Speaking Points by Minister Micheál Martin at the Small Firms Association: Better Business Roadshow

Thursday December 15 ^th 2005

I am delighted to have been asked here today to open the Association’s ‘Better Business Roadshow’. The Roadshow was first held in 2004 and was, I understand, an enormous success.

Since the early 1990s, the Irish economy has been transformed. During that period the value of exports has tripled to almost €85 billion. Unemployment has fallen from 15 per cent in 1994 to just over 4 per cent today. Net immigration has replaced net emigration and Ireland is now placed among the highest per capita income countries in the world.

Much of this success is due to our taking advantage, at a national level, of the opportunities offered by our membership of the European Union and of the new markets which it has opened up for our enterprising and entrepreneurial exporters.

I believe that it is essential, at this time of uncertainty in Europe, when opponents of the Union are seeking to capitalise on the setbacks in the referendums in France and The Netherlands, to promote coherent and convincing arguments in support of the Union and its continuing fundamental importance for Ireland’s future.

I am probably preaching to the converted in terms of today’s audience but I would, nevertheless, like to take this opportunity to point out that:

• the EU remains central to Ireland’s economic well-being and to our place in Europe and in the wider world
• the EU is the best means by which Ireland can meet the challenges of increasing globalisation, challenges which are too large for any one nation to meet alone
• the EU now has real meaning for Irish people, in terms of jobs and economic growth; it has – and can continue to – deliver for us in these areas
• it presents positive and unparalleled opportunities for business expansion in terms of the recent enlargement to twenty five Member States

It is estimated that there are about 23 million SMEs in the EU, providing around 75 million jobs and accounting for 99% of all enterprises. The importance of the sector has been recognised in the European Commission’s new, recently announced approach which aims at providing a single coherent policy framework for EU actions in favour of SMEs. The approach proposes specific action in five key areas:

• Promoting entrepreneurship and skills
• Improving SME’s access to markets
• Cutting red tape
• Improving SME’s growth potential
• Strengthening dialogue and consultation with SME stakeholders

By improving synergies between policy areas and by establishing a genuine partnership between the EU and Member States actions, this will help make SMEs more competitive. The Commission proposes to integrate the “Think Small First” principle into all policies to make them truly SME friendly. Better regulation is, of course, another key area for SMEs and the Commission have indicated that they are now committed to simplifying regulations and to ensuring that forthcoming legislation does not inhibit SME growth and innovation potential.

For my own part, I have always been conscious of the need to foster the development of the small business sector in this country. The task of attracting foreign multinationals to Ireland is becoming ever more challenging, while some of those that are already here are clearly being tempted by low cost regimes in Eastern Europe, the Far East and elsewhere. Against this background, a vibrant, dynamic - and, above all, a competitive - indigenous enterprise sector is, I believe, going to be critical to our future prosperity. It is clear that, in the future, we are going to need to encourage more people to start up their own enterprises, to facilitate more enterprises in growing their business and to help business people to be better at what they do on a daily basis.

I am well aware that the needs of small businesses are not always the same as for large businesses and that is why I decided, back in July of this year, to set up a Small Business Forum to consider, in broad terms, the current environment for conducting small business in Ireland and the adequacy of the public policy responses, including the interventions of the enterprise development agencies.

When setting up the Forum I specifically asked them to:

• Consider whether the strategies being followed to support and develop the spirit of entrepreneurship in Ireland are effective and appropriate;
• Consider how the pattern of growth of small businesses in Ireland compares internationally and seek to identify the particular characteristics that tend to lead to the growth of small businesses or inhibit such growth;
• Review the existing environment for accessing finance by small businesses at each stage of development;
• Review the propensity of the small business sector to conduct research and development and to innovate, and to consider the capacity of the sector to access the programmes aimed at the promotion of such activities

I gave careful thought to the composition of the Forum and took care to ensure that it comprised a diverse group of very well qualified people from different backgrounds who know the small business sector extremely well from a range of different perspectives. I was particularly anxious that it contain working businessmen - including, of course, a nominee of your own Association.

Since its establishment the Forum has, I am glad to say, been very proactive in seeking to obtain the views of the small business community. Their first action was to publish a public invitation for submissions which was very well received and attracted more than 60 submissions from interested parties. The Forum has also held, and continues to hold, a number of meetings with small businesses around the country to discuss their concerns and to identify any suggestions they might have for improvements in the environment for small business. Over 80 businesses have been involved in these meetings to date.

I have asked the Forum to report to me, with their findings, by 31^st March next. In the meantime however I have proceeded to pursue issues which I know are of interest to small business. In this respect, I have persuaded my colleague the Minister for Finance to make a number of changes in the recent Budget which will, I hope, assist small firms in particular.

For example, the VAT registration thresholds for small businesses will be raised to €27,500 in the case of services and to €55,000 in the case of goods. It is estimated that this will remove almost 2,200 businesses from the VAT net altogether.

In addition, the annual tax payment limit below which PAYE and PRSI can be paid on a quarterly, instead of the normal monthly basis, is being raised to 30,000 per year. This will assist 74,000 small firms at a cash flow of €102 million to the Exchequer in 2006.

Measures such as this confirm this Government’s continuing commitment to the support and encouragement of our small business sector and demonstrate our willingness to make changes on an on-going basis.

It only remains therefore for me to wish you all the best in launching this year’s Roadshow. I understand that its aim is to make small businesses in Ireland more professional, productive and profitable and I have no doubt that it will be hugely successful in all three of these aims in the year ahead.

ENDS

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