Damien English (Meath West, Fine Gael)
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We are to have a presentation on the future proposals for Enterprise Ireland's micro-enterprise and small business unit, with specific reference to how Enterprise Ireland will liaise with local authorities to replace the functions of the county enterprise boards and assist small Irish exporting companies. We will have two sessions today. In the first, we will hear from Enterprise Ireland. I welcome Mr. Tom Hayes, divisional manager, micro and small business unit, Mr. Richard Murphy, head of the CEB co-ordination unit, Ms Orla Battersby, head of policy and implementation, and Mr. Neil Cooney, policy adviser.

Members are reminded of a long-standing parliamentary practice to the effect that Members should not comment on, criticise or make charges against a person outside the House, or any official by name in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence in respect of a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any persons or entity by name or in such a way as to make him, her or it identifiable.

I now call on Mr. Hayes to begin the presentation to the committee on Enterprise Ireland's new micro enterprise and small business unit.

Mr. Tom Hayes:

I thank the Chairman and members for the opportunity to attend this afternoon and contribute to the important work of this joint committee. The Chairman already introduced my colleagues so there is no need to repeat that.

We have been asked to outline Enterprise Ireland's proposals for the new micro enterprise and small business unit and to draw reference to the proposed liaison with the local authorities on how this unit will assist micro enterprises in Ireland. Before I take the committee through our presentation, it is important to say that the Government decision to establish local enterprise offices throughout the country, replacing the county and city enterprise boards, CEBs, is being brought forward by an implementation working group, which is chaired by the Department of Jobs, Enterprise and Innovation and includes members of all the key stakeholders. These include county and city enterprise boards, Enterprise Ireland, the local authorities and the Department of the Environment, Community and Local Government. This group has been charged with reporting back to the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, by December and has been tasked with overseeing the practical implementation of the Government decision on the restructuring of the existing micro and small enterprise support structures with a view to creating an enhanced national enterprise support model.

The overriding objective of our work is to build on the already excellent work undertaken by the county and city enterprise boards and to bring to bear the input of the local authorities in developing an enhanced micro enterprise support system. The committee will also appreciate that the implementation working group is engaged in reviewing a range of issues and decisions on key aspects of the implementation process have yet to be made. A number of sub-groups are working through elements of the implementation process and these include functions and structures; service level agreements, which will underpin the relationship between Enterprise Ireland and the local enterprise offices; evaluation and approval procedures; and human resources.

I will now take the committee through some of the key points of the statement. I will preface my comments on the micro enterprise and small business unit by setting its activities in the context of Enterprise Ireland's overall objective on behalf of the State. Above all else, Enterprise Ireland's objective is to develop capability to generate sales and exports and to grow jobs in Irish companies, which is critical for sustaining the economy. In short, our job is to help companies create jobs. Enterprise Ireland client companies employ, on a full-time basis, over 141,000 people throughout the economy, supporting direct and indirect employment which is estimated to total more than 300,000 jobs.

I draw the attention of the committee to the fact that Enterprise Ireland client companies have a similar economic impact in the country to foreign-owned companies here both in terms of the number of jobs supported and also the estimated €19 billion in annual expenditure in the economy. The sales, particularly the €15.2 billion in exports achieved in 2011, that sustain this level of local impact have to be won day in, day out by our client companies throughout the world. Our job in Enterprise Ireland is to focus on all the elements of what a business or an entrepreneur needs in order to export successfully and create jobs. More than 8,000 jobs were created by our client companies last year. A similar number of jobs were, unfortunately, lost, mainly as a result of the continuing contraction of sectors such as construction and related business activity. However, it is critical that the severe losses of previous years have now been stemmed.

This year has focused on encouraging investment and supporting our client companies in a move to a growth path. In the first nine months of 2012, a total of 5,408 job commitments over the next three years, linked to Enterprise Ireland approvals to client companies, were secured. Additionally, in the last two weeks, the Kerry Group announced the establishment of an industry-leading global technology and innovation centre in Ireland. This €100 million investment will create 800 jobs over the next four years, as well as 400 jobs in the construction phase, which will be part-funded by the Department of Jobs, Enterprise and Innovation through Enterprise Ireland. This adds to a number of significant announcements by indigenous companies over the past months, such as Dawn Meats and EirGen in Waterford, Shay Murtagh Precast in Westmeath, GenCell in Limerick, Technopath in Tipperary, Danone in Wexford and Cork, Copperfasten in Galway, Sysnet in Dublin and Eishtec in Waterford.

A major aspect of our work is supporting indigenous start-ups each year and this is closely linked to the development of new sectors and clusters of job creation in the economy. In the first six months of the year, 53 new innovative high potential start-up, HPSU, companies were supported by Enterprise Ireland. Together, they plan to create over 900 new jobs by the end of 2014. Both the number of investments and the number of jobs to be created are significantly up on the same period last year. Over the past ten years, Enterprise Ireland has supported and invested approximately 800 high potential start-ups, which now generate approximately €1.5 billion in sales per annum, of which 75% is exported. These companies have directly created 12,000 jobs and account for a similar number of indirect jobs in the economy. I would suggest that a quiet revolution has been taking place within indigenous industry over the past number of years. Our efforts over the course of this year are likely to see us support the greatest number of high potential start-up companies ever supported by Enterprise Ireland in one year. We have supported a total of 80 HPSUs against a target of 95 for the year and, in addition, we will have supported a further 60 emerging start-up companies under the competitive start fund, which is building a pipeline of companies in the economy which will help create sustainable jobs into the future.

Underlying this end product of start-up companies support is a system of action which supports entrepreneurs in their efforts to set up internationally focused, innovative companies. This includes the development of an effective and sustainable seed and venture capital system in Ireland, which provides the necessary finance for these companies, in addition to other supports aimed at increasing the availability of finance such as business angels and working with investors here and abroad. The provision of support through the community enterprise centres, CECs, in every county as well as incubation space across Ireland is often forgotten about. Enterprise Ireland has invested substantially in CECs.

This year, we approved further support for the business development managers within 37 of those centres. These people are or should be the beacons of entrepreneurship in their communities. The incubation centres in the institutes of technology and universities are providing a support environment for approximately 300 companies employing over 1,300 people. We undertake a range of workshops, seminars and training programmes for entrepreneurs. These are designed to aid the development of their business programmes and plans and assist them in the process of getting their companies off the ground. The significant efforts of our high-potential start-up division seek to identify entrepreneurs and offer advice and assistance in the very difficult early-stage start-up phase. Ongoing support and engagement with the CEBs throughout the country is also a feature.

Enterprise Ireland has worked very closely with the CEBs. They are an important part of the State apparatus to support entrepreneurs and help to drive the creation of jobs throughout the economy. In recent years, this has involved having a responsibility for the central co-ordination of the CEBs through our CEB co-ordination unit in Enterprise Ireland. The unit is based in Shannon, and my colleague, Mr. Richard Murphy, is responsible for it.

It is clear that the CEBs have an excellent track record in developing and promoting entrepreneurship and enterprise in their respective areas. The challenge, of course, is to maximise that impact and activity and to ensure consistency in the delivery of services.

As the committee is aware, the Government made a decision earlier this year to enhance the micro-enterprise and small business support system. The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, recently set out his vision for the reform of small business supports which will deliver a better and improved service to enterprise. Micro-businesses and small businesses are crucial to our economy. Ensuring that they can start, expand and export comprises a key pillar of our plan for jobs and growth. This is why a part of the action plan for jobs commits to improving the support service for small businesses. It is crucial that we see these reforms through in a way that delivers improved services for the businesses that need them.

The local enterprise offices, LEOs, will deliver access to micro-business supports, such as: finance, marketing, mentoring and management development; a progression pathway for ambitious companies from LEOs to Enterprise Ireland; local business advisory services, including regulatory, licensing and planning services; advice on accessing local procurement processes; access to commercial and enterprise space; access to promotional space; and local networking programmes and initiatives to support early-stage companies.
Microfinance Ireland, MFI, is a real example of the latter. Applications to MFI are to be made with the support of the CEBs. The CEB network and MFI are working on a service level agreement to underpin the CEB role, which role will continue into the LEOs.

The Minister has outlined the key elements of the Government's plan to bring forward the establishment of the new LEOs. These include dissolving the 35 CEBs and transferring their functions, assets and liabilities to Enterprise Ireland. This will be underpinned in primary legislation. Another element includes delivering an enhanced service to the sector through the LEOs, which process will be underpinned by a robust service level agreement between Enterprise Ireland and the local authorities. The plan is to ring-fence the CEB staff to retain their expertise, enterprise culture, skills set and capability. This is vital. The Minister is to retain responsibility for enterprise policy and budgets.

The Minister said that, by working together, the new LEOs will deliver improved and expanded services to small industry but will also provide more direct insight for local authorities and county managers into the needs of small business. It is Enterprise Ireland's objective to have the Minister's vision of an enhanced, more consistent and coherent set of enterprise supports for small business delivered through the LEOs.

The work of the CEBs and the co-ordination unit in Enterprise Ireland must continue as normal during the planning phase of the implementation of the Government's decision. It is crucial that entrepreneurs and client companies remain the primary focus of all the agencies.

The design and rolling out of the small business unit is currently under development as part of the work of the implementation working group. However, it is fair to state the objective of the unit will be to lead, develop and manage the enhancement of a support system that generates innovative export-focused enterprises that will result in sustainable employment.

With regard to the local enterprise offices, the unit will have responsibility for the potential exporters unit and Enterprise Ireland's regional office network, which also provides supports to client companies throughout the country.

With regard to the areas of corporate governance, compliance and stakeholder management, let me refer to the key pillars associated with the centre of excellence that is to be established. The system will be underpinned by a service level agreement. The agreement will be very clearly dictated by metrics which will include: the number of start-ups supported - financial and non-financial; the number of jobs created and sustained; the economic impact locally, which will be defined in terms of increased sales, exports, employment and economic expenditure; progression pathways, with reference to the number of clients that progress and are transferred to Enterprise Ireland; the number of entrepreneurial promotional activities undertaken at local level, in respect of which we have an ideal opportunity to promote entrepreneurship at all levels locally; the number of micro-financed loan applications assisted; and a range of local authority service-associated metrics. There will be promotion of client development through the development of the pathways between the LEOs and Enterprise Ireland, and the progression of LEO clients to and from our high-potential start-up division, the potential exporter division or our established departments within Enterprise Ireland. This is a core measure and will be part of the performance indicators.

With regard to knowledge, competence, collaboration and the transfer, there is a wealth of knowledge, competency and resources within Enterprise Ireland and across the LEO network. An objective will be to increase the development, promotion and evaluation of a best-practice enterprise system. The unit will also assist with national event management, including the national enterprise awards scheme, and facilitate and support the LEOs in organising the delivery of the national enterprise education programme, including the national student enterprise awards. The unit will also facilitate the development of sectoral and regional networks and clusters, which will involve client companies from the IDA, Enterprise Ireland and the CEB, to develop businesses opportunities such as sub-supply to the multinationals by micro-enterprise.

With regard to online support, we would draw on material and best practice from around the world in establishing the centre of excellence for micro-businesses and small businesses. Based on the experience of our potential exporters unit to date, we have developed a customer-friendly interactive benchmarking tool, which has already been used by over 700 client companies. This will enable all inquirers and start-ups to gain access to basic information, such as signposting, how-to guides and where-to guides for the development of their businesses.

The priority is now to work through the implementation process and ensure the best-practice support system for micro-enterprise can be put in place. This will undoubtedly require the best efforts of all the stakeholders in this new approach, including the existing CEB network, the local authorities and Enterprise Ireland. It is clear that a real opportunity exists to expand and improve the range of services available to micro-enterprise in a single, accessible local support office.

On behalf of my colleagues, I thank the committee for inviting us. We will be happy to respond to any questions members might have.

Damien English (Meath West, Fine Gael)
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I thank Mr. Hayes for the good breakdown of the procedures.

Dara Calleary (Mayo, Fianna Fail)
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I welcome the delegation. Enterprise Ireland does fantastic work. I had the honour of travelling abroad with it to see the work it does there in addition to the work it does locally. I commend it on the initiative launched yesterday for female entrepreneurs. It is a niche that needs to be developed, and the initiative is a good start in that regard.

I am not convinced that the association between Enterprise Ireland, county enterprise boards and, in particular, local authorities, is good. It has the look of a shotgun marriage.

While respecting the work Enterprise Ireland does, the enterprise boards have fulfilled a niche for companies that have been established since 1993 that were never Enterprise Ireland companies. Much of the language used in Mr. Hayes's presentation suggests they are still not on Enterprise Ireland's map. He spoke about export-focused microenterprises. Many enterprises which fulfil a local demand or service got their start under the county enterprise boards and while they may grow and eventually develop an export niche in their start-up phase, these enterprises did not do that. When the local authority is brought into the mix and one thinks of small business and business efficiency, one does not think of a local authority. They do not get it. They do not understand the pressure under which small businesses operate. I am not convinced this new model will be of better service to businesses seeking information and start-up support.

I understand the implementation working group is to report to the Minister by December. Does Mr. Hayes have an understanding of the timeline following that? I ask that in the context of budget negotiations for 2013. Where is the budget that traditionally would have been part of the county enterprise boards due to go in 2013? Will it remain within the enterprise boards or will it go to Enterprise Ireland?

On the section on service level management, Mr. Hayes said that Enterprise Ireland will allocate individual budgets to LEOs based on agreed funding guidelines. Will he expand on what that involves? Are they agreed or what kind of guidelines has Enterprise Ireland in place? Mr. Hayes mentioned that part of the input to that will be a range of local authority services associated metrics. That is a new term. I believe members would be interested in getting some detail on that.

Mr. Hayes said that regarding client pathway development, "there will be promotion of client development through the development of the pathway between the LEOs and Enterprise Ireland". That is welcome but my key concern, and this was mentioned by Mr. Hayes, is the progression of LEO clients through the HPSU, the potential exporter division or established departments within Enterprise Ireland. Where within the Enterprise Ireland is the home for the traditional county enterprise board client? Is there a welcome for them or an understanding of their particular needs as we move forward? Where do the Leader partnerships, especially the Leader enterprise funds, fit into this? Will they come under the remit of the LEO or what experience has Enterprise Ireland of dealing with those?

There is considerable reference to service level agreements and the detail of them in the presentation. Who is responsible for supervising those? Is there an independent arbitration mechanism in place that can be accessed by a client company or a business which feels it is missing out or is there just going to be a cosy-up between the local authority and Enterprise Ireland for the sake of it to show that Enterprise Ireland is being tough on the local authority and vice versa? Is there a robustness to the system or an independent mechanism in place in that respect?

Damien English (Meath West, Fine Gael)
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Mr. Hayes will answer those questions.

Mr. Tom Hayes:

The Deputy asked a number of questions. I will deal with his last question on the service level agreement first. The service level agreement will be drawn up between Enterprise Ireland and each local authority and it will set out the broad parameters of the work we expect to be carried out based on a budget which will be provided to each LEO. Much of the work they will undertake will continue in line with the work they are currently undertaking such as promoting entrepreneurship locally, helping a small business locally, and providing a range of supports in terms of management development and training. We are in the process of drawing up the service level agreement and it is very early days. It is part of the work of the implementation working group, and a broad draft of that will be available in the next few weeks.

The budgets for the CEBs will be subject to the same budgetary arrangements as those that apply to any Department or to Enterprise Ireland. We will go through that process in the next few weeks. I expect the budgets that will be allocated will be largely preserved under measure one, measure two and the administrative support that is provided to the city and county enterprise boards. The legislation is likely to be ready in the first quarter of next year. It is primary legislation and work on it will depend on other priorities, but the drafting of it will take some time. It will probably be the second quarter of next year at the earliest before it is fully operational.

Enterprise Ireland officials sit on the evaluation and approvals committee of all the city and county enterprise boards. Therefore, we are well aware of companies and individuals that are coming through and the small companies that are likely to be in a position to progress to Enterprise Ireland. While the initial priming support is provided through the city and county enterprise boards, we are quite aware of those with the potential to grow. If there is a more appropriate and suitable product or service that can be provided to Enterprise Ireland, these are fast-tracked into Enterprise Ireland. Our potential exporters unit is operating throughout the country and 400 companies have attended the various exploring workshops at which we encourage more local companies to export as that is where they can secure growth. A number of CEB clients have attended those and are now attending the so-called get export ready workshop, which is a follow on to that. There is a reasonable progression trend in place for clients to come from the city and county enterprise boards into Enterprise Ireland. Some have gone on to become high potential start-up companies.

On the so-called one to many approach, in terms of support, Enterprise Ireland has largely dealt with companies that have a staff of more than ten and the potential to export. Our focus has been very much on exporting. That is the world we have inhabited. In terms of a new model, we will have to be one to many, as it were, rather than one to few. A typical development adviser in Enterprise Ireland will have a cohort of companies that he or she will get to know quite well in terms of their business, priorities, management team, marketing priorities and financial arrangements. For the smaller cohort of companies, the types of companies to which the Deputy referred, that would be reliant to a large extent on the domestic market, our centre of excellence unit will develop supports and information that will be available to all those.

For example, in respect of our get export ready model, we examined models around the world as to what constitutes best practice and what other countries do. We should examine what other countries do and learn from that. We now have a benchmarking tool. It would be worthwhile to go onto Enterprise Ireland's website and check the get export ready option, which goes through a number of steps, including whether a firm is ready, whether it has prepared, whether it has the necessary funding, whether its product is right for the market, what kind of distribution channels it needs in that market and what the competition is doing. There is a checklist under that option. We need to develop something similar for small businesses in order that they would be able to do a self-assessment check which would signpost them in the right direction. Such a checklist would include whether they need a mentor, whether they need some further developmental support and whether they have sufficient resources. That kind of a checklist will also be developed under the centre of excellence unit. In the six months we have been operating with potential exporters, we have found that most of the work is done over weekends. These are busy people trying to do business and win sales during the week and then they can access this tool at the weekend. I expect something similar will be developed for very early stage clients and start-up businesses as well.

Peadar Tóibín (Meath West, Sinn Fein)
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Ba mhaith liom buíochas a ghabháil leis na hoifigigh a tháinig isteach agus a rinne cur i láthair an-suimiúil. It is important when we talk about these issues that we contrast the position with what we are up against. We are in the midst of probably the worst enterprise and jobs environment this State has experienced in 50 to 70 years. For all the good that Enterprise Ireland has managed to do during the past year, there has been a net increase of six jobs with regard to Enterprise Ireland companies.

This shows the stark challenge faced by Enterprise Ireland.

The pace of reform in the microenterprise area is quite shocking in that the former Minister, Batt O'Keeffe, raised the change in county enterprise boards a considerable number of years ago but it still is ongoing. I was shocked to hear the planning stage will extend until December and legislation is not anticipated until the next quarter of next year. A representative from the Irish Exporters Association who appeared before the joint committee stated that at present, because of the state of not knowing, there was inertia within county enterprise boards that was having a serious effect. Consequently, over the past three or four years, a time when small businesses and enterprises actually have needed the most support, there has been this inertia in this particular segment. Members would like to see this reform up and running as soon as possible and this is extremely important. One issue mentioned by Mr. Hayes concerned the make-up of the implementation group. Does the implementation group include representatives of SMEs or of SME representative organisations because that is key to good development of that area? Sinn Féin has a major problem with the plans. The party considers the fit between Enterprise Ireland and the county enterprise boards to be quite good even though Enterprise Ireland's regional delivery has been uneven in the party's experience. We believe this could have created difficulty in respect of county enterprise boards in local areas. However, the fit with the local authorities is a wrong fit. The culture of local authorities is not pro-enterprise and in many areas, local authorities are the enemies of small business in the context of their associated costs and procedures. I always think it is akin to three Irish people going to an Australian city, in that it will be the Irish accents and not that of the Australian city that will change. Similarly, in the case of three of four people from an enterprise agency going to a local authority, it is unlikely their enterprise culture will alter massively the local authority culture. The reality is the local authority culture may alter that of the enterprise agency to the negative. This is one of Sinn Féin's major problems in this regard.

I refer to some of the information provided by Mr. Hayes, who mentioned the number of planned jobs high-potential start-up units sought to create. Typically, what is the ratio between planned and actual jobs from high-potential start-ups? What is the failure rate of high-potential start-ups? What is Enterprise Ireland's experience with the credit famine being experienced by businesses and the agency at present? In addition, I refer to a measure that should be developed in this context. Many small to medium enterprises are really stuffed in respect of the local market and export markets therefore are necessary. I have been involved in enterprise development for approximately seven years and one measure I saw that really worked was a programme called Operation Shamrock, in which small businesses in local areas were hand-held into the target market. In other words, an enterprise agency would select five or six really good local enterprises within a county, for example. The agency would identify the target market in the export market and would warm that target market for the companies concerned. It would then set up the meetings, hand-hold them over to the sales meetings and perhaps even chair the sales meetings until the aforementioned small businesses got their first export experience under their belts. This was a major plus in the way it was developed. Perhaps Mr. Hayes will answer some of these questions.

Mr. Tom Hayes:

I thank the Deputy. I revert to the six jobs to which he referred and I acknowledge that is true. However, it should be borne in mind that effectively, we have come through an economic tsunami, both in Ireland and globally, and the wash-out of that still continues. In that context, sustaining jobs is absolutely crucial.

Peadar Tóibín (Meath West, Sinn Fein)
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That was not a critique of Mr. Hayes's organisation. It was more an analysis of the environment in which we find ourselves.

Mr. Tom Hayes:

No, I appreciate that. I am just coming back to it because the figures for this year thus far, which I have provided, are much higher. I had the good fortune to work overseas for a number of years on behalf of Irish companies entering the market. I assure members that business must be won and re-won all day and every day. Regardless of whether someone wins a contract today to supply a major multiple or a systems integrator or a major telecommunications company, such business must be re-won day in, day out through innovating one's product, through research and development, further sales and marketing and through further investment. Consequently, the 140,000 dependent jobs and the other 300,000 indirect jobs must be fought for all day every day. Back in 2011, when competing against companies right around the globe, that was a major challenge. This year, as I noted, we have seen an increase in that regard. More companies are undertaking research and development this year than was the case last year. More companies are undertaking job expansion programmes this year than last year and more companies are undertaking management development programmes. These all are signs that companies are in a position to at least grow and develop and hopefully this will continue over the next number of years.

As for the local authorities, the Government has made a decision in this regard. Part of that decision refers to the one-stop shop and part of it refers to education. I addressed a conference of county and city managers last Friday, at which one county manager made a presentation. I detected therein that they are learning and that an education is under way. While there is an education and a learning to be undertaken by them, they recognise that and this probably is the beginning of a process that already has commenced. In respect of the jobs, I mentioned Enterprise Ireland's high-potential start-up division. This pertains to high-potential start-ups only and does not include our established cohort of client companies. However, over the past ten to 12 years, there have been 12,000 direct jobs. Moreover, these are really sustainable jobs because they are in areas such as biotechnology, the life sciences, the Internet, gaming and telecommunication companies. We have some superb companies supplying to global players in the telecommunications sector, many of which would not be well-known names. However, such companies exist and employ 30, 40, 50 or in one case, almost 800 people. The latter company won the entrepreneur of the year award last year and is planning to take the initial public offering, IPO, route. Many such companies are working away and the jobs fallout therefrom is very low. As for the failure rate, it is quite modest among such companies. While I do not know the precise percentage, it is very small. The main reason for this is Enterprise Ireland invests taxpayers' money and consequently, we ensure a real and significant level of due diligence is undertaken on each project in which we invest. We consider it from the perspectives of the market opportunity, the technology - we will not have any firm coming through that lacks the proper technology - and the financial and the commercial viability of the project, because our money always must be matched by funds coming in from the private sector. We will carry out a due diligence process in this regard and many of the entrepreneurs thank us for so doing, because they realise they have been through a fairly rigorous process in respect of assessing a project and usually are much stronger and better in consequence. Such companies usually survive and many of them now are in the process of going through an accelerated growth programme because we also try to pick winners. We try to support companies that will add value, create the jobs and hopefully will go on to become large-scaling companies into the future.

Peadar Tóibín (Meath West, Sinn Fein)
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What about the export programmes and the necessity to hand-hold?

Mr. Tom Hayes:

On the hand-holding exercise, exports really are where Ireland must go over the next number of years. There is no question about this as our domestic economy still is pretty flat. Consequently, to expand companies must develop exports. Enterprise Ireland has an entire suite and range of supports for companies that wish to export. It has 28 offices around the world, which provide coverage to more than 60 countries. Within the past few weeks, we had 2,500 meetings for our client companies with the people we brought back from overseas. They now are in the process of working through their export plans, which will include business accelerators. In the case of companies seeking to get into markets that are complex and difficult, we will set them up with business accelerators.

These are usually people who have a lot of experience of doing business in Spain, Portugal, Germany or whatever country it might be because the culture is different. These people know the market and can make the necessary introductions on their behalf.

Peadar Tóibín (Meath West, Sinn Fein)
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They would not in general be from the micro employment sector - companies with ten employees or fewer?

Mr. Tom Hayes:

They would be from small companies. Sometimes, the most successful companies who are exporting can be very small companies. We are dealing with companies that employ six, seven or eight people who outsource and possibly subcontract part of their work. We provide mentors and have close to 300 in Ireland, many of whom have international experience. These will help, challenge and guide the companies and provide them with the necessary support. They provide a very important part of it.

In respect of the Deputy's point about clustering and working together, we have something in the region of 30 applications this week under a clustering programme, which again goes back to what the Deputy was talking about in terms of helping companies work together where they will be able to join forces and learn from each other. Hopefully, there will be an announcement with respect to that programme over the next few weeks in terms of the applicants who have been successful.

Áine Collins (Cork North West, Fine Gael)
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I welcome the delegation and congratulate Enterprise Ireland on the great work it does. I have been working with Enterprise Ireland in a different capacity over the years. I have always found it gave everything and I know everyone in it works very hard. In particular, I compliment it on its offices abroad and the work it does abroad. Recently, I went on a parliamentary trip to Australia where we met people from Enterprise Ireland. If I ever get an opportunity to speak to the Minister, I will encourage him to increase those 28 offices to about 48 because it would be fantastic if we had more of them around the world, especially where we are trying to get into new markets.

I do not have a problem with failure. Where there are entrepreneurs, there is risk and there will be failure. The attitude in the US is completely different from the attitude here and we need to open up to that. Most people who fail in business once will go on to succeed the next time or the time after that. I would like to see far more turnover going into Enterprise Ireland than words about how many succeeded and failed because where there is failure, success usually follows.

I am a bit concerned about some of the language we are using in connection with the report and LEOs. Again, much of it is linked to exports. My view of the LEO is that it was aimed at getting people started so I am a bit concerned about that. There seems to be a mess in respect of the one-stop shop. I thought that when the LEOs went into local authorities, they would use more of a one-stop shop approach. If a business needed planning or support, everyone could work together. The LEOs have been challenged by a lack of funding and considerable administrative costs over the past eight or nine years. In particular, the funding has not been increased in the past four or five years. My understanding was that when they were subsumed into local authorities, there would be streamlining where there was duplication of work and there would be better outcomes and efficiency as a result. Again, that does not seem to be in the report but perhaps that is part of the implementation process. Those are my concerns.

My greatest concern is that I have not seen anything in the report about relationship managers meeting businesses locally. Most businesses are usually small, employing one to three people. They are trying to manage sales and deal with the bank, procurement and everything. They do not have the time to look at all the websites or go through all the stuff Enterprise Ireland and the local authorities offer. If we are to grasp the opportunity that exists in Ireland and globally, we must put people on the ground to help others get through this process. Again, the clustering is fantastic and there many opportunities. All the multinationals, of which there are 600, are more than happy to help small companies get off the ground, but for some reason we do not seem able to create the pathway for that to work smoothly. The only way we can do that is to have people on the ground, which would be my one big ask. Otherwise, it will just be changing the name of what is in place. The reason we are changing it is because it is not working to its optimum level and we need it to work at this level in the challenging times we face.

Mr. Tom Hayes:

The Deputy quite rightly mentioned the area of failure and I fully support her ideas on this. Our attitudes are changing. I am aware of one project this year involving an individual, which it always comes down to, which was supported because the individual had a previous business failure. The investor backed the team because they knew they had learned something from it. We need to spread that culture a bit more.

I will take on board the Deputy's views on people on the ground. We are working through the implementation groups at the moment and I will certainly take on board the Deputy's views in respect of people on the ground.

David Cullinane (Sinn Fein)
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I thank Mr. Hayes for the presentation. One of the areas on which I wanted to focus was regional development and regional disparities in respect of the work of Enterprise Ireland and this new unit, because we all want better outcomes. The three issues I will raise are funding, networks and clusters and the concept of incubation centres.

Mr. Hayes stated in his presentation that Enterprise Ireland will allocate individual budgets to the LEOs based on agreed funding guidelines. He went on to talk about metrics which are all quite good in terms of the number of start-ups supported and the number of jobs created, but he did not deal with targeting resources where they are needed most in areas of high unemployment. We know the Border counties and south east have very high levels of unemployment. Mr. Hayes stated that jobs were created in EirGen, Eishtec and Dawn Meats in Waterford. However, we know that unemployment in the south east is 5% above the national average and there are problems in the Border counties. There is a need for a regional focus.

The issue of networks and clusters is linked to that. Again, Mr. Hayes stated that the unit will facilitate the development of sector and regional networks and clusters involving the clients of the IDA, Enterprise Ireland and the city and county enterprise boards. That suggests it will facilitate the development of existing clusters. I want Enterprise Ireland to look at directing the emergence of new clustering, where this is possible, in areas of high unemployment and not just focus on what exists at present. One problem that could arise is that we could follow a pattern that has been set in respect of a lot of work that has been done but not look at whether we need to think outside the box and do things differently in respect of under-performing regions and areas.

Mr. Hayes spoke about having incubation centres in each of the institutes of technology and universities and providing a supportive environment for approximately 300 companies and units in these centres employing in excess of 1,300 people. There are areas that do not have third level institutions. There are areas in the south east that do not have a university, so we need to ensure these incubation centres are linked to their nearest third and fourth level institution. It is important for us to foster a culture of innovation, and the institutes of technology and universities can play a big part in that. In the south east, the Telecommunications Software & Systems Group and the eco-labs work with existing companies. We must ensure links exist and that we benefit from the innovation trade-offs that result from the links with the institutes of technology. That means, however, that policy must fit and a joined-up approach must exist to ensure areas have the educational facilities to bring that about. In the south east, there is the need for a university.

My last point relates to job retention. Deputy Tóibín mentioned the net increase of six jobs in Enterprise Ireland companies, and Mr. Hayes also mentioned that it is about retaining jobs. Much work goes into keeping jobs, which is important. Is there an idea about how we could do that better? Sinn Féin put forward a proposal based on having a rapid response unit that could work with companies which have gone bust to see whether there are opportunities.

We could give many examples. Workers' co-operatives could be set up, for example. Much more could be done in this regard. Time is often wasted and opportunities are lost simply because there is no agency focusing on responding very rapidly to circumstances. Could this be considered? I refer to small businesses, even those with fewer than ten employees. There is potential in this area for workers to take over some companies. The point was made that contracts are won and re-won, but the point could also be made that companies are invented and reinvented. They can be reinvented by employees if relevant supports are made available initially. I ask the delegation for its views on this.

Mr. Tom Hayes:

If I miss out on many points I ask the Senator to revert to me. I will respond to the last point first. We do respond where there are closures or where there is what we euphemistically call downsizing. This is usually in the case of larger companies. I will not list any of the names. Where there have been significant closures, we have worked with other Departments and the IDA to help to identify whether there are other projects of relevance. As a consequence of some of the closures and downsizing, there have been some very good spin-off developments. We have helped by way of feasibility practices but obviously the people in question know the businesses best. There is a cry or clamour when a large company closes because of the number of jobs involved but the Senator makes a very valid point that we should consider the resurrection of very small companies. Perhaps given the new circumstances associated with the local enterprise offices, we should pay more attention to this issue. Every single job matters.

With regard to fostering the culture, the Senator is absolutely correct. All the international indicators point to Ireland being among the most entrepreneurial societies on earth. The reality is that we hold up very well when benchmarked, and various international reports suggest we are very entrepreneurial. The most recent GEM report suggests that, in the areas of medium to high technology, we are ahead of the EU and OECD averages. This, in itself, indicates our position. It is borne out by some of the figures I listed on high-potential start-ups. These are significantly ahead of many of their European neighbours.

A programme covering the new local enterprise offices, which we want enhanced, concerns secondary education. The earlier that one inculcates the spirit of entrepreneurship, the better. The programme for second level run by the county and city enterprise boards should be encouraged further. Each county will have considerable opportunities in this regard. The authorities can work with the local secondary schools, ICA, ICMSA, IFA or GAA. They should be able to work with all concerned in local communities to encourage people to work for themselves and start businesses as opposed to just looking for work somewhere else.

There is significant involvement in the area of funding research within third level colleges. There are two programmes leading to some outstanding successes. The first is the Think Outside the Box programme. This year, there were over 350 applications north and south of the Border from teams of students in third level institutions. We have encouraged the cross-fertilisation of ideas so people in sciences and engineering can work with people doing business. The best teams involve the cross-fertilisation of functions. We have been running this programme for a number of years. Up to the past year or two, many students have seen it as a rite of passage, or another project. The students would have gone to Australia or sought a job afterwards but they are now much more serious in that they are starting businesses. Out of the ten finalists this year, six are beginning to commercialise their projects and one is in the pipeline as a high-potential start-up. There are some excellent ideas. There is much greater willingness to develop a business as opposed to just doing a project for the sake of doing it.

The other programme is the New Frontiers programme under the enterprise platform programme, with which some of the members will be familiar. The enterprise platform programme was largely educational and the entrepreneurial business development side was relatively modest. We have completely reformulated the programme. There are nine programmes on their way to the 13 IOTs. The last to start is in the Carlow-Waterford region, and it incorporates 15 business ideas. There will be 150 in total. We hope that, after six months, 100 new businesses will start up as a consequence of the programme. We have been very impressed with the quality of candidates.

I was in Waterford Institute of Technology in recent weeks making a presentation. We ensure that we espouse our views in the third level institutions and encourage students to start up businesses, undertake feasibility studies, participate in the New Frontiers programme or obtain a Think Outside the Box award.

On regional development, every single region and county is important in terms of retaining and increasing the number of jobs. Our remit is primarily associated with Ireland Inc., in which it is important to have jobs. I often ask parents whether it would not be better to have their sons or daughters working in Galway, Dublin or Cork as opposed to Dubai, Sydney or Perth. It is important that we consider the issue from a national perspective in the first instance.

Last week was the week of the Dublin Web Summit. The reality for the companies in question is that Dublin will be the primary focus of their investment because it has the appropriate ecosystem. This does not in any way suggest we do not wish to support businesses throughout the country. We have supported over 100 community enterprise centres, practically in every county. This year, we supported 37 business development managers. I will be addressing these managers next Friday as they will be coming to our office for a conference. It is a question of trying to encourage them to develop their businesses locally.

Our competitive feasibility scheme was targeted specifically at the regions. We had a pilot programme in the south-east and received over 40 applications. Yesterday, I received information from our manager in the west, where we had a similar programme in respect of which there were 46 applications from teams and individuals. The applications were from Galway, Roscommon, Leitrim and Mayo. With regard to regional development, that is our fourth roll-out. Our final programme will be rolled out in the midlands over the coming weeks.

David Cullinane (Sinn Fein)
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Consider the most recent figures received from Enterprise Ireland on grant aid. County Kildare, for example, received €30.6 million, whereas the figure for Sligo was €7.9 million. In Tipperary, €43 million was received and in Waterford €19.6 million was received. I take the point that inputs and grant aid do not in themselves paint the full picture, but they do tell us something about the fact that, for whatever reason, some areas are not creating jobs and the spirit of entrepreneurship or output is not what it should be. If we just follow the current pattern and do not determine why some areas are underperforming and what extra supports, resources and tools can be given to those areas, we are destined to make the same mistakes again. If we do so, we will end up reinforcing regional unemployment disparities.

Mr. Tom Hayes:

We are more than happy to take that on board. As we work through the local enterprise office network, that should certainly be considered.

Anthony Lawlor (Kildare North, Fine Gael)
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I thank the witnesses for attending the committee. I should be the most pleased of all Deputies and Senators, following the announcement of a couple of weeks ago. I welcome Kerry back to Kildare.

Áine Collins (Cork North West, Fine Gael)
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They will smarten you up.

Anthony Lawlor (Kildare North, Fine Gael)
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As I said before, there are as many Kerry farmers in Kildare as in Kerry.

Damien English (Meath West, Fine Gael)
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I hope they make a better job of farming than of football.

Anthony Lawlor (Kildare North, Fine Gael)
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A considerable number spin-off jobs and companies will be associated with this big enterprise development. Have we started to work on the potential for spin-off companies? Mr. Hayes referred to the potential for cluster development in that location and the possibility of establishing an enterprise park. When a major company comes into an area we should immediately target that area for spin-off companies, rather than wait for something to happen.

I was a member of a county enterprise board and I am very much in favour of them. They were able to target small start-up companies and people who had an interest in setting up their own businesses. I am worried that we may lose the common touch of the county enterprise boards and their relationship with local people who want to start up small businesses. Enterprise Ireland is focused on exports, as the witnesses have said several times. Many small start-up businesses are focused on their locality and often on supplying the large enterprise developments we have been talking about, such as Kerry. I am a little concerned about that.

Could Mr. Richard Murphy tell us the timeframe for moving from county enterprise boards to local enterprise offices? This question was asked but we did not get a clear answer. Can we be sure local enterprise offices will be in place? I am getting calls from staff of county enterprise boards asking what exactly is happening.

I am fearful of local enterprise offices being associated with county councils. In 1997 or 1998, Kildare County Council set up a business park in Kilcullen. Many people were interested in coming on board but because of the inefficiency and lack of experience of the individuals involved, only one company set up in the business park. The rest of the park is lying idle. County councils do not have experience in this area. I am nervous of the future with regard to them.

County enterprise boards are involved in many projects. I am thinking of school entrepreneurships, for example. In County Kildare, a small company set up by a young school pupil has gone international. Many schools in County Kildare have become involved in this enterprise competition. I would hate to see a programme like this being lost because funding to local enterprise offices was focused on setting up companies. School pupils are the key people. Secondary school pupils may even be too old. If children are given the entrepreneurial roadmap at primary level, we will have a real chance of seeing them become entrepreneurs later on.

Is there any cross training between Enterprise Ireland and county enterprise boards? County enterprise boards run excellent training courses for people who start up businesses. I hope that will continue and link with the experience of Enterprise Ireland which deals with companies at a different level, those with more than ten employees. The work of Enterprise Ireland could be micro-managed down to a smaller level.

The joint committee is planning to put together a publication showing what is available to people who want to start up businesses. Last Thursday evening, I knocked on a constituent's door and he asked me what was available in this regard. He told me my own website had more information than he could get from Enterprise Ireland. That is key. When someone clicks onto a web page they want to know exactly what is available, what they are entitled to and what they can get. Information should be made as simple as possible so that a small sheep farmer like myself can understand it.

Damien English (Meath West, Fine Gael)
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There is nothing small about you, Deputy, either in stature or as a farmer.

Mr. Tom Hayes:

I ask Mr. Richard Murphy to address the questions on the timeframe and the county enterprise boards.

Mr. Richard Murphy:

The replacement of county enterprise boards by local enterprise offices is working its way through an implementation group. The CEB budget for next year will be the same as that for last year. We will be moving forward with the same level of funding.

While a change is under way, the existing staff of the county enterprise board network will be carrying out the same role under the new local enterprise office system. We will not be losing their experience, competence or capability. I heard the Deputy refer to inertia around a decision. There may be inertia around a decision but there is no inertia among the staff. They are an incredibly professional, competent and experienced body of people.

Anthony Lawlor (Kildare North, Fine Gael)
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"Inertia" is a very big word for me. I would not have used that word. Someone else may have used it.

Mr. Richard Murphy:

We will be retaining the experience. Our focus will be on not throwing out the good things. Many excellent things have been happening, for example, the secondary school entrepreneurship programme. We would like to see that moved back to primary schools and to build on the work of transition year programmes in secondary schools.

The plan is that Enterprise Ireland will retain, enhance and continue to develop the capability of the county enterprise board staff as they move into the local authority. They will be invited and encouraged to attend Enterprise Ireland training courses on subjects such as finance, strategy and marketing. We will be working on export awareness development and on driving core skills in that area in the county enterprise boards. How to do, how to tell and how to teach will be a core mission for ourselves.

While people may see artificial borders or barriers between Enterprise Ireland and county enterprise boards, they do not exist from a client perspective. Current county enterprise board exporting companies have full access to Enterprise Ireland 's offices and services overseas. We do not get into who owns whom. If the client is capable of exporting, he or she is invited into the Enterprise Ireland international service network.

I hear people say the focus may shift from micro to export. The key word for us is "potential". We want to build on people's potential to export. We will help them to shape things such as value proposition and to become leaner. We can bring the Enterprise Ireland lean engineering stuff down into small companies to develop them and encourage them to look at cost initiatives. We would also like to see the seeding of new micro sectors so that games, for example, can come into a national perspective. We want to start promoting companies in the Enterprise Ireland body of companies.

We recognise there is work to be done in making our web page simpler, more stripped down and easier to access. This needs to be done in association with entrepreneurs rather than with people in our area. We would like to have the page logic tested so that people can understand it, work their way through it and point out difficulties so that the whole thing becomes simpler and easier to use.

Mr. Tom Hayes:

Deputy Lawlor spoke about taking advantage of the Kerry investment and building a cohort of sub-supplier companies.

Anthony Lawlor (Kildare North, Fine Gael)
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The same would apply to any major development.

Mr. Tom Hayes:

This is a valid point.

That is where sub-supply comes into play. We are working very closely with IDA Ireland. When the IDA is involved in a new investment or in the expansion of an existing operation, we are aware of the visit and we will introduce client companies to the foreign investor. While I am not saying that it cannot be improved, we are working with the IDA to ensure that when there is foreign investment, local companies which can supply or sub-supply to that operation are introduced.

Likewise, we are working in the south east with a whole cohort of companies that have come together to establish their own network called the FUSE initiative. That cluster is looking at how the larger local companies can source more product and service from smaller companies in the region. That is a major market and it is an area. While the consumer in Ireland is finding it difficult, the multinational corporations and the larger companies, such as Kerry, are sourcing significant inputs. We should take advantage as much as possible of the opportunities they present. One of the objectives of the clustering programme is to ensure companies come together to take advantage of opportunities that present themselves with the larger suppliers. I will ask my colleague, Ms Battersby, to comment on clustering.

Ms Orla Battersby:

We do not want only to continue to support the companies that are here. We have established a pilot clustering programme and we are trying to build up examples from the pilot programme to encourage more companies to work together. Many people may wish to come together but they do not have the wherewithal to pull it together. It needs some intervention by Enterprise Ireland to make it happen. When we have evidence, we can encourage more companies. The applications we are looking at this week involve CEB clients, non-agency clients, EI clients and IDA clients working together with up to 14 companies.

There are other peer to peer and clustering initiatives that are not within the formal clustering programme where we encourage companies to help each other, be they large or small. We have a mentoring programme. We are trying to get people to help themselves and help each other, in addition to what Enterprise Ireland can do with its reducing resources.

Mary White (Fianna Fail)
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I welcome the witnesses. I thank Mr. Hayes for his very comprehensive statement. There is no doubt that Enterprise Ireland has been extraordinarily successful. Between direct and indirect employment, some 300,000 people are employed in companies supported by Enterprise Ireland. That speaks for itself. I had the honour to be on the evaluation committee of the very first Dublin City Enterprise Board. The then city manager, Mr. Frank Feely appointed me to that.

The county and city enterprise boards have made a major contribution to creating awareness of an entrepreneurial culture at a micro level throughout the country. They have been innovative. I do not support this move to subsume county enterprise boards into local enterprise offices. I will spell out the reasons and will ask questions.

Damien English (Meath West, Fine Gael)
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I ask the Senator to concentrate on seeking answers to questions and not on the reasons she is against this initiative.

Mary White (Fianna Fail)
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I will ask questions that will spell out the reasons I query it. Under the current arrangement, Enterprise Ireland comes under the remit of the Department of Jobs, Enterprise and Innovation and the local authorities are under the Department of the Environment, Community and Local Government. I have a major issue with that. Most of the current enterprise boards have been very successful, although an odd one or two have not been as satisfactory as others. When Fianna Fáil was in government and at parliamentary party meetings, members would raise concerns about which county enterprise board was not working. I think the Department of Jobs, Enterprise and Innovation by its nature is not entrepreneurial and did not manage the strategy for the enterprise boards. That is not taking from my personal belief in their success.

I see a major struggle between both Departments. Civil servants are great at fighting turf wars. Many county managers are very autocratic people. We would love to think that they are visionaries and leaders, and they are thinking of their country first. How will the county managers co-operate? Will there be consistency? I doubt it.

The question of staff has been raised. In times of economic turmoil it is very wrong to change direction. The major issue is to provide jobs for people. Some 87,000 people emigrated last year. Why would one make a political decision in a time of turmoil to change a system that works well? Mr. Richard Murphy suggested that the staff will stay focused but I do not believe that staff are happy about this. Their jobs are at stake. There are 124 people employed in the county enterprise boards. Human beings, by their nature, will worry about what will happen to their jobs. Will there be promotional and career development opportunities for the staff when these changes have been made?

It makes good copy to read of a robust service development agreement between Enterprise Ireland and the local authorities. My experience as an entrepreneur and a politician leads me to ask what sanctions Enterprise Ireland will apply to a local enterprise office that is not delivering its applications for start-ups. Who will deal with the offices if they do not reach their target?

Has Enterprise Ireland the resources to handle all the queries that will arise from the change in the structure? I agree with Deputy Áine Collins who states there should be twice as many Enterprise Ireland offices around the world for the great work it does. How many applications are processed by the city and county enterprise boards at present? How many actually deliver? In my experience one must bore down into the domestic market before one can dream of exporting. How will Enterprise Ireland handle that?

We had a delegation from the Irish Exporters Association before the committee about one month ago. They were seriously concerned about potential exporting companies that were not getting help from Enterprise Ireland. I was amazed to learn that as I thought that Enterprise Ireland had an open door policy. I think Mr. Hayes should meet Mr. John Whelan, the chief executive of the Irish Exporters Association, to find out about the hundreds of companies that cannot get official help to export their produce. I think that is very important.

I know that Mr. Murphy is the CEO and co-ordination person in Shannon, is that not right? Mr. Hayes is also involved, so it is complicated. What is his role in the micro-enterprise unit? What new elements will the implementation group add to it? I am not arguing with the witnesses but, in principle, I instinctively cannot support this move under the local authorities. By its very nature it is not entrepreneurial enough. Fianna Fáil does not support this move.

Mr. Tom Hayes:

I will ask Mr. Murphy to start and I will come back in then.

Mr. Richard Murphy:

As regards the robustness of the service level agreement, we will be examining the performance of each individual CEB historically. We will be adding into that what we would expect in terms of performance primarily around job creation. That will then be set out as a target to be delivered by each of the local authorities or the new LEOs. If they do not achieve it, the primary legislation states that a sanction will apply. If it continues not to achieve it, the view is that it will be tendered for private people to come in and deliver what the LEOs are not delivering. However, that is looking at it from a negative perspective. In fairness, it is best to give them the opportunity to see what they can do. I can assure Deputies that they will be given quite stretched targets to achieve as the Exchequer is giving quite a significant amount of money to job creation.

As regards promotion opportunities for people who are transferring, those who elect to remain within the Forfás-EI family will have the right to apply for promotional opportunities within Enterprise Ireland. The others can apply for promotional opportunities within the local authorities should they see fit.

As regards the criteria for exporting, as I said earlier, one cannot apply criteria to companies too early. As long as it is not operating ineligible criteria for financial support, the company would, probably very early on, demonstrate some traits of good management - products that can sell beyond the local area. Those are areas that we would get involved in both from a mentoring and training perspective, offering significant encouragement for them to consider exporting. Exporting is not for everybody obviously. It does come with a significant risk and is demanding in terms of management time. We will seek ways of enhancing the capability of those companies as quickly as possible, either through putting extra resources on a temporary basis through mentors or through advocates in a more focussed manner than heretofore.

Mr. Tom Hayes:

I wish to assure Senator White on a couple of matters. The staff are the most important people who will comprise local enterprise offices. The word "culture" has been used and those working in county and city enterprise boards understand business. They also understand how to challenge a business proposition and they understand the dynamics of a business. In addition, they can read balance sheets and understand a proposed business plan. It is crucial that those core skills are maintained in every single LEO throughout the country. That is an overriding objective. Business people should not have to work with people who do not understand business dynamics. They may not understand the specifics of every single business but, nonetheless, there is a way to empathise and relate to a business person. It is absolutely crucial that those skills are maintained.

The Senator referred to the Irish Exporters' Association. For some time, it has been said that there is a gap between the cohort of companies that Enterprise Ireland supports, which is in the region of 5,000, and a huge cohort of companies that are not being helped or supported in terms of exporting. I know Mr. John Whelan quite well and while there may be some such companies, they are being catered for under two banners. One is the launch of Going Global which is to attract service companies that were doing work on the domestic market but may never have thought of exporting a service. One may genuinely ask how some services could be exported, but over the years companies involved in architectural services, quantity surveying, legal services and financial services have exported as a result of undertaking a feasibility study. Through connections and partnerships with companies overseas, they are now in a position to export some such services. That support service product is still there.

The potential exporters' service was established primarily to encourage, excite and energise a cohort of companies that was largely able to support itself through the boom years. The cohort comprises companies involved in areas such as construction, service and manufacturing related to that sector. We have already supported them, either through our online benchmarking tool, or on a one-to-one basis. Today, we have an "Exploring Exporting" workshop in Tullamore. We had one last week in Kilkenny. We have had nine so far this year and will have another four before the end of the year. As a result, we will have met individually with about 500 companies that are seeking to export. That is a whole new effort to energise and re-energise. It is open to any company, not just clients of Enterprise Ireland, but also to CEB clients or other companies, in any community that feel they have a product or service they wish to export.

As Senator White well knows, exporting is not easy and one must first test out a product or service in the domestic market. However, many companies do not have that luxury because the domestic market is so small in some areas that, almost from day one, they must consider exporting. I am certainly happy to meet Mr. John Whelan.

Mary White (Fianna Fail)
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That is why I said it to Mr. Hayes. I was amazed at the numbers they were talking about.

Mr. Tom Hayes:

Absolutely. I am happy to meet Mr. John Whelan to ensure that companies get the very basic support to enable them to export.

Damien English (Meath West, Fine Gael)
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I thank Mr. Hayes for that. Before we move on to supplementary questions, I have a few observations to make. First, I want to congratulate Mr. Hayes and everyone else at Enterprise Ireland on their work in winning the Kerry investment. I know that a lot of work went into that, specifically from his own section in Enterprise Ireland. The team had to focus on that and it was not an easy win. However, it was worthwhile and will certainly be of benefit to this country. Hopefully there will be a knock-on effect.

Mary White (Fianna Fail)
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It started as a small company.

Damien English (Meath West, Fine Gael)
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I congratulate Mr. Hayes on that because he does not always get the credit to which he is entitled. Mr. Hayes must also be complimented on the net gain in jobs. I recall having the same discussion during the boom times with a different set of people from Enterprise Ireland. Even at that time, it was seen as a success to have a net gain because there were many losses in certain sectors during the boom time. It is a major credit to be still winning and have a net gain at the end of the day, rather than a net loss. Mr. Hayes should keep up the good work on that.

While concern has been expressed about the proposed new LEOs, there is also an opportunity here. We all have such concerns because there is a perception among many business people about how local government works. While that perception may be right in some cases, it is not always correct. For example, some local authorities have improved a lot through their economic development units. There is perhaps a chance to merge talents and develop this further. I look on this as an opportunity to get it right, but it is important that we do get it right. Although the people in enterprise boards have done an excellent job, it is important to retain the excellent staff involved. It is not a major panic that they are moving to work under a new name, provided that we keep them and their skills. Enterprise boards have done well by being driven by the people working in them. Some enterprise boards have not done well because the people in them did not do so. In the majority of cases, however, good people drove them. I am confident that we will still have them working under a new heading and under the direction of Enterprise Ireland. which is the key. There is a fear that this will be directed to the local authorities but it is quite clear to me that the LEOs will be directed by Enterprise Ireland and the Department of Jobs, Enterprise and Innovation. We have to keep that business drive and that message needs to get out. There should be an opportunity here to address the concerns that people have with their perception of county councils.

It usually relates to planning and enforcement matters and charges, albeit contribution levies more so than rates. New businesses must be given a chance before forking out large amounts of money on contribution levies. That obligation is unfair and blocks business. I hope that the local enterprise offices, LEOs, will act as one-stop-shops, champion the issues affecting businesses and provide solutions when problems with local authorities arise. Since the LEOs will be in the local authorities, there should be a greater opportunity to resolve planning issues at an early stage.

Many new businesses start in backyards, kitchens and garages. They should not be hit by planning enforcement straight away. We must work on this matter. In 2008 or 2009, moves were afoot in the Department of Enterprise, Trade and Employment to address it, but the environment changed. LEOs have a chance to address the matter and work with everyone involved. I hope that our guests take my point on board.

The presentation referred to how the LEOs will expand the range of services. Perhaps Mr. Murphy will inform the committee of what the one-stop shops' new services will be. I served on an enterprise board. Such boards were restricted in their work by a limited set of criteria. They could either work with manufacturing businesses or not work at all. I hope that the new LEOs will be able to work with any business that has the potential to export or to create jobs locally. There has always been a spatial issue, but every member present has seen opportunities to create jobs lost too often because that year's pot of money was gone or the businesses in question did not fit into a specific box. A one-stop shop will ensure that no one with an idea is left adrift.

Our guests mentioned that there will be guidelines on financial allocations to each county. If a county's money runs out, I hope that access to the central pot will remain. There is nothing worse than being told in October that there will be no money to save or develop jobs until six months time. That is not good enough in the current environment. I hope that this will not occur after Enterprise Ireland becomes further involved in these units, particularly if there is money going unspent in other counties. It is not good enough that jobs will be lost because of a lack of common sense.

A question mark remains over the role of Leader partnerships. Perhaps our guests will address this issue in terms of supporting enterprise at the local level. As there is often a crossover, clear direction as to who does what, and how, is necessary.

We are discussing start-ups and developing businesses. Many people with new concepts or inventions are struggling to access finance to develop them. The LEOs could have a role in this regard. A person who does not want to start a business but who has an idea or invention is finding it difficult in the current climate to develop his or her work. The responses from State bodies have not been good to date, as we are focusing on business development and job creation. We must remember products and new ideas, particularly those of backyard inventors.

Exporting associations have concerns about export credit insurance. When the committee raised this issue one and a half years ago, it was told that it was not a problem. However, it remains a problem and we need to focus on it. Enterprise Ireland might be better placed than most to address it, either today or at another time. It is important that we get this matter right.

We hope that the LEOs will have a can-do approach instead of telling people to go somewhere else for help. Anyone who walks through an LEO's door should be given a chance to develop his or her business idea. I will stop asking questions. It is key that LEOs work with local authorities to develop solutions instead of creating problems. Sometimes, business people are concerned about walking through a local authority's door. Often, this is merely a perception and we must do away with it.

Deputy Collins touched on my final point, namely, failure rates. Enterprise boards are too cautious. Enterprise Ireland can be the same, that is, results oriented and concerned with high success rates. I become depressed when I see high success rates, as there should be failure rates if we are doing our jobs right. If we are too cautious, we will miss out on potential job creation. I grow nervous when people claim that they have great success rates. We need to judge them on failure rates as well.

Deputies Tóibín, Collins and Calleary will ask additional questions. Our guests can address my comments while answering those. As Deputy Lyons has not contributed yet, we will start with him. I did not see him waving.

John Lyons (Dublin North West, Labour)
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I cannot underestimate Enterprise Ireland's work in maintaining or slightly increasing job levels. It has been incredible in these tough times. However, I wish to ask about Enterprise Ireland's approach to job losses. I only wish to highlight the issue and do not expect our guests to be able to answer fully, but I would appreciate it if they could answer. The Workers Co-operative Network appeared before the committee a while ago. It mentioned how successful co-operatives and that type of economic activity could be. The model that we typically use to measure economic activity is foreign direct investment, FDI.

The Workers Co-operative Network stated that in some countries, for example, France, legislation is in place to allow jobs and enterprise agencies to examine a company that is about to go down the drain to determine whether it is sufficiently viable to have life pumped into it. Must we review our approach to companies that are going down the Swanee? Is there a fresh way to determine whether they remain viable? My impression is that there is. Enterprise Ireland and other bodies, including the Legislature, need to ask themselves these questions. Are other countries using better practices to save jobs?

Peadar Tóibín (Meath West, Sinn Fein)
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County enterprise boards, CEBs, were mentioned. It is important to point out that morale in some of them is on the floor due to what has occurred in recent years. The Irish Exporters Association, IEA, referred to an inertia within the CEBs in terms of their dealings with small businesses.

An emergency response unit was mentioned. Spicer's Bakery closed in Navan and 70 jobs were lost over a period. Could Enterprise Ireland organise a small group of skilled people to examine the various elements and ingredients, as it were, of that business and try to prevent it from closing? Sometimes, large debts inhibit functional businesses and must be resolved.

Until approximately 18 months ago, there was no State-wide export programme for CEBs. Some CEBs delivered courses on exporting whereas others did not. Most found it difficult to locate course providers.

Was there a business voice on the implementation panel?

Áine Collins (Cork North West, Fine Gael)
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Mr. Murphy referred to potential. It is a big word with a capital "P" in terms of exports and Enterprise Ireland. Where the new LEOs are concerned, though, must new companies requesting support need to have export potential?

Dara Calleary (Mayo, Fianna Fail)
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Regarding the service level agreement, will our guests revert to us regarding what is meant by "agreed funding guidelines" and "a range of local authority service-associated metrics"? What will the role of Leader partnership companies be?

All of the discussion has been on exporting. Our guests seemed to be obsessed by it. While that is Enterprise Ireland's lead role, many CEB client companies are not exporters. After this questions and answers session, I am concerned that they will fall between the cracks in the new organisation.

Mr. Tom Hayes:

I will address a number of those points.

An emergency response is something we will certainly take on board. In 2009, when the financial crisis arose and the economic scenario was at its worst, we introduced an enterprise stabilisation fund to help and support companies that were vulnerable but viable. Owing to the banking crisis and the economic difficulties, these companies may well have gone out of business were it not for the support. Between 600 and 700 companies were supported under that scheme. Largely, we put preference share support into those companies. We examined the companies' prospects, trading record and future prospects. Within the past 48 hours I read an application from one of those companies seeking research and development support. The company, which employs 47 people, might not be in business today were it not for support at that time. That is the nearest to an emergency response. Deputy Tóibín mentioned companies which are vulnerable but viable, but with support from us or from outside, they can be sustained and maintained.

I take Deputy Calleary's point on the SLA and the agreed funding. We are working through that issue. The implementation working group and the three subgroups are meeting on that issue and another meeting is planned for next week. We will come back to the committee on what comprises the SLA as it is still at the early stages, but it will be worked through during the coming weeks.

We are conscious that the majority of companies have to test the product or business on the domestic market initially. There is always a cohort of companies that think globally from day one. In the telecommunications industry, it can have an application in China or the US almost from day one. For most companies the home market is vital, whether it is a consumer product or a product that can be sold to international companies. I refer to my own days overseas. If someone came to me wanting to sell to a department or public utility in that territory, I would ask how that person got on in his or her home market, who had bought from him or her in Ireland, and if the Department or local public utility bought from him or her because, if not, it was going to be difficult for an exporting company to take on the products in foreign countries. The home market will continue to be vital in terms of preparing companies and ensuring they have the necessary skills, management development, training and capability to grow and develop.

Damien English (Meath West, Fine Gael)
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Are there any other comments?

Áine Collins (Cork North West, Fine Gael)
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May I have a response to the issue of potential?

Mr. Tom Hayes:

I apologise. There was one point on whether small business is represented. There has been one presentation through the small business advisory group on the county enterprise boards, but there is not direct representation on it. While I understand there are plans afoot to consult in the next few weeks with the representative bodies, no one is directly involved in the implementation groups.

Damien English (Meath West, Fine Gael)
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Does Mr. Richard Murphy wish to respond to a question from Deputy Áine Collins?

Mr. Richard Murphy:

On the question of whether we would focus just on companies with export potential, the opposite is the case in that we would like to see the new LEOs embracing the wider audience of entrepreneurs. That could cover everything from, say, companies involved in catering, restaurants and retail. By embracing them, they could offer best in class training, customer service management, financial access in terms of accounts and so on. We have a focus that is inherited because of policy and EU rules in that there are certain companies that are eligible for the financial packages, and that will remain in place. Those are companies which, for reasons of state aid rules and displacement, must have the potential to trade internationally. That is only half the budget. The other half, which is for the development of companies, management and capability, should be broadened.

Áine Collins (Cork North West, Fine Gael)
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Just to clarify, is Mr. Murphy saying in respect of the LEOs that any company that does not have export potential will not be supported financially?

Mr. Richard Murphy:

No.

Damien English (Meath West, Fine Gael)
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Is it in certain sectors?

Mr. Richard Murphy:

Yes.

Damien English (Meath West, Fine Gael)
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Is it that certain sectors need to have export potential?

Mr. Richard Murphy:

Yes.

Áine Collins (Cork North West, Fine Gael)
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Does a company also need to have export potential?

Mr. Richard Murphy:

To be financially supported?

Áine Collins (Cork North West, Fine Gael)
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Yes.

Mr. Richard Murphy:

It does.

Dara Calleary (Mayo, Fianna Fail)
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Is that for every company?

Mr. Richard Murphy:

That would been the criterion since the county enterprise boards were set up.

Damien English (Meath West, Fine Gael)
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That goes back to the point on rules that prevented job creation in the past. We would hope the new units would be able to help many more companies than previously. I understand that, for reasons of space, it is only certain sectors-----

Mr. Richard Murphy:

Yes.

Damien English (Meath West, Fine Gael)
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-----that would have to have export potential, but others would get employment grants from Enterprise Ireland. Is that correct?

Mr. Richard Murphy:

For example, we are not in a position to support financially companies in the retail industry.

Damien English (Meath West, Fine Gael)
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What about the service industry?

Mr. Richard Murphy:

In the service industry, if a company has the potential to trade internationally it can and will be supported.

Damien English (Meath West, Fine Gael)
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And it is recognised that it could take a couple of years to get to the-----

Mr. Richard Murphy:

Absolutely.

Damien English (Meath West, Fine Gael)
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It is how one interprets the criteria.

Mary White (Fianna Fail)
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Manufacturing companies would not know initially whether they would be able to export.

Mr. Tom Hayes:

If a company is manufacturing a product it can sell on the domestic market, invariably it has the potential at some stage to export, irrespective of what-----

Mary White (Fianna Fail)
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I thought there was a prohibition on-----

Mr. Tom Hayes:

There are two kinds of support: financial support and what is called soft support, which includes training and so on. Any company will be able to avail of the soft support which, in many cases, is as important as if not more important, than financial support. Mentoring, being shown how to and all such support is vital. We would envisage a situation where any company can avail of that support. Under policy and EU guidelines for competition purposes, if there are ten hairdressers in a town and the 11th seeks financial support, it would be difficult to provide support because of displacement.

Mary White (Fianna Fail)
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I hate that word "displacement".

Mr. Tom Hayes:

It is a factor. There are situations where the other ten can come and ask why they did not get financial support. They can be given other support, for example, how to write a business plan, how to prepare a proposition for the bank and so on. There is much information and support that can be provided, including mentoring. From a financial perspective, however, it does not make sense if in any town there are, say, ten hairdressers or bicycle shops-----

Mary White (Fianna Fail)
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I agree with Mr. Hayes on that issue.

Damien English (Meath West, Fine Gael)
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There have to be new customers.

Mr. Tom Hayes:

Yes. There have to be some guidelines around that issue.

Mary White (Fianna Fail)
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Mr. Hayes says he will not support another if there are ten in the town. Some people can go overboard about displacement. It is an ideological issue. If there is one other company, they are told they cannot go there whereas competition is the spice of life.

Damien English (Meath West, Fine Gael)
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I thank the representatives for appearing before the committee.

Mr. Tom Hayes:

I thank the Chairman and members of the committee for some very interesting suggestions which we will be happy to take on board.

Damien English (Meath West, Fine Gael)
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If it is okay, we may engage with the representatives in the new year when they present their proposals to the Minister.

I now welcome Ms Avine McNally, assistant director of the Small Firms Association and Mr. Mark Fielding, chief executive of the Irish Small and Medium Enterprises Association, ISME. I apologise for the delay in coming to this part of the meeting. Ms McNally, please make your presentation.

Ms Avine McNally:

Thank you, Chairman, and I thank the members of the committee for giving me this opportunity to address the joint committee.

The points I will address have already been discussed, some at great length, in the earlier session. While I will mention them, because they reflect the concerns of our members and of the organisation, I will not labour them.

The Small Firms Association is the voice of small business. We represent approximately 7,500 small companies that employ fewer than 50 people. Since the establishment of county enterprise boards, in a similarly difficult economic climate in 1993, the network has contributed substantially to the development of start-up and micro-enterprises in Ireland. They gave direct assistance through their advice and finance but they have also paid a key role - this point has been made - in raising the profile of entrepreneurship throughout society, particularly through their schools programmes and in partnership with my organisation through the emerging ethnic entrepreneur programme. This is a key issue.

County enterprise boards have also been successful in leveraging EU funding, in addition to Government funding, to expand their range of services which they have developed and expanded as the needs of business have grown since 1993. They have been strong in developing relationships in local communities, across Government and through many of the other groups within the business community. This allows them to tap into a vast quantity of expertise and knowledge which has been supportive of many of their clients. In the current economic climate much of the advice and support they give is voluntary and free and can add to the business knowledge of many of their start-up clients. Many members of my organisation who availed of their services attribute their success to the support they received from their county enterprise board, particularly in the early years of their business being established.

The Small Firms Association has always been supportive of the stand-alone county enterprise board structure and of their strong presence throughout the regions. While we recognise that efficiencies could be made, and the recent oversight of Enterprise Ireland is welcome to give the boards a national coherence, we have concerns about the movement into local authorities. One of the concerns, which has been mentioned already, is the poor relationship the small business community tends to have with local authorities. Many view their local authority as a mere revenue collecting body.

The proposed structural change will be damaging to the enterprise agenda. It is difficult to understand how such a small group will survive in such a large organisation whose main priority is revenue collecting and imposing on these businesses that they are now are deemed to support.

We are also concerned that small businesses need state agencies to be honest brokers in giving them the best advice for their organisation. If this advice is to be influenced by local authority employees this credibility may, over time, be lost. Some of these individuals may turn into gatekeepers in terms of collecting rates, licence payments and so on. This could be an issue for the support that should be there for the establishment of small businesses.

A key concern is that we will lose the valuable time, expertise and knowledge that business people so generously give to county enterprise boards. There is a concern that by moving into local authorities the service may move away from its core market.

We must also talk about money. Budgets will be overseen and viewed by Enterprise Ireland, but in a local authority struggling to meet its budget how can we be assured that enterprise funding will be red-circled so that a council cannot, at some time in the future, view it as funding that is more essential for other services?

With regard to some points raised by Mr. Tom Hayes in the earlier session, the Small Firms Association is supportive of the online support services. We have been saying for a long time that they should be there. Equally, we believe the knowledge and competence collaboration of the sectoral regional networks will be beneficial when they are established and are up and running. The development of greater supply chains can be beneficial for many small and medium enterprises, both in working together and in linking with some of the larger agencies and companies that they may, traditionally, not have been able to access so easily.

Listening to Mr. Tom Hayes, we had concerns about other issues, which have been discussed already. A member of the committee asked what is the associated metrics. We would like clarification of that. I was concerned by the mention of enhanced services. Enterprise Ireland mentioned enhanced services being provided through the new structure, but all the services outlined in the presentation already exist. It would be good to have clarification on that.

Without labouring the point, there is huge concern at the focus being moved towards export and internationally focused businesses. While we recognise that the focus has to be on creating sustainable employment and on adding value to the local and national economy, we must bear in mind that the county enterprise boards support all start-ups. While many of these are businesses that will never export or trade internationally they will trade indigenously and are very important for their regions. This mandate must be protected.

In line with the EU Small Business Act, we believe there must be a full impact assessment of the implementation of this Government decision. This assessment must be conducted from the perspective of the small business community and small business user, rather than a Government Department. We also have concerns about the implementation process to date. While we understand it is ongoing, we are aware that there has been little or no involvement or focus on the end users and clients. We are also unaware of any action or analysis done to date by these implementation groups on how the county enterprise board clients and end users feel about the new structure and what they would like to see coming out of the new system.

I thank the committee for their attention. I will be happy to take any questions.

Damien English (Meath West, Fine Gael)
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Thank you for attending, Mr. Fielding. I know October is a bad month for you to come to the committee. The Small Firms Association addressed the joint committee a few weeks to ago to discuss its pre-budget submission and unemployment, particularly youth unemployment. You might like to use this opportunity to add some comments on those issues to your presentation. We might have a chance to engage on those issues during the meeting.

An examination of the black economy and its effect on small businesses is on the joint committee's work programme for December and January . I hope you will be able to attend some of those meetings. I know the issue is close to the heart of the Irish Small and Medium Enterprises Association.

Mr. Mark Fielding:

Thank you, Chairman, and I thank the committee for the invitation to address this meeting. I represent the Irish Small and Medium Enterprises Association, ISME, which represents small and medium businesses throughout the country. We have 8,700 members. I do not need to tell members of the committee about the global and national crisis we are in and I will not talk about the need to restore stability and reignite short-term economic activity. We are here today to discuss micro-enterprise, the small business unit and its liaison with local authorities.

We are talking about changing a structure but we still do not have a national policy on entrepreneurship. That is a massive indictment of the current and previous Governments. We must develop and adopt a national policy for entrepreneurship and small business development. I am asking the committee to put such a proposal at the top of its agenda, and in doing so to think small first.

Supports for entrepreneurs are of the utmost importance in encouraging new business start-ups, growing businesses to a sustainable level and making the transition to a global scale. We talk in terms of three tiers: at the top level are the multinationals, foreign direct investment companies that have the backing of IDA Ireland, report to the Department of Jobs, Enterprise and Innovation and are doing an excellent job. At the next level down are the medium and small businesses. Again, they are within the remit of Enterprise Ireland and can avail of the support provided by its high potential start-up, HPSU, policy and export units which report to the Department of Jobs, Enterprise and Innovation. At the lowest level, the micro-business level, the real seedbed, is where all businesses start and obviously they need support. They represent about 85% of all business entities in the country. These businesses need advice and encouragement which they will get from local authorities under the Department of the Environment, Community and Local Government. Is that thinking small first?

The county enterprise boards and the Irish Small and Medium Enterprises Association, ISME, share a birthday. We left IBEC in 1993, the year the county enterprise boards were established. They have played a significant role with very limited resources in the past 19 years. They have promoted small and medium business development at local level throughout all parts of the country. I will not say they have done an excellent job, but they have done a good job. ISME was a critic of them in the early part of this century. In the first press release I issued in August 2001, I was having a go at them for being a little bit distant from their clients. In recent years they have improved and remain the main contact point for support for so many micro-businesses. The locally based county and city enterprise boards have assisted entrepreneurs with start-up capital and financial support in the form of loans which are almost unobtainable from our busted but bailed out banks. They supply training support, as well as engendering a positive attitude to entrepreneurship in local communities. We have seen attitudes to entrepreneurship improving greatly in the past ten years, but there are still significant gaps in the provision of start-up capital, market knowledge and ensuring the development of the appropriate entrepreneurial mindsets and business skills. It is imperative that the level and quality of the service provided are maintained and improved. The best model is the continuance of the county enterprise board ethos under the control and guidance of the Department of Jobs, Enterprise and Innovation, with a greater focus, better direction and greater cost control.
Let me comment on the issue of public expenditure. One of the promises of the Government after the McCarthy report was issued was to get rid of quangos as part of the strategy to curtail public expenditure. Obviously, ISME would agree with this. There is no need to have 35 sets of overheads, CEOs, finance officers and different offices, as the money spent could be used much more beneficially in assisting micro-enterprise businesses. This is a perfect opportunity to put in place shared services. Killing off 35 quangos might make a great soundbite, but it is not sound judgment if it is done without thinking through the consequences of a proper solution. It is dangerous. The way it is being portrayed and pushed could put the provision of entrepreneurship support back ten years.
In the place of the dissolved county enterprise boards we will have a micro-enterprise service within local authorities that will work to establish a new network of local enterprise offices in each local authority. The intention is that the county enterprise boards will migrate to this new structure. That announcement has sparked concern and confusion among many micro-businesses that we support and represent. There has been no mention of changes to the range of services county and city enterprise boards provide by way of business supports and the budget available to them. There is very little detail on matters such as reporting responsibilities, levels of autonomy, advisory structure and staff levels. We have not seen a cost benefit analysis or a savings breakdown. The real challenge will be to avoid the county enterprise boards getting lost in the labyrinthine structures which will not be able to deliver quality services to clients and which will not be an efficient use of limited resources. Is that thinking small first? Most county enterprise boards are seen as doing a good job and the fear is that by making them part of a bigger entity, the intimacy of the local services they provide may be lost and decision-making will be slowed down. Whatever happens, we will still need local assessment boards. There is creeping inertia in the boards because this has been ongoing for a number of years. Fears have also been expressed about undue administrative influence if the link between the new entities and the local authorities is too close and it will be close. The new entities will be part of the local authorities, which is a danger.
From the point of view of responsibilities and ethos, in one fell swoop the Government is interfering with the organisations that are actually making a difference to micro-businesses. The county enterprise boards were always the first port of call for new entrants, where they received initial encouragement and support. I would be very fearful about the boards operating under the wing of local authorities because local authorities have a job to do; they do not have the same ethos or experience of dealing with small business. As I said, the move has the potential to set Irish entrepreneurship back and should be resisted. We recognise that some unpalatable decisions will be made and that current structures cannot be immune from the requirement to achieve savings and the need for more innovative responses. However, shoe horning the county enterprise boards in under the Department of the Environment, Community and Local Government is wrong. The Department of the Environment, Community and Local Government looks after the environment and has responsibility for matters such as water charges, septic tanks and bogs. It should stick to its knitting and look after the taps, toilets and turf. The remit of the local authorities is to look after a long list of items; I will not bore members with the 26 listed in my presentation, but they include housing, estate management, roads, plant and machinery, water services, drainage, leaks, metering, planning, parks, museums, the heritage, libraries, rates assessment, rates collection and enforcement, just to name a few. Now we will add business support and the encouragement of entrepreneurship to their remit. We have a seedbed for small business in which these businesses are being nurtured by the county enterprise boards, yet we are going to take that structure and migrate it to an underground carpark in the local authorities. We have plenty of big buildings around the country, the Taj Mahals being built by them, which is wrong. The Department of Jobs, Enterprise and Innovation should look after and have responsibility for job creation, enterprise and innovation. It seem ludicrous to strip away the seedbed for businesses from the relevant Department.

The issue of timing was mentioned. The timing is all wrong because entrepreneurs, whether they be survivalists, nascent or budding entrepreneurs, need all the help they can get. What we are doing is upsetting the infrastructure, the people, advisers and, or, management and starting mini turf wars where there is uncertainty. There is always the danger of inertia happening. We talk about the clients or customers of the county enterprise boards. Changes to the county enterprise board network structure must keep the needs of clients at the core of deliberations. In that context, a locally based flexible, client-focused system under the control of an enterprise service will undoubtedly have most merit. Have the customers or clients being asked for their opinion? The answer is "No." Even the customers' representative bodies have all voiced their opposition at the small business advisory group but we have been almost ignored. The question was raised of how many small businesses were represented on the implementation body. The answer is none. Mr. Hayes states the plans are in place and that ISME will be consulted. The customers of the county enterprise boards, which are about to be changed, have not been consulted. In fact, our displeasure has been ignored.
There is also a difficulty with the bridge when a business customer of a county enterprise board, somebody with fewer than ten employees, grows to become a customer of Enterprise Ireland when he or she has more than ten employees.

There is a difficulty in the transfer of the functions of CEBs to Enterprise Ireland, and while efforts are being made all the time to overcome that difficulty, imagine what will happen when not alone is there to be a transfer from the local enterprise office CEB to Enterprise Ireland, but responsibility for this is to transfer from the Department of the Environment, Community and Local Government to the Department Jobs, Enterprise and Innovation. All along, entrepreneurs are working in same businesses in the same sector and are confused because of the potential that this will happen. That is not thinking small first.

All Departments need to be in unison in how they co-ordinate the delivery of sustainable growth and meaningful, long-lasting jobs. A fragmented approach will not be conducive to long-term growth and job creation. What the Government needs to consider is the creation of a clear, effective and holistic approach to sustainable job creation and growth. We need to stop the turf wars, the in-fighting and the manoeuvrings between the Department of the Environment, Community and Local Government and the Department of Jobs, Enterprise and Innovation.

In a nutshell, to encourage entrepreneurship and job creation in all Government and public sector initiatives, we must protect, defend and nurture micro-businesses from their set-up through to their growth and we have to streamline those services, not create obstacles, as is proposed in this move under local authorities and the Department of the Environment, Community and Local Government. We need to have a national policy of entrepreneurship and we need to think small first. Putting the support services for micro-businesses under the Department of the Environment, Community and Local Government and local authorities is a wrong move. It will stunt and delay growth and will set back entrepreneurship by decades. I predict that if and when this happens, we will back here in a number of years to rectify this bad decision. I thank the members for their time.

Damien English (Meath West, Fine Gael)
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I thank Ms Avine McNally and Mr. Mark Fielding for their contributions and I appreciate the frankness and directness of their comments. On that last point, the committee can bring up the issue of developing a national policy on entrepreneurship. If Senator Feargal Quinn were present, he would be very excited about that. We have touched on that issue and talked about it in many ways without saying it as it is and focusing directly on it. We can take on that issue and link back with the association on it.

Dara Calleary (Mayo, Fianna Fail)
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I agree effectively with much of what the witnesses said. It is a disgrace the association has not been consulted. It says a good deal not about Enterprise Ireland but also about the parent Department that it did not even think to nominate representatives of the small business bodies to be on this body. That is not a criticism of the Minister but of the Department that the users were not even consulted in what is the biggest change in the microenterprise sector. That says it all about that Department.

Peadar Tóibín (Meath West, Sinn Fein)
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Go raibh maith ag na haíonna as teacht isteach. Aontaím go mór leo. Most of what the witnesses said has been properly articulated by previous delegations, although the witnesses have probably articulated the position in a stronger fashion. On the issue about the confused relationship between the Department of the Environment, Community and Local Government and the Department of Jobs, Enterprise and Innovation, perhaps the people who are designing this are more clear on it but I do not believe there is a proper delineation of responsibilities that will lead to good outcomes. I have been trying to ascertain whether we will have more, fewer or a mix of staff in the enterprise function and how that will happen. We have not been told about that yet. I propose the committee ensures the major concerns we have all articulated and those articulated by the witnesses in their evidence are sent to the Department of-----

Damien English (Meath West, Fine Gael)
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That is the reason we are having these presentations. We will act on them.

Peadar Tóibín (Meath West, Sinn Fein)
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Most particularly, as Deputy Calleary said, we should request immediately that the stakeholders in the enterprise sector be given a role in the process and that proposal should be forwarded to the Minister.

Áine Collins (Cork North West, Fine Gael)
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I thank the two witnesses for attending and for their frankness. It is disappointing that people who represent these bodies are not on the implementation body. I would go further and say there should be a few entrepreneurs on it as well. I would like that proposal to be forwarded to the Minister. I do not know at what stage in the cycle we are in terms of when the implementation body will report back and what the next consultation will be. I appreciate that the body will report in December but I am not sure where the process will go from there. The body will report to the Minister but will that be the end of the process or will we have a say in it?

Peadar Tóibín (Meath West, Sinn Fein)
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The next stage will be legislation.

Áine Collins (Cork North West, Fine Gael)
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I know the process will move on to the preparation of legislation but, prior to that, will the report come to the committee?

Damien English (Meath West, Fine Gael)
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I understand there is a good deal of time remaining before it will be at that stage. That is the reason we are having these presentations and going through this. That is our job and we will be going through all this.

I want to clarify that the enterprise boards are represented on the implementation body. Some of the representatives from those boards could potentially be engaged in small business. I will check that to find out the position. I note the point that representatives of the association should be on the body or at least have a greater role in the process, and we can make that clear. There is no problem about doing that.

Áine Collins (Cork North West, Fine Gael)
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It may be outside its remit but perhaps the implementation body could be invited to come before the committee.

Dara Calleary (Mayo, Fianna Fail)
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I second that.

Damien English (Meath West, Fine Gael)
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We can do that but we almost had that representation when Mr. Richard Murphy was present. I will find out the difference in that respect.

Mary White (Fianna Fail)
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I also second that proposal.

Áine Collins (Cork North West, Fine Gael)
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Perhaps we could arrange for a group to come in to discuss this.

Dara Calleary (Mayo, Fianna Fail)
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The Department of the Environment, Community and Local Government is on it and in terms of most of our concerns about local authorities not understanding small businesses, the Department's representative should come before the committee and explain what the Department is doing to educate-----

Damien English (Meath West, Fine Gael)
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A departmental representative is not present today. That was an oversight. We can arrange that.

John Lyons (Dublin North West, Labour)
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I do not want to rehash what has been said as my views are pretty much in alignment with what everyone has said. I wish to ask the witnesses about an unrelated matter because Mr. Fielding was unable to attend on the occasion when the committee discussed this matter. In terms of the announcements made under the jobs initiative on the PRSI exemption scheme, other long-standing initiatives introduced by the Department of Social Protection and the Revenue Job Assist initiative, what is the level of awareness of the members of the association of these initiatives? How much does the association promote them? Does Mr. Fielding consider they have been sufficiently promoted by the respective Departments? Is there anything we can do to ensure the association's members are better informed about those schemes? I apologise for raising an unrelated matter but Mr. Fielding could not attend on the previous occasion.

Damien English (Meath West, Fine Gael)
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That is okay.

Mr. Mark Fielding:

On Deputy Calleary's comment, the reason the Department has not invited small business representatives onto the implementation body is that I do not think either Department knows which one is running this. Which Department should have invited us? Should it have been the Department of the Environment, Community and Local Government or the Department of Jobs, Enterprise and Innovation? This fell between two stools because the two Departments are fighting this one.

There has been mention of shotgun weddings, shoe horning and culture. There is no doubt that the culture of the local authorities in this respect will be the prominent and the dominant one and, if that is the case, we are making a very big mistake in terms of the seedbed of entrepreneurship. People talk about the Kerry Group and how that business was started in a caravan. While not every business starts in a caravan, it is started by one or two people. We are taking that seedbed and giving it to people who know as much about entrepreneurship as my elbow knows about snipe shooting. We are making a major mistake.

The implementation body is to come back with an initial report in December. This has been dragging on for a long time. The former Minister in the previous Government, Batt O'Keeffe, started this ball rolling and it has been ongoing since then. People working in local county enterprise boards do not know what will happen in this respect. It is madness. We are expecting them to go out and burst their chops, so to speak, helping small businesses to set up. It is crazy.

On Deputy Lyons's question on the level of awareness of the PRSI exemption scheme, we as an organisation would have notice of the PRSI exemption scheme, the Revenue Job Assist initiative and some 13 other initiatives brought in by this Government, all of which are included in our newsletter on a regular basis, at least every two months in the past year.

The difficulty is that one has the Department of Social Protection promoting the PRSI exemption scheme, while Revenue is promoting revenue assist. The two of them could not meet, although I see a road show is starting now. They fell between two stools. Less than a month ago, I met the Minister for Social Protection and her colleagues. I offered anything that ISME could do to help them when they were bringing their roadshow on board. I said I would put it to our members that we would support them. I saw a note last Friday which said that the roadshow was starting and that it was supported by IBEC and the chambers of commerce.

Mary White (Fianna Fail)
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That is terrible.

Mr. Mark Fielding:

We were left out again, for whatever reason, I do not know. It is maddening to see that when one bends over backwards to try to get somebody to do something, it is forgotten about.

Mary White (Fianna Fail)
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It is disgraceful and does not augur well.

Ms Avine McNally:

Can I make a final comment to Deputy Lyons?

Damien English (Meath West, Fine Gael)
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Yes.

Ms Avine McNally:

From an organisational perspective we would have circulated information to the members. It would have been brought up in newsletters, as Mr. Fielding said, and it would also be available on the website. One often finds with these issues that one can keep telling everybody, yet they will make contact by telephone because they have still not heard about it. Only when it becomes a question on their radar will they start paying a bit more attention to it. It is frustrating that the information is getting out there, but one often finds it is not being picked up as quickly as one had hoped or initially intended it would have been.

Áine Collins (Cork North West, Fine Gael)
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I want to make a point on where the new LEOs will be in regard to the county councils. I do not care so much where they are to be situated as long as they are doing a good job. We have to be fair. I sat on this committee during the last 12 months when the CEB representatives came in. We engaged with them over the fact that they were not delivering. Their budget was €23 million, yet the majority of it was going on administration. The whole idea is to make this better. We need to have people out on the ground. That is where we need to get to. It is about getting the right job done. I am pleased that Enterprise Ireland is involved. It will be part of its remit to be involved in this because that link has always been missing.

Damien English (Meath West, Fine Gael)
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I wish to clarify two aspects. In fairness, having spoken to enterprise boards and in dealing with their customers, most of the staff are still doing their job and are implementing it. They are not sitting at home, they are fully active and, yes, they are concerned about their future. However, most of them recognise that the decision has been made. I am not too sure if we can reverse that decision but we can certainly try to make it work better for everybody.

Many issues have been discussed both in the earlier presentation and at our own discussion concerning what we want done with this and the changes being sought. We all have doubts and concerns but there is also a huge opportunity to get it right. If the committee spends some time on this, with the help of the witnesses, we might be able to focus on it with our list of what we want to ensure it works correctly. I believe it can do so. The committee will bring in the implementation body. The Minister will be in attendance twice in December so we will have an opportunity to discus it with him also. However, we need to focus on the fears, concerns and suggestions expressed by the witnesses, as well as trying to get them addressed and adopted.

Áine Collins (Cork North West, Fine Gael)
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If one goes back to 1993 when the CEBs were set up, most of their staff came from local authorities and it went on from there.

Damien English (Meath West, Fine Gael)
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Correct.

John Lyons (Dublin North West, Labour)
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Given that we are about to finish our meeting and we have been dealing with a very important issue today, can the committee come back to this matter at the start of our next meeting to discuss it when there are more members here?

Damien English (Meath West, Fine Gael)
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We can. In the Deputy's absence last week that is what we decided to do, as a rule.

I wish to thank Mr. Fielding and Ms McNally for coming in today. We may get a chance to debate the matter with Mr. Fielding again before Christmas in the pre-budget submissions. We did not get a chance to do so last week, although we did so with the Small Firms Association.

I wish to now adjourn the meeting until 1.30 p.m. on Tuesday, 6 November 2012.