Matt Shanahan urges SME rescue reforms, warns on VAT & rents

I am a member of the Enterprise Committee and was glad to waive the pre-legislative scrutiny on this bill because I think it is very important that it gets enacted. It is applicable to small and micro companies and this represents 98% of all companies in Ireland. These companies support almost 800,000 employees in the state and as other deputies have alluded to recent Central Bank and ESRI reports have shown the significant pressure that the SME sectors are under and a number of them when government supports are reduced are going to have a difficult time of it without a doubt. The insolvency process that is being proposed would allow a practitioner to act as a process advisor to assist company directors in coming up with a rescue process framework. For people that would not be aware, the administrative process in the country to date would require application generally to the High Court, a minimum 100,000 euro expenditure to try and get protection from your creditors while company directors would seek support. This is not a viable avenue to small business, so that is why I and members of the regional group are supporting this legislation. We recognise that the process is designed to streamline the examinership process, allowing communication with creditors and employees and to propose a restructuring plan including write-downs and write-off of debt. But there is a question here, Minister, which is with respect to revenue and how revenue proposes to deal with historical debt, particularly in light of the warehousing that has been allowed in the last year as per Covid, the warehousing of VAT, for instance, and revenue claims. So I would hope that revenue will take a proactive stance here, because otherwise it will be very difficult to find a restructuring process that is going to work for many small SMEs. The second question I would ask you is the treatment of rental agreements and leases, particularly the upward-only rental agreements, and it has been said that these are protected by the constitution. I and others have seen legal questioning of this, which shows that actually these agreements are not protected by the constitution, and I think something will have to be done, and it is ridiculous to think that companies are going to engage in a rescue process where they are faced also with an immediate increase in their rental costs. I want to applaud the work of ISMI in particular with respect to this process, Minister, who I know you have liaised closely with, and also their work on insurance. These are two key areas in terms of the small business sector in getting back on their feet and trying to reduce these significant headwinds. I would ask you again, Minister, to consider, as I asked the Thornish at the Enterprise Committee the other day, for the inclusion of ISMI on the Labour Employer Economic Forum. The Thornish has referenced that IBEC small firms are there and Chambers Ireland, but I do not believe that this represents the full gamut of SME companies. I would ask you to look at the work that ISMI has done and to lobby hard that ISMI would be included on this arbitration process. I think it is very important that the voice of micro-business is heard in this country. As members of the regional group and as a member of the regional group, we have supported the passing recently of perjury legislation, which we promoted as a private member's bill, which was unanimously accepted by the House. At present, under the proposed SCARP legislation, false or misleading statements by a company director are a Category 2 offence. Minister, I would ask you to ensure that these offence categories and the new legislation are in line with the recently enacted perjury bill, as I say, which we in the regional group have built upon the final work of Paddy Gorkhalig, who promoted this legislation. In terms of SMEs and micro-business, can I just talk about the macro policy that affects the small business sector? I think we do a lot of talking in Ireland about micro-business and small business, and yet we enact large-scale policies that actually reflect what should be happening to the macro companies, but not the micros. I am talking about recently the expansion of paternity leave, the expansion of a sick pay scheme, the discussions on a universal living wage, the potential increases to minimum wage, and the increasing regulation that is coming down the pipe for many businesses. I can tell you, Minister, as someone who ran business myself for a long time, these are very, very hard costs to achieve. Everybody would like to pay their employees more. Everybody would like to offer sick pay schemes, pension schemes, all of that. But these are largely the preserve of large business. Small businesses and micro-businesses and family-owned businesses in the large are not that profitable. And it is often the case, I can assure you, that company directors and company owners often take less remuneration in a year than some of their best employees. So I think we have to look at some of these and what we are proposing around future employer taxes. And again, we have the issue of rates, which is going to come in to play this year, and insurance. And despite the fact that we have COVID supports in the business space at the moment, we have a lot of companies who have not been trading, particularly in the hospitality sector, who continue to have to pay insurance. And they are continuing to pay employer insurance, which makes no sense because they are not open. But yet they have no choice because they cannot find an underwriting option outside of the one that they are in. And this, again, Minister, is something that government must take up. Could I also talk for a minute about what is entrepreneurship in this country? Because I am not sure that many in this house understand it, that they understand the difficulty of trying to start a business, and trying to employ people, and to try and make it profitable. And we do a lot of work in this country, in the enterprise space, talking about investment and LEO support and all of that. But at the end of the day, it is down to the hard graft of individual promoters to get up and make it happen. But I will give you an example. If tomorrow you wanted to open a chip shop anywhere in Ireland, the very first thing you would be faced with is finding a suitable premises and location. That will bring you into a rental agreement, where no landlord will enter a rental agreement for less than 12 or possibly 18 months. The fit-out costs you will come up with yourself. Before you get trading, you will have to apply for a health cert. And health inspections and the actual requirements will cost you probably close to €100,000 instead of costs, before you take a penny. You then have to go out and make sure that you have adequate insurance to cover your premises. And then begin the employment process. And then begin the sales process. And then look at your revenue and try to build it up. And all the while you will be faced with rates and demands for employer taxes. So Ireland is fast becoming not a benign place anymore to do small business, Minister. And I can tell you there is a large, large number of small businesses in this country and owners and promoters who are now approaching 50 and 60 years of age. And if they could get out and they could sell out, they would be gone. Because it is not profitable anymore. And the stress that you are seeing and that we are seeing across the enterprise space is reflecting that. And I think it behoves all of us here in this house as public paid servants to understand how well remunerated we are at the expense of many of these people, hard pressed, paying taxes and getting very little from the state for it. I welcome the supports the Department of Enterprise has provided to small business. Namely the TWSS, the EWSS and the CRIS. But I think we are going to look and still need further supports, particularly to the hospitality sector, with the deferral of reopening, Minister. And I hope again that this is something the government will look at. Can I also mention the European travel search, which has come into place on July 19th. And anybody who was looking at the news yesterday would have seen the pandemonium that has been caused across the airports yesterday, trying to get harmonisation of QR codes, etc. And I would ask whenever we get a travel search up and running, Minister, that we do not emulate what we saw yesterday. We must, we will have a lead into this, we must have time to get this right, so that whatever travel is going to happen, that it can happen as easily as possible. And also with respect to the announcement today of a working group on antigen screening. I brought antigen screening to Neffert over, I think it was last April, May in 2020. And we are still talking about implementing it. And now we are talking about another body on the back of two reports, Minister, as to how antigen screen testing is going to be delivered. We now have the Delta variant and we do not have time. And we need to start putting some momentum behind these initiatives. Also, the Green Cert, that Darnished referenced the other day, that the Green Cert in Europe covers those that are vaccinated, those that are recovered and those that have been recently tested. And I think in this Parliament, we now need to look for a Green Cert that is going to take a count of antigen tests, so that people may have some access to hospitality while they are waiting on vaccination. With regard also to the macro policy and political posturing, I would like to reference here today a decision from the High Court to refuse leave to appeal to Antashka for the development of a cheese plant in Bellevue, Walford. This project has been held up for over two years. It was passed by Board Planala. It has had independent reviews. It has had a number of examinations by the EPA. And I think the decision to look and to obstruct that policy was largely built in South Dublin. And it is essentially, I would call it, political posturing. Basically trying to, on a philosophical political point, about the Green Agenda. And it has delayed for two years the dairy and food agri sector in the South East. And again, Minister, this is something that Government will have to look at. How state-subsidised actors can involve themselves in obstruction of processes that have already been cleared by other regulatory frameworks. So Minister, we are facing many challenges in the SME sector. And I think one of the main ones that is going to come as soon as supports are reduced are going to be solvency. And revenue, as I say, will have to take a benign look at business. And also businesses themselves are going to find that their cost basis are not competitive anymore in light of the revenues that they are going to be receiving. And Government and Finance are going to have to be aware of this. I would like to thank the Tarnished for recently receiving a delegation I led from the Regional Group in terms of Buy Genuine Irish and supporting an Irish campaign and the commitment of Government to start a new Buy Local campaign in July. This is very important to support Indigenous food agri manufacturers, Irish companies and Irish jobs. Can I also point out to you, Minister, that recruitment is still a major obstacle, believe it or not, as the economy tries to open up. And Government now needs to look at the provision of the pub, particularly in light of the lower paid areas, which is acting now as a disincentive to re-engaging with employment. And this must be looked at as a significant problem. Overall, as I say, Minister, we in the Regional Group welcome this proposed legislation and we hope to see it enacted as soon as possible. We look forward to further support by Government of our critical SMEs, our Indigenous Irish manufacturing. I look forward and I hope to see, as I say, a benign attitude taken by the Department of Finance, by Revenue, in terms of hard-pressed entrepreneurs and sole traders who are trying to get back on their feet after what has been a cataclysmic period of economic uncertainty. And they are facing still into it. And I look forward, Minister, to your support to that agenda also. I'm going to give them all good. Last can I go now. Can you just turn to mind, Mayor?