Gerald Nash (Louth, Labour) | Oireachtas source

I do not plan to detain the House too long. I appreciate the opportunity to respond to the Minister of State's remarks and to discuss what the Bill seeks to achieve in general terms. I also appreciate that sections of the Bill have been long overdue, as well as long awaited. It is not too long ago since the media uncovered the fact that such ILP funds are not covered by European anti-money laundering law which requires the identification and registration of the real owners behind obscure and complex funds. Likewise, limited partnerships, which are separate but similar to ILPs, continue to elude anti-money laundering requirements for beneficial ownership. We have seen such funds implicated in several scandals in the UK.

It is a concern that there has been a trebling of such phantom ILP firms, an abnormality noted by the Companies Registration Office, especially given that these phantom or postbox firms do not register a principle place of business in Ireland, with this abnormality also noted directly by the Companies Registration Office. Accordingly, I welcome the measure that beneficial owners of funds managed under ILPs will have to be disclosed as part of anti-money laundering safeguarding measures.

We must be careful, however, regarding access to the central register of beneficial ownership. As we have seen time and again in this country, rules are one thing but enforcement is another. We know only too well where turning a blind eye here and applying a light touch there can bring our society and economy.

It is essential that the mechanisms enabling access to the register are truly accessible and comprehensible. It must not be restricted by price or means to those with an inside knowledge of the industry. There must be absolute transparency with regard to information pertaining to the ownership of these funds and those who have a beneficial interest. For the sake of the public interest, such details must be readily accessible, not just to financial regulators but also to the wider public. Only then can we truly ensure confidence in the nature and activity of these funds, which, to be frank, do not enjoy widespread public understanding.

Despite this much-needed and long overdue safeguard, I am still concerned at the way in which some of the murkier financial instruments in this industry operate. They can be opaque, to say the least. They are literally designed to be as impenetrable as possible in order to attract little real attention. It is my understanding that unlike real high street businesses and many of the important international institutions that are big industry names and employ tens of thousands here, many, if not all, of these investment limited partnership funds are under no obligation to publish financial accounts or statements. Meanwhile their individual partners are taxable in their resident jurisdictions. Unsurprisingly, many of these are in low-tax jurisdictions. Again we could stand accused of standing over legal tax avoidance for those who are skilled enough and wealthy enough to afford very creative and skilled accountants and tax advisers.

As we saw with last month's sudden drop in corporation tax receipts, which now account for one fifth of all of our tax revenues, we have become over-reliant on a handful of multinational corporations, many of which operate in the financial services sector. This Bill seeks to intensify the share of employment that is reliant on highly mobile capital and to make Ireland more attractive to new kinds of funds and investments. We value the investment made in Ireland by firms such as State Street's international fund services company, located in my home town of Drogheda. The broader financial services sector accounts for tens of thousands of quality jobs held by skilled professionals throughout the country. The fact that many of these companies are located outside Dublin is important. They have driven regional jobs growth. The strategy for the industry worked on several years ago by the then Minister of State at the Department of Finance, Deputy Eoghan Murphy, and the former Minister of State, Michael D'Arcy, was imbued with a focus on attracting financial services firms to invest in the regions and to develop second-site solutions outside Dublin to ensure the growth they bring is shared across our State.

The uptick in remote working and the change in attitude and culture against being present in the office will present challenges to IDA Ireland where our future approach to foreign direct investment is concerned. I know that our financial services sector and the funds management industry generally are susceptible to that issue. I know that the Minister and IDA Ireland will be very conscious of this when planning strategies.

I return briefly to the very many kinds of opaque financial instruments developed in recent times that are used to move billions of euros in and out of states at the push of a button, often attracting little tax liability in this jurisdiction or, indeed, any other. A very live and important global debate on international tax justice is ongoing. Christian Aid Ireland and other important development NGOs have led this debate. We should all note the recent decision of the UN Committee on the Rights of the Child to examine the impact of Ireland's international tax policy on the ability of countries in the global south to raise revenue, invest in their states and fulfil their basic social and human rights obligations. Our actions or inaction in this area have implications not just for Ireland but for states and citizens across the globe. Our policies ought to be mindful of this fact. Too often we are not and we fall short of the standards to which we should hold ourselves. I urge the all the Ministers and senior officials in the Department to engage openly and frankly with this review and to ensure that Ireland does the right thing and is not left on the wrong side of history or justice on this front.

See this speech in context