Arthur Morgan (Louth, Sinn Fein)

I thank the Labour Party for sharing time with me, but I do not thank it for requiring me to follow Deputy Penrose as I cannot match his lungs or delivery.

I hope the Minister, Deputy Dermot Ahern, who is present and is a solicitor by profession, will consider the compelling legal argument which has been presented by Deputy Penrose regarding this matter. It offers strong encouragement to the Government to at least consider carefully the Bill. As has been explained already, upward-only rent review clauses mean that when there is a periodical review of the rent being paid, the conclusion of the review is that the rent will not decrease. How, at a time when retailers, small businesses and enterprises are struggling to keep their doors open, trying to keep a few more people from the grasp of unemployment and trying to contribute to economic recovery, are upward-only review clauses still in existence?

At a time when there was an over-reliance on property and consumption, these clauses became a universal feature which were accepted in Irish commercial leases. This is just further testament to what Sinn Féin have said all along, namely, that the over-reliance on the construction sector and the development of a property bubble posed a massive threat to the economy. This over-reliance was not sustainable and could not continue. Not only did these clauses mean that small businesses were priced out of the market, but, because the artificial wealth created by the property bubble veiled the reality that rents would come down because of the over-inflated nature of the sector, those with a long-term lease and such clauses are left paying more in rent than someone taking up a contract. How can companies compete? It will strangle existing businesses.

Government representatives always tell us we need enterprise in Ireland and about the importance of increasing competitiveness, but the existence of these clauses in existing leases is damaging business and creating unemployment. Upward-only rent reviews bind tenants with a lease to pay more for property than it may be possibly worth, as they add extra pressure in terms of expenses to businesses which are already struggling. This is particularly exacerbated by the fact that 55% of small and medium-sized businesses are being refused credit by banks. We all know, from the debates in this House and the broader public domain, that when the NAMA legislation was going through the Houses, we were promised it would resolve the issues of credit flow to small and medium-sized enterprises, which are the backbone of our economy and employ some 80% of those employed in the State. Yet, there is no sign of the delivery of proper credit streams to small and medium-sized enterprises.

Hughes & Hughes bookstore has been mentioned. Bestseller, the company behind the clothing brands Vero Moda and Jack Jones, recently announced it is closing its operations in Ireland. Both attributed their closure to the high property costs in Ireland. All a person has to do is walk down Grafton Street or any other street in the State to witness the effect exorbitant rents are having on businesses. While there was once a time when businesses clambered to get rental space in and around the areas to which I refer, retailers are trying to get out. It may be more accurate to say they are being forced out because of the large rents involved. Soon, we will see more businesses act like Molly Malone and wheel their wheel barrows through streets broad and narrow to sell their wares. This is not an exaggeration. It is not scare-mongering. It is inevitable unless something is done.

This time last year the Minister for Justice, Equality and Law Reform, Deputy Ahern, first signalled that he would introduce legislation to tackle the rent review issue. Since then a welcome Act has been introduced in order to ban upward-only rent clauses, but that does not deal with the possibility of downward clauses. Since last year almost 15,000 businesses have ceased trading. While new commercial leases cannot now include an upward-only rent review clause, there are thousands more which are locked into these unsustainable leases. The working group to examine commercial rents is not due to report until the end of June. Can the country afford to wait that long? I look forward to the Minister's reply. Businesses cannot afford to wait for the report of the Minister's working group. After receiving the report, how long will it take the Government to take action? The example of the mid-west task force demonstrates that often the Government is only prepared to pay lip-service to economic recovery. We will have to wait and see in this case. I hope the Minister will take the matter very seriously.

Spiralling rents, coupled with the economic downturn, has had a serious impact on the retail sector. Opponents of the abolition of upward-only rent reviews argue that these rent reviews actually benefit tenants in the long-term. They argue that if landlords could not increase rent, they would be willing to grant only short-term leases in order to ensure they could re-let a property soon after at a higher rent. However, the process of negotiation needs to be given greater focus. Carluccio's restaurant in Dublin negotiated a reduction in rent after it closed earlier this year and said it would not be reopening unless it could secure a rent reduction. Today, the business has reopened and is reported to be doing well. There is no possibility landlords will yield the same rents on commercial leases as they did five years ago. That is why it is in the best interests of the landlord and tenant to abolish these clauses.

There are two types of tenants. One is the institutional investor and the other is a smaller investor. Both are naturally anxious to gain the maximum possible from their investment. However,they have to recognise, and they have not been prepared to do so thus far, that retailers are being squeezed out, forced to lay off their staff, close their doors and walk away.

The Government has regularly talked to us about the need for competitiveness in this economy. Of course, when the Government does so, it is referring mainly to low and middle income workers, and mainly those in the public service. It is time we brought competitiveness, some level of fairness and a level playing pitch back to the rental sector. The Government has an opportunity to do so through the Bill.

I understand the comments by Deputy Ciarán Lynch earlier in regard to the Government, first, voting down a motion he put forward and, then, bringing back pretty much the same motion at a later date in its own name. Since I have come into the House, that has been the practice, although I do not understand it. Where is the embarrassment in the Government in accepting legislation that is well crafted, or reasonably well crafted if it wants to so describe it? As was said by the two previous speakers, the Government could itself amend the legislation to put it into the shape it would accept in order to save jobs and create a level playing pitch.

Let us consider for a moment who are the employees in these businesses. Sometimes, they are full-time employees who are very grateful for what is often long-term and secure employment. In other cases, they are people who can only afford to do short-term or part-time work because they are, perhaps, single parents, parents with a young family who simply cannot afford child care or people looking after elderly parents. For those reasons, they are delighted with the work offered by this sector.

I hope the Government will recognise that if it does not take this business seriously and move soon, more people will be added to the 432,400 already on the live register. The Minister for Justice, Equality and Law Reform has a capacity to act quickly when the need arises. The need certainly arises here, and I hope he will act accordingly.

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