Lucinda Creighton (Dublin South East, Independent) | Oireachtas source

This Bill is very welcome. The objective of facilitating lower cost examinership for small businesses is a sensible step. I am disappointed by the delay in bringing forward the Companies Bill on which I recall questioning the former Minister for Enterprise, Trade and Employment, Mary Coughlan, in 2009 or 2010. I understand it is not due to come before the House until 2015, so it was a wise move to extract this element from it and expedite it through the House. I am happy to support that.

The legislation goes some way to address the U-turn on policy on upward only rent reviews which we promised in advance of the last election but failed to deliver on. That is disappointing, to say the least. The reasons proffered for the failure to introduce retroactive alteration of upward only rent reviews were constitutional, which is not unusual. As is long-standing Government practice, the legal advice of the Attorney General was not published. I accept that is the norm. While inevitably legislation of this nature would have been subjected to constitutional challenge, it is fair to say that there is no legal consensus on this matter. While the Attorney General's viewpoint is, of course, persuasive to the Government, it is just that. There are alternative views from legal experts throughout the country.

There was economic consensus at the time, predominantly from commercial property owners, or creditors to commercial property owners, that retroactive changes to upward only rent reviews would significantly damage commercial property price recovery. This was understandably a significant concern for the Government in 2011 given the total amount of exposure the State had both to creditors of commercial properties and the underlying properties themselves. Combining NAMA, Anglo Irish Bank, Bank of Ireland, AIB, Permanent TSB, Irish Nationwide Building Society and EBS, the exposure was considerably higher than the entire GDP of the country, so it was a massive exposure.

We know NAMA and the NTMA were utterly opposed to the change and it is worthwhile pointing out that in the period of time since the Government's policy U-turn on that legislation, commercial property prices rose by 0.3% in the third quarter of 2013 after a 65% fall since the beginning of the recession. Annual income returns for all property now amounts to 7.3% which is remarkably higher than in the UK and most of Europe. It is a very significant and relatively rapid increase. Ireland is now a very attractive place for foreign investors to make considerable income returns on commercial property. This includes properties leased out for retail purposes.

While buildings that are occupied by large multinational companies can bring in high incomes - I would argue that they are inflated - for their landlords, the same simply cannot be said of buildings occupied by small retailers. The ownership of office and retail commercial property is increasingly concentrated among a tiny group of foreign owners who are looking to make huge yields for their investors. There is limited or no protection for the people in the middle, about whom as legislators we should be concerned. This Bill should help smaller businesses to use the examiner process as a means of forcing reductions in rental charges. Increasing rental charges are an inevitable consequence of rising prices in the commercial property market.

I am concerned that this Bill does not go far enough to address one of the largest costs that small businesses face during the examinership process. I refer to the professional fees charged by accountancy firms, particularly in order to conduct examinership reports. This aspect of the matter was alluded to briefly by Deputy John Paul Phelan. Contrary to popular belief, the single largest cost of the examinership process is not the legal fees which are charged by solicitors and barristers. The Minister of State, Deputy Brian Hayes, is well aware of this. The single largest cost is, in fact, the fees charged by accountancy firms. While I hope the initiation of this Bill will encourage smaller accountancy firms to begin offering examinership services to struggling businesses, invariably these skills are not found in the smaller firms. Companies like PricewaterhouseCoopers and KPMG are highly unlikely to reduce their fees to help small businesses in the absence of some regulatory intervention or tool to force them to do so, or some attractive incentive to encourage them to do so.

I ask the Government to monitor closely the success of this Bill. All efforts should be made to urge the larger accountancy firms, which are far more accustomed to conducting examinerships precisely because they have been the preserve of the High Court up to this point, to offer significantly reduced fees to smaller businesses that are looking to avail of the new Circuit Court examinership process. The accountancy firms to which I refer are handsomely profiting from the State across a range of services. That has not changed since the recession started and the property market crashed. The same firms are advising the vast majority of Government agencies and Departments. Their bottom line is unlikely to be severely hit if pressure is put on them to reduce their fees or tailor or target their services to the small businesses that the Government is aiming to support and assist through this legislation. I hope some cognisance will be given to that and constructive solutions will be found. I think there would be widespread support for that in this House. Such pressure would make this extremely attractive legislation even more attractive to retailers and small businesses, the incomes of which are being stripped as a result of uncompetitive rents, which are rising at an alarmingly rapid pace.

Other Deputies have alluded to the inconsistency among local authorities when it comes to commercial rates. Many councils have an over-reliance on commercial rates, partly as a result of the decline in developer levies over the last five years or so. I support Deputy Deasy and others who have raised this issue today and consistently over recent years. Their argument that there is a need for a centrally driven effort to reduce commercial rates must be taken seriously if we are to alleviate the pressure on small businesses. It is not right that small businesses are paying for most of the services provided at local authority level. That, combined with the very foolish decision of the Minister, Deputy Hogan, to row back on his commitment to ring-fence 80% of local property tax revenues for the delivery of local services, is putting added pressure on small businesses. We should be supporting this cohort of people if we want our economy to recover and jobs to be created. I thank the Chair for his indulgence. I thank the Minister of State, Deputy Brian Hayes, for being here with us for so much of today's debate.

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