Peadar Tóibín (Meath West, Sinn Fein)

Go raibh míle maith agat, a Chathaoirligh. Is rud iontach tabhachtach í infheistíocht ó thar lear agus braitheann an tír seo uirthi. I mo thuairim, braitheann an geilleagar an iomarca ar infheistíocht ó thar lear. Foreign direct investment is extremely important to this State and brings massive positive benefits in regard to jobs, output, GDP and taxation and also in respect of bringing skills, cross-fertilisation of ideas, management styles and knowledge into the economy. It also offers, as it should, opportunity for the supply side of the domestic side to meet the needs of the foreign direct investors. As was discussed in the Chamber, there are major benefits in regard to the figures. They include 146,000 people who work in the area, in some 1,004 foreign businesses operating in Ireland. It is also a key instrument from the Government's current perspective, given the fact that the domestic economy is sinking. In an effort to try to keep the totality of the economy afloat a large level of effort has gone into creating more foreign direct investment in this State.

As I have stated repeatedly in this Chamber, what we see, however, is a tale of a two-tiered economy. On one side, the FDI side, there is quite a bit of activity but the domestic economy, which provides six out of seven jobs, is under major pressure. It is important that when we have these debates we do not overstate the importance of foreign direct investment and that we realise it is not a panacea or a silver bullet that will solve the economic problems we face. Yesterday I watched the RTE programme, "Reeling in the Years", which, looking at a year in the mid-1980s, carried a report about the shocking emigration figures in the period it covered, stating that 30,000 people had left the shores of the State during that period. The Central Statistics Office will tell us that 76,000 people left the shores last year. On this side of the House, we have stated that figure means nine people every hour for every day of every week of every month, making up all those people who left Ireland last year. It is a shocking indictment of the employment situation. No matter what way we try to scrub up the spin, the CSO also showed last week there is 14.8% unemployment in this State, some 3% off the percentage maximum figure there was in the mid 1980s. The actual figure, not the percentage figure, is one of the highest figures the State has ever seen. There has been a steady decrease in the number of people at work and a massive increase in the numbers of those who are considered long-term unemployed. We talk about a possible 5,000 jobs coming though the foreign direct investment system. That is to be welcomed but that 5,000 is the equivalent of three weeks emigration from this State. The size of the problem and the proportionate response by the Government are out of kilter.

On this matter the IMF has stated that foreign direct investment operates as an enclave in the Irish economy. By that I mean there are not nearly enough organic links between domestic economy and foreign direct investment. If one looks at the chemical and pharma sections they account for 60% of material exports of this State but that sector imports 80% to 90% of the components it uses to make those exports. Its reliance and impact on the natural domestic economy is extremely low, shockingly so. Those types of figures are not seen in FDI statistics across the rest of Europe. We have seen that foreign direct investment is extremely capital intensive. There has been a large upscaling of production in many FDI firms over the past ten years without any increase in employment in those companies. In addition, foreign direct investment is very light on taxation contributions, much more so than the domestic economy.

I highlight these issues not to lessen the good work that is done in regard to attracting foreign direct investment into this State but to try to put it into perspective and motivate the Government in regard to the necessary steps to take to develop the channels that will allow the domestic economy to start to supply into foreign direct investment companies. I do it also to motivate the Government to increase its efforts to focus on the domestic economy which employs more, contributes more and has a bigger impact on this State but is strangled due to the fact there is no credit going into it and because demand has fallen off a cliff, both here and in Europe.

In addition, I am disappointed in the regional delivery of foreign direct investment. I come from County Meath which has one of the biggest populations of any county within the State yet we receive a fraction of foreign direct investment compared to what County Kildare, for example, receives. Kildare gets 12 times more investment and jobs from IDA Ireland and Enterprise Ireland than Meath does. In many ways, Meath has been relegated to commuter county status. Most of the jobs are located outside the county; we have the highest commuter distances to travel, the greatest number of people leaving the county every day to go to work. There is the danger, when enterprise organisations and authorities are organised on a regional basis, that they will prefer one county over another.

Most of the jobs that came to County Meath during the boom times related to the construction industry. Those jobs are now gone. This creates major difficulties in counties like my own. When jobs are not there, not only does it mean that people's quality of life is reduced because they have to travel such distances to go to work, but it also means that local authorities receive less income and consequently are less able to deliver services. That is especially the case in County Meath. We have the lowest per capita number of local authority jobs in the State and the lowest per capita local authority spend in the State, which can mean that young people who leave to go to third level colleges do not get to come back to their local areas to live near their families. It is important for us to organise our enterprise development authorities in a way that allows for a fair spread of jobs and investment. I am worried that as the county enterprise boards morph into the local area enterprise offices, they will become more regionally focussed and their delivery will be uneven as a result.

I would like to ask the Minister about another important matter. In recent years, EU regulations have determined the level of grant contributions that can be offered to foreign direct investment as it comes into Ireland. The BMW region is allowed to offer far more than the mid-east region, which is considered to be wealthier than the BMW region. There is a logic to that. As I have stated previously, Meath gets much less than the rest of the mid-east region. It is time for the grant contribution regulations, which were initially negotiated at the height of the boom, to be renegotiated now that we are living in a completely different space. It is wrong that businesses in Navan cannot receive the full level of foreign direct investment grants that can be given to businesses 17 miles up the road in Drogheda. I appreciate that might be to the advantage of the Minister of State, Deputy O'Dowd. It is time to reorganise and reappraise the determining factors that allow us to offer foreign direct investment grants in each area.

I am broadly supportive of the thrust of this Bill, particularly in so far as it pertains to the functioning of the foreign direct investment sector in this part of Ireland. In the absence of a greater degree of international convergence in the sector, it is important to avoid the unnecessary costs that would have to be borne by companies if they were forced to recalculate their financial statements under different systems. We should work with foreign direct investors to make life easier for them, albeit at no major cost to the State. I am conscious that section 3 of the Bill, which is an enabling provision, will allow other international codes to be used in the future. As Deputy O'Dea said, there is no doubt that different codes will give different results. He mentioned the difference in deutschmarks in the profits and losses made by Daimler-Benz, depending on the code that is used. It is important to give complete confidence to the House that any standards that are used will not have a negative financial impact in this State. I ask the Minister of State to comment on that. Equally, the standards that are used should not cloud people's understanding of the functionality of a particular business. When different codes are used - like different languages - some people are able to understand one better than another. The financial health of a company, as indicated on its balance sheet, should be properly understood.

I note that the State is engaging in a selective incorporation of standards. I would like to refer to an issue that is quite similar to the one we are discussing. The White House recently said it would introduce measures to discourage accounting games that allow companies to shift profits abroad in the absence of actual relocation of production overseas. It is understood that one of the accounting games the White House has in mind is the notorious "double Irish" tax avoidance scheme, which is said to be used by some American firms in this State. Under the scheme in question, multinational companies use subsidiary companies to route their overseas profits through Ireland and onto a tax haven like the Cayman Islands or Bermuda. If they do so by means of royalty payments, they can reduce or negate the taxation exposure they might experience. The reality is that such routing does not have a material impact on job creation or wealth creation in this State. In fact, it unfairly inflates the income of the State. At a time when we are talking about working towards international taxation convergence, I suggest we should be trying to ensure such loopholes do not exist and firms cannot take advantage of Ireland's taxation policies in this way.

I have similar concerns about potential abuses of Ireland's research and development tax credit system. Although that does not relate directly to the legislation before the House, it is relevant to the broader context of the foreign direct investment sector and transfer pricing. We support the facilitation of those involved in foreign direct investment who have asked to be allowed to trade in a fair and equitable manner. The Government needs to ensure that short-term gains with regard to tax loopholes do not have the effect of corroding long-term international relationships.

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