Adjournment Debate. - Fishing Co-Operatives Funding.

Deputy Cecilia Keaveney gave notice of her intention to raise the following matter: the need to categorise fishing co-operatives as small and medium enterprises for the purpose of soft loan finance. I take this opportunity to congratulate her on the occasion of her maiden speech in Dáil Éireann. I have no doubt that it will be the first of many contributions she will make in this Chamber.

Thank you, Sir, for the opportunity to raise this matter which relates to allowing the fishing co-operatives access to the Government's affordable loan finance programme.

There is an anomaly in the regulations for the programmes and as a result fishing co-operatives appear to be excluded. The fishing industry also appears to be excluded from participation in the subsidised loans schemes for Border counties from the European Union. There can be no doubt that the two soft loan schemes introduced in response to the Task Force on Small Business have had a major impact on the overall ability of asset backed small companies to secure affordable longer-term finance. However, for some bizarre reason fishing co-operatives and those running fishing enterprises have not had access to these funds.

This represents a discrimination against a sector that has much to contribute in terms of enterprise and jobs. Fishing is a major business and its role should be recognised; for example, it is the biggest enterprise in County Donegal. Fishing is also a sector that is under intense competition and, therefore, needs a modern fleet. The failure to allow fishermen to have access to the funds appears to go against the spirit of the Government programme which gives a commitment to improve fishermen's working conditions and safety by reducing the age of the offshore and inshore fleets.

The dangers of fishing are well known as we have found to our cost in Donegal. Fishing is considered to be ten times more dangerous than mining. This underlines the importance of the renewal of the fleet. At present much of the fleet is very old. According to the review of the Common Fisheries Policy, the average age of a vessel in the Irish dimersal fleet in 1990 was estimated to be about 30 years old but many boats are up to 50 years old. No new vessels have been built since then; in fact, vessels of this kind stopped being built in the early 1980s. What is now approaching is a situation where the older boats are being decommissioned, they are being left in port and we are losing out.

A 1992 socio-economic study on the fisheries sector said that, given the average age of the Irish fleet, most vessels are able to pay their way but few are returning sufficient profits to facilitate vessel replacement. This emphasises the importance for fishing co-operatives and fishermen to have access to affordable loan finance. If they do not, the fleet will continue to disintegrate. It will also be unable to meet the challenge of other EU countries, with Spain for example, currently rebuilding its total fleet.

The Irish fishing industry must compete or die. As somebody who comes from County Donegal, where the ports of Greencastle and Killybegs play such an important role, I am not willing to allow the fishing industry to go into decline. If the fleet goes, with it goes schools, shops, services and, indeed, life itself in depopulated rural areas.

I am calling on the Minister of State to extend the affordable loan finance programme to fishing co-ops. I also ask him, in conjunction with his Government colleague, the Minister for the Marine, to consider a special, separate fund for fishermen and fishing co-ops the next time a fund is announced. This would reap dividends for the economy and would be a wise and welcome development.

Fishermen are not looking for charity. They are looking for recognition as small and medium enterprises, and to have the same access as other firms in the sector to affordable loan finance.

I am delighted to hear Deputy Keaveney make such an eloquent maiden speech on behalf of her constituents and of an important industry for her area.

To take up her point about fishing safety, the Health and Safety Authority is within my brief and we have paid particular attention to safety in the fishing industry. We are concerned about the appalling loss of life experienced in the industry, especially within the last year. I have visited fishermen's wives in Donegal and launched an exhibition on fishing safety. A task force within the Authorty has been appointed to concentrate on this area and, in conjunction with fishing representatives, it is examining what constructive steps we can take together to reduce the toll of death and injury.

The subject of the Adjournment debate is access to the finance scheme, the primary measure of the small business operational programme launched in September 1996. The scheme provides a total fund of £208 million with a subsidised interest rate of 6.5 per cent fixed for a period of seven years. It is being administered by four commercial banks — AIB, Bank of Ireland, Ulster Bank and National Irish Bank.

The scheme is a unique partnership between the European Community, the participating banks and the Exchequer. The subsidy on the loans is carried by the European Commission as part of its contribution to the operational programme under the European Regional Development Fund, by the Exchequer and by the four participating banks. The banks carry all the risk associated with the loans, which are appraised by the banks in accordance with normal commercial banking criteria. The banks also carry almost 50 per cent of the cost of the subsidy.

The purpose of the scheme is to improve the access of small business to finance and credit and to address the key borrowing needs of small business by providing low cost funds with certainty in relation to repayments and simplicity in administration. The scheme is intended to be as broadly based as possible; accordingly, with the exception of sectors specifically regulated by the EU to which special conditions apply, the scheme is available to all types of non-agricultural small business in Ireland.

As regards categorising fishing co-operatives as small or medium enterprises, the scheme is aimed at small businesses which are defined as enterprises which employ 50 or fewer employees or have a turnover less than £3 million or, where the businesses are part of a group structure, the total employment of the group does not exceed 150. Consequently, fishing co-operatives which come within the scope of that definition would be eligible under the scheme provided certain additional criteria are met.

In regard to these additional criteria it is relevant to mention that the access to the finance scheme constitutes a State aid and consequently it had to be notified to the Commission of the European Communities for approval as part of the operational programme for small business. The scheme was duly approved by the Commission with the inclusion of a number of conditions relating to Community policy and sensitive sectors. For example, the Community contribution for the scheme under the European Regional Development Fund cannot be used to fund investments falling within the exclusive remit of the FEOGA fund under Regulation 866/90 and the granting of loans to the agricultural food sector is subject to the prior certification of the Department of Agriculture, Food and Forestry, so that the selection criteria specified in Regulation 866/90 are met.

In the case of the marine food sector, discussions took place between officials of my Department, the Department of the Marine and the Commission to establish working arrangements to ensure appropriate access of the sector to the scheme while fully respecting Community policies. These discussions led to an agreement that each application for a loan relating to the marine food sector must be certified by the Department of the Marine as complying with the general provisions for fisheries set out in the Community Support Framework for Ireland, 1994 to 1999. That Department must also improve the investment and inform the monitoring committee for fisheries of the investment to ensure a comprehensive and integrated approach to fisheries investments and their subsequent evaluation. This certification is carried out by the aquaculture division and sea fisheries division of the Department of the Marine as appropriate. It does not in any way guarantee that a project will qualify for a loan under the scheme as the banks are required to apply normal commercial criteria to each project before approval can be given. I hope this clarifies the position for the Deputy.

The Dáil adjourned at 9.05 p.m. until 10.30 a.m. on Wednesday, 1 May 1996.