Tuesday, 10 December 2019
OECD Report on SME and Entrepreneurship Policy in Ireland: Statements
I welcome the opportunity to discuss this quite large but important report from the OECD. We need the recommendations to be implemented. I welcome the fact that the Minister intends to publish her plans soon. Could she define what "soon" is? We are all aware that we may not be in the current Dáil for all that much longer and it is important that this be addressed.
By and large, the report points to many strengths in SMEs but also to challenges and issues that need to be addressed. As has been said, they represent a large sector of our economy and employ a large number of people in the workforce. As the Minister said, 70% of our workers are employed by SMEs. This does not always get the attention they deserve. Job announcements in large multinationals receive a great deal of attention whereas the same number of jobs may be provided by in a large number of SMEs in the same area but they are seldom mentioned. It is important to stress the large role they play in our economy, particularly in local economies and in the regions. We need to redress the balance between the small number of large companies, primarily multinationals, and SMEs and provide the opportunities that are recommended in this report for small businesses to scale-up. That is central to many of the recommendations.
They point to a number of issues and one of the key findings is access to finance. This should not be such an obstacle, given the presence of the Strategic Banking Corporation of Ireland, for example. The commercial banks have been put on a healthy footing, thanks to the people, at a huge cost. They should be more proactive in providing funding. Many pension funds are investing but they do not always invest in productive economic activity. There needs to be more of an effort to address that. As has been mentioned, the cost of insurance is a significant barrier as well and progress has been far too slow in addressing that issue. We have had opportunities to debate that but it is a key factor.
Small businesses are particularly worried about taking risks and taking out loans. Wherever it is possible, loans should be guaranteed or it may be preferable to provide grants rather than having the risk of a small company being worried about being able to pay such loans back. If loans are the option, these should be issued on favourable interest rate terms. All of these issues are important to small companies willingness to invest in developing and becoming larger.
An issue that is clearly highlighted, which has been referred to by previous speakers, including the Minister, is the gap between the LEOs and Enterprise Ireland. We will be aware of this in our local areas. We all know people who are trying to get a small company up and running and are trying to get certain support from the LEOs. They then find, as they try to scale up, that they are not big enough for Enterprise Ireland but too big for the LEOs. That is a problem. Some practical measures need to be put in place in that context. Consulting people in the sector is crucial as they know exactly the challenges that are facing them. They can often identify exactly what kind of supports would be suitable to help them to grow.
If a large number of small companies can grow, that would make a major difference in respect of employment opportunities in local economies and generally in respect the economic health of the country. We do not want to be as dependent as we currently are on multinationals for jobs.
We have a healthy jobs economy, but it is over-dependent on large multinationals.
Brexit uncertainty is an obvious issue. We have had the opportunity in parliamentary questions and so forth to raise the concerns and uncertainties that still exist about the effect of Brexit. Perhaps there will be more clarity by the end of this week in that regard.
Regarding spin-offs, many of the smaller indigenous companies are set up as a result of people working in multinational companies and seeing an opportunity to start their own business. I see it in my region where a large number of companies have been established in that way. They need support. The ones that start in incubation settings in higher education institutions tend to have good support due to how they start and where they are situated, but those that start outside that setting and in the community are probably more exposed. Perhaps there is a way they can get greater support. The Minister referred to clusters. My area has both a university and an institute of technology which are good at supporting and incubating companies that develop out of the institutions. I am sure that is the case in other parts of the country. However, there are many entrepreneurial individuals in Ireland who set up companies and do not have that type of structure. If possible, they should be linked into the higher education sector that is already doing that type of work.
The Minister mentioned the need for us to move to a low-carbon economy. That is a crucial requirement and it obviously must be on a large scale. There are opportunities in that regard and many of them are locally based because, by definition, one wishes to produce things in the local area rather than having transportation costs and the effect that has on the carbon footprint. We must put more emphasis on supporting businesses operating in that sector, and this is mentioned in the report. There are many such businesses. By and large, they are highly motivated but they need specific supports. They can potentially make an enormous difference to our economy and, indeed, to the air we breathe and the future of our planet. There should be a particular focus on those companies.
I looked at the selected recommendations in the executive summary. They have largely been covered in all the contributions this evening. They refer to identifying local cluster challenges and bringing together a network of regional enterprise network managers. We also have regional skills organisers in the eight regions. They come through the Department of Education and Skills and link local businesses with higher education institutions. They have an important role to play. There is also a reference to building up apprenticeships. I have often spoken about apprenticeships. There is huge potential in that regard. Again, it is driven primarily by the Department of Education and Skills, but there are now apprenticeships across a variety of sectors in the economy. They provide an opportunity for SMEs to develop their workforce and give opportunities to people in a variety of sectors to develop very good careers as well as stronger businesses.
It is important that these recommendations are implemented and in a way that involves consulting widely with the people directly involved in the businesses. They know more than probably any Member of the House what the challenges are and what would help them to scale up their businesses and be sustainable for the future.