Ruairi Quinn (Dublin South East, Labour)
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Question 38: To ask the Minister for Enterprise, Trade and Employment the action he intends to take regarding the black economy; the actions which have been taken by his Department or by agencies under his control to date in 2006 to crack down on companies, organisations or persons operating in the black market; the reassurances he can give to consumers at risk of exploitation and legitimate businesses at risk of losing sales to unregulated competitors; and if he will make a statement on the matter. [23523/06]

Micheál Martin (Cork South Central, Fianna Fail)
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The "black economy" is generally described as the hidden sector of the economy where private cash transactions go unreported and hence untaxed. As such, the policing of this area is a matter for the Revenue Commissioners in the first instance. In the context of the new social partnership agreement, which is subject to ratification over the coming weeks, it is proposed that the hidden economy working group will be relaunched immediately upon its ratification and will meet on a monthly basis or as appropriate thereafter. The Revenue Commissioners chair this group which consists of members from ICTU, CIF, SFA, ISME and the Departments of Social and Family Affairs and Enterprise, Trade and Employment. It is also anticipated that the new office of the director for employment rights compliance, when established, will join this working group.

I am advised by the Revenue Commissioners that they are continuing with their programmes to tackle the problem of the hidden economy through their routine audit and compliance activities, with a special emphasis on the construction sector in 2006. Furthermore, special compliance districts throughout the country actively pursue intelligence and inquiries surrounding all aspects of the hidden economy.

With regard to the activity of bodies operating in the context of my Department's area of policy responsibility, the Director of Corporate Enforcement regulates the compliance of companies and their officers with company law rather than taxation. However, sections 17 and 18 of the Company Law Enforcement Act 2001 provide for the sharing of information between the Revenue Commissioners and the Director of Corporate Enforcement and a memorandum of understanding has been agreed between the two bodies to give concrete effect to this. If, in the course of investigation of a particular company, a significant taxation issue comes to the attention of the director and his staff they apprise the Revenue Commissioners accordingly. Equally, there is provision for information flow from the Revenue Commissioners to the Office of the Director of Corporate Enforcement.

Ruairi Quinn (Dublin South East, Labour)
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I thank the Minister for his reply, although I note his Department's reluctance to take this question in the first instance. On the basis of his reply, the Department does not wish to have anything to do with attempting to bring the black economy into the white or grey economy. Does the Minister accept ISME's assertion that departmental agencies, including its inspectorate, should assist the Revenue Commissioners to ensure operators in the black economy competing with legitimate small firms are properly policed and investigated? This is not only about taxation but about operators breaking health and safety, company, planning and transport regulations, which means an illegal company operating outside the rules poses a serious threat to legitimate small enterprises that are trying to compete on a level playing pitch. However, they are being undercut by people who break more than taxation rules. Should the Minister's Department, rather than the Revenue Commissioners, take the lead in combating the black economy, which is a complete reversal of the opening sentence of his reply?

Micheál Martin (Cork South Central, Fianna Fail)
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A cross-departmental approach is needed to tackle the hidden economy as no Department in isolation can deal with it. We are anxious and committed to undermining the black economy because it affects the entire edifice on which most of our social progress is based and on which legitimate business is carried out. However, the Revenue has a significant role to play on the working group with ISME, SFA, CIF and ICTU. That group could make a co-ordinated attack on the hidden economy.

Labour law compliance is important in tackling this part of the economy. We made a positive contribution to the new social partnership agreement, particularly in paragraphs 11 to 26, inclusive, which deal with labour law compliance and employment rights. There is a strong shared commitment between the social partners and Government to improved compliance with legal requirements underpinned by strong enforcement. A major package of measures has been agreed such as the establishment of a new statutory office for employment rights compliance.

Significantly, similar to the ODSCA, the new office will have clear links to Revenue through the memorandum of understanding and the legal underpinning of its establishment. The office will be permitted to share information with the Revenue. Such co-ordination is needed to crack down on much of the illegal activity as people avoid taxation and various other legal requirements. The new package of measures, outlined in paragraphs 11 to 26, inclusive, of the new agreement manifests a strong commitment on my behalf and that of the Department to tackle the hidden economy effectively and in a co-ordinated manner with other relevant authorities.

Ruairi Quinn (Dublin South East, Labour)
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Will the new working group be chaired by the Revenue Commissioners rather than the Minister's Department?

Micheál Martin (Cork South Central, Fianna Fail)
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Yes.

Ruairi Quinn (Dublin South East, Labour)
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If the group is driven by the Revenue, it will miss much of the action. It is estimated the value of the black economy could be as high as €15 billion a year. While it is difficult to measure, the OECD and Jim Power of Friends First say it is enormous. Does the Minister agree that many activities in the hidden economy other than tax evasion fall within the statutory remit of his Department and it should be the lead agency in driving the new group in conjunction with other Departments? For example, work permits and compliance with company law and health and safety standards are vested in his Department through statutory instruments. I do not get a sense from the Minister that his Department looks on this as even a peripheral concern, not to mind a central concern, and it considers this to be primarily a Revenue issue. More than 100,000 enterprises that employ fewer than ten people are struggling daily in a buoyant economy because illegal, pirate and cowboy operators are not complying with the law. These enterprises are forced to cut corners and reduce their compliance with legal standards, which we all support.

They desperately need help and although the Minister has primary responsibility for the economy and employment, as well as company and employment law within the economy, I do not get the impression that he envisages for himself a central and primary responsibility in the minimisation — it will never be eradicated — of the operation of the black economy. Some people have suggested it has grown by 50% in the past 20 years.

Micheál Martin (Cork South Central, Fianna Fail)
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I must reject the Deputy's assertion that neither I nor my Department are committed to this issue. It appears as though the Deputy had made up his mind in that regard before asking the question or hearing the reply. For example, our contribution to the social partnership talks in respect of labour law compliance has been strong. If one considers health and safety, within the past year my colleague, the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Killeen, has finalised and brought into law a substantial new consolidated Safety, Health and Welfare at Work Act, which contains extremely significant obligations for employers regarding their responsibilities. In terms of company law, the Department is very committed to the Office of Director of Corporate Enforcement, which comes under the aegis of my Department. The establishment of this office is a recent development. Hence, there is no evidence at all to suggest a reluctance on the part of my Department to deal with the issue of the hidden economy.

Ruairi Quinn (Dublin South East, Labour)
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The Minister should show some leadership in this regard.

Micheál Martin (Cork South Central, Fianna Fail)
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I do not see anything wrong with the agreement on the part of the social partners to the effect that Revenue should chair a working group on this matter. It is of key importance that everyone should be represented on the working group to ensure co-ordination. Revenue is a powerful force with regard to the hidden economy and its impact on the latter should not be underestimated or understated. As far as the new director within the Office of the Director for Corporate Enforcement with responsibility for labour law is concerned, it is of key importance that he or she has the legal capacity and obligation to relay any Revenue-related matters, which he or she might encounter in the course of specific investigations, back to Revenue. Such intersectoral and interdepartmental synergies will achieve the best results in this respect.

Séamus Pattison (Carlow-Kilkenny, Labour)
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The House should proceed to Question No. 39.