Seanad Éireann díospóireacht -
Wednesday, 8 Nov 1995

Vol. 145 No. 3

Adjournment Matters. - Molitor Report.

Mr. Howard

I thank the Minister for coming in to respond to this matter this evening. As he will probably recall, I referred to the substance of the matter here last week during the discussion on the Industrial Development Bill. Some time ago the European Commission set up an independent group of experts to advise on the effects of legislative and administrative requirements on business, particularly on small and medium sized enterprise. This committee is known as the Molitor committee.

Molitor has reported and from my reading of the report the central theme is that over-regulation and the cost of compliance is inhibiting the growth and development of small and medium enterprises in Europe. In addition, over-regulation is putting Eurobusiness, large and small, at a serious cost disadvantage vis-à-vis the business and products of, say, North America and the Far East. The report calls for deregulation and for legislative and administrative simplicity on a wide scale throughout Europe.

I want to pick up a few points mentioned in the summary of the report. The report states that overregulation stifles growth, reduces competitiveness and costs Europe jobs. It goes on to say that if Europe fails to take account of the likely trends in the business environment, including its regulatory frameworks, it will suffer reduced competitiveness, slower economic growth and higher levels of unemployment. Europe cannot ignore the fact that other industrial countries with which it competes are making strenuous efforts to reduce their regulatory burdens. The report further adds that there is little purpose in the Union simplifying its legislation if under the cover of subsidiarity or transposition, member states take an opposite course.

The report was published last June and contains 121 proposals on how to improve the industrial development environment. These proposals come under seven headings. They will be further discussed in Madrid next month. A decision will then be taken to prioritise the proposals. Therefore, decision time is near.

I represent the Federation of Trade Associations on a committee in Brussels known as the Committee of Commerce and Distribution which is attached to DG 23. The Molitor report has been discussed in that committee twice recently. I find myself at a considerable disadvantage because I do not know what the Government's position or policy on these proposals is. There is also the disadvantage that no Irish official ever attends meetings of this committee; this contrasts with other members states. I have previously drawn the attention of the Department to this. It is to inform myself properly that I have raised this matter.

The next meeting of this committee takes place on Friday week. I would like information, if it is possible to have it, on the following points. To what extent has the Molitor report been considered here? To what extent does the Government accept its central theme, which is that overregulation is a hindrance to development and the expansion of business, particularly where small and medium enterprises are concerned? How many of the 121 proposals for improvement are acceptable to the Government? Which of them would the Government deem appropriate for priority?

A number of the proposals are of considerable interest to me and I feel will they will impinge to a substantial extent on how industry progresses here. I am concerned to know what the position is with regard to these proposals, particularly Nos. 2, 4, 8, and 12, which are classified as general proposals. Under the heading of food hygiene, what is the policy on proposals 1, 2 and 15? With regard to the environment, I am concerned to know what the position is on proposals 1, 3 and 9. Where small and medium enterprises are concerned, I would certainly appreciate being informed, if this is possible, of what the Government's position is on all 14 proposals under that heading.

The committee referred to what it considers an undesirable practice in which national governments, in giving effect to EU directives in domestic legislation, avail of that opportunity to add on an additional raft of regulations which are not required to give effect to those directives.

Minister for Enterprise and Employment (Mr. R. Bruton)

I thank the Senator for raising this issue. The Molitor report is important and it draws attention to an issue which is well understood by anyone in business, which is that increasingly there are heavy burdens in complying with a range of regulations across the board. Many of the regulations are important and are related to health and safety, labour rights and environmental protection. However, they have often evolved without a proper consciousness of the compliance costs imposed on business. Business has often not been properly consulted before the regulations evolved and the benefits of regulations were not compared with the costs they might impose on particular businesses.

This group was named after its chairman, Dr. Bernhard Molitor, and had an Irish member in Mr. John Horgan, the former chairman of the Labour Court. The work of this group is important. It would not be possible to respond to the Senator's queries on the hoof. Out of 121 recommendations he has listed ten or 15 in which he is particularly interested. The Government has not evolved a specific response to each one. At the Cannes Summit it was concluded that this issue should be addressed by the European Commission and that it should present specific proposals to the Madrid Summit.

In Cannes some member states were concerned that simplification along the lines of the Molitor agenda might be a cover for throwing out important protections which they wanted to keep. Equally, most member states, including Ireland, saw the importance of simplification. At that summit the Taoiseach clearly supported the report and he noted the need to keep to an absolute minimum any friction between regulatory policies and the promotion of employment and competitiveness in Europe. The world competitiveness ranking for the last 12 months shows that many EU countries, including Ireland, are declining in that ranking. We must be conscious that excessive regulation can be damaging to competitiveness.

The European Commission is preparing proposals which will be presented in Madrid and my Department and the Government are awaiting these with interest to see how they set out the way in which the Molitor agenda can be advanced. Everybody recognises that simplification of rules is attractive in principle, but it can be quite difficult to implement. There have been efforts in the past at national level — I am sure the Senator is aware of them — to carry out an audit of all regulations with a view to simplification, but this has not gone far. The process has to be accepted at the highest political level and there must be a commitment to see it through. There must be a proper strategy based on consultation to make sure people are happy that the baby is not being thrown out with the bath water. There must be an emphasis on small firms and a focus on creating a new administrative culture.

The report was discussed in Brussels this week at the meeting of the Council of Industry Ministers. The EU Commissioner, Mr. Bangemann, put forward some tentative views of the Commission as to how it might advance the agenda. It would like to see a move towards codification of law so that the review of certain regulations would be forced to surface and if they did not fit into the code they would cease to be applicable. The Commission seems to envisage an audit procedure. At this stage, until we see the precise vehicles, it is hard to react to the overall report.

Our own approach to the agenda is more important. As well as a European agenda there is very much a national agenda in this area. The Senator will be aware of the small business task force, which identified about 50 administrative headaches in taxation and other areas. All of its recommendations cannot be implemented but the Department is currently considering what can be implemented and we hope to make proposals for specific changes which could be implemented quickly. We would also like to develop a process where simplification becomes a permanent feature in all Departments; it cannot be just driven from one Department. My Department does not have responsibility for many regulations which affect businesses.

The Government supports the process and wants to develop the principles of simplifying forms, improving administrative procedures, creating a business friendly enforcement system and looking at compliance costs before signing regulations. The issue now is how to move forward in this regard. I hope to come up with proposals in the near future which will address the issue of administrative simplification. I have appointed the small business forum which advises my Department and it has already addressed this issue as a priority. We are trying to put together an agenda which will lead to an action plan.

I assure the Senator that we are aware of this problem, but we are equally conscious that this area has been examined before without great success. We must prepare the ground well and we must ensure that people buy into the process. However, that takes time.

I thank the Senator for raising this issue. I know he would like a more comprehensive answer on issues such as hygiene, etc. However, I will take note of the specific points he raised and, if possible, I will arrange to send him a more detailed response by letter.

The Seanad adjourned at 9 p.m. until 10.30 a.m. on Thursday, 9 November 1995.