Tuesday, 24 January 2017

Ceisteanna (147)

Róisín Shortall


147. Deputy Róisín Shortall asked the Minister for Finance the steps he is taking to reduce financing costs for the construction industry; and if he will make a statement on the matter. [2956/17]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

As the Deputy is aware, small and medium sized businesses, including those in the construction sector, play a central role in the sustainable recovery of the Irish economy. Government policy is focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.

The Deputy will also be aware that in my role as Minister for Finance I have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to products as determined by the banks.

All viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy. As the Deputy will be aware, Chapter 7 (Finance for Growth) of the Action Plan for Jobs 2016 (APJ) set out a range of commitments to ensure viable SME's can access appropriate finance at a reasonable cost from both bank and non-bank sources. Finance for Growth will again feature in the Action Plan for Jobs 2017 and a number of actions have been proposed by my Department for inclusion in relation to this.

In line with Action 144 of the APJ 2016, officials from my Department collated and examined data from AIB and Bank of Ireland on a monthly basis, including data pertaining to the various sectors. Furthermore, my officials meet the banks on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment which assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.   

It should be noted that the results of the most recent Department of Finance SME Credit Demand Survey, covering the period April to September 2016, show that when pending applications are excluded, 84% of credit applications to banks were approved or partially approved. Demand for credit remains subdued and the latest survey shows only 39% of SMEs in the construction sector requested bank finance in the previous six months a decrease of 9% from September 2015. Furthermore, the main reason for not applying for bank finance is that SMEs do not need it (86%).  Only 1% of respondents stated the reason for not applying for bank finance was because it was too expensive to borrow. Further results from the survey can be found at www.finance.gov.ie.

The Government remains committed to the SME sector, as reflected in the Programme for a Partnership Government, and sees it as a key engine of ongoing economic growth. Consequently, my Department and the Credit Review Office, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit on both a macro and sectoral basis in order to ensure sufficient access to finance is available to facilitate indigenous viable SMEs, including those in the construction sector, to reach their full potential in terms of growth and employment generation.

Separately, the Deputy may also wish to note that the Ireland Strategic Investment Fund (ISIF) has been actively involved in a number of important initiatives which enhance the availability of finance to the construction sector in line with the terms of the Fund's mandate. This includes its investments in:

- Activate Capital - which is an innovative non-bank financing platform that has the potential to provide funding for substantial numbers of new homes in Dublin and the other major urban centres in which demand is most pronounced;

- Ardstone Residential Partnership - which is a residential equity investment fund that is focused on delivering residential units to the market over the short-to medium-term; and

- Wilbur Ross Cardinal Commercial Real Estate Mezzanine Debt Fund - which has funded a number of residential developments in recent months.