Mr. Fergal O'Brien:

I thank the Chairman and members for the invitation to join the joint committee. As they will be aware, IBEC is the country's main business representative organisation. Its members employ 70% of the private sector workforce. IBEC represents 40 sectors of the economy. As the committee can imagine, there is a broad range of issues about which our members are concerned in advance of budget 2020. However, we are seeing an increasing coalescing on four issues about which I will speak briefly in the course of my opening remarks.

The first and by far the most important is the challenges we see for the economy as a result of significant global tax reform. The second which is connected is how we urgently need to broaden the enterprise base and do much more to support entrepreneurship and the SME sector more generally in the economy. The third is what we see as the urgent necessity for the delivery of much needed infrastructure and housing to address quality of life concerns. We could not have this session without speaking about the fourth, the ongoing challenges presented by Brexit and the mitigation measures we need to see being taken in budget 2020 from a business perspective.

On the issue of international tax reform, there is unprecedented change under way in the global tax environment. Recent developments, most notably the ongoing changes under the OECD-G20 base erosion and profit shifting, BEPS, initiative, will have a major impact on how the foreign direct investment, FDI, model will evolve in the future. It will have significant implications both for industrial and fiscal and budgetary policy. We have recently seen the publication of the G20 BEPS programme of work on global tax reform. The proposals, if implemented, as we think they will be, represent the most significant and fundamental changes in global tax policy in a century. Some of them, in particular, those that pursue a minimum effective global corporate tax rate, will pose significant challenges to Ireland's FDI based model. The decisions we make in coming budgets will probably be the most important for industrial policy for decades. For the moment, the FDI-driven growth model continues to deliver the resources we can use to help Ireland to transition to a new model.

Cumulatively, in the past four years we have taken in €14.3 billion in unexpected corporate tax receipts. That is the scale of the corporate tax surprise in the space of four years. The significance of this issue is widely under-appreciated in the public policy debate. The significant resources and investment this trend continues to bring to the country is a once in a generation opportunity to prepare for a future in which, ironically, other parts of the business investment toolkit will become relatively more important. Managed well, we could use these significant resources to ensure sustainable growth in Ireland's business substance, matched by improved public infrastructure, a thriving indigenous sector and improved standards of living for households. However, thus far, we have used the majority of the €14.3 billion corporate tax surprise to fund unplanned Supplementary Estimates. This trend has to stop.

Starting in budget 2020, we will have no choice but to follow through on the promises of previous decades and finally make a concrete effort to grow the indigenous enterprise base. It should include an intense focus on productivity, innovation, skills and helping companies to export early. The prospect of a no-deal Brexit adds significant urgency to this need and must provide a moment of clarity for all policy makers. We must make Ireland a much more attractive country in which to start and grow a business. We must also ensure the enterprise base in the future will be much more balanced than at present.

On infrastructure delivery, Ireland has a long history of focusing cuts on productive spending during a downturn. We now have an opportunity to break that cycle and deliver significantly improved quality of life into the future. We strongly believe any additional unexpected windfall in corporate tax revenues in future years should be set aside in a designated strategic investments fund which should be used to guarantee the funding of capital projects included in the new national development plan and other key pieces of national innovation infrastructure and provide much needed funding for the cash starved third level education sector. It is imperative that planned capital projects in the NDP be delivered as quickly as possible and that they do not fall victim to either administrative or process responses to recent high profile project overspends or the re-profiling of capital spending.

On the challenges presented by Brexit, it is clear that the risks to the economy and Irish businesses have not gone away. Many IBEC members spent millions of euro in preparing for the March and April Brexit dates. They have incurred significant business costs, many of which were unnecessary. We continue to hope the withdrawal agreement will be finalised and that an orderly Brexit can be achieved. However, businesses must also plan for the worst. They need to continue to make preparations for every scenario. The Government must also do more in order to provide clarity on meaningful mitigation and support measures that would be implemented in order to preserve jobs and enterprises in the event that there is a disorderly Brexit. These measures must be timely and substantive.

In summary, business believes budget 2020 will be one of the most important budgets in recent times. It must respond to the exceptional nature of corporate tax trends. This issue for the economy is probably more important than the risks posed by Brexit, to which we might come back over the course of our conversation. We want to see the budget provide for much stronger discipline in current spending to help to broaden the enterprise base and deliver much needed investment in infrastructure, housing, the education sector and innovation, all of which would help to preserve our future growth prospects and national prosperity.