Willie Penrose (Longford-Westmeath, Labour)

As Mr. Pat Crotty, the chairman of the Small Firms Association, SFA, recently said, small businesses are created, mostly, by ordinary people who do extraordinary things. They have the vision, determination and willingness to take risks to deliver on their ideas, and they extend their business, create employment and, hopefully, generate the profits that enable the Government to generate tax income to redistribute. Thus they fulfil the social needs of our society, a noble concept which we in the Labour Party wholeheartedly endorse and applaud. Those concepts go back to our very foundation. Without a normal, functioning financial system, Irish small businesses have no hope of surviving this recession, and the jobs that will be lost as a consequence have absolutely no guarantee of being replaced.

As well as access to finance, which is critical for all businesses at every stage of their development, and which is especially important in the current climate, the issue of late payments across industry generally is also critical. This is the root cause of most businesses' problems, and the reason they require assistance from the banks more than usual. The Prompt Payment of Accounts Act has a lot of merit, but it does not work in practice as well as anticipated, as businesses are unwilling to apply its terms for fear of damaging long-standing business relationships and recourse through the law in terms of enforcement is too expensive. Perhaps the legislation should be renewed with the possibility of strengthening it and make the 30 day payment period mandatory. Some sort of buffer would have to be agreed by way of transition to the new arrangements; perhaps we should consider the establishment of a small claims court for business similar to the Small Claims Court for consumers. That could be a way forward.

Management capability is another area that requires immediate action because if managers are not given the skills to deal with a recession, they have little or no hope of coming up with or delivering a plan to ensure their businesses' survival and potential expansion into the future. Even in the good times, 40% of small businesses were failing during the first five years. The OECD estimated that the primary reason for this was lack of management capacity. The SFA National Centre of Excellence was set up in 2006, and it is imperative that it becomes a top Government priority that adequate funding is allocated to this centre.

We need to concentrate on securing new markets. It is clear we have been over-reliant on construction and domestic demand over the past decade or so, when there was surplus cash in the economy. This has meant that many businesses have not looked overseas for new markets. This is now an imperative due to the small size of our domestic economy. Given that two out of three people are employed in domestic services, the internationalisation of our service industries must now become a policy priority. Enterprise Ireland has recently set up a unit for such services.

Government supports must be specifically targeted. The difficulty, as we in the Labour Party point out in our motion, is that county enterprise boards, which have been very effective, can deal only with entrepreneurs or companies employing fewer than ten people. We want to remove the limitation of the type of enterprises the boards can support and raise the limit on the number of jobs they can create significantly above ten, which is totally inadequate in the current climate. This will necessitate a significant increase in measure one funding to maximise that potential for job creation. The vast majority of companies in the country have no State support, other than training through FÁS or Skillnets, so we need to look after all companies that have the capacity to grow and create vital and much needed jobs for our citizens.

The cause of small businesses has not been helped by this Government's actions or, more correctly, inaction over the past decade. Is it not time a self-employed allowance was considered and that the PAYE allowance be given to proprietary directors? In the context of recent developments in Britain the level of indirect taxes and other forms of stealth taxes imposed over the years assume even greater importance in terms of competitiveness, and their possible impact on the distortion of economic activity must be addressed.

Our fuel and energy costs are way out of line with our EU counterparts, especially for SMEs, which account for almost 36% of total electricity consumption and have borne the burnt of these increased costs. The Government has achieved windfall gains through higher VAT receipts on fuel, electricity and gas, as these prices increased, as they also did for the consumer.

The level and depth of bureaucracy imposed upon businesses, which effectively strangles them and often prevents them getting off the ground, is another bugbear. People in small businesses have told me they often have to employ a specific person to formulate replies to all the queries and documents, some of which run up to 100 pages, received from various Departments and agencies. It is time to consider a significant reduction in red tape especially at this point in the economic cycle. A standard form could be developed to allow businesses to reply to queries from the Revenue, the Departments of Enterprise, Trade and Employment and Social and Family Affairs, the Chief State Solicitor's Office, CSSO, county enterprises boards, Leader boards and the Health Service Executive. The CSSO form is dropped into the letter boxes of small businesses and they must reply within a certain number of days. What is the CSSO? It is another imposition. This would cut out the duplication and unnecessary, but time consuming, questions. We must make it simpler for businesses to get on their feet and stay there. I commend this motion to the House.

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