Mattie McGrath (Tipperary, Independent) | Oireachtas source

No problem. Beidh lá eile againn. We can continue the debate elsewhere. We had many a good debate over five years when we were in the Technical Group together. It is very important that all views be heard.

It is very timely that we have this debate on the Knowledge Development Box (Certification of Inventions) Bill 2016. The Finance Act 2015 introduced a knowledge development box, KDB. One would think it was the KGB when listening to Deputy Boyd Barrett. He is not listening now. Tá sé ag caint leis an Acting Chairman. The Bill brings in an effective reduced rate of corporation tax of 6.25% for qualifying income derived from qualifying expenditure in the European Union by an Irish tax resident company. The KDB has been described as the first OECD-compliant KDB in the world, which means it is in line with international guidelines, the OECD Action 5 report, published on 5 October 2015, and specifically the OECD's modified nexus approach. As I understand it, the KDB is a way for national governments to encourage the commercial exploitation of intellectual property by offering generous tax breaks on the profits derived from that intellectual property. That is vital.

While we have had the saga and mess of the Apple tax, in respect of which a judgment is awaited, I, as a Deputy representing Tipperary, acknowledge the amount of foreign direct investment in Clonmel and in Dungarvan and Waterford city in the neighbouring county, the constituency of the Minister of State, Deputy Halligan. We value this. The companies have provided considerable employment. They provide reasonably good and very good jobs but also have a spin-off effect on the services industry. We have to nurture them and encourage them. There is little point in having the ideologies of the hard left and harder left. It is so hard now that kneecaps are nearly freezing. This is in the belief that we are going to encourage the big companies to nurture smaller companies. Deputy Boyd Barrett is hung up over the bigger companies setting up smaller companies to avail of the supports. It is fine if they do. From little acorns major trees grow. We must support that.

I agree with Deputy Boyd Barrett on one area. The €7 million limit is very high for small indigenous companies or community enterprises we may like to or want to nurture. In this regard, a turnover of €7 is huge. As I understand it, the KDB is a way for national governments to encourage the commercial exploitation of intellectual property by offering generous tax breaks on the profits derived from that intellectual property. While it might not be perfect, this legislation is necessary and timely, as is the debate on it. Intellectual property might be very limited and scarce at the outset. We must remember the investment that must be made in any new patent, design or research and development. Considerable work, time and energy goes into it also. Therefore, we have to have a level playing field and a carrot-and-stick approach to encourage it.

The patent box regime was first introduced in Ireland, in 2000, and has since been introduced in many EU member states, including the United Kingdom, France, Belgium, Hungary, Luxembourg, the Netherlands, Spain, and Italy. Is it not nice to think in these troubled times in our European Union, albeit with Great Britain threatening to exit, that we led the way in this regard? Perhaps when the Minister of State Deputy Halligan and many other Ministers are lobbying their sister or brother Ministers throughout Europe, this might be one thing they will point to. We have had innovative ideas that have replenished our own economy. We have given ideas to other European states so they might nurture growth and take the baton or torch and run with it.

Together with the existing 12.5% corporation tax rate, research and development tax credit and depreciation allowances for capital expenditure on intangibles, Ireland provides a hugely competitive offering to international business. They would not be here otherwise. We have to be competitive. We cannot be so inward-looking and introverted that we bring down the barriers, especially with the onset of Brexit. We must expand, explore, encourage, initiate and beg, steal or borrow in asking the companies to come here to avail of the supports available. We must give the same kinds of supports to small indigenous businesses, SMEs and sole traders. They will have difficulty getting funding because, as I have said, the limit is too high. We cannot lose sight of this in these dark times as we try to come out of this recession. We are being hit now with what is happening across the water and the associated reverberations throughout Europe and the world.

Deputy Boyd Barrett referred to US President Donald Trump as a maniac. That language should not be used in any parliament. Mr. Trump was elected as leader of the people of the most modern democracy in the world. They elected him and they deal with him. We should react only if he starts firing salvos at our people here or starts threatening to bring home companies that have been nurtured here, including with IDA grants. I have used an analogy before about walking into a yard. The Minister of State, Deputy Halligan, my colleague from Corcaigh who is present, Teachta Aindrias Ó Muineacháin, and mé féin go into a lot of houses and yards and meet dogs lying down. We look to see whether they are cross or will bite. I have been bitten three times during election campaigns. One does not go over and kick the dog. One slips in nicely and rings the bell. The dog may be asleep or lazy, or he could be an old, tired dog, but you do not kick him until he bites you.

That silly narrative has grown in this Chamber, especially on the left. People keep attacking because something does not suit their ideologies, liberal agendas and so on.

Despite the obvious incentives, we should be clear - I mean this, regardless of my welcome - on at least some of the ethical issues surrounding intellectual property rights. Discussing this issue is not the preserve of the AAA-PBP and the hard left. We all have that right. The ethical issues involved are evolving on an hourly basis. We must be ever ready to examine, explore and engage on them.

Professor Jørn Sønderholm has noted that intellectual property rights are a socioeconomic tool that create a temporary monopoly for inventor firms and enable them to charge prices for their innovations that are many times higher than the marginal cost of production. Deputy Boyd Barrett mentioned this matter frequently, although I did not hear other Deputies because I was at a meeting. We all have those concerns. Last night, I watched a video on Facebook of eight year old children who were working in mines. Thank God for the power of Facebook and other such tools that allow us to see the exploitation of young people, the abuses, greed and naked slavery inflicted on people just to source and extract minerals out of the ground. The same applies in sweat shops. It is wholly unacceptable. We all need to be educated on this situation, given that we all shop in the same places and buy the wares produced in those sweat shops. We are all guilty, not only the Government and regulators, of turning a blind eye. Hear no evil, see no evil, speak no evil.

The prices charged raise broader ethical issues surrounding intellectual property rights. I was delighted that Deputy Eamon Ryan was able to remind Deputy Boyd Barrett that the models in question, despite not being in law, existed in Brehon times. They are not new creations. They were there fadó fadó.

In line with much contemporary literature on the ethical dimensions of intellectual property rights, the product type in question that would give rise to most concern is life-saving medicine. Indeed, I have just come from a Rural Independent Group meeting with a group of relatives of cystic fibrosis sufferers. I also met them last week in the AV room. I saw and listened to the horror and torture on their faces and in their voices as they read out letters from loved ones who had been dying. One lady had the drug Orkambi with her. She had a 14 year old. She sent a picture around the room showing him playing sports, running and doing everything else that he inevitably would not be able to do. Others had guilt about being alive when their siblings had passed away. Those families have been living through mental torture, so to leave that meeting and then have to try to balance it with the intellectual property rights of drug companies is difficult. How many companies did I mention were in Ireland? Maybe the one making this drug is not. How to balance its rights with the social good, life and death? How could any Government delay and procrastinate? People were given promises and we were all lobbied in the AV room last year. They were told that it would be January, then early February.

Not only the Government is involved, though. The out-of-control HSE has also been procrastinating for a long time. We met a group prior to that one regarding life-saving equipment on helicopters for rural areas. The Irish Community Air Ambulance, comprising volunteer doctors and paramedics, found €3.5 million from a donor to run the service for one year. Hey presto, the HSE did not trust the group's bona fides. This is the same HSE that will not perform due diligence or show enough compassion to consider these requests.

These are the ethical issues that we must try to address. They apply in the cases of life-saving medicines as well as other production types, but there is no comparison with a young child who is dying when drugs could save him or her. The drug in question cost €159,000 per year, but that is now down to €129,000. That murky big business has to continue after this debate, but the HSE has procrastinated so. My colleague, Deputy Harty, spoke about the lack of governance and the desperate need for same. The Taoiseach told us that the governance was fine, but it is not. There is no governance. The people who need these drugs are trying to survive. Parents have needed to come to Leinster House tonight, last week and regularly when they should be at home with their sick loved ones. It puts our passion and engagement in perspective when we debate these ethical concerns.

Will the Minister of State give us any guarantee that, if the State offers generous terms to the development of intellectual property, issues such as this one will be addressed and form part of the broader conversation on the Knowledge Box Development (Certification of Inventions) Bill 2016? They must be. The Minister of State has an important role, given his dealings with schools and wider education. He has travelled half the world in recent times. Deputy Boyd Barrett was critical of him - the Deputy had looked on the Minister of State as a bedfellow on the hard left for many years - and said that he would not be open to change. The Minister of State will be open to change, though. He has to be. When one goes from this side of the House to that side, change occurs. That change is difficult to handle. I have never been on that side of the House, nor do I want to be, but the Minister of State must deal with the system, the Cabinet and the administration of the State, warts and all. I have some appreciation of how difficult it is from our briefings with the Minister of State and the Ministers, Deputies Ross, Naughten and Zappone.

The Bill and this debate are necessary. The knowledge development box was introduced in the Finance Act 2015 as a tax incentive to encourage innovation and research and development. Under the initiative, a corporate tax rate of 6.25% will apply to profits from intellectual property and assets that result from research and development carried out in Ireland. Research and development work has never been more vital. We must send out the message that we want more research and development and will give more grant aid to support the companies involved. I know some young innovators who are finding it difficult to access that funding.

The Finance Act provides that a number of distinct categories of intellectual property qualify for the knowledge development box - copyrighted software and patented inventions that share the characteristics of patents, in that they are novel, non-obvious and useful. Everything designed is novel to the person designing it and beauty is in the eye of the beholder. The people involved might be intellectually able. They have to be the thinkers, creators and thought provokers who can get their ideas out there, perhaps with others in companies. This is why some of the larger companies might invest. Deputy Boyd Barrett claimed that this would be bad, but it would not be. People will have ideas and research them for years, but they are not bankers. They do not have the accountants, design artists, specialties or qualifications necessary to bring their ideas that bit further. We must encourage linkages and be available to help the person with the idea. The man or woman who never made a mistake never made anything. It is important that people, including young people, be encouraged. I missed the BT Young Scientist and Technology Exhibition this year, although I have attended it every other year. I have seen the innovation in our schools. Mar focal scoir, it is very timely that we are having this discussion. We must have more debate on the issue and fully educate ourselves on it.

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