Ms Mary Rose Burke:

I thank the committee for its invitation to discuss the priorities and recommendations for budget 2020. Dublin Chamber of Commerce is the largest chamber of commerce in Ireland, representing over 1,300 businesses across the greater Dublin area. Our diverse membership base gives us a strong insight into the needs of both businesses and their employees, informing a holistic view of the commercial environment. Our vision is that Dublin will be globally renowned for its economic competitiveness and quality of life. We have a duty to our members to highlight issues of concern and the public policy changes that are needed to improve the business environment. As a civic actor, the chamber strives to do this in a way that supports the needs of the community at large. We are acutely aware of the challenges facing the business community and the Government in the face of a no-deal Brexit. The decision to base budget 2020 on a no-deal scenario is a prudent one in light of current uncertainty.

Deputies will notice that while some of the goals in our submission are ambitious, we have also outlined several targeted measures that could be more easily accommodated within the fiscal constraints of a single year, even a year such as 2020. The Government has a package of circa €600 million remaining unallocated in budget 2020. Dublin Chamber recommends the use of these resources to prepare for the challenges ahead by strengthening the fundamentals of the economy. This should involve supporting Irish enterprise, ensuring sustainable infrastructure and housing investment, and improving labour market access. Ahead of Brexit, the chamber has compared the environment for enterprise in Ireland with that of the UK. As outlined in our submission, Ireland now lags behind the UK on a range of metrics. Foreign direct investment is vital to the Irish economy but as the global environment changes, so too must our business model adapt, remaining attractive to foreign investors while avoiding excessive reliance on a small number of highly mobile firms. We need to foster an entrepreneurial environment and strengthen Ireland's indigenous base. This will require a step change in the level of investment by SMEs. Ireland's capital gains tax rate is now the third highest in Europe. The flat 33% rate still applies irrespective of the contribution of the investment to the economy. The same tax is paid on passive investments in large blue-chip multinationals as is paid on high-risk Irish start-ups. This effectively incentivises investment in large foreign firms over investment in Irish SMEs. We embrace the ambition of moving towards a 20% rate of capital gains tax for all unlisted trading firms. Conscious that this may have significant Exchequer implications in the short term, we have also outlined a number of targeted measures that could be adopted more quickly. These should be considered both as steps to improve competitiveness and as possible tax expenditure, as in a post-Brexit stimulus package. First among them is our proposal to outmatch the UK on capital gains tax entrepreneur relief by raising the lifetime cap on qualifying gains to €15 million. We have also proposed changes to the research and development tax credit, the taxation of entrepreneur dividends and the key employee engagement programme. While progress on all fronts is not possible in one fiscal year, there is scope within the budgetary parameters to send a strong signal that Ireland intends to sharpen its competitive edge in the face of Brexit.

Infrastructure and housing consistently rank as the most important challenges facing Dublin.

Joined-up thinking between housing and infrastructure development will be key to addressing Dublin's deficits in these areas. Projects such as metro north, the DART expansion programme and the eastern and midlands water supply are essential to ensuring a sustainable future for the greater Dublin area. The announcement of the national development plan was welcomed by the business community but it is critical that the Government follows through.

There is serious concern that in the event of a downturn, capital investment will be cut as has often been the case. Steps must be taken to guarantee delivery of the infrastructure improvements that the economy so badly needs. There are three practical steps the Government could take to ensure that, next time, it will be different. If economic growth dips below the level required to fund the national development plan, drawdown from the rainy day fund should be permitted to ensure steady delivery. This would meet the fund's short-term aim of economic stabilisation through stimulus while also building future capacity. All parties should commit to reasonable use of excess revenues. Last year, the corporation tax take was approximately €1.4 billion ahead of target. Raising current spending on the basis of unexpected receipts is a recipe for instability. Such revenues should be used to accelerate priority projects or to bolster the rainy day fund. The revenue from future carbon tax increases should be ring-fenced for green infrastructure investment. Dublin Chamber of Commerce fully accepts the need for the carbon tax while calling for a clear schedule of planned increases to ensure that businesses can plan and adapt in good time. Securing public buy-in will be difficult if the Government punishes carbon use without providing alternatives. Improving public transport is the place to start.

The final concern I will bring to the committee's attention is the tightening labour market. While this reflects a good news story in some respects, we must remain cognisant of the immediate challenges it poses to scaling businesses and the potential risk to Dublin’s competitiveness. There is still considerable scope to raise female labour market participation. The cost of childcare and the combined effects of the tax and social welfare system appear to have a depressing effect on the female labour participation rate. Addressing this would improve the situation considerably. Dublin Chamber of Commerce calls on the Government to focus on improving the universal component of the national childcare scheme in 2020 and to carefully assess the scheme’s incentive effects on labour market participation. We have also proposed for future consideration a returning to work credit to reduce the marginal tax benefit rate for second earners in a family who are returning to work.

We are conscious that budget 2020 comes at a delicate time. As the last budget before the UK's exit from the EU, it offers an opportunity for Ireland to demonstrate serious intent about business competitiveness versus the UK, as well as its commitment to long-term planning for sustainable infrastructure investment and improved quality of life. I thank members for listening and I look forward to exchanging views with them.