I thank the Chairman and the committee for inviting us here. I am the chief executive of ISME and Mr. Jim Curran is head of research. ISME is an independent body representing owner-managers in small or medium businesses throughout the country. Our members constitute 98.5% of all businesses, numbering approximately 250,000, and employ just over 1 million people, which equates to approximately 62% of private sector employment and approximately 54% of total employees in the country. I stress the word "independent" as it is imperative committee members understand that when ISME speaks, it does so independently of big business, trade unions and Government. We represent the owner-managers' voice in the economy.
Small and medium businesses play an important role in the economy and society in general. Owner-manager entrepreneurs, as a group, are more interested in long-term development of the economy, while shareholders and managers in larger businesses are primarily concerned with short-term profit and boosting shareholder returns. In general owner-managers are more responsible towards their employees and integrated into local society. They play an important role in stabilising society and have a bridge-building role between workers and capital equity owners. However, small and medium businesses suffer the disadvantage of having limited human and financial resources and being locally bound. Being small has certain advantages, such as flexibility, innovation and a capacity to rapidly adjust to changing market conditions, which are all the hallmarks of a true entrepreneur.
In view of the importance of small and medium businesses in the national and EU economic and social fabric, the key objectives for any agenda for change must be to place entrepreneurs and their requirements at the centre of policy making. One of the concerns that ISME has is that small and medium businesses may become lost in the vastness of EU legislation and regulation, as we have experienced in the past. Legislators must consciously take a "think small first" approach when drawing up EU policies and legislation. That approach will have a direct benefit for 98.5% of businesses in greater productivity and job creation and leading to social improvements and advancements.
The Nice treaty has been mentioned and we all hear about the two referenda. The lack of information at the time, especially in 2001, was notable and it was highlighted by our survey in August 2002. Subsequent to that survey the then Minister for Foreign Affairs, Deputy Dick Roche, requested that he and other Ministers undertake a nationwide briefing of owner-managers through our ISME briefing sessions. That process was welcomed by ISME and by the SME community. It helped clarify many issues and, some would say, had a major impact on the eventual outcome of the Nice treaty referendum.
With this in mind and our attendance here today, we surveyed our members in the last number of days on their knowledge of the treaty and how they might vote based on their knowledge as of mid-January 2008. The results are as follows. Question: "Do you have enough information on the proposed EU reform treaty to make a considered judgement and vote?" Answer: "Yes", 4%; "No", 88%; "Do not know", 8%. So, 96% of small and medium business owners do not have a clue. Question: "Are you aware of the implications of the EU reform treaty on your business?" Some 87% do not, 5% say they do and 8% do not know. Question: "If you were to vote today based on your knowledge of the treaty, how would you vote?" Answer: "Yes", 12%; "No", 19%; "Abstain", 10%; "Do not know", 59%.
It is interesting to note that in August 2002, when asked about the impact of the Nice treaty on their business, 42% stated they did not know. The figures for 2008 show an extremely worrying 95% who do not know or would say "No". Added to this, in 2002 only 8% were satisfied with the information supplied and in the current survey that drops to 4%. This leaves 96% not having enough information on the proposed treaty. The resulting percentage of people who would vote for the treaty is therefore not surprising.
In summary, accurate and unbiased information must be delivered to small and medium business owner managers to allow them make up their minds and vote accordingly. No amount of lobbying, cajoling and telling these people how to vote by us in the executive at ISME or at national council level will make owner managers do anything one way or another. They must be informed.
The joint committee is to hold advertised public meetings across the country, which we are looking forward to. These will be an information exercise as the committee's role is not to promote a particular point of view or exert influence. I hope that will mean considerable knowledge and expertise within this committee will be put at the disposal of the public and small and medium business owners in particular.
I suggest specific emphasis be placed on the effects of the reform treaty on business in Ireland, particularly with regard to indigenous small and medium businesses and enterprises. As we know, and as the establishment sometimes acknowledges, the SMEs are the backbone of the economy, contributing to Irish wealth as distinct from Irish profits, which in many cases are repatriated to other lands.
We cannot achieve competitiveness, employment growth and innovation targets without dynamic SMEs and understanding the background within which they work. One of the most striking changes in the latest treaty and perhaps the biggest threat to acceptance is that in order to enable many governments to reassure their electorates the changes will have no constitutional implications, the idea of a new and simpler treaty containing all the provisions governing the union has been dropped in favour of a significant series of individual amendments to two existing treaties. As Dr. Garrett FitzGerald has stated, virtual incomprehensibility has thus replaced simplicity as the key approach to EU reform. That is the feedback we are getting from members.
A difficulty we have seen is the sheer magnitude of the treaty and the EU jargon contained in it. We have also voted twice since 2000 on the Nice treaty, and it is only two years since the Dutch and French rejected the previous treaty. There is also the different posts created, the position of the charter on fundamental rights, the changing of democratic representation, the opt-in and opt-out clauses and the lack of a clear and concise answer on the taxation harmonisation question, all of which lead to continuing uncertainty being felt by small and medium business owners throughout the country.
New words being used would confuse a saint, requiring a linguist and scholar to interpret and decipher. We have a new president of the European Council and a presidency of the Council of Ministers, which will provide a team of three member states working together. We will create a new post of almost Gilbert and Sullivan stature, entitled the high representative for foreign affairs and security policy. Small and medium business owners would be really knocking about that.
The charter of fundamental rights will be separate from the main body of the revised treaty but will be given legally binding treaty status. Is it part of the treaty? Confusion reigns in such matters. Certain words and phrases are used throughout the treaty, and although we understand "unanimity", there are other words such as "subsidiarity", "proportionality", "QMVs", "competencies" and "enhanced co-operation" that are less clear. We also have "yellow cards" and "red lines", "conferral", "exclusive competence" and "passerelle", which one of my members thought to be a posh umbrella. It continues to confuse, frighten and turn off the ordinary citizen and, to this end, the preparation and distribution of a clear and concise synopsis of the treaty, outlining pros and cons, is of vital importance to our citizens. There must be a facility that allows relevant questions be answered in an unbiased fashion and without jargon.
In June 2007 it was agreed that Ireland, on account of its legal system, could avail of special arrangements with regard to judicial co-operation on criminal matters and police co-operation. This option must be clarified as it creates a confusing Lanigan's ball scenario: are we in or out?
The shift in EU law making by the Council of Ministers to a population based voting system is to the benefit of bigger states and will reduce the relative voting weight of smaller countries like Ireland. The protection of the voting rights of smaller countries was one of the key arguments put forward by the "Yes" campaign in the approach to the Nice treaty referendum, together with the retention of our Commissioner. While the use of majority voting and co-decision making has been extended in some areas we still await a definite answer regarding the area of special interest to Ireland, taxation.
The members of our association have concerns about many issues, such as the democratic deficit in the EU, the slowing of free market economic policies, the one size fits all approach, the lack of transparency on international trade, labour law, energy, climate change and, again, most importantly, taxation. The small and medium sized business community is particularly concerned that the European Commission will push commonality, also known as harmonisation, when the time is right. This area is of greatest concern to the business community, as evidenced in the Nice treaty campaign. It is essential that there be total clarity in this area as it will be decisive in influencing how business votes regarding the reform treaty. This point cannot be over-emphasised. Until these questions are answered fully to the satisfaction of Irish business people and the public the EU reform treaty will be a non-event and an embarrassment to the country.
The positive side is that the treaty proposes to strengthen the EU's common commercial policy on trade in public services, such as health and education, and increases the probability that parts of these sectors will be opened to competition from the private sector. This would be of benefit to Irish business and could revitalise and modernise the public sector. Irish small and medium sized businesses currently have difficulties with the public procurement system and the proposals under the treaty could address this to allow such businesses greater access to the enlarged system. The only caveat is we currently find it difficult to get a fair deal on procurement from our own public service and I wonder whether it will be fairer under the treaty.
Many of our members are concerned by foreign interference as the most independent minded people in the country are owner-managers of small and medium sized businesses. They would greatly resent any unwanted interference in their decision making processes; they want information and education but they do not want interference. Interference or blatantly biased information will result in a backlash and with this in mind it is important to note the potential for and dangers of unwanted outside influence.
Pro and anti groups across Europe have already indicated that they intend to come to Ireland to campaign on the treaty. The French far-right leader, Jean-Marie le Pen is one of a number of prominent figures who have expressed a desire to get involved in the "No" campaign. Angela Merkel, Nicholas Sarkozy and a number of other leaders have stated their wish to get involved in the "Yes" campaign. All we need in Ireland, in the approach to a referendum, is for the country to become the cockpit of Europe, with Irish concerns relegated to the sidelines by disparate European ideologies. We ask the joint committee to exercise its influence in this matter and recommend that these visits be discouraged or, at best, stopped entirely.
We at ISME acknowledge that the EU has been the outstanding political achievement of our time. In Ireland, membership of the EU has been an important catalyst for change. Access to the Single Market, the European Structural and Cohesion Funds and the Common Agricultural Policy have played a significant role in our economic success story. ISME members, like the Irish public at large, will find it difficult to take a simple "Yes" or "No" position on a complex and wide-ranging treaty that contains both positive and negative elements. In many cases, the same treaty provision may be interpreted in a positive or negative way depending on the perspective taken and the timing of the intervention. It is the role of Government to lead; however, it is also its responsibility to educate citizens on their rights and thereby allow them to exercise their referendum vote with all the information available to them.
In addition to business concerns about which we have heard anecdotally, many voters remain confused about the treaty's contents. They are concerned about the direction of European integration and dissatisfied with the decision making procedures. They are also resentful about being asked to revisit an issue on which they feel they have already expressed their opinion. For this reason, we at ISME urge the joint committee to ensure that every effort is made to inform the public before they are asked to vote. As we have learned from previous referendums and the recent ISME survey, people will not vote for what they do not understand and, just as importantly, they will vote "No" where there is doubt, lack of knowledge or confusion. We at ISME will disseminate information to our members when it comes to hand and we will assist the joint committee in whatever way possible to ensure the information is available, as we did in the past with the Nice treaty. However, we need that information to allow our members and the electorate at large to make a considered choice on the EU reform treaty.