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JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT debate -
Tuesday, 2 Feb 2010

Restaurant Industry: Discussion with Restaurant Association of Ireland.

We move to a discussion on protecting and developing investment and employment in the Irish restaurant industry. I welcome the delegation from the Restaurant Association of Ireland.

I remind the delegates that members of the committee have absolute privilege but this same privilege does not apply to delegates appearing before the committee. I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person outside the Houses or an official either by name or in such a way as to make him or her identifiable. In case the delegates are worried about that, the position is the same for everybody. We have just discussed the issue of privilege and I emphasise that we cannot guarantee any level of privilege, although I do not anticipate we will have any issues in that regard.

I invite Mr. Cummins to begin.

Mr. Adrian Cummins

We appreciate the Chairman's consideration in ensuring that the Restaurant Association of Ireland was invited to appear before the committee to discuss protecting and developing investment and employment in the restaurant industry. My colleague, Mr. Paul Cadden, is national president of the Restaurant Association of Ireland and is an owner-operator of a restaurant in Dublin. To discuss developing the Irish restaurant industry we must address major issues which affect it such as the following: employment and employer rights; the anti-business JLC format; pay rates; the minimum wage; overheads, including commercial rates; bank charges; and, above all, how we keep businesses open and people in jobs?

The Restaurant Association of Ireland sees one-third of Irish restaurants facing closure, with more than 80% operating at a loss. In November 2009 we launched a ten-point plan to protect existing employment, create new jobs and ensure the viability of the restaurant sector, a copy of which we sent to all Members of the Oireachtas.

I will set the scene for the current crisis facing the sector. Irish restaurateurs pay the highest catering wage rate in Europe, the minimum hourly catering rate in Ireland is €9.32 as opposed to €5.38 in the UK and €1.93 in Spain. Ireland has the highest excise duty on wines in Europe and Irish food cost inputs are 24% above the European average. The source of this information is the cost of food preparation report commissioned by Fáilte Ireland.

Currently, the Irish tourism industry, in particular the hospitality sector, is facing a crisis. This crisis has been illustrated in the report of the tourism renewal group launched last September, which identifies survival and recovery recommendations. The Restaurant Association of Ireland's ten-point plan is fully consistent with the survival recommendations on investment and marketing, reducing access costs, prioritising public spending and supporting sustainable enterprises.

Founded in 1970, the Restaurant Association of Ireland is the professional body of the Irish restaurant industry. Its primary functions are to promote and defend the interests of its members. The association has established itself as the representative voice of the restaurant and catering sector in Ireland.

The restaurant sector is a critical part of the tourism and hospitality industry. It employs 64,000 people, of which one in four are tourism jobs, and contributes €2 billion to the Irish economy each year. Not alone does it encompass a large number of owner operated SMEs but is also a crucial supporter of small businesses, local agriculture and food producers throughout the country. A vibrant restaurant sector is crucial to a successful tourism product and is the fabric of a progressive society. Restaurateurs have adapted to the downturn by reducing costs and menu prices but this is not enough. A series of urgent actions are now needed as the current business environment is unsustainable. Each week last year, 2,500 people lost their jobs. Many restaurants have had to cut staffing levels by one third. The Restaurant Association of Ireland cannot highlight enough the importance of restoring consumer confidence in the country.

How do we keep restaurants open and keep workers employed? The Restaurant Association of Ireland would like to see a reduction in the national minimum wage from €8.65 per hour to €7.65, the abolition of the JLC structure and minimum rates of pay, which are 8% higher than the minimum wage, and the abolition of Sunday premium payments. This will help the sector be more competitive and help businesses survive. The joint labour committees, employment regulation orders and registered employment agreements are effectively a throw back to the 1970s and 1980s when there was a lack of legislation to protect employees' interests. Since then there has been significant new legislation and updating of old legislation to cover areas like the minimum wage, unfair dismissals, holiday entitlements, hours of working and other entitlements. As a result of all this legislation, employees' rights are fully protected and covered whereas employers' rights are significantly diminished by virtue of the legal status of employment regulation orders and registered employment agreements. What has happened is that national legislation has become the base from which higher impositions have been imposed upon employers. For example, there is currently much debate about the appropriateness of the national minimum wage. In the catering industry the minimum wage is 10% higher than the national minimum wage. In addition, a 33.3% premium applies to Sunday work. In essence, employment regulation orders, registered employment agreements and joint labour committees were for another time and should be abolished.

The current regulated and statutory wage rates do not reflect the dramatic worsening of the business performance of the restaurant sector during the past 12 months. The national minimum wage is now the second highest in the EU and the highest after tax, more than twice that of the US, the largest economy in the world and 26% higher than the UK, our near neighbour directly competing for jobs just over the Border. Since its introduction in April 2000, the national minimum wage has increased by 55% while inflation during the same period amounted to a cumulative 34%. The Restaurant Association of Ireland supports the Minister for Finance's call at the MacGill summer school that the minimum wage be reduced as it is now directly impacting on job maintenance and creation. With inflation as of August 2009 at -5.9%, the Restaurant Association of Ireland is advocating a reduction of the minimum wage from €8.65 per hour to €7.65 per hour, the rate set in May 2005, which is the level to which our GDP is expected to fall to this year.

Unless the Government takes urgent action to address the cost factors it controls, businesses will continue to have little choice but to put people on the live register to bring their cost base down, thus ensuring they can survive. Ultimately, this will cost the Exchequer more in social welfare payments and tax foregone. The Restaurant Association of Ireland has advocated the abolition of Sunday premium payments. To put this in context, restaurants are seven day a week operations with Sundays being a prime dining out day. Furthermore, the current economic climate has reduced restaurants to a three day, Friday, Saturday and Sunday, operation. This means that on one of the three days of business, restaurants pay time and one third, that is, €12.10 per hour plus employers' PRSI and holiday accrual. Factoring this in, it is still not viable for many restaurants to open on a Sunday. By treating Sunday as a normal working day, many restaurants will open and will create an employment opportunity for workers.

We are currently advocating a reduction of at least 10% in local authority charges. Regulatory burden is crippling restaurant businesses across the country and is a barrier to development of the sector. The 2009 Fáilte Ireland food cost report has proven that Ireland is the most expensive country in Europe in which to run a restaurant. For example, waste licence fees have increased from €1,200 to €4,000. The introduction in some local authority areas of grease trap monitoring fees has added huge costs to restaurants with many owners closing down or shedding staff. Other local authorities have introduced profit making levies and taxes, including a sunshine tax on outdoor seating, music performance rights, business improvement district levies and HACCP regulation. These are unsustainable and are driving restaurants out of business.

The Restaurant Association of Ireland would like to see the prioritisation of a food tourism strategy as a jobs creation mechanism plus the establishment of and a dedicated restaurant division in Fáilte Ireland. The association believes that more than 3,000 new jobs can be created if a strategy is developed and implemented. The Government and policy makers need to address the situation of landlords charging extortionate rents on premises with many restaurant owners locked into 25-year leases with no downward rent reviews as an option. This is forcing many owners to close.

Deputies and Senators know the value of the Irish restaurant sector in terms of employment in their local areas. The Restaurant Association of Ireland is hoping that Members will address these urgent issues which will benefit not alone our organisation but constituents in the areas they represent.

I am happy to take questions.

I thank Mr. Cummins for his presentation.

I welcome the witnesses. I sympathise with the restaurant industry. The retail, construction and hospitality industries are suffering the brunt of the recession. For them it is a 30% to 40% rather than 10% to 15% contraction. I note the extent to which prices in the sector have decreased. It is extraordinary what good value one can get in restaurants in Dublin these days, particularly at lunchtime. While that is great there is another side to the situation. While, as an industry, restaurants have reduced their prices more than anyone else, they incur enormous fixed costs which they cannot reduce, including those imposed by Government by way of regulation. While I sympathise with the association I do not intend to give it a totally easy ride.

I am interested to know how many of the witnesses are restaurateurs. Often delegations appearing before the committee are officials rather than people involved in the business concerned. I am sure members would be interested to hear from all those who are restaurateurs.

As regards the employment regulation order and the Sunday one-third premium, I am sure the delegation is aware of the Fine Gael Party view that this system is outdated. We discussed the Government's new Bill in the Dáil last week. It will strengthen the system. Fine Gael argues that it needs to be reformed. It is full of absurdity and restrictive practices. However, we do not argue that it should be got rid of completely. Those employed in the sectors covered by joint labour committees are, in general, low paid and uneducated and many are foreign nationals. They need some form of protection. However, the right way to proceed is to have an independent chairperson so that any agreement will be genuine and not imposed by either side. I understand that when this matter came to the JLC which deals with catering, the Restaurant Association of Ireland, which is represented on that committee, did not call a vote but agreed to the one-third premium. The representatives of the association might explain why they seek the abolition of JLCs although they are members of one of those committees and did not call a vote on the issue of the one-third premium.

Joint labour committees deal with several rights which workers should have, such as sick pay arrangements, protection from penalisation and designated breaks. Every sector needs rules for these. If the JLC system were abolished completely what would replace it? An arrangement which dealt solely with pay rates would not be sufficient. How would people working in the restaurant industry be assured of some protection with regard to holidays and working hours, for example? Does the Restaurant Association of Ireland envisage them being given the bare minimum required by law? Does the association propose an alternative system whereby workers in the catering sector would have the non-pay elements of their terms and conditions defined in law or would it be left to an individual restaurateur to decide whatever conditions he or she wants?

Mr. Cummins suggested a return to the 2005 minimum wage rate, which is where our GDP is at present. However, prices have not fallen to 2005 levels. They are now at 2007 levels, which is when the minimum wage was last increased. Should the minimum wage relate to GDP or to the cost of living? In either case it should go up in approximately 18 months when the economy recovers and prices and GDP both begin to rise. If we accept the association's argument that the minimum wage should come down because GDP is at its 2005 level or prices are at their 2007 level, we must accept that the minimum wage must rise when GDP rises and inflation returns. Would it not make more sense to freeze the minimum wage for a couple of years?

Everyone knows the economy has shrunk by 15%. Is it not inevitable, therefore, that restaurants will close? There has already been consolidation in the catering industry. Government can only bring in a limited number of measures. It cannot magic back the money which has been lost in the economy. Would the association agree that we are trying to manage consolidation within the industry? No Government measure can restore the industry to the way it was during the boom.

Mr. Adrian Cummins

With regard to the JLC structure and the calling of a vote, a vote was taken eight times while the restaurant association was at the table and each time the vote went in favour of the trade unions. We see the JLC structure as pro-union and anti-business. It takes too long to get movement and change within the JLC structure. It took almost 18 months to bring the Sunday premium down from double time to time and a third. That followed protracted negotiations with the unions. Very few restaurants in rural areas opened on Sundays because it was uneconomical for them to open. The JLC structure must be modernised. Our vision is that it should be abolished. We must come to a consensus as quickly as possible. In the current situation that is not possible for us and people are going out of business. It took us too long, and too many businesses went to the wall over an 18 month period to get the Sunday premium down.

We see the minimum wage as the benchmark level for wages. Currently, by law we have to pay 8% above the minimum wage. The National Employment Rights Authority has been established to implement the law and it is doing good work across the board. There are 110 NERA inspectors who go into all businesses, many of them catering businesses, and check their records. Workers are well protected by that system.

With regard to contraction in the market, we are trying to keep businesses open. The Fáilte Ireland cost of food preparation report showed that the profit margin in 2008 was only about 4%. Even that has since reduced. Many of our businesses have a minus profit margin at present. Some of my colleagues may wish to give the exact facts about the state of their businesses. In our sector wages represent, on average, 38% of costs.

Mr. Paul Cadden

Throughout the restaurant industry wages represent between 35% and 40% of costs, which is unsustainable. When Sunday wage rates went from double time to time and a third, which took 18 months to negotiate, restaurants could open on Sunday, which is one of the key days in the restaurant business. Most restaurants are busy on Friday and Saturday nights and on Sunday lunchtime. Many restaurants had been closing on Sundays but when the Sunday premium was renegotiated they re-opened and found they could break even. If Sunday wage rates were the same as every other day and at the minimum wage of €8.65 it would be profitable for restaurants to open on Sundays, which is one of their busiest days. This would keep people in jobs and in business.

We cannot even hire a student who wants to work at the weekend on a lower rate. They must be paid €9.32 per hour while in the retail trade they are paid €8.65. The JLC system is inflexible. By abolishing it and by reducing the sector's minimum rate from €9.32 to €8.65 more people would be kept in jobs and businesses would be open when the economic upturn comes.

A key finding of Tourism Ireland research is that the food experience is the number one reason people come back to Ireland. We are known as the food island. In many rural towns the tourism and restaurant businesses are central to maintaining local jobs.

It is interesting to hear about the JLC vote. It sounds to me as though the Restaurant Association of Ireland does not accept the independence of the chairman and feels that the JLCs are biased in favour of the unions. Is that correct?

Mr. Adrian Cummins

The JLC system is pro-union and anti-business. Negotiation takes a long time and many businesses are under severe pressure at present. In the next 12 months we will see interest rates going up, which will add more pressure to businesses. The single fixed cost which we can address is the wages structure, if only on an interim basis. We should address this matter now and renegotiate it when times get better. The JLC structure is inflexible and is unhelpful in addressing issues as quickly as possible.

How is it pro-union if there is equal representation?

Mr. Adrian Cummins

If the chairperson votes on the side of the trade unions eight times in a row those on our side of the table must ask must ask what is going on.

I think that answers my question.

If the JLC system were abolished and employers could pay the standard minimum rates, which is what it seems they would like to do, would that not take away the non-pay elements of the JLCs, which are quite important?

Mr. Adrian Cummins

Many of those are enshrined in other legislation. NERA was set up specifically to protect employees. Our sector was the first to carry out mass inspections and we inspected every catering premises to bring them up to compliance. We work well with NERA, which is there to make sure all businesses comply with legislation to protect employees and that is what businesses in our sector do.

There are sector-specific issues such as breakages so, in the absence of a JLC, it is left up to each employer to decide the rule. Otherwise it could be very unfair.

Mr. Adrian Cummins

If there is a proposal for an alternative structure we will look at it but the current structure is not flexible from the point of view of an employer. The most important thing is to keep businesses open and people in jobs because some 2,500 people lost their jobs every week last year.

If the minimum wage was reduced in line with GDP would the association see it possibly going up in line with GDP in the future? There is no mechanism for setting the minimum wage — it goes to the Labour Court to decide. Should it be linked to inflation, to GDP or to anything at all?

Mr. Adrian Cummins

All of the JLC rates of pay were negotiated in the good times but now we are in bad times and need to address that as quickly as possible or more and more businesses will struggle. The costs are fixed at 38% on average across the country but when we struck a deal regarding the Sunday premium we could not enter into negotiations with unions for at least six months. In the event of a massive economic crash we cannot do anything about it for that period so it is inflexible in that regard.

It could be seen the other way if we entered an inflationary phase, which I believe will happen in the next year or so when price rises of 5% or 6% and rising interest rates will really bring home to people the meaning of their pay cuts. We may be in a recovery phase by then and the unions will argue that they cannot get employers to talk at that point.

Mr. Adrian Cummins

Unfortunately, in our experience dealing with unions has been very protracted. It took 18 months to reduce double time to time and a third. That is too long and too many businesses outside the Dublin GLC area went to the wall as a result.

How many restaurants are unionised? Is the association prepared to talk to unions and accept union representation in its member restaurants?

Mr. Adrian Cummins

We do not have exact figures for how many restaurants are unionised. I presume the unions have their own list.

Mr. Paul Cadden

Most restaurants outside Dublin are small, family-run businesses where family members often work so it is not a heavily unionised sector. Every employee has a contract and good terms and conditions but there is no flexibility when it comes to negotiating a reduction from €9.32 to €8.65, let alone tackling the minimum wage. We are not on a level playing field with regard to the rest of industry. Restaurateurs along the Border counties remind us that the minimum wage is £5.33 in the North and there is no comparison between those rates and ours, even in hotels and restaurants.

We deal with Tourism Ireland and Fáilte Ireland and they suggest value menus and other offers to bring the price down but restaurateurs cannot bring their prices down any further. We have cut costs on energy and done every deal possible. The only thing we can now tackle is wage costs or the next step will be closures. We have been the quickest industry to react to the economic downturn with fantastic offers at lunchtime and so on and the competition is cut-throat as restaurants try to survive. The only way we can now get leverage or flexibility is to cut wage rates. There are employees who are prepared to take the cut or do a deal so that a restaurant can stay afloat but it is impossible.

The association could potentially keep all its restaurants open if staff worked for nothing.

Mr. Paul Cadden

That will not happen either.

I have to leave so I require an acting chairman.

Does the Chairman want to ask questions of the guests before he goes?

I cannot do so.

I apologise to delegates but Question Time takes place at 3.15 p.m.

Deputy Damien English took the Chair.

I have an interest in this issue as I spent many happy years in the catering college at GMIT, which was Galway RTC before it was rebranded, and I empathise with everybody in the food business. Everybody has been talking about making money but many people have a passion for their trade. They invest a great deal of hope in their ventures so I understand their situation.

Last year Suzanne Kelly carried out a comparison of those in low-paid jobs with those on welfare and concluded that there was very little difference between the two. If the minimum wage is dropped it cannot be in isolation and one also has to look at reducing the cost of social welfare. The minimum wage is a much bigger issue than JLCs and if it is over analysed it will take away from the serious business that needs to be done.

I represent Dublin South-East and there are many extra levies on tenants of restaurants in Dublin city centre, such as the new one on fats, oils and greases and BID levies. The delegates outlined what the Government could do but what can local authorities do for the local restaurant association?

How are landlords dealing with the problems? One hears mixed stories on this issue. In some cases landlords work with their tenants while others do not. Do asset managers refuse to deal with tenants or are they bringing down rent voluntarily, in co-operation with the restaurants association?

I will take all the questions so that every member gets a chance. If a member has to leave he or she can check the Official Report for the answers.

I thank the delegation for its helpful presentation. We appreciate the difficulty the restaurant industry is going through because we deal with small and medium-sized enterprises all the time. We are aware it is not about profit. More often than not it is about hanging in and trying to work one's way through the recession and, hopefully, come out the other side.

I would like to run through some of the points made. The issue of regulatory burden is something the committee has been concerned about for a long time. Could we have examples of any particular regulatory burden so that we can take up that issue? I am aware of HACCP and the other regulations, but I presume HACCP is not a problem because it concerns health and safety regulations. Can we have an indication of what is causing difficulty?

The delegation has also suggested there should be support for upskilling and training. What costs would be involved per annum for training and can the delegates be as specific as possible on that issue? A reduction on the excise duty on wine served with meals was suggested. What would that cost the Exchequer per annum?

The issue of the minimum wage must be addressed. Wages in this regard were compared with those in Britain and Spain. That is fair enough, but Britain does not have the same education costs we have nor the same medical and dental costs. I am sure some of the delegates have teenagers going through secondary education here and have some idea of the significant costs. Wages are driven from this base. We must look at costs across the board. Education costs are soaring rather than decreasing. We must, therefore, provide a living wage. Many of the staff working in the restaurant business are single parents because the hours in the sector suit them more than those in any other sector. We are not unsympathetic to the position of restaurant owners, but we must keep in mind we are also dealing with employees who are dependent on their employment.

I am delighted to see the members from the Restaurant Association of Ireland here and congratulate them on the standards achieved by them. I have been at another meeting, but have been watching what has been happening here. We are fortunate, particularly myself and those in the north Dublin area, to have Cathal Brugha Street catering college in our area. It provides a standard of excellence that cannot be beaten anywhere in the world. We have many other cookery schools throughout the country, but rather than give a certain television cook an unfair advantage, I will just mention Ballymaloe. Her name and that of others here are renowned throughout the world for more than their delicious relishes.

I congratulate the association on the standards it has achieved, not just in Ireland but internationally. I was pleased to note the Minister did something with regard to encouraging tourism in budget 2010. Hopefully that will assist the restaurant industry. I will lend my support to the position that has been put with regard to the difficulties in the marketplace. I am tired from dealing with queries from local restaurant owners with regard to demands and regulations from the local authority and health inspectors. We all want to meet the standards, but the regulations can go over the top, for example, with regard to the size of the grease trap. It is clear there are two main perpetrators with regard to breach of fats, oil and grease regulations, but yet the coffee shop or nice restaurant next door to the two perpetrators — I and the delegation are probably aware of who the perpetrators are in this regard — are penalised to the same standard as the two perpetrators and have the same demands placed on them by FOG, the fats, oil and grease monitoring system. This is regrettable and unfortunate. The same is true with regard to other demands by local authorities. We have seen a local authority rate increase which does not make sense at this time. There have also been increases in waste charges and elsewhere.

I urge the committee to consider what it can do. Perhaps, following the meeting and consideration of the points raised by members and of the committee report, the association could identify a strategy and targets to address. I would welcome hearing from the association as to how the committee could achieve the targets on which it would like us to make meaningful inroads.

I have a few questions to add before we take a response. I understand from a background of working and managing restaurants that profits are very tight. In most cases there are no profits, just barely a wage for those working in the business. I accept this and I believe most of those here have got the same picture. However, one can still look at costs that can be reduced or worked on. It is some time since I saw the books of a restaurant. Perhaps it would be useful to the committee if some members of the association were willing to provide their books. We have been told 40% goes on the wage bill and we must take the association's word for that. Therefore, it would be useful to see a full set of books. There need not be a name on the books or it can be removed, but it would be helpful to see an average set of books, the number employed, etc.

I am not in favour of touching the minimum wage, nor is the Fine Gael Party. I do not believe that reducing the minimum wage would solve the problem for businesses. I cannot believe that is the highest cost restaurants have. Some kitchen staff, chefs, etc, are certainly not on the minimum wage. There is a high cost for restaurants in preparing food and this can be just as high as the cost of staff serving food. However, I am prepared to hear any argument on that.

What percentage of wage costs are for those on the minimum wage? Last week I said that I believed the minimum wage was used as a benchmark by some on which their higher wage is based. That may be where the problem lies. It is wrong to try to penalise those on the minimum wage as a way of solving that problem. People on the minimum wage find it hard to survive and this must be borne in mind. I am aware everybody is trying to survive and that businesses are trying to stay open, but it must be worth people's while working.

I do not understand the history of the 10% extra with regard to catering. I presume it came about through the joint labour committees, JLCs. As my colleague said, Fine Gael has a problem with regard to how the JLCs work. I suggest the Restaurant Association of Ireland should look for some sort of temporary changes for the short term, perhaps for the year ahead. If it takes so long to get a solution to the problems, a temporary solution with the agreement of the staff might be the way forward. Perhaps we could back that, but we have an issue with regard to permanent changes or cuts.

We have debated the issue of the high costs facing restaurants. We used to only have council rates, but now there are extras, including water and waste charges. We appreciate these costs have risen and we would like to tackle this area. I note that in its submission to the Government before the budget, the association raised the issue of a PRSI reduction for training. I would support that as retraining makes sense. It also makes sense to reconsider the level of VAT and we can look at that. Another suggestion was that corporate spending should be 100% rebateable. These suggestions make sense. We either want a tourism industry and a restaurant industry or we do not. Therefore, these are suggestions I will advocate this committee seeks and considers. Capital allowances were also mentioned. I accept that high costs attach to building restaurants, especially considering the regulations with regard to kitchens, health, etc.

On the issue of EU laws and regulations and the comparison between wage rates here and in Spain and other countries, I accept there is extra pressure put on businesses here to enforce some of the directives and regulations in the area of food presentation and preparation. That is unfair on Irish restaurants. We can examine this area and the high costs involved. The Joint Committee on European Scrutiny is examining the issue, but we can also examine it.

Many other costs need to be addressed which are just as important as the minimum wage. I am surprised that every group ranks the minimum wage as its main issue. If the witnesses want to elaborate further on this and prove us wrong, that is fair enough, but there are many other costs such as rates which Mr. Cummins referred to.

Does Mr. Cummins have any idea how many of the association's members have given personal guarantees to their landlords? I am aware of some whose homes are at risk if they walk away from a rental agreement. I accept that the rents many people are paying are ridiculous, make business totally unsustainable, regardless of wage levels, and cannot continue. Rents will have to be addressed and the Government has a major role in this regard.

I would like to say more but there is no point in dragging out the meeting as members must leave shortly. I will hand back to Mr. Cummins.

Mr. Adrian Cummins

With regard to rents, we have a major issue at present where restaurant owners are locked into 25-year leases and have given personal guarantees. A number of restaurants are facing closure where the landlord is probably a property speculator and is looking for the cash flow to keep his or her businesses afloat and, therefore, there is no downward rent review. This needs to be addressed urgently.

On the local authority regulatory burden and the issue of rates, we feel local authorities are not working with businesses. To give the example of one local authority, Dublin City Council has introduced the fats, oil and grease, FOG, regime and many other local authorities are considering rolling this out. This is adding an average cost of approximately €6,000 for a small restaurant, approximately €28,000 for a hotel and €40,000 for a larger hotel. When Dublin City Council brought in the regime, it employed independent inspectors under a contract. Restaurateurs had to pay the contractor to carry out four inspections per year when one inspection would have been good enough if the restaurant was up to standard. No cost-benefit analysis was done in this regard. This must stop throughout the country.

The local authorities are very rigid, are not pro-business and are not helping to encourage economic development in local authority areas. We would support any recommendations from the committee which would point in that direction.

On the regulatory burden, we agree we must keep our standards high. The industry in Ireland has high standards of food preparation and presentation. On the regulatory burden in the area of waste removal charges, a new charge which is being introduced at present concerns the separation of food waste from other waste on a premises, which will add extra costs for restaurants throughout the country when it is applied in June of this year.

Reference was made to the capital allowance scheme. There is no capital allowance scheme for restaurant fit-out and we would welcome one. We welcomed the capital allowances in the budget for energy-efficient equipment but other equipment goes into a restaurant to set it up. If one is building a factory, one is entitled to capital allowances.

There is a two-step scenario with regard to the issue of the wage structure. We need to address the JLC structure immediately given we are paying 8% above the minimum wage. If we can get that reduced to the minimum wage level, we would be extremely happy. In parallel, we need to consider how competitive we are as a country, and this has a knock-on effect for all businesses and sectors. If a report is issued that we should have a reduction in the minimum wage across all business, so be it. However, from a restaurant perspective, we are paying 8% above that, which is unsustainable moving forward and needs to be addressed.

With regard to the structures of the JLCs, our position is that they should be abolished because they are not working. If the committee comes up with a structure we can work with, well and good, but this is not working for businesses at present.

With regard to restaurants opening their books with regard to the wage percentages, the Fáilte Ireland food cost report identified that issue. It used an independent firm of accountants to produce the report and the relevant statistics are contained in that report, including the benchmark level for wage percentages. The data goes back to 2008, some 18 months ago, and we are now in a worse position in this regard.

We need a food tourism strategy. We are working with Fáilte Ireland on this but it needs to be developed quickly so we can identify job creation mechanisms within it and start creating jobs in this country. We need the full circle approach, from the local food producer supplying into local restaurants and helping Irish agriculture to diversify.

Was there a reference to 7,000 new jobs?

Mr. Adrian Cummins

It is 3,000.

The report talks about 7,000 jobs. Is that a case of holding what we have or the creation of new jobs?

Mr. Adrian Cummins

It is in addition.

What is the cost of the reduction in excise on wine served with meals? What is the cost of training?

Mr. Adrian Cummins

All businesses have cut their costs and, without doubt, training costs have reduced. Our proposal with regard to the costs of training being linked to PRSI contributions would help businesses to upskill and keep up their training levels. We engaged with the Skillnets training programme and we work with Fáilte Ireland, the national tourism development authority, on training courses across the country. For some of the training, there is a barrier with regard to the cost element of engaging in training. We want to keep our levels of training up and continue to broaden and diversify into other new training, for example, in the area of social media marketing, which is the new thing with regard to promoting not just restaurants but all businesses.

Training levels are extremely high within the restaurant industry. We work with all of the training colleges and regional institutes of technology with regard to work placement schemes from those training centres.

Is an approximate cost per annum available?

Mr. Adrian Cummins

We will submit the costs to the committee.

It would be useful to quantify this in order to see what we might be able to advocate in that regard. I was also anxious to hear details of the reduction in excise on wine. If Mr. Cummins does not have the information, we can get it from the Department of Finance.

Mr. Adrian Cummins

I do not have the figures on excise duty to hand. However, the food cost report carried out by Fáilte Ireland identifies a benchmark across European levels.

On the issue of the fats, oil and grease regulations, has Dublin City Council shown any willingness to introduce greater flexibility to the system, as Mr. Cummins suggested? How do the association's members who are affected by BIDs view them?

Mr. Adrian Cummins

With other catering representative bodies such as the Irish Hotels Federation, the Licensed Vintners Association and the Convenience Stores and Newsagents Association, we have worked on a campaign in regard to the FOG licensing regime. The council has moved on the cost element but this was after its hand was forced and it was brought to the table to negotiate. For 18 months, it did not want to negotiate with us and, basically, it made restaurants comply with the four inspections per year, even if only one inspection was needed. This was at an average of approximately €870 per restaurant, on top of one's trade effluent licence, and went up as far as €1,400 for hotels. Other local authorities, such as the authority in Cork, are considering the introduction of similar regimes.

While we endorse the polluter pays policy, our proposal asked why we should spend almost €4 million on monitoring charges. Why did they not first engage with HSE environmental health officers, who conduct audits daily of the food preparation business, in regard to this monitoring charge, which would have resulted in a saving of €4 million to restaurant businesses in Dublin alone?

Does Mr. Cummins believe the fats, oil and grease regulations are here to stay?

Mr. Adrian Cummins

If businesses are compliant, they are compliant. Businesses have spent thousands of euro ensuring they are compliant. The average spend of small 40-seater restaurants in terms of bringing their equipment up to standard is approximately €6,000. Some of the larger hotels have spent up to €40,000 on new equipment. Small restaurants do not currently have this type of money to spend. This issue needs to be addressed. We suggested to Dublin City Council at the beginning of the process that it introduce a national standard which would ensure businesses know exactly what is required of them. After 18 months, it agreed that a national standard should have been introduced. We are working with the National Standards Authority of Ireland to develop such a standard. This type of cart before the horse attitude is putting huge pressure on businesses.

With regard to the business improvement district levy, we are working with the council in regard to implementing economic development proposals. For example, the promotion of a dine in Dublin week, which has resulted in some benefit for businesses. However, that runs for only two of the 52 weeks of the year. We need to examine how we can obtain a return on investment because it is a 7% top up on commercial rates.

I apologise that some members have had to leave the meeting. However, the joint committee will scrutinise the Fáilte Ireland cost of food report in its deliberations on this issue. We will also contact the council in regard to various issues. The issue of local government in terms of local business is included in our work programme. Mr. Cummins is correct that a pro-business attitude does not exist. There is a perception in many local authorities that all businesses are or were making great money. We all know that not every business makes great money. Many sole traders only make a living from their business.

I thank Mr. Cummins, Mr. Cadden, Ms O'Leary, Ms Cox and Mr. O'Halloran for assisting us in our deliberations today. I acknowledge the efforts of Deputy Chris Andrews in ensuring the delegation attended today's meeting of the joint committee. I believe that as a former chef he has a keen interest in this area. The topics raised by the delegation are important to us. We are aware that the restaurant business provides a great deal of employment to people of various skills. The local restaurant or shop is very often the place where a person obtains his or her first employment.

I appreciate the attendance of the delegation at today's meeting. We will continue to work on this issue.

The joint committee adjourned at 3.25 p.m. until 2 p.m. on Tuesday, 16 February 2010.
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