The Small Firms Association (SFA) yesterday called on the government to improve the provision of childcare facilities, encourage companies to partake in research and development and ensure its 2006 budget improves the nation's competitiveness.

"Ireland's deteriorating cost competitiveness has already undermined the ability of many companies in Ireland to compete in international markets," Pat Delaney, the SFA's director, said in the group's pre-budget submission.

"One of the key challenges of the budget is to regain competitiveness and permanently eliminate the inflation differential with the rest of the Eurozone."

The SFA also called on the government to reduce the cost, and increase the provision of childcare, a problem it described as a social time bomb.

"The SFA believe that this is the year to lay the foundations for the delivery of a high quality, flexible and affordable childcare system," said Mr Delaney.

To alleviate the problem, the SFA is proposing employer childcare contributions are not taxed as a benefit, and that tax concessions are made available to both community and private sectors for the provision of childcare places.

At as much as €275 a week, Irish childcare costs are three times the EU average.

The group also called for greater incentives to encourage people on moderate incomes to invest in retirement provision.

It wants to see tax reliefs at the highest level for all working people, regardless of what they earned.

While welcoming the introduction of the 20 per cent tax credit for R&D expenditure, the SFA proposed the scheme be switched to a volume-based approach and extended to include third parties and independent researchers.

It also called for more local authority accountability, particularly in the area of non-pay business costs, such as electricity, waste charges and commercial rates.

The group said a more equitable approach is needed to prevent businesses paying over the top for poor services.