Dáil Éireann díospóireacht -
Thursday, 23 May 2024

Vol. 1054 No. 6

Business Support Package: Statements

Minister for Enterprise, Trade and Employment (Deputy Peter Burke)

I welcome this opportunity to address the House on recent measures the Government has taken to reduce costs for small- and medium-sized businesses. SMEs are the backbone of our rural and regional communities and are central to Ireland's ability to build a broad-based and successful economy. Of a total of approximately 350,000 small- and medium-sized companies in Ireland, 325,000 employ fewer than ten people.

SMEs have faced a number of economic shocks in recent years, which have resulted in cost increases. The Covid-19 pandemic and the quicker-than-expected bounce back in global economic activity significantly strained global supply chains. The Russian war in Ukraine has significantly impacted energy costs, which have escalated for both businesses and consumers. While wholesale energy prices have eased somewhat over the past year, prices remain elevated compared with historical averages. These shocks have been international in nature. However, there have also been costs associated with domestic measures.

In line with a recommendation by the National Competitiveness and Productivity Council in its report, Ireland's Competitiveness Challenge 2022, an assessment was published by the Department of Enterprise, Trade and Employment and the Department of Social Protection examining the cumulative impact of associated measures, including auto-enrolment, parent’s leave and benefit, statutory sick pay, an additional public holiday, the transition to a living wage and the right to request remote working. These improvements will bring wider societal benefits and will serve to bring Ireland in line with other advanced economies.

The various changes have been signalled in advance, were typically subject to public consultation processes prior to being adopted as public policy and are to be implemented on an incremental basis over a number of years. However, the report indicated that there will be a cost and impact on firms as a result of these measures and these costs are expected to vary significantly by sector. The implementation of the living wage is assessed to have the most significant impact on costs, with those operating in the hospitality and retail sectors expected to experience a sharper increase in costs compared with others. These two sectors account for almost two out of every three workers on the national minimum wage. Overall, the analysis suggests that while there is a cost associated with the introduction of these measures, there is only a moderate effect on wage costs on a wider economic basis. However, it is clear that certain sectors will feel the impact to a greater degree.

In response, a number of measures were agreed by the Government in March. These included asking the Low Pay Commission to have due regard to the findings of the report during the course of its current and future deliberations when forming recommendations. They also included the preparation of an options paper on the application of the lower rate of employer PRSI contribution, making available up to €15 million to local enterprise offices to enable a top-up payment of up to €3,000 in energy efficiency grants for businesses in the hospitality and retail sectors, and accelerating the roll-out of a fully functioning national enterprise hub.

With further time to consider the appropriate intervention, I, along with the Minister for Social Protection and the Minister for further and higher education, brought forward a more substantial range of measures to reduce costs for small- and medium-sized enterprises. These measures were announced last week and include ensuring that the employer PRSI threshold is explicitly considered as part of the Low Pay Commission deliberations and is reviewed on each occasion that the minimum wage is increased, and increasing the employer PRSI threshold from €441 to €496 with effect from 1 October 2024, which will ensure that employers with employees earning the weekly equivalent of the national minimum wage will pay the lower rate of employer PRSI, at 8.8%. The increased cost of business scheme will be reopened for another 14 days and a second phase of the scheme will be launched and targeted at businesses in the retail and hospitality sectors. The innovation grant scheme will be doubled from €5,000 to €10,000 and the maximum amount available under the energy efficiency grant scheme will be increased to €10,000, while the business contribution rate will be reduced from 50% to 25%. Eligibility for the trading online voucher will be widened, extending it to all sectors with up to 50 employees; modernising eligible expenditure and doubling the grant to €5,000. The lending limit for Microfinance Ireland loans will be increased to €50,000 from €25,000. Eligibility for a digital for business consultancy scheme will be widened, extending it to all sectors with up to 50 employees. A new Ireland's best entrepreneur programme will be launched to encourage entrepreneurship and startups, which are under-represented groups.

In addition, the measures include launching a new online national enterprise hub for SMEs to access information on the wide range of Government business supports. We are implementing an enhanced SME test by the Department of Enterprise, Trade and Employment in conjunction with the Department of the Taoiseach. We are also reviewing ESRI research on the impact of statutory sick leave before deciding on any further increases and reviewing the roadmap for increasing minimum annual remuneration thresholds for employment permits.

I note the engagement of Government colleagues on this package of measures and thank them for this engagement. Other actions which will emerge from this package include the following. The Minister for Social Protection will continue efforts to streamline and improve access by employers to her Department’s JobsPlus programme, the work placement experience programme and the wage subsidy scheme. In light of the commitment in the Estimates 2024, the Minister for Further and Higher Education, Research, Innovation and Science will develop proposals for consideration in Estimates 2025 for the effective and sustainable use of the €1.5 billion surplus in the national training fund to future-proof workforce skills in SMEs and ensure workers in SMEs can readily access lifelong learning opportunities. The Minister for Housing, Local Government and Heritage will shortly issue a circular letter to local authorities informing them that no fees shall be charged or levied for tables and chairs for the purpose of outdoor dining up to 31 December 2024. Furthermore, the Minister for Further and Higher Education, Research, Innovation and Science will consider progressing proposals for SME incentivisation and increasing supports for consortia-led apprenticeships following further engagement with the Minister for Public Expenditure, NDP Delivery and Reform.

The implementation of these measures will improve the cost competitiveness of small and medium-sized businesses and, in particular, the proposed annual review of the employer PRSI threshold will ensure that firms do not fall liable to the higher rate of employer PRSI due to the increase in the minimum wage, while the application of an enhanced SME test will ensure there is increased consideration of the business cost implications of future Government decisions. Working with the Department of the Taoiseach, my officials are developing proposals for improving the impact and application of the SME test as it applies to legislation and they are working to extend it to key non-legislative policy changes that impact the competitiveness of small businesses.

The increased cost of business scheme has seen a broad take-up, with 74,000 businesses having registered to date, or almost 62% of the total number of eligible businesses. By comparison with a number of previous schemes, this take-up is positive. The number will increase as we have reopened the scheme for a limited time for those businesses that have not registered yet. It is currently open with a new closing date of 29 May. Given the greater impact that increased costs are having on the hospitality and retail sector, as noted in An Assessment of the Cumulative Impact of Proposed Measures to Improve Working Conditions in Ireland, it has been agreed that businesses operating in these sectors should receive a double payment under this scheme. However, these measures go beyond seeking to support firms to solely help to ensure their viability. We are taking action to ensure our business community can compete, grow and scale up as part of a vibrant enterprise sector which is driving productivity growth and providing high-quality sustainable employment. As such, there is a range of increases in innovation grants, green supports and entrepreneurial supports which look to foster innovative activity among firms, while also improving access to finance by increasing the maximum loan size available through Microfinance Ireland. This will ensure that should firms be seeking to secure growth, they can access the funding to achieve this.

As set out earlier, the Government has introduced a number of measures aimed at improving working conditions in Ireland across measures such as the introduction of statutory sick leave, the transition to the living wage and the expansion of parent’s leave and parent’s benefit, among others. These are important measures for society. The work of the Low Pay Commission ensures that a fair and sustainable minimum wage is recommended to Government. In making its recommendation, the commission considers a wide range of criteria, including employment, productivity, competitiveness and the cost of living. However, the implementation of these measures, specifically the introduction of additional days of statutory sick leave and the transition to the living wage, has always been subject to prevailing economic conditions. The Government will continue to have regard to these conditions in the implementation of these measures.

In terms of business closures, it is important to point out that there is no clear evidence to support the proposition that we are facing a wave of business closures. In fact, data from the Companies Registration Office clearly demonstrates that there are more businesses incorporating than entering into liquidation. The most recent data available from the CRO shows that, as of 20 May 2024, there were 9,483 new companies incorporated in 2024 compared with 800 liquidations. As of 20 May, there were 273 new restaurants incorporated in 2024 compared with 36 liquidations in that sector in 2024. There has been a rise in business closures in the last number of months. However, the level of business closure in the past number of years has been at a historic low and reflects the support of the Government for firms, including the warehousing of debt, for which the deadline passed on 1 May for making an arrangement with the Revenue Commissioners. The measures announced last week will reduce costs for businesses and improve viability.

There has been a significant level of inflation for both businesses and consumers in recent years and this has led to cost-of-living pressures for citizens, along with business concerns regarding cost increases and viability. Understandably, this inflation led to increasing wage levels and wage demands, which itself has follow-on implications for measures such as the calculation of the living wage. Ultimately, the Government must ensure balance across necessary improvements for workers and ensuring that minimum rates of pay are fair, while also having regard to developments in business costs and the broader economic climate. Businesses must be viable. Improvements in pay and conditions are no longer an asset when people find themselves without a job.

That inflation is now easing is positive. The Government has adopted an active approach to supporting firms across this inflationary period. Over the two-year period prior to budget 2024, a total of €12 billion was provided in cost of living and business supports, comprising a mix of permanent and one-off measures, most significantly in the form of the temporary business energy support scheme. Budget 2024 also contained several measures which supported businesses facing increased costs, including the following: the 9% VAT reduction for gas and electricity was extended for an additional 12 months, until 31 October 2024; the temporary excise rate reductions applying to auto diesel, petrol and marked gas oil were extended until 31 March 2024; and there was an increase in VAT registration thresholds for SMEs to €40,000 for services and €80,000 for goods.

The measures announced last week continue to demonstrate that the Government is ready to support firms should there be a need. Ultimately, however, we should move to a position where the Government need not intervene to directly support firms for viability reasons but focus on measures directed at areas such as improving productivity performance, helping firms to scale up, securing the green and digital transition across businesses and stepping up enterprise innovation, all areas which are set out in the White Paper on Enterprise 2022-2030. Indeed, this remains the core focus of my Department and its agencies. I also emphasise the ongoing support provided for enterprise more broadly across Ireland, with a full range of programmes aimed at aiding firms to develop and grow. As set out in the White Paper on Enterprise 2022-2030, our vision is for Irish-based enterprises to succeed through competitive advantage founded on sustainability, innovation and productivity, delivering rewarding jobs and livelihoods. The Government is committed to backing business and will continue to work closely with small businesses to support their growth into the future.

Deputy Louise O'Reilly

I welcome the opportunity to speak on these statements. Businesses are struggling with a cost of doing business crisis, workers are struggling with a cost of living crisis and both need to be supported. Unfortunately, instead of helping both, the Government has put forward a support package which pits business against business and business against workers. It has been clear for some time that supports for businesses must be forthcoming. For nearly a year, Sinn Féin has called for the Government to engage with industry to design a bespoke but time-limited support for those sectors most impacted by public policy interventions and other additional costs. However, the Government’s business support package falls short of what businesses really need.

Sinn Féin welcomes the reopening of the increased cost of business grant. We called for this several weeks ago and it is good that the Minister listened to us and to businesses. Since its announcement in budget 2024, the increased cost of business scheme was beset by delays, confusion and a certain amount of incompetence. The nature of the scheme, the qualifying criteria and the grant rate changed on a number of occasions. Therefore, it was not surprising that businesses were confused and that less than 50% of qualifying businesses had applied before it closed on 30 April. Thankfully, the Minister has listened to Sinn Féin's advice and reopened the scheme so more hard-pressed ratepayers can apply for relief.

Data I received in a reply to a parliamentary question show not only that many businesses have not been able to apply but also that firms that have applied have not had their applications processed and thousands of approved businesses have not received any money to date. Only 17% of businesses have had their applications approved nationally and only 10.7% of applicants have had grant money paid to them. In six local authority areas, including Dublin City Council, not a single cent has been paid out to struggling businesses. Across the whole of Dublin city and county, just 157 businesses have received the ICOB grant. The situation is replicated in Kerry, Roscommon, Cork county, Wexford and Laois. This is a shocking situation for a scheme which was announced six months ago and which was supposed to issue money to businesses in January. Struggling businesses need this money. It should be released to all approved businesses immediately. In addition, the Government and local authorities must engage in a comprehensive communications strategy to encourage further SME take-up of the ICOB scheme before it closes for a second time.

The second ICOB grant for the retail and hospitality sectors is a welcome payment for retail and hospitality businesses which have borne the brunt of business insolvencies so far in 2024. The hospitality and retail industries made up 40% of the total number of insolvencies in quarter 1 of 2024. It is disappointing that the Government has waited until halfway into the year before bringing forward supports for these sectors. In January, many retail and hospitality businesses warned the Government that they would need support to stave off a raft of business closures. There are, no doubt, many struggling businesses in other sectors wondering why they have been excluded from this additional support. That is what I mean when I say that the measures from the Government are pitting business against business. Sinn Féin again calls on the Government to engage with industry to design a bespoke but time-limited support for all those sectors most impacted by public policy interventions.

The changes for the innovation voucher scheme are welcome moves by the Government, but much more must be done to help SMEs with research, development and innovation. Research, development and innovation are core drivers of economic progress. Much more must be done to strengthen and deepen the research, development and innovation capacity of the State and of business. Investment in research, development and innovation will be central to addressing the economic and social challenges in the decades ahead, such as decarbonisation, digitisation and public health. Research, development and innovation will also be central to developing the knowledge-intensive sectors of the future: clean tech, renewables, AI, machine learning and quantum computing, among others. There are two international benchmarks with which to review Ireland's performance in respect of research and development. Unfortunately, due to Government underinvestment in research and development, both indices show fluctuating and worrying performance for Ireland. According to the European innovation scoreboard, Ireland is classed as a strong innovator. However, we are not in the top echelons of innovation leaders like Belgium, Denmark, Finland, the Netherlands and Sweden. A similar performance can be observed in the context of the global innovation index, on which Ireland has dropped to 22nd behind fellow European states such as Sweden, Finland, Denmark, France, Estonia and Norway. Ireland's declining and fluctuating performance on these indices is a direct result of underinvestment in research and development by successive Governments. It will take a lot more than doubling the innovation voucher scheme to improve research, development and innovation among Irish SMEs and in the economy more generally.

The failure to properly utilise the National Training Fund to upskill and reskill the workforce has left our SME community at a disadvantage compared with our European peers. The 2023 national skills bulletin, produced by SOLAS, identified skills shortages in science and engineering; ICT; health and social care; construction; other craft; hospitality; and transport and logistics. At the same time, the size of the National Training Fund continues to grow, having reached €1.5 billion, but as it is just being invested in short-term Exchequer notes, it is not fulfilling its purpose. This is a lost opportunity at a time when it is badly needed to fund further skills, education and training. At the same time, the Government budget allocated to research and innovation fell this year. The expenditure Estimates show a planned reduction in spend of 3% for research, innovation and science.

The economy is crying out for a fast-tracking of the reform of the National Training Fund. In particular, any fast-tracking must be aimed at increasing competitiveness and productivity among the Irish SME sector. Increasing productivity, in particular SME productivity growth, is an economic priority. While Ireland is successful in generating and attracting high-growth firms, particularly multinationals, domestic SMEs suffer from productivity issues. SMEs account for 99% of active enterprises and 70% of employment; however, their level of gross value added is only 35%. Recent research carried out by the Nevin Economic Research Institute and trade union SIPTU showed that the average value-added per hour worked by domestic workers here between 2017 and 2019 was well behind peer countries. The report stated that increasing productivity based on 2019 levels by 16% in the domestic market economy would be the equivalent of a €10 billion rise in value-added in the domestic sector. An increase of this scale would put SMEs in a significantly more advantageous position in terms of increased profits, and for workers it would mean increased wages. It is for this reason that Sinn Féin wants the State to invest in and boost innovation and productivity in the domestic economy in order that gap between the FDI sector and the domestic SME sector can be closed.

In order to do this, the State must invest to help SMEs adopt international best practice management skills and constant upskilling of the workforce; SMEs need to be facilitated in improving capital investment and have access to finance through long-term, low-interest, State-backed loans; there has to be greater funding for SMEs to facilitate technology adaptation and improved digital skills; and there needs to be better linkages between multinational companies and SMEs.

The decision to review the statutory sick leave before deciding on any further increases is nothing more than an attack on workers' rights. Sinn Féin has been clear that while Government supports for business are necessary, they cannot and must not come at the expense of workers' rights. Sinn Féin believes there is no reason business and workers cannot be supported in tandem. Pitting business against workers is a time-honoured Fine Gael tradition, and it is not surprising that it is again raising its head as Simon Harris takes control of the party. He is, after all, the Minister who forced nurses and midwives onto the streets to strike for improved pay and conditions. Workers have been forgotten about in the debate about what business needs. Over the past decade, we have seen an explosion in corporate welfare, with business receiving significant additional supports from the Government. Nevertheless, this has not stopped businesses from attacking workers and workers' rights. In recent years, we have witnessed a race to the bottom in terms and conditions of work, falling living standards and a decline in real incomes, and the marginalisation of trade unions and workplace democracy. Half of Workplace Relations Commission inspections uncover breaches of employment law, with withholding of workers' wages by employers rife. Real wage decline has left workers worse off today than they were in 2020, and CSO data shows that more than 145,500 people in work are living in poverty.

Workers and their families deserve good pay and decent working conditions. For Sinn Féin, workers' rights are not negotiable. We believe it is essential to legislate to give workers and their trade unions the right to organise and to deliver a legal right to collective bargaining. Workers need a Government that is on their side. For too long, workers and their rights have been an add-on or an afterthought. Sinn Féin believes that it is time for workers and workers' rights to be front and centre of the political agenda.

Deputy Ruairí Ó Murchú

We will probably have a fair amount of agreement, at least on this side of the House, on the issues out there at the minute, among them the cost-of-living crisis that workers and everybody else are going through. I have no doubt that, as people are hitting the doors, they are getting it in the neck, for want of a better term, on the pressure businesses are under also. There is a cost-of-doing-business crisis also. It is a matter of how we look after the people we need to look after. We need to make sure we look after workers' rights. Deputy O'Reilly spoke about shortfalls we have not dealt with as regards conditions and workers' rights, the fact that we still do not have the necessary legislation on collective bargaining, and ensuring we have the sorts of union protections that are required. We also know there is severe pressure on a huge number of businesses. I have spoken previously about a guy who was involved in running a garage and dealing with fuel. I spoke to him when I was canvassing in Ardee. He said the business does not wash its face any more. That is at the minute, he said; he did not know what will happen if the increase in fuel that is proposed by the Government is to be followed through on. This is far worse in the Border region.

That needs to be looked at.

We would all welcome the fact that the ICOB scheme was reopened. It is fair to say that there were difficulties in its initial framework and set up and in its execution. That is why we had 49.94% of qualifying businesses applying for the grant before the scheme closed on 30 April. We know that we are racing very quickly towards another closing date, so everything has to be done from the point of view of ensuring that all businesses know about the grant. There are issues for many businesses in the context of how the supports are formulated. We know of all the issues regarding who pays the rates. Some businesses cannot apply, but we need to ensure that all those that can apply are facilitated as much as possible.

The Government have spoken a great deal about how it will deal with the issue of retail and hospitality businesses under the pressure they are under. Deputy O'Reilly put it very well that what we need is something far better than that and that we cannot necessarily be pitting businesses against each other. We accept that a significant number of businesses in this particular sphere need support. Beyond that, we need to look at other areas. I refer to the idea of a bespoke and time-limited support for all those sectors that are impacted by public policy interventions. These are the many proposals that we in our party would have supported and talked about over many years. None of us wants to reverse anything developments relating to the minimum wage or those other entitlements that workers absolutely require.

We need to do a hell of a lot more in order to ensure that we deal with all of the businesses involved. I am are talking about businesses that can survive but that are under severe pressure at this point. We need to give them a framework and a means of getting through the current period. At the same time, there cannot be any diminution of the right of workers.

Earlier in the House, I referred to businesses in the Clanbrassil Street and St. Nicholas Quarter and the fact that they could be under pressure tomorrow or on Monday because they received last minute notice of an 8 a.m. to 8 p.m. road closure to facilitate what Uisce Éireann calls essential works that could lead to the discolouration of water and low water pressure. Sallins and other places will also be affected. It is the middle of communion season, and a significant number of people could be incredibly put out by what is happening. I spoke to the Minister for housing earlier. It is absolutely necessary that the Government engage in respect of this matter. If there are mitigations, it is vital that they are put in place.

Before I finish I was at the Advanced Manufacturing Training Centre of Excellence, AMTCE, of Louth and Meath Education and Training Board, LMETB, alongside the Minister for the Economy, Deirdre Hargey. Hopefully Conor Murphy will be back in place fairly soon, which I believe we would all welcome. Much of work has been done by the LMETB. A memorandum of understanding, MOU, was signed with Southern Regional College and Queen's University Belfast. We all know the issues we had in the past in the context of Xerox and PayPal. It is absolutely necessary that we have support for this kind of positive work. I know this centre is looking at an apprenticeship in automation and robotics, and is dealing with KUKA and ABB, which also have a footprint in Dundalk. These are the sort of matters we need to look at in the context of innovation, etc.

Deputy Ged Nash

The Irish economy is in rude health, which is something we can all be very proud of. Anybody who is proud of this country will be proud of our economic performance and the fact that 2.7 million people are now in work. This is a record. There were 90,000 new net jobs in quarter 3 of 2023. That trend has continued into 2024. VAT receipts are up 6.3% so far this year. There are at least three interest rate cuts due that will benefit aggregate demand and businesses.

Business failures in 2023 were 27 per 10,000. The figure for 2019 was 36 per 10,000. Liquidations in the UK are twice the number in Ireland. The then Minister of State, Deputy Burke, said on 1 May on national radio that: "It is 10:1 the rate of businesses opening compared to closing." That is a good thing. The years of 2008 to 2011 these are not. It is quite the opposite. The low margin sectors of retail and hospitality, those locally traded services most exposed to payroll costs actually added a third of all new jobs, 90,000 in total, last year. There are significant challenges facing some businesses in those sectors. Nobody can deny that. I work, as many others do, day in and day out to support those businesses in our constituencies and across the country.

It has always been the case in times of normal and, indeed, sub-normal trading conditions where high churn has been a feature of the hospitality sector. This is not unique to Ireland. I know the Minister would agree, on foot of his professional background, that every business failure is a personal failure. It is a failure for the individual who owns the business, the people who run it and the people who work in it. Some of the businesspeople I admire and respect the most are hospitality entrepreneurs in my constituency. Those who survive and thrive are the innovators and are those who are always willing to change and adapt. It is very competitive and margins are tight. That is and always has been a real problem and difficulty for that sector.

The Labour Party has no difficulty whatsoever in the Government coming forward with support packages for viable businesses to assist them through demonstrable difficulties. Forms of corporate subsidies from the Exchequer have now been embedded into our politics by Fine Gael and Fianna Fáil in recent years. It would be better for all if such supports, if they are to continue, were evidence-based and properly targeted and had defined social and employment conditions and objectives attached. In nobody’s language is the package that was presented last week targeted. Neither is it time-limited. It is a pre-election package from Fine Gael designed to create the impression that it is the sole party of business.

It has been stated that the range and pace of the reforms under way have created real cost problems for business. There is no doubt that there is some truth in that. However, Fine Gael is solely responsible for that. It had possession of the ball between 2016 and 2020. That period of prosperity was a reform-free zone. There were limited moves on a minimum wage and moves towards a living wage and no moves towards modest sick pay rights. Auto-enrolment was parked. The list goes on. If Fine Gael had done all of this in a measured way over those four wasted years of prosperity, the situation for the businesses the party now says it is concerned with would have been very different. It is extraordinary that the Government is effectively doubling the value of the ICOB scheme when take-up has proven to be so low and nobody has tried to figure out why that was the case. The Government made a mess of the temporary business energy support scheme, TBESS, where take-up was also low and there were no lessons learned. There is no attempt in the package published last week to tackle the structural problems that indigenous Irish businesses have. Where is the reform of the anachronistic Victorian commercial rates system that hammers Main Street bricks-and-mortar businesses, and lets many others off scot-free? Where is the plan to take energy costs down? This is a failure of this Government and the regulator.

There is a €1.5 billion surplus in the National Training Fund. What does the Government plan to do with this to help businesses become more competitive and to upskill workers. That is where the magic should be in our economy. We have an innovation and productivity problem in Irish SMEs. Where is the actual plan to fix that?

Support for the far right does not happen in a vacuum. When over 20% of workers are on low pay, when the social wage is so poor, when access to secure housing is hard, when public services are not anywhere near where they should be in a rich country, when wealth inequality keeps growing, some people look for other, even poorer, people to blame. One cannot take on far-right populism by slowing wage increases for the lowest paid. This is politically and socially idiotic. The Government seems to think that by slowing down the rate of increase to the national minimum wage that this will help businesses to stay open, when all of the evidence actually shows, nationally and internationally, that incremental hikes to national minimum wages do not cost jobs.

The Government has effectively run its studs down the leg of the Low Pay Commission. It has instructed the latter to slow down moves towards a living wage. The Government knows full well that it is stated in the legislation I had passed in 2015, the commission has to take questions of competitiveness and other economic factors into account on its way to making evidence-based annual recommendations on the rate of the national minimum wage every July.

This is an expert, independent group set up by statute nine years ago, and it is working. Fine Gael has said and the Minister has, in his letter to this body of experts, issued a direct threat. That is what is. Where does this leave Ireland's obligation under the minimum wage directive to introduce a living wage of 60% of median hourly earnings over the next couple of years? This unprecedented intervention with the Low Pay Commission will be counterproductive. In time it will be considered to be notorious and infamous. I described it last week as Fine Gael's "We have had enough of experts" moment. Along with the disgraceful backsliding regarding the modest commitments made on the promises about sick pay, it is socially divisive and frankly ideological. I believe the Government will pay a price for it.

Minister of State at the Department of Finance (Deputy Neale Richmond)

I am delighted to be given the opportunity to say a few words here this afternoon and to point out some of the excellent work that has been done by a slew of Ministers and officials across a number of Departments, led by the Minister, Deputy Burke, and following on, despite some revisionism, which we are used to, from certain parties across the Chamber, from a package announced a couple months ago announced by the Minister, Deputy Coveney, and following on from one of the most expansive pro-enterprise budgets in the history of the State in October. What we have here is an opportunity to discuss where there is clear need and where the impact can be felt by businesses of all sizes but particularly small- and medium-sized businesses throughout the country and which are the lifeblood of every town and village and indeed the capital city, which I am proud to call my home.

Within the 15-point plan of action, I would like to go straight to welcoming the extension for another couple of weeks of the application deadline of the increased cost of business grant, but also the secondary payment, especially to those businesses in the retail and hospitality sectors that have been struggling. As of the last count, 2,680 businesses in my own area of Dún Laoghaire-Rathdown, nearly 8,500 businesses in Dublin city and just over 3,500 businesses in South Dublin County Council, home of the Minister for State, Emer Higgins, have applied for this grant and are receiving these payments into their accounts this very week. Despite some of the rhetoric we have heard, I was contacted by businesses in Dublin city, in Rathfarnham in south Dublin and indeed in my own area that have received the money in recent days. However, I do agree with Opposition Members when I say that this is too slow. I make the call quite clearly to city council and county council leadership around the country of the importance, for their own sakes as well as for the economy and the country, of getting these payments made to businesses as soon as possible. It is a real test of confidence in our local government system to make sure we can implement this.

Key to delivering on this is the role of the local enterprise offices. I was very proud in the ministerial brief I held until recently, which work is now being wonderfully carried out by the Minister of State, Deputy Higgins, to have visited pretty much every single local enterprise office in the country. I had a wonderful visit to the Ceann Comhairle's own county local enterprise office and the excellent hub they have there with great work being done by Jackie and the entire team in the county of Kildare. We know these local enterprise offices are supporting 370,000 businesses in the country. Of those businesses, more than 6,600 jobs were created by clients of local enterprise offices throughout the country. Every single local enterprise office from Louth to north Kildare to Longford to Westmeath created jobs in a range of sectors last year. We can see that, through this package, those businesses will be further supported with the doubling of the energy efficiency grants, something that is so important when we are not just trying to support businesses but also trying to help them on their decarbonisation journey. We want to make sure that the savings are not just one off or tokenistic. These are actually the long-term measures we talk about so many times, not only in terms of tackling climate but supporting businesses as well. I am particularly pleased to see the expansion of the trading online voucher to all businesses of up to 50 employees. This will give so many businesses the opportunity to maximise their work online and make sure these businesses are supported going forward.

One area that came up a lot in my previous role and comes up in my present role is access to finance. The decision that was made to double the funds available for Microfinance Ireland can loan to those businesses that struggle to engage with many other financial institutions is really welcome. It will give many so many businesses the opportunity to provide that investment to future-proof and to ensure they protect and save jobs and protect those workers we all talk about.

It would be remiss of me in my current role not to refer to the really important work being carried out by credit unions in the sector and the potential for them to do even more. Last year, business loans from credit unions increased by 11%. This is real money going into businesses that are truly at the heart of our local communities. These are businesses that choose to do their financial business with their credit unions. We all know the structures of credit unions. I would argue that the vast majority of us are members of credit unions or at least are familiar with them. Plenty of us have been involved in clubs, sporting groups and associations that are reliant on credit unions, not only for their financial business but also for the sponsorship and support they give. This is an area that can be increased to give those businesses the opportunity to get the finance so they can expand, save jobs and meet those difficult bills that need to be paid.

An issue that has come up consistently in this Chamber and on which Deputy Ó Murchú and I had a spirited debate late last Tuesday is the cost of insurance for businesses and the concern so many businesses face when totting up their bills about the rising costs of insurance for certain sectors. However, with 95% of the Government's action plan on insurance reform having been completed, many are increasingly seeing the opportunities for a pathway, not only first and foremost for those businesses that are struggling to get access to multiple offers of insurance, but also towards making sure claims are going down. In due course, we hope and expect to see premiums go down also.

In the time remaining to me I want to take up a few comments made by the Opposition speakers so far. I know there will be more comments made and lots of dramatic language, but we are here talking about backing businesses. We all have to accept that if we do not have a functioning economy and businesses that are able to be successful, generate a profit and expand, every time we talk about workers' rights and societal improvement, it is for naught. Someone has to pay for it. Many people are more than happy to tell us how we can spend the money, but they have absolutely no interest in how we are actually going to generate those funds bar saying it is all relevant to some other big bad beast.

We talk about the increased cost of business grant scheme. Deputy O'Reilly, with whom I spent 14 lovely months engaging across the Chamber in genuine progress on workers' rights and the recognition of the trade union movement, of which she and I are both proud members, as is Deputy Nash, and we have also had those conversations, spoke about the increased cost of business scheme and cited the fact the Government is not listening to Sinn Féin. The increased cost of business scheme was budgeted for €257 million. That is a colossal amount of money for one scheme. The Deputy said there is a failing and it is not paying out. Let us look at the Sinn Féin alternative budget. It is back on the party's website.

Deputy Ruairí Ó Murchú

It was never off it. The Minister of State is just not very good at finding it.

Deputy Neale Richmond

Sinn Féin's entire enterprise budget last year was €30.3 million. Within that, Sinn Féin says that there should be the creation of an Irish jobs agency. We have Enterprise Ireland. When we have a 15-minute intervention from the Sinn Féin spokespeople, and we will have more slating of this package, they really need to start looking at themselves and the sheer lack of interest Sinn Féin has for business. We hear talk about sectors and how this is pitting business against business, which is an absolute nonsense. Only a couple months ago a report of more than 465 pages produced by the Department of Enterprise, Trade and Employment in co-operation with all State agencies and other Departments, which I hope Deputy O'Reilly and others read, showed that increased costs to business, especially those being felt due to really welcome and important Government reforms, are being felt most acutely by the hospitality and retail sectors. This is not a matter of pitting business against business. Sinn Féin is clearly misrepresenting what is clear economic research presented by Government officials which shows that the economy is doing exceptionally well. It is not doing exceptionally well by accident, despite what some people will say in due course. However, there are areas that need support.

I welcome Deputy Nash's concerns regarding the commercial rates systems. He might extend that to the Labour Party candidates in my own area of Dún Laoghaire-Rathdown who have consistently increased commercial rates over the past five years, even though-----

Deputy Ged Nash

They lowered the property tax

Deputy Neale Richmond

No, they have also increased local property tax; Deputy Nash can ask the local councillors - even though the council has taken in more money and is spending more than ever, but yet it will not reduce commercial rates or local property tax.

That is something Deputy Nash can reflect on. I am more than happy to engage with the local Labour Party candidate when she calls to my door looking for my preference vote in due course. Before other speakers come in and Deputy Higgins concludes, it must be stated that the stats are clear. We have 2.71 million people at work in this economy. That is more people at work in this State than lived in this State in the 1950s. When Fine Gael came into government with the Labour Party and produced the action plan for jobs under Deputy Richard Bruton, the aim was initially to create 80,000 jobs; 100,000 jobs over the entire period. Last year alone, 50,500 jobs were created in this State. This year, so far, 7,900 jobs have been created. More people are at work. The rights of workers are improving despite the criticism of the Opposition. A lot of good has been done and it is right that it has been done but it has been done in a process where we need to make sure we do it in tandem, hand in hand, with the business community. These are the creators of wealth and of opportunity, the people who will take the risk that the vast majority of us in this room simply are not prepared to do and I include myself in that. We have a situation where we have record receipts of both corporation and personal tax and the highest levels of spending ever in the history of the State. Just this week, we passed legislation in the Seanad to create two funds which will allow us to continue to future proof and to prepare ourselves for when corporation tax receipts will naturally decline, or indeed, when we face the next rainy day. The last time we faced a rainy day when we entered the start of Covid-19 pandemic, the very people who lambasted the Government for creating a rainy day fund were pretty glad to see that it was there. They were glad we had a few bob in the account and that we were able to go through that period still increasing the amount of exports going to sale, keeping people in work. This is a good Government that is presiding over a good economy that is ensuring workers get rights. There are areas within our society that need extra help. We all work to that every day. None of us has a monopoly on that. However, crucially, there are aspects that need increased supports, particularly in our business community, to allow us in the Government to increasingly support society.

In conclusion, I commend the Minister, Deputy Burke, and the Ministers of State, Deputies Higgins and Calleary, on putting this package together. I look forward to seeing it rolled out. Crucially, I look forward even more to it being delivered in the budget in October.

Deputy Chris Andrews

I thank the Minister of State. The cost of doing business is challenging for everybody. No even the Government would deny that. Is is challenging, particularly for smaller businesses. I have raised an issue before in this House about schemes right across the country. Different local authorities have different schemes for street furniture licensing. The Minister for housing has waived the fees for tables and chairs in the areas outside the retail unit. That, of course, is very welcome. However, the section of the scheme that is not waived is probably the most burdensome for small businesses, and that is for retail units. Other local authority areas have different schemes for outdoor seating but the small businesses feel like they are having their pockets picked by the local authorities. That there really needs to be an intervention by the Minister is clear when you look at the charges. The application itself for a street furniture licence consists of ten different actions. First, businesses have to complete the application form which is not too bad. They also, and this is for small businesses that are not coining it and may have two or three employees, have to put an ad in the newspaper, put a photograph of the premises with site notice in situ; have evidence that food is sold on the premises; evidence of an intoxicating liquor licence if applicable; and details of screens proposed to enclose in the licensed area. They then have to have a 1:100 scale drawing of the area to be licensed, including the width of the footpath. People need a professional to help you through that process because it is challenging.

They also have to have details of cleaning and maintenance schedules; details of proposed street furniture; a site location map; e-tax clearance certificate, which obviously is not an issue; and then for all of that, they have to pay €100. If the council grants the licence, there are four different zones. Up to 4 sq. m - which would probably take up one table - you have to pay €200 per metre, and above that, it is €400 per square metre. Then of course that goes up for the city centre pedestrianised street where it is €200 per square metre. It goes up to €500 per square metre over the first 4 sq. m. Therefore, it is extremely expensive to have any sort of street furniture. I gave an example previously of Ernesto's coffee shop in Rathmines. It has a couple of tables. It does not use them for outdoor dining. These are really for people who come for a coffee and gives them space in the coffee shop. People drink their coffee outside and it frees up room inside in the café for people to dine or have a quick bite. That is replicated right across the city. The café owner has to pay €4,500 for a couple of very small tables per year, which is a ridiculous price given that due to the Irish weather, he will only be able to use them for three or four months of the year anyway. He is already facing higher energy costs and increased ingredient and staff costs. It all adds up to a fairly hefty figure at the end of the year. It is €4,500 for a couple of small seats. As I mentioned before, the same is happening in other places. The council installed a protected seating area for diners but the retail units cannot use it because it is too expensive. There needs to be a kind of uniformity around the schemes. I know in Galway they have a much more flexible one where you can get a licence for a month or two, but Dublin City Council appears to be pickpocketing small businesses. That is very harsh and unfair on small business and it is something that needs to be factored into any thinking by the Government.

Deputy Catherine Murphy

I welcome the opportunity to contribute to the debate. One of the things business people will tell you is about the high input costs, including, for example, energy. We have some of the highest energy costs in Europe. It depends on the particular business but they will tell you about insurance costs. They will all talk about them but some businesses are particularly impacted by it. The Minister of State, Deputy Richmond, spoke about premiums coming down in due course but people need to see them coming down now. It has been something that has been a bone of contention for a long time. There is no doubt that particular businesses, such as main street retail, cafés and so on and so forth, have been particularly struggling. It is really important we try to retain as many as possible because if we lose them we lose a vibrancy in our main street or city. It is important that we listen to people in particular sectors. There is no doubt the impacts can be different.

I had to laugh when the Minister of State started talking about commercial rates as if the only issue was that they were perhaps increased in local authority areas. In actual fact, the structure of the commercial rates date back to the 1850s from Griffith's Valuation. The rates have obviously been reviewed over the years but if you actually look at their structure, they work to the detriment of those in main street areas where they should be advantaged. The first 3 ft. or 4 ft. in are a certain amount. Then if you go a little bit further in, it is another amount. It is lower as you go further into a building. That obviously means that if you have a small building, you are going to end up paying the premium. The other aspect regarding local government funding and commercial rates is that the local government fund was essentially removed when local property tax was introduced.

A lot of business organisations welcomed the introduction of the local property tax because they thought it would be an additional contributor to local authority funding. In fact, it was a replacement tax for the removal of the general purpose grant funded by the ring-fencing of the motor tax fund. The way it has been revised in the baselines recently means that if the population grows, there is a tiny difference in that. You cannot grow the square footage of your county but you get a huge benefit if you have a bigger county in the most recent revision of the baselines. It is very patchy in the benefits that will accrue. I have gone into that in quite considerable detail.

I welcome the doubling of the innovation grant. I do not understand why that did not happen before because it is very useful and I have seen some positive things come out of it. It is a small amount of money but it gives a good benefit. On the surplus in terms of the National Training Fund, it is important there is a medium- and longer term view. We need to resource the National Apprenticeship Office to drive delivery of an action plan for strong alignment between training schemes and employment need. I favour the reinstatement of the apprentice incentivisation scheme to support SMEs and small businesses. If we incentivise apprenticeships by removing the student fees at college, it may encourage more people. The gap in skill sets is an issue. It should be targeted at areas in which there are low levels of registration, like bricklaying, plastering and painting and decorating, which need to be targeted.

People on low pay spend all of their money. There is no money to save. They too spend money in the local economy. That we would do anything other than incentivise getting to a point where we have a living wage is in many ways a fool's errand because those people spend in their local businesses. The cost of living for households has an impact on people's ability to spend because their discretionary spend is impacted due to high energy costs and other costs. Energy has been a particular cost issue over recent years. I hear from people that they notice that the month in which they have a double bill or something like that has an impact on the discretionary spend on local things like hairdressers and cafés. That definitely has an impact. Why our energy costs are so high is repeatedly asked. It has a bearing on households and businesses. High input costs need to be considered. The problem is it is a lazy way of considering it when you look at labour costs without looking at other costs like energy and insurance. I favour looking at the structure of commercial rates because some businesses, particularly main street businesses, have a function beyond the retail side. There is passive security, vibrancy and lack of vacancy in buildings which all impact other businesses nearby. If there is dereliction, there are no two ways about it, it has a bearing.

An Ceann Comhairle

Deputy James O'Connor and Deputy Joe Flaherty are sharing time.

Deputy Joe Flaherty

If the Ceann Comhairle will indulge me, I welcome members of Drumlish Hill Club. It is a predominantly a female audience in the House. I think there are three men among 19.

An Ceann Comhairle

Blessed are they.

Deputy Joe Flaherty

I know we are talking about enterprise and retail but I want to get them out of Dublin as quickly as possible because they are spending too much money, so I want to get them back to Longford where it is to be hoped their money will be more productively spent.

I think this is my first time to address the Minister in his new capacity. I commend him. I know he is a number of weeks into the role. I welcome the work he has done to date, especially in the increased cost of business supports. It is no secret that small businesses in rural Ireland, particularly those in retail and hospitality, are struggling. We have seen a seismic societal change compounded by Covid. The landscape in rural Ireland has changed. Traditional bricks-and-mortar business has never faced such a challenge as it does today. We are probably in the last generation of people who go to the bricks-and-mortar stores. Younger people instinctively go online. There is a challenge for us in building vibrancy and retaining rural communities and small towns and villages. We need to change how we encourage people to stay in business and the line-up of businesses on the main street. The increased cost of business scheme has been welcomed, in particular the recent announcement that the Minister would increase the grant amount, which is significant. I commend officials in Longford County Council, in particular the LEO office and revenue generation team. County Longford has the third highest uptake of the grant in the country. Herculean work was done by officials in the county. When it was extended for two weeks recently, they took it upon themselves to start ringing businesses that had not applied and encouraging them to apply. That is important.

It is fair to say businesses have seen a plethora of challenges, compounded by large increases in energy and food costs and, while it is admirable that we have tackled the issue of low pay and the minimum wage, it has had a significant knock-on effect for many small businesses in rural Ireland. I welcome the recent changes in PRSI but I would like to see those on minimum wage are moved out of PRSI and the additional burden taken off employers. It remains a major challenge for employers. Auto-enrolment is another challenge. I appreciate that moves have been made to extending sick pay to six days, which I welcome.

I must take this opportunity to raise the issue of 9% VAT for the hospitality sector. If you can keep your smiles in, I will also raise it in relation to the hairdressing sector. A large number of people from the sector have left and set up their own operations at home, many of which operate outside the mainstream economy in the black market economy. It is unfair on those who have invested large sums in their businesses, especially in rural Ireland, in towns like Longford or the ladies' village, Drumlish, where the local hairdresser is part of the local community. It is much more than a hairdresser. It is where you go to catch the news and catch up on what your neighbour is doing. It is important we keep our hairdressers. They play an important role in our local communities.

We have taken a number of important steps but we have to be the Government of the day that acknowledges that what was a traditional business in rural Ireland 20 years ago simply cannot survive now. Conceptually, how we shop and what we want from our shops has changed. Considering what Tesco and other large stores did, it is very much experiential shopping. People want an experience when shopping. It is much more than just going out and buying a new shirt or scarf. People want a whole experience. There are a number of successful businesses in that regard in Longford such as Fabiani. It is an award-winning store that pioneered that. There are many successful examples in County Longford and across rural Ireland. There is more to do but this is an important first step. I echo Deputy Catherine Murphy's point on commercial rates. If we look at what we have done with commercial rates since Covid and now with the increased cost of business grant, we have relied on the rates issue to put back money into these local businesses.

It probably comes to a point where there may be a certain section or size of business we need to exclude from the rates base. I think that is an important point to consider. I thank the Minister of State for taking those points on board.

An Ceann Comhairle

I do not think Deputy Flaherty or I would generate a lot of activity for local hairdressers. Deputy O'Connor might generate more activity.

Deputy James O'Connor

I was waiting but the Ceann Comhairle took my joke. I join Deputy Flaherty in welcoming his guests. The issue we are discussing is of huge relevance at the moment. In my constituency of Cork East, whether in the local villages, towns or out in the countryside, time and again I meet small employers. I am not talking about the companies with between 50 and 100 employees. I am talking about the cafés, butcher shops, hairdressers, barbers, publicans or restaurateurs. The report coming back is unfortunately not good. It is concerning. As a Government TD, I never wanted to come in here and give heaps of unnecessary praise. I am conscious we have a new Minister of State and I congratulate her on her appointment. However, this is one of those areas where, as a Government, we perhaps need to acknowledge we made a few errors in the past few years. An enormous amount of good work was done around the pandemic supports, with more than €20 billion paid out in supports to individuals and businesses in this country but, following that, when traders got back up and running, we saw a rapid increase in inflation and the costs of doing business. In this House this morning I spoke about the deeply concerning issue of electricity prices and how far out of sync we are with the rest of Europe for unit price of commercial electricity. You also look at the changes around the minimum wage, how they have impacted small pubs or corner shops, and the bank holiday pay aspect of it. Obviously, there has been a change in the PRSI rules and regulations and that is really important, but we need to acknowledge we made a mistake. I put that on the record of the House.

The Department needs to have a way of diffentiating between companies that are in a position to pay their employees significantly above the minimum wage, or that have employees on the minimum wage but also have resources, and small businesses that are getting up and running. Starting a business is an incredibly difficult task. The risk on the business owner or entrepreneur that does that is enormous. In the case of restaurants, I believe that eight out of ten fail. The business package that has been put together is a positive move in the right direction. The forthcoming budget will be the last one the House passes before the election. We know that constitutionally we cannot have another. We have a chance to rectify some of the errors we made. I would rather see cafés and the other important small, local businesses that populate our main streets remaining open rather than closing them for the sake of adding another 20 cent onto the minimum wage.

There is also the electricity issue. Electricity firms in this country have gotten away with murder. They have been taking an excessively high amount of money from consumers. The profits within individual firms, and even ESB Networks, are excessively high but there seems to be little ambition on behalf of the Government to tackle them on this. When we look at the consumer protection aspect of what we fund in government, they are more interested in car parks in Dublin Airport than they are in this issue. It affects everybody. It affects small businesses and homes. From my perspective, this is something that the Department of the Minister of State, Deputy Higgins, and her Cabinet colleague, the Minister, Deputy Burke, whom I also congratulate on his appointment, needs to put a strong focus on. These firms are making very significant profits.

The rates aspect for small businesses needs to be looked at for the upcoming budget. Local authorities are very quick to request that money and funding. However, we heard in this House this morning that Cork County Council has only paid out €100,000. It is the largest local authority per members in the State but it has only paid out €100,000 of the money that has been available. To me, that is completely unacceptable. Small business owners will be quick to tell you that when the rates are due, they are in. That is something I would also like to see happen.

I support what the Restaurant Association of Ireland is doing in respect of VAT. We have to look at the fact that the VAT rule change on restaurants and hospitality is having a big impact. We have seen 200 restaurants close since the start of the year. My fear is that if we allow this to persist, there will be nothing left on the main streets of many rural towns. I come from Youghal, County Cork. The vacancy numbers in Youghal are the highest in the entire county. It is sad to see. That is because it is so hard to get a business up and going. It might not affect urban cores like Dublin or Cork, even though businesses there have their challenges. It is in the small towns where you have to put aside economic prudence, for want of a better term, for the public good. The job of politicians in government is to decide where that line falls. At the moment it is falling too close on the side of managing the purse. The economy is doing well and something we could do to make a real difference is to focus on those main streets in rural towns to try to get the vacancy numbers down.