Shane Ross (Dublin South, Independent) | Oireachtas source

I welcome the Bill in principle because I believe it is a constructive effort not only to consolidate vast volumes of former Companies Acts but also to encourage new investment and to make Ireland a more attractive place for both indigenous industry and overseas industry. I am not quite sure I share the sentiments that were expressed in the press release, which is full of superlatives about landmark reforms to slash the cost of operating a company and to make Ireland the best small country in the world in which to do business, but I understand the language and rhetoric which is necessary to draw attention to matters of this sort. I suspect the claims are somewhat over the top but, nevertheless, the Minister's heart is in right place. It is hardly landmark legislation but it certainly tweaks in various places the law as it stands at present, and it certainly makes a very definite effort to produce a buzz and reduce red tape.

One has to be a bit careful when talking about reducing red tape. While it is a useful cliché, one man's red tape is another man's regulation. I hope the reduction of red tape does not mean the rules we have been recently forced to enforce rather more strictly in various areas, particularly the financial area, are now being relaxed again in a way which will make Ireland not just an easier place in which to operate but also somewhere the wrong sort of loose regulation leads to further mischief and difficulties down the road.

My guess - the Minister could help me on this - is that this Bill is introduced with the multinationals and native entrepreneurs in mind. I note the briefing to the Whips specifically mentions that the IDA was consulted on the Bill and my guess is that a vast number of other bodies were also consulted. In the type of climate in which we find ourselves, I believe this is targeted at those areas where we think there is the greatest room for expansion, which I suspect are the areas involving the multinationals and small indigenous industry. Its purpose is to facilitate both those areas and it is stated that some measures will reduce the cost of locating here in that they are an attack on bureaucracy. The Bill goes on to list the amount of professional fees that can be charged.

I am not sure it will impress multinationals all that much. I believe it will improve the atmosphere and make them less irritated by what they see here but I am not sure it will change the big picture which is, by the way, healthy enough and encouraging, although it is getting more difficult. Indeed, the reference in the Minister's press release and in other Government statements on this, namely, that it will improve competitiveness here, may or may not be true and it will certainly not reduce it. However, it fails to look at the real elements which seduce or persuade multinationals to come here. While there are several issues and several moves which could have done that, I do not believe tweaking the law in favour of less red tape is necessarily going to make that large a difference.

My colleague, Deputy Richard Boyd Barrett, regularly suggests there is a case for increasing corporate tax. My guess is that this would scare away a large number of multinationals and they would not go with any apology, they would simply go elsewhere. Competition among corporate tax regimes is very intense, not least in Europe. The Minister might be able to tell me if anyone has done a forensic analysis of what difference it would make to the economy if there were changes in corporate tax, both upwards and downwards - this would only be a projection. My guess is that, in the current atmosphere, the Minister and his colleagues should be looking at a reduction, not an increase, in corporate tax. This is the kind of heresy that always unites the conventional political parties, which say "No, Europe would not tolerate it", or, indeed, "No, the trade unions would not tolerate it", and so it is a no-no. It is said that we are up against it already, fighting with our backs against the wall to retain it at 12.5%.

I am not sure about that. I would have thought that if we flew this flag in Europe, it would cause a certain amount of trouble, but it would also send a signal that there were areas, particularly company law and taxation, in which we were still an independent nation and not frightened to take steps which would offend our European partners, just as they are not frightened of taking steps which offend us. The downside, obviously, would be a loss of revenue, but the benefit would surely be drawing the attention of those multinationals looking at Ireland as really the best small country in which to do business. Were we to reduce the rate by 3.5% to 9%, I would like to see an accurate analysis of the loss of revenue and what the spin-off effects might be in terms of an increase in revenue. I do not expect the Government which is so incredibly committed to the European project and which identifies, to a large extent, with obedience to its European masters to even contemplate this suggestion for the moment, but it is something about which they should think very seriously as having a beneficial economic effect and possibly leading to an increase in revenue. When capital gains tax was reduced from 40% to 20% by a former Minister for Finance, there was uproar led by all the Opposition parties. They stated it was absurd, favoured the rich and was bad for the economy. What happened, of course, was that revenue from capital gains tax rocketed in the years after that decision was made because people were prepared to start selling their assets and moving them around, whereas before they had been prisoners in a capital gains tax trap that they could not get out of. Nobody knows the answer to this - no economist ever knows the answer to anything - but it is possible that a reduction in the corporation tax rate might produce an inflow of foreign investment and companies which would raise revenue. It would certainly improve the employment position and send a message that we did not take diktats from Europe about our tax regime. As, it is worth considering.

Multinationals look at this country in a jaundiced way, as we do not normally do business the way they do. There is another area in which they are somewhat surprised at how we run our business. I imagine they were surprised at what happened last week when a single trade union managed to sink a Government project which, supposedly, was to save us the necessary €300 million to get us out of the bailout programme and back into the market. I would have thought this would be another big area, not a small one as in the case of this Bill, at which the Government would look. It should look at no longer allowing trade union leaders who are completely out of touch with their flock to dictate the future of Government economic policy. Multinationals are staggered by this. They do not tolerate trade union leaders dictating to them, although they are very sensitive, as they should be, to the wishes and conditions of their workforce. I would have thought a challenge to the leadership of the trade unions by the Government would send a really strong message on the attractions of doing business here. What was important was that the deal was rejected by hard working members against the wishes of the trade union leadership. This tells us that something is going wrong in the power structure and the social partnership agreements when the largest trade union is completely out of touch with its membership. As any US multinational will point out, only 45% of SIPTU members actually voted in the ballot. Of these, a majority rightly went against the wishes of the leadership. This meant that only about one in five voted in favour of the agreement. The Minister may be able to correct me, but I think one in five represents only about 13,000 people who held the union and then the nation to ransom. The leadership carries enormous responsibility if it is going to torpedo Government policy and frighten overseas investors to an extent that we should no longer allow it to do.

There is almost unanimous approval of the measures brought forward in the Bill in their individual form, even if their extent is so limited. Having only one director, as Deputy Kieran O'Donnell noted, is absolutely fine. The practice of having two directors was often abused by a person in having his or her spouse on the board and getting him or her to sign something every year, even though the person not directly involved had no idea of what was going on. The proposed measure recognises the reality.

The idea of not having a physical AGM is rather like the ideal of incorporeal Cabinet meetings, of which there was one in 2008 that is now infamous. Facilitating AGMs, both private and public, is very sensible in principle, but the Minister will be aware of a certain practice that has been increasing in companies. Directors sit down, read through pre-written minutes, tick the boxes and say they are fine - that what is written down happened. One is not very far away from people saying this is what happened, even though there was no meeting. One then gets to a stage where what secretaries think ought to happen is written down and one gets one, three or four directors to sign it. One then has retrospective minutes, which are not unknown. If one does not have a physical AGM, one might not have physical meetings at all and move into the world of creative board meetings, which might not be the best possible route to go down.

The idea of memorandums and articles of association being merged into one document is very sensible. I have never seen a need for two documents and I am ashamed to say I am not quite sure what the difference between the two is.

The idea of codifying directors' duties is very important because many directors in private and public companies do not know what their duties are. They tend to be dominated by one or two people on the board. A large number of them do not do a proper job; it is a sinecure and they suddenly find they have extraordinary responsibilities they did not realise they had and are liable for things for which they did not want to be liable. Being a director of a company, both non-executive and executive, is a serious job.

It is important that this is made absolutely clear to them.

There is a missed opportunity for the Bill to provide more radical measures. There are references to the liquidator and the need for liquidators to be approved by various self-regulatory bodies, specifically, the accountancy body, a body regulating liquidators or the Law Society.

It is high time the Government looked at the overall effectiveness of self-regulation. It has set up bodies which are sometimes effective such as IASA which looks after the accountants and the property regulation body which takes away certain powers from auctioneers. However, self-regulation has failed in Ireland.

Not that long ago, for fun, I became an auctioneer. I was not even a member of a body. I just went through the system of going down to the court and putting in a bond. I suddenly became capable of moving into this wild, unpoliced, unregulated jungle, buying and selling houses, handling people's money without any particular discipline, without being a member of a regulatory body. I did not practice, I hasten to say, at any stage, because that would have been utterly irresponsible. However, I was allowed to do so. It would have been utterly wrong but people with equal qualifications to mine are still practising as so-called auctioneers and valuers who should not be allowed near the sale of a house.

Two auctioneering bodies were set up some years ago to regulate the industry. Above all others, that exposed the very significant flaw in regulation in Ireland, in particular, for professional bodies. These bodies were set up not to look after the interests of consumers - or the end-users as they are known in this Bill - but to protect the industry itself. Both these bodies were very close to running fiascoes in terms of the disciplining of their members which virtually never happened. Rules, regulations or ethics were not imposed or were certainly significant by their absence. One only needs to see the absolutely unfettered, unhindered activity of auctioneers, valuers and estate agents during the time of the property boom, to know what I am talking about. They were issuing guide prices and exaggerated claims which were completely unchecked, unpoliced and connived in by their bodies. The result was a fuelling of the boom and the public were misled into believing that houses were of far greater or sometimes lesser value than was the case. That was the result of having no proper regulation.

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