Brendan Smith (Cavan-Monaghan, Fianna Fail) | Oireachtas source

As we do our work on a daily basis, we must all be conscious of the huge importance of the small business sector throughout the country. Practically every parish, town and village depends on the small business sector for its economic lifeline. By and large, every small business is under severe financial pressure. Such businesses need cost reductions rather than additional costs. Like every other Member of the Oireachtas, I have received many representations conveying the concerns of employers about the possible imposition of additional sick pay costs. Those employers have clearly outlined the negative effects on employment that would ensue if such additional costs were imposed. These representations have come from all sectors and from businesses that rarely bother us about budgetary matters. They have made the point that the effect of this additional taxation would be to drive many small and medium sized enterprises out of business, with the attendant loss of much-needed employment. This country's 200,000 small businesses provide valuable employment for more than 655,000 people. In a small country like this, the provision of such a valuable level of employment in so many enterprises is a great testament to the individual entrepreneurs and their staff. It is a reflection of the valuable State assistance that has been provided over the years under various schemes and programmes.

By their nature, small and medium sized enterprises are located in both urban and rural areas. This country has a very dispersed population. It differs from many other EU member states in that regard. We need to incentivise small and medium sized enterprises for that and many other reasons. It is through the SME sector that we have some hope of dispersing business and employment opportunities throughout rural and smaller urban areas. Many of these enterprises are already dealing with additional costs in areas like transport because of their rural or peripheral locations. Deputy Calleary and other colleagues have dealt with the international comparisons, which had been the subject of misleading commentary. Over 40% of employers currently have no sick pay costs. They are predominantly small employers. It is clear that a new cost burden would be a further tax on employment. Businesses with low margin returns would be particularly vulnerable. The figures for the 2010 Forfás report are very important in this regard. They highlight that labour costs account for 60% of domestic input costs in the retail and hospitality sector and a much higher percentage in the services sector. Those sectors provide employment throughout the country. The major reduction in the redundancy rebate from 60% to 15%, along with the VAT increase in last year's budget, also had an impact on the necessary profitability and competitiveness of small and medium sized enterprises.

We cannot ignore the results of surveys recently conducted by representative organisations like the Irish Small and Medium Enterprises Association and the Chambers of Commerce. I would like to refer specifically to a survey carried out by Early Childhood Ireland, which is the representative body for child care providers throughout the State.

We are all conscious this is a relatively new sector of the past decade to 15 years, whereby 100,000 children are cared for daily in a professional manner, both preschool and after school. The sector has indicated that, if the sick pay proposal was introduced, 42% would increase their fees to accommodate the plan while 97% said they could not afford to pay for the four weeks of sick leave. More than half, unfortunately, responded that such a move would lead to them closing their service. We do not want to see the closure of services that are so important from the point of view of the development of the child and of providing preschool education, with facilities provided throughout the country in both urban and rural areas. They cannot afford to have such an additional burden imposed upon them.

I am glad the Minister, Deputy Noonan, is present. He will recall that through parliamentary questions I have raised the issue of diesel laundering and the illegal activities that are unfortunately so predominant in the Border areas. I know the Revenue Commissioners are introducing additional measures and I hope the Minister will give them every support possible in order to deal with those illegalities, whereby the Minister is losing revenue and local authorities in Louth, Monaghan, Cavan and Donegal in particular incur an additional cost in cleaning up after that illegal activity. Whatever additional measures are needed to deal with those sophisticated operations, I urge the Minister to introduce them and to assist the Revenue Commissioners in this regard.

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