JOINT COMMITTEE ON ECONOMIC REGULATORY AFFAIRS debate -
Tuesday, 27 Apr 2010

One of the things we find from the statistics going into the CSO is that we are well-known as an organisation to run surveys on a very regular basis among our members. We got a response rate of between 25% and 30%. The reason is that we issue the results back to the members so that they can benchmark their own businesses against the general.

I want to look at the recommendations, set out in the presentation which states:

There needs to be a review of the objectives of regulation as, in our opinion, neither the objectives nor reasons for regulation are fully understood by the public service or the wider political stakeholders.

Is it Mr. Fielding's view, given that he has quoted the CSO example in that firm, that the CSO imposes an obligation through the Statistics Act, on businesses to supply the figures but that the CSO has no clear understanding of the administrative or cost burden that places on the business and it is acting as just one arm of Government to do that? In effect, Government needs to ensure that businesses are not over regulated in a way that increases their administrative functions for no stated aim at the end of the day, except that it gathers figures which may or may not be used productively. Is the higher level group on business regulation looking at that specific topic and getting into the nitty gritty to ensure that business function is taken away from that business person so that he or she does not have to waste a number of labour hours over the course of a week preparing material for which there is no gain to the business person and only adds to his burden of work?

The objective of the XBRL project would be that in X number of years' time one set of statistics would be given and everybody could feed out of those, so all the pigs could go to the same trough. There was a time when I would have said the CSO did not have a clue in regard to the burdens it places on small business. However, during the past two or three years, given the dialogue with ISME, it is coming to understand those difficulties. Of course, one gets the shrug of the shoulder because the CSO has a job to do. The blame goes not to Dáil Éireann but to Brussels. Given the problems with Greece and the figures it produced, the European Parliament will seek more figures and more accurate figures and will not accept some of the statistics being provided at present. The danger is that we will become more statistically challenged.

In terms of the regulatory process as a whole, Mr. Fielding makes the distinction between the light touch regulation of the banks and the heavy regulation for SMEs. I am sympathetic to everything that has been stated here because we deal with them at the front end. For example, in regard to Revenue, there are scenarios where agreements are struck between businesses and Revenue in regard to outstanding obligations for taxation and so on but what is happening in the SME sector is that guys are not able to collect the money outstanding and due to them. While one gets a sense that Revenue is flexible in stretching out the time lines and is coming up with agreed repayment schedules, the agreement on a repayment schedule is made in good faith by the SME but what happens is that the goalposts shift further in that the person who owes the money outstanding is not in a position to pay and then the heavy hand comes back down on the business. I am dealing with one such engineering firm in north Cork which is finding it very difficult to get to talk to Revenue. The reason he is finding it difficult is that having already been in to Revenue and drawn up a schedule, the payments due on invoices have not come in and Revenue is now putting the heavy hand on him. To see that business thrive, I want to see him being given some sort of a break. His impression, as a business owner, is that Revenue will come down heavy on him and shut him down, rather than cut him more slack. How as politicians do we legislate to cut that business a bit of slack in current times?

The major issue the Deputy is highlighting is the difficulty with the Prompt Payment of Accounts Act 1997, which is the most incorrectly named legislation that was ever brought through Dáil Éireann. It was amended and implemented by regulation in August 2002. .

We were engaged in consultation with the Department prior to its implementation and our understanding was that payment had to be made within 30 days, and if not, an interest penalty had to be paid for breaking the law. At the very last moment, obviously as a result of lobbying by a group representing big business, there was a change that allowed businesses to contract out of the legislation. We were to enact legislation to allow small business to be paid on time but the legislation was amended to allows big businesses to abuse their dominant position and dictate to small business that they will pay in 45 or 60 days' time. We have letters on file from multinationals and some of the large Irish companies that are multinationals stating that in the past they used to pay accounts within 45 days but will now extend that period to 60 days.

Is it impertinent of me to ask that copies of the correspondence, without referring to the individuals in question, could be furnished to the joint committee? That would assist us in seeking to effect changes to the legislation, if necessary.

We must grapple with this issue because it affects sub-contractors who are operating on a more informal basis. We raised this issue at the previous meeting. If we had substantive evidence and bearing in mind that we can conceal people's identity, that would assist in highlighting this issue.

The letters we have seen would have gone out to all of the suppliers to those companies. It would not be just picking some. Remember the people who are doing this are the big guys, the companies at the top of the tree. They are abusing their dominant position by telling people when they will pay, and the 45 days then becomes 60 days. There is a domino effect down the chain.

I have a particular interest in the food industry and one of the issues that is coming up in terms of the regulatory regime is the Hassop regulation. Have food businesses contacted ISME about the overly stringent Hassop regulations, given the way the system works in France, where an artisan producer can continue to produce, and there is no hassle.

Yes, we have. The legislation is enacted as if everybody in the food industry was operating a McDonalds rather than a McDonnell's farm out in County Wicklow or the Clonakilty pudding. The small businesses are being put through the hoops. Safety is of paramount importance, but artisan producers would say they are not going to kill one person. There seems to be an over-emphasis on this and the costs to the producers is phenomenal.

I am not exasperated with Deputy Sherlock's very interesting questions, but I have a time constraint as I must go elsewhere. I did not mean to be disrespectful of Deputy Sherlock's contribution.

When I was a small boy, there were two ladies who used to sit at either side of the corner of the main street and sold fish from stalls. That fish never killed anybody in the town. It was the freshest of fish. Then along came the European Union and with that came the man with the biro and laptop and before we knew where we were, we had regulations, directives, commissions, committees, red papers, black papers, white papers and green papers and yellow papers. Before we knew where we were, we had driven these poor people off the streets. It must be difficult enough for people who were involved in that type of a business for all their lives to travel to other European cities and see stalls such as they had in main thoroughfares across market streets and there does not seem to be a fellow with a laptop, biro or briefcase running after them not to mention a good few summons in the back pocket. Maybe the stories are apocryphal but right across the small business sectors, there is a feeling that there is massive over-regulation. They feel they are being driven from pillar to post by an administration and by an administrative system which insists on implementing not just the spirit of the directive or regulation from Brussels but the very letter of the law.

Does it come as a surprise to anybody that when certain very sensible treaties, which are put before the people for the welfare of the Irish people are defeated? It is happening because ordinary people are looking at what they consider to be the Europeanisation of Ireland and the dictation of their lives. It is fair to say that these directives and regulations which are the function of the European Commission and must be implemented by member states are implement more stringently in this country than they are in any other European state. Why is that?

I will define administration for the Deputy. Having been born and reared in a small business, and having set up a solicitors firm — which is a small business — with my family, from the perspective of the broad mass involved in small business, the definition of implementation is the arrival at the front door of a fellow with a biro, a set of statistics and a briefcase. No sooner has he gone out the front door than there is a fellow with a laptop at the back door.

That is the bottom line. The EU introduces 500 new laws or directives a year but these are negotiated and agreed by Irish officials and Ministers, who are elected representatives and in whatever party. In the past ten or 15 years this has been one particular party. It is time we said that enough is enough on a cross-party basis. In France they cook bacon with a cigarette in one hand and a bottle of beer in the other hand. No law or laptop gets them. We have had good discussions at the Joint Committee on EU Scrutiny with those involved in artisan food production. They cannot compete against other countries in Europe under the enactment of regulation in Ireland. Deputy O'Donoghue put it much more eloquently than me.

I do not normally intervene. Every public representative in Ireland sees what is stifling Irish business. If a person falls foul of regulation, by the time we can get that business back on track they must go through 16 different hoops. Rather than committing to getting it sorted today, they must spend three or four weeks with the best people they can find to advise them on going through the hoops. It may have been a minor breach.

Deputy O'Donoghue gets the gold at the end. We will have a chance to have a greater say. The EU recognises there must be a two-tier system with rules for small business and for larger business. That started but the impact at this level will take longer. In implementation we need to allow for differences between small businesses and larger businesses. The absorption of costs is completely different. Large business needs to be regulated because it can totally abuse power, which is not the case with small business where there are four or five employees. Can Mr. Fielding issue us with a list of the 1,000 items of legislation that affect him? It is serious if there are 1,000 items of legislation. I also asked the Small Firms Association for this. It would be helpful if ISME can provide us with a breakdown of items of legislation in different categories. Can we have a breakdown of the 30 or 40 regulations that could be eliminated? If we can compile a list we can approach various Ministers and tell them certain regulations must go. There is a target of cutting regulation by 25% by 2012. That target is out the window and no progress has been reported. We did not have the figure of 1,000 to cut by 25% in the first place. I am glad that Mr. Fielding gave us this figure. There is no real plan to cut this if we do not know what we are starting with. Perhaps we can work on this as we go along if the delegation can provide a list.

The Chairman referred to small businesses ending up in trouble as they break one of these rules. They then have a problem correcting the situation and there is nowhere for them to go. They probably ring ISME for advice and help. We need experts and advisers paid by the Government in order to facilitate businesses in these situations. Under the health check system in the UK, the Government makes available professional management accountants and legal people to sit down with small businesses. The small business person may be a genius in one particular field but does not have expertise to get out of the current situation. It may be a problem with a specific employment law or a problem in these economic times. The State should provide advisers to guide visitors through their problems in every county. Does ISME think this would be worthwhile? It is supposed to be there in the 70 or 80 organisations available but advice to help people redraw a business plan or negotiate with creditors is not available. This service should be available.

Procurement contracts are a major issue for small businesses. The French excel at this, they divide contracts into such small parts that they are required only to advertise locally. This keeps their people in jobs. We love putting small contracts together to have one large contract which then must be advertised all over the world. Our guys miss out and we must correct that.

We all agree we need a specific recovery bank, whatever it is to be called, that will make money available to functioning businesses that can survive if they get help. Is ISME in any negotiations with credit unions? There is a lot of money in those sectors and it could be used to help small businesses.

Some of the large businesses abuse their position with regard to late payments. Some State bodies also abuse their position and I would like to hear the comments of ISME if that is the case. We are told that the period has been reduced to ten days or 15 days but that is not a case. State bodies always find a reason not to pay. An example is Iarnród Éireann, which owes hundreds of thousands of euro to contractors. That is not good enough in the current environment. The Government should pay its bills. If there is a problem, it should be sorted out. There should not be people waiting two or three years for their money while others come into this House and tell us the bills have been paid. That matter must be examined.

We can make massive progress on e-banking if we want to. The budget is the opportunity to do that. It could cut costs dramatically for businesses. We are very fixated on cash, carrying cash and paying in cash in Ireland. I am one of these people, I prefer to have cash in my pocket. Other countries have moved on dramatically by using laser cards or debit cards. In business, we must make some progress on that front.

Some small businesses fall foul of circumstances and cannot survive and it is my belief that we will kill their spirit by the way they are treated afterwards in respect of social welfare. If small business owners who fail are treated well, they will bounce back in a year or two and go at it again. We need the entrepreneurial spirit to start again and employ three or four people. We are putting these people through hoops and hardship and we are building walls in front of them. They will never become self-employed again if we do not treat them properly. Does the delegation get the same sense from its members?

Much work was done behind the scenes on e-Government about the collection of data. The intention was to facilitate information being collected and used by everyone. It is lunacy that information must be filled out in forms and the same information must be given to ten different Departments. It makes no sense. Are Departments engaged in power struggles, which creates additional costs for businesses? Has the delegation seen any improvement in its members' dealings with local government? Most people in local government and probably Departments have the perception that small businesses could take it and could handle any costs thrown at them because they were making big profits. The majority of small businesses do not make big profits; they make a wage. Perhaps they make a little more in good times but most times they probably lose money because it is difficult to cover all costs. However, the perception is that they are making money and should be hit with more costs. That perception must be done away with and the only way to do so is for ISME to be part of the talks. It should be part of them and have a major say.

In February 2008 I tried to discuss this with Deputy Micheál Martin, who was Minister for Enterprise, Trade and Employment at the time. It was in small businesses that the jobs went first. I received phone calls on a daily basis from small businesses losing one, two or three jobs. That is where it started and within six months it was having a major impact on larger businesses. Small businesses are closest to the ground and reflect what is happening. We badly need them to get out of the current situation. However, ISME is not involved enough in talks. I hope we can get that sorted.

Many recommendations are made and I agree with most of them. ISME needs to allow for common sense in the coming years. It is impossible to change all of the rules to create breathing space now. What needs to happen is that a message should go from each Minister through the Department of Enterprise, Trade and Employment to ease up for a year or two on small businesses and give them a chance to survive, be it with regard to revenue or regulations.

With regard to data and form filling, census information is meant to be collected to provide for planning. If it was done properly we would not have shortages of schools, buses or roads in certain areas. Obviously, we have never done that. We have all this form filling but the follow-on does not seem to be there. It is generally a waste of time unless we collect data every four years so we know ten more buses or three more schools are needed to serve a particular area. However, people do not see that impact; they see crisis management. Obviously, data collected is never used for planning purposes so why should people participate? Small businesses do most of that data collection. One could speak on this for ages but I will stop now. We could link with Mr. Fielding on many of these issues to try to make changes. We all speak about it but nothing is being done about it. We have to get some changes made.

With regard to advisers, why not get the existing regulators to place them? When I was in practice, when somebody established a business the Revenue Commissioners sent someone out on a visit to go through the requirements. That was a success. However, they do not have the manpower to do it now. With regard to NERA, rather than doing all of this——

——prosecution it should be there. People saying "I am from the Government and I am here to help" does not exactly help we could get across that more education and advocacy within the various regulators is required rather than establishing new ones.

Procurement is becoming a bit of a joke in Ireland. It is like what Deputy O'Donoghue stated, we are the best in Europe so when there is a procurement we have to issue it to all of Europe. I attended the Enterprise Ireland launch of the innovation vouchers for small business. A plastic sheet containing the documentation and a beautiful biro were handed out. The documentation was printed in England, the plastic cover was obtained from England and the biro was made in Spain.

That is the type of rubbish we must put up with all of the time. Last week's "Prime Time" programme featured Future Print. The amount of Government printing work leaving this country and going North or to Britain is phenomenal. In Future Print, 112 jobs are on the line because it cannot get this type of work. The fruit and vegetable contract for the Army barracks in Donegal went to a firm in Antrim and the building work on the barracks went to a Northern Ireland company. Many small businesses in Ireland would be well capable of doing it but we are part of Europe and the best Europeans. ISME is doing much work on procurement. Today, we held a workshop where approximately 30 small business owners met the OPW at the Red Cow Hotel. Two more groups of 30 are waiting to meet the OPW to discuss procurement. We have already discussed it with the HSE and held meetings throughout the country with 30 or 40 owner-managers. Those within the HSE and the OPW are excellent people but they are being caught in the overcoat they must put on of being Europeans.

With regard to credit, a recovery bank and credit unions, the credit unions and Dún Laoghaire-Rathdown County Council have come together to work on such a project. Work can be done on this and we have been involved a little but we have not advanced it very far.

With regard to late payments and the Government, Departments are good at paying.

It is the agencies which have been left out of the initiative. Deputy English mentioned CIE and I will mention the HSE. While they are supposed to pay within 30 days, Deputy English is correct that one will find they come up with all sorts of excuses, such as asking for an invoice to be issued again. For instance, someone will state he or she knows an invoice was issued in October but will ask for it to be re-issued with the date 1 March. That is happening all the time. This is abuse of a dominant position because if one rocks the boat with the HSE, will one get the next job? That is the difficulty.

We have been advocating e-banking for years and it is quite difficult to get owner-managers of small businesses to use it. For every cheque transaction that is changed to e-banking one saves just over €1. It was introduced in Belgium and a purse was created whereby there was an incentive. It was almost that money was put into one's account to use it. People then got used to it.

At present, a small business will save €1 on every cheque so there is a gain to be made for SMEs.

I take the point on the XBRL but I am not competent to speak on it. The agencies are working together on it and the faster the better as far as I am concerned.

Deputy English also spoke about local government and he is correct. Deputy O'Donoghue also spoke about the European matter. Our own jobsworths in local government, with local government legislation behind them, are even worse and I will give a quick example. If one wanted to bring a wide load from Limerick to Dublin one would have to obtain at least seven different licences or permits: one from the Garda which is valid for five days; and at least six from the local authorities in Limerick, Tipperary, Offaly, Laois, Kildare and Dublin. One may also need one from Limerick corporation and from the various local authorities in Dublin. If one's truck is off the road that morning because something happened and therefore another truck must be used, one will have to apply again so the load cannot be transported. There is some woeful stuff going on but under section 283 of the 2007 Act, local government will not do anything about it. We have been in touch with the Department of Enterprise, Trade and Employment, the Road Safety Authority and the Garda. However, the county and city managers will not get up off their backsides and do it. It is such a small thing but it is creating havoc. Three counties, Mayo, Sligo and Donegal, do not charge for those permits but every other county charges for permits and one only gets a permit for one shot. That has really gone to the other side.

I have nothing to say about the census but statistics are quite important. I was asked about social welfare for owner-managers. A director who loses a business does not go on the dole as do employees. They are bunched in that regard.

Our attitude to failure is changing slowly but surely. However, there still needs to be a sea change. In the United States a person who goes bust wears a badge of honour.