Any SME will confirm that there is a severe shortage of credit lines, Limerick West Fianna Fáil Deputy Niall Collins told the Dáil.
Speaking during a Private Members’ debate on access to credit, he said if companies do not have credit facilities, they do not have blood flowing through their commercial veins and so their businesses will die. That must be the starting point.
The consequences of less credit include less turnover, less choice for customers, less competition and less employment, he said. In addition, there will be less business in our cities, towns and villages.
“We are seeing many SMEs dying on their feet, so to speak, with businesses closing down, particularly in city centres,” he said.
“In my city of Limerick, the business core has been hollowed out. Similarly, many towns and villages have been hollowed out as businesses have closed.”
Deputy Collins said the banking landscape has changed with the pull out of Danske Bank, ACC, Halifax and PostBank, as well as Anglo Irish Bank, Irish Nationwide and EBS.
It is worrying, he said, that the two pillar banks comprise almost 70% of the market. This means we do not have competition or choice.
“We all know the consequences of a lack of competition and choice, namely, higher fees, higher interest rates and higher bank charges, all of which put pressure on SMEs and erode confidence,” he continued.
“We all also know that the pyramid and structure upon which business is built is credit and confidence. Confidence in the marketplace is as important as credit. Our SMEs account for 90% of our active enterprise and up to 70% of employment throughout the country. This puts into context the reason SMEs need to move further up this Government’s list of priorities. Sadly, from the feedback which I and other Members are receiving, they do not rank as a priority.”
Replying on behalf of the Government, Finance Minister Michael Noonan said it is the Government’s vision that 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.
“Therefore, credit availability for SMEs is a key aspect of the Action Plan for Jobs 2013,” he said. “The working capital requirements of many SMEs are often fulfilled by short-term credit in the form of overdrafts or short-term loans.”
Additionally, he said the Government has imposed challenging SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion in 2012 and €4 billion in 2013 for new or increased credit facilities to SMEs.
“Both banks have reported that they achieved their 2011 and 2012 targets and a recent Credit Review Office quarterly report commented that both banks are on track to achieve their €4 billion loan sanction target,” he added.
Local authority merger will benefit county and city - Neville
The amalgamation of Limerick City and County councils was a comprehensive decision to bring two large local authorities together and, as a result, there will be better synergy and benefits of the city and the county, Limerick Fine Gael Deputy Dan Neville told the Dáil.
Speaking on a new Local Government Bill which implements major reforms of local authorities, he said it will also address the long-standing debate about the expansion of the city and the oversight of its environs, which up to now came under the remit of the county council.
“Limerick city will be the capital of the county and there is concern that the funding for services in peripheral areas might be sucked into the city for regeneration,” he said.
“It must be ensured the new unified authority does not interfere with services in the county. There will not be individual budgets for both city and county and while everyone wants the city to develop and expand, there is a concern this should not happen at the expense of any part of the county.”
Local government in other European countries plays a key role in economic development and this Bill will allow for local authorities in Ireland to do the same, he said.
Community development is a small section of the work of local authorities as currently constituted. This work will be enhanced and will allow for a varied level of community involvement and experience. Over the years, power has been removed from local authorities to various unelected bodies.