Dr. Conor O'Toole:

I am happy to come in on Deputy Ryan's question, as it relates to something that Deputies Boyd Barrett and Doherty mentioned. It is like the rationale for a research and development tax credit in the first place. The OECD's assessment of Irish SME policy and entrepreneurship highlighted low productivity among SMEs. From international evidence, one of the well-proven ways of boosting productivity is investment in research and development. This allows firms to unlock technical change and gain productivity benefits. Research and development is risky, and these reliefs allow it to be de-risked somewhat.

A complementary set of policies that has been introduced internationally is bespoke access to finance for research and development-specific credit constraints. Research and development is difficult to collateralise. A firm cannot use it as borrowing capacity with a bank. Firms that undertake research and development often face higher financing constraints than they do in respect of other assets they purchase.

There is a clear rationale for research and development tax credits from a productivity perspective and there is a strong rationale for having a bespoke facility that would allow the heterogeneity and complexity of the SME sector to be covered by it. This would work in conjunction with other enablers, for example, access to finance, or other levers that would help to de-risk research and development investment.