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Small and Medium Enterprises

Dáil Éireann Debate, Tuesday - 22 February 2022

Tuesday, 22 February 2022

Questions (18)

Catherine Connolly

Question:

18. Deputy Catherine Connolly asked the Minister for Finance the status of the study by his Department into SME survival, recovery and investment following Covid-19; when this study will be completed; and if he will make a statement on the matter. [9680/22]

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Oral answers (12 contributions)

Gabhaim míle buíochas leis an gCeann Comhairle. I was asking the Minister a very specific question on the publication of the report and he has clarified that it has been published which I am aware of. The misunderstanding was on my part as I thought that the Department of Finance itself was carrying out a report. Can the Minister address in his reply, moving on from the fact that the report has been published and I have it in front of me, where we are going on the findings of that report? I thank the Minister.

Specifically, the findings of the report estimate that the share of firms making losses throughout 2020 and 2021 could have been around one third higher if supports were not available. It finds that in the absence of the extensive supports provided by the Government to SMEs, the distress rate for companies would have been 72% higher.

Moreover, by 2024, without the support that we had in place, the distress rate is estimated to be around 20% higher relative to the baseline. In respect of what happens beyond this, this answer provides the backdrop to the phasing out of the EWSS that is now in place. As the Deputy and the House are aware, we are now in the final phase of the first reduction of the EWSS. Companies that were receiving up to €350 per employee will now be receiving up to €203 per employee and that will now move to €100. The same process will then happen to companies four weeks later which were affected by the December public health regulation requiring companies to close at 8 p.m., such as restaurants and so on. That will provide the backdrop to the phased exit from the EWSS.

I have read the paper and it is not an easy paper to read. It is the second working paper that has been produced by the Minister’s Department along with the Economic and Social Research Institute, ESRI. I fully accept that without the support, all of these businesses would have been much worse off. I am on record in supporting the Government on quick action.

That is not what I am asking here. I am asking where we are going next. When one looks at the figures, for example in the 2021 report from the same group of people, the facts are staggering. SMEs are the predominant enterprise type in Ireland, which we know. They account for 99% of the active businesses with 92% of these being micro, where they have fewer than ten employees. It goes on to say that despite Ireland’s reputation as a high-tech, knowledge-intensive economy, the majority of employees in Ireland work in traditional domestic-facing sectors, where SMEs are the dominant employer. When I take the two reports together, it is the small enterprises that are in serious trouble, notwithstanding the help. The prediction is that by 2024 a substantial proportion of these will have gone out of business.

I am thankful to Deputy Connolly for raising this issue because this has been a matter of considerable concern. Of these sectors, some have been naturally slower to open, particularly in the catering sector where people have been slow to plan events, exhibitions, and so on. It is a sector that is uniquely small in the number of employees, with fewer than ten. I am thinking of two businesses in my own constituency which adapted throughout the pandemic to try to provide food in different ways but they are highlighting that theirs is a slower recovery, even when things are open, because of their dependence on people planning events into the future, such as exhibitions, weddings, big catering events and so on. Is there any capacity for that sort of sectoral analysis that provides additional supports to those small, particularly those microenterprises that Deputy Connolly has referred to, to be able to help them through?

I am afraid I do not follow the questions from Deputy Connolly. She asked me what was the way forward, and I said what the way forward was in the employment wage subsidy scheme. The report focused on the impact of the employment wage subsidy scheme on SMEs.

On the question asked by Deputy Carroll MacNeill, she raised an important point that is covered in this report, which is that there are parts of our economy that clearly are having or have had a slower recovery than other parts of the economy. The way in which we seek to recognise that is by the varying speeds of how different sectors will leave the employment wage subsidy scheme. I believe there will be a need to do further sectoral analysis, to better understand how different parts of our economy are responding to the withdrawal of supports. However, even with that analysis done, the Deputy will appreciate that we simply cannot maintain, nor is the Deputy calling on me to do so, an employment wage subsidy scheme that was introduced for a health crisis when the health crisis has passed. Even though many sectors are now facing new challenges, the solution to those challenges cannot be the continuation of this scheme. Yes, we will do more sectoral analysis, because it will be a key issue for our economy over this year.

The Minister's approach, as opposed to divide and conquer in a classroom, is to have the good student and the not-so-good student who he fails to understand. It is beneath the Minister and it does not do him justice with regard to the issue being raised. I did not ask him about the extension of the programmes he has. I asked what was the follow-up from the report that identified serious difficulties with small to medium-sized enterprises, particularly going up to 2024. I asked him to focus on that. I acknowledged that the Minister did not need to read out the answer to the question to give him extra time to look at the difficulties identified by two reports, last year and this year, relating to small to medium-sized enterprises, and I am highlighting what the reports are telling us. The SMEs are the backbone of the country, as the Minister of State, Deputy Fleming, has repeatedly told us in the Dáil. I agree with him and with the Minister. However, they are highlighted as being in particular trouble. I am not sure why the Minister is shaking his head, but I will try to avoid it and concentrate on the issue. However, my time is up. The Minister is saved by the bell.

I repeat what I said to the Deputy. She has a habit of giving me a very precise question and when I give her a very precise answer, she normally dismisses it.

This is a stand-up comedy.

The Deputy asked me what the future of the schemes was and I answered the question. She asked what was the way forward for the sector, and I answered the question. I gave the Deputy a precise answer to a precise question. I do not know how my answering the question has provoked her to draw an analogy of good pupils and bad pupils.

That is what the Minister did.

I come into this House, as is my obligation and duty, and I answer the questions the Deputies put to me. However, as I said, the Deputy asks a precise question, I give a precise answer and more often than not she dismisses it. The Deputy asked me a question about the future of the employment wage subsidy scheme and I answered it.

I did not ask the Minister that question, but I will keep my mask on to stop me talking.

Questions Nos. 19 to 22, inclusive, replied to with Written Answers.
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