SPEECH BY CLLR. JIMMY HARTE AT WINNING THE WEST CONFERENCE
OCTOBER 16, 2010
Party president, Deputy Jan O’Sullivan, Deputy Willie Penrose, fellow councillors and party members, ladies and gentlemen, I appreciate the opportunity to get to talk to you here today about the rural economy at what I’m sure you’ll agree is a very important event. I am delighted and honoured to be representing Labour in Donegal North East, and look forward to the challenge ahead over the next few months. I firmly believe that the ‘Winning the West’ strategy is a vital strand in Labour’s election masterplan and the turnout here today is an indication that the party is going from strength to strength in the West of Ireland.
The challenges facing the rural economy today are serious and immediate. In Donegal, where I reside, I have seen the obliteration in recent years of long-established family businesses in towns like Ramelton, Letterkenny and Milford, while many local farmers I know have seen their incomes drop by a colossal 40% in the last two years. The fishing tradition, once a vital source of employment in the county, has also declined considerably despite the best efforts of the county’s fishermen. I also know of new businesses in towns like Letterkenny which have folded while those which remain are struggling under the weight of overheads including rates, and a lack of Government support. This is a sad indictment of an administration who claim to be pro-enterprise and innovation.
There are endless stories of pain and loss in Donegal as young people, unable to secure work in the local area, are being forced to emigrate, which is in turn draining rural areas of new blood, energy and fresh ideas. It is a vicious cycle and for the sake of the survival of rural communities, it can’t continue. However, amid the gloom, there are chinks of hope. The people of Donegal are resilient and success stories – though few and far between – are happening.
There are three main things I would like to discuss today – setting up business in the rural economy; maintaining a business in rural economy; and ways to support and stimulate enterprise in the rural economy.
But first I would like to briefly talk about my own background as a businessperson for 25 years in the rural economy. I set up my own insurance business at age 24 in my hometown of Raphoe and since then I have developed into Letterkenny also. I now employ six people between my two offices and I am lucky that the business is in a healthy state despite the current economic difficulties. However, I know as well as anyone the difficulties involved in setting up in a recession and moreover, the difficulties in maintaining it in this recession. Issues such as overheads, rates, staff costs, broadband connectivity and cashflow are real to me and I identify with the economic experiences of the rural businessperson on the ground.
From these perspectives, I’d like to share with you a few of my observations which I hope will help identify the key problem areas and help map a way forward.
- SETTING UP
Firstly I’d like to discuss the issues around setting up business in a rural economy. In my opinion there are 4 Cs which sum up the key points in this area.
Anecdotal evidence is showing that the banks aren’t lending to businesses. Unless you have family money, it is incredibly difficult to set up business and to get credit. Therefore, there has to be Government-backed loans offered to the SMEs which will kickstart the economy.
Poor customer confidence is just another term for fear of the future. We are living in a deflationary period and people are afraid to spend now, for fear products will be cheaper later. The effects of this for business are palpable. The Government has to show the way forward in this respect.
Cash is king. Without cash and turnover businesses are doomed to failure. The Government must help the consumer by giving them confidence to spend money they may have in savings because without cash registers taking in money, then unemployment will increase.
Customers are the key factor for all types of business. You may have the nicest premises, the best idea, and the friendliest staff, but unless you are attracting footfall, those are redundant. Those setting up business need to focus on inventive types of direct marketing and social networking to attract people in the door and generate revenue.
As a businessman I know it is also cheaper and easier to hold onto existing customers than it is to get new ones. Therefore it’s important to drop your prices and work at improving your relationship with them.
- MAINTAINING A BUSINESS
Secondly, I’d like to discuss the problems in terms of maintaining a business in the rural economy. We are all aware of the various roadblocks that hinder enterprise – overheads, other rates, rent, staff costs, energy costs, insurance.
There are many difficulties involved in maintaining a business nowadays. In rural areas, there are less banks than there were 20 years ago and as a result, there is less competition. National Irish Bank, for example, is closing all its branches in Donegal and having a cashless bank in Letterkenny, and if AIB and BOI amalgamate, there will be further branch closer. Many people might think this will be a good thing – but allowing banks a monopoly in rural areas allows them to increase their costs with inevitable consequences for businesses. This cannot be allowed to continue and the Labour Party in Government
Farming is also a bedrock and generator of wealth in rural areas. Years ago, I heard a saying that when farmers were doing well, everyone did well. They bought cars, their wives bought new kitchens, their children bought new shoes in local shoestores, and so on. The drop in farm incomes recently has hit many rural businesses hard and is compounding the weaknesses in the local economies.
Broadband connectivity and phone coverage in rural areas are basic necessities that are sadly lacking in many rural areas around the country. I know of many cases where people on business in Donegal passing through a small rural area might want to stop there for lunch but decide not to because there is no phone coverage or broadband there. It may seem like a small issue but for cafes and restaurants trying to attract business through their doors, let me assure you it is a big concern.
- WAYS FORWARD
Many of the challenges outlined above are compounded by the fall in family farm incomes in recent years, the long-term impacts of renewed emigration and the increasing prevalence of rural poverty, particularly in areas that saw rapid population growth since 2000. There is a great need to stimulate growth in indigenous enterprise sector once more. We need to give people reasons to stay in rural towns and spend in their local businesses. Without commerce we are without community.
So, where do we go from here? Firstly, we need to incentivize people to set up small businesses in rural areas. The way to do this is to highlight that there are opportunities out there and to tackle the rates issue which is seriously hindering business set-ups in rural areas.
There are opportunities out there for business people today. Rents are lower, there is more staff available, set up costs are cheaper and support services from agencies such as County Enterprise Boards , Enterprise Ireland are plentiful in a way that they weren’t years ago.
Finally, I am fed up hearing this American business philosophy of “Thinking Outside the box” all the time. It was this very type of thinking that executives in Irish banks promoted for the last 10 years in order break the rules. Today we all see the consequences of that.
I think it’s about time we got back to “Thinking Inside the Box”. And that means: playing by the rules and sticking to the tried and tested formulas that served the community well down the years.
After all, it was the small businessman and farmer who thought inside the box and played by the rules who built the Irish rural economy in the first place. And therefore it’s high time we began supporting him once again, otherwise the rural economy will wither away, and with it the social and cultural fabric of Irish society.