Richard Bruton
Question:62. Deputy Richard Bruton asked the Tánaiste and Minister for Enterprise, Trade and Employment the top competitiveness challenges for small businesses; and if he will make a statement on the matter. [25378/22]
View answerThursday, 19 May 2022
Questions (62)
Written answers
One of the main competitiveness challenges facing small businesses today is the high inflation environment and rising input prices. This is damaging to the enterprise sector as the costs of doing business may rise too quickly for some firms to absorb, resulting in the closure of otherwise viable enterprises. Small, domestically-focused firms can also be negatively impacted by lower discretionary consumer spending, as Irish consumers are forced to allocate more of their household budget to cover higher energy prices. Many small businesses around the country are seeing their margins squeezed by the rising costs of doing business, and in particular the significant increases in energy costs. Ireland is highly import-dependent for its energy needs, importing over 70 per cent of the energy we use.
The rapid recovery in the domestic economy, along with rising energy prices, international supply chain bottlenecks and base effects relating to weak price trends in 2020, have been driving a rise in prices since mid-2021. Russia’s invasion of Ukraine has sparked further energy price increases and brought unprecedented volatility to energy markets.
The Government has been helping to mitigate the effects of energy price increases but, unfortunately, cannot fully compensate people and businesses for the increases in cost. The Government has approved a temporary reduction in the excise duties charged by 20 cent per litre of petrol, 15 cent per litre of diesel, and 2 cent in the excise duty charged on marked gas oil. For hauliers, a temporary grant scheme will provide a payment of €100 per week to help mitigate the rising price of fuel. The scheme will operate for a period of eight weeks and is valued at €18 million. The agriculture sector has been particularly impacted by inflation in the price of almost all farm input prices. The Government agreed a temporary, targeted intervention package for the tillage sector to the value of €12.2 million in response to the impact on farming. The agriculture package will support the production of more native grain and protein crops, and crops with a low demand for chemical fertiliser, which will contribute towards the expected deficit in these crops and help farmers to deal with challenges related to the availability and price of animal feed and fertilisers.
The Government has established a new Energy Emergency Security Group chaired by the Secretary General of the Department of the Environment, Climate and Communications to advise Government on how to respond to the developments in energy markets, to ensure that our emergency plans are up-to-date and to examine impacts on consumers including businesses. My Department is represented on this Group.
The Government will keep the energy situation under close and active review, and we will continue to examine what measures are possible to manage the impact of rising energy prices for households and businesses. My Department is engaging with industry to understand the issues and the business impacts.
The Government will explore what additional options to help businesses may be available based on the European Commission’s Temporary State Aid Framework for businesses affected by the Ukraine crisis possibly by pivoting schemes that were put in place to deal with Brexit and Covid.
It is also important to take a holistic view of the enterprise ecosystem and ensure that areas such as adequate labour supply, appropriate skills base, adequate access to finance and historically non-competitive domestic markets are not overlooked when an acute issue such as the current surge in inflation arises.
We must also be conscious of the extra costs Government is imposing on small businesses through initiatives such as Statutory Sick Pay and the living wage. These reforms are worthwhile but it's important we strike the right balance.
My Department continues to engage with the Expert Group on Future Skills Needs to ensure that Ireland can attract and retain a talented workforce to meet the current and future skills needs of the economy. The Department of Finance continues to coordinate the Retail Banking Review to ensure that Ireland businesses have access to affordable financing.
The National Competitiveness and Productivity Council is responsible for identifying the key competitiveness and productivity issues facing the Irish economy and offers recommendations on policy actions required to enhance Ireland’s competitive position. In the NCPC’s latest annual report, Ireland’s Competitiveness Challenge, the Council recommended that the Government take action to ensure Ireland has a dynamic business environment, to boost productivity growth, and to deliver key housing and associated social and economic infrastructure, together with other critical infrastructure projects, in order to ensure a balanced and sustainable economic recovery. The Government is currently actioning these recommendations and we look forward to the Council’s next annual report which is expected to be published in September 2022.