Maurice Quinlivan (Limerick City, Sinn Fein)
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All those present in the committee room are asked to exercise personal responsibility to protect themselves and others from the risk of contracting Covid-19. Members are required to participate in the meeting remotely from within the Leinster House complex only. Apologies have been received from Deputy Paul Murphy.

Today we will discuss the challenges facing small businesses. Small businesses play a vital role in the Irish economy and in communities across Ireland. They often play a key role in providing the goods and services that are most relied on in our daily lives. Small businesses are operating in a very difficult and uncertain environment. This includes challenges from higher energy costs, labour costs and insurance. Today I am pleased that we have an opportunity to consider these matters further with representatives from the Family Business Network, the Convenience Stores and Newsagents Association, CSNA, and the Retail, Grocery, Dairy and Allied Trades Association, RGDATA. From the Family Business Network, I welcome Mr. John McGrane, executive director, Ms Ellen Kehoe, chief development officer, and Mr. Aidan Finnegan, policy and public affairs manager. From the Convenience Stores and Newsagents Association, I welcome Mr. Vincent Jennings, chief executive officer; Mr. Derek Moran of the national executive and Ms Flora Crowe, a member who is joining us online. From the Retail, Grocery, Dairy and Allied Trades Association I welcome Ms Tara Buckley, director general and Mr. Colin Fee, president. From the same organisation we are being joined online by Ms Rachel Twomey, Mr. Padraig Broderick, Ms Annie Timothy and Ms Leona Pender.

Before we start, I wish to explain some limitations to parliamentary privilege and the practices of the Houses regarding references witnesses may make to another person when giving evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name, or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if witnesses’ statements are potentially defamatory to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that witnesses comply with any such direction.

The opening statements have been circulated and to commence our consideration of this matter, I invite Mr. John McGrane to make opening remarks on behalf of the Family Business Network.

Mr. John McGrane:

I thank the committee for inviting us to speak on the issues that face family businesses and the communities they support in every townland in the country. I am the executive director of the Family Business Network, and I am joined by my colleagues Ms Ellen Kehoe, our chief development officer; and Mr. Aidan Finnegan, our policy and public affairs manager in the Gallery.

The Family Business Network of Ireland, FBN, was founded in 2013 by leading Irish business families. It represents family businesses throughout the country and has members from a broad variety of sectors, all essential to supporting and driving the Irish economy in every constituency around the country. Family businesses employ nearly a million people across every town and village in the country and that million is twice the aggregate of the State sector and the foreign direct investment sector combined. They provide billions of euro annually to the economy nationally and locally. Ireland’s family businesses have shown their resilience, not least in recent times. Their strength and importance to their communities was evident over the past two years as they weathered back-to-back challenges to their enterprises and communities. Brexit, the pandemic and now a crisis in the cost of doing business due to inflation, have all posed and continue to pose significant challenges to our family businesses. However, these businesses have shown that they are here to stay. They are here for good, supporting jobs and acting as the beating heart of towns and villages up and down the country. Our family businesses do not need hand-outs and they do not want them. They have never asked for them. What do they need and ask for is an economic environment in which they are allowed to create jobs, grow and contribute to their local communities. I want to detail today, the immediate challenges that threaten the viability of Ireland's family businesses. I also want to briefly touch on the macro challenges and opportunities that we all face. We want Ireland to be the best place to start and scale up an indigenous business.

In our most recent survey, our members gave the following areas as being of most concern to them: energy costs, labour costs, availability of labour, cost of raw materials and business insurance. Speaking to members daily, we consistently hear how input costs across their businesses have increased at a pace never seen before. Family Business Network members in the industrial sector have reported increases in their fuel costs of up to 80%, freight costs up at least 20% and basic raw materials like chemicals and steel up by 15% and 25%, respectively. Those cost increases have placed an unprecedented strain on their businesses and on their ability to employ. We have one member firm that recently reported the cost of the core raw materials in its manufacturing process has increased by a staggering 250% this year. Insurance is an area in which we have seen great work by the Legislature and our appreciation of that is genuine and comprehensive. However, that is not filtering down to businesses in a way we believe was intended. Members are familiar with that.

We thank the Department of Enterprise, Trade and Employment, in particular the Tánaiste, the Minister of State, Deputy Calleary, and Deputy Troy before him, for the huge focus they applied with colleagues on the issue of insurance reform. We note particularly the invaluable Cabinet subgroup on insurance reform, where the Government and Judiciary have delivered in terms of judicial guidelines, the Garda Insurance Fraud Coordination Office and the perjury Act, as well as the reform of the Occupiers' Liability Act 1995 and the Personal Injuries Assessment Board Act 2003, due this year. These measures have dramatically reduced the cost of claims and the future risk associated with every motor and liability policy in Ireland. In particular, we wish to thank this committee for its work in ensuring that the Personal Injuries Resolution Board Bill 2022 received such thorough and efficient scrutiny both at pre-legislative scrutiny and Committee Stage. However, while this work has helped deliver ongoing reductions in motor insurance premiums, precisely the opposite is happening in the less competitive business liability insurance market.

Renewals are increasing by an average cost of 16% since the guidelines were implemented in April of last year. It is up to Government to get serious with insurers to ensure the benefits of these reforms are passed on in premium reductions to family businesses, as well as voluntary and community groups, charities and sports and cultural organisations, which are all struggling with the costs of staying open. On the cost of energy, we welcomed the temporary business energy support scheme, TBESS, when it was announced in budget 2023 and we understand it needs EU approval. However, the particular details of this scheme cannot come quickly enough for our member businesses. We understand the drastic increase in energy costs is due to external issues, but we believe the scheme is a prudent and proportionate response to this price shock.

Lastly, labour cost and availability remain the key immediate challenges facing our members. Issues that face the whole country, such as the housing crisis, are directly impacting the ability of businesses to attract and retain talent in key areas where the crisis is most acute. Family Business Network welcomed the announcement of the key employee engagement programme, KEEP, in budget 2018 and its extension in budget 2023 as a positive step in the right direction. However, over the past four years, feedback from our member businesses is that start-ups, SMEs and family businesses are unable to avail of the scheme in a practical way due to the restrictive nature of its conditions. The poor takeup of the scheme indicates the structure is not yet fit for purpose.

Our members are also worried about the increased cost of creating jobs that has been suggested by the Commission on Taxation and Welfare. This potential increase in the cost of creating a job leads on to the topic of macro challenges and opportunities for our members. We note the findings of the Commission on Taxation and Welfare and acknowledge the consensus that our ageing demographics require a re-examination of how we generate Exchequer revenue. It was a grave mistake this was not examined in tandem with examining public expenditure on the other side. It is now vital a commission on public expenditure be established. Increasing the cost of creating jobs impacts the ability of our indigenous businesses to create these jobs, which will impact our communities and corporation tax for the Exchequer. The more costly it is to create and sustain a job, the more likely that job is not going to be created or that it will be created elsewhere. Under the OECD’s incoming base erosion and profit shifting, BEPS, agreement, where a company’s workforce is located will influence where it pays its corporation tax. The tax will be paid where the company has a significant presence. If jobs are lost from Ireland, which we are already seeing, this will affect the amount of corporation tax the Exchequer can book here.

It is exceptional that Ireland is the best small country in the world for attracting foreign direct investment, FDI. Hats off to the IDA and the officials across that endeavour. Corporation tax receipts from those FDI firms have allowed the Government to increase public expenditure by nearly 50% over the past ten years. It is the result of a deliberate national strategy which has grown Ireland’s economy into the powerhouse it is today. We continually advocate that similar foresight and ambitious thinking need to be shown by our Government to allow our indigenous family businesses to grow, innovate, compete with their global peers and support their local communities in the unique way they do. The turbulence in the technology sector in recent weeks and the resulting job losses show just how exposed Ireland now is to global shocks. Over recent years, Family Business Network and others have warned that Ireland has become overly reliant on foreign direct investment, while the Exchequer has become dependent on volatile corporation tax revenues. Foreign direct investment has got our economy to where it is today, and we appreciate that, but the bedrock of this economy is the family-owned indigenous business sector, represented by us and other like-minded bodies here today. Those businesses will never relocate to another jurisdiction when global shifts occur. It is to the disappointment of our indigenous, non-exporting businesses that they have not enjoyed the same world-class, world-leading national strategy that is enjoyed by their foreign direct investment and export-focused peers. We have brilliant State agencies in the IDA and in Enterprise Ireland for implementing our FDI and export-led strategy. They are helping, along with the local enterprise offices, LEOs, to incubate businesses at the start-up phase. What is missing from this equation is a body to support non-exporting businesses, the small medium-sized indigenous businesses that may be unsuited to exporting but which could benefit from advice and assistance as they seek to scale their businesses and create more jobs in their communities. They are an essential supply chain for our FDI community and State sector. Be it under the umbrella of Enterprise Ireland or a stand-alone agency, we encourage the members of this committee and the Government to examine the feasibility of such a dedicated agency. This agency could also deal with the worrying contention that Irish SMEs have lower productivity than their continental peers, according to the OECD.

It is critical that Government policy is focused on both dealing with challenges that face businesses immediately and on seizing the opportunities that lie ahead, even now in the midst of a crisis, by looking forward to the medium to long term. The Government should aim to make Ireland the best small country in the world in which to establish, scale up and pass a successful employment-sustaining community business onwards to the next generation of Ireland’s job creators. I thank the committee for its time. My colleagues and I are happy to take any questions.

Mr. Vincent Jennings:

I welcome the opportunity afforded to the Convenience Stores and Newsagents Association, CSNA, by the committee to assist it in understanding further the challenges that face in particular those of us in the subsector of the retail trade, namely, the convenience, forecourt and newsagents sector. I am accompanied by Mr. Derek Moran, a retailer in Drogheda and a member of the CSNA national executive, and online by Ms Flora Crowe, a CSNA member from Sixmilebridge, County Clare. Many of our members are second- and third-generation shopkeepers and have managed to remain in business throughout the most difficult and trying times. We are not quitters or moaners. Although we compete in what is acknowledged to be the most competitive sector in Irish business, our members continue to serve their communities in the certain knowledge that they are appreciated and respected. While a number of the challenges we face today are similar to those we faced 30 years ago, such as access to finance, unfair commercial terms from suppliers, planning, parking and, in urban areas, antisocial behaviour, today's retailer is further burdened by an ever-increasing number of legal and regulatory obligations: enormous increases in public liability insurance, a highly erratic rateable valuation process, and, especially of concern to customer-facing service businesses, an ever-increasing payroll cost. For members who do not own their premises, the relationship between tenant and landlord is fraught with difficulties that extend well beyond upward-only rents and include having to negotiate and sometimes re-negotiate with vulture funds and institutional investors.

All of those challenges pale into insignificance when compared with the most recent threat - the cost of electricity and gas necessary to run our businesses. While all businesses will incur additional costs, those of us in a sector that must have refrigeration, electric motive power, lighting, heating, and cooling facilities will suffer the greatest pain in the form of bills that are 300% to 350% in excess of similar periods last year. Despite every store owner taking additional energy-saving measures, which lead to a modest reduction in comparative consumption, we still have the appalling reality that a two-month bill that was €6,500 last year is €22,000 this year. These are viable businesses that are incurring a series of increases to their cost base that they cannot possibly sustain. These are businesses that have carried out Sustainable Energy Authority of Ireland, SEAI, energy audits over recent years and quite frequently have been able to avail of the accelerated capital allowances to ensure they were able to run their businesses in an energy-efficient and environmentally responsible way. These businesses cannot be permitted to wither on the vine due to the actions of a Russian bully.

The association does not wish to be critical of the initiatives the Government has put in place, particularly the TBESS, which is reported to have a €1.25 billion fund underpinning it, but the delay in implementation and the stated commencement date of September fail to pay sufficient attention to the urgency of the crisis. All Deputies and Government Ministers were aware from early 2022 that the Ukraine invasion had caused seismic shocks to the cost of electricity and gas for domestic and commercial customers. Once their annual contracts finished, our members were unable to renew them and had to accept a default unit price which was ratcheting upwards weekly and sometimes daily. It will be necessary to provide for a rebate to those customers that can demonstrate these additional costs incurred earlier than September. With the greatest of respect, providing a 40% rebate on bills as large as many our members have received still leaves them with an unsustainable and mounting drain on their cash flow. While we know that the present crisis is grounded in the unit price being charged, it needs to be acknowledged that our collective reliance on fossil fuels must be reduced and, ideally, eliminated. Energy companies profiting significantly from the situation need to be repositioned in the national interest and charged with facilitating sustainable energy to all of their customers' properties on a commercial basis.

CSNA represents more than 1,500 retailers which employ in excess of 45,000 people in their stores.

The overwhelming majority of our members were designated to be essential service providers and as such remained open throughout the Covid-19 restrictions. Many of our members ensured delivery of vital supplies to those customers in their community that were cocooning.

This committee has asked the CSNA to discuss the challenges facing small businesses. As it is primarily interested in enterprise, trade and employment, the remainder of our written submission will focus on these areas, with particular reference to recent, suggested and proposed legislation that will, we submit, affect our members disproportionately. We are concerned that the combined increased costs our members will incur over a relatively short timeframe in implementing a series of changes will render many of their businesses unprofitable. For all of us, payroll is by far the greatest single business cost. The recent statutory sick pay scheme will affect our businesses differently from others for which service is not a prerequisite or where the employee numbers are sufficiently large that absences can be accommodated without substitution. Members of this committee had been made aware of the double whammy by the association but we will await a review of the Act before restating our view that a rebate mechanism for both medical fees and a proportion of the sick pay should be contained in the scheme.

The committee met recently with the Low Pay Commission on the subjects of the national minimum wage recommendation and its report on the living wage. As a former low pay commissioner for two three-year terms, I must advise the committee that the commission will not be able to earn the confidence of employers unless there are significant improvements in data capture given the total absence of capability at present.

A further challenge to our small businesses will come in the shape of the mandatory 6% employer's contribution outlined in the auto-enrolment proposals. We are not so naïve to believe that our employees will not wish to incorporate some or all of the cost of their pension into wage claims which will, in turn, be an additional overall cost. A convenience store with ten participating employees with a combined annual payroll of €285,000 will incur an additional €17,000 in pension contributions. How are these increases in sick pay costs, potential living wage costs and auto-enrolment costs to be funded by small businesses that are already struggling to make a profit commensurate with the risk involved? If this committee is really interested in learning about our challenges, it needs to accept that the interests of larger businesses represented by the Irish Business and Employers Confederation, IBEC, are not always similar to, and are sometimes quite different from, those of small and medium sized enterprises. We are aware the Tánaiste and Minister for Enterprise, Trade and Employment has continually rejected the idea of including the Irish Small and Medium Enterprise Association, ISME, in the Labour Employer Economic Forum, LEEF. We remind the committee of the long-established principle that employment agreements need to be accepted by a majority of those affected.

We welcome today's engagement and commit to an open discussion. We ask that the committee see this as the beginning of a process of learning and dialogue rather than a mere optic.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I invite Ms Tara Buckley to make her opening remarks on behalf of the Retail Grocery Dairy and Allied Traders Association, RGDATA.

Ms Tara Buckley:

I thank the Chair for the invitation. I will first introduce my colleagues. I am joined in person by Mr. Colin Fee, RGDATA president, who owns convenience shops, a bar and a restaurant in County Louth. We are joined online by RGDATA directors, Ms Rachel Twomey of Twomeys Supermarkets Limited in Deansgrange village in south Dublin; Ms Annie Timothy who runs a supermarket in Abbeytown, County Roscommon; Mr. Padraig Broderick who runs a town centre convenience store in Croom, County Limerick; and Ms Leona Pender who runs a forecourt convenience store in Kilcock, County Kildare. All my colleagues are keen to give the committee some perspective on the specific challenges they are facing at this time.

I will first tell the committee about RGDATA and the people we represent. We represent 3,500 independent family-owned food retailers in Ireland. Our members operate in every community providing employment and local services to their towns, villages and local communities in city centres and urban areas. RGDATA members make a big economic contribution nationally. More than 100,000 people are working in our stores and we generate over €4 billion annually for the national economy. RGDATA members, who have more than one third of the retail-grocery market share in Ireland, share a number of common features across their businesses. All the businesses are independently owned. The person who owns the shop is directly involved in running the business and is usually on the shop floor from morning to night. In the past 30 years, most of the businesses have become allied to a buying group and trade as symbol retailers, usually with their family name associated with the store. This has enabled them to remain viable and compete with the biggest multinational grocery retailers.

Our members are substantial employers. Retail is a labour-intensive service business and the formats operated by our members typically employ more staff proportionally than other retail model per square metre. The business is highly competitive. Our members compete against Irish and international global retailers, including some of the largest food retailers in the world, on a daily basis. Members' businesses are rooted in their local communities. Our members' stores are usually located at the heart of their local communities and they employ, source and invest in the local community. They provide diversity, value and choice to local communities. Every day our members must earn their customers' business. Nothing is taken for granted.

The past 12 months have brought a series of unprecedented challenges to the independent retail-grocery sector and our members have been impacted in ways that few expected at the start of the year. I can honestly say that this is the most challenging and stressful time that independent food shopkeepers have faced since the founding of RGDATA. Local convenience shops and supermarkets are heavy users of electricity. A modern food shop has an extensive power demand through the load required for refrigeration, lighting, air conditioning and plant. Many of our members have invested heavily in measures to increase energy efficiency and reduce their energy consumption, but high essential energy use is still part of all their businesses. Fridges cannot simply be turned off and stores cannot be left in darkness. The scale of the increases in electricity costs since February 2022 is simply staggering. My colleagues can directly address the level of increases they have faced. For instance, Annie Timothy from Roscommon can tell the committee how her normal €6,000 per month electricity bill has climbed to an eye-watering €21,000 over six months. Most of our retailers have seen their electricity bills more than treble over the past six months, all at a time when turnover has stayed static or declined due to consumers being under increased pressure.

We welcome the temporary business energy support scheme announced in the budget. It will be of some help. However, it needs to be revised to take account of increased electricity costs incurred since 1 March 2022 and not 1 September. It also needs to be reviewed in the months ahead to see if the level of support provided needs to be increased to deal with an anticipated increase in bills throughout the winter.

Left unchecked, the energy crisis has the capacity to shut down many viable but vulnerable shops. They simply cannot continue to trade in the face of such adversity. As owners of labour-intensive businesses, RGDATA members are facing a host of new employment costs. Many of these costs are a consequence of State-imposed labour costs, such as increased wages, sick pay and pension provisions. Our members are good employers and are always keen to meet their obligations and responsibilities to staff, but there is a simple conundrum arising from how these additional costs can be funded at a time of unprecedented challenges. This is causing significant stress for SME food-business owners.

The reality for many trading retail-grocery businesses is that they are operating with low margins, facing increased competition and costs and dealing with reduced consumer expenditure. This time of particular challenge will pass, but in the meantime businesses that can remain viable need Government support to help them to adapt to increased State-imposed employment costs. There is no hidden pot that retailers can dip into and the increased cost pressures are plain for all to see.

During the COVID 19 crisis, the Government demonstrated creative and meaningful ways of helping viable businesses to support and sustain employment. Similar schemes are required now and for at least the next 12 months. Our members are hardworking retailers who will compete with the largest global food retailers on a daily basis and they are good at what they do. They run local food shops to a standard and quality that meet and beat the highest European standards. Not only do they battle against the competition, but they also have to trade in what is an increasingly challenging operating environment.

All our members pay significant commercial rates and local charges to local authorities. The rates revaluation programme which is proceeding nationally is also causing major stress as shop owners in areas like Donegal are receiving massive 100% increases in their building valuations and now fear the increased rates demands they are facing from the local authority. Insurance costs continue to be a major issue for local shops and despite broad political support for measures to tackle exorbitant insurance costs, the insurance industry is still disgracefully slow in bringing in reductions in premiums. The time has come for that industry to be shamed or taxed into producing reductions.

Local convenience stores and supermarkets are also facing new State compliance schemes, which will need to be funded and serviced, including the deposit return scheme and the latte levy. Perhaps one of the biggest challenges that some of our town centre retailers are facing is the negative impact of traffic management and active travel schemes that have blossomed since Covid-19 traffic restrictions were introduced.

If car-based customers cannot access their local family-owned retailer because of parking restrictions, reduced lanes or new traffic restrictions, then they will just drive by them to the out-of-town supermarket with a free car park which can be accessed easily. It makes no difference how good your shop may be, if the local authority has skewed the traffic around your premises to make it less accessible, then customers will go elsewhere.

Our request on this is simple. Active travel and traffic management schemes should not just be seen as engineered solutions to traffic flow. They need to be properly assessed and configured to minimise adverse commercial impacts. We are all for creating sustainable communities which can be accessed by different modes of transport but local food shops should be at the heart of sustainable planning.

With the permission of the Chair I would like to ask each of my colleagues to give a short account of their businesses and the specific challenges that they are facing at present. We would of course be happy then to take any questions.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Ms Buckley and with the permission of members, I will allow that request. There are four witnesses who wish to come in and I will limit them to a minute each.

Ms Tara Buckley:

I thank the Chair. I will ask Mr. Colin Fee to start.

Mr. Colin Fee:

I thank the Chair and committee members for affording me the opportunity to speak today. I am president of RGDATA and operate four convenience stores, a pub and a restaurant in Dundalk, County Louth. Three of the convenience stores have Maxol forecourts attached. My family have been involved in retail in Dundalk since the mid-1950s and like all RGDATA members, I operate an SME that is unique, distinctive, and a vital part of the local community. I live locally to my business and am in my store every day and employ almost 100 people locally. I support local suppliers and play an active role in the local community. Since the mid-1980s we have experienced and have had to deal with the Troubles in the North, cross-Border shopping and fuel laundering, foot and mouth disease, the crash in 2008 and the Covid-19 pandemic. In all that time, I have never been as worried about the viability of my business as I am now. We have seen practically all of our overhead costs rise dramatically and our gross margins have been squeezed due to price inflation on goods inwards and on raw materials. On behalf of the SME store owners represented by RGDATA, I can say that this is the most challenging and stressful time we have ever faced.

To give some examples, in just two of our two Centra stores the cost of rates, electricity and insurance have increased by more than 200% between 2019-20 and 2022-23. If our next ten ESB bills are the same as the last two, these three overheads, namely, rates, electricity and insurance, will cost over €200,000 more than they did three years ago. Added to this wage inflation, increases in other overheads, reduced margins and the possibility of a reduction in sales and I feel we are in the middle of a perfect storm. We see increases in the price of chicken, which is one of our biggest raw materials, of 80%, in bread of 40%, and in milk and cream of 40% to 50%. I want the committee to understand that cost increases of this magnitude are not sustainable in the medium term and will result in closures and job losses. We have already started to reduce the hours and curtail services to try to reduce our wage cost, which is the only overhead we have direct control over and that has any sizeable effect.

From next year, we will have phased increases to the living wage, the introduction of the sick pay scheme and changes to pensions, all of which will add to the cost of doing business. Throw in the proposed deposit return scheme and the latte levy and something will have to give. There is only so much that the sector can withstand.

I welcome the TBESS, as everything helps, but I respectfully ask the committee to look at the whole problem. Energy is only one piece of the jigsaw. We need supports to cover not just 40% of the increase in energy costs but the percentage of the increase in the total costs or else we will begin to see shops close. Once again, I stress to the committee that in 35 years of trading this is the first time I am anxious, concerned and afraid about the viability of all my businesses and the jobs they provide.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. Fee. If anyone who is online would like to come in if they indicate I will bring them in.

Ms Annie Timothy:

I thank the Chair for the opportunity to address the committee. It is not something I would normally do because, like most retailers, we do not have time to put our heads above the parapet. On this occasion I could not let it pass. I operate a Londis supermarket in Roscommon town with my husband Vincent. We have been in the shop for the past 22 years. I can identify with all the challenges that have been mentioned by the speakers today but the one that really concerned me was the energy one because it is the one that has most affected our business in the past six months.

As Ms Buckley said, our ESB bill is normally on average approximately €6,000. Our bill went up to €20,000 and since I did the interview, I have had more phone calls from other retailers, business people and pub owners. I actually had someone's family member ring me from England only this week to find out how they would advise their dad on his energy costs going forward. There are huge concerns for us all. For instance, taking my energy bill since last April as an example, the difference in what I have paid in my energy bill would normally cover six months of the bill for the year and we still have the bills for October, November and December to come in.

I appreciate the temporary business energy support scheme that was announced in the budget and which we hope will come online for us now. However, we really need that to be backdated to last March in order that anybody that has been hit and is struggling has some hope or redemption coming forward. We desperately need the committee's help in all of this. We are locally owned and everything about us is local and for us to survive, we need the committee's support going forward. Otherwise viable businesses will become unviable. Some €37,000 has walked out of my back door from the bottom line over the past five months so that is the extent of it for me going forward.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Ms Timothy and if remaining witnesses wish to come in they will have to limit it to one minute.

Mr. Padraig Broderick:

I thank the Chair. I have had a Spar supermarket in Croom town centre for the past 20 years. I employ 49 people, 20 of whom are full-time. Like most town centres in Ireland we suffer from a lot of dereliction and I am active in reviving Croom town centre, including my expansion of my own store in Croom during the past year and a half. I was able to borrow a significant amount of money on the strength of my business and purchase the closed Ulster Bank building beside me, and move in and offer new services and expand my business into this building. I was also able to house our local post office, which was about to close down due to the previous owners retiring. I have a really good vibrant business. We are an award-winning store for our day-to-day practice in the running of the business so I have a good grasp of retail and have been in retail since I was 15 years old. The big focus in my investment was energy-saving equipment. As retailers we are always very conscious that it is our next biggest bill, after wages.

I carried out an energy audit in February and the only piece of the jigsaw I was missing was solar so I borrowed €50,000 to put solar on my roof. At the time the grant was available. Within weeks of securing that loan, the grant was 90% available, then 50:50, then it disappeared but I was still hell-bent on putting solar on my roof. Then along came the unprecedented costs over the past six to nine months and that money has now gone into paying my increased electricity costs. For the next three years, I will be paying for solar that is not on my roof and trying to figure out how I actually got into this position after having a very vibrant business 12 months ago. From a vibrant business to paying for solar and not having solar and building up arrears with my energy supplier and building up arrears with my wholesaler, for the first time in 20 years, the future is not very bright for Padraig Broderick in Croom, who is very much part of Croom's town centre's revival.

I have a very viable business, be it in a very vulnerable position at present. We need Government support to weather the storm.

During the course of this meeting, I just got notification that Electric Ireland is increasing its prices from 1 December.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I have used Mr. Broderick’s store a number of times and I concur that it is a good asset to Croom. Is there anybody else online who wants to come in?

Ms Tara Buckley:

Can Ms Twomey join us?

Maurice Quinlivan (Limerick City, Sinn Fein)
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We will then go back to members after that.

Ms Rachel Twomey:

I thank the committee for giving us the opportunity to speak. It is a very challenging time. I am a second-generation independent retailer. My father set up Twomey’s SuperValu Deansgrange in 1988, and 3,000 people from our community had their first job there. The store has always been a grocery store since the terrace was first built in the 1950s. It has a long-standing history within Deansgrange and we serve the local community. We face stiff competition from a range of retailers and know that our customers' business and custom cannot be taken for granted.

I am facing many of the challenges that Ms Buckley and my colleagues outlined in relation to increasing costs. Electricity alone for the first nine months stands at €197,000. That is plus €100,000 for the first nine months. We received a further two bills of €90,000 because I was very prudent and locked in in July with Bord Gáis. We are now paying a premium price for off the variable. That is a substantial addition to the business and very worrying.

I am also facing an additional challenge that is directly threatening my business and is directly caused by actions of our local authority in my area. During Covid-19, the new active travel and traffic management measures were introduced to Dún Laoghaire-Rathdown County Council, reducing the road area available for cars and increasing cycle lane provision, in part due to social distancing requirements. These changes have not been undone since the end of the Covid-19 lockdown and instead are forming part of the permanent traffic management scheme. We are all for increased safe travel. However, if we want to keep vibrant local communities and retailers, it is imperative that the commercial impact of such schemes is carefully assessed before they are introduced. Local authorities need to factor in the community and economic impact of the changes to traffic capacity and traffic flows before introducing such schemes. The impact of the proposed traffic scheme on my business has seen my trade reduce from €45,000 a week, while still paying rates €70,000 pay per annum.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Ms Twomey. I am afraid she has to wrap up there. We now come to the members who have indicated they wish to speak.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank all of our witnesses for the information and the very hard evidence from their own members. I am very struck by what Ms Timothy said, that they desperately need our help. We fully understand this is not the witnesses’ first port of call and we understand the situation their members are facing.

I wish to ask a couple of questions about the TBESS and how it is currently constituted. The finer details are being worked out, but the broad parameters of it are known. Some people are saying, obviously, the TBESS is very welcome. In terms of pounds, shillings and pence, what will it actually mean? Will the witnesses give us a practical example in terms of the reduction in the monthly bill? What will the scheme actually mean in terms of what it will give back by virtue of the size of the bill?

It has been suggested by some people that many of the members of our witnesses’ organisations will have been part of a scheme to purchase energy. When did those arrangements run out? I understand they are not getting renewed, but just confirmation of that would be helpful. I note the call from some people is to backdate the scheme further, but that has to be balanced against whether a person had price controls up to that point. Will the witnesses give us a wee picture of that? I understand they may not have scientific evidence, but whatever they have to inform us would be helpful. I am very interested in the difference that the scheme will make in terms of what it will contribute.

Mr. Colin Fee:

Many of the affinity schemes, depending on who organised it, would run from different times. They all would have ended at various times over the course of this year. People on affinity schemes have seen perhaps a three times increase in their bill.

The TBESS only runs from September until February, at the moment. On the effect of it, to keep the maths simple, let us say a bill was €10,000. If a person on a scheme comes off it and the bill rises to, say, €30,000, there is a €20,000 increase when, let us say, September this year is compared with September last year. There is a €20,000 increase. The TBESS is 40% of that €20,000, which is €8,000. Therefore, we still have €12,000 of an increase, which is unsustainable. The scheme is welcome. It is grand and it is better than nothing.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I am not suggesting that for a moment. I just wanted to know in practical terms what the contribution is.

Mr. Colin Fee:

In a medium size shop, for example, our bills in our main shop typically would have been around €6,000 to €8,000 every month and they are now three times that.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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It is still fairly heavy duty.

Mr. Derek Moran:

To answer the question raised on the affinity deal, the Deputy is quite right. Most of us in groups, such as SuperValus, Centras and Spars, would be part of affinities. I operate a Eurospar in Drogheda and I am on an affinity scheme. However, this morning, as one of the witnesses alluded to, the rate has gone from 31 cent to 53 cent. Just working it out very quickly here while I sit at the desk, that is €65,000 extra per year for me, even though I am on an affinity-----

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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That extra is important. That is also very useful information and it is helpful to know.

Mr. Vincent Jennings:

The unit price has moved. Energy was never a concern to us. We locked ourselves in. I would have people who were on 14.6 cent per unit cost and are now paying 56.5 cent. That is a 400% increase. Ms Crowe is with us. She was paying €6,500 and is now paying €22,000. Those are the type of things we just cannot sustain.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I understand.

Mr. John McGrane:

I could give an example of a significant employer in the Border counties area, namely, Abcon in Cootehill. The Smith family employs 160 people from the local community – jobs that would not be manufacturable, to use the word, in any other way. It is a very significant community resource. Their bill in October two years ago was €9,500 for energy. Last year it had already gone up to €19,000. In October of this year, it was €33,000. It is off the Richter scale. All schemes, as colleagues have rightly appreciated, are welcome.

Indeed, as a nation, we learned a lot in Covid about the importance of using the State’s money, which comes from the taxes collected from employees and employers, to make sure we do not turn out the lights on those employers and employees. We need to go further in how we are thinking about this.

The Minister for Finance talks about shift or shock. We have had the conversation about whether the energy matter is here to stay or is a short-term shock. Please God, it is a short-term shock and, if that is the case, there is little justification for saying we should not help businesses to fully sustain the shock effect and take other measures that can roll that forward, or regard it as a grant. Businesses cannot sustain these kinds of price increases. Some 160 jobs in an irreplaceable business in Cavan are at stake, along with those in associated retail and other services. By the way, it is not a foreign direct investment company. It does not have those resources or IDA Ireland to argue its case. It has support from Enterprise Ireland, which is very appreciated, but Enterprise Ireland is not in a position to help the company on this.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Mr. Broderick touched a little on changing and reducing energy use and switching to renewables. For the avoidance of any doubt, I will ask this question. I suspect I know the answer but it is important we have the conversation. Do any of our guests think there is more they could do to reduce their energy use or have they cut everything back to the bone? I have heard from people that they get mildly annoyed at being advised to cut down on their energy use because they have cut it to the bone. In the local supermarket in my area, I noticed that staff now close the doors. They do not have to do that because I do; it is a service I provide for nothing because open doors drive me wild. From talking to local business owners, they say they cannot reduce or change their energy use by more. I ask for a brief picture on switching to renewables, more sustainable forms of energy such as microgeneration, and cutting back on energy use.

Mr. Derek Moran:

The Deputy is quite right. In 2019, I invested in solar panels, which were expensive at the time, with a five-year payback. Ironically, the shift in the unit rate, which has gone up, has accelerated the payback time. It is now quicker. We also invested in LED lighting through the Electric Ireland scheme at the time. That was a no-brainer. Refrigeration has been mentioned a couple of times as a huge component of an energy bill in retail premises so we invested in energy-efficient refrigeration. Is there more we can do? Absolutely, but are heat pumps cost-effective? I have quotations for generators and am looking at quotations for, as the Deputy mentioned, wind generation but sometimes it might not be feasible because I am in a residential area and who wants a big windmill beside their front door?

There is more we can do. We are doing basic stuff, similar to that mentioned by the Deputy as happening in her local supermarket, such as turning off lights in mineral coolers and refrigeration in beer coolers that do not need to be turned on for a couple of hours, but these measures are not sustainable. People do not want to turn their lights off. They want to show they are open for business and do it properly. Of course, there is more we can do. I am open to anything that will reduce our usage. My usage is down about 5% year on year but my costs are up in the region of 80%.

Mr. Vincent Jennings:

On the retrofitting of refrigeration with doors, many of our fridges are open access. Europe and the US have moved to them all being fitted with glass. We could do that. Changes are coming in eight years relating to gas requirements and the like. Some of the retrofitting could not work, but I know one very large multinational company spent more than €4 million in recent times in retrofitting all their fridges. They did that in conjunction with the Sustainable Energy Authority of Ireland, SEAI, and the ESB's electricity network. They were not doing it just as a good experiment but because they knew it made sense. The UK convenience store body has done the numbers on it. We could retrofit where it is possible and where people do not want to buy new fridges or do not feel the need to throw out a perfectly good fridge. We have spoken with the Department and energy specialists on having this as part of the accelerated capital allowance because it would make sense for us to retrofit some of the fridges. It will not work for all but it will work-----

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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It will work for some.

Ms Tara Buckley:

The committee heard Mr. Broderick's example of borrowing the money to retrofit. Many of our members have gone down that route and have done a lot to try to make themselves more sustainable and to reduce their energy use. Their challenge now is that even if they had started along the route of solar, and Ms Timothy and Mr. Fee have looked into it, the reality is that by the time they got the quotes for solar and got the bill in the door, they knew they would not be ready. It will not change and they cannot now afford to invest in it, while they face these huge extra bills.

We also have many members who have done a huge amount of work, as Mr. Moran has, on becoming more efficient. They are so frustrated because their bills are jumping equally as high as everybody else's. They feel they have done all this work and invested all this money but are still facing these huge increases.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Usage is going down but bills are going up.

Ms Tara Buckley:

Yes.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I have a specific question for Mr. McGrane, if he does not mind. He outlined in his submission how a State agency dealing with indigenous non-exporting businesses is missing. Will he comment for a few minutes on how beneficial he believes that will be? As he knows, that is a long-standing Sinn Féin policy and is something we have put a good deal of work into. Will he share with us what specific benefits could come from such a State agency?

Mr. John McGrane:

Certainly. I thank the Deputy for the question. The reality is we have done extraordinarily well, going back to the 1960s, T.K. Whitaker and various political representatives at the time, who had the vision, at a time we were exporting our young on the hoof alongside our cattle, to look upwards and outwards and say we should not stand for this. What did we do? We developed a national strategy that leveraged our availability of, frankly, cheap labour at that time because people were emigrating otherwise, along with our ability to give tax breaks. We developed a foreign direct investment, FDI, strategy that was almost immediately successful. People will remember the Shannon free development zone, etc. We have become the envy of the world for having that strategy. IDA Ireland, and its officials, is a superb, globally acknowledged agency, as are the departmental processes that support all of that. That is simply by way of saying this is not a mystery. We know what happens if we take a business strategy, invest in it, give it the resources at State and private sector level, and go out and get the best businesses in the world to come in to employ people. Of course, it has gone from being a cheap labour strategy to one of high-tech and high intelligence. It underpinned the development of our universities and research centres, which are also now in a world-class state as a result. It is self-propelling and almost exponentially successful strategy for the State and our people.

We do not do that for our native businesses. Enterprise Ireland also does a good job to help exporting companies build their export markets to Great Britain and beyond and to enable non-exporters to become exporters. That is fine too, but all of the above need local services, including the grocery sector, the people who take care of cars at the top of the town, the people who run a local hotel and the people who provide professional service at local level, without which communities, and FDI and exporting companies, could not function. We had the opportunity to think about this but never did. The foregoing examples of EI and IDA Ireland strategies show us exactly what an agency that could take care of our local, home-grown firms, which provide those goods and services locally, could achieve.

As a proud citizen of Ireland, I am shocked and deeply irritated when the OECD states that Irish SMEs have the lowest productivity in Europe. I have gone to considerable lengths, with my colleagues, to get to the root of that. Nobody can tell me exactly what the example of that is. We get compared with the German Mittelstand, and we admire all that it does, but it is not a fair comparison. Enterprise Ireland, which has a new chief executive, Leo Clancy, has equally positive views on this area and will point to things such as technology usage and innovation.

These are good things but not at the expense of jobs. We simply need to stand back and take a strategic view of what natural competences locally are and what the heart of community locally is. Colleagues who are here today will attest to the beating heart of local towns up and down the country. These local firms buy local, hire local and support local - much more than foreign direct investment is in a position to do in terms of getting sponsorship cheques for the local football team or school - and, of course, they vote local. Those indigenous firms are doing that completely on their own. I will give an example beyond present company, which is well able to illustrate. Waste disposal used to be collecting rubbish. It is now a green transition industry. You have some of the world's best what used to be called rubbish collectors turning waste to energy and being a significant contributor to our climate goals. Those firms are typically home-grown and family-owned. They might have had one truck 30 or 40 years and now have a national fleet in one form or another. They are not exporting companies or foreign direct investment. They are too big to avail of the supports that are welcome from the LEOs and they are on their own. They are not asking for anything but it does strike us as a missed opportunity to ask whether we could support and develop more of those, not least in the energy and climate space. We are not looking for handouts. We are looking for the missing State strategy here that can deliver far more for our economy but for our communities most of all.

David Stanton (Cork East, Fine Gael)
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I welcome all the witnesses and thank them for their presentation. Inviting representatives of these organisations to appear before us on a regular basis should be a standing item on our agenda. It is something we need to do because we are talking to entrepreneurs, innovators and risk takers. Mr. Jennings mentioned risk in his presentation. We must recognise that their members do take risks all the time. Hopefully, they pay off and the businesses are successful. Mr. Fee mentioned the perfect storm coming at us. This is what we are in at the moment. Things are buffeting various businesses and sectors from all sides. We must listen and take note of that and see what we can do to assist.

We discussed the issue of energy, which is the big one. Mr. Jennings recognised the illegal Russian war against Ukraine as the main reason for this. Last night, we saw the danger of an escalation of this with the missile attack on Poland, which really frightens me. It is bad enough as it is but if it escalates beyond that, we could really be in a black place. Hopefully, that will not happen and we might see peace break out at some stage.

Leo Clancy appeared before the committee last week. I raised with him the issue of small and medium Irish businesses who scale up to a certain level, cannot go further and are typically taken over by multinationals or other companies. Mr. Clancy said he was very conscious of the need to support such businesses and was working actively to do that. This committee needs to ensure that this does happen because I recognise the issue raised by Mr. McGrane as being hugely important. This is an aside from the main issue we are talking about today.

Mr. McGrane also said the key employee engagement programme, KEEP, scheme is not fit for purpose. I have an interest in that so could he provide some more information? If he cannot do so now, perhaps he could send us a submission on it because that is something we need to follow up on.

Mr. John McGrane:

By all means

David Stanton (Cork East, Fine Gael)
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If it is not working, we need to know what is happening from the witnesses' perspective and possibly that of others and possibly do some more work on that to see what we can do with the Government and the Department to make it work or do something else instead. If Mr. McGrane has suggestions, I would be very interested in hearing them.

Mr. John McGrane:

By all means - we will certainly provide them.

David Stanton (Cork East, Fine Gael)
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Ms Buckley mentioned creative ways to assist. I think she was talking about backdating the payment to March. I am not sure what the cost of that would be. We all recognise that Government can only go so far. It cannot alleviate the entire cost that is imposed. Mr. Moran illustrated quite well the fact that businesses have absorbed so much but you can only do so much. We recognise that too.

Mr. Jennings mentioned that the Convenience Stores and Newsagents Association is not part of the Labour Employer Economic Forum, LEEF. I am interested in the reasons we have been given about why it is not a member of LEEF. Could Mr. Moran come back to us on that at some stage?

In normal times, increased wages, sick pay, pension provision, rates demands, insurance costs, the deposit return scheme, the latté levy and traffic could be absorbed by various businesses and sectors - possibly with a bit of pain but it probably could be done. Some of them have benefits in their own way. For example, we do not want people who are sick coming into work for obvious reasons. We have done a lot of work on insurance but I am concerned that it is not filtering down and that is something we need to work on. The major issue is energy costs and we need to do a lot more there.

Ms Tara Buckley:

Energy is the priority because of these ginormous bills businesses are facing and because they are so much higher than the benefit scheme that is in place. We are really struggling to understand how we are going to pay those bills over the next number of months. Given that we are hearing of further increases, we would love it if the committee scrutinised the charges we are being charged and those extra charges on our energy bills, which we find extraordinary and which have also increased exponentially.

We are good employers and we understand the need for a lot of this legislation and new regulation but at the same time, it is about the cumulative impact of this on a small business that is already struggling to deal with the day-to-day costs. We know the National Competitiveness Council has said there should be an investigation into the cumulative economic impact of these factors on a small business. We really believe this committee should support that as a matter of urgency. It seems that there is lots of movement on introducing sick pay and the living wage, and we understand that, but at the same time, the cumulative impact of these on a business that is struggling to pay daily costs is creating huge stress among these employers.

Mr. Vincent Jennings:

We are not so greedy that we want to be in LEEF but I know many others have questioned why a body as large and representative as ISME was not involved. Ms Buckley and I, the restaurateurs, the vintners and the hoteliers were part of what is known as the Local Jobs Alliance and we believe that we collectively should be part of that. Although IBEC does a very good job at representing, it does not necessarily represent our businesses. We know what is hurting us on the ground and at this point in time, it is energy.

I will mention something that is hugely important for the committee to understand. Many years ago, the PSO was introduced. It was calculated for businesses in a different fashion compared to homes. It was calculated for us in respect of kVA. This year, it was announced by the CRU that we would be getting a rebate. Private individuals would get €89 and we will get a rebate of no less than €312 but in many instances, thousands of euro because of the way it was calculated. That was supposed to kick in from 1 October. We are crippled with energy bills and the CRU has not brought about a mechanism for us to be credited. That is astonishing. Do not forget that the new levy being introduced by Revenue will effectively take the PSO into account as the bill the last time yet because we have nothing this time, it will be less of a percentage.

That is wrong. It is our money that we have paid and we should get a rebate. I have written to the Minister and the CRU but have not heard anything back. I would like the committee to investigate where the money has gone.

Mr. Derek Moran:

I will come back in on one of the questions. A colleague of mine did an exercise. The Deputy asked about a requirement or request that the scheme be backdated until March, approximately. The biggest percentage increases were in April, at 108% compared with the previous year, July, at 143%, and August, at 221%. That includes the affinity schemes that are in place. The percentages of the increase are behind us now and the energy support scheme only kicks in from September.

Ms Tara Buckley:

We can certainly provide committee members with detail to explain why it needs to be backdated.

Maurice Quinlivan (Limerick City, Sinn Fein)
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If Ms Buckley were to send on that information, that would be perfect.

David Stanton (Cork East, Fine Gael)
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We should make this a regular event in our calendar. These groups should appear before us at least every six months and we should keep the lines of communication between the committee and the groups and their members open.

Richard Bruton (Dublin Bay North, Fine Gael)
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Coming from the dismal science, as they say, economists know the price of everything and the value of nothing. Essentially, the witnesses want to make a business case for more assistance from the Government. Can they provide the committee with the percentage of costs that electricity constitutes in various of their member businesses? I presume a fishmonger in Howth will have a higher energy cost than some of the other retail outlets, such as clothing outlets. That would give us a notion of where the pinch points are.

On the issue of sick pay and auto-enrolment, there is no doubt they will bring additional costs but the approach of the Government has been to try to phase them in over a period. Are the witnesses arguing for a slower phasing in? What would that mean in terms of it starting at three days and then moving steadily to ten days? In general, what are average wages among their members as compared with the living wage that is being spoken of? What is the gap or increase in payroll in that regard? That information will help to give the committee a handle on some of the changes that are coming through. As all present have acknowledged, the lessons of Covid have been that some lower-paid people played a strategic role. We want to have better protection in some of these areas because they are so important. Clearly, we have to strike a balance in the way that is done.

I am not sure I share Mr. Moran's optimism that these energy prices are temporary. I do not take the view that 100% support from the Government is a credible or feasible approach. How much of his unit power did he reduce with an aggressive retrofitting programme? Could the Government be more aggressive in supporting such retrofitting? It does not just tide a business over for this year; it provides a permanent improvement in the long term, not to mention its impact on climate. How far could we go with in that regard by aggressively going after businesses, particularly those such as fishmongers rather than clothing outlets?

Mr. Derek Moran:

I can give the Deputy a definitive figure in respect of solar energy. Solar energy now generates 16% of my electricity needs, which is excellent. As regards energy-efficient refrigeration, I cannot provide an exact figure but there is no doubt it is a significant component. Similarly, water heating, air-to-water pumps and wind generation need to be considered. As an independent retailer, I do not have the expertise to cost that out and say-----

Richard Bruton (Dublin Bay North, Fine Gael)
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Would it be possible to survey the members of our guests' organisations to get an idea of the energy profile of fishmongers, for example? I presume electricity must account for north of 10% of their costs, whereas in clothing outlets, energy consumption is mostly accounted for by lighting and heating. Can we get a handle on that? If there is to be a response to this, it will be much more in the territory of whether there are businesses that are acutely caught and whether we can do something for them.

Mr. Vincent Jennings:

Our sector has a disproportionately high use of energy compared with other forms of retail because of its nature. We can obtain those figures and provide them to the committee.

Ms Tara Buckley:

It should be remembered that we represent food convenience retailers and we definitely have higher energy requirements than a general retailer does. We can provide the committee with figures from members who have done considerable work on energy efficiency. That will illustrate the impact it has had on their consumption and bills.

Ms Annie Timothy:

One of the issues is that grants are available for a consultant to advise a business, but that is where the money seems to be going. The consultant gets the money to advise but I hope there will be something coming to us for retrofit. Rather than all the money going to consultants, some money should be put aside for retrofitting.

Richard Bruton (Dublin Bay North, Fine Gael)
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The point I am making is that I would rather see the Government move towards 80% support of retrofitting than 80% support of electricity bills, which will be burnt up every year. It can be a win-win. If something could be designed to particularly focus on the businesses that are exposed, that is the territory in which we could make progress.

The figures released yesterday in respect of insurance are revealing. It seems that insurers are now using motor insurance to subsidise public liability insurance and employer's liability insurance. The issue is how to get to grips with the latter two forms of insurance. The figures do not show that the insurers are making profit on them. The work that has been done to date seems to be missing something. Are there other measures we should be considering in the area of public liability insurance and employer's liability insurance to get the work that is being done, such as in respect of the Personal Injuries Assessment Board, PIAB, the standardisation of settlements and so on, to impact in those areas?

Ms Tara Buckley:

It is essential that the amendments to the Occupiers' Liability Act 1995 contained in the Courts and Civil Law (Miscellaneous Provisions) Bill 2022 are passed and that the duty of care is rebalanced to make it fairer-----

Richard Bruton (Dublin Bay North, Fine Gael)
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We are doing that.

Ms Tara Buckley:

Yes, but it needs to be done. It seems to be taking forever to happen. We are five years down the road from when RGDATA drafted the Bill and presented it to the Minister.

Richard Bruton (Dublin Bay North, Fine Gael)
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Does Ms Buckley believe that will solve the issue of employers' liability-----

Ms Tara Buckley:

It will go a certain distance towards solving it. The other thing is that employer premiums have not reduced. I do not understand that there has been any balancing over from motor insurance. As far as we can see, there is no such balancing. Employers' insurance premiums have increased every year.

Richard Bruton (Dublin Bay North, Fine Gael)
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Am I wrong? The data from the Central Bank showed that there is no profit being made by the insurers on employer's liability insurance and public liability insurance. The profit is being made in motor insurance. The insurers are not passing that on to motorists. The argument is that they are cross-subsidising employer's liability insurance and public liability insurance. There is something with which we still have to get to grips in the context of employer's liability insurance and public liability insurance and I am trying to get the combined wisdom of the witnesses as to what that is.

Mr. Vincent Jennings:

There is still a problem insofar as even though we have judicial guidelines, a considerable number of judges are electing to go outside the agreed areas. There is a considered risk by insurers that if a matter goes to court, there will be excess amounts of money. When the Judicial Council agreed the judicial guidelines, we thought there would be a movement downwards in the level of awards. That is still not happening. It is all part of a grand scheme. They all have to work together. This Government, more than any other, has worked assiduously to bring in a level playing pitch. That still has not happened, however, because, unfortunately, not all judges - I know the committee does not like to criticise the Judiciary - are necessarily playing ball on this matter.

Mr. John McGrane:

We would certainly echo all of that. The issue is there is not a uniform deployment of the political and business strategy that was rightly envisaged and that has been very well crafted. It needs to be followed up with pretty tough inspection.

I acknowledge the point Deputy Bruton made on Central Bank numbers but I am not sure we are getting the traceability appropriate to this, given that the law was changed and, as Mr. Jennings said, there are a number of known judges who are adopting their own approach because the system still allows that to be done. We need rigorous tracing between cause and effect. The Oireachtas has done great work in this space but we need to see it come to fruition. That is about inspection, inspection, inspection.

The Deputy asked about auto-enrolment and other measures. We take his point that printing free money for energy bills cannot be a solution, even on a temporary basis. The link to supporting measures that reduce our dependency is right but we need the patient to still be alive by the time we get there. In that light, we talk about maximising the opportunity for the lights literally not to go out completely.

There are other costs that, this year not least, we have seen coming down the track. I had the privilege of serving on the Pensions Commission. Auto-enrolment is a measure we actively supported. Our view is that good employers will look to do the best they can anyway for their employees. Family businesses and other businesses will always do the right thing but there has to be affordability and sustainability.

There is a wider dimension to this theme. The socially important measures the Government has introduced this year, such as mandatory sick pay, auto-enrolment, the living wage and others are important national social commitments we are making. There is one legitimate question, which is whether all the financial cost of that should be taken by the people who make the jobs or whether it should be borne more widely by society, in terms of how we fund these things. Essentially, just like PRSI increases, these are taxes on a job. They get paid by the employer and add to the cost of the business, sometimes with a personal contribution, regardless of whether the employer can afford it or is profitable. It is worth standing back to consider how, if we want to maximise employment, we can make it easy, competitive and affordable for employers to create private sector jobs that sustain local economies. We would welcome a conversation at national level about where we want to go socially and how we afford that as a community.

Matt Shanahan (Waterford, Independent)
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I welcome and thank everybody, including those online, for attending the meeting. I echo Deputy Stanton on recurring meetings, except I think they should happen every quarter. I have been on the record for some time about the challenges facing the SME space and have stated in the committee that the SME sector is treated as a second-class citizen in our economy. We are all about FDI and the public sector but we do not spend enough time dealing with the small businesses employing over 1 million people in this country. There are significant headwinds affecting the SME community at the moment.

I will group issues together because we could have three meetings on what we are talking about. On energy bills, I note and support the request to backdate that to March. The Tánaiste appeared before the committee some weeks ago and I told him the TBESS would not be adequate to support businesses. Unfortunately, because businesses are not yet falling over, people seem to think the problem is not as great as it is. They do not understand, because they have not run businesses, that business owners will accumulate costs and keep on doing so while trading, before getting to the nuclear option where they suddenly have to decide they cannot go on any more. Then they are into the small companies administrative rescue process, SCARP, administration or liquidation or whatever.

Mr. Jennings asked about ISME being taken onto LEEF. I have asked the Tánaiste in the Dáil and in this committee if that will happen. I have said IBEC does not represent the majority of small businesses in this country any more. It predominantly deals with FDI and the public sector. That needs to happen and the witnesses need to keep on asking for that. I support the idea of a body to help non-exporting businesses and other indigenous businesses. We need that. We have a focus on IDA and Enterprise Ireland, EI, and they do an excellent job in attracting FDI and supporting exporting companies, but we are not doing enough or putting enough money in to support our own. The commission on public expenditure is needed but not for today.

The biggest things that strikes me are, one, wage inflation. It is occurring because of the cost in the economy, the FDI component and being at full employment. That is a problem. Another problem concerns rates and the apathy of local authorities to understand what is happening to businesses. I get so frustrated. I had a man on to me from Bandon yesterday talking about a whole street cut off for the next number of months into the Christmas period because the local authority has decided to do roadworks. These things need to be looked at.

On insurance reform, I tried to bring an amendment, with the support of Deputy O'Reilly, to the Dáil last week on PIAB giving more than one recurring review. Unfortunately, the amendment was not accepted. We accepted the Minister's position but I hope he will make an amendment on that legislation coming into the Seanad in order that we will have more than one recurring review. As Mr. McGrane highlighted, the judicial guidelines are not being adhered to. That is a significant problem.

Another concern is that the shift happening in retail is a consolidation of large multinational business into the sector. Three German multiples are looking for planning permission to add more shops in Galway. In my town of Dungarvan in Waterford, we have four large international retailers and a fifth one is coming in, a British one which is well established already in Waterford city and which will be to the detriment of the retail landscape in a market town like Dungarvan. We have no policy to prejudge, other than arbitrary planning. These things need to be looked at.

In the first instance, we need to get support for energy bills because that is the pre-eminent thing needed for business. We need to get the local authorities engaged and the committee needs to get grouped in with the witnesses' organisations on a recurring basis because the SME sector is the most vulnerable and least supported in this country and has been for some time. Unfortunately, other vested interests are having their way in many cases to the detriment of our indigenous business. That is my rant. I have heard everything. I know exactly where the witnesses are at. I feel for people in this position.

I suggest to the Chairman that we might look to do a report on this aspect of the meeting, even a short report to the Department outlining the concerns. We know what is not working. Mitigating with solar and all of that sounds wonderful but will not happen for anybody for six months. I accept what Deputy Bruton said to the effect that we cannot write a blank cheque but I know nobody can get solar in the country for six months, simple as. You cannot have energy efficiency in a business where you are doing food production and have to heat, cook and freeze. There is only so much you can do. You cannot bring in new technologies. There is no new technology that will reduce fridge costs by 50%. It does not exist anywhere in the world so we have to get real about the difficulties and try to support the witnesses' sectors because they are vital for the health of our country and indigenous people. That is what I am concerned about. I do not have a question; I have a rant. I am sorry to have to give it but I feel for the witnesses' situation.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Does anyone want to come in?

Mr. Vincent Jennings:

Could we ask Flora Crowe from Sixmilebridge to contribute? She has something to say and I would like members to hear.

Maurice Quinlivan (Limerick City, Sinn Fein)
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We saw her tweet last week. I call Ms Crowe.

Ms Flora Crowe:

I thank the committee and Chair for having me. I, like every retailer in the country, have been hit by colossal bills. I got a lot of publicity in the last week about my enormous bill. One element that has been left out here is that rural Ireland will die on its feet unless somebody steps in and helps us. The bills are so enormous that we have no hope of ever recouping or being able to pay for it because we cannot pass those costs on to our consumers. Grocery is a very low-margin business.

It is highly competitive, so we cannot start charging €6 for a loaf of bread. We are up against the German discounters and the multinationals. We also do not have parent companies that can foot the bill for electricity costs. We want to pay our bills but we physically cannot as we do not have the money. No matter how much we sell, we would never be able to make up the increases in the price of electricity.

Rural Ireland was revitalised during Covid between cafés and shops opening, and that helped with the housing crisis, among other things. Unless the Government steps in and, at the very least, backdate the scheme then rural Ireland will die on its feet so where will people go for a local shop or café? The main thing that has been left out is that rural Ireland will die but I thought it was a Government policy to revitalise rural Ireland.

Ms Tara Buckley:

Can we try Ms Leona Pender since she has been on the call?

Maurice Quinlivan (Limerick City, Sinn Fein)
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Yes. I think Ms Pender's mike is still on mute. There might be a problem with her system.

Ms Tara Buckley:

We cannot hear Ms Pender.

Maurice Quinlivan (Limerick City, Sinn Fein)
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We will move on.

Mr. John McGrane:

To build on Deputy Shanahan's theme and on what Ms Crowe has rightly said, there is a picture beyond just the immediacy of the issues, which are very important. It is the question of what kind of Ireland do we want to have in five, ten, 25 and 100 years from now. We have done amazing things to get to here and we have catalogued the various contributing factors not least our home-grown enterprise community. Ms Crowe talked about the hollowing out of traditional country or provincial life not from some postcard image of 100 years ago but from where we live now. I mean what do we want to have. When we talk about a national strategy for the home-grown enterprise community it is absolutely bound up in that sense of what is our enterprise for. It is for the sustaining of lives and livelihoods in our towns and villages right across the length of the nation. We have catalogued some of the impediments, and we will get through them all, but we need to catalogue all of them. For instance, rates is an outdated methodology to pay for services. Rates are now paid for by all our local indigenous businesses. In the retail sector, whether it is clothing or certain food products and other items, online deliveries by a global company that does not pay rates in the community does not make sense in a modern Ireland. This is about standing back and reworking the total numbers, which is the money in and the money out, and saying that we can do this better even if it takes us a year of hard work to do so. In the meantime, we must keep the lights on and must keep communications running. My colleague, Ms Kehoe, will tell the committee about a situation where we have a broadband strategy, which simply is not working either, and that is damaging employment and community life.

Ms Ellen Kehoe:

I was speaking to a member of ours in the Cavan-Monaghan region. They are expanding their factory and have a new building but have no access to the Internet. It will cost them €7,000 to dig up the road outside of the factory and put in their own line. They have a foreign direct investment facility on the opposite side of the town, which I believe is across the county border, so they have a different county council. The facility experienced the same issue yet were able to receive a grant to fund the installation of a fibre-optic cable.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Was the grant from the second local authority?

Ms Ellen Kehoe:

I believe IDA Ireland was involved and I think it was a combination of the two. I recall that our member was given the date of December 2024 for the national broadband plan.

To respond to the point made by Deputy Bruton, in the midst of all these extra immediate costs, it is extremely difficult to invest in business even for essential matters. Funding does not have to be all about energy costs, as there are other areas of relief that are helpful.

Maurice Quinlivan (Limerick City, Sinn Fein)
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We will have another round of questions. Deputy Shanahan raised some issues about continuing this work. We can talk about that in the private session afterwards and will see what we can come up with. Deputy O'Reilly is next will be followed by Deputy Bruton.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I share the sentiments expressed by my colleagues. This is something that we do need to hear and we need to hear it on a regular basis. We will have a chat in private session about how we can best achieve that.

Everyone has mentioned labour costs and labour availability factors. People have also mentioned the need to provide additional supports for business. Nobody is going to say that a policy of more money for business and not more money for workers is a good idea, as that is not fair. Do our guests have suggestions for the Government as to how balance the two? The labour market reforms, and people might use that phrase, are very welcome. At the end of the day, these are local businesses so if their local customers do not have money in their local wallets then they will not spend money so we need to balance the two elements. I appreciate that increasing labour costs can pose a difficulty for some companies. On the flip side, having customers who do not have money in their back pocket equally poses an issue. All of the delegations have been at pains to stress that these enterprises are good employers, and I know that they are, that want to do best by their workers, and I know that they do. We cannot tip the scales one way or another and a balance must be struck. Can the witnesses suggest ways that the Government can strike the right balance?

Mr. John McGrane:

I might take a macro lens approach first and then drill in. The best way to improve labour earnings is to improve the ability of the employer in any given situation to pay that. Not to be ridiculous about it, the market is competitive but way beyond that, every employer, not least the indigenous home-grown firms, want to keep good people and take care of them.

Earlier I made the observation that the State may add to the costs of labour in ways that are discretionary. We are not saying that should not happen. These are well-being issues and, therefore, concern the well-being of society as a whole but we might challenge should they be borne fully by the employers' side. If they are part of a national policy then they might come out of national funding and that is not about just printing more money. That is about accompanying that thinking with a deep-dive review of how well we are spending the money we collect in the first place. This country is building the most expensive children's hospital in the world and it has not been built yet. We are rolling out national broadband with ten-year old technology and it is not there yet etc. The State sector, and we have a great public service that is charged with taking care of many of these programmes along with the private sector, deserves better outcomes. Balancing how we collect and spend the money that we take, from employment and communities, with the ability to provide social justice and better social conditioning, as part of the communities they are involved in, is the way to think going forward and then one can drill down into individual local examples.

Ms Tara Buckley:

Obviously we understand that a number of things will come in and they have been promised. Let me outline the reality for the business owners whom I represent. In the sector we are in, we are not exporters but we are best in practice in Europe and the world. People come from all over the world to see Ireland's fresh food retailers. The people whom I represent are really good at what they do. We use a high-employment model. It has suited local communities and this economy that we create great local jobs in tiny towns and villages, and in urban and rural areas everywhere. When one has a range of staff in one's store, our staff stay with our members. There is not a lot of staff turnover in our members' shops because these are good local jobs and you can afford to raise a family with these jobs. We are not minimum-wage employers. The people who work in our stores probably range across a range of different hourly rates, which depends on their levels of responsibility, training and all of these aspects. The problem is that when we have an increase at the lowest level, then everyone along the scale effectively and understandably expects to get an increase.

The overall impact on the wage bill is effectively right across the scale. That is the challenge for the business owner. That is why we think some of these measures will disproportionately impact on us, as food retailers. If a person goes out sick in a shop, he or she has to be replaced. Everybody else cannot just take over. If he or she is behind the deli counter, there has to be someone to replace them to do his or her job. It is not like we can just absorb these measures. We have to put somebody else in place. We believe that the Government must look at the businesses that have to do that, and look at the scheme to see if there is some way that that type of employer can be assisted to ensure that the replacement worker can be paid. All of the money is coming from the one pot and the pot is not getting bigger, it is only getting smaller. That is the big challenge for us. We understand that these schemes need to be brought in.

Maynooth University did research on the phased introduction of the living wage. It found that the impact on the wage bill will be a 1.5% increase in the retail and wholesale sector. That is absolutely untrue. From a back-of-the-envelope calculation made at the meeting, a member in the room said that for them, the phased introduction of the living wage would probably result in a 20% to 25% increase in their annual wage bill. It seems fine if there is a 1.5% increase in the wage bill. Perhaps that will be the case with the big multiples. What will happen to the small individual stores is that there will be a 20% increase in the wage bill. To be honest, at the moment, that is not possible. What does that owner do? The owner has to work out how he or she can reduce and make the wage bill smaller. That is about reducing hours and whatever. Owners do not want to do that. They value the staff and do not want to do have to do that. If they have to introduce all of these different schemes, they believe they will have to do that. Our sector is not an exporting sector. We rarely get handouts from the Government. I think that some of our members qualified for some of the schemes introduced during Covid. It is rare for us to come in and ask for support. As we have said, it is a unique situation for our members. They are viable businesses that provide good jobs in local communities. If they are given a small bit of support to help them through the next 12 months, they will continue, grow and be viable. What we are saying is that we are extremely challenged at the moment.

Mr. Vincent Jennings:

I am not dodging the question, and never would, but unless we sort out the energy issue and give these businesses back the viability that they have always had, we will not be able to talk about wages, salaries, training or all of those necessary things, because the businesses will not be there. I mean that sincerely. Yesterday, at the meeting of our national executive, one of our representatives said that he had spoken to a retailer who had been disconnected by the ESB. That is the seriousness of the matter and it is what is going on. I know that this is a general catch-all meeting on challenges and the like, but we are imploring this committee to focus on what our problem is. Our current problem is most certainly energy. It follows on from that if we have business, we have to make further commitments, we have to look at PRSI and the money that is being gathered by the State ostensibly for certain things but not being spent. There are billions of euro for training that are not being used. Until we can actually secure our businesses, I ask the committee members to listen and hear me. That is the priority now.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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We are listening and we are hearing the representatives. I have raised the issue of labour market costs because it was raised by every single one of our guests in their submissions to the committee. It is clearly an issue. I respect that it may not be the issue but it was raised by the representatives, which is what prompted my question.

David Stanton (Cork East, Fine Gael)
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I wish to put on the record that the Irish Exporters Association, IEA, has also put in a submission to the committee. Its representatives are not here today because they did not get enough notice of the meeting. The organisation is supporting what Mr. McGrane has called for, which is the creation of a bespoke step-up unit or agency that in a way lies between Enterprise Ireland and the local enterprise offices, LEOs. According to the IEA, it most likely should be placed within Enterprise Ireland and solely dedicated to the provision of supports to have high potential micro and small businesses, to lessen red tape and concentrate on preparing those companies to enter the Enterprise Ireland pipeline, which will allow these business to balance quality with growth and in time increase the number of sustainable SMEs in the country, which is good to hear. This whole issue that Deputy Shanahan has also alluded to is quite important, and I would like us to follow up on it at some stage.

I also hear Mr. Jennings' passion in what he has just said. It has come across from all witnesses today. I think Deputy Bruton's suggestion with respect to assisting companies to cut down on energy costs by taking steps, such as those taken by Mr. Moran with the use of solar power and so on, is important, as are the other issues raised. The sense I am getting is that we may not have much time and we need to do more quickly to keep businesses afloat so that we can reach the stage to which Deputy Bruton has referred, where we can actually do more with the energy costs and usage, which is going to help in a big way. There are also other issues that have been raised. I think that as a committee, we should write to the relevant Ministers, highlighting the issues that have been raised. Mention was made of producing a report. That may take a bit of time. In the time available to us, I think we should write to the relevant Ministers to highlight the issues raised. It is crucial. We do not want to see any businesses closing because of this. With a bit of assistance and support, they can keep going until, hopefully, we can get over this. I hope things do not get worse.

Garret Ahearn (Fine Gael)
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I apologise for the fact that I have only arrived to the meeting. I was listening online earlier and then I was speaking in the Seanad, so I heard most of the contributions at the start of the meeting. I thank the witnesses for their contributions and for the representations they make for small businesses, particularly in rural areas. As Mr. McGrane is aware, I am from County Tipperary. I have two questions, one on the immediate challenges, which Mr. Jennings will be happy with, and one on the longer-term challenges, which relates to Ms. Buckley's contribution. My colleague, Senator Ward, could not be here today but as Ms Twomey knows, he is on about theses issues in Deansgrange quite a lot. He wanted to pass on his apologies to the witnesses.

In his contribution, Mr. Jennings spoke about how bills have gone from €6,500 to €22,000. Obviously, as part of that a scheme has been brought forward which will provide qualifying businesses with up to 40% of the increase in electricity or gas bills. That will bring that €22,000 down to around €15,500, which is still astronomical - there are no two ways about it. What should we be supporting? What is the figure we should be giving businesses to make it viable for them to survive over the winter months, and what costs will that involve for the State, so that businesses can be supported and a large proportion of them that are under huge pressure do not fail?

My second question is for Ms Buckley. She spoke, in her contribution, about the redevelopment of towns and the challenges businesses have when councils come up with wild ideas that they might see as enhancing the town centres, but which can actually impact greatly on businesses. In my own experience, there are redevelopment plans for three of the eight towns in Tipperary. We just got funding last week for Cahir, Carrick-on-Suir and Roscrea to totally redevelop the whole town centres. There will be issues with parking and things like that. They are all issues that we can work through with the council. Ms Buckley spoke about the impact that such redevelopments have on businesses and trade. Has research been done on the actual financial implications for small businesses in rural towns across the country that can I can use going forward when we are talking about redeveloping Cahir and Carrick-on-Suir? What lessons have we learned from other towns, from a business perspective? The real challenge is to support businesses when we are trying to redevelop towns. Is there research on the loss of incomes businesses have suffered not just during the redevelopment, but following the redevelopment of town centres?

Mr. Vincent Jennings:

The first principle is that this problem did not start on budget day. Perhaps we should have had more foresight and sought the permission of the European Commission a little earlier, rather than seeking permission to grant us state aid when it was patently obvious that this matter was a problem. Since March, we have had problems with people who are out of contract.

However, it was not the entirety because of the nature of the contracts. People were on two-year and one-year contracts. There are some fortunate people who are just this month going out of contract so they have not had any increases. We have already circulated some figures on this. Those people who were hit in March, April and May have suffered enormous increases. Ms Timothy is one of them and Ms Crowe is another. There are people who are supposed to sustain an additional €15,000 or €18,000. The Senator asked about the percentage. What we need more than anything else is to accept that this figure needs to be increased beyond September-----

Garret Ahearn (Fine Gael)
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Mr. Jennings has said a couple of times that we need to talk seriously about the immediate problems. Is the scheme correct in the way it is formatted? It he just saying that it is not enough money?

Mr. Vincent Jennings:

There will be-----

Garret Ahearn (Fine Gael)
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How much money? How much does that cost?

Mr. Vincent Jennings:

At the moment, we have a scheme that is not operational as of yet and will take more time. Every day, people are paying money and paying the full amount or part of the amount so they are depleting their resources. We do not know how quickly Revenue will be able to return this. We have great faith in Revenue in many respects. It ran a marvellous campaign in returning moneys from the TWSS and others. We do not know yet. There may well be problems because people have answered questions incorrectly and so on. There will be more problems relating to that cash flow. We would like to see it acknowledged that where bills were greater than 50% from March or April, those people will be accommodated as well. That is important. Those are the people suffering most because they have had to endure six months of these additional costs. There are people who have expended all their money in the hope that something will be coming through and money has not come through yet because the scheme is not in operation yet.

Garret Ahearn (Fine Gael)
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Ms Buckley also asked that the scheme be backdated to 1 March rather than 1 September. Is 40% of the increase adequate?

Mr. Vincent Jennings:

We are loath to seek anything because this is taxpayers' money. We have never been people who wanted to grab and grab. We understand the nature of the State. If the State were to say it cannot give us any more than 40% and that is it, we would accept that, although of course we would prefer the figure to be higher. For a start, it should go back to March. That is the very limit we would need.

Ms Tara Buckley:

The Senator asked about town centres. We have some members who have been subject to no negotiation traffic management schemes or new types of traffic management around their towns or neighbourhood centres and so on. There would be a reduction of around 30% in their turnover as a result. Customers want to go to the shop but if it suddenly takes three quarters of an hour to get to the shop when it used to take ten minutes, people are not going to keep going there. The frustration for our members is that councils have allowed out-of-town and edge-of-town developments by multinationals with large free car parks. That is effectively pushing people away from the town centre or village centre and out to the stand-alone shop, which is not doing anything to bring competition, variety or footfall to the town. It is just driving people to do a one-stop shop out there and never come in and support any of the businesses in the town centre. What we are talking about is mainly collaboration and community engagement as these schemes are developed. Food shops need to have delivery vans come to them so we have to be able to do that safely. Their customers range from people who can come on bicycles to people who can walk but an awful lot of their customers still have to come to do their weekly shopping in a car. If they are elderly or have a disability or whatever, they need to be able to get their car near enough to the shop that they can come in and safely do their shopping and get it out to the car. We would bring it out for them but they still need to get their car somewhere near the shop. We need collaboration.

We want our towns to be more vibrant. It is absolutely in our best interests but we just need more collaboration and engagement. We do not have data about our towns because we do not collect the data we are supposed to collect. There is vacancy and dereliction and we do not even understand the extent of it. We have very good people now starting to show the extent of it in their towns social media. We should be addressing this from the very top. RGDATA was very involved in designing the collaborative town centre health check with the Heritage Council. That was extremely useful. It was the most practical project we ever got involved with and it brought towns together. All the different people in the town came together with a blank sheet of paper to work out what needed to be done in their town. That brings everyone along from the start. That is a fantastic programme that has been left to sit where it is. We have come up with other ideas around the town centre first scheme.

We do not have the proper practical programmes. We do not have the leadership in this space. Our local authorities are floundering. We are going to appoint regeneration officers but they will be hired internally so we do not know if they will be properly trained or understand all the issues. I understand that the planning students in UCD are really disappointed. They have studied all of this and they will not be able to apply for these jobs. We still have a huge amount to do to try to get that community aspect. There is so much goodwill among these businesses to work with their communities. They already do a huge amount of work with their communities to try to regenerate their town centres, deal with derelict buildings and vacancy, get more footfall and more business and get more people coming in and enjoying their towns. We want to do that and work collectively to do it but we need some leadership and national engagement from the top.

Garret Ahearn (Fine Gael)
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On that point, Clonmel is a prime example of how planners got it all wrong. Everything was moved outside the town and now the town centre is in real trouble. We are trying our best to get money to revitalise it and get businesses up and going again. It is a beautiful town centre but the businesses cannot compete with free parking outside and challenges like that. In fairness to businesses, the majority of them are really good and try to engage with the council. Sometimes they feel the engagement happens but nothing happens on the back of it or they are just not listened to.

Another issue touched on was that of rates. Many councils are challenged in terms of finances at the moment. Some have already put up the property tax but a lot of them will not put it up. It seems the chief executives' next option is to put up rates. That is happening in quite a few local authorities. It seems like madness to me to do this to the sector that is most hit. Everyone is hit by the energy crisis and cost of living but no one has been hit more than businesses and no one in the business sector has been hit more than small businesses in towns. Is this proposal being put forward in every local authority? It seems bonkers to me that we would, at the worst time ever, send a letter to small businesses saying we are increasing their rates by 5% or 10%.

Ms Flora Crowe:

Clare County Council was due to increase the rates on businesses but on the back of all the publicity I got in County Clare last week, as far as I know, councillors have rejected that motion and they are not going to increase the rates. Sometimes councillors or the general public are not aware of the costs on businesses. Thankfully, Clare County Council will not now increase its rates but unfortunately we are in the middle of a revaluation process. Every business I have spoken to has had its rates increased. I have not come across any that have had them decreased. I will not find out about mine until January but I can only assume they will be increased as part of the general revaluation method. The more we highlight this, the better because Clare County Council was going to increase the rates and now it has pulled back on that.

Garret Ahearn (Fine Gael)
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When trying to have engagement between small businesses and local authorities, and trying to have a good relationship with each other, it is very hard to take local authorities seriously if their solution to solving their problem is to raise rates for businesses at the worst time for them in the history of the State.

Mr. Vincent Jennings:

The problem is also the whole valuation process, as it is based on the notional rental value of the business. In this crisis, there are very few entrepreneurs who will be willing to buy or rent a property. In the retail sector, we also compete with online retailers but this is never factored in.

The problem is twofold. First, the Valuation Office is being unrealistic and hitting people in fuel retail, namely, petrol forecourts over and above the already disproportionate hit being taken by retail. Second, it is left to businesses and others to supply finance to local authorities because local councillors refuse to look at the property tax. We have no problem with shouldering the burden, given that we also benefit, but not disproportionately. Local rates are a problem. They are an expense to us and are done unfairly.

Mr. John McGrane:

I echo all of that. The rate system is outmoded. It is not even-handed and is entirely discretionary, with town being pitted against town and businesses in the community being pitted against online businesses. It does not make sense. The Family Business Network is calling for a root-and-branch overhaul of funding local services into ways that are not destructive, as is the case now.

Town planning is a vital issue in our provincial towns. It is also an issue in central Dublin. We are about to cut off access to some of the city's, and therefore the country's, most significant hotels. They bring in visitors - business, hospitality and tourism - and often act as feeder centres for provincial tourism. Visitors will have to leg it from somewhere on the other side of College Green to get through what is now a pedestrianised area. The lack of engagement on and consideration of consequences for one of our most important national industries - the tourism sector - is mind-boggling. It has to do with the relationship between local authorities and their communities, including their business communities. We need a root-and-branch dialogue about that.

Matt Shanahan (Waterford, Independent)
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It was good to hear the comments on town centre planning and so forth. There are major traffic issues in Waterford city. We are trying to introduce cycle lanes in the middle of what is a vital city where street sizes are constrained. Planning is a problem and has to be discussed, but we might revert to the immediate point under discussion, that being, the energy difficulties and levels of business indebtedness.

My questions are for RGDATA and Mr. Jennings. I imagine that the Department did not just arbitrarily pick September as the month in which it implemented the scheme and that there was a degree of budgetary analysis of whether to backdate the scheme to March, as has been requested at this meeting. What are the witnesses' positions on sector-specific supports? Similar to what Deputy Bruton described, businesses with certain profiles could be considered. For example, energy will be a greater cost component in a food processing business or a convenience store because it has a great deal of refrigeration and, therefore, will see higher costs, so the 40% will represent less of a return for such businesses than it will for a retailer with lots of LED lighting, whose energy costs will be high but will certainly not be the largest cost components.

Some weeks ago, I raised with the Government a food processing company in the south east that had seen its energy bills increase from €8,000 per month to €58,000. The company is not in a position to mitigate those because it is cooking, processing and freezing. I am glad to say that Enterprise Ireland has stepped in to try to offer the company some support and there will be restructuring to maintain the business and the employment it offers in the region to some degree. I acknowledge that the Government and the agencies are doing good work.

If we backdated the scheme to March, I suspect that the Government would have a problem with the supports required. Should sector-specific supports be considered instead? Some of the members of the witnesses' organisations would get less while others got more.

We have discussed energy mitigation. Ms Timothy was right, in that the issue of paying consultants to come out and give people reports when other grant aid is not available has to be addressed. The committee can apply pressure in that regard.

I am told that Revenue has taken a decidedly different tack in recent months compared with its previous approach, when it was hand holding and allowing people who had warehoused debt to gather themselves together and try to get out of those circumstances. I understand that demand letters and sheriffs' warrants are being issued quickly now. Do the witnesses wish to comment on this?

I wonder about the tax status of companies. Some weeks ago, I asked the Tánaiste whether companies that had availed of the warehousing scheme during Covid and were slow to make payments were clear for tax purposes and could access the SCARP. I believe they cannot while he believes they can, but I am unsure as to whether a decision has been made. Does any of the witnesses have an understanding of this matter?

Mr. John McGrane:

I do not have sufficient detail to respond immediately, but we will make inquiries. We are hearing about heightened activity by Revenue. We welcome the vital extension of the warehousing scheme for a further 12 months, without which we would definitely have been seeing a deluge of insolvencies.

On some broader business issues, we have not mentioned the "B" word yet, but Brexit is still a factor for many importing and exporting businesses in competitive situations. There are logistics issues. We have been lulled into a sense of calm about the matter, primarily because Britain has not yet enforced its own Brexit inbound barriers and so forth. This calm belies the fact that there is still a great deal of disruption, particularly groupage issues for SMEs that do not own their own trucks. While we will not deflect from the immediate concerns that are being voiced volubly at this meeting, Brexit has not gone away. The committee might keep that in mind in its vital work.

Matt Shanahan (Waterford, Independent)
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Would Ms Buckley like to discuss sector-specific supports?

Ms Tara Buckley:

We have never been beneficiaries of Government schemes, but given the different types of business that we represent, it would probably be prudent to consider sectoral schemes. Like the food processor the Deputy mentioned, our members are seeing jumps in electricity costs. We have essential usages and, while we have done a great deal to reduce our consumption, there is a point beyond which we cannot go. It would be right to have sectoral schemes. We would also support sector-specific elements being applied in employment and wage schemes. Often, the voice of the indigenous SME is not heard at the highest level, meaning that people do not understand the different challenges that we face compared with some of the large exporters and multinationals that operate in Ireland and the public service. We would support issues being addressed sectorally.

Richard Bruton (Dublin Bay North, Fine Gael)
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It is important that Ms Buckley give us information on the different sectoral profiles. That will be the key to identifying further measures.

Mr. McGrane raised a valid point about taking a longer term view of business development. I am among the optimists about rural Ireland. It can build on the infrastructure and practices of the future much more effectively than it can on the familiar infrastructure of the present. I refer in particular to the move from fossil fuel dependence, which remains high, to renewables, which are much more distributed and present better opportunities. There are moves to introduce broadband. Others are plugging what they have done, so I will say that the broadband move was the right decision. We made it in the face of opposition from the most senior public servant in the country, but it was right to bring fibre to the home throughout Ireland. This move can build remote working, remote diagnosis and remote delivery as a pattern.

It will be very good for rural Ireland. The fact that the circular economy emphasises better use of materials, less dependence on plastic, more repair and more reuse is a good news story I welcome.

As a country, we need to take a more positive view of these new opportunities that are emerging and of infrastructure that we will become used to. By 2030, we will have halved fossil fuel dependency. We will have complete broadband roll-out. Very soon, we will be in a position to think differently about policy. I welcome the challenge for us in engaging in that type of discussion. We just take an ad hoc reaction to what is happening today without looking over the next hill. The witnesses mentioned the latte levy and their resistance to it, but we cannot go on with people discarding single-use cups. It is just not compatible in the long term with where we are trying to get to. I acknowledge that these things are irritants and that they result in costs in the short term. We need to take a longer term position in order that we can identify the strands we need to accelerate. Maybe we will have to grin and bear it when it comes to some of the things we do not like because it is part of the bigger picture. Since there was an opportunity for rant, I am having one.

Ms Tara Buckley:

If I may come in, I think the Deputy may have picked up wrong. Our issue with the latte levy is that it is treating compostable cups as the same as single-use plastic cups.

Richard Bruton (Dublin Bay North, Fine Gael)
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Compostable cups do not end up in a compost heap. They end up, typically, in the black-bin stream and they go to landfill. They are not an alternative and they are not reducing materials. Industrial-style composting is needed to break them down. I know the point Ms Buckley is making-----

Ms Tara Buckley:

Just so that the Deputy knows the point we are making.

Richard Bruton (Dublin Bay North, Fine Gael)
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Yes, but in the long term it does not hold water to try to distinguish between compostable and non-compostable. We just have to discarding material willy-nilly after one use.

Ms Tara Buckley:

We completely accept -----

Ms Annie Timothy:

Why, then, are we, as retailers, always the ones who have to do the collection for the Government? Why is it that the levy is not charged at the point where those cups are either imported into the country or at the point of being sold? Why is the onus put on us to get it for the Government and to then return it for the Government?

Richard Bruton (Dublin Bay North, Fine Gael)
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The levy will fall on the user. It is much like the plastic bag levy. The intention is that it will stop the practice, but the intention is also that it will fall on the user, not the retailer. To defend a compostable cup, one first has to collect every compostable cup one gives out in order to be robust. It is not practical for businesses to do that. My point was more a response to Mr. McGrane's point. I just threw in the compostable cup as an aside. It is taking a longer term view of what the framework will be like for businesses and rural Ireland in five years' time. It will be a very different framework from the one from which we are still emerging. I welcome the invitation to have more positive thinking about what we want for the future.

Mr. John McGrane:

To take the macro point, the best circular economy is local community. I refer to the natural circularity of a town in Tipperary or Cavan, for example. If local employers, retailers, manufacturers or whomever can make it through the crises of the moment, they will be key to sustaining the fabric of that circular economy. They pay the wages, and those wages get spent in local shops and petrol stations. Some of the money goes to the Exchequer for the wider social good, etc. This is the opportunity now. You only have to look at our nearest neighbour to understand how bad things can become and what bad looks like. Outside of the greater London and the south east, England is in a poor state. It is paying a heavy economic and political price.

We, as a State and as a people, have choices to make at this point of our evolution. It is not accidental; it is conscious. It is about what happens if we do not make a decisive choice in favour of the regional economy or community and redeveloping towns like Clonmel, looking at west Limerick and asking do we care about this or not. Because it is a choice. We could say that it not important and that we will just go wholly urban from now on. That is what a number of other countries have done, with disastrous political and community impacts. We are in a brilliant place right now for us to take the opportunity. We have done a very smart thing budget-wise this time around. We have argued for years about the hazard to the national economy of depending so much on taxes from just a handful of FDI companies. Now, however, we have put some money into the piggy bank and probably just in time in light of the hardships that are coming down the line and the change that is happening with the FDI firms. We should stand back and instead of chopping trees all the time, take time to sharpen our axe and ask what country we want ten, 15 or 20 years from now. We can make that happen. It would not take long to implement. There is a need for a clock-speed issue to be resolved. I refer here to the speed at which we get the conversation going on the structures for national dialogue and the interactions with the LEEF, as an outmoded small club that is no longer representative at all of the wide majority of employment and job creation. We need to stand back and say that we know what to do but that we need to find ways of doing it faster, more democratically and with more engagement, and then we make the choices at national level about options that we have. Those in positions of power must lead. They must take the relevant insights and compare them against a template of what kind of country we want to be responsible for passing on to the next generation and to generations after that. They must make choices, just as Whitaker, Lemass and people of that era took dangerous political choices and delivered the wonderful outcomes that we enjoy today.

Richard Bruton (Dublin Bay North, Fine Gael)
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Some of the options are not ones that every business supports such as the right to work for remote working, a commitment to a circular economy and the types of measures that involves. There will be friction in many ways in designing that future. This is not all motherhood and apple pie. There is a hard edge to the change that is coming at us at a rate of knots.

Mr. John McGrane:

That is the role of leadership for us all.

Richard Bruton (Dublin Bay North, Fine Gael)
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I agree.

Mr. John McGrane:

It is to understand that it is not motherhood and apple pie. It is tough choices, but it is choices grounded in a commitment to community well-being.

On working from home, I would not overstate the position. This is finding a resolution, in one form or another, but as my great friend Pat McDonnagh of Supermacs says, you cannot flip burgers in your bedroom. We have to be context sensitive about it.

Richard Bruton (Dublin Bay North, Fine Gael)
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In my constituency, a company called Vytal has just set up operations. It operates on the basis of a German model. It uses all reusable products for all takeaway foods. The products are reusable, so people go back to the takeaway with their containers. It is a take-back scheme. Once you get the whole community using these vessels, then you will eliminate single-use items. That is just an example of what different thinking can do.

Ms Tara Buckley:

The sort of businesses that RGDATA represents are the best example of the circular economy and sustainability in communities throughout Ireland. They are completely underestimated in the context of their contribution. They are always the first movers in trying to do something locally to reduce waste and do things for their communities in terms of sustainability. The shops that are already built are the most sustainable shops to have. We continuously approve additional extra large shops outside our towns on greenfield sites when we should be concentrating on regenerating the buildings and businesses that we have in the town centres. We consistently come up with plans to divert people from our town centres and push them out into less sustainable modes of transport and so on. The shop in the middle of the town, where people can walk from shop to shop, is the most sustainable in terms of the circular economy and reducing our carbon impact. Many of our members have engaged with various projects, such as those relating to tree planting and reducing the number of single-use plastic and disposable containers. They have gone much of the way down that route, with their customers bringing them along.

They are small and do not have the the big PR budgets to greenwash us with their corporate plans for 2030. They are doing it on a daily basis. One does not hear about it but it is happening. They are the first movers in respect of sustainability and greening in this country.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Ms Buckley. That concludes our consideration of this matter today. I thank everybody who contributed, with representatives from the Family Business Network Ireland, the Convenience Stores and Newsagents Association, and the Retail Grocery Dairy and Allied Traders Association assisting the committee in consideration of this important matter. The committee, as everyone has suggested, will consider this matter further as we go forward. Our business in public session is now concluded and I propose we go into private session to consider that matter further. Is that agreed? Agreed.