We will be supporting the Bill and will do everything to ensure it passes smoothly through the parliamentary process. We welcome the fact that we are putting in place funds for small and medium-sized businesses in both the business and agriculture sectors to allow them to access loans to fund working capital projects.
We all know that there is grave uncertainty, primarily as a result of Brexit, the America First policy, tariffs and potential trade wars and all that flows from them. Uncertainty is the barrier to investment. It diminishes people's business confidence and very quickly access to credit dries up. People cannot invest and there are difficulties in maintaining growth in individual companies and the broader economy. This fund, therefore, is very welcome.
In the coming months we will be trying to ensure we are as Brexit-proofed as possible. There are uncertainties beyond our control. We are waiting for Westminster to decide on the Prime Minister, Mrs. May's proposals. We do not know if they will be successful in the short or medium term, but what we do know is that there will not be many upsides to Brexit for Ireland. We can start planning and ensuring support for small and medium-sized businesses that are dependent on the export market, primarily to the United Kingdom but also farther afield.
Diversification is critically important. Companies need to be weaned off their dependence on the UK market because of proximity and language; they need to look farther afield into the eurozone and beyond. All of these things will take time, planning and effort. I know that Enterprise Ireland and others are continually supporting that process. Credit is a critically important component for any organisation that is trying to expand and open up new markets for its products. That is something about which I would be concerned. It seems that we have not been able to encourage enough companies to look beyond immediate markets and diversify, as is the policy. Providing supports for companies, through Enterprise Ireland and others, will be a necessary component in ensuring that process continues.
The European Investment Fund was established because of the credit crisis and the fact that small and medium sized businesses were unable to access credit in the traditional forms through banks. I am concerned that the risk has shifted from the pillar banks back to the use of these funds again. It should be additional funding, not replace what the pillar banks should be funding. We must be able to monitor what is happening in the short and medium term. The Minister for Agriculture, Food and the Marine and the Minister for Business, Enterprise and Innovation will have statutory powers to enter into agreements to draw down loans. The Strategic Banking Corporation of Ireland will assess individual applicants to see whether they are suitable and I assume they will then make an application through the pillar banks or the financial institutions participating in the scheme. That is the issue about which I have concerns. The participating lending institutions to which applicants will go are the same ones with which they would be doing business in the traditional manner. I do not want to see a situation where banks will start to lend money through this scheme but squeeze the credit they should be lending to their clients. It must be additional funding; it cannot be replacement funding.
We are subservient to the lending institutions and I am consistently critical of the pillar banks. They are simply not engaging meaningfully to try to address the credit challenges for small and medium-sized businesses and in the broader economy. I have continually referenced the fact that interest rates in Ireland are completely out of kilter with those charged across the eurozone. Interest rates are 5% and 6% to fund a small or medium-sized business in Ireland. Businesses in the eurozone can access loans for much less. The pillar banks are consistently gouging the economy, day in and day out, and we have done nothing about it. They will continue to gouge and profiteer on the backs of small and medium-sized businesses. They are also doing it in the mortgage market and we are subservient to them. We accept it, nod and gracefully allow them to continue. We then go to the established European Investment Fund to borrow from it and allow the pillar banks to disperse the funding, unless I am misreading the Bill. We must insist, through whatever mechanism is required, on this being additional funding. In other words, it is to fund the higher risk elements and the pillar banks should fund the lower risk elements, but I can guarantee that they will fund their clients through this fund. They will replace the funding, which is not good enough.
The Minister only needs to look at previous funds that were made available through the pillar banks to small and medium-sized businesses and the agriculture sector. That is what they did. They lent to people who were very low risk, their immediate clients and had a good client base. People who actually needed working capital and those with cashflow difficulties who needed short-term loans could not access funds. There has to be some independent assessment of a refusal. The Strategic Banking Corporation of Ireland states whether a client is suitable. The client then makes an application to the relevant financial institution, but if the client already has an application for funding through the pillar bank, I would be very disappointed if that funding was replaced. I hope the Minister will bring clarity to the matter and insist on it not being replacement funding.
How Brexit ready are we? In looking at the applications under the various schemes available we have to acknowledge that businesses have been slow enough in taking up some of them. For example, there were 307 applications received under the Brexit loan scheme, of which 270 were approved by the Strategic Banking Corporation of Ireland, while 54 progressed to sanction at bank level, to a value of €12.5 million. To say the very least, that is a fairly high refusal rate. Enterprise Ireland has an online platform for Irish companies to self-assess their level of exposure to Brexit - the Brexit scorecard. A total of 3,332 Brexit scorecards have been completed, including by 502 local enterprise office clients. That is a reasonable effort, but, when looked at in the overall context of the number of Enterprise Ireland clients, it could be a lot better.
The Enterprise Ireland Market Discovery Fund, a support for Enterprise Ireland clients to research new markets, has seen 166 projects approved. The fund was launched in 2018 and the level of expenditure to date is about €165,000. Again, in the overall context, 166 projects is a small number. We must acknowledge that we are an exporting nation. As we trade in open markets, we have to be lean, agile and responsive to market demands. With Brexit as the backdrop, we must be able to respond. Some of the application processes for the various schemes which are all good discourage people. The most feared words in the English language are: "I am from the Government and I am here to help." To a certain extent, it is a bit like that. The application forms discourage small and medium-sized businesses from applying. We should look to simplify them as much as possible, while ensuring the taxpayer is protected at all times. We need to ensure applicants are not discouraged by an avalanche of form-filling and administrative burdens.
When Brexit is finally decided over the coming months, regardless of whether the withdrawal agreement is accepted, we will have to contend with another major step when we enter into the next phase of our trading relationship with the UK and the EU. One thing we know for certain among the grave uncertainty of Brexit itself is that if the UK does not decide to retreat from its present pathway by staying within the EU, there will be a different trading arrangement between the UK and the EU and therefore between the UK and Ireland. We need to be conscious of that as well.
This issue might be slightly outside the scope of the Bill, but it needs to be considered anyway. I have been trying to explain it. Maybe I am not explaining it in a way that people can comprehend or understand. Our common travel area with the UK precedes our membership of the EU. It is part and parcel of the political, cultural and social set-up between the Republic of Ireland and the UK for many historical and political reasons. Many of these arrangements are ad hoc in the sense that they do not have any statutory underpinning. If and when the UK withdraws from the EU, free movement of people will become an issue for the UK and the EU. Our common travel area with the UK will remain. This means, in effect, that we will be in the same labour market as two entities. We will be in the same labour market as the EU by virtue of our membership of the Union. We will be in the same labour market as the UK by dint of having a common travel with the UK.
One of the areas in which this will be a matter of concern is the health system. Both Ireland and the UK have major shortages of skilled labour in their health services. When the UK withdraws from the EU, it will not have access to the EU labour market pool, but it will continue to have access to the Irish labour market pool. There needs to be a critique and an analysis of this issue over the next short period. We already have massive labour shortages across whole swathes of the economy in various sectors, including agriculture and high-end finance. Many parts of our public service are under pressure because we are unable to recruit consultants, doctors, psychologists, speech and language therapists and occupational therapists, etc. The labour market in the UK is facing the same challenges. Until recently, the UK was able to fill vacancies because it was part of the EU labour market. As that changes, the UK could very well look at the labour pool in the Republic of Ireland. We could be in direct competition with the UK as we try to retain workers in our economy. We are already under pressure. I would like the Government to look at that.
The changes I have mentioned could have a profound impact on SMEs. If we start to haemorrhage labour, the shortage of labour will undermine our competitiveness. In such circumstances, difficulties associated with the cost of exporting into a weaker sterling zone will arise immediately. All of these issues have the potential to have knock-on effects on the competitiveness of SMEs. While the loan scheme for working capital that is being proposed is welcome, we need to be able to assess the various potential risks that Brexit poses for the Irish economy, including the risks for the export market and internal risks like the impact on this country's labour market. For all of these reasons, I emphasise that everything we do should be done with potential risks very much to the fore of our minds.
I do not need to go through the technicalities of the Bill that have been outlined by the Minister of State. The Irish pillar banks were saved by acts of Dáil Éireann like the bank guarantee and the legislation that was passed here to underpin it. We threw them a lifeline. We saved AIB and we shored up Bank of Ireland at great cost to the taxpayers and people of the State. They are not repaying us in the way they conduct their daily affairs in almost every branch they occupy throughout the State. The variable mortgage rate is twice the European average. The interest rates available to SMEs are twice the European average, if not more. Even though we are in a common currency zone under the European Central Bank in Frankfurt, our banks are consistently pillaging us. The most amazing aspect of this is that the banks regularly announce to great fanfare that their profits have increased. It is easy for them to increase their profits when their customers are slaving away in the workplace morning, noon and night to pay for overpriced mortgages and business loans. If nothing else is done, this issue should be addressed, at least.
The ideal scenario, regardless of the arrangements that are put in place under the European Investment Fund, is for our banks to step up to the plate and be competitive. They need to be able to assess loans, make lending provisions and charge reasonable interest rates, rather than the extortionate rates they currently charge. I know that after I have spoken, I will get phone calls from representatives of the various banking organisations to tell me that I am wrong. Unfortunately, I am not wrong. That has been accepted by Mr. Draghi, who said when he attended an Oireachtas committee meeting some time ago that these organisations are operating a monopoly. Monopolies are, at the very least, very damaging to economies. Mr. Draghi said that a monopoly is being operated in this sector in this State. I remind the Minister of State that monopolies in many parts of the economy are illegal. We have a monopoly in this country's financial services sector.
I welcome the European Investment Fund Agreement Bill 2018 and hope it has the desired impact. SMEs need support. If the Government does nothing else, it should ensure our pillar banks are brought to heel and brought to book. They need to play their role in ensuring SMEs, family homes and the broader economy are funded through reasonable interest rates, rather than the extortionate rates that are being charged by most of our pillar banks at present. I commend the Bill to the House.