Joint Committee on Enterprise, Trade and Employment díospóireacht -
Wednesday, 1 Mar 2023

Challenges Facing Small and Medium Enterprises: Discussion

An Cathaoirleach

I remind everybody who is present in the committee room to exercise personal responsibility to protect themselves and others from the risk of contracting Covid-19. Members participating in the meeting who are doing so remotely are required to do so from within the Leinster House complex, as they well know. Apologies have been received from Deputy Matt Shanahan, who is on constituency business in Waterford.

Today we will examine some of the challenges facing small and medium enterprises, SMEs, which play a vital role in the Irish economy and communities across Ireland. While much focus is on multinational companies and foreign direct investment, our domestic SME sector is often overlooked despite the fact it makes a huge contribution and employs people all over Ireland at every level in every local area.

Inflation, the housing crisis, a talent shortage and concerns around Ireland's competitiveness are among the issues that present major challenges to SMEs. Today, I am pleased the committee has an opportunity to consider these matters further with representatives from Chambers Ireland, ISME and the Irish Exporters Association. From Chambers Ireland, I welcome Mr. Ian Talbot, chief executive, and Mr Shane Conneely, director of policy. From ISME, I welcome Mr. Neil McDonnell, chief executive. I also welcome Ms Elaine Dunne, founder and chairperson of the Federation of Early Childhood Providers. From the Irish Exporters Association, I welcome Mr. Simon McKeever, chief executive, and Mr. Karl Picard, communications and public affairs lead.

Before we start, I wish to explain some limitations to parliamentary privilege and the practices of the Houses as regards references witnesses may make to another person in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that may be regarded as damaging to the good name of a person or entity. Therefore, if witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue your remarks and it is imperative that they comply with any such direction.

The opening statements from all three organisations have been circulated to members. To commence consideration of our matter today, I invite Mr. Talbot to make his opening remarks on behalf of Chambers Ireland.

Mr. Ian Talbot

I thank the Cathaoirleach. I will speak about Chambers Ireland's perspective on the current challenges for SMEs. We represent 38 affiliated chambers throughout the country. As part of our support for sustainable development goals, Chambers Ireland tries to lead businesses towards the attainment of those goals. At the moment, keeping their attention on the medium term is a challenge for many businesses. With businesses experiencing crisis after crisis, year after year, it can be difficult to prioritise the long-term crisis. However, those firms which acted early on climate action by reducing their energy usage, or building on-site microgeneration and storage have demonstrated how efficient and resilient these investments can be.

The greatest challenge facing small and medium enterprises this year is the lack of available talent, which is driven by affordable and appropriate housing being unavailable across most of the country. With a small number of exceptions, our chambers have housing as the main cause of their businesses’ challenges, which highlights how important it is for us to achieve the goal of sustainable cities and communities. The transformation of our built environment to support sustainable living is not simply an aspiration; it is a necessity.

There are regional differences. In the north and west, the mica issue is interacting with higher interest rates to make it harder to finance the one-off housing that was the primary source of increased supply there. In the mid-west, there are challenges with local authorities and affordable housing bodies buying out scheme housing developments in their entirety. In the south west, about two thirds of houses are one-off builds, and of the balance, about two thirds are being bought by State supported institutions, meaning the real market for housing in that area is tiny. It also means it is a distorted housing market, with institutional buyers driving up the prices of homes.

Imagine being a young couple trying to build a life and finding that, when bidding on a house, the competition is the county council. Now imagine one is an employer, there is an enormous scarcity of talent, one cannot find anyone else in the area with the same skills or afford to pay more, but employees need to increase their income if they are going to get a mortgage and compete with the local authority. Those staff leave, they move to a different area - worryingly, sometimes to a different country - or they get a remote or hybrid job which pays them extra and allows them to stay close to their roots and their community. It is very hard to compete with that.

Our members are having to take on new people without the skills or experience they need and train them up. When they become productive members of staff, they need higher wages and have aspirations.

The house hunting begins and the cycle recurs. This is having a tremendous effect on the productivity of the Irish labour market. It is an even greater challenge in the cities. The competition for talent is even higher and employees are able to find work in large multinationals across a wide variety of industries and sectors. It is becoming even harder for smaller and medium-sized firms to compete. Already, across the country large employers are buying up individual homes, houses and apartments in order that they can ensure their employees have somewhere to stay. Several times in the last year we were contacted by businesses hoping to make big investments, potentially supporting hundreds of jobs, that were considering buying out entire housing estates if that would allow them to grow their workforce.

We know that the Irish units of multinationals are often not competitive for further internal investments because they cannot meet their existing employment targets, never mind expand their workforce. We are growing as an economy, but we are not growing at the pace we could grow. Our domestic market has been constrained by this lack of housing. Up and down the country our members are telling us that businesses are busy, but they are leaving opportunities on the table because they do not have the capacity to take on more work. This is a great kind of challenge but it is a challenge because if a business is to be sustainable over the longer term it needs to grow and to invest, both in its capital and in its people.

At the moment, the other big conversation among our members is about uncertainty. Most businesses, outside of sectors which have specific issues, are saying they are busy now but are concerned about what will happen in three months’ time, for example. This seems to be the new normal we spoke about during Covid-19. Businesses are finding it hard to plan for the future because of that uncertainty and the volatility of recent years makes a mockery of many of the plans our members had. Brexit, Covid-19, supply chains, sanctions, energy costs and interest rates have all interacted to impact businesses. However, by and large, they have struggled on. This is not surprising as these are the businesses that either survived the great financial crisis or were formed by brave people in the wake of it. They are fit for growth but they are constrained by the lack of talent, the lack of housing, the lack of infrastructure, and support in other areas such as childcare.

Our members are increasingly worried about the capacity of the State and the wider economy to deliver on the aims of the national development plan and our climate action plan. If we fail in the execution of these programmes, achieving our climate targets and the sustainable development goals is unlikely. Our members are concerned that the uncertainty and the delays to projects mean that the labour will not be available when it is needed, particularly should all these many projects be commenced in a rush towards the end of the decade in an effort to meet our targets.

They are also uncertain that the planning system will be able to perform as needed if we are to have €150 billion in infrastructure investment out to 2033. With housing needing at least €100 billion in investment, and likely much more to hit the 300,000-unit target for 2030, they are wondering if our planning decision-making capacity will be robust enough to make good decisions that will survive the challenges in the courts which our common law system makes inevitable. Although 7 GW is planned for offshore for 2030, our members are concerned that the initial offshore renewable energy support scheme, ORESS, 1 action of 2.5 GW will be all that is in the water by 2030.

Business owner-operators can have confidence in themselves, they can have confidence in their business model, they can have confidence in their staff but it is increasingly difficult for them to have confidence in the economic environment in which they are trying to operate their business. This is demonstrated by the failure of a policy like the initial version of the temporary business energy support scheme, TBESS. The lesson that we should have learnt during Covid-19, that supports are only effective when they are accessible and targeted at sectors that are vulnerable but viable, seems to have been forgotten. Instead, we had a scheme that was available for everyone but with such constraints put on it that it was useful to no one. A manufacturing business in Limerick saw its energy bill increase from €500,000 to €1.5 million saw no benefit from TBESS because its problem was so large. A Waterford hotel, which saw its annual electricity bill go from €900,000 to €2.7 million and which decided to bring forward refurbishment to drive down operating costs, could not be helped by TBESS. A printer in north Dublin saw the Department and the Commission for Regulation of Utilities, CRU, raise its bills by an extra €20,000 in October. This does not inspire confidence. We recognise and welcome the recently-announced adaptations to TBESS. We will need such flexibility to continue in the future.

In summary, our members were clear that their principal policy concerns this year are housing and urbanisation, skills and talent, energy and decarbonisation and productivity and competitiveness. These are issues for businesses because these are issues the businesses themselves cannot address. We need politicians and officials to deliver on them, for everyone. If there is one overriding thing that is needed for confidence to be restored, it is the fixing of the planning system. The planning authorities and courts needs to be staffed. Moreover, they need to be staffed by people with expertise, not generalists. They need people with the technical capacity to make decisions that can withstand scrutiny. It is extremely hard for businesses to plan if the State is bad at planning.

An Cathaoirleach

I thank Mr. Talbot. I invite Mr. McDonnell to make his opening remarks on behalf of the Irish Small and Medium Employers, ISME.

Mr. Neil McDonnell

I thank the Cathaoirleach and ISME thanks the joint committee for this opportunity to address it on these challenges. The first challenge for domestic SMEs that ISME identifies is the fact that Irish industrial policy is structured around large businesses, and more specifically foreign-owned large businesses. While this has been a great success in terms of GDP growth and the amount of corporation tax the State earns, it has come at the expense of a far less productive domestic sector. This results in our industrial and taxation policies, our research and development policy and our policies on remuneration, motivation and retention of staff being optimised for big business. We have excellent agencies in the form of the Industrial Development Authority, IDA, and Enterprise Ireland overseeing industrial development, but the former is focused on foreign direct investment, FDI, and the latter on exporters and high-performance start-ups, despite the fact that both represented a mere 1% of Ireland’s 279,000 active enterprises in 2020. While the Department of Enterprise, Trade and Employment’s White Paper has allocated responsibility for the small enterprise, the ten to 50 employees sector, to the local enterprise office, LEO, network, we have reservations as to whether the LEOs have the capacity and capability to adequately look after this sector.

The second challenge flows from the first and is the fact that the success of the FDI sector means it is expanding at a far faster rate than the domestic sector. The Central Statistics Office, CSO’s, 2021 national accounts show a GDP of €426 billion compared with a gross national income, GNI, of €231 billion, a divergence of 46%. In simple terms, this means the output of the FDI sector is almost approaching that of the remainder of the Irish economy. In one respect this is good, generating high employment, high wages and high corporation tax returns. On the other hand, it risks regulatory capture and pricing or crowding domestic enterprise out of our own economy. We have seen recent examples of this with the energy network rebalancing mechanism for large energy users, which meant they paid less for electricity than consumers did, and the special assignee relief program, SARP, which works well for big business, while the key employee engagement program, KEEP, for small businesses does not work at all. However, this fixation on FDI means we undervalue our domestic enterprise sector. The FDI sector makes a huge contribution to Ireland but in net national product terms, the domestic sector contributes three and three quarter times more to the Irish economy. This is principally down to employee remuneration. While employees of FDI operations typically earn a substantial income premium over those in domestic businesses, there are fewer of them and they are geographically concentrated in the urban conurbations. SME employers on the other hand are everywhere. The State also excludes SME employers from the Labour Employer Economic Forum, LEEF, despite the fact that they make up the vast majority of employers in the State and account for the majority of employees.

The third challenge and arguably the most important one is that of our domestic costs and competitiveness. In 2022, Ireland had the dubious privilege of overtaking Denmark as the most expensive EU country for consumer prices. Denmark has a land border with the largest economy in Europe, a luxury Ireland lacks. Our VAT rates are also high by EU standards, even at the currently reduced rate of 9% for services. We believe not only in the retention of the 9% VAT rate but in its extension to the whole services sector. The 23% rate should revert to its historical 21% level. Some service businesses such as early years childcare represented here today must pay these exorbitant rates of VAT, while being incapable of recovery of VAT paid. Despite a significant amount of legislative activity over the past four years, insurance costs remain high. Reforms to date have made a minimal impact on motor insurance and there are signs that motor premiums are beginning to rise again. Employer and public liability insurance costs have not declined and excessive premium cost remains an issue, as does non-availability of cover or a single, take-it-or-leave-it quotation from one underwriter in certain sectors. We need to see action by the Judiciary on perjury and we need rapid progress on Defamation Act reform, we need Personal Injuries Assessment Board, PIAB, reform, duty of care reform, and reform of legal costs.

Regarding the Review of Administration of Civil Justice report completed by Mr. Justice Peter Kelly, we endorse the minority report by Mr. John Shaw, Mr. Liam Gleeson, Ms Oonagh Buckley, and Mr. Kevin Fidgeon, which recommended the setting of fixed maximum costs charges and rates. We look forward to the publication of the Indecon study into legal costs later this year. We will be happy to answer any questions members may have.

Mr. Simon McKeever

I thank the committee members for inviting us to speak to the issues faced by small and medium-sized enterprises. I am chief executive of the Irish Exporters Association, IEA, and I am joined by my colleague Mr. Karl Picard, our communications and public affairs officer. The Irish Exporters Association was founded in 1951. Since then, it has supported the growth and development of all export businesses in Ireland, leading the export agenda as the voice of Irish exporters, promoting their interests, identifying critical issues and in many cases delivering solutions to them.

Ireland is a small open economy, which has seen exporting businesses drive us out of troubled waters. Exporting has become a way of life for Ireland. The IEA has adopted a simple view – if a business wants to grow substantially, it needs to get off the island. Speaking to our SME members, they pointed to the following areas as being of most concern: housing shortages, staff retention issues, supply chain issues, inflation and energy costs, as well as concerns over their ability to comply with upcoming sustainability regulations. Housing has become a significant issue for our members' ability to attract and retain talent. We have consistent engagement with businesses across the country and housing has been a pressing issue for some time, but it is now becoming a greater concern. It is being discussed at every level of the company. Inflation and the cost of living are major issues, but we believe it is the acquisition and retention of talent that has become the issue of most concern.

Many companies are talking about housing or, rather, the lack and cost of it. This is having an impact on their ability to attract and retain staff, particularly in more rural areas. On top of our monthly national council meetings, we operate a series of regular regional network meetings with members. We are in recurrent one-to-one contact with senior people in these companies, and we visit their businesses regularly. One of the most frequent concerns arising at the moment is the availability and cost of both talent and housing. Members are concerned about how they can attract and retain staff if these people cannot find affordable, let alone any, accommodation close by. Our members are increasingly concerned about how they will deal with the wage demands associated with this acute shortage in the supply of housing. Simply put, our members have consistently raised housing, or the lack of it, as a significant problem. If people cannot get or afford homes, how will these employers attract new workers and hold on to the ones they have? The housing situation has deteriorated to such a point that some companies have taken to building their own accommodation in which to lodge staff. They have been unable to obtain suitable accommodation locally or even marginally local to where they are located.

Certain sectors find it immensely difficult to find general operative staff locally as it is, and particularly due to constraints in securing visas for workers coming from outside of the EU. We spoke to an established family-run business operating in the consumer foods industry, which has had to cut production levels by 25%, putting it at a significant competitive disadvantage. The consumer foods industry is not listed in the critical skills occupation list and, moreover, process operatives within this sector - and most others - remain on the ineligible list of occupations for employment permits. The IEA is of the opinion that it beggars belief consumer foods companies do not constitute an essential service. I assure the committee that this issue is hampering the productivity of companies in other sectors too.

The lack of housing and visa issues are crippling the potential of many businesses to hire new staff, maximise production and therefore remain competitive. We are told that the reduction in the number of landlords is driving up the prices of what rental properties are available in most areas of the country. When both issues come together it creates a vicious cycle that only serves to hinder SMEs across the country.

Entrepreneurs are a key driver of Ireland’s indigenous growth and have helped sustain economic growth in recent times. In an economy as reliant on foreign direct investment as Ireland, supporting a strong indigenous economy and the Irish entrepreneurs fostering it is essential to having a more balanced industrial mix. It can be an added mitigating measure to insulate Ireland from global economic uncertainties in the current geopolitical climate. As a State, we have developed a core national competence in our enterprise policy and have long been successful in supporting the scaling of small to medium-sized indigenous exporting businesses. However, we have been poor at bringing micro-businesses into the loop. Equally, we are poor at developing these medium-sized businesses into global corporations.

We have created a very successful scaling loop, where entrepreneurs grow, and are supported to grow, their business to small or medium size, before selling out to reinvest in early stage companies that will inevitably follow the same trajectory into familiar territory. It is not only financial resources, which these entrepreneurs invest but also their knowledge, with many of them mentoring and in some cases being involved in directing these companies. What I have mentioned is laudable and may sound positive, but there is an inherent issue with this process. In most cases, support for SMEs coincides with encouragement to sell that business on. Hence, we see very few Irish SMEs willing to float on the Irish Stock Exchange. While it might, in some instances, be desirable to sell, the IEA believes more can be done to support the development of larger indigenous Irish businesses. A revised strategic approach is needed to support both sides of our very successful small to medium development loop.

One way of assisting the development of larger organisations is by doing more to assist the intergenerational transfer of companies. We have very few large third or fourth generation family run companies in Ireland, which is in contrast to other countries. It is a reasonable presumption that Irish Government policy should be tailored towards encouraging the sale of Irish-owned SMEs, often to foreign-owned multinationals or larger scale operations. Should a business owner wish to hand down a company to their children, they run the risk of succumbing to an unforgiving rate of capital gains tax, at 33%, or the recipient is liable to pay capital acquisitions tax, also at 33%, with stamp duty of 1% on top of that. This compares with a rate of 20% capital gains tax in the UK with the first £1 million taxed at 10%. There is no incentive to keep the company within the family, encouraging them to grow it to more global proportions.

On supply chains, companies have told the IEA that from their perspective inflation pressures remain an issue. Despite predictions earlier this year that we are at the top of this latest spiral, the most recent figures in the USA suggest that interest rate hikes, initially predicted to stop following one more hike, will probably be prolonged by another quarter. With Germany, our second largest export market, expected to enter a technical recession during this quarter, we need to keep our wits about us.

Last year, a mix of items were delayed in the supply chain. A bit of everything was missing. Companies were able to balance operations to ensure their range of lines remained open. This has forced companies to increase the inventory they were carrying, buying forward what they needed whenever it became available and storing it. We are acutely aware that smaller companies have considerable working capital tied up in this storing of inventory and concerned about the effect that a potential slowdown in one or more of our critical export markets might have.

This year, companies tell us they are increasingly finding difficulties sourcing particular key components required for the manufacturing process. This is particularly the case with electronics, and they foresee these components being almost impossible to source into the latter half of 2023. This will hamper investment into and additional job creation within these companies. While we have seen a reduction in shipping costs and an improvement in container availability, we remain alert to potential issues that the rapid reopening of the Chinese economy post-Covid may have on global supply chains.

As an organisation, we are very concerned about the upcoming sustainability regulatory changes that will have a seismic impact on SMEs. It is without doubt that trade sustainability is the single biggest challenge we face as trade professionals. This is especially true considering the particular acuteness of the greater need for sustainability efforts in our industry owing to the global nature of supply chains. Without sustainable trade policies in place, the economic growth gains from trade will inevitably decrease, while the social and environmental costs will grow intolerable. It is not spoken about very much, but the corporate sustainability reporting directive, CSRD, will be one of the single biggest impacts on businesses. Companies do not know about it and are not ready for it. I am paraphrasing here but there is a misconception that it will only affect large businesses. It will not. They will push it down through their supply chains and it will come out in tendering processes. I have paraphrased the final part of my statement.

An Cathaoirleach

I thank Mr. McKeever and Mr. McDonnell. Members will now discuss the issue. I remind members participating remotely to use the raised hand feature and, more important, to take it down when they are finished. I call Deputy O'Reilly.

Deputy Louise O'Reilly

I thank the witnesses for the information and for giving their time to the committee this morning.

If my time runs out, I might come back in later in the meeting. My first question relates to housing. It is instructive for us to see it written down. This is an issue that committee members deal with on an individual basis when we meet businesses and it is useful to see all the information gathered together here. There was reference to the situation in rural areas being as concerning as that in urban areas. That might come as news to some people, though not to me. There may be a perception that it is a problem for cities rather than one for country areas but this housing crisis is now in every town, village, city and townland across the State. Mr. McKeever stated that the housing crisis is increasing the cost of acquiring talent as companies have to try to keep up with the rising rents and so on. I ask the witnesses to elaborate on the difficulties the housing crisis is causing and, in particular, the potential for long-term damage. Business owners in the SME sector are telling me they are losing out on workers and business that are mobile. Their fear is that recovery might be very slow or, in some instances, impossible. I ask the witnesses to address those issues, in any order.

Mr. Ian Talbot

The Deputy is absolutely right. As we stated in our presentation, there are opportunities going a-begging while this situation continues. There is no overnight solution to this, unfortunately. There is the legacy of what happened post 2008, when building more or less stopped and many of the skills were lost. It took many years for the sector to regather momentum and we now need to get the skills back. We also have concerns relating to the other things that need to be done in the economy, such as our climate change imperatives. That will require the construction of a significant amount of infrastructure. There will be competition for a limited pool of construction capability. In our pre-budget submission, published last September, we referred to issues such as vacancies and living city initiatives. It is about trying to get some of the existing housing stock that is not being used, or not being used properly, back up and running. There is a significant opportunity, particularly in smaller towns and rural areas, to get that stock of housing back into use. It is there but needs to be adapted. It should not require the same planning obligations that come with new builds, for example. In addition, we have seen instances of companies in large cities signing up people who may be living in Donegal to work remotely and paying them a city-based salary to live in a rural town. That means the skill set of those workers is not available in that local town, or is only available at city prices. There are so many things going on that have been caused by the shortage of housing.

Deputy Louise O'Reilly

Is there potential for long-term damage?

Mr. Ian Talbot

There are opportunities going a-begging every day, such as potential to grow the economy by a little more than is happening. That is compounding itself all the time. All of us on this side of the table are very keen to promote Ireland in the most favourable light. We also have to be realistic-----

Deputy Louise O'Reilly

That is also true of those of us on this side of the table. I understand that was implied; I am joking.

Mr. Ian Talbot

Absolutely. From our perspective, we do not like to be the ones delivering bad news. Rather, we like to put a positive spin on things.

Deputy Louise O'Reilly

We have to be honest with people.

Mr. Ian Talbot

We would normally say we will find solutions to the housing crisis but on this one, as we summarised at the end of our opening statement, we need things like the planning system to be solved. There is a new planning Bill going through the Houses. We need to keep making progress and to have a lot of things in the air at the same time. There is no single solution; we need to be doing a lot of things. In that regard, I refer the Deputy to our pre-budget submission, which she went through at the time it was published, which contains many thoughts and ideas on this issue.

Mr. Neil McDonnell

Although this issue is very significant for employers, many of them are not making a lot of noise about it. That is because there are thousands of businesses that are housing tens of thousands of workers. I am aware of one of our member companies that has almost 110 people housed outside Dublin. People are not making a lot of noise about it because it presents a significant tax and benefit in kind issue for employers and employees. The employers are providing the accommodation at a sub-market rent or are not charging rent. It is not just an issue for SMEs. I serve on the board of a school in Dublin. The school lost a teacher after one day because he secured a job offer in the midlands and took the job on the basis of the rent he would be paying. For most employees considering employment, available housing and the cost thereof is the most important consideration after salary or wage offer. That has nothing to do with the employer. We have a big concern that in the most recent recession a strategic or Government-level decision was taken that rental accommodation would be provided by institutional landlords. Those landlords are not interested in Ballaghaderreen or Lahinch. I am not saying it is not a problem in Dublin; it is a big problem there.

Deputy Louise O'Reilly

It is huge.

Mr. Neil McDonnell

The absence of rental accommodation is now a significant issue outside Dublin as well as in Dublin, however.

Deputy Louise O'Reilly

There is a thread going through this discussion, which is that before this became a full-blown crisis or emergency, there was a perception that it was more an urban issue than a rural one but it is now in every town, village and townland.

Mr. Simon McKeever

The perception was that the lack of accommodation was more affecting people than businesses, but now it is feeding right into businesses. I am sure the Deputy has seen the report published by Daft.ie this morning, which indicates there are 3,800 homes available now, compared with more than double that number previously. The Deputy inquired as to the short-term and long-term impacts. As regards the short term, there is plenty of opportunity, as my colleagues have stated. Certainly from an exporting point of view, there is significant demand for companies' product post Covid. If they cannot find the necessary workforce and locate it close to their businesses, they simply will not be able to fulfil the orders because they will not have enough people or right-priced accommodation. In terms of competitiveness and house price inflation, many companies have been told by their staff that they are moving elsewhere. The remote nature of jobs is also impacting in rural areas because people are getting Dublin salaries. Many companies, particularly smaller ones, are not able to meet the wage levels that a large multinational organisation might be able to offer. They simply cannot afford to keep the workforce. On the long-term impact, I have serious concerns regarding our whole economic model if we do not get this right. Despite what has been said about the FDI model, it is a successful model that is very important to the country. The FDI companies bring a level of global expertise. After people work for those companies, they leave and go out and set up their own businesses. It is a skill set that comes into the country. One must question our ability to continue to attract FDI if we do not have enough accommodation for workers.

Deputy Louise O'Reilly

Having somewhere for people to live is fundamental.

Mr. Simon McKeever

People coming in from larger companies tend to buy more expensive houses. They are better paid and buy more expensive houses, which is pushing up the price of everything. It is now critical. Business is screaming about it. Something needs to be done about this or it will affect our long-term economic model.

Deputy Louise O'Reilly

Mr. McDonnell referred to the intense focus from the Government on the FDI sector combined with the lack of attention on helping to promote growth in the indigenous SME sector. He stated that approach runs the risk of regulatory capture of the Government by multinationals. I ask him to provide examples of how that is manifesting.

Mr. Neil McDonnell

There are several such examples.

I will ask my colleague to speak to one of them. However, the press recently reported that we effectively had subsidisation of large energy users by the consumer sector. There was effectively subsidisation of their network rates. We understand that many of those large energy users are, as Mr. McKeever said, extremely important. However, if we have a situation where those businesses that are most profitable and most able to sustain cost variability are actually being subsidised by consumers and small businesses, that undermines the stability of the business sector we represent. We also see, and I will ask Ms Dunne to step in here, for small childcare facilities, which are the backbone of allowing people to go to work especially outside the major conurbations as big network providers are not in small towns and villages, the pricing structure currently on offer from the Department is not able to support them.

Ms Elaine Dunne

Last year we did a survey of 1,193 providers. It showed that 260 have closed their doors. We recently ran a quick survey, last week, and 669 answered of whom 125 will close their doors in June. They have all notified parents. These are mainly in rural Ireland. A few are in urban areas. In the past 48 hours we have seen one of the large chains put out a document to parents stating that it is no longer taking in part-time, ECCE or after-school children. It only wants full-time children, displacing many children in Dublin alone. We have a huge problem in Dublin now. We cannot take these children on. There are massive waiting lists throughout the country. Core funding is closing down these services. It has failed many small providers. Only large services gained, unfortunately. Realistically, right now, we need the Government to step in to keep these services open and allow them to take in more than 22 children at a time. Legislation has guided that they can only take 22. They have rooms that can fit 35. It is the same in Dublin. We need to be allowed to take in more children to help the parents. If they are in rural Ireland and those services close down, those parents are out of work. There is no hope for them at all.

Deputy Louise O'Reilly

I want to ask the Exporters Association about two points that are referenced in its submission. Firstly the failure of the State to link up with micros and bring them into the exporting loop, and the failure to develop SMEs and mid-caps into larger global corporations. Will it elaborate on this, especially in regard to the latter where Irish SMEs often sell up to foreign buyers rather than receive the help they might need to scale up and grow the business? It is an area I have a particular interest in. There are only a few seconds, but the Cathaoirleach might indulge us.

Mr. Simon McKeever

I do not want to knock what we are good at. We are very good at helping small- to medium-sized businesses, but you could name the three or four truly global companies that we have which are real champions in the field. There is something going on whereby most of our businesses are small businesses, down in microspace, and they are not getting up into that successful loop of which I spoke. How do you get a company that has one to ten employees into the loop and bring it from ten to 50 employees or more? You need to look at what those companies lack. The first thing a small business needs is customers. Exporting allows a business to find a great many more customers overseas but requires a great deal of resources. To find customers locally, there are many private sector supports. However, is it the Government’s job to find customers for small businesses? I am not sure that is the way to go. For the smaller businesses it is about taking some of the stuff that we do very well in our State support agencies, particularly Enterprise Ireland, and bringing some of that DNA into smaller companies and helping them and potentially infusing that into the system, or a separate entity that looks at owning that space.

In the larger ones, companies have told us that they have been encouraged to sell once they got to a certain scale. Something is wrong in our thinking, nationally, in that regard. Do we believe we are not up to the task of creating global companies?

Deputy Louise O'Reilly

It is as though a piece of the jigsaw is missing.

Mr. Simon McKeever

There are two pieces missing. What Enterprise Ireland does is exceptional. We are world-class at that. The IDA is world-class in what it does. However, we are missing a trick on both sides of that equation. It is a whole different skill set to get from medium-sized to global companies. That raises questions as to whether we are prepared to let Irish companies set up production facilities or service sectors in other parts of the world. Possibly we need to get over the hang-up we have about the possible result that jobs will be transferred from Ireland to another part of the world. It is not necessarily so because when a company becomes global and operates in other parts of the world it tends to bring innovation back in. Some of, but not everything, that happens in the parent company in Ireland might change. It changes to be able to deal with the world better. We have always had a hang-up nationally as regards shipping jobs abroad. What we require, to become a centre of global excellence for large companies, is a different mindset than that which we currently have. I am not sure whether I have answered the Deputy's question.

Deputy Louise O'Reilly

That is very interesting.

Mr. Ian Talbot

There is an EU-funded programme called the Enterprise Europe Network, EEN. That is intended to help smaller businesses to export and to trade. Other countries' EENs help their countries to trade with us. I fear that is heavily underutilised in Ireland. Enterprise Ireland runs the overall programme, Dublin and Cork chambers of commerce run parts of it but the LEOs run the rest of it. I am not sure how much activity there is in there. That is an example of where EU funding is readily available which we might be able to use better, to help more.

Deputy Richard Bruton

To make a general point, if a Martian came in here today it would probably think we had one of the worst enterprise policies in Europe, to listen to what has been said. There was not a single mention of Covid-19, Brexit, the war in Ukraine or the measures the Government put in place. Since four years ago, 300,000 additional people are at work in this economy. Many of them are employed in companies represented by the witnesses. I want to make the point that this enterprise policy has not been a failure. Other European countries do not have that record coming out of this period. That is an important context here. The increase of 300,000 equates to a 13% increase in employment. We have been experiencing phenomenal growth.

There is an imbalance in what is happening and that is what we need to dig into. Looking at the last two years we put on more because 2019 fell, but in that 300,000, only 20,000 went into construction, where the vast majority went into other sectors, mainly private sector activities. The health sector saw a massive increase of 46,000, not surprisingly.

I would like to dig into some of the issues raised to get a better understanding. I recognise there is an issue in getting planning permissions. Notwithstanding that, there are 70,000 private sector planning permissions for homes that are not being activated by the private sector. I would be interested to hear why that is the case. That is the case despite the Government offer from the LDA of substantial subsidies to get these off the ground. What is happening in the private sector that does not see it capable of responding to what is a housing market with exceptionally high prices and rents, where one would expect good returns to be made?

The other issue relates to skills. I have never seen more apprenticeships on offer or more Springboard courses on offer. Where is the weakness in the skills policy that leaves the witnesses’ members finding it so difficult? Is it that we have grown 300,000 jobs and simply the pool of available people is low at this point?

Is it that we do not have the capacity or is it weakness in the suite of skills on offer from Skillnet Ireland, apprenticeships, Springboard, universities and what were institutes of technology and are now technological universities? I want to get more of a handle on this.

Take insurance as an example; the Government has been exceptionally active on insurance. The quantum of damages has been brought in. I see from reports that the awards are falling quite rapidly. There are more people going to the Personal Injuries Assessment Board, PIAB, where they do not go into the courts. It is just that from Chambers Ireland's presentation it did not sound like it was sharing the problems. It was offering a very strong critique. I am just trying to understand. Does it recognise that changes are being made in these areas, such as apprenticeships, Springboard, and the capacity of our system, and indeed in work permits? We need a balanced appraisal of the challenges we face here so that we can address this in a coherent way.

On housing itself, what are the changes in housing policy that Chambers Ireland would like to see at this point?

Mr. Ian Talbot

I could not agree more with the Deputy about the success this economy has had in the last few years and how we have so well recovered from the various shocks, including the recovery in unemployment levels both after the financial crisis, as well as Brexit and Covid. There are other forums and we have spoken at other Oireachtas committees where we have brought that up. The focus today was the impact for small businesses as much as the economy as a whole. That drove what we are talking about today to really focus on the challenges for small businesses. Yes, as an economy we are doing extraordinarily well. We have 2.57 million in employment now. When the Deputy and I both started our careers there was probably a workforce of about 1 million people. We are heading for treble that and it is an extraordinary change in that time but there are still the challenges that we wanted to address today in the limited time available to us. I will pass over to my colleague, Mr. Conneely, to talk through the Deputy's specific questions around planning and the impact of the skills challenge we have.

I should also say that I am a director of Skillnet Ireland. It is obviously doing a great job but there are other challenges.

Mr. Shane Conneely

On planning problems, there is a huge number of extant planning permissions available. Very often they are in the wrong part of the country and they are the wrong type of housing as well. There is a huge problem with the strategic housing developments that are offered. Often, they had high density as a whole in the footprint but the high-density part was left to the end, phase 5, and was never actually built. The more profitable things were built initially and the more expensive ones were not.

On why it is so difficult to do it here, after the last crash approximately 100,000 people who were working in the construction sector left. Ireland's construction sector is typically populated by much older people. Our productivity levels have been flat in that area for the past two decades or more. There is a huge systemic issue in construction. The State could do an awful lot in how it procures and what it demands of the sector in terms of upskilling and making it much more effective. We see a lot of talk about things such as modular builds and the advanced manufacturing techniques and that would be excellent - we would love to see this being delivered - however it would have to be done at scale and it is very difficult for the private sector to compete with that.

In continental Europe, the sweet spot for construction is about eight storeys. In Ireland, our skill set is not strong enough in that you need to have extremely tight tolerances to build at that capacity and scale. Often, what we build in Ireland are hand-crafted individual builds with lots of problems to be solved and worked out as we go along. That issue is very much holding us back.

The skills issue is the reason we were so strong on housing. Before I was involved in Chambers Ireland, housing was an issue. Then, it was particularly with the larger companies that were trying to bring in staff from abroad. They would go through the process of recruiting someone, getting the permits and making the offer and the person would back down inevitably at the end because they could not find somewhere to live. This is something that is repeated across the country. A chamber in one city told us that a big build was going in and there might be 500 or 600 jobs in it but they cannot get housing for the planning team to build the factory never mind everything else that will go with it. In another part of the country, a rural part, there was another project that could be a huge employer but if you looked at daft.ie on the day that was announced, 12 houses were available in the entire county. This is the case across the country. The reason things such as Springboard or the apprenticeships are not working in the way we want them to is that there is not the population to flow through them to the jobs market. We are seeing it among our members and our staff. People are realising that they cannot afford to live in Ireland and they will get up and leave for Denmark or whereever. We have a highly mobile population. We are not attractive to people from outside of Ireland. These things come together to create the skills shortage we are dealing with at the moment. Yes, it is great that so many jobs have been generated over the past three years and we are not disputing that. We did refer to Covid, Ukraine, etc., in our statement here today but the challenges are real and profound for this country. While they are difficult now, where we will be in ten years, when those working in the construction age out of it, is what we are really concerned about. We will not be able to bring in 100,000 Polish builders as we did back in the early 2000s because they will be rebuilding Ukraine over the next 15 years.

Deputy Richard Bruton

So Chambers Ireland is saying it is all around the construction labour force and upskilling it is the nub of our problem.

Mr. Shane Conneely

That is part of it but look at our planning system. At the end of 2021 there were 450 planning applications in the system which had not even been looked at or decided on. Last year it was 2,000.

Deputy Richard Bruton

Looking at the employment statistics in construction, the numbers working on office construction are back to 70% or 80% of what they were at the peak of the Celtic tiger years. That has not happened in the housing sector. How different are the skills of building an office, which we seem to have been able to do, and to bring in skilled workforces adequate to building offices on a huge scale, which are now facing declining demand? What is the obstacle to the housing sector, which ought to be using the same kind of construction methods as an office? It is not that radically different.

Mr. Shane Conneely

It is that different. Ideally, just to maintain the housing stock, we would be building 1% of our housing stock every single year. That is just to stay at a steady state. We expect that housing will last for 100 years for that to be true. We have a growing population in Ireland and we should be doing significantly more than that. Very often, the suburban builds that we have been building over the last 60 years or so are perhaps lasting 80 years before they can credibly be continued. On the commercial side, it is a completely different kind of building. They might last for 30 years or 50 years but it is a different class of building entirely. It is something that can be much more efficient than our housing sector but the big issue is that the State has a role to play as a monopsony, as a buyer of housing, so we are talking about it investing in housing of sufficient quality so that we could build up that skill base and attract in talent. If it could guarantee there would be 30,000 houses built every single year for the next ten years then that would be something that businesses could react to and therefore attractively bring in talent for. As it stands, these things are aspirations. They do not seem to be as concrete as we need our buildings to be.

Mr. Neil McDonnell

It is really important to understand exactly what we are saying. We are absolutely not knocking FDI. We have members whose only clients are FDI businesses. That is not the issue at all. I apologise if I gave any impression to the contrary. We are talking about the mix. We are saying that on the Central Statistics Office, CSO, data, assuming they will be reflected when we see the gross domestic product, GDP, and gross national income, GNI, figures for last year, we are looking at a post-Whitaker situation. We are going back to 1958. We have had a massively successful injection of foreign investment.

Deputy Richard Bruton

The sector employs perhaps 250,000 of a total 2.5 million people. It accounts for 10% of employment. It is not sucking people away.

Mr. Neil McDonnell

Actually it is.

Deputy Richard Bruton

In certain skill sectors only.

Mr. Neil McDonnell

It can be seen in the CSO wage figures. Imagine the kind of horsepower the IDA invests in attracting these businesses was invested in domestic champions. Mr. McKeever referred earlier to some of our domestic champions. The only really big ones we have now are Ryanair, Cement Road Holdings, Kerry Group and Flutter. If they were foreign businesses, the IDA would possibly only look at Kerry Group. I am not sure. The others would certainly not have been identified as business champions. Compare that with Norway, which only has 250,000 more people than we do. In 2021, it listed 68 businesses. We listed two. I echo Mr. McKeever's concern about businesses here. Their only strategy is scale, then sale. They do not see any imperative to get bigger than a certain size and when they sell, it is invariably to a foreign business. We see UK, US, EU and Israeli buyers in Ireland. It is great when a business sells for a few bob, but that intellectual property is lost to a foreign business permanently. We want to see the championing of businesses in the way newer countries such as South Korea and Israel did. They championed businesses such as Teva Pharmaceuticals and Hyundai. We have not championed big domestic businesses.

Deputy Richard Bruton

The model we have is that Enterprise Ireland is the largest investor in start-ups and scaling in the world. There is no other state agency on its scale. Though the IDA has a significant impact, its budget, the amount of State money it is spending on these companies, is relatively small. The heavy investment by the State from the enterprise sector is going into this. However, Mr. McDonnell states we are not successful. What is wrong in the model we have that makes companies want to sell? Is it only capital gains tax, CGT, as Mr. McDonnell suggests or is it a wider issue?

Mr. Neil McDonnell

Intergenerational transfer is not as attractive here. It is relatively not as attractive to transfer a business from one generation to the next. CGT is part of that. Tax treatment of property is also relevant as if the business is split into its business and property components, CGT reliefs do not follow. However, the issue is more that we have not identified and championed Irish growing businesses. That is the key metric. It is not only about listing either, in case I gave that impression. We want to see the next Stripe stay here and scale. We have some good fin-tech exemplars such as TransferMate. That kind of business should be able to stay here and scale. We have a small number of those exemplar businesses, but we should be focussing on those so they can scale and grow outwards and not sell to foreign entities.

Mr. Simon McKeever

I reassure Deputy Bruton that we got many things right in recent years. The reason Covid-19 and Brexit have not been mentioned this morning is that they are not big, pressing issues. We are here to discuss the current challenges. Brexit will continue to be an issue for this country because the UK looks as though it will go into medium- to long-term economic decline. That will have an impact on businesses here. Germany is now our second biggest export market. Britain no longer features in that. It is now our fifth or sixth biggest export market. Germany is now the second most important market we have.

A few issues were raised. I am not an expert on how to solve the lack of accommodation or housing, but I bumped into a developer this morning who is also a private landlord. He is exiting the private landlord business because he cannot make any money from it. His simple message to me this morning was that people need to understand there is a problem with the funding model and that outside funders, commonly known as vulture funds, are needed to provide funding. Perhaps the State needs to step into a funding capacity to allow developers to build houses.

On the skills piece, many things are going on. As we have reached full employment, there are simply not enough people to fill the jobs. Many of our companies, especially at the general operative level, want to bring people in from abroad, whether from parts of the EU or beyond. There are simply not enough people here. During the Covid-19 pandemic, one of the things that happened with those general operatives who keep many of the factories operating is - they are a mobile workforce. They can go from working in a meat plant to a construction site. Many of them moved to the businesses that stayed open during the Covid-19 pandemic and many went into the construction sector in the UK. They are mobile and will go wherever the jobs are. We simply do not have enough people.

Deputy Bruton and Mr. Talbot mentioned the education and training supports such as Skillnet Ireland and Springboard. It goes back to a question raised by Deputy O'Reilly earlier. What needs to be done with the micro-companies to get them going? The three of us are all micro-businesses and I guarantee that we are all time-poor. The ability of a small business to stop the clock in order to spend time trying to develop things is a big issue. There are 12 or 14 people in my business and I am doing ten jobs. Everyone does a bit of everyone else's job and the 12 people are doing the work of 16 or 18 people. It is something we need to try to solve.

We must try to grow a skill set akin to successful businesses. Enterprise Ireland is extremely successful and I know from having worked for a foreign government, that it is the envy of many countries because of the way it goes about its business. We have some good supports and programmes, but small businesses have a problem in trying to find the time to develop. How do they get beyond that piece of not having the time? They might also not have the funds, though some support is available.

I will bring in Mr. Picard to speak about the upcoming legislation for workers, the Employment Permits Bill 2022. There are few things in it that we think need to be looked at.

Mr. Karl Picard

I will give examples from some of our members. In his opening statement, Mr. McKeever referenced a family-run business that operates in the consumer foods industry. It was crying out for staff. It needed food operatives. It reached out locally to try to fill those vacancies and could not. It therefore had to look abroad and found that food operatives are on the ineligible list of occupations for employment permits. It now cannot source the staff it needs and has had to reduce its productivity by 25%.

Another example is a company in the midlands that operates in the meat industry. It wanted to hire a considerable number of people. Again, it advertised locally, tried to get people locally, could not fill the positions and then tried to source people abroad, but with the redistribution of meat processing employment permits this month, it has to go back to square 1. On 14 March it must apply for permits for all those people again and they will be issued on a first-come-first-served basis. The company is back to square 1. It cannot fill those roles at the moment so its productivity has decreased.

We have a slight trepidation about one section of the Employment Permits Bill 2022 where obligations are put on employers. They might be able to get employment permits faster if they provide accommodation for staff.

There is trepidation attached to that when we consider that there are less than 1,100 properties nationwide available to rent this morning on daft.ie. That is not in the big cities. I am a Westmeath man. In Westmeath or Dublin, it is equally difficult to find a rental property. Now, we are putting the obligation on employers that they will get their apartments faster if they can provide accommodation for workers. The problem is that, first, they cannot get the workers, whether they are in Ireland or coming from abroad and, second, there is not accommodation out there to be able to house them. We create a vicious cycle where employers are trying to do everything they possibly can to get the staff but they cannot, whether it be through the red tape of the obligations they have to follow or the fact that they cannot put a roof over workers' heads.

An Cathaoirleach

I thank Mr. Picard. Deputy O'Reilly is next, followed by Deputy Stanton. Both Deputies have seven minutes.

Deputy Louise O'Reilly

The situation to which Mr. Picard referred with regard to employment permits is something we will discuss. There are a range of views and all those will be taken into consideration by this committee and, indeed, all parties.

He referred to what might be classed as an underappreciation or lack of focus on the indigenous SME sector from Government, and the manner in which that is maybe hindering the creation of a balanced industrial mix; that jigsaw piece to which we referred. We agree on this. The sector has not received an equitable level of support to other comparable sectors.

In the opinion of the witnesses, what could be done to help indigenous businesses? They might agree that when we refer to that jigsaw, what is missing is an Irish enterprise agency that is needed to help domestically trading SMEs and micro industries to foster a more balanced industrial mix and help create a more robust economic base. It is those in the centre.

Mr. Simon McKeever

I thank the Deputy. We are referring to Deputy Bruton's comments earlier. A large amount of the cash the State puts into enterprise goes into the domestic piece and into Enterprise Ireland rather than into the smaller businesses. It is disproportionate in terms of the resources. We are focusing on domestic businesses; we are just not focusing on them all. My sense has always been that there is some really good DNA in Enterprise Ireland. We need to get it down into the smaller businesses.

I was out on my own for four years. I had my own micro consulting business. I describe what we do as an organisation of 14 people. When you are on your own, it is difficult and challenging. The number one issue is how to find a customer. How do we develop a business and create a website and do all that at the same time?

Enterprise Ireland does a great job but we are not as a country looking at the whole spectrum of domestic businesses. We also need to be very careful in that if we develop domestic businesses that are focused solely on the domestic market, they are missing a trick because the domestic market is very small. If we start with a domestic company that is selling locally into what is eventually a local value chain or local supply chain, how do we connect them up into the bigger buyers? One of the problems we have with the bigger buyers is that a larger organisation with a global footprint tends to have global suppliers. Therefore, how do we get a small Irish business into the global value chain? It is extremely difficult because that decision does not reside in Irish enterprise. It tends to reside in the American headquarters or French headquarters or wherever it might be and, therefore, I absolutely believe there is something in the DNA of what Enterprise Ireland does that can be transferred down into the smaller companies. However, smaller companies need a whole different set of skills as well.

Deputy Louise O'Reilly

I will agree with Mr. McKeever on that. What Enterprise Ireland does, it does incredibly well, as does the Industrial Development Authority, IDA, Ireland. There is that kind of necessary transfer, however. I am conscious of the time.

Mr. Simon McKeever

I am sorry; I would just say to the Deputy that our ambition with the micros needs to be bigger than just focusing on the domestic economy.

Deputy Louise O'Reilly

I agree.

Mr. Simon McKeever

We have to find a way for the micro businesses to eventually go into the Enterprise Ireland loop. There has to be-----

Deputy Louise O'Reilly

It is that pathway to lead them through.

Mr. Simon McKeever

Absolutely.

Deputy Louise O'Reilly

Would Mr. McDonnell like to comment?

Mr. Neil McDonnell

My view is similar to that. I will just qualify that I know what Mr. McKeever is saying. I am not disputing what he has to say on the export front, but sometimes we can be very dismissive of old tech, yet we can get innovative, disruptive businesses coming out of that. The bed and breakfast accommodation sector is almost clichéd in Ireland now after a couple of decades, but Airbnb actually grew out of accommodation finding. The taxi trade would have been seen as very old tech, yet it spawned Uber and all sorts of things like that. Therefore, there are disruptive people who will come into a business model. That is not often pleasant for many incumbents who are in there and do not like it. To very simply say what we think is missing from that, however, I echo the comments about Enterprise Ireland. A refrain I hear all the time is that we want our own Ms Julie Sinnamon, Enterprise Ireland and Mr. Leo Clancy. I know what the Government is trying to do with the local enterprise office, LEO, network. That is a very new policy. Whether that will work, I do not know. I really hope it does. Enterprise Ireland is set up, however. It has the corporate nous and experience. I would agree with Simon; we need to start getting that knowledge base down into the local businesses.

The last thing I would say, and Deputy Bruton also brought up apprenticeships, is that it is about having a funding model that works. We have people in the hair and beauty business, for example, which is a low-margin business, who say the change to the apprenticeships in 2015 made some of those unaffordable for people when they are going to college.

We also said, and we have been banging this drum since 2019, that the business owner-manager network needs upskilling as well. Our businesspeople need upskilling. We made a proposal on a basic certificate in business knowledge, which we colloquially call the blue cert because it is modelled on the Teagasc green certificate. Germany upskills its family-run and small businesses through the so-called mittelstand network and we think we need to focus and upskill our local businesses in the same way.

Deputy Louise O'Reilly

I thank Mr. McDonnell very much.

Mr. Ian Talbot

I want to talk through the minutes of an executive committee, which talked about the following topics: the Courts of Justice Bill 1923; a fiscal inquiry committee; customs; bankruptcy; trade disputes; trade and shipping routes; local government funding; and high taxation on the price of petrol. Those are the minutes of the first meeting of the executive committee of Chambers Ireland in 1923.

Deputy Louise O'Reilly

There is, therefore, consistency.

Mr. Ian Talbot

We are still talking about the same things. There was also a reference to delays in payment of compensation claims-----

Deputy Louise O'Reilly

Okay.

Mr. Ian Talbot

-----which is not mentioned on the list. We keep talking about the same things over and over again. Education was a big issue. We will be 100 years old tomorrow, in fact. It has been enlightening to look through the history of the organisation and see what we have been talking about. What I feel it comes back to is that the same stuff keeps recurring around things like insurance and all these things. They keep recurring. Let us take education, which we were talking about first. It was about giving boys and girls a primary school education. Now, we are talking about the best quality of primary, secondary and third-level education. It has moved on, but we are still talking about the same things.

The point I am getting to is that what small businesses really want are the small things done well so that they do not have to worry about them, for example, education, housing and infrastructure. They just want those things done well. Most businesses will get on with it if those core things are in place.

The Deputy is proposing an Irish enterprise agency. I will go another way. We all have infrastructures. As Mr. McKeever said, we are all time poor. We all have as good as it gets when it comes to experts in our fields. Everyone working in our business is a specialised expert. Everyone working in LEOs, for example, does not necessarily have that background and expertise. There is an opportunity for the State to look more closely at helping us run our business better and co-operate with us. If the LEOs have extra money to spend, for example, and particularly as they are looking at moving from ten to 40 or ten to 50 employees, they could focus on export companies. Companies need to import stuff. They need to import components to create the things to export, for example. They meet both ways. Let LEOs, Enterprise Ireland and such organisations help. I know they work with us already but let them look to help us more to help our companies around the country. We are representing all those companies that actually want to make a difference. We all have joiners and leavers. There is probably a lot of overlap in our members. There are people who say they want to see things done and want to contribute to policy. They are the engaged people. Let us, therefore, use our organisations as well-----

Deputy Louise O'Reilly

That is interesting.

Mr. Ian Talbot

-----rather than creating another agency that is just another quango. The Deputy might remember our quango hunt ten years ago.

Deputy Louise O'Reilly

Indeed. How well did that go?

Deputy David Stanton

I thank the witnesses for coming in today and for their fascinating and interesting presentations. We asked them to come in to talk about the challenges but they have also recognised all the good things that have happened and that we are perhaps victims of our own success in some ways, as we have grown so quickly. Now, there are stresses and strains in areas we may not have anticipated to the extent we should have.

Mr. Talbot spoke a lot about the housing issue, rightly so. It affects everyone, including members of my family, believe it or not. It affects everyone across the board. As Mr. Talbot said, in villages, towns and cities across the country, we see vacant houses and properties boarded up. I recently spoke to a gentleman who has ten such properties in one town. When I asked him why he did not bring them into use he said he did not have to. He is a very successful businessman. What can we do to encourage somebody like him to bring these properties into use? Serious grant aid of up to €50,000 has been made available for derelict properties and there is also funding available from the Sustainable Energy Authority of Ireland, SEAI. There is a lot of State funding available. As Mr. Talbot said, some of these properties may not need a lot of work because they have planning, connections, services and everything is done. Is bringing in the stick, perhaps through serious taxation, needed to make people sit up and take notice? What do the witnesses think about that?

Mr. Shane Conneely

Yes, we need serious taxation. We need to change the incentives. There are problems with many of those properties. Often, the title can be unclear or there are access to capital problems because they are owned within a family and the resources are not there to upgrade them. We are not sympathetic to those arguments. These problems are real but having a vacant property beside one's business or home is a cost to one's family and business, whether it is damp coming through the walls, the risk of fire increased insurance rates or the anti-social behaviour that is attracted to vacant properties. All those things affect everybody else in the community and therefore there is an argument for taking over these properties, whether through direct taxation, compulsory purchase orders or compulsory sale orders. Those things should be done.

Deputy David Stanton

Under the Dormant Accounts Fund, we can take dormant accounts and funding that nobody is using. Perhaps we should do something similar with properties, whereby if there is a problem with the title, the State goes in and takes the property. I want to be clear that business, as such, would not have an issue with raising taxation, perhaps some kind of vacant property tax, on these derelict and vacant properties sitting idle across towns and cities. One of my colleagues told me that in one town in his constituency, there are 100 properties from one end of the street to the other that are just boarded up and lying idle. If we brought a fraction of those back into use, it would help hugely.

Ms Dunne mentioned childcare and the impact it is having on business. It is mentioned in her submission but just in respect of taxation. Will Ms Dunne send the committee a more comprehensive note on that?

Ms Elaine Dunne

Absolutely.

Deputy David Stanton

If it is impacting business to the extent Ms Dunne stated, we should take it on board and contact our colleagues in the other committees and the Minister responsible. I thank her for that.

Last week, there was an interesting presentation from the National Disability Authority, NDA, Pobal and the Rehab Group on disability and the fact that a lot of people with disabilities cannot get work in Ireland. The Open Doors Initiative is operating and I know Chambers Ireland supports that. It is doing a lot of work in encouraging and supporting people with disabilities to gain employment. We are not doing well as a state in that space. I would be interested in hearing what the witnesses have to say on that. I should say I am on the board of the Open Doors Initiative, in case there is a conflict of interest. The witnesses may be aware of it. If not, they may look at it and see what it is doing. The initiative also assists migrants to gain employment. It helps employers because many of them do not understand what supports are available to get people with disabilities into the workforce. Employers for Change is an employer-led initiative, which the witnesses may not be aware of. It may help businesses to tap into that resource of people who have disabilities but could quite easily work with some support and help.

Mr. Picard mentioned the CSRD, which is also on our radar. I would be interested in engaging with him more on that. Perhaps he will follow up with us on it.

Mr. Karl Picard

I am happy to follow up.

Mr. Simon McKeever

We are a bit behind as a Government and a nation because the CSRD is the next Brexit, Y2K and general data protection regulation, GDPR, event. It is Brexit level. In our psyche nationally, we are in 2017, pre-Brexit. It is going to have a massive impact from the end of next year. I am concerned when I hear people talking about it because they say it will only affect large organisations with more than 500 employees. Our banks have more than 500 employees and 90% of their loan books are small businesses. They cannot report properly on the CSRD unless they are getting the information from small businesses. This directive is going to have a massive impact. We set up a new training body, the Institute of Sustainable Trade, to help companies get ready for it. It is going to take the level of effort across government, business organisations and civil society we saw in Covid-19 and Brexit to address the issue. It needs to be led by the Government. I do not think the Government is on message at the moment. It needs to be much further out there than it is at the moment. It is going to be massive.

Deputy David Stanton

I agree with Mr. McKeever fully. It is going to be huge and is something we are focusing on in this committee under the leadership of our Chairman.

Mr. Shane Conneely

Specifically on the CSRD, we have engaged with our partners in Brussels in the Eurochambres network since before this was a directive. We are very concerned about it. Our ask is that there be some kind of voluntary SME-level reporting available because it would give standardisation across the network. One issue for businesses across Europe is that they are in the value chains of these larger firms. Some have environmental, social and governance, ESG, commitments which are not the same as the CSRD commitments. That means they have to report on sustainability anyway, and for every one of their customers, they have to report in a different way, which is creating loss of business for many operations. Some kind of a standardised framework would be very useful.

On disabilities, we acknowledge we are part of Employers for Change. Supports available for people with disabilities could do with a refresh. Currently, the supports are for employers to employ people with disabilities, not for the individuals who have disabilities. That person could work remotely from home, could get the supports they need to facilitate them working from home and working remotely, and could then have their pick of employers at that point, which would help that particular system. Those are our two asks in those areas.

Mr. Neil McDonnell

On disability, employers are very keen to help but there are significant knowledge and finance costs involved in employing people with disabilities. As part of a consortium with Chambers Ireland and the Irish Business Employers Confederation, IBEC, we ran the employer disability information service until the end of 2019. It was not renewed by the National Disability Authority, to our great regret, despite us corresponding with the whole of the Government in the lead-up to the termination of that. We are determined to do our best and put our best foot forward but we must resource small businesses to do that.

On the CSRD, not alone is the directive going to be very substantial, but we have also written to the Government, MEPs and the Department of Enterprise, Trade and Employment about the report of the JURI committee, which followed that directive last November and advocates an even more stringent version of the CSRD. None of this is badly-intentioned. It is hugely well-intentioned but there is an absence of understanding in the European Parliament of what it means for a small business to, for instance, evaluate the value chain of a tea supplier in Kenya or a clothing manufacturer in China. Realistically, it is not possible.

If we want to go the route of the CSRD in the way it has been vocalised in Europe, we may as well just say we are no longer interested in having small businesses in the value chain. As we have already heard, what will happen is that big businesses, but also local authorities and the State, will not contract with businesses that are not able to validate their supply chain all the way down. That will just kill off a lot of small importers.

Mr. Simon McKeever

On disability, as an organisation with reach throughout the country, we absolutely stand ready to help in any way we can and to support any initiative brought forward, including in the context of assisting with finding jobs for refugees. We were very vocal about that last year when the invasion of Ukraine began.

To come back to the CSRD, I want to labour the point because I think we need to get moving on this. This is Brexit all over again. From a small business point of view - and, in fact, from everybody's point of view, we not only have the CSRD coming down, but there is the corporate sustainability due diligence directive, which is all about human rights. As the exporting association, what is important for us is that when people talk about sustainability, they think it is all about going green and climate change, but it is not. There are 17 sustainable development goals, each of which needs to be looked at. The human rights aspect is very important in the context of all of our supply chains. A reporting requirement in that regard will be forthcoming in 2028. There is now EU taxonomy, which is backing everything up and sitting underneath the CSRD, and it will be virtually in place in the next few months. Even the biggest companies in the world are not fully across this, so I labour the point deliberately. What is proposed is massive. If you talk to any of the large law firms and consulting houses, they will indicate the amount of work and expense that are going to be involved in getting companies ready to be able to report on this. It is huge.

Deputy David Stanton

I agree with the witnesses. We have done some work on this already but we need to do a lot more. The witnesses might keep in contact with us to keep us informed about their concerns, maybe with suggestions as well.

Mr. Simon McKeever

It requires something like the working groups we had in respect of Covid and Brexit. It requires Government, business and civil society coming together to get ready for it, like we had with the various groups working on the other big issues.

Deputy David Stanton

That is a serious clarion call. I agree with Mr. McKeever, because I know how serious it is. We will certainly follow that up.

There are two other issues. The point about scaling up is well made. When Leo Clancy was before the committee recently, he stated that Enterprise Ireland is aware of what is required with regard to scaling up and is working on it. Have the witnesses engaged with Enterprise Ireland on that issue?

Mr. Simon McKeever

Absolutely. I am very much on the record in respect of this matter. I feel it in my heart. In a previous existence, I worked for the British versions of Enterprise Ireland and IDA Ireland, so I am experienced in working in both of those kinds of organisations. There are many threats coming to the Irish economic model. When we look at sustainability and at Ireland as a base for manufacturing going forward, we can see what the future holds in the context of to getting stuff on and off the island, particularly as Ireland is more expensive than any country in Europe. The ability of the transport sector to meet its 2030 goals will be a problem..Where will that leave us, as a nation? We really need to up our game in all of this.

Mr. Talbot made a point about organisations like ours. There is definitely a move to bring us into the fold in terms of being able to deliver services to these companies. An organisation like ours is able to identify what is a critical problem. In 2015 or 2016, with Brexit coming down the road, we had a whole set of training courses ready for Brexit in 2017. There is still huge demand for those. We are very close to the coalface in terms of being able to identify problems or identify solutions that will help companies in a very practical way. There is a move to bring us in further and we can add to that picture quite significantly.

Deputy David Stanton

It is something we will keep an eye on. Mr. McDonnell mentioned that ISME is not part of the LEEF. Why is that the case?

Mr. Neil McDonnell

The honest answer is that I do not know. The issue is becoming live because collective bargaining is under consideration. We do not have a problem not being part of LEEF if partnership 2.0 does not intersect with small business. What we are talking about is largely the way this works in Europe. Business in Europe is largely organised; it is a quasi-voluntarist model, but those businesses that are not involved in sectoral collective bargaining are not interfered with by it. If we go down a partnership route similar to that which as existed here until 2009, however, we will need to get it right this time. The partnership model became so involved on the previous occasion. The concerns of genuine small businesses like Ms Dunne’s are not at the table if they do not have SME representatives there. We really need to have that.

Deputy David Stanton

We have done a lot of work on remote working as an issue, in particular the impact it has on employers and businesses and on workers themselves. We have looked at the positives and the negatives. We have been talking about sustainable development goals. We have to consider that people do not have to travel; they can stay at home, they are not burning diesel or petrol, their quality of life improves and so forth. I recently engaged with a very skilled therapist in the public sector who has to spend one day per month doing administrative work. Her line manager said that she must come into the office. She told me that she is out of here and is going somewhere else. She is an extremely skilled therapist and is very diligent, but the way she was treated by her line manager was appalling. What are the witnesses’ reactions to remote working? Where does it stand? Can do more in respect of it?

Mr. Shane Conneely

We would like to contextualise remote working in a broader context of flexible working. This is because it is an issue within a broader context. The workplace has changed, and employers are changing with it. There are certain sets of managers who are very unhappy with it. I probably do not have a huge amount of sympathy for them because the tide is shifting. If they do not shift with it, they are going to be left stranded.

What we are finding around the country is that very often the first question potential employees are asking is whether there is remote, flexible or hybrid working. If the answer is “No”, they are not asking about salary from that point on for many jobs. There are particular businesses and sectors where it is not possible, and that is fine. There are particular businesses which may be better suited towards one form or another. An issue that has come up is that firms which perhaps set up in the past six or seven years and had an offer that staff could live wherever they want, but at lower wages, are finding that this is not competitive anymore.

Probably the most profound issue is in those small to medium-sized towns where staff were working for a local firm and they are now working for firms in Dublin, Cork and Galway. That is becoming a bigger issue, and it means their positions are being backfilled by people with perhaps lower skill sets, which means productivity is declining. There is a general upskilling required in the context of the economy. A response to that would be to move towards some kind of voucher scheme to allow those who are in employment or seeking employment to engage with more modular and flexible upskilling for themselves. The OECD is working on this at the moment. An issue we can see is that a large number of people, particularly women, are underemployed. These people would not necessarily be in full-time work and are perhaps working below their potential skill levels. Having them refresh their skills in order that they can engage to a higher, more effective level would be better for overall productivity.

Mr. Neil McDonnell

On the whole, this has worked out very well. We have to qualify that, however. We typically represent a lot of service businesses. You cannot mind the children remotely, so it is a case of horses for courses. There are businesses that can do this and others that cannot. We think the Government’s hub proposals are very useful in that regard. Yes, it is remote working but there is an element of centralisation involved.

That may be an answer for some of the retail units in rural towns and villages. Aside from the liability context, and a lot of businesses are waiting to see how this settles down because there have been some strange and interesting cases coming out of Europe on this, other aspects that must be considered in the long run are mental health, social engagement and workplace conflict and avoidance of same. Aside from the post-pandemic issues, some of the people who have been extremely busy post-remote working are counsellors, mediators and communication staff. We offer one of these workplace services. Whereas previously one could get an appointment almost on demand, now people who are ringing up, sometimes with quite serious concerns, are being asked to wait six, eight or 12 weeks to see a counsellor. There are down sides to this that we are not talking about openly, but let us keep them all in the round.

Mr. Simon McKeever

By and large remoted working has worked very well and has become the norm. Employers have to offer it. It assists services, businesses and office workers. It does not suit the manufacturing sector or the transport sector where people physically need to do things. When I saw my own gas bill for the first two months of this year I nearly fainted. There is a cost to working at home in the winter months at the moment. We note that electricity and gas bills have been dropped for businesses but not for consumers yet. This needs to be addressed. There is a cost to people.

I like the idea of the hub processes. I believe people have become quite introverted as a result of home working. Is the call for therapeutic support at the moment because of Covid or is it because people are more isolated than they were? It would be remiss of me not to say there are definitely concerns in some companies around productivity levels. There is also a sense that companies have lost contact with their employees and vice versa. We need to look at how that community piece is going. We run a lot of events and there was a rush from physical events to webinars during Covid. There is not a huge demand for them at the moment. I get the sense that some people, not everybody, have withdrawn a little from that engagement piece. This does not apply to everybody but there is a sense among businesses that there is a reluctance around the level at which people want to go out and meet, and in business this aspect is very important. One cannot do everything over Teams or Zoom. One must meet people. That is an issue. Introversion is probably the wrong word but there is a withdrawal of people. Maybe we were all meeting too often beforehand.

Deputy David Stanton

I thank the witnesses.

Mr. Ian Talbot

To go back to the Labour Employer Economic Forum, LEEF, Chambers Ireland is represented on LEEF. Membership selection rests with the Department of the Taoiseach as much as with the people here today. I do not have the terms of reference with me but LEEF has quite a limited agenda, which is around matters affecting the employer and employee relationship, excluding pay. Most of the work has been done in the past through subgroups. These included groups on pensions, housing, aviation and the auto enrolment subgroup, which was run by the then Minister for Employment Affairs and Social Protection, Senator Regina Doherty. Within the enterprise trade and employment area there is a lot of overlap with committees being run by the Department of Enterprise, Trade and Employment as well. The views of small businesses are being well represented at LEEF, but the membership question is one for the Department of the Taoiseach.

Mr. Neil McDonnell

I absolutely get the point about membership made by Mr. Talbot. The concern we have sprang up in particular during the pandemic when the work safety protocols were being developed and we were not there. They were not the right size for small businesses and I had to write to the Minister at the time about this. Secondly, I absolutely acknowledge Mr. Talbot's point that, nominally, pay is not discussed. The reason we have Ms Elaine Dunne here today on behalf of the childcare sector is that one of the first outputs of LEEF was an early years committee, which produced a joint labour committee JLC. Every effort was made to exclude Ms Dunne from that, despite the fact she represents more than 80% of employers in the sector. While nominally it is a non-statutory body that does not engage with these issues, in reality it has a very significant bearing on how things happen.

Deputy Richard Bruton

There is another aspect on which I am interested to hear the views of the witnesses. There was a report in today's newspapers from the president of the European Investment Bank, EIB, saying that investment by Irish business in climate and sustainability is only one third of the level made by other member states. This is certainly an issue which is not just coming down the tracks, it is right down the tracks. What are the issues surrounding that deficit and how do we address them? Listening to some commentators one would think the only thing we needed to do was close down data centres and our hero would be free. We need to make hugely transformative change here. I am interested to hear the witnesses views on that.

I must go back a long time now to refer to a McKinsey report which stated that if we want to make an impact on the performance of Irish business then management development skills was the area to invest in. In view of ISME and Chambers both saying that this is a deficit and a time scarcity for a lot of these leaders, do we have the capability to deliver management development programmes? I am aware that Enterprise Ireland has mega-programmes that are Stanford based and so on, but they are for very small numbers of people and not on the scale I believe the witnesses are envisaging here. I would be interested to hear comments on that.

Going back to the point that was made about builders needing a guarantee from the State, will the witnesses elaborate on what exactly that guarantee would look like? Listening from the outside, the Land Development Agency, LDA, is offering a grant if one sells to an owner occupier. It is offering to go joint venture to take some of the schemes that had not been activated, and go into a joint-venture with the LDA to activate them. I believe it is called Project Tosaigh. There are a number of schemes out there to grope towards this guarantee the witnesses are seeking. The number of schemes seems legion. I am wondering what is wrong with them that they are not leveraging the response we need.

Mr. Shane Conneely

Specific to the building one, the issue is that we work on incentives and we work on marginal effects when we are doing things like Project Tosaigh. I am not sure this is ambitious enough for where we are right now. When I suggest that the State would play a more active role, it is specifically with regard to needing X number of properties that it will buy and pay for as the State, then builders and those in the construction sector can tender for those particular projects, and those projects would be designed so that the skills development, which would be useful for across the sector, can be cemented in those builds. This is what I mean. Trying to do something at the margin when we have seen a very volatile marketplace for housing over the past 25 to 30 years, is not going to be that successful a strategy. It has proven not to be a successful strategy so I believe we need to do something different, more adventurous and more ambitious.

Mr. Neil McDonnell

The Deputy has asked if SMEs are going to get involved in the green economy, which is a very important question. I would characterise a lot of SMEs as very similar in financial outlook to a domestic consumer. There was a very good story in the newspapers last year about a Green councillor, I believe she was in Bray, who did a deep retrofit on a house. It cost in the region of €70,000 or €75,000. After a full SEAI grant she was still left with €30,000 odd to pay.

The payback for that person, even with energy bills reduced to zero, and even at current prices, is probably 15 years, so there is a capex issue. This might need some left field thought from the Government. The only debt products that worked well during the pandemic were the likes of the future growth loan scheme. As for the credit guarantee scheme, the shorter dated debt was not very attractive. We think the only way in which businesses will invest significantly in stuff like deep retrofit or a replacement for thermal energy systems is if that capex issue, which we know cannot be made go away, were dealt with on an equity basis, for example, such that the Government invested in low-interest or no-interest loans with long repayment periods, not dissimilar to the way the fair deal scheme works now in providing old people with nursing home care. The capex problem is militating against businesses investing in this.

Deputy Bruton is absolutely right to identify the education issue. EI does some really significant programmes but they are very much targeted. What we are saying, and the reason we have modelled this on the Teagasc green cert, is that there is tax incentivisation. In other words, as the committee has heard from all three bodies today, the commodity that small businesses are shortest of is probably time. They will not make a time commitment unless there is a coupon attached to it. We suggest something to make it worthwhile. We are talking about bridging knowledge gaps that we know exist in employment law, treasury, finance, export familiarisation, digitisation and the green economy. We are committed to getting that, and I think the Department of Enterprise, Trade and Employment is very much committed. Whether the Department of Finance is is a different thing, but we will keep banging the drum.

Mr. Simon McKeever

On Deputy Bruton's three questions, I will defer to chambers on the construction piece, but I think the reason for low investment in sustainability is that it is not perceived as critical yet. I go back to what I said earlier. This is like 2017, with Brexit. There is a perception that this has not become critical yet. As I said, we had developed all these training courses by 2017. We had three roadshows going up and down the length and breadth of the country from 2016 onwards talking about Brexit. I was all over the media on it, yet the traction within companies to do something about it really came about only in 2019. That was because the deadline was looming.

What I could not think of, and what I was trying to call for the other day, is the CSRD stakeholder group. There were various stakeholder groups across the Government engaging with the likes of us representing members, with the Government extremely vocal about it and supporting change in it. Excuse the turn of phrase, but this has not become a burning issue for companies yet. They do not necessarily see the advantage to doing it when there are lots of other things going on. If I may leave the committee with an image, this is like 2017, with Brexit. That is where we are.

Deputy Richard Bruton

I am of the view that it is well past five minutes to midnight on this-----

Mr. Simon McKeever

Yes, but that is not the way companies see it.

Deputy Richard Bruton

-----in terms of circularity, the green deal and all the things coming headlong at us. How do we get that sense of urgency into this? Is it with sectoral strategies? Do we drill down and look at food and construction? Is that the way we might-----

Mr. Simon McKeever

I am a firm believer that this will come about. What will make people change on this is legislative change. The CSRD is a huge issue that we need to embrace to help companies change in this regard. It is landslide legislation that will force change and is time-bound. There is the nice-to-have stuff that goes with sustainability and then there is the hard business reality of it, which are two completely different things. What has forced companies to change in the past on these critical issues has been legislation, the Government and business. We are very effective at that in this country, where it is Government-led and there are organisations like ours around the table, where we are able to support the Government but also the Government supports us to get that message out. I think the CSRD with the stakeholders group is the way to start that.

Deputy Bruton also mentioned management skills and asked if we have the capacity within our education sectors to deliver all that. I think we do and I think the education piece is changing. I think the way in which third level education engages with business is changing. We are part of the Convene programme, which is funding the Government has put in. I think it was €17 million initially. We work with the Innovation Academy in UCD and TU Dublin and we have set up a thing called the Institute of Sustainable Trade, which is about professionalising our industry. We are focused on leadership, sustainability and international trade. We originally went down the route of creating a master's programme in sustainable trade. We looked at that and decided there was no point in doing it, so we have gone down the route of looking at developing a professional body. There are, I think, 48 pieces of paper in international trade-related courses delivered by 16 or 17 third level education bodies in Ireland. We work with TU Dublin, the Innovation Academy in UCD and Arizona State University in the United States to deliver a set of on-the-framework and off-the-framework programmes. It is like what we said to Deputy O'Reilly. We are very close to businesses so we understand the problems they are having and we are able to design and deliver very practical solutions to them. There is still a huge demand for all our customs training courses. We are in the process of developing a programme for what are called certified trade advisers. We think we will be able to roll that out to some of the agencies in Ireland because we know what is required.

The capability is there. It is about being a bit more imaginative. One of the things we are looking at in the Institute of Sustainable Trade is micro-credentialing. Typically, if you do a master's, you need 90 credits at level 9. We propose that you could do a professional diploma, another professional diploma and either a thesis or a third professional diploma, each worth 30 points. The way third level education is going is such that you can have a five-pointer at level 9, a certificate in something you might add to and a ten-pointer from something else. The education system in Ireland is looking at being able to mix and match micro-credentialing within individual universities but, eventually, across the universities and then across Europe. We have the people who are involved in that sitting on our steering committee. We see this as the way forward in terms of organisations like ours being extremely close to business and being supported by third level education. Also, the IEA brand is very strong in terms of the training programmes we already provide, so I think we have the capacity to deliver this in Ireland very close to what business needs.

Mr. Ian Talbot

On the sustainable development goals or climate change front, I empathise with Mr. McKeever on the Brexit issue. We have been banging the drum about the goals since they were introduced in 2015, and our global organisation, the International Chamber of Commerce, got observer status at the UN based on its willingness to promote the goals globally among businesses. We have done all manner of things. For example, for the past several years we have produced our pre-budget submission aligned not on the traditional headings but on the goals that our recommendations impact. Members will see on the front of our presentation today the five goals on which Chambers Ireland, our micro-organisation, is focusing. All our chambers around the country are doing events on them, we produced a toolkit, all our chambers signed a pledge to support the goals, and Mary Robinson was involved in one of our launches in 2019, just before the Covid crisis broke. We are doing an enormous amount of work on why more businesses have not adapted. I have not seen the EIB report yet, but I think a lot of what has been said here already counts. I think someone said people have bigger issues, as they see it, ahead of climate change. There was still for some organisations a fear of debt. They had just paid down their last debt and did not want to borrow more and get into more debt problems when there were crises looming on the horizon.

There are more cost-effective green loans coming into the system only quite recently, so perhaps that is good. Sometimes, for a lot of companies, energy is not necessarily the biggest stand-out cost on their profit and loss account; wages, salaries and other cost of sales are. There has been a shortage of construction workers to get things done. I worry about our message about deep retrofits and whether we are letting perfection be the enemy of good, and if we should be encouraging people to do more basic stuff. We did get most people to change to LED lights a couple of years ago. We must look at whether there is more simpler stuff that we can get people to do rather than say it is all or nothing and that people must move out of their premises or house for six months. There is nowhere for people to go if they move out of their house for three months to do a deep retrofit. That is a real barrier.

That brings me back to Mr. McDonnell's point about taxation. Tax matters to a lot of people. Perhaps we should look at speeding up capital allowances for work done. At the moment, businesses get a write-down of one eighth of the expenditure over eight years. Perhaps we should speed that up for certain types of expenditure. In the past, when corporation tax was 40%, capital allowances were more meaningful than when tax is at 12.5%, but it is still an encouragement.

I also agree with what Mr. McKeever said about legislation. When it comes to packaging, I still get annoyed on the rare occasion when I get a takeaway coffee cup and it says on the outside that it contains plastic. There are symbols but all I want to see is whether it is compostable or recyclable. How do we speed things up legislatively in that regard? Two years ago, everyone said it would be too expensive to have a compostable cup. Now a lot of places have them and it does not seem to be a big deal.

There are a lot of small things. The Sustainable Energy Authority of Ireland ran out of money a couple of years ago, quite early. That put people off as well as they were concerned about being left hanging. A lot of things have contributed to us being way behind our European peers but many of them are quite easily fixed.

On the management skills in this area, I am not 100% sure but I do not think it is that difficult. I think it is about the motivation and the choice as much as the management skills to deliver on projects in this case. That is it. I thank the committee very much.

An Cathaoirleach

That concludes our consideration of the matter for today. I thank all the witnesses for assisting the committee in its consideration of this important matter. The committee will further consider this matter as soon as possible. That concludes the public session element of the meeting. I propose that we go into private session to consider other business. Is that agreed? Agreed.

The joint committee went into private session at 11.33 a.m. and adjourned at 11.52 a.m. until 9.30 a.m. on Wednesday, 8 March 2023.