Marie Sherlock (Labour)
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I thank the Minister of State for coming to the Chamber. My question relates to the increased cost of business scheme which was announced as part of budget 2024 by way of response to rising costs for businesses and the increase in the minimum wage. Most of us recognise employers face increased costs. I question the untargeted, once-off and exclusionary nature of the support. I understand non-rate payers will not qualify for the scheme. I would rather see the Government moving away from the once-off payments and thinking about how to support businesses and quality employment in a longer-term manner. When we spoke to Low Pay Commission officials last week, we asked them to look at longer-term support to businesses, in particular the use of the State’s procurement budget of more than €17 billion and how the might of the State can be used to support quality jobs, decent pay and businesses in our communities.

My question concerns the rates rebate within the cost of business scheme. We have not seen much detail to date. The chair of the Low Pay Commission referred to the rebate last week. What will be the arrangement with local authorities to make sure they are not out of pocket? In budget 2024, local government only received €29 million extra in funding and that was largely for increased supports to the fire service and for the directly elected mayor. When we talk to councillors, they tell us of significant needs in their local authorities for additional funding. Rates make up an important part of the revenue that local authorities generate for themselves. There is an issue with the administration of a rates rebate, the cost implicit in that and the funding shortfall that will arise for many local authorities. What arrangements will be put in place? What will be the timing of the rates rebates? What will be the scale of supports to local authorities with regard to the scheme?

Neale Richmond (Dublin Rathdown, Fine Gael)
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I appreciate the opportunity to speak on this matter in the House. It is always a pleasure to come back.

As the Senator will be aware, the increased cost of business scheme is worth €250 million. Not a single cent will be required from local authorities, or indeed the Department of Housing, Local Government and Heritage, to administer it. The fund has been generated by the Department of Enterprise, Trade and Employment and will be allocated to 31 local authorities. We have decided to use the rates scheme as the most effective way to get a quick cash injection to businesses struggling with rising energy costs and the increased cost of doing business, whether it be the increase to the minimum wage, which the Senator and I both welcome and hope goes further in future, or other costs such as pension auto-enrolment and the fact we will on 1 January move from employees being entitled five rather than three days' paid sick leave. The latter is something the Senator called for and will look for us to go further on, which we will in due course.

This is a manner in which we are able to support 87% of businesses in the State, largely small and medium enterprises, SMEs, which are the businesses struggling the most. Large multinationals and large employers will not be eligible for this scheme; rather, it will be targeted at SMEs who paid rates under €20,000 last year. They will be able to get a payment of up to 50% of their rate in the first quarter of next year.

The scheme is being worked out by my Department and the Department of Housing, Local Government and Heritage. We have had a lot of good arrangements with it. It will be a straightforward transfer of funds that will not require arduous administration. No form-filling by businesses will be required. This will be a strict cash injection. Having spent the entirety of last year traipsing around the country meeting businesses and representative groups in shops and on factory floors, I recognise the serious costs.

I do not accept that this is exclusionary beyond the fact, about which we have been open, that we are targeting SMEs.We are targeting those smaller businesses that are most exposed to any increased costs in doing business, either as a cause of Government policy or wider global economic pressures. We have used the rates system. This is not a rates recalculation or rates rebate. We have used the system available to us to deliver the quickest and least administratively complicated system to get a fund in place for businesses as quickly as possible.

The budget only comes live on 1 January.

When we talk about longer term support, the most important support that any Government can give to any business is to create an economic environment that allows businesses to thrive. The Senator will recognise that we have one of the strongest economies in the European Union. As recession clouds gather across the Continent, we will consistently see job growth and new small and large businesses being set up. We will attract foreign direct investment and we will see an economy that is supporting and backing business. It is not always just the State's job to provide financial assistance to businesses. We recognise that smaller businesses have extreme costs that merit state intervention for SMEs. That is what we are doing with this fund. The policy of the Government and my party since we came in to office in 2011 with the Senator's party has been to get the economy up and running, which we have done. There have been 780,000 jobs created since 2011. The Senator's party played a proud part in that during very difficult years. That is, first and foremost, how we are going to support businesses during tough times. It is not always just about State contracts, although that area is always being looked at as well.

Marie Sherlock (Labour)
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On the Minister of State's last comment, I hope he is looking at State contracts. We have an endemic problem with low pay in Ireland. If we are serious about ever changing that, we need to look at how the might of the State and the State procurement budget of more than €17 billion is used.

I very much welcome that this scheme is not going to cost the local authorities a penny. The Minister of State's predecessors will have heard many of us talk, during the height of the pandemic, about the exclusionary nature of some of the Covid supports when they were targeted at ratepayers. I am thinking in particular of two events caterers who operate out of Dublin 9. In the middle of the pandemic, they asked me why every other small business was getting support when they were being excluded because they were operating out of a non-rateable premises. They were decimated during the pandemic because their business dried up. It is a mistake to be exclusionary. The Minister of State referred to 87% of businesses but the other 13% of businesses, many of them small, are trying to get up off the ground and unfortunately they are excluded from the scheme.

Neale Richmond (Dublin Rathdown, Fine Gael)
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We have looked at the data and the vast majority of the 13% of businesses are large multinationals making large profits. The scheme is targeted at small and medium enterprises, most of which have greater exposure for a number of reasons. These include the fact that they are commercial ratepayers and there has been a rate revaluation in the past couple of years in pretty much every local authority, increased energy costs and increased interest rates on properties they have purchased or are leasing from landlords.

To refer again the pandemic, we cannot let the perfect be the enemy of the good. This is a good scheme which will benefit 87% of businesses at a time of difficulty. It will mean no administrative burden or forms to fill out and will provide a direct cash injection to make sure they have some respite in the first quarter of next year. It will allow local authorities to use the rates system to pay back rather than just take. This is a good news story and I look forward to seeing it supported through the finance Bill in the Houses.