Matt Shanahan (Waterford, Independent) | Oireachtas source

The small company administrative rescue process, SCARP, has been proposed. I am a member of the Committee on Enterprise, Trade and Employment and was glad to waive the pre-legislative scrutiny of this Bill because it is important that it be enacted. It applies to small and micro companies, which represent 98% of all companies in Ireland. These companies support almost 800,000 employees in the State. As other Deputies have alluded to, recent Central Bank and ESRI reports have shown the significant pressure that the SME sector is under. When Government supports are reduced, a number of them undoubtedly will have a difficult time of it. The insolvency process that has been proposed would allow a practitioner to act as a process adviser to assist company directors in coming up with a rescue process framework. For people who are unaware, the administrative process in the country to date would generally require an application to the High Court.

This means a minimum expenditure of €100,000 to try to get protection from creditors while company directors seek support. This is not a viable avenue for small businesses. That is why I and other members of the Regional Group are supporting this legislation.

We recognise the process is designed to streamline examinership, allowing communication with creditors and employees, and the proposing of a restructuring plan, including write-downs and write-offs of debt. There is a question with respect to Revenue and how it proposes to deal with historical debt, particularly in light of the warehousing that has been allowed in the last year due to Covid, for example, the warehousing of VAT and Revenue claims. I hope that Revenue will take a proactive stance on this issue. Otherwise, it will be very difficult to find a restructuring process that will work for many small SMEs.

I also raise the question of the treatment of rental agreements and leases, particularly upward-only rental agreements. It has been said that these are protected by the Constitution. I, and others, have seen legal questioning of this, which shows that these agreements are actually not protected by the Constitution. Something will have to be done. It is ridiculous to think that companies will engage in a rescue process in which they are faced with an immediate increase to their rental costs. I applaud the work of ISME in particular with respect to this process - I know the Minister of State has liaised closely with it - in addition to its work on insurance. These are two key areas for the small business sector in getting back on its feet and trying to reduce these significant headwinds.

As I asked the Tánaiste at the enterprise committee the other day, I ask the Minister of State to consider the inclusion of ISME on the labour-employer economic forum. The Tánaiste referenced the fact that IBEC, the Small Firms Association and Chambers Ireland are on it, but this does not represent the full gamut of SME companies. I ask the Minister of State to look at the work ISME has done and to lobby hard for it to be included in this arbitration process. It is very important that the voice of microbusiness is heard in this country.

Members of the Regional Group have supported the recent passing of perjury legislation, which we promoted as a Private Members' Bill and was unanimously accepted by the House. At present, under the proposed small business administrative rescue process, SCARP, legislation, false or misleading statements by a company director are a category 2 offence. I ask the Minister of State to ensure that these offence categories in the new legislation are in line with the recently enacted perjury Bill. As I said, the Regional Group has built upon the fine work of Pádraig Ó Céidigh who promoted this legislation.

On SMEs and microbusiness, I will talk about the macro policy that affects the small business sector. We do a lot of talking in Ireland about micro business and small business and yet we enact large-scale policies that actually reflect what should be happening to macro companies rather than the micros. I am talking about the recent expansion of paternity leave and a sick pay scheme, the discussion on a universal living wage, potential increases to the minimum wage and the increasing regulation coming down the pipes for many businesses. As someone who ran businesses for a long time, I can tell the Minister of State that these are very hard costs to achieve. Everybody would like to pay their employees more and to offer sick pay schemes, pension schemes and all of that, but these are mainly the preserve of large business. Small businesses, micro businesses and family-owned businesses, are not that profitable in the main. I can assure the Minister of State it is often the case that company directors and owners take less remuneration in a year than some of their best employees. We have to look at some of these schemes and what we are proposing around future taxes on employers.

Again, we have the issue of rates, which will come in to play this year, and insurance. Despite the Covid supports in the business space at the moment, many companies have not been trading, especially in the hospitality sector, but continue to have to pay insurance. They are continuing to pay employer insurance, which makes no sense because they are not open. Yet they have no choice because they cannot find an underwriting option outside the one they are in. This, again, is something Government must take up.

I will also talk for a minute about entrepreneurship because I am not sure that many in this House understand the difficulty of trying to start a business, employ people and make it profitable. We do a lot of work in the enterprise space in this country, talking about investment and local enterprise office, LEO, supports and all of that, but at the end of the day it is down to the hard graft of individual promoters to get up and make it happen. For example, if tomorrow you wanted to open a chip ship anywhere in Ireland, the very first thing you would be faced with is finding a suitable premises and location. That will bring you into a rental agreement and no landlord will enter an agreement for less than 12 or, possibly, 18 months. You will have to come up with the fit-out costs yourself. Before you get to trade, you will have to apply for a health certificate. Health inspections and their requirements will probably result in close to €100,000 in set-up costs before a penny is taken. You then have to make sure there is adequate insurance to cover your premises, begin the employment and sales processes and then look at your revenue and try to build it up. All the while you will be faced with rates and demands for employer taxes.

Ireland is fast becoming a non-benign place in which to run a small business. A large number of owners and promoters of small businesses in this country are now approaching 50 and 60 years of age. If they could get out and sell out they would be gone because it is not profitable anymore. The stress we are seeing across the enterprise space is reflecting that. It behoves all of us in this House, as public servants, to understand how well remunerated we are at the expense of many of these people who are hard-pressed, paying taxes and getting very little from the State for it. I welcome the supports the Department of Enterprise, Trade and Employment has provided to small business, namely, the temporary wage subsidy scheme, TWSS, employment wage subsidy scheme, EWSS, and the Covid restrictions support scheme, CRSS. However, we are still going to need further supports, particularly for the hospitality sector, since the deferral of reopening. I again hope this is something Government will look at.

I will also mention the European travel certificate, which is to come into place on 19 July. Anybody looking at the news yesterday would have seen the pandemonium caused in airports in trying to harmonise quick response, QR codes, etc. I ask that whenever we get a travel certificate up and running, we do not emulate what we saw yesterday. We will have a lead-in for this. We must have time to get it right so that whatever travel there will be will happen as easily as possible.

With respect to the announcement today of a working group on antigen screening, I raised the issue of antigen screening with the National Public Health Emergency Team, NPHET, in April or May 2020. We are still talking about implementing it. We are now talking about another body, on the back of two reports on how antigen screen testing will be delivered. We now have the Delta variant and do not have time. We need to start putting some momentum behind these initiatives. On the green certificate, the Tánaiste referenced the other day that, in Europe, it will cover those who are vaccinated, those who have recovered and those who have been recently tested. In this Parliament we now need to look for a green certificate that will take account of antigen tests, so people may have some access to hospitality while they are awaiting vaccination.

With regard to macro policy and political posturing, I will reference a High Court decision to refuse An Taisce leave to appeal a decision on the development of a cheese plant in Belview, Waterford. This project has been held up for more than two years. It was passed by An Bord Pleanála and has had independent reviews and a number of examinations by the Environmental Protection Agency, EPA. The decision to obstruct that project was a policy that was largely built in south Dublin and is essentially, what I would call, political posturing. It is basically trying to make a philosophical political point about the green agenda. It has delayed the dairy and food agri-sector in the south east for two years. Again, Government will have to look at how State-subsidised actors can involve themselves in obstruction of processes that have already been cleared by other regulatory frameworks.

We are facing many challenges in the SME sector. One of the main ones that will come, as soon as supports are reduced, is solvency. As I said, Revenue will have to take a benign look at business. Businesses will find their cost bases are not competitive any more in light of the revenues they will be receiving. Government and the Department of Finance will have to be aware of this. I thank the Tánaiste for recently receiving a Regional Group delegation I led on buying genuinely Irish products, supporting an Irish campaign and for the commitment by Government to start a new buy local campaign in July. This is very important in order to support indigenous food agri-manufacturers, Irish companies and Irish jobs.

I also point out that recruitment is still a major obstacle, believe it or not, as the economy opens up. Government needs to look at the provision of the pandemic unemployment payment, PUP, particularly in lower-paid sectors, which is now acting as a disincentive to re-engaging with employment.

This must be looked at. It is a significant problem. As I said, the Regional Group welcomes this legislation and we hope to see it enacted as soon as possible. We look forward to further support from Government for our critical SMEs and indigenous Irish manufacturing. I hope to see a benign attitude taken by the Department of Finance and Revenue in relation to hard-pressed entrepreneurs and sole traders who are trying to get back on their feet after what has been, and still is, a cataclysmic period of economic uncertainty. I look forward to the support of the Minister of State, Deputy Troy, for that agenda also.

See this speech in context