JOINT COMMITTEE ON ECONOMIC REGULATORY AFFAIRS debate -
Wednesday, 5 May 2010

Cost of Regulation to Business: Discussion with Small Firms Association

Chairman

We have delegates from the Small Firms Association with us to discuss the cost of regulation to business — in particular to small and medium enterprises — and proposals for reducing costs. We would also like to hear their views on the performance of the relevant regulators and on the effectiveness of their consultative procedures. On behalf of the committee, I welcomeMs Avine McNally, director of the Small Firms Association, Dr. Aidan O’Boyle, chairman, Mr. Des Cummins, council member and business owner, and Mr. Ian Martin, council member and business owner.

Before I begin the meeting, I draw witnesses attention to the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside of the House, or an official, by name or in such a way as to make him or her identifiable. I call on the delegates now to make their formal presentation.

Dr. Aidan O’Boyle

I thank the Chairman for the opportunity to address this committee. I will begin by introducing myself and the others. I am chairman of the Small Firms Association, SFA, and more importantly in the context of this meeting, managing director of Aalto Bio Reagents which employs ten people and is, therefore, subject to the bureaucracy associated with running a business. Mr. Ian Martin is a member of the SFA council and managing director of Martin Services. Ms Avine McNally is acting director of the Small Firms Association and Mr. Des Cummins is managing director of National Recycling and has some practical insights to give in terms of the impact of regulation. I will ask Ms McNally to present the key elements of our submission and we would then like each of the business people to give some practical context with regard to how regulation impacts on our firms.

Chairman

Following that, we will move to committee members for comments and questions.

Ms Avine McNally

The Small Firms Association made a presentation to this committee in September 2008 covering the area of bureaucracy and regulation, particularly in the small business community. Our overall concern at the time was to try and reduce the regulatory burden as much as possible. Unfortunately, while we have seen some progress in that time, this has not been to the rate or extent we would have liked. We cannot ignore the fact that regulation can and does result in higher prices and costs. Obviously, there is a reduction in consumer choice. It reduces flexibility, in particular for a small community and small businesses. None of this is conducive to the current business environment in which they are working.

While some progress and information has been coming forward on the regulatory impact analysis for which the Government set out a matrix and template in its White Paper, the bad news is that while this has been introduced, it is not to the level which we would have liked. The main reason is that the Government committed to significant resources but sufficient resources were not provided. As a result, a regulatory impact analysis for one or two major pieces of legislation, such as the Employment Law Compliance Bill which would have impacted on SFA and non-SFA members, was not conducted. The reason we asked the Minister at the time to publish and conduct a regulatory impact analysis was that under the Bill an owner or manager could be subject to 23 criminal offences just for the sake of employing an individual to grow his or her business.

When we spoke to the committee in 2008 the whole area of the administrative burden was often viewed as red tape hell for a lot of our members, a situation which has not changed. In a recent survey, 49% of companies viewed it as a major business problem, with just under 9% reporting it was their number one business problem. In our current climate, that says an awful lot.

The most frustrating thing for a small business is that if one currently works and trades in Ireland, one may have as many as 80 core forms which have to be completed, many of which require submission a number of times a year and involve the same information being supplied to a number of different agencies, a point which will be discussed by other witnesses. The regulatory framework we have in Ireland adds to the difficulties faced by the small and medium enterprise environment. However, because of this something needs to be done.

The big concern for us is to measure the administrative burden of legislation. The standard cost model should be introduced immediately, which was proposed by the business regulation forum and of which the committee will be aware. We also need to examine a risk-based approach to our legislation. Obligations placed on small firms are proportionate to the risks which will arise from non-compliance and places more significant burdens on those businesses that operate in these areas. We view this as being an objective of the regulation to reduce the cost for those firms who do not need to over-invest simply to comply with the regulation which may not be directly applicable to their business at the outset.

Dr. Aidan O’Boyle

I would like to ask for a few practical comments from each of the business people here. I will call on Mr. Cummins to give some practical insights on the impact of bureaucracy and regulation on his company.

Mr. Des Cummins

We are 62 years in business in Dublin and I have run the business for 35 years. We have two waste management and recycling businesses. We recycle everything which we receive and export it all over the world. Last year one of our businesses closed down due to regulation and the way things are going we will lose the other one.

In the area of waste in which we work the real issue is waste permits. We have to have a permit and have had one every year since 1996 — one gets one for three years. Since 1996, 30 Bills have been passed in the area of environmental law as well as untold numbers of statutory instruments, which comprise many pages, with which the industry has great difficulty in keeping up with. Small businesses cannot cope with this level of regulation. Large businesses may be able to. We renewed our permit three times in the past. It used to cost €1,000 per year, but the same permit we had last year will now cost us €12,000 a year.

The regulations were changed last year and the application form to renew a permit we have had for 15 years is now 48 pages long. The explanatory booklet which explains how to fill in the form is 148 pages long. The bottom line is that small businesses cannot cope with this. The permit costs €500. It costs €800 just to put the advertisement in a newspaper. The permit we applied for last year was rejected three times, once because we forgot to put "LTD" on a piece of paper. It is now the case that one has to employ a consultant to apply for something that two years ago one could do oneself. The cost for us has escalated beyond €40,000 to apply for a permit that costs €500.

This is a living nightmare, which has only ramped up in the past two years. The regulations are constantly being ramped up. The people who are operating the system have not been properly trained or do not understand what they are doing. There are significant differences in the way the regulations are enforced in Cork, Donegal, Galway and Dublin. A permit we have costs €250 in Galway and €5,000 in Dublin. The local authority has increased the costs from €1,000 to €5,000 in one year. No regulatory impact assessment has been done on this. I have had a couple of meetings with the Department of the Environment, Heritage and Local Government and the Minister on this issue and we know that no regulatory impact assessment has been done on any of these issues. If there was, we would not have the situation which pertains today. It is crazy.

Conditions are contained in the permit, such as an obligation to pay within 14 days or the permit is invalid. That is a hi-jack, but it is there all the same. If a bank did that to businesses there would be an outcry. There is no spirit of partnership or working relationship between people, rather it seems to be them and us. We do not know what has happened to the relationship between business and local authorities. I am a member of the small business forum, as I was in 1992. Last year it suggested that a user group be set up between business and local authorities — it has been a requirement of the small business forum for two years. After two years it has not been established.

It is not much to ask a local authority to form a group which sits down with business users in its area once every three months and ask them, "What's up, doc?" That is my current situation. After next year I may not be here to talk to the committee.

Dr. Aidan O’Boyle

I will comment on my firm, Aalto Bio Reagents Limited, which supplies diagnostic raw materials to all the main kit manufacturers in Europe, the United States, Japan and across the world for the diagnosis of cancer, disease, etc. I have been in discussions with our administration director, Ms Marie O'Boyle, about what we are doing in terms of compliance with Revenue requirements and CSO requirements. I was shocked yesterday to see how much time is invested in it. We are spending one full day a month, for which we have to hire someone, to submit the VIES quarterly submission, which was the quarterly submission until 1 January this year. It is a new European Union regulation which states that if sales for any of the previous four quarters exceeded €100,000 one now has to submit monthly VIES submissions. It requires the entry of the VAT number for every sale made in the month and the value of that sale. They have to be collated by VAT number. It takes three or four hours and instead of being done on a quarterly basis, it is now done monthly. In the letter we received on this issue, it states that from 1 January 2012 the limit will be €50,000, so there will be three or four times the numbers of companies.

This system does not take into consideration the fact that somebody has to have a holiday. If it is done on a monthly basis, we know that if this information is not submitted by the due date one receives phone calls and threats. Intrastat was a system whereby we had to collate, on a monthly basis, our sales by commodity code by the incoterm. That has now changed from purchases inwards to purchases inward and sales outward within the European Union. The VAT 3 return is submitted every two months, which takes two to three hours to complete. What is really intriguing is that it is a bimonthly return, and one also has to do an annual return. In the annual return they ask for two or three new pieces of information that are not in the bimonthly return. The bimonthly return should contain all of the information they require and they should be able to collate it themselves from their computer rather than asking for it from people who have already done a bimonthly submission. There are also the P35 and P30 tax returns. We are coming to a stage where small businesses are spending an enormous amount of time collecting data and information and sometimes one wonders why. I invite Mr. Martin to say a few words.

Mr. Ian Martin

I echo some of the comments made by the previous two speakers. We are in the first aid and hygiene business. I also own a business in the North of Ireland and a smaller business in the South so I can compare the two but, effectively, we operate in the same environment area.

On the waste side, because it affects part of our business in Dublin, recently we had to renew some of the licences we have had, being in business for the past 25 years, and advertise in the newspapers and so on. We invited Dublin City Council to visit our small facility, which has a turnover of approximately €200,000 in this part of our business. In the end three groups of officials from Dublin City Council visited the premises, not singly but in twos and nobody looked at the previous file. They were all from different sections of Dublin City Council and all took photographs of a washing machine which one would find in any hotel in Dublin. It was a total waste of time. Dublin City Council officials come out to check on the permits for our vans. We have such permits but they wanted to see the vans and all the permits. It is a total waste of time and resources. Given that we are in the system, Dublin City Council know about us and we are visited on a regular basis.

In the unit where we are located there are 21 factories, yet we are the only company that gets a visit from Dublin City Council. They are all getting rid of waste, computers and so on. If one is honest enough to go forward, one gets all the extra bits and pieces. One of the licences for renewal of our permit cost €1,200 three years ago. The renewal bill this year, up to last October-November, was €4,500. I asked the reason. The officials said its labour costs have increased, office costs have increased, and a visit to a premises costs €600, yet they are in the premises for only 20 minutes. I would like to get €600 every time I visit a Government office to provide a service for it. We are being asked by Government agencies to reduce our prices while Dublin City Council is increasing our costs.

Recently I was in the US and got stuck there owing to the volcanic ash. We had to fill in a CSO form yesterday which took an hour and a half to complete. The information requested is already contained in our statutory accounts. The only extra information required was what business we are doing in each county. I do not know what benefit that information is to anybody. It does not make sense to me. As Dr. O'Boyle said we had to submit our interest returns. It so happens that our financial controller is on maternity leave. I can do it. However, I could not do it as I was stuck in New York and then we are subject to a fine of €1,200 because our interest returns are not submitted on time. This is bureaucracy gone absolutely mad.

If somebody wants to take holidays there is a problem. One item has to be submitted by the 14th of the month, another item by the 19th of the month and so on. There are so many dates for one form or another spread over a month that if someone wants to take holidays there is a problem. If one is in the accounts area or the financial controller of a company one must organise one's holidays around the form filling which one has to get through. All of this takes a massive amount of time and resources.

We all have tax clearance. We receive letters from all Departments asking for our tax clearance certificate. It is on-line. There should be some system in place when it is automatically renewed and that the HSE knows that our tax is up to date. Why should we have to tell the HSE as the information is already available? This is a waste of time and resources. I am convinced that people are trying to create work for themselves because they are afraid they will be made unemployed. It is bureaucracy gone mad.

Deputy Kieran O’Donnell

I thank the delegation for appearing before the committee. Not wishing to take from Ms McNally's presentation, I welcome in particular the views from the business people. From a practical viewpoint, much of what they have had to say, we have heard from other business groups. Is it correct to say there is an export factor to all your businesses?

Mr. Des Cummins

Yes.

Deputy Kieran O’Donnell

Obviously the North of Ireland is involved. Do the witnesses believe the current regulatory regime is a disincentive to taking on employees? What is the disincentive for taking people on or keeping them? Do they believe there is a need for the Government, as a matter of urgency, to conduct a regulatory impact assessment on all the regulations out there and, if so, would that be a start? Mr. Cummins mentioned that there would be a meeting of all the local authorities. He also said there is an inconsistency in the way local authorities deal with waste permits.

Following on from the other issues, an issue that has arisen everywhere is the filing of returns. The VAT 3 form must be submitted by the 19th day of each month. There is the Intrastat and the annual return of trading details on VAT 3. Form P30 falls due at a different time and there is also the P35. What difference would it make to businesses if there was a common window? Mr. Martin referred to the tax clearance certificate. It would be extremely logical in the Internet age that a public sector body one is going to for work can simply press a button. I believe more efficient regulation would make better regulation. Mr. Cummins said he had a large file in connection with his most recent submission for a waste permit. Does he think it would be possible to make that submission on-line rather than——

Mr. Des Cummins

Not on the basis of the regulations in place. The fact is that people have been operating since 1996 without any great difficulty. Why do we need excessive regulation? As Mr. Martin said we have a tendency to believe that time makes paper and that if there are people in an office with nothing to do, they dream up a whole lot of new regulations. We believe they are working on the son of the present regulation.

Deputy Kieran O’Donnell

Does Mr. Cummins believe there should be an independent regulatory impact assessment and, if so, who should conduct it?

Mr. Des Cummins

That is as inevitable as the day is long.

Deputy Kieran O’Donnell

Who should conduct it? Mr. Martin has a business in Northern Ireland. Will he please elaborate on the differences he experiences in doing business in the North in terms of regulation, the way in which business is done, making returns to the revenue or whoever else and the issues that could be addressed here? Perhaps he would deal with the issue on a practical level? We know the issues but how can we take a positive step forward to address the regulation issues and the whole issue of form filling? The way the system is structured at present is crazy. It is anti-business. People in business become more preoccupied with form filling and bureaucracy than their business. I am an accountant and was in practice for many years. One could go out to people in business who may have a debtors' listing and they are more pre-occupied with getting the form into the CSO than in going out and trying to reduce their debtors' listing and bringing cash into the business. It seems illogical but they are petrified at the prospect of a fine from the Revenue and the CSO while the core business suffers. They are so exhausted from the form filling that their core business is neglected, through no fault of their own. Will the Small Firms Association address that fear of non-compliance with the regulations in a human sense and the practical measures that could be introduced to make it easier to comply with the regulatory system? Will Dr. O'Boyle comment on the impact of the regulatory form filling required of small business? What positive steps can be taken in the next six months to improve the bureaucracy?

Mr. Ian Martin

I will start the ball rolling. If one takes the example of our distribution business, we deal with international companies and they have the code numbers for the various products we bring in. However, we are dealing with large UK companies with a turnover of €15 million to €20 million who have no export business apart from the Republic of Ireland. They do know what Intrastat is, because it does not apply to their business in the UK. We constantly have to ask for the code for the various bandages. It involves a great deal of extra work when we import goods. When we are selling goods from the North of Ireland to the UK, we have none of that regulation.

VAT returns in the North of Ireland are on a three monthly basis and we have only two forms to complete in the North. On our turnover of €500,000 in the North we fill in a VAT form and a PAYE form. That is the total. We have nothing else to fill out.

Deputy Kieran O’Donnell

At all?

Mr. Ian Martin

We do not have requests from the CSO looking for information. We have no Intrastat. If we export from the North to the South, we do not have to fill out Intrastat information. Much less is required in running our business in the North. In regard to our waste business, we supply sanitary bins in the North and one licence covers the whole of Northern Ireland. For the greater Dublin market, which is now effectively Meath, Kildare, Wicklow, when we get a licence, we must get one for Dublin and a separate licence for counties Wicklow, Kildare and Meath, which are hinterlands of Dublin. Each licence costs €500, which adds up in costs. We should consider designating "Dublin" as the area in a 100 mile radius of Dublin.

Deputy Kieran O’Donnell

Who issues the licences in Northern Ireland?

Mr. Ian Martin

Belfast City Council.

Deputy Kieran O’Donnell

Does the licence issued by Belfast City Council cover all of Northern Ireland, even though there are other local authorities in Northern Ireland?

Mr. Ian Martin

Yes, that is correct.

Deputy Kieran O’Donnell

How has that come about?

Mr. Ian Martin

That is the way the system operates in Northern Ireland. We operate in the South and we should have automatic cover everywhere in the South. However, they are bringing a system of licensing that will cover all of Ireland but the cost is horrendous. It costs us £200 in the North.

Deputy Kieran O’Donnell

What about the form filling in the North?

Mr. Ian Martin

The forms are nowhere near as detailed as the forms in the South.

Deputy Kieran O’Donnell

Is the regulation as strong in the North?

Mr. Ian Martin

It is deemed to be as strong in the North as in the South. In our first aid business, we have a licence from the Irish Medicines Board which requires renewal every two years. We are subject to an audit and they come out and spend two or three days auditing our company. We are a big operator but in relative terms to a pharmaceutical company, we are quite small. They spend three days at our premises to do an audit. We have ISO and everything is in place. In the North, I fill out a three page form listing my suppliers, I send my application to the UK with a payment of £150 and that is the total cost. I can sell the exact same goods in Northern Ireland as I do in the South.

Deputy Kieran O’Donnell

Do the authorities carry out an inspection?

Mr. Ian Martin

They will come and inspect, but not on a regular basis. In the five years we have operated in the North, we have had one inspection.

Deputy Kieran O’Donnell

The inspection is conducted on a risk basis?

Mr. Ian Martin

Yes, it is conducted on a risk basis. Obviously, it is related to the size of the company.

Deputy Kieran O’Donnell

Is it easier to operate a business in the North than in the South?

Mr. Ian Martin

In Northern Ireland there is less regulation than in the South.

Deputy Kieran O’Donnell

Yet the business is similar.

Mr. Ian Martin

We sell the same products in the North as we do here. Obviously, the cost base is considerably different. The rates we pay in Belfast, and we are literally beside Harland and Wolff in the city centre, are 30% less than in the South and there is a horrendous difference in the running costs North and South.

Deputy Kieran O’Donnell

Has Mr. Martin quantified the difference in operating costs in the North vis-à-vis the Republic?

Mr. Ian Martin

I will give the example of local authority costs on a square footage basis. We pay 30% less in Belfast than we do in the South. That is a big difference in the operating costs. We use the same insurance company, North and South but the company cannot write our general insurance for all Ireland because there are slightly different laws in both jurisdictions. Our building insurance priced on a square footage basis is much less in Belfast than in the South. Strangely enough, we insure our cars in Dublin for the North of Ireland, because we can get an all Ireland policy for motor insurance but not for general insurance.

Deputy Kieran O’Donnell

Yet, you are dealing with the same company for general insurance?

Mr. Ian Martin

Yes, the same parent company, but they are in two jurisdictions. It seems absolutely daft that we cannot have one all Ireland insurance for general insurance.

Deputy Kieran O’Donnell

Does Mr. Martin think the issue of regulation must be looked at to ensure that we are competitive?

Mr. Ian Martin

Yes, to take my earlier point, if the Government agencies require extra information, let us get it into our annual accounts, and as an accountant, Deputy O'Donnell would appreciate that it is done once and it is looked at once a year. If the authorities require another three pages of information, get it done at the account side, when one is looking at the books of the company.

Deputy Kieran O’Donnell

The same point applies to the VAT 3 form, they should extend the amount of information so that they can do a correlation.

Mr. Ian Martin

Yes.

Dr. Aidan Boyle

While we are talking about regulation, we should look at the process from the reverse direction as perhaps that would give the drive. There are about 323,000 self-employed individuals in Ireland. Of those, 105,000, businesses have paid employees and 58% of that number have two to three employees. There are 267,000 unemployed on the live register. If each one of the 105,000 businesses were to take on one employee, think what that would mean to the unemployment situation? We need to come at this from a different direction, to focus on the broader scale to really assist small businesses to develop their businesses and create employment. One of the ways we can do that is by minimising the amount of regulation and burden on them. It should not be beyond the wit of people to do that if there is a will to do it but because it crosses all Departments and all organisations, one must find a mechanism by which one can apply "regulatory impact assessment" or whatever one calls it. I wonder if the people who collect all of this information know the impact it is having on a small business. If they do not know and are not concerned, somebody must be. The Deputy has asked: who should be that person? I do not have a ready answer, but there are people within the CSO and Revenue and to give fair dues to Revenue, its research unit has been doing a great deal of work in terms to trying to reduce it.

Deputy Kieran O’Donnell

The ROS system has been a great success, to give credit where credit is due.

Dr. Aidan Boyle

Absolutely. I would be the first to say that. It may be that some small businesses need to sit down with the authorities. We are a small business and we are using a SAGE system which has a limited capability. We do not have a system whereby the information from the invoices we are generating can be taken out and filed under another name. When we discussed this problem yesterday, one person asked if Revenue could provide an off-the-shelf type of system that would enable a small business that does not have the sophisticated computer programming to be able to upload all of this information in an easy way. That is a question I put to the committee.

Deputy Kieran O’Donnell

A way of tagging on to the existing system that the business has.

Dr. Aidan Boyle

Exactly. We need to come at the issue from the reverse direction, rather than focusing on regulation for regulation sake. The whole purpose is to get more businesses going in the current climate. I would hate to think how we would manage if I had not the experience of being 30 years in business. If I were new to business, I would know nothing until confronted by the regulatory system and I would spend my time trying to comply with it. I am a worrier and I would worry about dealing with the system instead of thinking about growing our sales and employing more people. I should be worrying about growing our sales and employing more people.

Chairman

On the North of Ireland and the permit which is given by Belfast City Council, is it the case in the North that if any local authority gives a permit which is valid within——

Mr. Ian Martin

It depends on where one's base is.

Deputy Kieran O’Donnell

Is that the case in the South?

Mr. Ian Martin

No, only in the North.

Chairman

It is valid anywhere in the North. If one local authority issues a permit in the South it should be valid for the 26 counties.

Mr. Ian Martin

It is the same in the United Kingdom. Mr. Cummins can discuss it more than I can. In general, the regulation in the United Kingdom is nowhere near as tight as it is in the South.

Mr. Des Cummins

There are two types of permit, namely, a site permit and a collection permit. A site permit refers to where one lives and the local authority. A collection permit allows one to collect in different areas. The country was originally split into 13 sections. We suggested it be split it into 32 because the country would then be back together again. One has to apply to every local authority for a permit. At one stage, we had to apply for 13 permits in order to collect stuff throughout the country. It was recently consolidated into one permit for collections throughout the country, which is done by Dublin City Council. We recently applied for such a permit and it asked us what we would collect in Santry in six months' time. We said we did not know and it said unless we knew, we could not get the permit. We had to tell it what we would collect in Santry, Tullamore, Cork, Limerick and everywhere else in advance, which is impossible. Why did it need to know such information?

Deputy Seán Sherlock

I welcome the delegation. It is the first time we have talked to individual businesses and seen first hand the effect on them. I welcome that because it is the only way we, as politicians, can fully understand how this is having an effect on people. If the SFA is actively participating in the high level group on business regulation, the question which arises is why no progress is being made on the issues which are before us today. Does there need to be more of a political imperative to push the process on to try to get results sooner than we are seeing? I am beginning to question that process because if the SFA is before us today one could surmise that we are not seeing the progress we should be seeing on that issue.

I am fascinated by Mr. Cummins's submission. If the cost of a permit is €500 and it costs €40,000 for a consultant to put in a submission, which is based on 30 pieces of legislation and any number of statutory instruments, I do not understand why, if there is a process through the high level group, the issue has not been tackled before now. It is something which this committee has to take up with the Minister after this meeting, in order that an action arises from it and the delegation is not just coming in here, pleading its case and walking off, with nothing else being done. Perhaps the officials who are involved with that high level group should be brought before the committee in order that we can see what progress is being made on those issues, if that is possible.

I wanted to get a sense of where the high level group is currently at, from the delegation's perspective. I would like an honest appraisal on where it sees that going and whether it is yielding results.

Ms Avine McNally

The SFA has participated in the high level group. It started off on a very positive note. For the past six or eight months I have been very much involved in the three key areas of business on which it is now focused, namely, employment law compliance, corporate governance and health and safety compliance The Deputy is correct; it has not happened as quickly as we want it to. The area of employment law comprises 40 or 45 pieces of legislation. To examine each piece of legislation and distil where the administrative issue is, relative to regulation, then the problem becomes a nightmare.

For example, one concern we had, which was raised by our chairman, was the OWT 1 form, which we discussed in previous committees. This is, unfortunately, a form which under the legislation companies must complete. It is a record of employees' working hours, start times, finish times and rest breaks. Most companies are not even aware of this and are legally obliged to fill it in, despite the fact that they may already be compiling the information in another form within their IT or wage systems. This type of discussion can create hours of debate over the cost and implications.

The problem is that because the standard cost model has not been introduced across the board, it is very difficult to get down to the actual cost. While I might say it could take somebody 90 minutes to complete, it is a long time if one multiplies it by the 2,500 companies which operate here. A lot of work is happening in the higher level group but, to be honest, it is probably not happening as quickly as we would like it to happen. As there is so much regulation in Ireland, by the time one drills down through it all and tries to examine a couple of key areas, one only begins to get into the bigger discussion regarding costs.

Deputy Seán Sherlock

The SFA stated in its submission that it is examining the employment laws to which Ms McNally referred, corporate governance and health and safety. The Health and Safety Authority came before the committee. There are issues, in terms of the cost of running it and the expenses it has incurred which are, to my mind, questionable. I wish to refer to the issue of waste and waste management, and regulation from that point of view. Has the higher level group discussed the issues which we are discussing today? Is it still stuck on other pillars?

Ms Avine McNally

As far as I am aware, it is still only working on those three pillars and has not moved away to areas such as waste regulation, as my colleagues have discussed in more detail. I understand the plan is to examine that but the problem is it is taking a very long time to deal with the three core areas with which we are dealing.

Deputy Seán Sherlock

Fair enough. I wish to return to the issue of waste management. If there is a standard model and one is operating in Cork, Waterford, Limerick or wherever, one applies for one licence which is then eligible across the 26 counties. It seems to speak to common sense. However, I have a sense that the local authorities are gradually, of their own accord, moving out of waste management and are transferring it to private operators. It may be a philosophical issue. What needs to be done now for a business which is in the waste management sector? What is the ideal thing which needs to happen? Do we get rid of the statutory instruments? Do we amend the legislation? We could introduce a new statutory instrument which gives the Minister the power to override the local authority and state, by ministerial decree, that there is one licence for the whole country, which may be the ideal scenario.

Mr. Des Cummins

The situation is that business sees itself as being in a different box. There is no communication. When the recent regulations were introduced last year there were six people on the steering committee, all of whom were from the Department of the Environment, Heritage and Local Government or the EPA. Nobody was from a business, even through I wrote to the then Minister, Deputy Dick Roche, and offered to be part of the agreement. No one was interested. There is bureaucracy which is producing regulations for businesses, while businesses are collapsing under the strain of it all.

A small business task force, of which I was a member, produced a report for May 2006. I was also a member of a previous task force in 1992.

Dr. Aidan O’Boyle

I was the chairman.

Mr. Des Cummins

The recommendation in the report for May 2006 is for the establishment of a business users' forum in every local authority area to improve consultation with and responsiveness to business. It has not been done. We have asked for this to be put in place every six months for the past three years. No one is interested. Communication between local authorities and business and the Government and business is non-existent.

Deputy Seán Sherlock

We are getting down to brass tacks. This is the nub of the issue. I am on my first mandate. It predates my membership of this House. If I understand Mr. Cummins's point correctly, it is that when regulations, legislation and statutory instruments are being drafted, there is no consultation with affected stakeholders. We are not talking about reinventing the wheel but about matters referred to in other reports. The net effect is that we need to allow for a legislative process that——

Mr. Des Cummins

The problem is that there is a body of oppressive material. Groups in business, including the SFA and ISME, are happy to work with people. We acknowledge the need for a relationship with the State involving co-operation and partnership but we do not have it. The State just makes regulations. Everything we manufacture is for export. We are part of the Bureau International de la Récupération in Brussels. We get all the information from Brussels and know what is going on in countries such as Germany and France. People in Brussels are telling us we are zealots in Ireland. We get the EU legislation and ask how we can make it as difficult as possible for our own people. One should think about the French model. In the Irish case, every t must be crossed and i dotted.

Deputy Seán Sherlock

The Chairman may disagree with me that there is a disparity in that case. When the State itself decides not to comply with legislation from the Union, as it often does, it often blames Brussels, yet we are very compliant when applying legislation to businesses.

Mr. Des Cummins

We are saying Ireland is over-compliant.

Mr. Avine McNally

The European Union has taken a very pragmatic approach to examining specifically the burden on small companies. It has come forward with the "think small first" principle, which is not really relevant to the daily business in which many of the regulators in Ireland are involved. This does not seem to be considered. We have suggested that, where practicable, small businesses should be exempt or excluded. For example, a business could be excluded if it had a staff of fewer than ten. None of these points ever seems to be considered. If they were, it might reduce the volume of new legislation coming down the track.

Deputy Kieran O’Donnell

Is that the case in other countries?

Mr. Avine McNally

In Europe it is very much the approach to consider the impact on a small business as part of a cost-benefit analysis.

Deputy Kieran O’Donnell

What EU countries have exempted businesses of a kind that are not exempted in Ireland?

Mr. Avine McNally

I do not have precise examples but I could put some together for the Deputy, if he is interested.

Mr. Des Cummins

It is not a matter of exemption but of the level of compliance. Mr. Martin will confirm that he gets six inspectors coming to visit. It is almost the case in this country that one is guilty until proven innocent rather than innocent until proven guilty.

Dr. Aidan O’Boyle

This relates to a point made by Deputy O'Donnell. He asked whether there is a requirement to carry out a regulatory impact analysis on existing legislation. Manifestly, there is a need to do so. The focus is on doing so regarding future legislation but even that is not happening.

If there were a business forum such as that suggested, whereby local authorities and small and larger businesses explored together the areas of difficulty in a very positive framework, perhaps there would be some results. The ultimate result we need in Ireland is to have more businesses operating and more people employed.

Deputy Seán Sherlock

Does Dr. O'Boyle have faith in the high-level group?

Dr. Aidan O’Boyle

I would always be very slow to denigrate any grouping. The task of the high-level group is enormous. Even with a high-level group, tackling our vast array of regulations is a daunting task. When one considers the high-level group's first report, that of July 2008 in which it focused on five areas, including taxation and statistics, one will note the administrative savings achieved from the work up to July 2008 amounted to €20.6 million. The anticipated additional savings from the work in train amount to €8.9 million, giving a total of approximately €30 million. We know from all the studies the supposed cost of bureaucracy is approximately 2% to 3% of GDP, or €500 million. Clearly, there is a vast distance to go.

I would be very slow to point the finger at any committee because the task is really daunting. The only point we can make is that there is a need to move faster to prevent us all from being strangled.

Deputy Seán Sherlock

I do not have any further questions.

Deputy Kieran O’Donnell

How often does the high-level group meet and how does it work in practice?

Mr. Avine McNally

I have only recently commenced as a member of the group and did so because our director is on maternity leave. However, I understand there is normally between six and eight meetings per year. Over the next four to five weeks, the group will be conducting workshops specifically looking at the three areas to which I referred. Many meetings are held behind the scenes before the group itself meets to discuss the outcomes.

Deputy Kieran O’Donnell

Does it have an administrative executive?

Mr. Avine McNally

It does, through the Department of Enterprise, Trade and Innovation.

Deputy Kieran O’Donnell

Could it be the case that the group is not taking the simple questions first and instead taking the hard questions?

Mr. Avine McNally

As Dr. O'Boyle mentioned, the mountain is vast. The approach taken thus far has been to consider three key areas. The group had to start somewhere.

Deputy Joe Behan

My point is an observation rather than a question. I thank the delegates for attending. I missed the initial part of the presentation but listening to the experience on the ground has been very educational for me. I refer in particular to the statistic on the impact on unemployment if each self-employed person employed one other person. It would probably be a more sustainable impact in the longer term if the businesses in question could be supported.

This committee is called the Joint Committee on Economic Regulatory Affairs. The presentation given and the discussion we have had thereon have been some of the most relevant we have had since the committee first met. The delegation is being affected by regulations, rules and legislation passed in the Dáil Chamber. There is a very practical step this committee can take, namely, not allowing the momentum to die today. One of our most important tasks during the term of this Dáil is to try to assist the delegates in achieving stable businesses and having a major impact on unemployment. We should return to this issue time and again. Deputy O'Donnell suggested inviting officials.

Deputy Kieran O’Donnell

The members of the high-level review group should be invited.

Deputy Joe Behan

We should keep returning to this until we see we are having an impact on the problem.

Mr. Avine McNally

We would certainly like to feel that the time we have taken away from our businesses today will be of benefit, not just to ourselves, because we are not here to represent ourselves alone, but also to the SFA, which has 8,000 members, and the 250,000 small businesses. None of these businesses would have the opportunity to raise these concerns individually. Our concerns are probably just the tip of the iceberg. Depending on the sector one is in, one will have other problems.

Mr. Des Cummins

If the members wish to go away from here having achieved something other than reviewing the circumstances, they should get the Minister for the Environment, Heritage and Local Government to implement recommendation 329 of the Small Business Forum, which reads, "Establish a Business Users' Forum in each local authority area to improve consultation with and responsiveness to businesses".

Deputy Kieran O’Donnell

Which report?

Mr. Des Cummins

The one of May 2006 is the most recent small business report. We have called on the Minister almost every six months for the past three years to implement the recommendation. It is not a big deal; it is a matter of the county manager and a couple of the head bottle-washers in a local authority having a cup of coffee with a couple of businessmen for an hour and a half once every three months. What is the big deal? Perhaps the local authority staff do not want to hear what we have to tell them. If they sit down with us every three months, as the committee members are doing with us, and discuss the issues, perhaps things will happen. They will not happen if we are all in our own boxes.

Chairman

I thank the delegation for appearing. We intend to have the high level group and the Department of Enterprise, Trade and Employment, which is reviewing the entire regulatory system, appearing before the committee in the next number of weeks. We will follow up on the last point made by Mr. Cummins with regard to local authorities. We hope to produce a report reviewing everyone who has contributed across the business sector. This will be produced in the next number of weeks rather than months. We thank the delegation for its time today, especially for giving us the benefit of its practical experience, which is of great importance.

The joint committee adjourned at 1.40 p.m. until 3.30 p.m. on Tuesday, 11 May 2010.