Mr. Pádraig Dalton:

The Deputy asked when concerns about the usefulness of GDP and GNP first crept in. The debate on that issue in this country has been going on for many years, since the 1980s. At that time, the globalisation activity everybody was talking about was profit repatriation and transfer pricing. Things have moved on considerably since then and now we are talking about contract manufacturing, corporate inversions, relocation of assets and so on. The concern about GDP and GNP is not new; in fact, it goes back right to the 1940s. Simon Kuznets, who developed the metrics, was of the view that post the recession of the 1930s, the focus in measuring economic activity should shift back to an income measure rather than a production and output measure. What has happened since then is that from time to time, events will tend to resurface the debate. Certainly, the publication of our figures last July resurfaced the debate in this country in a very real way.

We fully understand the difficulties the publication last summer of the GDP and GNP figures caused for our users. We are not immune to that and are now trying to move the narrative beyond GDP and GNP. That is difficult, however, because - not just in Ireland but globally - those metrics are the denominators for everything. It is a conversation that needs to take place beyond the statistical community. The legislative and policy community must also consider whether, in an environment where economic activity is increasingly globalised, GDP and GNP are appropriate sources of information. We have already surfaced this discussion and raised the issue at European level within the statistical community. Current practice will not be changed by statisticians, however, because we measure what we are told to measure. The debate must happen elsewhere.

Going back to 12 July, the national accounts framework contained a great deal of information other than the GDP figure. For example, the net national product measurement, which we published on the same day, showed a growth rate of 6.4%. We published a figure for personal consumption and expenditure, which was showing a growth rate of 4.4%. Employment, the data showed, was up 2.3%. Last week we published sectoral data which indicated a growth rate for the indigenous sector of 4.4%. Household income data were published the week before last from a national accounts perspective, showing growth of some 5.5%. It is perfectly understandable that those figures were lost in the haze of the growth figure of 26%. We in the CSO have a job to do to give greater prominence to a broader range of issues. However, if we move in that direction while the EU and international community continue to base everything on GDP and GNP, it will be a very difficult battle. We have already commenced discussion on these matters with international partners, including the UN. My colleague, Ms Banim, has been asked to travel to Washington in November to deliver a number of talks and papers about what is happening in Ireland. People want to learn from our experience because they know it is an issue. Indeed, how Ireland has dealt with these matters is seen as a case study of how other countries might proceed, while pointing up the significant issues that may arise.

The Deputy's second question was whether the movement in intellectual property could go in the opposite direction, to which the answer is "Yes, it could". There is no doubt it could happen. Our view, however, is that as long as the environment persists which has given rise to the trend whereby IP has, for some years now, been locating in Ireland, we are unlikely to see a shift the other way. In fact, we in the CSO expect we could actually see additional level shifts - not to the scale we saw in July but certainly additional level shifts in our GDP and GNP, because that environment still exists. As such, there will continue to be question marks over GDP and GNP, which gives an urgency to the need for all of us to start thinking beyond those metrics and looking at other indicators like net national product, personal consumption and expenditure, the data contained in the institutional sector accounts we provide, and the indigenous sector figures we publish.

On the revisions, the first estimate of 6.7% was based on the suite of quarterly returns up to the end of 2015. It is only at the end of the year, when all companies, particularly the multinational enterprises, are finalising their accounts, that they make decisions around pricing and location of certain issues. That is why we end up having to revise the four previous quarters, because the multinationals, especially, make changes at the end of the year. Early in 2016, when those entities were finalising their annual accounts, our large cases unit became aware of a number of cases that raised our antennae and led us to undertake a series of direct site visits. In some cases, we had up to nine visits with the companies in question over a period of four to five months. It is a challenging task because each of those companies might have 40, 50 or even 60 subsidiaries or affiliates. Our first job, then, is to profile the entity and find out how many affiliates it has. Second, we need to ascertain its residency for statistical purposes. Finally, we must discover the balance sheet of the entity, its assets and liabilities. That was a block of work we had to do over the first four months of this year.

That is why we have moved from this figure of 6.7%.

It must be remembered that the change in structure in some of these entities actually took place in the first quarter of 2015. As soon as we found out about it, we engaged directly with the companies involved and undertook the site visits. I think this is a particular benefit of our large cases unit. The large cases unit in Ireland is seen as best practice across Europe. Since July, a number of national statistical institutes have been in contact with me wanting to come and visit the CSO to see how it operates. That is how it happened. I hope I have answered the Deputy's question.