Credit Guarantee (Amendment) Bill 2020: Second Stage (Resumed)

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

It is important after five months of this pandemic that we as policymakers pause and assess where we are in our response to the pandemic. We have seen the pandemic have a significant impact upon society, but as legislators we need to recognise that our response to it must be based upon accurate, factual information. If people are looking for accurate, factual information on the pandemic, I recommend they go to the State's Covid-19 data hub, which is available on the Ordnance Survey website, as it provides very detailed, factual, empirical information in respect of the pandemic and its impact on the country.

At the outset, I wish to set out some of the relevant factual statistics in respect to the pandemic as I think they must guide all of our decisions as policymakers when it comes to legislation or policy decisions. Since the pandemic arrived on these shores some five months ago, 25,802 people have been detected as having the Covid-19 virus. Of those 25,802 people, 1,753 people have died of or with Covid-19. That is a tragedy for all of those families. However, it may be the case that the number of deaths is too high because we know that when we look at the information about excess deaths in Ireland in the past five months it seems to suggest there is an excess death rate of approximately 1,200. Whether the figure is 1,753 or 1,200, a large number of people, unfortunately, have died as a result of this pandemic.

We also need to bring ourselves back to March and recall why we decided we were going to introduce such a stringent lockdown. The reason for it was that we saw what was happening in the intensive care units in Italy and Spain and in the hospitals of Italy and Spain, and we were legitimately concerned that when the pandemic came to Ireland we could find our intensive care units overwhelmed with people coming in with Covid-19 and we would be unable to provide them with the appropriate medical attention. That was an appalling prospect for any country to face, and it was for that reason we made the correct decision to go into the lockdown.

We need to record, however, and remember how many people have gone into intensive care units as a result of Covid-19. To date, over the past five months, 437 people have been admitted to intensive care units with Covid-19. That reached a heightened level of concern in April. On 11 April there were approximately 155 people in intensive care units in Ireland, which was a matter of real concern to us. What we need to be aware of, however, is that today, 22 July, we are in the fortunate position that only seven people in Ireland are in intensive care units with Covid-19. That is a very manageable figure, although it is obviously a very difficult time for those seven people, but it is a considerable reduction on where we were on 11 April.

We also need to assess where we are in terms of hospitalisation, because obviously a much greater number of people went into hospital with Covid-19 than went into intensive care units. To date, some 3,343 people in Ireland have been hospitalised with the Covid-19 virus. However, today, 22 July, we are in the fortunate position that only 13 people are in hospital with Covid-19. We have come from a situation where we had significant numbers of people in intensive care units in hospital to a situation where there are only seven people in intensive care units and 13 people in hospital with Covid-19. I wish all of them a speedy recovery. I know it is a very difficult time for them and their families, but it is important to state that if we can retain figures at that level, there will be no reason for us to consider having to go back into lockdown. I know people are concerned about the increasing number of cases that are being reported on a daily basis, but we need to be careful we do not become unnecessarily unnerved by those figures. It was always going to be the case that the figures were going to rise as a result of the loosening of the significant restrictions that we put in back in March.

We also need to look at the economic consequences and facts in respect to this matter. As I stated last week, unemployment is now 22.5% and youth unemployment is 45%. We need to ensure we have measures in place to deal with that. That is the reason I am supportive of this legislation, which I believe will be very helpful to small businesses in providing them with credit to ensure they can get their business operations up and running again.

Deputy Jim O'Callaghan has outlined the stark numbers that have presented with Covid-19. We have faced an extreme challenge. It is appropriate to note that in fact has been the case throughout our history. I refer to famine, invasion, occupation and economic struggle. That hardship is recognised. I expect the Covid-19 pandemic will, unfortunately, cause a very significant economic difficulty for this nation. The challenge we face is of a different type than we are used to throughout our history. The challenge of tackling Covid-19 will require the State to act in ways it has never acted before. We have risen to the challenges of this situation, both in terms of the response of individual citizens and the State's response by means of public sector workers, from hospital porters and doctors and nurses, up to and including Members of the Oireachtas who passed emergency legislation some months ago for the purposes of ensuring that citizens were supported through this process during the lockdown.

Unfortunately, it does appear the struggle will continue for some time. The economic fallout from the virus will likely long outlast the impacts of the virus itself. As we are all acutely aware, Ireland's business community has been hit hard in recent months and this scene has been replicated across the world. The global economy now faces the challenge of a generation. The spectre of a second wave of the virus in the autumn and winter has sown scepticism and caution within the business community and international markets. It is in this light we can recognise the need for clear and effective domestic legislation to support businesses and people through this economically turbulent time. Thousands of families across Ireland woke up this morning filled with worry, as their livelihoods have been severely curtailed in recent months. We will have to wait, and still may never know, the full extent that this period has had on the mental health and well-being of so many people in our country. For most, the sacrifice of jobs and livelihoods were made with grace, dignity and understanding, understanding that these sacrifices were made to protect the lives of the vulnerable in our community and to protect people they may never meet. Together, we flattened the curve and are doing our best to keep the situation under control. However, as society and the economy have begun to reopen, the risks to the future financial viability of many businesses in Ireland are becoming exposed and pose a real threat to our long-term economic health.

Small and medium enterprises, SMEs, play one of the most significant roles in the economy, employing approximately 1 million people prior to the pandemic, driving new innovation and advancing our contribution to every field of endeavour. Their impact on the success of this country cannot be overstated. I am, therefore, pleased that since the earliest phases of the pandemic, supports for SMEs have been made available and continue to be adapted to reflect the economic reality of this crisis. This Bill will result in the implementation and development of the largest credit guarantee in the history of the State, accurately reflecting the magnitude of the issues in front of us. Such measures, along with important amendments to company law legislation and the grant schemes available, will provide SMEs with a stable environment in which they can navigate their way through this crisis.

The availability of, and access to, stable lines of credit may prove to be a significant factor in the survival of countless businesses, reaching into every sector of our economy and touching every village in Ireland. While it may not be possible to protect every business and job, we can limit our exposure to the worst ramifications of the global economic downturn. By acting now and implementing the necessary changes to give SMEs breathing space, we can weather this storm and emerge from the crisis in a position of stability that will allow us to regain our growth and take advantage of new opportunities.

For many years, Ireland has been an attractive destination for foreign direct investment, FDI. This source of revenue and jobs has undoubtedly contributed to the transformation of our economy and our island. However, in a global environment of uncertainty, we must give pause to consider, rightly, the long-term health of the economy. We have a strong foundation of SMEs and this, combined with an attractive and open system that supports new companies being launched and expanded in Ireland, can secure continued growth into the future.

The Covid-19 pandemic has demanded changes within our society and not all of these changes can or will be reversed. The nature of work, long debated over recent years, has been shown to be more adaptable than we might have ordinarily thought. Working from home and improved work-life balance have been shown to be possible and to be a viable arrangement for many businesses. Helping SMEs adapt to these and other changes help the whole of society and can ease certain costs SMEs and employees endure.

Developing a flexible and innovative economy and business environment can provide Ireland with a competitive edge over other nations when we, as an international community, overcome the impacts of Covid. Creating innovation hubs, increasing programmes to enhance the financial education of SME owners, drafting effective national SME policies and action plans, as well as supporting a significant increase in the digitalisation that SMEs have clearly shown appetite for in recent months, based on applications for the trading online voucher scheme, will deliver real change to our SME sector. I believe that a renewed approach towards SMEs can benefit all of society, helping, in effect, to stabilise the present but plan for the future and better days.

Ireland has the potential to make significant gains in the years ahead. No longer bound by geographic or industrial might, Ireland finds itself competing in a global economy, driven by progress in innovation, the digital economy, medical advancements and environmentally friendly technology. These sectors will see an ever-increasing number of jobs and revenue streams in the decades ahead. Through a young and educated workforce, we have the ability to provide the right environment for businesses and start-ups to release the full potential of our people, helping to drive a new era of financial and economic success. None of this will be easily gained, nor will it be possible to achieve in the absence of a vibrant and healthy SME sector. Diversifying our approach and ensuring SMEs and entrepreneurs have the supports they need to thrive will be to the long-term benefit of everyone, lifting our society to new heights and emerging from this time of struggle with a positive story to tell future generations.

As was mentioned by Deputy O'Callaghan, the unemployment rate is at 22%. It was a lot higher. Hundreds of thousands of people in the State are still being supported through the wage subsidy scheme and the pandemic unemployment payment, PUP. Those decisions were made by Members to the betterment and improvement of society as a whole.

The decisions the House will make in the coming weeks and months will shape the economic future of the country for years to come. It is imperative that we send a message to existing SMEs and young entrepreneurs that the Government and the House supports them on every step of their companies' journey from their beginning, through an approachable system that fosters company growth, to ongoing support through business development grants and to credit support should those businesses experience difficult times. Providing certainty to our business community will result in Ireland having a better future.

Some of the difficulties with the previous scheme are well known to the business community. Given the changes made in 2012, certain aspects of the scheme have been a little bit slow to be taken up by the business community. I have long believed a business-led simplification of the credit guarantee schemes available through the State should be made. While I accept, of course, that our financial institutions must bear some of the risk of State-backed supports to the SME sector, I wonder whether there are lessons we can learn from recent years, in respect of the success rate of individual companies drawing down the credit guarantee schemes available, to ensure this enhanced scheme with a €2 billion limit does what Members want it to do. This is something worthy of consideration.

We must consider a number of aspects of the Bill and associated legislation, particularly as September approaches. One of the discussions that took place last night with the Minister for Children and Youth Affairs on a motion tabled by the Sinn Féin party was on supports for the childcare sector. This is a prime example of parents who might want to go back to work and who will avail of their children returning to school for the first time in six months when they start in September. If a child is unable to attend school because of a cold, a respiratory short-term illness or a sniffle, and is not allowed into the classroom because of certain arrangements, what of the parent trying to run a small business or who is an employee in a small business? What protection will these individuals have in the context of their employment rights? Should they have to take additional time off? Many parents throughout the island have run out of annual leave. There are associated considerations to be made by all of us in the House. While I am certain the Bill will pass, I am not certain we have the time left in the Dáil schedule to consider all aspects and implications of the Covid-19 pandemic on employment rights and the various supports that have to be provided across the board throughout all sectors.

I welcome the Bill. I have long been an advocate of altering the system we have in place for the purposes of making it easier for businesses to draw down on it. However, I recognise that certain financial institutions will review an application to the credit guarantee scheme or other State support scheme and apply what I believe to be difficult criteria, which involve companies being refused even if they are granted by the Department's process. Unfortunately, this leads to the type of uncertainty for businesses whereby they might not be in a position to keep their doors open and retain the 1 million people who work in the SME sector. I look forward to the speedy passage of the Bill.

I would like to take this opportunity to acknowledge and congratulate Deputy English on his appointment as Minister of State at the Department. I am certain he will bring the same zeal he brought to housing to this Department. I wish him and the Minister well in their endeavours.

I call Deputy O'Connor who, I am afraid, has just over a minute.

I welcome the Bill. It is at times like this we must recognise that we have to do things differently and act responsibly and urgently to address the severe challenges our economy faces in responding to the Covid-19 pandemic. This is the right time for the State to play a key role in our economy and to work side-by-side with businesses to get through this crisis. That is why I welcome the decision of the European Commission to introduce the temporary framework for state aid which is the basis of the Bill.

The Bill has much potential and I would like to use my time to speak on implementation. Big ideas need action and successful implementation. I would like to speak about the proposed amendment to section 3 of the 2012 Act which extends the scope of the credit guarantee scheme to primary agriculture, fisheries and aquaculture producers and the implementation of the scheme through the Strategic Banking Corporation of Ireland, SBCI. On the inclusion of agriculture, I do not have to stand here and debate the importance of the agricultural sector to the Irish economy. My constituency includes towns such as Fermoy, Mitchelstown and Mallow and I have a background in agriculture. My region is very reliant on the agrifood sector. I was pleased to note the inclusion of agriculture in the temporary framework for state aid.

In recent weeks, the House gave the agriculture sector a much-needed boost by extending the future growth loan scheme. This will help to future-proof Irish agriculture and to make sure it is as cutting edge as possible, as well as allowing it to continue to be a world leader in high-quality produce and research.

The Deputy is out of time. My apologies for that. We now move to the Sinn Féin block. Deputies Mairéad Farrell, Martin Kenny, Brian Stanley and Imelda Munster will share time.

Bhí go leor gnólachtaí i dteagmháil liom le tamall anuas mar gheall go bhfuil an t-uafás éiginnteachta ann maidir lena dtodhchaí. Tá faitíos an domhain orthu nach mbeidh siad in ann iasacht ar bith a fháil agus nach mbeidh deontais ar fáil dóibh.

Sinn Féin has consistently stated since the onset of this crisis that these are extraordinary times which necessitate extraordinary measures. Many SMEs are starved of capital right now. The reality is that these businesses are the backbone of our economy and provide much needed employment in the most rural and remote areas in the State. They have, I am sure, contacted every single one of us to tell us they cannot cope with the onset of Covid-19. For many this also involves the changes they will need to make to their businesses in order for them to be in line with public health advice. These people, families and communities need to know we are doing everything in our power to ensure their survival. For many rural areas the survival of these small and micro-businesses impacts on the survival of communities.

One group of businesses that is gravely concerned about their livelihoods are the owners of bed and breakfast accommodation. The tourism industry has fallen to its knees in recent months. I spoke with one owner of bed and breakfast accommodation yesterday who told me she had not had a single knock on her door since March, meaning that she has had no income since then. A woman to whom I spoke highlighted the fact that she was a pensioner and, therefore, was ineligible for the Covid-19 pandemic unemployment payment. As I have said in the Chamber, people have told me they are working not as a hobby but because they have bills and mortgages to pay. They are unable to survive without this income.

A key issue for the owners of bed and breakfast accommodation is that they are non-ratable businesses because they are businesses which are run in homes. Therefore, certain grants are not available to them. Another owner of bed and breakfast accommodation told me it was estimated to cost in the region of €40,000 to make all of the necessary changes to be in line with public health advice. This person has a mortgage that still needs to be paid, no visitors are knocking on the door and grants cannot be accessed. The family told me they do not think they would be able to get a loan from a bank. Non-ratable businesses need access to grants and assurances in the credit guarantee scheme. Clearly, the scheme is there to assist businesses in acquiring much-needed capital so they can stay in business and preserve jobs.

Several problems with the scheme have been highlighted by my colleagues in recent days. Today I would like to draw the attention of the House to another issue, namely, the timeliness of the appeals process for SMEs that have had their initial applications for finance turned down. For many SMEs whose loan requests have been turned down by their respective banks, they will first have to exhaust their banks' internal appeals process before they can take an appeal to the Credit Review Office which acts as a type of ombudsman. It overturns, on average, more than 50% of the appeals decisions that come before it. Nevertheless, while it offers borrowers an independent review and, therefore, the right to an impartial appeal, this can be time consuming for many SMEs. Given our current predicament, many small businesses simply cannot afford to wait up to three months while they exhaust their banks' internal appeals processes before they can appeal to the Credit Review Office.

I ask the Minister to consider putting in place a mechanism which would allow SMEs which have had their requests for funding turned down by their banks to bypass internal appeals processes and be able to take appeals straight to the Credit Review Office, and that such a policy would remain in place for the duration of the Covid-19 crisis. Furthermore, could the appeals fee, which ranges from €100 to €250, depending on the size of the credit involved, be refunded to the applicant given the current emergency? If this would put too much pressure on the Credit Review Office and would simply move the backlog from banks to the appeals process, could the Minister request that banks establish internal dedicated credit guarantee appeals teams that would be responsible for assessing appeals within a short turnaround timeframe? If an applicant is not satisfied with this appeal, he or she could bring the matter to the Credit Review Office.

I would be also interested in hearing whether the Minister, in the event he can proceed with this proposal, could also commit to ensuring the figures on the rates of refusals and declines for loan applications and appeals are published. This would alleviate a lot of the fears out there.

It is obvious to everyone that we have a situation across the country where many small businesses are under massive pressure as a result of Covid-19 and the onslaught it has brought on their cashflow. They are trying to keep on employees and to keep their businesses afloat under the most difficult of circumstances.

There is a lesson in all of this for the economic model we have used in Ireland for so long. When there is a crisis, whether it is Covid-19, an economic crash or Brexit, who has to come to the rescue? It is not the markets, yet at all other times we are told the markets are there to solve all of the problems. They do not solve problems when there is a crisis. Instead, it is up to the taxpayer and Government to come in and shore up and support businesses. That is appropriate and proper, and it is exactly what we need to do right now.

It is ironic, given the circumstances in which we find ourselves, that the way the Government has chosen to address the crisis is through a credit guarantee scheme, which of course is necessary. However, the model it has again chosen is to provide help through the pillar banks. The difficulty many small businesses have is that they are at the mercy of credit committees in these banks. That has been always the case.

Business owners who are looking for money are usually already under stress and in debt from trying to establish their businesses and keep them going. When they go to banks to look for additional cash to keep cashflow going, to stay afloat and to get over a hill to the top so they can continue to flourish, they find they are meeting the same problem, namely, that the banks are the ones that are in control. That is one of the major flaws in the proposal. We continue to use pillar banks as if they were going to solve our problems. They certainly will not, and in many cases we find that many of our small businesses are at their mercy.

A lot of small businesses in Ireland are struggling even in ordinary times. I have spoken to the owners of small businesses across my constituency who employ a small number of people and continue to work very hard and keep going even in these difficult circumstances. They pay their way and are able to continue in business. Crises like Covid-19 put them in a situation whereby they are now considering whether they should remain open or close. Many are choosing to close.

That is one of the ironies of all of this, and it goes back to what I said at the beginning of my statement, namely, that the economic model we use in this country puts just enough support under people to get them started and then abandons them to the mercies of the markets. That simply does not work in the long term and we need to review that model as we move into the future so that if we face another crisis in one year or ten years' time we are not in a situation whereby the taxpayer has to come in and rescue businesses. There must be a better and more sustainable model that works for everyone.

Another aspect of this involves the European Union and the way it treats countries that choose to invest in their local and indigenous economies. The Stability and Growth Pact states that Governments cannot invest in their economies, which is a significant problem. Of course, many of the other countries in the EU, even Germany which is one of the most strident in defending this policy, break the rules and are most adventurous in investing in their economies and ensuring their indigenous economies are flourishing.

At the same time, such countries punish other countries for trying to do the same thing. The Government needs to become more adventurous and strident in ensuring that we develop our indigenous industries and economies, particularly in the regions. I come from the north-west region and that part of the world has the greatest opportunity and potential in the country. There is a highly educated workforce but, unfortunately, many of those from the area who get degrees and do well in life cannot find work in their local area and must travel to the east coast or leave the country altogether. That is a part of the lesson that we need to learn. We need investment in the economy that is deep and spread across the island so that we can ensure, come what may, we will have the strength to work our way through it.

This credit guarantee scheme is necessary but the manner in which it is being rolled out is totally mistaken. We should not be doing it through the banks. We need to pump money in at the bottom of the economy so that people will spend it because if they do, they will keep the economy going.

I welcome the opportunity to speak on this Bill. The past five months have been a very difficult time for the economy and people of Ireland. Covid-19 has brought with it unexpected and unprecedented financial issues for many businesses which would otherwise have been sustainable. Many workers have been left in limbo, not knowing whether they will have a job to go back to. Sinn Féin therefore welcomes the Government's credit guarantee legislation which will make it easier for SMEs to access affordable credit. In May, we wrote to the Minister for Finance and called for legislation similar to the Bill the Government is now implementing. We are glad the Government has taken on board suggestions from Sinn Féin and listened to us. We are determined to be an effective Opposition and want to provide real solutions to deal with serious issues such as this.

A number of sectors are struggling in my constituency of Laois-Offaly, including the coach and bus industry, and the hospitality sector. Many pub owners have their backs against the wall, as do others in the retail sector. I have spoken to many people in these sorts of companies during the Covid emergency and in recent days. They have told me that what they need right now is grants. A large number of these businesses are already carrying substantial loans and the last thing they need is more debt. They are already struggling and cannot afford to take on extra debt. It is for that reason that Sinn Féin is calling for grants of up to €25,000 for those SMEs. There should be no interest accruing to loans under the credit guarantee scheme for the first 12 months. Thereafter, only low interest should apply, no more than 2.5%, as opposed to the current scheme where up to 5.5% is being charged. The rates waiver scheme, which has been successful in keeping businesses afloat, needs to be extended beyond 1 January 2021.

It is also essential that the wage subsidy scheme continue for businesses that meet the criteria and qualify for it. I stress that these schemes should mainly be for small and medium-sized businesses. Many large companies are able to leverage credit and capital from the banks and are thereby able to stay afloat. The loans and grants to which I am referring should only be for decent employers. If the State, using taxpayers' money, gives a helping hand to the private sector, employers must uphold their side of the bargain by continuing to pay fair wages and upholding decent conditions for workers. Employers should not use the emergency to slash the wages of workers. We know that is happening and I have heard complaints from workers that some businesses have not wasted a good crisis. It is unacceptable for a business to use this opportunity to slash the wages of workers even when it is availing of the wage subsidy scheme.

The Government should also implement the voucher scheme that Sinn Féin proposed a few weeks ago. Sinn Féin proposed a voucher scheme for families who take a staycation. The vouchers could be spent on anything in the hospitality sector, excluding alcohol. That would get tens of thousands of workers back into employment and give families a badly needed break.

Sinn Féin wants to make a positive contribution to the economic recovery, which will be difficult. We are glad that many of our proposals are being taken on board. That is good news. We need to stimulate the economy and get money circulating again. That will, in turn, generate revenue for the State through the universal social charge, PRSI, PAYE and VAT. It is important that we regenerate the economy and get it back up off its knees.

The Central Bank issued a report on the SME sector yesterday and it made for very stark reading indeed. It tells a story of less money coming in. Some 39% of firms report that invoices have gone unpaid. Small businesses are struggling to get banks to lend to them. Unpaid invoices have a knock-on effect on the whole of the supply chain and we need to be conscious of that. Whether we are talking about a small food supplier, a self-employed person or whatever else it may be, the negative multiplier effect, in that sense, is something for which we need to watch out because businesses will be collapsing under the radar.

All this has meant that staff have been let go, payments have been deferred and businesses have been forced to close altogether. I am glad to see this common-sense Bill and a willingness on the part of the Government to adopt recommendations from Sinn Féin. That said, I strongly urge the Minister to look at the rest of the proposals made by Sinn Féin. The Bill improves the credit guarantee scheme but we need to do far more. This legislation does not get us away from the fact that an injection of cash through grant aid is required. Sinn Féin has spoken about that necessity and has acted accordingly in the North by supplying grants for small businesses.

We know that small businesses are struggling right across the country. For example, coach and bus operators are struggling, as my colleague, Deputy Stanley, mentioned. Those businesses have been hit extremely hard. I have been in contact with owners of such businesses in my constituency and despite how hard their businesses have been hit, they are clear that they can only stay in business if there is genuine support for them. They are watching the activities of the Dáil with interest and hoping that no one in the Government is asleep at the wheel. Those business owners agree with Sinn Féin's assessment of the credit guarantee scheme. They knew straightaway that it was badly designed and would mean higher interest rates that would be of little assistance to small businesses such as theirs. The amendment is a small step in the right direction towards supporting industries such as the coach tourism sector and many others but more needs to be done. The country cannot function without a proper transport system that serves all areas, no matter how remote. The business owners that I am talking about have invested heavily, are already carrying debt and cannot bear any more, particularly at high interest rates.

Much has been said about the opening of so-called wet pubs. Regardless of the rights and wrongs of this, they have been asked by the Government to stay closed for the safety of everyone, like many other businesses. Owners of such pubs need to know that the Government is doing all it can to put the necessary supports in place. The Government cannot make decisions in isolation. It must ensure that these viable yet vulnerable businesses are supported in order that they can continue to trade. It must work with the Opposition and listen to our ideas, not dismiss them out of hand for political reasons.

The accommodation and food sectors have experienced an extreme shock across the board. The Central Bank, in its report, states that 77% of businesses in the sector have reported turnover more than 75% below normal. We must look at the supply chains in that regard, as we must with dry cleaners and launderettes. Between 60% and 80% of income in dry cleaning and launderette businesses comes from the hospitality sector. It is important that dry cleaners and launderettes are considered and aligned with the hospitality sector so that we can keep those businesses up and running.

The Bill increases to 80% the portfolio cap in the Government's Covid-19 credit guarantee scheme and I welcome that, although it should be higher, as Sinn Féin has suggested. Without the removal of the cap, banks would refuse to lend to small businesses in dire need of affordable loans. As has already been said, Sinn Féin is proposing a cap on interest rates at 2.5%. The interest rates on the loans provided to date are too high.

The issues were flagged by Sinn Féin shortly after the loan scheme was announced in May. This was communicated to the Minister for Finance and the Minister with responsibility for business. My earliest contribution in the Dáil was on interest rates and the amount of money the banks would be making on the back of these struggling businesses. The reasons loans would be unattractive to smaller businesses were outlined. Today, one of these issues is being addressed. I urge the Government to look at the other issues highlighted as a matter of urgency. Businesses need a minimum of a 12-month window guarantee before they make repayments on loans and they also need guaranteed low-interest payments.

There is so much uncertainty about the future. The situation regarding a vaccine is evolving. I hope we will have a vaccine sooner rather than later. However, we will not get back to a normality whereby these businesses can trade until there is a vaccine in place. That needs to be reflected in terms of what the Government is doing. These are vulnerable but viable businesses that we depend on for employment. We depend on having these businesses in our communities to allow them, particularly those in rural Ireland, to be prosperous and viable.

I welcome the Bill, but much more needs to be done. The key words are "simplicity" and "urgency" in the context of getting the money to the right places at the right time.

I remind the House that the debate on this Bill must conclude at 10.30 a.m. Our next slot is a Government one. We will begin with Deputy Murnane O'Connor.

I am sharing time with Deputies Flaherty and Crowe. The Government has my full support. This legislation to extend the option of overdrafts, term loans and working capital for small and medium-sized businesses that have been severely hit by the Covid-19 pandemic is welcome. It is important that we support viable businesses and ensure that our entrepreneurs do not go to the wall because of something that was completely beyond their control.

I am keen to encourage robust scrutiny of this loan scheme to ensure that the taxpayer will not be on the hook because we failed to engage in due diligence at this stage of the process. It is important that these credit agreements will be accessed not only by those who have the means but also by those who do not.

I wish to raise another issue. Some banks refused to issue mortgages to people who were put on wage subsidy schemes. Are businesses going to suffer the same fate? These businesses abided by the public health advice, closed for the pandemic and are now reopening with less potential for profit than before. Will they be denied these loans because their bank balances are less pretty than they were previously?

The Credit Guarantee Act 2012 and the subsequent amending legislation refer to where a participating finance provider fails or refuses to comply with the terms of a credit guarantee scheme and provides that the Minister may withdraw a guarantee given in respect of any qualifying finance agreement to which the participating finance provider is a party. Is there a commitment in respect of businesses if banks refuse to lend to those which have traded at a loss in recent months but which had been viable previously? Will they have some recourse? Does the guarantee provide that these businesses can still qualify for the credit facilities? Obviously, we cannot interfere with the day-to-day running of the banks. However, can we assure those who might want to apply that the banks will lend? Have the main financial providers told the Government that these credit facilities can be accessed immediately? What is the timeline regarding decisions? Can businesses receive guidance on how long they can expect to wait for approval?

I want to ask about VAT. I have been speaking to those in hospitality and the vintners. I have had several Zoom meetings with them. The biggest issue they face is the need for a reduction in VAT to 9%. They believe that will keep their doors open. Is there any way we can do that to keep this sector going?

I have also had Zoom meetings with barbers and hairdressers and other small businesses. The biggest concern they have is that we will go into a second phase of lockdown. If we do, some believe that it will not be viable for them to reopen and they will not be able to keep their doors closed. This morning, I listened to RTÉ Radio 1. A health professional was interviewed and outlined his belief that are we looking at the prospect of staying in our counties again. The biggest issue is the schools. These are all major issues for businesses. Perhaps the Minister of State could come back on this point.

The main thing is a commitment to manage the uncertainty for businesses in order that they can survive. Is there any way we can look at the fact that online businesses outside Ireland are free to advertise their prices without VAT while Irish companies cannot do so? Obviously, the customer pays the VAT, but it seems unfair to Irish businesses trading online that they are immediately at a disadvantage. Maybe the Minister can come back to me on this matter.

I am pleased to see the Bill proceeding through the Dáil today. It will be important as we look to kick-start our economy in a Covid-19 era. The Bill will enable the distribution of low-cost loans to many businesses affected by the global pandemic. That will be a great help.

Equally important and as significant as those low-cost loans will be the July stimulus programme. It will include a suite of measures and supports to aid the Irish public and hospitality sectors. Those supports and incentives need to be decisive and strong. The reality is the pub sector in particular has suffered adversely throughout this crisis. We have to acknowledge the great contribution made by publicans. Let us think back to early March. Many of our rural and country publicans led by example. They put their hands up first and said they were closing their bars in the national interest, in the interests of public health and, more importantly, in the interest of the welfare of their local communities. They did so ahead of any talk about a national lockdown. They did so prior to any talk about Covid-19 payments. They did so ahead of any talk about a business restart. They were completely selfless. The broad cohort of publicans have behaved admirably throughout this crisis.

It is fair and reasonable to say that as of now publicans are angry and frustrated. Their eagerly awaited reopening has been delayed. It is understandable and correct that the public health advice has been that we should delay the reopening. However, it is incumbent on the House, specifically in respect of the July incentive package which will be unveiled later this week, to deliver clear, meaningful and strong incentives to encourage as many publicans as possible to come back to the fold.

The reality is that, owing to Covid-19 social distancing guidelines, public health requirements and, unfortunately, a general downturn in the economic viability of the pub sector as a result of Covid-19, many of our pubs will not reopen. Everyone in the House is well aware of the significance and importance of the community pub to rural Ireland as well as the importance of the traditional pub to our tourism model. That is why it is so important that we need to see strong and meaningful support from the House this week. We need a business incentive scheme to encourage as many of our rural pubs as possible to reopen on 10 August.

There are 12 minutes remaining. Deputy Crowe is next.

I join my colleagues in welcoming the Bill, which makes provision for the largest credit guarantee scheme in the history of the State. That is certainly welcome for businesses that are now at the pin of their collar. This will offer some much-needed liquidity as they try to get back on their feet. It is good news on top of last week's financial provisions and microenterprise loan fund legislation. It proves that in the early weeks of this Government there has been a real willingness on this side of the House to prime local businesses to ensure that they are in the fittest and healthiest financial state possible as they try to resurrect, get back to work and start doing what they do best.

There are a number of outliers. I want to briefly mention one of these to the Minister of State. A man came to Dublin last week. He arrived at the gates of Leinster House. His name is Sean Kilkenny. He is a colourful character from Tuamgraney in east Clare. He got plenty of coverage on the national airwaves. Sean Kilkenny operates a jarvey business in east Clare. He has beautiful carriages that at this time of year would normally operate in and around the grounds of Dromoland Castle. He has a range of other carriages that are used for funerals and weddings. He has 42 or 43 animals, including some beautiful Connemara ponies and Irish draught horses. He is really holding up and shoring up a rural economy, providing a vital tourism industry in the region.

Mr. Kilkenny is in one of those outlier situations. He is getting his Covid-19 related payment of €350, but he has major operating costs. We need to see scope within the July stimulus and the measures we are adopting this week to support and benefit those such as Mr. Kilkenny to ensure these businesses will not go to the wall during this crisis. Owners of bed and breakfasts also have issues, particularly those over the age of 66 as they are not eligible for Covid-19 payments. They also find themselves outside the qualifying net for several supports already announced.

My final point concerns bank loans, because I understand that what we are approving this week will be dispersed through the Bank of Ireland, AIB and Ulster Bank. Defaulting on any standing order with a bank, or even a missed direct debit relating to a Vodafone or ESB bill, will mean that a person's credit rating will go sour. Credit ratings are fragile. The very people who will look for this finance in late July and August as they try to refinance their businesses, therefore, are probably the same people who have defaulted on basic, simple and small direct debits that were unable to come from their accounts because of a lack of liquidity. Going on the credit ratings system will mean that some of these people will go into the bank, with all of their paperwork in order and with a credible claim for a loan, but they will not be able to get it because they defaulted on some small basic payments in the previous six months during the Covid-19 crisis. This issue will be a major anomaly affecting many people, so I urge the Minister to look at it and give some assurances to SMEs.

I join others from my party who have spoken about publicans. What has happened thus far has had to be guided by public health guidance and we all accept that fully. There has, however, been a disproportionate benefit to those who run food-serving pubs in urban constituencies, as opposed to those in rural areas who can see no light at the end of the tunnel. That situation needs to remain fluid and more clarity needs to be brought to this area by the Government.

There are seven minutes remaining. I call Deputy Cahill.

We find ourselves in the unique situation of an economic crisis caused by a health emergency. Businesses that in normal times would be on a sound financial footing are now under significant economic pressure, unfortunately, because their working capital is completely tied up or their cash flow has stopped. That is why I am delighted to have this opportunity to welcome the credit guarantee scheme. A sum of €2 billion sounds like a ferocious amount but there is much pent-up demand for this credit scheme. Our SMEs are very important and it is essential that we do everything in our power to help them.

The cost of this loan scheme must be kept to a minimum. We have seen other initiatives where interest rates have been quoted at between 4% and 5%. That is not acceptable given the cost of money on the financial markets. The reality is that the public and business people have completely lost confidence in the banks. Every week, people come into my clinics who have been trying to get mortgages and some who had already been approved for mortgages by financial institutions. Like many hundreds of thousands of other people, they have gone on supporting payments because of changed circumstances due to the coronavirus or they have moved jobs and have gone on to contract employment. The banks are refusing to honour their previous commitments to people seeking mortgages. We devote much attention in this House to the housing crisis and rightly so. The issue regarding the ability of young couples to avail of mortgages during this pandemic must get more attention. The way our banks are treating these people has to come under greater scrutiny. I urge the Minister to give directives to the banks regarding people who, through no fault of their own, have changed circumstances. The commitments given to those people should be honoured.

The July stimulus package, of approximately €7 billion, will also be announced this week. I reiterate that the pressure on businesses is immense. Two weeks ago during a Topical Issue debate, I made a plea on behalf of private bus operators. They are under great pressure and they are the cornerstone of the infrastructure for our tourism industry. Like many other sectors, those businesses will not recover even in 2021 or 2022. Even if the pandemic goes well and a vaccine is found, those businesses will not return to where they would have been even in 2022 and they will need ongoing help into the future. We have some of the big operators in that sector in our neck of the woods and they are a key part of our tourism infrastructure. Those operators have buses sitting in their yards that were bought new this spring for €350,000 in preparation for this year's tourism season. The problems for those operators are not going to go away today, tomorrow or even in six months.

Like other Deputies, I was disappointed that the pubs were not allowed to open. I accept fully that decisions regarding the health of our citizens are paramount. Unfortunately, rural publicans cannot understand how pubs in large urban centres can open while those pubs that would count ten or 15 people a big crowd cannot. Restricted admission might have got us over some of the problems that the health officials thought the opening of rural pubs might cause. The health experts told us that when the economy started to reopen that cases would increase. That is normal, because people are mixing more and that was bound to happen. Publicans need clear guidance and they were very cross at the lateness of this decision. All the indications coming up to last weekend and last Monday suggested that pubs would be allowed to open. Many publicans had ordered stock, serviced their coolers and incurred additional expense. These are people who have had no cash flow since mid-March. If there are going to be changes to the roadmap, those changes need to be signposted well in advance.

Like my fellow Government Deputies, I welcome this initiative. The costs for businesses, however, must be kept at a reasonable level. Our businesses and SMEs never wanted help more if we are going to reboot our economy. Figures are being bandied about this week regarding the large amounts that will be coming from the EU, but that is over a seven-year period. Many businesses will need grants as well as loans and businesses in some sectors that are under more pressure than others. This is a unique situation and austerity will not solve it. We must spend our way out of this crisis and we must give help to these businesses to get back on an even keel and to do that as soon as possible.

I thank the Deputy. A little over one minute remains for the Minister of State to reply. Would he like to make brief concluding remarks?

We will probably get a chance on Committee Stage to go through many of the suggestions that were made. I thank the House for the support for the Bill. Most Members across the board supported it. I noticed that Deputy Martin Kenny did not like how we are going to administer the loans, but he did not put forward any other way to do it. Most Members agree, therefore, that this is the right approach to take regarding this intervention. Again, this is only one initiative and some €12 billion more in supports will be announced as part of the July stimulus plan. This is a mechanism to ensure we can get our banks lending to those who need it at good interest rates as quickly as we can.

Many comments reflected on the existing scheme that has been operating since 2012. I want to clarify that this is a very different scheme. We are changing the criteria and putting an allocation of €2 billion behind this initiative, compared to €150 million for the other initiative. This is, therefore, a very different scheme. We are changing the portfolio cap and the businesses that can be supported, and we have no doubt that this scheme will work and will be able to respond to the demands created by the impact of Covid-19. People are making judgments on a scheme that was not necessarily needed in the seven to eight years pre-Covid-19. We know, however, that because of what has happened since February and March that we need a new scheme and this legislation is intended to respond to the needs of today.

Question put and agreed to.

I understand that the Government Chief Whip has a business proposal to put to the House.