Economics: Where Ireland's parties of the left have often failed, the Irish Congress of Trade Unions (Ictu) has come out with positions on economic issues that are thoughtful and useful. Its latest position on the Business Expansion Scheme (BES) isn't one of them.

There are, of course, imperfections in the scheme and Ictu's objection spots them. But, in substance, the scheme is a good one and Ictu has done itself no favours by opposing it.

Due to end this year, the scheme was renewed for a further seven years in the last budget. Investment thresholds were also updated, and not before time. Small companies can now attract up to €2 million in funding, up to €1.5 million in a tax year, from investors who write this off against tax. This is double the previous limit and is a reasonable increase, given recent inflation.

The limit on individual invests was increased fivefold in the budget, from €31,000 to €150,000. That threshold is way in excess of even Ireland's inflation rate. But as the Small Business Forum report last year revealed, it might still be justified for other reasons.

Some 800,000 people - two in every five workers - now rely on small businesses for employment. Assisting the small business sector makes particularly good sense in a country like Ireland where the pool is too small for big fish to grow.

But as the Department of Finance acknowledges, the scheme is a form of State aid. Brussels must be consulted and must approve. And this is where Ictu comes in. Ictu, which has issued a complaint about the policy to the commission, represents more than 600,000 workers in whose interest - as taxpayers - it is claiming to act. Noting its claim to represent those workers under social partnership, the complaint gives a number of reasons why it feels the scheme should be dropped.

Ictu correctly points out that the measure borders on the illegal. At the time of the budget, permission from Brussels was not forthcoming.

The Department of Finance states, in a clarification, that the new BES will not become law until next month's Finance Bill but, as proposed by the Government, the scheme took effect as of the first of this month and monies committed under the scheme before commission permission is granted will be treated as if they had been committed post facto. This is playing a little fast and loose.

Another valid criticism is one that echoes the repeated call by the Labour Party for the establishment of a Commission on Taxation to examine the plethora of exemptions and schemes in our tax code. As Ictu points out, the scheme is devoid of any serious cost/benefit analysis.

While it produces some striking support for the scheme, the evidence in its favour has been confined so-far to a sloppily-produced survey that just lists a lot of answers to a questionnaire (the tables containing survey evidence are not even numbered for reference).

Unfortunately for Ictu, this is where its complaint runs out of steam. Kicking off its economic objection to the BES scheme, Ictu states that the policy is "unnecessary in a booming economy".

If this is true, it is also the case that an 11 per cent rise in public spending is also unnecessary - totally detrimental, in fact - in a booming economy. That's particularly so when spending increases disappear into unjustified pay increases that are totally disconnected to any improvement in public sector productivity. Strangely, Ictu didn't object to this waste of its members' money - because its membership is overwhelmingly public sector, peut être?

Moving on, the complaint states that the scheme will "distort competition between those firms which have the subsidy and those which do not". Is Ictu serious? From Dublin Bus to ESB, from Aer Lingus to Telecom Éireann, Ictu has strenuously and stridently opposed competition, in spite of an overwhelming majority of its members benefiting from the lower prices and improved services that increased privatisation and competition have delivered in most sectors where they have materialised.

The third complaint is that the measure will lead to overheating in the economy. This refers to the potential of any stimulation of the economy to increase inflation. As a cursory glance at any recent inflation statistics will show, apart from external forces beyond our control (interest rate rises and oil prices), inflation increases are being driven everywhere by increases in the cost of state monopolies. By contrast, subject as it is to competition, the small business community is driving costs and prices down.

Eventually, Ictu gets down to the nub of its objection to the BES. It is, according to Ictu "essentially a tax avoidance scheme, mainly aimed at high income earners". Use of the scheme by the business community, Ictu says, will cost the taxpayer €178 million over seven years. The fact is that the business community is the taxpayer. In contrast to the public sector, it not only creates sustainable employment, but contributes virtually the entire tax take (public sector taxpayers don't count because their wages and salaries are funded from taxes in the first place).

And far from begrudging small businesses and their backers €178 million over seven years, if Ictu really wants to represent taxpayers, it should be asking why we allow the public sector to waste close to this amount on a weekly, never mind annual, basis.

Unlike the public sector - where BES funds would otherwise go - funds spent under the BES will be subject to investment according to some criteria of efficiency.

In its contributions up to now, Ictu has really scored on the policy debate where it sticks to its knitting. Paul Sweeney's contribution to the debate on labour markets, his proposed system of "flexicurity", combining generous benefits for the genuinely unemployed with greater flexibility for employers, was a really excellent document. Ictu's latest complaint has strayed from that path, at great cost to its own credibility and image. It would be wise to drop its objection to the scheme's renewal, and to do so quickly.

If the commission objects to the scheme on grounds that come within a bargepole of Ictu's complaint, the latter body may find its future role in social partnership greatly diminished.