John Paul Phelan (Fine Gael)

I wish the Minister of State the very best in the task he faces. He brings a freshness to dealing with this area. Even in his contribution, he did not stick purely to the script. It is good to see someone who is willing and able to speak off the cuff on a issue about which the Minister of State has some knowledge.

I acknowledge, as outlined by the Minister of State, that a number of changes introduced in the budget will have a positive impact on small businesses. The raising of the audit threshold and the changes in research and development funding are to be welcomed.

I agree with what the Minister of State said about the provision of a university for the south east. This does not specifically relate to this debate but the provision of a university is important to the development of small and medium-sized enterprises in my region. I concur with the Minister of State's sentiments that a university needs to be developed in the south east region as soon as possible.

I wish to pick up on a number of points made by the Minister of State. One aspect of his contribution was a little disappointing in that he did not outline sufficiently the direction in which the Government is moving to introduce reform to address the difficulties faced by small and medium-sized enterprises.

The Minister of State mentioned a number of points I wish to address. He made an interesting comment about academia. He asked have the voices of academia been drowned out by the roar of the Celtic tiger. I believe he is right in that many voices were drowned out by the roar of the Celtic tiger. Many younger people in particular entered the workforce before they had finished their education. We had a good debate on upskilling a few weeks ago. I was disappointed the Minister for Finance did not refer specifically to that area in the budget because it is of vital importance. Many voices were drowned out when the Celtic tiger economy was strong. Now that its gallop has been halted somewhat people are exploring other alternatives.

I was interested in the Minister of State's remarks about the new guidelines to local authorities on development contribution schemes. I agree with what he said about local authorities putting high development charges on new developments, which will have an effect on our competitiveness. That cannot be divorced from the fact that local authorities are forced into that position because their funding is not being supplied from central funds to the level it was previously. That is the bottom line. Local authorities are exploring other areas to secure funding, whether it be development charges or rates.

I agree with the Minister of State's remarks about rates and the calculation of rates across the country. The calculation of rates by local authority areas is very much hit and miss as a result of a lack of consistent and sufficient funding from the Department of Enterprise, Trade and Employment to support local authorities. The Minister of State cannot criticise the calculation of rates on one hand and not accept some of the blame for that on the other.

The Minister of State mentioned the action the Government has or is considering taking to create a favourable atmosphere for the development of small and medium-sized enterprises. He referred to the tax system and how we have positioned our tax system to be supportive of business. That is correct and it has been hugely beneficial in the past 15 years. The development of Ireland as a knowledge-based economy will be through the dedication of sufficient Exchequer resources to the promotion of research and development. Following the discussion in this House with the Minister of State, Deputy Kelleher, a number of weeks ago, I was disappointed sufficient emphasis was not placed in the budget on the area of upskilling and further education. Changes were announced in regard to research and development but if we are serious about ensuring the continued development of the economy into the future, we need to invest huge resources in the area of further education and adult education. That must be done sooner rather than later.

The Minister of State said that the introduction of a better regulation programme to tackle regulatory burdens, particularly those faced by the business community, was a priority. I wholeheartedly agree with that, as I am sure would everybody concerned. Up to this point the Government has failed miserably in this area. It has put more regulation in the face of small businesses in recent years, a problem that must be addressed in the near future. The Minister of State mentioned that a committee, chaired by the Secretary General of the Department, has been established and that legislation will be soon be introduced. I welcome that and that this problem will be addressed, although it should have happened a while ago.

I recently spoke to a number of people in my area who are engaged in small business ventures and asked them what they considered to be the major issues affecting small and medium-sized enterprises into the future. They gave me four headings on which I will briefly speak. They mentioned inflation as a continuous problem facing small business; regulation, which the Minster of State mentioned; the efficiency of public services; and infrastructural problems. The Government has contributed significantly to the problem of inflation that has existed in the past few years in particular. The inflation rate has been in excess of 4% for a large part of the last year and a half, which is having a detrimental effect on small and medium-sized enterprises. It is estimated that the effects of the changes announced in the budget would add about almost a half of 1% to the inflation rate, and that is something in which the Government has a direct role in implementing.

The Minister mentioned the role of the local authorities in terms of the costs small businesses face, with which I agree. I mentioned rates and development changes. The area of regulation is in many respects probably the single biggest impediment many small businesses face. Many people staring their own business face over-regulation and strangling red tape. I am glad the Minister of State intends to introduce legislation to reform some of the needless bureaucracy that exists in this area. As he comes from a small business background, he will have a particular interest in this area.

With regard to efficiency in the public services, in a number of recent surveys carried out by different groups small and medium-sized enterprises were asked to identify the key problems they face into the future. The key problem identified in the most recent survey by BT Ireland was the lack of efficiency in public services. Only 10% of those surveyed said that public services had improved since the benchmarking process was initiated. Some 50% of those surveyed said that it had stagnated and 40% said that there had been a disimprovement in terms of the public services they use and need to carry out their business. That is a startling statistic. This key problem must be addressed across the board and not only for small business. A serious problem exists in the lack of efficiency and delivery of service by certain sectors of the public service. The Minister of State has a difficult job in this regard, but it is essential it is addressed if small businesses are to progress in coming years.

I agree with the view of those surveyed recently by BT Ireland that VAT should have been addressed in the budget. Regrettably action was not taken. Some 26% of respondents in the survey said it was the most important issue they wished to see addressed in the budget. The only change in VAT in the six years I have been a Member of this House has been the increase in the rate in the immediate aftermath of the 2002 general election. It is a crippling cost on small businesses and it needs to be addressed sooner rather than later.

The final issue affecting people in this sector was mentioned to me is infrastructure. There is no doubt significant developments have occurred in our road infrastructure and the ongoing developments will result in significant improvements across the country. However, there is much more to infrastructure than the road network, although some road blackspots have not been rectified. I refer in particular to broadband. We are debating the issue of broadband roll-out later tonight and I hope to speak on that issue. The Minister of State, being from my own county, will be familiar with the difficulties that people with small businesses in rural areas have in trying to get a high-speed Internet connection. These broadband connections are essential for the development of such businesses, especially if they are operating in a global context. It is a disgrace that they are not in place. If the Minister of State did nothing in his five years in office except to ensure that we get adequate broadband provision across the country, then he will have done a good job. I will do anything possible to assist.

We have seen increases in funding for the provision of rail services and carriages and I welcome that. However, there is a strong case for opening old lines that still exist and that have not been built on. New Ross has been put to the end of the queue in waiting for the new bypass, even though it is the biggest traffic blackspot in the south east and possibly in the whole country. There are six and seven mile tail backs every evening on the Waterford approach into New Ross. There is an existing rail line from New Ross to Waterford, even though it would need a major upgrade, yet no effort has been made to re-open it.

I wish the Minister of State well in his new job. He has the necessary drive to tackle some of the big issues that face small and medium enterprises in the future.