Michael Kitt (Galway East, Fianna Fail) | Oireachtas source

I commend Deputy Calleary on preparing this motion. Other speakers have described SMEs as the backbone of the economy but the additional €89 million in taxation which the Minister for Social Protection proposes to impose on them will make it more difficult for already struggling businesses. My party is opposed to any move to introduce statutory sick pay. We should instead be trying to reduce the cost of doing business so that the country can become more competitive. Many businesses are hanging on by their fingertips. A survey conducted by Chambers Ireland found that more than 87% of respondents believed that transferring the cost of sick pay to employers would affect their businesses negatively.

The issue has been extensively debated in local media in the west. The Tuam Herald reported that banks are stymying small business start-ups in Galway because they are not offering matching finance to companies approved by the county enterprise board. This is a worrying development because the board has been active in awarding a total of €380,000 to 28 businesses in the city and county of Galway, which has led to the creation of 56 new jobs and the retention of 77 existing jobs. This is happening at a time when the Government proposes to merge county enterprise boards with the local authorities. Funding for the Galway County and City Enterprise Board has already been cut with the result that fewer local jobs are being created and supported. Of the 28 businesses which received finance this year, 18 are existing enterprises. The remaining ten new start-ups could not get finance anywhere else. It is a serious matter if the main banks are that slow in helping new businesses. The banks provided only €80,000 in matched funding for the board's investments. I ask the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Sherlock, to provide additional funding for the waiting list of pre-approved businesses. A delay in funding means that it will be too late to offer grants to those companies.

I welcome the introduction of the micro-finance scheme. The majority of small businesses will qualify as micro-enterprises or sole traders. Applications have been accepted and are now being processed. However, a report on enterprise found that the interest rate of 9.5% is putting many people off the scheme. Some 30% of clients were unable to draw down their grants or get further funding from their banks.

If employers are already paying large amounts in PRSI to cover the cost of sick leave, it will be difficult for them to do more. In 2010, employers paid €5 billion in contributions to the Social Insurance Fund, which was 75% of the total. The current proposal will make them pay on the double. For the more than 40% of small enterprises which do not at present incur sick pay costs, statutory sick pay represents a substantial additional burden. This new burden is seen as a tax on jobs which will impact most on smaller and more vulnerable employers operating low margin businesses. ISME has argued that it will lead to job losses and the cost base will increase. Where does the Minister of State think small and medium enterprises will find the money to pay for sick benefit in addition to paying for replacement staff given that the majority of them are hanging on by their fingertips?

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