Mr. Ian Talbot:

I thank the Cathaoirleach. I will speak about Chambers Ireland's perspective on the current challenges for SMEs. We represent 38 affiliated chambers throughout the country. As part of our support for sustainable development goals, Chambers Ireland tries to lead businesses towards the attainment of those goals. At the moment, keeping their attention on the medium term is a challenge for many businesses. With businesses experiencing crisis after crisis, year after year, it can be difficult to prioritise the long-term crisis. However, those firms which acted early on climate action by reducing their energy usage, or building on-site microgeneration and storage have demonstrated how efficient and resilient these investments can be.

The greatest challenge facing small and medium enterprises this year is the lack of available talent, which is driven by affordable and appropriate housing being unavailable across most of the country. With a small number of exceptions, our chambers have housing as the main cause of their businesses’ challenges, which highlights how important it is for us to achieve the goal of sustainable cities and communities. The transformation of our built environment to support sustainable living is not simply an aspiration; it is a necessity.

There are regional differences. In the north and west, the mica issue is interacting with higher interest rates to make it harder to finance the one-off housing that was the primary source of increased supply there. In the mid-west, there are challenges with local authorities and affordable housing bodies buying out scheme housing developments in their entirety. In the south west, about two thirds of houses are one-off builds, and of the balance, about two thirds are being bought by State supported institutions, meaning the real market for housing in that area is tiny. It also means it is a distorted housing market, with institutional buyers driving up the prices of homes.

Imagine being a young couple trying to build a life and finding that, when bidding on a house, the competition is the county council. Now imagine one is an employer, there is an enormous scarcity of talent, one cannot find anyone else in the area with the same skills or afford to pay more, but employees need to increase their income if they are going to get a mortgage and compete with the local authority. Those staff leave, they move to a different area - worryingly, sometimes to a different country - or they get a remote or hybrid job which pays them extra and allows them to stay close to their roots and their community. It is very hard to compete with that.

Our members are having to take on new people without the skills or experience they need and train them up. When they become productive members of staff, they need higher wages and have aspirations.

The house hunting begins and the cycle recurs. This is having a tremendous effect on the productivity of the Irish labour market. It is an even greater challenge in the cities. The competition for talent is even higher and employees are able to find work in large multinationals across a wide variety of industries and sectors. It is becoming even harder for smaller and medium-sized firms to compete. Already, across the country large employers are buying up individual homes, houses and apartments in order that they can ensure their employees have somewhere to stay. Several times in the last year we were contacted by businesses hoping to make big investments, potentially supporting hundreds of jobs, that were considering buying out entire housing estates if that would allow them to grow their workforce.

We know that the Irish units of multinationals are often not competitive for further internal investments because they cannot meet their existing employment targets, never mind expand their workforce. We are growing as an economy, but we are not growing at the pace we could grow. Our domestic market has been constrained by this lack of housing. Up and down the country our members are telling us that businesses are busy, but they are leaving opportunities on the table because they do not have the capacity to take on more work. This is a great kind of challenge but it is a challenge because if a business is to be sustainable over the longer term it needs to grow and to invest, both in its capital and in its people.

At the moment, the other big conversation among our members is about uncertainty. Most businesses, outside of sectors which have specific issues, are saying they are busy now but are concerned about what will happen in three months’ time, for example. This seems to be the new normal we spoke about during Covid-19. Businesses are finding it hard to plan for the future because of that uncertainty and the volatility of recent years makes a mockery of many of the plans our members had. Brexit, Covid-19, supply chains, sanctions, energy costs and interest rates have all interacted to impact businesses. However, by and large, they have struggled on. This is not surprising as these are the businesses that either survived the great financial crisis or were formed by brave people in the wake of it. They are fit for growth but they are constrained by the lack of talent, the lack of housing, the lack of infrastructure, and support in other areas such as childcare.

Our members are increasingly worried about the capacity of the State and the wider economy to deliver on the aims of the national development plan and our climate action plan. If we fail in the execution of these programmes, achieving our climate targets and the sustainable development goals is unlikely. Our members are concerned that the uncertainty and the delays to projects mean that the labour will not be available when it is needed, particularly should all these many projects be commenced in a rush towards the end of the decade in an effort to meet our targets.

They are also uncertain that the planning system will be able to perform as needed if we are to have €150 billion in infrastructure investment out to 2033. With housing needing at least €100 billion in investment, and likely much more to hit the 300,000-unit target for 2030, they are wondering if our planning decision-making capacity will be robust enough to make good decisions that will survive the challenges in the courts which our common law system makes inevitable. Although 7 GW is planned for offshore for 2030, our members are concerned that the initial offshore renewable energy support scheme, ORESS, 1 action of 2.5 GW will be all that is in the water by 2030.

Business owner-operators can have confidence in themselves, they can have confidence in their business model, they can have confidence in their staff but it is increasingly difficult for them to have confidence in the economic environment in which they are trying to operate their business. This is demonstrated by the failure of a policy like the initial version of the temporary business energy support scheme, TBESS. The lesson that we should have learnt during Covid-19, that supports are only effective when they are accessible and targeted at sectors that are vulnerable but viable, seems to have been forgotten. Instead, we had a scheme that was available for everyone but with such constraints put on it that it was useful to no one. A manufacturing business in Limerick saw its energy bill increase from €500,000 to €1.5 million saw no benefit from TBESS because its problem was so large. A Waterford hotel, which saw its annual electricity bill go from €900,000 to €2.7 million and which decided to bring forward refurbishment to drive down operating costs, could not be helped by TBESS. A printer in north Dublin saw the Department and the Commission for Regulation of Utilities, CRU, raise its bills by an extra €20,000 in October. This does not inspire confidence. We recognise and welcome the recently-announced adaptations to TBESS. We will need such flexibility to continue in the future.

In summary, our members were clear that their principal policy concerns this year are housing and urbanisation, skills and talent, energy and decarbonisation and productivity and competitiveness. These are issues for businesses because these are issues the businesses themselves cannot address. We need politicians and officials to deliver on them, for everyone. If there is one overriding thing that is needed for confidence to be restored, it is the fixing of the planning system. The planning authorities and courts needs to be staffed. Moreover, they need to be staffed by people with expertise, not generalists. They need people with the technical capacity to make decisions that can withstand scrutiny. It is extremely hard for businesses to plan if the State is bad at planning.