Oireachtas Joint and Select Committees
Tuesday, 24 September 2019
Committee on Budgetary Oversight
Pre-Budget Engagement: Dublin Chamber of Commerce and Chambers Ireland
We are in public session. I remind members and witnesses to turn off their mobile phones. We welcome the witnesses and thank them for joining us. This is part of our pre-budget consultation process, feeding into our pre-budget report. From Dublin Chamber of Commerce we are joined by Ms Mary Rose Burke, CEO. She is accompanied by Mr. Eoin Quigley and Mr. Fergus Sharpe. Chambers Ireland is represented by Mr. Ian Talbot, who is accompanied by Mr. Aidan Doyle.
I draw the attention of witnesses to the fact that 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 the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a 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 they 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.
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 House or an official either by name or in such a way as to make him or her identifiable.
I invite Ms Burke to make her opening statement.
Ms Mary Rose Burke:
I thank the committee for its invitation to discuss the priorities and recommendations for budget 2020. Dublin Chamber of Commerce is the largest chamber of commerce in Ireland, representing over 1,300 businesses across the greater Dublin area. Our diverse membership base gives us a strong insight into the needs of both businesses and their employees, informing a holistic view of the commercial environment. Our vision is that Dublin will be globally renowned for its economic competitiveness and quality of life. We have a duty to our members to highlight issues of concern and the public policy changes that are needed to improve the business environment. As a civic actor, the chamber strives to do this in a way that supports the needs of the community at large. We are acutely aware of the challenges facing the business community and the Government in the face of a no-deal Brexit. The decision to base budget 2020 on a no-deal scenario is a prudent one in light of current uncertainty.
Deputies will notice that while some of the goals in our submission are ambitious, we have also outlined several targeted measures that could be more easily accommodated within the fiscal constraints of a single year, even a year such as 2020. The Government has a package of circa €600 million remaining unallocated in budget 2020. Dublin Chamber recommends the use of these resources to prepare for the challenges ahead by strengthening the fundamentals of the economy. This should involve supporting Irish enterprise, ensuring sustainable infrastructure and housing investment, and improving labour market access. Ahead of Brexit, the chamber has compared the environment for enterprise in Ireland with that of the UK. As outlined in our submission, Ireland now lags behind the UK on a range of metrics. Foreign direct investment is vital to the Irish economy but as the global environment changes, so too must our business model adapt, remaining attractive to foreign investors while avoiding excessive reliance on a small number of highly mobile firms. We need to foster an entrepreneurial environment and strengthen Ireland's indigenous base. This will require a step change in the level of investment by SMEs. Ireland's capital gains tax rate is now the third highest in Europe. The flat 33% rate still applies irrespective of the contribution of the investment to the economy. The same tax is paid on passive investments in large blue-chip multinationals as is paid on high-risk Irish start-ups. This effectively incentivises investment in large foreign firms over investment in Irish SMEs. We embrace the ambition of moving towards a 20% rate of capital gains tax for all unlisted trading firms. Conscious that this may have significant Exchequer implications in the short term, we have also outlined a number of targeted measures that could be adopted more quickly. These should be considered both as steps to improve competitiveness and as possible tax expenditure, as in a post-Brexit stimulus package. First among them is our proposal to outmatch the UK on capital gains tax entrepreneur relief by raising the lifetime cap on qualifying gains to €15 million. We have also proposed changes to the research and development tax credit, the taxation of entrepreneur dividends and the key employee engagement programme. While progress on all fronts is not possible in one fiscal year, there is scope within the budgetary parameters to send a strong signal that Ireland intends to sharpen its competitive edge in the face of Brexit.
Infrastructure and housing consistently rank as the most important challenges facing Dublin.
Joined-up thinking between housing and infrastructure development will be key to addressing Dublin's deficits in these areas. Projects such as metro north, the DART expansion programme and the eastern and midlands water supply are essential to ensuring a sustainable future for the greater Dublin area. The announcement of the national development plan was welcomed by the business community but it is critical that the Government follows through.
There is serious concern that in the event of a downturn, capital investment will be cut as has often been the case. Steps must be taken to guarantee delivery of the infrastructure improvements that the economy so badly needs. There are three practical steps the Government could take to ensure that, next time, it will be different. If economic growth dips below the level required to fund the national development plan, drawdown from the rainy day fund should be permitted to ensure steady delivery. This would meet the fund's short-term aim of economic stabilisation through stimulus while also building future capacity. All parties should commit to reasonable use of excess revenues. Last year, the corporation tax take was approximately €1.4 billion ahead of target. Raising current spending on the basis of unexpected receipts is a recipe for instability. Such revenues should be used to accelerate priority projects or to bolster the rainy day fund. The revenue from future carbon tax increases should be ring-fenced for green infrastructure investment. Dublin Chamber of Commerce fully accepts the need for the carbon tax while calling for a clear schedule of planned increases to ensure that businesses can plan and adapt in good time. Securing public buy-in will be difficult if the Government punishes carbon use without providing alternatives. Improving public transport is the place to start.
The final concern I will bring to the committee's attention is the tightening labour market. While this reflects a good news story in some respects, we must remain cognisant of the immediate challenges it poses to scaling businesses and the potential risk to Dublin’s competitiveness. There is still considerable scope to raise female labour market participation. The cost of childcare and the combined effects of the tax and social welfare system appear to have a depressing effect on the female labour participation rate. Addressing this would improve the situation considerably. Dublin Chamber of Commerce calls on the Government to focus on improving the universal component of the national childcare scheme in 2020 and to carefully assess the scheme’s incentive effects on labour market participation. We have also proposed for future consideration a returning to work credit to reduce the marginal tax benefit rate for second earners in a family who are returning to work.
We are conscious that budget 2020 comes at a delicate time. As the last budget before the UK's exit from the EU, it offers an opportunity for Ireland to demonstrate serious intent about business competitiveness versus the UK, as well as its commitment to long-term planning for sustainable infrastructure investment and improved quality of life. I thank members for listening and I look forward to exchanging views with them.
Mr. Ian Talbot:
I thank the committee for inviting us. I will share my time with Mr. Aidan Doyle, chief executive of Sligo Chamber of Commerce, who will add a regional dimension to the discussion. As many of the members of the committee will know, Chambers Ireland is Ireland’s largest business network with a geographic footprint that extends across the country, with 41 chambers, of which Dublin Chamber of Commerce is our largest. We were delighted to launch a new Laois Chamber of Commerce this morning, with approximately 350 people in the room. It is a vibrant network. Every member of the committee has a chamber of commerce in his or her constituency and will no doubt be glad to see their representatives at our network's event tomorrow morning, to which they have all been invited.
We welcome the Brexit-driven approach which the Government is taking to budget 2020 as a necessity and believe it would be foolhardy to take a business as usual approach. The first order effects of Brexit will hit certain exposed sectors of the economy such as agrifood and tourism where we know issues will arise as a direct consequence. The second order effects will likely have a broader impact, potentially depressing consumer spending in regional areas significantly. We think it is wise to assume the worst, to seek to leave the national balance sheet in as robust a position as possible and to be ready to respond.
Those in the business community who are most likely to be affected by Brexit have taken actions necessary to minimise its effects on their businesses, such as rerouting logistics in a way which is unlikely to change regardless of what happens next with Brexit. This has imposed additional costs on Irish businesses, which will continue, and assuming Brexit occurs, there will be further hits to the economy. This kind of external shock is likely to have a strong, immediate impact on our economic growth at the national level, the duration of which is unclear, but we have no doubt that we will all be collaborating to address the regional impacts of Brexit for a considerable time to come.
While Brexit consumes so much of our policy discourse, we must not lose sight of the longer-term challenges that Ireland will meet.
It was with this longer-term perspective in mind that Chambers Ireland formed its pre-budget submission, which is centred on the decarbonisation of our society and the necessary mitigation and adaptation strategies which follow from that.
While there is broad acceptance in the business community of the need for carbon taxes, it is vital that the proceeds of such taxes do not flow into the general fund. Over €400 million is already collected through carbon tax each year. We welcome the early indications from the Taoiseach that ring-fencing will be the Government's chosen approach. It is crucial that the current revenues and any future increased revenues are ring-fenced and channelled into schemes and infrastructure which will allow people to access lower-carbon alternatives. Increased carbon taxes which are not complemented with investment in grid infrastructure, public transport and retrofitting will have a disproportionate impact on poorer people and the more remote parts of the country. We believe that a schedule for carbon tax increases should be set out because this would help businesses to plan and budget for such increases and would bring greater predictability to the present value of energy-efficiency measures, thereby encouraging viable investment.
At an infrastructural level, our energy networks need to transition towards meeting the challenges posed by the growth in renewable energy sources while maintaining energy security and continuity of service. If our grid is to cope with the added demands that Government policy relating to e-vehicles and the full electrification of home heating will place on our electricity network, its generation and transmission capacity will need to be expanded. This will require considerable investment and needs to be a priority. Unless we can achieve this, we will not be able to meet our emissions targets and the related fines will continue to grow. We need to ensure investments which are in line with the principles of the national development plan are continued. Such investments, particularly in public transport, are necessary for a long-term reduction in our society's carbon intensity. As these investments will act as a countercyclical ballast against the economic headwinds that are before us, they will allow our economy to maintain momentum during difficult times.
Mr. Aidan Doyle:
As a designated regional centre of growth under Ireland 2040, Sligo is a city that faces the many challenges experienced by every urban area in Ireland. The economies of regional cities and towns have been undermined by a lack of planning and by underinvestment. This has contributed to the doughnut-type development that is continuing to happen in larger cities like Dublin and is leading to long commutes and suburban sprawl. We want to see this process reversed. The best kind of economic stimulus for towns and cities like Sligo is to have people working and living in the heart of them. The Living City initiative in places such as Cork, Dublin and Limerick aims to protect the Georgian parts of those towns by bringing life back to them. The initiative is a tax incentive scheme for special regeneration areas in Ireland's major cities through which tax relief can be claimed for expenditure on converting residential or commercial properties. We believe that the expansion of the initiative to Sligo and other regional towns and cities, with the extension of the initiative beyond the current May 2020 deadline, will enhance the regeneration of our regional towns and cities and will attract people back to live above shops and restaurants in buildings that are hundreds of years old. According to what we have heard from our members, that is the kind of living people want. The planning problems which make above-the-shop conversions almost impossible need to be fixed. Good local transport services, protected bicycle lanes, decent transport links and proper broadband are also needed. It is much easier to provide such services in town centres than to service mile after mile of new housing and once-off builds. It makes more sense for people to make their homes where we already have schools, water infrastructure, doctors and other government services then to have people driving 50 miles in and out to work each day and trying to serve the spread-out population at the same level.
Businesses in regions like the north west have higher energy costs and a larger carbon footprint. This makes the region less attractive to people who are seeking to set up business. One of the reasons for this is that Sligo is not linked into the gas grid. If we are to enable balanced regional development, attract new industries and allow industries that are already established to be competitive nationally and globally, Sligo and the north west need to have a similar quality of infrastructure to that available to more successful regions. In Sligo, we are working closely with the local authority, the agencies and industry on a compressed natural gas project, transported from the national gas transmission network. This will facilitate the move away from other more polluting fossil fuels, especially oil and diesel.
Without this facility, the region is essentially denied the associated cost savings, CO2 reductions and air quality improvements that CNG transport options provide by replacing diesel fuel for heavy road transport and aiding the transition to a low-carbon economy.
These are just some of the things that local businesses in Ireland are looking make happen, but our planning systems, including our marine planning system, and how we invest in national infrastructure will need to recognise this to facilitate of the kind of progress that we need. Life is for living, and our State organisations should be assisting regional cities and towns across the country, including Sligo, to develop and attract new investment as places where people want to work and live.
I did not expect to be saying this, but I agree with much of what the presentations contained, particularly the points made by Mr. Doyle about making Sligo a living city, albeit it a small one. I welcome the emphasis on transport but Dublin city is facing a crisis in which its very character is under siege, from financial and money people who are literally gouging the heart out of the city and making it as unaffordable for families as Manhattan. They are turning Dublin into a city that relies extensively on tourism for a huge number of jobs and, if it keeps going in this way, it will not be recognisable as a living city for families and other people, at least between the canals. We will kill the goose that lays the golden egg.
Co-living developments are being encouraged under the strategic housing initiative and we are seeing, every week and in different parts of the city, including Blanchardstown, co-living proposals for up to 210 bedrooms. The business spokespeople need to wake up about this type of development, which is imposing living spaces on people in their 20s and 30s, and perhaps in their 40s, 50s and 60s, for which the rent will be so expensive that they will never be in a position to save to buy their own home. We will have an end to the home-owning democracy in our cities and that is what Fine Gael will have delivered in government. If the presentation on Sligo applied to Dublin, we would recognise the need for a vibrant urban space with good transport systems and opportunities to walk and cycle and where attractive family living was possible. All these things are being driven out of Dublin by a superfinancialised model which is leading to the emptying out of the city.
Is the Dublin Chamber of Commerce concerned about the future of Dublin? Many venues, from theatres to pubs, are disappearing from Dublin, falling before globalised finance which wants to invest in Dublin because the rental returns here are bigger than the returns in a place like California. The chambers represent businesses and they probably know what this is like.
If Dublin Chamber of Commerce is seeking workers, in terms of being able to afford rents, people will not be able to live near where they are likely to work. A crisis is developing in Dublin. Has Dublin Chamber of Commerce a sense of that? I agree with much of the presentation, but to be honest, it is as if we are in the run-in again to the previous crash. We are now overdeveloping at a point where we risk bringing the whole thing down on everybody’s head.
Ms Mary Rose Burke:
I will respond to that one. We did a recent survey of our members and the cost and availability of housing is an issue for two thirds of businesses. Businesses are very cognisant of the impact of this on their employees. It creates great difficulties in filling open positions when businesses cannot find people to fill roles. The average national salary is €45,000 and the average Dublin rent is more than €2,000. Therefore, the asking price is out of reach for anybody on that type of salary.
We have put much thought into some of the solutions we can put forward on that. We know lack of residential capability in the city is putting a drag on the economy and will into the future. We know we need greater density. I agree with the Deputy, particularly in terms of within the canal cordon. Dublin Chamber of Commerce is always focused on both the economic and social well-being of the city and, therefore, the first element of a liveable city is about Dublin being an active walking and cycling city. It is then about a reliance on public transport once we get outside the walking and cycling distances. We know that even just adding one storey onto a one-acre site gives us 20 new housing units. We need densification in all ways, not just in height. We need greater densification and infill on brownfield sites.
In our submission we have identified quite a number of available sites that should be focused on such as the Jamestown Business Park in Finglas, the Dublin Industrial Estate in Glasnevin, sites near the Malahide Road in Coolock and a large tranche along the Naas Road. Those should be a priority if we are focused on areas along public transport routes. I agree housing is a critical issue for the economy and our individual businesses. The number one and number two issues are infrastructure and transport, and housing, which are raised constantly. They should not be business issues but they are. We have identified many proposals in that respect. On the issue of social housing, while the housing assistance payment, HAP, scheme and other such elements are useful, social housing provision needs to be accelerated by Government to increase the overall supply side with respect to the number of houses.
Mr. Ian Talbot:
Our submission focuses on countrywide aspects. In our detailed submission we have a very strong set of recommendations on housing. As business organisations, chambers of commerce are strongly connected to place-making in communities. We want to see the building of our cities and towns as places to live, work, educate and basically have a high quality of life.
As a Deputy representing rural Ireland with respect to both Dundalk and Drogheda in my constituency, I commend the members and staff of Chambers Ireland on the excellent work they do on behalf of business people and the community. I have always found it a go-to organisation during my time in public life. Equally, their contribution to the strategic policy committees and the overall development of my region is excellent and their help in response to public representation is superb.
I have a few questions. Will the delegates from Chambers Ireland and Dublin Chamber of Commerce set out for the committee the cost of the proposed budget measures they have put forward in their pre-budget submissions? They have dealt in their submissions with the issue of sustainable and affordable housing. What budget measures would they propose to implement to address that issue? Will the witnesses suggest any other budgetary measures that would be worth pursuing to help increase labour support?
I commend the living city initiative.
Is there a combined strategy among the chambers of commerce to ensure the various locations seeking the living city initiative, such as my own region of Dundalk and Drogheda, get it, and how is the work progressing?
I wish to briefly raise three personal issues. As you know, Chairman, I do not take the full five minutes allocated to me and I will not be coming back in. As a relatively new Dáil Deputy since 2016, I am also relatively new to travelling into a gridlocked Dublin. Are the witnesses looking at solutions to solve the gridlock on the M1? It is blatantly obvious to me from 6 a.m. I am anxious to hear what debates are going on about the movement of lorries and the gridlock not just on the M1 but on many other access roads. It strikes me that much of the traffic is heading to the port to coincide with ferry travel times. Have the witnesses considered what incentives could be used to get the lorries into the port at an earlier time that would help people who are trying to commute into the city?
My final two points relate to Brexit. Do the witnesses have a view on the need for an all-Ireland economic zone on the island to solve many of the issues relating to the Single Market and the difficulties with trade? Have the witnesses considered the impact of the proposed tariff regime that will be introduced in the context of no deal, and what impact it will have on their businesses? That would have a significant impact on the Border region. The type of goods we are talking about will impact on the business community in Dublin and the wider region.
Mr. Ian Talbot:
Deputy Breathnach used his few minutes very well and got in several questions. First, the thrust of our proposed budget measures is to keep the capital investment going. The capital investment has been clearly outlined. While we could debate which project should be in the capital plan, we are desperately crying out for investment around the country to make up for the ten-year gap we had during the recession and financial crisis. Our strong message is that no matter what happens we must keep the investment going and not have a lull. From that perspective, we feel there is very little financial implication of our budgetary thrust. We want to ensure we spend the money. In terms of what Deputy Breathnach said at the end of his contribution, that is a vitally important aspect of the Brexit debate as well, that we continue to ensure Ireland's ports, roads and airports, among other infrastructure, continue to facilitate the more complex trade that will arise.
We have a strong set of recommendations on sustainable and affordable housing. At a Chambers Ireland level we are seeking to come up with an overlay of the challenges facing the big cities and the growing cities under Project Ireland 2040, as well as towns such as Sligo, Athlone, Dundalk and Drogheda, which were allocated special status in the strategy. Deputy Breathnach will be very familiar with the work of colleagues such as Mr. Paddy Malone, Mr. Eddie Phelan and Ms Shona McManus in Chambers Ireland groups along the M1 corridor. We very much leave it to those local groups. Mr. Paddy Malone, for example, presented at previous discussions to the committee on the fantastic work his group is doing in those areas to grow the Drogheda-Dundalk corridor.
In terms of labour supply, Chambers Ireland has a very strong set of recommendations on an inclusive and future-focused workforce, including access to quality childcare and how we can encourage greater female participation in the workforce. That is one opportunity for us. We are very conscious that the shortage of housing creates difficulties in terms of people moving to jobs and also the opportunity to bring resources into the country to help us deal with the labour shortages.
I hesitate to come up with a view on an all-island economic zone. It is still developing. We are talking very closely to our counterparts in Border counties. It is great to have Mr. Doyle from Sligo and we speak regularly to our colleagues in Letterkenny, Dundalk, Drogheda, Cavan and Cootehill, among others, about the issues they face.
That is very challenging, so we are always as focused as we can be on the issues that may arise.
We have not looked at the detail of the impact of the proposed reintroduction of duty-free shopping from a national perspective. However, I would like to think that if we compare the level of trade activity Ireland undertakes with both the UK and the rest of the world in 2019 versus the level of economic activity and exporting it undertook in 1994, there are two very different numbers. I would hope it will not have as significant an impact as it might have had in 1993-1994, when I recall concern in the media that the loss of duty-free shopping would have a big impact.
Mr. Fergus Sharpe:
On the costings relating to the capital plans, those are largely outlined. Our focus on infrastructure is not so much on outlining new spending plans as suggesting fiscal measures that could be put in place to ensure that spending plans in the capital envelope will be delivered consistently as planned in the coming years. The lead feature in our submission has been in the enterprise space. For any proposal we have in that regard, to the extent that we have been able to cost it, a cost is included.
Our headline ask relates to cutting capital gains tax, CGT, for unlisted trading firms to 20%. That would start to compete with the UK, which has introduced a similar scheme called investor relief, specifically with a view to encouraging equity investment in its small and medium enterprise, SME, base. Thanks to a parliamentary question Deputy Quinlivan's colleague, Deputy Pearse Doherty, submitted for us last year, we were able to get an idea of the thinking of the Department of Finance on this and how much work it had done on it with a view to seeing where Ireland was in comparison with the UK on investor relief. We were informed that the Department is unable to calculate the cost of introducing the same scheme as the UK because tax returns do not identify the amount of the chargeable gains that are associated specifically with unlisted firms. Cuts in CGT and the cost for, say, every 5% or less are outlined in the Tax Strategy Group papers but those are static costings. It is worth bearing in mind that the whole point of this proposal is to have an effect on changing the pattern of investment towards unquoted firms rather than listed firms. One would need a dynamic costing rather than a static one.
We appreciate that it would probably have significant Exchequer implications in the short term, which is the reason, as Ms Burke outlined, we have suggested this as a goal to move to in the medium term while outlining a couple of more targeted measures that could be adopted in budget 2020 and in the coming years. We have led with entrepreneur relief. Our request to raise the lifetime cap on qualifying gains to €15 million, in the case of entrepreneur relief, would cost €84 million. Again, that is a static costing from the Department of Finance. The proposal relating to the research and development tax credit would cost €30 million. In terms of a reduction in the rate of income tax relating to dividends for entrepreneurs to 30%, we would be looking at a figure less than €95 million. I say less because we estimate that €95 million is what it would cost to reduce the rate of income tax on income from shared dividends in Irish resident companies universally to 30%. Limiting that to shares received by entrepreneurs or dividends from shares sold by entrepreneurs would limit it to a fraction of that figure. Further details are contained in our submission.
Mr. Fergus Sharpe:
Gridlock in Dublin is raised consistently by our members as a serious issue. It is worth pointing out also that it has a measurable cost to the economy. The Department of Transport, Tourism and Sport has estimated the annual cost to the economy of gridlock and traffic congestion in the greater Dublin area at approximately €350 million. That is due to rise to €2 billion per annum by 2031. When we take into consideration the impact of future carbon fines, the amount will be even higher. We have a range of proposals regarding the infrastructure projects we believe should be prioritised. Those are outlined in the infrastructure section of our submission.
We are also working with local authorities to try to promote investment in cycling as a means of addressing that.
I thank the delegates from Chambers Ireland for their contributions. I want to mention the chamber in Limerick in particular. It has been very successful and professional. It had a great impact on the revitalisation of the city.
Ms Burke stated that foreign direct investment is critical to the Irish economy. I agree 100%. She indicted that there needs to be a step change regarding SME investment. This may result in a more stable economy. Deputy Munster and I recently launched a policy on an Irish enterprise agency that would be similar to IDA Ireland but with a focus on SMEs. The idea was to examine the role of local enterprise offices and determine why some work really well while others do not. It is to have a more co-ordinated system. Would our guests have an opinion on such an idea?
I was interested in Mr. Doyle's comments on the Living City initiative. What pitfalls does he envisage? It has been in Limerick for a number of years. It has not been very successful. We would like to know what could be done to make it better, not just for Limerick but also for other regional cities and towns, such as Sligo.
Gridlock is a massive problem, as other Deputies stated. I do not drive to Dublin because it is quicker to use public transport. I can walk to the local train station in Limerick and get the Luas when I get off in Dublin. I drove to the Dáil from Limerick once or twice and noted it takes much longer than public transport. Therefore, we should consider enhancing public transport.
The main topics we are talking about, namely, Brexit and climate change, have been identified clearly in the submissions. They are probably the biggest generational challenges we will face in the coming years. How do the delegates square their comments with their call for a reduction in capital gains tax and their comments on dividends and tax cuts? We do need investment.
A detailed submission shows that only 10% of the members of Cork Chamber of Commerce believe tax cuts should be the emphasis in the budget, whereas 40% indicated that there should be an improvement in public services. How can one improve public services if taxes are to be cut? Dublin Chamber of Commerce has called for the extension of the special assignee relief programme, SARP, regime to SMEs. It is a terribly discredited regime. It gave people who earned over €100 million in 2016 the benefit of the tax break. Tax breaks worth €18 million were given to very high earners. How do the delegates envisage the extension of the scheme to SMEs benefiting a country facing a hard Brexit and a serious climate change crisis?
Ms Mary Rose Burke:
I will address some of those comments and then ask Mr. Quigley to respond on some of the issues. Foreign direct investment has been industrial policy since the late 1950s and into the 1960s and it has been very successful. Our foreign direct investment is probably responsible for half of our economic output and approximately one third of the jobs. While over 99% of the enterprises in the country are SMEs, they employ in the region of two thirds of the people. The Future Jobs Ireland report has identified a number of areas that need to be addressed, and we are working with businesses to identify them in respect of the use of technology, particularly, and productivity. The aim is ultimately to make the businesses grow. There are, however, institutional barriers. We need to identify those SMEs that need support to grow, not the SMEs that do not wish to grow. There is a certain cohort that we need to identify in order to support its ambition to grow. We have a number of proposals in place to deal with it. Mr. Quigley will talk us through those.
In the longer term, we need to broaden the economic base in terms of jobs and economic output while not dialling down on foreign direct investment. It is more about increasing the productivity of our SME sector. I will ask Mr. Quigley to talk about some of the specific initiatives we have described in the proposal.
Mr. Eoghan Quigley:
What we are looking at are targeted approaches to supporting enterprise. Deputy Quinlivan referred to the comments of members of Cork Chamber of Commerce on tax cuts. We had similar comments from our members, who would prefer investment in infrastructure and housing to tax cuts. There are different forms of taxation. Our income tax regime is broadly based and highly progressive. When it comes to corporate taxes, our key ask is to apply a lower tax rate, of 20%, to certain types of gains.
We have sought to target those in areas that will help to broaden the economy. Irish entrepreneurs are subject to a tax of 33% on all gains. The UK, our closest neighbour, has a 10% tax rate applying to gains of up to €10 million. We feel that is a disadvantageous net position. Increasing our entrepreneur relief up to, say, €15 million, is based on a static costing model. It has been found before in the past that when capital gains tax rates were reduced by a Fianna Fáil Government and the then Minister, Charlie McCreevy, the capital gains tax take actually doubled.
Reducing capital gains tax brings it back into being subject to tax. When entrepreneurs sell their businesses and structure it in a way that capital gains tax arises or does not, they can choose to stay in Ireland, reinvest and be serial entrepreneurs or go abroad and not pay tax here at all. When we talk about tax reductions, we are talking about targeted tax reductions to help stimulate and support a small constituency that is contributing to the broadening of our base. What we have done brilliantly in this country over the past 60 years is to embrace foreign direct investment, FDI. There are many headwinds in that space. We are trying to focus on being proactive in supporting our indigenous entrepreneurial bases. With the headwinds coming in with international tax changes that will run against Ireland, we will have to embrace what we can control. We cannot control international tax policy changes but we can control how we treat our domestic entrepreneurs. The targeted measures we are looking at are improving entrepreneur relief and as, Ms Mary Rose Burke said in her opening statement, applying a lower rate to investment in small and medium-sized companies. That is designed to focus activity in active companies that are contributing to employment and the robustness of our economy. While they are reductions, we feel they are productive and focused which, based on experience, would yield more tax than net costings.
Ms Mary Rose Burke referred to the potential phasing in of some of these measures. Since there is some fiscal space in the current environment and the experience of capital gains tax reduction yielding more tax, we suggest there is merit in embracing these changes and seeing what impact they have on the economy.
There are other certain measures on which we have focused such as research and development tax credits, along with an upfront cash refund to small and medium-sized enterprises that are always in a desperate need of cash. That latter proposal is costed at €30 million but would be stimulative.
Particular aspects of the special assignee relief programme, SARP, have been referred to and have been widely covered in the media, with uses of it to deal with high wages. Our submission proposes applying SARP to small and medium-sized enterprises that are seeking to compete with the multinational sector. The latter are exciting and brilliant companies that can offer their employees share options, large remuneration packages and job security. Jobs in the SME sector cannot advertise in the same way.
Sorry, I am jumping around slightly. We have referred to some measures to improve the KEEP regime to make it more applicable in helping to attract employees into those SME areas, but on the SARP side there is a war for talent in our city. We are in very good economic condition but, again, the multinationals have the ability to pull in foreign talent, which helps develop and embed their businesses in Ireland. What we are asking for is a level playing field for our SMEs to bring in talent to help our SMEs get established. The number of people who have availed of SARP at the €1 million level referred to would be relatively small. SARP is a very valuable relief for many businesses. In looking to apply it to SMEs, I would say very few if any SMEs would look to pay people in excess of €1 million. SMEs are looking to bring in key talent, and in getting that level playing field there is a question of fairness and what it can do for the economy in embedding the SMEs and supporting them. That is well worth considering.
Mr. Ian Talbot:
Yes, please. I thank Deputy Quinlivan for his comments about Limerick. It is a very good example. Limerick County Council under Mr. Conn Murray and the local chamber are working together, which has certainly helped, and Limerick is looking great these days, so well done to all concerned there.
Regarding the concept of help for our SMEs, yes, there is a gap where the IDA is helping FDI, Enterprise Ireland is helping a limited number of high-potential start-ups, and the LEOs are down at the county enterprise board-plus level. The one thing I will say is that what we are working very closely at, as an organisation, is trying to make sure that our chambers come forward with a single message in every county. The message is one of looking for investment and engagement with the local authority and the LEO in the chamber's area. We see that there is real potential for LEOs and the chambers working together with local authorities. I would potentially have a concern just about a new organisation with new funding actually pushing chambers out. As a chamber network, we are called a not-for-profit. It is a frustrating description because we have to go out and encourage members to join and pay us money to do the work we do. We do not like to see ourselves frozen out by additional State investment in an area where we think we can really help. Yes, there is room for it, but we would like to think that the structures are potentially already there if we give the right signals to the committee's network of State organisations and our network of chambers to work together to invest in those areas.
Going back to the M1 issues and so on, this is why in our submission we have really focused on the need to continue to invest in public transport. I was delighted to see that this week Iarnród Éireann has been able to invest in capital stock for the first time in ten years. In response to Deputy Breathnach, I live in Malahide, so I see the Dundalk trains coming in and how jammed they are and I see people leaving Malahide and driving into town every morning and I wonder why they do not get the DART. To some extent, however, they do not because at key times there are not enough trains or they are very full. Therefore, that critical investment to make the most of infrastructure we already have and the need to keep putting in new structures, such as the new metro project, are vital for us in ensuring we learn as we build out growing cities under the national planning framework, Project Ireland 2040, and ensuring we learn from what Dublin did right and what we could have done better.
Regarding Brexit and climate change, tomorrow Chambers Ireland will bring out an announcement that all our chambers around the country have signed up to a pledge on the sustainable development goals. As a network going back to our community base, we are very focused on the need to drive business forward on climate change. I ask the committee to consider, for example, the necessary changes we will need to make in our grid, the types of fuels we use and the potential to retool people around the country to work on climate change projects rather than traditional power generation projects. Tying in to that, we need to encourage entrepreneurs and increased enterpreneurial activity. We need to encourage people to go out with new ideas, start up new businesses and so on.
We have been very focused on infrastructure this year, but we will always, in the background, have things that we need to encourage our entrepreneurs. We encourage people to become entrepreneurs and have a go, thus generating more employment and some additional wealth that we can push into the economy. My colleague, Mr. Doyle, may wish to talk about the living city initiative, LCI.
Mr. Aidan Doyle:
Yes. We would like to broaden the remit so the initiative covers not just old buildings but also long-term vacant commercial and residential properties. I know from working in the Atlantic economic corridor, AEC, on the west coast that a lot of the urban towns and cities on the AEC regularly appear high up on the vacant property statistics. That is one of the reasons we believe that the initiative not only should be extended past May 2020 but also should be rolled out in other urban towns and include the long-term vacant commercial properties.
I wish to clarify what I said about an Irish enterprise agency. It is not to displace the chambers but to strengthen LEOs, which I believe do very good work in some areas but not in other areas. Some business people I have met have told me that they struggle with LEOs in some parts. I have also met some business people who told me that they approached LEOs but did not get any help. A more co-ordinated approach is needed to strengthen the economy so that we are not totally reliant on FDI, although I know it is crucial I thank the witnesses for their responses.
On the issue of taxation, is this the year or the budget to be contemplating introducing tax relief, whether in the form of entrepreneurial relief, capital gains or whatever? We have been having Brexit debates here virtually every week, if not every day, and last week the key issue arose of what the Minister, Deputy Donohoe, did last year with his €300 million and what may have to happen if we still get a massive hit to our revenues of maybe €6 billion in the following year, today's encouraging news notwithstanding. Should we be thinking along these terms at all of introducing tax relief? The witnesses mentioned capital gains and the Charlie McCreevy era, but that was a fundamentally different era and the world has moved on very seriously since then. To echo the Minister in some respects, is it not time to be prudent on taxation?
On wages and the demand side, what does the chambers do to encourage members to pay a living wage or to move towards that level of wages in, say, the vast area of service firms on the high street that we are familiar with? Has the chambers a policy of encouraging companies that are doing quite well to pay workers a premium and therefore stimulate demand? Obviously if people are better paid, they have more money to spend in the economy. Is that something the chambers has given any consideration to?
On decarbonisation, I am sure chambers has members around the country who are in the car industry. Do the witnesses think that they have done enough, or have they done anything whatsoever in many cases, to encourage people to move towards buying electric vehicles, hybrids or whatever? We have heard from the Society of the Irish Motor Industry, SIMI, one of chambers's sister organisations and a motor industry body, that the 2030 targets are simply impossible and that we could not be like Norway and roll out 90,000 chargers, or whatever it is that the Norwegians have, or that kind of encouragement in that regard.
The witnesses mentioned indigenous business.
Obviously indigenous business can be very heavily impacted by a reliance on the British market, North-South trade and so on. There is a link with FDI because many companies have flourished due to being contractors and provided cleaning and all kinds of services to Google up the road and so on. The organisations have echoed the Taoiseach by calling for hypothecated taxes. We have not had such taxes before. Most economists would now say that there is a strong case for doing so. A lot of us are concerned about poorer households. It is great for us to move towards the 2025 or 2030 targets. However, the levels of fuel poverty that we have seen in the past, which affected between 15% and 20% of the population, are so profound that we cannot afford to leave poorer households behind.
Lastly, we should strive for the cities of Sligo and Limerick, and all of our great cities around the country, to become vibrant regional centres and that Dublin becomes a world-class capital. Recently I was struck by the fact that a certain European capital that is only one third the size of Dublin has, unlike us, a tram service to an airport. The tram line was built in the last couple of years without hysterical debate. Much of Dublin city does not have a fixed line. We still wait for a Luas to be built in Cork city and Galway city.
Ms Mary Rose Burke:
We consistently lobby the Government and all of the Departments on various elements of infrastructure. Infrastructure is the building block for a competitive city in the future. We work under the umbrella of Dublin 2050. I mean we try to envisage what a competitive city in 2050 will look like and what type of city people will choose to live in, work in, invest in and visit. The elements that make a competitive city are very multi-layered and touch on areas of place and so on, as mentioned by Mr. Talbot. It is very much seeing where the competitive cities are and what is it that they do well. When we identify competitive cities they, typically, have a very good public transport system plus affordable and accessible housing. It is no surprise that the business community has identified these aspects as the biggest challenges.
In terms of the tax issues that have been mentioned and whether this is the budget in which to do so, we are very much in the space that it is important to have a prudent budget but, equally, we must be careful not to wear Brexit goggles. Come what may with Brexit or changes in America or the East that influence global investment, there will always be challenges. For a small globalised country we have to very much consider what is within our control and what we can do about our competitiveness and attractiveness as a place in which to live, work, invest in and create jobs. Mr. Quigley went into some details about some of the tax measures, particularly to support entrepreneurship that would very much help competitiveness, create jobs and help sustainable businesses here in Ireland. It really goes contrary to the national interest that we incentivise people to invest in bluechip companies yet not invest in indigenous Irish companies that need investment.
The ESRI has identified in a report that about €1 billion has been missed in terms of investment in SMEs if they were to operate at the same level of productivity and innovation. We know SMEs want to invest in research and innovation but they cannot do so because cash is tight and, therefore, we have brought forward measures to stimulate that type of activity. We need that level of job creation, research and development, and innovation to build out a sustainable indigenous business base that will protect us regardless of the challenges. There is a risk of a very competitive UK and it is already more attractive than us to entrepreneurs. Whether the UK stays or leaves we need to look at what is within our control. Perhaps Mr. Quigley wishes to build on the specifics of that.
Mr. Eoghan Quigley:
Ms Burke has covered everything. The Deputy mentioned that prudence is required. I think everyone will agree with him on that but this is also a time to be proactive.
In terms of Brexit, the UK has a wonderful regime that supports entrepreneurs but it also has a more favourable personal tax regime for Irish entrepreneurs who might want to set up a location in the UK.
In preparing for Brexit, who knows what way it will go? We are exposed in this area, however, because the UK authorities have moved to make the UK much more attractive from a taxation perspective in recent years. Its corporation tax rate is 17%. The UK economy is much larger than our economy and its corporation tax rate is getting closer to our 12.5% rate. To a certain extent we have to mark our closest neighbour in preparing for Brexit because if the UK gets clear of the European Union, as many politicians in the UK wish, it will be free from many of the state aid restrictions that apply to us. We can introduce certain broad based targeted measures to apply to SMEs. In one sense, I would use the term "proactive" rather than "prudent". They are not imprudent and when one gets away from static costings, I have a strong belief, with which most economists would agree, that these targeted capital gains tax measures we are suggesting will yield more tax that they would cost us.
Mr. Ian Talbot:
I thank the Deputy for the questions. We all become frustrated by those who do not join organisations. Our collective membership across networks is about 10,000, which means that 190,000 companies or trading enterprises are not members of Chambers Ireland. We possibly appeal to certain types of companies. Different policies work at different times.
Tomorrow, we are bringing out a pledge that Chambers Ireland will adopt the sustainable development goals. Issues such as quality of work are key components of that. We are focused on that area.
On the car industry, we are all looking at the numbers for 2030 and the very substantial change we need to make. A key point is that alternatives exist to which people can migrate, but there is a very serious concern that there are not enough charging points for electric vehicles and there are issues around hogging of charging points and so on. In the past 12 months, I have been to Norway and Finland where I looked at the relative performance of those countries. In Norway, every second car is an electric car. This is based on a combination of factors. First, a wide range of incentives is available to encourage people to buy electric cars, including free parking and significantly reduced taxation. In addition, most houses already have a charging point because people plug in their cars during the winter to keep the battery protected. Norway already had an infrastructure that coincidentally enables it to roll out a significant number of charging points very rapidly. That is something we do not have, which presents an extra challenge for us. We need alternatives and we need some sort of carrot and stick incentives. We need more carrots. There is the question of expense. Electric cars for the mass market still look very expensive and until more people globally start buying electric cars and the production lines get more efficient in bringing the prices down, we are facing a challenge. While it is a major challenge, we cannot ignore it and we must continue to make progress. We must make tough decisions on this.
Fuel poverty is a concern and we need the grid to protect the poorest in society who will be disproportionately affected by the imposition of a carbon tax on a bag of coal. We need to invest in the grid infrastructure and alternative technologies to bring forward the opportunity to ensure we can either subsidise people who are challenged or provide viable alternatives.
A major bugbear for Chambers Ireland as a network is that we are constantly calling for capital projects to be delivered as there are constant challenges around finding the investment and with the planning process with projects being deferred. For example, Cork Chamber was very vociferous when the Dunkettle interchange project, which is vital infrastructure for Cork, was deferred for a year. When we explored this issue, we found that an argument can be made that the procurement system is working because the system was saying that we needed to re-evaluate this project to ensure we are getting value for money and do not end up with a big cost overrun. The clock is ticking on all these projects.
Infrastructure projects, such as those relating to more tram lines, DART underground and so on, are not happening quickly enough in Dublin and other cities. Our population is growing and people's quality of life is being impacted upon. This is an enormous issue for us and, to be honest, I think we are all on the same page in respect of it.
On the research and development tax credit, given the limited amount of money that may be available for any discretionary budget measures,
why does Chambers Ireland not argue for redirecting some of the research and development funding that is currently disproportionately benefiting a small group of IT companies and big multinational corporations rather than seeking an extension of the research and development element to those who are not getting the funding? The research and development tax credit has absolutely ballooned to approximately €700 million and, overwhelmingly, this money is going to a handful of multinational corporations, the names of which names we are all familiar with. In the interests of developing a sustainable economy, should that money not be redirected towards SMEs and public universities rather than being extended to another group of people? I am of the view that it should be redirected. I do not see why Apple should get a research and development tax credit for coming up with the latest upgrade to its iPhone 11 Pro. Directing money towards such an upgrade should not be a priority. Why do we not invest the money in projects that will benefit the domestic economy?
To follow up on what Deputy Broughan stated, would our guests agree that any consideration the Minister for Finance might be giving to holding back on social welfare increases or introducing measures that might reduce the spending power of ordinary working people is completely wrong in the face of Brexit or a possible international recession? Should we not be boosting the purchasing power of ordinary people because that would benefit Chambers Ireland members and also prevent suffering and hardship being visited on ordinary working people as a result of economic turbulence or difficulty?
I welcome the comments on public transport, childcare, infrastructure and so on. Will our guests elaborate on those? What do we mean when we refer to investing more in public transport in order to tackle climate change, alleviate congestion, etc.? We should move to free public transport because that would really encourage people to abandon their cars. There must be far greater frequency on public transport routes, greater reliability and public transport routes that are run on a not-for-profit basis. The latter could be operated in areas where they are not commercially viable, in the narrow sense, in order to get people to use public transport. Do our guests agree that we need to heavily subsidise public transport systems? One could make the same argument about childcare. What do they have to say about the blight of vacant shop units and vacant accommodation units above shops? What should be done to prevent such units becoming vacant? There are units on the main street in Dún Laoghaire that have been empty for years.
Mr. Ian Talbot:
I am no expert on research and development. Perhaps Mr. Quigley will elaborate on that. The Minister for Finance has choices to make in the context of social welfare. During these proceedings, we have prioritised Chambers Ireland's perspective on the need to invest in infrastructure. We wrote our submission several weeks ago. As matters in the UK have continued to evolve, we have become increasingly aware of the need for a Brexit-focused budget and to retain HAP investment as a core principle. We have not formed any views on whether social welfare payments should be increased.
We just focus on what business is looking for in order to maintain a strong business environment and ensure that businesses employ people, generate revenue and pay taxes, VAT, PAYE, PRSI, etc.
Across our network, we have significant and consistent asks in respect of investment in public transport. We have consistently gone out and done things such as the DART underground and metro north, which has evolved into the metro project.
On the need to service particular areas, I will stray into Dublin's expertise because we can learn from its experience in developing other cities. I refer, for example, to BusConnects and how that will evolve. Much of this comes back to the need to continue to secure investment in order to continue to invest money in these projects, which Chambers Ireland will continue to support.
We need to ensure that the planning system is capable of ensuring we can deliver these programmes in good time and at a reasonable expense. The committee will be familiar with the DART infrastructure. Iarnród Éireann still has plans, including that which would involve moving the northern line to the docklands. We need to go ahead with these things and explain to people what they will mean. People might be slightly discommoded in the context of making the journeys they are used to, but we need to explain that because we are going to live in a sustainable fashion into the future, we need to detach ourselves from cars and have the right public transport infrastructure in place. It is for this that Chambers Ireland has consistently called.
We have some recommendations on vacant shop units. We are equally concerned about them. It is not just in Dún Laoghaire, where there is a prominent shop-----
Mr. Ian Talbot:
No. It is a lovely walk through. There is great variety on that street now. Large stores are being left vacant in other areas and this is causing concern for some chambers. It is very much an issue, and it goes back to our desire to see town centres grow and thrive and communities created. We are very much in favour of measures to ensure that many of these matters will be progressed.
Mr. Fergus Sharpe:
On the prudence point, I do not think we are suggesting that the aim of budget 2020 should be to hold down purchasing power. In terms of the unallocated budgetary package available, there is room to adopt targeted measures in a couple of different areas. We proposed several for consideration in the area of enterprise. In terms of the cost of living, which is the broader issue for the committee, the main aspect does not relate to wage costs. The labour market is quite buoyant, but there is a focus on it because of the high cost of living due to issues such as housing and public transport.
On the specifics relating to public transport, there are other cities in which free public transport services can and have worked. I am not sure whether Dublin can adopt that on a large scale just yet. The main problem for Dublin is that the necessary infrastructure is not in place rather than it being a case that there is a price issue for the average commuter. That is why we have detailed a lot of projects that we think need to be prioritised. I refer to what is now called the DART expansion programme, which relates to a number of improvements to the system over several years. The underground element, the DART interconnector, has been talked about in one form or another since 1971. There has been virtually no progress half a century later and it has been subject to multiple plans, revisions and postponements. It is now being looked at again for some sort of lower-cost technical solution. In the absence of any progress on that, we would like to see progress on other elements of the expansion programme. We want to ensure that we do not do the same thing with MetroLink and that, at the least, the northern element of that project will be delivered.
In terms of the research and development tax credit, our short answer would be that it is not an either-or. There certainly is an SME need for it.
I will defer to Mr. Quigley for the specifics on research and development tax credits.
Mr. Eoghan Quigley:
The question was broadly on retaining the credit and the Deputy mentioned costings of €700 million. He asked why we should incentivise Apple in its creation of the iPhone 11. The overall contribution of foreign internationals to our economy has been quite spectacular. We are a small peripheral economy on the edge of Europe and the multinationals located here and spending money here have been the bedrock of our economy. In the past number of years, the focus has been on having real substance in countries. Given that we want to be a knowledge-based economy, in order for us to attract that substance we need to attract the development of intellectual property, IP, because it is with IP that jobs come. The €700 million cost in tax is exceptionally good value in terms of the jobs it brings into the economy. The credit is for qualifying expenditure, which is typically expenditure on high-paid, skilled workers. Multinationals typically have a cluster of people and will bring further projects, or the skills will already be here and available for the SME sector and the broader economy. The sum of €700 million for the research and development credit is extremely good value in helping to embed multinationals and it should be protected.
Our submission focuses on making research and development tax credit more attractive for SMEs. For early stage companies, the most important thing is cash. The tax credit offsets against corporate tax for the larger multinationals but SMEs often do not pay tax. They typically get a staggered payout, over three years, of the tax credit against PAYE but we suggest bringing this forward. We also suggest lifting the 25% credit to 30% for SMEs to support the sector. Instead of its cost, we should consider the stimulative impact of research and development tax credits on the economy.
On the question of housing, do the witnesses accept that there is a big problem with gentrification? To put it even more dramatically, I could talk about the social cleansing of areas like the inner city, as well as some suburbs such as my area. This is because of the punitive and exorbitant cost of rent and home purchases and the lack of social housing delivery from the Government, leading to the crowding out of sites by cuckoo funds who go on to rent properties out at exorbitant prices. Do the witnesses accept that this is a problem that needs to be addressed?
Ms Mary Rose Burke:
The biggest issue is the lack of housing supply and the fundamental cause of the problem is the fact that there is more demand than there is supply. We need a multifaceted response. A vibrant city, and global capital, needs a mosaic of different types of housing for the variety of people who live in the city. I was a student in the 1980s in Dublin and I compare those days with the vibrancy of now. Nobody wants to go back to those days but this is what happens when the population jumps from 3.3 million to 4.7 million. We have a massive demand for housing without the associated public policy that provided a house for everybody. At the sharp end, we see homelessness and the reliance on social housing and measures such as the housing assistance payment. We do not think that is the long-term solution and believe the Government should build houses for social purposes across the country, particularly in Dublin.
I thank the witnesses for their attendance at the committee. I will not go over areas that have been discussed already. Brexit is the key issue dominating all of our days, and sometimes our nights, and today has been a particularly incredible day and one we will study in the coming years. Ms Burke is correct in that we can only control the things that we can control. We have to look at our own preparations and how best we can, with the limited resources we have, buffer our own businesses and protect our citizens as best we can because even in the event of a deal, we will still face considerable challenges due to a change to the trading environment. While there might be some bumps for Dublin in terms of, say, financial services, for the rest of the country it will be a challenge for us. I am very glad to see Mr. Aidan Doyle here, representing the west, which is where I am from. I am in a very rural constituency in Mayo, so I am a neighbour of Mr. Doyle. There is a particular concern around the regions in the event of Brexit but even more generally, as Dublin continues to grow and struggle with the challenges of a fast-growing city, the regions are finding it difficult to compete.
I was in Sligo over the weekend, which has come on a good deal in recent years. The development around the Garavogue is very good. There is a good theatre and a lot is happening there. A good technology industry is being built up there also, which is really exciting. Chambers Ireland mentioned in its opening statement Ireland 2040. It is the hope of the entire western region that Sligo will grow and that we will all grow together as one region. I am sure the delegates from Chambers Ireland will recall the final draft of Ireland 2040 did not include Sligo. It is meant to be the final draft and there was not supposed to be a great deal of tweaking at that point. It was compiled after a long process of consultation and all Ministers having their say. I was gobsmacked when I looked at the map in the final draft and saw there was nothing in it for the north west. There was nothing in it north of a line one could draw from Galway to Dublin. We fought very hard to get a regional growth centre and it was a good win for the north west to get Sligo on that map. I hope it will pay dividends not only for Sligo but for Donegal, Mayo and Leitrim and that we might grow together.
In terms of the infrastructural demands for the north west, there are complaints in Dublin that the DART is overcrowded and the Luas is too slow but we do not really have public transport so that is our biggest complaint. We do not have motorways. We have the odd dual carriageway and even our national routes are of poor standing. From Chambers Ireland's perspective, what are the priority infrastructural developments for the north west to assist it to grow?
Chambers Ireland referred to the problems in the planning process. Could the delegates give more detail as to what those issues are? To take the example of the proposed Apple data centre in Athenry, it has thrown open some challenges. Much of that related to the court system in that the appeal process and even moving through the court system are quite slow. Are there other issues in the planning process that could be addressed in the short term to make it a bit easier to move the planning process along?
I met IBEC West yesterday in Medtronic in Galway and a large number of multinationals were represented at that meeting. The key message from all of them was they are struggling to attract and retain talent. Housing is a factor. They are finding it difficult to house people. They are also are finding it difficult to attract and retain people with engineering, science and mathematics qualifications. From Chambers Ireland's perspective what could we do in budget 2020 to address the talent issue?
Mr. Aidan Doyle:
Brexit is a challenge. We do not know what will happen but we envisage there will be much more traffic coming down through the west coast, especially in the north west rather than going through the North when, for instance, the destination is Dublin Port.
There is an opportunity for the north west in terms of opening up and expanding the ports, for example, in Killybegs and down as far as Foynes. The biggest challenge with Brexit is connectivity on the west coast.
The planning process is another issue. It has taken a while for development to be established again in places in the north west and the west. Nothing really happened from 2006 on. However, things are now starting to happen. The word "vibrant" was used a few. It is very important that towns such as Castlebar in Mayo and towns in Sligo and other counties are seen as vibrant when companies are looking to invest in them. The first thing companies look for is that the town is vibrant and that people are living there. The planning process must be relaxed a little in that regard. Reference was made to people living above shops. It is very important that it is easy to get planning to allow that to happen and that there are incentives, such as the Living City initiative, in place.
Mr. Aidan Doyle:
That initiative must be extended to rural cities and towns. The schemes cannot be restrictive. I am aware that are properties that have been vacant for some time. It is important that we push the agenda.
From looking at our members, we are aware of the demographics of the people who are looking to move to the west and north west and that they want to live in the cities. The talent is there. In that context, it is very important that people have access to education. IT Sligo, Galway-Mayo Institute of Technology, GMIT, and Letterkenny IT have come together and will be applying for technical university status next year. That is key to it, not only so that we will attract more talent but also in order that we will have talent available for the next five to ten years. It is very important that the issue is addressed and that education is available to access.
Mr. Ian Talbot:
I am sure the Deputy will recall that Chambers Ireland and its member organisations in the regions were very strong on the final draft of the national development plan in the context of having Sligo, Dundalk, Drogheda and somewhere in the midlands included in it as well. We share her concern in that regard. Mr. Doyle dealt comprehensively with the specific issues relating to the north west. In terms of planning, there is a danger that when one comes up with a good idea that is to be implemented, that when one puts planning down as a concern and one is asked what could be done to change it, it is clear that it is very complicated. The situation in Athenry was ultimately about the length of time it was taking-----
Mr. Ian Talbot:
-----to get through the courts process. The project was ultimately approved following a ruling of the Supreme Court ruling but by that stage the investor had moved on due to being weary of the process, which is understandable. Some of that was due to the fact that there was a lack of ability to control a situation where someone on one side of the country might object to a project on the other side of it.
Mr. Ian Talbot:
Ultimately, the original ruling was overturned but it took time to get through the court process. There were constitutional issues concerning limiting who could object. That was a challenge as well. We accept that it is very difficult, but we have some recommendations on how the Land Development Agency, for example, might be given more powers to compulsorily acquire land. This would deal with specific challenges we face in respect of vacant sites. Unfortunately, it seems that there is no quick or easy solution. It is clear that planning is a bit like Brexit, in that if the ideal solution was there, somebody would have thought of it by now. It is a big worry for business given the amount of time, effort and energy that is invested in the planning process, the risk one is taking and the money one is spending, and the weariness of people who have an idea and who want to get on with it.
Ms Mary Rose Burke:
I will add a couple of comments. I am conscious that the Deputy's question was very much rooted in matters relating to the north-west region. One of one of the initiatives we undertook in 2018 was a national conversation whereby Dublin Chamber of Commerce was involved in sending a roadshow to the other cities listed in the national development plan.
The roadshow went to Waterford, Cork, Limerick and Galway asking what did they want for and from their capital city. The upshot was a shared understanding between the cities that the issues facing cities as centres of economic growth were similar. Housing and transport were issues for everybody. So too was attractiveness as a place to bring talent. In a knowledge economy, the jobs follow the talent.
We also look at the position internationally. We understand that the cities and urban areas that do well are those that have academic, business and political leadership that come together with a vision for the area, and take the long-term view.
I certainly understand the frustration. Deputy Boyd Barrett mentioned empty shops. By the time one's main street has empty shops on it, that is merely an outcome from previous policy decisions. Typically, when one examines towns where that has happened, one will see that the cinema, swimming pool, schools or supermarkets all moved out to the edges. Retail is a footfall feeder, not a footfall driver. By the time one's main street has empty shops, the issues have happened 30 years beforehand. We need to learn from where measures have worked well and how we plan our urban centres.
We also need to have a grown-up conversation about the future being urban in Ireland. The international and global trend is towards urbanisation. City regions will be the economic hubs for their areas and how we support them properly.
We are clear that Dublin does not compete with Galway, the mid-west or any other area. Rather we are competing with other international economic centres. If something is lost to Dublin, it is lost to the country. It is not available for disbursement around the city. We need to pull together.
We are finalising a big piece of work that we will be sharing with various Deputies on countries where the capital city is successful and where the reputation of the city internally is strong. There is a number of issues around city regions, urbanisation and that leadership, but also decrying a current problem without understanding the root cause that, typically, has happened 20 years ago.
I thank Ms Burke. We are almost running on time for this part of our session today. I thank the witnesses for coming in. I thank all the Deputies who engaged with them. It is very much part of our process, building towards our report which we hope to have finalised towards the end of this week. With that, I will conclude this part.
I propose we suspend for approximately five minutes before commencing the next session.