Mr Ian Martin, Chairman of the Small Firms Association, said that “2010 has probably been the most scrutinised and debated economic year in the history of the State.  However, despite the economic environment, it is heartening that the SFA’s business sentiment survey shows that confidence has increased throughout the year amongst members.”  

While recognising the financial constraints that the Government is operating under, Martin said it was essential that they continued to focus on where there will be a direct return on investment and that is through supporting small businesses in retaining jobs.

“We need to ensure that the competitive environment is urgently created to allow small Irish firms compete, through tackling Government controlled costs such as electricity & other energy costs, local authority charges, regulatory burden and waste/water charges.  While the four year plan has provided a commitment to addressing the cost of doing business, we have yet to see any focused proposals from Government in this regard.”

Martin stated that motivating staff in 2011 will be a challenge for many firms, “staff over the last 2 years have shown great commitment and worked with management in reviewing wage rates and reducing working hours, with the tax band and credit changes in Budget 2011 most employees take home pay will be reduced, so employees will be working for less – this will undoubtedly impact on staff morale and it will be a challenge for employers to motivate staff as a result.”

In 2011, Irish small indigenous firms will face many challenges, some of the main concerns are:

Access to Finance

As credit remains a key concern for small firms Martin welcomed the extension of the 15 day prompt payment to the HSE, Local Authorities and state agencies.

Regarding access to credit, Martin commented that while further investment was being made in the banking system the Government had again ignored the issue of credit for small firms.  “Budget 2011 ignored the fact that many viable small businesses lack two key ingredients to access financial support from the banking system: they lack collateral because of the property bubble collapse and associated high negative equity and they lack a good track record over the past two to three years because of the worldwide economic recession and loss of consumer confidence and spending at home”.

“The banks are commercial entities and will not move from risk assessment criteria about what is a viable business and therefore we will still require Government intervention to breach this gap, with some form of risk sharing scheme between Government and the banks.  We, small business, are the life blood of this country and it is time this was recognised. Time is running out - we need action,” stated Martin.  

Local Authority Rates

“The National Recovery Plan states that ‘where possible’ rates charged to businesses will be reduced.  This is not acceptable!  For many years the business community has been the main source of funding for many local authorities, and the Implementation Body to oversee the changes within local government must ensure that cost savings achieved are passed back to businesses in the form of reduced rates and other charges,” Martin said.

Support for Entrepreneurs

Martin stated that rather than supporting entrepreneurs the Government in Budget 2011 seemed to have put further barriers in their way by raising the PRSI rate for the self employed without providing any benefits, “this is not encouraging for small business development at a time when job creation and retention should be our primary objective.”

Martin also highlighted concerns regarding the change in pension provisions saying that “the ‘aim of the National Pensions Framework is to deliver security, equity, choice and clarity for the individual’,  this appears not to be the case in regard to self employed individuals, as pension tax relief is essentially being phased out.”
 
“The pension tax relief changes will also be a disincentive to employees to save for retirement and are at odds with the Government’s objectives contained within the National Pensions Framework, which aims to encourage worker pension contributions. We are just going to replace a banking crisis with a pension crisis in years to come!”

"Budget 2011 did not go far enough to help job creation or to restore the competitiveness of the Irish economy.  However, while the scale of the budget adjustment was required, it could have been done in such a way as to be less damaging to economic growth and employment.  Small business has shown that they are flexible, resilient, adaptable and ready for growth if the Government creates the right economic conditions, they will invest and thrive.”  

“The Government must remember that this model of creating a supportive environment for indigenous small businesses has been, and must continue to be, the corner stone of our economic success.  The small business sector are the engines of recovery! Now is the time for Government to recognise the key role they play in our economy, and to provide the small business sector with the confidence and supportive environment to ensure future success and job creation.”  

Small Firms Association
Telephone: +353 1  6051633
Fax: +353 1  6381633
Website: http://www.sfa.ie