Shane Ross (Dublin South, Independent)

I think I welcome this Bill. I do not want to disturb the unanimity that exists in this House on it. My reservations in this regard are partly based on my ignorance or lack of experience of the difference between the International Financial Reporting Standards and the US GAAP facility and partly based on my in-built suspicions about any legislation that introduces deregulation of any sort at this time. There are obvious historical reasons for my difficulties in that regard. Questions should be asked about the accounting standards that were used at the time of the banking crisis and the collapse in the property market. I refer particularly to the process that led to various debts and property values being written off or provisioned and to the discretion that is used by accountants and auditors.

We heard a good illustration of the difference between US accounts and Irish accounts from Deputy O'Dea when he mentioned a company that had massive losses under the US system but could produce a large profit under the Irish system. I suppose it makes one particularly suspicious of accountants or auditors using their discretion. It is alarming and revealing to those who are not conversant with the accountancy profession and its methods that different accountants can produce such extraordinarily contrasting results. One has to ask where the truth lies in such cases. Why are US companies looking for this concession, which has so readily been given to them by the Government? According to the Government - the Minister of State will correct me if I am wrong - it is a straightforward question of introducing measures to encourage multinationals to come here and stimulate foreign direct investment. The Government claims that this Bill is not fundamental, but that the thrust of it is to make concessions and give it the right to extend US GAAP accountancy standards to these companies, rather than giving such companies an absolute right.

It is obvious that the US Chamber of Commerce and others have put a great deal of pressure on the Government to make this concession. There is nothing wrong with that per se. Every speaker, including the last one, has conceded that US companies have played an extraordinarily valuable role in the economy. I remember when a Minister in the last Government told me he was very worried about the economy because it was depending on the construction sector and on multinational companies. It was a prescient warning. I will not identify him because it was a private conversation, but he was right. The second of those pillars is the only one that survives now. His analysis might not have been particularly sophisticated, but it was a pretty rough estimate of two parts of the economy that were vibrant at the time.

I was interested in Deputy Tóibín's point that indigenous business should be encouraged, as it should be. The easy part, in some ways, is what we are doing with multinationals. I wish to applaud the Government for its encouragement of multinationals and its successes in bringing multinationals into this country at a time of great difficulty. I am a great supporter of multinationals. Nonetheless, it sometimes amazes me the success the Minister, Deputy Bruton, the Minister of State, Deputy O'Dowd, and others have had in continuing to attract multinationals with household names to locate their headquarters here at a time when Ireland is getting such a bad press around the world. That is a great success story at a very bad time. God knows what we would do without them at the moment. It should be recognised that the concentration, encouragement, effort and energy which has gone into this has been successful. Some are leaving and some, tragically, are laying off some of their workforce, but others are coming here and are still recognising Ireland as a good place in which to locate and develop.

This measure, if it is part of a concession to those particular demands, is prima facie a good idea. I would issue a caveat in saying that we should be careful about deregulation and about allowing the rules to loosen because they can be exploited in a way which might come back to bite us. The multinationals are employment driven and I understand there are some 250,000 employees in the multinational sector here. They have to be encouraged and kept at work as we cannot afford to lose them. Therefore, we have to give them reasonable concessions when they want them. If this is one of their reasonable demands, which I understand it is, it is right that we should do it for them.

We must also look towards the future for multinationals here, and let us hope they are here for many years to come. The reasons they are here are taxation-based, and this Bill is related to that matter. They are here because there is a 12.5% corporate tax rate and because there is a young, well educated workforce. All of those reasons still stand.

On the corporate tax rate, I suggest the following, not as a way-out idea but as one which the Government should consider at some stage. We have had a lot of flak from France, less from Germany and other countries, about harmonising our tax. We have also had a lot of flak from several countries, including the US, about some of our practices such as transfer pricing. This is such a success story. Can we not learn the lesson from the 12.5% tax rate and say that we will consider lowering it? I do not know how much less tax would be raised although, when capital gains tax was lowered, this country boomed and revenue boomed as well. Were we to lower corporate taxes even further, there is very little doubt that we would offend our European colleagues but, God knows, we do not owe them much in the present climate and they are not showing any signs of giving us anything else we want at the moment. Therefore, were we to lower it to a psychologically powerful and pivotal place like 9.9%, does the Government not agree this would send a message around the world that Ireland was open for business, including multinational business, and that it was multinational friendly? If we were to combine that with the audit concessions we are giving them in this Bill, I believe we could become a focus of even greater attention from multinationals, not just from the US but from elsewhere in the world.

I want to issue a word of warning which I have issued in this House before. One of the core aspects of the success of the multinationals here has been the tax position and one of the great beneficiaries has been the International Financial Services Centre, IFSC. While I do not know what are the Government's intentions, there is a real danger to the IFSC by the financial transaction tax which is proposed and is lurking around the high tables of Europe. It seems to have got very little publicity here but if one reads what is happening in Germany, one will see that the fiscal stability treaty is about to go through the German Parliament at some time in the next six weeks. A deal is being concocted in the German Parliament and the treaty will go through, but the price that is being paid for it going through is a concession to the opposition - the Greens and the SPD - and that concession is the financial transaction tax. It is about to become part of German Government policy that a financial transaction tax should be introduced in Europe. How far that is going to be extended and how far they will push it, I do not know, but it is lurking on the horizon and it is a very strong threat. It is also likely to get the support of France and many other countries.

If it were to be introduced, nobody in this House needs the consequences explained to them. It would provide a threat to the IFSC because it might well not be introduced in the UK as the UK would not be subject to the same compulsory imposition of this tax by the other nations. If that were to happen, the danger is that many of those companies which are located in the IFSC would move over to the UK and others would not come here. We would be sending out a signal that Ireland is not as attractive a place to do business as it was because there would be a financial transaction tax on transactions that take place in the IFSC. This would be dangerous to companies coming to locate here and because a large number of them are, if not brass-plate organisations, somewhat inactive organisations in terms of cerebral activity, they can relocate very easily. The revenue we would get from that would presumably not be adequate but there is also the danger that the many thousands of people who are located in the IFSC would suffer and there would be unemployment as a result. Let us watch this carefully while we are trying to encourage multinationals.

I will focus my final words on the auditors. I sometimes wonder when we are discussing auditors, GAAPs, US-GAAPs, IFRSs and all of these complicated formulae which nobody really understands, why we put these people on such an extraordinary pedestal and why we believe very much of what they say. So many of them, whether they are Irish auditors or US auditors - many of them are the same firms - dominate the companies which they audit in this country and the US, and produce accounts which are very little short of fictional.

One of the problems in this country is that we insist on using the "big four" auditors-accountants for nearly all the business which is given by the Government. That is very difficult to understand. The "big four" auditors gave the all clear to the banks up to 2008 and later, which gave an extraordinarily unclear and inaccurate picture of what was actually happening inside the banks. One of the problems with the auditors was that they missed everything. They seemed to be unable to spot things happening that they ought to have spotted. As Deputy O'Dea said, nobody wants to suggest they should necessarily be bloodhounds. However, if they cannot insist that the big banks make proper provisions and produce accurate accounts or if they allow the banks produce accounts that are misleading, one would have to wonder why we put them on such a pedestal and why we believe they are producing a true and fair view of what is going on inside the company they are auditing.

With regard to auditors' fees, I do not know what is happening in the US in comparison to here, but fees are significant here. PricewaterhouseCoopers got over €100 million over ten years and KPMG got over €40 million for three years, just for auditing the Bank of Ireland. The accounts they passed as true and fair are questionable and in such a case we must ask why we are paying auditors so much and why we regard them as some kind of icons with particular skills. We must also ask whether they are so cosy with the banks and companies they audit that the value of what they do is only of value to themselves and the banks, but of no use to shareholders, the nation and employers.

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