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New SME loan scheme can create thousands of new jobs over coming years – Bruton

Minister for Jobs, Enterprise and Innovation unveils plans for partial loan guarantee scheme, micro-finance fund, 15-day prompt payment scheme, radical reform of JLC/REAs, diaspora finders fee scheme and other measures

Unveiling further details of measures contained in today’s Jobs Initiative announcement, Minister Bruton said:

"Governments don’t create jobs, entrepreneurs do: the risk takers, the business people, the exporters up and down the country who have succeeded often despite, not because of, Government action. Governments through their decisions can and do affect the environment in which these wealth and job creators operate.

"For too long we have drifted from the very basic building blocks that made our economy strong nearly two decades ago: controlled costs, flexible and well trained workers, new products and export markets and a Government that understood that selling property to ourselves is not a sustainable basis for a strong economy.

"I have argued for some time that Government needs to find ways to help, not hinder, the efforts of those business people and workers, not politicians or commentators, who will lift our economy out of the gloom. I have focused much attention in my efforts on three key issues:

· Getting new lines of credit flowing,

· Reducing costs to business and

· Supporting new technology and innovation.

"This Government’s Jobs Initiative addresses all these issues and more. It represents a very positive intervention to support those entrepreneurs and business people that will create jobs and rebuild our economy. It does not correct all the things that need to be corrected but it represents a tangible tipping of the scales towards the entrepreneur and his workforce and sets down a marker of clear intent in other key areas.

"I am particularly pleased to be able to announce new initiatives to help get lines of credit flowing.

"Firstly, a partial loan guarantee scheme will be in operation by the autumn. This measure, which operates successfully in most of the countries with which we are competing, will be of particular help to precisely the innovative companies which we are trying to encourage as part of our growth strategy. For every €400m that is guaranteed by the State an additional 4,500 companies can get further credit that will in turn create more than 8,000 jobs.

"Secondly, a micro-finance fund will provide funding for small loans to start-ups. We recognise that the recovery will be driven, in part, by businesses which start up during the recession but many start-ups lack the small amounts of finance that can be the difference between success and failure. This commitment on a micro-finance fund is the government’s contribution to filling this particular gap in the enterprise finance gap in the market.

"Third, it is clear that Government can also play a key role in improving cash flow to businesses, and from 1st July next, all government bodies (excluding commercial semi states) will be required to pay suppliers within 15 days of receipt of a valid invoice. Given that the public sector enters contracts with suppliers worth €15bn each year, the importance of such a policy for all the companies that do business with the State is clear.

"In terms of reducing costs to business I very much welcome the announcements by my colleagues Ministers Noonan and Varadkar of reductions in employers’ PRSI, a targeted VAT reduction and in the travel tax.

"I would also like to welcome the reversal of the previous Government’s decision to impose employers’ PRSI on share based remuneration. This measure reduces the cost of employment and promotes modern workplace arrangements whereby employees share the rewards of success.

"I recently received the Report of the Independent Review of Employment Regulation Orders and Registered Employment Agreements, which I will be publishing shortly. The Report says that the system requires radical overhaul so as to make it fairer and more responsive to changing economic circumstances and labour market conditions.

"In particular, there are issues relating to overtime and premium payments for Sunday working, the number of JLCs, and the general functioning and supervision of the system.

"Along with the publication of the report, the Government is determined to proceed with urgency to a major reform of the system. I intend announcing details of this wide ranging reform in the coming weeks.

"We have also committed to continuing work across government departments to reduce the administrative burden on business arising from government regulations, and to tackle costs in sheltered sectors. Furthermore, we will be seeking ways to increase take-up of already-existing cost-reducing schemes, including Revenue’s Job Assist and the Employers PRSI Incentive Scheme.

"In the area of research, development and innovation, the change in the R&D tax credit announced today will make Ireland a more competitive location for locating R&D activities, and will thus have a substantial impact on job creation in this vital sector. This technical change, which will be revenue neutral, will allow companies to choose whether to account for the credit against corporation tax or against the cost of employing researchers. This will greatly improve Ireland’s attractiveness to multinationals when comparing operating costs between alternative locations. This change will be included in the forthcoming Finance Bill.

"I will shortly be announcing a further series of R&D investments totalling more than €50m underpinning employment across a number of sectors.

"Finally, two other issues that I am pleased to announce.

"We will shortly be piloting a scheme to incentivise individuals, both in Ireland and among our diaspora, to attract fast-growing emerging international companies which are currently not reached by the IDA. I have had detailed discussions with the IDA and private sector organisations, and details of the scheme will be announced in the coming weeks.

"I am also pleased to announce a range of measures to improve access to public procurement by SMEs. Every 1% increase in public procurement contracts won by small and medium sized firms would deliver €150 million extra in business for this crucial sector".

"It took many years of bad policy decisions to get our country into the economic crisis we endure today. It will take a number of years of the right policies to get our economy and country back on track. Today is an important day in both delivering on our Government’s commitments at a very early stage but also, crucially, committing to further reform, changes and focus on getting our people back to work."