JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT debate -
Tuesday, 22 Sep 2009

Retail Trade in Ireland: Discussion with CSNA.

Chairman

I welcome Mr. Vincent Jennings, chief executive officer, Mr. Joe Mannion, president, and Mr. David Bagnall of the Convenience Stores and Newsagents Association, CSNA, and thank them for attending. I understand the organisation is based in County Kildare. Deputy Seán Power will be familiar with the representatives. Everybody has a home patch they wish to protect.

Before beginning, I draw attention to the fact that members of the joint committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person inside or outside the Houses or an official by name or in such a way as to make him or her identifiable. As this is the usual warning outlined to all witnesses appearing before the committee, our guests need not be nonplussed by it. I invite Mr. Jennings to make the presentation.

Mr. Vincent Jennings

We appreciate the Chairman's consideration in ensuring we were invited to appear before the committee. It probably has little to do with the fact that he has a family background in the newsagent business. It is most important that we convey to the committee our perceptions of and perspective on our difficulties and, we hope, make some suggestions on the way forward. My colleague, Mr. Joe Mannion, is the national president of the CSNA and a traditional CTN — confectionery, tobacco and newsagent — in Clondalkin. Mr. David Bagnall has a SPAR franchise in Park West in Dublin. If there are any questions relating to convenience stores and symbols, he can deal with them, while Mr. Mannion can reply to questions about the CTN sector.

Practically every Oireachtas committee, Deputy and Senator has commented on the important service our shops provide in the community. They are frequently the first point of reference for children entering the workforce and, in many cases, substantial employers in villages and towns. The difficulty is that the statistics I have provided for the committee show that a very substantial number of shops have closed during the years and, unfortunately, the position is getting worse. We are rapidly approaching a retail wasteland, where villages, communities and small towns will be without any choice. People will most certainly be able to buy products at a rate the National Consumer Agency considers appropriate but they might have to travel 15 or 20 miles to do so. The decision for everybody in society, including our association, is whether this is the way for the future or whether the committee and the State can ensure our sector remains viable.

One of the areas we are pleading with the committee to consider is where there are statutory functions that affect our overheads such as rates, banking charges and wages. We must pay JLC rates. Are these areas we should be examining in the new and modern Ireland or does one wait until it is too late and the wheel cannot be turned back?

Chairman

We have had a detailed and comprehensive presentation. I will now open the floor to questions, starting with Deputy Morgan.

Deputy Arthur Morgan

I thank the delegation for their presentation, particularly as it was forwarded to us. That allowed us to have a good look at it before the delegation came here. That is always helpful, and I appreciate it. The employment opportunities Mr. Jennings' association offers across the land are crucial not only for the age group he has described, first entrants, but for mothers of young families who may not be able to afford full-time employment due to the huge cost of child care. I am sure the association's members are aware of all those issues, as I am. That is a crucial part of the economy, both socially and in terms of labour costs.

On many occasions, this committee discussed the implications of planning laws and regulations which have impacted negatively on the association's members. We know those laws and regulations have contributed to the ever decreasing numbers of convenience stores, not to mention the implications for communities. As a former local authority member, like most members of this committee, I can empathise with Mr. Jennings when one considers the list of costs, including rates and banking. The cost of compliance is a huge challenge. We do not do politics on this committee, we just try to do our business. However, I must express my concern that nobody in authority seems to be getting to grips with those issues to reduce the ever increasing costs, including legal fees. I know the Chairman does not have a view on this, as he is completely neutral, but large retailers seem to name whatever they want to charge. It is crazy stuff. It is amazing that the association's members have managed to hang in there. They do so because they are part of the community in which their stores operate. Nonetheless, they are hanging on by their fingernails in many cases and I commend them for that.

The LRC is the issue because it recommends above the minimum wage in some cases. Mr. Jennings has cited that as an issue. I know that a number of stores are exempt, such as book stores and some other categories. Does Mr. Jennings accept that someone making sandwiches and other ready-to-go food would need a higher qualification than somebody who swipes a book and accepts payment? Perhaps the additional qualifications required, and the issue of food safety, have a bearing on the matter.

I am concerned that the written presentation we got leans heavily on the issue of the minimum wage, rather than all the other costs involved. Does Mr. Jennings feel that a substantial amount could be done to reduce overheads and other costs in all those other areas before getting to the wage issue? I am not dismissing the wage question. There are about 34 people employed in our own business at home, so I know the impact of wage costs. Those people are struggling as well, however, and the cost of living is huge. Mortgages still have to be paid irrespective of what the banks do. In the context of his overall submission, would Mr. Jennings say there are other areas that warrant close examination? Could he cut to the chase quickly before we deal with the wages issue, which is undoubtedly the most contentious?

Mr. Vincent Jennings

I thank the Deputy. In our convenience/CTN sector, Forfás has correctly pointed out that between 54% and 60% of our overheads comprise wages. If we could mange to stem that percentage it would lead to a significant reduction on overheads. Tinkering around with other matters, which most certainly are costs, would not come to the same level of overall cost as 60% of overheads, which wages are. It will always be the case because we are labour intensive and need to be, but it is bringing us down further so we need to tackle that. We can neither be disingenuous nor dishonest in suggesting that we will skirt around the wages issue. At the JLC in April, 600 individual employers wrote pleading for a delay and deferral of a 2.5% increase, which was rejected. It went ahead and we are now paying 2.5% more than we were earlier this year. We cannot allow that to continue if we want our business to survive.

Deputy Leo Varadkar

I have a few points and questions, but it may be more appropriate to allow Mr. Jennings, Mr. Mannion and Mr. Bagnall to take ten minutes to make their case first before going into questions and comments.

Senator Brendan Ryan

The report was e-mailed to us yesterday evening and I have not had an opportunity since then to go through it in detail. I would like to listen to the delegation for about ten minutes and I agree with Deputy Varadkar in that respect.

Chairman

Do Mr. Mannion and Mr. Bagnall wish to comment?

Mr. Joe Mannion

I am the national president of the association and, as a result, many of the members feed in to me directly. The three main items are definitely wages, rates and power. Those are the biggest overhead contributors in our business. Every business is suffering from the rates issue. Rates in the south Dublin area were put up in line with 2005 rents last year. We have no option but to pay them. There is no "get out" clause of any description for my business or any other.

Wages are like anything else. I tried to save €1,000 on my accounts bill last week, but it does not go a long way towards impacting on prices in the shop — it is less than €20 a week, whereas wages for an average CTM could be as high as €4,000 or €5,000 a week. That is where we currently are in trying to get savings. We are not looking at the minimum wage, it is the JLC. We are particularly taken on the issue of paying one third extra on Sundays. What makes Sundays so different now in our trading environment? We have to open and cannot charge different prices on Sundays.

When one says that a person has a role, such as making sandwiches, they get rewarded for going for these awards. Mr. Bagnall would have a bigger sandwich-making business than I would. We had discussions with FÁS recently to try to get the whole retail area award-driven so that we can pay wages on that basis. One can be three years in the business and one will get an incremental increase, although one might be useless at the end of the day. Bankers are being told they should not get bonuses unless they do the job properly. By the time I arrived into the minimum wage, I was paying over it, so the market dictated that. I know there are rogues out there and we are not defending them for a minute.

Nationally, those three items — wages, rates and power — are the main ones. We can and are trying to save money. Some of us have already pared down those costs. However, we are not here to discuss minor matters today, just the big matters, which are definitely wages, power and rates. Those are the three big items that are impacting on us. I take responsibility, as everyone else does, because we all got into a lazy mode over the past ten years. My wholesaler would say "That's gone up" and we would put it up again, and there were no complaints from consumers. We were all doing well, but the particular wages we are now dealing with are partly trapped in that environment. The sooner we do something about it the better.

Mr. David Bagnall

I thank the committee for the invitation to come here today. I am proud to say I am an independent trader. Anybody who knows me will have heard me state that retail is not a job or career; it is vocation. It is something that I would not recommend my children to get involved in, but many who run their own business would discuss it.

We are responsible for our business seven days a week, 365 days a year. This year I will earn less than the minimum wage as the business owner. My store manager gets paid more than I do.

My store is located in a business park. Last year I won four of the five national industry trade awards. We are known to be one of the best convenience stores in the market.

I am very proud of my staff. To me, they are not just staff or numbers on a payslip. They have become colleagues and friends, and have seen my business develop to what it is today, which is, or certainly has been, a successful business.

In the current market with the downturn that is in place, certainly I must make very difficult decisions and on the last JLC increase, it was a simple one. As an employer, I was forced to increase wages and to let somebody go. It was very simple. Therefore, that problem became somebody else's problem. On the next increase that comes up, if business remains at the same level it means simply that I will have to let somebody else go. There are no grants for retailers to retain people within the industry.

Our industry offers a significant opportunity to people like myself. I started off as a trolley boy in my local SuperValu in 1987, became a trainee manager, became store manager, went to college and became a graduate, and am proud to say I have run a store for the past number of years. Certainly, the effort I put in justifies the rewards I got out, which are not financial. Unfortunately, Bank of Ireland will not accept awards as lodgement slips. If it did so, I would have a very good bank balance.

The reality is that business in our industry is down between 15% and 22% to 23%. There are three main costs within our industry — I can only speak about my own business. My first cost is my financial cost — my commitment to the banks, institutions and to the brand of Spar. My second cost is my general day-to-day operational cost. With my team and staff, I have been absolutely committed, and proactive rather than reactive, in reducing my costs on a day-to-day basis, whether that is a cheaper spoon or napkin, and doing all this without reducing the quality of the product and, more importantly, the consumer offering. One must remember that Ireland, within the Spar world, is considered the best in innovation and quality. We have won virtually ever global award over the past couple of years and I am proud to say I have been involved in that.

My third, and most significant, cost is my wage cost. Simply, my wage cost, because of the reduction in turnover, now equates to between 13.5% and 15% of my business. There is massive pressure on me due to margin erosion because of the current climate in which we live. We also must accept breakfast-roll man is dead and gone, and will not be back. The luxury cups of coffee are not being purchased and the €5 sandwiches are not being bought. The margin on those type of products, which were the profit contributors to our bottom line, is not there. Not alone are we suffering from sales, there is margin erosion. Retailers are willing honestly to pass on the savings to our valued consumers where we get it, and we are getting it and passing it on.

The wage costs, however, as Mr. Mannion correctly stated, are out of our control. Beside my store there is a coffee shop, which is currently going through its own difficulties and which is paying its staff €1.20 to €1.50 an hour less than I am legally obliged to pay. How can I compete against that store because those are costs?

I would be proud to say that I spend thousands of euro a year on staff innovation and training because the best investment I can make within my business is in my staff. I do not want to let them go. I do not want to add them to the end of the queue that is not too far from me waiting outside in the rain for the dole, but every time we are legally obliged to take these increases I must let somebody go.

We are looking at our costs. Anybody who is still in business has had to look at costs and reduce them. Deputy Morgan referred to the 34 employees in his business at home. Mr. Mannion correctly stated that €1,000 off the cost of the accountant is certainly welcome, but it does not add to the bottom line in the current market.

Rates are killing us as retailers. They are absolutely outrageous. I am paying 50% more in rates than businesses across the canal from where I am located because I am considered to be in a different area. That difference would almost pay for a good driver. It has nothing to do with the type of area, and the type and nature of serving five and a half days a week. It is not a level playing pitch.

In the trade, one sees continued marketing by energy companies about great cost reductions. I challenge anybody to try to get that delivered into their business. I am waiting two and a half months to get my energy bill down. I cannot get that.

I challenge anybody within the trade to come in and run a more cost-efficient business than I am running at present. It is quite difficult to say, but considering the type of business I operate which is recognised within the industry, I feel strongly enough to come here and say that I would pay somebody else to make those sandwiches. However, I am quite happy to do so to express how difficult it is becoming for us.

If changes are not made, we as business owners within the trade will have to change our business. We accept that, and we are doing that every day, but there are so many issues outside our control that we cannot deliver. If we cannot deliver it, something must go.

If one travels along main streets, such as Grafton Street, where one will find 15 closed units. One should go into any county, any constituency or any area and look at the significant amount of closed stores. That will continue. It is not due to lack of commitment, bad locations, bad decisions, the banking crisis or anything like that. It is down to the fact that we cannot make our sites viable because of the cost structure in which we operate.

Deputy Leo Varadkar

I will make a few comments about JLCs and ask a few questions. It is no secret that Fine Gael does not like the way the JLC system has worked. Essentially, they date from a long time ago and probably should have been either abandoned or at least amended significantly once the National Minimum Wage Act 2000 came into force. I acknowledge JLCs also cover matters other than wages and that is probably why they remained in place.

JLCs are unfair to employers because they are not voluntary. Essentially, there is an equal number of employees and employers, but the chairman in many cases decides the outcome. One measure Fine Gael will propose in the legislation going through the Seanad at present is that the independent chairman should not have a casting vote, that there should be a genuine agreement among the employers and employees on rates. It is not an agreement at present; it is imposed by law.

JLCs are also full of anomalies. For example, they apply to hotels in some parts of the country but not in others. JLCs also apply in Blanchardstown but not in the city centre, which is absurd. The retailers have a similar issue, where JLCs apply to some retail businesses and not others, and depending on whether one sells sweets or ham. There are some strange aspects.

In addition, it has got to the stage where the JLC system is anti-employment. In fairness to the unions, it is important to recognise that they have agreed to defer the increases in agriculture and in retail. That is welcome. However, the previous increases that happened more recently were out of line with what is happening in the rest of the economy and probably cost jobs. It reflects the fact that the system is failing that it took so long to respond to what was going on in the real economy.

My first question relates to the origins of JLCs. One must bear in mind that part of the reason for JLCs is that they cover by and large the most vulnerable subset of workers who are generally very young, poorly skilled and poorly educated, and many of whom are foreign nationals. We have JLCs because they are not able to organise and if they organise, they will not be recognised and, therefore, they are open to exploitation and minimisation. If the JLCs were voluntary or were abolished, would employers be prepared to negotiate collectively with workers in their own shops to agree fair rates as an alternative system?

I refer to viability. The retail sector is suffering and it is the second most troubled sector after construction. Much of that is not the fault of workers. Ireland has too many retail outlets, which is a planning failure. Many retailers have over-borrowed and that is their own fault. The economy is shrinking, as a result of which businesses will go under. More businesses could remain open if people were paid nothing but that would not be fair. People are entitled to a fair and decent wage for a week's work. What would Mr. Jennings consider to be a fair wage if the JLC rate is unfair? Does he accept the minimum wage is a fair rate or will the association seek to have that reduced in a year or two?

Fine Gael is strong about other costs. We are prepared to cut spending to reduce VAT and excise and to introduce exemptions for employer's PRSI. The corporate budget of FÁS alone could be reduced by €150 million and rates cut by 10% across the board, which would be the right thing to do. Utility prices could be reduced to the European average while rents could also be reduced. One of my problems with NAMA is the agency will try to inflate property prices. Government charges such as the wine licence fee could also be reduced. There are 1 million and one Government charges that should not be there and they are still increasing in this deflationary period. If sufficient action was taken in these areas, would shopkeepers be able to maintain wages at their current level, at least until the economy begins to recover?

Mr. Joe Mannion

I refer to the JLC issue. We have looked at the minimum wage. Nobody can predict what it will be like in two years but many factors are impacting on the minimum wage other than us and, therefore, we have to look at it on that basis. We have not taken issue with the minimum wage; we have taken issue with the JLC, particularly with the fact that it is biased regarding shops. I could have a bookstore beside me, paying lower wages than I pay. Mr. Bagnall gave an idea of the competition he faces and the effect of an increase of €1.20 or €1.30 per hour. That is where we are with the JLC.

I agree with the Deputy. We have suggested to the Government that we need to talk with a proper chairperson who is not biased so that we may be able to thrash out a deal. As an association, we are open to discussions but our members clearly mandate us to say the JLC is causing us a problem.

Mr. Vincent Jennings

It is important that the Deputy understands we are not seeking a race to the bottom. I know this is a fear in a different context. We are not looking to pay our work colleagues and retail partners the minimum wage. We pay those work colleagues the JLC rate but we are concerned nobody will come on board after the people we have let go because we have to pay the JLC rate. In future we are looking to be able to pay national minimum rates to entrants. Retailers who have a net retail space of less than 400 sq. m., which is 90% of the retail environment, should be removed from the statutory requirement to pay the JLC rate for newcomers. An expensive commission was set up for the national minimum wage. We do not have a difficulty with the wage rate. It is based on need and it is considered by society to be the bare minimum under which people should operate. There is no requirement to go below that. We would not ever seek that. However, we have pointed out that variations in premium rates on Sundays and so on run as high as 19% above the minimum wage. That is our difficulty and challenge.

Mr. David Bagnall

The Deputy might think we are whingeing about €1.20 or €1.30 per member of staff but that is a considerable cost where a normal convenience store has between 30 and 50 staff working 40 hours a week. One competes on price and quality in one's service and offering with one's competitors and one may have a forecourt, off licence and coffee shop, for which one is legally obliged to pay a higher rate. One is challenged on the margins on which one can operate. I am happy with my staff. They are fully entitled to the rate of pay they earn, particularly in the current pressurised environment. They all have legal contracts of employment and are entitled to the rate of pay stated on their contract. I have no issue with that but the difficulty is that because there is no flexibility there is no opportunity for us to also reward those who are loyal and work hard.

I have no issue regarding minimum cost. If I have options in my business to take on another €20,000 or €22,000 annually when employer's PRSI is added to the cost, it is a massive investment along with between €3,000 and €5,000 for training on top of that. We are not looking for the price to be reduced to a ridiculous price. We are asking for a level playing pitch so that we will be in a position to compete within the sector and we will have the option to head-hunt the person who gives an exceptional level of service and who is polite and courteous.

Deputy Leo Varadkar

Nothing in the legislation prevents retailers from paying more. Mr. Bagnall could pay them a bonus if he wanted.

Mr. David Bagnall

Absolutely. Looking at the JLC rates, the challenge is how can I as an employer allow a 5% or 10% increase to the JLC rates when I have management, delicatessen staff and others who are salary-based working as hard, if not harder. That 5% or 10% cost would extend across the board. I have been approached on two occasions. On one occasion I had to make the difficult decision to let a person go because of the last increase. Collectively the staff came to me to reduce or not accept the increase. I could not do that. They wanted to keep their colleague in place particularly because of productivity and being part of a well oiled team and I did not want to reinvest and get somebody in on a part-time basis such as a younger person with less experience in the trade.

Deputy Leo Varadkar

Mr. Bagnall referred to a well oiled team. There must be equality and respect for a team to be a team. JLCs are about more than pay. They are about terms and conditions of employment and if they were abolished and retailers worked on the basis of the existing legislation, would Mr. Bagnall be prepared to sit down and negotiate with his employees and recognise them as a group, allow them to have a representative, if they wished, and then negotiate terms and conditions appropriate to the store or would he seek to impose on them the minimum legislation allows?

Mr. Joe Mannion

That is happening at the moment. Many retailers have a framework in front of them and they have different people going through the various years, year on year. They are looking at how this will impact on them as a composite. Members nationally have contacted me by telephone to say all they are paying is the yearly rate and that they are not even considering paying anybody anything extra. Having their hands tied, as is the case, is impacting on rewarding those who deserve more. Many of us have excellent managers working for us. The people concerned deserve to be rewarded for the efforts they are making. While this may not serve them when working in a shop, it will in future life when they go out into what I call the real world. People expect to be properly rewarded; that is what it is all about, but our hands are tied. If I have ten people working for me in year three, I must keep going and pay the agreed rate. I cannot consider much more. That is the situation we are in as the market contracts. We no longer have the leeway to reward people properly.

Mr. David Bagnall

We must recognise that the consumer is getting a reduced offer. The change in the off-licence legislation has resulted in the majority of our retailers, including my colleagues in Spar, having to close their stores earlier, as it is no longer commercially viable for them to remain open. As a result of this and the security issues we faced as traders in refusing to sell alcohol to young girls and boys, I have become the operator of an inconvenient convenience store. Owing to the high rates of pay required at weekends, on public holidays and Sundays, it is not commercially viable for me to provide any service at any of my locations. What is happening is that there is a return to traditional trading patterns with stores in small towns closing early on Sunday after mass or remaining closed on bank holidays. I am obliged to pay a person working on a bank holiday at my store making sandwiches the same rate as a qualified electrician. I am not suggesting the job they do is any less important but that is the comparison one is forced to make. In the current environment, with many other retailers, I am having to close on Sundays, not for religious reasons, as was the norm some years ago, but because it is not commercially viable for me to trade. Many retailers open on Sundays only to sell newspapers and then they close. That has been the impact on us. This, in turn, will impact on communities, as in the case in the United Kingdom, where after 6 p.m. on Saturday or 1 p.m. on Sunday premises are closed, thus creating social problems with which the police will have to deal. That is how the downturn is impacting on our business.

I agree with the statement made by Deputy Varadkar. We accept the current economic climate will not improve today or tomorrow and that it is a medium to long-term project. As an industry, we are well capable of fighting this but when one's hands are tied with a rope and knot that one cannot open, one cannot fight. This results in the consumer obtaining a poorer offering, a reduction in the number of trading hours and our becoming commercially unviable. We are facing many challenges in terms of trading hours, banking costs and reductions in overdraft facilities. That is the reality for us as traders. We do not have the flexibility we need in regard to how we operate. We are lucky in that wholesalers are commercially supporting us. A number of retailers are on extended credit terms but many shops are in arrears. We, including the people in this room, have not yet witnessed the true impact of the economic downturn. It is only when overdraft limits are reached and creditors refuse to allow arrears to breach a particular line that the true impact will be known. The situation will get worse. We are trying to put in place a framework to ensure that, as an industry which at one stage made a large contribution to the national coffers, we can build and survive the recession. We are going to financial institutions to set out how our costs are down by 1.5% and what we have done in terms of wages and so on. This is not all about wages; it is also about many other issues.

I recently purchased a licence for an off-licence. I paid €900 for my licence a couple of weeks ago but have to pay a further €1,500 this week. Where is the logic in this? I am providing people in my area with a responsible offering but I am being penalised. This is not all about staff; there are many other issues involved also. I would like to be able to pay my staff €15 a hour, as some of them deserve it. However, given the shrinking margins, I cannot do so. When the situation was better, we paid better rates. The retail market is a good payer. It is not just a job or career to people like me or Mr. Mannion, it is a vocation.

Mr. Vincent Jennings

It is worth mentioning the impact on legitimate registered retailers of tobacco and alcohol smuggling and the predominance in some areas of the sale of food without the correct labels by ethnic shops which are not subject to the same visitations as our shops. It is important that there is a level playing pitch. The Director of Public Prosecutions has suggested the level of tobacco smuggling is as high as 25%. I believe it is more in the region of 18% to 19%. It must be borne in mind that whether one operates a convenience store, is a CTN newsagent or has a forecourt, one relies on the legitimate sale of this product which may account for between 15% and 35% of one's total sales. It has been shown time and again that this product, pornographic DVDs, fireworks and other products are being sold by smugglers at places such as the Clara or Kildare market and in door-to-door sales. We are legitimate traders; we pay our taxes and should be entitled to sell this product in a responsible fashion but we are being denied the opportunity to do so by the demand for products on sale outside shops.

Deputy Seán Power

I thank the delegates for attending and the honest way in which they have responded to the questions posed. I would like to make a few observations and ask a few questions. Our efforts in these Houses should be focused on protecting existing jobs and the creation of new employment, where possible. Any changes that would assist in this regard would be progressive.

The delegates spoke about the main areas of concern to them as retailers. On rates, all parties recognise the difficulties and, perhaps, unfairness in this regard. As a former member of a local authority, I always believed businesses were very much the easy target and that when Estimates were being compiled, little consideration was given to rates, other than to how much they would be increased. Despite much debate on the issue this year, most local authorities showed a distinct lack of understanding or appreciation of the difficulties being experienced by retailers and simply hiked up rates again. Party leaders have given a commitment in regard to how they would like to see matters progressing during the next five years.

The delegates were hugely critical of the rates system and have stated it discriminates unfairly based on arbitrary geographical demarcation lines. Reference was made to the position in Fingal. While I accept the criticism the CSNA has made, has it made any proposals as to how we could bring fairness to that?

The CSNA dealt fairly well with the minimum wage and the JLC. Are there any other examples in Europe of people being paid extra for working on Saturdays or Sundays? Ireland has changed very much in recent years. For many people living in the country Sunday is just one of the seven days of the week and is not greatly different from any of the other days. It has created enormous difficulties for businesses with the extra demand and expense it places on people to turn the key in the door of a Sunday morning or afternoon. I was surprised that the association seems to have a certain acceptance or contentment with the minimum wage and it does not seem to want to see it change. Would its representatives not feel that if the minimum wage were to be reduced or abolished it would create extra employment? If the minimum wage of €8.65 were seen as a fair reward for people's labour last year or six months ago and it is costing less to live in the country today, how can the association justify still having a minimum wage of €8.65?

I had intended asking a question about the breakfast roll man but the witnesses have informed us today that he is dead. Would they put it down to the unhealthy diet or were other factors at play? On a serious note, I ask the witnesses to outline how they would define the typical breakfast roll man.

While the CSNA documentation mentions the cost of security, it has not made any great reference to insurance. A number of business people talking to me make the criticism that while we made considerable progress in recent years over the cost of insurance — much effort was made in that regard — especially in the past 12 months the cost of insurance is increasing fairly substantially in many areas. The witnesses mentioned the lack of credit facilities from banks and I ask them to expand on the matter. Do they have any figures to give the committee on the number of units that are closing? Is anyone deciding to open a new business in recent times?

Mr. David Bagnall

The breakfast roll man has been an integral part of our business for the past number of years as David McWilliams used to state. It is actually quite sexist to refer to breakfast roll man as many breakfast roll women have come into our stores in recent years. They have been very welcome. On a personal basis, I used to sell more than 400 breakfasts a day; I would be lucky to sell ten now. There is an old saying about being cash rich and time poor. I live in Leixlip, Léim an Bhradáin. On a wet day it can take two hours to get to Dublin city centre. Many people would leave home quite early and use our facilities to have their breakfasts. Surprisingly breakfast roll man did not just eat the two sausages, two rashers and two eggs as Pat Shortt used to sing. They quite rightly had the salad, fruit salad etc. However, that part of the business has effectively gone. That spend, which was massive, is gone.

Interestingly one builder would spend more in a week than a family would in a convenience store. In the morning they would buy their breakfasts, their cigarettes and The Star. They would come in at lunchtime to buy a roll and would get a few bits on the way home in the evening. Within the convenience sector they would represent a different type of spend from those coming in for their full shopping needs on a weekly basis. The breakfast roll man is gone. The vans have gone off the road. I am not sure if the Deputy has driven past some of the auction houses on the Naas Road in the past couple of months to see them full of vans with plumbing and electrician signs. We no longer see the white hats or the yellow jackets. Unfortunately, I believe they will be gone from the market for the foreseeable future. The breakfast was not just about the yellow jackets; it was about the time poor, cash rich consumer who bought a coffee to go. It was fashionable to be seen walking into the office with an Insomnia or Tim Hortons coffee. It was not just the builders. However, they have gone and are not spending their money.

Mr. Joe Mannion

Deputy Power asked about rates. In order to consider rates the first thing to do is visit a local authority. The first thing one will be told is not to touch them. The local authorities need to spend money on various things and cannot afford to do without them. They will also claim that it is basically Government funding. Some 44% of South Dublin County Council's budget comes from business rates and the rest comes from general Government funding. They will claim that unless the issue is addressed centrally there is not much they can do about it. That is what we find when we meet the local authority finance officer or whatever.

The next people to phone are those in the Valuation Office to ascertain the situation. They will basically say there is not much that can be done about it. They are set in stone. They date back to somewhere in the 1700s and not much updating has been done on them since. Our organisation would be most interested in feeding into them. It would be the role of every chamber of commerce and business association to feed into them fairly. We are not saying we do not want to pay them. We are saying they need to demonstrate equity for everybody. When applying cutbacks, the first thing a local authority will do is stop sweeping in front of shops, which is amazing given that it would look considerably better from the viewpoint of tourism and ourselves feeling better. The latest one in south Dublin is stopping cutting the grass verges. I wonder what the tourists think at a time when we are trying to boost tourism. There is no joined-up thinking on rates. We would certainly feed into that.

On the question of the minimum wage, we did not say we were happy with the minimum wage. We said we would be prepared to sit down and negotiate it. It is valid to make the point that the minimum wage was introduced when things were good and it will need to be reviewed. Today we are really talking about the JLC. Insurance is one area that has changed dramatically. In 2000 my shop's insurance was between €5,000 and €6,000 a year. It dramatically increased to the point where I got a quote of €17,000 one year and I eventually paid €11,000 or €12,000. It has fallen back since then mainly on the back of what is a soft market. Insurance is now hardening up somewhat. It will really depend on how that will go as to whether we will start to complain again. Insurance premia in the convenience sector are probably pretty reasonable at this stage.

On credit from the banks, while we have not studied it enough, a very large number of people have property related problems which are impacting on them getting money. In the case of a person with two rental properties who is finding repayments difficult, the banks will look at that even though he or she might have a very good convenience business. That might be what is impacting on them. We are very concerned that because the banks cannot get revenue from interest charged, they will look to charges. Our retailers have seen their rate per 100 increase sizeably — some of them on 16 cent could be on 32 cent per 100 for every 100 lodged. It is interesting that many retailers are now bill collectors. We do much more business than we ever did before. It is interesting that we get paid for 19 cent collecting a bill that might be worth €200 or €300. We might end up paying 48 cent to the bank to lodge it. Certain retailers are weighing that up. I believe we have not yet done enough work on it. We will have to tackle the banks at some stage. We need to remind this country's gas suppliers and utility companies that while we are willing to provide a service, it has to be relevant to the cost it captures.

Deputy Seán Power

Does the association want to sit on the fence as regards the minimum wage?

Mr. Vincent Jennings

No, there is no sitting on the fence. We have not developed a national strategy on the minimum wage. We are perfectly content with the existing minimum wage, the introduction of which we had nothing to do with. We will not attempt to assault it or otherwise. I appreciate that other associations and groupings consider it to be too high. The current minimum wage of €8.65 an hour is considerably less than the rate we are paying. We would be happy to pay the national minimum wage rather than the rate we are paying. We are not looking for it to go any further.

Mr. Joe Mannion

I would like to mention one aspect of the minimum wage that has arisen on many occasions. I do not refer to the value figure Deputy Power is talking about. People's perceptions of their earnings tend to be based on a comparison with the minimum wage. If the minimum wage is X, people think they should be paid Y. Problems start when something is set in stone. Some people think they should be getting twice as much as the minimum wage. Mr. Bagnall is aware that problems of this kind are often encountered with shop managers. They think that if the staff in their shops are getting a certain amount per hour, they should be getting much more. I do not suggest there are no problems with the regulation of the market. We would be prepared to make an input in that regard.

Mr. David Bagnall

I have a convenience store that trades five and a half days a week. The rate I pay my one full-time member of staff equates to the joint labour committee rate. The store is in Park West rather than Dublin 4. That is a quick answer. I would be absolutely delighted to employ another member of staff, rather than pay certain rates, so that I could provide a better service to consumers. I agree insurance costs have increased by between 12% and 15% this year. The difficulty is that there are fewer people in the insurance market who are prepared to offer one a competitive quote. As Mr. Mannion said, it could cost €17,000 or it could cost €10,000. Compliant traders do not receive any reward or recognition, which is a huge challenge. I am a compliant trader. I have a full health and safety statement. I have trained my staff in how to lift certain items and how to cut sandwiches. I have done all these things, which might sound very trivial, in order to be compliant. I am paying the exact same rate within the trade as somebody within the trade who does not have a health and safety statement or the proper licensing. The latest thing I have had to acquire is a licence to sell tobacco. It has started off at €50 but I can guarantee that, like the off-licence trade, it will increase to €500 or €600 within the next three or four years. We continue to be hit with such costs. It is important to have proper insurance to ensure that businesses, their staff and their customers are properly covered. We place a value on insurance within our business because we understand it needs to be adequate and right and our staff need to be protected.

We have spoken about the minimum wage but we have not touched on security, which is a major issue in the current market. If the minimum wage were cut, there would be a higher risk of internal theft. There has been a massive number of armed robberies. There is an armed robbery in a Spar shop every day. There is a break-in every day. Insurance costs are massive as a result of what happens in our industry. However, I do not understand why compliant retailers should be penalised for inefficiencies within the market. The insurance industry should reward compliant retailers by giving them discounts, perhaps in the form of a no-claims bonus. When one applies for house insurance, one is asked whether one has a monitored alarm and certain other things in place. One gets a reduction unless one has certain difficulties. There are just three or four companies who are prepared to offer quotes to retailers.

Deputy Chris Andrews

I appreciate the honest, frank and genuine presentation that has been given to the committee. A retailer told me recently that he pays more than €180,000 in rent each year and has annual staff costs of more than €150,000. He said he is making no money at all and is likely to lose money this year. Many of those who make a difference in their communities, for example, by making a huge effort to employ people, did not make a vast amount of wealth during the Celtic tiger years. They represent the glue that binds the community together in many ways. By employing people, they give them a sense of worth. It is important for us to listen to people like those appearing before the committee today and show our appreciation for them. This committee understands the position they have taken. The issue of rates is a serious one. Fingal County Council has changed its valuation rate and Dublin City Council is considering doing likewise. All local authorities will have to adopt a new system of valuation. One of the crippling impacts of this change will be to increase costs significantly. When one reads about the charges that are imposed on some companies in the centre of Dublin for making bids, one has to wonder about the mindset of the local authorities. I have raised this issue, which is Dublin-based, at previous meetings of this committee. I note that the cost of complying with the fats, oils and greases regulations was also mentioned in the presentation. It is one levy after another. The levies are crippling people.

There has been a great deal of discussion of the minimum wage, which cannot be discussed in isolation from the context of social welfare payments. There has to be a gap between what people are paid when they go to work and what they would be paid if they did not go to work. There must be an incentive for people to go to work. If the minimum wage is reduced, that gap will not exist and people will not have any incentive to work. One cannot talk about the minimum wage in isolation. If one wants to reduce the minimum wage, one has to consider the consequences. I believe that one of the consequences would have to be a reduction in welfare payments. I agree that the joint labour committee payment system is unfair because it creates an uneven playing surface. The same can be said of local authority valuations in so far as one authority might charge less than another. This practice, which is unfair on businesses, is having a devastating effect on businesses. While I strongly support the argument made about joint labour committee payments, I caution about making any change to the minimum wage. I do not think that can be done in isolation. Many other factors would have to be weighed up.

Senator Brendan Ryan

I welcome the delegation. I agree with Mr. Jennings that convenience stores play a positive role in introducing children to the workforce. A couple of my daughters have availed of such opportunities in my home town. It is a positive and welcome aspect of this sector. Is it not the case, however, that many convenience stores rely on people — I will not call them children — between the ages of 16 and 20 when they are looking to cover unsociable hours? I refer to those who are asked to work in stores of this nature on evenings, Saturdays and Sundays. It is clear from the table that has been circulated that the minimum wage does not apply until a certain age. This means that from the ages of 16 to 19, these children, for want of a better word, are still being paid below the minimum wage. I suggest, therefore, that the picture may not be as bad as it is being painted.

Another table compares the national minimum wage with the JLCs at point 1, 2 and 3. The row featuring the national minimum wage correctly multiplies a figure of €8.65 by 39. However, this is not done in the figure referring to points 1, 2 and 3, where the figure has been inflated to include some form of Sunday payment. As this figure is not included in the national minimum wage, the comparison is unfair. I ask our guests to examine the figures.

How much time has been factored in to take account of Saturday and Sunday working and give the higher rate? One could work 39 hours between Monday and Friday. Some weekend working time has been factored in but the picture painted in the table is not accurate. I ask our guests to comment.

Deputy Seán Power asked what was the position of the Convenience Stores and Newsagents Association on the national minimum wage and appeared to suggest it would be preferable to reduce the minimum wage. I do not agree because I fail to see how anyone could live on a wage of less than €337.35 per week.

Mr. Bagnall stated it is a plausible scenario that a person making sandwiches earns as much as an electrician. That is not the case and I fail to understand how he arrived at such a conclusion. Perhaps he was exaggerating to make a point. The rates shown in the presentation are certainly not the same as the rates paid to electricians.

Mr. David Bagnall

I can only comment on my own business. I have an alcohol licence and also sell tobacco. As is the case with the majority of convenience retailers, I no longer hire teenagers due to changes in legislation. As part of the responsible retailer to alcohol programme we volunteered not to have young people from this age group serving in our stores. Given that a certain amount of alcohol and tobacco is sold in our stores, we cannot allow teenagers to serve in our shops. The majority of retailers, including in my business, do not employ staff from this age group.

On the Senator's comment regarding the cost of electricians, I am having electrical work done on my house through direct labour at a cost of €15 and €16 per hour. One of my full-time members of staff covering holidays in the middle of the summer, a woman who has been working for me for seven or eight years, is earning €11 or €12 per hour. While she deserves to be paid a little extra because she is covering for others, if one adds time and a half to her wage, one arrives at the rate paid to electricians. That is the fundamental reality.

Many of us in the industry have invested considerable time and effort in developing jobs in our businesses into careers. My staff turnover is minimal and I am proud that I have not lost a full-time member of staff to any other business in recent years. The great advantage of this is that one has consistency in the business and one builds up a relationship with consumers. The disadvantage is clearly the cost, although this cost to me is good value for the consumer.

On Sunday trading and summer work, one has changes in shifts due to holidays, bank holidays and Christmas and Easter periods. One will have managers working in one's store on a bank holiday. My store manager earns between €42,000 and €45,000 per annum. When one divides this figure into five-day weeks and factors in cover provided on a Sunday, one finds that he earns €150 or €200 per day, which is more than €20 per hour. While the view outside the trade may be that it mainly employs students and kids to work behind check-outs, the reality is that the convenience store business is career focused. Of approximately 40,000 employees in the sector, 10% or 12% treat their jobs as a career. Like me, they are qualified and have spent a number of years at college. I used to work at night while at college breaking up carcasses of beef and taking stock in fruit and vegetables. These individuals are fully qualified and deserve a good level of income. Some of them earn considerably more than a local electrician who is doing work in my house.

Senator Brendan Ryan

Mr. Bagnall must acknowledge that a proportion of those working in convenience stores are students.

Mr. David Bagnall

Yes, a considerable number of convenience store employees are students. However, the majority of retailers are highly responsible and recent changes in legislation have meant that most of them do not employ people from a certain age bracket to serve behind the counter because tobacco and alcohol form a proportion of their business. In the current economic climate, we no longer have the luxury of employing an additional member of staff. It would be irresponsible to have young people serving alcohol and tobacco products. At any rate, it is physically impossible because the EPOS systems most of us use, which include data on date of birth and so on, preclude people of a certain age from selling these products as they must scan through their name.

The position may be different in rural towns where convenience store owners may come under social pressure to employ Paddy's or Mary's son or the goalkeeper of a local team. If a 15 year old employed clearing rubbish at the back of the premises hurts himself in an accident with a compactor, the insurance company will not cover the retailer. This kind of behaviour is irresponsible retailing. On the whole, responsible retailers do not employ staff of that age.

Senator Brendan Ryan

A retailer who employs an 18 or 19 year old at below the national minimum wage is in compliance with the law.

Mr. Vincent Jennings

Yes. A number of issues need to be borne in mind. Regardless of whether one is speaking about the RGAT JLC, any other JLC or the national minimum wage, the same percentile applies. In the case of the national minimum wage, those who are aged under the age of 18 receive 70% of the national minimum wage of €8.65, those who are aged 18 to 19 receive 80%, and those aged 19 to 20 receive 90%. One is not entitled to earn the full national minimum wage until after that age. This formula is replicated within the RGAT JLC. The presentation shows that the national minimum wage for those aged under 18 is €6.56. For those aged 18, it is €7.49 and for those aged 19 it is €8.43. As a mathematical constant the variation would remain the same.

Senator Brendan Ryan

It is up to the employer to manage it.

Mr. Vincent Jennings

Yes. On another important point, the rate shown in the table is for 39 hours which is worked. However, as the person works on a Sunday, he or she is paid for 41.67 hours. Time and one third is paid for this.

Senator Brendan Ryan

Does that indicate that 7.5 hours is worked on a Sunday?

Mr. Vincent Jennings

A person would work 31 hours plus eight hours or 31.5 hours plus 7.5 hours. That is the way one rosters it. If someone works on a Sunday, he or she will not wish to work for only two hours. It must be worthwhile for the employee to come into work. For this reason, he or she will earn time and one third. That is because our industry is——

Senator Brendan Ryan

Mr. Jennings has clarified the question I put. However, the same formula is not used in the comparison with the national minimum wage.

Mr. Vincent Jennings

The reason is that there is no statutory requirement to pay a Sunday rate on the national minimum wage. We are statutorily obliged under the JLC to pay time and a third.

Senator Brendan Ryan

One is not statutorily obliged to roster people to work on a Sunday.

Mr. Vincent Jennings

No, but somebody has to work on a Sunday.

Senator Brendan Ryan

I accept that somebody has to work, but one could use the students as well.

Mr. Vincent Jennings

They will still have to get the rate.

Senator Brendan Ryan

Yes, but at a lower rate.

Mr. Vincent Jennings

If they were on the national minimum wage they would be on a lower rate again. I do not know what Senator Ryan's point is. The same disparity would remain.

Mr. Joe Mannion

First, we are regulated by national legislation in terms of the age at which staff can be taken on. We expect that people are spending time on that. The rate at which an inexperienced person aged 16 is paid goes up in two years' time if he or she stays with us. They go up the scale. We are talking about students who will possibly be liable for college fees. They might work, on average, for 20 hours per week. They are not liable for tax or PRSI and they take home approximately €13,000 or €14,000. They get by on it quite adequately. I would certainly not spoil my children. I would like them to get by on proper amounts and to learn to budget. I would not like the perception to be that we are taking advantage of anybody because we are not. Anyone who wishes can look at my books. We are governed by NERA and it does not tolerate any messing when it comes to what wage rates we pay.

Senator Brendan Ryan

I did not suggest that advantage was being taken of the students.

Mr. Joe Mannion

It smacks a little of it being the case that we are using children, but we are not. We had no choice up to 12 or 15 months ago but to employ staff of that age. At times we could not get people to work, other than when immigrants came and we could employ them. Senator Ryan is aware that 18 months ago we had work for everybody and many people would not work on a Saturday or Sunday.

Deputy Arthur Morgan

A number of members acknowledged the employment Mr. Mannion is giving to that age category. That is not an issue.

Senator Ivor Callely

I welcome the CSNA submission. I wish it well in its endeavours. I support much of what has been said. I congratulate and thank the members of the delegation for what they are doing in terms of providing job opportunities for young people around the country. Many prospective employees arrive with a CV that an employer must second-guess in terms of whether a candidate would be good, bad or indifferent. The members of the CSNA take on people at face value. Time may be spent with them and they may be provided with training only to find that they are useless in the shop and one has to move on. One can expend a great deal of time and energy. The members of the CSNA do not have to do it, but they do it. They give young people an opportunity to gain their first experience in the workplace. It is marvellous. I take my hat off to people around the country in convenience stores who put a great deal of effort into training young people who have no experience in the areas of merchandising, cash, stores, health and safety and everything else that has been mentioned. I congratulate the CSNA. On behalf of young people I thank it very much for what its members do. That is greatly appreciated. My three children have all participated in that type of work and have benefited greatly from it.

I share the concern expressed about store closures. I have said this previously. Decisions are sometimes taken in committees with the agreement of all sides. It is important for us, as legislators, to address some of the issues highlighted by the CSNA. My colleague, Deputy Seán Power, touched on the issue in terms of the standards and regulations we have put in place for the national minimum wage. It was great having compliance and that people were prepared to do what was necessary when we were all on a roll and in a position to do so. We were able to carry the costs associated with that. Because things are different now we have to change to reflect the situation in today's marketplace.

I have a view on the minimum wage and many of the other things imposed by legislators. We should address those issues. It is up to us in the committee and in our respective political groupings to do so in the way that is open to us.

It is clear that the cost of products is directly linked to wholesale. That is the way it is. We know other factors are also relevant. Sometimes retailers work it through their system as best they can, whether there are LTAs or other deals such as 13 to the dozen or anything else from which they might benefit.

It is important that we send a clear signal to groups such as the CSNA about rates. I read that the rate in Fingal, which is not in my constituency, has increased by 50%. That has nothing to do with us. I am not sure if anybody around this table would say we are in a position to do anything. That is a matter for the locally elected representatives in each local authority area. This is where the issue gets complicated. Reference was made to compliance. Some aspects of compliance, but not all, are directly related to this House. Collectively, it is causing people in the marketplace a significant problem in terms of survival in this difficult economic climate. That is what we must recognise and resolve it collectively.

It has been brought to my attention that there has been a withdrawal of overdraft facilities. Some of those present may have experienced something similar. We have met the banks and they have given us certain undertakings in terms of funding small and medium enterprises. One or two of the groups have given us categoric assurances that there is no widespread withdrawal of overdraft facilities. After the meeting with them, the banking groups said they would welcome me bringing cases of such withdrawal to their attention.

Local authorities implement FOG, fats, oils and greases, compliance. It is off the wall stuff. The FOG personnel in Dublin City Council know the people who are flouting the rules. In case the Chairman has not heard, the position is that the council is monitoring the situation until October 2010 and then it will have a clear picture. After that things will be different as it will be able to address the issue properly. That is absolutely crazy stuff but that is what is happening. Again, it is not an issue for us; it is an issue for Dublin City Council.

Perhaps the Chairman would like to inform the group members of the controls on us as an Oireachtas committee in terms of assisting them with FOG compliance or rates. It is important that we do one thing. The CSNA members should leave here knowing exactly what impact we have on those issues. It would be foolhardy of us to let them think we will resolve the issues addressed in their submission. It is important that we speak honestly and openly to one another; put on the table where we are, what we can do, how we can do it and when we can do it. That is what we need to do in this difficult and challenging time. It is important that we do that for the CSNA because of the good submission it has made today. I, for one, would be happy to work with the CSNA in whatever way I can in that regard.

Mr. Vincent Jennings

I am under no illusion whatsoever about the strengths and weaknesses of this committee and was pleased to respond to the kind invitation from the Chairman. However, before absolving themselves of the difficulties arising from the rates issue, Deputies and Senators might recall that it was they who passed the Valuation Act. It was they who brought about the new situation where rates were based on the rental figure as opposed to square footage. This is causing problems for retailers in the Fingal County Council area who are being charged much more than in the past. There is an inherent bias against retailers in the way the Valuation Office is obliged to carry out new valuations. This is a matter for the Oireachtas to resolve because it is the Oireachtas which caused the problem.

Chairman

As Mr. Jennings probably knows, my wife and I run a small retail business in my home village selling groceries, tobacco, newspapers, fuels and so on. It is better to declare such interests in this era of openness and transparency. I do not have much time for that type of notion but that is neither here nor there. It may well come to pass that we will not be able to put on a shirt without having to say where we purchased it.

I certainly do not support a lowering of the minimum wage. It is not the critical factor in the difficulties facing retailing businesses and would likely lead to poverty traps. It is the regulation and bureaucracy attaching to the running of small retail enterprises such as mine that are the problem. My wife runs our small shop and employs three people. In recent times we had to build a special storage area for tobacco products in order that they would be concealed from customers, which involved a considerable cost. Simple bureaucratic and administrative transactions involve a significant rigmarole. The CSO is on to us every month looking for figures and there are environmental levies and so on with which to contend.

The reality is that Government, of whatever hue, has set out to strangle these types of retail businesses. As far as I can see, everybody is in the pocket of the big players and there is absolutely no interest in saving small rural shops. We should not fool ourselves or be hypocritical in this regard. There is a view that the quicker all these places go to the wall the better. There are three or four small shops in our village, each employing two or three people, some of whom are housewives who work from 2 p.m. until 7 p.m. or 8 p.m. One cannot employ a person under 18 years of age to sell cigarettes and we must be careful to question people who attempt to purchase tobacco products or a lottery card. A person may be 21 years of age but look under 18 and in the absence of proof of age, the onus is on the retailer to refuse to sell that person cigarettes or a lotto ticket.

Small retailers are subject to strangulation and bureaucracy. We get damn all credit for playing the role of tax collector in respect of VAT and PRSI. My wife's shop operates on a gross profit of some 6%. She works approximately 50 hours a week and does not draw one cent from the takings. We pay the same price for our newspapers and groceries as any other customer. We must stop the tomfoolery. Mr. Jennings is correct that allowance must be made for local agreements and scope given for a degree of flexibility. For example, people who want to work at the weekend for the minimum wage should be allowed to do so. The housewife who has worked in our shop for years often has her own arrangements and we try to fit around them. However, we sometimes find we cannot employ her on a particular day because of provisions in some of the legislation.

Legislation in this area is brought forward by bureaucrats who have never run a coffee shop. They know nothing about running a business. Members of all parties have tried to amend such proposals as best we can. All members of the committee know how business works and have experience of it. When we point out how legislation could be improved, we are told it cannot be done, that current arrangements are more streamlined and so on. I have tried to introduce amendments only to be told there would be a cost implication and so on. The reality is that this bureaucracy has visited more costs than anything else upon ordinary retailers.

I am convinced there is an agenda to get rid of such retailers. Mr. Jennings is absolutely correct that we are in danger of creating a rural wasteland. Anybody who has sat on this committee with me has heard me make the same point. I am reminded of a Clint Eastwood film where the doors clatter open and the wind whirls down the empty street with bushes being blown before it. That rural wasteland will become a reality if we do not cry "Stop". I would love to be the one to do so. If we can find billions of euro for the banks, none of which is being particularly helpful to small retailers, we should be able to find a few million to reduce rates or at least ensure there are no further increases. Deputy Power is correct in that small retailers are expected to bear everything. If one is currently operating on a 6% gross profit, another imposition will reduce that margin to 4%, then 2% and finally 0%. After that one will be losing money and Revenue will be wondering how on earth the business is being run at a loss, with the result that one will be subject to yet more inquiries.

Most small retailers of whom I am aware in rural areas are doing nothing more than providing a social service. Some elements of the media are sceptical about this but it is the truth. There used to be an old saying in rural areas that a yard of shop counter was worth 50 acres of land. Mother of the divine institution, a yard of counter would not buy a perch of land at this stage. I recall one incident when we had briquettes for sale on a pallet in our shop and a person arrived from some agency or other and told us this was not good enough. The wind had been blowing through the Bord na Móna briquettes harvested in Derrygreenagh bog and Coolnagun but we were told the pallets must be cement based. I was never told I needed a cement base but this apparently was the requirement. That is not a joke; it cost £2,000 to meet the requirement. This is the lunacy with which we are contending. It is the type of regulation I detest and abhor. It has one aim, namely, to get rid of small retailers. I am infuriated by this as a person from rural Ireland who has always stood for rural people in the Dáil Chamber and elsewhere. It annoys me to hear it claimed there are no major problems in rural areas. Even during the Celtic tiger period, our margins were pitiful. We did not object to paying the minimum wage. There will be locks and chains on shops if many more burdens are imposed. Perhaps that is what everybody wants; one does not miss the well until it runs dry. We are located ten miles from Mullingar, the nearest major town, 26 miles from Athlone and 20 miles from Longford.

I was eager to speak to Mr. Jennings because the businesses he represents provide a vital social service. By providing for only one interpretation, the Valuation Act 2001 is a disaster. It does not allow for flexibility or discretion. The rental situation is an absolute disaster. When valuations were based on square footage, they were tough but everyone knew what the value would be. It is time to change the Valuation Act.

Mr. Jennings is correct in regard to the other costs. There was a great hullabaloo about the decrease in insurance costs but I always knew insurance companies would increase premiums at the first available opportunity. It might have been said that I held that view because I am a barrister but it did not take long for my words to come true. Insurance costs are now on the way up and every excuse is being made. I thought I was in dreamland listening to the presentation. I guarantee the media that Mr. Jennings has provided the committee with a living document. Let them come to my part of the country for 48 hours and they will see for themselves. These little shops are family run for the most part and they will do all they can to avoid laying off staff. They are not hard-nosed employers. If someone wants three hours off to go to a funeral or a date, he or she will be accommodated. That sort of flexibility is not possible with bigger employers. It is a case of serving mutual interests.

The presentation was excellent in terms of reflecting what is happening on the ground. It is a struggle to survive and, if there was no cross-subsidisation, our shop would close because we have a small throughput. At most, 300 people live in our small rural area and we are not on the N4. That is a true story.

How easy is it to compete with supermarkets in securing favourable terms with suppliers? That issue is of significant interest to the committee. We are trying to get to the bottom of matters such as LTAs but it is a very slow process.

Mr. Vincent Jennings

We would not consider ourselves as being in competition with the third largest retailer in the world. A company with a turnover greater than the gross national product of many countries does not lose sleep over Irish convenience stores and newsagents.

The greatest sin committed against us was the advice by Ann Fitzgerald of the National Consumer Agency that price should be the only determining factor in deciding where to shop. It is an old adage that the cynic is a person who knows the price of everything and the value of nothing. Unfortunately, the National Consumer Agency showed itself to be extraordinarily cynical. We are not in competition with Tesco but we would like to see a level playing pitch. We certainly do not believe cut price alcohol should be sold here and loyalty cards should not be used to chalk up alcohol sales. VAT should be paid on every sale rather than off-set on below cost selling of alcohol.

Chairman

Would Mr. Jennings favour a code of practice being put on a statutory basis and does he support the proposal for an ombudsman?

Mr. Vincent Jennings

The Tánaiste and Minister for Enterprise, Trade and Employment will make these decisions. We know that a voluntary code of practice will not work but we will co-operate with whatever is put in place.

Chairman

I agree that a voluntary code will not work. We have engaged with large retailers, suppliers and Government agencies over several months but, as Senator Callely and Deputy Seán Power have noted, Mr. Jennings has added a vital link to our chain of deliberations. Some local retailers have operated in the towns and villages of rural Ireland for 100 years or more. These are the traders who are most under threat from globalisation and modern trends towards consolidation. We all accept that progress is necessary and desirable but it would be a retrograde step if current trends led to the disappearance of the corner shop. Local consumers and the social life of both urban and rural communities would lose out if this happened.

All my colleagues are acutely aware of the issues. We lack competence in one or two areas but Mr. Jennings has left us with an array of concerns which we will seek to address at the earliest opportunity. We cannot afford to lose any more jobs, let alone the 40,000 created by convenience stores and newsagents. We enjoy a degree of control and supervision and will offer what help we can. If we roll out the red carpet for businesses seeking to come to Ireland, it is time we rolled out a lemon or pink carpet for our own businesses.