JOINT COMMITTEE ON ECONOMIC REGULATORY AFFAIRS debate -
Tuesday, 18 May 2010

Cost of Regulation to Business: Discussion with RGDATA

Chairman

RGDATA, the representative organisation for the independent family grocers in Ireland, has come to discuss the cost of regulation to business, in particular to small to medium enterprises. On behalf of the joint committee I welcome Mr. John Foy, president, and Ms Tara Buckley, director general of RGDATA, Mr. Jim Power, economist, and Mr. Colin Fee and Mr. Richard Nolan, retailers.

By virtue of section 17(2)(l) of the Defamation Act 2009, you are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against any person(s) or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

I invite Ms Buckley to make her presentation.

Ms Tara Buckley

Thank you, Chairman, and members of the joint committee. RGDATA is delighted to have this opportunity to make a presentation on its concerns about the cost of regulation for small and medium-sized businesses.

I am joined today by the president, Mr. John Foy, an independent retail grocer from Cootehill in Cavan, Mr. Colin Fee, an independent retailer from Louth, and Mr.Richard Nolan, an independent retailer from Dublin. I am pleased to be joined by Mr. Jim Power, the eminent economist who has just completed a report which we published yesterday on the economic contribution made by independent family-owned grocery shops. The report looks specifically at the issue of regulation and the cost burden for retailers.

At the outset it is important to record that RGDATA recognises that regulation is an important feature of doing business in a modern economy. We recognise that as businesses involved in the sale of food stuffs, some controlled products and dealing with customers on a daily basis, regulation is important and necessary. Indeed as a sector we are all too keenly aware of the consequences of bad regulation. Independent retailers are one of the many sectors suffering as a consequence of poor regulatory intervention in the financial services sector and I am sure that is an area that this committee has looked at in detail. However, we are adamant that regulation should be proportionate, carried out in a cost-effective way and constantly be assessed to determine its adequacy, necessity and proportionality. It is about having good and effective regulation, rather than just box ticking or form filling.

This is particularly the case at a time when the economy is under significant pressure and shops are striving to cut costs and maintain their competitiveness in a difficult operating environment. There is often a feeling among retailers that regulatory costs and obligations are imposed by statutory agencies and regulatory authorities without regard for the necessity of the measure or the cost of compliance. There is a feeling that the SME sector is regarded by some in authority as a sector of the economy that does not merit specific State intervention and support, but which on the other hand can be the target of numerous regulations and administrative burdens. The report by Jim Power, which we published yesterday, entitled The Economic and Financial Significance of the Local Shop, highlights, probably for the first time, the important contribution that the independent retail grocery sector makes to the national economy. Mr. Power has calculated that local, family-owned grocers contribute €4.78 billion to the national economy annually and employ 95,000 people.

The retail sector has borne the brunt of the recession and suffered badly from the decline in consumer spending. There have also been significant numbers of retail shops closing down and jobs lost. We would estimate that up to a quarter of jobs in the retail sector have been lost as a consequence of the recession, so it is a trade that has experienced and will continue to experience challenges in the short to medium term.

The sector is heavily regulated. In the course of preparing the research for Mr. Power's report, we sat down with our members and sought to discover the extent to which they are subject to regulation. Together with all the necessary compliance regulation that applies to all small and medium enterprises, retail grocery shops have an additional burden. As the committee will appreciate, in the case of every licence there is also a sanction for non-compliance and usually an inspection regime to ensure adherence. By our count there are at least 17 separate inspection regimes that retailers are subject to. Some of these can involve inspectors arriving in a shop unannounced to check the size of potatoes or if the eggs are cracked or dirty. There are also inspections relating to weights and measures, taking food and water samples and checking whether VAT is being charged in respect of teddy bears contained in vending machines. Retailers are also often subject to specific obligations attached to the sector, such as the plastic bag tax or requirements relating to the sale and display of tobacco and alcohol products and certain species of fresh fish.

In addition to these inspections, there are at least 21 separate licences which retailers can be required to obtain in order to comply with statutory requirements and to be in a position to sell particular goods or provide particular services. Some of these licences are specific to retailers but others apply across the SME sector in general. For example, a retailer must secure a licence in respect of the sale of postage stamps, salmon, shellfish, alcohol, tobacco, oil and certain glues, batteries, national lottery products and petrol, the playing of music, the sale or rental of DVDs, the provision of entertainment machines and the use of water and waste water. There are also non-governmental compliance schemes, such as Repak and the responsible retail of alcohol, in respect of which a compliance scheme and regulation costs, which must be paid, apply.

We asked Mr. Jim Power to assess the cost of regulation for the independent retail grocery sector and he did this in his report. Mr. Power estimates that for an average retailer, the actual spend each year on licences and permits amounts to €5,500. He also estimates that the amount of time, at management level, spent each year in ensuring compliance and completing surveys averages approximately 50 hours. I refer here merely to what is involved on the retail side of a business and not to the various regulations which must be adhered to in the context of running a company or employing people.

What Mr. Power uncovered means that store managers work for in excess of one week while solely dealing with regulatory compliance and administrative issues imposed by statutory authorities. Adding the staff cost to the cost of permits, Mr. Power conservatively estimates that the average cost per retailer is €6,600 per annum. When applied to the 4,000 members of RGDATA, this represents an actual cost of over €26.5 million. I stress that this is a minimal cost and takes account of one manager and no other staff being involved. It is likely that the actual cost, when spread across the entire operations of a shop and taking into account the involvement of the owner in such a shop, can run to many factors of this figure of €26.5 million.

This cost amounts to a direct hit on the bottom line. It is a cost, which like all other costs inputs, must be justified and continually challenged in order to ensure that it represents a necessary spend and value for money. Unlike other cost inputs, however, it is difficult for a retailer to control, particularly as it is a third-party cost which is imposed generally and without negotiation or agreement.

What can be done with regard to this regulatory burden? It is not enough to moan about it. We must put forward some concrete suggestions as to how the situation might be improved. In that context, it should be possible to group some of the inspections carried out in order that one body will carry out inspections on behalf of a number of agencies, rather than having individual agencies making separate visits in the course of the year.

The inspections that are imposed on retailers are clearly identifiable across a number of categories. Some relate to hygiene, some to weights and measures and the sale of alcohol, tobacco and dangerous substances, while others relate to health and safety. There are also others that are linked specifically to the gathering of information and statistics. It should be possible for Government to establish structures whereby the carrying out of inspections on businesses by agencies of the State, or those in possession of statutory rights and powers of enforcement, could be streamlined and carried out by fewer bodies and agencies. There is no reason a person who is coming to a shop to inspect eggs cannot also examine the position with regard to potatoes and food hygiene at the same time. Similarly, inspectors who deal with health and safety issues should be able to consider matters relating to fire safety and security.

We are operating in an environment where all costs are being reduced as part as a national imperative to increase our competitiveness. While most suppliers to the retail grocery sector, including some utility suppliers, have cut their costs considerably to ensure greater competitiveness, the costs of regulation have largely increased over the period. These increases occurred either through straightforward price hikes in licence costs or through the introduction of new regulatory obligations and licence regimes that impose additional overheads. It is imperative that the State should play its part in ensuring that costs are reduced.

It is difficult to see how, in circumstances where the costs of carrying out inspections have been reduced as a consequence of reduced incomes paid to the inspectors, these costs cannot be passed on to businesses. It should be incumbent on every regulatory agency to reduce its costs to business by a certain proportion, reflecting the general shift in the economy towards reducing costs. We would have thought that a reduction in regulatory fees of at least 15% should be achievable in light of the efficiencies and pay reductions that have been secured across the public and private sectors.

A similar cut should also be applied across any State or semi-State charge imposed on private business, including rates and local charges. The State can issue edicts to its suppliers forcing them to cut their charges by 8% or more but local and central government balk at the prospect of reducing their costs to consumers of their services. It is time for some consistency on the part of the State and the providers of public services generally. Central government must take the lead in a concerted push to reduce State-based costs on business.

One area that is particularly frustrating for retailers is the extensive information requests they receive from the Central Statistics Office, CSO, on a regular basis. These information requests are extremely time-consuming — some forms can take up to one day to complete — and must be complied with under fear of prosecution for non-assistance. It should be possible for the CSO to streamline its information requests in order that it could base its research on the retail grocery sector on a smaller sample. In such circumstances, that sample could then be taken on a basis that rotates the information request across retailers so that they will not all be presented with similar requests on a regular basis.

It should also be possible to streamline the number of visits that are imposed on retailers by inspectors through the increased use of IT as a means of monitoring compliance. In addition, it should be possible for people to self certify. If this were to happen, however, they would have to be subjected to a more occasional audit than might currently be the case.

A combination of an imaginative approach on the part of the regulatory authorities to ensuring that their compliance functions are exercised properly and without undue burdens being imposed on business, would give rise to a better way of carrying out regulatory reviews than that which is currently in place. Some regulators appear to operate on the basis of turning up unannounced at stores. There is no reason some inspectors could not make an appointment rather than turning up unannounced. While an unannounced inspection may be understandable in some circumstances, there are other regulatory obligations that can be addressed through appointments, particularly in cases where paper records are required to be completed.

Most retailers will have had an inspection from the National Employment Rights Authority, NERA. Such inspections can be difficult, even for the most compliant employers. This is one area where the State's involvement in regulating labour costs and terms and conditions of employment imposes direct and challenging costs on the independent retail grocery sector. Under State-imposed regulations and because they sell certain foods, all independent retail grocers are legally compelled to pay their staff an hourly rate of pay that is in excess of the national minimum wage. This is known as the JLC rate. As Mr. Jim Power shows in his report, rates can very from between 8% to 25% in excess of the minimum wage. A retailer who does not pay this increase can be prosecuted by NERA. There is no inability-to-pay mechanism.

This is a level of regulatory intervention in the marketplace that imposes a direct cost on RGDATA members and which leads to their paying more in wages than similar non-grocery retail businesses. In addition, this intervention mechanism incorporates a degree of inflexibility that is ill-suited to current conditions. Under this regime, grocery retailers will be legally compelled to pay an additional 2.5% increase to their staff in October. Unless the increase is deferred, the retailers to whom I refer will be prosecuted if they fail to pay it. This is an example of a regulatory burden which is inappropriate and disproportionate and which adds directly to costs, without delivering any specific benefit. It is a regulatory burden which will damage employment because fewer retailers will take on staff and many will lay off staff in circumstances where they do not have the options to reduce pay rates by agreement with staff. The latter is an option which the State has sought to use in respect of its own labour costs.

This is a matter which has exercised the SME sector, in particular, and RGDATA is one of a number of groups representing the smaller owner run business that have come together to mount a targeted campaign in respect of it. There is a need to change the JLC regime and this must be done as a matter of urgency. In the context of current economic and working conditions, said regime is an anachronism. RGDATA supports the minimum wage and believes there is a considerable amount of employment legislation which provides protection in respect of employee rights. The existence of such legislation makes the JLC regime obsolete and unnecessary.

Before the question and answer session, we thought it might be useful if I asked the retailers present to provide details of their experiences in dealing with regulations and inspections. Mr. Jim Power will also be happy to deal with any questions relating to the cost of regulation on business in our sector. I thank members for their attention and I wish to introduce our president, Mr. John Foy, who is a retailer from Cootehill, County Cavan.

Mr. John Foy

In the context of bureaucracy, there appears to be little input into regulation by retailers on behalf of retailers. As part of the solution to the problems we are highlighting, it would be of assistance if retailers had such an input. In the past 12 to 18 months, people from the Department of Agriculture, Fisheries and Food have visited my premises and proceeded to rip open bags of potatoes to grade them. On one occasion, a member of my staff who was new to the job approached the inspector from the Department to say that the bags of potatoes should not be interfered with. The inspector took umbrage and stated that she felt she had been the victim of a verbal assault from the staff member in question.

On another occasion — it was lunchtime on a Saturday — I was approached by someone I presumed to be a customer who inquired if I had a licence for the teddy bear machine located just inside the front door. I have been in business for 35 years but I was not aware that one requires an entertainment licence for such machines. Even though the official who approached me was off duty, he felt he had the power to approach me and ask if I had a licence for that type of machine.

One feels threatened in dealing with matters of this nature on a daily basis. If someone from the Department of Agriculture, Fisheries and Food comes to the premises and discovers up to three or four mistakes — one example could be where oranges from Spain are listed as being from Chile because a staff member forgot to change the sign — one can be fined up to €3,000. One feels like a bold schoolboy on each occasion the premises is visited by officials from the various Departments.

We are all pro-regulation. However, we need everyone to work together rather than having some people feeling threatened. There should not be penalties in respect of everything. As retailers, we are working towards achieving higher standards and we want to work in conjunction with the authorities. The system has become far too cumbersome. A month ago an official visited me and requested to see our wild salmon licence. We had changed our shop around and moved the fish counter and, by chance, we did not have the licence. He stated that if we could not produce it on the occasion of his next visit he would issue a letter of proceedings against us. That was in respect of a wild salmon licence. Is such a licence completely necessary?

Last week I attended a soccer match in Germany with my son who is 11 years old. We went into Starbucks where I had breakfast in the company of my son and three dogs. I would have always believed Germany to be one of the leaders when it came to bureaucracy. As far as I am concerned, we have overtaken Germany and have become overly bureaucratic in respect of implementing legislation. Ireland is now the leader in Europe in this regard. I accept that this is not a bad thing in certain respects. However, a balance must be struck so that businesses do not incur additional costs which they must then pass on to their customers. If the balance to which I refer can be found, we would be quite happy to ensure the regulations are enforced.

Ms Tara Buckley

Next is Mr. Richard Nolan who is a retailer from Clontarf in Dublin.

Mr. Richard Nolan

No one would dispute the validity and importance of statistical information. As retailers, we would like to see a similar approach being adopted in the context of how we conduct ourselves — in a focused and businesslike way — from an entrepreneurial point of view.

I am fortunate to have an in-house accountant who prepares all of my statistical returns. I would not have the patience to do so myself. In late 2008, we began importing a product directly from the UK. At some stage in 2009, we were issued with a statistical form the size of a telephone book — the intra EU trade statistics return — by the Office of the Revenue Commissioners. I happened upon this form in the office of our in-house accountant and discovered a passage which stated that failure to comply by the due date could result in prosecution. I asked about the level of fine that would be imposed for not completing the form and stated that I would be prepared to pay it rather than fill it out.

In the context of the form in question, from an import point of view we traversed a particular threshold whereby we were importing more than €191,000 worth of goods per annum. Previously we had no obligation to complete the form. One is obliged to wonder about the importance of the statistics. I do not know whether it would be feasible, but if I were to purchase 25 off-the-shelf companies and important €150,000 of products through each of them, I would remain below the radar as regards statistical returns. Questions must be asked about the validity of the request in the first instance.

The level of detail required is farcical. For example, one is asked to round up the number of raspberry yoghurts purchased to the nearest kilo. It is a meaningless exercise in providing finite statistical information. Fortunately, we are now in a position to complete the form by electronic means so it is no longer a major issue.

In the context of other CSO returns we are obliged to make, there is the business energy use survey 2009, which is not very difficult to complete — it only takes 90 minutes to fill out — and would possibly be useful. We were also obliged to return a survey on e-commerce and ICT in 2009. Again, this took only 20 minutes to complete and could possibly prove useful. The quarterly assets inquiry — which measures quarterly stocks, capital assets purchased and sold, trade debtors and trade creditors and quarterly stocktaking figures — would be excessively expensive for us. Estimates are meaningless. The monthly retail sales inquiry takes five minutes to complete and is definitely useful. The national employment survey 2009 was an extremely complex survey of employees. It is probably useful and took approximately two days to complete.

The first survey related to cuts in salaries. There were many assertions in the media in 2009 that wage cuts had not happened in the private sector. Such wage cuts were imposed in 2009 but we were not asked about them until March 2010. I am not sure why there was such a time lag.

In principle, the annual services inquiry 2009 was not difficult to complete because the information requested could be garnered from annual accounts. In practice, however, the layout of the form changes every year. For example, the headings relating to operating expenses and changes in fixed capital assets have changed each year. If we set up a spreadsheet to analyse our accounts, this becomes useless by the following year. If categories are not consistent, we must inquire as to their usefulness. it takes at least two days to complete the form in question.

The final matter to which I refer in this regard is a particular favourite of mine. It relates to the Department of Agriculture, Fisheries and Food and the reporting requirements placed upon us, as retailers, in respect of selling organic products. While we acknowledge the importance of traceability from site of production to the consumer, the original concept of retailing an organic product is — from the point of view of retailers — a bureaucratic nightmare. The Department of Agriculture, Fisheries and Food and its officials seem to be hell bent on understanding, in terms of individual packs of products, what we sell and how we sell it. Most of our 820 organic lines are prepacked and certified. As a curiosity, the Department requires us to sell organic products in plastic. This strikes me as being against the ethos behind the production of these products. Our incentive to sell such products decreases each time we are asked by the Department to complete forms in respect of them. I have nothing else to say.

Ms Tara Buckley

Next is Mr. Colin Fee, who is a retailer from County Louth.

Mr. Colin Fee

The number of regulations with which we must comply and the amount of forms we are required to complete is increasing on a monthly basis. In addition, the cost of obtaining licences is continually increasing. We are obliged to spend approximately 50 hours each year completing CSO forms. There does not appear to be any consistency in respect of this matter. Other retailers with whom I am familiar do not appear to receive these forms at all. We have been completing them and have been subject to inspections for 13 years. It seems that retailers in some areas of the country are far more liable to be obliged to complete these forms and undergo inspections.

There also appear to be differences between the different inspectors who visit stores. An environmental health officer, EHO, or health and safety inspector might outline a certain set of criteria and one might not then see him or her again — he or she might be transferred elsewhere, retire or whatever — and no one else pays the premises a visit for a long period. When a new inspector eventually arrives, he or she will invariably come down heavy in respect of certain aspects of the business, while other aspects do not seem to bother them at all. There are major inconsistencies with regard to what is happening.

For smaller shops, the cost of obtaining licences for some of the more obscure products means that it is practically not worth selling these products in the first instance. Many of the stores RGDATA represents are owner-operator establishments. They are quite small and would be obliged to pay accountants to complete forms, particularly some of those from the CSO which are quite detailed in nature. Many of our members are obliged to employ accountants to complete these forms on their behalf, particularly as they would not be able to access the relevant data or whatever.

Difficulties arise with regard to the amount of time people must spend either filling out forms or dealing with inspectors. The latter always seem to arrive at the worst possible time. We understand that inspections have to take place. However, they give rise to many problems. The overhead in this regard is huge and it appears to be continually increasing. There does not appear to be any rhyme or reason in respect of that increase.

Deputy Seán Sherlock

I welcome our guests. This is the first occasion on which the issue of regulation has been presented to the committee on a pounds, shillings and pence basis. We have received a micro view of how regulation has affected the sector. I was particularly intrigued by Mr. Foy's story in respect of potatoes. From a layman's point of view, I wish to discover more about the regime which allows someone to enter a shop and rip open a bag of potatoes and examine the contents.

What power is bestowed on inspectors from the Department of Agriculture, Fisheries and Food which allows them to do this in the first instance? Surely it must be possible for these people to take a step back from their own regulatory regime and visit wholesalers in order to inspect goods. I imagine they are doing this in an event in respect of eggs, tobacco and the other items to which our guests refer. If they visit the premises of wholesalers or primary producers, why then are they also visiting independent grocers in order to inspect the same products? Do our guests have a view on that matter?

Mr. John Foy

Perhaps it is in the interests of retaining jobs. If an inspector visits the premises of a wholesaler from whom I purchase potatoes, I do not understand why it is necessary for him or her to visit my store. We are, after all, talking about the same product here. This is a double-jobbing exercise which has been carried out for a long period. I have been based in Cootehill for ten years and I have received visits for that entire time. To be fair, the lady who ripped open the bag of potatoes on my premises had checked in with and shown her badge to one of the members of the management team. However, she did not show it to the girl who is responsible for the fruit and veg department.

Deputy Seán Sherlock

Mr. Foy has been based in Cootehill for ten years. The Department's inspectors have been checking the potatoes on sale at his premises for that entire period and I presume a situation has at some point arisen where they stated that those potatoes were substandard or that certain actions needed to be taken. I do not wish to sound flippant, I merely wish to discover whether such a bizarre scenario exists in the first instance.

Mr. John Foy

I am not telling lies about it because it actually happens.

Deputy Seán Sherlock

I accept that.

Deputy Damien English

I did not realise that such a system existed in respect of the inspection of potatoes.

Mr. John Foy

It is the same with regard to eggs. Someone is employed by the Department to inspect the eggs that are on sale in our store. He or she checks whether a proper code is imprinted on our eggs and to ensure that we are not selling eggs seven days before the end of their shelf life. I only highlighted the inspections that are carried out in respect of potatoes. Eggs are also inspected and samples are taken from the delicatessen for health and safety purposes.

Deputy Seán Sherlock

The HACCP legislation, even though it applies on a Europe-wide basis, arguably would not allow for the situation to which Mr. Foy referred in respect of Starbucks. We implement and accommodate European legislation and HACCP regulations relating to food in as robust a fashion as possible. I do not know if any of our guests' stores are affected by the HACCP legislation. If it does affect them, will they indicate whether that affect is adverse in nature? It is well documented that if one visits a country market or artisan store in France, it is obvious that those stallholders and store owners do not adhere to the legislation in the way retailers here are obliged to do. What is our guests' view on that matter?

Mr. Richard Nolan

That is an extremely good point. I am fortunate to be able to holiday in Spain on a regular basis. The Spanish do not do HACCP in the same way as the Irish and neither do the Germans or the English. Ireland is top of the league when it comes to the interpretation of EU requirements as far as HACCP is concerned. HACCP is an extremely important procedure to have in place. There is an important point to take into consideration in the context of HACCP and the requirements of the HSE, namely, that what is good one day will not be good the next. In other words, what are acceptable standards during one inspection will be entirely unacceptable during a second. That is extremely frustrating, time consuming and costly. Ireland is very much at the elitist end with regard to what is required under HACCP.

Deputy Seán Sherlock

We need to return to first principles, exercise a degree of common sense and deconstruct the culture whereby everything needs to be examined and jobs need to be created for the sake of doing so.

Mr. Richard Nolan

I am not sure whether I said that. If it would assist the committee in its deliberations, I would be more than happy for members to visit my premises in order to assist us in filling out the forms. They might also see how inspections are carried out while they are there. I would have no difficulty facilitating such a visit and I am sure members would quickly come to the same conclusions we have reached.

Deputy Seán Sherlock

A high-level group is examining the position with regard to regulation at present. Is RGDATA providing that group with information?

Ms Tara Buckley

This meeting is our platform for doing so.

Deputy Seán Sherlock

Okay. ISME and the SFA have come before the committee and a common theme runs through our deliberations, namely, that there is far too much regulation and that it must be reduced. I would argue that the high-level group to which I refer is understaffed and that its work is not moving at an acceptable pace. This committee should take a view to the effect that RGDATA should play a more formal role in respect of the high-level group. I hope other members agree with me in that regard.

What are our guests advocating in respect of requests for statistics from the CSO? Everyone agrees that the CSO is necessary, particularly as there is a need for statistics. However, perhaps there is a need to consider what it is doing in seeking statistics from the grocery sector at the level to which our guests refer.

Mr. John Foy

RGDATA has over 3,000 members and all of these individuals are obliged to fill out particular forms on a monthly, quarterly or yearly basis. They are obliged to complete a great deal of paperwork. The first question that arises relates to what is being done with the information our members provide. If 300 shops are chosen for the CSO figures this year and next year a different 300 are chosen, is there a need for 3,000 stores to fill in the CSO figures on a continual basis?

Deputy Seán Sherlock

We could take a representative sample.

Mr. John Foy

Exactly, if we want the information.

Mr. Colin Fee

With regard to the CSO, it looks as if one keeps getting asked if one is compliant. However, if one delays and the CSO must contact the person, one can get away with it. I know some retailers who have got out of doing it in this way. I do not know how many people the CSO has taken to court for not filling out forms.

Deputy Seán Sherlock

It seems to be more of a quantitative exercise than a qualitative exercise.

Mr. Richard Nolan

I second what Mr. Fee says. The more compliant one is, the more requests for information and inspections one receives.

Mr. Colin Fee

On the question regarding HACCP, the legislation as it stands is such that 30% of the rules cover 90% of the risk. One example is stock sitting on the floor in the stock room. Some environmental health officers will see minerals in plastic bottles wrapped in cellophane and say they cannot be sitting on the floor, others will say the regulation is for the birds and that the stock can be left where it is. Much of it seems to be insignificant and 30% of it would cover 90% of the risk.

Deputy Seán Sherlock

What is coming across is that we need to apply some common sense. The witnesses are arguing for something quite logical.

My last question does not relate to what the witnesses presented. The regional planning guidelines are under review. I have a strong view on what I call the "Tescofication" of the grocery sector. Pressure is coming from the larger multiples for a change to regional planning guidelines. Does RGDATA have a formal view on this?

Ms Tara Buckley

RGDATA is a strong advocate of the retail planning guidelines. We completed a report last year on the effectiveness of the guidelines since they were introduced in 2000. It showed they have been a great success and it is an area of regulation where we have put down some very good markers. Other countries should be looking at our example rather than Ireland following them. We have comments to make on any review of the guidelines and we have positive input in terms of town centre management strategies and parking strategies that could improve the guidelines. We strongly support retaining the cap on the size of stores and a bias towards town centre development and regeneration. Development should be strategic and led by retail plans rather than developers or retailers leading developments. This should be in the best interests of the citizens and the communities rather than in the best interests of developers here and there.

Deputy Seán Sherlock

I would like to take Mr. Nolan up on the offer.

Deputy Leo Varadkar

I thank the witnesses for attending. People believe we do nothing in this place but much of the time we must be in three places at once. In six minutes I must be at a different committee meeting on the Competition (Amendment) Bill. It is a legislative meeting and I must attend unless I am in the Chamber for a vote. That is the way things work here and when we are busy, we are very busy.

The presentation addressed joint labour committees, JLCs, and employment regulation orders, EROs. It is fair to say that if anything closes retailers in the next few months, it will not be the existing albeit excessive body of regulation and the administrative red tape but issues such as wages going up when wages in the rest of the economy are stabilising or going down. Fine Gael has a clear view of this and is supportive of the minimum wage. We do not think the minimum wage should be reduced. It has been frozen for three years and we are happy enough for it to be frozen for another three years. In that way, it will stabilise in line with European norms without having to be reduced.

Fine Gael has a very different view on JLCs and EROs. This is similar to the views of RGDATA. JLCs and EROs are very inflexible and have not, by and large, responded to the recession. There is no inability to pay clause, which exists within the minimum wage, which is lower. It is inconsistent in that it applies to some sectors in some areas of the country but not others. Many anomalies exist and there are different rates for male and female hairdressers and another for a unisex hairdresser. I assume the designation applies to the customer, not the hairdresser. The regulations cover beef butchers but not butchers of other meats. In RGDATA's sector the distinction is between sale of confectionery and pressed ham. It is not voluntarist but is imposed by order of the Labour Court, which is probably unconstitutional. We will see how the case goes. There should be subsidiary protection for vulnerable workers in non-unionised sectors such as RGDATA's but not as it works now. It should be voluntarist and the chairperson should be genuinely independent without a voting right.

Fine Gael is the only party that holds that view and other parties want to strengthen the existing system and have voted in this way in the Dáil in recent months. I am encouraged to hear businesses are coming together on this issue because I have not seen evidence of this. I have had meetings with every business sector group imaginable about this issue and none of them seems to be talking to another. Most of them do not understand the Industrial Relations Act, which I find extraordinary. I am glad the witnesses are coming together and perhaps they can develop a common position. Nothing can be campaigned for if ten different business organisations are not talking to each other and maintaining slightly different positions on these issues.

On Government charges, we have a similar view to RGDATA in that if the Government can use emergency legislation to reduce its pay bill and its welfare bill by 5% and 6%, why can it not use emergency legislation to reduce its costs? I refer in particular to Government charges and regulated charges controlled by the Government, whether energy or telecommunications. The local authorities we control we are doing their best to freeze rates or reduce them. We have done the best we can, taking into account the large cut in revenues from other sources.

Regarding regulation, we are toying with having a single inspectorate. The different agencies can remain but we could outsource the inspector function to a single inspector. It could not be done in Revenue where the subject is very complicated, but most could be done by a single inspector carrying out an inspection of each business once every two years. We are interested in the views of RGDATA on this.

I am disappointed to hear the delegation is not involved in the high level group, which seems to be social partnership involving high level people. I wonder if some of the organisations involved represent the 3,000 groups filling in these forms. Fine Gael has been talking about the administrative burden of regulation and standard cost models for as long as I can remember. What does the delegation propose for regulation and form filling? Should there be a single form that one fills in once a year? Someone mentioned using sampling instead of asking everyone to fill in forms. What are the practical solutions?

Ms Tara Buckley

From Deputy Varadkar's comments in the Dail, we have noted that he is one of the few people who understand the JLC system. Our big concern is the 2.5% increase due in October. We are conscious that the chairman of the Labour Relations Commission said there should not be pay increases this year, especially in the business we represent. People have already tried to cut costs and manage but they have small teams working in rural towns. The whole team wants to work.

Deputy Leo Varadkar

Is there any negotiation towards deferring that increase?

Ms Tara Buckley

We are starting the process of trying to defer that for a further 12 months. RGDATA is speaking with the IFA, the Vintners Federation of Ireland, the Restaurants Association of Ireland and other retail trade associations. We are trying to come up with a group proposal so that we are singing from the same hymn sheet. Nobody in RGDATA has any problem with the minimum wage but we want people who are starting out in the retail trade to begin on the minimum wage so that we do not get out of sync with other retailers. People in jobs want to keep those jobs and we would prefer a freeze on wages rather than a cut in hours or in staff. We will come back to the committee with our proposals.

Our members fall into three groups — small shops, medium-sized convenience stores and larger supermarkets. Once we have spoken to 15 or 20 stores in any of the categories we quickly get an idea of their sales, levels of employment, costs, etc. We believe the CSO could do its sampling on a smaller scale and rotate the practice. A shop might be surveyed for a period of, say, three years but then be exempted for three years. This would cut down on form-filling but, as has been said, if a shopkeeper is perceived as compliant in filling in forms, he or she will get another form to fill in when there is another survey. As a compliant retailer one ends up filling in more forms than others.

We would appreciate the opportunity to be part of the wider group discussing these issues because small businesses have a lot to offer on the burden of regulation. It is different for large companies because, as Mr. Fee said, they have HR directors and financial directors to deal with surveys and other forms while in a small shop the owner plays every role. If those owners have to pay for somebody to do the work it adds more costs to businesses already struggling to survive.

Deputy Kieran O’Donnell

I welcome the guests. Group inspections were mentioned and, as Deputy Varadkar said, we are considering having just one inspectorate. Has RGDATA considered what amalgamations could take place to reduce the number of inspections?

I read the report on local shops prepared by Mr. Jim Power. It seems to raise a couple of points, which I hope the witnesses will comment on. Has regulation in the past 12 months cost jobs in the sector? The behaviour of multiples arises regularly. What can be done in that regard? I assume that the buying power of RGDATA members is as big as that of some of the multiples. Is that the case?

The witnesses did not touch on bank credit but it is very relevant. How big a factor is access to bank credit, working capital and overdraft and term loan facilities for members on the ground?

Are all the CSO forms sent in hard copy? Are any completed on-line?

Mr. Richard Nolan

The intra-EU trade statistics return is the only one we can complete on-line.

Deputy Kieran O’Donnell

If returns were on-line would it make it much easier to complete them?

Mr. Richard Nolan

Not really. All one would save is the time spent in licking the stamp and sending the envelope back.

Deputy Kieran O’Donnell

If the sector's financial systems could include a function which pooled the information, would it make a difference?

Mr. Richard Nolan

There should be a way of standardising the information but, as I said with regard to the annual services inquiry, the forms change every year.

Deputy Kieran O’Donnell

I was in practice for years and dealt with a lot of such forms. They were crazy and, as Mr. Fee said, if people dumped enough of them in the bottom drawer the CSO went away, whereas it kept coming back to those who were compliant. Could a more streamlined methodology be devised for filing CSO, CRO and tax returns?

Has RGDATA asked to be allowed make a formal input into the high-level group?

Ms Tara Buckley

No.

Deputy Kieran O’Donnell

Why not?

Chairman

I understand from the group that RGDATA will be asked.

Deputy Kieran O’Donnell

Reports are often put together that do not reflect what is happening on the ground so it is very important.

Mr. John Foy

The Deputy's first question was whether the requirements were putting people out of business. They put more pressure on a business and have a knock-on effect. If sales are down by between 5% and 10%, necessitating lower staff numbers, they add more costs.

Deputy Kieran O’Donnell

Or the manager ends up doing the work, rather than the accountant.

Mr. John Foy

Yes, exactly. Affordability becomes an issue so a businessperson sometimes ignores it and his or her standards start to slip. It has a long-term negative impact and it will affect every business if we give up. Hygiene regulations are very important for me and, while paperwork is not a priority, if I received a €7,000 fine for an INTERREG form it would have a serious impact on my accounts. It also puts unnecessary burdens on people, given the times we are in.

Deputy Varadkar asked about costing. When business was good local authorities increased rates accordingly but it is even more important that things come back into line quickly in a downturn so that businesses can sustain themselves.

Deputy O'Donnell asked about bank charges. One of my concerns is that the person who survives in business will face increasing pressures in the form of increased charges, margin calls and higher interest rates. There will be more pressure to pay for the mistakes that have been made in recent years.

Deputy Kieran O’Donnell

How many RGDATA members rent their business premises? Witnesses will be aware that the ban on upward-only rent reviews does not apply to existing leases. Mr. Power said that the indigenous retail sector had been outside the scope of State support to date. While regulation has created an enormous burden, what has been the effect of the lack of State support?

Ms Tara Buckley

The Deputy asked about banking and credit facilities and we have received some feedback from our members on the subject. When banks are asked about the number of loan refusals they make, they tend to give details of people who have filled in the necessary forms but our members speak to their banks first and, if they are given discouragement as to the likelihood of being able to take out a loan, they do not fill out the forms and do not, therefore, become a statistic. They are wary of putting their heads above the parapet by complaining because they hope they will be able to get a loan at some time in the future. Our members have told us how they have been refused opportunities of investment, even though they have been around for 30 years and have never reneged on a loan from a bank. Other members have indicated that they were very upset, having had overdraft facilities for 29 years, to suddenly discover they had been withdrawn.

Deputy Kieran O’Donnell

How many RGDATA members have gone out of business in the past year or two?

Ms Tara Buckley

In the past two years we believe approximately 112 member shops have closed, while 40 new shops have been opened. We represent approximately 4,000 shops. Many of our members own more than one shop. Given that people still need to eat, food will still sell. Many of our members have been in business for a long time and can batten down the hatches if they can manage their costs. As they are in their own buildings, they do not have these costs being imposed on them. It is the newer entrants to the trade and other types of shop that have gone out of business. The shops that will close down first are bookshops, fashion shops, etc. We will probably be the last. Tobacconists and newsagents — members with small shops — are certainly under enormous pressure. Our members with convenience stores and supermarkets have adapted, but it is very difficult for those with smaller shops because of the way trade, buying and consumer habits have changed. They are certainly struggling.

Regarding jobs, while many of our members have reduced the number of hours, they have tried to keep their staff. In many cases, a shop might be the biggest employer in a town. They are conscious that many of the people they employ might have partners who have already been let go from their jobs. They know them very well.

Deputy Kieran O’Donnell

I notice that many of them are working longer hours.

Ms Tara Buckley

The owners — our members — are working very long hours and cannot afford to pay for the support they would have had in the past in terms of consultants and professionals. They are taking on that onus. However, they are under pressure, particularly if they are threatened with prosecution. We recently conducted a telephone survey of our members, two of whom — men who had been in business for 30 years or more running shops — broke down in tears on the telephone because they were under so much pressure. One does not hear about such stress until it is too late.

Deputy Kieran O’Donnell

Given the inspections and forms that need to be completed, does Ms Buckley believe that in the current climate the bodies concerned should be cognisant of the need to relax the pursuit of enforcement requirements? Aside from the need for reform, do we need to give businesses breathing space and latitude?

Ms Tara Buckley

Given the businesses we are in, we understand the need for good standards of hygiene. However, at times the approach adopted is excessive and the first thing a shopkeeper is told is that he or she will be prosecuted. We have come across cases in which inspectors took out badges and read our members the riot act in the middle of the shop. This makes people very stressed. There should be a more effective way of managing it, given the pressure under which an owner-manager of a business is working. We do not want to shirk our obligations in terms of the need for good standards of hygiene.

Deputy Kieran O’Donnell

They should still have to meet the requirements but with a degree of latitude.

Chairman

Deputy O'Donnell touched on the issue of the multiples. Over the weekend I read reports that last year in excess of €2 billion worth of food had been imported by the multiples. As the representative body of an indigenous group, RGDATA should strongly highlight its support for primary producers and processors.

Ms Tara Buckley

We represent the independent family-owned grocery store sector. Two thirds of our members are aligned with a group, while one third trade under a family name. They range from the owners of a small corner shop to a supermarket. We have examples of aligned and non-aligned supermarket owners. In the past two years the market has changed significantly for everyone because of the actions of certain players. To be competitive and in the game, our members need to ensure they are providing the value and quality their customers want. Independent traders are the best supporters of Irish producers and suppliers. They go out of their way to provide a route to the market for local producers and often provide the only route to the market for local producers and small suppliers.

Deputy Kieran O’Donnell

Does Ms Buckley have any figures in that regard?

Ms Tara Buckley

We would have figures to quantify the matter.

Deputy Kieran O’Donnell

By comparison with the multiples, what percentage of RGDATA members' produce is sourced in Ireland? We all know RGDATA members in our localities. They are to be found throughout Limerick, many of them in the heart of the city. While all businesses are struggling, RGDATA members are employing people locally and selling produce which has been sourced in Ireland. The multiples issue struck me as being significant when I read the report. I presume that many of the newer businesses, about which Ms Buckley spoke, are based in rented premises.

Ms Tara Buckley

Many of our members who have new convenience stores in suburban areas are more likely to be in rented premises. Our more long-standing members own their premises.

Mr. Richard Nolan

Deputy O'Donnell raised a number of issues, not all of which I may remember. In a certain way I am probably the odd man out in that my business is not group-affiliated. Therefore, in the strictest sense I am an independent grocer who is hiring people.

A number of issues were raised about planning guidelines, regulations, etc. I have a family-owned business and employ 130 people in a neighbourhood shopping centre. I have no great difficulties with the bank. A number of issues have been raised that are relevant to my business. I am very fortunate to be in a position where I can hire people. However, on a personal note, I am working twice as hard now than I was ten years ago.

This is a complex business. Regarding planning guidelines, it is not unreasonable for me to say one will not find a neighbourhood shopping centre like mine. One would not find 40 of them in the United Kingdom and I believe Swedish regulations prohibit such buildings. It is not that I am necessarily afraid of the concept of greenfield sites, but if the planning guidelines are allowed to be changed, there will not be facilities such as mine in this country.

Regarding what is required of us as retailers, approximately three weeks ago I visited one of my competitors. Every item in the store was labelled incorrectly to such an extent that Irish chicken fillets were labelled with the number of a Dutch processing plant. The Chairman referred to imports. In my store we go out of our way to support Irish artisan producers. However, I import pizzas from Scunthorpe in the United Kingdom, even though they are made on the Naas Road.

Deputy Kieran O’Donnell

It is made on the Naas Road and goes to the UK.

Mr. Richard Nolan

It is made on the Naas Road, it goes to the UK and I bring it back in. The committee does not have enough time to address all of these issues.

Deputy Damien English

Is Mr. Nolan allowed to source the product here?

Mr. Richard Nolan

I can clarify that.

Chairman

It would be interesting.

Mr. Richard Nolan

I do not buy the product from the Irish distributor any more. The manufacturer sends it to the UK and I bring it back from a distributor there.

Deputy Damien English

There is an Irish supplier of the product.

Mr. Richard Nolan

The Irish supplier of the product charges me twice as much as the amount for which I can get it in the UK. I could give the joint committee hundreds of examples like that. That is why I have said from the outset that I am different from Mr. Foy, who is associated with SuperValu, and my colleague at the end of the table, who is associated with Spar. I am one of very few retailers in the country who are not affiliated with a group. Apart from filling out my returns for me, the committee could learn a great deal from my business — what it is, where it is and how it operates in the context of a neighbourhood centre.

Chairman

Are the pizzas which Mr. Nolan imports bracketed for statistical purposes as imported processed food?

Mr. Richard Nolan

I assume they are bracketed as exported, in the first instance, and then as imported. I can give hundreds of examples of that.

Deputy Damien English

Another Oireachtas committee is preparing a report on that issue. It is due to be published in the next couple of weeks. It is something we can bring in here as well. It is unreal. There is a major problem with suppliers.

Mr. Richard Nolan

I would like to return to the point I was making about labelling. For some reason, I have to ensure we have all our labelling correct in the event of an inspection. When I was in a competitor's store, not one label was correct on any of the products being sold.

Deputy Kieran O’Donnell

It is a question of consistency.

Mr. Richard Nolan

There are anomalies within the system.

Mr. John Foy

I would like to return to the point about Government supports. My store, which is part of the SuperValu group, is near the Border. Our business, including our hardware business on the same premises, dropped substantially — by approximately 16% — between 2008 and 2009. We were notified about a scheme that was introduced in early December 2009 and lasted a short period of time. It gave us a chance to avail of a subsidy if we did not make any staff members redundant, which we had not done. I subsequently employed my accountant to carry out work to meet the requirements of the form. When we sent in the form, we were told our business did not meet the full criteria of the scheme because we did our stock take at the end of July instead of at the end of September. We were eliminated from the process because of that piece of bureaucracy.

Deputy Kieran O’Donnell

Okay.

Mr. John Foy

Our business has started to turn since November or December of last year. The sterling difference has come back into play. We have not let anyone go. I am giving an example of bureaucracy. A scheme to assist retailers was introduced at short notice, with a tight window. I have discussed the matter with Ms Buckley. Many of our members did not avail of it because of its complexity. If one met the criteria in the first round, one qualified for the next round. I have not heard of any retailers who have actually benefitted from it.

Deputy Damien English

I could name a few similar schemes. They are only sitting there.

Mr. John Foy

Yes. If the Government is to do something to support the retail sector, it should be true and real. Other things have been introduced in different sectors. Some of the schemes in the agricultural sector were massively over-subscribed. I would not like to see that either. It should be easy for people who need such schemes to avail of them.

Deputy Kieran O’Donnell

It should be practical.

Mr. Jim Power

I would like to summarise much of what has been said and give my perspective on it. I prepared a report for RGDATA on the independent——

Chairman

Perhaps we will allow Deputy English to speak briefly.

Mr. Jim Power

Okay.

Deputy Damien English

I will keep my comments brief. Much of what I had intended to say has been covered. Ms Buckley will agree that we have been through this before. I agree with everything she has to say. I will not go back through it all.

There is finally a willingness about the place to do something about these problems. That is a start. I fear that there is a lack of urgency in this regard. Ideally, everybody could be brought into a single room for a weekend to pick out and go through the 1,000 things that need to change. We are probably going to spend a year or two debating this and going to and fro with the different reports. The report under discussion was with the high-level group from Christmas until now. There is a lack of urgency in this area.

I welcome the report that has been compiled. I heard a little about it on yesterday's news. Perhaps the coverage it has received will force the issue. Many good groups came before this committee in the last couple of weeks to highlight the same issues. If we can focus on them, some action might be taken quickly. There is a need for urgency. Some of these changes will be too late in a year's time.

What we are missing in this country is common sense and simplicity. Perhaps Mr. Power can touch on that when he speaks about his report. We have gone off the wall by complicating everything with red tape. I do not think it has been done to create jobs. It just happened over time, for whatever reason. No one stopped it or checked it.

I welcome the idea of checking existing laws on a regular basis. When new things are introduced, they should be re-examined after six months or a year. We need some kind of forum in which people can sit around a table on a regular basis to consider the relevance of such matters. Each side can make its case and someone can decide whether they should be kept, or changes should be made. It may be the case that just 30 out of 300 people fill in the CSO reports each year, for example.

There is a perception that retailers and small businesses are able to absorb all of these costs and take in all of these regulations. There is a feeling among officials that everyone involved in business is making loads of money. That perception needs to end. Most people in small business, including those in attendance, are lucky to make a wage. They have a lot of hassle on their minds all week as they try to pay their bills, etc.

The report prepared by Mr. Power touches on the economic and financial aspects of this issue. Independent retailers also make a massive social contribution to every local village and town. It is not Mr. Power's job to highlight that, but it should be highlighted. I have referred previously to the training of young people in shops. In most cases, it is their first job and their first practical experience of a business. It is very useful. We could provide some supports by coming at it from that angle. A great deal of the good work that is done by independent retailers is not recognised.

I would like to comment on the planning guidelines. We have to be very careful when we consider changing them. This committee and other committees have a role in protecting businesses like those owned by the witnesses from the hoover concept that prevailed in the UK and everywhere else. I do not think these guidelines will change. We have to be careful to ensure they do not change. It is a pity that it drags the debate away.

I would like to comment on a couple of key points. The attitude of many of the inspectors who come to retail outlets seems to be wrong. If one gets the wrong person at the wrong time on the wrong day, one is in trouble, especially in the food business. I have been in that business, so I know what it is like. If one is not ready to meet an inspector at 5 p.m. on a Friday evening, it can go horribly wrong. That should not happen. There should be standards. There should be a logic to what is being done. Personalities should not come into it, but they do. That is a problem in this country that we need to address as we go along.

When it comes to EU laws, we are way over the top. There is no doubt about that. We know the EU is trying to address some of its laws. It is happening at a slow pace. Common sense needs to be applied as we go along.

The National Consumer Agency did nothing to flag the costs associated with regulation in this country. Businesses have many such costs. There was a great deal of talk about profits and margins. It helped to send people across the Border. The costs incurred by businesses should have been highlighted as well. A new body will be formed when the National Consumer Agency merges with the Competition Authority. That body will have to highlight the costs of businesses. At the end of the day, they have a direct impact on consumers. The problems of businesses are not being highlighted by any authority other than the businesses themselves and the groups that represent them. No Government body is acting on behalf of businesses. We can look at that when the new organisation is created by the merger.

The witnesses know where we stand on the JLCs and on wages. Would it be of benefit if floating advisers were to go into shops to help retailers out? They could talk the owners of businesses through some of this stuff on a regular basis. They could help to cut through some of the red tape. Rather than having to fill in all of these forms, is there any chance that this work could be done by means of a telephone questionnaire?

I said previously that many businesses need health checks. They need professional people to advise them. I have dealt with people in four or five shops in County Meath who needed advice and help to save their businesses. That should be available through the State, but it is not. Are the witnesses coming across such initiatives? Do they agree that it is time for people like Mr. Jim Power to give people advice on how to save their businesses? I appreciate that Mr. Power is a high-end expert, but people at other levels could perform a similar role. While some retailers are business experts, they might not be not experts on finance or employment. They could do with that help now. It should be provided by the State at a subsidised cost, rather than at a high cost. I would like to hear some comments on that. The rest of what I had planned to say has been covered by other speakers.

Mr. Jim Power

I will say a few words. I compiled this report for RGDATA. I did three things. First, I carried out a lot of desk research. Second, I carried out an extensive survey of members of RGDATA asking a series of questions about the sourcing of their products and local sponsorship spend. I captured some of the social aspect but there is a lot more to be considered. I carried out a very strong survey to find out exactly what was being done locally and I tried to measure that contribution. Third, I went to a number of retailers and spent between a half day and a day in their stores examining what they do and how they do it. The overall impression I was left with was of an incredibly entrepreneurial, innovative business sector that is not recognised. It is deemed to operate by itself without any assistance or mentoring of the type Deputy English mentioned. Mentoring is a very important idea.

I measured the economic contribution and arrived at the figure of almost €25 billion. I then considered the issues facing the sector. There are four, one of which is the economic environment and the dramatic slowdown in consumer spending, which obviously is having a significant impact. Second, the general cost base is a factor, especially on the wage front. However, for many retailers, the rent issue is very important. The third issue is competition and the behaviour of the large multiples. I feel very strongly about this. It is an area that needs to be seriously regulated. If not, we will have a serious market failure of the type that has devastated rural towns in the United Kingdom, for example. In that context, the retail planning guidelines are essential. They need to be examined and tweaked. They are doing a fine job and need to be preserved. Otherwise, we will end up with a very undesirable retail landscape. The fourth issue is the cost of regulation. We did a lot of surveying of members on regulation and tried to capture as much data as we could. I applied the international standards for measuring regulation, basically including the cost of licences or other required permits and the number of hours required to comply with the various regulations. I costed the latter on the basis of management time and came up with a very significant figure. On its own, regulation has not forced the closure of retailers but when one combines it with all the other pressures on the sector, it creates a seriously difficult environment.

The retail sector is seriously entrepreneurial and innovative and makes a major local contribution, much more so than any multiple will ever make in that shopkeepers are part of the community. They do not comprise a faceless multinational.

Deputy Kieran O’Donnell

Regulation represents a fixed cost in a declining market.

Mr. Jim Power

Absolutely. That is very important to recognise. A sensible approach needs to be adopted to the environment created for entrepreneurs. Regulation should be all about quality rather than quantity. We need to examine the former.

Chairman

What is the position on the sourcing of primary produce by the retail sector rather than the multiples? Are there statistics to prove RGDATA's position?

Mr. Jim Power

I found that 55% of the product line of the medium and larger retailers is sourced in Ireland.

Deputy Damien English

Is that 55% of RGDATA retailers? The multiples claim a figure of 40%, which is questionable.

Mr. Jim Power

I refer to 55% of RGDATA members. Some 4,000 were surveyed.

Ms Tara Buckley

When one starts fighting over statistics, one must remember that some operators have huge market shares. It is a question of export and other factors. We are the only group that provides small Irish suppliers and artisan suppliers with a route to market. Very big players do not want to deal with a small cheese maker from west Cork.

Chairman

While figures can be manipulated, the reality is that the route to market is what is being provided.

Deputy Kieran O’Donnell

Are suppliers being put under pressure by the multiples by stealth to the extent that the terms they are giving to RGDATA's members would not be as competitive as they might be?

Ms Tara Buckley

We are concerned that the smaller players pay for the deals the biggest players get. Our customers should not have to suffer. We are the customers also.

Mr. Jim Power

The attempts I have made to get suppliers to talk about this have failed.

Deputy Kieran O’Donnell

We are looking for a level playing field.

Mr. Jim Power

We are.

Chairman

The term "hello money" and other such terms have been used but it is impossible to have them put on paper.

Deputy Damien English

At other committee meetings, seven admitted to it eventually. That was only part of the picture. There is a big report to be published that will finally set out an angle that can be taken.

Ms Tara Buckley

Independent family-owned shops do not indulge in any of those practices.

Deputy Damien English

Regulation was introduced to protect the consumer. In recent years, consumers have become much more aware of their rights and of regulations. Is it fair to say the customer has a role in regulation and that if there were a problem, he or she would highlight it?

Mr. Richard Nolan

That is a very good point. Let me give an example. If I were a chicken processor in the Republic, I could source Thai chicken in Holland with a Dutch plant label, import it to Ireland as Dutch chicken, put Irish breadcrumbs on it and stick the Bord Bia stamp on it.

Chairman

I thank the delegation for attending. This issue is very important. The high level group will be asking——

Deputy Kieran O’Donnell

As a committee, can we follow this up to ensure RGDATA will be written to formally by the high level review group?

Chairman

We will do that. We hope to compile a report on the cost of regulation involving all the small to medium enterprises and businesses. We may invite the delegates from RGDATA to appear before the committee again, if necessary, to give further information.

Ms Tara Buckley

I thank the members of the committee.

The joint committee adjourned at 5.10 p.m. until 3.30 p.m. on Tuesday, 25 May 2010.