Leo Varadkar (Dublin West, Fine Gael)

The purpose of the Bill is to allow US companies that move their parent undertaking to Ireland to continue to use US GAAP for the next four years. The Bill allows the Minister to extend by order the same recognition to other accounting systems for a limited period. There are also additional Seanad amendments to which I will need to give more attention at a later Stage. When reviewing the Bill we need to consider three things. First, we need to consider the potential gain for Ireland in jobs and investment. The second matter is the potential reputational risks that may derive from the Bill and the third is the appropriateness of section 2 and whether we should give the Minister powers of this nature to recognise other accounting systems without being required to come back to this parliament.

As the House will be aware, EU regulations currently require that companies use the international financial reporting system or continue to use Irish GAAP. A convergence of accounting standards is currently taking place and I do not know when it will be concluded. In view of this, it is probably appropriate to allow a transition period for companies that are moving their parent undertakings here.

Implementation of this legislation would appear to involve genuine economic gains for Ireland in terms of jobs, investment and, potentially, revenue, provided the operations involved are real and not just brass-plate operations. It also helps to underline the pro-business nature of our country and the fact that we are open to foreign direct investment. However, I would be interested to know one or two things. Is any reciprocation being offered to Irish companies that may for whatever reason decide to have their parent undertakings in the United States? Will such companies be allowed to use Irish GAAP or IRFS? Has that situation arisen?

Part of the justification for this legislation is that companies would face a significant cost in making the transition from US GAAP to IFRS over such a short period. It has been suggested by one company that it would cost it €20 million to do so. I find that hard to believe, and I ask the Minister of State to outline at a later stage the estimated administrative cost to companies if this legislation were not brought in. The figure of €20 million was mentioned in the regulatory impact analysis for this Bill. What is not explained in the RIA is whether the additional cost is entirely an administrative one. Given the complications of moving from one system of accounting to the other, is this the case? Are there other benefits for companies in this? For example, can they declare their assets or pay their taxes in a different way?

I read the detailed table showing the difference between US GAAP and IFRS. Not being an accountant, it was difficult for me to understand, but there seemed to be many differences in the way companies do their books under each system. How does that affect the potential benefits for these companies? Will they be in a position to pay less tax than they would if the Bill was not introduced? Will they be able to value their assets in a different way - for example, based on capital depreciation of equipment? What is the potential impact on the State in terms of lost revenue, if any, given that the four companies mentioned are here already?

We must have some regard to the potential reputational issues arising from this legislation. We often talk about the five-part crisis: the budgetary crisis, with which the Government is obsessed; the banking crisis, with which it is also obsessed; the jobs and competitiveness crisis, which it does not care about; and the social and reputational crises. Ireland's reputation has taken a real hit because of the failure of our political system, our civil service, our banks and our public institutions. As a result, Ireland has gone from being a good word to a bad word internationally, which is costing us in terms of investment and jobs. It is also costing our exporters by making it harder for them to export overseas, and the Government by raising the cost of borrowing.

We have a duty over the next couple of years to restore the reputation of Ireland. If there is any possibility that this legislation may result in damage to our reputation or cause us to be perceived as the Bermuda of Europe, the Wild West or Liechtenstein on the Liffey, as we have been described by the Financial Times for other reasons, we must take this very seriously. The RIA states that the Revenue Commissioners, the Department of Finance and the IDA do not believe there are any reputational risks in this legislation and I suppose I must take that on trust. However, I have concerns about potential damage to our reputation from the Government's bending over backwards to facilitate a small number of companies which are moving their headquarters from Bermuda - a tax haven that is now being squeezed by President Obama - to what I hope is not a new tax haven in the west of Europe.

I refer to section 1(1)(a). The explanatory memorandum states: "These are parent companies incorporating in Ireland for the first time whose securities are not traded on a regulated market in the EEA, whose securities are registered with or who are subject to reporting to the US Securities and Exchange Commission (SEC)", while the Bill itself states:

"relevant parent undertaking" means a parent undertaking---

(a) which does not have securities admitted to trading on a regulated market,

but does not specifically mention the EEA. Is there a reason for this?

I have serious problems with section 2. I will need to confer with my colleagues on this but I do not think we as a party can stand over this section, which would essentially allow the Minister to recognise accounting systems other than US GAAP by order. I do not know what types of accounting system are out there in the world, but I am not sure whether I trust this Government - or any Government - to have the power to decide, by order, suddenly to recognise Zimbabwe GAAP, Iceland GAAP or Serbia GAAP. If it was appropriate for the Minister of State to come to this parliament with primary legislation to recognise US GAAP, it would be equally appropriate for him to come here again with primary legislation, if he feels it necessary, to recognise accounting systems of fourth and fifth countries and explain to the House - that is, the representatives of the people - why he thinks that should be done.

I also have some concerns about regulation and monitoring. Is it the view of the Minister that the Irish Auditing and Accounting Supervisory Authority and the Office of the Director of Corporate Enforcement are fully competent and resourced to regulate, manage and oversee three different systems of accounting - namely, Irish GAAP, IFRS and US GAAP - or will we be relying on the SEC? Will we be effectively outsourcing oversight to a foreign country?

The Minister commented on the usefulness of the Seanad. As Members know, it is my party's proposal to have a referendum on the future of the Seanad. The Seanad in its current form is not capable of being reformed and should be abolished. That is not to say I do not see the case, in some countries, for having an Upper House, but our Seanad is not an Upper House. What happens in a proper parliament - which, under this Constitution and Government, we unfortunately do not have - is that legislation is brought in to the lower house and discussed and amended, after which the upper house reviews and reconsiders the legislation. It should be made up of people who are not ordinary politicians and who are not directly elected but have a particular expertise or sectoral experience. The practice of introducing Bills into the Seanad and amending them before they are discussed in the Dáil undermines it. If we are to have a Seanad at all it should be an upper house; legislation should be introduced and amended in the Dáil and should then go to the Seanad for a fresh look. If we are to continue to have an upper house that is the kind of role it should have. I would welcome some clarification on the matters I have mentioned.

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