Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

We are here to discuss the departmental six-monthly report submitted by the Minister under section 2(5) of the European Union Scrutiny Act 2002. The report covers the period from July to December last year. We will also review the progress made during Ireland's Presidency of the EU, with emphasis on Single Market measures, product safety and market surveillance, and SME competitiveness and financing.

The Minister was here last week and we congratulated him and the team for the great work done during the six-month Presidency. We are very conscious of the workload the officials of the Department had on their desks in the last six months and probably before that as well. It is recognised that a great job was done and that the Department's area was very significant during the Presidency. On behalf of the committee, I want to thank the officials of the Department for that extra work and congratulate them on the job done for Ireland, which we appreciate.

I welcome the Secretary General, Mr. John Murphy, who will make the presentation. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I ask the Secretary General to make his presentation, which will be followed by a question and answer session.

Mr. John Murphy:

I thank the Chairman and members for the opportunity to discuss the Department's six-monthly report to the Oireachtas on EU developments and also our EU Presidency outcomes and achievements. I am joined here today by my colleagues, Mr. Philip Kelly, assistant secretary, corporate services, EU affairs and trade policy; Mr. Tommy Murray, principal officer, EU affairs and internal market; Mr. Gerry Monks, principal officer, trade policy unit; Mr. Pat Kelly, assistant principal officer, Office of Science and Technology; and Mr. Paul Cullen, principal officer, labour affairs unit.

I want to acknowledge and comment on the Department's significant contribution to the recent successful EU Presidency. I thank the Chairman for his remarks on behalf of the committee and I would be happy to convey those back to the staff. There were a number of notable achievements under the remit of the Department of Jobs, Enterprise and Innovation in the jobs, enterprise, trade, competitiveness and innovation area. Chief among these, for example, was the consensus by EU Trade Ministers on the mandate to enable the Commission to begin talks on an EU-US transatlantic trade and investment partnership, the agreement on the new €70 billion research and development programme, known as Horizon 2020, the agreement on the accounting directive, the signing of the agreement on a Unified Patent Court by 25 participating member states, as well as the agreement on the Commission's new state aid modernisation proposals.

I will come back to these and the other important Presidency outcomes in more detail but suffice to say that, overall, the Irish Presidency has delivered significant long-term policy objectives and concluded agreements on numerous decisions which will be vital for Europe's future. We should be proud of the reputational benefits flowing from what has been an efficient, effective and value-added Presidency for Ireland and Europe. I have set out in an appendix, for the information of the committee, a comprehensive note on the Department's outcomes and achievements.

Turning to the six-monthly report for the period July 2012 to December 2012, which covered the period of the Cypriot Presidency, I will focus first on the key legislative and policy developments that occurred in the various EU Council formations during that six-month period. The report covers three Councils that fall within the remit of the Department, the Competitiveness Council, the Employment Social Policy, Health and the Consumer Affairs Council, usually referred to as EPSCO, and the Trade Council. In relation to matters under the EPSCO Council, while the Department of Jobs, Enterprise and Innovation is the lead co-ordinator, it should be noted that the Departments of Social Protection and Education and Skills take the lead responsibility for matters in their respective social, youth and skills policy areas covered under this Council. Furthermore, it is important to note that the Competitiveness Council has a broad cross-cutting remit, which covers the Internal Market, industry, research and space areas. While the Department takes the lead on this Council, given the wide range of sectoral issues involved, a significant number of files fall under the remit of other Departments. During the period of this report the Council met on three occasions, twice formally, under the Cypriot Presidency. A number of the dossiers discussed at the Councils during the period under review are ongoing while many were finalised during our term of the EU Presidency.

I will now turn to the specific areas. Under the Competitiveness Council, Single Market Act I and Single Market Act II,the October Council examined the state of play of the 12 measures contained in Single Market Act I and held a debate on the way forward. Ministers also welcomed the second wave of the new 12 priority proposals presented by the Commission under the Single Market Act II and Council conclusions were adopted.On the issue of consumer protection, the Cypriot Presidency successfully concluded discussions with the European Parliament on the proposals relating to alternative dispute resolution and online dispute resolution. The Cypriot Presidency provided for an exchange of views on European industrial policy and its contribution to growth and economic recovery at the October Council. Measures in support of the construction sector and the cultural and creative sectors were also considered. In addition, Council conclusions were adopted on key enabling technologies. Following significant progress under the Cypriot Presidency, broad agreement on the patents package was secured at the December Council. The December Council held a debate on the three proposals contained in the package on the modernisation of public procurement policy. Agreement on a general approach was reached on all three proposals. In relation to professional qualifications, note was taken at the December Council of a report drawn up by the Presidency on the progress made regarding a draft directive aimed at making the system of recognition of professional qualifications more efficient. Also, at the December Council delegations noted the progress made on the review and simplification of the accounting rules applicable to EU companies. An exchange of views at the December Council on the future of state aid policy from the point of view of industry resulted in delegations agreeing on the need to modernise state aid policy by setting objectives that support growth, employment and EU competitiveness. A resolution approving the launch of an EU customs action plan to combat the intellectual property rights infringements for the period 2013 to 2017 was adopted at the December Council. A public debate on the Commission proposal for a modernised Union customs code also took place with a view to facilitating a first-reading agreement with the European Parliament.

Turning to the Competitiveness Council, research and development Ministers, and space issues, in October, the Council agreed on the main elements of the rules of participation in projects funded under Horizon 2020, which is the next research and innovation framework programme for the years 2014 to 2020. It also agreed on the arrangements for incorporating the European Institute of Innovation and Technology within the Horizon 2020 programme. The Council held a policy debate on the next steps towards the completion and implementation of the European research area. At the December Council Vice President Tajani presented the EU-European Space Agency communication to the Council and also informed Ministers that the space industry package would be adopted in January 2013.

Turning to the EPSCO Council, the Council held an exchange of views on economic governance in the field of employment and social policy within the framework of the implementation of the Europe 2020 strategy. In October 2012, EPSCO Ministers agreed a general approach on the electromagnetic magnetic fields file. An orientation discussion on the enforcement of the posting of workers directive took place at the December Council. The proposals on the quotas for women on boards were presented to the Council. The Council was also briefed on difficulties that had arisen in negotiations with the European Parliament on negotiations for a programme for social change and innovation.

Turning to the Trade Council, there was one Trade Council held during the Cypriot Presidency on 29 November. The main trade achievement was the agreement of Ministers on an EU-Japan free trade agreement negotiating mandate. In addition, the Cypriot Presidency oversaw the conclusion of EU free trade agreement negotiations with Singapore and progress on FTA negotiations with Canada, Vietnam, India, and the southern and eastern neighbourhood countries. A decision was made to enter into negotiations to conclude a comprehensive and deep free trade area with Morocco, within the context of the Euro-Mediterranean partnership.

Turning to Ireland's Presidency from January to June of this year, my Department played a central role in driving the EU policy agenda embodied in the overarching policy theme of "promoting sustainable economic growth and jobs and building Europe's competitive advantage". In its Presidency Ireland focused on measures to promote growth and employment in accordance with the compact for growth and jobs as agreed by Heads of State and Government in June 2012. The Presidency placed a strong emphasis on advancing proposals that can boost the EU's competitive edge globally and add greatest value to jobs, growth, competitiveness and investment. Within the various Council formations chaired by Ministers and officials of the Department, we also succeeded in attaining agreements on all of the significant funding programmes under the EU's budget, the multi-annual financial framework for 2014 to 2020. To start with the Trade Council, as I indicated earlier, I supplied the committee with a note of some of the Department's achievements and therefore I will lightly touch on some of the key highlights. Under our Presidency, we attached great importance to promoting the EU's external trade agenda for the benefit of Irish companies and for the wider EU economy and its exporters. Trade is essential to job creation; 30 million jobs or 10% of the EU workforce depend on exports. In June, we reached agreement among EU trade Ministers on the mandate in order for the Commission to start talks on an EU-US Transatlantic Trade and Investment Partnership.Reaching agreement among EU trade Ministers on the terms of the EU's negotiating mandate was a top priority for the Irish Presidency and I am happy to say that the trade negotiations commenced last week in Washington.

According to assessments made by the EU Commission and other European bodies, a comprehensive trade and investment partnership between the US and the EU could over time boost EU GDP by 0.5% per annum and help create approximately 400,000 jobs in the EU. Based on those assessments, if Ireland simply benefited in proportion to the size of our economy, a comprehensive trade and investment partnership could over time provide gains to Ireland in the order of €800 million per annum in increased GDP, and 4000 new jobs.

Turning to Horizon 2020 which comes under the Research Council, on the agreement on the new €70 billion research and development programme, Horizon 2020, Ireland argued strongly, and successfully, in favour of a greater emphasis on the SME sector. In addition to new specific supports, such as access to finance and debt and equity facilities, for SMEs, it has now been agreed that the target for SME participation in relevant areas of Horizon 2020 should be increased from 15% to 20%. This is a significant change given the proposed scale of Horizon 2020. The programme will use a simplified funding model which means that a greater number of businesses and research providers - small, medium and large - can access the programme with less bureaucracy. In line with the action plan for jobs, we will pursue funding and other opportunities under EU Horizon 2020 programme for specific sectoral activities of national importance and in line with our national research priorities.

Turning to the Competitiveness Council, furthermore, agreement was also achieved on the €2 billion dedicated programme for competitiveness and SMEs which is known as the COSME programme, which will provide targeted financial support for SMEs. In particular, the proposed equity facility for growth-phase investment will support the development of the EU-wide venture capital market, as well as the loan facility which will provide direct or other risk sharing arrangements with financial intermediaries to cover loans for SMEs.

Regarding smart regulation, which falls under the Competitiveness Council, we worked with member states and the European Commission to agree an approach for the medium term whereby all European regulation would be assessed so as to remove unnecessary costs for business and all end users. Council conclusions on smart regulation in response to two communications from the Commission were approved by the Competitiveness Council on 29 May, setting out the next steps for the simplification of EU regulation. The conclusions focused largely on the manner in which outputs would be delivered by the Commission from its various overlapping programmes.

In light of the adoption by the Employment, Social Policy, Health and Consumer Affairs, EPSCO, Council of Ministers of a recommendation on an EU-wide youth guarantee, the Department is continuing to support the Department of Social Protection in improving its services to unemployed young people with a particular focus on optimising the benefits of the guarantee for Ireland. The agreement reached by EPSCO Ministers in Brussels in February recommended that member governments should move quickly to implement youth guarantees in their respective countries, taking into account existing national, regional and local policies and objectives. At EU level, our Presidency had pushed strongly for early production of implementation plans in all member states.

Arising from this agreement, the European Council has approved a youth employment initiative amounting to €6 billion for the period 2014-20 to support measures aimed at addressing youth unemployment and, in particular, to support the youth guarantee for regions with particularly high levels of youth unemployment. The June 2013 European Council decided that member states seeking to benefit from the youth employment initiative should adopt a plan to tackle youth unemployment, including through the implementation of the youth guarantee before the end of 2013. Most funding of measures required to implement a youth guarantee will none the less need to come from the national budget.

The European semester process was greatly improved this year under the stewardship of our Presidency. The Presidency obtained Council agreement on Council conclusions on the Commission's Annual Growth Survey 2013 as well as adoption of the 2013 joint employment report and a decision approving the guidelines for the employment policies of member states for 2013. The majority of member states supported the country-specific recommendations addressed to them on employment and social policy issues.

Proposals on state aid modernisation were also agreed. These new state aid regulations will take account of post-crisis structural reforms and industrial restructuring that member states are undergoing as well as the need for better alignment of state aid with Europe 2020 objectives.

A number of important files that were vital to completing and integrating the EU Single Market were also agreed or significantly advanced, including those on recognition of professional qualifications, public procurement and the accounting directive. With the agreement on these files, some long-standing barriers to completing and integrating the Internal Market have been removed, making it easier to move and work across all member states and lowering transaction costs for SMEs. The accounting directive will provide for transparency on revenue streams that governments in resource-rich countries around the world are receiving from European companies active in these industries and in the logging of primary forests. The directive is also important, in that it updates the EU's accounting legislation, improves transparency and reduces red tape.

The signing of an international agreement on a unified patent court by 25 participating member states during the Competitiveness Council on 19 February provides the impetus for creating a genuine Internal Market for those seeking to protect and enforce their patent rights at European level. It has been estimated that users of the unified patent court could save between €148 million and €289 million per year, given the present cost of such litigations of approximately €1.5 million in some member states. The figure of €289 million refers to individual patent cases.

Given the diverse range of dossiers covered by each of the Councils, it is only possible to provide a summary overview on the main legislative and policy developments covered by the six-monthly report. The note on the Presidency, which I have also submitted to the committee, provides a more comprehensive debrief on Presidency outcomes and achievements. During our Presidency, we worked hard to progress these key dossiers with a view to advancing and contributing to a pro-growth and pro-employment agenda across Europe. I will be happy to respond to questions or observations.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank Mr. Murphy. We will turn to members for questions.

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I endorse the Chairman's remarks, as I did the Minister's last week, in complimenting the Secretary General and his team in the Department and Brussels on a busy Presidency. I also compliment the Secretary General on his report.

I wish to raise specific issues. The youth guarantee may be the most important legacy of our Presidency. Mr. Murphy mentioned that most of the resources would need to come from national budgets. What is the EU bringing to the equation? What will his Department's role be? He stated that rolling out the guarantee is for the Department of Social Protection, but what responsibility will his Department have in that roll-out?

Will Mr. Murphy confirm that we will need a referendum in respect of the unitary patent system? Has there been any discussion of when that referendum will be held? My understanding is that the referendum is ready, but I have heard no word of it being included among the forthcoming referendums in the autumn. If so many benefits are to arise from the system, one would assume that the Department would be anxious to move to a referendum as quickly as possible.

Mr. Murphy's comments on public procurement were made in the context of removing blockages in the Single Market. From this committee, Deputy Lawlor and others, Mr. Murphy will know that our concern about public procurement relates to the manner in which it is being rolled out in Ireland, particularly by the Department of Public Expenditure and Reform, as an anti-Irish SME programme. Tenders are rolled out in large blocks and Irish SMEs are not given the chance to get involved, losing them job creation opportunities. Will the developments make it easier for Irish companies to access public procurement, thereby maintaining or creating jobs in Ireland?

Horizon 2020 and the Programme for the Competitiveness of enterprises and SMEs, COSME, are welcome. We have one year of influence left in terms of Horizon 2020, given Commissioner Geoghegan-Quinn's presence. What plans does the Department have in place to tie down some specifics? A great deal of work is under way in Science Foundation Ireland, SFI, and the Department's science wing. Some good announcements have been made.

We raised the issue of state aid modernisation with the Minister via parliamentary questions last week. The activity in what are called "C" regions will have a particular impact on Ireland. Will Mr. Murphy confirm for the record what this will mean? A great deal of work was done by the Department and the Minister to bring Commissioner Almunia down from the cliff again, given his initial proposals. Will the modernisation have implications for the way in which the IDA engages in its operations? It will not kick in until this time next year, but one assumes that the IDA is in preparation mode.

The Minister has set up a group of what he called seven dynamic people in the sector to advise on the Entrepreneurship 2020 Action Plan. Will their work feed into our contribution to the 2020 action plan? In light of the work done by the Cypriot Presidency on the proposal for quotas for women on boards, I wish to point out that only one woman was appointed to the group of seven. Will Mr. Murphy outline the quota proposals agreed under the Cypriot Presidency and highlighted by him?

Mr. John Murphy:

On the youth guarantee, the EU brings a total of €6 billion in additional funding to the table, of which €3 billion will be specific to a youth employment initiative. A further €3 billion will be added to the European Social Fund, ESF, budget. The second part of the €6 billion must be matched nationally at a 50:50 rate.

That sounds like a large amount of money but it is not when one considers the number of unemployed young people across the European Union.

There is a reference in the youth guarantee that it will focus on the regions where youth unemployment is particularly high and Ireland would qualify. A number of member states in the European Union have significantly higher rates of youth unemployment, particularly Spain and Italy. As I said earlier, the Department of Social Protection plays the lead role and the Department of Education and Skills plays a significant role when one examines the full range of policies and measures that address further training and education for young people. In the context of the youth guarantee that means people aged between 18 and 25 and there is quite a range of policies involved. The Department of Children and Youth Affairs also plays a role. My Department of Jobs, Enterprise and Innovation also has a role and works closely with those Departments. It tries to ensure, to the greatest extent possible, that there is a role for enterprise whether in traineeship programmes or any other initiatives that might be rolled out. We are anxious to ensure that we get industry and enterprise generally actively involved in these programmes.

I do not know the precise timescale for this initiative but there is work under way between interdepartmental groups. I expect that the Minister for Social Protection will want to return the matter to Government in the autumn. I expect that the Cabinet committee system will be used. If so, it would enable us to adopt the programme which needs to be adopted by the end of the year and would mean that we could maximise and draw down funds.

Another important dimension of the youth guarantee is that it is frontloaded for 2014 and 2015. Is that right Mr. Cullen? Does wish to add anything on the matter?

Mr. Paul Cullen:

No, just to confirm that frontloading means that the bulk of the funds will be expended in 2014 and 2015. That raises further issues about whether there is scope for re-apportioning funds from other sources.

Mr. John Murphy:

There will be a referendum on the unified patent court. If we are transferring sovereignty from the Irish courts to an international court then it is not an EU institution and, therefore, is not covered by Article 29 of the Constitution that provides for certain things to be done under the EU rubric. Work needs to be done on the specification for the court and so on and it would be necessary to have that done before a referendum is held.

As the committee will know, there are a number of possible referendums, including one that we are certain of this September. The unified patent court referendum is likely to take place in the latter half of 2014. Such timing would allow for the degree of certainty that one needs to operate the court. It would also enable the Government to take a number of decisions that are relevant to the court before the overall matter of the jurisdiction is put to a referendum.

We have discussed public procurement issues before. Deputy Calleary mentioned that the public procurement policy is a matter for the Department of Public Expenditure and Reform. Recently it appointed a new chief procurement officer. As I have mentioned here before, there are conflicting policy objectives. There is definitely a need to ensure we have efficiency in public procurement which often means a focus on saving money, economies of scale, etc.

The other policy objective that we particularly focus on is ensuring there is as much openness to SMEs and Irish firms as possible in the public procurement market. We are often quoted statistics to the effect that a very high percentage of public procurement contracts go to Irish firms, most of which are SMEs, certainly if one uses the European definition. On the other hand, there is a fair bit of anecdotal evidence on particular types of tenders and people feel that the conditions of the tender exclude them.

The focus of our interaction with the Department of Public Expenditure and Reform has been on ways to get better SME involvement. Let me give an example. We examine restrictive clauses in public procurement tenders to do with insurance bonds, for example, and things like that. If the clauses are set at too high a level firms can be excluded. We also focus on facilitating SMEs in order for them to come forward with innovative solutions rather than over specify what needs to be provided. We try to encourage people to come forward with solutions. We have worked with Enterprise Ireland and a range of actors in the public sector to advance that agenda and will continue to do so.

The public procurement directives relevant to this discussion were about simplifying administrative procedures and facilitating the use of e-procurement. The EU spends approximately €2 trillion per annum on public procurement which is a huge amount of money and about 19% of EU GDP. If we are serious about opening up the Single Market then there are significant opportunities in procurement. We work closely with Enterprise Ireland, for example, and help companies to internationalise, identify and avail of opportunities. Turnover requirements have been explicitly limited to twice the size of a contract. Therefore, one should not set very high levels of turnover that SMEs cannot meet, it is possible to divide contracts into smaller lots and there will be detailed monitoring by the Commission on SME participation.

I understand Deputy Calleary referred to the Commission's definition of SMEs. Is that less than 500 or 250 employees?

Mr. Tommy Murray:

Fewer than 250 employees.

Mr. John Murphy:

It is 250 employees or fewer. To be clear, that is not-----

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is the size of a major company here.

Mr. John Murphy:

Yes, I know that. The Deputy must understand that this a Europe-wide directive and that is why I qualified the matter for the committee. That is what this matter is about.

Deputy Calleary asked what Science Foundation Ireland is doing for Horizon 2020. A lot of work is under way here to ensure that we fully draw down the available funding.

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I included SFI and the Department of Jobs, Enterprise and Innovation in my query.

Mr. John Murphy:

Yes.

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Very significant work is being done by the Department.

Mr. John Murphy:

Yes, I am aware of that. There is a lot of work going on. We have focused, in particular, on certain critical administrative aspects of Horizon 2020 that could act as a barrier to participation in smaller countries like Ireland. Some member states favoured a more complex set of arrangements for funding that would benefit large research institutions at the expense of smaller ones and make funding more difficult. Let us say one tries to put together a consortium comprising a number of institutes. In that case we would be anxious to ensure that the funding arrangements are as straightforward as possible to better facilitate smaller member states, Ireland in particular. There is a lot of work being done. First, we must maximise our potential for funding under the existing programme that has not finished yet. Second, we want to be ready to hit the ground running when Horizon 2020 comes on stream.

I shall respond to the question about state aid modernisation. Aid in the "C" regions is extremely important to several member states, including Ireland. There are two critical issues. First, will aid be available. Second, if so is it only available for new products or enterprises. A significant part of IDA Ireland's work is to retain, build and help existing multinationals to change their product plans or processes and so on in order to stay ahead of the competition. Therefore, it was important to get some modifications to facilitate aid for existing enterprises provided it was for new products or processes. We have achieved significant success in that regard. Where an issue arises IDA Ireland will have to ensure that it can work with people to develop their proposals in a way that meets requirements.

Finally, an entrepreneurship strategy was mentioned. We are developing an entrepreneurship strategy at present.

We know the rate at which new businesses start up is critical to economic recovery. We know, for example, that the bulk of new employment comes in the first five years of the life of an enterprise and that after that it tends to go into more steady state environment unless it happens to be in a rapidly growing sector. The first five years is critical to the creation of employment in the bulk of companies.

We need to increase the rate of start-up and to ensure we have the right mix of policies and measures in place to facilitate that. There is work being done on a national strategy at present. In that context, the EU's proposals on women serving on boards was mentioned and also that the Minister had appointed a group recently. These are two different issues. We were conscious in developing the action plan for jobs 2013 of the need to do more in the area of female entrepreneurship and we included some specific measures in that regard, on which Enterprise Ireland is working. The proposal coming from the EU on quotas for women serving on boards refers to major companies, PLCs. There is division among member states on this. We have had a policy of trying to achieve a 40% quota on State boards, which is quite difficult to implement as I am sure Deputy Calleary will recall from his time as a Minister of State. It has not been easy in recent years to find people generally who want to serve on State boards but it is difficult to find women in particular, especially in the enterprise sector. A number of member states objected to this on subsidiarity grounds, including the United Kingdom, Denmark, the Netherlands and Germany, countries that would normally be regarded as relatively progressive on matters of social policy and so on, but it is interesting that on this particular proposal there was significant opposition.

David Cullinane (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I welcome the Secretary General and his team. Again I too commend them on their role during the Presidency.

The overarching theme of the presentation is to promote sustainable economic growth and jobs. We all accept that and want to see it realised. There is an obvious relationship between economic growth and job creation. If we are to reach the very modest job creation targets which the Department has set, we must see improved growth figures in this State and across Europe. My view is that economic growth has not been great in Europe in the past six months. It certainly has not been great in this State. I met the troika on behalf of my party when they were in town last week. It was of the view that the figures for the first quarter of this year and the early indications of the first half of this year were negative. That creates a problem. If we are not achieving real sustainable economic growth, it is unlikely we will reach job creation targets. That is important. While growth is the overarching objective, the reality in Europe unfortunately is different.

In regard to Horizon 2020, my understanding is that the State's overall target for spending was 3% of GDP. Are we reaching that percentage? What percentage are we currently achieving? The Secretary General also referred to Horizon 2020 and that SME participation in relevant areas should be increased from 15% to 20%. What are we achieving at present? We need to have the baseline figures so that we can benchmark them against the objectives. Are we realising our targets? I believe we should support the small and medium sized enterprises in the area of research and development and accessing EU and global markets. Much work remains to be done in that area. If we are to set targets, we need to have a sense of the present position.

The proposed equity facility for growth phase investment was referred to in the opening statement. Will this equity facility be over or below the interest rate of current bank lending? We had a problem with the micro-enterprise loan fund. Unfortunately, the take-up rate in some regions was low. From the discussions I had with the enterprise boards across the south east region, among the issue raised was that the scheme was not attractive enough as the interest rates were too high. We need to get that right. If we are to introduce schemes designed to help SMEs, they must be attractive and relevant and the take up rate among SMEs should be at a proper level so that they avail of the supports being given to them.

The youth guarantee is one of the major achievements of the Presidency but we need to see it rolled out and add value not only in regard to training and education but job opportunities for people. There is a tendency for us to fall back on education and training when the jobs are not there but our focus must be on jobs. If the youth guarantee is rolled out have we any indication of the time frame for people getting a job and having a genuine career pathway when they participate in a youth guarantee scheme? I am sure the Secretary General will be aware that this committee published a substantial report on the youth guarantee, as did the Joint Committee on European Affairs. Have the officials studied that report and considered the raft of recommendation we would have made which would underpin the Department's approach to rolling out its programme?

Is there greater scope for state aid for manufacturing industries? A related issue is regional aid. I am aware that the maps and guidelines for regional aid are being re-examined. I am from the south east and I make no apologies for continuously raising the fact that the region is under performing with high unemployment levels. When I look at the regional aid guidelines, the south east as a sub-region should be on a par with the BMW region. Is that being considered?

Notwithstanding the gender imbalance of the delegation, there is a need to do more in terms of women entrepreneurs and do what we can to help and assist them, especially we need to look at intervention and supports at the early level. We need strategies to target young people.

My final point - I made this point to the Minister when he has appeared before the committee - is that the Department must work in conjunction with the Department of Education and Skills to look at second and third level education and to foster a spirit of creativity and innovation. While we are all going for the immediate wins, we need to focus on the long term so as to ensure there is a generation of young people who are geared to innovation and creativity. There is a role for the Department of Jobs, Enterprise and Innovation to work with the Department of Education and Skills on this as well.

Mr. John Murphy:

I will deal with the issue of gender balance in the Department. We meet the criteria at the level of assistant secretary, principal officer and assistant principal and in fact at every other grade, but not at Secretary General level, as I am more than 40% male. The 40% representation of women is met, but that is not the composition of the delegation today.

On the targets of the different percentages of GDP, there are a number of different targets for research and development. The goal we set for the Europe 2020 strategy is to improve the conditions for research and development with the aim of raising combined public and private investment levels to 2.5% of GNP, which is about 2% of GDP by 2020. Our national reform programme of 2012 indicates that underlying assumption remains valid and that progress is on track. The latest available data shows that the research intensity rate for 2011 is estimated at 2.2% of GNP.

The update on our national reform programme of 2012 indicates that underlying assumptions remain valid and that progress is on track. The latest available data show that the research intensity rate for 2011 is estimated at 2.2% of GNP, approximately 1.8% of GDP. Achievement of our research and development target under Europe 2020 will require continuing government funding and supportive measures, as indicated in the national reform programme, to support the research and development base.

We would have set an outside target of the order of €600 million out of FP7 - the seventh EU framework programme for research and technological development - the existing programme that expires at the end of this year and would already have achieved over €500 of that. The latest figure I have is from earlier this year and I am very confident we will achieve the target by the end of this year.

David Cullinane (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

This is an EU initiative and it was to be 3% of GDP. GNP is a different way of calculating it and the target mentioned may be the Department's target, but what I was talking about was the target of Horizon 2020, which was 3% of GDP. Where do we stand in that context? In GDP terms, what percentage are we realising?

Mr. John Murphy:

I gave the figure for 2011, which was 1.8%. I do not have the figure for 2012.

David Cullinane (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Okay.

Mr. John Murphy:

The Senator also asked about SME participation and why it has gone from 15% to 20%. That is a percentage of funding, but I do not have a figure with me now with regard to what percentage of our funding now has come from SMEs. If we look at the €70 billion for Horizon 2020 over the years, the 15% to 20% would give €7.6 billion in 2011 prices; it is quite complicated. There are a number of elements of the programme where there is specific reference to participation of SMEs. Perhaps one of my colleagues would like to deal with this in more detail.

Mr. Pat Kelly:

In regard to Horizon 2020, during the negotiations Ireland took the lead in asking Europe to increase the participation of SMEs. The target for the current framework programme had been 15%, but we wanted to push that up and we pushed it up successfully, with the support of other member states. Ireland led this and we got the percentage up to a 20% target. This means there are now specific SME-friendly instruments in the next programme - Horizon 2020 - which will ensure greater participation of SMEs. We saw this as important to assist indigenous industry. There is plenty there for the larger companies, but we wanted to do more for the SME sector in particular.

David Cullinane (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The figures are not here, so would it be possible to get the current figures for us?

Mr. Pat Kelly:

We can certainly have figures from Enterprise Ireland, which manages Ireland's participation in the framework programme and we can also get details on the participation of the university sector, the health and education sector, SMEs, large multinationals and so on. That information is available. Based on previous information we got from Enterprise Ireland, I can inform members that Ireland is one of the leading countries, if not the foremost, in terms of SME participation in framework programmes. I will be happy to get the details on this and to provide it to members.

Mr. John Murphy:

With regard to the youth guarantee, Senator Cullinane asked what measures would be put in place and whether there would be a clear pathway for young people. This is not something that will be done in isolation from other measures that are being developed by the Department of Social Protection and the Department of Education and Skills. Significant work is being done under the Pathways to Work programme, which operates to complement what we are doing in the Action Plan for Jobs. Reform and restructuring of employment services is taking place through Intreo and a particular objective is to get better linkages between persons on the live register, employers and other opportunities.

The intention of the youth guarantee is that it will build on existing measures, including the full range of activation measures in other schemes, to offer eligible categories of education, training or employment. Significant work is also being done by the Department of Education and Skills in developing SOLAS, the further education and training authority. The legislation for this was passed recently. I am going from this meeting to a meeting between the Minister for Jobs, Enterprise and Innovation and the Minister for Education and Skills, where we will look at the strategy that will be developed for SOLAS and the role we envisage for employers so that they are brought into it. Members may have seen, for example, that when JobsPlus was being launched, it was important that we had employers involved. In the south east we had an interesting example of this. There, a new company developed an important programme, in partnership between the employer and FÁS, to retrain people who had lost their jobs in TalkTalk. This is the kind of programme we want to consider, along with other initiatives, so that when we are building a range of measures under the youth guarantee, we can ensure enterprise is plugged into that and the programme does not just become a course with nothing following on from it.

With regard to state aid and the regional aid maps, coverage is a significant issue. We have managed to retain and slightly increase the proportion of Ireland's population that can be covered under regional aid maps. The percentage covered will increase to approximately 51.4% of the population. This is only a marginal increase, but we had faced a potential reduction at one stage. It is important to avoid a reduction. State aid is a matter that must be considered and it is a matter for Government to decide on it in due course. I have no doubt every region in the country will make its case, including the south east. I think I have covered all the issues raised by the Senator.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I congratulate the Secretary General and his team on the work done in the six months of the Presidency and in the lead up to it. I am fascinated by the report itself. It is the sort of report that should be presented before an EU committee rather than an Irish committee. I was elected by Irish people and I would prefer to have seen much more about what the Department is doing in this country to follow the policies laid down by the Government and to have got a report on those policies, rather than the overall EU report we have got.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I understand that and perhaps we can do that, perhaps next week. However, this committee has a specific role to go through the six-monthly reports every year. For this meeting, we also included the report on our EU Presidency. We must deal with these now.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I think we should deal with what goes on here.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

We can do that, and that is not a problem. However, this is a specific requirement of the committee. In fairness to the Secretary General, he has made it very clear he is very happy to come here on other occasions also. He has done so in the past and recently.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I would prefer for him to come here on a six-monthly basis to deal with Irish matters rather than EU matters.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is not an issue. He has agreed to do that already.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I wish to mention a couple of issues. We have spoken about procurement on a number of occasions. How much work has been done by the Department with regard to the definition of an SME within Europe? The figure of 250 employees was mentioned, but here in Ireland we would consider a company with 50 employees as an SME. In the context of EU procurement rules we must follow, has the Department worked hard to convince the EU of the different set of circumstances in Ireland? In the context of procurement, will Mr. Murphy comment on the fact that it is a Swedish company that is running the Irish procurement website? What impact does this have on Irish companies in the context of being able to access some of the tenders on offer?

With regard to women entrepreneurs, last year a fund was set aside for these.

Is it proposed to commence that again this year? It was very successful last year and was way oversubscribed. Are we looking particularly at youth entrepreneurs? Is the Department actively pursuing policies that would allow young people, particularly those under 25 years of age, to access funding through microfinance and so on? Is the Department putting policies in place for people under 25 who would not have a financial track record, so that such things could be taken into consideration?

What level of funding will be available in respect of Horizon 2020? The Secretary General mentioned 15% to 20% of the overall budget but what level of funding are we actively pursuing for Ireland under this? What base of funding are we going to get? In respect of smart regulation, page 6 refers to setting out the next steps for simplification of EU regulation. What is the timeframe for this? How far have we advanced in reducing red tape for our own small and medium enterprises, be they start-ups or existing companies that are coming under pressure at the moment?

The second paragraph deals with the youth guarantee. How quickly does the Secretary General see us taking up the funding that is being made available? A pilot project has been set up in Ballymun. How quickly can we access the €6 billion that is being front-loaded? We have to obtain matching funding for some of the programmes under the youth guarantee. How soon will we be able to put that in place? Will it be part and parcel of our own budget for 2014? Is there a possibility of leveraging what we might be able to access in additional funding which we used for school buildings and which we got from the European Investment Bank? We could use that allocation to leverage other funding, apart from our own State funding. Is that possible? We could increase the pot significantly as a result.

Seán Kyne (Galway West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome the Secretary General and his team here today. I commend them on the role they played during the EU Presidency. I agree with the concerns expressed by other speakers on public procurement. Are there any recent examples of Ireland being granted allowances under the state aid policy? Is there an equal interpretation of those rules across the EU? Is there an appetite for relaxation of those rules, considering the jobs crisis, or are they more open to abuse in light of the jobs crisis in many countries? The Secretary General mentioned the loan facility of the competitiveness council and the targeting of financial support for SMEs. Can he expand on the operation of this?

My final question is about the EU-US transatlantic trade and investment partnership. I presume that the agrisector would be included in those trade talks. The importation of US agricultural products would be a concern because of the different regime that they have in respect of the use of hormones and the use of BST for milk production. I would be concerned that if there was no proper labelling, we could have food scares that were similar to those which we had in the past. We have made great strides in Europe over the decades on traceability, quality product and hormone free beef, so perhaps the Secretary General might expand on these issues.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have one more question about Directive 2010/32/EU. That is the sharps directive. When do we expect the regulations or the legislation on this?

Mr. John Murphy:

Deputy Lawlor was complaining that the report was EU-centric and did not focus sufficiently on what we were doing to advance Irish policies in an EU context. The report does what it says on the tin. It is specifically about developments at EU level. If a member state goes into a Presidency with a perspective that it is going to use it as six months to pursue policies of that member state, then that is a very risky approach to take. It is quite likely to result in it not being a very effective Presidency. We have sought to take the agenda as it has evolved up to our Presidency, to identify those parts of it that are most critical from an EU and from an Irish point of view, and to progress those, but we also do the day job, which is the regular run-of-the-mill EU work that a Presidency must manage efficiently. If that is not done, we will not get success in areas of higher priority.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

This was not a criticism of the Department or the policies or the policies that were pursued. We only get the Secretary General in every six months and we like to deal with issues in our own Department and what they are pursuing, rather than on the EU Presidency and our role in that. It may have been a misinterpretation of what I meant. I welcome the fact that the Secretary General will come back here in the next couple of weeks to address us on what we are doing.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That will be in August, so you will be off gallivanting.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I do not mind coming in here in August, especially if the Secretary General-----

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Secretary General was here two months ago and we agreed that they would come back during the holidays, but this has to be voted on.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I accept that.

Mr. John Murphy:

Let us take the example of trade. We identified the trade area, especially an EU-US mandate, as something that would be very significant for the EU but also for Ireland. The Taoiseach, our own Minister and the Tánaiste and Minister for Foreign Affairs and Trade invested a lot of time and effort in ensuring that we gave it the priority that it needed at political level, and at Council and working group level, and we delivered an important result. That will be a difficult negotiation, and Deputy Kyne referenced a couple of areas that might be contentious, such as agriculture. Based on previous experience, that will be a long and complex negotiation. Perhaps one of my colleagues will comment on the agricultural element.

Mr. Philip Kelly:

Agriculture will certainly feature in terms of market access. We have defensive and offensive interests in this area, such as dairy, beef and so on. These are areas in which we want to make breakthroughs in the US market. It will also feature in sanitary and phytosanitary regulations for plant and animal welfare.

A couple of benchmarks were put down when the mandate for the negotiations was launched, that we were not going to lessen the standards or protections in Europe so, for example, issues such as hormone beef and GMOs were ruled out from the start as not being subject to the agriculture discussions.

Mr. John Murphy:

I thank Mr. Philip Kelly. Deputy Lawlor asked what we have been trying to do to reduce our definition of an SME for procurement purposes from 250 employees. That 250 is an EU-wide definition. It does not mean that one has to have 250 employees. In our national policies we focus on much smaller firms across a range of programmes, for example, Enterprise Ireland operates with smaller firms. We generally use a figure of 50 as a defining point.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The question I was asking was, if funding is coming in from the EU which definition is used, ours or the EU definition?

Mr. John Murphy:

If it is EU funding it will be an EU definition.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Could we not fight to regionalise that? The bulk of companies in this country employ fewer than 10 people so they are totally excluded.

Mr. John Murphy:

No they are not.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I know that the definition is up to 250.

Mr. John Murphy:

Nobody is being excluded. The same issue applies across many member states where a very large proportion of firms are quite small. That is not the case just in Ireland.

The Deputy referred to the youth guarantee. As I said earlier, the Department of Social Protection is the lead Department for this. It will have the job of co-ordinating the preparation of a youth guarantee set of proposals for adoption by Government by the end of this year, with a view to ensuring that we can put the measures in place and draw down the funding. The portion of the EU funding that comes through the European Social Fund requires matching funding on a 50:50 basis. Therefore, any measures under that will have to feature in the estimates process in the normal way and will have to be eligible for ESF funding in order to draw down that money.

The EIB funding to which the Deputy referred is essentially a loan facility, not grant aid. I do not have the detail of its precise terms. I do not think they have been worked out yet. We will certainly be anxious to ensure that they are as advantageous as possible.

Before he left, Senator Cullinane raised a question about the interest rate available under various loan facilities and whether they are advantageous or high. The problem with instruments such as the credit guarantee or the micro-finance loan fund is that by definition they are for firms that would not qualify for funding from banks and there is a risk premium associated with that. One cannot ignore that risk premium because if one were to seek to do so one would be giving illegal state aid so it must be given on a basis that meets those requirements.

Deputy Kyne asked whether there are recent examples of State aid. I am not sure what exactly he meant.

Seán Kyne (Galway West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Were there contentious issues of state aid being refused in Ireland or that type of thing?

Mr. John Murphy:

I am not aware of any. I know from previous jobs I have done that where state aid is a consideration the prudent thing to do is to make sure that whatever one is doing will not fall foul of state aid rules because there is no point in risking prosecutions, infringements or fines or whatever, or indeed legal action by an affected party.

Mr. Philip Kelly:

Depending on the threshold there are notification procedures so, on a precautionary basis, one might run something past the Commission to check that a new scheme of grant aid would not infringe. In the design one might take their views into account.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome all the witnesses here today and thank them for such detailed information. I congratulate them all on the great work they did during the Irish Presidency. It was outstanding.

If the figure for Horizon 2020 and research and development is 1.8% of GDP, how much in monetary terms is the Department spending per year and how is it planned to get that up to 3% over the next few years? We all agree that is of huge importance. Much of the research and development investment for small companies is coming through the innovation vouchers from Enterprise Ireland. According to some of the feedback I get that is quite bureaucratic for both the universities and the businesses involved. Could we look at this in another way, whereby we would give a payment to universities which would have to reach a certain target? That might be more appropriate than for a small business to try to work through the bureaucracy and the university.

I missed, or did not understand exactly, the point about venture capital. How is that going to operate in real life, for example, how will we increase the level of venture capital for somebody running a business? There was much talk earlier about female entrepreneurship. There is significant activity in this area, and has been for the past few years. It may not yet be quantified in reports but Enterprise Ireland has a very dedicated team working for female entrepreneurship and finds it quite challenging. Its staff are on the ground every month trying to get activity going but women view entrepreneurship and risk very differently from men. That seems to be a challenge for Enterprise Ireland. The Cork Institute of Technology runs the PINC programme which has been very successful.

John Lyons (Dublin North West, Labour)
Link to this: Individually | In context | Oireachtas source

By way of preface, I was quite involved in the youth guarantee before I came in here so I probably know a little bit more than most people about it. We all seem to use this phrase now but there is an onus on everybody to get involved in understanding the concept. At the moment Ireland is only trialling and testing how such a concept could be applied. Although there are figures for the amount of money that will be available, the most important thing is to trial and test a concept that can be adapted to the Irish environment and people.

The witnesses here today are not on the proposed steering group that has been set up to oversee the implementation of the youth guarantee scheme and, unless that is a mistake in the press release, I would advise revisiting that decision. Since coming into Leinster House my understanding has been that the Department of Jobs, Enterprise and Innovation focuses on creating the environment for work to happen and the Department of Social Protection focuses on providing and upskilling the people who will work in that environment. That is a fine and happy medium but there does not seem to be any bridge between the two. I do not know what is at play there. There are two excellent documents, Pathways to Work and Action Plan for Jobs but it is very hard to see where they are intertwined. For the Department of Jobs, Enterprise and Innovation to say it will support the Department of Social Protection in the roll-out of the youth guarantee scheme is not enough. There are talented people in the Department of Jobs, Enterprise and Innovation, six of whom are sitting across from me now, plus many others, who probably have ideas that will not be heard or sought if they are not on the steering group.

I know that the Department of Education and Skills and the new SOLAS will play a part but the Department of Jobs, Enterprise and Innovation has an innovative part to play in the roll-out of the youth guarantee scheme. I do not know what that is but the Department is not mentioned in the press release that was issued on 3 July. That expertise is much needed. For whatever reason the two Departments do not appear to be as intertwined as they should be. That needs to change if we are genuinely concerned about having an appropriate youth guarantee scheme in Ireland.

Mr. John Murphy:

I will deal with Deputy Lyon's last point first. We are involved in the preliminary meetings of the steering group. I have not seen the press release to which the Deputy refers. However, I assure the Deputy that we are involved. On the broader point, there is significant collaboration and there needs to be. Labour activation measures must be complemented by actions taken under the broad rubric of enterprise policy. They cannot be in two separate silos. For example, the Action Plan for Jobs specifically cross-references Pathways for Work. One of the disruptive reforms, one of those measures to specifically change how things are done, is JobsPlus. At the initiative of the Minister for Jobs, Enterprise and Innovation, the Government has ensured that we identified some significant players in the private sector who will become champions for each of these reforms, including for JobsPlus. We believed it was very important that enterprise should become more directly involved in labour market activation measures so that these are not seen as something out there for young people or the long-term unemployed and which have nothing to do with enterprise. We wanted to change that mindset. Equally, we want enterprise to be more involved in the strategy for SOLAS and in the role of Intreo. We will pursue this policy further and deepen the connection when we are developing the action plan for jobs for 2014. I can assure the Deputy the Department is involved in drawing up the proposals for the youth guarantee scheme.

John Lyons (Dublin North West, Labour)
Link to this: Individually | In context | Oireachtas source

I will keep an eye on it.

Mr. John Murphy:

I am sure the Deputy will do so. Deputy Collins asked about the composition of 1.8% of GDP. Gross expenditure and research and development is known as the GERD measure. There are several different measures. The figure for 2010 was €2.8 billion which is 1.8% of GDP, of which business contributed €1.9 billion, the government sector directly contributed €90 million, the higher education sector which is largely public funding was €800 million and a small amount for the private non-profit sector. These figures are adjusted every year. It gets rather complicated after a while. We will endeavour to find more up-to-date figures for 2011.

Mr. Pat Kelly:

We can provide those figures for the Deputy.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I ask if they could be pleased e-mailed to me.

Mr. John Murphy:

Deputy Collins referred to the innovation vouchers. She suggested that they are bureaucratic and that it might be better to set a target. I am happy to take that up with Enterprise Ireland.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I was getting feedback from the universities and from people in small business that much of the expense is caused by bureaucracy. There might be an easier way of delivering the €5,000. Perhaps if the universities had a particular target, the entrepreneurs could deal directly with them and then the universities could target it differently. I am sure there are more conversations needed. In general, the innovation vouchers have been successful but I thought that was a useful piece of information.

Mr. John Murphy:

On the question of venture capital, there are a number of national and EU instruments. At a very strategic level there is a significant difference between the way new enterprises are financed in Europe compared to the United States, for example. In the United States, while bank funding is important at early stages in businesses, non-bank financing, venture capital equity, for example, provides a much higher proportion of enterprise funding and is a very definite engine of growth. Bank financing everywhere tends to be risk-averse. What we have been looking to do both in Ireland - because of our particular circumstances with our banks - but also more broadly at European level, between ourselves and our colleagues in the Department of Finance, is to look at ways in which European financial instruments can support more non-bank financing as well as putting in place guarantee measures and other measures that will facilitate more bank financing, particularly for SMEs. The capital was increased by €10 billion and part of that is designed to increase the level of venture capital funding. We already have a range of programmes and Enterprise Ireland is directly involved in many of these. The State puts some money up and issues calls for the private sector to put up money and investments can then be made in the new businesses or in the expansion of existing businesses. If the Deputy requires further information I will be happy to provide it.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

There has been a gap in the market for many years. The people with over €10 million are usually funded quite easily. Enterprise Ireland seems to be filling the space under that quite well with the €750,000. This seems to have been a significant problem even long before the Celtic tiger. The companies usually end up going to the US and the first requirement there will be for the company to relocate to the US. We are losing potentially viable businesses in great numbers. Could it be possible to set up a venture capital programme and for the State to take an equity stake in businesses in partnership with other players in the market?

Mr. John Murphy:

I am happy to get further information for the Deputy on reports for companies in that particular segment. The Deputy is correct that there is an in-between stage where it is very difficult to the level of funding needed.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

They have gone through the valley of death or debt, but they are not quite there yet.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

On the issue of European company law we had engaged with the Department about the general approach, the auditing directive and regulations. The committee spent a lot of time scrutinising that directive and I ask what the current situation is. With regard to the EU Patent Court, is there a concern that we could lose expertise in the country? It has been brought to our attention from legal experts that if the EU Patent Court is based in the UK and not here, in the long run this could become difficult for Irish businesses wishing to access the expertise required to challenge a patent ruling or to register a patent. If the Secretary General wishes, he can provide the information later.

I compliment the work done on the youth guarantee scheme and Pathways to Work scheme. It is important that the enterprise side of the Department should play a role in this regard. The committee recognises the speed at which the Minister for Social Protection, Deputy Joan Burton, has brought this issue to European level but a cross-departmental initiative is needed in order to make it work. It is clear that the pilot stage will need to be completed in order to draw down the funding for 2014 and 2015. Certain projects may need to be reclassified, renamed, in order to come under the guarantee. The focus must be on youth.

There is a necessity for the business community to link in with Intreo. I am concerned that this is not really happening as yet. There have been delays in the opening of Intreo offices because of accommodation issues. The Pathways to Work document is excellent when taken in conjunction with the action plan for jobs but these projects need to be driven and pushed. Businesses must be encouraged to tap into those projects through the influence of local chambers of commerce. We need to have business engage with social protection. This is not happening, in my view. Perhaps the Department could encourage and drive that connection. We are often told that local businesses are unsuccessful in finding employees. However, I accept that on investigation there is not always proof of this statement. We need to tell businesses that we expect them to engage with the services. I commend the JobsPlus scheme. Other services are there to help employers employ staff. We need to put that message out there.

Mr. Philip Kelly:

A couple of big questions arose at the end of the Irish Presidency with regard to the auditing directive. These concerned the rotation period, as to when the auditor would be required to be changed. There had been significant divergence between member states and between member states and the European Parliament on the length of time of the rotation period.

Some in the Parliament were suggesting it should be a couple decades, while others pushed for a much shorter period. As the Irish Presidency left it, an initial trigger point for rotation would be approximately ten years. We suggested various possibilities for extensions, such as five years or potentially even an additional two or three years on top of that depending on whether, after the ten-year period, the company had gone to market and it was valid, through a normal procurement process, to reappoint the existing auditor. That would get a company from ten to 15 years. If the company was mid-merger or something like that, there might be a business case for retaining the auditor for an extra year or two. Variants of the ten years plus five, or ten years plus five plus two or three, are floating around under the Lithuanian Presidency.

The other major issue related to the limit that should be imposed on audit firms in regard to audit and non-audit related income from the audit client. The suggested approach was, on the one hand, to develop a so-called blacklist of activities which an auditor cannot provide and, on the other, to consider designating certain audit ancillary activities the audit company could do for the client while limiting the income to be earned in this way.

The other major question related to how the auditing profession might be overseen at European level, whether by a single institution or a network of national regulators. There seemed to be a preference for the latter rather than giving this as a function to a pre-existing EU body. Those are the three questions we have left with the Lithuanian Presidency in regard to the audit directive.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is it expected that those issues will be resolved by the end of the Lithuanian term?

Mr. Philip Kelly:

If they are not, the prospects for their resolution during the Greek Presidency are questionable in the context of the changes in the Commission and Parliament. My expectation is that in the absence of a resolution under the Lithuanian Presidency, they will drift on into next year and possibly beyond.

Mr. John Murphy:

The Chairman highlighted concerns among the legal profession that it might lose out if plans proceed to establish a European patent court. I understand the Chairman wrote to the Minister about this issue and received a detailed reply. I do not have much to add as we are only in the early stages of working out what needs to be put in place. The question of whether there is sufficient existing and potential patent work in Ireland to justify seeking to have a local court is one that will require further consideration by Government, including by our colleagues in the Department of Justice and Equality. On the face of it, it seems a fairly tall order given that we generally see only two or three cases per year and 50 is the type of scale we would probably need to justify such a request. There is a suggestion that there might potentially be a lot of work which would not necessarily end up in cases. That, however, is a difficult argument to sustain. We have not worked out our position on this.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In regard to Food Horizon 2020, I understand the initially indicated allocation of €80 billion has been reduced to €70 billion. Ireland has done quite well out of that programme. At one of the meetings of the committee which took place at Dublin Castle during the Presidency, we had a detailed discussion on Horizon 2020 and how beneficial it has been for Ireland. Enterprise Ireland has been particularly effective in its role in this regard. Is there an implication in the reduction to €70 billion that Ireland stands to lose out on funding under the initiative?

Mr. John Murphy:

The negotiations on the new multi-annual financial framework involved a process where different member states argued for different outcomes, as did the Parliament itself. We worked very hard to protect the budget in the context of the MFF and were very successful in that regard. In terms of what we can expect to achieve under Horizon 2020, we would be looking to increase our take from approximately €600 million under the existing programme to close to €1 billion in the next round. I am reluctant to describe it as a target because there is a lot of work remaining to be done. That, however, is the order of magnitude we have in mind.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is quite ambitious.

Mr. John Murphy:

It should be borne in mind that the figure of €70 billion represents an increase of €15 billion on what was available under framework programme 7.

Anthony Lawlor (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Will Mr. Murphy comment on the sharps directive?

Mr. John Murphy:

Those regulations have been drafted. I was going to say there was a sticking point, but that would be an unfortunate choice of words. There was a legal wrinkle in terms of the level of penalties or sanctions applicable. We received advice that our draft regulations required amendment, and we are in discussion with the Commission in that regard We expect to have the final regulations prepared for signature very shortly in conjunction with the Health and Safety Authority and the Office of the Parliamentary Counsel.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Thank you, Mr. Murphy. I take this opportunity to thank the officials for the comprehensive material we received from them in respect of the Presidency and the various related events. We always find the Department forthcoming when we request information. It is much appreciated. I thank the officials for their contribution to today's debate. No doubt we will be inviting them back soon to discuss other issues.