DÁIL SPEECH ON OECD REPORT ON SMEs

I am delighted to have the opportunity to speak briefly on the OECD report on SME and entrepreneurship policy in Ireland. I welcome that it has been put before the Dáil. Hopefully, the Minister will move forward quickly and publish her unified strategy document for the future.

 

Small and medium-sized enterprises are a vital part of our economy and employ over 70% of the workforce of 2.3 million people. That is quite typical of the European Union where approximately two thirds of all workers work for SMEs. Even in the UK, approximately half the workforce is in SMEs. Medium-sized companies have 250 employees or less, small companies have fewer than 50 employees and microenterprises have ten or less. Like many Deputies, I have worked in small and medium-sized enterprises in the past. I was a director of a community enterprise centre and was involved in training local entrepreneurs on the north side of Dublin for more than three decades. Throughout that time there have been many initiatives by organisations such as area partnerships, which in the case of Dublin Bay North include the Northside Partnership, Pobal, SOLAS, the Revenue Commissioners, the Department of Employment Affairs and Social Protection, the Department of Business, Enterprise and Innovation and local enterprise offices in Dublin City Council and Fingal County Council. They have all played a vital role over the years in supporting the development of small business. What the Minister must do in the new unified strategy is try to address some of the deficiencies in the sector, particularly with Brexit looming over it.

 

It is welcome that the Minister commissioned this report last year. I looked through the various themes and actions and there are many common-sense initiatives that could be taken. I welcome that the Minister has established the interdepartmental consultative group, which is chaired by the Minister of State, Deputy Breen. The 11 actions under the six themes refer to the work that has already been put in place to develop small and medium-sized enterprise. For example, action 2 calls for an online business diagnostic tool, to be able to benchmark small businesses and improve their access to finance and their skills in recruitment and marketing their products. One of the areas where SMEs are sometimes squeezed out, and other Deputies have referred to this, is with regard to tax credits in the research and development area. Action 3 recommends a simplified pre-approval process. It is skewed towards the large companies at present and this would give smaller companies, partnerships and even small co-operative businesses a chance in this regard.

 

Action 5 refers to the slow rate of digitisation and the fact that the LEOs could play a strong role in helping small businesses in that area. There is also reference to clusters, which have been successful not only in this country but also in Germany and in some sister jurisdictions in the European Union. Obviously, there must be access to credit. The trading online voucher programme is mentioned, as well as the fact that SMEs need better resources to be able to pursue such implements to develop their businesses. Action 9 refers to access to finance through the microenterprise loan fund and so forth.

 

Action 10 refers to tax reliefs for non-domiciled new hires by Irish SMEs. That involves the special assignee relief programme, SARP, but there are many concerns at the Committee on Budgetary Oversight, and I indicated them in my budget submission, about how SARP works, how it discriminates, how the programme has expanded and how it has been taken advantage of by some larger companies. I am not sure if it is the right implement for SMEs. Another area highlighted in the report is the levels of productivity. The National Competitiveness Council mentioned this in its productivity statement in 2019.

 

We need measures and supports to boost productivity in SMEs and the National Competitiveness Council has also drawn attention to this. There is more than enough evidence to show that Irish SMEs must be supported better in the future and we have a roadmap in this report to help us to do it. I welcome the report and urge the Government to implement its key recommendations as soon as possible.