2026-06-16

151. Deputy Cormac Devlin asked the Minister for Enterprise, Tourism and Employment the way in which the SME test is helping small businesses; and if he will make a statement on the matter. [45641/26]

Last year we brought in the SME test. It is a great way of checking all legislation before it comes in to see how it will affect SMEs. In what ways does the Minister think the test has helped small businesses in that time?

I thank the Deputy very much for the question. The SME test encourages policymakers across Government to apply the principle of thinking small first, to consider the impact any measures may have on SMEs and to mitigate any impacts where possible. This approach helps small businesses by ensuring new policies are designed in a way that supports SMEs and reduces unnecessary burdens on them. In May 2024, the Government committed to ensuring an enhanced SME test would be applied to all major new measures. In October 2024 the Government formally approved the enhanced SME test and guidelines. Under the current programme for Government we have committed to rigorously implementing the SME test to scrutinise every piece of legislation and regulation for its impact on SMEs. In addition, the Action Plan on Competitiveness and Productivity commits that all Departments will apply the SME test to all measures and in particular to policy initiatives where it is proposed to increase costs on small business and include the SME test in the Government handbook. As for impact, we are seeing a growing and more consistent use of the SME test. In 2025, 33 SME tests were applied by ten Departments. This compares with 26 SME tests applied by eight Departments in 2024. The year-on-year growth of almost 27% in the number of tests applied in 2025 is a good indication the enhancements, implementation groups and Government commitments are having an impact. The SME test is influencing outcomes and helping small businesses in a practical way. For example, in the development of additional powers for the Agri-Food Regulator, engagement identified a potential burden on smaller firms, thereby resulting in small businesses with up to 50 full-time equivalent staff being excluded from the scope of the legislation. In our Department, its application to the employment permits Bill identified options to mitigate impacts on SMEs.

Gabhaim buíochas leis an Aire Stáit. The principle, as he said, behind the SME test is to think small first to reduce unnecessary administrative burdens on businesses. However, many small business owners would say they are still spending too much time dealing with paperwork and compliance requirements rather than running their businesses. For example, a constituent who operates a petrol station informed me he requires 14 separate licences, permits and registrations to operate his business. While each requirement may have a valid purpose, the cumulative burden can be significant. A lot of these requirements were there before we brought in the SME test but what can the Minister of State and his colleagues do to reduce this burden going forward? Will he outline specific examples where the SME test has resulted in reduced reporting obligations, streamlined processes or simplified compliance requirements for small businesses?

I again thank the Deputy. The Minister, Deputy Burke, and I are looking at how we streamline the application processes for a lot of businesses and SMEs that take the opportunity to apply for grants. We have undertaken a simplification process to do with the LEOs. We are also looking at more systemic reform within the LEOs to make them more accessible to small businesses across the 31 local authorities. We will ensure that we engage with businesses to make sure their feedback feeds in to the enhancement process. That is really important. Overall, the SME test and the consistency of its application is really important. The Minister, Deputy Burke, has been very vocal in ensuring it is in the Cabinet handbook that all Departments that are bringing memos to Government on new legislation or initiatives undertake the SME test to look at any untoward cost impact on businesses. It has been effective in its implementation so far.

Gabhaim buíochas leis an Aire Stáit. Another key objective of the SME test is to identify circumstances where exemption thresholds or more proportionate requirements may be appropriate for smaller businesses. Can the Minister of State provide examples where the SME test has resulted in exemptions or thresholds being introduced for smaller businesses? Furthermore, does he believe there is scope to expand the use of such measures in future, especially where the cost of compliance falls disproportionately on small businesses with limited staff and resources?

As I said in my earlier contribution we have seen real, practical outcomes in regard to its implementation, such as with the Agri-Food Regulator legislation. SMEs employing fewer than 50 staff were excluded from the initial analysis in the employment permit system. Processes were simplified and digitalised and fees were made more flexible. As for regulatory thresholds, we have looked at turnover limits, which were introduced to protect small businesses from compliance costs. These are really practical and meaningful changes that directly benefit small businesses. Through the enhanced framework, every memorandum for Government must include a completed SME test or explicitly explain why one is not required. That is a fundamental shift in how we protect small businesses from undue cost burdens and regulatory impact.