Oireachtas Joint and Select Committees
Tuesday, 27 May 2014
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Scrutiny of EU Legislative Proposals
We are now in public session. Session three is a meeting with Mr. Paul Cullen, principal officer, from the Department of Jobs, Enterprise and Innovation, to discuss COM (2014) 221. It is a proposal for a decision of the European Parliament and of the Council on establishing a European platform to enhance co-operation in the prevention and deterrence of undeclared work. Members will recall that, at our meeting on 13 May, it was agreed to scrutinise it further.
I welcome Mr. Cullen to the meeting. In accordance with procedure, I am required to inform him of the following. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they 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 are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. For the third time today, I remind members 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, either by name or in such a way as to make him or her identifiable. I could almost recite that without looking at it.
I call on Mr. Cullen to make his presentation to the committee. There will be a short opportunity for any questions, if necessary afterwards, from members.
Mr. Paul Cullen:
We submitted information to the joint committee in the form of the standard Oireachtas scrutiny note in April and when we learned that the committee was intending to proceed to further scrutiny, we sent it a more detailed written submission.
In that submission, we addressed five areas that we thought would be relevant to the subsidiarity check that the committee has embarked upon. First, we addressed the issue of the legal basis chosen by the Commission and the question as to whether the EU is competent to act on the basis of Article 153 of the Treaty on the Functioning of the European Union. We point out that the Government does not have any objection to the use of Article 153(2) as the legal basis for the establishment of this platform. This legal basis is also viewed by the Council legal service and by a large majority of the member states to be an appropriate legal basis for this proposal.
Second, we looked at whether the kind of action proposed is consistent with the principle of subsidiarity. We would point out that the objective of the proposed platform is to facilitate, promote, encourage and support co-operation among the member states rather than the introduction of any specific binding agreements or harmonisation of laws. We are satisfied that all operational aspects of the measures that might be taken to combat undeclared work would remain exclusively within the competence of the member states involved and we have noted that the committee's counterpart scrutiny committees within the legislatures of Sweden and Poland, which are not without their picky approach to these matters on occasions, have already concluded that the proposal does not infringe the principle of subsidiarity.
Third, we considered whether the action proposed is proportionate to the objectives the draft decision seeks to achieve. We are satisfied that the proposed platform does not go beyond the range of activities, all of which are undertaken by member states on a voluntary basis, set out in the instrument and that any measures adopted would exclude harmonisation of laws and regulations of member states. Fourth, we considered whether the action proposed could adversely affect national competence in the fields of social protection and taxation, and we have concluded that the proposed instrument would not impinge on national competence in the fields of social security, taxation policy or operational practice in that regard. Finally, we looked at the transnational dimension to tackling undeclared work. We note that the emphasis the European Parliament and the International Labour Organization have placed on promoting enhanced co-operation at EU level, especially through transnational exchanges of information and mutual learning between enforcement authorities in a bid to fight undeclared work.
The Irish experience of multi-agency co-operation and data sharing between different state authorities and the mechanisms established for them to work together with other labour market actors has already attracted a high level of interest especially among eastern European member states, as did the fact that the co-operation here extends across the Border through a cross-Border operational forum.
Counteracting undeclared work can create a better level playing field for businesses and improve the quality of employment. We consider that in the light of the complexity and the heterogeneity of informal or undeclared work and the diversity of circumstances within the member states that there can be simple solution to tackling this problem. The traditional mechanisms and resources employed by the enforcement authorities are best suited to tackling, mainly, domestic aspects of undeclared work. The international dimension of undeclared is, however, a reality. As a consequence of the free movement of services and workers, the effects of non-compliance with national legislation can influence businesses, societies and governments beyond a single country's borders.
We welcome the development of common concepts, measurement tools and the promotion of joint comparative analysis. We are concerned that the World Bank estimates used by the Commission, along with many other sources, in its impact assessment seriously overstates the problem in Ireland. The results for Ireland from the Eurobarometer direct survey undertaken last year of the general population's personal experiences of undeclared work are useful as a counterbalance to some of the problematic indirect methods used by the World Bank in this instance to estimate the size of the black economy. It is interesting to note from the survey last year that Irish respondents were half as likely as the EU average to say that they had undertaken undeclared paid work in the previous 12 months. Ireland had one of the highest proportion of respondents, 47%, who thought that people who worked without declaring their income ran a fairly high risk of tax or social security institutions finding them out and issuing supplementary tax bills or fines. In our view, action at EU level is justified in order to enhance co-operation between the responsible national authorities such as labour inspectorates, social security and tax authorities, in particular, enabling them to exchange information and best practices, analyse common problems and so on in the effort to deter undeclared work.
The Irish Government considers that a European platform on the lines proposed would be an appropriate vehicle for practical voluntarily agreed activities and shared studies undertaken on the basis of co-operation between the Commission and member states.
One of the issues we heard about was cross-Border movement, in other words a person who is registered in the North and comes across the Border to work without declaring, or the other way round, people here going North. Is that a particular problem? From what Mr. Cullen has said it does not appear to be in Ireland.
Mr. Paul Cullen:
There have been instances. It has tended to be more from the North to the South and in the context, heretofore, of public procurement as well. Consequently, there has been a tightening in the context of the social procurement arrangements for the new school building programme and much closer vetting in that instance. The problem, and it is shared between the Northern Ireland authorities and ourselves, is that the work undertaken might be undeclared and unregistered, either North or South, for tax purposes. However, the existence of a memorandum of understanding between the authorities North and South, and a forum the social security authorities North and South have established, is already an exemplar for practice between other countries but in that instance the practical focus tends to be country to country in a bilateral arrangement rather than more broadly.
Mr. Paul Cullen:
We have had an instance of this already in the past year where, springing from work initially undertaken during the Irish Presidency, a decision was made on establishing a network of public employment services. In these instances there is a degree of ambiguity. Everybody was in favour of being party to it but they did not like the idea that the claims being made for the legal base were such that a decision is binding on all member states. The decision to establish the platform, therefore, is binding but what is done within it is not. In this instance we distinguished between the nature of the platform which will embrace all 28 member states and the activities they then decide to do, whether it is to produce guidelines or undertake particular studies. Only the willing will engage in those actions and in that sense the decision to establish the platform is mandatory. The Commission is asking the Council to take the decision to establish the platform. The Commission cannot wriggle out of it; it is mandatory. All member states will be engaged. What they do is then-----
Mr. Paul Cullen:
No. To put it another way, we do not have to take any decision to attend because our attendance is assumed to be necessary and part of the mandatory decision. We are in the club. Whether we decide to organise a particular night out in that club is up to us. The activity we do is voluntary; being there is mandatory.
Mr. Paul Cullen:
In our view, from the point of view of addressing some of the problems and the nature of the problems, it would not be particularly attractive to us if our immediate neighbour was not part of this, therefore, to some extent we are quite relaxed about the idea that it is mandatory. We are thoroughly in favour of it then being up to all the people to subscribe to any actions that are taken.
Any final questions? I thank Paul Cullen and Dermot Sheridan for attending and providing us with the comprehensive briefing.
Are members agreed that this concludes the scrutiny of COM (2014) 221? Agreed.