Thursday, 15 October 2020

Questions (1)

Louise O'Reilly


1. Deputy Louise O'Reilly asked the Tánaiste and Minister for Enterprise, Trade and Employment if his Department will consider the establishment of an Industrial Development Authority or similar styled body specifically to focus on microbusinesses, workers' co-operatives, and small and medium-sized enterprises. [30000/20]

View answer

Oral answers (6 contributions) (Question to Enterprise)

The question is about the establishment of an Irish enterprise agency. Will the Government consider the establishment of an Industrial Development Authority or similar body specifically to focus on microbusinesses, workers' co-operatives, and small and medium-sized enterprises?

The Government values the role of SMEs and microenterprises in our economy and as creators of employment throughout Ireland. Balancing our enterprise policy between foreign direct investment, FDI, export-only businesses and non-exporting indigenous firms is an important policy consideration and one which was touched upon by the OECD in its 2019 report on entrepreneurship and SME policy in Ireland. The OECD report refers to 250,000 active enterprises in Ireland, of which 92% are very small businesses with ten employees or fewer. Such a high number presents challenges in terms of the State’s engagement with and support for enterprises. It also creates challenges in complying with the EU's state aid rules. In terms of expanding the number of businesses eligible, the local enterprises offices, LEOs, have already started on this road with the productivity fund and business continuity voucher which targeted an expanded cohort of enterprises, namely, firms with up to 50 employees which would not customarily have qualified for funding. Enterprise Ireland is also working with a broader base of non-exporting SMEs, with the retail online scheme and the Covid-19 sustaining enterprise fund.

Whatever overarching institutional framework we have for developing microbusinesses and SMEs, it is important that a benign environment is in place for SMEs to start up, scale up, access international markets and enable SMEs to become more productive and ready for the transition to a digital and green economy. In that context, I have established the SME growth task force as committed to in the programme for Government. The task force is designing a national SME growth plan that will map out an ambitious long-term strategic blueprint for SMEs and entrepreneurs. It meets for the second time this Friday, 16 October and the possibility of establishing a new agency for SMEs will be part of its deliberations. The task force will also examine the recommendations of the 2019 OECD report, including the strategic framework and current delivery system for SME supports and entrepreneurship policy in Ireland. This new task force is composed of a broad range of business people with expertise in a range of sectors, as well as SME representative groups and other individuals uniquely positioned to contribute to a long-term vision for the SME sector and how best it can be supported by Government. I hope to receive recommendations from the task force in November.

I thank the Tánaiste for that response. As he said himself, almost 70% of people employed in Ireland are employed in small or medium enterprises. When speaking to those in these businesses, they often say they feel left behind and that successive Governments have preferred to focus on foreign direct investment instead of helping indigenous industry. Foreign direct investment has been a crucial component of Irish industrial strategy and has been really important for my own area, the mid-west. Almost 90% of all the State's exports originate from foreign-owned multinational corporations based in Ireland, and this acts as a boost to our GDP as well as being a significant job creator. SMEs however, are the lifeblood of the Irish economy and cannot be neglected. This is especially true as we face the twin crises of Brexit and Covid. There is an opportunity, however, in the midst of these crises for our SMEs and microbusinesses to capture the market share of any available opportunities which may arise due to Brexit in particular, and that is the reason we have put down this question.

The idea of a new agency is certainly something I have an open mind on. A lot of business people I talk to say they feel there is a gap. When a business is very small, it can get help from the local enterprise offices and, when it is a bit larger or is an exporter, from Enterprise Ireland, but there is a gap in between. The question is whether we fill that gap by expanding the role of Enterprise Ireland or the local enterprise offices or whether we set up a new agency to fill the gap. There is an important constraint we need to bear in mind here. When we are attracting FDI into Ireland, we are competing with Tel Aviv, Amsterdam, London and other places. When we are helping an exporter to export, it is generally competing with other companies abroad. An indigenous company, however, is very often competing with a company in the same town, two towns over or in the same county, and we must be very careful to not use taxpayers' money in the form of State aid to help one business to take business off another when both are in the same town or county. That is why there is often a constraint on what we can or should do.

As the Tánaiste said, some of the local enterprise agencies are quite good but some of them are not so good. That is why we see a specific focus being needed on local SMEs and small companies. We believe the greatest potential for growth in the next few years is within our SME sector. SMEs are the priority when it comes to fostering indigenous industries and ensuring job creation. With that in mind, I again ask whether the Tánaiste and his Department will consider the establishment of an Industrial Development Authority, IDA, style agency or similar enterprise agency specifically focused on microbusinesses, workers' co-operatives and small and medium-sized enterprises so they have a body to advise them specifically, help them and advocate for them? The IDA has done a wonderful job, as has Enterprise Ireland and InterTradeIreland, which is often forgotten. The latter agency has done really good work in recent years, creating and sustaining and keeping jobs going.

I do not really have anything to add to what I said earlier but I join the Deputy in acknowledging in particular the work InterTradeIreland does on cross-Border trade. We have provided that agency with extra funding for next year. I am keen to engage and work closely with my counterpart in the North, the Minister for the Economy, Ms Diane Dodds MLA, with whom I have already met, to see what is possible and what we can do on an all-island economy basis and to use that agency to its full potential as it is one that has more potential.