Ciarán Lynch (Cork South Central, Labour)

I understand The Body Shop has a business on Grafton Street. Referring to the statement I cited from the Society of Chartered Surveyors, Mr. Macdonald writes:

This sounds like the type of statement that might have been made in Westminster in 1845 in defence of Irish landlords' response to the plight of tenants during the Famine. It reads well but is not a true reflection of reality on the ground.

What is the reality on the ground? It is that the job is only being half done in this legislation. Total employment in the wholesale and retail sectors in the first quarter of this year was 285,000 employees or 14.5% of the working population. According to the latest recorded figures, the Exchequer received €4.5 billion from the sector in 2007 under the headings of VAT, taxes paid, PAYE, income taxes other than PAYE, corporation tax and capital gains tax. Given that retail and wholesale are significant players in the economy, the rent issue needs to be addressed.

The House has heard that costs are undermining Ireland's competitiveness. In the retail sector, the problem is not the costs of employment but the cost of leases which are a multiple of labour costs. As the Title of the Bill I have introduced indicates, we face an emergency.

I propose to outline what will occur should the Minister refuse to accept the Labour Party amendment. The measure proposed by the Minister does not have a retrospective element. Given that few leases are for five years and the vast majority are for 25 years, it is possible that many leaseholders will wait for up to 24 years before the measure proposed by the Minister will come into play. We have many more Celtic tigers and recessions in the next 24 years. A mechanism is required to allow retailers who are pinned to their collars and in danger of laying off staff to renegotiate their leases from next week onwards. This will not be possible under the Minister's proposal.

What signal is the Minister sending out to the market? What specific message does he have for retailers? Given that most lease cycles are for 25 years, how will landlords and tenants in the private commercial sector interpret the Minister's actions this evening? Is his message that further legislation, whether primary or secondary in nature, will be introduced if the proposed measures do not produce the desired results?

Intervention is required in the market because it is distorted. Leases are the only area where it is not legally permitted to reduce prices. Will the Minister outline the nature of the legal difficulties to which he referred? They cannot relate to property rights, as outlined in the Constitution, given that this issue has been addressed in other legislation. Compulsory purchase orders, for example, are one mechanism under which the State may determine the value of land or property. Part V of the Planning and Development Act provides that 20% of a development may be set aside for social and affordable purposes. The State has, therefore, intervened in the market. In light of these precedents for State intervention, I fail to understand the reason for the Minister's legal concerns.

What does the Minister expect commercial landlords to do next week? Does he hope they will take an altruistic view in response to his request to review rents and approach their tenants for discussions? As the law clearly protects landlords, they have no reason to engage.

The Minister is effectively creating a two tier system. From next week onwards, new leaseholders may avail of a downward rent review. While I acknowledge that the measure provided for by the Minister establishes a precedent and breaks new ground in terms of how rents in the commercial sector operate, it also creates a second tier for existing businesses trading on the streets of Dublin, my city of Cork and high streets in towns and villages across the community. These companies are locked into 25 year leases and may not benefit from the Minister's proposal. One possible outcome will be that businesses will go to the wall in the next couple of months because they cannot secure a downward rent review, new tenants will assume their lease and avail of this mechanism and jobs will be lost in the meantime.

The Labour Party amendment proposes to delete three lines of the Bill. If it is accepted, the Minister will ensure that current and future tenants will benefit from the measure he has proposed. This is an issue of critical importance. This morning, Deputies heard once again that jobs are being lost and Ireland is not competitive. Given the figures from Revenue showing the number of people working in the retail sector and the income it generates for the State, it would be wise of the Minister to accept the amendment.

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