Mattie McGrath (Tipperary South, Independent)

I too am delighted to speak on this Bill. I know how important foreign direct investment is, and has been over the decades, to our economy. I want to mention my own constituency in this regard, because in south Tipperary and a small part of west Waterford alone there are many foreign-owned companies - mostly American - including Boston Scientific, Merck and Abbott, although we have also had some that were not so successful. They are doing tremendous work and providing a lot of employment. Many of those employed are in highly technical positions with good wages, but there are low-skilled jobs as well, so there is variety. There are close to 4,000 people employed in such industries, so I know how important they are. I also know the importance of good employers. I have been hearing warnings about our graduates for a number of years at conferences and in speeches given by industrialists, especially Americans. There was a blunt warning recently at the residence of the American ambassador, Dan Rooney, in the Phoenix Park. The message is that we are unfortunately falling behind in producing the types of graduates that are required by investors - that is, graduates in maths and science, including biology. It is a pity. The company representatives stated that sometimes when they are locating in Ireland they must bring graduates with them or recruit them from other European countries. That is something that needs to be addressed. I am straying from the point, but we must be cognisant of this issue. I listened to some reports this morning about universities and the debate about people going into universities and having to be retrained. We need to examine the whole system from secondary school onwards and consider where we are going.

This legislation is important, and I welcome its introduction. I support it, but it makes me more aware of the lack of reaction from our Government and institutions of State in other areas. When the Americans say "Jump", we say "How high?". I do not mean to be cynical - it is right that this is the case - but we should be just as responsive to other issues, which I will mention later.

Some of the jargon in the Bill is very technical. The eligibility criteria applicable to companies in respect of the use of US generally accepted accounting principles, GAAP, are essentially those set out at section 1 of the Companies (Miscellaneous Provisions) Act 2009. Beneficiary companies are those 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, and who are existing eligible beneficiaries under the 2009 Act. I accept that the 2009 Act went a long way, but obviously it did not go far enough. It is now 2012 and the Act needs to be amended, so that is the only way to proceed, and it is right and proper to do so.

As I said earlier, there must have been quite a bit of pressure from US companies and others to make these changes. We cannot say a lot about this. I can only speak for south Tipperary; I do not have the national figures for foreign direct investment, especially by American companies, but they are huge. As far as I am concerned they will always be welcome because they are good employers in the main.

However, I am concerned about the current state of Europe. Deputy Tom Fleming referred this morning to the difficulty of lifting mercury with a fork. I am more worried about Chancellor Merkel and her slowness in adopting the treaty. We voted on it and I complimented the Taoiseach, the Tánaiste and the Minister for Agriculture, Food and the Marine on their success in getting the referendum passed but the Greeks and the French have yet to cast their votes. The Germans, who are always wise, delayed their decision. I fear they are playing a trump card which could be damaging to foreign direct investment in Ireland, namely, the financial transaction tax. The German Greens, on whom Chancellor Merkel relies for support, are hellbent on introducing this tax. It would have severe consequences for Ireland, particularly given the favourable treatment that the UK offers to its financial services centre. London is only a stone's throw away and there will be another flight of the earls as people transfer their operations. Apart from pharmaceuticals and health care, many American companies with high turnover in Ireland are represented here by no more than the plates on their office doors. These companies could move to London overnight. We must be aware of that danger and be forthright in fighting it.

I know from my limited experience of European countries that some jurisdictions, such as France, levy lower taxes than what multinationals pay in corporation tax here. Several speakers have referred to perceptions of good or creative accountancy. Creative accounting allows companies operating in France and elsewhere to pay less tax than the companies which operate in Ireland. It is a trick of the loop job. They have been creative with their accounting but we are cast as the bogey boys who are attracting multinationals to the detriment of other countries. One would imagine we were not in the EU and were on an outlandish island. We have been good partners in Europe and why should we have to face a sustained attack when other countries close to the heart of Europe grant more generous concessions to foreign direct investment in a less transparent manner?

Last night Deputy O'Dea explained the difference between accounting in the US and Ireland. He spoke about a company which made significant losses under the US system but enjoyed large profits in Ireland. It makes me suspicious that creative accounting is being used because our cost base is not that low. The contrast is extraordinary. Are we being honest with ourselves and are these people being honest with us? We have to fight the transaction tax at all costs.

I accept that the action being taken by the Government is warranted but I contrast it with the lethargic efforts by this Government and its predecessor to deal with the organs of the State which have become too cumbersome and are no longer fit for purpose. VAT was increased by 2% in the last budget. The former Minister for Finance, Brian Lenihan - God be good to him - increased VAT by 0.5% in a previous budget but he subsequently reduced it again because it sent the wrong message. Why did Department of Finance officials not put those figures on the table for discussion? It was a no-brainer. If a 0.5% increase in VAT failed in its objectives, a 2% increase was four times as likely to fail. Businesses have closed as a result of this increase.

Small and medium enterprises are crying out for support and legislation that will give them a breathing space. They do not want to break the law or evade taxes but they want to be left alone rather than crucified with the legions who call to their doors on a daily basis with briefcases full of forms. An employer with six staff would need to hire an additional employee simply to fill in the forms. We need to change the system to deal with that. Anywhere we see an indigenous sole trader, an employer who wants to take on one or ten staff, farmers who are running businesses or small shopkeepers, we see people who are paying rates and taxes in order to keep our country afloat through this desperate recession. They are hanging on without a shilling in credit even though they are suffering like the rest of us to bail out the banks. I was delighted that John Trethowan announced last week that he recognises the banks are not lending. They did not lend under their agreement with the previous Minister for Finance and they are still not doing so. When are they going to be brought to book? We are losing valuable businesses on a daily basis and many business people are so burnt out that I doubt they will ever have sufficient energy to return to sole trading or employing people. That is a significant concern because if each of our 300,000 small businesses took on one additional employee, we would all but wipe out the dole queues. That energy is there to be tapped if we can remove the burden of red tape. I am starting to sound like a broken record but I have been in that situation and I regularly meet people who are dealing with these problems.

The Leader companies and county enterprise boards did great work but for some reason they are being amalgamated. We seem to attack the good things while leaving alone waste, inertia and top heavy Departments of State. It is my personal belief that we cannot tackle this problem because it is run by a cosy cartel. These Departments are too powerful. Today I met two individuals who operate companies in the agricultural sector, one of whom has 25 years of experience and the other 18 years. They have come under attack from the Department of Agriculture, Food and the Marine, which has decided to sponsor a different company. The Department provided this company with 75% funding two years ago and 66% this year. Despite this funding, I was told in a reply to a parliamentary question on the issue that the Department has no responsibility for the company. The officials gave me that reply but the Minister is supposed to be in charge. Something serious is going on if they can claim that the company has nothing to do with the Department. Two viable businesses are being strangled. Their owners worked alongside the Department for many years and charted a course for information technology in farm businesses. Now they are being taken over by a wing of the State and cobbled and nobbled. When we ask parliamentary questions, we are told they have no responsibility for them. I do not know why the troika is not looking at matters such as this but it should examine it, as should the Minister. I can provide the Minister with details, Dáil questions, numbers and dates.

The Leas-Cheann Comhairle may think I am straying from the Bill when I mention the voluntary sector but I am contrasting the need for this Bill with the inertia in dealing with other areas. I have been involved in the voluntary sector for a number of years and I am a member of seven or eight companies limited by guarantee with articles of understanding and memoranda. They must have audits and accountability. I want to refer to the costs associated with that and the impact on the functioning of groups. Many companies are assisted by community employment schemes, Tús and the rural social scheme. They make the rural towns and villages tick. I cannot understand why there cannot be a template for auditing. I acknowledge the directors of the company limited by guarantee must be above board and, if they are not, they should not be allowed to continue. I want to make it easy for them. Why should they be forced into fund-raising every year for a sum between €1,300 and €2,500 for audit fees? Another voluntary company next door must pay the same fee. It is becoming a racket for auditors and the fees are too high. There must be some way of doing this cheaply. It is the same with insurance schemes.

I asked the Minister for Social Protection a question about the review of community employment schemes promised in December. These people cannot survive because part of the funds they received for materials paid for the audits, paid to keep the doors open and paid for lighting and heating. Some voluntary groups are big employers. I am chairman of a voluntary group that employs 16 people. We do tremendous work in the community and it is acknowledged by all. We have given countless hours of retraining and upskilling, leading to many people returning to employment and self-employment. One went into the dying profession of farrier, which is tremendous. We found those people when they were on the live register. They were downcast and downbeaten and they thought it was the end of the line but the scheme gave them a new lease of life. The Minister and the Deputies on the Government side understand this happens in every community. I am not blowing my own trumpet.

There will always be 5% of participants who do not return to employment and will be residual on the scheme. That is natural. FÁS did great work locally in contrast to management at the top. I saw an article in the Irish Independent about the HSE and the scandal involving the FÁS training budget. The budget was raped, which is a strong word, and plundered by senior people to fly all over the world. It was not FÁS participants, voluntary sponsor groups or local FÁS officials. It was the high flyers at the top who hijacked it in the same way the country has been hijacked in every profession and in many Departments by top officials. These are the same people who got away with the pension levy under the late Brian Lenihan four years ago. Everyone else paid it but them because the levy was reversed in their case. It was scandalous. They are the people with power clasped in their hands, they are in the Minister's way and he cannot do anything without them. I am not saying anything about the officials in the Chamber because I do not know who they are. It is the case in every Department, where the officials have more power than any Minister. If they do not want to act, they will not act. If they do not want to change, they will not change.

As we adopt the measures in this Bill to make changes, we are promised reform by the Minister for Public Expenditure and Reform, Deputy Howlin. I wish him well and he is doing okay. We saw the report today but much more needs to be done. We must help to nurture these people. We employ 16 people and the next parish has the same figures, as do many more parishes. Community employment schemes provide every kind of service, from meals on wheels to community alert and helping in daycare centres. Participants do work the State has abandoned because it does not have the money. The State abandoned this work ten years ago and it was happily taken up by voluntary groups, which is good. Participants are highly trained, reskilled and have undergone Garda vetting but now the scheme is under attack. The Minister for Social Protection, Deputy Burton, is doing her best.

This morning we saw the case of the ESRI report. If it does not suit the official Government, it is hijacked and buried. I am not talking about the Taoiseach because he said this morning that he would not do it and did not do it. It is the official Government that does not like it because it might expose them. Some people are much better off unemployed than they would be working. I am a small employer and I have been the victim of this. Unfortunately, I had to put people on a three-day week in the past number of years and I could not get them to come back to work. I cannot blame them. The Minister has moved to change the legislation. With a three-day week, one gets three days work from the employer and three days from the State. That automatically puts one eight hours ahead of the person working full-time.

Many areas must be examined and dealt with. We must get serious because Ministers are doing their best. I commend the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, who is bringing in foreign direct investment. It is needed and I understand why this legislation is being passed. We must act in the same way in other areas of indigenous business to keep it alive.

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