I move: "That the Bill be now read a Second Time."
I wish to share time with Deputies D'Arcy, Creighton, Reilly, Neville, Breen and Crawford. It gives me great pleasure to introduce the Small Claims (Protection of Small Businesses) Bill 2009. I welcome the Government motion, which Fine Gael will be accepting this evening, that the Bill be given a Second Reading within six months. Although I would prefer if the Minister of State could accept the Bill today, I appreciate that the Government accepts the Bill in principle. I expect the Government will introduce its own legislation within six months and that if not we will proceed to Committee Stage with this Bill.
The Bill is made up of two parts. Members will be aware that the small claims court procedure, introduced approximately ten years ago, allows consumers to seek redress in respect of disputes in regard to the sale of products or money owed up to a limit of £1,000 or €1,270, which is a low limit given that a family holiday, a wide screen television or a suite of furniture would cost more than €1,270. The first part of the Bill seeks to increase that threshold to €3,000.
The second part of the Bill, which is in many ways is the most important part, allows businesses, in particular small businesses, to use the small claims court procedure to pursue debtors, including companies and Government agencies who fail to pay their bills. This is a particularly important provision for small business which, as the Minister of State will be aware, employs approximately 800,000 people in 250,000 different businesses. Small business is the largest single employer in the State. It is a sector that is hurting in this time of recession owing to the reduction in the supply of credit due to the banking crisis, rising costs in doing business imposed in the most part by the Government and its agencies and from reduced consumer confidence, which relates to the downturn in the economy and the fact that take-home pay has fallen as a result of increased taxes and levies.
Overall, this proposal forms part of 18 proposals put forward by Fine Gael to support small businesses. It is a valuable proposal. As the Minister of State will be aware, the Taoiseach has given a commitment that Departments will pay their bills to businesses, in particular small businesses, within 15 days. A late payment survey has yet to be carried out. I understand that the Department of Enterprise, Trade and Employment has reneged on its offer to carry out such survey. However, from the information available to me so far, Departments are by and large honouring that commitment to pay within 15 or 30 days. Unfortunately, this commitment has not been extended to cover Government agencies or State-owned companies. A person in business will know that his or her client is much more likely to be a Government agency such as the Health Service Executive, HSE, or a State owned company such as Iarnród Éireann or the ESB rather than the Department of Finance or the Department of the Taoiseach. We believe that commitment, that bills be paid within 15, or even 30, days, should be extended beyond Departments to all Government agencies, including the Houses of the Oireachtas and all State-owned companies. This procedure will allow businesses to pursue unpaid debts of a small value, less than €3,000, where it is currently not feasible for them to go to law because of the costs associated with hiring a solicitor and utilising the District Court procedure. It will allow them to pursue small claims without having to incur significant legal costs which will, in turn, help to reduce the cost of doing business.
I would like now to draw the attention of the House to some of the other proposals being put forward by the Opposition in respect of support for small business. In many ways, our economic strategy is based on four main pillars, the first of which is a fiscal and banking strategy that involves balancing the budget over a number of years but in such a way that keeps taxes low by concentrating on reductions in current spending rather than increasing taxes or availing of higher borrowing as proposed by other parties. The second pillar relates to the banking sector and proposes to immediately establish a national recovery bank capitalised with State funds but funded by the European Central Bank. Crucially, this proposal does what no other proposal will do, namely, it will allow the immediate flow of credit to businesses, consumers and home buyers. Irrespective of whether we go for NAMA or nationalisation, everyone accepts it will take a number of years to clean up the balance sheets and that, therefore, credit, the life blood of the economy, will not flow freely for a number of years under either of those models.
Those who continue to advocate the nationalisation policy need only look to Anglo Irish Bank to see how successful it has been. It has cost us €7 billion already and that bank has not loaned money to anyone in the past six months. Another example is Iceland which has nationalised all its banks and has had to raise interest to 17% just to keep them funded. In many ways, NAMA is in my view nationalisation by stealth in that the money one gives to the banks by way of buying loans from them will have to be given back to them by way of recapitalisation. As stated, this will involve the purchase of ordinary shares and, therefore, will result in thede facto nationalisation of at least Allied Irish Banks if not Bank of Ireland. While we may end up there one way or the other, nationalisation should happen as a last option and not as a solution. It will not do what we need it to do, namely, extend money to business, which is what is needed now.
The Bill also includes a proposal for a PRSI exemption or wage subsidy. We understand that the biggest problem facing people is unemployment. Some 400,000 people are currently signing on the live register. It appears that number will continue to rise even though the economy will return to growth, and I accept it will return to growth.
While the Taoiseach is correct that the recession will end in the next six to nine months, the growth that ensues will be jobless and will not fix the problems in the public finances. The recession of the 1980s ended in 1983 yet it was 1991 before we saw real job creation or repaired the public finances. Ending a statistical recession will not on its own solve our problems. We need to improve competitiveness and support businesses in creating jobs.
We have put forward proposals on reducing VAT and abolishing the travel tax. I understand the Labour Party is preparing a Private Members' Bill which will provide for a prohibition on upward only rent reviews. Retailers in particular have been locked into leases which prevent them from negotiating reductions in their rents. As someone who managed to negotiate a 20% reduction in rent for my constituency office, I have great sympathy for retailers and other businesses who are locked into clauses which prevent such reductions.
My party's proposals for greater flexibility in wage costs and conditions are particularly relevant to the hotel, catering and security sectors, in respect of which current employment regulations mitigate against employment. We have sought a reverse of the cutbacks in SkillNets and the Government has partially acceded to this. We have also asked for proposals on reducing red tape and forced a commitment out of the Government on reducing by 25% the cost of red tape to businesses. However, little real progress has been made in that regard and the Government has not yet shown us how it plans to calculate the baseline cost of regulation.
We want to see proposals on making it easier for small businesses to win Government tenders. I hope that the commission appointed by the Tánaiste to consider this issue will report quickly. An obvious measure would be to break large tenders into lots which could be bid on by small businesses. I am surprised at how many printing contracts, for example, go to other countries, as well as by the limited number of Irish companies tendering for them. I learned from the response to a parliamentary question that every element of Garda uniforms, from hats to jackets, is made in other countries. In many cases, these are Asian and other low cost economies but parts are also made in places such as Scotland and Belgium where costs are not dramatically lower than here. It seems our systems do not give Irish companies a fair crack of the whip on tenders.
We have also made proposals on reducing energy costs, which are 30% higher than in Northern Ireland, the UK and elsewhere in Europe. If the Government set a target for reducing energy costs to the EU average within two years, it could thereby make a significant impact on the costs for small businesses and increase the likelihood of investment in Ireland by businesses which use large amounts of energy. As Deputy Coveney has noted on many occasions, the current regulatory system drives up the cost of gas and electricity to encourage competition but, particularly in electricity, we now have such competition. Tens of thousands of people have transferred their accounts to Bord Gáis and Airtricity and it is time we reviewed the system and gave the regulator a role in setting the price ceiling rather than the floor.
We have also raised the issue of local authority rates. Considerable efforts have been made by councillors, including some from Fianna Fáil, to keep rates low. Given that Fianna Fáil has lost control over virtually every county council and that the Green Party has only three councillors, I am concerned that the Government might further reduce funding for local governments in order to force councils to increase rates or to vote for their own abolition.
We have proposed a redrafting of the Employment Law Compliance Bill 2008, which establishes the national employment rights authority on a statutory footing and gives it extreme powers to raid businesses and seize documents. I am pleased the Department of Enterprise, Trade and Employment has decided to defer Committee Stage of that Bill until September or October. That is a recognition by the Government that the Bill as originally introduced by the Tánaiste in March 2008 was highly deficient and needs to be redrafted.
Small and medium enterprises deserve proper recognition within the social partnership structure, which for too long excluded important interests such as taxpayers, elected Members of this House, small businesses and consumers. If we intend to continue with this process, it must be modified to include proper and full representation for the small business sector and for the self-employed. The Minister for the Environment, Heritage and Local Government, Deputy Gormley, who seems to have some influence on the Government, has managed to include an environmental pillar in the social partnership structure so that environmental NGOs will have a place at the table. However, there is no place at the table for the self-employed, the unemployed or ISME, which represents independent small and medium enterprises. If we are to retain social partnership, its structure will have to be very different from the one which contributed to our present mess.
I am happy to move this Bill, which represents a small but important victory for consumers and small businesses. I thank the Government for accepting it in principle and look forward to either seeing new legislation within the next six months or proceeding with it to Committee Stage.