Inside the world of business

Jobs saved as vital as jobs created

IN THE context of the political struggle as to who will form the next government, there is much talk about creating jobs. The parties and those who work on their policies might also give some time to the matter of job preservation.

As things stand, many small and medium-sized businesses have managed to rearrange their affairs so there is some sunlight between income and expenditure.

However, for many of these, hangovers from the bubble period remain an existential threat. Debts from equipment bought when turnover looked set to increase, or an extension to the corner shop that was to accommodate a new hot food counter, loom over many a small business.

Creditors, often under severe pressure themselves, can press the button and bring a struggling business crashing down, sometimes even when there is little prospect of significant financial gain. Examinership is for the big boys, and even then is often a questionable process, given the professional fees involved.

What is needed is some form of arbitration process where everyone involved is made to realise that the prime objective has to be to keep the business going. In many cases, that will be the best way for creditors to maximise the amount they can retrieve, even if over a lengthy period. In order to deter chancers, books of the businesses concerned could be opened to whoever was involved in the mediation, and probably to the creditors as well.

Many business owners have found that individual landlords can be encouraged to see the sense in helping their tenants keep going, but that institutional landlords are less able to make such sensible judgment calls. Some type of State-sponsored Business Advice Bureau mechanism could be helpful in that regard also.

The key point is that something should be done to stop circumstances bringing businesses to an end when a bit more effort, and common sense, could keep them afloat. Jobs saved are just as valuable as jobs created.

Ibec seeks to usher in glorious new PPP era 

IBEC WANTS a new quango. It’s calling it the National Infrastructure Development Agency. It wants this agency to usher in a glorious new age of jobs-producing Public Private Partnerships (PPPs).

Haven’t we got one of those already? Well, we have the National Development Finance Agency (NDFA), which has a quiet life under the auspices of the National Treasury Management Agency, and has full responsibility for the procurement and delivery of PPPs in sectors other than transport and local authorities.

Ibec proposes that the NDFA be merged with National Roads Authority and the Rail Procurement Agency. It also wants the next government to begin an audit of all planned infrastructure projects within the first 100 days of coming to power, with a view to prioritising those that can be funded through PPPs.

The rationale for giving the private sector “a more extensive role both in the provision and funding of a range of services and infrastructure” lies, on the surface, in the fact that exchequer funding for capital projects is tightening rapidly.

The outgoing government envisaged a 60 per cent drop in funding for the public capital programme over the next four years.

But can Ibec really blame anyone in public administration for adopting what the business body claims is an “uneven” commitment to the PPP funding model? Recent property crash history has yield many stories of failed PPPs involving developers such as Bernard McNamara (social housing projects) and Pierse (public sector offices).

Of course, the days of Irish developers attempting to cash in on infrastructure projects traditionally in the realm of the exchequer are over. The suction of foreign capital is what Ibec desires. Whether this aim, if achieved, manages to provide the “significant boost for economic recovery” that Ibec claims it will remains to be seen. But then demanding that the next government “embrace the concept of non-exchequer funding mechanisms” and scale up private financing for any other reason might seem less than pure.

Podcast

Current Account,the weekly Irish Timesbusiness podcast presented by John Collins, takes a look at the business and economic issues of the week with Irish Times business reporters and outside experts.

Online

For regular commentary on business and economic issues visit our blog, Current Account, at irishtimes.com/blogs/business

Twitter users can receive links to the latest business news and blog posts by following us at twitter.com/IrishTimesBiz