1. Fine Gael Business Forum:
Working Together

2. Message from Enda Kenny TD, Leader of Fine Gael
The Irish nation is currently enduring a deep recession caused by the boom bust
economic decisions taken by this Government. While most of our EU neighbours
return to economic growth our business community continues to feel the effect of
recession with increasing numbers of insolvencies, lays offs and pay cuts. The
experience of every country has been that small businesses drag economies out of
recession. For this reason I saw it necessary to take my economic team around the
country to hold a number of business forum meetings to hear the views, concerns and
ideas of our talented business leaders. No political party has ever undertaken this
simple exercise before. Under the auspices of our business forum committee our
economic team and I met with over 1,200 business leaders in Dublin, Waterford,
Cork, Galway, Limerick and Athlone.
Fine Gael’s approach to the economy has been consistent on one central aim; the need
to promote job creation and retention. Bailing out banks and budget cuts without an
employment plan is an inadequate response to the crisis the country faces. Politicians
cannot create jobs by themselves but need to implement policies to make it easier for
businesses to invest, hire more staff and look to the future with confidence. The one
message we heard loud and clear from our businesses was that they need a break.
Government imposed charges and taxes continue to drag down business activity by
pushing up costs. Consumer confidence is in a tailspin and our businesses continue to
lose out to their cheaper rivals north of the border and overseas.
The Fine Gael’s economic plans contain the ideas to promote job creation and
business. It was informed by the views and opinions of the business leaders we met
around the country. One of the central policies of our recent alternative budget was
the Jobs Tax Cut which would lower crippling labour costs by cutting both rates of
employers PRSI. It has the added advantage of benefiting 175,000 Irish businesses
and their 1.7 million employees and avoids excluding large sections of the economy
which has blighted the Government response.
Ireland’s most valuable resource has always been its people. We are a hopeful,
innovative and confident people and this is best seen in Irish businesses. With the
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3. right Government in place, pursuing the right policies I firmly believe Ireland can
once again be held up as an example of a model economy achieving full employment.
Working together with the business community we can make this aim a reality.
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4. Summary of Concerns & Ideas Raised by Business Leaders
Labour Costs
A common theme raised by businesses leaders in all cities was the issue of labour
costs. This can be broken down into three broad areas:
• Minimum Wage: Many businesses perceived the minimum wage to be a drag
on their cost competitiveness. The minimum wage in other areas such as
Northern Ireland was used an example of Irish business having to compete
with lower cost economies. Fine Gael’s view that it was not appropriate to
lower the minimum wage as there are other options to be exhausted first in
order to lower labour costs.
• Social Partnership: A reoccurring comment from many small business owners
was their anger of the social partnership process which they claimed they were
mostly excluded from and as a result had unsustainable pay increases forced
upon them.
• Competitiveness: Concerns about labour costs reflected a broader concern
about the general lack of competitiveness in the Irish economy. High costs
imposed by Government pushed up business costs and end prices.
Council Rates
Very strong concerns were raised by businesses and their representative bodies about
local authority business rates. Businesses, unlike domestic households, pay additional
taxes to their respective local authority. There was a worry among businesses that
Councils would simply increase their business tax to plug the gap in their finances
caused by decreased Government grants. Fine Gael has committed to freezing local
business rates in Councils for the next number of years and reducing them where
possible. Many businesses expressed the opinion that rates should uniformly drop in
line with decreasing inflation and business activity. Fine Gael Councils, such as
Fingal County Council, have dropped their rates by as much as 10% for the coming
fiscal year.
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5. Banking and Credit
Credit is still not getting to small business. Fine Gael heard first hand stories in every
city visited of small businesses being turned down for credit, having difficulty
extending overdrafts and accessing banking services. There is no evidence that the
creation of NAMA has had any positive effect on business lending. Meanwhile,
employers continue to lay off people in order to cut costs as much as possible in order
to simply survive through the recession. Fine Gael’s plan for a new Wholesale
National Recovery Bank remains as necessary as ever in order to provide a credit
stream to businesses via the existing commercial bank network.
Public Sector Tendering
A perfect example of Government not reforming its structures or procedures to help
indigenous small businesses is in the area of public sector tenders. Even though it is
worth €15 billion to the economy the public tender process is almost designed to
exclude smaller Irish suppliers. The tender packages are not broken down into smaller
contracts and larger companies continually win out over their smaller rivals. This, as
was pointed out during our event in Cork, was preventing many small companies
from growing into medium sized companies. Businesses suggested that Government
create smaller tender packages or place new conditions on the requirement to
subcontract sections of a successful tender contract.
Red Tape & Duplicated Regulation
An area that continues to prompt the ire of small business is that of duplicated
regulation and unnecessary red tape. Most Irish SMEs have very limited staff
resources and cannot afford to waste staff time on multiple forms and surveys issued
by a myriad of Government Departments and Agencies.
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6. Education Quality Concerns
Engineering and computer companies in Dublin and Cork expressed deep concern
over the quality of graduates emerging from Irish universities. One Dublin based
engineering company went as far to say that they hire all their skilled staff from
abroad. The lingering perception that Irish science, engineering and computer
graduates cannot compete with their foreign counterparts should be matter of urgent
concern for the Government. The quality and flexibility of an indigenous labour force
is a key component to wider economic competitiveness.
Political Leadership
The lack of political leadership within Government is a great concern to Irish
business. It was an opinion that was raised in all locations visited with the Fine Gael
business forum. A vacuum of leadership at the highest levels of Government has a
direct impact on consumer and business confidence. There was a strong dire among
the business community for a new reinvigorated political leadership who would take
the smart decisions to restore the economy back onto a sustainable footing.
Consumers want to spend and businesses want to invest but as long as they see
Government floundering from one crisis to another they will not look to the future
with confidence.
Rent Reductions
Commercial rents have not come down in line with nearly all other costs. Until very
recently upward only rent reviews continued to hammer businesses which are
struggling to survive. An accountancy firm in Galway stated that they had to reduce
labour costs because they couldn’t lower their rent costs as a way of cutting general
expenses. Businesses want immediate Government action on rent reviews by
landlords to give some relief, especially those businesses in the retail sector.
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7. Lack of transport and communications infrastructure
The lack of proper transport and communications infrastructure was another common
theme among locations but was especially acute in the South East of the country.
Ireland has some of the slowest broadband speeds among other developed economies
in the OECD. An advanced telecommunications network is the lifeblood of any
‘smart’ or developed economy and our deficiencies are holding back Irish business.
Despite a decade of heavy investment in road infrastructure our major towns and
cities still suffer from chronic road congestion.
Energy Costs
Irish businesses are keenly aware that they pay some of the highest electricity costs in
Europe. They were burdened with unprecedented energy price increases during 2007
and 2008 yet prices remained high following the collapse in world oil and gas prices.
Many felt that the nature of the Irish regulated energy market is not working in the
best interests of either business or the home owner and that major reform was needed.
Social Welfare Payments
Some employers offered the view that they could not entice more workers to work for
them as they could not compete with social welfare payments and additional benefits.
Others employers reported that they had employees who had been reduced to a shorter
working week not wishing to return to a full working week as they would lose
benefits. There is a need to reform the social welfare system so that is avoids making
people dependent on the State but encourages employment or training instead.
Public Service Reform
Business leaders were eager to see reform of the public sector as a way of improving
its interaction with business. Outdated opening hours, closed telephone lines and
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8. duplicated red tape and business inspections drag down the efficiency of business.
Many were angry at their taxes being wasted by Government using examples of FAS,
PPARs and banking bail outs.
Imposition of the Carbon Tax
A very real concern in areas in the west and midlands was the imposition of a carbon
tax and how that would affect solid fuel businesses operating here. One such business
speaking at the Limerick meeting declared that he would have to move his business to
Northern Ireland because he would not be able to compete with suppliers not
burdened with the tax. Other businesses located in rural areas were concerned that the
increased prices for petrol might suppress business activity further in rural areas.
Lack of effective local government
Frustration, annoyance and a loss of confidence was expressed when the issue of local
government was brought up in the Shannon and Western areas. Businesses were
frustrated with the large number of regional development agencies and local
authorities all talking and producing reports but failing to promote any meaningful
change. The system of local government produced local politicians with very little
power to introduce policies to promote their own localities. This issue was strongly
debated in Limerick where people expressed annoyance that the same problems being
discussed by their local agencies decades ago are still being discussed today. Business
leaders stated that for all the talk of proper regional development there was very little
action or progress.
Promoting Tourism
The tourism industry was strongly represented throughout the business forum tour.
Hotels, restaurants and travel companies all expressed the view that Government was
not doing enough to promote tourism. They argued that a strong and vibrant tourism
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9. sector would boost local economies across Ireland. Strong criticism was directed at
the manner in which failed hotels in ownership of banks were being kept open until
the property market recovers and thus driving away business from viable family
owned hotels. The continuation of the tourist ‘exit’ tax was also highlighted as an
attack on the tourist industry.
Renewable Irish Energy
Many small energy companies attended the business forum to communicate to Fine
Gael how Ireland is continually failing to take advantage of our ample natural
resources to produce energy. An owner of a two wind turbines, one located in the
Northern Ireland and the other in the Republic, told how his Northern Irish turbine
made a small profit while his other turbine was struggling to break even due to
insufficient Government supports to get the industry off the ground. Ireland imports
over €6 billion worth of foreign fossil fuels every year and if this amount was
reinvested in Ireland it would provide a huge economic stimulus. There was support
for Fine Gael’s NewERA stimulus plan that proposes to build next generation
infrastructure for communications, energy and water services.
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10. Message from Denis Naughten TD
Chair of the Fine Gael Parliamentary Party Economic and Business Forum
Fine Gael is a political party that encourages initiative, innovation, investment and
self-reliance. We stand for a vibrant, competitive economy. To that end, we believe
Government policy must encourage initiative and reward hard work, thus driving
economic activity and creating jobs.
The real risk for our economy is the complacency of the current Government which is
continuing its mantra that solely addressing the public finances will lead to growth.
This will not get people back to work but will prolong our deep recession.
We must innovate or we will stagnate. And while science and technology will play a
key role in this drive to change, innovation is not just about the smart economy, it’s
also about thinking smart.
We have to think smart and we have to use what is available to us.
For example, the State-owned broadband network is currently owned by a myriad of
State companies and agencies. By bringing its elements together and building a
national high speed broadband network we can create thousands of jobs and take
advantage of all the benefits to the economy that will bring.
We also need to change the way tenders are issued by the public sector to encourage
public sector bodies to tender ‘the problem’ and invite solutions from tendering
companies. This approach promotes innovation and can lead to significant savings if a
company identifies a cheaper service or solution to the problem. Government should
not assume it has a monopoly on knowledge, ideas or solutions.
Fine Gael has published targeted plans to support small business, which focus on 4
priority areas: tax relief, credit, costs and getting Government working for business.
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11. Targeted Tax Relief
• Fine Gael Jobs Tax Cut: To give businesses and their employees a much
needed boost Fine Gael has proposed cutting both rates of employers PRSI.
This will have the effect of reducing average pay costs by 2.5%. Furthermore,
Fine Gael proposes no increases in Corporation Profit Tax or marginal Income
Tax rates.
• Reduce VAT: In our Pre-Budget submission, Fine Gael proposed to introduce
a temporary "stimulus" by cutting the lower rate of 13.5% VAT to 10% until
the end of 2010. We still believe that a 12 month reduction is warranted.
• Abolish the Travel Tax: Fine Gael proposes to abolish this new tax, which
acts as a disincentive for tourists to come to Ireland and will do further
damage to our struggling tourism sector, leisure industry, hotels and
restaurants.
Get Credit Flowing
• Get the Banks Lending: Fine Gael will establish a new National Recovery
Bank that will use the facilities and staff of existing commercial banks to
provide a credit stream to business and individual customers straight away.
• Prompt Payment from Government: Businesses are suffering because
creditors will not pay their bills. Among the worst offenders is the
Government and its agencies. Fine Gael will honour this commitment and
will extend it to all government agencies, local authorities and State-owned
companies.
Curb Costs
• Cut Red Tape: Fine Gael will reduce the costs associated with red-tape by
25% by 2013 using a best practice solution that has worked successfully in the
United Kingdom, the Netherlands and Austria.
• Reduce Energy Costs: The Government’s regulatory system for energy is
flawed. Businesses in Ireland continue to pay more for electricity and gas than
their UK counterparts. Instead of fixing prices, the Commission for Energy
Regulation (CER) should set a price ceiling. Greater transparency should be
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12. introduced into the pricing decisions with more input from groups representing
business and vulnerable people.
• Reduce Government Charges: Cut all government charges by 5% in line
with deflation and cuts in pay and welfare. Fine Gael has consistently
highlighted the unacceptable situation that while costs are lowering in the
economy Government controlled charges remains high or are even increasing.
Getting Government to Work for Business
• Restructuring Public Tenders: Irish public contracts are worth €15 billion a
year to the national economy. Yet this procurement system works against
small Irish companies as a massive proportion of the larger Irish contracts are
awarded to non-Irish companies. The resounding message from business
owners who attended the recent Fine Gael business forum was that restrictive,
inflexible and expensive public procurement procedures are excluding Irish
businesses from even entering procurement competitions.
• Redraft Employment Law Compliance Bill (NERA): In its current form, it
will criminalize employers severely reducing employment creation. In
addition, Fine Gael wants to overhaul the Joint Labour Committee System and
Employment Regulation Order System which are out of date and costs us jobs
in the catering, hotels, retail and other sectors.
• Supporting the Agri-Food Sector: The agriculture and food industries are
often over looked when talking about the SME sector. Fine Gael has proposed
an overhaul of the myriad of State departments and agencies currently
involved in food safety inspection and regulation with a view to establishing a
single food monitoring body.
• Supporting Innovation: Fine Gael will implement its NewERA economic
strategy to build much needed broadband, water and renewable energy
infrastructure. Furthermore, we want businesses to be able to offset Research
and Development expenditure against employer’s PRSI and extend the ‘look-
back’ period. To facilitate innovation in small business Fine Gael also wants a
Government funded National Internship Programme (NIP) and subsidies for
employers who put staff on short time to avoid lay offs (WorkShare).
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13. The message which Fine Gael is hearing from business people is clear. Unlike the
banks they don’t want ‘a bail out’ but they need ‘a hand up’. And that is what you can
expect from the next Fine Gael Government.
At its peak over 800,000 people were employed by small and medium sized
businesses in Ireland. These are valuable jobs in every village, town and city in
Ireland. This sector contributes billions to the economy in taxes and PRSI, but is
being very badly hit in the recession.
These businesses are dying quietly. While every job lost is a hammer blow, unlike in
larger companies whose troubles are headline news there is no national outcry when a
small business shuts its doors for the last time. Yet this is happening every day and
the number of jobs being lost continues to grow.
All of us have to change the way we do things, and Government is no different. Fine
Gael recognises the value of small business to Irish society and we are working to put
their needs, and consequently the jobs of those who they employ, at the top of the
political agenda.
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