Anne Rabbitte (Galway East, Fianna Fail) | Oireachtas source

I move:

To delete all words after "Dáil Éireann" and substitute the following: "welcomes:

— the introduction of measures aimed at improving working conditions in Ireland, such as the right to request remote work, sick pay legislation (mandatory paid sick days), pension auto-enrolment, Parent’s Leave and Parent’s Benefit, an additional public holiday and the transition to a Living Wage;

— the broader direct and taxation measures contained in the 2024 Budget package, aimed at alleviating some of the cost pressures faced by Small and Medium Enterprises (SMEs);

— the introduction of the once-off Increased Cost of Business (ICOB) Grant Scheme, which will provide €257 million to small and medium sized businesses and is estimated to support 143,000 or 95 per cent of commercially trading businesses; and

— the recent announcement regarding the tax debt warehousing scheme, whereby the interest rate applying to warehoused tax debt has been reduced to zero per cent;

acknowledges:

— the sustained Government supports to assist Irish enterprises across successive periods of disruption in recent years and the deployment of extensive Exchequer resources to this end;

— the recent Government initiatives taken to support the enterprise sector and the availability of the 9 per cent Value Added Tax (VAT) rate to the end of August 2023 (in recognition of concerns raised by the hospitality and tourism sectors);

— the extension of vital energy supports including the 9 per cent VAT rate on gas and electricity for a further year to the end of 2024 and the temporary excise rate reductions applying to auto diesel, petrol and marked gas oil until the final day of March 2024;

— the continued supports available to businesses relating to improvements to working conditions in Ireland, such as the right to request remote work, sick pay legislation (mandatory paid sick days), pension auto-enrolment, Parent’s Leave and Parent’s Benefit, an additional public holiday and the transition to a Living Wage;

— the wide range of financial, mentoring and training supports on offer to Irish SMEs from Government agencies, including Enterprise Ireland as well as the Local Enterprise Offices; and

— the Government’s ongoing engagement with business across multiple sectors through various Department of Enterprise, Trade and Employment platforms, such as the Hospitality and Tourism Forum, the SME Taskforce, the Enterprise Forum and the Retail Forum; and

supports:

— the decision by Government to undertake a joint assessment of the cumulative impact of changes to working conditions on employers by the Department of Enterprise, Trade and Employment, working jointly with the Department of Social Protection; with a view to taking the necessary policy initiatives to support businesses in sectors under financial pressure where appropriate; and

— the Government's ongoing commitment to monitor the business environment for potential threats and subsequent solutions.".

The impact of rising prices is not unique to Ireland but an issue facing all major economies around the world as the effects of the pandemic unwind with the rapid resumption of economic activity and, more recently, the geopolitical uncertainty following the invasion of Ukraine. The Government, under the auspices of the Department of Enterprise, Trade and Employment, continues to hold ongoing engagements with businesses across multiple sectors through various platforms such as the hospitality and tourism forum, the SME task force, the enterprise forum and the retail forum.

While the Government is acutely aware of the cost pressures affecting SMEs in Ireland, it is worth mentioning that the most recent and forthcoming changes to improve working conditions are a necessary step in ensuring that workers in Ireland can avail of the same conditions as in many of our trading partners. The Government remains cognisant of the fact that certain sectors may be subject to additional payroll costs. For many other sectors of the economy, however, the impact of this range of measures will be minimal and will give rise to an associated suite of benefits to those working in these sectors, especially low-paid staff. Meanwhile, the extension of sick pay and pension coverage to staff in all sectors will ensure that living standards remain high for all types of workers and that those in certain low-paid roles can avail of entitlements already available to other workers.

According to recent work undertaken by officials in the Department of Enterprise, Trade and Employment, these improvements are also expected to bring wider societal benefits and will serve to bring Ireland in line with other advanced economies. For instance, the proposed living wage in Northern Ireland has been set at a rate higher than that in effect here, while workers in Northern Ireland already have long-standing access to entitlements such as statutory sick pay and an auto-enrolment retirement savings scheme. While these changes to working conditions will bring many benefits, in particular for employees, it is recognised that businesses may face rising costs, in particular in the short term. The situation is being monitored continuously with a view to identifying measures which may support businesses in this transition.

Furthermore, it is important to recognise the range of supports the Government has made available to businesses to deal with shocks ranging from Brexit to Covid-19, supply change disruption and the rising energy costs associated with the crisis in Ukraine. These include the Covid-19 commercial rates grant and waiver schemes, the restart grant and the small business assistance scheme for Covid, and the Ukraine enterprise crisis scheme, alongside measures such as wage subsidies and tax warehousing. The Government has been proactive in limiting the fallout from higher rates of inflation in input costs and prices. Prior to budget 2024, a total of €12 billion, 4.5% of national income, was provided in direct relief to absorb some of the impact and ease the burden of inflation on households and businesses. The main programme introduced by the Government to alleviate cost pressures on small businesses was the €1.3 billion temporary business energy support scheme, TBESS. Nearly 7,000 businesses in the hospitality sector received support from the scheme.

The Government has maintained this consistent approach of providing valuable supports during times of crisis. This is evident with the recent increased cost of business, ICOB, grant announced by the Minister, Deputy Coveney, in budget 2024 as well as the business users support scheme for kerosene, launched in September 2023. To elaborate, the increased cost of business scheme was announced as part of budget 2024 and will provide a grant to benefit a significant number of small and medium-sized businesses at a cost of €257 million. The ICOB grant will be available to up to 143,000 businesses, or 95% of all commercially trading business, operating from rateable businesses in all corners of Ireland. Officials in the Department of Enterprise, Trade and Employment are leading the introduction of the ICOB grant, working in conjunction with local authorities, the Local Government Management Agency, the County and City Management Association and the Department of Housing, Local Government and Heritage. A service level agreement is being drafted between the Department and local authorities to underpin the operation of this scheme. This service level agreement will cover the delivery, funding and oversight arrangements for the grant scheme.

The role of the small companies administrative rescue process, SCARP, must also be acknowledged, providing an accessible and cost-effective restructuring process for small viable companies experiencing temporary financial problems. It has been welcomed as a valuable addition to the State's restructuring toolkit for our small company sector.

The use of SCARP continues to be monitored. I note that a total of 50 small companies have availed of the process to date.

While uptake is low to date, it is important to note that this is in the context where liquidation activities, while rising, remain below pre-pandemic levels. The increase in applications this year in comparison to the first year of operation must also be highlighted. Positive feedback from the enterprise sector and practitioners suggests that SCARP is well positioned to assist companies in the period ahead, which is reflected in the registration of almost 65% of approved rescue plans with the Companies Registration Office, CRO. The availability of SCARP as a means to restructure can also encourage creditors to engage constructively with viable companies in distress, diminishing the necessity to enter into a formal process.

A further range of positive supports were introduced through budget 2024, all of which were largely welcomed by both small and large enterprises across the country. Some of these included the extension of the 9% VAT rate on gas and electricity for a further year to the end of 2024; the temporary excise rate reductions applying to auto diesel, petrol and marked gas oil which were due to expire on 31 October 2023 were extended until the final day of March 2024; an increase to the VAT registration thresholds for goods and services, meaning a substantial reduction in the administrative and cost burden for many small businesses across the country and; the extension of the accelerated capital allowances, ACA, scheme for energy efficient equipment beyond the end of 2023 to assist SMEs with environmentally friendly purchases and to alleviate cash flow concerns for smaller firms.

Furthermore, the Government accepted the recommendation of the National Competitiveness and Productivity Council, in its report entitled, Ireland's Competitiveness Challenge 2022, to undertake an assessment of the combined impact of recent and forthcoming changes to working conditions. The Department of Enterprise, Trade and Employment is currently working with the Department of Social Protection on this report, which is supported by evidence received from both employer and trade union perspectives. This report is currently being finalised and will play a pivotal part in informing future public policy responses made by the Government.

Finally, in relation to tax debt warehousing, the Minister for Finance has earlier this week announced a significant change to the tax debt warehousing scheme of a reduction in the interest rate applying to warehoused tax debt to 0%. Therefore, in light of the positive supports for businesses and in consideration of further measures that it intends to undertake, the Government's countermotion is proposed for consideration.

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