Oireachtas Joint and Select Committees
Wednesday, 22 October 2025
Joint Oireachtas Committee on Enterprise, Tourism and Employment
Competitiveness and the Cost of Doing Business in Ireland: Discussion (Resumed)
2:00 am
James O'Connor (Cork East, Fianna Fail)
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You are all very welcome to our public meeting. Before we proceed I have a few housekeeping matters to go through. I wish to explain some limitations of parliamentary privilege and the practice of the House as regards reference witnesses may make to other persons in their evidence.
Witnesses within the parliamentary precincts are protected by absolute privilege in respect of the presentation they make to the committee. This means they have absolute defence against any defamation action for anything they say at the meeting. However, witnesses are expected not to abuse this privilege and it is my duty as Chair to ensure that this privilege is not abused. Therefore, if their 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.
I advise members of the constitutional requirement that members must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate where 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 they are on the grounds of the Leinster House campus.
Members and witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way 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 their statements are potentially defamatory in relation to the identifiable person or entity, they will be directed to discontinue their remarks. Again, it is imperative that they comply with any such direction.
I propose that the minutes of the following meetings be approved: 8 October 2025; 15 October 2025; and 16 October 2025; and the revised minutes from 16 July 2025 and 24 September 2025. Are the minutes agreed? Agreed.
Today's discussion will be on competitiveness and 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 fifth meeting on this topic and we look forward to hearing from many stakeholders from various sectors of our economy, and many we already have. I propose that we publish the opening statements and submissions provided by the witnesses on the committee's website. Is that agreed? Agreed.
In relation to speaking arrangements, I suggest that we invite our witnesses to speak for approximately five to ten minutes and that we allow members to ask questions or make comments for around seven minutes. We may have a second round of questioning if time permits.
I am delighted to welcome the representatives from the Alliance for Insurance Reform: Mr. Brian Hanley, chief executive officer, and Mr. Vincent Jennings, chairperson. We are also joined by the following witnesses from Retail Excellence Ireland: Ms Jean McCabe, chief executive officer; Mr. Enrico De Luca, director of Maxi Zoo; and Ms Aoife McBride, director of MacBees. You are all very welcome to today's meeting.
I now invite Mr. Hanley to make his opening statement.
Mr. Brian Hanley:
I thank the Cathaoirleach, Deputies and Senators for the invitation to attend the committee. The Alliance for Insurance Reform brings together 48 civic and business organisations across Ireland to highlight the negative impact of persistently high liability insurance premiums. Collectively, our members represent over 55,000 organisations, 700,000 employees, in excess of 600,000 volunteers and 300,000 students. Recent reforms have delivered benefits, with award levels reduced, claims volumes down and greater transparency introduced. These are important achievements. However, premiums have not come down as they should in response to these changes. In fact, they continue to increase for most businesses. This trend undermines competitiveness and adds to the cost of doing business.
The previous action plan for insurance reform, which ran from 2020 to 2024, delivered a substantial package of reforms, from the introduction of the personal injury guidelines to amendments to occupiers' liability around the duty of care. These measures were presented by insurers as the necessary precursors to a lowering of insurance premiums, but the evidence shows they have not been lowered. According to the Injuries Resolution Board, claims volumes fell by 40% between 2019 and 2023. Median awards are down by around a third. Despite this, the Central Bank of Ireland 2023 report on liability shows premiums increased by 17% between 2020 and 2023. Insurers reported a profit margin of 13% in 2023 alone and this is more than double international norms. Our own survey of 775 organisations this year found 74% faced premium increases in the last two years, whereas only 14% saw reductions; 20% had only one insurer willing to cover them; almost three quarters reported higher excesses or new exclusions, which essentially dilutes the cover despite the fact they are now paying more for it; and 90% said they had not benefited from the reforms to date.
The lived experience is stark. A midlands watersports activity centre is paying liability premiums equivalent to about one tenth of turnover despite having no claims. It essentially has a premium 40% above British and European averages. A small seasonal hotel in Donegal faced a 43% rise over two years. A restaurant in the south east is trying to absorb a 23% increase despite zero claims and stable turnover. Sectoral data point the same way. A recent poll of its members by the Association of Visitor Experiences and Attractions found average liability premiums had risen by about 12% per year for the last two years. Case after case shows small businesses paying more for less cover despite safer practices and fewer claims. These costs are damaging competitiveness, investment and services across the country. The gap between reform and reality must now be closed.
On the key issues we see as driving these costs, we need to look at the personal injury guidelines. The guidelines were designed to ensure consistency and bring awards more into line with those of other countries, which they have clearly helped to do. However, as we have seen this year, the process for reviewing them is flawed. We support recommendations to amend the Judicial Council Act 2019 to extend the review cycle, introduce international benchmarking and mandate proper consultation with the Injuries Resolution Board. We also believe amendments are required to afford greater legislative discretion to amend or reject recommendations and that the Oireachtas finance committee should be required to consider any future recommendations before the Government makes a decision.
Looking then to competition, the liability insurance market has seen no new entrants in over a decade. Too many businesses report being effectively captive to one or two underwriters. The Office to Promote Competition in the Insurance Market must be properly and additionally resourced, given KPIs and have a published strategy. The Competition and Consumer Protection Commission should review barriers to entry and the impact of broker consolidation. Without real competition, premiums will not come down.
We need faster and fuller publication of national claims information reports. This should take place within 12 months of year-end. Fortunately, there is some progress being made on this particular issue. Additional information is also required regarding insurer practices when it comes to reserving, reinsurance and remittances. The proposed transparency code in the new action plan for insurance reform should apply to liability as well as motor and must be independently validated given the ongoing concerns about insurers’ role in its design.
Some two thirds of liability claims are still settled through litigation, even though the average awards for claimants are broadly the same whether they settle at the Injuries Resolution Board or through the courts. The only major difference is cost. Average legal fees are under €1,000 for cases settled at the injuries board, but average over €23,000 when settled in litigation. These often unnecessary costs add years of delay and tens of thousands of euro to the final bill, which is ultimately borne by businesses and voluntary groups across the country. We want to see a far greater number of cases settled at the injuries board and fee scales introduced to control legal costs. Transforming the board into a decision-making body, similar to the Residential Tenancies Board, for example, should be examined.
Despite a 40% fall in overall claim volumes, businesses with strong safety records are not being rewarded through lower premiums. The absence of meaningful risk-based pricing undermines incentives for continued investment in health and safety measures and represents a direct disincentive to proactive risk management.
In conclusion, Irish businesses continue to experience unaffordable and unjustifiable insurance costs despite the wide-ranging reforms delivered under the previous action plan. Evidence from the injuries board, the Central Bank and the alliance’s survey shows claim volumes and award levels are falling, but premiums continue to increase for most businesses. Excessive insurance costs are not just an overhead but a brake on competitiveness, recruitment, and investment. By supporting targeted, cost-of-doing-business-focused measures in competition, claims resolution, transparency and legal reform, the committee can ensure the action plan for insurance reform translates into real, measurable reductions in premiums and improved access to cover. I thank members and look forward to their questions.
James O'Connor (Cork East, Fianna Fail)
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I thank Mr. Hanley and appreciate his contribution to the committee. I call Ms McCabe, chief executive officer of Retail Excellence Ireland, to make her opening statement.
Ms Jean McCabe:
I thank the Cathaoirleach and members for the opportunity to address them on the critical issue of escalating business costs in Ireland. As CEO of Retail Excellence Ireland I wear two hats: one as a small business owner and one in the seat that I sit in today. We represent the largest forum of retailers in the country, ranging from independent stores to large multiples. Ms McBride is from MacBees Boutique, which is a family-run business in Killarney operating for 40 years. Mr. De Luca is managing director of Maxi Zoo Ireland’s 32 stores.
I acknowledge the contribution of other representative groups who have appeared before this committee in recent weeks and highlighted critical infrastructure deficits as well as energy and housing, which are issues essential to Ireland’s competitiveness. We agree they are critical but rather than revisit well-covered ground I am focusing on what is immediately determining survival for our members, that is, labour costs and the cumulative burden of mandated increases that are pushing once-viable businesses to insolvency. In the next nine minutes I will explain why 200 retail businesses failed last year, why January's minimum wage increase will accelerate closures and what needs to be done.
The numbers tell a stark story. There were 200 retail insolvencies in 2024. This was a quarter of all insolvencies, the highest of any sector. There were some 17,000 fewer jobs in wholesale and retail in the last year. We estimate each closure costs the State €6.2 million annually in lost economic activity and every week four more businesses close their doors with the loss of an average of 80 jobs, which is €25 million in revenue gone.
Retail is central to Ireland's economy. There are 326,600 people directly employed, which is 12% of national employment We contribute €8.4 billion in VAT and €2.7 billion in corporation tax. Retail is present in every small town, city and village in the country, with three out of four jobs in retail being outside Dublin. When I speak about retail, it is important to note 98% of businesses in retail are SMEs. That is what we are talking about here. We are talking about the small micro stores that employ fewer than ten people. It is the small guy who is suffering the most.
When hospitality faced cost pressures, the Government responded with VAT relief in budget 2026. It was a welcome respite, but retail faces identical labour and utility cost pressures plus fierce online competition on a playing field that is not level. However, retail SMEs like my business, Ms McBride's and Mr. De Luca's received no respite in the budget. Let us fast-forward to January and the proposed minimum wage increase to €14.50 an hour, topped with pension auto-enrolment.
Retail is left to shoulder this alone, with no respite.
Before I move on, I want to be very clear that retailers want to look after their people. We know how important they are to what we do. They are core to our business. The Government's mission may be to introduce a living wage, which is commendable, but it has mandated a 44% increase in minimum wage costs in six years in a sector with some of the lowest margins and highest cost pressures, and we have shoulder it alone. That has always been our case in point. To move towards this is commendable, but it has to be offset elsewhere because the camel's back is about to break.
There is also a fundamental problem in the methodology to calculate the living wage. I do not think anybody wants to acknowledge that Ireland has two completely separate economies, and we are using one to set wages for the other. In simple terms, Google salaries in Dublin are determining minimum wages for shop workers in Donegal. That is essentially the economy we are in. Let me explain. Ireland's workforce is split, with roughly 50% working in large multinationals or the public sector and the other 50% working in domestic SMEs like my own business. The wage gap between these two economies is staggering. ICT workers earn on average about €35 per hour. Retail workers are looking at €15.75 per hour. That is a 115% gap. ICT workers are on double the rate of pay of those in retail. Here is the flaw: the EU formula sets the living wage at 60% of the median, but Ireland's median is grossly distorted by our unique economy. No other EU country has this concentration of high-wage multinationals. Ireland has double the EU average of people employed in ICT or pharmaceuticals. When calculating the national median, it is completely skewed. The calculation includes ICT workers earning €35 an hour, financial services employees earning €25 per hour, public sector workers earning nearly €26 an hour. That is used as an inflated median to set minimum wages for retail workers. This makes no economic sense.
The Government's own report from the Department of enterprise on the cumulative cost of doing business in 2024 identifies retail as one of the most impacted sectors. The report acknowledges retail is "labour-intensive, relatively low-wage sectors typically characterised by low margins" and important for employment, "particularly in rural areas." Yet again, hospitality received relief in budget 2026 but there was still no respite for retail.
There is another area that has been a big challenge for our members in trying to manage wage costs. Wage costs are the biggest cost for any business. Unlike any other sector, retail and hospitality employ more people on the minimum wage than any other, so it disproportionately affects us more than others. This is an area that is extremely difficult for our members to manage. I want to reiterate that we are all about paying people fairly, but let us look at the numbers. From 2020 to 2026, the minimum wage went up 44%. During the same period, consumer prices went up 20%, meaning minimum wage inflation has been double the cost-of-living increase. Ireland has the second highest minimum wage in the EU. Over the last four years, it has seen a 34% increase with no offset. That is the point here. There has been nothing to counterweigh the cost that has been imposed on businesses. However, here is what is really destroying businesses from within. The minimum wage of €14.15 versus retail's current median of €15.75 means only €1.60 separates an entry-level employee from experienced staff. That is the knock-on effect on a businesses payroll that has been the extreme challenge for so many of our members. How do we reward loyalty and experience? How do we promote talent with increased responsibilities? How do we maintain management structures when supervisors earn barely more than new hires? This is what we call the spillover effect. When the minimum wage was increased 12.4% in 2024, the average increase across the teams was 8%. This spillover effect has been equally challenging to afford and manage and the true cost of the minimum wage increase far exceeds the headline figures we see today.
We have created the perfect storm. We have wage increases on top of some of the most expensive energy costs in the EU for businesses at 63% above the EU average. We sit at seventh highest in the EU for VAT rates at 23%. We have already heard the story of where we sit with insurance costs for business. If we look at commercial rates, retail businesses shoulder the burden of commercial rates while Amazon, Temu and Shein are allowed to sell in and out of our jurisdiction freely versus the rest of us.
The message I want to send is that we want to work with the Government, but we cannot solve the cost-of-living crisis, driven by housing and energy, by raising minimum wages beyond business capacity. It creates a destructive cycle. Higher wages force price increases or closures, reducing employment, ultimately harming the workers we are trying to help. In a report, the ERSI stated that increasing the minimum wage would be a "blunt instrument" and not the tool to be used to help people out of poverty. It also has a report highlighting that most minimum wage workers are coming from high-income households, so it is not getting where we need it to get to in order to help those who need it the most.
I will leave members with a final message. This is about Ireland's future. When retail closes, communities lose their heartbeat. For the elderly person who walks to the local shop daily, it is not just commerce, it is community. Every closed shopfront is a lost meeting place, a lost first job, a lost local identity. Most critically, retail is where Ireland's young people learn to work. It is where students get their first job and where they learn customer service, responsibility, work ethic and skills no classroom can teach. Members will know this from their own experiences of a first job in a shop, a restaurant, a local business. That is where they learned to work. That is where they learned to show up and learned their love of people. If we lose retail, we lose those pathways and we lose Ireland's future. As businesses cut hours to manage impossible costs, these opportunities disappear. The members' constituents will soon tell them that their little Sinead or Seán cannot find a part-time summer job. Imagine Ireland's competitiveness with an educated workforce that never had the opportunity to learn the fundamentals of work itself. We are not asking to abandon fair wages. We are asking for policy grounded in reality, not formulas where Google salaries determine retail worker wages. Ireland is fundamentally different from other EU economies. Our wage policy must reflect this reality or we will continue losing retail jobs to an unworkable formula designed for countries that do not look like us. At stake is whether Ireland remains a country for real communities and opportunities or becomes a cautionary tale of how flawed policy destroyed the pathways that could build our future and the communities that sustain us.
I am open to members' questions.
James O'Connor (Cork East, Fianna Fail)
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I thank Ms McCabe for her contribution. We are going to move on to the next section, which allows members to speak. Senator Linda Nelson Murray is our first speaker.
Linda Nelson Murray (Fine Gael)
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I thank the witnesses for coming in. It is great to see them here again.
Turning first to the Alliance for Insurance Reform, this morning I quickly printed the action plan on insurance reform, which was produced in the summer of this year. It was the most submissions we have ever had, such is the need for action when it comes to insurance costs, fair insurance and competition in the market. There are 26 actions in the action plan, described in detail, all going from the final quarter of 2025 and up to quarter 1 of 2027. In Mr. Hanley's opinion, what is the most important point in that action plan to get done now? I know it is all important, but what would Mr. Hanley want to see happening?
Mr. Brian Hanley:
I thank the Senator for her question. There are a number of key areas that need to be addressed and the first is competition. There are some good ideas within the action plan about how they can increase the level of competition in the liability market, which has suffered from an absence of it for a number of years. For a time, we saw competition increase around motor insurance and that put some downward pressure on premiums but we have not seen that in liability cover. My sense is that the office promoting competition needs to be additionally resourced because, without additional resources, it is hard to see how it is going to get the priority status it needs, given that there are so many competing demands on officials' time.
That would be very welcome.
On the personal injury guidelines and addressing the legislation there, we saw earlier in the year some challenges about a proposed 17% increase in the cost of awards despite awards still being significantly higher here than in other countries. It was welcome, obviously, that the Government decided not to put forward that increase. However, there is an opportunity now - it is contained in the action plan - to look at international benchmarking and to have a greater role for the injury resolution board in providing data, etc., because it deals with cases in the thousands. Extending the review period from three years to seven years would be advantageous because three years is quite a short cycle, and even for insurers in terms of predictability and stability around their financial forecasting, there is obvious benefit to that too. We need international benchmarking. It is right and proper that awards for people are fair to claimants who have been injured through the negligence of someone else but they also have to be fair and reasonable to policyholders who are paying those premiums. It is important that any amendments that are due to be considered, as I understand it, later this year reflect on those principles.
There is one last point I would like to make. Members have already done so much to deliver changes. All those things are needed but we do not need to wait a day longer for premiums to come down. Maintaining members' interest is why opportunities like this are so important, as is speaking out in both Houses about the issue. The volume of claims is down by 40%, awards are down by 30%, profits for insurers in the liability space are almost two-and-a-half times the international norms and yet premiums are still going up. There is more than enough space there for premiums to come down in a meaningful and sustained way. Absolutely, let us look at these other areas that will benefit the system significantly but do not let it be a case that the members are all told that premiums will not come down until or unless we see legal costs and some such addressed. We just need to be mindful of that as well. More than enough has happened.
Linda Nelson Murray (Fine Gael)
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Mr. Hanley mentioned competition. We know we have not seen any new public liability insurers in the market in over ten years. He mentioned the personal injury guidelines, which we need to get from three years up to seven years, and we all worked together to make sure that they did not increase by 17% this year. That was incredible and was great to see happen.
Mr. Hanley did not mention legal fees. I attended the Injuries Resolution Board strategy launch last week in a packed room in Buswells. The Minister of State, Deputy Troy, and the Minister, Deputy Peter Burke, were there and they seemed to be on the same page. It was great to see the extra functions that the Injuries Resolution Board was going to have.
When Mr. Hanley talks about premiums coming down, am I correct that we are still seeing that more cases are being put through litigation than the Injuries Resolution Board and looking at fees of €23,000 to €24,000 on average compared to €1,000 going through the board?
Linda Nelson Murray (Fine Gael)
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Can Mr. Hanley explain what happens in Northern Ireland with legal fees? Are they capped?
Mr. Brian Hanley:
I could not say for definite about Northern Ireland. However, the Senator will see in the alliance's submissions to the action plan - I think it is referenced in the action plan as well - that the idea of caps that we have in the District Court at the moment for certain types of case would be applied at Circuit Court level to bring that greater predictability and stability. That is needed because it is not uncommon for legal costs to exceed the awards that people are getting, and that has to be a huge concern.
Despite all the reforms of the injuries board, the number of cases going into litigation in recent years is a concern. Do not get me wrong, as they have slightly increased at the injuries board, but the number going to litigation has also increased. A priority has to be examining how we can attract and retain the resolution of more cases at the injuries board by looking, for example, at a model wherein the injuries board becomes a decision-making body, like the Residential Tenancies Board, RTB, where the decisions would have to be made, save in certain circumstances. That would reduce the flow. In the event that they have to go to the Circuit Court or some such, we know caps that have proven effective in the District Court work and they should certainly be considered there as well.
Linda Nelson Murray (Fine Gael)
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I could be wrong but I think there is a cap in a court in Northern Ireland of £5,000 on a personal injury claim for smaller injuries. I would say there are three priorities: competition, personal injury guidelines and legal fees. I thank Mr. Hanley.
I have questions for Ms McCabe as well but I am out of time. I hope I will get a chance to come back in.
James O'Connor (Cork East, Fianna Fail)
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We will have time for a second round, so do not worry. The next slot is Fianna Fáil's. We are joined by Deputy Albert Dolan, who is our next speaker.
Albert Dolan (Galway East, Fianna Fail)
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The witnesses are all very welcome here today.
It has been an interesting dynamic to watch over the last few years and see how retail has been adapting. It has been adapting successfully in some cases and struggling in others, particularly in small county towns. Ms McCabe put it eloquently, in that small businesses are the heartbeat of our towns. They are the ones that support our GAA clubs. They are the ones that provide the summer jobs. They are the ones that give people that real-life experience.
My personal opinion on it is that it is becoming more difficult to be in the retail space when you are competing with transactional organisations that will have something delivered to your door the next day but I believe that there is an opportunity in that for retail as well. The reason I go into my town to buy clothes or whatever is because of the experience. I get an incredible service and a fantastic experience. That is the key differentiator. Every town that wants to succeed has to focus on the experience that it is going to provide to customers when they set foot in that town but that experience has to come from the local authority, not only inside the shop door. It has to be a case that if I land into a town, I have to be met with services that reflect the rates that ratepayers are paying. I hear it when I am around canvassing. I meet all the businesses. I come from a business background - I am an accountant myself. I am listening and what they are all asking is what are they getting for the couple of thousand euros they are paying in rates. The footpaths are cracked and falling apart, which leads to probably more insurance claims. How can a business put its best foot forward when the local government is not meeting it halfway? That is important. Obviously, there has been a huge amount of work done to invest in our towns to see transformations of town centres, etc., but more has to be done to make towns an appealing place for people to frequent and to visit. It is really important for social cohesion. If people keep ordering online and they stop going into the towns, people will become more insular, have less connection to their community and have less awareness of what is going on around them.
I guess what I would like to ask is, what does Ms McCabe see being a key determining factor in the costs for retail at present and what way has it been trending, and what practical solutions would she like to see the Government coming forward with for retail?
Ms Jean McCabe:
Deputy Dolan is 100% right on the local authority direction. I always say that the benchmark for any town in the country is Kildare Village. That is the experience you need to deliver and that is what customers expect. That is the benchmark that they need to work towards. That is managing every element of the experience from the minute you get out of the car. Unfortunately, that expertise does not sit in local government.
To go to the Deputy's question, there is no doubt that the biggest cost for everyone has been the increase in wage costs that we have seen. They are incomprehensible for so many. I often ask how someone would survive if their mortgage went up by 44% in six years, because that is essentially what we are asking businesses to do.
Outside of that, what we are seeing is a lot of businesses that are maintaining their sales volume. They are busy fools but there is nothing at the end. You are seeing hours changing. You are seeing stores closing on a Monday in towns. You are seeing closures at 5 p.m. You are seeing stores opening later. You are seeing that part-time position at the weekend being only one now when it used to be three. That is the type of tailoring that businesses are doing. Mr. De Luca would be able to give an example of things that he has had to do in his business to make it sustainable and to try to grow.
Mr. Enrico De Luca:
First of all, I thank the committee for the invitation. I am the CEO of Maxi Zoo Ireland, which has 34 shops in the country, employing more than 300 people.
Like many other retailers in the country, my organisation is part of a wider European group with a presence in 15 countries. As a consequence, part of my job is convincing our shareholders to invest in this country versus other countries as part of their portfolio management. Such investment, of course, would have incremental benefits for our employees, customers, suppliers and local communities.
In the past three or four years, my job has become significantly harder because Ireland ranks as one of the most expensive countries when it comes to the cost of doing business.
Albert Dolan (Galway East, Fianna Fail)
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On that point, Maxi Zoo has stores across Ireland and throughout the wider European region. Are the margins worse in Ireland compared with those of the company's stores abroad?
Albert Dolan (Galway East, Fianna Fail)
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Is the difference significant?
Mr. Enrico De Luca:
It is quite significant, especially given the significant reducing of margins we have had in the past four years.
Ms McCabe addressed very clearly the impact of the minimum wage. To add to that, in the profit and loss considerations of a retailer, two cost brackets make up the vast majority of costs, namely, labour and occupancy costs, by which I mean rent. The rent cost in Ireland per square metre is the second highest in Europe and 30% more expensive than the average. The rent review mechanism does not offer any certainties to tenants. That is a big issue. I will not repeat what has already, rightly, been said about commercial rates. Ireland has the highest non-household electricity costs at 60% above the European average. Much has already been said about insurance costs. Another cost that hinders our capability to invest is the cost of construction. We have been opening shops but, once again, doing so has become super-expensive. Opening a shop in Ireland costs two to three times more than in any other country in Europe because of construction costs.
These are facts and concrete examples. As Ms McCabe said, we are here to seek help because businesses in our sector, whether SMEs or larger organisations, have been in trouble for the past three or four years. We need support.
Albert Dolan (Galway East, Fianna Fail)
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I thank Mr. De Luca. I am conscious that my time is up. I apologise that I did not get to ask Mr. Hanley any insurance-related questions.
James O'Connor (Cork East, Fianna Fail)
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Deputy Dolan may ask a final question.
Albert Dolan (Galway East, Fianna Fail)
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I have just one question on the insurance side. The witnesses will tell me if I am wrong but I understand that following the recent review into PIAB, we have not seen insurance premiums reduce.
James O'Connor (Cork East, Fianna Fail)
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That discussion could take a good two hours.
Albert Dolan (Galway East, Fianna Fail)
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If an answer could be given succinctly in one minute, what is the one reason for that? There probably is not just one reason.
Mr. Vincent Jennings:
I will limit my answer to one word, and that word is "greed". It is a result of the insurance companies' greed. They keep wanting more and not giving anything. Members must collectively be furious because every one of them broke their backs to give society all assistance in this matter but the insurance companies took and took. What are they saying now? They claim they cannot reduce premiums until this or that is done. Enough is enough. They must not be given one more thing until all our insurance premiums, liability and motor, go down and stay down. I apologise; that was a few sentences rather than just one word.
Albert Dolan (Galway East, Fianna Fail)
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It was a perfect response and all I needed to hear. I thank Mr. Jennings.
James O'Connor (Cork East, Fianna Fail)
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That was very well put. The next speaker is Deputy Conway-Walsh.
Rose Conway-Walsh (Mayo, Sinn Fein)
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I apologise that I had to leave the meeting to speak in the Chamber. I could not agree more with Mr. Jennings. I sat on the finance committee when I was a Senator, in 2016 or 2018, and we went through the issues with the insurance companies week after week. They said they needed this, that and the other to be done, all of which was done. Yet, the prices are the way they are. There must be accountability for this because it is absolutely scandalous. The companies are obliged, since we introduced our recommendations, to show information for the year, so people can see on their bill the detail for 2020, 2021, 2022 and so on. It is absolutely frightening that the companies have not passed on reductions.
I have two questions on insurance, the first of which is about the barriers to entry to the liability insurance market for new providers. What can be done to dismantle those barriers? We need to bring other insurance companies into the market to create more competition.
Second, it is extraordinary that despite the 40% fall in overall claim volumes between 2019 and 2023, businesses with strong safety records are not rewarded with lower premiums. There is no excuse for that. We know a reward for good behaviour is one of the best incentives for risk management and prevention. When people feel their actions can influence the price being charged, that manifests in better behaviour. What more can be done to incentivise or make insurance providers implement genuine and truthful risk-based pricing?
Mr. Brian Hanley:
I am happy to take those questions. Following on from Mr. Jennings's point, it has been interesting to note a change in the language insurers have been using recently. I have seen it in policy documents that went to the cost of business advisory forum and I have heard it on the radio, with the insurance representatives saying there will be no reduction until they see action on legal costs or some other issue.
Mr. Brian Hanley:
It is quite the ultimatum when we consider all the other reforms that have been forthcoming and the reduction in the volume of claims. It is quite revealing of the providers' attitude to everybody, including policyholders and the people like Deputy Conway-Walsh who implemented the reforms they said were needed.
Turning to competition, two or three points occur to me. One is that there are some good initiatives in the new action plan on how we can promote it. The Office to Promote Competition in the Insurance Market needs to be additionally resourced. It is important to recognise that Ireland had a bad reputation for a long time in terms of the volume and the size of awards, and it can take time to address and change that reputation. The landscape has been completely reformed, including in terms of the volume of claims, the legislative changes around the duty of care for occupiers' liability and the stability around awards by way of the personal injury guidelines. The Minister of State, Deputy Troy, had a meeting with Lloyd's of London recently. It is really important that there is a clear strategy that is properly resourced because it will take time to change our reputation. If we do not put in additional resources and do something different, we can only expect the same results we have been getting to date, which for businesses seeking liability insurance, unfortunately, means there are no additional underwriters.
We also need to look at why the incumbents in the market are not increasing their risk appetite. Many businesses, including members of the Alliance for Insurance Reform, are stuck with only one or perhaps two underwriters. Having one underwriter willing to provide cover depicts, in essence, market failure in that particular space. It would be useful for the CCPC to undertake a review of the liability market now that all these reforms have come in to better assess why we have not seen increased competition. Given the number of consolidations in the brokerage market, that should also be factored into any CCPC review. A lot of reforms have been introduced. Why is the dial not moving on this? There is never any harm in shining a light on these issues. This is an additional element beyond further resources for the competition office. It would be very welcome to have the committee's support on that.
Rose Conway-Walsh (Mayo, Sinn Fein)
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Mr. Hanley certainly will have that support. I expect it to be one of the recommendations in the report we are doing. I am very conscious that we do not just need report after report but there must be some accountability when huge profits are being made at the cost of struggling businesses. If there was a rationale for that, it would be in some way acceptable, but when there is no rationale whatsoever, it is just a crazy situation.
Ms McCabe of Retail Excellence Ireland said we need to remove unnecessary regulations, consolidate reporting and eliminate duplication. I absolutely agree regarding consolidating reporting and eliminating duplication. However, who decides what regulations are unnecessary?
Ms Jean McCabe:
Retail Excellence Ireland is represented on the cost of business advisory forum within the Department of enterprise. The forum's primary remit is to examine regulation. The regulatory bodies are also involved in these conversations. It is about a cultural shift. I hate to refer to Donald Trump here but we do need a bit of a Donald Trump approach to this because we are over-regulating. There are so many regulations not adding value and only adding costs. We need a common-sense approach in how we deal with this. Every regulator believes every regulation is essential. That is the world they live in. It is like asking an accountant to think outside the box. They live within the world of that box. We certainly need a different mindset and a cultural shift from the Government in how regulation is viewed and a shift among the regulators to realise we can still achieve what needs to be achieved and that Ireland does not have to be the A1 student in Europe. We tend to gold-plate everything and to be overzealous in how we implement, interpret and enforce regulations. We need to take a step back. It is perfectly fine to be the B2 student in Europe. We also need to work with businesses to ensure regulation is still enforced and adhered to, but let us do it in a common-sense way. We need a common-sense approach from people involved in the forum and also the Government. It is about a cultural shift that must go from the top to the very bottom, because we have a tendency to box-tick and over-regulate, adding to cost.
Rose Conway-Walsh (Mayo, Sinn Fein)
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Yet, we have areas in which there is no regulation, meaning we end up paying billions of euro, as with the materials that came out of quarries, resulting in the defective block issue.
Tony McCormack (Offaly, Fianna Fail)
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I thank everybody for coming in today and for their opening statements. I look around the room and ask when we as a Government are going to listen. We have had organisations and groups coming in time after time saying insurance costs and the minimum wage are too high. Let us take the minimum wage, for instance. I am a big believer in paying people a fair wage for a fair job, but unfortunately we have gone too far. Ms McCabe talked about the pendulum swinging one way and then the other. It has swung too far. What we are doing as a country is making ourselves so uncompetitive. At the end of the day, the only natural resources we have in this country are our people and our agriculture. We have no oil, gas or anything else we can fall back on.
The FDI companies that come here look at us and, as has been said, say Ireland is one of the dearest countries in Europe in which to do business. We need to address that quickly; otherwise, we are going to fall off a cliff and will have no work. We will not be able to pay insurance for anybody. That has to be addressed and the Government needs to grasp the nettle in that regard.
The minimum wage, as Ms McCabe said, has a knock-on effect on everything above it. The value that was got at €10 per hour is not being got at €14 an hour. The value is lower, and it is getting lower the whole time. This living wage being spoken about is a movable feast because, as the minimum wage goes up, it moves as well. We need to address that quickly.
We have talked about permits and the cost of doing business. A brother-in-law of mine who has a service station has to have 11 permits and licences to be able to do business. There is too much regulation and we need to cut it quickly or we are going to lose out as a country, and then we will not have jobs. Instead of talking about people coming to the country to work and thrive, we will be talking about our people going out to survive, as they are at the moment.
My question for Retail Excellence Ireland is this: what supports does it believe the Government could give to retailers in order for them to survive and maybe thrive in smaller towns, bigger towns and cities?
Ms Jean McCabe:
Given the increases we will face with pension auto-enrolment and increasing wage costs, we need a grant system like the one introduced for the increased cost of business and the one that saw the introduction of the power-up grant in 2024. I am talking about a quick injection of cash into small businesses to keep them viable. In the longer term, we have to consider the fundamental core cost of doing business. If Government policy is to move towards a living wage, which is admirable as we do not want to deny anyone a decent standard of living, we must not keep loading on costs without balancing them elsewhere. That balance might look like a reduction in VAT or a reduction in PRSI, the two biggest tools the Government has to help to offset the costs.
In the intermediate term, we need to revisit the methodology of how we calculate the living wage here in Ireland, because we are not like the rest of Europe. That methodology does not apply here in the same way. If we do not revisit the methodology and the economy continues as it is with the growth in ICT we have been seeing, we will be back in the same situation again in two or three years' time. We need to examine the methodology and find one that suits the fabric of our economy, that truly reflects it and that is fair.
On regulation, which I covered earlier, we need a common-sense approach. It is not rocket science. It is a case of asking whether the regulation adds value and whether it is essential. Let us remove the regulatory cost burden on businesses by 25% by finding the 25% of the regulatory burden that could be toned down or condensed. Those would be the three asks to help to support the sector.
Tony McCormack (Offaly, Fianna Fail)
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Would it be an idea to link the minimum wage to inflation?
Ms Jean McCabe:
That is a fair analogy. I do not think any retailer would deny that linking the minimum wage to inflation would be fair. However, if we examine the methodology and apply the EU average proportion of ICT workers in the workforce – currently 11%, while our own is nearly 20% – then plugging that 11% into the formula already brings us to the living wage, if not ahead of it.
Tony McCormack (Offaly, Fianna Fail)
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The other issue is that because of Internet shopping, we have lost many high-street shops across the country. Our town centres do not have the mix we would like. We have many vape shops, betting shops and coffeeshops, which are great at bringing footfall, but we would like a better mix, with bakers, butchers, newsagents, and men's and women's clothes shops. I am referring to the shops we had years ago, which resulted in footfall in town centres. How does REI envisage the Government helping to bring the footfall back?
Ms Jean McCabe:
I am going to introduce the Deputy to Ms Aoife McBride because her family business epitomises exactly the type of retail he wants to see in town centres. It has been in Killarney for nearly 140 years but, tragically, it is now closing after generations. Ms McBride will depict the challenge. I will be happy to contribute on what could be done to help to support it a little more.
Ms Aoife McBride:
I am thankful for the opportunity to speak. I am here as a retailer and as somebody successfully running a business in Killarney that has been there for 40 years. I want to start with the story of my grandfather's shop, which was in business for 121 years last year. That is an amazing achievement. It is run by my aunt and uncle. My cousin went back into the business three years ago. This year, she has had to step out of the business and retrain because it is no longer viable. This means that a shop that has been operating for 121 years – my mother grew up above it, and it is where they all trained – will be out of business once my uncle retires in the next few years. That is the reality.
In Killarney, we are very lucky to be in a very vibrant town. We have actually been very busy this October, but we have been busy because of the number of other retailers that have closed. That is depressing. I do not want to be busy because other shops are closing; I want to be busy because we are in a vibrant economy where people can afford to shop in my shop. That is the point. It means a reality check whereby we must ask, regardless of all the figures in the world that I could give, what we want the country to look like, what kinds of towns we want to walk into and whether we want shops. I own the building that houses my shop and we are just about breaking even, or a little bit over that. If I were renting, I could not start the business. I could not start it now. I have inherited it.
I have worked in many different sectors. Ms McCabe and I have just found out that we are both qualified engineers. I have worked in the film industry and in events. I came back at the start of the Covid pandemic. We had 12 employees and I did not want the business to go under. I thought I would go back to London but I did not and stayed here. I am now running the business and love doing so. I am a fifth-generation draper and have massive respect for the industry and everything my mother taught me. The women who work in our shop have been there for 40 years. The first woman my mother employed still works for us. She turns around to me and asks why her wage is only a couple of euro above the minimum wage. That is so degrading for the women. It is really heartbreaking. From the perspective of someone who has worked in other industries, I say this is a joke and that I am not staying in the industry.
If the Government's decision is that there is to be no support for retail and that it does not believe there is a future in retail, will it give us the memo, because we do not need to waste our energy here? I do not need loads of money but I need a fair wage for the people I am employing.
It is the language around the Low Pay Commission, the minimum wage and so on. Women who work hard and have been working with me for 25, 35 or 40 years are being told that they are close to the minimum wage. People keep talking about it with regard to students who work at the weekend and people with part-time jobs. This is my profession and I have respect for it and for the women who work in it, but no one else seems to. I do not know what is going on. We did a simple calculation before coming here about €100 that comes into my till-----
Tony McCormack (Offaly, Fianna Fail)
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Sorry to interrupt, but my time is up. I am looking for ideas to bring the town back to life. Killarney is a beautiful, fantastic and thriving town. It probably bucks the trend of provincial towns around the country. It has a fantastic mix. I am my party's spokesperson for SMEs and retail and one of my passions is to try to find a solution for, or at least do something to improve the quality of, town centres because they have been ripped apart.
Ms Aoife McBride:
Fair enough; I understand the Deputy is asking me to get back to the point. I have points to make. First, rates breaks in the town could be encouraged. I live in Killarney, but my grandfather's business is in Killorglin. Every second shop is closed. The rent costs are what they are but no one can pay them so no one can start a business. Minimum wage should also be by sector and region. Why is it set at a blanket rate for all of Ireland? That makes absolutely no sense. If the VAT rate cannot be reduced because it affects so many different sectors, why can funds from the big players not be diverted down to the micro, small and medium businesses? I do not want it to be seen as others having to support my industry for it to exist. I should be able to run my business. I work hard and I should be able to run it without being subsidised. It is a diversion of the VAT we are already paying. We pay the highest VAT and we have the lowest wages. What is going on? How are we supposed to make this business work? I do not understand.
James O'Connor (Cork East, Fianna Fail)
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Unfortunately, we are three minutes over.
Tony McCormack (Offaly, Fianna Fail)
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It is not like a Kerry woman to talk.
James O'Connor (Cork East, Fianna Fail)
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We will go now to Deputy Gogarty. We will have a second round so members will have a further chance. I know Mr. Jennings wanted to come in so I ask him to bear with us.
Paul Gogarty (Dublin Mid West, Independent)
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I thank the witnesses for their contributions. I could have listened to that for another couple of hours if we had time.
I will stick to the retail angle first. I will play devil's advocate. On the comment about how the minimum wage is calculated and how it has a knock-on effect on the living wage, the reality is that in Dublin, for example, all the software companies are coming in with Google Pay and a lot of software localisation people are employed. I have mentioned in this committee before that 85% to 90% of the workers who bought the houses in one new housing estate in the Clonburris strategic development zone are from overseas. They are welcome. They are making a contribution, paying taxes and so forth. However, in terms of policy, it is pushing up prices of affordable housing and means a garda or nurse cannot get onto the property ladder. What is a living wage? It is what allows people to live.
How many employees in the witnesses' sector are the lead breadwinners in their families? In the North - this is anecdotal from the past - people worked in forecourts and because the social welfare was £50 and the cost of living was lower, a person who worked in the corner shop could be a family breadwinner. In Ireland, I suspect that is not the case. We have a lot more students, people working part time and retired people. Is that how the witnesses want it or do they want to be able to pay people a wage to enable them to work in retail as a long-term career? It is a chicken and egg situation and a cart and horse cliché.
I was taken by Ms McBride's suggestion about having a regional minimum wage. We have different regional bodies. In the Joint Committee on European Union Affairs we have had presentations. Let us twist that a little. I would be interested in this on the insurance side as well. How would that relate to something like a Dublin allowance, which I have been calling for for nurses, gardaí, teachers and so on? Maybe we need to have a general Dublin allowance because of the high cost of living in Dublin until we sort out the longer term issues that contribute to inflation. We have no control over some of them. We are on the periphery. Historically, we have planned the country badly so we do not have proper population density for footfall to make it more viable for retailers in a small area. I would interested in the witnesses' comments on that.
On the insurance side, we already heard the contribution on legal costs being brought down and trying to have more done through the Injuries Resolution Board. My next question is left of centre. The GAA used to do bouncy castles, big slides and so on and then they were suddenly gone. There was a case in an unnamed GAA club where a child went down one of these slides, broke her ankle and got a €70,000 payout. That is scandalous. Is reform of how we quantify injuries needed ? Many of the members of Alliance for Insurance Reform, for example, are adventure-type premises, many of which have closed because of the cost of insurance. Have we gone mad, not only with the fees for the legal profession but also with what constitutes reasonable compensation for an injury? If children go on a bouncy castle, they might bang their heads together. That is not negligence, it is just children playing. If something sharp is sticking out of the bouncy castle and cuts the child, it is the responsibility of the provider. Is there any mechanism whereby we could look more closely at what constitutes damage versus normal day-to-day risk? We are not talking much about the personal responsibility side. I will give an example. A hockey ball was rolled to my daughter in school. She tripped over it and broke her ankle. We did not think about using any public liability insurance. We just went to the accident and emergency department and got it sorted out. It was an accident. Maybe we need a bit of common sense as well to push the costs down, which would also affect retailers. I apologise for taking up the witnesses' time. Do they have any inputs?
Mr. Vincent Jennings:
This is general. It is just in addition to something Ms McCabe said. I was a low pay commissioner for six years. I was on the Low Pay Commission. It was in my last year that we directed Maynooth University to commence its deliberations on the living wage. We gave them clear instructions and terms of reference, one of which was to reference against the foreign direct investment companies. We also felt there should be consideration of the fact that we rely significantly in our workforce on those who are paid from the public purse. Although Ms McCabe spoke about foreign direct investment, an incredibly high number of people are paid from the public purse and, according to the CSO, they are paid 25.7% more than the private sector. When you throw together the two substantial cohorts of workers, those paid from the public purse and those paid by foreign direct investment, and put them in with the rest of the mix, economists have accepted that the median point automatically, de facto, rises.
Very few countries have a living wage, although many cities and states do, and no country has the mix of massive companies and a substantial public service. In many European countries, public servants are paid less than those who work in the private sector. In Ireland, we have skewed that completely. I honestly believe that if the committee is to do something, as I am sure it will - there is a period before 2029 when the living wage will come - one could be to re-evaluate leaving out the public sector and foreign direct investment. It would then find, and we as retailers would see, that this is a fair number, that it is justifiable and that it meets the requirements.
None of us would survive without our colleagues or our workforce. However, we cannot afford a figure that is plucked out of the surreal nature of Ireland as it is constituted. I just wanted to say that. It has been left aside that public sector pay is a significant part of where our median wage is.
Ms Jean McCabe:
I will answer the Deputy's question on the cost of the living wage and the cost of living in general. He is right when he says that a majority of the workers on the minimum wage are students, people on a gap year or part-time workers who want to do a few hours every week. They are not the main breadwinners in households. The ESRI's own reports and studies have shown that data. The other point is that the instigation of an increased minimum wage has little to no effect on low-income households. As people in those households are not on the minimum wage, these increases are not having an impact on them.
Paul Gogarty (Dublin Mid West, Independent)
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And they can avail of the working family benefit.
Ms Jean McCabe:
Yes, exactly; I did not want to say it. Many of those on the minimum wage are students and part-time workers. As I said in my opening statement, these increases have a knock-on effect on everyone else along the line.
I will provide some context. From January, the minimum wage will be €29,500 per year. A student nurse coming out of college after four years of studying will be on €32,000 or €33,000 per year. That is where we are at. When you put it in context like that, it is not a minimum wage; it is a living wage. If I was a 22-year-old on that wage while taking a gap year, I would be delighted. That is the reality of where we are at. As I said from the beginning, this is not about paying people fairly; it is about the fact that we have had to shoulder the cost burden of this completely alone. There have been substantial costs.
Were there any other questions the Deputy asked which he wanted a response to? There was a second one.
Paul Gogarty (Dublin Mid West, Independent)
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I asked whether it should be regionalised, or how it could be regionalised.
Paul Gogarty (Dublin Mid West, Independent)
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Perhaps provision could be made for an allowance without having to change the minimum wage.
Paul Gogarty (Dublin Mid West, Independent)
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I will briefly interject. A teacher in Donegal or Mayo has a much better quality of life than a teacher in Dublin.
Paul Gogarty (Dublin Mid West, Independent)
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Maybe teachers in Dublin need to be paid more. Equally, there may need to be a higher minimum wage rate in Dublin. Can you get away with having a lower wage rate in the rest of the country? That is the question that arises from that.
Ms Jean McCabe:
Increasing the minimum wage is not going to change that. If anything, it will compound it to be more expensive over time. In January 2024, food inflation was at the same rate that we have seen it this year. It is going to go up. Other sectors in retail will not see as much inflation as they do not have the bandwidth to increase prices because we are in a global economy.
Paul Gogarty (Dublin Mid West, Independent)
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Ms McCabe is basically saying that the people on the minimum wage are not those who have mortgages or are looking for affordable housing mortgages. They are mainly students.
James O'Connor (Cork East, Fianna Fail)
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I am the next speaker. I thank all the witnesses for being here. We have done a number of engagements with a very broad range of companies, stakeholders and representative bodies and the witnesses' input here is very welcome as part of our work.
The reason we are doing this is to platform how important the concerns are among the public regarding the huge cost increases in terms of doing business in Ireland. I have been really interested in each of the individual contributions today. I am very interested in the Alliance for Insurance Reform and its membership of 48 organisations. Given the depth of difference between each individual company across the various sectors, from the road hauliers to Sport Ireland to Play Activity and Leisure Ireland, we have been shown a very small snippet of the broad range of people in the 48 organisations who are badly impacted by such huge increases in the cost of insurance in this country.
I want to get an understanding of how businesses have been able to cope with it. I appreciate that in many cases they have not been able to do so, and they have closed down. I wonder whether we are giving this enough attention at Government level. As policymakers, as backbench TDs in government, as Opposition TDs and as Senators, the members of this committee need to bring the witnesses' message back to the Minister and to the Department. That will certainly happen after today's meeting.
I want to get an insight. The 74% increase in public employer liability premiums, according to the data the witnesses have provided, is catastrophic. Could they tell me a little more about that? They might provide an insight from their members on their conversations with the insurance companies about this matter. Will they comment on the lack of alternatives, perhaps, and the lack of competition in the sector? I would like to get a read on that first and then I will move onto my next question.
Mr. Brian Hanley:
Our very broad membership is reflective of the challenge across all aspects of society. The Cathaoirleach asked about things that the committee members can do. There is a lot of potential in the new action plan for insurance reform. It will be up to TDs and Ministers to put the flesh on the bones of that plan and make it something that will ultimately reduce premiums and increase competition. The committee has invited us in today and shown an interest today in this matter. Potentially, we will see legislation later in the year to amend the personal injury guidelines. It is important in that context for the committee to understand the breadth and depth of the people impacted by what will come.
It is hard to believe the increases that are happening in so many sectors. Competition is undoubtedly a part of it. There is also an extent to which they are doing it because they can. You will often hear that the reason that premiums have gone up is that there has been an increase in turnover. However, turnover does not equate to risk; footfall does. If the number of people going in has increased, you could understand it but if all the costs have just gone up, that is not a justification. Bear in mind that the awards are flat; they have stayed at 2021 levels in the guidelines. There has not been inflation in awards and there has not been an increase of footfall. It is very easy for them to turn around to the local pub, the local shop, the local charity or whatever it is and say that its turnover has gone up. It has nothing to do with risk. They do it because they can.
My chair made the point earlier that the committee has a lot of power in what it can say to insurers. There will be auto-enrolment coming up, which will mean a huge windfall for insurers down the road in terms of the pension thing and so on. They have a long list of things they would like to get from Government and politicians and so on. It is not unreasonable, after all the Government has done, for it to say that it needs to see meaningful and sustained savings. All of this is independently measured and verified by the Central Bank. We do not need a "he said, she said" about this. That is what has been great about previous reforms - we have independent data to back up what we are saying in order for the Government to make informed decisions.
Yes, we are seeing excuses like turnover, footfall and things like that. They have the ability to do it because they feel they can. There is a degree of impunity about it. If you are in one of the 20% or 30% of sectors that have only one underwriter, there is no pressure on you to do anything about your premiums. You can charge what you want because you are the only show in town. That is why our recommendations are around increasing competition, having the CCPC look at the income and attracting new entrants into the market to add some value.
James O'Connor (Cork East, Fianna Fail)
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That is very interesting. I appreciate Mr. Hanley's input.
Also, Retail Excellence Ireland is a very interesting organisation and I would be familiar with its work. I want to get an idea of what pressure has been put on business owners by the increased costs in hiring employees into small businesses. We are joined today by Ms Aoife McBride, who has a small business in Killarney. As a TD who represents the people of Cork East in Dáil Éireann, including those who are involved in the high streets of towns and villages in the constituency, I have heard a lot about the enormous pressure they feel. From the organisation's point of view, how has that transpired? What has its engagement been like with the Department of enterprise in respect of the changes that have been made over the course of recent years? In particular, when Leo Varadkar was Minister in the Department of enterprise, there were significant changes made and the kickback from businesses on that was exceptionally strong. It feels there is a sense of rollback ongoing at present in relation to some of the commitments made at that time. I would love to get a bit of insight into that if that is okay with the witnesses.
Ms Jean McCabe:
To give the context in terms of the Department of enterprise, Retail Excellence Ireland is part of the retail forum with the Minister of State, Deputy Alan Dillon. We are also part of the enterprise forum with the Minister, Deputy Peter Burke, and the Minister of State, Deputy Dillon, and we are part of the cost of business advisory forum. We participate in many other fora at different stages but the ones I have listed are consistently in our diary. We have a lot of engagement with the Department but we are one voice. As I am sure every member will know, there are a lot of balls in the air that everyone is calling on. The statistics and numbers that are coming out this year show the pressure that businesses are under. We know from that and from talking to our members that the pressure is very real and the camel's back is about to break. As a retailer and in this role, I was flabbergasted to see the Low Pay Commission's recommendation. I genuinely thought that the message had got through that businesses cannot afford this constant increase in costs without something being offset elsewhere whether it is a package for SMEs, a VAT reduction or a PRSI rebate. However, it happened again in isolation at a time when all the numbers are showing insolvency rates in retail are at their highest. A stark statistic is one in four of all insolvencies last year was in retail. So our members are cutting hours and changing their opening hours. Stores are closing at 5 p.m. on a Friday. That is not just SMEs but large multiples as well as they try to manage their costs.
In terms of the trajectory for next year, I talked to members last week and a lot of them were very upset with me wondering what the hell are we saying at the Government table. They asked is our voice not cutting through and why are we getting lost in the noise. Honest to God, it is not for the lack of trying. Certainly being a retailer myself I can empathise with the struggle. What we are seeing is that a lot of businesses now - the larger guys - are all looking at automation. They are looking to replace people at any opportunity that they can, which is a sad place to be. Last week, I visited a retailer in a fulfilment centre in the west of Ireland and a big employer in the area. An automated system was installed and 30 part-time jobs are gone.
Ms Jean McCabe:
That is the reality. It is a generation that will miss out on an opportunity to learn a work ethic, and gain social skills and personal skills. Retail and hospitality play a far bigger role than just doors on a high street. We say it all the time that we are the fabric of society. In fact, we are the training ground for future leaders. If we do not provide them with that opportunity then I would hate to see where we are in a number of years' time.
James O'Connor (Cork East, Fianna Fail)
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That is an interesting point. The last time I spoke to Mr. Jennings we discussed newsagents. These businesses provide a great social value in rural towns. Quite frankly, people are in business to make a living and money but I worry about the Department's attitude to small retailers and small companies, and what they do for the fabric of society in constituencies like my own and a number of other constituencies. It is a fact of life that not every town can host a large IDA Ireland facility with a large number of multinational companies. As I mentioned during the last two meetings of this committee, 90% of the corporation tax take in this country comes from US multinationals. That is a huge risk in terms of the exposure we have on that particular point. I appreciate the information given by Ms McCabe. I might ask questions in the second round. The first person for a second round of questions is Senator Linda Nelson Murray and she has five minutes, if that is okay.
Linda Nelson Murray (Fine Gael)
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Yes, I thank the Chairman. I thank the delegation from Retail Excellence Ireland for their passionate and real presentations. I have been in retail since I was 13 years of age and in leisure and retail for the last 18 years. My husband sent our accounts to me about a month ago and it is the first time that we have lost in a long time and are wondering what will we do in January.
Similar to Deputy McCormack, I am the enterprise spokesperson in the Seanad. Last week, in the Seanad I welcomed a lot of the budget but I also had the opportunity to say to the Minister that I really felt we had missed out on the smaller retail businesses. I can name every business on Trimgate Street, Navan. They include Geoghegans boutique, Reign Boutique, Connollys Seafood shop, David's butchers, Henry Loughran's pub that does not sell food, the Paddy Fitzsimons pub that does not sell food, Sorella Boutique, and the Ribbon Rouge boutique. All these people did not get anything from the budget and I wonder what will happen to the main street.
On Ms McBride's comment that if the Government "does not believe there is a future in retail, will it give us the memo", is a scary statement. What do you want the country to look like? Another statement was we do not need an educated workforce that does not know what it is like to be in the retail sector. My husband and I opened our business in 2008 and we got through the recession. I crawled over the counter to every customer that came in because that was all I had, and there were very few coming in, to try to make them book a party and deal with us. Therefore, customer service is so important. Deputy Tony McCormack said, "the only natural resources we have in this country are our people", yet businesses are considering the installation of automated systems. I dread when I ring a shop or somewhere and I get an automated voice and much prefer to talk on a phone and book something. We do not want automated systems; we want to see people and talk to them.
Mr. De Luca mentioned construction costs. I do not think that we have talked about construction costs. Mr. De Luca said construction costs here are two to three times higher than any other country in Europe to build a Maxi Zoo. He also said it is harder to convince shareholders to invest in a Maxi Zoo in Ireland. We have heard very big statements here.
Ms McCabe said the benchmark for any town is Kildare Village. In my town they are scared of that approach because of car parking. Navan is one of those towns where a huge investment is going on due to the Navan 2030 plan. It is beautiful with granite footpaths, trees, plants and everything but they are being put in former car spaces and that is another factor that we did not discuss today. I think we need a cross-departmental approach, not just an enterprise angle. We need to look at this from the perspective of local government, infrastructure and transport because people sometimes need to park their vehicles outside a shop in order to buy a paper or magazine.
A lovely retailer rang me the other day. His name is John Joyce. I asked him was it okay to mention his name and he said it was. He had a lovely curtain shop in Navan. It is 39 years open and he told me he desperately wants to reach 40 years. He sold net curtains which were his biggest seller. I wondered who buys net curtains but lots of people buy them. He told me that he cannot continue due to the costs. He also told me that parking was another big issue. He told me that people came to him to buy rolls of net and rolls of material for tablecloths so they must park somewhere. He said they cannot park 300 m away in a carpark and walk to him because he cannot do business that way.
Ms McCabe mentioned that 17,200 jobs have been lost in the sector. What do the members of Retail Excellence Ireland say are the main reasons for that?
Linda Nelson Murray (Fine Gael)
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So it is always costs. It is just everything.
Linda Nelson Murray (Fine Gael)
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So when a business owner is trying to trim the fat out of that, it means that if someone leaves then he or she is not replaced.
Linda Nelson Murray (Fine Gael)
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Hours are reduced and the business owner does not take on an extra student over Christmas.
Linda Nelson Murray (Fine Gael)
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The impact on tourism is phenomenal.
Linda Nelson Murray (Fine Gael)
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Had Mr. De Luca greater plans to open more stores? Has all of this stopped him opening more stores? Is he still on plan to open the same number of stores or is he reconsidering? Can he continue even with the high costs or has that prevented him?
Linda Nelson Murray (Fine Gael)
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So Mr. De Luca has halted expansion plans.
Linda Nelson Murray (Fine Gael)
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Is that due to the costs in Ireland of doing business?
Linda Nelson Murray (Fine Gael)
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Yes. It is not very pleasant to listen to all of this.
Linda Nelson Murray (Fine Gael)
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I hope that the Department is tuned in and listening to us. I can assure the three business owners sitting here that we will all convey their sentiments and work on this on their behalf.
James O'Connor (Cork East, Fianna Fail)
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Yes. I thank Senator Nelson Murray. Next is Deputy Tony McCormack and he will be followed by Deputy Gogarty.
Tony McCormack (Offaly, Fianna Fail)
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First, I thank the witnesses for being forthright and honest with their feedback to us. I thank them for telling us the current situation.
Ms McCabe and Mr. Jennings have put the whole wage argument into a different perspective because I never really thought about the whole Dublin, Cork and rest-of-the-country scenario. It certainly puts a different complexion on this that we have to be cognisant of.
I completely agree with Mr. Jennings when he says it is greed in regard to the insurance costs. The other elephant in the room we have to look at or start to talk about is legal costs. They are hugely represented in here. The conversations do not normally go that well but we need to do it. We have to grab the bull by the horns and start to move on that.
In regard to the retail end of it, I was brought up living over a shop. I was behind the counter since I was eight years of age. I know the value of a yard of counter. As my granny used to say, all you need in life to sell is a yard of counter. That has actually got smaller now that we can sell on our mobile phones but the principle is still the same. It is tough out there. It is tough for all of those retail businesses that are trying to survive on the high street with all of the costs such as rent, rates, wage costs as well as all of the other costs that do not need to be there.
I wish all of the witnesses well because I know they have taken time out of their businesses to be with us. I hope in the future that we as a Government will listen to what they have said and make those changes that will make a real difference.
Mr. Vincent Jennings:
I am very conscious of the fact that the committee had a number of people in here previously and would have heard the same things. The Deputy is meeting people in his constituency every day as well, so he is familiar with a lot of the issues and he knows they are burning topics. There are a couple of other elements that are unfair. Someone mentioned about common sense. There is a lack of common sense in the regulatory approach to some matters, such as the exorbitant cost to retailers and the hospitality sector of street furniture and the licences for same. It is not just street furniture but there are costs related to awnings and the like. If we are looking at it overall, it is the cumulative effect of the drip, drip of money here, there and elsewhere. There are royalties for Irish Music Rights Organisation, IMRO, and Phonographic Performance Ireland, PPI. There is a binding judgment by the European Court of Justice about the playing of radios in businesses. That was never implemented here. I am not talking about canned music. I am talking about a radio inside a shop. I am talking about coming into a shop. Nobody is getting a real benefit from that. They walk into a shop, buy something and walk back out again but you have to pay a royalty for it.
The Deputy spoke about the valuation of rates. Petrol stations received the most extraordinary additional valuations. The methodology that was used in that needs to be investigated because it was grossly unfair and highly discriminatory towards a particular sector.
How we look at turnover is another issue. For many of us who sell excised products, be that alcohol, tobacco or fuel, it includes an enormous amount of excise, yet we are judged by insurance companies or otherwise on the overall turnover. In the same way as VAT is excluded, excise should be excluded because that money is pledged to the State, yet it is incorporated as part of turnover.
We have all heard about crime and the costs of that. They are real costs to us. I am really happy the programme for Government has within it a number of specific recommendations but they have to be done. We have to look at those things for data sharing and the like.
There is also the question of revisiting the living wage and what will be a fair one. Unless we actually manage some formula that excludes the public sector and the foreign direct investment sector, there will not be a like-for-like situation in Ireland.
I appreciate this opportunity and thank the Chair.
James O'Connor (Cork East, Fianna Fail)
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No worries at all. Deputy Gogarty is next, followed by Senator Fitzpatrick.
Paul Gogarty (Dublin Mid West, Independent)
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I will follow up on that calculation on the living wage. Given that it is coming from Europe, has Mr. Jennings done any calculations as to whether it is binding on the State or whether we have some leeway to ignore it? I am speaking from a position of ignorance.
Paul Gogarty (Dublin Mid West, Independent)
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It is not a directive.
Paul Gogarty (Dublin Mid West, Independent)
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So, we basically do have that discretion.
Paul Gogarty (Dublin Mid West, Independent)
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I raised the issue before about stupid items in terms of insurance costs. Can I have some opinions on that from Mr. Jennings or Mr. Stanley, but also from Retail Excellence Ireland, in terms of the other side of it? I mentioned this during a debate on a motion on antisocial behaviour and the consequences of it, and we had presentations earlier form retailers talking about defamation claims if they accused someone or asked to search someone. I think we should go further and retailers, if they have security staff, should be able to detain people until gardaí arrive if those people are shoplifting. What are the witnesses' views on that?
Paul Gogarty (Dublin Mid West, Independent)
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The costs are massive.
Ms Jean McCabe:
Absolutely. We are involved in the retail crime strategy along with the Department of justice and we have fed into it. Mr. Jennings has also been there. How do you change behaviour? You change behaviour by having a consequence for that behaviour. We all know that the issue with the system is that there is no room in the prisons, so it has become a revolving door. When someone is caught and apprehended, gardaí go through the paperwork and the people are in and out the door of the justice system faster that the garda can get back out to his or her car. That is the reality.
If there is a blockage there, how else do we ensure there is a consequence for behaviour? It if was up to me, I would hit them in their pockets. The mechanisms are there already for the Government. If someone does not pay their child benefit, the courts can take it out of their wages or social welfare at source. We should do the exact same thing for retail crime. Hit them where it hurts. Take it from their social welfare or pay packets, fine them, make them do community service and then watch to see if there is a behavioural change. If there is no consequence for behaviour, we will constantly see this revolving door. Those are my thoughts on retail crime.
Mr. Vincent Jennings:
In regard to GDPR, giving criminals the same rights as a shop worker is crazy. The consequences are really important. The Data Protection Commission, DPC, is saying we must give that person six hours of tape because he or she requested it and there is no concern whatsoever about it being in any way disproportionate or otherwise. The person asked for it, so he or she is entitled to it. There are those types of thing. These are the laws. There are a number of State bodies that are saying we have Repak fees, we have to pay a street licence and we have to give these criminals the CCTV. These are your laws and within your ambit to change. Legislators have heard about it for 20 or 30 years. Go in and make the recommendations that will actually bring about change. We are sick, sore and tired. There is great hospitality and every thing like that, but please do something about this.
Ms Jean McCabe:
Even in the WRC cases coming out at the moment, the law is completely on the side of the employee, and fair enough. They can steal and we are the ones getting fined because we did not follow procedure because the employee was robbing from our business. I talked about the pendulum swinging too far to the left. It has swung so far to the left and I am afraid to see where it will end up. Again, we need a common sense approach. The regulation is actually there to serve the people who disobey the most and the ones who are trying to be good citizens are the ones who are bring punished.
James O'Connor (Cork East, Fianna Fail)
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There are 32 seconds left.
Mr. Brian Hanley:
I will be quick. I am conscious what is going on in the Seanad today in the context of retailers and what is impacting on their insurance premiums. We have 14 times as many defamation claims in Ireland as there are in our nearest neighbours. Unfortunately, the system is set up such that it is too expensive to defend oneself against a claim, so a business has to bear the cost of an increased premium. Bear in mind that we are dealing with multiples of volumes of claims.
It is not that you cannot go and defend yourself in court, but the minute someone threatens an appeal, you have to settle because you are not going to be able to get the money out of the person accusing you of defamation for merely asking for proof of purchase. There are things like that-----
Paul Gogarty (Dublin Mid West, Independent)
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Briefly, anecdotally, how many of those would be people basically scamming the system? They were shoplifting before but they are trying to catch you out for a false accusation.
Ms Jean McCabe:
It is so bad that I am hearing from members that their cases are not even appearing in the statistics. They are paying them off instantly. It is going to cost them a couple of grand, so they are just giving them €3,000 and saying, "Good luck, goodbye". It is not even making the statistics.
Mary Fitzpatrick (Fianna Fail)
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I thank the witnesses for coming in today. I apologise for being in and out but, as Mr. Hanley mentioned, we have the defamation Bill in the Seanad. I was nominated to contest the Seanad by RGDATA, which represents a lot of small retailers and independent, indigenous Irish businesses. I hear Ms McCabe, Mr. De Luca and Ms McBride. I get it. The reason I have been in and out of the Seanad is because I am on the case of the Minister and the Department with regard to the defamation Bill. I have amendments in and we are seeking to try to rebalance the dynamic between the retailer trying to operate their business and those who are actively undermining those businesses and services in our communities.
I am sure it is not lost on the witnesses the absence of much interest in their contributions from Labour, the Social Democrats and Sinn Féin. I guess it is because the points they are making do not at all flatter or support their political arguments and direction. It is an important point to make because as the witnesses very eloquently outlined, they are representing indigenous Irish businesses, which are valuable businesses providing employment, support and services in all of our communities. I absolutely accept the evidence they are giving at this Oireachtas committee, in that changes that have been made by the Government and the State are undermining the viability of their businesses and their capacity to continue to provide employment and services in our communities. As a committee, we take it very seriously.
Mr. Hanley and I engaged earlier this year and I was glad we made some progress and had some success. I hope for similar success on the defamation Bill.
On insurance, I again accept and support Mr. Hanley's assertion that small businesses are paying more for less cover despite the fact they are doing more. They are upping their game in terms of health and safety, employee responsibility and welfare and all of that. However, on the international benchmarking, I would like to understand a bit more about what Mr. Hanley is calling for. I am particularly thinking about the European context. We talk about the European Union and the Single Market but there is not much harmonisation. At least, it appears to me there could be more harmonisation. There would be a real opportunity there for the European market to improve our competitiveness as a European market if there was greater harmonisation. I would appreciate Mr. Hanley's views on that.
Mr. Brian Hanley:
I thank the Senator. In regard to international benchmarking, that is really important. Awards have typically been considerably higher here than in other countries. In 2019, the Personal Injuries Commission, which I think was chaired by a former President of the High Court, found that awards in Ireland were a multiple of 4.4 compared to the levels in England and Wales. Ours are 440% higher. We can cycle forward to last week, when a piece of research was conducted by the injuries board in conjunction with a consultancy firm on minor, small tissue injuries. The comparison there with England and Wales found that our awards were a multiple of 3.9, or almost 4.
It is not about a race to the bottom in regard to the size of awards and so on, and that is where international benchmarking comes in. We do not need to be paying 400% more in awards than our nearest neighbours. We need to look at what is happening in other countries and find something that is fair and appropriate for us. At the moment, paying such considerable multiples of awards makes us an outlier and it undoubtedly directly impacts the cost of premiums in this country. I welcome the commitment in the action plan for insurance reform to engage in international benchmarking. We will not be burdened by having those kinds of data to assess the type of scheme we want where awards can be set that are fair to claimants but also to policyholders, given the direct impact it has on them. At the moment, it is not sustainable with increases in insurance.
While we did see some benefit from the personal injury guidelines coming in in 2021, we saw what could happen with recent increases. That is why it is now necessary for there to be meaningful and considered reforms of how we are going to assess awards with international benchmarking, have greater input from the Injuries Resolution Board, and extend the review period. It should also come back to the Houses and probably to the finance committee to assess any recommendations from the Judicial Council about awards so that there is that piece of democratic oversight before the Government makes recommendations. There is scope and potential to make meaningful changes that I think will stabilise awards and international benchmarking is a huge part of that.
Mary Fitzpatrick (Fianna Fail)
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Gabhaim buíochas le Mr. Hanley. I will return to the issue of the living wage and the Low Pay Commission. Even in Deputy Gogarty's contribution there, it became apparent that it was not very transparent as to how the calculation was made. Ms McCabe articulated it really clearly. Can the witnesses share with the committee what engagement they have had with the Low Pay Commission on the actual formula that is being used? Has there been any engagement or traction, or are the witnesses getting an "it is not our area" and "hands off" response?
Ms Jean McCabe:
We certainly submitted to the Low Pay Commission prior to its review of increasing minimum wage costs back in June. We also met the Low Pay Commission about those costs and relayed the pressures they were putting businesses under. With regard to feedback on the methodology, we have not received any correspondence on that.
Mr. Vincent Jennings:
I was on the Low Pay Commission, so I know the methodology and how this was done. Maynooth University was asked. There was no - and I mean zero - stakeholder consultation formally done. Nobody offered to make any observations in advance, unlike most things coming from Government bodies. It was after the event. Leo Varadkar accepted the recommendation from the Low Pay Commission, which had accepted this without any interjection whatsoever from anybody in civil society.
Maynooth touched base with a couple of businesses, academics and others but nothing was done formally. There was never an offer. Every year, the Low Pay Commission always asks for people to make observations on the national minimum wage. However, on this crucial piece, the living wage is going to be around for ever and yet we are going to be stuck with and hidebound by a methodology that nobody has actually challenged or done. The fact of the matter is, the Low Pay Commission stayed outside of the terms of reference under which Maynooth operated, because while it was told to have a look at what the effect would be on foreign direct investment, it did not do that. Nowhere within its 59-page report is there any indication whatsoever that it even looked at that and you would question why that was. What was it going towards or was it concerned that this would queer or slow the thing? I do not know but the question deserves to be asked. Afterwards, I asked, on behalf of the association, about us having the living wage and what it thinks about this. It is done and dusted at that stage. The methodology was used by the academics, bearing it on international stuff, etc., but never actually contacting a single representative organisation.
Mary Fitzpatrick (Fianna Fail)
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I thank Mr. Jennings for that and I propose that we invite the Low Pay Commission to come and meet the Oireachtas committee to explore this issue. Academics have been elected to these Houses and they have contributed, I am sure, but I do think it is a really important issue. When you look at other European countries, it is going to have long-term effects on the cost of living, employment and doing business. I propose that we could maybe discuss it at a private meeting.
James O'Connor (Cork East, Fianna Fail)
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Absolutely. I have said that.
Aubrey McCarthy (Independent)
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I thank the witnesses for being here. They came on the worst possible day. We are so busy with different committees, meetings and all the rest. Apologies but, as Senator Fitzpatrick said, it is not rude that we are coming in late.
I am in business. I know some of the guys here. I went for many Retail Excellence Ireland awards but never won them, so I have a problem with that. I am involved in retail and my family has been involved in retail since 1969. One of the witnesses said that a lot of those in business keep the businesses going because of pride. Their families have been involved in it for so many years that they give it their all. They do not pay themselves but make sure they keep the business running by paying staff, etc.
Insurance is a huge bugbear of mine. I have three different cases this year. You go out of your way with health and safety audits. The cost of policing all that is phenomenal. Sometimes, I admire the likes of Pat McDonagh from Supermac's, who fights. When he feels he is being wronged, he fights. I like that approach, when you feel you have been wronged. However, with anything I tried to fight, my insurance company stated that the cost of defending it would far exceed doing a settlement, so it was easier to settle. We were debating the defamation Bill. It is the same thing. I met up with ISME, which is stating that the cost of defending is too high and, therefore, the person is entitled to €10,000 or whatever. How come businesses that have a strong record of a no-claims bonus, etc., are not being rewarded? I have a number of businesses. I notice that every year, I know my insurance will go up. I do not know by how much. Is there no meaningful risk-based model we could look at? Maybe there is an international model we could emulate that works everywhere and could work in Ireland. Insurance has gone up and up. We are now nearly working to pay the insurance.
On Retail Excellence Ireland, I listened to Ms McBride and read her details on that. Out of every €100 spent in her store, how much goes to her and how much is spent on Government tax, regulation, etc.?
We talked about the knock-on effect of increasing the minimum wage. I have got the most amazing staff. One of my businesses is a restaurant. If the minimum wage is put up, it has a knock-on effect all the way. If you touch the menu again, your customers will say you are taking advantage of them. Is there a policy we could use to deal with the minimum wage where we could all work together? We want to see our workers earning a decent wage but, at the same time, we cannot squeeze it. It cannot keep going because there will be nothing left.
Mr. Brian Hanley:
I am happy to take that. The Senator asked why businesses with good risk records are not being rewarded. The answer is there is no good reason. There is nothing satisfactory or unacceptable about them not being rewarded. A report from the Injuries Resolution Board earlier this year stated that in the last five years, or between 2019 and 2023, there has been a 40% reduction in the volume of claims. If nothing else had happened, that alone shows a precipitous fall in risk, claims and incidents that should have led to reductions, but we did not see that. There has also been a reduction in the size of awards, which is coming on top of that, thanks to the guidelines, of about 30%. That has stayed constant as well. We also have to look at where it might be going if it is not going to policyholders. Insurers are making record profits. They are making double-digit 13% or 14% margins in liabilities for 2021, 2022 and 2023. Any notion they have only just become profitable is not correct. The Central Bank data bears that out.
Aubrey McCarthy (Independent)
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Is that a case for the ombudsman? Is there an insurance ombudsman we could go to and say there is a problem here?
Mr. Brian Hanley:
It is a case for everybody. Nobody objects to a bit of profit. That is fine, but two and half a times the international norm is excessive. If we are wondering where it is going, and why organisations that have prioritised health and safety and strong records have not benefited, we need look no further. That is why it is so important that our elected representatives make sure sufficient pressure is being brought to bear because the insurance companies want things too. Assurances were given that premiums would come down if the reforms came in.
I will briefly turn to the piece about vexatious or exaggerated claims. I understand it is more expensive not to settle, but if we settle every suspect, dubious, vexatious or, particularly, fraudulent claim, it is short-term thinking. No message goes out and it will only get worse.
Aubrey McCarthy (Independent)
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The business cannot afford it, however. I cannot tell my insurance company it has to do this.
Mr. Brian Hanley:
This is up to the insurers. The insurers have to take that stand. It is great when we see some cases in the papers where they have challenged and chased cases, but we need to see more of it. It absolutely should be positively acknowledged when it does happen because suspect and fraudulent claims need to become as socially unacceptable as smoking indoors has become now. That is where we need to get to. We need insurers to step up on our behalf because they determine whether a claim is brought. There is nothing more frustrating for a business than knowing it is an unfair claim but the insurer decides to settle for financial expediency.
Ms Aoife McBride:
I am glad the Senator asked the question about the €100 because when we were coming here, we were breaking down what the cost of running a business is. In very simplistic terms, if I take €100 through the till, if VAT is taken out I am down to €81.30. If I am operating on a 40% gross profit margin, which a healthy enough profit margin in our industry, I am then down to €32.52. I take wages out of that, which are 25% of my turnover after VAT. I am then down to €12.20 out of every €100. Out of that, I have to pay rent, rates, insurance, heat, light, marketing, packaging and every other expense that is always left. If you talk to somebody in marketing, if you want to future-proof your business, they will recommend you spend 10% on marketing. That would take me down to €2.20 for every other expense within my business. Obviously, that is not viable.
The Senator said he has a restaurant and mentioned putting up prices. We have a recommended retail price. It is set by the company. I am selling to the same person who is selling in France, Belgium or wherever else. I do not have the opportunity to add anything on the other end, so you are squeezing in the middle. We are then talking about raising the minimum wage, which has the knock-on effect of raising all the other wages. You then just cut the hours because you have to. What is going to give within that? I do not have control over the other expenses; that is the other thing. I cannot buy less stock because I have to have the turnover to generate the business. That is the thing. It is said that the minimum wage is being increased, but people are not benefiting from it because if their hours are reduced, they do not have any more money in their pocket.
Deputy Gogarty made a very good point. I suggested a regionalised approach. Maybe that is not the answer, but it is more about not setting global industries against local businesses. That is how we are being set. It comes back to the same thing - what do the towns look like? Do we want businesses in these towns? How do we support that? I do not have an answer on how the wealth that is taken from all these multinationals is redistributed, but we need to spread the wealth. As was said, a nurse in Dublin cannot afford a house. It is not fair. The country is not fair in the way it is set up at the moment. I do not have the answer on how to fix it, but I am seeing it from the point of view that if things do not change, I am out of this business anyway. I guess that is not an answer.
Aubrey McCarthy (Independent)
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No, it is. Your sanity would need to be questioned, if you want to get into business now.
Ms Aoife McBride:
I do not think you would get into retail now. The sad thing is, when I spoke to other retailers in Killarney and Killorglin, every single one of them said that the Government does not care about small business or retail. It was not that they were angry. This was just a thing they were used to and that is the way it is. Maybe it is only because I have come back into the business and am fighting for it, but they are just exhausted. They are saying, "I just need to wait until I retire and get out of here", and nobody is taking over those businesses. It is just sad.
Aubrey McCarthy (Independent)
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Is there something we are missing on the minimum wage? It is a knock-on. As I said, the top is here and we are now putting up the cost, and squeezing and squeezing.
With Enterprise Ireland, IDA Ireland, etc., we focus on the likes of Intel and Pfizer and we provide huge supports. I have spoken in the Seanad about the SMEs, small retailers and hairdressers. They are the backbone of the economy. When Pfizer, Intel or any of these leave Leixlip or Celbridge, we will be done. It is only you guys who will keep it going. I am wondering if we are missing out something here. Is there something that we could do differently with the minimum wage?
Ms Aoife McBride:
You have to make living more affordable. Increasing the minimum wage is not making it any more affordable for anybody. It is pushing up the price of everything so it is not really the minimum wage increase that is going to do anything.
Outside of that, where is the wealth? We are the richest poor country or the poorest rich country - whatever way you want to say it. I am 45 years of age. I live at home with my mother and my daughter and I own my own business. That is tragic. What is this country like? What are we doing? There is loads of money and nobody seems to have it. I do not know.
Aubrey McCarthy (Independent)
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I am involved in a homeless café on Pearse Street and we feed different people. It used to be people who are destitute and people who have addictions, etc. When I was in there last week - I go in to have my dinner there once a week to meet the different people - I met a guy who has a job and lives in a tent in Ringsend. He cannot afford accommodation and he comes into us for his food.
Ms Aoife McBride:
We are in a country where even if you are employed, you cannot afford to live. You cannot afford a house. I do not know what the answer is. In the house where I live, my sister also lives there with her daughter and my brother also lives there. We are all in our 40s and we run businesses. We all have full-time jobs. What is this?
Aubrey McCarthy (Independent)
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Has Ms McBride any good news to finish on, just to cheer me up?
Aubrey McCarthy (Independent)
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Ms McBride will get the vacancy and dereliction grant.
James O'Connor (Cork East, Fianna Fail)
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Was it Garret FitzGerald who said that a sense of humour can be fatal in politics? Is that not right? Anyway, thanks very much. Am I right in saying that Deputy Gogarty wants to come in for a second round?
Paul Gogarty (Dublin Mid West, Independent)
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I was just indicating that I will have to go to speak in the Chamber shortly.
James O'Connor (Cork East, Fianna Fail)
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My apologies, sorry. No worries. I will just say finally, "Thank you so much." It was very informative. I apologies that members had to dip in and out, but I think everyone who came here got a good opportunity to ask good questions and get great answers. The information, although a little depressing, is interesting.
As Cathaoirleach of the committee, I suggest that something we might have to consider specifically is insurance. Maybe we could take a direct approach with the companies as well as the Cabinet subcommittee. We could deal with the Low Pay Commission as well, as suggested by Senator Fitzpatrick.
As Chairman of this committee, I have a concern about the enormous profits being made by energy companies in Ireland. I refer to ESB Networks as the company that is in charge of energy on the grid and to the companies that are dealing directly with the consumers, whether businesses or households. At one point during the lifetime of the current Dáil, Ireland had the highest non-residential - commercial, effectively - electricity prices in all of the EU. It is repulsive that it has got to that stage considering the significant profits that are being made. That is something we might have an opportunity to discuss and raise. I hope that is of some comfort to the businesses that are represented here because it is across the board.
I thank all of you for your time and input. You are all most welcome.
I propose that the joint committee adjourn until Tuesday, 4 November 2025 at 2.30 p.m. for a private virtual meeting and that we sit again in public session on Wednesday, 5 November 2025 at 12.30 p.m. Is that agreed? Agreed.