Tugann sé an-phléisiúir dom labhairt ar an mBille seo agus, ar ndoigh, is ábhar an-tábhachtach é, go mór-mhór do lucht gnóthaí na tíre. Tá obair nach beag déanta ag an ICC le gnóthaí a chothú agus a chur chun cinn. Is dóigh liom, i dteannta leis an IDA, SFADCo, agus an Údarás, go bhfuil tábhacht faoi leith leis na hinstitiúidí a dhíríonn ar fhorbairt eacnamaíochta le pacáiste iomlán a chur ar fáil don phobal le gur feidir leo a gcuid gnóthaí a chur ar aghaidh.
The ICC has played, and continues to play, a very fundamental role in the development of our economy. It has developed, as the Minister said in his speech, new services to meet new requirements. However, I would like to take the opportunity to spell out some of the problems facing small businesses in relation to the provision of capital. Most lending agencies work on the basis that they will fund fixed assets reasonably readily and also, where there is good security, will give further borrowings against working capital based on mortgage debentures or similar type security.
It is very important that these questions of the provision of grants, of seed capital and of borrowing be tackled in a co-ordinated way. Many people of my acquaintance who are trying to set up in business find that the biggest problem they face with the financial institutions and the State grant-aiding authorities, is that they lack ready seed capital of their own. Most of those institutions work on a ratio basis where they would be talking about £1 from the lending agency, £1 from the promoter and £1 from the grant-giving agency or something of that proportion. Therefore, if there is a lack of funds subsequently it has a knock-on effect in the help that one gets either from the lending agencies or the development authority. I have found, in my experience, that this lack of ready cash is one of the greatest inhibitors of development, particularly small-scale development, indigenous development, throughout the country.
I should now like to deal with the second problem. It is usually fairly easy to get capital for fixed assets but I know of several cases where the provision of working capital, because of security problems, posed major problems. What tends to happen when businesses start off with cash flow problems is that they tend to operate for cash flow rather than taking a long-term perspective and, therefore, taking the most profitable route. They tend to be forced to sell under a system that provides a ready cash flow. To my way of thinking, this is one of the fundamental problems we have not yet addressed when we look at industrial policy.
I appreciate that the idea behind the business expansion scheme when it was initiated was to try to provide capital for risk ventures. However, experience indicates that since the number of people applying for BES funds was greater than the supply of money, basically investors had a choice and they were taking the low risk or the up and running project. There was not a source of ready finance for projects that had not yet got off the ground. We will have to examine ways to get a pool of seed capital together. This seed capital should be available to people with proven track records who would be accepted as having good business ideas and good business acumen.
These people, if they were given seed capital, would have to accept that they would have to have the services of an adviser available to them from the agency that provides the seed capital so that they run their business according to good business practices. Again, there is the problem of people with good technical skills and good marketing ideas not having the experience from a financial point of view of running a business. Whether this role should be entrusted in some way or other to an agency like the ICC is a matter for debate but it is very important that this problem be addressed. We should have a fund of seed capital available for likely entrepreneurs who have viable ideas. In my experience, the main criteria — and I accept the need for security and borrowing — are the basic sense and viability of projects and then the character and ability of the person to carry the projects through. The third most important requirement in that case is security because a bank will only call in security as a last resort. A bank's business is to lend money and get repaid in the normal way and for that to happen, it is most important that the ideas and funding are right and that the person can promote the idea.
It was announced in the budget that an agreement had been reached that £200 million would be provided this year by the banks for new business. I suggest that the ICC should be drawn in and involved in this venture. As regards the attraction of funds, the ICC is a State bank and I suggest that it might be possible to look at ways for people on social welfare to invest money in it. I suggested that money invested for productive purposes and put into the productive economy, might not be assessed to a limit of, say, £5,000 for an individual for social welfare purposes. In this way particularly in rural areas, we would be able to put an end, on the one hand, to what is called the "mattress" economy and, on the other hand, get capital that would be reused to develop enterprise in our communities.
We have to face the fact that "mattress" money, as it is called, is dead money. Unless money is reused within the market to provide development, it is not doing any good for the community.
My experience in the past year has been that by the development of a local enterprise on a private enterprise basis, surrounding the co-operative for which I work, between borrowings and investment by ordinary local people, we have achieved a total investment level of £250,000 between about six or eight people within one year. However, to continue that type of development we need a system under which those people will have sources of reasonably priced finance.
The normal experience is that through leasing and whatever, it is possible to get finance, but for the person starting off the cost of this finance is much higher than for the established business. This puts new businesses, particularly indigenous businesses starting off from a small base, at a very serious cost disadvantage when it comes to the cost of money. A major impediment to development is if one has to pay rates of interest in excess of 20 per cent for borrowing for assets. It puts one at a competitive disadvantage vis-à-vis the established businesses who are getting rates which are a lot less. That problem should be looked at. The IDA, in looking at new methods of providing aid to businesses, should develop some system, either by interest subsidy or otherwise, under which borrowing could be made available at what would be equivalent to the AAA rate to businesses that they consider to have a reasonable chance of success. In this way small businesses would not start off with very high borrowing expenses and would be given a reasonable competitive profile in the market.
This question of the provision of finance to small businesses cannot be considered separate from IDA policy. The two must work hand in hand. The experience of many people is that when they go to the grant-aid authority and get grant sanction, they find that there is no connection between that and getting finance from the financial agencies. That operation will have to stop. It is very important that the total financial package of a company be discussed and that a total package is put together by consultation between the financial agencies, the grant giving authority and the promoter so that one part of the package is not provided without the second part being provided at the same time. That will ensure that on day one there is enough money available to start off the business on a firm footing.
I would like to commend the Bill to the House. This extra facility to the ICC is very important. I would like to praise the work they have done.
Tá mé cinnte go leanfaidh siad leo ag cur tuilleadh fás agus forbairt ar bun sa tír, rud a theastaíonn go géar le na post-anna a chruthú ar fud na tíre a choinneoidh na daoine óga sa bhaile agus a thabharfaidh deis dóibh forbairt a dhéanamh in a dtír féin agus a gcuid acmhainní agus a gcuid scileanna a úsáid ar mhaithe le pobal na tíre.
