The Cost of Doing Business In Ireland
Report by the Joint Committee on Business, Enterprise and Innovation, July 2018
The Joint Committee on Business, Enterprise and Innovation published their Report on the Cost of doing Business in Ireland on the 11th July 2018. This report followed a year of investigation by the Committee on the various costs associated with running a business in Ireland, as well as hearing submissions and testimony from stakeholders and relevant organisations. The Report identified six key areas where costs were a significant concern across the business sector:
- The increasing cost of insurance;
- Commercial rates;
- The cost of credit and banking;
- Labour costs and skill shortages;
- The cost of compliance with regulation;
- The cost of crime, particularly retail crime.
The Report highlighted that SMEs are the most affected by the increasing cost of doing business in Ireland and that starting and maintaining a business can be extremely difficult given the level of associated costs, particularly in the above listed areas. The Report also notes that Ireland needs to maximise opportunities and minimise risks to the economy, particularly in light of the challenges expected in the wake of Brexit.
Some of the recommendations made by the Committee in their Report to reduce the cost of doing business include:
- Making rates alleviation measures available to local authorities to reflect changes in trading conditions and government policy;
- The introduction of an Irish Public Banking Model to increase competition in the Credit and Banking Sector;
- More stringent oversight by the Central Bank on the fees charged by banks for the physical banking of cash;
- The establishment of a Garda insurance fraud unit to help stem increasing premiums due to fraudulent claims;
- A requirement that policyholders be informed before a claim against them is settled by their insurers;
- An increased focus on Apprenticeships as an alternative education model as a way to provide skilled labour in the future;
- Mandatory Regulation Impact Analyses for the introduction of all new regulations; and
- Increased resources committed to combatting both online and retail crime.
As part of its investigations, the Committee invited submissions from various bodies on the cost of doing business in Ireland, for example:
- Enterprise Ireland spoke to the Committee about the programmes they had developed to prepare SMEs for Brexit, including the running of Brexit Advisory Clinics, the preparation of a “Brexit SME Scorecard” allowing Irish companies to self-assess their exposure to Brexit, and a €5,000 grant to support the costs of SMEs in preparing plans to mitigate risks and optimise opportunities arising from Brexit.
- The International Small Business Alliance made submissions on the benefit of Public/Community Banking to Ireland as a means of reducing SMEs’ reliance on obtaining finance from large commercial banks as well as the importance of robust enforcement of competition laws to ensure lower costs. Seamus Maye, the founder and Chair of the ISBA, has described the Report as “a terrific start to tackling Ireland’s high cost base.”
- The Irish Pharmacy Union made a submission on the impact and cost of crime on pharmacy businesses and recommended a more visible Garda presence, increased use of public CCTV and tougher sentencing of perpetrators as means to address the issue of retail crime on pharmacies. IPU President Daragh Connolly said at the launch of the Report that the IPU were pleased that their recommendations were taken on board by the Committee and that the Report is quite comprehensive and addresses many of the issues that small business owners, including pharmacists, face on a daily basis.
- IDA Ireland also addressed the Committee on the subject of Brexit, but from the perspective of Foreign Direct Investment. Their presentation focused on how terms of continued access to the UK market from Ireland is a key issue and that any details of an EU-UK agreement and transition arrangements would be of critical importance.
The Committee’s Report should provide some comfort to SMEs concerned about the rising cost of doing business in Ireland as it shows a willingness by the Oireachtas to see developing SMEs as a priority for the economy, particularly in the context of Brexit.
Gríana O’Kelly– Partner, Corporate and Commercial