Mr. Neil McDonnell:

I thank the Chair. ISME thanks the committee for the invitation to address it on the issue of business costs. We have identified five separate cost lines for business. I have asked our vice chairperson to voice the actual cost impacts of those areas on a small and medium enterprise, SMEs. These areas are commercial insurance, labour costs, public service costs, commercial property costs and energy costs. The one thing which all five of those cost areas have in common is that they are within the gift of members of the committee, as legislators, to control.

Insurance costs are a direct function of how members legislate for the insurance industry, the Courts Service, legal services, and the status of the book of quantum. I can confirm that ISME will present a draft law on perjury to the Houses of the Oireachtas for their consideration next month.

Ireland is a high-cost economy where citizens and businesses struggle to meet basic costs of living and trading. That does not mean, however, that we can meet those costs simply by increasing the cost of labour. As has been said by our colleagues from the Irish Tax Institute, our average hourly rate of pay is just over €30 per hour, placing us in tenth position among our OECD comparators, but we receive much lower levels of social services than those who are paid more than us. Our income tax is extremely low below an income level of €20,000 a year and extremely progressive above €34,000 per year. This leads to an unwillingness to get promoted, to work overtime, or to take a job which would breach the income threshold for social housing, which is €35,000 in the cities.

Regarding our public services, they would be tolerable if they gave us, as citizens and businesses, satisfactory outcomes. The Secretary General of the Department of Public Expenditure and Reform, Robert Watt, last week criticised the "nonsense, waste and inefficiency" in our public services. We also have an extremely high gap between public and private sector remuneration, and yet all the pressure for pay increases come from the latter. This pay gap is no longer sustainable economically, politically or morally.

Commercial and private property prices are rising to unsustainable levels and constitute a direct threat to employment in small and medium enterprises and inward investment. All of these costs are heavily influenced by legislation and Government policy. Upward only rents and commercial rates are within the gift and control of legislators.

Energy costs are also a function of Government policy. While the public service obligation, PSO, levy was introduced with the best of intentions, namely, to support green energy generation, the fact that it is linked to wholesale energy prices defeats the very objective it was designed to support because the levy increases as wholesale prices decrease. As the cost of renewable energy fall for everyone, the PSO levy absorbs savings that are being made by SME users. This is counterproductive and legislators need to change it. I ask Ms O'Connor to give some examples of the real world effects of these factors.