Small and Medium Enterprises: Statements

I welcome the Minister of State, Deputy Pat Breen, to the Chamber.

I am delighted to be here in the Seanad as Minister of State with responsibility for trade, employment, business, EU digital Single Market and data protection to discuss the matter of small and medium enterprises, SMEs. In particular, I wish to cover three items of strategic importance to SMEs. First, I will address the strategic SME policy direction. Second, I will discuss entrepreneurship, specifically female entrepreneurship. Finally, something we cannot leave out in a discussion on business is Brexit.

Senator Pádraig Ó Céidigh has raised the issue of developing a strategy to support indigenous SMEs. This is extremely timely. At present, my Department is considering such a strategy that would bring together the many Government supports for SMEs, as well as ensuring the business environment supports our SMEs and is fit-for-purpose, which is important. I have mentioned the name of the Senator in vain; I hope he will not mind. Such a strategy will ensure all relevant Departments, agencies and local and regional bodies support SMEs. This collaboration is extremely important.

Everyone here knows that this Government has consistently been focused on the creation of jobs through the creation, retention and growth of businesses, given that business is very important. With unemployment levels now reaching a new low of 5.8% in May this year, we can adjust our focus to quality employment and providing the necessary further support for businesses. To do this, it is important that we understand the breadth of supports available to SMEs. In addition, we need to establish which of these policies and programmes work and whether the wider SME ecosystem is performing well.

One of the best measurements of the wider framework conditions for SMEs is the European Commission’s small business act, SBA, fact sheet. This is a yearly report which ranks Ireland against other EU member states. In the 2017 report, Ireland’s SBA profile continued to be competitive and has even improved on last year’s performance. In eight SBA areas, namely, entrepreneurship, second chance, responsive administration, state aid and public procurement, access to finance, Single Market, skills and innovation and internationalisation, Ireland performed well above the EU average. Therefore, we can see Ireland gets a good report card as it stands.

However, as I mentioned earlier, we cannot and must not be complacent. We need a co-ordinated strategy to continue Ireland's upward trajectory. That is why I travelled to Mexico in February to the OECD ministerial conference on SMEs as head of the delegation for Ireland and spoke on topics such as what policy makers should do to help SMEs harness the most recent trends in digitalisation and the best way to support SME adoption of productivity-enhancing digital technologies. Digital technology is important and we have to embrace it in every sector, right down to micro-enterprises and up to multinationals. It is not about the future; this is the future. It was an excellent conference where great ideas were shared and a declaration to strengthen SMEs and entrepreneurship for productivity and inclusive growth was signed by member countries.

At the same time, my officials and I were engaging with the OECD on the possibility of conducting a review of SME and entrepreneurship issues and policies in Ireland. I launched this review with the Minister for Business, Enterprise and Innovation and the secretary general of the OECD in March of this year. This is a major piece of work which will take 18 months. We can expect publication at the end of 2019. Not only will it assess the state of play of the policies, programmes and issues as they currently are, but will also result in a SME strategy roadmap which can form the basis of a wider SME strategy for Ireland.

I note Senator Byrne is in the Chamber. Female entrepreneurship is the second matter I would like to discuss. It is an important element of the SME ecosystem in the new business environment. It is imperative that we have a culture and business environment that is conducive to entrepreneurship. This environment must support people from all backgrounds to get out there and start their own businesses. The latest global entrepreneurship monitor report on Ireland released just last week shows that Ireland ranks as No. 1 for a positive attitude towards entrepreneurs. Our new businesses rank fourth in Europe for high potential and internationalisation.

The story is not uniformly positive when it comes to the breakdown of who is creating the business. Female entrepreneurs lag far behind in numbers. Generally, female labour participation rate is lower than for men. In 2016 it was 14% lower than the rate for men. One method the Government has to encourage women to enter or re-enter the labour market is to encourage women to be their own bosses. In order to do this we must provide a whole suite of supports so that we can get the best out of Irish female-led companies and they can get the best out of themselves.

There are supports for female entrepreneurs, specifically in Enterprise Ireland and local enterprise offices strategies for Irish companies. Enterprise Ireland has run female-only feasibility and competitive funds since 2012. This spotlight has yielded results. In 2012, just 8% of the 97 high potential start-ups were female-led, whereas in 2017, 28% of 90 new high potential start-ups were female-led, which is a significant improvement over a number of years. Enterprise Ireland also awarded 42% of the competitive start funds to female-led companies. I look forward to these figures continuing to improve over the next few years.

Enterprise Ireland also partners with knowledge providers in a series of accelerators designed especially for females, including: the DCU Ryan Academy female propeller programme; the NDRS female founders programme; the CIT female exxcel programme; and Going for Growth.

The local enterprise offices, LEOs, which play an important part in job creation in the regions, are also actively engaged in encouraging and inspiring an increase in female-led businesses through initiatives such as the annual national women’s enterprise day and the women in business networks.

An important aspect of the networking programme is the promotion of successful female entrepreneurs as role models, and the use of mentoring and networking opportunities, which aim to build the confidence of newly emerging female entrepreneurs. Enterprise Ireland, EI, and Network Ireland, in conjunction with the LEOs and the Entrepreneurs Academy, have announced their second nationwide Fuelling Ambition, Steps to Success roadshow, targeting existing and potential female entrepreneurs. The aim of the roadshow is to encourage, support and drive the ambition of female entrepreneurs nationally by showcasing the steps to success of thriving Irish businesswomen and entrepreneurs, who are client companies of either EI or LEOs.

These are major supports for an under-utilised group from whom Ireland needs greater participation in the entrepreneurship and SME ecosystem. The increase in numbers is positive but is far from parity with male entrepreneurs or even the levels in northern EU member states. One of the areas under scrutiny in the OECD review is female entrepreneurship. I fully expect that we will receive recommendations on how to continue to improve this vital pipeline of new business in the report.

I refer to Brexit, which is part of our work every day in the Oireachtas and which every Department is working on at the moment. There is great uncertainty for Irish businesses and for the landscape in general; there is no doubt about this. The Government has been trying to inform businesses about Brexit to get them thinking about its impact and, most important, to get them ready. While many have put strategies in place to counteract the impact of Brexit or to consider alternative markets or suppliers, others have done little. This is a huge task, but there may also be opportunities.

Over the medium term, Brexit will disproportionately affect SMEs, particularly those in the Border area Senator Mac Lochlainn comes from and those in sectors such as food and agriculture. My Department has been particularly busy in engagement with businesses and in accessing supports and grants that can assist those who are at risk of scaling back or closure. Uncertainty affects all those businesses. The onus is on all of us in government and local government and in agencies to get the message out that we understand the threat to business and the importance of doing something about it. There is no shortage of advice and supports, and LEOs have played an important part through seminars, training, grants and so on for those who seek them. There are 31 LEOs throughout the country which supply that support. My Department has launched a €300 million Brexit loan fund which is available to all companies, regardless of size or sector, to address the challenge. LEOs will play an important role in promoting the new fund and encouraging local businesses to access it.

Enterprise Ireland Strategy 2017-2020 represents a strategic response to Brexit, aiming to grow more resilient Irish companies by building scale and expanding reach. To support its strategy, the Department provided for additional capital moneys in 2017 to enable El implement a variety of initiatives and ramp up its supports to drive improvements. Those improvements are needed in productivity and innovation, which is an important word that I use in my Department or when I go on trade missions every day of the week. We have to be innovative. Management capacity is important and, above all, leadership skills. It is so important for companies to have leadership skills to build on the ambition of managers to consider other markets around the world. That is what we have been doing in my Department. It is what Enterprise Ireland has been doing. I was in Prague last week and I was in Warsaw with 26 innovative Irish companies located all over the country doing business. We signed nearly €8 million worth of contracts for those companies. Our reputation among those companies is second to none. They support our Brexit strategy 100%.

We are seeking to accelerate the number of EI clients diversifying into new markets, and if we are to diversify, Europe is an important market for us because it is our nearest neighbour after the UK. We have increased the number of trade missions and events planned for this year by 22% on last year. In 2018, EI will run 215 trade events in Ireland and overseas, 70 of which will be Minister-led. This extensive programme of international trade events is central to achieving this increase in exports, first, to the eurozone and to wider global markets such as Asia and the US. However, the UK will continue to be a major trading partner for Ireland because it is our nearest trading partner and there are many similarities in our culture. Trade between both countries totalling €1.3 billion takes place every week. The UK needs Ireland as much as we need the UK. The 70 trade missions and visits that will be led by Ministers this year are essential to supporting clients who seek to extend their global footprint.

Another agency under the aegis of my Department, InterTrade Ireland, ITI, is uniquely well positioned when it comes to understanding the needs of businesses on both sides of the Border and helping businesses to prepare for the challenges that lie ahead. We have given the other 26 member states a greater understanding of the importance of the North and South. A key part of InterTrade Ireland's Brexit work is the provision for SMEs of a Brexit readiness voucher scheme entitled, Start to Plan, which enables companies to purchase specialist advice in areas such as customs, tax, tariff and non-tariff barriers, and legal and labour mobility issues. These are worth €2,000 to each of the companies. To show how interoperable these grants are, intelligent businesses have used this voucher to put together their proposal for funds through the Brexit loan scheme. This is tangible assistance to SMEs in Ireland and is evidence of Government supports working well.

I thank Members for the opportunity to discuss SMEs. We could spend a lot more than an hour and a half talking about SMEs. They comprise 98% of the enterprises in the country, and employ 70% of the private sector workforce. Whether the enterprises are based in Donegal, Galway, Limerick or Dublin, the SME sector is extremely important. We must continue to ensure that we grow the SME sector and the indigenous sector. Foreign direct investment typically goes into clusters in large urban areas. Out of those big multinational companies are formed the seeds for many indigenous companies that can grow. I have witnessed this in the medical technology sector. Some 20 years ago, that sector was small but, today, we are on a par with Minneapolis, and we are second to Germany in Europe. When one considers all that is happening in this sector in Ireland, and the output from the sector in a global context, it is astonishing.

My Department and the Government are looking to create a better business ecosystem for Irish SMEs, whether they are starting up or established, in many areas. They are a vital part of our economy. It is essential that we all collaborate to support Irish businesses. It is also important that the people support Irish business. Irish businesses will support them by creating quality employment.

Brand Ireland is great, as can be seen when one travels all over the world. It is a great brand in the UK. The brand, and the reliability of it, will help us overcome the challenges and obstacles in our way. If we work together, we will grow together and remain resilient in the face of any obstacle that comes before us.

Cuirim míle fáilte roimh an Aire Stáit chuig an Teach seo. I dtosach báire ba mhaith liom a rá go bhfuil an tacaíocht atá Rialtas an Aire Stáit á tabhairt do ghnóthaí beaga le feiceáil. Tá sé an-mhaith agus an-tábhachtach.

The support the Government is giving to small and medium-sized businesses is significant and appreciated. I see a lot of that support in action on the ground. I endorse everything the Minister of State said about the support mechanisms in place and the ongoing work of creating the environment for entrepreneurship and small business in Ireland. Over 98% of all businesses in Ireland are small. They employ well over 1 million people. Some 70% of the working population - those employed in private industry and in businesses - work for small or medium-sized interests. While this is important for our cities, it is even more important for the rural areas to which it is difficult to persuade large companies to move. The SMEs in those areas were among the worst hit during the recession. Those businesses were down in the dumps and had to try to make their way back up again. Some did not survive but many did, thank God.

In September, I intend to be the rapporteur of a public consultation committee that will deal with the issues facing SMEs. I would really welcome the input of the Minister of State to that committee and, if he is available, his presence at one of its meetings. The committee will be based in the Seanad. I have also been involved in bringing innovation hubs to the AV room, including, among others, PorterShed. Other such hubs, including university innovation hubs, will appear in the AV room this year. The idea is to link third-level education, institutes of technology, universities and industry, and to bring students across the divide from the academic and the practical side. This is hugely important and I know that the Minister of State, the Department and the Government all support the concept. Representatives from hubs will be here on 27 June. It would be great if the Minister of State and other colleagues could attend in order to see what is happening on the ground.

The SME fraternity feels that nobody represents it. Nobody is standing up and asking questions on its behalf. Other organisations and structures exist in Ireland, but SMEs tend to work in silos. That is my experience and the experience of colleagues involved in SMEs. They keep going. They plough ahead. The people involved in SMEs often work 16 or 18 hours a day. They remortgage their houses. I happened to bump into a bank manager in London who was retiring. He told me that most entrepreneurs reach one of three milestones: first, he or she loses his or her health, second, he or she loses his or her wealth, and, third, he or she loses his or her family. Those issues arise because of the focus these people have for building the business, and the passion they have for it. Unfortunately, it can lead to a silo-type situation. It is not always the fault of the Government. The people behind SMEs tend to focus on their own areas. They need to move away from that and they also need the Government to help create the culture and environment within which expansion can happen. Enterprise Ireland is working hard in that area, particularly in terms of female entrepreneurship. Significant focus has been placed on developing that area by the CEO and the team at Enterprise Ireland.

Enterprise Ireland is one of our greatest assets in helping Irish companies export their products. That is what it focuses on; it is the organisation's raison d'être. We have thousands of SMEs. There are approximately 240,000 SMEs in Ireland. The vast majority of them do not qualify for Enterprise Ireland support. Some can go to LEOs, of which there are 32 in the country, for assistance. In the past 12 to 18 months, the Government has created one website which brings together all available support mechanisms. Previously, that information was scattered all over the place. That is one of my main concerns. As the Minister of State was speaking, I made some notes. In terms of supports for SMEs in Ireland, Bord Iascaigh Mhara, BIM, Bord Bia, Enterprise Ireland, LEOs, Fáilte Ireland, InterTradeIreland and others are available. We need to ensure that there is greater joined up thinking between those bodies and that we are all on the same page. The website that has been created is helpful, but it is only the starting point. It is really a brochure.

I recall being at a function that was attended by a colleague of the Minister of State, former Taoiseach, Deputy Enda Kenny, in 2011 or 2012. The latter said that he wanted to leave his mark and the mark of the Government on Ireland, ensuring that it would be the best small country in the world in which to do business. It is going very strongly in the right direction, but we have to keep pushing it on. Let us keep SMEs at the forefront, because those behind these enterprises are the people paying taxes with their blood, sweat and tears, and taking the risks in terms of their wealth, their families and their health.

Approximately 50% of SMEs survive for five years or more. The reasons for that are a lack of capital, resources and knowledge. I have a big issue with personal guarantees to banks. Particularly after the most recent recession, the last thing an entrepreneur wants to do is to put his or her family home on the line. I strongly urge the Minister of State, if nothing else comes from this, to encourage the banks to become more like those in Germany, France, the UK and the USA and get rid of these personal guarantees. Such a move would ensure that the banks would move in step with the entrepreneur in terms of taking the risk, rather than putting an extra layer of significant stress on the entrepreneur. That level of pressure is counterproductive in terms of his or her ability to think clearly and to carry out his or her business.

In terms of growth, management skills are an issue. The big problem with management skills is that-----

Tá noiméad amháin fágtha.

Tá brón orm. Tá fadhb mhór ann leis na scileanna bainistíochta. I actually think in Irish and speak in English. Gabh mo leithscéal faoi sin. A big problem with that is that the larger companies - the multinationals - are scooping up all of those people. Our unemployment rate is now 5.8% and it continues to go down. However, it is becoming increasingly difficult for SMEs to attract staff.

One of the major issues facing SMEs is legislation passed in both Houses of the Oireachtas that has unintended consequences for them. Those consequences can be severe. Is it possible that the cause and effect of the unintended business consequences faced by SMEs be considered in the context of all legislation, perhaps on Committee Stage? Sometimes we pass legislation which concerns multinationals but which affects all the SMEs and causes significant issues for them.

I fully endorse what the Minister of State is doing and I fully support the Government in its efforts. It is making a great effort and it is really appreciated. We have to keep it going, and make Ireland the best little country in the world for SMEs.

I welcome the Minister of State. I also welcome his comments about SMEs and the commitment the Government is showing to the sector. As others have said, SMEs are the backbone of our economy. In rural Ireland, they can be the backbone of the community as well. As somebody who believes that the economy is extremely important insofar as it supports society, it is critical that we remind ourselves of that.

Many positive things have been done and all objective barometers speak to the success Ireland has had in reducing unemployment to its current rate of 5.8%. Who would have believed, back in 2011 and 2012, that this would be possible?

At that time, unemployment was more than 15%. We can see the recovery occurring. It is a word that can sometimes upset people but it is real and in business we see it. The difficulties emerging now are different, as Senator Ó Céidigh has just pointed out. It is, in fact, about trying to get human resources to work in companies, because as more and more people are at work it becomes more difficult.

I want to mention many of the achievements made through the LEOs, with 15,000 net jobs created, almost 13,000 clients approved for priming grants and 7,500 training programmes with more than 100,000 participants. This is all since 2014. There is also the development of Ireland's best young entrepreneur, with 1,471 applications in 2017.

I am very pleased the issue of Brexit has been mentioned because it is on many people's minds. One of the serious considerations with regard to SMEs and the Small Firms Association is the fact many people, because they do not directly export to the UK, were not aware of the fact Brexit would have a huge impact on them because they might be second or third down the line in supplying people who do export. While we have a Department of Agriculture, Food and the Marine, agribusiness is also hugely important. We have the Brexit SME scorecard, which the Government introduced to help people measure where they are at, technical assistance for microenterprise and the nationwide roll-out of the Lean for Micro programme, which will make small businesses more efficient and competitive. All of these measures are very welcome.

As Government spokesperson in the Seanad on enterprise, innovation and business, I want to highlight these issues but I do not want to be accused of forgetting what problems remain for us, and there are problems. The Minister of State mentioned the great supports now in place for female entrepreneurship. As Senator Ó Céidigh just pointed out, there are wider Government considerations with regard to helping in this regard, such as childcare costs, broadband and other issues that have an impact on people's ability to strike out on their own and make a career for themselves as self-employed persons.

There are also issues with regard to personal insurance and what the Government seeks to achieve in this regard. This issue was highlighted by my colleague, Senator Butler. Somebody could be an employer of 15 people and if the business goes bust, he or she is left high and dry while all the employees are looked after through social welfare. There are all these anachronisms that we must still address. We have started to address them and I welcome this. As a member of the Oireachtas Joint Committee on Business, Enterprise and Innovation, I am struck by the issues raised by SMEs, the Small Firms Association and others on the challenges of costs of doing business in this country. One of the issues was rates, which I will not go into in any great detail.

Another issue that warrants greater attention is the cost of finance, on which the Government has done a lot in terms of the microfinancing put in place but there is a need for a third force and a different type of bank in the country. I am thinking specifically of Sparkasse banks, which have been here on a number of occasions and have presented to the committees on finance and business, enterprise and innovation. They have invited both committees to see the model in action. They do not seek to own a bank here but want to mentor a similar model. It is an old-style bank that has survived 200 years in Germany, including two world wars, great depressions and everything else. It is a bank that still believes in going down to the customers and walking the land or business with them and understanding their strengths and weaknesses. It is a bank that believes in community and contributes back to the community. We need to progress this and I ask the Minister of State to put to his colleagues that they call upon the Minister for Finance to publish the report sitting on his desk, which has been completed, on the possibility of this community-type banking being put in place here. Small businesses still speak to the fact they pay higher rates here than elsewhere in Europe and they still have difficulty in accessing funds.

The other issue on which I want to spend some time is a presentation by the Alliance for Insurance Reform, a group of more than 200 businesses concerned about the startling rise in the cost of insurance in this country. It has not been just onefold, twofold, or threefold but tenfold in some cases, without any transparency as to how the figure presented to the business person is reached. This cannot be sustained and is a real risk and danger to us if it is not addressed. What I particularly liked about the presentation of the Alliance for Insurance Reform was that it outlined the problems and gave examples and concrete evidence and then gave us the solution to the problem as it saw it. It gave us a number of measures, some of which I agree with and others with which I would have issues. One which makes absolute sense to me, and one over which the Government has control, is the setting up of a Garda insurance fraud unit funded by the insurance industry. This is critical. Another measure it suggested is linking sections 26 and 25 of the Civil Liability and Courts Act 2004 in order that exaggerated and misleading claims are automatically forwarded to the Garda for investigation and further assessment to bring a sense of consequence to those who engage in this ever-increasing fraud perpetrated on businesses. We watched a series of videos showing it very clearly. If people can try to defraud somebody of money and there is no consequence when it is thrown out of court, they just go and do it again and they get more clever about it. If they were to rob a bank we know what would happen. If they were to be involved in non-payment of their taxes we know what would happen but when it comes to fraud, they need not bat an eyelid or worry about a thing.

The insurance alliance asked for ten measures, but the three I would go after are the Garda fraud squad, linking sections 25 and 26, which are intricately related, and not interfering with the Judiciary but merely to have a clear directive in the law whereby if the book of quantum is exceeded by a judge, he or she must explain why that is. My requests are that we look at and publish the report on banking that is on the desk of the Minister for Finance, that the Minister for Justice and Equality encourages the Garda, which is ready to go with this fraud unit, and that the law be changed with regard to sections 25 and 26 and create that link.

The Senator went over a bit, but however.

At present, there are more than 250,000 SMEs throughout Ireland. These businesses employ almost 928,000 people and are the engine of the Irish economy. Unfortunately, many SMEs are struggling to grow due to a lack of Government action in specific areas. In particular, the Government's lack of action on insurance costs, its disregard for the impact on SMEs of hikes in commercial rates and the lack of urgency about Brexit are seriously affecting the prospect of small and medium enterprises.

Ironically, the Government parties of Fine Gael and Fianna Fáil, which is not here, attacked Sinn Féin over the weekend on policies for SMEs without so much as a look at themselves. Perhaps today, the Minister of State will answer how the Government intends to support SMEs, specifically with reference to insurance costs and commercial rates.

Small and medium businesses are being bled dry with outrageous increases in insurance premiums. Real and tangible action by the Department is needed, not more reports and discussions. The CSO recorded an increase of 57% in insurance premiums from 2011 to 2016. This cannot be solely blamed on high payouts for injury costs. Let us be under no illusions. This is about profit and our smaller enterprises are the ones carrying the brunt of this profiteering. The insurance industry occupies a privileged position in our economy due to the legal and necessary requirement of businesses to have various types of insurance.

As a result, insurance companies need to accept that extra responsibility and a need for greater transparency come with this privileged lucrative position. We need urgent reform of the way insurance companies operate. Every time this issue is raised, we are told of a new report, consultation, discussion or working group. We do not need any more of this; we need real and tangible action. My colleague, Deputy Maurice Quinlivan, has met the Alliance for Insurance Reform and I am sure that the Minister of State is aware of its work. Can he outline how he plans to address its concerns?

SMEs are also at the mercy of sudden hikes in commercial rates. When will the Government bring forward the long-promised legislation in this area? That legislation must balance the ability of businesses to pay and the need for a sustainable model of funding for our local authorities. My party is hearing stories of businesses experiencing increases in rates of 200% to 300% overnight due to the revaluation process. No explanation as to how these figures are arrived at is being provided to business owners and these rates are proving critical to some family businesses. We acknowledge and accept the importance of commercial rates to local authorities. It is right and fair that businesses which benefit from local communities give back to them. We know that local authorities provide roads, transport and measures aimed at increasing tourism and footfall which, in turn, are positive for SMEs. However, this first national revaluation in 150 years could not come at a worse time for some businesses just starting to get back on their feet after the recession.

We need to examine the process of how we are doing this revaluation more closely because the current sudden trebling of costs is crippling smaller businesses, while larger businesses remain largely unscathed. It should not be the case that large multinationals on the outskirts of towns are paying minimal rates out of large profits while small, family-owned businesses which happen to be situated on main streets are paying through the roof. The family-owned business is the cornerstone of Irish society and it is being seriously impacted upon by the current commercial rates system. Can the Minister of State indicate how his Department plans to take this feedback on board?

I wish to raise the matter of the low take-up of Brexit business supports. Information provided to Sinn Féin in response to parliamentary questions shows that only a small number of SMEs have so far availed of grants put in place by the Government. The market discovery fund was launched in January with the aim of encouraging companies to expand into new markets but just 33 of these grants have been awarded to date. No data is available regarding the €300 million Brexit loan scheme, while 277 Start to Plan vouchers relating to Brexit have been issued by InterTradeIreland. The Be Prepared grant was launched by Enterprise Ireland in March 2017 and offers funding up to €5,000 to SMEs to help them prepare action plans for Brexit. Despite being launched 15 months ago, just 110 companies have availed of this assistance, accounting for just 2% of Enterprise Ireland’s client companies. The Minister of State needs to examine whether red tape or unreasonably strict criteria are preventing SMEs from applying for these State supports or whether the Government is doing enough to raise awareness of these Brexit grants.

My colleague, Senator Gavan, published a paper on the advantages and benefits the co-operative sector could bring to the Irish economy. The co-operative method is very successful across Europe and developing this sector would allow workers to own their businesses. It would act as a counterbalance to the FDI sector, which can be unreliable when economic conditions change. It is important to create that balance, particularly in regional towns and communities. Has the Minister of State any plans to develop this sector and does he recognise the advantages it could have for the Irish economy?

Sinn Féin’s enterprise policies aim to support our indigenous sector by tackling insurance costs and reforming the commercial rates system, both of which are currently hampering its growth. We propose to maintain the 12.5% corporation tax rate and we also want to ensure foreign direct investment is spread right across the State to the benefit of all regions. We want to ensure that businesses receive State support in order to prepare for and deal with Brexit, something the current Government is struggling to do given the worryingly low take-up to date of the supports it is providing. Our party has a broad range of enterprise policies that aim to help grow Irish businesses while also ensuring workers are treated fairly.

I thank the Minister of State for coming to the House to engage with us on this important issue, which concerns employment and SMEs. As he is aware, I come from a small business background. My family has been involved in business for over 60 years. The supports being put in place by the Department are to be very much welcomed. Many SMEs struggled for a long time. The fact that there is now co-operation and collaboration between the Department and the SME sector is to be very much welcomed.

I served for 14 years on a local enterprise board. Such boards do great work to support SMEs. The Minister of State referred to female entrepreneurship. I saw a significant amount of work being carried out to encourage females to have the courage to start their own businesses. Incentives were put in place and experienced mentors were provided to some small business start-ups. Networking events were very positive in terms of people learning from one another. Training courses were also provided. Mentoring and collaboration programmes need to be built on and expanded because people from all walks of life can learn from one another, which is very important.

One important term is "encouragement". It is important that we encourage SMEs to know that they are not alone and to make them aware of the supports which are available. That is evident in the policies brought forward by the Department and the Minister of State. The Living City initiative encourages businesses outside of the Dublin region to expand and invest in their operations. While they may have considered doing so in the past, they may have found it prohibitive because they perhaps felt there were not sufficient tax exemptions or that costs were significant for some of the work which had to be carried out. People could be encouraged to live above business premises, which would raise funds for SMEs to invest in their operations. The expansion of the programme could be considered.

Start-up grants are available. Senator Reilly referred to insurance. Reference was also made to the rates that are set by local authorities. I am not sure that they have increased by 200% or 300%, but in some areas rates have increased while in others things are more balanced. It is not fair to expect SMEs to pay the same amount of rates as larger businesses because some are not able to compete. Some small businesses in parts of rural Ireland have found it very difficult to exist. We should put in place as many incentives as possible for such businesses in order to ensure their survival. After all, they are the heartbeat of many towns and villages. They are the main employers in parts of rural Ireland.

The news that the rate of unemployment is decreasing is a good message to hear. The current rate is just over 5%. This is important for development and shows the rest of Europe that we are open for business and are serious about the message we are sending out.

I compliment the Minister of State and the Minister, Deputy Humphreys, for their work on job creation and for portraying a positive image. I would like to see more collaboration and encouragement and a greater expansion of the incentives the Minister of State mentioned for women entrepreneurs. It is disappointing that in 2017 only 28% of start-ups were created by women because many heads of industry are female.

I welcome the Minister of State to the House. I also welcome his contribution and those of previous speakers. Some interesting points have been made by previous speakers which, in the main, I agree with. The SME sector is responsible for the creation of 250,000 jobs, which is a high percentage of the total employment pool, and it must be nurtured and cared for. Many hurdles are placed before people in small businesses. I know that from personal experience and the experience of many in my town and county, and throughout the country. The self-employed pay higher income tax and pay related social insurance, PRSI, rates than those they employ, while there are no equivalent social protection supports if their business fails. Senator Reilly made that valid point. It is overlooked that there is little protection for the employer and just about adequate protection for the employees. This treatment is crippling small business and low income earning self-employed persons who try to meet their financial responsibilities every week. Their endeavours need to be better rewarded.

My party has consistently supported extending, on a phased and voluntary basis, a full range of social protection supports to self-employed PRSI contributors as part of a commitment to foster an entrepreneurial culture as well as enhancing social solidarity. It is important to note that was part of the arrangement to facilitate the formation of a minority government, which was essential to the continuing stability of the country at a critical time, and my party stepped up to that when many others disappeared. Fianna Fáil extracted policy commitments under the confidence and supply arrangement to support entrepreneurs and the self-employed. We succeeded in getting dental and optical benefits extended to the self-employed while PRSI contributors are eligible to qualify for the invalidity pension scheme. However, the Fine Gael-led Government has failed to meet its commitment under the programme for Government to full equalisation with the PAYE credit by 2018. This needs to be remedied swiftly. Full tax equalisation is a core Fianna Fáil policy which we will continue to campaign on.

The Government also turned a blind eye to successive warnings from the National Competitiveness Council, NCC. Its Cost of Doing Business in Ireland 2017 report is a damning indictment of current competitiveness policy and emphasises Ireland's position as a high-cost location under several cost metrics relating to childcare, property, labour, insurance, transport, energy and business services. Ireland had the fourth highest SME interest rates on bank overdrafts and credit lines in the euro area in 2016 while childcare costs are among the highest in the OECD for couples, and the second highest for persons earning below the average wage. In addition, competitor countries have more attractive tax regimes to entice SME start-ups and scaling up such as the entrepreneur capital gains tax, CGT, regime in the UK.

Many domestic businesses are highly concerned that the UK might leave the EU Single Market and customs union. The Minister must immediately seek approval at EU level for transitional aid measures to safeguard Irish export enterprises and jobs that will be impacted by a hard Brexit. Fianna Fáil has consistently called for an enterprise stabilisation fund and employment support scheme to be made operational and available to the worst affected firms as a policy response to protect from the impact of a hard Brexit. Similar measures were introduced following the 2008 crisis. It is shocking that the Government refused a request by the chief executive of EI before the 2018 budget to create an enterprise stabilisation fund of €40 million. EI received €1.3 million in additional Brexit funding. The level of awareness raising and contingency planning by the Government for a hard Brexit is a matter of concern with only 100 companies applying for EI's €5,000 Be Prepared grant. The SME sector must be supported by every means.

My party remains firmly committed to driving a pro-enterprise agenda to promote our current and future SMEs. The rainy day fund was negotiated into the confidence and supply agreement by Fianna Fáil in the summer economic statement of June 2016. The Government committed to the establishment of such a fund. We have to ensure that when difficult times come again, the first decision of the Government of the day does not have to be to raise taxes or cut spending on vital public services. Despite this, the Taoiseach in his leadership campaign recklessly sought to undermine the rainy day fund and to raid it before it was even created. The fund is a key part of the confidence and supply agreement. As we move towards budget 2019, Fianna Fáil will seek progress on the objectives set out in that agreement to ensure the budget is a progressive one that moves us towards a fairer Ireland.

Will Fianna Fáil remove the confidence and supply agreement?

I knew the Senator's heart was not in that contribution.

I was a member of the Joint Committee on Jobs, Enterprise and Innovation in the previous Dáil. In 2011, we were staring over a precipice. Senator Ned O'Sullivan's contribution was like an election speech. I hope he did not mean it and that the things he promised do not happen. In 2011, small businesses were failing rapidly. The then Government changed the bankruptcy laws reducing the time limit for businesses or people running businesses declared bankrupt from 12 years to three. There is no safety net for people who start their own businesses. Previous speakers have mentioned social welfare. Many people who fail want to try again and we should encourage them to try again. That is why I was delighted that the former Minister for Justice and Equality, Alan Shatter, reduced the bankruptcy limit from 12 years to three, and it has since been further reduced to one year. Most people who have that entrepreneurial spirit want the opportunity to try again if they fail. Previous Administrations failed them in that respect. At least this Administration recognises that entrepreneurs are the driving force of the economy.

SMEs face difficulties getting staff. We are at full employment now and we should not kid one another on that. People talk about a 4% unemployment rate but I recognise 5% or 5.5% as full employment because otherwise labour costs rise as companies compete for the same person. It is a difficult issue and we will have to bring people in from outside to fill this void. We must consider our visa system and how to get bring people in to fill key positions in the economy. It can be difficult particularly for multinationals and small exporters to get staff.

I like the recent links between third level education facilities and businesses. Educational institutions are gearing their programme to what business needs, which is important. We are still falling back, however, on the small manufacturing side by not creating enough apprenticeships. There are approximately 26 apprenticeship schemes in the country.

It takes so long for that model to be set up. If one goes to Germany there are approximately 250 different apprenticeships. We need apprenticeships so that those companies in the manufacturing sector will be able to take on staff. Funding has been mentioned before. Banks have a difficulty with lending to entrepreneurs for start-up companies, but there are other sources of funding. When I was on the then Joint Committee on Jobs, Enterprise and Innovation, initiatives on microenterprise and microfinance were introduced. The credit unions are out there. They are an alternative source of funding and they are not being allowed to fund small and medium businesses at the moment. Instead of trying to reinvent the wheel by using the post offices to set up a banking system, let us use the banking system we have, the credit unions. Let us allow them to assist small and medium enterprises wherever possible.

The last point I would make is one I have been harping on for a long time. Young entrepreneurs coming out of college are a real source of positivity in this country. The problem they have is access to funding. The real problem associated with that is that they have no credit rating. Banks will not lend to them and other sources of funding are not available. While the Minister of State has looked at the female side, he might look at young entrepreneurs, whether male of female, who are coming out at 22 or 23 years of age. They have a gift and we should support them as much as possible. Some of the microfinance money could be specifically targeted at young people under 25 who have good ideas.

Cuirim fáilte roimh an Aire Stáit chuig an Teach seo. Tréaslaím le Seanadóir Ó Céidigh as an díospóireacht tábhachtach sin a spreagadh. Ba mhaith liom cúpla focal a rá i dtaobh trí ábhar - costais árachais, rátaí agus Brexit. With regard to insurance costs, it is the case that approximately 14 years ago myself and the then Minister, Mary Harney, when we were both members of Government, tackled the problem of rising insurance costs for employment and for other areas in a fairly radical way with the Personal Injuries Assessment Board and the statutory provisions to which reference was made earlier by Senator James Reilly. It seems that we are sliding backwards. At that stage there was a real problem in that, in addition to employer PRSI, employment insurance premiums were frequently of the order of between 9% and 12% of payroll. This meant that, before one even got to PAYE and all the rest of it, there was a 20% levy on employing people. That was a serious burden for employers to bear. I say this as a lawyer and as somebody who would probably be in a minority within my own profession on this matter, but I really hope the Government is determined to tackle insurance costs. I hope the current investigation being conducted by the former judge, Nicholas Kearns, will bear fruit and that the Government will act on it. We did it 14 years ago. It can be done. It is not inevitable that insurance costs spiral. One only has to get into a taxi in Dublin and talk to the poor driver to hear that taxi drivers find themselves facing annual insurance bills of €2,000, €3,000, €4,000 and sometimes up to €5,000 to put their taxis on the road.

The second thing I want to say relates to rates. Rates are a huge imposition on those small and medium enterprises that cannot work on a virtual basis from homes or wherever else. Anybody who has to establish an office, a shop, a plant or a factory has to pay rates. There is one thing I want to say here. I am not suggesting that this should be the case but we, as a society, should ask ourselves whether it is fair that somebody in Senator Lawlor's constituency who tries to establish a small business in Naas should pay rates for a small office, shop or factory while somebody outside the town with a very large farm, 600 or 800 acres for example, and with huge farm buildings and many other buildings on his land pays nothing towards the cost of local government in his area. It is just a thought. It is not a very popular thought and I can imagine it is a lead balloon politically but I wonder, if rural Ireland is to prosper, is it fair that those who attempt to establish businesses in towns in Ireland - and I am thinking of Boyle in County Roscommon which has suffered such trauma since the financial crisis - pay a huge rates bill while people around them are running large enterprises which equally depend on local authority spending?

With regard to Brexit, there is one point that has been troubling me more and more. Is the United Kingdom to be bound by state aid rules after Brexit or are we on the island of Ireland to be in a situation in which we are bound by European rules about not aiding enterprise while the United Kingdom Government is free to subsidise businesses across the Border which compete with ours? That is an issue I have not heard much about in the whole Brexit debate. Are the rules against state aid to be made equal on either side of the Border? Those are my few thoughts on this important debate.

Senator Mulherin has five minutes but she has to finish up by 7.10 p.m. because the Minister of State has six minutes.

I think it is 7.11 p.m. I was there not long ago. It says 7.11 p.m. up there.

That is Mayo Fine Gael haggling.

This is a vast topic because small and medium enterprises are so critical to our economy. I want to focus on the small independent trader. We know that all businesses will be affected by Brexit. Some will be affected to greater degrees and some to lesser, but it cannot but have an impact when it involves trade. We need to have a renewed initiative in respect of our local rural market towns and villages. Boyle has been mentioned. I can give the Minister of State a list the length of my arm of such places in Mayo, Roscommon and Galway. Towns that were once vibrant no longer are. One walks up the main street and sees that retail is in difficulty. A shop on the main street is charged rates on the same basis as an out-of-town multiple retailer, yet there is no comparison. One even controls the price of commodities. We have farmers complaining about how they set the prices for vegetables, milk and other produce. They are not the same animal at all.

We also have those shops competing with online retail and other services, yet the shops have to pay the rates. Their existence on the high street enhances its visual amenity. The owners are painting the shops. There is activity going on. There is life and vibrancy and yet, in a way, they are being penalised in a way that online business is not. We have to come up with a formula or we will not see independent traders on the high street. They will be gone because they cannot afford to compete unless they are highly specialised or in highly unusual situations.

I very much welcome the initiatives of my county colleague, the Minister, Deputy Ring. I welcome Project Ireland 2040 and the funding of €2 billion for towns with populations of more than 10,000 and €1 billion for those with populations less than 10,000. We need more than projects however. We need to really drill down and get to grips with the individual businesses - the shops, the restaurants and the pubs - that are struggling to survive.

We must come up with a formula that will treat such businesses differently from larger ones and I am sure that we can arrive at a definition to also protect the core of towns. Very often it is as easy to get planning permission for a shop located on the outskirts of a town as it is for one in the middle of a town. That does not sound like good town planning to me. We must preserve our heritage because many old market towns and villages have many properties of fine heritage and architectural value.

Finally, I must address the cost of insurance. A cost of insurance working group was set up and it made recommendations. Last week, a representative organisation made itself available for consultation in the AV room but, unfortunately, the meeting was of no help whatsoever to the organisation. Businesses have been cited, and black and white examples offered. They have gone out of business due to insurance costs, fraudulent claims and all of the rest. A list has been compiled of what needs to be done. We must tackle the issue. There are many issues with insurance but we should definitely not tolerate fraud. We need to establish a Garda bureau that is dedicated to investigating insurance claims. A great deal of evidence seems to be available. A lot of evidence in the form of CCTV footage has been shown to us but, notwithstanding that, there have been no prosecutions. There are many ways to approach this issue. One thing that is for sure is we must tackle the issue or businesses will continue to go out of business. These are the businesses that sponsor local football teams and the business owners who run community festivals. They are the people who ensure money is kept in local economies and they need support. One can have full employment in rural Ireland but that is no good if towns are so quiet that tumbleweeds could roll down the roads due to a lack of shops being open, no one lives in the houses and people are totally depressed. We have to get the correct policy to solve the issue and we are not there yet.

The Minister of State has four minutes to conclude.

I had my name down for speaking.

I am sorry Senator but we have to conclude because we are out of time.

It was a pleasure for me to attend this evening to hear the statements on micro and small and medium enterprises. I thank all of the Senators for their contributions. Some Senators made positive contributions while others expressed genuine concerns about SMEs. Without doubt, SMEs are very important to every public representative whether one lives in an urban or rural constituency. In fact, in many rural areas SMEs are the only form of employment. That is why it is extremely important for us, as a Government, to ensure that we protect small and medium enterprises.

Insurance issues and rates have dominated this discussion. Senators have expressed their genuine concerns here and these issues are a concern for the Government. The cost of doing business for any small business is extremely important if it wishes to remain viable. In the first instance, rates are an issue for local government. On another day we could have a wider discussion on how local government is funded.

I have taken on board the issues raised about the cost of insurance. Of course, we must tackle the issue. The Minister of State at the Department of Finance, Deputy D'Arcy, is tackling it at the moment. The Senators' contributions dealt primarily with the cost of motor insurance. Senator McDowell raised the issue of the cost of motor insurance. That is a huge issue even for a small business that has a company car. We must seriously examine the compensation culture that exists in this country. We must also ensure that we have a good database on claims. Last year, the cost of insurance report was published and the group concerned has done a lot about this matter. Moreover, although some may not agree with me, the cost of insurance has decreased in certain cases and in many instances. However, insurance costs remain very high and pose a problem for many companies. We know that insurance companies would rather pay out than go to court due to the claims that have been made in the past. It is extremely important that we tackle fraud. I assure Senators that all of these issues form part of the process in which we are engaging at the moment. To be frank, there is no easy solution and the cost of insurance is an issue in every country.

Senator Mulherin raised issues related to small rural villages and towns, with which we are all familiar. We all want broadband, including those in the retail sector. If every rural community has broadband then there will be greater access to the Internet. Young people nowadays tend to do a lot of their business online. Without doubt, the problem with broadband affects the retail sector. People shop differently now and use the Internet. An Post and some of the package delivery companies can point clearly to the amount of business being done online through Amazon and many other online stores. In fact, some people say that more parcels than cards are delivered by post at Christmas time. Broadband is an issue and brings its own negativity. At the same time, particularly for retail and downtown stores, people are considering different approaches. The Government could put all of the incentives it likes in place but in the end it is up to consumers to decide which way they want to shop. If they choose to shop with their feet, that is fine but many of them shop with their fingers.

I feel privileged to be here with the Senators this evening. I want to restate the importance of the strategies. The Government will work hard to ensure that strategies, policies and programmes are put in place to meet the demand for SMEs and entrepreneurships.

The Department of Business, Enterprise and Innovation is engaged with the OECD on a review for a roadmap for SMEs in the future to be published in 2019.

I want to talk about the assistance that we give agencies. It is important that we resource Enterprise Ireland, the local enterprise offices and IDA Ireland. In 2016, when I became a Minister of State, the local enterprise offices had a budget of €18 million. Last year, I increased the budget by €4 million, which meant there was a total budget of €22 million for SMEs. At the moment, my Department and I are preparing for budget 2019. I was delighted to hear Senator Ned O'Sullivan talk about budget 2019. It is reassuring to know that we are sticking to our target, particularly on the rainy day fund. The Minister has released the summer economic statement this evening.

The world is rapidly changing and we must adapt. Our small businesses are a good news story. Our unemployment rate, which is 5.8% and falling, speaks for itself. Most experts believe that we will have an unemployment rate of 5% before the end of the year, which brings its own challenge in terms of critical infrastructure. Last week, I visited Prague and the unemployment rate in that country is 2.6%.

Many Senators have spoken about the shortage of skills. I refer in particular to the shortage of labour skills in the agricultural sectors. We are making changes, particularly in terms of work permits. We hope to also increase the number of visas.

I could continue talking for another ten or 15 minutes. However, I shall conclude by thanking all of the Senators for their contributions. Let us hope that we can have this debate again in the future. I urge Senators to think positively and not to think negatively all of the time because there are good things happening for small businesses. There are better things to come from my Department as well.