Wednesday, 6 November 2019
Report of Seanad Public Consultation Committee: Statements
I am sure they are all happy to be back here again. I am delighted to be here following the publication of the Seanad Public Consultation Committee's report on small and medium-sized businesses in Ireland in May of this year. I congratulate Senator Pádraig Ó Céidigh for his excellent work on the small and medium enterprise, SME, sector. As an entrepreneur, he was in a strong position to talk about the importance of that sector in Ireland. I also congratulate the Chairman of the committee, Senator Paul Coghlan, on the publication of this thorough and well-formulated document. Documents such as these are important and are useful dictionaries for us when preparing policies in respect of SMEs.
I adhere to the central premise of the report, which is that the Government should focus its business policies and support to ensure the best business environment in Ireland. The committee is preaching to the converted. I have been working hard on the SME agenda for the past three and a half years in my ministerial role in the Department of Business, Enterprise and Innovation. I have frequently and repeatedly promoted Irish SMEs and entrepreneurs at many events throughout the regions and internationally. I have been on many trade missions and have had a lot of bilateral meetings with Ministers and it is amazing that the SME sector is important no matter where one goes. It does not matter what kind of economy it is, even in the largest economy in the world, the SME sector is always important.
I take note of the many recommendations, such as the recommendation that a coherent and comprehensive strategy for SME development be developed. I am also glad the committee captured the need to increase the capacity of SMEs to participate in global value chains. I was particularly interested in its recommendation that a regional ecosystem approach be adopted, which would involve identifying regions as specialist areas for targeted cluster or hub buildings.
As a Government, we want to create policies and programmes that are of value to the business community. I want SMEs to feel confident that they are getting the best available supports when they approach any agency or Department of this Government. To do this, it is sometimes important that our country look outside itself for expertise. That is why last year we reached out to the OECD, one of the most reputable research organisations in the world, to carry out work on the importance of the SME sector in Ireland and on how we should move forward.
I would like to take Senators on the journey I took with the Department and its officials on engaging with the OECD on SME policies and evaluation. Internally, the Department, the Minister, Deputy Humphreys, and I had wanted to take the next step in bringing together SME policies spread throughout the Department, other Departments and a number of agencies. While we were all doing Trojan work to support SMEs, there needed to be a review of what was out there, whether it was working for us, and how it could all be brought together.
To investigate how best to do this, I led the Irish delegation to the OECD ministerial meeting on SMEs in Mexico city in February 2018. Here, I could see the scope of what the OECD could bring in many areas. Of particular interest to me, because of my responsibility for EU single digital market affairs, was how to digitise SMEs and how to get the best out of the digital world to give our SMEs the competitive advantage we want them to have. I spoke on that matter as part of a panel of experts. These high-level engagements, along with numerous conversations with the Secretary General, Ángel Gurría, gave me confidence that working with the OECD on these topics would be benefit all of us in Ireland.At the end of 2018 we were provided with an early draft of the review. One of the most prominent recommendations was to form an interdepartmental group, led by a Minister, and consisting not only of policymakers but also of agencies, representative groups, academics and more important - and Senator Ó Céidigh will agree with me on this - to ensure we have the businesses themselves included. We held our first meeting in March. Many of the people we targeted for this group were present at that conference in July and were here when we launched the review last week. Subsequent to this, we broke it up into pillars, asking for members' expertise to drive forward areas such as standards, skills and internationalisation.
In April of this year, I led the Irish delegation at the working party on SMEs and entrepreneurship. We presented the first draft to the working party at the OECD headquarters in Paris. Four countries peer reviewed it, namely: Canada; New Zealand; Italy and; Sweden. It is important to get a mix of similar open economies with countries like Sweden but also different countries such as Canada. One will then see the best practice models from both types of economy within the review. There was great enthusiasm for the Irish review in the working party, and we received constructive feedback from quite a number of delegates. I met with the Deputy Secretary-General of the OECD during that visit and also explored the advantages of the work in the digital area in the OECD, which could be brought into policy in Ireland.
This is an area of the review and roadmap I would like to emphasise, particularly as it is an area under my remit as Minister of State. Digital advancement is an area where Irish SMEs can bridge the gap with the larger multinationals, particularly in the area of productivity. That is something we will highlight this afternoon during the debate and we will examine how we can get Irish SMEs to be more productive and to compete with the big multinational companies. The Government is concerned about that gap, so much so that it is the theme of Future Jobs Ireland, pillar 2 of which is to increase SME productivity. I remember at the Mexican ministerial summit, the delegates also identified this as an area of priority. We can see the importance of the digitalisation process as an action in the roadmap of the report the OECD presented for us. An area of that report mentions ramping up support for the digitalisation of SME business processes. It is an important area because we know the Irish SMEs perform well in the DESI, digital economy and society, index, as the country with the highest percentage of SMEs selling online, the highest level of e-commerce revenue and the most sales cross-border. However, this recommendation relates to digital programmes such as enterprise resource planning and the use of the cloud. I want to push these solid, tried and tested technologies into the business world of our SMEs. The roadmap we have presented in conjunction with the report recommends that the LEOs take a leading role in this process.
To bring Senators onwards on the journey, I also spoke at an excellent SME and entrepreneurship strategy conference last July in the Aviva stadium. As Senators know, the keynote address was given by the Taoiseach. Just last week, we launched the OECD report and review with OECD Deputy Secretary-General Knudsen in our Department buildings and we will now work with my officials to drive forward the SME agenda throughout Government. Following on from this, I will be attending the OECD's digital for SMEs global initiative on 29 November in Paris. Also, I want to let the Senator know of my deep commitment to ensuring Ireland is at the heart of international SME policy. I will also be attending a useful meeting in Helsinki in November. It is organised by the European Commission and it is important Ireland is represented there because this will be the first meeting of the new Commission under President-elect von der Leyen. This meeting will be on the area of European SME strategy. We will get an idea at that meeting of how much the new Commission prioritises SME strategy. That is why I am determined to drive the SME and entrepreneurship agenda through the recently established SME and entrepreneurship consultative group, which I am chairing, and we had the first meeting in March. This brings together policymakers and programme managers from our agencies such as Enterprise lreland and the LEOs, all sitting alongside representative groups and businesses themselves. I will lead this group into developing an inclusive SME and entrepreneurship strategy to form part of the Future Jobs Ireland framework.
Working together, we can achieve far more than each on their own agenda. The all-time giant of basketball, Michael Jordan once said: "talent wins games, but teamwork and intelligence win championships." We see here today that it requires a collaborative effort, putting aside any differences and working together to a common goal; to make Ireland a great place in which to own and operate a business. That is why the Government places huge priority on the area of entrepreneurship and start-ups. They are really important, particularly for the regions and it is important we have start-up companies growing all the time because when a small company is successful it grows. We have agencies like the LEOs and Enterprise Ireland that will help them to grow on that journey so they can become an export company.
I would also like to give the committee some background on the current situation for small business owners in Ireland. I understand the importance of SMEs to the Irish economy. The latest CSO business in Ireland report states that in Ireland, SMEs accounted for 99.8% of or 249,450 active enterprises and over 68% of all persons engaged in SMEs generated 50.2% of total turnover in the business economy and over 41% of gross value added was attributed to these enterprises. SMEs are operating in every county, community, town and village and are so strategically important - as Senator Ó Céidigh will know - for all rural areas of Ireland and people in rural Ireland see the benefits of these small micro-enterprises in their areas. We all know multinationals tend to go into clusters in the large urban areas, and so I believe our policy of having 31 LEO offices around the country is paying off. The LEOs have created a lot of jobs in recent years and I believe they will continue to do so in the future. That is why they are so important for us and I want to see people continuing to live in rural communities. It is to everyone's benefit that rural Ireland prospers and grows. SMEs are the key to this. I am determined to provide the supports that allow this to happen. If we want people to remain in rural communities, especially young people, we need to provide them with quality and rewarding jobs. Primarily through agencies such as Enterprise Ireland and the local enterprise offices, Irish SMEs can access supports in areas such as access to finance - which is so important for many companies; skills enhancement, because upskilling is extremely important and; assistance in exporting and in research and development. Research and development is really important as well. I always say that companies that do not innovate will evaporate and that is why they need to be evolving all the time.
The business environment in the regions will not return to what it was in the past. I am not saying that in a negative way. It will be different. We have to adapt to new ways of working such as remote working; co-working spaces; and digital hubs. That is why we are supporting new regional projects such as the Ludgate Hub in Cork, Donegal Digital innovation hub, the Kilkenny Carlow design innovation hub and the Kildare community network to name a few. Senator Ó Céidigh will know about the hub in Galway city as well, which is very successful. We have invested heavily through the regional enterprise development funds administered by Enterprise Ireland to support regional stakeholders, both in the public and the private sector, to work together and to bring forward initiatives that build on each region's capacities and strengths. So far, we have invested nearly €60 million in 42 projects under the regional enterprise development fund. All regions received funding under that competitive fund. The Minister, Deputy Humphreys, will shortly be announcing the successful applicants from the €45 million regional enterprise development fund 3, which was launched in the summer.In recognition of the key role they play, the funding for LEOs has increased by 22% since I have been in the Department. This is used to assist microenterprises in becoming more competitive and better able to cope with the changing environment in which they do business.
Most recently in July, two new funds worth €3 million were announced. The first is the competitive challenge fund, a €2.5 million LEO competitive fund to support LEO-led projects, in alignment with the framework of the future jobs Ireland strategy and the regional enterprise plans. The projects will focus on new approaches and emerging innovations towards fostering and creating sustainable employment and improving productivity through collaborative and joined-up approaches. On 4 October, the Minister, Deputy Humphreys, announced the approval of 16 LEO projects to receive the €2.5 million support. The second is the LEO productivity challenge fund of €500,000, which is now open. This is an important fund as it is primarily aimed at supporting domestically focused small businesses rather than exporters.
The funds will help small businesses to identify opportunities in addressing productivity gaps, embedding the Lean practice we all talk about, greening their businesses and, of course, reducing waste. This initiative will also focus on training and capability development, thereby enhancing customer experience, time and performance management. The scheme is aimed at enterprises employing fewer than 50 people in a variety of sectors and will be delivered via 200 productivity vouchers valued at €2,500 each to help them develop a more efficient and productive business operation.
Enterprise Ireland is supporting indigenous businesses in every county. For example, the numbers in Longford increased from 1,642 to 2,979 in that period. Enterprise Ireland supported companies sustain more than 375,000 direct and indirect jobs nationwide. Enterprise Ireland's records show that last year, 65% of jobs were created in regions outside Dublin. I want businesses to see the wide range of Government supports available to them so they know where to go. This is why I emphasise the importance of the LEOs as the first-stop-shop for many people who want to start a business. I want small businesses to use these supports to seek out new opportunities at home and abroad. I want them to take advantage of the digital revolution going on around us. The digital economy is changing the way we do things and many of the children born today will work in jobs that have not yet been invented. We see the use of robotics, artificial intelligence and augmented reality. We must ensure our SMEs embrace this technology. They must be more productive, as the OECD report stated. They must be leaner so they can compete on the global stage. The digital revolution will bring quality jobs to all of us. It will bring quality jobs to every county, town and village in Ireland. The SME sector is crucial, which is why the Taoiseach appointed me as Minister of State with responsibility for small business in 2016. It is a great honour because it represents so many communities in Ireland.