Before we proceed, I have a few housekeeping matters to go through. I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references that witnesses make to other persons in their evidence. Witnesses attending today's committee are protected by absolute privilege in respect of the presentation they make to the committee. This means that they have absolute defence against any defamation actions for anything they say at the meeting. However, they are expected not to abuse this privilege. It is my duty as Chair to ensure that this privilege is not abused. Therefore, if witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

I advise members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate if they are not adhering to this constitutional requirement. Therefore, a member who attempts to participate from outside the parliamentary precincts will be asked to leave this meeting. In this regard, I ask any member partaking via Microsoft Teams to confirm they are on the grounds of the Leinster House campus.

Members and witnesses are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity they will be directed to discontinue their remarks, and it is imperative they comply with any such direction.

I propose that we publish the opening statements and submissions provided by the witnesses on the committee website. Is that agreed? Agreed.

With regard to speaking arrangements, witnesses will be invited to speak for approximately ten minutes. I will then allow members to ask questions and make comments for approximately seven minutes. We will have a second round of questioning if time permits, when members will be allowed to ask questions or make comments for approximately four minutes. Members may be called as they appear on the week 2 speaking rota, which was circulated before the meeting. Committee members may substitute within their parties or groups. Non-members or substitutes may only speak after committee members or substitutes have spoken. Are these arrangements satisfactory and agreed? Agreed.

The minutes of the meetings of 26 May, 27 May and 9 June were circulated and approved in private session. Are those minutes agreed? Agreed.

The items on today's agenda are competitiveness and the cost of doing business in Ireland and views on budget 2027. The committee has decided to invite witnesses here to talk about these issues.

I welcome our witnesses here today. We have the following stakeholders: from the Irish Road Haulage Association, Mr. Ger Hyland, president, and Ms Sandra Dennehy, vice president; from the Licensed Vintners Association, Mr. Donall O'Keeffe, chief executive; from the Restaurants Association of Ireland, Mr. Adrian Cummins, chief executive, Ms Eimear Killian, vice president, Mr. Liam Hayes, public affairs and communications executive, and Mr. Paul Lenehan, past president; and from the Vintners Federation of Ireland, Mr. Pat Crotty, chief executive officer and Mr. Michael O'Donovan, president. They are all most welcome and I thank them for being here. I invite Mr. Hyland of the Irish Road Haulage Association to make his opening statement.1

I am grateful for the invitation to appear before the committee today on behalf of the Irish Road Haulage Association. The IRHA represents road transport operators throughout Ireland, ranging from small family-owned businesses to large national logistics providers. Our members move over 95% of all goods transported within the State and form a critical part of every supply chain serving Irish consumers, businesses, exporters and manufacturers. Road transport is often described as the economy's hidden essential service. When haulage works efficiently, shelves are stocked, factories receive inputs, exporters reach ports and consumers receive goods. When the sector comes under pressure, the effects are felt throughout the wider economy.

Today, the Irish haulage industry faces a combination of challenges that are significantly undermining competitiveness and increasing the cost of doing business. The industry continues to experience sustained cost inflation across virtually every aspect of operations. Labour costs have increased substantially in recent years, fuel remains volatile, insurance premiums remain high, vehicle purchase costs have risen sharply, and operators continue to absorb increasing regulatory and compliance costs. In addition, toll charges, road user charges and a growing range of environmental and administrative obligations are placing further pressure on operators, particularly SMEs which make up the majority of our sector. Unlike many sectors, road haulage often operates on very tight margins and has limited ability to pass increased costs through the supply chain. As a result, many operators are experiencing significant financial pressure despite maintaining high service levels.

One of the most serious challenges facing the industry remains the shortage of professional HGV drivers. The average age of drivers continues to rise, and recruitment of younger entrants remains difficult. While industry initiatives are helping to promote the profession, domestic supply alone is not sufficient to meet current and future demand. To address this effectively, we must develop a permit-to-drive system that operates efficiently and without unnecessary delays or bottlenecks, including the 50:50 rule that is in place for HGV driver permit workers. This should include a one-stop-shop approach for HGV drivers, bringing together all relevant departments and agencies involved in the journey from obtaining a learner permit through to driver testing and the issuing of a full driving licence. At the same time, we must continue to support and strengthen the work of the logistics and supply chain skills group to promote the haulage and freight sector as an attractive, rewarding, and long-term career choice. The IRHA also recommends that we continue our partnership with our education and training boards to develop a co-ordinated national approach across all ETBs to recruit young people into the profession of HGV driver and develop a sustainable indigenous workforce. This requires creating a streamlined pathway into the profession of HGV driver that supports the recruitment of drivers from car licence to HGV qualification and can access training and testing in a timely and efficient manner, free from unnecessary delays. Without access to sufficient drivers, supply chains become less efficient, costs increase and economic growth is constrained.

Ireland is a peripheral nation and island economy that depends heavily on efficient logistics and transport links and must be considered in the context of the additional structural costs associated with being an island nation on the periphery of Europe. While investment in critical infrastructure is necessary, the cumulative impact of these additional costs risks undermining Ireland’s competitiveness and increasing the cost of doing business across the economy.

The recent introduction of additional infrastructure-related charges to end users, such as the recent €15 charge at Dublin Port, places further financial pressure on businesses that rely on efficient freight movement. Irish businesses are heavily reliant on roll-on, roll-off ferry services and port infrastructure to access European and global markets, creating unavoidable transport and logistics costs that competitors in mainland Europe do not face. These challenges are compounded by operational inefficiencies within the port system, including inflexible depot operating arrangements, restricted staff and union-driven working practices and poor alignment between empty container returns and full container collections. The resulting delays frequently lead to additional demurrage, detention and customs-related charges. We also encourage continued investment in secure truck parking facilities, freight-focused infrastructure and measures that support the transition to lower-emission vehicle technologies.

The haulage industry is committed to supporting Ireland's climate objectives. However, the transition to low and zero-emission heavy goods vehicles presents particular challenges. Vehicle costs remain significantly higher than conventional diesel alternatives, charging infrastructure remains limited and the business case for investment remains difficult for many operators. The sector requires a realistic and properly funded transition pathway that recognises operational realities and supports businesses through the change, including diesel alternatives.

In advance of the next budget in October, the IRHA urges Government to prioritise the retention of the measures introduced to help address high fuel and other operating costs. These measures were introduced to assist with high fuel and operating costs and were a recent recognition that our sector has been overtaxed across a range of taxation headings. The fundamentals justifying the introduction of these measures have not changed and we need to see them included as specific proposals in the next budget. We need to see real and substantive progress on a just transition scheme for the licensed haulage sector which addresses current discrepancies in the taxation regime dealing with HVO and biofuels. Our budget submission proposes two targeted fiscal measures to support decarbonisation while maintaining competitiveness and which can be applied within the current DRS scheme. These measures will support and promote an accelerated adoption of HVO and biofuels as the only immediately scalable pathway for HGVs.

While our requests are non-budgetary measures, we believe they should be addressed by Government in the run-up to the budget. They include measures to address driver shortages, including greater flexibility within the employment permit process for the transport sector; enhanced support for skills development and driver training; continued investment in strategic road and freight infrastructure; measures to improve the competitiveness of SMEs facing rising operational costs; a commitment to ensuring that new regulatory obligations are accompanied by proportionate implementation costs and timelines.

Ireland's economic success depends on efficient and competitive logistics. The road haulage industry does not seek special treatment. Rather, we seek recognition that a resilient and competitive road haulage sector is essential to the functioning of the wider economy. By addressing the challenges faced by the sector, including increasing costs, barriers to decarbonisation, labour shortages, supporting competitiveness and investing in infrastructure, Government can strengthen supply chains, reduce costs for consumers and businesses, and support sustainable economic growth. I thank members for their attention and I look forward to answering questions.

I thank the Chair and members for the opportunity to appear before the committee today to address a critical issue for the licensed trade: competitiveness and the cost of doing business in Ireland. I acknowledge the Government’s support for the hospitality sector, including pubs that serve food, with the reintroduction of VAT of 9% on food from 1 July next. This is a critical measure and is vital to the sustainability of food businesses right across the country. VAT at 9% is also the right rate from the perspective of the competitiveness of our international tourism offer.

The licensed trade business environment has been severely challenged over the longer term, as evidenced by a drop of one third in per capita alcohol consumption since 2001. Ireland is now in the middle of the EU average of per capita alcohol consumption. Some 2,200 pubs have closed since 2005, a decline of one quarter. There is very high excise and VAT on alcohol compared to EU levels. There have been significant increases in business costs over time, squeezing margins and driving prices higher. The economic outlook is characterised by huge geopolitical uncertainty, likely higher inflation and higher interest rates, combined with slowing growth.

I will set out our position on some of the key competitiveness and business cost challenges, focusing on issues and policy responses within the Government’s control. The licensed trade priorities are, first, labour costs. We appreciate that the minimum wage applies economy-wide, but it is the single most important Government labour policy impacting pubs, given the labour-intensive and service nature of our industry. As a service industry, labour costs are particularly important to our financial sustainability. Drink-only pubs have a labour to net turnover ratio of 22% to 25% while pubs with substantial food operations could have a ratio of 32% to 37% so the minimum wage level and its increase is critical to pubs. Government policy, in setting the level of the national minimum wage, is a direct driver of overall labour costs in the licensed trade. The level of increase in the minimum wage drives the total wage bill in the licensed trade, as all other workers seek similar pro rata increases. Post Covid, the minimum wage has increased from January 2022 to January 2026 by 35%. Inflation over the same period, per the CSO, was 17%. It is simply unsustainable for the minimum wage to be running at double the rate of general inflation, as this is directly challenging business viability, a fact confirmed by the rate of pub closures nationally. Our policy ask is that budget 2027 must set the increase in minimum wage for 2027 at the general inflation rate for this year, at a maximum of 3.5%.

This has to be seen in the context of other employer labour costs also increasing. Pension auto-enrolment was introduced in January, adding 1.5% to labour bills. Employer’s PRSI is scheduled to increase again, and to move from 8.9% in 2024 to 9.3% by 2027. Statutory sick pay must be maintained at current levels for the next three years. It should be noted that pubs are obliged to bring in direct replacements for sick staff, thereby adding to total labour costs to cover for absent workers. Our policy ask is for budget 2027 to pause employer’s PRSI at current rates to limit increases of employing staff at a time of uncertainty and a deteriorating growth outlook.

Licensing costs, in particular late trading licences, are an issue. A special exemption order costs €205 per night for two additional hours trading. This amounts to €32,000 a year for a bar operating late three nights a week, with solicitors' fees in addition. It is extortionate. Our policy ask in the short term is for budget 2027 to reduce the cost of special exemption orders to €100 per night, but, in the longer term, as included in the programme for Government, the sale of alcohol Bill be enacted as a priority. This includes provision for an annual late bar permit, the scrapping of the SEO system and an annual nightclub licence, which is required for our capital city.

While very welcome for the wider hospitality and food sectors, the reintroduction of VAT of 9% is of no benefit to pubs that do not serve food, which is the majority of pubs in Ireland. Ireland has one of the highest rates of alcohol excise across the EU and UK, despite our per capita consumption having fallen to the EU average. Such high excise rates are damaging to the competitiveness of the licensed trade, especially when VAT of 23% is added for alcohol. Our policy ask is that in budget 2027, alcohol excise should be cut by 10% across all categories of alcohol to boost the commercial viability of the licensed trade.

On economy-wide policy priorities, we await the publication of the cost of business forum’s report and trust the Government will implement its recommendations with urgency. A strategic perspective on reducing costs is required. Of specific relevance to our sector are costs relating to energy. Pubs are intensive users of both electricity and gas, with bills rising by between 45% and 50% on electricity and gas since summer 2001. Insurance is a significant cost for pubs, with the average Dublin pub paying well over €30,000 annually. Large late bars could be paying €100,000 per annum. We welcome the Government reforms delivered to date and note there are fewer liability claims and reduced awards in lower value injury claims. However, the Central Bank’s report shows that business premiums are almost a quarter higher than in 2020. Essentially, businesses are not seeing the savings promised by the Government reforms, while insurer profits and legal costs continue to increase. Government reforms must focus on delivering premium reductions for businesses.

Taxi availability is an issue. It is a shocking statistic that the number of taxi drivers has fallen by 20% nationally since 2012, despite the growth in population, expansion in the economy and increase in tourism. The shortage of taxis is particularly damaging for the night-time economy and is especially severe in rural areas. Our policy ask is that, in line with the recent recommendations of the Competition and Consumer Protection Commission, taxi regulations be amended to increase taxi supply, allow part-time drivers to use their own cars and expand the use of ride-hailing apps as they apply internationally.

Finally, there are Dublin-specific policy priorities. The first is the removal of the Dublin airport cap. Long promised by Government, this should be an immediate and urgent policy priority to facilitate the competitiveness and growth of both our capital city and the national economy. The second is the Dublin task force. Progress on this has been glacial but we trust that the interim advisory board, which had its inaugural meeting this week, will bring a renewed focus and urgency to implementing the task force’s recommendations. Our policy ask is that budget 2027 provides the dedicated, specific financial resources to commence the essential investment programme to renew and revitalise our city centre. The provision of the much-promised 1,000 extra gardaí for Dublin must be an urgent priority for Government.

Government policy is a huge driver of the costs of doing business in the licensed trade. Given the increasingly uncertain economic outlook, with higher inflation, higher interest rates and slower growth all forecast for the coming year, budget 2027 must prioritise the competitiveness of domestic SMEs and put a strategic focus on reducing the costs of business. I thank members for their attention and welcome any questions they may have.

I thank Mr. O'Keeffe. I call Mr. Cummins to make his opening statement.

I thank the Chairman and members of the committee for their invitation to appear before them today on behalf of the Restaurants Association of Ireland. I am joined by Eimear Killian, vice-president; Paul Lenehan, past president; and Liam Hayes, public affairs and communications executive.

Ireland's food-led hospitality sector has been one of the country's most resilient and culturally important sectors. Through economic downturns, rising inflation and a global pandemic, restaurants, cafés, gastropubs and food-led businesses across Ireland have continued to serve their communities, employ local people and contribute to economic activity in every county.

Our sector is central to Ireland's tourism offering. Visitors come to Ireland not only for our landscapes and heritage, but for our renowned hospitality, our food experiences and our famous céad míle fáilte. Restaurants, cafés, gastropubs and food producers play a vital role in showcasing Irish produce, supporting local supply chains and strengthening Ireland's reputation as a world-class tourism destination.

Food tourism is a growing driver of the visitor economy and a major opportunity for regional development. Hospitality businesses across Ireland deliver authentic visitor experiences while supporting local economies. With 34% of tourist spending going on food and drink, its importance has been recognised in the new national strategy for tourism, with a dedicated culinary tourism strategy set to follow.

want to acknowledge and thank the Government, Members of the Oireachtas and all those who supported the restoration of the 9% VAT rate for food-led hospitality businesses. This is a significant and welcome decision. The return of the 9% VAT rate from 1 July on a permanent basis represents an important recognition of the pressures facing the sector and the strategic importance of hospitality to employment, tourism and regional Ireland. It is also important to address a point that is often overlooked in discussions around the hospitality sector. The sector is overwhelmingly made up of small and medium-sized enterprises, with 99.6% of hospitality businesses in Ireland being SMEs. Of the 20,213 hospitality businesses operating across the country, only 73 are classified as large enterprises. When we talk about the 9% VAT rate, we are talking about supporting local family-run businesses. We are talking about the café on our main streets, the restaurant employing local people in our towns and the pub serving food at the heart of a rural community. These are the businesses that benefit from measures that improve viability and competitiveness. These are the businesses that create local employment, support local suppliers and help sustain vibrant town centres and communities throughout Ireland. However, challenges remain.

Two key issues facing food-led hospitality businesses today are labour costs and cumulative business costs. The challenge is that labour-intensive businesses are facing an ever-increasing accumulation of costs. Rising wage costs, increases in employers' PRSI, energy costs, food inflation, insurance premiums and growing regulatory obligations are collectively placing enormous pressure on viability. Recent RAI survey data found that 91% of businesses believe rising labour costs are threatening business viability, 75% have reduced or expect to reduce staff hours and more than half of businesses now report labour costs exceeding 40% of turnover. The impact is unfortunately already visible.

Recent CSO figures show employment across restaurants, cafés, pubs and food service businesses fell from approximately 136,000 to 116,000 in a year, representing a decline of almost 15%. Across the country, businesses have reduced trading hours, closing on quieter days and delaying investment decisions. They are not doing this because demand has disappeared. They are doing it because the cumulative cost of doing business has reached a point where viability is under pressure.

We welcome the establishment of the cost of doing business forum, on which the RAI is represented. The success of the forum will ultimately be judged not by the reports it produces, but by the implementation of its recommendations. The work has been done. The challenge now is delivery.

As the Government prepares budget 2027, we believe competitiveness must remain at the centre of the decision-making process. In particular, we are calling for future national minimum wage increases to be linked to the consumer price index, the introduction of a no-tax policy on customer tips and gratuities, a more practical application of benefit-in-kind rules relating to staff meals and corporate hospitality, targeted action on employers' PRSI for labour-intensive SMEs, as set out in the programme for Government, and continued support for culinary tourism.

We also want to see increased investment in hospitality skills, apprenticeships and workforce development, alongside reform of employment permit rules to help address ongoing recruitment and retention challenges across the sector. Regarding apprenticeships, we would like to see a level playing pitch in respect of craft apprenticeships and the new apprenticeships in terms of the supports not just for apprentices, but also for the business owners.

Finally, we support the Vintners' Federation of Ireland's proposal for an on-trade sustainability scheme. We are also asking for a reduction in excise duty, which is one of the highest in Europe. Regarding transport, we would like to see a move on the taxi availability for our sector, more taxis in rural areas, if possible, and pilot schemes to be developed through budget 2027.

Ireland needs a strong hospitality sector. It is a major employer, a key tourism asset and an essential part of community life in every county. The objective should be to create an environment where businesses can invest, expand trading hours, employ more people and remain viable for the long term. I thank committee members and look forward to their questions.

I thank Mr. Cummins. I call Mr. Crotty to make his opening statement.

I thank the Cathaoirleach and members for the invitation to appear before the committee today. We appreciate it.

Local pubs act as social and cultural hubs at the centre of our towns and villages. They support the economic and social sustainability of our local communities. They generate employment and attract tourism. They host community events and provide an important place where people can socialise.

The pub contributes to social well-being and connectedness, and, in many rural communities, the pub is one of the last, if not the last, remaining indoor public gathering place. We are here today to talk about the future of a business typology that is, in fact, more than just a business. When we talk about the future of the rural pub, we are talking about the survival of critical social and cultural infrastructure in communities right across the State.

At the heart of the threat to the Irish pub is the topic this committee is currently focused on, namely, competitiveness and the cost of business. Pubs, particularly smaller, rural pubs, continue to face a crippling cost base that is posing an existential threat to their ongoing commercial survival. In the statement circulated, I have included a short table setting out the average cost increases of significant items that our members have reported over the past five years. They are CSO matched.

Electricity has had very significant increases and, indeed, there are Government fingerprints on that. Wages are entirely Government fingerprinted. Everyone gets pay increases but the migration from minimum wage to living wage has put significant pressure on hospitality businesses, which are the main employers of people who were previously on minimum wage.

Water is another Government-related item that has had very significant changes with a 30% increase in October 2024 and an additional 10% in October 2025. These increases have come on top of the general range of rising supplier costs, insurance premiums, and other cost drivers. Our members are telling us they simply have no capacity left to absorb any further cost increases. They are already leading to job losses.

Recent CSO data shows that employment in the food and beverage service sector declined by almost 15% in the past year. Findings from a new VFI member survey confirmed this. It found that 22% of pubs reported a decrease in staffing levels over the previous 12 months.

The survey also found that 65% of publicans believed rising business costs are having an unsustainable impact on their operations, while 41% reported that trading conditions are in fact worse than they were 12 months ago. Confidence in the future outlook is also weakening, with almost 42% expressing a lack of confidence in the future sustainability of their businesses.

More critically, pubs are closing. One of the starkest indicators of the challenges facing pubs is the decline in the number of pubs across the State. According to data from the Revenue Commissioners, more than 2,200 pubs have closed since 2005, a decline of 25% in the total number of licensed pubs. More concerning still is that the rate of closure is accelerating. While the average annual rate of closure over the past 20 years stood at 112 pubs per annum, that figure increased to 128 closures annually when averaged over the past five years, pointing to an increasing rate of market failure within the sector. Against this backdrop, the VFI believes there is a strong case for targeted intervention to support the competitiveness of pubs, particularly in rural Ireland.

We welcome measures introduced to support parts of the hospitality sector, including the restoration of the 9% VAT rate for food services. This is a recognition by the Government of its responsibility to support the sector. However, as 65% of our members do not serve hot food, another form of support is required. For that reason, the VFI has proposed a new on-trade sustainability scheme for consideration in budget 2027.

The proposal is based on a tax credit model already used by the Government in sectors such as film and television production, digital gaming and unscripted television production. Pubs would qualify for a tax credit based on verified purchases of draught products, capped at €20,000 per premises per annum. The credit could be offset against tax liabilities or provided as a cash payment where tax liabilities are insufficient. The proposal is specifically designed to support smaller pubs. Indeed, 50% of pubs would not qualify for the maximum support but even half that, €10,000, would be a very significant tonic to small rural pubs. It is important to note that our proposals are fully compliant with the EU alcohol structures directive as the credit would not be linked to or offset against excise payments. We acknowledge the constructive engagement of the Department of Finance regarding previous proposals and have developed this proposal to address its concerns.

The Irish pub is recognised around the world as an important part of our national identity, but for those of us who live and work in communities throughout Ireland it is also something more personal. It is a local employer. It is a community hub. It is where we go to meet our friends and family. If the Government values pubs as community infrastructure, tax policy should reflect that. We ask for the committee's support for our proposal ahead of budget 2027. We support the detailed commentary by our colleague associations here today and we are happy to answer any questions members have.

Thank you, Mr. Crotty. That concludes the opening statements for today's meeting. We now go over to members. The first slot will be Sinn Féin's, followed by a Fianna Fáil slot. We will go then to whoever is here. I call Deputy Rose Conway-Walsh.

I thank all the witnesses for their opening statements. It is very clear there is a commonality across them all in terms of the pressures of the cost of doing business. I see the value of rural pubs, the community value and so on - I think all members of the committee see that - but I want to look at the tax credit model the VFI has proposed. I want the VFI just to explain it a bit better but I will also ask the VFI about its interactions with the Department of Finance on that and with the Government to date. What indications has the VFI got that that tax credit model would be acceptable to the Government? Has the VFI done an aggregate costing of it?

We had it costed by an economist last year. On the basis that the scheme is similar but would use a different vehicle - the tax credit as against an excise rebate - we have reproofed the cost at somewhere in the region of €75 million to support a very significant number of pubs. As I said, the smallest pubs would-----

Has that €75 million been accepted as a figure by the Department of Finance?

We have had no indication that the Department has not accepted it. A number of Deputies have asked questions in the Dáil, which have been answered by the Department of Finance, that relate to the cost and to the vehicle as being compliant.

Okay. Mr. Crotty is saying the VFI is getting a favourable response from the Government to this. Is it the VFI's expectation that this model will be outlined in the 2027 budget?

Favourable in that it passes muster, not favourable in that it passes the wishes of the Ministers in Government. We still have our work to do.

The VFI has ongoing discussions about that. You can see what the issue would be in one sense because so many sectors and so many SMEs are suffering right now with costs and so on. The question would be asked as to why we would give a tax incentive to pubs, particularly in relation to alcohol and the cost on the health services as a result of alcohol and so on. I am trying to tease out all this. I am not saying yes or no to it. I want just to fully see how much work the witnesses have done on it.

One of the big things for this is the rural pub aspect. In rural Ireland, as outlined in our opening statement, the pub is a very big part of the community. If rural pubs disappear, there will also be a health issue as to where people go to socialise, where-----

For sure. I am completely au fait with that and I think everyone else here is, but I just want to tease out the economics of this today in order that we have it very clear in our heads. The witnesses are asking the Government for a €75 million intervention for pubs across the board, with a maximum amount, Mr. Crotty says, of €20,000 per premises per annum. I want to look at the dead weight in relation to that for the larger pubs that are wedged, say, here in Dublin. Are the witnesses talking about them getting the €20,000 as well?

Yes. We cannot discriminate between any pubs. They would be entitled to claim it as well, but one of the big things is that for the pub here in Dublin that turns over €5 million, €7 million or €9 million a year, €20,000 will be used up in a couple of weeks and it will pay tax on it, while the rural pub, maybe in tax band A, might turn over only €150,000. It will never reach the €20,000 capacity-----

I understand.

-----but it may get to half of it or to €7,000. That is nearly a tenth of its turnover. That would be a real lifeline to it. This is totally aimed at rural pubs. It is a survival mechanism for them.

I can really see the merit of it in terms of the rural pub. I see them struggling every day and, as one of the witnesses rightly said, in terms of having to close a couple of days a week and all those challenges. I am completely au fait with all that. However, I want to see whether the VFI has measured the dead weight. Of the €75 million, how much would be not necessary in the first place in terms of the larger pubs? What is the breakdown of that?

Statistically, we have 3,300 members. There are not that many pubs outside Dublin that are not in some form of membership. In Dublin - I am putting words in Donall O'Keeffe's mouth now - there are approximately a thousand pubs, and within that cohort about 300 are small local pubs because Dublin does have small parishes and places too. The vast bulk of all pubs in Ireland are small and family owned and operated. A Deputy asked me about how groups would be affected because there are some big pub groups and whatever. They would be one unit. If you multiply, as Mr. O'Donovan said, a pub that does €5 million and there are several pubs in a group so they are very substantial, they would get €20,000. There would actually be-----

That is important. They will still get €20,000 across all the pubs. It will not be €20,000 for each individual pub.

No.

Is that what Mr. Crotty is saying?

If it is a group that owns a number of pubs, it is one company. From what we have been advised, it would be more costly to try to create and to administer the exceptions than to just do the thing as it works and pay the money. It will come back anyway.

It would be useful, even for the vintners, to do a bit more digging deeper into it rather than there being a vast range, many or whatever. It would be really helpful if we could close in on the exact cost.

Turning to excise, it is something like 55 cent on a pint of beer where in Germany it is down 5 cent. With wine, it is 80 cent versus 1 cent in France. There is all of that. I could see excise and tax being introduced as a behavioural tax when there was a very high alcohol consumption in this country, but the witnesses are saying that the consumption of alcohol has now reduced, so there is no need for the behavioural element. It is simply a revenue-raising exercise. Will the witnesses talk to me about the excise? What would be the aggregate cost of reducing the excise?

First, excise is not in any way related to health measures. It is a straight revenue-raising tax and there is no public health element to it. Revenue regards it as a tax on alcohol – full stop.

Second, along with the UK and the Nordics, alcohol excise in Ireland is by far the highest in Europe and substantially ahead of the averages. For more than 30 years we have had the highest excises on alcohol in the EU.

What is it in the UK again?

It is a broadly similar level. It is a fraction higher depending on the category.

To Ireland – to the South.

Yes. In simple terms, Ireland, the UK and the Nordics are a mile ahead of the mainstream European market. The examples the Deputy quoted are right. Beer is a very important industry in Germany. It supports its domestic brewers and domestic pubs by having 5 cent a pint excise tax on beer. Beer is a big industry in Ireland - it is integral to the Irish pub offer - and we tax it very heavily at 55 cent a pint. We pay tax on tax, with 23% VAT on top of that 55 cent, meaning that, in round figures, 30% of every drink we serve goes to the Government in tax. The sector is extremely heavily taxed.

On the Deputy’s point about excise being a behavioural mechanism, the Department of Finance never saw it as that. It always saw it as a straight revenue-raising measure. Since 2001, per capita consumption has fallen by 30% - we are now back at EU levels - and at the same time, we have seen 2,200 pubs close and the supermarkets and multiple retailers-----

Sorry, but we are over time.

I am over time. Just the overall cost.

A 10% excise reduction across all three categories-----

I am so sorry. I have to be careful with time. There is an absence of people in the room but there is a vote in the Seanad as well and hopefully the Senator will rejoin us. I have to be careful. The next slot is Fianna Fáil, so Deputy McCormack, and then I will go to Deputy Brian Brennan.

I thank everyone for coming in today. If we listen to everyone, we hear a story of rising costs and the damage that is doing to their businesses. The businesses they represent are, in many cases, the fabric of our community. Mr. Crotty spoke about the local pub being the social hub. For many people in rural areas, it is probably the only contact with other people on a weekly basis, be that going to a meeting, playing cards or having a drink and a chat. It becomes a huge part of the community. There is something I am hearing from everybody here. That includes Mr. Hyland, when he talks about the work being done by the hauliers in bringing goods to shops across the country, whether supermarkets or the smaller retail stores, as well as bringing goods to foreign directive investment, FDI, firms, whether bringing raw materials into the companies or picking up finished products for export or distribution around the country. It also includes the Restaurant Association, whose members provide services in communities, be those for people just going out for a meal or for weddings, christenings, funerals or whatever. They are all very much part of the fabric of our society and a huge part of our communities but the story I am hearing from them is not a good story. It is probably one replicated across Europe because of the increased costs due to the war in Ukraine, first, and now the war in Iran, which has restricted the flow of oil through the Strait of Hormuz.

My question is where do we go from here. Mr. Hyland spoke about getting away from the costs aspect of it and looking at the future of the haulage industry across the country. He mentioned a problem attracting new members into the business. In his opening statement, he mentioned ETBs and the courses they ran. How do we make it more attractive for young people to decide they want to go that way? Looking at a lot of service industry businesses, local Irish people do not want to get involved. It seems like it is not good enough for them. How do we make it attractive for them to want to get involved?

Of the transport fraternity in Ireland, 77% of the companies are rural based. They are the one-to-five truck guys. They are all employing people in rural Ireland. Our problem is that our industry has been struggling for a number of years. It was a low-pay industry. That has all changed now. There is a very good profession there for any young person, whether a lady or a gent, to come into our industry.

A lot of our smaller companies are being swallowed up by the bigger companies now. On getting a young person involved in transport, there is a certain cohort of young people in country areas, especially where I live. I have three trainees who I took on when they left school. I gave them jobs in the warehouse and around the yard. I put them through their car tests and their van tests; I paid for their lessons and their tests. They are now doing truck lessons. It is costing me an arm and a leg. I do not mind paying that type of money - they are neighbours’ children who are going to get a decent chance in life and going to get a profession – but my problem is that it is taking me over two years from the time I bring them into my yard until I have them trained to be a truck driver. The biggest obstacle to my business is the Road Safety Authority, RSA, and the length of time it is taking a young person to get a test in this country. If they are lucky enough to pass their test first time, it will take up to two years from the day they come into my employment until the day they have their commercial licence in their hand. The day they get their commercial licence, they are told that the RSA will call them back in 12 to 14 weeks when it gets around to it and they can do a walkaround check. That walkaround check consists of showing an instructor where water and oil goes into a truck, how you check the lights and how you check the tyres.

I am not cutting off Mr. Hyland, but we only have a limited time. I hear his story. What he is saying is that the RSA needs to tidy up what it is doing in order to make it easier for him. He is saying it takes two years. If I went out in the morning and decided I wanted to start driving a truck and organised lessons, say with Hynes Driving School in Tullamore, it would take two years from the time I started with them until I could drive on the road. Is that right?

If the Deputy was lucky enough to pass his test first time.

It sounds ludicrous from where I am sitting that something like that would be dragged out over a long period. It is not like an apprenticeship where you go into a job and work and earn a decent wage. A normal person will have to go in, do the lessons, do the test and then do the walkaround test after that, which sounds ludicrous.

In his opening statement, Mr. O’Keeffe mentioned the reduction in alcohol consumption.

That is a good thing in ways because there was a lot of abuse here, but is there any factor underlying this reduction or is it just that people nowadays want to live healthier lives and there is less abuse of alcohol?

It is clear there is a very big change demographically. The younger generations are simply drinking less alcohol and there are a number of reasons for that. There is growing health-consciousness. They are getting up earlier, working harder, going later and commuting longer. They are choosing to spend money on alternative social things, whether that is running clubs, Hyrox or travel. They have loads of options. They are still coming to the pub, which is great, but it is really around events. When there is a match, a concert, a party or an office event they are in but the regular drinking previous generations did, especially early in the week, is dying off. Clearly, there is an issue with illicit drug use as well. That is in every village, town and city in the country too.

We remain very optimistic about the future of the pub in Dublin. We have a product that is just fantastic. It is integral to our tourism offer and to our local communities. Everybody, when they think of Dublin pubs, thinks about Dublin 2 and Temple Bar where there are some very large, very successful businesses but in suburbs up and down Dublin there are regular family pubs doing a local trade with local customers and local staff. We have to live with that decline in alcohol consumption. It is driven by a whole pile of factors beyond our control. Our job is to have an offer that is good enough to attract customers in and one of the things we are saying is our costs are being driven very aggressively by government policy, especially on labour and alcohol taxation.

I thank the witnesses. I have more questions but I will wait until the end.

I apologise as I am caught between two committees. The GAA is in next door.

I had skin in the game. I was born and reared in a pub. My father had a pub in Westmeath in a little village called Dysart. Then we went on to Gorey. I got into the hotel game and expanded into the great city of Kilkenny. I ended up paying 600 people every Thursday. I remember I was at a debate on RTÉ with a colleague at the time I first put my toe into politics. He said he was the only one with political experience but I felt I had business experience. What I am hearing this morning is frightening. It really is. I fear for all trades involved. I often say it does not matter what you do, if you do not make a margin you are absolutely at nothing. That goes for Mr. Hyland's business, Mr. Cummins's, Mr. Crotty's and Mr. O'Keeffe's. That is the key. What is being eroded here is the margin.

I will start with hospitality. If you looked at any other business sector and a quarter of the businesses closed in the last 11 years there would be a national emergency. Let us discuss the pub. We have discussed prices, labour costs and everything but a key factor is the social fabric of every town and village, with due respect to Dublin. I have mentioned before that I had a case of a neighbour of mine whose child was very quiet in school and very introverted. They sent the child into a pub that was doing food for one summer and that child was changed. You cannot put a price on that. You cannot put a price on driving through a village and seeing a pub closed. The dereliction affects confidence in that village. I totally understand where Deputy Conway-Walsh is coming to in relation to drink and the amount of investment we are looking for on it but having been in the hospitality business it is far healthier to drink in a pub than to be drinking large whiskeys in front of a fire and a television. The onus is on us as a Government to keep as many pubs open as possible. That is something we should support. I read the report in relation to this figure of €20,000 but I feel it should be turnover-related. To contradict myself on that, I had a meeting lately with a fast food chain that has a business on Grafton Street and one in Arklow. The turnover is six times more on Grafton Street than it is in Arklow and could be up to 12 times more in busy periods, but the chain is making more money in Arklow, mainly because of security and the famous costs. It is all about the margin when he sits down at the end of the month. I am of the strong opinion that we have to provide support.

Turning to Mr. Hyland, when I was elected I made a promise to visit three different things. The first was GAA and all sporting clubs, which are such a huge part of the community. The second was schools and the third was businesses. One Monday I drove down to a place called JC Breen. It is literally on a crossroads in the middle of the Harrow, Monagear and Boleyvogue just outside Ferns in Wexford. JC, Lord have mercy on him, died too young. He started with one truck and now there are 60 trucks and 100 people working down there. His son Nick took it on. His lieutenant, as I call him, William Cullen is there. They tick everything that is right about Ireland. They are working and living in their communities. However, I got into the car and I worried whether they were doing it for the love of the business or were they actually making money, because they were being hammered with costs. Tolls are part of it. It goes back to margins again.

Turning to Mr. Cummins, how can we reverse what is going on? That is what we have to take out of this meeting. I would like to give the last minute to Mr. Hyland to come back on how we can reverse the boat because we need to support the people in this room.

I thank the Deputy very much. I am joined by two business owners and I will let them answer the question because they are at the coalface.

I operate a small café in Spiddle in the Gaeltacht. We employ 36 staff between full- and part-time. We give opportunity to everyone. The Deputy mentioned giving people the opportunity to work. I have had 11 TY students work for me since last September, so we are really trying to encourage people to work in the industry as well. On the costs, our labour costs are at 44%, which is just not sustainable. They have come up from 40% at the end of last year. It is just really not sustainable. The minimum wage really has to be in line with inflation. To date this year we have paid €23,000 in employers' PRSI. That is a huge amount of money knocked off your bottom line. Our margins are being eroded. I am worried about our business. We are a social hub like the pubs. We are a coffee shop and so many people come there to meet, talk, chat and celebrate. We really are the hub of communities, we give huge employment and then on the other side we sponsor so much in the local community between GAA, local charities and all that sort of stuff as well. The 9% will definitely help. It will ease our cash flow a little bit and bring our margin a little bit up, but labour costs are our big thing.

Okay. I would like a comment from Mr. Hyland.

I thank the Deputy for his words there. Only for the intervention of the Government in the last few months the number of transport companies we were facing losing was phenomenal. Most transport companies in Ireland are paying 36% of their turnover back to the government in tax. That is 36% of every euro my company turns over going back to the government in tax.

The average transport company in Ireland was working on somewhere between 3% and 5% of a margin. When the Gulf crisis happened, fuel went up in one week by over 7%, which completely took that margin away in one single week. That will tell the Deputy the dire straits the transport industry is in. This is the lifeblood of parishes in rural areas. I am a third-generation haulier. I went into transport at 14 years of age when I left school. There are a lot of people like me in transport businesses. We have done it all our lives; we know nothing else. A lot of us are in it for the industry and for the love of our industry. That is what keeps me going. That is what keeps a lot of the transport companies going. It is not for the margin.

I apologise, Mr. Hyland. We have gone over time.

That is fine.

I thank Deputy Brennan very much. We will go next to Deputy Gogarty. I apologise; I did not spot the Deputy online. He will be joining us via television.

I confirm once again that I am in the complex. I thank everyone for their contributions. I am conscious of time, so I will try to ask as many questions as I can to all of the witnesses quickly.

First, I note that the Irish Road Haulage Association is looking for a streamlined pathway in relation to the progression for HGV drivers from the car licence to HGV qualification. How soon should that start? Should it be in transition year, for example? What do the witnesses think should encourage young people to get involved? In terms of suitable pathways for non-diesel HGVs, I noticed in terms of biomethane in the UK that the John Lewis Partnership now has over 500 HGVs running on renewable bio. An Post has hydrotreated vegetable oil, HVO, with zero impacts on vehicle performance in Galway and Cork. Is it a just question of the Government providing enough grants or is the infrastructure not there? Obviously, the infrastructure for EVs definitely is not there but there was a pilot done in Munich where ABB and MAN showed that a vehicle can have very fast, rapid 30-minute charges during a HGV driver's break, which would give it up to 400 km and then it can have a slow charge overnight. There is a case for Ireland to put in those kinds of structures for a roll-on, roll-off located supercharger. What would the witnesses like to see in in this regard?

Moving on to the Vintners Federation of Ireland and the LVI, they both have a common issue in terms of energy costs. Again, on that green agenda, most of the publicans would have ample roof space for solar photovoltaic, PV, modules. They could be exporting to the grid at times they are not open or at least creating a very sustainable amount of energy that would cut their costs. Have the witnesses seen any signs that they are going to be getting grants to put this type of infrastructure in? They have the roof space compared to a lot of other types of businesses. I also take on board the comment from the VFI about the tax credit for the verified purchases of draught products capped at €20,000. Are there examples in other EU countries or even in the UK, where this already operates, that we could try to develop? The same thing would relate to the issue of taxis. Are there any other countries where there have been incentives to get more part-time taxi drivers out, particularly for rural areas? It is a huge deficit. We are trying to cut down on alcohol consumption but the pub is still the heart of the community. Getting people into the pub to have a few drinks and being able to get a taxi to go home is a huge benefit to everyone from a social aspect and in all other capacities. Have the witnesses any best practice examples to throw in there?

In relation to the Restaurants Association of Ireland linking future national growth with minimum wage increases to the consumer price index and looking for exemptions to benefit-in-kind rules, etc., I note that the Government is not making a differentiation in any way in terms of the association's needs. The Government is keeping it very strongly with Revenue rules. The same thing applies to tips. Obviously, we are trying to push this as a budget message. What else do the witnesses think we need to be doing as elected representatives to try to persuade the Government and Revenue that there are special cases and that the industry needs to be supported in ancillary ways as well as through taxation and VAT rates?

I hope I have left enough time for the witnesses.

Is there anyone in particular to whom Deputy wants to direct the questions?

I asked one of each group so maybe we could start off with the hauliers.

We have stated before that, at a minimum, any person leaving transition year in this country should have at least his or her theory test. Once people do their leaving certificate, if they are 18 years of age, we can take them on in companies like mine and train them to become HGV drivers or coach drivers. However, that needs to be speeded up. For a young person coming into a yard like mine, it is taking two years for him or her to get a commercial licence. It is nonsense; it is way too long. A company like mine should also be supported, whether it is through a VAT break or tax break or whatever, to employ a young person like that.

We will move on to the EVs. The infrastructure is not there yet for the EVs in Ireland. The problem is that a commercial EV is costing at least €200,000 more than a conventional diesel vehicle. That all needs to be ironed out and that has to be supported. Certainly, we will embrace the EVs when they come on stream because the cost of fuel to our industry is the biggest cost we have. If we can get EVs and we can get electric chargers in at a reasonable cost to our commercial viability, we will certainly support it.

There was a programme on television the other night called "Ireland's Deadly Roads". It should be mandatory for every transition year student in Ireland to watch it. These are the types of things the Government needs to come forward with and support, whether it is the transport company in rural Ireland or the pub in rural Ireland. Unless rural Ireland is supported, it is going to die.

Who would Deputy Gogarty like to get an answer from next?

I will go to the vintners in terms of help with putting solar panels on the roofs and those sorts of things. We will start with that one.

I thank the Deputy. I can answer very quickly on a couple of them if he likes. The small pubs usually deal with the local enterprise office, LEO, in the local council. They deal with the Sustainable Energy Authority of Ireland, SEAI, terms of getting the initial assessments. At the moment, there is not a grant structure that supports the smallest of businesses to look at the solar panels in a significant way. There are some bigger players, such as big pubs and hotels, that have certainly rolled that out but it is on a much larger scale and requires very significant investment. Grants may be an assist to help people to look that way and it would mitigate what is currently a significant cost.

The Deputy asked about sustainability in other countries and what is being done. An example we quote is that in France, they created a scheme where they give grants through the local mayors of the villages and towns where there is no pub or cafe or any social gathering place left. They give grants of up to €80,000 to open new ones, if the mayor can find a local operator who is prepared to do it. The Government has recognised the social and cultural value and health and well-being value and is supporting it. In other words, France is creating something that we might have to create in a while. They are backing out of a place that we are driving headlong towards.

That is actually fascinating what the French have started. That could cause a fair few rows in Irish local government.

We are also joined by Deputy Lawlor. Is the Deputy indicating to come in online?

Yes, Chair. I can confirm that I am on the campus.

Before the Deputy proceeds, I will just explain the running order. Deputy Lawlor is down as speaker No. 4 today. He will be followed by the Fianna Fáil slot and then by Senator Nelson Murray and Deputy Clendennen. We have quite a few people so we have to be quite strict on time. Lean ar aghaidh.

I can confirm I am on the campus. I have listened to and read the opening statements. I can fully understand the frustrations and difficulties the restaurants, pubs and road haulage sector are enduring as a result of the cost of living.

In regard to the labour costs at 44%, as outlined by our colleague from the restaurant industry, we also have to acknowledge that the people working in it are also enduring extra costs in just living, if you like.

On the increased cost of energy and product, how is that impacting the witnesses' ability as they strive with their product, that is, their restaurant, service or food? How is that impacting on their ability to do business? In recent times, we know energy costs have gone through the roof, as has the cost of produce. We hear the cost of beef, for instance, is extremely high and that is reflected if you go into many of our restaurants, where you will see the cost of a steak is quite high by comparison to recent years.

In relation to road haulage, in my office in Wexford we have encountered a number of issues where foreign drivers coming in from places like South Africa are encountering quite a bit of difficulty in accessing the visa process. Is that causing a difficulty, given the shortage of drivers? Is that proving problematic in recruiting overseas foreign drivers to immerse themselves in the industry?

I live quite close to Rosslare Harbour, which is obviously one of the busiest ports in the country. I know there are a lot of times where you see the driver just driving the container to the port and then it is sort of bogeyed onto the ship, if you like. How is that affecting the industry in terms of drivers, and the terms and conditions? Before, you had drivers going on the boat and travelling maybe 20 hours to France or other parts of Europe. How is that impacting? Is it having a positive or negative impact on the industry and is it improving productivity as well?

On pubs, and specifically rural pubs, I always felt there should be a radical intervention on the part of the Government, given the regulations on drink driving and the law changes we brought in during recent years. I know from travelling around parts of rural Wexford that they have had a fairly devastating impact. We obviously need to strengthen legislation in the area of drink driving. I am not, in any way, carrying a flag for that but is there a way the Government can radically intervene in regard to serious provision - not just tinkering around the edges - for rural taxis where, for instance, vehicle registration tax, VRT, is no longer on the vehicle and where VAT, if it is being provided for rural transport to keep rural pubs alive, can be looked at? Is that something that has ever been discussed with the Government or has it ever indicated that this type of radical intervention would be something it may look at, given the drastic drop in the number of pubs across the country?

I thank the Deputy. Does Deputy Lawlor want to direct that at anyone in particular? There were two different-----

We had restaurants, road haulage and the pubs. There were three specific questions there for each of them-----

Do you want to go with the restaurants first?

In terms of the restaurants, it is energy and the cost of produce. For road haulage, it is the foreign driver issue and what impact the containers going on the ships by themselves is having on the industry. Is it helping productivity and reducing costs? Then, in regard to the rural pubs, on the radical intervention I suggested-----

Okay. Mind the clock.

-----have they ever had any discussion with Government on these things?

I thank the Deputy for his question. I will be very brief. My colleague, Mr. Lenehan, who is a business owner, will talk to him about energy, energy costs and how that is affecting our industry.

The Deputy mentioned minimum wage and our proposal around the CPI. We have also indicated that we would like to look at the tax on tips for our workers. Other countries like France have done that. Second, benefit-in-kind, BIK, is affecting workers across the country. I will give the Deputy a very simple example. Staff meals out are being hit by benefit-in-kind for anomaly by Revenue, and also professional and union fees, which will hit workers as well. They are things we would like to speak to in more detail and we have proposals around them. I will bring in Mr. Lenehan.

I thank Mr. Cummins and Deputy Lawlor. Mr. Cummins referred to the objective to create an environment where business can invest, expand trading hours, employ more people and remain viable for the long term, which is key and sums up everything we are trying to do in our industry.

Energy costs, of course, have skyrocketed over the past five years and will continue to be a huge burden on our businesses. We probably need to go back and look at more grants. We have no idea what the next winter is going to bring towards us so I think we need to get ahead of that.

To back up what Mr. Cummins said regarding wages, we have no margin left in our business and the 9% VAT coming back would certainly give us that small bit of a buffer. Going long term, we need to be able to invest. We need wages to come under some control that is definitely linked to inflation. No tax on tips is a big one. That is something that could be looked at. An average hospitality worker could probably earn another 20% in tips alone and that might go up to 50%. Even on the lower scale, 10% to 20%, that is a huge amount of money that can be added in. If that goes through payroll and is done with proper transparency, the overall sector would benefit and without the tax on it, people would see it in their payslips, giving our sector a much better look.

Deputy Lawlor has a minute remaining. Is there someone else he would like to call on?

Yes, the haulage industry, on foreign drivers and-----

Okay, perfect.

It is taking us between nine months and a year to get a South African driver, from the time we start the process until we finish, with a number of different Government agencies involved. We want a one-stop shop for that person. It is taking that long there are companies here that have applied to get South African drivers here but by the time we had the paperwork up and ready to go, when we went back to the South African driver, he said he was not interested and that he got work elsewhere in Europe.

The Deputy asked me about the trailers in Rosslare. Prior to Brexit, we used the land-bridge. We would get on a ferry here in Dublin, land in Holyhead, drive down through the UK to Dover and then go across to Europe. Now, with customs and whatever, we are going on direct ferries. There were six direct ferries from Ireland before Brexit; there are over 30 today per week from Ireland to Europe. The reason we are using the drop trailer option now in most cases is the length of time it is taking. We have truck drivers, not sailors. That is an additional cost to exports in this country. For every trailer you see, there is a green charge on that trailer leaving Rosslare, going to Dunkirk or wherever it is going. We are paying up to €500 extra in carbon taxes alone for that trailer. All of that is a cost on the Irish economy and on doing business from Ireland. We would like all of that to be looked at but we would certainly like a one-stop shop so we can attract in South African drivers, and drivers from other countries that have an agreement with Ireland.

I sincerely thank the witnesses for the presentations earlier. Mr. O'Keeffe highlighted the need for insurance costs to fall in addressing sustainability for pubs. It is very disappointing to see that despite reforms resulting in fewer claims and lower rewards, as he noted, insurance firms are not passing these savings on to pubs. He also noted that Government reform should focus on ensuring premium reductions for businesses. Will Mr. O'Keeffe expand on that? What measures does he think the Government should take to make further impact here?

There are two points. First, we need better clarity on how insurance premiums are calculated, and on the breakdown of profits between insurers, the legal sector and costs. It seems to us looking from the outside that the benefits of the reforms have been pocketed by the insurance industry and the legal sector. Our premiums are going at something like 5% to 7% annually in an environment where the previous Government and this Government have delivered very significant reforms. We are seeing lower claims and less costly claims.

Despite the fall in those claims, our premiums are going up. The only KPI or measure that matters is the level of insurance premium that the business pays and that is continuing to escalate. There needs to be a better understanding of why insurers and the legal sector are benefiting from those reforms. Clearly, the sector needs more competition. There is an office designed to increase the number of insurance suppliers in Ireland and it needs to deliver more because competition is ultimately what is required here.

I will make one additional point. Insurance is a significant problem for the cost of every pub, but for large late bars in particular, it is an extortionate burden. A large late bar in the centre of Dublin could be paying anything form €80,000 to €120,000 on insurance alone. That is €2,000 to €3,000 per week being spent on insurance.

I thank Mr. O'Keeffe. Mr. Cummins mentioned the need to reform employment permits. In fairness, he has raised the issue a couple of times. To help address recruitment and retention challenges, could Mr. Cummins expand further on the detail of what changes are needed at this stage?

On work permits, there is a proposal to link your work permit to your visa and make it a one-stop application process. When you apply for your permit, you would apply for your visa at the same time. At the moment, you have to apply for your work permit, wait until you get it and then apply for your visa. If somebody is coming from India to work in an Indian restaurant, it could take up to 12 months before they arrive. In that case, they are more than likely not going to arrive. They are going to go to the Middle East where it is easier to get a job. We would like that integration done.

We have an issue in hospitality at the moment whereby if you have a restaurant or pub and you are doing pizza or other food to go, you are now excluded from getting a work permit. That means that even if only 10% of your turnover is takeaway food, you are excluded. In the small print, takeaways are excluded from work permits. I get it if your business is fully takeaway. You have to look at the more labour-intensive sit in and sit down sector. We would like to see that.

In terms of attracting staff to our industry, Ms Killian has spoken already. She might like to say a few more words.

Transition year programmes are definitely good. We want to encourage people in schools. Everyone should work in hospitality or retail. It brings people out. Such work can be people's first jobs and they encourage people to socialise, to engage and to be able to work. We bring them along. Three staff started with me this week for the summer. They are all between the ages of 15 and 17. These are their first jobs. They are getting training from us. We feed them and train them, and they are getting paid. It gives people a good start in life. It is part of being in a rural community. That is the base of my staff and I hope that some of them will stay on. At the moment, I have people who started during TY and are now in college. They work through the winter part time and then come on full time in the summer. We are the industry where people get their first jobs. We must encourage that through TY and put proper programmes in place. Apprenticeships need to be a little more streamlined for our industry.

I thank Ms Killian. That is very encouraging to hear. She is doing the community some service and it is welcome news.

Mr. Crotty spoke about the pubs as community infrastructure. It is an important point. We are all well aware of smaller villages across the country where the pub is the heartland of the community. It is where people come together to celebrate, thankfully, most of the time, whether it is after a local GAA match or whatever the case may be. We do not want to see pubs closing. That is the loss of businesses and jobs, but also the loss of community resources.

Mr. Crotty spoke about engagement with the Department of Finance. Could he expand on that? Perhaps he would outline his current proposal and address the concerns the Department raised.

The Department did not raise concerns about our current proposal. It accepted that the proposal was compliant with EU directives and mirrored schemes that are already in use in the country. Our difficulty was last year. That is history. I know the Senator has a short amount of time so I am not going to rehearse it for him. We have moved on. The Department is happy. We have taken all advices that the proposal is compliant. The Department has confirmed it is compliant and does not step on anyone's corns in Europe. It is then a matter for political decision and whether politicians are prepared to help us. We hope they will. They have been supportive of the sector. The change in the VAT rate to 9% is indicative of the fact that they recognise there is a significant problem that needs a significant response. It does respond, but it does not respond for businesses in the same sector, which are subject to the same Government-driven costs, particularly everything in the labour space, that do not do food. They have all the same costs. They are looking at their neighbours across the street who are running a very similar business but with food. Those other businesses will have a benefit from 1 July. Those that do not do food are struggling with costs. They started from a much lower gross profit margin. If are only selling pints, you are starting at 55% and not 70%. Labour costs started lower, too, but if they go up by 40%, your wages go from €16 per hour to €22 per hour. It is a 6% increase in costs overall. You probably were not making a 6% profit in a small pub. The difficulty then is that you are either treading water or nearly under water. That cannot be sustained and it certainly will not be sustained for the next generation.

Deputy McCormack asked earlier, "Where to from here?" We need to have a debate as to whether the State sees value in the pub as it exists, in its cultural and social element, and does it want it to survive. If it does, and if we agree there is value to keeping the pub, we must change. That does not mean that every pub will survive. In the best of times, there were pubs that closed and in the worst of times, there were pubs that thrived. There will never be a simple solution. If we can take the right steps to make it sustainable for the next generation, we will have something to work with.

I thank Mr. Crotty. It is an important point in the context of the Irish economy that tourists consistently highlight the Irish pub as a key attraction, frequently ranking it number one in surveys. I ask the witnesses to expand on the VFI's view of pubs as cultural infrastructure. What do they believe is the importance of that?

Tourism is one of the biggest industries in rural Ireland. The pub plays a vital part. When tourists comes to a town or village, they want to go and see music and meet the locals in those pubs. They are crucial to rural Ireland and for us. It goes back again to the survival of the pubs. They create employment in those areas. Tourists wants to come here for the experience. They want to see all the cultural offerings and amenities that we have, and the pub is a vital part of that for the survival of rural Ireland.

We will take a five-minute sos to allow people to use the facilities or toilets.

The next speaker is Fine Gael Senator Linda Nelson Murray.

I thank everybody for being here today. The representative groups could have done with three hours each because there is so much to discuss about the cost of doing business. We have done a lot in this committee with various stakeholders and witnesses. I turned around to Deputy Brennan earlier and asked what the magic fix is. It is so difficult to know. I know we could say there are many things we need to do but, as a business owner myself, the increase in costs is really tough. We can really feel it.

I will move on to some of my comments and questions. Mr. Crotty mentioned how pubs are used as good community spaces. It brought me back to last weekend. My children were involved in the Cumann na mBunscol division 1 final. They won. Both sisters, aged ten and 11, were on the team, one as a substitute and the other as a player. It was such a celebration and it was all in the local pub. I am from an urban area, Navan, but I live in a very rural area, Kilmessan. We made our way back to the pub. There were nuggets and chips for the kids. We were not there until late at night. It was just for two hours of celebrations, with the medals and cup. If we did not have the couple of pubs in Kilmessan, we would not have had anywhere. There is no real community facility. Where we were was a great place for families to be.

I could have put my head on top of Deputy Brian Brennan's for all he was saying because he spoke a lot of sense. I cannot imagine what rural communities, and other communities all around the country, would be like with a quarter of the pubs gone. That is a very scary situation. As political people, we need to do all we can to keep that culture. People now go to other people's houses for barbecues and so on. There are more and more cans of beer from across the Border and we are losing the income here. In some cases, people feel they may have no choice but to go over the Border to get cans. We are also losing income on the return-and-recycle scheme. The trend is a little worrying. I could not support the LVA and VFI more on the question of hanging on to our pubs.

On the Irish Road Haulage Association, one of the very first political meetings I ever went to before I was ever a politician was in County Wexford. The current Ceann Comhairle, Deputy Verona Murphy, was there where the difficulties with insurance affecting members of the IRHA were outlined. There are two brilliant people in my area, Geraldine and Gerry McQuaid, who have been advocating for everything. I have sat down at the kitchen table and listened to them talk about how difficult it is to run haulage businesses, given the tolls, charges, fuel costs and labour costs. I acknowledge everything the witnesses are saying in this regard. I would like to explore further what they mean and what we can do to decrease the two-year wait that it takes to get somebody properly licensed to drive a vehicle.

I will move on to the insurance side of things. There will be no surprise that I am going to talk a little bit about insurance. Mr. Crotty, I believe, said something about our not having seen the savings promised by Government reforms. That statement is incorrect. The Government has delivered many reforms and continues to do so, as promised. The savings were not promised by the Government; they were promised by the insurance industry, which asked us to make these reforms, but it has not passed on the savings. We keep coming to committees to talk about what more the Government can do. I have to give credit to the current Minister of State, Deputy Robert Troy, and his predecessors, including Deputy Jennifer Carroll MacNeill and Michael D'Arcy, and all the various Fine Gael and Fianna Fáil Ministers who have been trying to keep on top of insurance reforms, but we are not seeing the insurance industry pass on the discounts. It needs to be held to account for that.

I sat in front of Insurance Ireland officials years ago and they said that if we brought in the duty-of-care reforms and personal injuries guidelines, we would see premiums coming down. That has not happened and it is extremely frustrating. There are more reforms that we have to deliver. We are working on them. We spoke about transparency earlier and how we need to see transparency in premiums. Motor premiums now have transparency. You will see a pie chart on your premium document and a breakdown of how the premium is calculated but, unfortunately, this is not done for businesses on the public liability or employer liability side. However, I can guarantee that I will absolutely be pushing for this.

On insurance, what further reforms would the witnesses make, or what do they think would make the biggest difference to their sectors? What do we need to do in this regard? What is the biggest cost issue that we, as politicians, are overlooking? If the witnesses had a window tomorrow in which to state what would make a massive difference to their businesses, what would it be? I am looking for an answer that does not impact customers because I feel I cannot charge any more for a cup of coffee in my business. I just cannot, because I do not think anyone would buy it if I did. There is only so much you can keep putting on it.

What was said by the hospitality sector is very true because if we do not save businesses like cafés, restaurants and pubs, our children will never know what it is like to have a normal job. They will never know what it is like to not just be scrolling on a phone but to have social interaction with people. How will introverted children know what it is like to talk to people? If I have to tell one more mother who comes in to me with a child's CV to get her child out of the car and get them to come in with the CV-----

I ask the Senator to be careful about the time.

Sorry. If I could get answers for a minute and a half, that would be great. We can start with what Mr. Crotty would like to see in insurance.

What would I like to see in insurance?

Yes.

We have a number of asks. Mr. O'Keeffe mentioned that people who operate late bars are not only being charged exorbitant premiums but also, in a lot of cases, they do not even have a choice of companies to give them a quote.

Competition.

There is no appetite for being in that space, so there is no competition there. We are fortunate that we have managed in recent years to improve our situation with insurers, but we are still hugely supportive of everything the Senator has said, because she made the insurer's case herself.

In our business, we would not have insurance if we did not have a group insurance scheme. We are so grateful to our broker and the underwriters for that, without a shadow of a doubt, but we should not have to have a group insurance scheme; we should be able to go out and get it.

Mr. O'Keeffe mentioned insurance specifically in the presentation, but I did not. However, the Senator asked what item would be the magic wand which would help. If the State allowed us - through excise or in whatever way - to make a decent gross margin and we could not run our businesses after that, we should not be in business. It would be our own fault. At the minute, the problem is between excise and labour, which is the other cost. Labour is now vying with the cost of the product as to which of them is the bigger problem. Labour for hospitality is being driven by Government policy. I have said before that if the Government has a health policy or a housing policy, it has a budget to support it. There is no budget to support the labour policy on bringing the minimum wage up to a living wage. We are the only budget to support it. There was never a conversation with us to ask if we could afford it at all, or if we could afford it what would be a reasonable timeline over which to afford it. We are just told on 1 January every year, "You are paying this, full stop." There is no partnership in that, but there needs to be one in it.

I might get a chance to come back in if there is a second round. We will see how we go.

We have Senator McCarthy down as our fifth speaker, so he may proceed.

I thank the witnesses for being here today. I wear a few hats in that I am in business with SMEs, and I am involved in the homeless community and housing. I know how all this affects things. Today in the Seanad, I spoke about SMEs and referred to an article last week in The Irish Times, which interviewed a cafe owner whose latte is priced at €4.30. He said that when his accountant broke it down, it was found that the owner makes just 18 cent on each latte. The margins are wafer thin, as Senator Nelson Murray said, and the increases in insurance, wages and rates are making it non-viable. I had a cafe near Mr. Lenehan in County Kildare, which I closed a few weeks ago. It had been there since 1967. I kept it going because of the pride that the family had in it. It was on the family farm. Eventually, I thought that there was only so much I could subsidise it. We were busy and full every day, but it just was not making money. The perception out there is that you are making a lot of money out of this. I know the arrangement in Kill, Kildare and Ballymore. People say, "They are making a fortune; look at the price of steaks" but when you break it down, the costs and the margins are very tight.

Mr. Cummins welcomed the 9% VAT rate. In certain sectors, and certainly in my own case, it was not enough to stabilise things. What are the next 12 months looking like with regard to closures? Are many closures expected?

I thank the Senator for that and for his comments earlier on SMEs. Yes, we are anticipating closures. There are businesses that will not survive because we have headwinds coming, for example in terms of energy. What is happening in the Middle East will have knock-on effects in terms of energy for the winter, but also in terms of raw materials and food products. Fertiliser prices will go up because 25% of ammonia, which is part of fertiliser, comes out of Qatar, which has been and will be affected for five years. The price the farmer is going to have to pay for fertiliser will have a knock-on effect for everybody else. We will have to take the brunt of that, by taking it in from our suppliers in terms of food costs. We are going to have headwinds. We can see customers being affected by two ECB rate hikes, one already announced and another forecasted. This will have an effect on consumer confidence. We are a luxury item. People do not have to go out and eat - they can eat at home - so that will also have an effect.

As an operator, Mr. Lenehan can talk about the specifics of his business and what is going on there.

What is the tipping point for small businesses, such as cafes and restaurants?

Wage costs are a specific tipping point at present.

We all want people to be on fair wages-----

Correct.

-----but the employers are absorbing those wage increases. I spoke today about small businesses all around Ireland, such as cafes and hairdressers, which are the backbone of the community. For example, my business sponsored a large part of the Eadestown field day. We will sponsor the under-tens in Twomilehouse or whatever. All the supports seem to go to Pfizer, Intel and the big FDI companies, which are vital for Ireland. I do not believe sufficient supports are going to the ordinary people who are the backbone of society and are employing hundreds of thousands all around Ireland.

We acknowledge very clearly there is a cost-of-living crisis for our staff, who are the backbone of our industry. Some 230,000 people are working in tourism and hospitality. A minimum wage increase that is above inflation, and has been above inflation in recent years, is out of kilter with the viability of a business. We are asking that in the future, we link our minimum wage increase to inflation and the consumer price index, as has been done in Belgium. We cannot have this living wage coming in because it will totally blow labour-intensive industries like retail and hospitality out of the water. We will not be able to afford it. It will tip the smaller businesses over the line. The larger businesses may be able to absorb it, but the small micro-businesses with one to five or ten staff will be really affected.

It was announced today that Dublin City Council is doubling the levies on accommodation in Dublin. In other words, if you were paying €2.5 million in levies before, you will now be paying €5 million for the same thing. We are short of 15,000 hotel spaces in Dublin, so it is a big issue.

I want to go to Mr. Hyland quickly. The other hat I wear is in the transport business. I have a removals and storage business, which has been the bread and butter for years. I know how much it costs every time we go through the toll bridge. I know the impact it has on us. I also know about the driver shortages. People who would have used our service previously are now hiring a van because it has gone cost-prohibitive. What is the single biggest pressure Mr. Hyland finds is facing operators?

The biggest pressure facing operators is staff.

It is staff.

Whether that is drivers, office staff, warehouse staff or even someone to sweep the yard, that is the biggest problem. There are not enough young people in Ireland able to get a licence in a timely manner; that is a huge problem. There are South African drivers coming in here, but it takes between nine months and a year before they have a permit to come. By the time you pay the money, get the permit for them and tell them it is okay to come, they have got a job elsewhere in Europe. The €3,000 you paid towards the permit is now gone; you may start again with another person from scratch. It takes two years for a young person from the time they start here to become a licensed driver with a full truck licence. It is a nonsense. This has to be fast-tracked in some way or another.

I just want to ask everyone a question. The Minister for Finance, Deputy Harris, is preparing the budget. In each of their areas, what could he do to impact the witnesses' sectors?

We probably will not get time to hear from each of their areas, because there are only 30 seconds left. It will have to be only one.

I will be quick. Our budget submission is going in next week, and we are looking for support on HVO.

For us, the most important thing would be to limit the increase in the 2027 minimum wage to inflation or lower. For context, on the Senator's point, in the four years from January 2022 to January 2026, the minimum wage went up by 35% and general inflation was 17%. It was double the rate of inflation.

Same as.

I said to Senator Nelson Murray that we would like to see a reduction in excise in whatever format so that we can make a decent gross profit. If we can do that, we should be able to run our businesses.

I thank Senator McCarthy for that. Next is Deputy Clendennen.

I thank the Chair. There are many familiar faces in this room. I am not just talking the talk on this one; I am walking the walk as a small publican and accommodation provider in Offaly.

I have seen the challenges at first hand over many years. Pubs are important, particularly in rural communities, not just from a social perspective but also from an economic perspective in the context of the creation of employment. I compiled a study last year in advance of the reduction of VAT to 9%, which I was a strong advocate for. The vast majority of these businesses employ fewer than 20 staff. They are key pillars of employment in their local communities. From a health perspective, it is not just about the consumption of alcohol; it is also about mental health. Pubs give people an outlet in their communities that they can visit on a spontaneous basis as opposed to, for example, attending a scheduled event in a community centre. People can go down to the pub any day of the week and meet whomever is at the counter. That person could be from anywhere in the world, and both will have a story that will stay with them for life.

I have read many times that the best way to stay open is to close on particular days.. We do that in our business. On Tuesdays and Wednesdays during the winter, we close up. The purpose of that is to bring our costs down to zero and ensure we remain viable. That has been an ongoing issue in the sector. We need to look at what the likes of the community centres investment fund has done on an annual basis by spending €25 million to achieve objectives the pub is already achieving in every community that has received investment fund moneys. Why on earth would we neglect a pub 100 m down the road and put all this money into a community centre that is voluntary and that is not economically beneficial in many scenarios, although I accept that it also plays an important role?

There is definite merit in supporting pubs. The rebate scheme that was proposed is welcome, but I would like to get a better understanding or sense of - perhaps not today if the data is not to hand - why the members of the VFI and the LVA are not engaging in respect of the energy efficiency grants through the LEOs or the non-domestic microgeneration schemes from the SEAI. There is obviously a problem. Any business that has invested in energy efficiencies and renewables has seen a change in its expenses. What percentage of the VFI's or LVA's members have subscribed and enjoyed success? What are the problems if these schemes are not working?

One of the big things for publicans right now is the cost of doing business. The Deputy asked about energy efficiency. We would all love to be more energy efficient, but over the past three budgets, our margins have been eroded. Right now, we are treading water. One of the things I heard travelling the country and going to our AGMs in January and February and talking to publicans was that while we would all love to invest in energy efficiency and many of us have taken on board the SEAI audit and know what we need to do, it is expensive to put solar PV on a roof in order to try to bring down the cost of energy.

My point is about the grants. If we look at this as a formula of financial support from a bank or a financial institution plus the grant, is it still not feasible? What are the repayment terms in the eyes of the VFI members?

Right now, it is not feasible because we do not know whether we will survive for the next three years or five years. If people put €10,000 or €15,000 into their businesses now, it is a major investment. That is small money in the real terms of running a business, but there is huge concern among our members. We do not know what is coming in the next budget, whether the Government will increase labour costs by an amount higher than inflation and whether our cost base will go up. The margins have been eroded radically and most of us are now treading water at a margin of 1% or 2%. As a result, trying to invest in a business is a gamble right now and it is one many of our members are not willing to make. They are waiting to see what will happen in the next budget. I have real fear that if the Government does not make a decision to support the pub industry going forward, we will see a lot of closures in the next 24 months.

There is no issue with the energy efficiency schemes that are available. It is that members cannot afford to apply for them.

Right now, yes, it is a major concern among many people across the country.

Okay.

Unusually, there is a vote in the Dáil. Does the Deputy want to proceed with his remaining time?

I will pick up my six minutes after the vote.

From a practical point of view, we will probably be in the Dáil for 20 minutes. Does anyone need to say anything?

I will just put one question to Mr. Hyland. I had other questions that I wanted to ask. I appreciate the work of the haulage sector and the important role it plays in the supply chain. The Government has subsidised by means of fuel supports in recent times. I have had a number of debates recently about a matter Mr. Hyland also raised, namely the cost of fuel. What measures has the Irish Road Haulage Association or the sector taken or what investigations have they done on the supply of fuel? If we get to a situation where supply is impacted rather than cost, we will have bigger issues. How can we manage the transition of more fleets to electricity?

The quick win for the Government and the country is HVO. We could reduce our carbon footprint by 90% tomorrow morning if we got support to use HVO in our vehicles. If that happened, the reduction of carbon emissions across the country would help us to mitigate the EU fines that are coming down the line. It would be cost-neutral for the Government. We will put in our budget submission next week. It all relates to HVO. It shows that there is enough of a definite supply of HVO in the country to sustain our industry and help us to mitigate the fines that are going to come from the EU.

I appreciate that. I am sorry for interrupting. I did not get an opportunity to speak. I will do so for 60 seconds.

The committee has been working on the issue of competitiveness for the past 12 months and looking at everything from insurance to energy. We will have a finalised draft report on everything that has been discussed. It has been hugely concerning to see what is happening in the SME sector - and I include the hospitality trade in that - with businesses under ferocious pressure. When we were deciding on which witnesses we wanted to invite today, we wanted to have a diverse mix but also organisations that are similar in terms of what they do. It has been topical having the Irish Road Haulage Association before us, particularly after what happened a few months ago. We wanted to have engagement on a cross-party basis. I am grateful to all of the witnesses for attending.

I apologise that our meeting will conclude 15 or 20 minutes earlier than normal. That is because the Dáil vote will bring us up to 3 p.m., when, I understand, some of the witnesses will be heading to the audiovisual room for a briefing. I thank the witnesses for their time and for being here. We must run to the Dáil.

I propose that the committee meet in private session at 2.15 p.m. on Tuesday, 23 June and in public session at 12.30 p.m. on Wednesday 24 June. Is that agreed? Agreed.