Dáil debates

Wednesday, 27 March 2019

Saincheisteanna Tráthúla - Topical Issue Debate

Small and Medium Enterprises Supports

4:10 pm

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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Gabhaim mile buíochas leis an Cheann Comhairle.

Small businesses are under significant pressure. Foreign direct investment is seen as the glamorous part of the Government's enterprise policy. Micro businesses and small enterprises are seen as worthy elements of that policy, but they are the poor relations when it comes to effort and investment. Many small businesses are in serious danger. This week and in the next two weeks a number of profitable businesses in the children's soft toy play sector are due to close. These businesses are being killed by insurance industry dysfunction. They are profitable in every way and provide a great service, but they are being stuffed owing to the dysfunction in the insurance industry. The Government has been defeated by the vested interests in the sector, but these are good businesses that give people a livelihood. People have invested in them, but the businesses will disappear silently this week, next week and the week after and little is being done about it. Would it be possible for the Minister to come up with an emergency package to help these small businesses to get over the hump owing to the lack of an insurance function in order that when the sunny day arrives when the Government gets things together, they will be able to get insurance cover for their businesses?

Things are not looking well for small and medium-sized enterprises. In the last quarter of 2018 nine of the 12 confidence indicators showed a decline from the previous year. Labour costs are increasing owing to the dysfunction in the housing market, as workers are being forced to pay higher rents. There is the same problem of rent inflation in the commercial property sector. Congestion is nearly at crisis proportions throughout the country. Legal costs here are significantly higher than European comparators.

The appreciation of the euro-sterling exchange rate is hitting hard on small businesses throughout the country. As the Government has created a banking duopoly here, two banks have 85% of the market and they determine the price and availability of credit to small businesses. This morning, it was reported that there has been a significant reduction in credit to small businesses since 2016. Business rates are still ignoring whether a business is profitable. Businesses are really stuffed with regard to the infrastructure around the country. The infrastructure is missing in areas where small to medium-sized enterprises are more important to the economy: for example, the midlands, the Border region and the western part of the country. Retailers are migrating online at a fierce rate. The Irish are the biggest online shoppers, with Irish consumers having spent over €6.5 billion online in 2017 and online spending set to rise to €10 billion in 2020. Most of this money is leaving the country. Not only is it leaving the high street, it is also leaving the country and shops are being closed as a result.

We heard this week from the ESRI that the domestic economy is likely to lose approximately €100 billion of turnover and 80,000 jobs over the next ten years. We know that SMEs are by far more exposed with regard to Brexit than the foreign direct investment, FDI, sector. We know that SMEs in the regional parts of the country are far more exposed. The Government has been involved in the development of some level of mitigation with regard to this area but I would contend, as I believe would most people in small to medium-sized enterprises, that it is nowhere near enough to deal with the challenges they are facing.

4:20 pm

Photo of Pat BreenPat Breen (Clare, Fine Gael)
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I thank Deputy Tóibín for raising this important issue. I was appointed Minister of State with responsibility for small business in 2016. My responsibilities have increased significantly since then.

My Department and the agencies have developed a suite of advisory and financial Brexit supports for businesses. We are very conscious of the importance of small businesses. I will address some of the questions raised by the Deputy in my follow-up reply. For now, I will focus on Brexit. Exposure to the UK is likely to mean customs procedures, duties and consequent delays in moving and receiving goods, which is critical for SMEs. This is likely to impact business cashflow. As stated by the Deputy for some businesses, the impact of currency fluctuation is already being felt. To alleviate some of the cashflow impacts, the Government is introducing a number of measures, including a system of postponed accounting for all traders for a period after Brexit in order that businesses will not have to pay VAT at the point of import of their goods from the UK.

The €300 million Brexit loan scheme provides working capital funding to businesses to innovate, change or adapt in response to Brexit-related challenges. Once sanctioned, these loans can be drawn down if and when needed giving businesses peace of mind to focus on navigating their business through Brexit. Beyond this, my Department and the agencies are fully engaged in preparing for Brexit and have participated in the Government of Ireland series of Getting Ireland Brexit Ready events throughout the country. As part of awareness-raising activities, Enterprise Ireland continues to roll out regional Brexit advisory clinics. The 31 local enterprise offices, LEOs, and InterTradeIreland offer a range of Brexit-focused supports to businesses, including those engaged in cross-Border trade with Northern Ireland. The LEOs offer Brexit supports to micro and small businesses through the LEO network nationwide, including tailored mentoring to address Brexit-related business challenges and targeted training on specific Brexit challenges. Additional business advisers are being recruited to the 31 local enterprise offices to work with businesses to develop and implement a Brexit contingency-growth plan which will incorporate job and export market growth. Businesses should contact their nearest local enterprise office, Enterprise Ireland, EI, office or InterTradeIreland, ITI, office where they can find out more detail about a voucher worth €2,250 to help businesses navigate their way through Brexit and which can be used towards professional advice on Brexit issues such as customs, logistics and financial issues such as currency management. Enterprise Ireland and InterTradeIreland also offer vouchers worth up to €5,000 and £5,000, respectively, which will enable companies to implement a change as identified in their Brexit plan. Some Members will have heard from local and national radio about the Enterprise Ireland PrepareforBrexit communications campaign, featuring the Brexit SME Scorecard and the PrepareforBrexit.comwebsite, which offers information on the likely impacts of Brexit on Irish businesses and allows businesses to self-assess their Brexit exposure.

Turning now to some of the questions raised by the Deputy, the InterTradeIreland Brexit advisory service provides advice to SMEs on dealing with changes in cross-Border trading relationships. As part of the service, InterTradeIreland has organised a series of awareness events focused on improving knowledge of customs processes and procedures and identifying actions that can be taken in areas such as logistics and supply chain management. Businesses can also avail of customs training through Enterprise Ireland, InterTradeIreland and the local enterprise offices where they can learn about customs concepts and procedures that will prepare them for trading with and through the UK post Brexit.

As the Deputy rightly said, the retail sector is undergoing an exciting but also challenging transformation as the digital economy provides a different retail experience for consumers across Ireland and the EU. As chair of the Retail Consultation Forum, the Minister, Deputy Humphreys, launched the online retail scheme in September 2018, which arises out of the forum working group on the issue of the digital economy. My Department has worked closely with the forum over the past two years to develop this scheme in line with the needs of the sector. I take this opportunity to acknowledge the work being done by the forum.

I will respond to the remainder of the Deputy's questions in my follow-up reply.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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The Minister of State will forgive me if I am concerned about the gravity of the loss of €100 billion and 80,000 jobs to the economy over ten years versus a €300 million loan scheme; loans at interest rates of 4%, if sanctioned; a voucher scheme here and there; a diary of Government events and public meetings around the country, a website, some online courses, a series of information talks around technical matters and an InterTradeIreland body that is capped with regard to the number of staff it can employ in this time of crisis. If one juxtaposes the gravity of the situation and the Government's response to it, one finds it is nowhere near good enough. The Government should seize this opportunity to create a step change with regard to how it deals with small to medium-sized enterprise in this country.

Business functions to the path of least resistance so the Government needs to identify the elements that are resisting development around the country. Anyone involved in business knows that real insurance reform is radically needed, as is real banking reform that allows for natural credit to flow within society. Infrastructure is also important. We are losing services from Rosslare into France, which is ludicrous. The Government should be looking to invest in Rosslare, Cork, Waterford, Drogheda and Shannon-Foynes ports. It should be investing in the road and rail networks. Two weeks ago in this House, the Taoiseach spoke about €25 million being withdrawn from the Derry-Dublin motorway project, at a time when the North-South infrastructure should be developed. We should be looking for real North-South convergence across the business world and additional lorry parking and inspection posts in Ireland, as well as in places like Cherbourg.

My party, Aontú, wants to see the Government take small to medium-sized enterprise seriously into the future. We believe small to medium-sized enterprises should have a representative at the Cabinet table, rather than being dealt with by a junior Minister.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
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Small to medium-sized enterprises are an integral part of the Irish business network. Only this morning, I launched the small to medium enterprise and entrepreneurship, SMEE, consultation group, which in conjunction with the OECD will draft a report on the SME sector in Ireland. The report will be an important one. I will also attend a working group dealing with this issue in Paris next week. I expect the report to deal with the past, the present and the future of SME sector. It is hoped it will be published by the OECD with recommendations in the third quarter of this year. There was a huge turnout of businesses, SMEs, agencies, including Government agencies, at the event this morning, all of whom are very active in this area and want to get involved in the consultation process.

As the Deputy rightly pointed out, SMEs are important to the economy because they are located in the regions, the counties and the communities. The purpose of the local enterprise offices is to provide mentoring and training to SMEs.

On the €300 million loan scheme, today the Minister for Business, Enterprise and Innovation, Deputy Humphreys, and the Minister for Agriculture, Food and the Marine, Deputy Creed, launched a future loan scheme to help SMEs and the farming sector to prepare for the future as well. There is a lot happening in this area, and we will continue to act in this way in the future as well, irrespective of Brexit, because we know that the indigenous industries and SMEs will be affected by Brexit in the future. We allocated approximately €1.8 million to the Craft Council recently. Enterprise Ireland got an additional €2.5 million. This is all part of an effort to help the SME sector, because it is really important.

4:30 pm

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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On the issue of insurance for play centres for small children, is there any way that an emergency package can-----

Photo of Pat BreenPat Breen (Clare, Fine Gael)
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I will follow up on that for the Deputy. Insurance is a very important area, but it is an issue for the Minister of State at the Department of Finance, Deputy D'Arcy, rather than my Department. I will follow it up with him.