Dáil debates

Tuesday, 29 March 2011

Priority Questions

Economic Competitiveness

3:00 pm

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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Question 32: To ask the Minister for Enterprise; Trade and Innovation the steps he will take to help the struggling retail sector [5973/11]

Photo of Richard BrutonRichard Bruton (Minister, Department of Jobs, Enterprise and Innovation; Dublin North Central, Fine Gael)
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The retail sector, like every other sector of the economy, has been affected by the global economic crisis and by the loss of competitiveness in our economy. While Ireland has regained some of its competitiveness in the past two years, for example through reductions in electricity and gas prices for business and the reduction or freezing of local authority rates in 2010, this Government is committed to doing more to reduce the cost base for business. Our programme for Government has a focus on helping the domestic economy while continuing to maintain a strategic focus on exports and investment.

As part of this focus on the domestic economy we will explore initiatives which will assist the retail sector. It is very labour intensive and, taken with the wholesale sector, employs approximately 267,000 people or roughly 15% of our workforce. In this context, the Government's commitment to halve employer's PRSI costs for those earning less than €356 per week is likely to assist the retail sector, particularly given the part-time nature of many jobs in that sector. With regard to other labour costs, as the Deputy is aware a review of the framework for registered employment agreements and employment regulation orders is under way. This review will be completed by April 2011.

To reduce anti-competitive behaviour in the sector, the programme for Government states our intention to enact a fair trade Act to ban a number of unfair trading practices in the retail sector. Rental costs are an important factor for high street retail businesses in particular. in recent years, upward-only rent reviews kept rents for many businesses at artificially high levels, despite the fall in property values and open market rental trends. Under the Land Conveyancing and Law Reform Act 2009, upward-only rent reviews were abolished for all new leases signed on or after 28 February 2010. The programme for Government expresses our intention to legislate to end upward-only rent reviews for existing leases. This is a matter for the Minister for Justice and Law Reform in the first instance, but there is also ongoing contact between officials of my Department and those of the Minister on the issue.

Additional information not given on the floor of the House.

I am also keen to ensure that Local Authority costs which impact on businesses are kept as low as possible. In this context, I intend to explore with the Minister for the Environment, Heritage and Local Government what measures can be taken in this regard.

While there have been significant reductions in Ireland's electricity and gas prices in recent years, retailers and other businesses can continue to reduce their energy bills by switching suppliers to get the best available value. We also intend to impose rigorous efficiency targets on the ESB, Bord Gáis and EirGrid to drive further efficiencies in the energy sector, leading to further cost reductions. The national energy efficiency action plan aims to achieve national energy savings of 20% by 2020, including measures to assist SMEs to lower electricity costs. Agencies such as the Sustainable Energy Authority of Ireland are helping individual businesses to identify actions they can take to improve their efficiency and reduce their energy costs.

Photo of Michael McCarthyMichael McCarthy (Cork South West, Labour)
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We have gone over time.

Photo of Richard BrutonRichard Bruton (Minister, Department of Jobs, Enterprise and Innovation; Dublin North Central, Fine Gael)
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I will have to curtail the answers to stay within the requirements of the Chair.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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We have a Grand Prix Chair today. I accept the Minister's answer. On rates, can the Government increase resources for the re-evaluation project that is happening around the country? At the current rate of progress it will take 40 years to revalue every commercial premises. The rates that are currently being charged belong to a different era. A campaign got under way in Wexford last night on not paying, or challenging, rates.

When can we expect legislation to come before the House about upward only rents? I know this is a matter for the Minister for Justice and Law Reform. However, it is a matter the Minister and his spokespersons from business made a big issue of during the election.

I welcome the appointment of the Minister of State, Deputy Perry. As a small businessman he will bring a very particular perspective. What functions have been delegated to him within the Department? Does he have a designated budget to support retail and small business generally? What is the extra cost to the retail sector of the increase in the minimum wage?

Photo of Richard BrutonRichard Bruton (Minister, Department of Jobs, Enterprise and Innovation; Dublin North Central, Fine Gael)
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The Deputy asked many questions. I nearly needed notice of many of them. The revaluation process is something I will bring to the attention of my colleague, the Minister for the Environment, Heritage and Local Government. To give credit to the Deputy's Government, there was a review of local authority costs which indicated the capacity for, I understand, a cost reduction of €500 million to be achieved by the local government sector. Clearly, the long-term solution to rates is to start getting the cost base right.

On the timing of legislation, I have spoken to my colleague, the Minister for Justice and Law Reform. It is an issue which has been contentious in terms of the view of the former Attorney General who took the view that upward only rents could not be restricted on existing leases. There is an alternative legal opinion on this. There is a general view that while there are property rights in the Constitution, they are not untrammelled rights and in certain circumstances they can be set aside in the greater public interest. That will require the Minister for Justice and Law Reform and the Attorney General to work on the issue.

The functions of the Minister of State have not been finalised. I thank the Deputy for his welcome for his appointment. The Minister of State, Deputy Perry, will bring not only energy but a huge understanding of the sector to the Department. I intend that his delegated functions will give him full scope to work on the concerns of small business.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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Will the credit guarantee scheme apply to the retail and hospitality sector? Is it intended that there be an employment limit on it, in terms of businesses with fewer than ten employees? That has been the case with previous State schemes. Will it be open to every business, regardless of the numbers of employees?

Photo of Richard BrutonRichard Bruton (Minister, Department of Jobs, Enterprise and Innovation; Dublin North Central, Fine Gael)
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The details of the scheme are currently under examination. We will look at how that can be developed. This will be a targeted scheme. We are not in the business of substituting for bank commitments that have been made under the recapitalisation programme. The scheme will be targeted at the areas of greatest need and how we will do that is yet to be finalised.