Sean Barrett (Independent) | Oireachtas source

I will live within the time budgeted. I welcome the witnesses and thought I was back in Kenmare - I note its winning of the Tidy Towns competition yesterday - when I saw Mr. Fergal O'Brien present. I also thank the witnesses for their submissions. I have concerns about the research and development tax credit and raised it with the Minister for Finance, Deputy Noonan, when he was in the Seanad on 20 March last.

I refer to the key employment provision for the research and development tax credit and note the amount of time an employee must spend on research and development to qualify was reduced from 75% to 50%. At the time Senator Kathryn Reilly and I, as well as many others, tabled amendments because that tax break was designed to do the opposite. One wants a research and development tax break to be spent on research and development, not to give the guy concerned time off from it. A total of 33 amendments were tabled in respect of those kinds of tax breaks, which are never evaluated. At the time, there were approximately 14 or 15 people in the ante-room to the Chamber, one of whom told Senator Gilroy that Members would never understand this issue. However, they did and had a pretty good idea of what the tax lawyers and accountants were up to, that is, the fiscal termites, as Mr. Vito Tanzi has called them. This is the problem I have with the business sector, in that while I support the 12.5% rate, people should please pay it. They are always seeking new dodges and both the OECD and the European Commission are concerned about this. It is a tax lawyer and accountant industry and to my mind, paying people not to do research and development as part of a research and development tax credit represents that kind of fiscal irresponsibility.

In respect of upward-only rent reviews, Senator Feargal Quinn will introduce a Bill on that issue in the future. I hope the Seanad has not been abolished in the meantime but the Bill will be appearing before the Seanad soon. This has been a barrier to enterprise and brings out the property fixation of Irish people. As far as I am concerned, the Irish private sector lost the plot for most of the decade before the collapse five years ago this month and asset price inflation is not entrepreneurship. Representatives of the banks appeared before the joint committee last week and the business community really must reform the banking system. They are still engaged in property speculation and joint committee members found they have not the slightest interest in what industry does, or at least do not lend industry any money. As the banks are in the various business associations, why have the witnesses not got hold of them, given them a good throttling and told them to get back to it?

I refer in particular to Ulster Bank, which was a bank based on industry in the north-eastern part of the island but which became completely based on giving two people massive loans to buy one house. Thereafter, prices shot up and Ireland experienced the highest house price inflation of any country for which The Economist keeps figures. It is up to the business community to tackle the activities of the tax lawyers and accountants and to seek proper bank reform because as far as members of the joint committee could ascertain last week, the banks have no interest in business. They would like to go back to the same way they were previously.

It is the same with stimulus packages, in that we were there before. It is the favourite lobbying industries of the bureaucracy and of whatever government is in power and that is called stimulus. I favour low tax rates across the board with no deductions or allowances, a simple tax system and as much restriction on lobbying as possible. The private sector, which I support, must seek reforms in its own sector because banks and accountants - I believe the only person who is suing the accountant at this point is Mr. Quinn - and the senior bureaucracy largely have walked away from a disastrous five years in the Irish economy. While I am a relatively new Member, I note the Parliament bore the brunt and one party which had 82 seats was reduced to 19, while the other party in government that had six seats now has no seats. However, I do not discern the rest of the Irish private sector or the central bureaucracy coming to terms at all with the disastrous performance that put an economy on the rocks in September 2008.

The voice of industry should be asking the reason no accountant walked the plank for preparing the accounts of banks that totally misled the market. There is a quote in Vito Tanzi's book that "Laissez-faire is all well and good until something goes wrong". We have paid out too many dud enterprises and useless banks and it will be extremely difficult to do much in the way of business in Ireland. The volume of retail sales has fallen by 25%, which is the reason there are empty shops. The private sector should be far more assertive in stating what it seeks to have reformed to make this a place for enterprise again and not to seek small tax breaks and allowances and so on. That is what got us into this trouble and while Members of the Oireachtas may be willing to do it, the private sector, the public sector trade unions and many people still have not faced up to how this economy crashed. There have been five years of recession and there is a good possibility of another five. I am afraid that Mr. Fergal O'Brien's proposal that we relax the criteria sends out all the wrong signals. While I acknowledge it is well-intentioned because I am familiar with the work he does, why not tackle the people who really caused this? Is bank regulation any better now? Are banks or accountants any better now? Is the construction industry any better now? I believe the answer to be "No" in all four cases. I admire and support what has been done in tourism but this is a crisis in which a business sector destroyed the entire macro-economy and we are not nearly there yet in respect of getting out of it. A completely different approach is needed to making this an enterprise economy again, rather than a lobbying economy.