Seanad Éireann debate -
Wednesday, 29 Jun 1983

Vol. 101 No. 3

Joint Committee on Small Businesses: Motion.

Professor Dooge

I move:

(1) That Seanad Éireann concurs with Dáil Éireann in its Resolution communicated to Seanad Éireann on 21 June, 1983, that it is expedient that a Joint Committee (to be called the Joint Committee on Small Businesses) consisting of 9 members of Dáil Éireann and 7 members of Seanad Éireann, be appointed to examine and report to each House, with its recommendations, on the following matters:

(i) a common definition of small businesses having regard to the criteria applied by State agencies, the Small Firms Association of the CII and definitions used in other EEC countries.

(ii) the development of the small business sector of the economy;

(iii) the means of facilitating the financing of small businesses with particular reference to existing loan schemes;

(iv) the provision of finance for innovation, research and development for small businesses with particular reference to EEC initiatives, including the setting up of an industrial innovation and development fund;

(v) existing export financing arrangements to see if they are adequately tailored to the needs of small businesses;

(vi) the small industry programmes of the Industrial Development Authority and the Shannon Free Airport Development Company Limited;

(vii) ensuring greater linkage between new foreign industry and small domestic businesses;

(viii) the use of State purchasing decisions as an encouragement to the development of small businesses;

(ix) improving the marketing capability of small businesses;

(x) existing management training techniques insofar as small business are concerned and, in particular, the retraining of management;

(xi) the working of the Committee of Enquiry to be established by the Minister for Finance, which is to recommend a simplified tax regime for family businesses.

(2) That the Joint Committee have power to appoint sub-committees and to refer any matter comprehended by paragraph (1) of this resolution to a sub-committee.

(3) That the Joint Committee and each sub-committee, previous to the commencement of business, shall elect one of its members to be Chairman, who shall have only one vote.

(4) That all questions in the Joint Committee and in each sub-committee shall be determined by a majority of votes of the members present and voting and in the event of there being an equality of votes the questions shall be decided in the negative.

(5) That the quorum of the Joint Committee shall be four of whom at least one shall be a member of Dáil Éireann and one shall be a member of Seanad Éireann and that the quorum of each sub-committee shall be three at least one of whom shall be a member of Dáil Éireann and one a member of Seanad Éireann.

(6) That every report which the Joint Committee proposes to make under this Resolution shall on adoption by the Joint Committee be laid before both Houses of the Oireachtas forthwith whereupon the Joint Committee shall be empowered to print and publish such report together with such related documents as it thinks fit.

This is essentially an ad hoc committee. We already set up one ad hoc committee earlier in this session in regard to building land. It is proposed that we should set up this other ad hoc committee to report to Dáil Éireann and Seanad Éireann in regard to the particular problems of small industries. We have had, since 1967, a special programme under the IDA in regard to small industries. In 1968 SFADCo initiated a similar scheme in the mid-west region. Small industries have particular problems. It is appropriate that the Oireachtas should examine this. After all, if it is going to examine our giant semi-State bodies, why does it not examine the problem of these 50,000-odd small firms who have particular difficulties at all times but very severe difficulties at present? It is particularly appropriate that we should establish this committee because the European Parliament have designated 1983 as the year of small medium sized enterprises. If we are to have this ad hoc committee it is an appropriate year in which to do this job. The terms of reference are very wide. They have been deliberately drawn wide so that, having been given these terms of reference, the committee can settle down and take whatever part of the terms of reference it thinks will serve the most useful purpose. I am glad to say that in this instance the representations that I and other people made in regard to more use of the Seanad have been acceded to because it is proposed to be a committee on nine Deputies and seven Senators.

Mr. Lanigan

There are a few comments I should like to make on this committee. One of the problems I have with it is that section (1) (i) which deals with the definition of a small business, states:

A common definition of small businesses having regard to the criteria applied by State agencies, the Small Firms Association of the CII and definitions used in other EEC countries.

To me for many years it has appeared that the definition that somebody down the country would give to the small business and what the EEC would consider to be a small business are two totally separate things. A small business in EEC terms is a company which employs fewer than 500 people; under no circumstances would that be considered a small firm in Irish terms. With regard to the Small Firms Association of the CII, I suggest that 90 per cent of small businesses in this country have nothing to do with the CII because they could not afford to pay the fees that the CII ask to become members of that institute. That is not running down the institution but it is a fact that 90 per cent of smaller business are not members of the Confederation of Irish Industry or members of any confederation. The criister' teria applied by State agencies, such as the IDA, do not seem to be the criteria that we should be looking at in terms of small businesses. Many small businesses which are supportive of larger industries are one-man businesses or businesses which are run by families of one, two or three people. In country areas there are supportive industries for the agricultural sector which are being run on a one man basis in small villages. They go out in the middle of the night to help in fixing a breakdown on a machine that might be worth a lot to a farmer and is necessary in getting his crops ready for market.

Many single person industries are operating in servicing many factories. We have also smaller businesses which serve the transport industry. These people work at night and have nothing to do with a confederation. For that reason I sincerely hope that a common definition of small businesses will be brought in but that it would not have regard to the criteria applied by State agencies such as the IDA, the CII or the EEC.

The motion mentions the problems of financing for small businesses and loan schemes with particular reference to existing loan schemes. There is no existing loan scheme for small businesses in this country. Small industries in Ireland, whether in the servicing or manufacturing area, are not given any loan scheme other than the rate of interest which is applicable to any normal customer in a bank. If they go to the ICC or the IDA for a loan it seems to be still the situation that you have to prove that you do not need money to get it from many of the State agencies who are involved in the small industrial sector.

A small businessman sets up on his own because he has the capabilities of running a business technically but he has not got the exact know-how or the financial background to allow him to get financial help from any of the State agencies or the public banking sector agencies. The only person that he might have a hope of getting a loan from without having to produce his financial background and his projections is the best service sector in the banking area at present, the credit union, who will allow a very small businessman to get a loan to set him up in business and maintain him until such time as he can prove to the IDA and the ICC that he does not need them.

This whole question of small businesses and the facilities that are available to small businesses needs to be gone into in very great detail. Not alone can they not get the finance they need, they cannot get the expertise either but largely in debates in both Houses of the Oireachtas these people are being castigated as self-employed people who are not contributing to the economy and are continuously under pressure in both Houses and in the media. The benefits that have been derived from a very viable small industry sector, whether they are self-employed or family businesses, have contributed greatly to the development of this State and, without them, we would not be here discussing the setting up of a committee which will have as its criteria the State agencies, Small Firms Association of the CII and the EEC.

Mrs. Robinson

I too welcome this committee. I concur with Senator Lanigan on the importance of this area for our economy and the relevance of having it examined by a Joint Committee. I am puzzled once more by the detail of the terms of reference; it is the lawyer in me. Why, given the quite difficult task allocated to this committee under the various subheadings is it denied the power to look for specialist help which other committees are given? Why is it not empowered to seek the services of persons with specialist or technical know-how to assist it in performing its tasks? This is something we have enabled the EEC Committee and State Sponsored Bodies Committee and so on to have. It would seem to be particularly appropriate in relation to the tasks which we are allocating to this committee because a number of them are innovatory and may give rise to particular difficulties.

I am interested in looking through the list setting out the terms of reference of the committee to note no express reference to the potential for expanding employment in the small business sector. It may be implied in some of the subheadings but if a parliamentary committee is examining this area it will be particularly important to examine the possibilities of expanding employment opportunities through the development of small businesses and whether our own tax provisions or other aspects of our laws inhibit this at the moment is an aspect that the committee could well examine and make recommendations on. I certainly believe that we must examine very closely the possibilities for increasing employment in these small Irish-owned firms which are a very important part of our economic and social development.

Professor Dooge

Senator Lanigan raised the question of the difficulties of definition, that one person says 50, another says 100 and another says 500. In fact these terms of reference are drawn so that the first task of the committee will be to work out what is the definition most suitable for a discussion of the place of the small business in the Irish economy. It may well be that this use of numbers of employees does not give a good reflection of the problem. Even if we say it is not suitable to use the EEC figure for Ireland, it should be this, that or the other figure, we may still find ourselves in trouble and end up using a different figure for east of the Shannon and west of the Shannon. There have been suggestions that we look at the definition in another way. One suggestion, with all due deference to my colleague on my left, is to define a small firm as a firm that cannot afford an accountant on a full time basis. It would be wrong of us in the establishment of the committee to put in a definition plucked from this report of the EEC or that report of the IDA. Let the committee do that as their first job and come back and tell us from the point of view of the development of the Irish economy, from the point of view of employment and of developing innovation in the Irish economy what is the appropriate definition to use. This task will certainly be covered by the committee.

The question of the difficulties of financing is adequately covered here under (1) (iii), which covers the means of facilitating the financing of small businesses with particular reference to existing loan schemes. What are they like? Let us have a report on this.

In regard to the point made by Senator Robinson that there is no mention here of expert advice, of people who could come in as experts and provide a memorandum or a report. That is a deliberate omission because it is considered we had enough memoranda and reports by experts and that what essentially is wanted here is to set up a committee of politicians who will look at the reports that are available in the IDA, SFADCo and from the EEC and apply their political commonsense to these particular reports. If one of their conclusions is that there is a particular gap in regard to information there will be no difficulty in getting that information through some of the existing facilities and agencies.

We all agree that employment is a vital factor. I feel that employment is adequately covered under paragraph (1) (ii), which asks the committee to make recommendations in regard to the development of the small sector business of the economy. Certainly any report on that which did not deal with the employment aspect would not be a worthwhile report. While the concerns of this House would perhaps have been better represented if employment has been mentioned here, it is certainly adequately provided for. Equally, the question of whether the effects of tax incentives or tax disincentives are hampering the development of the small business sector of the economy is covered here. We are concerned here with setting up a committee of Deputies and Senators to look at this whole problem which, as Senator Lanigan and Senator Robinson said, is of vital importance to us and to give us back a report, not another report full of statistics or graphs but one which has a good deal of political commonsense.

Mrs. Robinson

Professor Dooge has dealt very fully with the points raised but if we are deliberately denying this Joint Committee expertise in looking at particular areas of the committee report could we have some indication of what the staffing of this committee will be because it is very important to have adequate staff?

Professor Dooge

That is a point well made. I have repeatedly said in regard to committees that one of the difficulties that was encountered in the past was the lack of proper staffing of committees. If we fail to staff the committees that we are setting up today adequately we are asking for trouble. The point is very well made by Senator Robinson that if we are saying that we do not need an expert because there are so many reports then we certainly do need adequate staff to service the committee so that they can go through those reports, filter them and organise them for the benefit of the members. I will see that that view which, I take it, is shared by the House, is conveyed to the proper quarters.

Mr. Lanigan

I sincerely hope that this committee will bring a sense of realism to our attitude towards small businesses and business in general. It was put into perspective recently when a new industry was coming into Kilkenny to take over the Fieldcrest enterprise. When Mr. Luc Santens, the new managing director of the firm was asked how many people he was going to employ he gave the simple answer that in the beginning they would employ one person.

Question put and agreed to.