to stay within the regions. An examination of the procurement process would take care of that.

Ireland has challenges, including Covid-19 and Brexit. We need to again socialise and save our commercial sector. We must save our employers and in turn to save our citizens. The time is now right for dynamic and innovative planning. I hope that this credit guarantee scheme will be the beginning. I look forward to the debate to follow in the hope that we will manage to craft legislation that will rescue our SME communities.

We move now to the Rural Independent Group. I understand Deputies Mattie McGrath, Nolan and Danny Healy-Rae are sharing time.

Deputy Nolan will speak first.

Tá áthas orm labhairt ar an mBille fíorthábhachtach seo. The purpose of this Bill is to make particular amendments to the Credit Guarantee Act 2012 to support the needs of businesses to access additional finance as a result of the Covid-19 crisis. I support that principle. However, I have some concerns.

In May of this year I engaged with the Minister for Finance on the need to expand the way in which the credit guarantee scheme has operated to date. At that time, I made the point that microenterprises and SMEs related to agriculture, horticulture and fisheries were excluded from 2012 onwards from the scope of the existing credit guarantee scheme because of particular restrictions in regard to state aid rules. I was concerned about this and I suggested the introduction of the low interest loan Covid-19 market disruption support scheme which the Irish Farmers' Association, IFA, and other farming bodies have called for. I am happy to note that following my insistence and engagement with the former Minister for Finance, Deputy Donohoe, clarity was brought to this issue and the current Bill goes some way towards addressing these particular concerns. That said, I would like specific assurances that SMEs related to the agri-sector are not excluded from accessing much-needed finance under this Bill. This is incredibly important not only because the SME agri-sector has been hit by massive losses but because of the losses being experienced in the wider European context of a potential and highly damaging loss of CAP funding in future years.

We know that as a net contributor to the EU what we will receive in EU funding is likely to diminish considerably in the long term. It is important we have equality of access across the different economic sectors and agriculture should be no different. Rural sectors must not be disadvantaged in a way that would amount to competitive favouritism by any provision contained within this Bill. I note that one of the conditionalities associated with this Bill is that once the credit guarantee scheme is operational SMEs wishing to avail of the scheme will have to contact a participating Irish bank. I understand from an analysis performed by Mason Hayes & Curran that it will be up to the bank to make the necessary assessments and to decide whether it is prepared to grant a loan to the SME. Based on that Mason Hayes & Curran analysis it is highly likely that banks will require SMEs availing of credit guarantees to be of "good financial standing and commercially viable". This is extremely worrying. I am concerned that a number of SMEs, as a result of this criteria, will be locked out. It is abundantly clear from recent and historical experience that when we leave it to the banks to determine what "commercially viable" means, trouble inevitably follows for the small farmer, the small businessman or the small businesswoman.

There is also a need to bring clarity to how interest rates will be applied to the scheme. Again, as I understand it, a recent Government press release stated that credit guarantee scheme, CGS, loans will be made available at below market interest rates but the information available on the Department of Finance website and from some participating banks states that the interest rate is the standard SME interest rate plus a premium, which is currently 0.5%. I find that confusing. Which is it? We cannot have any profiteering off the back of this scheme by the banks.

I would like to mention the publicans. Last week was one of the most stressful for the 3,499 pubs that were due to reopen. The lack of consultation only compounded the issue. In my constituency of Laois-Offaly there are approximately 135 pubs affected. If even a fraction of them were forced to close permanently, this would represent a massive blow to an already struggling region that is undergoing radical disruption under the just transition process. The vintners have said that they will need grants of approximately €20,000 to €50,000 to survive. I support that call. What will this Bill do for those particular businesses that cannot contemplate further debt through loans, even low interest loans? It is clear that what we need is a whole-of-Government approach where no business is excluded. Everything from finance to the Department of Finance, local government and commercial rates must be brought into the mix if our SMEs and microenterprises are to survive and thrive.

I welcome the appointment of the Minister of State, Deputy English. I am very concerned. Like many speakers tonight I support the thrust of the Bill and the need for it. With no disrespect to the departmental officials present, the Bill is drawn up by mandarins in the Department. This is a problem for me. Why do we not have business people in here who can be consulted and engaged with and who could then draw up a Bill? This scheme will be a failure. I do not want to be a prophet of doom and gloom or to be pessimistic but we already have rates waivers for business people who pay VAT and are registered for tax yet throughout July the councils sent out the July moiety of the rates for the next six months.

I understand they have to do that under law but businesses have not got a shilling, not a red cent, from the previous or current Government.

All the promises are rolling out. First, the Government said it would be €2 billion and now that will be €1.5 billion, or whatever. It is all schemes and rhymes but it is not practicable or workable. It will hit ordinary businesspeople until such time as we tackle the utility companies, the insurance companies and the banks. The banks are not functioning. Why is the Strategic Banking Corporation of Ireland, SBCI, in charge of the scheme? Will it lend to its friends in the pillar banks - AIB, Bank of Ireland and some others - which are not functioning?

The Minister of State stated this is the largest credit guarantee ever. It is, but what about the bank bailout? That was the biggest whopper we ever did. My children, my grandchildren, my great-grandchildren and all our grandchildren will be paying it back. Let us cut out the baloney. We are in a huge crisis and pandemic. I have called it a scamdemic. The more I see of these schemes, and the more I see of what is going on, I am beginning to see I was 100% right. There is scamming everywhere. The banks are going to look at these business people, and if they do not have a good credit history, a line will be put through them straight away. The banks are not functioning. They are functioning to make profits. We fought hard in the previous Dáil and before it to bring in a model based on that of Kiwibank in New Zealand or that which existed in Germany. I thought that in Germany, it would all be companies such as Volkswagen that we are well aware of. When I was doing research, I was shocked to find out that between 80% and 85% of companies in Germany are small or medium enterprises, but they are supported. There are community banks and the profits go back into the community.

This is a bad start for the Government. It and several of its predecessors are in hock to the banks. We seem to be able just to adore and admire them on high, and we cannot say a word to them. During parliamentary questions last week, I happened to be in the Chair when the Minister for Business, Enterprise and Innovation, Deputy Varadkar, did not come to the Chamber. I know there were different circumstances, but nonetheless we need answers and he is not here tonight either. He needs to get down and dirty instead of the Flash Harry kind of stuff he has on his Twitter, with #Leo and hashtag this and hashtag that. He should get down to the ordinary people who are trying to put food on the table, who are trying to employ themselves, keep themselves employed and employ other people.

This is all about jobs in the regions and it is SMEs that provide them. Our tourism industry is on its knees. It has not got a shilling. While those businesses that provide public services have got money and have received 50% of the funding, I am talking about the whole tourism industry if we get the borders open and if we become a green country again. It is more important that our country flourishes before we talk about green zones throughout the world. We should look after ourselves. Ní neart go cur le chéile. We should look after our people, but I do not believe that this scheme will do so or that it has the ability to do so. We have not touched the insurance industry, banking legislation or the utility companies. A hotelier in my town of Clonmel paid almost €9,000 in utility charges incurred while his hotel was closed. God almighty. That is daylight, night-time and 24-7 robbery. It is a plundering. Businesses are being plundered but the utility companies are getting away with it and are not being tackled.

Earlier I raised a very sensible idea. We are looking for a VAT reduction and the Government is minded not to give it, but it must give incentives to people so they will go out and spend. I was contacted by a number of hoteliers and ordinary bed and breakfast owners. There are many in my area and they are well noted. If the Ceann Comhairle gets an opportunity on his staycation this year, he might come down to the Nire Valley, to Hanora's Cottage and to O'Gorman's of Glasha. One will not get the like of them in the country: the hosts, the cuisine, the area and the way they look after people.

Will the Deputy be there too for the entertainment?

I will be around. The Minister of State need not worry; I am always around. A gang of his crowd arrived one night in January in a kind of clandestine raid to Hanora's Cottage in the Nire Valley. I happened to turn up and knocked on the door, and the poor woman, Mrs. Mary Wall, nearly collapsed. When I arrived, there were five or six of us, and they enjoyed it and I enjoyed it. We were well looked after, with a nice drop of the craythur, a roaring turf fire, wonderful food and splendid mountains to climb.

As has been shown again with this pandemic, everything is booked online. It is online, online, online. It is all card payment, no cash. Every time we make a booking, whether on booking.com or numerous other booking agencies, between 10% and 20% of the cost of the sale is taken by the companies. Whether it is a bed for a night, a meal, a trip on a bus, a boat tour on a lake or whatever, between 10% and 20% is being creamed off by those companies. One must deal with simple matters such as that. We should try to curtail it. Such companies have to live too but they should be given 5% instead, for example. A charge of 10% or 15% cancels out a 12.5% VAT waiver. The money is flowing out of the country and we cannot seem to see it. We need to get down and dirty and get in business people such as Michael O'Leary or the many other self-made people who have started companies. I am sure they will be attacked for having low-paid workers. I am an employer myself. Almost all small employers look after their staff well and vice versa. It is a two-way street.

The scheme is doomed to failure. It is too slow and has been nobbled by the banks. They will have control of it and we know they will do what they have always done. I am asking the Minister of State, even though it is probably falling on deaf ears. He is wearing a face mask tonight but the Government has a mask around its ears. It does not seem to understand what makes ordinary people tick, what makes a man get up in the morning, be self-employed and borrow. The Government is trying to roll the credit unions out of business altogether. The Minister of State is a Meath man and he should know it. He should talk to the small employers there about what they want. It is not loans at these interest rates. They should be paying no interest. They need stimulus and grants, but above all, they need to be allowed to live. The Government should cut out the cabal of the insurance companies, the banks and the utility companies, robbing businesses in daylight every day.

I call Deputy Healy-Rae. Follow that.

I wish the Minister of State well in his new portfolio. While I am grateful for the thrust of the scheme, like Deputy Mattie McGrath I am doubtful of it. The banks will be the distributors. I was once told the banks will give a person money if he or she does not need it and if he or she has a good credit rating. If a person needs money, however, the banks will not give it. That is the truth of the matter.

There are many problems specific to Kerry, in respect of seasonal workers, hotel workers, bus drivers and so on. Take, for example, the pandemic unemployment payment, PUP, of €350. Many seasonal workers who work in hotels, drive buses or are otherwise involved in the tourism industry did not receive it because they had not been working for the week of 6 March to 13 March. If the lockdown had not come for another fortnight, all of them would have been working. Now the story about them is that their stamps have run down and they will not get jobseeker's allowance.

On top of that, many of them will not qualify for the wage subsidy scheme either, because the guidelines state that applicants had to be working in January and February. Hotels, therefore, that called back their workers are not entitled to the scheme and they too are caught. I ask the Government to deal with that. If someone worked for a lower number of hours, as some people did in January and February, employers can receive the wage subsidy based only on that number of hours. I want the Government to address that.

Many people over the age of 66 years who feel they have been left behind employ people. I refer to people such as publicans. One woman rang me all the way from Donegal when it was announced last weekend that pubs would not be allowed to reopen. She and her daughter run a pub. In April she turned 66 years old. She has many commitments and outstanding bills to pay, like a lot of other publicans. Many of them are older and all they get is their old age pension, which is not sufficient to pay the outstanding utility bills, whether they are for water, additional electricity or other charges that accrue. Such people were employing others. Those who are over the age of 66 should at least have been given as much as the PUP of €350.

There are several other matters to consider, such as the plight of businesses in sectors such as farming and fishing. I ask the Government to consider the people involved in these sectors. There is much talk about creating jobs but we must try to retain the jobs we traditionally had and which have worked. We need to help businesses connected to farmers and fishermen.

Others have been forgotten, including musicians who used to play around the counties and were paid for it and singers. These people have been left behind. We can take the likes of Siamsa Tíre in Tralee as an example. Siamsa Tíre has done wonderful work promoting youngsters between the ages of 15 to 18 and has taken them all over the world. The people involved with Siamsa Tíre got them going and recognised over the years. It has had to close and, although it needs money, it cannot fundraise. The Minister of State knows the groups that do so much work cannot fundraise so I ask the Government to consider their plight. On top of everything else that the pandemic has done to people, we do not want to lose our culture. We do not want to lose what people brought us over centuries and that they want to carry us into the future. We must recognise that.

I spoke about Skellig Michael earlier and I appeal to the Government to open the island again. A part of the problem in getting it reopened is the cost of insurance for boatmen. When paying insurance, these workers used to be able to spread their payments over a longer period but now their time working has been practically halved, assuming the island will be reopened. Their premium will now be more than they can afford. I ask the Government to help people like them. It is important to consider how just that one place could affect all south Kerry. We can think of the spin-off effect if we could even get it going at a slow pace. The national park and traditional farmhouses in Killarney are closed but there is more in the area. People are struggling because when places were open during the lockdown, it cost them much more. People have not been remunerated and it is likely that those businesses will be in serious trouble.

We have weathered much this year but next year we will see trouble. We are looking to the new Government to do something to help retain the jobs and businesses we have had. Many of those businesses will be in trouble next year and the banks are not the ones to save them. I appeal to the Minister of State to listen to my comments about the pubs because as what has happened in that sector is totally unfair. As I said last week, how does the virus know a person is eating a meal while drinking a pint? It is absolutely ridiculous but as the Government kept the pubs closed, it must do something about giving the owners grants rather than loans. These people have enough loans to repay. I am asking the Government to look after the publicans in rural Ireland because if it does not, some of them will never open their doors again. I mean that.

I agree with Deputy Shanahan's comments on procurement. That process was introduced, ostensibly, to make the position fairer and to ensure fair competition. From my limited experience of four years on the Committee of Public Accounts, however, it seems that there are serious problems in the way the process operates to the disadvantage of businesses in Galway and other areas. It certainly must be looked at. I understand that it was being examined, although I forget which Department was involved. It would be great if the Minister of State could clarify the matter because we were in receipt of ongoing representations from the likes of the Galway and Roscommon Education and Training Board, which highlighted the problems relating to procurement.

As I always do, I thank the Oireachtas Library & Research Service. I realise that it is under pressure but it has produced an excellent document to give us an overview of the Government's proposal and previous legislation from 2012 and 2016. It is important to thank the Oireachtas Library & Research Service because it does a great job in educating us. If we do not follow through on that, it is our own fault.

Before getting into the intricacies of the matter, it seems Deputy Boyd Barrett has absolutely captured the nub of it. We are setting up a €2 billion fund, which is good to make credit available but this will be done through three pillar banks while ensuring that their level of risk is tiny. We should really be looking at community banking. The Opposition tried to suggest this to the previous Government, which said it could not be done, although other countries, such as New Zealand and Germany, have done it. We are now looking at the three pillar banks to do this. Although I will get to the minutiae, I must state that what is being suggested seems incredible. Deputy Boyd Barrett is absolutely right in saying this is socialism for the banks and capitalism for the taxpayer. I could not have put it any better than he has.

To put it in context, we are being told that this credit guarantee scheme will be the largest of its type in the history of the State. As with the existing credit guarantee scheme, it will be operated by the Strategic Banking Corporation of Ireland. We have been told that all loans and credit facilities will be made available through the three participating banks, which are AIB, Bank of Ireland and Ulster Bank. I listened carefully to the Minister of State and I understood that this is open to other credit institutions. I am not sure why we do not know who they are. When will we know? I am sure the Minister of State will clarify that when he speaks again.

The initial efforts were with the main banks because they have 90% of the customers. It will be open to all lending institutions to use the scheme.

That is good to know. The sum involved is €2 billion and liability to the State is to be capped at €1.6 billion. I will not get into the detail, particularly as it has been mentioned by many speakers before me. We do not know the interest rate. We have been told it is expected to be low and the rate will be reduced because the cap on the portfolio is gone. The Government seems to be anticipating this but there is no guarantee at all that the interest rate will go down.

We have all received letters from the bus and coach operators. Among many points and recommendations these people tell us that the existing credit guarantee scheme needs to be altered in order to address the needs of small business because interest rates are too high. The same points apply to this. We know the uptake on the current scheme has been very low. I am looking at the Covid-19 business supports tracker from 3 July. The existing scheme was set up in 2012 and only 867 approvals had been made by this year. I am not sure if these materialised into loans. Different figures have been used tonight but what is absolutely clear is that the scheme was underutilised from 2012. The value of total approvals made in eight years was €152.56 million, while there was authorisation to go to €150 million every year.

We can consider the review, which was, unfortunately, carried out in 2013. I would have thought the scheme could have been reviewed more frequently. A second process was carried out by Indecon in 2019 but the credit guarantee scheme was only a small part of that analysis. These analyses indicate that the existing scheme is too cumbersome and restricted, with too narrow a time span and many other weaknesses.

It has taken a pandemic for the Government to put legislation before us to change the existing scheme. I would have thought that a scheme which has been in place since 2012 and which was, given the importance of SMEs to the economy, under-functioning should have been reviewed and changed. I know that legislation was brought forward in 2016 with some limited changes but that did not alter the level of uptake relating to the scheme. The latter went up only slightly. If we look at figures in isolation, we see that the sanctions went up, and that is welcome, but we have to put it in context of the number of enterprises in Ireland. The Minister of State quoted the numbers, and they are staggering. SMEs alone account for 99.8% or 255,000 of active enterprises in Ireland, representing 70.1% of all employment and generating 41.5% of the gross value added in the economy. The Minister of State knows that, and he has quoted the figures. We all know the position but it is worth focusing on those figures.

Until the past few weeks when I took a particular interest in the legislation before us, I had not realised the importance of SMEs and microenterprises to the country and in the context of employment. When we look at the figures and see that the existing scheme is not being used, I have worries that this scheme will not be used or that businesses will not draw down the loans being provided because of the interest rates involved and their experiences to date. As other speakers stated, it is also adding to their indebtedness.

There is a lack of clarity regarding the criteria that will be used. I understand that a statutory instrument will bring in the fishermen, the farmers and other mid-caps, if that is the correct reference. Again, there is lack of clarity on that or on when it will happen.

In the context of the speed with which this measure is being dealt- this has been commented on by other Deputies - I realise that there is urgency required. However, we have been aware for months - and we certainly know from the report produced by the Central Bank in April - that liquidity is a big problem for businesses. It is now July and, as Deputy Boyd Barrett indicated, we are again rushing legislation through the Dáil. As with the legislation last week, which I spent a lot of time trying to get my head around, I have a difficulty. I will support the Bill but I am supporting something that I am not entirely happy with. I am supporting legislation in respect of which a regulatory impact analysis has not been carried out because of the speed with which we are being asked to put the legislation through the Dáil.

I look again at what the Oireachtas Library & Research Service has told us, which is that a short regulatory impact analysis was produced for this Bill by the Department of Business, Enterprise and Innovation. The key points are included in table 4, which outlines the costs and the competitiveness. The benefits are then considered and the analysis concludes: "North-South, East-West Relations, Gender Equality Benefits - None." and "Poverty Proofing, Industry Costs, Quality Regulation Benefits - None." I am not sure how to interpret that but Social Justice Ireland, and I quoted it last week, tells us that, prior to the pandemic, rural areas generally had older populations, higher rates of part-time employment, lower medium incomes, higher dependency ratios and higher poverty ratios than the national average. The Library & Research Service's material goes on to quote from a report I have previously used from the regional assemblies which looked at the impact of Covid-19 on a regional basis. Their finding that the regions and the rural areas - and they mention Donegal, Kerry, Galway, Clare, Cavan and a number of other counties - are all suffering much more than other places because of Covid-19 is not surprising, yet there is no impact analysis as part of this legislation, which is very difficult to accept and to vote for.

There has been a great deal of discussion about the new green way in Europe, and I welcome that. I am looking forward to seeing the details of it but none of this legislation so far has mentioned climate change or our obligations in that regard. We have stated on the one hand that we cannot go back to the way things were and that we have to learn from the Covid-19 pandemic and go forward. On the other hand, we are actually making things worse in my opinion. To take one example in Galway, we decided to run a cycle route out in Salthill on a pilot basis. It worked a treat. Under pressure, I understand, the local authority has stopped that. It is gone. The local authority bent to pressure and the traffic on the road is almost back to the way it was previously, at the same time that the Government is giving out a daily message that we should not use public transport. The Minister of State should reflect on that message. He should make public transport ready to use during the Covid pandemic.

I am an example of someone who used public transport and I am now putting a car on the road, much to my shame. I am part of a message going out to say do not use public transport, at a time when we have declared a climate emergency. The Minister of State has got to reflect on that message and on what needs to be done to get public transport back in full use. He has to tell us what he is doing for those in the bus and coach industry. They have written to the Minister and to the Government on many occasions with very practical suggestions. We cannot say that we are serious about climate change and the biodiversity crisis we have and that we will never go back to the way we were when we are doing that with every measure we are taking. I have repeatedly stated that I represent Galway West and south Mayo, taking in the Aran Islands, Inisboffin and all of the rural areas in Connemara and beyond, namely, Kilmaine, Shrule, Cong and Galway city. I stand here for sustainable development for my city and my county, not on a parochial level but because we need to do it for every county.

We are getting a fund of €2 billion. We are guaranteeing it. We are letting the banks set the interest rate, and we see nothing wrong with that. I am a party to the debate on this legislation, which is giving the thumbs up to the banks to set whatever interest rate they want when struggling businesses want to access funds that we are getting at a zero rate. That does not make sense to me. What also makes no sense to me is that we are not looking at the sustainability of businesses, certainly from a financial and a business point of view but also in terms of the environment, climate change and energy. We should be looking at all of that in regard to funds.

Finally, we are not looking at grants at all. We are giving out loans to companies and small businesses that are already indebted and that, according to the Central Bank's report, have liquidity problems. Surely grants would make much more sense in view of the fact that we are accessing money at a very cheap rate.

I intend to reflect on whether I will support this legislation. I am inclined to support it because the concept behind it is very good. We already covered small businesses and microbusinesses in other recent legislation. The fishermen and farmers need our help but they do not need it in circumstances where they are going to be further indebted and in more trouble. We need to look at sustainability on more than a financial level.

Debate adjourned.
Sitting suspended at 9 p.m. and resumed at 9.20 p.m.