Emer Higgins (Dublin Mid West, Fine Gael) | Oireachtas source

I thank all Deputies for this useful discussion on the recent set of measures agreed to reduce costs for small and medium businesses. I would like to begin by reiterating the point made earlier by the Minister that small and medium businesses are vital to the success of the Irish economy. As someone with a business background, I understand the importance of supporting small businesses and how integral they are to local communities, as many Deputies have pointed out, and why we need to future-proof them so that they can be passed to the next generation, sold or moved on and continue to have certainty and success.

I spent my first month as a Minister of State meeting many local businesses and business owners up and down the country to get under the hood of what is going on for a business perspective. I met businesses not just here in Dublin but in Limerick, Wexford, Waterford, Galway and Roscommon. I met business groups like ISME, Retail Excellence, RGDATA, Retail Ireland, chambers of commerce and the small and medium enterprise task force, in addition to many more. The feedback from businesses on the ground was why the Minister and I were pleased to extend the increased cost of business grant, which is now open for registration until Wednesday, 29 May. That will give businesses an extra chance to register to get up to half of their rates, facilitating much-needed cashflow. It will provide even more support for businesses in the retail and hospitality sectors.

As the Minister indicated, we have had 74,000 registrations, which represents an uptake of 62% to date. I encourage businesses that have not registered to do so now. They have until Wednesday.

It is a two-minute process. All that businesses need to do is register online. There is no long application form and their local authority sends them a pin code. This is a really quick and easy way of getting cashflow back into their businesses.

It is important to acknowledge the challenges facing Irish enterprises in recent years, as many Deputies here today have done. The Government understands the concerns of businesses in respect of the rising costs they are experiencing at the moment, but the impact of rising prices is not unique to Ireland. This is an issue facing all major economies around the world, arising, first, on foot of the Covid-19 pandemic and, second, from the quicker-than-expected bounceback in global activity that has strained global supply chains. In addition, we have had a period of geopolitical tension that has had a major impact on energy costs. The latter have increased for consumers as well as for businesses.

Earlier this year, the Department of Enterprise, Trade and Employment, along with the Department of Social Protection, published a comprehensive analysis of the cost of doing business. This provided robust evidence in relation to the future impact of new potential sets of measures. This analysis firmly established in a clear and evidence-based manner that there is a cost impact on firms from measures to improve working conditions and that these costs are expected to vary significantly by sector. That is factual. Implementation of the living wage is assessed to have had the most significant impact on costs, with those operating in the hospitality and retail sectors expected to experience a sharper increase in their costs compared with others. Contained in that report is a heat map depicting exactly that.

The package of measures being brought forward will make a difference in helping firms to adjust to these increased costs, as well as more generally to improve the cost competitiveness of firms. I will reflect briefly on a number of these measure and how they will improve the cost competitiveness of firms. Let us take the example of the enhanced SME test. This was agreed as part of the SME package announced last week. Ireland first introduced the SME test following an action in the action plan for jobs back in 2017, under the then Minister, Deputy Bruton. This recommended that my Department would develop an easy, user-friendly SME test suitable for the Irish context to ensure that policy makers think small first. Ireland's SME test was designed to invite consideration of less stringent compliance requirements for smaller companies, where appropriate and proportionate, including simplification of regulatory adherence through the use of templates, reduced regulatory thresholds for SMEs and the use of exemptions, where possible. This approach mirrors EU best practice. The SME test has become an integral part of the European Commission's better regulation guidelines since 2009.

Back in 2022, my Department established a cross-government network of officials to monitor and ensure that the SME test is applied to all relevant upcoming legislation. In advance of the most recent meeting of the network, all Departments had officially nominated a representative. This group reports back on a quarterly basis on the implementation of the test and since the introduction of reporting obligations, 11 Departments have applied the SME test to 32 items of legislation. Working with the Department of An Taoiseach, officials in my Department are now developing proposals for improving the impact and application of the SME test as it applies to legislation and are working on extending it to key non-legislative policy changes that impact the competitiveness of small businesses. Currently, the Cabinet stress tests all decisions on policy, statutory instruments, legislation and regulation against three core areas, namely the cost to the Exchequer, the impact on jobs and on the Good Friday Agreement. Going forward, the Cabinet will soon be stress testing decisions from an SME perspective and looking at them through a small-business-owner lens. To achieve this, a number of steps have been agreed, including increasing the frequency of our cross-government network meetings, rolling out training internally in the Department and across Government and reviewing the SME test guidance document. The Department's legislative handbook is going to be updated to elevate the use of the SME test. We are also examining how the SME test can be better embedded in the national policymaking system, including in the Cabinet handbook, departmental legislative handbooks and the Attorney General's guidance on legislation, for example. We will be encouraging Departments to publish their completed SME tests on their websites to make them publicly available. We will also be requiring justification for any Department of Enterprise, Trade and Employment legislation that has not been subjected to the SME test. Having the SME test fully embedded will ensure that an enterprise perspective is there when all Government Departments are making decisions.

As I mentioned earlier, the reopening of the increased cost of business scheme for further registrations until Wednesday as well as a second round of funding for those in the retail and hospitality sectors demonstrates our commitment to these areas. The Government is taking very seriously all concerns in relation to cost impacts on firms and the evidence available in relation to this. The aforementioned two measures will help to ensure that there is as much of a draw down of the funds allocated to the scheme as possible to help firms to deal with increased costs. Companies have until Wednesday to apply. I ask Deputies for their help in pushing the scheme with business owners and SMEs in their constituencies and encouraging them to avail of it. This is cashflow and cash injections back into their businesses. These measures go beyond seeking to support the viability of firms across Ireland but will also ensure that they can compete effectively and grow their businesses, while providing high-quality, sustainable employment.

It is important to mention again that there is a need for balance in considering the current position of enterprise. The Central Bank's financial stability review of 2023 does not raise alarm bells regarding insolvency spikes or SME impacts. It does note that corporate insolvencies continue to rise but are doing so from an historically low base. Significantly, the report notes that this trend appears to relate primarily to firms that exited the pandemic in a weak financial condition and that did so having availed of huge Government supports. It is the role of Government to make sure we achieve a balance across improvements for workers, such as ensuring that minimum rates of pay are fair, while also having regard to the business environment and the viability of firms. The Government is absolutely committed to achieving this balance. The fact that inflation is now easing is really positive and will make striking that balance easier going forward. The measures announced last week also demonstrate that this Government remains ready to support firms, should there be a need. Ultimately, however, as the Minister said earlier, we need to move in a direction where concerns around viability do not dominate the discussion on the enterprise agenda. We need to keep driving productivity and growth across the enterprise base, helping firms to grow and access export markets and the measures introduced last week will help firms to do that.

The Irish economy is one of the most competitive, globally and that is an evidence-based statement. Ireland has a strong and stable financial position, with sound institutions, a supportive business environment and strong democratic endowments. It is important that we do not become complacent but continue to ensure the delivery of infrastructure alongside investment in enterprise. We are all aware of the increasingly difficult geopolitical environment in which we live now, including the increased difficulties in global conditions as the USA and China take actions to protect their supply chains. That needs to be reflected also. Ireland will weather the uncertain global economic and geopolitical environment ahead in the coming years. We need to ensure that we continue to foster a supportive business environment that is innovative, attractive to inward investment, that fosters enterprise and entrepreneurship and protects workers and jobs. That is what this Government is committed to doing.

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