James O'Connor (Cork East, Fianna Fail)
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I welcome everyone to our seventh public meeting. Before we proceed, I have a few housekeeping matters to go through. I wish to explain some limitations to parliamentary privilege and the practices of the House as regards references witnesses make to other persons in their evidence. Witnesses within the parliamentary precincts only are protected by absolute privilege in respect of the presentation you make to the committee. This means that they have absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty as Chair to ensure that it is not abused. Therefore, if witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction. One of today's witnesses is giving evidence remotely from a place outside of the parliamentary precincts. As such, that person may not benefit from the same level of immunity from legal proceedings as a witness who is physically present does. The witness in question may consider it appropriate to take legal advice on this matter should an issue occur.

I remind members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit members to participate if they are not adhering to this constitutional requirement. Therefore, a member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask any member partaking via Microsoft Teams, that prior to making their contribution to the meeting, they confirm that they are on the grounds of the Leinster House complex.

Members and witnesses are reminded of the long-standing parliamentary practice to the effect 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 a statement is potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that any such direction is complied with.

I propose that we publish the opening statements and submissions provided by the witnesses on the committee's website. Is that agreed? Agreed. We will now invite our witnesses to speak for approximately five minutes. I ask that members keep their questions to witnesses to around seven minutes. Members may be called as they appear on the speaking rota. Is that agreed? Agreed.

Today's discussion is on competitiveness, the cost of doing business in Ireland and related matters. The committee has decided that our priority policy will be competitiveness and the cost of doing business in Ireland. This is our first public meeting on this important topic. We look forward to hearing from many stakeholders from various sectors of the economy. I am delighted to welcome the representatives from the Small Firms Association, SFA, the Restaurants Association of Ireland, RAI, and the Retail Grocery Dairy and Allied Trades Association, RGDATA. I invite Mr. Adrian Cummins, CEO of the RAI to make his opening statement.

Mr. Adrian Cummins:

I thank the committee for the opportunity to speak here today as part of this important meeting on competitiveness and the cost of doing business in Ireland. With me is the president of the RAI, Mr. Sean Collender, who is the co-owner of three restaurants in Dublin.

I represent an industry that has shown remarkable resilience over the years. It is made up of hard-working people who have weathered recessions, survived a global pandemic and continued to serve communities across Ireland, day in and day out. I have to be honest with the committee and say that what we are facing now is unlike anything we have seen before. Every day I hear from restaurant and café owners who are at breaking point as a result of a combination of skyrocketing input costs, unsustainable energy bills, rising labour cost pressures and Government induced charges that are pushing food-led businesses across Ireland to the edge.

I will give some concrete examples of how out of control things have become in the context of input costs in the period since 2021. Fruit and vegetables are up by 50%, chocolate by 157%, chicken by 35%, gas prices by 58%, electricity by 94%, beef by 97% and insurance by 35%. These are all costs that our industry has to face on a day-to-day basis. These increases are not reflected on our menus. Restaurants, cafés and food-led businesses have done everything they can to absorb the impact, protecting their staff and shielding customers, but they have reached their limits. Last week, I spoke to a restaurant owner from Waterford who has been in the business for 25 years. She has decided that she just cannot keep her business open and needs to call it a day. Another café owner from Dublin who contacted our association said she is now depending on the return of the 9% VAT rate or she will have no choice but to sell her business. These stories are the same across the island of Ireland, whether it is Cork, Wexford, Galway, Offaly, or Mayo. Yes, consumer prices have risen, but not at nearly the same rate as the costs that hospitality businesses are facing. Since 1 January last, restaurant and coffee shop prices rose by 3.3%, as per data from the Central Statistics Office, CSO. Meanwhile, input costs for ingredients, energy, labour and insurance have, as already stated, surged far beyond that figure.

The data is clear that businesses have taken a massive hit to protect their staff and customers, but the resilience I spoke of earlier has its limits. No business can absorb endless blows and survive. Businesses are cutting hours, with many closing on Mondays, Tuesdays and, in some cases, Wednesdays in order to keep costs down. Others are closing altogether because they are not able to keep up with spiralling costs. Workers are losing hours of work each week, which is a serious blow. Business owners are also taking personal income cuts just to keep their doors open and protect jobs.

This is not just about hospitality any more; it is about the knock-on effect for communities, families and Ireland's reputation as a world-class tourism destination. A 2024 report by the economist Tony Foley warns that the reduced trading hours and closures could cut tourist numbers by up to 10%, which could mean a €1 billion reduction in tourism spending. This prediction may now be starting to become a reality. CSO data from May 2025 shows a 10% decline in in-bound tourism and a staggering 21% drop in tourism spend. Alarm bells should be ringing and if we do not act now things will only get worse. The most effective way to help is by re-instating the 9% VAT rate, as promised in the programme for Government. Leading economist Jim Power also estimates that the closure of a single restaurant can cost the economy up to €1.36 million, when account is take of job losses, reduced wages, lost taxes and increased welfare supports.

If 500 restaurants were to close, which happened in 2024, the total economic impact would be €680 million. That is more than the projected cost of returning to the 9% VAT rate for food-led businesses. Along with the reinstatement of the 9% VAT rate, we are calling for a reduction in employer's PRSI, linking the minimum wage to inflation and dedicated support for food tourism, including a food tourism strategy. Together, these measures would give businesses a fighting chance.

I thank the committee again for the opportunity to speak. We appreciate the chance to share our perspective, and we are ready to work with the committee. If we want to protect jobs, support tourism and ensure that our food businesses can be viable once again, we need to act now. I welcome questions and the discussion.

James O'Connor (Cork East, Fianna Fail)
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Thank you very much, Mr. Cummins. I appreciate that. We now go to Ms Tara Buckley, director general of RGDATA.

Ms Tara Buckley:

I thank the committee for the invitation to appear. I would like to introduce our delegation.

I am the director general of RGDATA. I am joined by Padraig Broderick, an RGDATA director and retailer from Croom, County Limerick, and Yvonne O'Meara, who is a member of RGDATA and a retailer from Portumna, County Galway. I offer my apologies on behalf of the president of RGDATA for his absence. As is the nature of this type of business, unfortunately, he was called away at the last minute and cannot be here. He would have liked to have been here, however.

To set some context, RGDATA represents the independent retail grocery sector in Ireland, which covers about 3,000 retailers who operate locally owned and run grocery outlets. Our members include grocery retailers who are not multiples or part of the big chains. Most trade under their own family names, and the majority are members of symbol groups. They have had to do this over a number of years. When RGDATA started out, there were 13,500 small shops and dairies throughout the country. Now, it is 3,000. Many of them have joined a buying group in order to stay in business.

Our members have some particular characteristics. They own and operate their shops within their local communities. They employ locally, source goods and services locally and are a key part of their communities. RGDATA members are estimated to employ more than 100,000 people nationally and are a core part of the vitality and vibrancy of local towns, villages and communities. They also compete daily against some of the largest global retailers. Our members work hard and are diligent and adaptable. The local food shop is a core part of the dynamic of a local community. In addition to providing a core economic service, the shop is also an important community hub and acts as a draw to bring people into a local area.

Costs and competitiveness are closely linked in a low-margin business such as grocery retailing. In recent years, retailers have seen an unprecedented increased in a range of costs that directly impact on their businesses, including those they have very limited opportunity to control or reduce. I will give some examples. One of the key operational costs for our members relates to labour, which represents a high element in the convenience retail sector, given that it is a service business. We have plenty of boots on the ground in our members' stores. Wage costs have increased significantly as a result of Government initiatives in recent years.

Energy is another area. Refrigeration, light, heat, catering and IT equipment all need to be powered up every day, and our energy bills are substantially higher than they were prior to the war in Ukraine. Our members deal daily with regulation and with compliance costs relating to permits, waste management, recycling and regulatory commitments. Yesterday, after we had written this statement, we got another notification that on 1 October our water charges will increase by 10%. Every day, we get notice of increased charges from different providers. In the end, there is a very small pot in a shop and there is nowhere to find extra money to pay.

We also have to pay significant amounts, maybe €100,000 per shop, in respect of security. We have a significant problem with retail crime and our members need to invest in security, CCTV, staff training and staff time. They experience a huge amount of shrinkage in their stores due to retail theft. Business service costs, such as maintenance, insurance, banking, cleaning, payments, rent, commercial rates and other utility charges, have increased substantially in recent years. The wholesale and supplier costs for products and services we sell in our stores have increased substantially.

Against each of these headings there have been considerable increases in the costs that retailers have to meet. Labour costs have increased through a range of new Government requirements, including increased statutory pay rates, new sick leave requirements, additional bank holidays and, with advent of auto-enrolment, new pension costs. We are good employers and have long-standing staff working with us. They have stayed through the generations. Their children come and work in the store. We are good employers and we want to treat our staff really well. However, with all of these things happening at the same time it has created a perfect storm for retailers in terms of the costs they have to manage. From a public policy perspective, there are clear benefits behind these employment requirements, but from a business perspective they impose a new cost which has to be borne from the existing business turnover.

Likewise on energy costs, retailers have seen electricity costs rocket in recent years. Our members have put a significant amount of investment into sustainability and new measures in their stores to be more energy efficient. The reality is they have reduced their consumption but their bills continue to go up. One concerning feature on energy costs is the increasing number of levies and standing charges that are being imposed by energy companies, which can amount to as much as a third of each energy bill. These charges include the public service obligation levy, a capacity charge, a standing charge, an electricity tax, use-of-system charges and an I-SEM trading charge. All of these are pushing up the costs of a necessary commodity which retailers cannot do without.

Some costs have remained consistently stubborn. For example, insurance remains a major bugbear for our members who seem to witness a never-ending spiral of costs.

It is increasingly evident that all suppliers of goods and services to retailers are facing similar challenges and therefore are increasing their costs due to the same pressures that our members are facing. The opportunity to shop around for lower cost service providers or supplies has been significantly reduced. They are just not in the market.

If costs increase, retailers have limited options to respond to stay in business. Given that we operate in an extremely competitive grocery retail market, increasing retail prices remains a very limited option for our members. Consumers are extremely price sensitive and are shopping around. Another option for a retailer is to try to do more with less, but this is challenging when it comes to energy, supplier and staff costs. Ultimately, if turnover does not increase to match rising input costs, the viability of a retail business suffers.

What can be done to address this high-cost environment for retail businesses? The State needs to limit the number of additional costs it imposes on businesses at this challenging time. Greater costs lead to higher prices and fewer businesses in operation. If the State wishes to increase business costs, then there needs to be some quid pro quoto address affordability on the part of the businesses, such as a reduction in employer PRSI rates or reductions in VAT rates. The State should relentlessly pursue all the input costs that impact on competitiveness and efficiency, such as energy costs, insurance charges, regulatory and compliance costs, and banking and payment costs. It needs to assess if all the recent price hikes in these areas are justified. Can a targeted programme be delivered to secure price reductions? Reducing the cost of these charges will lead to lower prices and more efficient businesses right across the economy.

Looking at rising costs in the round, as my colleagues will outline, there are some business costs that can be tackled directly by meaningful measures from Government. One area is clamping down on retail crime. Theft from shops represents a direct hit to the bottom line in each business and costs a medium-sized grocery store up to €100,000 per annum. Similarly addressing anomalies such as the concept of retail defamation is vital. RGDATA has heard many concerning stories from retailers who have had to fork out tens of thousands of euro in settlements and legal fees, simply because they asked a customer politely if they had a receipt for an item purchased in the shop.We urge all Members of the Oireachtas to support our amendment on this issue and ensure that such cases do not get into court.

Our members are resilient, inventive and creative, but they also must operate within the realities that they face. It is imperative that there is a relentless focus on reducing the input costs for business. The Government and politicians have a key role to play in this regard, not just in halting what appears to be a relentless imposition of new costs and hikes on business, but also through tackling elements impacting on business costs which the Government can reduce and influence.

We welcome the committee’s focus on this issue. We will be happy to answer any questions that members wish to pose.

James O'Connor (Cork East, Fianna Fail)
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I thank Ms Buckley. I now invite Ms Geraldine Magnier, chairperson of the Small Firms Association, SFA, and director and co-founder of Idiro Analytics, to make her opening statement.

Ms Geraldine Magnier:

Is mór an onóir dom a bheith anseo leis na baill inniu ar son 98% de ghnólachtaí na hÉireann. Tabharfaidh mé achoimre ar na dúshláin ghnó a bhíonn acu. I am grateful for the opportunity to be here today. I am joined by David Broderick, director of the Small Firms Association, and Jonathan McDade, head of policy and public affairs lead for the SFA. Joining us online is our colleague Rebecca Harrison, SFA council member and managing director of Fishers of Newtownmountkennedy.

The Small Firms Association is delighted to be invited to address the Oireachtas Joint Committee on Enterprise, Tourism and Employment on the topic of competitiveness and the cost of doing business. It is important to state that Ireland is a nation of small businesses. From shopkeepers to tech entrepreneurs, small businesses are imprinted in every community across the country. Small businesses, defined as enterprises that employ up to 50 people, make up approximatively 98% of all businesses in the country, employing approximately 43% of the total private sector workforce. This is proof that the entrepreneurial spirit is in the DNA of our nation.

The SFA is the representative body for small businesses in a variety of sectors, such as manufacturing, hospitality, retail, technology, agriculture, online sales and professional services. Our mission is to be the trusted partner of small business in Ireland, to deliver business-focused advice and insights to member companies, to influence Government policy to the benefit of small businesses and to connect our members in a thriving community. It is also our mission to ensure that the Government, the Opposition parties, the Civil Service and the public realise the importance of the small business sector. This is why we are delighted to take this opportunity to address this Oireachtas committee.

Recently, the SFA took the pulse of the small business community with a national survey conducted by Amárach. The survey follows a similar study a year ago that mostly focused on business costs. This year’s survey tracks business cost trends and examines issues around access to finance, public procurement and the adoption of artificial intelligence, AI. The details of the AI survey will be published next month. Over 350 small businesses nationwide took part in the survey in April and May. A key finding of the survey is that 49% of small businesses have seen costs rise in the past 12 months. This figure is down from the 84% recorded in the 2024 survey. However, it is worth noting that, this year, 44% of businesses report no change in costs, which further highlights that many businesses are still operating in a high-cost environment.

The other key findings of the small business survey are as follows. Some 31% of all small businesses reported an increase in labour-related costs in past 12 months. There has been an 11.7% increase in business costs among businesses that have reported increased costs. Borrowing among small businesses has fallen significantly, with only 13% claiming to have done so in this year’s survey compared with 40% last year. The percentage of businesses that state they have not borrowed any money in the past two years has increased from 54% last year to 81% this year. Debt levels have decreased, but almost half of businesses surveyed say that there are barriers to accessing needed finance. Some 54% of businesses surveyed state they would be unable to trade beyond six months without additional funding, a significant increase from the 35% reported in last year’s survey. Of the businesses that have successfully sourced funding in the past 12 months, 62% borrowed from the pillar banks, an increase of 24%. However, 22% borrowed money from family and friends, an increase from the 19% reported last year.

When businesses were asked to rank the most challenging costs, 20% stated that employment costs were the most challenging and 25% of businesses ranked mortgage or rent payments as the most challenging. Of all the businesses surveyed, 12% stated regulatory costs and 14% stated raw material costs as the most challenging costs. Regarding public procurement, 77% of the companies surveyed stated that they had not considered pitching for public tender contracts. One of main reasons for companies not considering these public tenders is a lack of resources due to the process being quite time-consuming, along with prohibitive criteria for small-business participation. The survey also found that 81% of small businesses said that the Government needed to do more to help small businesses, up from 74% last year.

Over the past 18 months, the SFA has been engaging with political and policy stakeholders about the urgent need to address business issues. Ahead of the recent general election, the SFA called for both a long-term strategy for small businesses and short-term solutions to the current cost-of-business crisis. Arising from that, the SFA welcomes recent developments within the Government to tackle rising costs, such as the pause in raising the statutory sick days allotment to seven days and the slight delay in the introduction of the auto-enrolment scheme. The SFA is very pleased with the establishment of the cost of business advisory forum and is encouraged by the commitments in the programme for Government to examine VAT and PRSI rates. The SFA believes these policies are a step in the right direction to alleviate the cost burden on small businesses.

I want to take this opportunity to thank the Minister for Enterprise, Tourism and Employment, Deputy Peter Burke, and his departmental officials for their ongoing dialogue with the SFA. I also want to thank the Government and the Opposition for raising the SFA's concerns within their respective parties and in the Oireachtas.

Recently, the SFA submitted its budget 2026 proposal. Within our proposal are various policy positions designed to tackle the issue of rising business costs for small businesses. One of our key requests is for a temporary PRSI rebate, which would be based on the number of lower earning workers on a company's payroll relative to the increases in weekly labour costs that will occur in 2025, 2026 and 2027. The PRSI rebate would be based on a rebate for each worker below an agreed earnings threshold. This could be operated through Revenue's PAYE modernisation system in much the same way as the employment wage subsidy scheme, EWSS, and other schemes have been in the recent past.

Furthermore, there must be a significant review of our commercial rates system. While we acknowledge that is a crucial source of funding for local councils, the SFA believes that a review of the system is long overdue. In addition, inefficiencies in the tax system must be improved. One specific example is the new enhanced reporting requirement, which has significantly added to the administrative burden for small business owners, who tend to be quite time poor. We recommend a variety of adjustments that will have minimal impact on the Exchequer but will ease the financial burden on small business owners.

With the possibility of increased tariffs between the EU and the United States, the SFA survey found that six out of ten firms were currently taking action to mitigate the tariffs while 22% of small businesses were reviewing spending plans. If a trade war between the EU and US were to escalate, the prospect of a tariff on digital services would have significant downstream impacts on small businesses that provided professional services. This is another reason the Government must introduce measures designed to stem the tide of high business costs in budget 2026.

I again thank the committee for inviting the SFA to address it on this very important topic. The small business community appreciates the ongoing dialogue with Department and Members of the Oireachtas, and in particular the members of this committee. Thar ceann gnólachtaí beaga go léir ar fud na hÉireann, gabhaim buíochas le comhaltaí an chomhchoiste go léir as a gcuid airde agus spéise.

James O'Connor (Cork East, Fianna Fail)
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I thank Mr. Cummins, Ms Buckley and Ms Magnier for their contributions. At the outset, I will say that this is an important topic for the new members of the Oireachtas Joint Committee on Enterprise, Tourism and Employment. It is an issue we wanted to highlight as quickly as possible. We are conscious that we could have many organisations in the room today. I feel we have a good flavour of what is happening on the ground from the representatives, who are from a wide spectrum of industry and employers.

I am going to hand over to the members of the committee. The opening slot is for Sinn Féin.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I am glad to be here with my colleagues, Deputy Donnelly and Senator Conor Murphy, to discuss the struggles that small businesses are going through. We are acutely aware of those struggles. In fact, as a party, Sinn Féin was acutely aware of them last year. That is why our alternative budget included the reduction to a 9% VAT rate for the food element of the hospitality sector. We also included a PRSI rebate for employers.

Even at that stage last year, we knew the pressures were mounting on small businesses. We have obviously become increasingly concerned as the months have gone on with the number of businesses that have been closing and what needs to be done there. That is the commitment we give to the witnesses in each of the different sectors they talk about.

I am acutely conscious of the smaller retail shops and the struggles they are going through. I commend all of the small independent retailers. A lot of them are in my constituency and they stay open regardless. They fulfil a huge social need as well as everything else. I know many of them do not take a wage themselves or pull a wage they deserve at the end of the week. That is not right in 2025. In fact, they are subsidising a huge asset to the community. That has to stop.

These are the two concrete ways we see of tackling that. There are also energy prices. For heaven's sake, we have brought up time and again the structuring of the energy prices at EU level and the twinning between gas and electricity. The witnesses will know that it is based on the last output. That is totally wrong. My colleague, Deputy O'Rourke, has tried to get the Government to see at EU level that the setup of marginal pricing does not work. However, as the witnesses rightly point out, the PSO levy, capacity charge, standing charge, electricity tax and the I-SEM trading charge and the carbon tax piled on top of all that means it does not work, so the figures do not add up. I want the witnesses to take the opportunity to speak to those in the context of energy and VAT, and how critical it is that those changes be made.

The theft situation is shocking. The witnesses say that theft can cost a medium-sized retail business up to €100,000 per year. What needs to be done on that?

Ms Tara Buckley:

On the theft issue, there are a couple of things. We are appreciative of the work being done by the Oireachtas. The Minister for justice has set up a retail crime forum and we are appreciative of that and making inputs into that. Members understand at this stage the huge problem we have. We really need to see a lot of things done like Garda presence on streets. One of the issues for us is the system. We want to see quicker results for somebody who has been caught shoplifting. At the moment, the system does not work. We need a better system.

We also have young people who are out of control, and we need to look at how that is managed. It probably needs an interdepartmental way of looking at it. There is this antisocial and really aggressive behaviour by young people who think they are untouchable. We end up with the poor business owners and their staff having to put up with really bad abuse and young people saying that they cannot be touched. They just do not seem to care. We really need to stamp that out. We have to look at how we address that and manage it. It seems to me that elements from social welfare, education and all of the other Departments need to come together to look at how we address that. That would be really appreciated by us. One of our members in Limerick had to go to hospital last week because he was bitten by somebody in the shop. This is unacceptable. We employ a lot of young people and people with disabilities. We try to set up a good atmosphere in our businesses for our customers and staff. What they have to put up with daily is just not acceptable. It is making it difficult. Some of these people do not want to go to work because they are stressed. It is totally unfair. When people are attacked in the shop, they are sometimes put off by the system they have to go through. They do not want to have to go into court to make statements. These are people who work in shops. That is not really what they want to be doing.

As to retail defamation, the issue used to be slips, trips and falls. With a lot of work the Oireachtas did, for which we thank it, we have addressed duty of care and sorted out a lot of that area. People have slipped now into retail defamation, so they pretend to steal from us. They come in with something they have brought themselves or have in their bags and they pretend to steal from us. We have to protect our businesses. Somebody in the store politely challenges and asks the individual to show the receipt or proof of payment. The next thing it is a court case and people are being dragged down to defend themselves in court. We win the cases, but we do not get anything. They appeal to a higher court. We never get our costs back. It costs us between €30,000 and €50,000 to defend a case. We would like it so that we do not have to go to court if we politely ask somebody. We agree we should if we defame somebody, but not if we politely ask somebody.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I hear what Ms Buckley is saying about the uncontrollable legal costs as well.

I ask Mr. Cummins about the 9% VAT and the energy. What difference will that make?

Mr. Sean Collender:

I will take that. I thank the members and wish them all a good afternoon. I have been in business for 25 years and we have three restaurants in suburban Dublin. We have been through many ups and downs over the years with domestic and international crashes, but we have been able to weather the storm. Since 2019, it has been inherently different. I am deeply concerned as a domestic restaurant owner. The risk-reward ratio for me as an entrepreneur doing business in Ireland is out of kilter. We have looked at the input costs. We are looking at a small cafe-type place of 1,000 sq. ft. The outfitting cost has come in from four separate places and it is touching €600,000. We operate three more mid- to upper market restaurants that have been operating successfully over a number of years. I will give an insight as to why VAT and PRSI are important. As of 31 May, our three wages were 41%, 39% and 50% of turnover for the first five months of this year. They are unsustainable. The figure has traditionally been approximately 33%.

We have not really increased our prices, apart from during the past six or seven months where we have unfortunately had to put up our prices three times. We traditionally might have increased our prices once every 18 to 24 months. Even with that, we are getting nowhere close to making our business sustainable. The market used to be able to correct itself over the years. From the 2001 crash to the 2007 crash I always had hope that the market would correct itself and we could get through it. However, the level of costs now is unsurmountable for us. That is why VAT going back to 9% and, as our colleagues have said, a PRSI reduction for the lower paid is essential to make us sustainable going forward. These are things that have to happen. In one of our locations, there have been units empty beside us for the past two years. In another location, one unit near us is entering its fourth operator in 18 months. Another unit has been empty for 24 months in our area. It is a 200-seater approximately and is now seemingly owned by a large UK financial hospitality group. It is a worry that outside hospitality groups coming in with huge corporate and financial backing can start to populate these restaurants and may exit.

More than ever, there is the bigger picture of how tariffs can have an impact and how this country is reliant on five businesses. Do not do the same to home-grown, small, independent businesses that are the lifeblood and culture of why we all go out and enjoy ourselves. Give them an opportunity to say it is worth their taking a risk.

Mary Fitzpatrick (Fianna Fail)
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I thank all the witnesses for joining us today, the submissions they made to the committee and the work they do every day. They provide valued services in all of our communities, and I am delighted to be here.

My colleagues Deputies McCormack and Dolan will both be returning later. On a day like today, there is a lot of coming and going and we do not mean, in any way, to be disrespectful. Both the Dáil and Seanad are sitting, as are other committees.

I thank Ms Buckley for her contribution on behalf of RGDATA. As she knows, we absolutely accept the issue around crime and the cost of crime in the retail space. Hospitality suffers from it as well, as do small businesses generally. I thank her for her engagement with the Minister's task force on retail crime. It is absolutely acknowledged by the Government that crime must be a top priority. The Minister for justice is committed to trying to address retail crime through the forum and RGDATA's engagement in that is very important. The recruitment of extra gardaí, the creation of more prison spaces and enforcement of the laws and consequences for people's actions are part of that. Ms Buckley can take that as read.

I would like to give Ms O'Meara and Mr. Broderick an opportunity to speak. Both of them have taken time out from their shops to come here today and we want to hear from them about their experience. Costs are obviously a big issue, if not the biggest issue. In real terms, in their daily and weekly business lives, what are the biggest costs? What are the most frustrating? What actions have they taken? Where do they see Government policy being able to help to ease that to ensure that their businesses are sustainable into the future? No different from restaurants, their shops are unique to our culture. They are what makes Ireland a destination for tourism but also for businesses to set up and for people to live.

Ms Yvonne O'Meara:

I thank the Senator. I am a proud second-generation retailer. Our SuperValu retail shop has been operating on Portumna for over 45 years. It was set up by my late parents Marie and Donie and I subsequently took over 13 years ago. We are the second biggest employer in our community. I am very proud to say that, remarkably, we have given over 1,700 people their first job. These are people who are in school or in college and we are really setting them up for their next career. As a SuperValu retailer, we are also really proud to give to the community. We sponsor an awful lot of local teams. During the storm in late January, a lot of people who came into the shop had no electricity. We had a man in our boardroom on a nebuliser and we had people feeding bottles to their babies. That is what we do. We are community based.

I am very conscious of the pressure on everyone when they are coming into the supermarket. We are doing everything we possibly can to keep our grocery prices low and their bills low but it is a difficult time to be a retailer. Our margins are very low and we have huge cost inputs. Our day-to-day input costs have risen significantly, including our energy and insurance costs. Our labour costs are up 30%. Every time we get our bills, we wonder how we will pay them. On Saturday last, we were looking forward to a good trading day but the local bridge broke. I had staff in the shop, with a few extra in because the weather was due to be good, but for four hours nobody could get in from Portumna. I still had all of these costs to pay but I could not trade as I would have liked to trade.

We were speaking about retail crime a few minutes ago. Right across the whole of Ireland, it is a big issue. It is not people who cannot afford to put food on their table but criminal gangs that are coming in and stealing to order. It is very upsetting for me when I am wondering what is going on in my business and I get somebody aggressive coming at me. I have a wonderful team in Portumna and a wonderful community and customers and I have to do my best to ensure their safety.

The main ask for me of the Government is to consider a PRSI scheme. As I said, we employ a huge number of people in our stores. I would like to see scaled-up measures for energy costs. I spent €150,000 on solar panels but I am not going to get a payback because the price of energy has risen. Two weeks ago, in my bakery, two machines broke down. I now have to find €30,000 to replace them because if I do not, I will lose out to my competitors. Consumers are very savvy and they have a number of choices of where to shop. I would also like to see an increase in financial support for local gardaí. The gardaí in Portumna and in the whole of Ireland are wonderful but they need support to tackle retail crime.

Mr. Padraig Broderick:

I have an independent supermarket in Croom, County Limerick. As such, it is a rural store but it is about ten minutes away from the multiples and discounters. I speak for every retailer in Ireland when I say that our goal is to make a living and to reinvest in our business, as retailers do. Every five or seven years, people will see significant investment in supermarkets and convenience stores, not for vanity purposes but because of wear and tear. Our fridges are on 24 hours a day, seven days a week, even when the shop is closed. There has been a lot of talk in the press in the past week about the cost of groceries and the cost of living more generally, and rightly so. The level of increases we have seen is unprecedented. Things like butter, bread, milk are 50% more expensive than they were four or five years ago. It must be borne in mind that they are also the raw materials that we work with in-store and, obviously, we cannot pass on those increases.

Notwithstanding the pressures we are under from cost increases, retailers are very adaptable. We spend anywhere between 12 and 15 hours on the floor every day, talking and listening to customers. In my own store, I am a butcher, a baker and a chef and a majority of my team can work in each department in the store. We do this not to grow the business but to save it. We have to find ways to keep the business open because the level of increases we are facing in input and employment costs is simply not realistic. This has been borne out recently by the figures we supplied to the Government, which show that the increases have come too quickly without enough thought and research going into them. I know from being on the shop floor in my own business that the word we use every day is "value". Regardless of price increases, we have to offer value. Value does not come in the form of giving jerseys locally or opening later and earlier. Value comes in pounds, shillings and pence. If we do not offer value, we will lose business, lose customers and close down.

Retail has always been competitive. I remember as a child going into Dunnes Stores and watching Maurice Pratt on television. The competition was ferocious and that has not changed. The scars of competition are now all over Ireland. I have been in Limerick for 30 years but when I drive home to Kerry, I go through towns and villages and see shops and filling stations that are closed. It is all over the country. Now we also have online competition, so we have plenty of competition. I would like to think that I am a sharp retailer and that I work hard. I have a great team who have come with me through a banking crisis, through Covid and through an energy crisis. We have done everything we could do. I never thought I would see the day when I would be a butcher, a baker and a chef but I am damn glad that I am, and I am damn glad that my team can row in as well. Four or five years ago, I thought I was ahead of the curve in borrowing for solar panels. I saw it as short-term pain in terms of repayments but, unfortunately, the energy crisis kicked in and bills went from €8,000 to €27,000. Government supports did eventually kick in and were very helpful but I ended up handing over every cent of that support to my energy supplier in order to keep the current running. I was damn glad to have access to that money to be able to do that. Otherwise, I would have gone into arrears, although I ended up in arrears anyway. Thankfully, those arrears are now paid. It was really demotivating to drive home on a sunny day knowing that I was going to paying for something for the next three or four years that was not on the roof but that should have been on the roof. I have recently gone down that road again and have put 95 panels on the roof. Apart from the input and the help it has given my business, it is heartwarming to know it is there and that it will work in the long term.

Unfortunately, I spent €64,000. I do not see any decrease in my bill because there are significant charges on the bill outside of what I am being charged for energy, and that is a sentiment echoed all over the country by retailers who have solar power and do not have solar power. These are difficult times. When I talk about reinvesting in the business, I am currently at the bank because I need to reinvest in my business. In essence, looking forward, I will not have a commercially viable business and now I am trying to convince a financial institution that it is commercially viable. The increases in my employment costs in 2024 and 2025 are equivalent to a second mortgage. They are very close to the cost of the mortgage I currently have.

James O'Connor (Cork East, Fianna Fail)
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I hate to cut across Mr Broderick, but we have gone four minutes over our allotted time.

Mr. Padraig Broderick:

That is no problem.

James O'Connor (Cork East, Fianna Fail)
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It was a very interesting line of information and I think another committee member will pick up on that. We will proceed. Deputy Gogarty is our third speaker.

Paul Gogarty (Dublin Mid West, Independent)
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Gabhaim buíochas leis na finnéithe go léir as ucht a dtaithí a roinnt. Níl ach cúig nóiméad agam so I will try to be quick. Mr. Broderick is only short of being a candlestick maker. That is the story of many retailers throughout the country. I was touched by the cost side and will go straight to the solar element because that makes a lot of sense. I come from a green background but find that with the way the tariffs are organised with the smart tariffs, it has to be operated very carefully or else those costs can kick in. I would be interested to hear from Mr. Cummins and Ms O'Meara. Do they think they will make a saving in ten years' time as opposed to during the energy crisis now? How confident of that would they be?

I will move to the restaurant side and ask Mr. Cummins and Mr. Collender a devil's advocate question. The cost of reducing VAT to 9% again for just food and catering services is estimated to be just short of €700 million. If they were the Minister, do they think it would be better to invest that €700 million into the restaurant sector rather than cut the VAT rate? The fear is, and this is not necessarily my personal view, that it would just go back into profits, in some cases, rather than actually keeping restaurants viable. More information about how that money would help to keep the restaurant sector going and create jobs would be useful for this committee.

In regard to Ms Magnier, the point about the employers' PRSI rebate and the threshold makes a lot of sense. I have a few questions about the barriers to finance. What is Ms Magnier's view on the potential for an enhanced role for credit unions, for example? There are already Microfinance Ireland supports through the local enterprise offices, LEOs. Has that been helpful and how could it be spread out more? Where are the problems in getting that type of support?

I have questions for Ms Buckley, Ms O'Meara and Mr. Broderick about shoplifting. It is a bugbear of mine and I have been calling for consequences, including fines for parents, curfews, the taking-away of PlayStations and community service with the Tidy Towns, for all sorts of antisocial behaviour. One of the big ones, besides 12- to 15-year-olds attacking kids who are slightly younger than them or attacking parents with buggies and intimidating people, is shoplifting. In my constituency, within half a mile from where I live, one Insomnia café has had people steal bottles of water and then throw the water at the staff. Another retailer has had people come in - these are slightly older individuals - do the honcho, threaten to hit someone, just grab stuff and walk out. These are not even the commercial-type thieves who do the rounds. There was a call previously for a community courts-type system where we could have that sharp shock and some sort of restorative justice and consequences. Would Ms Buckley, Ms O'Meara and Mr. Broderick support that? I think it was a Dublin business institute that called for this and a survey was done more recently by some academics, but it got nowhere. With the best will in the world, we will not have sufficient gardaí to deal with stuff on time.

In regard to the defamation side of things, how common is it that people make false claims by pretending to steal versus actually shoplifting and walking out with impunity? That seems to be the bigger issue, but you cannot lay a finger on someone. Would Ms Buckley, Ms O'Meara and Mr. Broderick like security staff to have powers to be able to detain people pending the Garda being called, for example, or have more powers, because I know some people try to do this in the bigger areas?

Mr. Adrian Cummins:

I thank the Deputy. The reduction of the VAT rate from 13.5% to 9% for food-led businesses would cost €540 million, as per the Department of Finance. When we reduced it the previous time, from 2011 to 2014, the industry created 31,500 jobs back then. This is about protecting jobs and we believe that if the VAT rate was reduced, businesses would be able to open for longer hours and open on Mondays and Tuesdays. They are not doing that at present. We think 9% is the correct rate for VAT. When Ireland is benchmarked against the rest of the European Union, Ireland's rate of 13.5% for hospitality is the second highest, after Denmark. If the VAT rate was reduced to 9%, it would be brought down to the average across the European Union. If we are to be serious about our competitiveness for tourism, 9% is the correct VAT rate for us.

Mr. David Broderick:

I will take the question about debt. It is a very difficult nut to crack, as can been seen from our survey. There is something wrong because debt, and the correct level of debt, is very important for growing and scaling businesses. There is also a bit of a hangover from the crash in terms of people not wanting to get into debt, which in one way is fair enough, given what happened over previous years with personal guarantees and where people did get caught out.

The Deputy mentioned the Strategic Banking Corporation of Ireland, SBCI, and Microfinance Ireland, which are doing fantastic work providing hands-on, tangible support for businesses. One of the solutions would be more of that, please, in terms of how they operate. There is an issue around risk. SBCI might produce a loan and at the end of the day the business effectively has to go through the same risk profile, which is quite difficult. Again, we do not want to go back to where we were but it is difficult for that business to show the same level of risk. Small businesses, by their very nature, are slightly riskier than other secure investments the banks could make.

We want to see more of the long-term investment schemes, such as the growth and sustainability loan scheme. Given the turbulence that has gone on over the past couple of years, there is now a strong case for the introduction of an always-on working capital scheme from the Government to support those small businesses. We have seen enough examples of that over the past couple of years. We would also like a debt solution for scaling operations. That currently falls outside SBCI and Microfinance Ireland and is something we should examine from a Government perspective.

Ms Tara Buckley:

The ratio of retail crime to the cost of defamation is probably about 70:30. The biggest issues for us are a couple of things. All of the Deputy's suggestions will be and should be examined by the retail crime task force because we need to examine every element of how we deal with retail crime and antisocial behaviour to try to see if there are good solutions. We need to examine those ideas and ideas from other places.

We have put in suggestions around fixed penalty notices because we have CCTV footage and know exactly what has happened. The gardaí know exactly what has happened and instead of taking up all of their time in the lengthy process we have, we need a blunter, faster response. We need to make sure everyone understands this is not a victimless crime. Retail crime has a huge impact on the retailer and his or her staff and on the other customers because if it is costing a retailer €100,000 per year, where does he or she get that €100,000 from? The retailer has to put prices up and we do not want to do that. There are a lot of ideas that need to be explored and we would be very supportive of any measures that could make the system faster, make it much clearer to people that there is a consequence to indulging in these crimes, and try to sort out antisocial behaviour.

On the VAT rate being reduced to 9%, our members would also appreciate that because a lot of our members run very good food service businesses within their shops and cafés, so we would welcome that too.

Linda Nelson Murray (Fine Gael)
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I could not wait for all the witnesses to come in here today. Anyone who knows me knows I believe anything to do with the increased cost of doing business is such an important subject. I thank all the witnesses for attending. I thank Mr. Cummins and Mr. Hayes for meeting me over the past couple of weeks, and also Mr. McDade. I have worked with Ms Buckley over the past few years and it has been great. I have also dealt with Retail Excellence Ireland. I am very happy the representatives are here.

I am on this side of the table because I was on the representatives’ side of the table. I had to come out fighting for my business and ended up going into politics because of it. Therefore, I totally get what the representatives are saying.

I thank Mr. Cummins, Mr. Collender and Mr. Hayes, from the Restaurants Association of Ireland, for sharing their story. As they said, the price of steak has gone up by nearly 100%. A restaurant cannot serve a fillet steak that cost €25 or €30 for €60, so it has to absorb the cost. In our business, we serve food, although not steak, to a few hundred people every weekend. I am absorbing the cost as well. Even with the increased cost of coffee, I cannot charge any more than €4. I am already charging €4 for a cup of coffee. You cannot charge any more than that, so you have to absorb the cost somewhere.

We are a nation with amazing food, and in this regard I fully support the delegates regarding the VAT rate of 9%. My colleague Deputy John Clendennen, for whom I apologise because he has had to step out to a clashing committee meeting, is a big advocate of the VAT rate of 9%. It is something we will be pushing with the Minister for Finance and the Minister for enterprise.

The Government has definitely tried to do its bit over the past couple of weeks on personal injury guidelines. There was cross-party support and we really pushed the matter in the Seanad, as Senator Fitzpatrick, who is also a good advocate, will vouch for. I am delighted to see that there has been a pause. All of us now need to put the pressure on insurance companies to ensure they are examining all the insurance reforms we have made over recent years and reducing premiums. We should not see premiums stabilised; we should see them coming down. Again, there would be cross-party support for all this.

Is RGDATA hearing from members that rent is an issue? I hear this a lot. I do not believe anyone has raised it here yet. I know of a business that has faced an increase of 100%. Its lease was up and it got a letter stating that if it did not pay 100% more, it would have to leave, although it had been in business for a long time under the landlord. Is this an issue RGDATA is encountering?

Senator Mary Fitzpatrick and I will be talking about defamation later. We have raised it and will be bringing it up in the Seanad again tomorrow when considering Third Stage of the legislation. We will be talking to the Minister for justice about it.

On the figures, Deputy Gogarty asked about defamation cases and shoplifting. We have 3,500 defamation cases in Ireland and a population of 5.3 million. By comparison, there are 53 million people in the UK and 3,500 defamation cases. Therefore, there is something wrong. We need to sort out the defamation law. There is new defamation legislation but we need to make sure the law is strong enough such that you can tap somebody on the shoulder and ask whether he or she has paid for a product without worrying whether you will be brought to court over it. I totally agree with the representatives on this.

Sometimes employers are afraid to mention increases in wages and sick pay because none of them wants to see their employees not getting what they deserve. Nobody does, but it is about being supported in this regard. Employers need to be supported, whether it is through a PRSI rebate or help with the tax on energy. We need this to coincide with what is being done for employees. It cannot be a question of everything going in the employees’ direction and not ours. I fully support the representatives on this also.

I was a little concerned about Ms Magnier’s point on borrowing. If the SFA is saying that only 13% of its members have borrowed money for their businesses, it should be noted that if they do not borrow, they cannot grow. Perhaps they cannot manage the cash flow or invest in the business. What is the hindrance in this regard?

Reference was made to the public tender process. Only yesterday I spoke to a small business that was absolutely petrified that if its current contracts go to tender, it will never be able to cope with tendering and also compete with another business. I would not mind having the witnesses’ opinions on that.

Mr. Broderick and Ms O’Meara did exactly as I did a few years ago. You need to get the emotion into this. It is great hearing from the likes of Ms Buckley and Mr. Cummins and the people from the SFA but real-life stories are what a lot of us listen to. I thank Mr. Broderick and Ms O’Meara for giving these. I would like to add to their stories. We need to support business owners in dealing with the pressure they are under mentally because of all the costs, the shoplifting and the defamation cases. Behind every social media post, complaint and video put out is a person who is perhaps sitting on the couch watching somebody defaming or giving out about their business. There may be a family or couple affected. Sharing bad news on residents’ groups forums and sharing bad news about businesses is not cool. I do not believe it is the way of Irish people and we need to remember that we must support businesses mentally as well as with costs because they are dealing with a lot daily.

I thank the delegates. I have left them with one minute although I have asked about five of them to answer questions.

Ms Tara Buckley:

I will respond quickly on rent. In general, most of the businesses in the convenience sector, the grocers, like Ms O’Meara, are second-, third- or fourth-generation businesses. Those concerned have been the town shop for a long time and own their businesses. Huge increases in rent are an issue for many members in the cities because they generally rent their premises.

There have been huge increases in commercial rates. A small supermarket in an urban village in Dublin will pay €80,000 in commercial rates. If there is a road closure, business goes down by 30%. Commercial rates comprise a big issue and we would like to see them reviewed. Our members own their premises but rent would be a major issue for the other businesses, including retail business, which are important to have a nice, vibrant town centre.

Linda Nelson Murray (Fine Gael)
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Ms Buckley referred to rates and road closures. This has been a major issue in Navan because it is part of the 2030 plan. The local authority and the Government are investing a huge amount of money in the roads. Navan will look fabulous but businesses are suffering in the meantime. What does Ms Buckley believe happens where somebody’s business has a yearly rates bill although that business is affected for six or eight months of the year?

Ms Tara Buckley:

We think the business should get a rates reduction. What my members were offered was a delay in the payment of the rates – we have had several instances – but that is not good for business. It is just another stress with an impact while waiting. We believe there should be a reduction. If business is going to be down by 30%, 40% or 50% as a result of something to do with changing a road or putting in infrastructure – it is all grand that this is going to happen – the authorities have to accept the business is not going to be able to produce the money to pay the rates.

Linda Nelson Murray (Fine Gael)
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Could the SFA answer the question on borrowing money?

Mr. David Broderick:

To go back to the first point, on property, mortgages and rent, borrowing did come up in the survey, surprisingly. We had not foreseen it coming back on the agenda. It is absolutely an issue for our members, as has been pointed out.

Mr. McDade will answer the question on public contracts.

Mr. Jonathan McDade:

We had a question on public contracts and 77% of small businesses stated they have not secured public procurement contracts. In fairness to the Office of Government Procurement, it has an SME committee, on which I sit, that has engaged in consultation. It is making efforts to simplify the process but we are still getting queries from members on some of the stipulations or conditions for applying for a public procurement contracts. Some have related to insurance but one of the key areas is that one has to have an example of experience. Of course, many first-time applicants do not have experience, so they automatically do not qualify. This is very frustrating for small businesses seeking to apply for public procurement contracts. Progress is being made and we will see what further actions come from the Office of Government Procurement on this matter.

James O'Connor (Cork East, Fianna Fail)
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I thank Mr. McDade.

We have a very full attendance today and I am conscious of time, so I ask members to try to keep an eye on the clock. I have been quite generous so far but I will have to amend that. Next on the speaker list is Senator Aubrey McCarthy. Deputy Lawlor has returned, so we will proceed to him after Senator McCarthy.

Aubrey McCarthy (Independent)
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I thank all the witnesses for being here today. I am involved in small businesses, including a family business, and know what it is like to run one.

I also have a restaurant and I am involved in the transport sector. A lot of what the witness said and the survey resonate. I probably took part in it as well. I thank the witnesses for being here today. I see Ms Harrison, whom I know from Wicklow, on screen. I have several social enterprises under a charity called Tiglin which has changed many lives through getting people back to work. It is interesting that there are no rates in the charity sector. It makes a huge difference. SMEs and small firms are bombarded with rates. I spoke this morning in the Seanad about the reports and statements and about the stark reality that more than 50% of the firms said they could not survive more than six months without further support, which is frightening. The Government supports at the moment seem not fit for purpose. With that in mind, what specific changes would the witnesses propose? Also, regarding employee costs, even with our own restaurant, there is the trajectory of the minimum wage and labour costs are topping all of the pressures. With the minimum wage trajectory, sick pay, which has been increased, and pensions becoming compulsory, are there ways to ease pressure for small firms that do not compromise workers' rights?

As my colleague, Senator Nelson Murray, said, the SFA survey, I think, shows a dramatic drop in borrowing. That is frightening - 81% of businesses did not borrow in the past two years. Does that reflect a lack of need or poor access to the banks? I am also on the housing committee; we are focusing on awful access. The access to capital is just not available. Regarding rates, which I started off with, on the review of rates, Senator Nelson Murray mentioned the new road around Navan and that a positive impact would be that rates would be suspended. Would the witnesses support a move towards something like a profit or turnover-linked rate scenario that reflects the ability to pay? Restaurants are facing huge insurance costs, a 96% increase in the price of beef, 94% in electricity and staff costs, etc. What policy interventions would the witnesses look for to help stabilise these cost pressures and help businesses to absorb them?

Mr. David Broderick:

I thank the Senator. I am glad the Senator called out my colleague on screen. If Senator Nelson Murray wants to hear another good story, there is a fantastic story on screen so I hope we get to it. I will take the borrowing question first. There are a couple of elements. When we first saw this figure, it was worrying in last year's survey and, unfortunately, a report by Deloitte shows liquidations are up 32% year on year. I am concerned that figure will go higher this year. As the Senator is well aware, it will take time for those liquidations to flush through the system.

Aubrey McCarthy (Independent)
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Is that in any particular sector?

Mr. David Broderick:

That was a general figure by Deloitte. There is no doubt our colleagues in the restaurant sector and certain other sectors are more exposed. The Small Firms Association is sector agnostic. While we are talking about specific areas which absolutely do need help and support, as they are our members as well, it is import to remember the same pains and cost pressures are happening across all members we speak to. That is an important point. That is why the PRSI rebate would be an efficient way, cross sector, of getting support into the pockets of hard-pressed business owners. That is why we would focus on that solution.

On borrowing, people borrowed in the past with personal guarantees and had more personal exposure so perhaps there is a fear within that. When you look at where they borrowed, they have borrowed but they are borrowing from family and friends as opposed to professional institutions. That could be something - these infamous people who had money left over after Covid. I do not know who they are who had that spare €20,000, €40,000 or €50,000 but that is a particular element as to why that is happening. It would not show up in figures across the board if there is inter-family borrowing. I hope that covered the two particular elements.

Mr. Adrian Cummins:

I will take the question about insurance and input costs. Price gouging is going on constantly with insurance. We use a broker for our association members. If it is able to get up to a 30% discount for our members, there must be absolute price gouging going on in the insurance industry. We do not see those charges coming down even though all the great work has been done by the Oireachtas in trying to help our industry. The insurance industry is not passing on the reductions and it should.

With regard to input costs, quite correctly, the Senator pointed out beef is at 96%. With farm to fork, something is going in the middle. The food regulator needs to have more powers up to the level of the competition authority to go in, look at the books in terms of processors and see how and why we have been paying a 90% increase on beef for the past two years. When you look at other inputs, fruit and vegetables is 50% and chocolate is 157%. Somebody is making a lot of money in some part of the food chain. When we have to buy it in from the wholesaler, we have seen increases in the past three years. I will pass on to Mr. Collender to speak about VAT and PRSI.

Mr. Sean Collender:

The Senator asked about policy changes. As I said earlier, the reality is the programme for Government includes VAT returning to 9%. We have all welcomed that, we just want it to become reality now. It will alleviate that cost pressure we spoke about across the board in all areas. The reduction of PRSI for the lower paid of our staff would be welcome. Low pay and minimum wage need to be looked at and linked to inflation. The increases that have happened in the past couple of years have gone up to 28%. Those big increases are unsustainable when we are already faced with many other increases. Not for a single moment does anyone want to curtail the minimum wage but the reality is we are trying to operate a business as well. There has to be some sort of common sense approach to that.

Aubrey McCarthy (Independent)
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On the back to work schemes and initial wage subsidies, I employed several people from them and they were amazing. They are not available any more. It that worth lobbying about?

Mr. Sean Collender:

Certainly, for the businesses that will take on a lot of people like that, yes. A number of our part-time staff are not so much transient but work a shorter number of hours per week. We want to keep the good ones on all the time. Those pressures exist but the problem with the minimum wage is it had a knock-on effect throughout the whole business.

The Senator also mentioned concern about the lack of investment in terms of debt. I mentioned it earlier; I have a real concern that the risk-reward ratio is out of kilter. It is not so much whether access to money is available, it is that people are struggling with the idea of making the jump to go into this when they see the struggle already. That is a big issue. If we are not investing, we are not growing.

Mr. David Broderick:

I would add the issue of timing as well. Business owners by their very nature are a bit last minute so the time it takes to make a formal application and turnaround unfortunately puts people off taking debt.

Aubrey McCarthy (Independent)
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I have a restaurant. It is full every day. I am trying to make ends meet on it. People look and say you must be making a fortune.

James O'Connor (Cork East, Fianna Fail)
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What is your restaurant called, Senator?

Aubrey McCarthy (Independent)
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I am not here to advertise - The Elms in Punchestown.

James O'Connor (Cork East, Fianna Fail)
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We will all be down. I thank Senator McCarthy. I call Deputy Lawlor and then Deputy McCormack.

George Lawlor (Wexford, Labour)
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I thank all the witnesses for their presence and presentations, which were extremely useful. As someone who ran a small business for more than 20 years in Wexford, I am all too well aware of the cost of doing business, be it energy, insurance or bad debt.

People who just would not pay were also a factor. There were those weeks without wages, particularly in the early days, and investing savings you had built up, just to keep things ticking over. One of the things that used to annoy me was when you employed someone and offered them a wage, the employer's PRSI came in on top of that, which really knocked the stuffing out of you. Employer PRSI should be something we focus on, even if it does not necessarily affect employees, who are also suffering, in respect of the cost-of-living crisis. We need to be cognisant of that.

I apologise if some of these questions have been asked in my absence; I had to go to the Dáil to speak. I am also interested in the ratio of rent to rates. I spent 20 years as a county councillor and even though I ran a small business, I never voted for a rates decrease because I saw the benefits of having rates to reinvest into the community. One of the things that annoyed me, however, was hugely inflated rent in places, particularly along our main streets. What would happen was a big multiple would come in and be able to pay hundreds of thousands in rent, which of course had a knock-on effect on every other property on that main street, while local authorities were attacked for charging rates, which were by comparison a fraction of that, although I appreciate what €80,000 is for a small supermarket. I know of one hotel in the south east that is paying €300,000 a year in rates.

This has probably been discussed and answered and if that is the case, that is perfect. Are any of the organisations part of business investment districts, BIDs? Do they see the benefits of those? Are the benefits directly invested into the areas they are involved in? It is probably more city-focused initiatives.

On restaurants, and I appreciate there appears to be a dramatic drop in foreign visitors indicated by the spend being down 21%, are local Irish visitors picking up any of the slack caused by the reduction in foreign visitors? That is one of the questions.

In respect of Ms Buckley's presentation, the horrific spectre of crime in retail is something we really need to grab by the neck. I listened with horror a few months ago when I heard one of RGDATA's members was seriously assaulted on a Friday. The offender was apprehended but was back in on Monday stealing again from the shop. Is the whole thing about repeat offenders coming back to punish, and basically laugh in the face of, people who are providing a wonderful service throughout the country something that is galling to RGDATA? Are the bigger multiples targeting its members? I have noticed in Wexford that some of the supermarkets go out to check each other's prices and to look here, there and yonder at what others are doing. Is that an issue for smaller companies? Are the bigger multiples focusing in or bringing pressure to bear on their facilities? In the rates incentive schemes of the past, if you paid within a certain time, there was a reasonable reduction in rates. Is that something RGDATA would consider pushing?

This may have been discussed, but I welcome any suggestions from the Small Firms Association on how to improve public tender contracts because they can be very cumbersome. Are the policies we have counterproductive? A number of years ago we introduced a policy where local companies were essentially competing with much bigger organisations in tendering for contracts for supplies and things like that. I would welcome some proposals, moves or suggestions on that matter. I would also welcome proposals in the area of commercial rates.

I have a question specifically for the SFA. Are regulations for some of the bigger businesses it is dealing with causing difficulty for its members in the context of the pressure that comes to bear on them to adhere to the regulations that are being imposed on the bigger suppliers?

I will also raise the matter of all the organisations' relationships when dealing with Revenue. At times when cashflow may be an issue or a problem and the brown envelope with the harp on it comes to their members' doors, what sort of interaction have they had?

Mr. Adrian Cummins:

I will take the BIDs question. I will also address the issues of commercial rates and Revenue. The BID scheme tax is a double taxation. It is a tax on top of commercial rates.

George Lawlor (Wexford, Labour)
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Is it somewhat voluntary though?

Mr. Adrian Cummins:

No. It is a compulsory tax based on a plebiscite in each local area. Some BIDs are small and are specifically spent on Christmas lights or a St. Patrick's Day parade, but Dublin has €4 million that is being spent. We would like to see greater transparency and for the scheme to come under freedom of information. It is outside of that, even though it is taxation.

On commercial rates and rents, rents are not a huge issue in our top ten. They would be between point number ten and five. The other issues that are more pressing at the moment are insurance, wage inflation, cost of inputs, etc. Commercial rates are not a major issue for us and nor are rents.

Revenue is quite blunt in that you must pay and if you do not pay, interest will be piled on. However, I welcome the warehouse tax measures for last year. Sense was brought to bear in that no interest was charged on the warehouse tax. There were businesses that were able to get repayment from one to ten years. The vast majority had a one- to five-year repayment. That was welcome, but if you do not make a payment on time, Revenue will take you out of the scheme. It is too blunt in that aspect.

James O'Connor (Cork East, Fianna Fail)
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Ms Harrison has her hand up as well. Apologies.

Ms Rebecca Harrison:

Thank you very much. I was putting myself off mute. It is fantastic to hear the contributions from everyone on both sides of the table, if you like, as it is to hear the support from the Government and Opposition. It is clear that this is a real issue and an understandable one.

My experience is very similar to those who have spoken with Mr. Collender, Mr. Broderick and Ms O'Meara. I run two businesses in County Wicklow. One is a fashion and lifestyle retailer and we also have a café. I will not reiterate what those people said. I will make two comments on the Revenue interaction and competitiveness, to give a little understanding from our side. This committee is about competitiveness. As small businesses, small retailers and small hospitality businesses, in particular, we are competing against big international players. That playing field by its nature is going to be one-sided and very steeply sloped. On top of that, when initiatives and impacts that have been applied to our way of doing business are added to it, such as the minimum wage increases and all of the things we have said already, the impact is felt much greater by small businesses. The introduction of the small business test has been a fantastic initiative by the Government, but it needs to be more widely applied and it needs to be at the back of everyone's mind, all of the time, to literally do it.

I will come back to the impact of those increased costs and put numbers on it a little. Mr. Cummins from the Restaurants Association mentioned those figures and the cost to the State and to Revenue of businesses closing. Not to put too fine a point on it, we are now at a position where businesses are going to close because of what has happened so far, never mind what is yet to come in terms of the new environment. The environment for operating a small business in Ireland at the moment means the numbers do not add up. As Senator McCarthy said, the turnover for our café and shop has stayed consistent but our profit has completely eroded. In fact, our café has been operating at a loss for the past two years.

We are now at a point where if I do not do something, which is either close the café or make more redundancies, I will continue to operate at a loss, and I cannot do that.

I will talk about the impact and share the numbers if our business were to close with the loss of 25 jobs. Mr. Cummins mentioned this in the greater scheme but ours is a little example. This is the retail side of the business but the numbers are similar to the café. The cost of redundancy would be €120,000. I will not be in a position to pay that. Revenue will have to pay that under the redundancy scheme. Some €245,000 will be spent on jobseeker’s payment for my 20 staff in one year. Some of my staff are older and will find it much more difficult to get another job. The cost will also include a €258,000 loss in income from VAT, a €25,000 loss on income tax from the employees, as well as €5,000 in USC, €30,000 in PRSI and €23,000 in corporation tax, which is the figure we had for last year. That is a total cost to the State of €700,000 for my one business closing, for the sake of probably €60,000 in increased costs. I do not have €60,000 sitting here because, over the past five years, I have cut every ounce of excess fat in my business. We have done everything we can. In fact, a year and a half ago we had to make some redundancies, which were horrendous to make. We only have a certain size pot from which to pay our team, so we have to pay fewer people more money rather than paying everyone. Our business is a little bit worse because we have fewer people involved in it and making it better.

James O'Connor (Cork East, Fianna Fail)
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I apologise for cutting across Ms Harrison. We will definitely come back to her. I am just conscious of the clock. We have gone five minutes over and we are on a rota. I thank her for her contribution. We will go now to Deputy Tony McCormack. I am conscious that Mr. Broderick is indicating to speak. I will come back to him in a moment.

Tony McCormack (Offaly, Fianna Fail)
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I thank our contributors. I have met all the groups individually previously. I understand exactly where they are coming from, as someone who used to own a restaurant, grew up in a retail store and had some retail experience and is now involved in business at a print and design company. I am involved peripherally but I started the company 23 years ago. I feel the witnesses’ pain and I understand. I will not ask many questions. Instead, I will speak in support of the work the witnesses are doing and about what is happening out there.

The 9% VAT rate is a must. It must happen in the next budget for retail and restaurants. When I say “retail”, I am talking about the delicatessen part of the sector. It has to happen. It is not a silver bullet and it will not sort out all the problems or issues the witnesses have, but it will help in cutting back some of the costs. We need to provide more supports for these businesses, whether that be the small and medium-sized enterprises, retail or the restaurants. The 9% VAT rate has to get across the line.

Commercial rates are not fit for purpose, as far as I am concerned. We need to have a look at that issue. Much of the blame is put on local authorities because they collect rates but it the system is run and organised from here, from the rates office. It sets the rate and then the local authorities have to collect it. The local authorities then use that income as part of their budget for all the services they provide in the local area. It needs to be taken away and a brought in in a new form.

We all saw the supports given to the business during the Covid pandemic. Businesses have been hit by a tsunami since then. They have had an increase in the minimum wage and increases in the cost of living and all the other costs such as energy and sick pay. While we all want to be able to look after our employees, we have to be realistic about the way this happened. It happened very fast when it should have on a slower trajectory.

New rules and regulations are needed on holiday pay in order to protect employers. I have spoken to many business owners. One man told me people should have been given holiday days instead. When I asked why he said that at least then he would know when staff were taking their days off. Now, people who would have been in work have a kind of a get-out-of-jail card and can get a sickness certificate from some fellow on the Internet, who could be anywhere in the country. People are not going to their own doctor, which makes the system hard to police properly.

Auto-enrolment is another cost to businesses coming down the tracks very shortly.

We need a change in legislation. We spoke about insurance. Last night on the floor of the Dáil, I raised the cost of insurance and the fact that the Government had put so much work into cutting insurance costs. As far as I can see, and based on what the witnesses have said, the insurance companies are engaged in price-gouging. They have a monopoly in the market because they are all using one or two insurers to cover insurance policies. They are making huge profits. Their accounts for the past year show they had 15% profits here, whereas the norm in other European countries is a profit of 5%. We need to get to the bottom of that. The Minister of State, Deputy Troy, and the Minister, Deputy Donohoe, are working together closely on that and much more work will be done in the near future.

Energy costs are a huge issue. They are probably one of the highest costs. Businesses are among the biggest users of energy, whether it is restaurants using fridges, cooking equipment, ovens and bains-marie, retail or whatever else. In the small firms, energy costs to run machinery are huge. We need to do something about that. Germany is looking at reducing costs or giving grants to companies to reduce energy costs by up to 50%. That would help hugely. When I raised it with the Minister during a discussion of the Estimates at the enterprise and tourism committee last week, he said he would have a look at it. We need to think outside the box and do something like that.

We need to bring life back into town centres. As I said a moment ago, commercial rates are not fit for purposes and not fit for the businesses in town centres. We all want to have a mix in town centres. While some of the units are full, and I will not criticise any particular business type in those units, we would like to see a better mix. As part of the programme for Government, we will bring in a grant that will bring life back into town centres by grant-aiding the conversion of units over shops. I grew up living over a shop. I played on the street. I know what it is like to have people living in town centres where they create their own footfall and their own lives. Businesses will survive or new ones will start up as a result of having more footfall in their areas.

Having listened to the witnesses and Ms Harrison's story of someone who is at the coalface the whole time, I applaud the witnesses for the work they do. It is not easy out there. It is not easy being an employer, paying the Revenue and facing up to paying all these bills every month to keep the door open. I know many of the members of the groups represented here are not making a profit. For reasons of pride, whether it is because they have a family business or want to look after their employees, many are taking a reduction in pay. In many cases, they are on the breadline as a result. I applaud the witnesses and the work they do. I will do everything I can, as my party's spokesperson on small and medium-sized enterprise and retail but also as a member of this committee, to make sure we address all the issues the witnesses have raised today.

Mr. David Broderick:

I thank the Deputy. It is not just us but it is people like Ms Harrison and Ms Magnier and everybody here who is running their businesses. It is good to hear that.

I will touch on two or three of the points raised. The Deputy mentioned auto-enrolment. I can tell him what is happening currently, and Mr. Cummins alluded to it earlier. There was a knock-on effect up the chain when the minimum wage was changed. Just last week, one of our members brought his staff in to talk about auto-enrolment and what it could potentially look like. Some were already in a scheme and some were not, so he was talking to people who were not in a scheme. The people who were in a scheme said that was fine but asked where the 1.5% increase in their wages was. I am flagging the probability that there will be more wage inflation. That is not to say that we are not supportive of auto-enrolment. We do have a pension issue.

We mentioned Revenue earlier. More common sense needs to come into play. Let us take as an example the enhanced reporting requirements and the small business exemption.

Instead of having a total of €1,500 when reporting on that, an element was put in whereby, after five payments, it was fully taxable. I do not know if people are familiar with the Easter egg example. If someone got a One4all card, an Easter egg and a bunch of flowers, he or she would be over the limit before long and fully taxable on that.

On Deputy Lawlor’s point about regulation, which crosses over, the Small Firms Association is cross-sectoral. Certain sectors, such as finance, technology and childcare - I am also responsible for Childhood Services Ireland - are highly regulated anyway. For a larger company to implement any regulation costs €1 per employee but for a small business, it is €10 per employee. That is something to remember when we are having this avalanche of regulation over time.

I do not know if there was anything more in particular the Cathaoirleach wanted to ask.

James O'Connor (Cork East, Fianna Fail)
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Unfortunately, time is restricted but I appreciate that. I remind members that we have 25 minutes more of allocated time. The next slot is Sinn Féin, which is available to Deputy Donnelly.

Paul Donnelly (Dublin West, Sinn Fein)
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I thank the witnesses for their presentation. I will not repeat some of the issues that have been gone through already. There are a couple of items of real interest I want to raise.

On the energy costs, I today got an email from Wind Energy Ireland that said there was a record amount of wind and solar energy for June, yet there is a 30% difference in what we and the witnesses pay compared with the rest of Europe. That has to be addressed, not only for businesses, but for everybody. When we are seeing such a shift to wind and solar and there has been such an uptake, why are we still paying 30% more? I am interested in the witnesses' thoughts on that.

On employee costs, I hear the witnesses on the increases and how difficult it is. On the other side, there are the employees and the people who work for the firms who are also experiencing a massive increase in the cost of living. When it comes to the cost of the food the witnesses are selling, that is food the employees are buying. The cost of childcare is increasing all the time. The cost of energy, which we just talked about, to heat employees' homes and pay for their electricity and gas is increasing massively.

Then there is the question of affordable rent. We have not really mentioned the cost of housing. The Dublin Chamber of Commerce mentioned it was one of the larger issues it faced in trying to get people to work. If people cannot come here to live and pay rent, then businesses will suffer and struggle. What are the witnesses' thoughts on how that impacts?

Theft and antisocial behaviour comprise a very complex issue. There are people who might have addiction issues who steal, there are people who steal because of the cost of living and then there are others who steal to order, to make money and to do whatever they want with that. I do not see a real process or examination of how we deal with this on an ongoing basis. I watched a programme recently on theft in retail - I think it was by RTÉ - and the real cost of theft. If someone breaks into a shop and steals €100 worth of something, there may be €1,000 of damage. We hear of the €100 that was taken but we do not hear of someone getting up at 3 a.m., getting a security company and an alarm company in, getting someone out to fix the window and all those different costs. That never seems to be factored into the consequences of all of that. What are the witnesses' thoughts on what we need to do? Do we need a report to look at the real costs of theft and shoplifting?

Then there are the consequences. Are the consequences at play now having an effect? Clearly, they are not but what do we need to do differently? My personal belief is that prison does not work for the vast majority of people. It is short term. For most of these offences, it will be very short term. Just this week, people in prison for very serious crimes are being released very early because of massive overcrowding in our prison system, so we have to look at something different. What could we do differently that might have an impact?

Ms Tara Buckley:

The Deputy is right about the additional costs of retail crime. For example, one of our members had the recycling bins outside his business set on fire by a gang of youths. The end bill was between €60,000 and €70,000 because the fire hit the vents going into his refrigerator system, so he not only had to replace his bins, but also his whole refrigeration system. It looks like it is a minor crime but it causes a huge cost. Our members take a lot of pride in the presentation of their stores and invest a lot in that. If someone smashes windows or internal cabinets or break things, there is a significant cost involved in putting those back and fixing them. We never get that cost back. We might go to court and we might win a case, but we never get that back. Even though it seems like it is a robbery of something worth €100, the cost to the business owner of managing it is usually thousands of euro.

A retail crime forum has been set up by the Department of justice. We are happy to take part in that and to explore any of the ideas. We have put some ideas on the table around fixed penalty notices for shoplifting and a simpler court system, like a night court, where someone would be in front of a local justice on the day the crime happened. The Deputy is right. A problem for our members is that someone may have been robbing the shop, the shop brings the person to court and wins, and that person is back in the shop the next day robbing again and laughing at the shop. We need to nip this in the bud. We would be very supportive of anything that can be done through that forum and this forum to try to address the issue.

Mr. Sean Collender:

On the staffing side of things, we have approximately 80 staff and, to be clear, we have no business without our staff. We value our staff and the contribution they make to the business and all our customers. The single biggest issue - the elephant in room - in the cost of doing business from a staffing perspective is finding staff acceptable, liveable accommodation or rents that are a reasonable percentage of their incomes. It is vastly out of kilter. That is a big issue that needs to be resolved. It is down to the respective Ministers to try to solve that problem as quickly as possible. The single biggest question we get from our staff when they are looking at wages is about how they are meant to live. I am asking the committee about how am I meant to operate my business. We fully understand the concerns our staff have in terms of looking after themselves, but it is about trying to create that balance. The cost of doing business for the business side has to be alleviated but, equally, the housing issue has to be resolved and fast.

James O'Connor (Cork East, Fianna Fail)
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As we are running out of time, we will have to cut speaking times down per member to five minutes. I do not believe we will reach the last speaker or two but we will keep going as quickly as we can. Deputy Clendennen from Fine Gael is next.

John Clendennen (Offaly, Fine Gael)
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I will speak quickly. I thank the witnesses for coming in. I wholeheartedly support their efforts on retail defamation.

It goes far beyond the cost of €100 of a wheelie bin. It is the stress and strain of people who have invested over many years, decades and generations in livelihoods. They are social pillars and economic pillars in their local communities. We cannot go far enough. There should be a zero-tolerance policy. There is no reason someone should be able to go into a shop, trash it, shoplift, etc. I am firmly with the witnesses on that.

I have been an advocate for supports for this industry for some time. If we introduce measures in the next budget or beyond, will they be passed on to the consumer? I put that to anyone who wants to answer. We will try to keep it quick if we can.

Mr. Adrian Cummins:

I will take that. It is the 9% VAT rate the Deputy is referring to.

John Clendennen (Offaly, Fine Gael)
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Yes.

Mr. Adrian Cummins:

It is a matter for each business as to whether to pass it on.

The last time there was a VAT reduction was in 2011, and those were different times, with different costs associated with businesses. We have never seen the level of cost increase we are being impacted by now, whether those are input costs, direct charges on electricity or insurance, or all of the other aspects we are laying out today.

John Clendennen (Offaly, Fine Gael)
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Regarding the churn rate, we often hear of 500 restaurants being lost last year, the cost to the Exchequer and so on. That is the exit side of things. What is on the entry side of things?

Mr. Adrian Cummins:

Looking at last year and this year in terms of the churn rate, more food-led businesses closed in the last two years than opened. The style of business is changing, which means labour is being taken out of the business model. We are seeing fewer businesses focused on sit-ins and set-downs and more going into take-away, which is less labour intensive. Take-aways are the businesses opening. It is a different style of hospitality. Now, this is not going to be the case in every part of the country, but it is what we are seeing in regard to the type of new businesses coming into the industry.

John Clendennen (Offaly, Fine Gael)
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Ms Magnier raised concerns about access to finance and the 62% that comes through the pillar banks. What are some of the reasons the pillar banks are refusing access to finance? I also have a concern about the increasing figure in relation to family contributions to finance. How does that work?

Mr. David Broderick:

I might take this question. The Deputy's question was on why the banks were refusing-----

John Clendennen (Offaly, Fine Gael)
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It was mentioned that 62% of finance came through the pillar banks. What would the percentage refusal rate be?

Mr. David Broderick:

Of those taking finance, which was the point of the survey-----

John Clendennen (Offaly, Fine Gael)
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I would imagine they are going to the pillar banks first.

Mr. David Broderick:

Not necessarily. We had a discussion on this aspect previously and on why it might be. It is not the pillar banks but the entrepreneurs, to be perfectly honest with the Deputy. There was so much regulation. As we have heard from many of the speakers here, they have become the chief bottle washers, the heads of sales, etc. I would imagine when they went to go see the banks, they were not as investment-ready as the banks would have needed. That is simply the way things have gone. It went down the agenda. As we have heard, it is now about keeping the doors open and the lights on. Where those businesses looking to invest are concerned, we have heard - I am getting this information through the likes of our mentor work programme that we run in partnership with Skillnet-----

John Clendennen (Offaly, Fine Gael)
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Has the banks' appetite for risk reduced?

Mr. David Broderick:

That is not a question for me. I see Ms Harrison here.

John Clendennen (Offaly, Fine Gael)
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Is a sense of frustration feeding back from the sector?

Mr. David Broderick:

I would more say that, when businesses are going in to see the banks, what we are hearing is that they are not ready to go for those particular applications. The tick on the application form that asks if credit has been refused in the last six months is a consideration for those entrepreneurs going looking for things.

John Clendennen (Offaly, Fine Gael)
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Is there much activity in the angel investment space?

Mr. David Broderick:

There was, although I believe it is down. It was up last year, but the results were down when we did our survey. The Deputy brought up a very good point in terms of making this aspect more attractive, and this is some of the information we put in our pre-budget submission. There is plenty of money out there in personal savings and among investors who have left and bought out of businesses. In our pre-budget submission, which does-----

John Clendennen (Offaly, Fine Gael)
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I have one more question. There has been a request by certain sectors in relation to tax amnesties since Covid, where there was warehousing of debt, etc. Would Mr. Broderick have any concerns about something similar happening where family financial arrangements are being called on?

Mr. David Broderick:

Would I have concerns about what?

John Clendennen (Offaly, Fine Gael)
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Would Mr. Broderick be concerned about a similar situation occurring in this context? How formalised are these family arrangements?

Mr. David Broderick:

I would have concern regarding that issue and it is something I have spoken about several times. If the money is coming from family and friends, look at the social discourse this could cause. Let us consider a situation where I have loaned my brother, sister, mother or uncle €20,000, €40,000 or €50,000 and I now need to go and try to get that money back. Unfortunately, if I, as the hard-pressed business owner in that scenario, now have to close my doors - as we have seen from all the statistics - consider the social impact that will have. A good point was made earlier - I am not sure who made it - about the mental health of those business owners who were struggling. Not only are they going to lose their businesses that they worked for and lose their staff by having to let them go, but they are also going to let down family members with €5,000, €10,000, €20,000 or whatever amount of money. A sum of €5,000 is still a lot of money. Let us imagine it was €100,000 or €150,000. I would, therefore, have major concerns about this issue.

John Clendennen (Offaly, Fine Gael)
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I thank the Cathaoirleach.

James O'Connor (Cork East, Fianna Fail)
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I thank Deputy Clendennen for his brevity. I call Deputy Eoin Hayes.

Eoin Hayes (Dublin Bay South, Social Democrats)
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I thank all the witnesses for attending. I really appreciate their time. I know it takes a lot of time to prepare for these things and get all the materials together. I am a former small business owner myself and I have advised small businesses, so I have a decent understanding of different things. This meeting, though, is an education for me as well. I am not as familiar with the restaurant sector, for example, so this is very helpful.

I am concerned about what is happening in the indigenous economy for small businesses. It is important to say to the small business owners that I am sorry for how difficult it is right now. I think the country is failing them. When we look at how we are thinking about the wider economy and the cost of living, which is something that every consumer and individual experiences, we often do not talk about the cost of living in businesses and for business owners as well, but it is part and parcel of the same thing. Importantly, I acknowledge the core role small businesses play in our economy, not just in terms of employment, but also in terms of community services and social need and the important taxes paid that fund 30% to 40% of everything that happens in our local authorities, as I remind my constituents when they talk to me about local property taxes.

More generally, I raised this issue of the indigenous economy with the Minister last week and how there are significant weaknesses here that we need to address, including things like the fall-off in tourist numbers, the increase in liquidations and the increase in redundancies. All of this then factors into demand for the businesses the groups here represent, the customers that come through their doors and the money they have.

I am going to make a very brief pitch with some of the time I have. Sometimes, people look at me and Deputy George Lawlor - people in left-wing parties - and they wonder what we are doing in left-wing parties as business owners. I will just say there is a social democratic model that allows private enterprise to thrive. If we pursue some of these policies, we will get reductions. We will get a VAT reduction, insurance and energy costs coming down and demand going up. Commercial rates would perhaps be more focused on larger, multinational businesses rather than the smaller businesses. There would also be investment in youth diversion programmes, access to justice, drugs programmes and community gardaí. Rents and mortgages would also be cheaper. I think these policies can have a big impact on how small businesses thrive.

More specifically, I will ask a few questions with my remaining time. First, I am not as familiar with the margins as a percentage in some of these different sectors. I would just like to get a sense of what these figures might look like from the perspectives of the Restaurants Association of Ireland and the Retail Grocery Dairy and Allied Traders Association and what kinds of margin they are dealing with.

Second, on demand, if the witnesses could speak to any footfall changes they have seen in the last few years, how this has influenced the average spending per customer and how this might have changed over the last little while, it would be helpful for me to understand the situation.

Third, on owned versus rented properties, we talked a little about the retailers. Multigenerational businesses often own their properties outright. I am not as familiar with whether this is common in the restaurant sector or if the properties are mostly rented. This might change a little bit, too, depending on whether people are in Dublin or outside it. I believe it is also different in the small business sector by the breadth of businesses concerned.

Fourth, the Social Democrats are very much in favour of a 9% VAT rate, for restaurants in particular. It was a commitment I wanted to see implemented as soon as the Government was formed. Obviously, we are still waiting for it. A business owner I spoke to last week said he thought the VAT rate was going to come in on 1 October, but it is 1 January in the budget, so that is disappointing.

Fifth, in terms of restaurant operating expenses, what is the breakdown of these in terms of the percentage of labour, the percentage of ingredients and the percentage of rent or mortgage costs, just so I can get some idea of that balance?

Turning to the retailers, I would like them to tell me a little about the buying groups people are engaging in. I refer to the pressures on supplies and ingredients, the acquisition of goods and how the costs may have gone up. Those questions are for the members of RGDATA.

James O'Connor (Cork East, Fianna Fail)
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I am sorry to cut across the Deputy, but I am conscious of the time. He has less than a minute for the witnesses to answer his questions.

Eoin Hayes (Dublin Bay South, Social Democrats)
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Okay. I will ask just one final question. To the witnesses from the SFA, there is an issue around not just access to finance, which we talked about a little, but also over-financial engineering, where some small businesses that have made their way into the newspapers might have taken on too much debt and made too many bets, putting what are otherwise profitable businesses into examinership.

What is the financial advice available to those members and how might they navigate that better?

Mr. David Broderick:

We will go to the topic of restaurants first given there was-----

Mr. Sean Collender:

I will speak about the margins for the restaurant side of things. We are going 25 years. Traditionally, the restaurant sector in general has been looking for between 5% and 10% of a profit margin. That has totally gone out the window over the past number of years. Many are flat-lining at 0%. Some of the others might be around 3%. Some people are carrying losses and trying to find a way out of where they are at. When I spoke earlier about the different cost sectors in terms of our labour rates, I said that our restaurants have unsustainable wage-to-turnover rates of 41%, 39% and 50%. Traditionally, they should be around 33%. We have increased our prices. These are net prices after VAT. Those types of percentage rates are damaging to my business. I also spoke about the need to look after our staff. It is a double-edged sword. We are trying to look after our staff with the rent pressures they are encountering. The Government has imposed a multifaceted number of increases on us in the past four years in too short a space of time. Those increases are having a detrimental impact.

Mr. Cummins spoke about the list of input costs in terms of food. We are seeing those dramatically rise. My businesses look after locals. My real concern is how far we can go. We are trying to absorb as much as we can. Where is that danger point where we start to lose our customer base? I am concerned about that. Where is that margin? We need the Government to step in here to look not at short-term supports but at long-term viable supports so that I can run my business without one-off supports. I want to run my business viably. They are some of the basic things.

Ollie Crowe (Fianna Fail)
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I thank the witnesses for attending. It is very much appreciated. When restaurants close down in small towns and villages, naturally it is not just the loss of the business, which is bad enough, but it is also the loss of the venue for people to come together to celebrate. It is a loss of resource for the community. Once they close down, they rarely reopen. Last year, the rate of closures in the sector was especially bad. It was averaging at two restaurants per day. Has that trend continued over the first half of the year? How many have opened over the same period of time?

Ms Magnier's opening statement referenced survey findings that reflect how difficult it is for small firms to access finance, with almost half of those surveyed saying that there are barriers. Did the survey unearth more information on this or would the Small Firms Association generally have more information on it? Is it as simple as an unwillingness from the banks to lend to small businesses without a long track record? Does this tend to be an issue in every country or is it especially challenging for small firms in Ireland?

Ms Buckley's opening statement mentioned the impact that retail crime has had and the implications of this. It has come up a lot in recent times. I saw a statistic recently that such crime is costing Irish businesses approximately €1.6 billion per year. The programme for Government contained a commitment to develop a retail crime strategy. That should address retail defamation as Ms Buckley's opening statement pointed out. Can the witnesses expand on that?

Mr. Adrian Cummins:

The number of closures has slowed down compared to last year. In 2024, we saw 120 closures in January. This year, there were 53 closures in the same month. Therefore, the level of closures has slowed down. When we look at the level of openings, we see that we have more closing than opening. Predominantly, when there is a closure in a rural area, we are not seeing somebody taking that unit as quickly as would be the case in Dublin. Dublin will see openings at a faster pace than rural Ireland. It is down to footfall and tourist numbers. More tourists come into Dublin than into the rest of the country. It will be easier for a business to restart in a vacant unit in Dublin because of the footfall, the population, etc. When we look at a closure - Ms Harrison broke this down - we see that approximately €1.3 million is lost to the Exchequer when a restaurant closes down, based on the loss of the VAT, the unemployment costs, the loss of commercial rates and all the other taxes of top of that. It costs €1.3 million every time a business closes down. In 2024, nearly €550 million was lost to the Exchequer due to businesses in our sector closing in that year alone.

Ms Geraldine Magnier:

I will quickly respond to some of the items that have come up. We are largely talking today about restaurants and goods, but we also have a huge economy in the associated services. Some 91% of businesses in Ireland are microbusinesses. Many of them are solopreneurs. I nod to and appreciate the social cohesion that Deputy Hayes referred to. I am a proponent of that and the intangible asset that they bring. On the other hand - this is an important point because Deputy Donnelly spoke about housing being an issue - many service businesses are now able to employ from abroad and have people work remotely because there is a housing crisis.

A blunt instrument is used when it comes to measuring rates. Many businesses are not able to receive any bit of rate help or measurement. If they are serviced offices, particularly in urban areas more than in rural areas, there can often be a landlord who has a landlord who has a landlord. It can be hard to measure the cost of what the rates are outside of a business.

Examinership, which has come up here today, is not an easy route. It costs €40,000 to €50,000 to go down the road of examinership. Sometimes a business is going down the swanny because of a lower cost than the examinership one. Ms Harrison illustrated that point earlier. She said that if she could have €60,000, she would save the Exchequer €750,000. Examinership is not an option. Let us look into the figures of examinership. Many of our members have asked us to advise them on it. We have said that the take-up on examinership is low, arduous and administrative and it may not be worth their while.

The minimum wage comes up a lot, particularly when we talk to the hospitality sector. In this country, we have indigenous tech companies that are not suffering through minimum wage attention, but are suffering through maximum wage takers. In services like technology, we are in a country where there is often a lot of brilliant indigenous and FDI companies. However, it is more often the FDI companies that are setting the wage. Indigenous tech people are absorbing that as maximum wage takers.

Another issue that was asked about earlier was investment and angel investors. That is onerous as well. Very often angel investors can come in on business owners too much. It is not a viable option in the operations of a business. When we look further into other types of investment, such as private equity or venture capital, even though Enterprise Ireland is the biggest venture capital investor not just in Ireland but in Europe when it comes to businesses, unfortunately many of our businesses are not falling under the caption of Enterprise Ireland's remit. There are many businesses that I call "stay-up businesses". They are the family businesses. They are not start-up businesses and they are not scale-up businesses, but they are importantly running the social cohesion of this country night and day and subsidising it by not always taking their own minimum wage.

I have to speak anecdotally on the banks because I do not have my figures with me. There are more details on that. We can be non-committal about it, but the banks are showing resistance rather than unwillingness. That resistance is measured over time delays rather than quick decisions where we need fast turnaround. On that, banks are not always friendly towards owners looking for a mortgage, never mind cash flow. We have to look at the risk analysis that is set out for indigenous business or small business differently from others looking for loans.

James O'Connor (Cork East, Fianna Fail)
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I wish to express my sincere appreciation to the witnesses from the organisations for their contributions.

I am aware it takes a long time to prepare for these meetings. The members of the committee appreciate the witnesses' time. We had a strong participation in the meeting, so much so that some members were not able to make their first contribution as we have constraints on the room. This is where our meeting must now end. I express my gratitude on behalf of the members for the witnesses' time. I thank the witnesses for their contributions to the meeting. They will be useful when we come to consider our draft report.