BUDGET 2009:Lobbyists for small and home-grown companies are tailoring demands for Budget 2009, writes Barry O'Halloran

SMALL COMPANIES are feeling the pinch with tighter access to bank credit and customers looking to freeze costs - like the HSE, which this week notified all suppliers that it would not entertain applications for price increases until the end of 2009, at least.

Costs, funding, infrastructure, tax and public spending - it's become a familiar refrain when the organisations representing the bulk of Irish businesses produce their budget shopping lists every year.

The basic themes have not changed a whole lot this time around, but lobbyists for small and home-grown companies are tailoring their demands for Budget 2009 to radically different global and domestic conditions.

Some of the individual issues loom larger than others. John Whelan, chief executive of the Irish Exporters' Association (IEA), which represents 3,000 of the 4,000 businesses that rely on selling goods and services abroad, says that members are having real difficulty getting cash from their banks.

"We are getting clear indications that people are having substantial difficulties getting their bank facilities (credit) renewed or expanded," he says.

The organisation handed in its pre-budget submission to minister for finance Brian Lenihan before news of the Government's guarantee of Irish banks' liabilities broke. Given that credit could remain tight, it wants more support for another source of funds, venture capital.

Whelan points out that State agencies, in particular Enterprise Ireland, provide funds for companies in mainly early stages of development, in return for shares. The association wants to see this expanded.

It also wants to see the Business Expansion Scheme (BES) rules extended. Currently, companies can only get one round of funding under this system, and they cannot get access to it at all if they have benefited under some other form of State aid.

The last Government introduced these rules to ensure that the scheme did not breach EU state aid regulations. However, Whelan believes that the Department of Finance should now try to find "innovative" ways around this.

A key issue for exporters is that the better performing markets are shifting away from the traditional targets for Irish goods, such as the US and Europe, to Asia and South America.

This means that they need to invest more in setting up bases in these locations, hence the need to get access to more funds.

Along with this, exporters need to have sales staff working for long periods in these markets. The association wants capped tax-free earnings for such employees who regularly spend sustained periods abroad.

Whelan points out that there were tax breaks available that benefited exporters, but many of these disappeared as a result of a review and subsequent Government "reform" of such incentives.

Whelan says this happened at a time when exports were actually falling and traditional markets were weakening. He adds that manufacturing exports were down 7 per cent in the first half of the year, while the sales of services abroad has not increased.

Whelan adds that the Republic is now formally in recession, and warns that many of its main markets look set to follow, leaving businesses here with little choice but to look further afield for new customers.

The Small Firms' Association (SFA) wants a new focus on businesses that are functioning well in the domestic economy. The organisation's chairman, Pat Crotty, says these have been neglected up to this point, as they are outside the remit of most State development agencies.

"The emphasis has been on manufacturing businesses that export, and on internationally traded services," Crotty says. "This neglects the group of companies that are operating very successfully in the domestic market. A development fund should be created for these businesses to further enhance their contribution to the economy."

Local authority charges are an ongoing bugbear for the SFA, which consistently argues that businesses carry more than their fair share of the burden, which is itself a result of a funding crisis in regional government.

This year is no different, but the association is proposing a radical solution, a "local area tax" charged on the sale of all goods and services in each county and paid to local authorities.

SFA director Patricia Callan says that this would be charged in addition to what businesses and householders pay for services such as waste collection.

"We recognise that there is a crisis because the local authorities have depended on the development levy paid by the construction industry and on the exchequer, and commercial rates," she says.

"We're very concerned that we'll see big increases in terms of stealth taxes and charges on business. What happens is that they know what they are going to get from waste collection and other charges, and they know what they're going to get from the exchequer, but there's a whole lot of other costs that cannot be charged and they pay for them through commercial rates."We have looked at this, and it works very well in the US. The local area tax means that everything that's bought in a particular county is reflected back in the money that local authorities receive."

Callan adds that under the current system, businesses often don't get their commercial rate bills until January or February, which means that they have no way of knowing what the extra cost will come to.

At a macro level, the SFA wants deeper cuts in public spending than those Lenihan proposed a number of weeks ago. It also wants public service reform and restructuring.

The public service and local charges are favourite targets of the Irish Small and Medium-sized Enterprise association (ISME). The group wants pay and recruitment freezes in the public service. Similarly, it wants local charges and stealth taxes frozen.

The group puts a bigger emphasis than the others on continuing with the National Development Plan, geared at boosting the Republic's transport infrastructure and vital services such as schools and hospitals.

ISME chief executive Mark Fielding says any attempt to row back on the National Development Plan would be a serious mistake, irrespective of economic conditions.

"Although economic growth has effectively ground to a halt, the infrastructure bottleneck continues to cause real problems for Irish businesses and unless the problem is addressed, could threaten any future economic growth prospects," he says.

"While there has been an acknowledged improvement, particularly in road transport, the decades of under-investment in the country's national infrastructure continues to affect all types of businesses."