Dáil debates
Tuesday, 20 October 2009
Government Charges on Businesses: Motion
7:00 pm
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I move:
That Dáil Éireann calls on the Government to freeze all charges on businesses until 2012.
I wish to share my time with Deputies James Bannon, Simon Coveney and Joe Carey.
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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As everyone knows, Ireland needs a competitive indigenous business base if we are to return the country to a secure financial footing. Our SME sector is facing serious challenges but is vital to the health of both the national and local economy. Our small businesses employed more than 800,000 people in every town and village in the country before the worst of the of the current crisis hit. They are valuable members of each community, they provide employment for local people and put back money into the local economy. They also contribute billions in tax to the national finances every year. The current crisis has hit them hard with scores shutting down and many people relying on social welfare payments. This motion is about trying to redress that balance and seeing what we can do to keep costs low and to protect employment.
The Government and local authorities have an obligation but action is needed, one way or another, to keep these viable businesses open. In the past year, the financial institutions have been largely responsible for neglecting the type of additional assistance required to keep small businesses afloat. Fine Gael and other Opposition parties have called on the Government to ensure the vital blood flows to the system so that businesses are kept afloat. Financial institutions must be forced to grant overdraft facilities and finance for purchasing stock so that the shop door stays open.
The motion calls on the Government to ensure that we do not do any more damage to indigenous businesses. Retail receipts have collapsed and the Government has maintained or hiked up charges and costs to business. Surveys published by the Central Statistics Office in the past month indicate that Government related charges are going up while market driven charges are going down. We recognise that Government must cut costs to survive the current financial crisis, but so must businesses. If there is to be a genuine upturn in the economy, our businesses need to be well placed to take advantage of that.
The lack of access to finance and credit continues to suffocate successful businesses which need only a helping hand through this precarious period. The National Asset Management Agency proposal does nothing to get credit lines restored to businesses in the short or medium term. The fear of most people is that when the taxpayer has contributed €11 billion of an investment into the banking institutions this year, with a potential investment of much more through NAMA, the banks will say, "Thank you very much" and will protect their shareholders and the banking institutions but will not look after their customers.
Irish economic competitiveness continues to slide as the sand on which we built our economy continues to crumble. In 2000, the Global Competitive League rated Ireland as the fifth most competitive economy in the world. Last month, they further downgraded Ireland to 25th position. The warnings given by the National Competitiveness Council and by Opposition parties about the need to place competitiveness high on the Government's agenda were ignored in the past seven years. The lack of access to finance and inefficient Government bureaucracy are serious problems which have accentuated this issue for business in Ireland.
In past years, there was a temptation for local authorities to balance the books by increasing commercial rates and to use them to pay for new goods and services while there was no urgency about imposing efficiency standards or any type of reform. Since income from building levies collapsed local government faces serious financial difficulties. All Members of the Oireachtas have been brought before our managers and directors of services in recent times and we know that development levies have dried up and that the difficulties local authorities are experiencing in collecting the commercial rates they are owed is a serious problem and that there is likely to be a shortfall by the end of 2009.
If we blindly increase building rates to balance the books, we merely prolong sustainable economic recovery as our businesses struggle. To restore competitiveness we need to lower business costs to help them through the recession. Our businesses already pay some of the highest energy costs in Europe and are burdened with unnecessary red tape and bureaucratic road-blocks. These issue have been raised on numerous occasions by Deputies but the Department of Enterprise, Trade and Employment has yet to come up with a response.
While Fianna Fáil was part of the problem, we must now look at what will be part of the solution. This week, I had the opportunity to meet the Fine Gael council group leaders and I asked them to agree motions at all local authorities to advance the proposal of keeping commercial rates at their present level for the next three years. We need to take action such as that if we are to give viable businesses the best chance to survive the current economic downturn. Then we can all look to a more stable and prosperous future in the years to come.
Tonight's proposal is not being considered in isolation. It should be part and parcel of a radical reform package of local government. As Fine Gael spokesman on the environment, I put my cards on the table last May when I outlined how we could reform local government and bring the various strands of community and public opinion into the remit of local government in order to focus every unit of local government on the objective of keeping people in employment and promoting job creation. Local government must change radically. Tonight, we outline our commitment to freezing local business rates but we cannot continue to charge and tax businesses and families at a local level without fundamental change to how local government works. The Fine Gael plan to overhaul local government will devolve power from the centre to the local and empower citizens with a stake in their own communities.
Local government, as the connective form of government to local communities, is the best form of government to advance projects in a small way at local level which will lead to the protection and creation of jobs. We all know that foreign direct investment will be difficult to attract to the country in the significant levels we have seen in the past ten to 20 years. We must consider the contribution the small business sector continues to make in protecting jobs and creating employment. Local government has suffered from an identity crisis, as it lacked a strong primary mission. We must give it a new mission as the focal point of creating jobs.
There is a strong disconnect between local authorities and their respective communities. Local authorities have been sidelined when it comes to providing new services, with central Government either providing services directly or devolving power to an agency or quango. It is not acceptable that Departments are funding various groups and boards established at arm's length in the community without an accountable remit to local government. We want to see local authorities becoming the primary driver of business support and development at local level. It will involve 95 State bodies being merged or moved under local government structures, which will save millions on administration and will make a major contribution to freezing local business rates. Local authorities must play an integral role in dragging Ireland out of recession. This will involve ending the widescale duplication of services among unelected bodies and bringing them under the one roof of local government to create a one-stop-shop for business and job creation incentives. Fine Gael has also identified 53 bodies which should be amalgamated into local government, with the abolition of 42 more. This would result in an administrative saving of more than €70 million per year to the taxpayer.
We are taking on board the precarious financial situation of the country while, at the same time, looking for the best opportunities to promote business and employment. The creation of business support one-stop-shops based in local areas should be a priority. There is a massive potential to benefit the national and local economy via the implementation of this policy. If local government were directly involved in this work it would revolutionise the connectivity between business ideas and local businesses and the local people who matter. The consolidation of the many agencies involved in local government would result in taxpayers' money being saved and avoid unnecessary duplication of services.
In the Celtic tiger era the system of local government has developed into an elaborate structure the country can no longer afford. An examination of the various agencies under the remit of the Department of the Environment, Heritage and Local Government, the Department of Community, Rural and Gaeltacht Affairs and the Department of Enterprise, Trade and Employment showed that a significant amount of work could be done to row back on the expansion of some agencies and the creation of new ones. The country cannot afford such agencies at present. An independent examination of those agencies would show they are not delivering on their remit in the way we would expect.
Citizens should continue to expect the highest form of customer service from their local authorities. We have proposed simple reforms in the structure of local government to improve services to the public and elected representatives, including a special customer service unit which would be uniform across all local authorities and based on best practice. We wish to see savings and efficiencies rather than new taxes and charges. We need to restore trust at local level. Putting local authorities back into a central role in the community would result in greater community cohesion, better services, and more employment opportunities, while recognising the difficulties in the public finances in terms of Government Estimates in 2010.
We are all familiar with stories we have heard from management and directors of service across the board. Given the lack of development levies, there is a lack of funding to promote employment opportunities and investment in infrastructure and we will have to devise new ways in which to maintain service provision and jobs at local level, which is the overriding objective of this motion.
I commend the motion to the House.
James Bannon (Longford-Westmeath, Fine Gael)
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I thank my colleague, Deputy Hogan, for bringing this important motion before the House to highlight an issue that is destroying our competitiveness and driving the galloping horse of recession, to the detriment of businesses throughout the country, especially small and medium enterprises, SMEs.
Government driven non-pay costs in Ireland compare poorly with other countries. According to an IDA business attitude survey, charges and energy costs are a strong ongoing deterrent to energy intensive companies coming to invest in Ireland. Prices were set extremely high in response to the $148 a barrel peak for oil, but despite the subsequent collapse in the price of oil and gas, in a blatant anti-competitive move, Government price levels have not reflected that. Currently, Ireland has the second most expensive electricity charges in Europe.
The Minister should consider the knock-on effect for our local regions, as high unemployment and closing businesses tear the economic viability from rural and urban communities. With a terrible sense of history repeating itself, the slowing of the live register can be attributed to one fact only - emigration. That is a word that dominated the post-war years up to the 1980s and impacted on generations. It is now to be the legacy of the Fianna Fáil and Green Party Government.
It is interesting to see the complete lack of impact the current Minister for Enterprise, Trade and Employment is having on the red tape that immobilises businesses. That was also a feature of the Minister's previous portfolio, with which she failed to get to grips, something to which our farmers will attest to their cost. Her reply to a parliamentary question on the issue, which stated that her Department is charged with leading the cross-Government drive to reduce red tape, is not guaranteed to inspire confidence.
My own area of Longford-Westmeath is at the heart of the country but it is certainly not at the heart of Government provision or assistance. Across the board from health to education to infrastructure, the midlands has been consistently ignored by this Government. Despite the economic development of Longford-Westmeath which was, until the Government pulled the plug, progressing at a steady pace, driven by local input and hard work, the Minister has now removed our competitiveness. We are facing one closure after another, as small firms are driven out of business and large foreign investors shun high charges to go elsewhere. Increasing costs have made it impossible to survive in a competitive global market. Car dealerships are particularly hard hit but the Government has failed to provide incentives to rectify the fall out.
Every town in the midlands is feeling the pressure. There is a strong feeling that businesses cannot be expected to pay the same rates as when times were good. It is imperative that rates are frozen to take account of the current economic climate. One hotel manager in the midlands said recently that businesses are being fleeced, between refuse collection charges, water rates and high energy charges.
We can forget about tourism. Hotels in the midlands are shelling out tens of thousands of euro every week on general running costs, in an industry that is currently low on occupancy and equally low on a future. Occupancy in some hotels has fallen by 70% in 12 months. Lack of trade due to drink driving restrictions is forcing hotels and bars to open late and close early. Unless the hotel industry is supported by the Government it is set to suffer the same fate as the construction industry. The Minister should step up to the plate and provide answers and incentives. That is what people need.
The gap between price and value is as much to blame for economic stagnation as the recession and that is where the Government is to blame. Logic would dictate that ever-increasing charges are not the way to promote recovery. Instead, incentives, especially for small and medium firms must take the place of increased taxation. Fine Gael will support small businesses through our SME rescue package, which will reduce local authority rates and freeze Government charges, reduce energy costs, abolish the €10 travel tax that is destroying tourism and make it easier for SMEs to win public tenders.
Small native businesses are the key to recovery due to their close relationship with consumers. Properly supported, with low cost of entry, these companies could provide a more affordable product that would fill a gap between the standardised global product and the requirements of the home market. It is a pity I do not have more time as I have much more to say on the subject.
Simon Coveney (Cork South Central, Fine Gael)
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I will speak for seven minutes and if Deputy Tom Hayes does not come into the Chamber I will continue into his time. Will the Leas-Cheann Comhairle indicate when six minutes are up?
I welcome the opportunity to have this debate. I welcome also the presence of the Minister of State with responsibility for employment, Deputy Kelleher. This motion is very deliberate and specific in its intention, namely, to propose a concept this party already supports, to try to convince the Government to freeze commercial rates at local authority level. The Minister of State will accept that when a country moves from almost full employment and boom time to recession, the priorities must change, as must the way in which we fund local infrastructure and local government. The rules change.
First and foremost, as policymakers our priority in government or in opposition must be to ensure we do everything we can to keep businesses afloat and people employed. The cost of retaining people and preparing them for new types of employment is expensive from an economic point of view and it is also hugely stressful for the people involved. It puts individuals and their families under pressure. We must avoid the creation of a situation where we have a large number of long-termed unemployed people who will lose motivation, leave the country to try to find employment or, worse still, develop a reliance on the State for income.
We have made a decision to ask all our councillors across the country to fight for a freeze on commercial rates to give businesses under financial pressure some breathing space in terms of the expenses they face. The Government will be cutting its costs in the same way because we can no longer afford to survive in terms of what we currently spend on our public sector or on social welfare. We must allow businesses to do the same. With the reduction in the centralised funding for local authorities now that tax revenue has decreased, we cannot force local authorities to lean on businesses that are already under pressure by increasing their rate base to make up the difference to ensure that basic services are provided at local level. The temptation exists to do that. I have had difficult debates with our councillors in making the case that local authorities need to face tough cost-cutting decisions because they are taking a stand to keep rates at the same level they were last year.
There is a purpose underpinning what we are trying to do, namely, the prioritising of employment. I come from the town of Carrigaline in Cork which has a population of 14,000 or 15,000. On one side of the main street in the town 14 enterprises have gone out of business since January. Almost one in every four premises is either unoccupied or up for rent, lease or sale. Small businesses, in particular, cannot afford to take up the extra costs local authorities face because of a reduction in the general income that get from the Exchequer. They are the soft touch. We are trying to protect them to ensure they can stay in business and in two or three years' time we can increase rates as businesses start to grow again and, hopefully, to employ extra people as confidence is restored in the economy and consumers start to spend again.
This is battening down the hatches time in terms of the economy. We must help small businesses. We must give them free advice on how to restructure to prepare for recession. We must also ensure that their cost base reduces or, at worse, stays the same to give them as much of a chance as we possibly can to allow them to survive, to keep a skeleton business in place until we have an economic stimulus and growth again.
The Government amendment to the motion misses the point. We can take specific action in terms of rates and water and refuse charges. We could make a strong statement to businesses that we will not increase the load on their shoulders coming from local authorities for the next two or three years while Ireland tries to struggle out of this hole of recession, that they should do their best to stay in business and that we will give them all the help we can. We are not saying that to them, rather we are saying we are stuck for money and we will target them to make up the difference or at least part of the difference. In doing that we are increasing the pressure on them, which is resulting in the closure of many small and larger businesses. We can do more than simply freeze rates.
I note in particular the reference to energy costs in the Government amendment. I do not know what I have to do in opposition to get the message across to the Government that it is not doing enough to reduce energy prices. It is trying to do a considerable amount in terms of a switch to green energy, a switch to more sustainable energy sources and a move away from a reliance on carbon-based imported fuels. I support all of that, but the priority in recession must be to reduce the cost base for businesses. That is not happening. Perhaps it is because we have a Green Party Minister whose philosophy is that the more expensive energy is, the less energy people will use, and that is good for the environment. That may be a valid ideology when we can afford to do it but it is not valid when we are putting people out of business. That is the position. It is why it is important that the Minister of State, representing the large party in Government - which understands how to prioritise between environmental concerns, which are valid, and competitiveness concerns, which are equally, if not more, valid at present - must take a stand with the Minister. The Minister is driven by an ideology that views high energy prices as a good thing in a world that is rightly increasing the cost of carbon charges. There needs to be a counter-balance that addresses the cost of energy and keeping enterprises in businesses.
A survey of multinationals based in Ireland, released as recently as this month, stated in regard to energy costs that, as with other years, respondents indicated that Ireland's cost base was significantly higher than in comparable locations. When asked to compare the number of costs in Ireland, the most expensive area highlighted was energy. Some 86% of respondents indicated that energy costs were more expensive in Ireland than in competing locations. One company with a base in Ireland stated, depressingly, that cost is the major challenge facing its Irish operation. It stated that virtually all offices globally have a competitive advantage over its Irish operation. It further stated that it had no doubt that if its company did not now have a substantial presence in Ireland, it would almost definitely not establish one. I rest my case.
We must make it easier and less expensive to do business in Ireland. We can take action, particularly in the energy area, in terms of changing the way in which we regulate the energy sector in Ireland and of not allowing energy generators to make windfall profits on the back of carbon charges, which they are required to do by regulation but for which consumers and businesses pay. Last year, Irish consumers, namely, families and businesses paid an extra €220 million to energy companies because of the cost of carbon charges on their bills. We have done nothing to recoup that and to try to give it back to people to boost Irish competitiveness.
Brendan Howlin (Wexford, Labour)
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I call Deputy Joe Carey and I presume he will share time with Deputy Tom Hayes.
Joe Carey (Clare, Fine Gael)
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Deputy Tom Hayes has been detained and I speak for the duration of the period in this timeslot.
I commend Deputies Hogan and Varadkar on bringing forward this motion. Government charges are making Irish business uncompetitive. I concur with what Deputy Coveney said. In my town of Ennis businesses and shops on the main street have closed and have not been replaced. Jobs have been lost and the Government has sat idly by and not offered them any hope or respite. This motion offers some hope to those business people by proposing to take some pressure off them in terms of reducing the costs the Government places on them.
The National Competitiveness Council has reported that non-pay costs compare poorly with other countries. Ministers during the past 12 months have constantly used the excuse that we are economic victims as a small export-driven economy and that international forces are to blame for our predicament. If this is so, those same Ministers must now acknowledge that the converse of this argument must now apply. It is critical that our cost base as an export-driven nation be addressed. It is not good enough nor sustainable for the Government to sit idly by allowing the business sector to deal with competitiveness issues while allowing costs under its control to escalate. Where is the "pulling on the green jersey together" approach when we see, despite general deflation in the economy, that the annual inflation rate in State services is expected to average 13.2% this year? Price increases have been applied across a range of public administered services, including increases in health insurance premiums of 19.4% year-on-year, in taxi fares of 8.2%, in rail fares of 13.7% and in bus fares of 13%.
Irish businesses, those that have survived, have performed admirably in an absolutely horrendous environment over the past 12 months despite the banking crisis, the recession and most of all the Government which, in the first instance, has done nothing to stimulate any type of economic activity and which, more important, presided over and orchestrated this 13.2% rise in the cost of State services.
Has the Government issued policy directions to its regulators and agencies to ensure that national economic and competitiveness objectives are prioritised in all regulatory decisions as recommended by the National Competitiveness Council in June of this year? Why had Ireland the second most expensive industrial electricity prices in the euro zone - 34% above the average - at the end of last year? Electricity prices have increased by 70% over this decade.
It is interesting to look back at the Office of the Financial Regulator and its snoozing on the job. Is it not time that all of the other regulatory officers were brought under the microscope and evaluated as to how they are doing their job? Does the manner in which they do their job reflect the consumer who they supposedly represent or does it reflect the interests of the industry they police?
Like many Deputies, I received correspondence from chambers of commerce in my constituency. In County Clare, commercial rates have increased cumulatively by 53.7% since 2001. Last year rates were increased by 3.8%. Water rates have increased by 43% since 2008.
There has been a water boil notice in the town of Ennis, County Clare for the past four years. People are advised not to drink the water without boiling it. Visitors, immunocompromised persons and infants cannot drink the water. The businesses in the town of Ennis must pay water rates. There is no respite. The Government has been asked repeatedly by the local authority, Ennis Town Council, to come up with the goods promised to pay for an interim treatment plant but it will not do so. This forces Ennis Town Council to pass that charge on to the businesses of Ennis. This is not right. It is not right in 2009 that the local authority cannot offer its consumers a fresh clean water supply. What it can do, however, is pass the buck on to businesses and ask them to carry the can even more. This is pressuring businesspeople and putting them out of business. Jobs are being lost and they are not being replaced. It is not right that the Government would sit idly by and fail to address the matter. I would appeal to the Government to address this matter and come up with the money it promised four years ago to pay for the interim treatment plant.
Development contributions towards infrastructure have dried up in effect over the past number of years. The Government simply must square the circle of providing better public service for less money; this can only be achieved by overdue reform of the public service. We, in Fine Gael, have been advocating that for many years. Fianna Fáil has been in government for 12 years in a row and has done nothing in this regard, but the day has come when it must address that. We, in Fine Gael, will keep the pressure on Government to do that.
Companies are struggling to survive. It has become obvious that banks are reacting to deteriorating business trends by restricting flexibility on overdraft limits. There is a fine balance between the sustainability of Irish business and its contribution to the financing of the Irish State.
In the context of local authorities now preparing their Estimates for 2010, the Minister for Finance would do well to revisit his decision of last year to increase the VAT rate and the consequential impact that such decision had on Revenue returns over the past 12 months. The Government has already admitted that the decision to increase VAT was wrong, but it did nothing to address it. It simply must reduce VAT in the forthcoming budget in order to reduce prices to business and consumers alike and thereby stimulate production and consumer demand.
The travel tax introduced by Government in last year's budget must also go. The Government's tourism advisory body recently called for the tax to be abolished. Ryanair and Aer Lingus speak with one voice on this, and it is not often that they agree. They have stated forcefully that they want this travel tax scrapped. There is a consensus among Opposition Deputies, airlines and those working on the ground. Why is the Government not listening to this? The Government can see before its very eyes that airlines are pulling routes and aircraft from all of the airports throughout Ireland.
In my constituency of Clare, Shannon Airport is being hit really badly. The average cost of a Ryanair flight out of Shannon in the winter months is €10. The €10 travel tax being imposed by the Government is crippling the airport. The impact of this travel tax is felt by hotels, guesthouses, restaurants and shops right across the constituency, from Loop Head in west Clare to Whitegate in east Clare and from Ballyvaughan in north Clare to Killaloe in south Clare. The reaction of the Minister for Transport, Deputy Dempsey, or the Minister for Finance, Deputy Brian Lenihan, is not to bother, to let them struggle away and to let jobs be lost. It is just not good enough because County Clare, like many counties, depends to a significant degree on tourism and a travel tax is detrimental. Other countries such as Holland and Belgium have axed this tax. We must do so. I again call on Government this evening to get rid of the travel tax.
Ireland needs to regain competitiveness. The SME sector is vital to the economy. Governments charges are running loose and strangling the SME sector. I appeal to all Deputies, including the Government Deputies, to support my party's motion this evening to freeze Government charges until 2012.
Billy Kelleher (Cork North Central, Fianna Fail)
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I move amendment No. 1:
To delete all words after "Dail Eireann" and substitute the following:
endorses the actions of the Government to support and develop business in the State through the current difficult economic cycle, and in particular
- commends the Government for its ongoing commitment to driving down the cost of doing business in Ireland;
- welcomes the undertaking in the renewed programme for Government to maintain a low rate of business taxation in this country;
- notes that the Commission on Taxation has made certain recommendations regarding broadening the tax base with a view to reducing local authorities levying charges on business;
- recognises that the Government has taken significant measures to mitigate the impact of energy costs upon business;
- commends the Minister for the Environment, Heritage and Local Government for calling on local authority managers to implement measures open to local authorities to support new or existing enterprises in their areas by, for example, reducing development contribution rates;
- commends the swift action taken by the Government in introducing the enterprise stabilisation fund and the employment subsidy scheme;
- notes the continued provision of large-scale funding to the bodies charged with enterprise development in the State;
- commends the Government for the strong focus on training and upskilling of those in the work force and those who have recently been made redundant;
- commends the continued investment in critical infrastructure in the context of the national development plan which will enhance the productive capacity of the economy;
- supports the actions set out in the Government's smart economy framework and its commitment to make Ireland a leading knowledge and innovation economy including the achievements of the strategy for science, technology and innovation which will strengthen further our performance;
- notes the number of initiatives taken by Government to strengthen national competitiveness and which will underpin future economic growth including the high level group on business regulation, which has already identified savings to business of €20 million per annum;
- welcomes the Government's determination to reform the way public services are delivered and to drive down the cost of providing those services; and
- looks forward to future export led growth and the continued strengthening and development of our manufacturing and services sectors.
I wish to share time with the Minister of State, Deputy Michael Finneran.
Billy Kelleher (Cork North Central, Fianna Fail)
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I welcome the opportunity to address the House this evening and wish specifically to mention the vital role of costs in restoring competitiveness to the Irish economy and the broader actions the Government is taking to help the enterprise sector at this time.
Let me begin by assuring the House that the Government is committed to driving down business costs at this critical time and that it views the control of such costs as vital to restoring competitiveness to the economy. The motion tabled by the Opposition party is based on the misleading premise that Government charges are among the biggest costs faced by businesses in Ireland today. This simply is not true. Research undertaken by the Irish Management Institute highlighted the major cost concerns of multinationals in Ireland. Energy and labour costs, not Government charges, were to the forefront of these concerns. This, too, is the message we are getting from the SME sector, along with the separate issue of credit availability. The Government has focussed on the actual priorities of businesses, including energy and labour costs and is addressing these concerns. Where Government charges are an issue, we are determined to maintain downward pressure.
I will deal first with energy costs as referred to by Deputy Coveney. The trend of energy prices in Ireland has been downward. Following significant energy price reductions in May 2009, since the beginning of October there has been a significant reduction in gas prices and a modest reduction in electricity prices for medium-sized business customers. Overall, all categories of businesses, including SMEs, have benefited from significant energy price decreases in 2009.
Simon Coveney (Cork South Central, Fine Gael)
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Yes, but comparatively, which is the problem.
Billy Kelleher (Cork North Central, Fianna Fail)
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I will come to the good news later. The Central Statistics Office inflation figures highlight this continuing downward trend. The category of costs which includes electricity, gas and other fuels has declined by almost 14% in the past 12 months. The energy regulator, responding to Government concerns about costs for large energy users, is maintaining the current reductions in network charges for large energy users until September 2010. The regulator is now committed to factoring competitiveness considerations into its regulatory decisions.
Over the longer term, the Government is investing in energy infrastructure that will ensure lower costs from new grid infrastructure through Grid25, to the 500 MW Interconnector between Ireland and Wales. The single electricity market, in operation on the island of Ireland since 2007, has also helped drive down costs through competition and economies of scale.
It is the Government's view that controlling pay costs, in the public and private sector, is a key element in restoring competitiveness. The Central Bank recently highlighted how our deterioration in international wage competitiveness threatens a quick return to economic growth. Although it will be a painful adjustment, a reduction in unit labour costs will strengthen our longer-term competitiveness. For most exporting firms, labour costs account for more than half their input costs. The NCB Manufacturing and Services Purchasing Managers' Indices have shown a sustained and deep period of declining input costs for businesses in Ireland driven, in part, by lower wage costs. This is matched by a decline in Irish inflation that reached -6.5% in the year to September 2009, the sharpest fall in Ireland since the 1920s. This deflation also cushions against the effects of any nominal wage declines. These indicators emphasise how we are meeting the challenge of restoring competitiveness through the primary means at our disposal - strict control over costs by all key players in Ireland's economy. With the OECD predicting mild deflation in Ireland for the next two years, the prospects are good for maintaining the current downward pressure on wages and prices.
On the question of local authority charges, the Tánaiste met twice this year with representatives of the City and County Managers Association to impress upon them the importance of providing a supportive environment for business and ensuring that all local charges and levies are applied in a transparent, fair and proportionate manner. The Minister for the Environment, Heritage and Local Government, Deputy John Gormley, also wrote to the local authorities earlier this year outlining a number of measures that local authorities should consider to further support economic activity. Local authorities are aware of these needs and have already reorganised to provide one-stop shops, or equivalent services, for local small and medium-sized businesses.
The Government recognises that further work needs to be done in this area and, in this regard, it welcomes the recent report of the Commission on Taxation, which recommends certain reforms that would broaden the tax base and provide additional revenue streams for local authorities. In addition, the renewed programme for Government agreed earlier this month contains commitments around local authority reform which my colleague, the Minister of State, Deputy Michael Finneran, will address.
I assure Members that the Government is committed to tackling costs for businesses and is taking a number of steps to this end. I would like to highlight three areas in particular where the Department of Enterprise, Trade and Employment has been working on behalf of the business sector. The Competition Authority, as the agency responsible for enforcing competition law in Ireland, has tended to focus its efforts, in particular its advocacy efforts, on promoting competition in the non-traded sectors of the economy. The authority has issued a number of reports in the past few years on non-traded and professional sectors. The Government has already agreed to accelerate implementation of the Competition Authority's recommendations to see how best they can contribute to achieving greater cost competitiveness. A prioritised list of recommendations, based on their impact on competitiveness, was recently drawn up by the Department of Enterprise, Trade and Employment. It is the Tánaiste's intention to submit a report to Government before the end of the year outlining the progress achieved on the implementation of these priority recommendations.
Better regulation, as referred to by Deputy Bannon, is a central part of our efforts to sustain and improve the competitiveness of the Irish economy. It is particularly important to reduce business costs at this time when all sources of efficiency are in focus and when jobs are at stake in all sectors of the economy. The Government is also conscious that the administrative burden of regulations falls most heavily on smaller businesses. We have set a 25% target for reducing the administrative burden by 2012. I believe that what gets measured gets done and that this target will drive improvements and reduce costs for business and the public sector. My colleague, the Tánaiste, has responsibility for driving this process and is committed to delivering simplifications and savings for small and medium-sized businesses.
The high level group on business regulation, chaired by the Department of Enterprise, Trade and Employment, was set up to take on board business suggestions for cutting red tape. The group welcomes any concrete, workable ideas from the business community that can be used to reduce red tape costs for business. The group's first report published last year identified more than €20 million of administrative cost savings for business. I urge businesses, in particular in the small and medium-sized sector, to continue to submit practical suggestions where they feel the current burden is excessive. I believe that the systematic approach we have adopted here will continue to deliver cost savings for business between now and the 2012 deadline and beyond.
I wish also to highlight the prominence we have given to the ongoing process of reforming public procurement. We fully recognise the importance of the public sector market for SMEs, particularly now that demand from the private sector has slowed. Government purchasing, whether by the HSE, local authorities, agencies or government Departments, can play an important part in driving SME growth.
Billy Kelleher (Cork North Central, Fianna Fail)
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An increased involvement of SMEs in public purchasing will allow SMEs to make the most of their potential for job creation and expansion and we have taken action to facilitate this.
Last July, the Tánaiste and Minister of State, Deputy Mansergh, launched a public procurement initiative to ensure a level playing field for all innovative companies wishing to participate in public tendering and to promote greater access for SMEs to public sector contracts. To progress this initiative, the Tánaiste has asked her officials to examine any further issues which may constitute an obstacle for SMEs accessing public contracts. These issues will be examined and addressed through the work of the procurement innovation group, chaired by the Department of Enterprise, Trade and Employment.
Furthermore, the Government is committed to addressing administrative burdens with regard to public procurement procedures. The national public procurement operations unit, established in March 2009 in the Office of Public Works, has been tasked with streamlining tender and contract documentation across the public sector to reduce the administrative burden on companies and to introduce a more standardised approach to tendering for public sector contracts. The unit has also embarked on a programme of meetings with bodies representing suppliers and potential suppliers to hear their concerns and proposals for public procurement policy.
The Government is committed to helping the approximately 250,000 small businesses in this country that employ some 770,000 people. SMEs need no reminding of the scale of the unprecedented challenges facing our business community. During the past year, exporting businesses have also been particularly badly hit by the fall of up to one third in the value of sterling against the euro, which on its own would be more than enough to create enormous competitive problems for exports to our closest and largest trading partner.
To address the immediate threats to Irish businesses from the current crisis, the enterprise stabilisation fund was established in 2009 to support viable but vulnerable enterprises. Already, more than 100 enterprises have been approved for approximately €45 million of funding. The availability of credit to the SME sector however, remains a key concern. That is why, as part of the bank recapitalisation package, the Government provided a number of supports for SMEs, including a commitment that recapitalised banks should increase their lending capacity to SMEs by 10% over 2008, a code of conduct on business lending to SMEs, published by the Financial Regulator and in force since March 2009, and funding for SMEs of €300 million provided by the European Investment Bank for lending through three Irish banks.
In addition, the Tánaiste and Minister for Enterprise, Trade and Employment, along with the Minister for Finance, established the credit supply clearing group to identify appropriate solutions where flows of credit to viable businesses appear to be blocked. To assist and complement the work of the credit supply clearing group over the summer, I completed a series of eight regional meetings discussing access to credit with groups that included representatives from the banks, SMEs, relevant State agencies and other business interests. The outcome of these meetings facilitated a greater understanding of the issue at both regional and national levels and will help inform policy and future engagement with the banking and business sectors.
Last month, the Tánaiste announced further measures to aid the SME sector. Over the next few weeks, the small business forum will reconvene to assess and review the impact of the current economic situation on the needs of SMEs. The Tánaiste also announced a significant broadening of the financial supports that the county and city enterprise boards can offer their client businesses. Finally, this Government intends over the coming months to bring forward a national entrepreneurship strategy aimed at stimulating entrepreneurship and coordinating existing measures.
Ireland's outward-looking policies as a small state, our membership of the European Union, and our constant focus on education, enterprise and innovation have shaped our development, enabling us to transform ourselves from an underdeveloped society into a high technology and knowledge economy, with a keen emphasis on innovation and enterprise. Last week I was in China, with representatives of 13 Irish companies, all leaders in their fields and poised to enter strategic partnerships with Chinese companies and bodies. This week, the Tánaiste is in North America with 35 Irish companies delivering this strong message to potential business partners - Ireland is still an excellent place to do business with and to invest in.
Ireland is re-emphasising the export-led growth model, and has historically stressed the vital role that education and learning plays in building a skilled workforce for future economic growth. Young people in Ireland now have one of the highest educational attainments in the OECD; some 40% of our 25 to 34 year-olds have a third level education. Earlier this month, the United Nations confirmed Ireland's continuing economic and social improvements when its human development index ranked us the fifth best country in the world to live in for a third consecutive year. There are many reports that highlight the positives of doing business and living in Ireland.
Ireland's attractiveness as a location for business continues to be recognised internationally. The World Bank's study, "Doing Business 2010", ranks Ireland seventh in the world for ease of doing business. Entrepreneurs in Ireland pay the second lowest rate of tax as a percentage of their profits. Ireland is the third cheapest country in the EU to start a business and the third cheapest for start-up business regulation.
In a key sector such as information technology, Ireland is ranked first for government support for IT industry development by The Economist and fifth for overall IT environment. This continuing attractiveness was highlighted just this week by the announcement of the significant expansion of an Internet services company, Newsweaver, in County Cork.
It is also encouraging that, in this difficult economic climate, Irish technology firms remain able to raise funds. More than €110 million in venture capital funds for indigenous technology businesses were raised in the first half of 2009, up 7% on the previous year, while the number of companies raising these funds increased by almost 35% on 2008.
Beyond controlling costs for enterprises in Ireland, this Government has been preparing for recovery by reorienting our economy to ensure a resumption of sustainable growth as soon as possible. For that reason, the Government published a blueprint last December to build Ireland's smart economy. This blueprint involves key areas for action such as establishing Ireland as an innovation hub, building the green technology sector and investing in critical public infrastructure.
The lesson from severe global recessions in the past is that weathering the economic storm is not sufficient; countries need to restructure their economies to target the next wave of economic growth. A key part of this vision for a smart economy is the need to effectively utilise the knowledge, skills and creativity of people and translates them into innovative processes, products and sustainable jobs.
In Ireland we currently have one of the highest performing clusters of high-tech multinationals. We will continue to incentivise these enterprises to invest further in high-value research and development areas to increase exports and create employment. We are also targeting the growth of our own Irish-based multinationals. Creating the smart economy will nourish a high-value, research-intensive, multinational community alongside a thriving set of Irish innovative companies. Ireland is one of the most entrepreneurial economies in Europe:as many as 2,800 people are setting up new businesses every month, a per capita rate significantly higher than that of the EU and the OECD.
We are investing billions in research and we must ensure we get maximum return for this investment. We will intensify our efforts towards creating the best research, innovation and commercialisation ecosystem in Europe, marketed internationally as the innovation island.
Just last week, Enterprise Ireland's "Big Ideas Showcase and Commercialisation Awards" highlighted Irish innovation and entrepreneurship at its best. This ability to successfully commercialise publicly funded research is key to our long-term economic prosperity. In this context, I welcome the renewed commitment by the programme for Government earlier this month to retain favourable treatment of smart capital for innovative start-ups and upscaling indigenous enterprises.
This Government believes that a smart economy must also be a green economy. Ireland's strategy for this green economy is focused on creating economic opportunities in high value, innovative, green technology sectors. The high level action group on green enterprise will shortly report on means of identifying and pursuing opportunities for jobs and economic growth and its recommendations will be pursued as part of the Government's recovery and growth strategy.
Simon Coveney (Cork South Central, Fine Gael)
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How many more reports do we need?
8:00 pm
Billy Kelleher (Cork North Central, Fianna Fail)
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This is a follow on from the smart economy document that was published in December. Since then many actions have been taken but the report of this group will form part of the Government's recovery and growth strategy.
We are pursuing major investment programmes in our energy infrastructure, renewable power, and energy efficiency. We are introducing incentives in a range of areas including for energy efficient investment by business. We are targeting opportunities in areas like ocean and wind power, and electric vehicles, where Ireland can establish a competitive advantage.
Despite the slump in global demand, our export performance has held up remarkably well, particularly in certain major sectors such as chemicals, pharma and the life science sectors. Medical and pharmaceutical exports grew by 22% in the first half of 2009, while exports to the key export market of the United States grew by 18% over the same period, in spite of the unfavourable currency climate. Overall, Ireland has seen modest export growth for the first six months of 2009, growth that contrasts with the double-digit export declines of some of our major trading partners.
The International Monetary Fund envisages a significant return to global growth in 2010 of over 3%, which will greatly enhance Ireland's ability to benefit from an export-led recovery. Indeed, the recent return to growth in export orders in both the manufacturing and services purchasing managers index lends credence to the prospects of an export-led recovery in Ireland. Due to the especially open nature of the Irish economy, we aim to benefit substantially from a global economic recovery.
Restoring cost competitiveness in Ireland is made more difficult by the inability to effectively devalue our currency, and the current weaknesses in the dollar and sterling, the currencies of two of our more important trading partners. However, in spite of these difficulties, we have made good progress in controlling costs and we are restoring competitiveness. The ESRI recently predicted that, with our current control of costs, productivity should grow by over 3% in 2010. Combined with projected wage decreases of 2.5%, this entails a significant improvement in the competitiveness of the Irish economy. The process of restoring competitiveness is set to continue into 2010. Indeed, the speed and extent of our economic recovery depends on how quickly our competitiveness can be restored.
I spent last week in China promoting Irish enterprise and driving partnerships with Chinese businesses. Both the vastness of the challenges and the uniqueness of the opportunities of the global economy are all too evident in China. It is a key market for us and one that will help drive our export growth. I saw quite clearly that there are challenges out there but, equally, there are opportunities. We are making progress in the marketing of Ireland as a place to invest and purchase. I am confident that with the measures I have outlined and the measures that will be included in the budget, which will be difficult for the people and cause pain and upset, we will cope with the challenge to make the country competitive so that our exports can be sold competitively and we can retain and create jobs at home.
Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I welcome the opportunity to address the House this evening. I wish to look specifically at the issues relating to the Department of the Environment, Heritage and Local Government and to touch on some other key points for the Irish economy. I thank my colleague, the Minister of State for Enterprise, Trade and Employment, for allowing me to share time with him on this important issue.
Local authority costs arise from their statutory and other roles in the provision and maintenance of public infrastructure, community and social needs, environmental standards, and quality of life needs. These services are essential to the social, economic and cultural development of communities at local level and benefit all users of local authority services, including businesses. They are funded from a number of different sources, including Government grants, the proceeds from the local government fund, commercial rates and certain local charges applying to either commercial or domestic users, or sometimes both.
Local authority rates and charges are significant contributors of local authority revenue, providing approximately 28% of the budgeted local authority current expenditure in 2009. It is important to note that the level of funding being made available to local authorities through the local government fund had been increasing over recent years and this had the effect of dampening the extent of demands on the commercial sector through rates and charges. While the strain on public finances resulted in a reduction in the amount of general purpose grants available for allocation to local authorities in 2009, some €905 million was allocated from the fund to local authorities by the Minister for the Environment, Heritage and Local Government towards day-to-day spending in local government, together with funding for local and regional roads from the Minister for Transport. This represents a significant and valuable contribution to the local government sector.
To put the situation in perspective, the Central Statistics Office's latest figures show that there has been no overall increase in water, refuse or other services over the past 12 months - there has actually been a marginal decline. The trend for costs for services, both in Ireland and internationally, is the "user pays" model. There is a broad consensus that this is the fairest and most equitable system of paying for vital services. The "polluter pays" or "user pays" principle is applied in particular in respect of waste management services and water services for the commercial sector.
The recently agreed renewed programme for government is committed to ensuring the financial viability of local services. In this context, the business community should welcome reforms to a system of revenue raising which they have long felt places too great a burden on the business community. The Minister, Deputy John Gormley, asked local authorities to give every consideration to businesses and to exercise restraint in adopting the annual rate of valuation. The average increase on local authority rates in 2009 was 1.15%, with a number of local authorities introducing no increase at all this year.
The Government acknowledges the need to balance raising revenue and supporting businesses. We recognise that Government charges can impact on business costs, but nevertheless, proportionate Government charges are a cornerstone of funding for local authority services. The updated programme for Government, agreed earlier this month, includes a commitment to introduce a new system for the financing of local Government, ensuring the viability of local services. The burden of local charges will be given full consideration in this process. The value of local authority services to businesses should not be underestimated. It includes road maintenance, water services, environmental enhancements such as street cleaning, litter control and public lighting, the services of community wardens, energy services, and services related to arts, culture, tourism and heritage, including local promotions.
In practice, a reduction in rates would, in competitiveness terms, make a negligible impact on the majority of ratepayers, as they are small businesses. However, a 10% reduction in rates would take a substantial amount of money out of the local authority system as a whole, at a time when it is already under considerable pressure. A further consideration in this regard is the fact that a significant amount of the rates raised remain within individual local authority areas. In this way the rates paid support local businesses and local jobs.
The Government and local authority managers will continue to take a balanced and prudent view and will continue to bear in mind the concerns of business at this difficult time. Local authorities are well aware of the pressures on their business and commercial customers, engaging as they do locally with business chambers and other organisations. The local authorities are also very conscious of the financial realities currently facing Ireland but indicate, however, that rates are not a significant barrier to doing business here.
The Government's water pricing policy requires local authorities to recover the cost of providing water services from non-domestic users of these services. Full costs include the marginal capital cost, meter installation and ongoing operational and administrative costs. The non-domestic sector includes all industrial, commercial, agricultural and institutional users of water and waste water services. Implementation of the pricing policy is in line with the requirements of the European Union water framework directive, under which member states are required to recover in full the cost of providing water services from the users of these services by 2010.
The renewed programme for Government also included a commitment to introduce charging for treated water use that is fair, significantly reduces waste and is easily applied. The Commission on Taxation report also raised the issue of domestic users paying for treated water, which would result in a more equitable sharing of the burden on businesses in this regard. Forfás undertook an assessment of water and waste water which was published in September 2008. The recommendations contained in the report are being actively considered within the Department and the local authority system to ensure that we manage our water resources in the most efficient and effective manner. In addition, the Department is currently undertaking a value for money review of water services.
The Minister for the Environment, Heritage and Local Government has signalled his intention to bring forward legislative proposals to allow for greater flexibility in setting the landfill levy. This is required to divert material from landfill which can be beneficially used in industries such as composting. It has the potential to add value to what has previously been seen as waste and to create significant employment opportunities. It will also contribute to meeting the targets for the diversion of biodegradable municipal waste from landfill. Failure to meet the targets set out in the landfill directive could result in significant fines being imposed on Ireland.
Local authorities have a key role to play in supporting and promoting business at local level. It was against this background that my colleague, the Minister for Environment, Heritage and Local Government, wrote to each county and city manager earlier this year asking that county and city councils establish a business support unit to act as a point of contact to ensure a quick, co-ordinated response to businesses from local authorities in areas such as planning, water and roads. Business units or other similar arrangements have now been established. They are there to assist individuals and businesses seeking advice and direction on business start-up and expansion. Such support is always important, but never more so than in our current economic circumstances.
I have already referred to the report of the Commission on Taxation and the renewed programme for Government in the context of the need for a widening or realignment in the funding of local government. The Government took steps recently to provide a new source of funding for local government through the introduction of a charge on non-principal private residences. This charge, which has only been in existence for some weeks, has already raised over €25 million which is going directly to local authorities for the provision of local services. The Government considers that this local charge is a significant development in the financing of local government and for the revenue raising capability of local authorities for services and projects they wish to deliver locally.
The essence of local government is that it is local. Local variations in expenditure, income and rates of charges in respect of various services are, therefore, an inherent feature of the Irish local government system. Charges take account of local circumstances and priorities and represent decisions of democratically elected local bodies. Many of the services provided by local authorities are availed of by local businesses or especially the customers of such businesses. These services must be paid for and commercial rates remain one of the current forms of local government financing.
Achieving future sustainable economic growth will demand that Government, business and all stakeholders continue to work together to ensure we get to a stage beyond the current crisis and once more equip ourselves to benefit from an upturn in international markets.
Willie Penrose (Longford-Westmeath, Labour)
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I wish to share my time with Deputy Arthur Morgan, with the permission of the House.
Willie Penrose (Longford-Westmeath, Labour)
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I am glad of the opportunity to contribute to this debate and thank Fine Gael for tabling the motion. I have indicated my concern in this regard throughout my tenure as Chairman of the Joint Committee on Enterprise, Trade and Employment. The committee has been examining on an ongoing basis the bureaucracy and regulation to which businesses throughout the country have been obliged to submit. This includes the cost of various licences, registrations and fees that have to be paid, either at local or national government levels, to Government agencies or whoever. It is not just a question of the amounts but the multiplicity of charges businesses face. They are subject to commercial rates, water charges, development contributions etc. These charges increase year on year and damage competitiveness in the process.
We are all acutely aware of the importance of competitiveness. We in the Labour Party are focusing on our own policy document in this regard, which shows how Ireland has lost its place in the competitiveness league. While the Fine Gael motion is laudable and noble, to freeze local authority rates, while welcome in many quarters, is too wide-sweeping an initiative. It could result, ultimately, in extra burdens being placed on many workers and on those on social welfare, as local authorities seek to make up the deficit as a result of such freezing. The thrust of the motion appears to be that commercial rates should be frozen at their existing levels for the next three years. While this might be politically attractive, without alternative sources of finance being put in place, it is utopian. We must face reality. My family has a small shop and we pay rates. We would be delighted if the rates were abolished and everything would be grand until the day we would step outside the door and find the refuse and litter has not been cleared up. It is not difficult, in theory, to freeze local authority charges and rates. However, such action directly affects jobs in local authorities.
I would like to see a strengthened role for local authorities as regards being in the vanguard of job creation, providing a base and local knowledge to promote employment opportunities. One of the mysteries when I was a member of a local authority was that everyone in the place seemed to get money to provide assistance and advice and to give a boost to the community. However, the local authority, a county-wide structure, did not get a penny. It was starved of finance, strangled. Somebody seemed to have had an agenda to cut out the local authorities because they were left bereft of finance at critical times. Local authority members often had to make very difficult decisions. I note that services in our local authority, Westmeath County Council, which were half-privatised have been fully privatised in the past 24 hours. The council had maintained a waiver system up to this, for the benefit of the elderly, people on social welfare and those less well off. With the recent privatisation, that has been wiped out. This caused great angst for my Labour Party colleagues on Westmeath County Council, and they were right, notwithstanding the snide remarks emanating from some quarters. Their concerns were to ensure that the people less able to bear the costs being visited upon them by the removal of the waiver system, which created enormous difficulties for them, should not suffer.
To take that proposal in isolation would lead to paralysis and the ultimate collapse of local authorities, unless the tax base were widened or an alternative source of funding were provided. Anyone who has served on a local authority knows that significant duties and obligations were imposed on them, deriving from the Oireachtas, without any concomitant level of finance to implement such burdens. Even as we speak burdens are being placed on local authorities. I therefore believe the Labour Party would not be in a position to support the Fine Gael motion, as constructed, despite its thrust being something to which everybody aspires. The Government amendment misses the point as well, and we certainly shall not be supporting that. It ignores the problem and is far too self-congratulatory in its tone, mode and tenor.
The Leas-Cheann Comhairle will appreciate that a review of the business environment was carried out in his home county of Wexford. Councillor George Lawlor is very diligent as regards his duty as a local representative and we are very proud of him for the role he plays in that regard. He carried out a survey, the results of which showed that one of the biggest problems for businesses was not rates but rents. Rents are a multiple of the rates bill for many businesses, and it would not be a profitable solution for small businesses to destroy the local government funding base and local authority jobs. The Labour Party has been always to the forefront in trying to protect local authority and public service jobs. These workers are out at 5 a.m. cleaning streets. If there is an accident, they are out at 3 a.m. clearing away the fallen tree or whatever. Those are the people on the frontline who would suffer if we supported this motion in its current form, and the Labour Party would not do that.
We all know about upward-only reviews of rents, tenancy and lease agreements. That is crazy stuff and does not take cognisance of the economic environment. This was all part of the Celtic tiger mentality that deluded people into thinking nothing was going wrong and everything was all right.
Deputy Morgan, who is here, played a prominent role for the committee in going around the commuter belt while the survey was being conducted. Commercial rates vary throughout the country and there needs to be consistency. We have the ridiculous situation of two companies operating side by side, or perhaps the same company operating in Louth, Westmeath or Roscommon, with people paying widely different charges for the same services. We must bring a degree of logic to this. The relevant levels can be seen as a way to increase local funding, and this is often unsustainable. Recently, there were a number of SME people before the committee when regulation and bureaucracy were frequently highlighted. One such person was Mr. Patrick Cooney, the owner manager of Gleesons, a fourth generation wholly-owned Irish company engaged in the manufacture, marketing and sale of alcoholic and non-alcoholic beverages for the home and export markets. At the committee meeting he stated, "It appears that there is a Government agency or quango for every conceivable activity. Generally, these boys see themselves as implementing to the letter a particular piece of legislation, without any consideration for the knock-on effects of their actions. The sheer volume of work and paperwork necessary to provide all the various combinations with this information or that statistic is mind boggling." He is right. Ordinary business is subject to too many inspections by various agencies, often duplicating work and bolstering irrelevant bureaucracy. There are CSSO documents to be filled out, environmental health levies, as well as this, that and the other examination. These initiatives may be justifiable, but there should be free-flowing unified inspection. If people are coming to inspect for X, they also inspect for Y and Z on the same day.
I want to mention oil and energy costs. I visited a horticultural and fruit growing company recently in north Dublin, with Deputy Morgan, which directly employs 460 people on a farm site and 180 in ancillary services, a total of almost 1,000 people. The company has an energy bill of more than €1 million, equivalent to about 35% of its costs. It is competing with Dutch companies in the horticultural area. There is no support within the Common Agricultural Policy for horticulture enterprises and Enterprise Ireland does not fund them either, even enterprises with that level of jobs. The industry competes with the UK. Gas and electricity costs are 30% to 50% higher than there for different aspects of business. It is engaged in significant research into combined heat and power, CHP, energy models, which are particularly suitable given the need for carbon dioxide emitted by-----
Brendan Howlin (Wexford, Labour)
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I must interrupt the Deputy to call the next speaker.
Willie Penrose (Longford-Westmeath, Labour)
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I think he will give me half a minute to finish. Approximately 35% of the CO2 the company currently produces is reabsorbed in this way and it has the capacity to use up to 6,000 tonnes of carbon if it introduces the CHP model. However, to facilitate this would require a €500,000 grant. Apart from this the cost of connection to the national grid was prohibitive. We need funding to assist in the provision of CHP energy models in the company and a realistic price for energy paid to the national grid. We need integrated joined-up thinking at Government level to ensure that energy cost, which is another significant imposition and burden on business, is tackled.
I thank Deputy Morgan for allowing me half a minute extra.
Arthur Morgan (Louth, Sinn Fein)
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I thank the Deputy for giving me nine minutes and thank the Labour Party for sharing time with me. If everybody in the Labour Party and Sinn Féin got on as well as Deputy Penrose and I, we would have a far better left Opposition in place. Perhaps it is to do with our mutual small business background which is our connection.
The Fine Gael motion is too sweeping and unfortunately it represents a missed opportunity. We could have been having a very constructive debate here this evening. The motion states: "That Dáil Éireann calls on the Government to freeze all charges on businesses until 2012." Let us consider some of the businesses to which we might refer in that very wide sweeping statement, including Intel, Diageo which owns Guinness, and the Kerry Group. Those companies can well afford to pay to local authority rates and whatever moderate increase might apply. The motion as it stands would allow those businesses to not pay their fair share. While most businesses suffer to some degree, these guys can certainly afford to pay and should pay.
The other major impact would be on the funding for local government. We know that central government has simply not been funding local authorities for decades, which is having a significant negative impact. If it were not for all the building and planning levies flowing into the coffers of local authorities in the past decade they would have continued to remain on their knees. As that building boom came the local authority system grew with it, but now it is in serious difficulty because of where we find ourselves. Local authorities are acutely aware of the difficulties that particularly small and medium-sized enterprises face.
I regularly hear councillors talking about the prospect of reducing rates in some cases. If the motion is carried, all of those rates will be frozen and the local authorities will not have that little bit of leeway in any cases where there is a bit of give and take for them to reduce rates in some cases or even to introduce some kind of opportunity for those businesses that are genuinely viable but are going through very difficult conditions because of the economic crisis to, for example, postpone their rates for the time being. I am concerned that it would have a very negative impact on them.
The motion should have been more flexible thereby allowing us to have this discussion about that category of entrepreneur, the genuine small to medium-sized enterprise undergoing difficulty but where all the fundamentals are sound and so that it could employ three or four people - for example a small printer - up to something of the scale referred to by Deputy Penrose, the Dublin Meath Growers Society with almost 500 people employed. There should be some flexibility in dealing with those. We all know of these small enterprises. They are in every city, town and village. We deal with them and make representations on their behalf on a regular basis. Those entrepreneurs need a stimulus package from Government, which brings me to the Government amendment.
Unfortunately that amendment engages in unwarranted back patting, which is not appropriate given the state of the economy that has been presided over for a very long time by the larger party in the Government which brought us to where we are now. The amendment "commends the Minister for the Environment, Heritage and Local Government for calling on local authority managers to implement measures open to local authorities to support new or existing enterprises in their areas by, for example, reducing development contribution rates". It is all right for the Government to call on local authority managers to do that, but what is the Government doing to help those local authorities? As soon as we begin to examine it we see it is not doing anything.
The one thing missing from the debate on the economic crisis to date has been a stimulus package for enterprise to assist job retention and creation. There is a minor package for a certain limited category of business which is exporting but it is far too limited. We know about the Government's NAMA enterprise, to which I may have time to return in a few moments. Its main economic drive of slash and burn will squeeze the life out of the economy. It is taking the few bob out of people's pockets and thus crippling the economy completely.
Let us consider just one area where that is happening. Only half of the education capital budget has been spent so far. Some €391 million of an €840 million package is still sitting there. What would that money have done for the economy had the political masters in that Department gone out there and made it happen? It would have been a great boost to the construction sector to get out there and start building those schools. As it is one of the most labour intensive sectors of the economy, with that would have come a substantial employment opportunity. However, that has not happened. I laughed when I saw the Minister for Education and Science in the House earlier with three Ministers of State beside him. I jocosely asked him if he thought he needed a few more Ministers of State to make this thing happen and put a bit of drive into it. Four Ministers of State and a senior Minister should be able to get the push behind that critical spending that would act as something of an economic stimulus for the economy and that sector as well as providing better conditions for children. Some children have been in portakabins for their entire primary and possibly secondary education. We know the difficulty teachers as well as students have in working in those conditions owing to the poor heat and light and all that goes with it.
I wish to finish up with the issue of NAMA. We will be dealing with Committee Stage of the NAMA Bill in the Dáil Chamber later this week and next week. In dealing with anything to do with the economy whether it is this motion or anything else we must refer to NAMA. Unfortunately it is a bailout for bankers. Bankers are being bolstered with taxpayers' money. The Bill makes provision for NAMA to support developers to finish their projects. There is no money for enterprise but there is money for the developers to finish their housing schemes at a time when there are at least 50,000 new homes without buyers and banks are not lending money to people to buy homes. This is what NAMA is about. It is about time the Government reconsidered what it is doing regarding the economy, banking and enterprise. If it did so and listened to some debate from this side of the House we would all be much better off.