Mr. Gerard Brady:

We did work on this in 2014. More recently, the Department of Finance did work on it last year which showed that about 40% of all the research and development that takes place in the economy is supported by the credit. It supports about €2 of research and development for every €1 we are spending on the tax credit itself, or a little more than that. That is really high when we compare our credit to those in the UK or other countries where a similar kind of analysis has been done. It is about €1.50 for every €1 spent there, so ours is much more efficient. It does not just help bring more research and development here. It is also becoming a more important part of bringing FDI - and high quality FDI - here in the first place.

Mr. O'Brien mentioned changes in the US tax reform. The headline rate of 12.5% is still important but it is becoming less important as competitors in the UK, the US and elsewhere close in on that 12.5%. To bring the high value jobs now, the next step up in the food chain of FDI, we need those research and development supports in place. Companies are looking to get smart people and those kinds of research and developments in the State as well as more investment in third level. They want to have the capacity to push out those skills and to work together on research and development.

On the cost of the research and development changes we are suggesting, many of them are administrative changes particularly aimed at SMEs. Many of the changes would not have a huge cost. It is partly about administration, partly about how scientific advisers - who are under the research and development tax credit - are appointed, and who takes part in that, and also the consistency and certainty of the credit. It does not have to cost a huge amount of money to make the credit better because the credit as a tax incentive is pretty good and attractive. Its operation, however, may not be. Making that easier, particularly for smaller companies, would not cost much but it could have a big impact. Getting the people working in those small companies into higher productivity jobs means higher wages and better living standards.