Ms Geraldine Magnier:

Is mór an onóir dom a bheith anseo leis na baill inniu ar son 98% de ghnólachtaí na hÉireann. Tabharfaidh mé achoimre ar na dúshláin ghnó a bhíonn acu. I am grateful for the opportunity to be here today. I am joined by David Broderick, director of the Small Firms Association, and Jonathan McDade, head of policy and public affairs lead for the SFA. Joining us online is our colleague Rebecca Harrison, SFA council member and managing director of Fishers of Newtownmountkennedy.

The Small Firms Association is delighted to be invited to address the Oireachtas Joint Committee on Enterprise, Tourism and Employment on the topic of competitiveness and the cost of doing business. It is important to state that Ireland is a nation of small businesses. From shopkeepers to tech entrepreneurs, small businesses are imprinted in every community across the country. Small businesses, defined as enterprises that employ up to 50 people, make up approximatively 98% of all businesses in the country, employing approximately 43% of the total private sector workforce. This is proof that the entrepreneurial spirit is in the DNA of our nation.

The SFA is the representative body for small businesses in a variety of sectors, such as manufacturing, hospitality, retail, technology, agriculture, online sales and professional services. Our mission is to be the trusted partner of small business in Ireland, to deliver business-focused advice and insights to member companies, to influence Government policy to the benefit of small businesses and to connect our members in a thriving community. It is also our mission to ensure that the Government, the Opposition parties, the Civil Service and the public realise the importance of the small business sector. This is why we are delighted to take this opportunity to address this Oireachtas committee.

Recently, the SFA took the pulse of the small business community with a national survey conducted by Amárach. The survey follows a similar study a year ago that mostly focused on business costs. This year’s survey tracks business cost trends and examines issues around access to finance, public procurement and the adoption of artificial intelligence, AI. The details of the AI survey will be published next month. Over 350 small businesses nationwide took part in the survey in April and May. A key finding of the survey is that 49% of small businesses have seen costs rise in the past 12 months. This figure is down from the 84% recorded in the 2024 survey. However, it is worth noting that, this year, 44% of businesses report no change in costs, which further highlights that many businesses are still operating in a high-cost environment.

The other key findings of the small business survey are as follows. Some 31% of all small businesses reported an increase in labour-related costs in past 12 months. There has been an 11.7% increase in business costs among businesses that have reported increased costs. Borrowing among small businesses has fallen significantly, with only 13% claiming to have done so in this year’s survey compared with 40% last year. The percentage of businesses that state they have not borrowed any money in the past two years has increased from 54% last year to 81% this year. Debt levels have decreased, but almost half of businesses surveyed say that there are barriers to accessing needed finance. Some 54% of businesses surveyed state they would be unable to trade beyond six months without additional funding, a significant increase from the 35% reported in last year’s survey. Of the businesses that have successfully sourced funding in the past 12 months, 62% borrowed from the pillar banks, an increase of 24%. However, 22% borrowed money from family and friends, an increase from the 19% reported last year.

When businesses were asked to rank the most challenging costs, 20% stated that employment costs were the most challenging and 25% of businesses ranked mortgage or rent payments as the most challenging. Of all the businesses surveyed, 12% stated regulatory costs and 14% stated raw material costs as the most challenging costs. Regarding public procurement, 77% of the companies surveyed stated that they had not considered pitching for public tender contracts. One of main reasons for companies not considering these public tenders is a lack of resources due to the process being quite time-consuming, along with prohibitive criteria for small-business participation. The survey also found that 81% of small businesses said that the Government needed to do more to help small businesses, up from 74% last year.

Over the past 18 months, the SFA has been engaging with political and policy stakeholders about the urgent need to address business issues. Ahead of the recent general election, the SFA called for both a long-term strategy for small businesses and short-term solutions to the current cost-of-business crisis. Arising from that, the SFA welcomes recent developments within the Government to tackle rising costs, such as the pause in raising the statutory sick days allotment to seven days and the slight delay in the introduction of the auto-enrolment scheme. The SFA is very pleased with the establishment of the cost of business advisory forum and is encouraged by the commitments in the programme for Government to examine VAT and PRSI rates. The SFA believes these policies are a step in the right direction to alleviate the cost burden on small businesses.

I want to take this opportunity to thank the Minister for Enterprise, Tourism and Employment, Deputy Peter Burke, and his departmental officials for their ongoing dialogue with the SFA. I also want to thank the Government and the Opposition for raising the SFA's concerns within their respective parties and in the Oireachtas.

Recently, the SFA submitted its budget 2026 proposal. Within our proposal are various policy positions designed to tackle the issue of rising business costs for small businesses. One of our key requests is for a temporary PRSI rebate, which would be based on the number of lower earning workers on a company's payroll relative to the increases in weekly labour costs that will occur in 2025, 2026 and 2027. The PRSI rebate would be based on a rebate for each worker below an agreed earnings threshold. This could be operated through Revenue's PAYE modernisation system in much the same way as the employment wage subsidy scheme, EWSS, and other schemes have been in the recent past.

Furthermore, there must be a significant review of our commercial rates system. While we acknowledge that is a crucial source of funding for local councils, the SFA believes that a review of the system is long overdue. In addition, inefficiencies in the tax system must be improved. One specific example is the new enhanced reporting requirement, which has significantly added to the administrative burden for small business owners, who tend to be quite time poor. We recommend a variety of adjustments that will have minimal impact on the Exchequer but will ease the financial burden on small business owners.

With the possibility of increased tariffs between the EU and the United States, the SFA survey found that six out of ten firms were currently taking action to mitigate the tariffs while 22% of small businesses were reviewing spending plans. If a trade war between the EU and US were to escalate, the prospect of a tariff on digital services would have significant downstream impacts on small businesses that provided professional services. This is another reason the Government must introduce measures designed to stem the tide of high business costs in budget 2026.

I again thank the committee for inviting the SFA to address it on this very important topic. The small business community appreciates the ongoing dialogue with Department and Members of the Oireachtas, and in particular the members of this committee. Thar ceann gnólachtaí beaga go léir ar fud na hÉireann, gabhaim buíochas le comhaltaí an chomhchoiste go léir as a gcuid airde agus spéise.