Mr. Ian Talbot:

I thank the Chairman and committee members for their interest. I would also like to introduce Ms Claire Greer, an intern from the University of North Georgia, studying international affairs. This is the third year in a row that we have had an intern from that college. It is going really well and is good experience. It is great to see an interest in people coming here and we are sending good information back as to what is happening here.

I hope all committee members have copies of the presentation. Chambers Ireland is the largest business organisation in the State. With over 55 member chambers in our network, we represent businesses in every region and economic sector in Ireland. Our geographic representation gives us a unique understanding of the challenges facing businesses throughout Ireland. In particular, we know and understand the threats to those doing business and providing much-needed jobs in towns and villages. We also understand the opportunities and believe Government can play a major role in minimising the threats and turning the opportunities into realities.

In this presentation, I shall focus on four main themes: the cost of doing business; the importance of local business supports; high street development; and public procurement. We are pleased to make this submission which focuses on creating the right conditions for growth. We believe that the buoyancy created by our recommendations will negate any costs attached. It is our hope that the contribution we make can assist in improving the trading conditions in Ireland’s towns and villages and help to retain and create employment within these areas.

On the first core series of points, the cost of doing business, the most clear and obvious way that businesses can be helped to create and retain jobs is to ensure they stay in business. To this end, it is vital that the cost of doing business is kept at sustainable levels. We believe there should be a targeted rates reduction. Many small businesses are struggling due to excessive rates imposed by local authorities. We understand local authorities have done their best and are striving to reduce rates, but the rate levels can still be high. In order to guarantee their survival, allowing them to retain the important jobs they provide, we recommend the introduction of a rates reduction for companies, located within town centres, which provide much-needed employment and contribute to the quality of life in these areas.

We recognise that this should be more nuanced than, for example, the large retail levy and expanded small business relief scheme, currently in operation in Northern Ireland. However, the support it provides for small businesses can be the difference between remaining viable and ceasing to trade.

While we recognise that the issue of rates is a reserved function of local authorities, it is the role of Government to provide the required funding supports and statutory and policy frameworks to enable the local authorities to implement initiatives focused on business development and job creation.
Recent reforms have enabled local authorities to raise or lower the local property tax, LPT, in their area by 15%. We are concerned that any shortfall in funding resulting from a decrease will be met through a corresponding increase in business rate or may make a planned reduction in commercial rates less likely. Cork County Council has already voted to lower its LPT by 15% in line with the manifesto commitments of many councillors. However, councillors must also be mindful of the business community in its jurisdictions as it is they who will support growth and create jobs. A short-term win for householders could lead to significant losses if previously successful businesses close due to an inability to pay local authority charges. This is an especially sensitive issue in counties such as Cork and Donegal, where former town councils are being integrated into county councils. In both of these counties, and there are others such as Clare, there are significant differences between the rate struck in the county and the town that is being incorporated. In this context it is vital that these and other similar local authorities are mindful of the need for a progressive levelling of the rate base, ideally towards the lower of the two rates over the longest term possible of ten years.
We believe that if local authorities were encouraged to be more flexible over rates, the standard and mix of businesses in town centres would be enhanced. The increased footfall from such an improvement would have a clear impact on job creation and retention.
The rates rebate scheme in Limerick, which allows new businesses to claim a rebate of up to 50% in their first year and 25% in their second year is a model that Government could encourage other local authorities to follow. The correlation between a proactive, supportive local authority and a strong business revival can be seen in Cleveland, Ohio, where businesses are encouraged to move downtown through a range of schemes and incentives.
We can now say with some confidence that the Irish economy is in a better place than it has been for some time. Our members frequently tell us that trading conditions in their local area are improving and business owners are now more confident about the future. However, there is still a reluctance to hire new staff. This reluctance is based on fear. Employers need certainty that the cost of employment will not increase. The rate of PRSI paid by employers, responsibility for sick pay and issues about redundancy create a hesitancy to take on new employees.
In our pre-budget submission we have included a wide range of recommendations designed to make Ireland's fiscal landscape more business friendly and in turn support and create more jobs. While many of these apply to businesses of all sizes, many are of particular significance to the type of small businesses generally found in town and village centres. They include continued certainty of the 9% VAT rate for hospitality; to increase the qualifying amount for cash accounting for VAT to €2.5 million per annum; no further changes to the sick leave payment regime and to reinstate the lower employers PRSI rate for Class A staff. This point is worth developing further. When wage bills are too high, businesses are less likely to hire new employees. The 4.25% increase in employers Class A PRSI in the 2014 Budget Statement directly contributes to businesses being unlikely to hire new employees. It has resulted in a reduction in employment growth levels and should be revisited with a view to supporting new job creation in significant numbers. This is a classic example of the opportunity cost involved not being factored into calculations determining whether to increase a rate or not. In our view, with a fair wind and further positive momentum in the economy, upwards of 50,000 retail jobs could be created in Ireland.
Another point related to the cost of doing business is the impact of excessive regulation. We welcome any moves to make compliance with regulations, such as licence applications, easier and more consistent. Legitimate business and legitimate jobs are threatened by the level of black market activity that persists in Ireland. We were pleased to learn this morning of the €14 million find. We congratulate all the authorities involved in that good news.
Counterfeit products of all kinds have a considerable impact on the profitability of legitimate retailers. The Revenue Commissioners made seizures of goods with a value of €5.4 million in 2012. As this figure related to seized good alone, the true scale of the problem remains unknown. This could be just the tip of the iceberg.
The sale and purchase of counterfeit goods takes footfall away from legitimate traders. The sale of counterfeit cigarettes, for example, takes secondary spend from retail areas that depend on it for their survival. We note that certain policies that seem attractive are actually counterproductive. We recognise that the Cabinet has just given approval to draft laws which may compel tobacco companies to use plain packaging, however, while this policy is based on long-term health considerations, which we fully understand, it fails to take into account the impact on employers, retailers and so on.
The counterfeiting group of our international organisation, the International Chamber of Commerce, states that branding allows customers to make better choices in the marketplace: "Plain packaging makes it easier for packaging to be copied by counterfeiters, exposing consumers to products with unknown and potentially dangerous ingredients". The local enterprise offices, LEOs, which are being established around the country must be exclusively focused on a core remit of mentoring and supporting start ups and SMEs with up to ten staff. There must be no duplication of services already provided by the private sector. Local community development committees, LCDCs and local enterprise offices, LEOs must use the expertise and experience of local Chambers Ireland to provide the best environment and conditions in which to do business. All business support units in local authorities should regularly engage with Chambers Ireland to work together on delivering agreed economic development targets. Ideally, business representatives on these bodies would be representatives of the local Chambers Ireland group.
We believe Government should encourage local authorities to follow the initiative in Cork where 1% of all commercial rates are ring-fenced for economic development to encourage economic growth and job creation. We have 55 Chambers Ireland bodies around the country. We have a chamber in every town in the country, providing us with feedback and is the source of our momentum.
As well as the somewhat indirect initiatives above, there are more direct ways that the Government can support our town and village centres and the job creating businesses in them. The local authorities must be encouraged to work with retailers and business organisation to introduce or expand town centre developments schemes and introduce a high street innovation fund. The impact of out-of-town retail parks on traditional town centres is dramatic and runs counter to the Guidelines for Planning Authorities on retail planning which state:

The town centre is the focus for a range of commercial and community activities, resulting in a mix of, often interdependent, land uses which contribute to a sense of place and identity. It include a combination of natural features; historic buildings, cultural, civic and governmental buildings, as well as public spaces. This physical form and mix of functions, which will have evolved over a considerable period of time, makes a town centre different from a shopping centre and provides much of its character which can be further enhances by introducing appropriate new uses into historic buildings. It also has a high level of accessibility to employment, services and facilities for all the community.

The decline of town centres has an impact which transcends the interests of retailers as traditional sites of community activity and social interaction are lost. Conversely the best performing town centres tend to have a significant proportion of retail activity; a broad and engaging retail mix and a good dining and entertainment mix. Government can encourage local authorities to work with business organisations to improve town centres. We have numerous examples of the benefits provided to local economies through collaboration between local chambers and local authorities, all of which have the potential to create new jobs. I have listed examples in my presentation but in the interests of time I do not propose to go through them other than to note the very good initiatives that could be replicated elsewhere. Examples of collaboration between the local authority and chambers are South Dublin Chamber, the Enterprise Europe Network, which is a partnership between Enterprise Ireland and five regional chambers, Letterkenny Chamber, Cobh and Harbour Chamber, Ballyhaunis Chamber, Ennis Chamber and Cork Chamber.
The Government could also follow the lead of the United Kingdom and introduce a high street innovation fund. This was created by the Minister responsible for local growth with money awarded to council with the worst affected high streets. It recognises the work done by local authorities and acts as an incentive for others to up their game. Perhaps the idea of a local growth Minister could be considered in Ireland.
Car parking costs must be applied strategically to increase footfall in certain areas, thereby supporting businesses and jobs. It is our view that the funding formula for municipal districts, whereby central government matches the funds raised by the municipal district through car parking and leisure charges, actually produces a perverse incentive for local authorities to increase car parking charges, so as to increase the matching funds. We believe that some of the saving arising from the reform of local government should be specifically earmarked to guarantee free parking provision at optimal time periods to support footfall and encourage consumers to shop in town centres.

In this context, a parking window of two hours would be ideal, especially on busy shopping days such as Thursday through to Saturday.

The final main point is public procurement. Many Irish companies, particularly small and microenterprises, feel that they are at a disadvantage when tendering for contracts offered by contracting authorities. This is a genuine threat to their survival and is subsequently a threat to the many jobs they provide and the rates they pay. We recently issued a white paper on this issue - we have copies with us if any of the members wish to see it - following extensive consultation with our network and a number of subject matter specialists. We conclude that Ireland needs a strategic public procurement policy to stimulate the economy, incentivise innovation, support business and promote job creation.

Our specific recommendations include: mandate the office of Government procurement, OGP, to consider always the wider impact that procurement reform has on the economy when measuring success, rather than a simple metric of how much money has been taken out of the procurement budget; transpose the new European Union directives into national law in a timely fashion, without gold-plating, and where options are available, the most business-friendly one must be chosen; reduce the number and types of contracts being awarded on the basis of price alone - an appreciation of the benefits to the Irish economy in terms of jobs created or revenue raised through taxation should become the norm in tendering procedures; help SMEs to become part of the supply chain for major capital works; guarantee the office of Government procurement employs fully professional staff, with specialist qualifications; simplify the process of pre-qualification and reduce the amount of material that must be provided by suppliers at this stage and make the process of banking or saving information on the system work better than it does; make open procedure tendering the norm for contracts of all values to level the playing field and facilitate SME participation; effectively use the process of dividing contracts into lots to encourage SMEs to bid, resulting in a wide range of bidders and potential winners; create opportunities for SMEs to enter joint bids which take account of the nature of the Irish economy; use eTenders to its full capability by promoting it, simplifying it, making it easier for SMEs to register and training suppliers and buyers to use it effectively - training is a key issue and we must ensure procurement buyers are well trained on new procedures such as the new circular 10/14 recently delivered by the OGP; make the entire process of public procurement fully transparent by allowing suppliers to see where and why they score or fail to score marks, defining clear roles for procurement officers and holding them to account on the basis of more than just cost savings achieved - face-to-face feedback should become the norm; and establish an independent review body entitled to adjudicate on matters where a firm feels it has been treated unfairly and to decide on redress.

We note the recommendations in circular 10/14 deal with some of the issues in procurement, but not all of them. It is now vital that all contracting authorities conform to the guidance set out in this circular and work towards a situation where indigenous businesses can benefit fully from public procurement processes.

Town and village centres are vital to our sense of community, and urgent action must be taken to support the businesses that do so much to support them. From providing jobs and creating wealth to engaging in corporate social responsibility projects, such as sponsoring local sports teams, doing charity work and protecting the environment, it is often businesses that put most into local areas. They deserve the support of both central and local government. We greatly welcome the committee's interest in this area and are happy to respond to members' questions.