I move: "That the Bill be now read a Second Time."
I welcome the opportunity to present this Bill to the House. I am grateful to the Members of Seanad Éireann for ensuring the speedy passage of the Bill in that House on 10 October last. I look forward to seeing the Bill progress through this House as quickly as possible with the kind support of Deputies. The Bill needs to be passed quickly because it is yet another flanking measure that seeks to ensure our businesses and our economy will be as resilient and as prepared as possible in the event of a disorderly or orderly Brexit.
As the Minister, Deputy Humphreys, said in the Seanad, the provisions of Part 3 of the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019, which is known as the Brexit omnibus Act, are set out again in this Bill. The substantive provisions relate to the granting of lending powers to Enterprise Ireland with regard to debt finance and the purchasing of shares etc. Other provisions in the Bill relate to support for research, development and innovation in several critical sectors. As part of the Brexit omnibus Act has not been commenced, it is prudent and proper to introduce those provisions in this stand-alone Bill now. This approach will further help the enterprise base to remain competitive on the global market through the support of Enterprise Ireland, thereby mitigating the adverse effects of Brexit, regardless of what its nature will be. Many of the provisions of this Bill, including Enterprise Ireland's proposed new lending powers and the enhanced grant-giving provisions in the area of research and development, were discussed during the passage of the Brexit omnibus Act earlier this year. Additionally, the Bill before the House proposes technical amendments to increase the aggregate limit for funding to the enterprise development agencies and to increase the aggregate limit on grants made to Microfinance Ireland.
I welcome the agreement that was reached last week between the EU and the UK on a revised withdrawal agreement and a political declaration on the future relationship between the EU and the UK. The Taoiseach has confirmed his support for President Tusk's proposal to grant the extension sought by the UK to give the UK Parliament more time to enact the necessary legislation aimed at ratifying the withdrawal agreement. Notwithstanding the great challenges of Brexit and other international developments on the horizon, the Government is determined to plan and prepare for future growth and the jobs of tomorrow. Despite all the uncertainty, Irish companies have continued to win sales around the world. We must ensure we can sustain these success stories and sustain and increase our market share in the UK and global markets.
The provisions of this Bill must be considered in the context of Enterprise Ireland's development and diversification agenda. The Government's ambition, through Enterprise Ireland, is to increase the exports of Irish companies to the eurozone by 50% by 2020, or from €4.1 billion in 2016 to €6.5 billion next year. A great deal of work is ongoing to drive this ambition. As part of the global footprint initiative, Enterprise Ireland has announced the targeted expansion of its overseas presence in 2019. Fifteen new posts are being created across 13 countries to help more Irish companies to accelerate their market diversification efforts. This will include new offices in Germany, France, the US, Denmark, Vietnam and Australia. This year, Enterprise Ireland's schedule for international trade mission and events covers an impressive total of 207 events in Ireland and international locations, including 73 ministerial-led trade missions and events. This includes missions across the eurozone, North America, the Asia-Pacific region, the UK, the Nordic states, central Europe and Latin America.
As outlined in budget 2020, the Government is putting in place an additional contingency package of more than €1 billion for Brexit supports for the coming year. This contingency will ensure an initial provision of €110 million will be available to the Department of Business, Enterprise and Innovation and its enterprise and regulatory agencies to provide targeted supports to affected businesses in the immediate aftermath of a no-deal outcome. This contingency funding will allow additional tranches of supports to be provided to meet actual needs in critical areas as the impacts of a no-deal outcome develop. The targeted no-deal supports that have been developed by the Department will be available to companies of all sizes, including microenterprises and small and medium-sized enterprises, SMEs. The sectors that are most exposed include those with a focus on food, manufacturing and internationally traded services. Exporters and importers are both included in this context. As the Department plans for no-deal Brexit enterprise support schemes, its supports will be prioritised in the first instance to assist the firms that will be most affected by Brexit and have future potential. In other words, we will focus on firms that are vulnerable but viable. In the event of a disorderly Brexit, it is essential that appropriate mechanisms are in place to provide liquidity support to businesses.
This Bill proposes to amend the Microenterprise Loan Fund Act 2012 to provide a further €10 million to Microfinance Ireland, MFI. This will improve the SME and microenterprise lending market and maximise the ability of businesses to access appropriate finance at a time when liquidity will be critical. This legislative amendment will enable loans of between €25,000 and €50,000 to be made available to businesses based on the Brexit-related eligibility criteria that apply under the Brexit loan scheme. As a further enhancement, MFI will be able to support the local enterprise office, LEO, network. A combined LEO-MFI Brexit support product will offer funds of up to €100,000 to LEO clients, with MFI servicing the first €50,000 and a LEO repayable grant providing the remainder up to a maximum of €100,000.
The likely immediate consequences of a hard Brexit include currency movements, supply chain constraints, delays, duties and tariffs. This will place a strain on the working capital position of businesses in the first instance. The urgent support requirement for these sectors will be financial liquidity, which will be available through the funded supports of the Strategic Banking Corporation of Ireland, the Brexit working capital loan scheme, Microfinance Ireland and the credit guarantee scheme. This will be available to all sectors.
The key message the Minister, Deputy Humphreys and I have been constantly delivering to business is the critical importance of putting in place working capital safety nets to deal with short-term liquidity demands, including through the Brexit loan scheme.
Adopting new customs arrangements will be a key challenge for business trading with the UK. In addition to the training programmes being rolled out by the local enterprise offices, LEOs, Enterprise Ireland, EI, and by Bord Bia in early August, my Department and the Department of Education and Skills, through a joint initiative with Skillnet and EI, launched Clear Customs, a new €5 million customs recruitment and training initiative. This initiative will boost the number of specialists by more than 500 in customs agents and firms.
With regard to EI's most Brexit-exposed clients, more than 530 companies received approval for funding of €74 million in total in 2018. We need to build on these supports and to provide further latitude to our development agencies to provide a wider suite of supports and flanking measures to help mitigate the negative effects of Brexit. Through these legislative amendments to section 29 of the Industrial Development Act 1986, as proposed in section 1, we are enabling Enterprise Ireland to help position Irish businesses to be more agile and to be able to respond to global challenges, including Brexit. By enhancing their research, development and innovation capabilities and activity Irish firms will have a greater competitive advantage and will be able to maintain it by developing cutting edge products and services that are better performing, more efficiently delivered and more effective for their customers.
The amendments remove the 50% cap set in national legislation on the research and development grant rate to allow EI to fund within permissible EU state aid rules and to pre-fund research and development grants to companies of all sizes. Allowing EI the flexibility to offer enhanced research and development supports will provide for the development of new or substantially improved products, services or processes and assist businesses to grow and increase employment by remaining competitive. All research and development projects that will benefit from the introduction of these amendments but we will still have to meet value for money criteria and comply with the Enterprise Ireland conditions related to the offer of research and development grants.
Section 2 is a technical amendment, which increases the aggregate capital funding that can be provided to IDA Ireland, EI and Science Foundation Ireland from €7 billion to €14 billion. Primary legislation currently sets a statutory limit of €7 billion on the aggregate capital funding that can be provided to these agencies since 1993. As the combined cumulative totals being prepared for the agencies annual financial statements as of end 2018 amounted to €6.543 billion, it is timely to increase the limit for the total capital amounts that the Minister is empowered to provide to these agencies.
Section 3 aims to permit EI to lend and participate in certain types of follow-on investments and provides that Government approval is required for investment amounts or loans in excess of €7.5 million for any client. Providing EI with the powers to facilitate additional lending and investment instruments in certain circumstances increases the flexibility to support enterprise development and to manage its investments on a par with private sector investors. Such additional powers will help to preserve the value of the State's investments in these businesses and will assist companies through restructuring or redevelopment programmes that may be critical in the weeks and months ahead. I emphasise that there is no additional cost to the Exchequer as the cost of these enterprise supports will be accommodated within EI's existing budget. It is now more important than ever that EI can respond in an agile and flexible manner as the opportunities and challenges for its client companies change, specifically in the context of a potential no-deal Brexit, and as the investment market changes. It is also important that EI can flexibly deploy the widest array of interventions that match supports available in other countries, particularly now in a Brexit context.
Section 4 provides for a technical amendment to section 5(2) of the Microenterprise Loan Fund Act 2012.
Section 5 caps the equity that Microfinance Ireland can receive at €25 million, providing for a grant of €10 million under section 5(1) and a further €15 million under section 5(2). The amendment to section 5(2) of the Act will increase the funding by €10 million, from €15 million to €25 million, to a total of €35 million. This will mean that up to €10 million in additional funding can be provided to enable Microfinance Ireland to provide increased lending in the event of a disorderly Brexit. The section also provides for the repeal of Part 3 of the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019, as this Part is now contained in this stand-alone Bill.
Section 6 provides for the Short Title, collective citation and construction of the Bill. It also provides for the Minister for Business, Enterprise and Innovation to commence the Bill, or sections of it, as appropriate.
In summary, the proposed amendments to allow an extension and enhancements to research and development supports aim to help firms that have tight cash flows to commence important research and development projects. EI can already do this with small companies. In proposing the amendments to the Microenterprise Loan Fund Act 2012, we can maximise the ability of businesses to access appropriate finance at a time when liquidity will be critical.