Ms Deirdre Donaghy:

It goes as well to Deputy Doherty's points on it. There are two separate parts of who is engaging. If you have the smaller companies there is certainly more of a financial pressure on them to try to do research and development because with research and development, in order to meet the definitions that are there, you have to be trying to resolve an uncertainty, so there is no guarantee anything beneficial for your business will come out of it. It is a much higher risk than investing your business's money in something you know for sure will deliver a return, albeit possibly a smaller return than if your research and development works out for you.

When it comes to the larger companies, what the Deputy needs to consider is whether there be a market failure in Ireland without the credit. What we consistently hear from all the companies that engage with us is some of the biggest competition they face in trying to locate research and development projects here is from other arms of the same firm in other jurisdictions because there will always be a lot of competition to get the research and development located in any jurisdiction. The reason people want it to be there is it brings a lot more with it. If you locate your research and development here it is more likely you will have manufacturing processes associated with it, for example, or that you will build other functions around it because whatever the outcome of it is, you need to manage it, develop it and protect in the long run. The very strong reports we get back when we do consultations on this is that in the absence of the research and development tax credit there would be a significant market failure in Ireland of research and development.