Mr. Vincent Harrison:

As Ms Mary Rose Burke outlined, Dublin Chamber advocates a targeted approach to the use of available resources in 2019. I will discuss these under three headings, each of which represents an imperative for government, namely, investment in Ireland's infrastructure, growing Ireland's businesses and investment in Ireland's human capital.

The inadequacy of our infrastructure stock is perceived as the most important barrier to doing business in Ireland, according the World Economic Forum survey. Infrastructure ranks as the most important policy issue for businesses in the greater Dublin area and is identified as the greatest challenge facing competitiveness of the region. In a survey of Chamber members carried out this quarter, almost half - some 48% - chose investment in infrastructure as the top priority for budget 2019. Dublin Chamber welcomes Project Ireland 2040and the accompanying national development plan, NDP. Alignment of spatial and capital investment planning is to be commended, as is the longer-term approach adopted in the NDP. The first test of budget 2019 will be whether it meets the Government's commitments as outlined in the NDP. This will require €7.3 billion in Exchequer funding for public capital expenditure. While the Chamber is heartened by the NDP, stable and timely implementation will be crucial. The recent pattern of capital expenditure in Ireland is among the most unstable in western Europe, and it must avoid slipping back into this traditional pattern of boom and bust. Given the importance of infrastructure delivery, the rainy day fund should be used as an insurance policy for the NDP. Dublin Chamber recommends that when economic growth dips below the level required to fund delivery of the NDP, drawdown from the rainy day fund should be permitted to ensure steady implementation.

The success of Dublin is critical to the success of Ireland. However, contrary to widespread perception, the capital city is significantly underfunded relative to other regions. For example, Dublin received the second lowest level of capital investment per head from central Government of any county from 2009 to 2016. According to a survey conducted earlier this year, more than two thirds - some 68% - of firms in Dublin believe that not enough is being done to improve infrastructure in the city. Traffic congestion in the greater Dublin area already costs the economy €350 million per annum. This figure will rise to a cost of €2 billion per annum by 2033. In this context, projects to relieve the growing pressure in the capital must be prioritised for delivery. Chief among these are MetroLink, the DART expansion programme, BusConnects, and the Shannon water pipeline project.

To secure its future prosperity, Ireland must remain attractive to multinational investors while also taking action to avoid excessive reliance upon a narrow number of multinational businesses. This will require the strengthening of the indigenous business base. There is little sense among businesses that progress is being made in this area. A recent Department of Finance and OECD study highlighted the widening productivity gap in the economy, with productivity being increasingly driven by foreign dominated sectors such as ICT, pharmaceuticals and telecommunications.

Budget 2019 will be the last budget before Brexit. To provide a competitive context for our proposals on entrepreneurship, Dublin Chamber has undertaken a comparison of the island of Ireland and the UK. The table displayed on the slide is included in our preliminary recommendations document and I invite the committee to consider it. While progress on all these fronts is not feasible in any one fiscal year, there is room for Ireland to make a serious statement of intent in 2019. First, Ireland's offering to entrepreneurs is starkly uncompetitive when compared with the UK offering, which includes a lifetime cap of £10 million on qualifying gains for entrepreneur relief from capital gains tax. This is worth approximately €11.4 million in current market prices. This compares with a €1 million cap in Ireland. To send a strong signal that Ireland intends to compete with the UK ahead of Brexit, Dublin Chamber recommends upgrading entrepreneur relief to surpass the relief available in the UK. The cost of bringing the lifetime limit applicable here up to the nominal UK equivalent of €10 million, as promised in the programme for Government, has been estimated at €54 million, using the non-dynamic costing model employed by the Department of Finance. A further increase in the limit to €15 million would incur an added annual cost to the Exchequer of just €2 million, according to the same model, while positioning Ireland at a clear competitive advantage against the UK.

Second, Dublin Chamber proposes a scheme to encourage greater investment in existing Irish SMEs.

As a matter of principle, the capital gains tax rate should reflect the risk profile of the investment concerned and its contribution to the Irish economy. In practice, however, the flat 33% rate of CGT effectively incentivises passive investors to invest in large blue chip multinationals at the expense of investment in higher-risk Irish start-ups and SMEs.

Dublin Chamber recommends introducing an investor relief along the lines of the UK model, offering a lower CGT rate of 20% on all investment in unquoted companies to encourage the growth of indigenous businesses.

Dublin Chamber calls on the Government to consider a lower rate of income tax on dividends for entrepreneurs in order to reward entrepreneurship at all stages in the business life cycle. To develop prospering indigenous businesses on a large scale, Ireland must offer rewards to entrepreneurs for staying on to scale their businesses rather than offering divestment as the only path to extract large-scale value.

Consideration should also be given to making the research and development tax credit more attractive to SMEs by allowing an up-front claim and increasing the credit rate to 30%. This would begin to address the low levels of innovation in the indigenous sector.

With regard to investing in Ireland's human capital, Dublin Chamber recommends that the Government takes measures to attract, retain and develop talent in the Irish labour force. This is crucial to check rising costs, maintain Irish attractiveness as a location for foreign direct investment and support indigenous business growth.

Access to skilled labour is a rapidly growing challenge facing businesses in the greater Dublin area. Almost two thirds of chamber members now report that they are searching for employees with a particular skill set but struggling to find them.

This challenge will continue to mount in the context of a buoyant labour market. As the OECD has recently noted, Irish labour costs threaten to slow business growth and undermine competitiveness through inflation, making it difficult for SMEs to compete with larger firms for skilled employees. While inward migration will continue to play a valuable role, population growth in the capital carries its own challenges in terms of managing overstretched infrastructure and the housing stock.

The female employment rate in Ireland is 10.4% lower than the male rate. This represents untapped potential in the Irish labour force that can be utilised without increasing demographic pressure. One in five Dublin Chamber members has specifically identified easing female labour market participation to help them access the skill sets that they require.

There is clear evidence that the gap in female labour participation is due to the burden of child-rearing falling upon women in a context of high childcare costs. Female labour force participation diverges sharply from male participation around childbearing age and fails to catch up before retirement.

This is increasingly supported by business feedback. Over three quarters of Dublin Chamber members now report that the cost of childcare has a material impact on their business. Noting recent IMF advice, Dublin Chamber recommends a significant expansion of fiscal support for the new single affordable childcare scheme to ameliorate the problem in 2019.

Dublin Chamber has a number of other recommendations to improve the skills base in Dublin and help SMEs to attract the skilled specialists they need to grow. These are included in our submission.

I thank the Chairman and the Deputies for their kind attention and the committee clerk and other committee staff for their assistance. We are keen to hear the members' feedback on our strategic priorities and recommendations in advance of our final submission to the Department of Finance. We look forward to discussing them with members in more detail this afternoon.