Seán Sherlock (Cork East, Labour)

I am aware of businesses in the small to medium-sized enterprise sector which have the ability to trade their way out of their difficulties, some of which have already reached agreement with Revenue on excise, VAT returns, income tax etc., but now find that some of the agencies of the State, including Revenue, because there is such a clamour to get money in, are changing those terms somewhat. It is something that needs to be examined. The motion refers to the SME sector, the loan guarantee etc. However, we need to look to the wider aspect and the potential of the SME sector within the economy. Where Revenue is now putting the squeeze on businesses that have the capability to trade their way out of difficulties, we respectfully suggest there might be some word from some Minister to suggest to Revenue that while it will get the tax due and every person will maintain his or her responsibility for that, it should be more relaxed in lengthening the terms so that some of these businesses are not put out of business for want of better terms from Revenue and other State agencies.

While it is said there is an oversupply of houses in the market, at the same time some businesses are still willing to build houses because there is still a demand by people, in rural areas in particular, who want to build, for example, one-off houses on family-owned land or in localities with which they have a connection. Many people of my generation who have received mortgage approval are finding that such approval lasts for only three months. However, a small building company cannot operate on the basis that someone has approval for only three months. Extending the approval to six or nine months would also help small building firms, most of which are family-owned and intergenerational, to get up and running. It is a case of looking at things more laterally.

I would also like to concentrate on the issue of the regulatory burden ascribed to the small to medium-sized enterprise sector. On 2 June, Mr. Seán Gorman, chairman of the high-level group on business regulation at the Department of Enterprise, Trade and Innovation, attended the Oireachtas Joint Committee on Economic Regulatory Affairs to discuss the work of the group in identifying ways to reduce the administrative burden on business arising from regulation. The high-level group was established in 2007 to act as the fulcrum through which Government, business and unions could tackle issues such as administrative burdens and red tape issues, and propose simplification procedures to reduce SMEs' cost burden. According to the terms of reference of the group as elucidated by Mr. Gorman "its remit is to identify the administrative burdens placed on businesses, in particular small and medium sized enterprises, arising from regulation or other administrative requirements, particularly in the areas of taxation; health and safety regulation; employment law; environmental regulations; company law and statistical returns; to determine ways to reduce and simplify administrative burdens and to eliminate them where they are unnecessary."

The bottom line for the group was to reduce the paperwork associated with regulation, and simplify and streamline the information flow between business and Government. The question for the group is whether it has achieved its aims and whether adequate resources are attributed to this task.

Since 2008 the CSO, in co-operation with the Department of Enterprise, Trade and Innovation, has adopted its standard cost model to compare the results. Mr. Steve MacFeely of the CSO, who also addressed the committee that day, stated:

Previously we had been using the EUROSTAT recommended methodology. The standard cost model measures the burden in terms of money rather than time. From those studies, we estimate that the CSO imposes a burden of approximately €10 million per annum on Irish businesses. That accounts for about 0.5% of total regulatory burden and is consistent with findings in other countries.

Compared with the figures for bank bailouts etc., €10 million is probably minuscule. For a small business, however, perhaps a sole trader or a business employing fewer than five people, reducing that kind of cost would increase turnover and should be considered.

The Labour Party would seek to address the baseline target. If the target is a reduction of 25% by 2012, it would appear there is not enough departmental staff to deal with the high-level group aspirations adequately to move forward the agenda. I am not convinced that any target has been reached to date in reducing the regulatory burden for small businesses. A new political impetus should drive this agenda and no more lip service should be paid to reducing the cost burden. The Government has signed up to an EU target in this respect. The challenge facing us now, given that this process started in 1999 and has been through two transitions, is that we are in an economic downturn. There is a serious urgency about this because of the cost implications for those same businesses.

There is a 25% target for 2012 but it must be remembered that the SME sector is under significant pressure. We clearly should have had a yearly target. The high-level group has met only five times in 2009 and if the need to reduce the regulation burden on businesses is critical then the group should meet monthly. This is a view that was proposed by Deputy Kieran O'Donnell when the high-level group appeared before the committee.

The group is examining five key areas where businesses have stated they have issues. These include the burden of complying with tax law, health and safety, employment law and environmental regulations. The fifth area is company law and the related area of statistical returns. At a recent meeting of the Oireachtas Joint Committee on Economic and Regulatory Affairs, I questioned the high-level group on the cost burden arising from the work of the Health and Safety Authority. I did so on the basis that we wanted the cost of health and safety measures reduced without compromising the safety of workers. On health and safety, the administrative costs associated with the IO/20 risk assessments were €167 million, and €146 million for the IO/13 safety statements. As a percentage of the overall cost burden, these amounted to 51% and 44%, respectively. How, in practical terms, is it proposed to reduce the burden of these two areas by 25% by the end of 2012?

I am somewhat sceptical about the targets being reached. It needs a new political impetus. What I am saying does not necessarily speak to the motion, but in terms of the spirit of the motion and giving some kind of a fillip and assistance to the SME sector, we also need to review the regulatory burden the sector is facing.

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