Cian O'Callaghan (Dublin Bay North, Social Democrats)

I welcome the fact the Minister recognises that there is a role for public R and D in universities and the benefits of that. That can particularly benefit small and medium-sized enterprises and companies that do not just have capacity issues necessarily with the complexity of the tax regimes. It can also just be issues of scale in launching their own R and D. Supporting it in the public system can be particularly beneficial to them. There can be multiple companies or enterprises doing collaborations or benefiting from what is done in a publicly accessible way. However, there is a bigger issue here, which is a structural issue, where we have a large amount of the R and D tax credit has been used and taken up by large companies that are well resourced in terms of their ability and capacities to engage and R and D. We would have to ask, how much of that tax credit is dead weight and how much of it is encouraging new and additional activity? That is one part of it.

We also have the structural issue in our economy of being weaker with R and D. We are a weaker country in R and D compared with our peers. For example, Ireland spends less than the EU average on research and development. The gross budget allocation for research and development per capita in Ireland is €198 whereas the European Union average is €274. We are one of the lowest countries in the European Union in comparison with our peer countries in terms of per capita spend on research and development. How that is spent is very much skewed towards the larger and some very large companies. We are out of kilter with our peers. There is a particular weakness and vulnerability here.

When we talk about budgetary issues and finance issues, we often talk about the risks we have in terms of over-reliance on corporation tax from a small number of multinational companies, and indeed a high amount of income tax coming in from highly paid workers in those companies and our exposure there. In broader terms regarding our economic development and productivity in our economy, we have a particular weakness and vulnerability in having that big gap in what is happening in research and development. That could leave us in a crisis situation. That would leave us very much exposed if we did have a worst-case scenario and we had a pulling back from some of those key contributors in terms of corporation tax. That would affect us. We need to be building up our economy, productivity and enterprise on multiple levels, including small and medium enterprises.

While I welcome the Minister recognising there is a role for universities and some funding is going to be going towards that from the surplus in the National Training Fund, I am concerned that we do not have a full analysis here and this is a significant measure. We cannot see the full analysis to know if this is the best use of resources or would it be better off using resources by targeting it more at the public system. While the surplus in the National Training Fund is welcome, it is relatively small compared with what we are talking about here. In any event, that is not what is in the Finance Bill that is in front of us. We are looking at these figures in the Finance Bill and my concern is that none of the pot that is available here is going towards the public system.