Noel Grealish (Galway West, Independent) | Oireachtas source

I move:

That Dáil Éireann: recognises that:

— Micro, Small and Medium Enterprises (SMEs) are a critical pillar of the Irish economy;

— the people who create and lead SMEs throughout the country are incredibly diverse, from family-owned businesses, rural-owner managers, traditional to high growth and technology start-ups;

— there are more than 1.2 million people employed by SMEs in Ireland;

— according to the Central Statistics Office, SMEs represent up to 99.8 per cent of active enterprises, with 69.2 per cent persons employed, which generated 41.5 per cent turnover, and Gross Value Added of 34.8 per cent in 2021; and

— the vast majority of these enterprises are micro-sized enterprises that employ less than 10 people;

notes that:

— Government policy decisions have increased significantly the cost of doing business, particularly in the SME sector;

— many SMEs, including rural and regional micro, small and medium sized businesses, are facing significant cost challenges;

— PricewaterhouseCoopers recently predicted that the number of business insolvencies would grow to 1,000 this year, with the retail, hospitality, and construction sectors coming under particular pressure;

— input costs due to the increases in energy, inflation, insurance, cost of labour, national minimum wage increases, higher Pay Related Social Insurance (PRSI), plans for pension auto-enrolment, extended sick-pay entitlements on top of Value Added Tax (VAT) increases, along with many other input factors are making it very difficult for small businesses to continue trading;

— the recent Ireland's Experience Economy survey from the Irish Business and Employers Confederation found that additional costs associated with energy, inflation, and labour were leading concerns for businesses in the hospitality, retail, travel, food, drink, tourism, and entertainment sectors;

— increased wage levels for those on employment permits will have additional implications for the food processing, horticulture and healthcare sectors;

— a combination of higher costs will lead to rising prices and closures;

— the present challenges to business viability in the restaurant and hospitality sector has the potential to significantly affect tourism this year; and

— increases in the national minimum wage will not address the cost-of-living issue for employees because, in the absence of access to affordable housing, most increases in wages will go to pay increased housing costs;

calls on the Government to:

— immediately establish a taskforce representative of micro and small business with Government Departments and agencies personally chaired by a Cabinet Minister to review the application of all Government controlled costs and to reduce Government charges and costs of doing business, with quarterly updates provided to the Oireachtas Joint Committee on Enterprise, Trade and Employment;

— as an interim measure:

— reduce the current VAT rate of 13.5 per cent to 9 per cent for food businesses in the hospitality sector before Easter;

— ensure the 8.8 per cent employer's PRSI rate covers the full national minimum wage level by increasing the 11.05 per cent threshold from €441 to €495.30 per week, commencing before Easter;

— expedite the work permit process and abolish welfare traps which will greatly aid staffing shortages; and

— revise the debt warehousing scheme to allow longer repayment schedules and preferential interest rates to retain business viability and sectoral employment;

— develop an action plan for financial education to strengthen the financial management skills of small business owners and managers;

— create a panel of industry expert advisors and mentors for SMEs partially funded by the State;

— expand access to credit initiatives for SMEs; and

— enhance flexibility in Government procurement of State services to permit Departments, such as Education, Health, Defence, and Housing, Local Government and Heritage, to procure supplies from local suppliers, as opposed to relying solely on central purchasing.

I thank Deputy Shanahan for putting together this motion and for all the work he has done to support it. He is a great supporter of SMEs. I also compliment Ms Cáit Nic Amhlaoibh on her excellent work in drafting this motion. I call on the Government to support it.

Small businesses have borne the brunt of the changes in the economy and world affairs of the past few years, with Covid, Brexit, the war in Ukraine, global supply problems, labour shortages and sky-high energy prices forcing up the cost of materials and goods. Energy costs may have fallen recently, but they are still at a level that is crippling for small businesses. These businesses are threatened. Who in this House cannot list off the names of a dozen or more enterprises in their constituencies that have gone to the wall in recent years because they could not remain economically viable? These are not just faceless businesses but enterprises that are the very heart of our communities – the local shop, the hairdresser and the café, just to name a few – and that offer vital employment to hundreds of thousands of people, often in areas where there is no major source of employment and the nearest is many miles away. This goes far deeper than just providing local employment, though. These are the people who are keeping our communities alive and our little villages and towns vibrant.

Due to the difficulties posed by the Covid-19 pandemic, the Government, to its credit, introduced a facility for companies to warehouse or postpone the payment of certain taxes. At its peak, the total debt warehoused by almost 105,000 companies surpassed €3 billion. Businesses in every county benefited from this stay of execution, including 5,600 in the Minister of State and my county of Galway, where some €115 million in taxes was postponed. I welcome the Government’s announcement of extending the period to repay this debt with no interest charged.

A major impediment to the survival and continued success of SMEs is the shortage of labour. Indeed, a survey undertaken last year for Chambers Ireland found that almost 90% of SMEs were struggling to recruit essential employees. There has been a significant improvement in the employment permit system for non-EU workers, but once a permit has been granted, employers have to wait up to two months for an entry visa application to be processed. There is no logical reason for the employment permit and entry visa not to be processed together in a single application and timely fashion. This would accelerate the whole procedure. In 2023, just short of 31,000 such work permits were issued. While that was below the 2022 total of almost 40,000, it was still nearly double the numbers seen in previous years. This shows that there is a real demand in many sectors, from healthcare to hospitality and from shops to cafés and restaurants, for workers from other countries to fill the gaps that are impacting on the way enterprises are doing business.

It would also help smaller businesses if a welfare trap contained in the regulations governing the payment of jobseeker’s benefit were removed. As matters stand, the benefit is paid in respect of the days people do not work but if they work more than three days, they do not get anything. The problem is that any number of hours worked is counted as a full day. If a local shop brings in someone to cover business for a couple of hours, that counts as a full day’s work. Resultantly, people feel that they would be better off not working at all if the alternative is them losing their benefit. This issue has to be examined. It is a disincentive to part-time employment. Setting a fair limit on the number of hours worked in a week rather than days would get over this problem and help the small businesses and individuals concerned.

Our group’s motion includes a call on the Government to increase the threshold for moving onto the higher rate of employer’s PRSI to reflect the increased minimum wage. This is another example of the many areas where Government policies and decisions impact directly on small businesses. The task force we are seeking to have established would help to better inform the Government on the effects of its decisions on the sector that provides the vast majority of employment in Ireland. Our motion also calls for a reduction in the VAT rate from 13.5% to 9%, which is crucial if small businesses are to survive.

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