Dara Calleary (Mayo, Fianna Fail)
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4. To ask the Minister for Jobs, Enterprise and Innovation his views on the cost competitiveness in the Irish economy; if his policy is assisting businesses to reduce costs; and if he will make a statement on the matter. [3090/14]

Dara Calleary (Mayo, Fianna Fail)
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As the economy begins to grow, I am concerned that costs will grow with it and undermine employment and growth potential. I would like to work through the Minister’s position on cost competitiveness in the economy and hear what plans the Government has in place in that regard.

John Perry (Sligo-North Leitrim, Fine Gael)
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The Cost of Doing Business 2012 report, published by Forfás in April 2013, showed that Irish cost competitiveness had improved markedly in the past few years. Between January 2000 and April 2008, Ireland recorded a 22.5% loss of competitiveness, fuelled by an unsustainable consumption and property boom. Since 2008 it has regained some of the cost competitiveness it had lost. Much of the improvement in Ireland's cost competitiveness since 2008 is accounted for by the favourable exchange rate movements. However, there have been falls in relative prices in a number of areas. Labour is the most significant cost for most businesses and the latest EUROSTAT figures show that the labour cost index in Ireland fell by 1.6% in quarter 3 of 2013, compared with quarter 3 2012. In the two year period 2011-12 there was a very significant improvement of almost 20% in our unit wage costs relative to the rest of Europe.

Construction and rental costs for both office and industrial space have fallen dramatically for new businesses since the collapse of the property bubble. Rental costs for office space, for example, declined by 45% between 2007 and 2011. Similarly, the Forfás report shows that the cost of the majority of business and professional services in Ireland has fallen since 2006. The cost of legal services is a notable exception, but the Government is continuing to press for reform in this area through the Legal Services Bill.

My Department has identified measures to simplify the administrative burden on businesses to the potential value of over €207 million per annum. Programmes such as Enterprise Ireland’s LEAN Business offering and innovation supports are helping companies to address competitiveness issues and improve productivity. Through the Action Plan for Jobs 2012 and 2013, the Government has focused on creating a supportive environment for businesses operating in Ireland. The action plans have included a range of concrete measures to address issues which impact on our competitiveness position. The implementation of these actions, combined with the Government’s exit from the troika programme and its return to international funding markets, will play a key role in improving our competitiveness further and realising our ambition of making Ireland the best small country in which to do business.

Additional information not given on the floor of the House.

The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, is finalising the 2014 Action Plan for Jobs on behalf of the Government which will build on the progress made in recent years and will include further measures aimed at reducing costs for business.

Dara Calleary (Mayo, Fianna Fail)
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I thank the Minister of State. Deputy Jonathan O’Brien and I were spokespersons on justice in December 2011 when the Legal Services Bill was first brought into the House and it is still meandering its way through the Houses. The Tánaiste said yesterday that it would be finished “when we are ready,” that is, when the Government is ready to finish it. It is a serious cost issue for small businesses, as the Minister of State said. We have welcomed the potential of the new Companies Bill in this area. When will we see the impact of that Bill or the Bill itself?

Our energy costs are still out of sync with those of our international competitors. A survey of businesses in Waterford shows a potential increase of 60% in rates after the Government’s revaluation of rates which is under way, for which they get nothing in return. Health insurance costs have increased by 10% in the past 12 months, much of it driven by tax changes. Small changes are happening quietly, but when they combine, it is too late and they are costing jobs. The rates increases are costing jobs. For what people will have to pay in rates they might have to pay somebody to come to work in their premises in Waterford. They cannot do this now that they have to pay increased rates.

John Perry (Sligo-North Leitrim, Fine Gael)
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Several local authorities have put in place arrangements to allow businesses to pay their rates in two instalments. Rates have not increased in all local authorities, even though their budgets are being agreed. Across the country rates have remained the same. One of the key features of local government reform is that there will be derogations.

It will be important for local enterprise offices that there will be critical involvement of local government in the establishment of the development of towns and villages. They will have discretion to encourage development where there is vacant property.

Most important, I am conscious of the pressure on business. Fully 87 out of the 88 rating authorities have either reduced the annual rate on valuation, ARV, or kept it at the same level as 2012, with an average decrease in the ARV from 2012 to 2013 of 0.34%.

Dara Calleary (Mayo, Fianna Fail)
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The Minister of State might come back with his thoughts on the Legal Services Regulation Bill and the view of the Department on the slowness of progress.

The rates issue is connected in some way to the rates that have been agreed. The Minister of State referred to the Local Government Reform Bill. As the Minister of State is aware, many rates will increase in the coming years as town and borough councils merge with county councils, where rates are higher. The rates problem is with the revaluation process that is under way. The valuations are being changed. There is a limited appeals process. There is no sharing of information. I accept this is outside the Minister of State's jurisdiction but perhaps he will offer his thoughts on the Legal Services Regulation Bill from the point of view of his Department.

John Perry (Sligo-North Leitrim, Fine Gael)
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The rates will not change because the valuation of properties and rates was carried out in 1988. That was when the rates were decided based on the value of properties. The rates will not change but perhaps property valuations may change. However, they will not change dramatically in towns and villages. There may be a different value on property in large urban centres. That is taking place throughout the country.

The Legal Services Regulation Bill is very much a priority for the Minister for Justice and Equality, Deputy Shatter.

Dara Calleary (Mayo, Fianna Fail)
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It is not for the Tánaiste.

John Perry (Sligo-North Leitrim, Fine Gael)
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Let us consider the country solicitors dealing with businesses at the moment. There are many new legal offices which have opened up and which are competitive. In recent times many start-up solicitor firms have emerged and people have started their own businesses. I spoke to a gentleman during the week in Ballina who has set up a small practice there very effectively. He has been given effective rates. There is a good deal more competition coming into the market. People have seen the pressure in offices and they are now establishing sole practices, which, in one sense, is bringing competition to the market, and that is welcome too.