Garret Ahearn (Fine Gael)
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I thank the Minister for being here and taking this Commencement matter. Before I speak about the 9% VAT rate, which is being pushed very hard by sectors across the country that are struggling, the hospitality sector in particular, it is first important to acknowledge what his Department and this Government have done. Since we have been in government in 2011, we have always held the Ministry for Enterprise, Trade and Employment within Fine Gael. We have done that because we have always been pro-business and we want to support businesses. Even in recent weeks, the number of measures the Minister and his Department have brought forward to support businesses through the cost-of-living crisis and the cost of business over recent months has been hugely helpful and will continue to be. As discussed, the increased cost of business grant that is being availed of by businesses right across the country, including in my county of Tipperary, is very important. When it was introduced in the budget, it was introduced to be very easy for people to apply for and to be done within the first quarter of 2024, and the local authorities would be able to give out that money very easily. Unfortunately, in Tipperary, only 42% of the businesses that have applied for it have actually got the money. We are trying to give money to those businesses as quickly as we can because we understand the pressures they are under, but for some reason the county council in Tipperary has not given that money to 58% of the businesses that have applied for it. It is crucial that they get it. Would the Minister be able to engage with the county council on that? I do not know if he has already, but perhaps he could continue to engage. There is an acting chief executive there at the moment who would be very happy to engage on this issue, I suspect, but it is important that that money gets to those businesses as quickly as possible.

In the broader scheme of things, and as regards the long-term support the hospitality sector, in particular, needs, we really need to look at the 9% VAT rate and returning to it. Looking at figures at the moment, almost two businesses every day are closing, and one of the main reasons they talk about is the increased costs to them and, in particular, the 50% increase in the VAT rate from 9% to 13.5%. I know we reduced it and it was always going to be temporary, but we recognise as a Government that these businesses are struggling.During negotiations between the Minister's Department and the Department of Finance, will the Minister ensure that this is a priority for this Government, the Minister's Department and him as Minister? A survey of 212 businesses was done only last week by the Restaurants Association of Ireland and 74% of those surveyed said they expect to close this time next year if the VAT rate of 9% is not reinstated in budget 2025. Some 66% said they would have already closed if it were not for the ongoing campaign for the return to a VAT rate of 9%. To put it in clear figures, Jim Power, a very respected economist, said that the average restaurant closure costs the State €1.36 million. It is a positive for us from a revenue perspective that we try to keep these businesses open as best we can. Having a split VAT rate between food-led businesses and hotels has been done in other EU countries. It would not be unusual. I often say we cannot justify dropping the rate from 13.5% to 9% for hotels, just as we cannot justify having restaurants and food-led businesses at 13.5% at this time. I know the Minister is open and willing to negotiate with the Department of Finance on this to support those businesses in the budget. This is a key request by the Restaurants Association of Ireland, which has been very vocal on the matter, and other organisations. If we want to secure the future of these businesses, which are small and medium sized businesses in rural towns like my home town of Clonmel, Cahir and Cashel, they need support over the next number of years. We need to fight hard for this. As I said at the start, Fine Gael is pro-business in rural areas like mine. This is a key statement we can make in budget 2025.

Peter Burke (Longford-Westmeath, Fine Gael)
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I thank Senator Ahearn for raising this important matter and for his ongoing work as Fine Gael spokesperson on enterprise, trade and employment in the Seanad and the great work he does in that regard. In introducing his Commencement matter, he spoke about the action the Government has taken, such as the increased cost of business scheme in 2024. He mentioned the figures for County Tipperary. We will work closely with Tipperary County Council and all other local authorities to ensure businesses get this vital funding into their bank accounts. There is a steering committee in the Department which meets regularly to ensure we review the figures daily, liaising with various local authorities which are finding it difficult to administer this fund. We will continue to do that. On other supports, there is the debt warehousing scheme relating to taxation, introduced during the Covid pandemic, which provided significant support to businesses and was enhanced by changes made to interest rates in February this year. There have also been suggestions that the hospitality VAT rate should be reduced in some form either for the entire sector or for food services, as suggested by the Senator. Last week, I attended the hospitality and tourism forum, at which many actors from the business sector representing tourism and hospitality were at the table. There was very good engagement by them with the Minister, Deputy Catherine Martin. We heard what they had to say. There is a view that the VAT rate is important to a lot of smaller businesses operating in smaller towns and villages in provincial Ireland.

We will work with the Government to put forward the best business package we can in the current budget. I cannot make any commitment on the floor of the Seanad but it is across government negotiations that take place as we form the budget between the Department of Finance and the Department of public expenditure in respect of the supports and grants we will also ensure. At this time, the package we have put forward for the SME sector includes an agreement to reduce PRSI from 1 October. That improves cash flow for businesses, in effect, not taking more of their hard-earned cash off them and making it easier and more accessible to employ those on minimum wage. In addition, the energy efficiency grants are a big support for cash flow, reducing monthly utility costs, be it through improvements to LED lighting, refrigeration or kitchens - areas that can reduce power bills every month. They are a significant asset.

The SME test will be important in future. Any changes to regulation, statutory instruments or legislation will have to go through a test. In essence, it is about thinking small first.This is about how this affects the small business in our locality with regard to changes which are considered in Leinster House, albeit by the Government. We must be consistent in terms of seeing how this affects local businesses.

The Department of Finance is working closely with our Department and has identified that the full year cost for reducing the 13.5% hospitality VAT rate to 9% in 2024 is €764 million, with the cost to the food service sector only amounting to €545 million or 71% of the total cost. Bear in mind that we have other services such as hairdressers who are also an important part of the cog in our service industry which we must take note of. We are looking at this as part of one of the policies in the budget which will be discussed and thrashed out by the Government. People, however, should be very much aware that that is under the parameters which will be set out in the summer economic statement. These will provide the guard rails within which the Government will have to stick. Bandwidth is very tight but we will do our best.

I am confident of one thing which is that we will put forward a very robust and strong package for our SMEs in this budget to show the Government is listening, that we are rewarding enterprise as a country and that we are the best country for business to establish, grow, flourish and employ people.

Garret Ahearn (Fine Gael)
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I thank the Minister very much for his response and agree with everything he said. Any time I speak with businesses in Tipperary, the very first thing they say, before they make a request, is that they recognise what this Government has done over the past number of years, particularly during the Covid-19 period, in supporting them and their employees and in keeping them alive. That has been crucial.

However, we do not want to get to a point where we helped them during Covid and kept them alive but being there when they really need us again. I recognise that if we do it for food-led businesses, it will cost over €500 million but, as I said, every business closing is costing us €1.36 million. If two are closing a day, we will quickly arrive at the €500 million it will cost to do this.

Supporting these businesses is the right thing to do. We have done it for a number of years and we can do it again temporarily. This supports businesses in rural areas like my own. It supports employment and has a knock-on effect on the rural economy. It is the main request they are bringing to the table for this budget and while it is a matter for the Minister for Finance to make those financial decisions in the budget, we are very much asking for him to put as much pressure as he can on the Department of Finance to ensure those businesses are supported.

That some 74% of businesses are saying they will close if the 9% VAT rate is not returned is a stark figure. We do not want to get to the point where that number of businesses will be closing right across our country.

Peter Burke (Longford-Westmeath, Fine Gael)
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I thank Senator Ahearn for putting forward his strongly held views on the VAT rate and its reduction to 9%, and also pointing out that we put approximately €12 billion into our business sector in the two budgets preceding budget 2024. That shows the scale of the Government commitment to our SME sector. Be absolutely assured that I will leave no stone unturned in fighting for the SME sector. I will do all that is available to me through the powers of my office in the budgetary negotiations and I will work very hard to ensure we have a package which is very robust for the SME sector and for the wider business community. This is because I am very much aware our SMEs employ 70% of all the people in our communities and drive so much of this economic activity. They need to be supported and Fine Gael, as a party, is very much committed to rewarding enterprise. This is about those who work five to nine as opposed to nine to five and try to ensure that there is valuable employment right across our communities. We will continue to do that and we will be working hard in the budgetary negotiations.

I thank Senator Ahearn for his efforts, as Seanad spokesperson for enterprise, trade and employment, in bringing these valuable data to our debate. We will work together as we build up to budget 2025.

Martin Conway (Fine Gael)
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I thank Senator Ahearn for a very interesting Commencement matter and I thank the Minister for his time. I know he had a Cabinet meeting this morning and that he is very busy, so it is very much appreciated. We now await the arrival of the Minister of State, Deputy Rabbitte.