Directors confident in new Government but call for a range of measures to support business
Date: 04 May 2011- 9 in 10 directors believe the new Government will create political stability
- 2 in 3 have confidence in the Government’s ability to rebuild the economy
- 3 in 4 directors believe the new Government can restore international confidence in Ireland
- 2 in 5 believe the new Government will be good for small business
- Directors call for a return to ICC bank model and want an SME fund set up
- Call for an end to ‘draconian’ bankruptcy laws and need for openness and transparency from Government
Confidence in new Government
With the Government over half of the way through its first 100 days in office and preparing to launch its jobs initiative this month, those at the helm of Irish business have signalled confidence in the Fine Gael/Labour coalition yet have called for a range of measures needed to support business and rebuild the economy.
Recent independent research* conducted by Behaviour & Attitudes on behalf of the Institute of Directors in Ireland among its members, has found that the majority of directors surveyed have confidence in the new Government, with almost 9 in 10 (88%) agreeing that the Government will create political stability and 2 in 3 (67%) confident in the Government’s ability to rebuild the economy.
3 in 4 (76%) directors surveyed believe the Government can restore international confidence in Ireland, with 4 in 5 (80%) directors of multinationals showing high levels of confidence in this regard.
Just over 2 in 5 (44%) directors believe the Government will be good for small business in Ireland, with just under half (47%) of directors in SMEs positive about the impact that the Government will make. Yet 49% of all directors surveyed believe that the Fine Gael/Labour coalition will be no better or worse than the previous Government as regards small business in Ireland.
When questioned on the biggest challenges facing business in Ireland, 1 in 2 (48%) directors cited access to credit/funding and a dysfunctional banking system as the main challenge to business. Almost 1 in 4 (23%) cited consumer confidence levels as an issue and 13% said our reputation internationally is a challenge to the business environment in Ireland.
Measures needed to support business
In conjunction with this research, the IoD engaged in a consultation process with its members on steps the Government should take to rebuild the economy by supporting business and through job creation.
The consultation found that there is a lack of confidence among IoD members that the banking structure can meet the needs of SMEs. Directors want to see a dedicated business bank established, modelled on the former State-owned ICC bank, with the primary function of supporting SMEs through providing working capital, credit management solutions and assistance with business planning.
In addition, directors are calling for an SME Bond Scheme to be set up, whereby a pool of money could be ring-fenced and made available to SMEs through a Government backed savings bond.
Another way by which the Government could stimulate the SME sector is to offer Irish investors a tax break for placing money on deposit in Irish banks rather than in foreign banks or elsewhere. A second tax incentive could then be offered to the banks to lend this money specifically to the SME sector – thereby creating an SME fund with lending at normal commercial terms. Such a scheme would breathe life back into the SME sector and stimulate long-term growth, with the cost to the exchequer likely to be outweighed by the potential tax revenues generated.
Directors are also calling for urgent legislation to amend the bankruptcy laws in Ireland as outlined in the Programme for Government. The 12-year term under Irish law is considered cumbersome and draconian and is a barrier to start-up companies and entrepreneurs. IoD members want to see systematic changes in the treatment of business failures as the current system disincentivises entrepreneurship and means that those who fail are often disinclined to try again.
Directors are also calling for greater support for small companies which are focused on the domestic market, in particular the indigenous food sector. In addition, there is a view among directors that the process for awarding public procurement contracts favours large international companies and that it should be made more accessible to indigenous SME businesses.
Job creation
IoD members welcome the upcoming jobs initiative designed to get people back to work and would like to see the Government and employers working together with regard to job creation as it is imperative to the future growth of the Irish economy that we create jobs and stem the flow of emigration.
If the Government were to subsidise the salaries, for an agreed period, of those recruited directly from the live register into new roles within the private sector, it would reduce unemployment, create jobs and support businesses that may not otherwise have the financial resources to expand their workforce.
While creating jobs is vital to reducing unemployment numbers, directors also want to see strategies put in place for job retention which is considered to be as important to rebuilding our economy.
Rebuilding confidence
The Government must recognise that its actions are being closely monitored at home and abroad and IoD members are calling for openness and transparency in all aspects of the Government’s strategy for reform.
Directors want to see an end to the drip-feeding of information to the Irish public and a clear and proactive strategy for rebuilding our economy. In particular, directors want to see increased transparency in the process of appointments to State boards with an emphasis on skills requirements.
Commenting on both the research results and the consultation with members, Maura Quinn, Chief Executive, Institute of Directors in Ireland, said: “Overall levels of confidence in the Government are high among those leading business in Ireland, yet the message is clear that supports must be put in place to stimulate the SME sector.
“There is a real opportunity for our political and business leaders to work together and while there is little doubt that the path to economic recovery will not be an easy one, by combining our efforts, recognising our strengths and marketing what Ireland has to offer, we can tackle and overcome the difficult times ahead and ensure that the message of Ireland being open and ready for business is delivered and heard both at home and abroad.”
Ends
Media Coverage
*Research was carried out online by Behaviour & Attitudes with a sample of 221 IoD Ireland members. Fieldwork was completed between 23rd March – 1st April 2011.
Consultation with IoD members carried out between 29th March – 18th April 2011.
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