Seán Kyne (Galway West, Fine Gael)
Link to this: Individually | In context

Our economy is one of the most open in the world, a fact that has both negative and positive aspects. An open economy is more vulnerable to international economic events and shocks which leave indigenous companies and businesses more exposed and thus constrain the intended effects of economic decisions taken by the State. However, the positive effects of an open economy where innovation, enterprise and investment are encouraged far outweigh the negatives.

A recent National Irish Bank-Financial Times foreign direct investment monitor ranked Ireland as the second most attractive country globally for foreign direct investment. It is worth noting that over 1,000 overseas companies support 146,000 jobs, generating €110 billion in exports, which directly benefits the Exchequer. The figures clearly demonstrate that foreign direct investment plays a crucial role in stimulating economic development here and, along with the clustering effect, promotes innovation and entrepreneurship among indigenous companies. It is some achievement for a country of our size to note that eight of the world's top ten ICT companies are here along with nine of the top ten pharmaceutical companies and 17 of the top 25 medical device companies.

Overseas companies play a very significant role in my constituency of Galway West. The Government, working with the IDA and the chamber of commerce in Galway, among others, has so far this year helped to attract 750 new multinational sector jobs, with hundreds more indigenously created jobs and spin-off jobs. I spoke recently with the senior manager of a multinational company in Galway, an Irishman who, like so many thousands of others, has benefited from the sector's progress and development in the West. It was his contention that, in the event of a conflict between Irish law and business practices or the wishes of a multinational company, it is Irish law that should be changed. As I believe in the legislative functions of the Oireachtas on behalf of the Irish people, I disagreed respectfully, but it does raise an important concept. The ability to make law must always rest with representatives of the people acting for the good of all citizens and the nation. However, that must not preclude us from having a common sense approach in creating a business-friendly environment which is conducive to job retention and creation.

On top of the commitments to aid economic recovery and employment creation contained in the programme for Government, the Taoiseach has set this country an ambitious target to make Ireland the best small country in the world in which to do business by 2016. Given the impact of foreign direct investment on our economy, implementing measures to make it easier to invest, conduct business and create jobs is central to achieving the target. The 2012 jobs action plan is one such measure. This document is a culmination of a new approach in delivering success by identifying not just the desired goals for job creation but also those groups, Departments or organisations responsible for achieving these goals. It also identifies a plan of action for further building on the success of the multinational sector. Multinationals invest in Ireland for many reasons, including our talented workforce, geographical position, competitive corporation tax rate and uncomplicated, straightforward business regulatory system. Revenue is one organisation which has gone to great lengths with online and IT support systems to make it easier for businesses to pay taxes and charges such as VAT and so forth.

This legislation forms part of this uncomplicated pro-investment and pro-jobs approach. By extending acceptance of international accounting principles we are simplifying regulations but not diminishing the strength and spirit of the underlying provisions of the various Companies Acts. Furthermore, the specific extension of the acceptance of US-GAAP, or generally accepted accounting principles, will benefit the some 550 US companies with operations across our country. The Bill will also benefit companies whose securities are registered with, or which report to, the US Securities and Exchange Commission.

With this legislation, the Government is ensuring red tape and bureaucracy is kept to a minimum. Accepting the international accountancy practices will further entice and attract multinationals from across the world to Ireland, including to Galway West. This in turn promotes investment and innovation and brings the benefits of employment to both citizens and the State. Indigenous companies also benefit from new contracts and networks, which can lead to new business. The clustering effect which multinationals bring greatly assists in the establishment of indigenous start-ups which spot opportunities either to complement or compete with the newly attracted companies. Ultimately, there is no single cure for our unemployment problem. We need a series of measures, this legislation included, which are well thought out and carefully constructed and complemented by clear points of responsibility which will get our people back to work.

Seán Kenny (Dublin North East, Labour)
Link to this: Individually | In context

This Bill proposes a number of focused changes to company law in the interest of maintaining a flexible operating environment, particularly for companies that bring foreign direct investment to Ireland. The Bill amends the provisions of the Companies (Miscellaneous Provisions) Act 2009, which permits the use of US accounting standards - referred to in the Bill as US GAAP - in the preparation of the accounts of a specified category of company, and allows for the prescription of the use of other internationally recognised accounting standards. Without changing eligibility criteria, the Bill extends both the timescales relating to the availability for use of US accounting standards and the period for which an individual company can avail of this provision. There was already a sunset clause and a maximum period companies could use, both of which are being amended. The Bill also correspondingly extends the periods in respect of the provision in that Act for the prescription of other internationally recognised accounting standards.

These measures can be seen in the context of the Government's policy of encouragement and facilitation of foreign direct investment. The importance of foreign direct investment to the economy remains highly significant. FDI accounts for a total of 250,000 jobs, one in every seven, in Ireland. The immediate outlook for Ireland's foreign investment portfolio is exceptionally good. To date in 2012, there have been 25 investment announcements, with the potential to create more than 4,000 jobs. It is encouraging to note that notwithstanding the economic downturn, Ireland continues to be an attractive location for foreign direct investment and that so many companies are prepared to undertake and announce these investments in Ireland. Foreign direct investment has a major role to play in the current situation where Ireland is in the process of emerging from a period of unprecedented financial turbulence and where critical stages in that process still lie ahead. The Government has operated on a wide variety of fronts in addressing the task of repairing our economy and restoring our international reputation. We are engaging with our European colleagues, the United States and many other countries to demonstrate that Ireland is squaring up to its economic difficulties and has the intent, resolve and imagination to overcome them.

As a member of the European Union, Ireland offers international investors a stable political and economic environment and a sophisticated and well developed corporate, legal and regulatory environment. The quality of our economic regulation is a significant factor in our competitiveness and growth. It is critical, therefore, that we have the capacity to respond to economic circumstances as they unfold in a way that is both strategic and reflects the evolving needs of business and investors. Those companies with a presence in Ireland and availing of the US GAAP facility under the 2009 Act provide significant employment here which this Bill should help to consolidate, with the possibility of further jobs being created, particularly if the economic situation in export markets picks up over time. Those companies are involved across of range of industry sectors, including health care, technology and services.

In my constituency of Dublin North-East, an announcement was made in April of 280 new jobs in Baldoyle with Mylan Inc, a key member of the Irish pharmaceutical sector providing high quality generic pharmaceuticals and over the counter medicines around the world. This was a very welcome announcement for Baldoyle and Dublin. It is a further sign that Ireland is attractive as a location for investment and serves to demonstrate why legislation such as this is important. At a time when unemployment is at very high levels, the Mylan and other announcements from US companies such as Amgen, Apple, Twitter and Paypal, show that Ireland is able to entice investment and to create jobs along with that investment. Jobs and investment are the only way our economy will ever recover properly. This legislation serves to show multinational companies that Ireland is a good place in which to do business.

I understand that the new Bill will run to over 2,000 sections, will consolidate existing Irish company legislation dating back to 1963 and will introduce several reforms. The Bill will consolidate the existing 15 Companies Acts - 16 when the Bill currently before the House becomes law - dating from 1963 as well as other regulations and common law provisions relating to the incorporation and operation of companies into a single Act which is expected to comprise 1,400 sections. Parts 1 to 15 of the Bill contain all of the laws relating to the most common company type in Ireland, the private company limited by shares.

In summary, the provisions of the Bill cover the incorporation of companies, corporate governance, sureties for directors and secretaries, financial statements and auditors, receivers, reorganisations, examinerships, wind-ups, compliance and enforcement. These provisions are brought together in a coherent structure which will facilitate business people in incorporating and operating companies on a day to day basis.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

I welcome this Bill. We must all agree that any Bill referring to company law is hugely important in any economy at any time, but anything that refers to company law in this economy and to the need to encourage foreign direct investment is of special importance.

At a time of so much instability and negativity, it is hugely supportive of the economy to see people interested in investing here who put their money where their mouths are and invest in the economy and create jobs. While we should not become slaves to this, we need to be able to attract foreign direct investment and to be able to demonstrate to those viewing us from outside that we are attractive to investors. We must also recognise the need to have ongoing investment in manufacturing, services and the financial sector, thereby enlarging our economy in the competitive, global market that exists currently. Deputy Ross mentioned that he had some reservations with regard to the possibility of a financial transaction tax being imposed by some other European countries and the impact this would have. I agree. It goes without saying that no European country will indulge in a financial transaction tax unless it is globally acceptable, because any country becoming part of such a system would find itself isolated and vulnerable. The financial services sector in this country would be hugely vulnerable, particularly vis-À-vis those countries that would not sign up to such a proposal.

In general, it is with regard to the application of company law in the main companies that I look forward to this Bill coming before this House. As I have mentioned many times, I believe there has been a flagrant cavalier attitude to company law in this country, and others, over the past number of years. If adequate regard was had for company law, we would not be in the economic situation we are in, or at least not to the same extent as we are. As one of those who participated in the sub-committee dealing with the 1990 Act, the last major visit we had to company law, I believe we need the consolidation Bill before the House as a matter of urgency. I am aware there are thousands of sections in the Bill, but so be it. In order to be able to work in an environment that is competitive nationally and internationally, it is of huge importance that those involved in companies and investment - those investing now and those likely to invest in the future - can be certain they do so in an environment wherein everybody refers to the same rule of play, the same ground rules and the same level playing pitch.

Even a superficial appraisal of what happened with some major players in this country over the past ten or 15 years would give one a jaundiced view of what was happening with regard to good fiduciary practice, good governance, annual reviews, independent audits, auditors' reports and their implementation, DIRT, and the reforms that were supposedly put into place during that period. Why were these never implemented? Why has every recommendation on company law in the past ten or 15 years been ignored? As a result of a lack of implementation of those basic principles of company law, many people are now out of work. Many in our society are paying the price for those who avoided company law to the extent of being cavalier.

While I welcome this Bill, which is to facilitate foreign direct investment - which we all support - I must point out that major consolidation legislation is eagerly awaited and badly needed, and should be dealt with as a matter of urgency.

There is a tendency in this country to be suspicious of foreign direct investment. There are some in the House who regularly state that people would not invest here if it were not to make a profit. I ask you, a Cheann Comhairle: what other reason is there for investment? Does anybody invest for loss? I have never heard of such a thing in my life. If anybody is suggesting that people would invest for loss or for another purpose, I would like an example, because no one has ever brought such a thing to my attention. To those who say in a critical fashion that people invest here only for profit, I say of course they do. That is what everything is about. It is what keeps the economy turning over.

There are also those who have been critical in the past of foreign direct investors, accusing them of repatriating their profits. What do such people suggest investors do - distribute their profits through charitable donations to the country in general? I have never heard such nonsense in my life. There is no reason people invest except to make a profit and to contribute to society and to social evolution.

We welcome the Bill as it is, and we fully accept what it proposes to do. Incidentally, in my constituency we have long had a positive attitude towards foreign direct investors, and their numbers prove it. We welcomed investors in a similar economic climate to the one in which we are living now, when many wise people were suggesting we should not go down that road but should take a different route involving the setting up of different types of industry which would supposedly be more effective. They were wrong. We commend those companies that have set up here, including Intel, Hewlett Packard and various companies in the pharmaceutical and medical sector. That is the approach we must take in the first instance. On the back of that investment, we must be prepared to encourage other industries to locate here and provide employment in order to maximise the economic impact and utilise all possible opportunities for increasing the size of our economy in the future.

I have long been of the view that we must protect and promote the manufacturing sector. Over the past number of years there has been a theory in this country that we should forget about manufacturing and invest everything in technology. That is a good idea; technological items must be manufactured as well. However, we should never forget that once we become uncompetitive, for whatever reason, in the manufacturing sector, it automatically follows that the same situation occurs in the services sector and, ultimately, our entire economy is affected. Over the past ten or 15 years, manufacturing companies have left this country and gone to adjoining jurisdictions. That should not be happening. We need to ask ourselves, seriously, what the reason is. I have a fairly good idea what some of the reasons are, but I will not go into them this evening, the Ceann Comhairle will be glad to hear. However, we need to focus on this, because every economy depends on competitiveness - how we compare with those in the same market as ourselves. As public representatives we should do all in our power to ensure we are constructive and that, particularly in the present climate, we are positive in encouraging those who want to invest here.

We do not want to see a repeat of some of the things we have witnessed over the past 20 years with regard to the application of company law, such as companies being used as investment houses for the benefit of those seeking to make a quick buck and walk away afterwards. We do not want that in the future and we do not want to give the impression that it is in any way acceptable in this country.

Mattie McGrath (Tipperary South, Independent)
Link to this: Individually | In context

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.

Terence Flanagan (Dublin North East, Fine Gael)
Link to this: Individually | In context

I propose to share time with Deputy Paul Connaughton. I welcome this short and focused Companies (Amendment) Bill, which extends the period by which certain companies can use the US accounting framework rather than the accounting framework used in Ireland. Generally, the international financial reporting standards, IFRS, system is used in Ireland but this Bill will allow US companies to use the general accepted accounting principles, GAAP, system until the end of 2020. This was to be phased out by 2015 but there is no global agreement on the accounting rules and how companies in different countries use different rules. Accordingly, this is being extended. The Bill will be particularly of interest to US multinationals and the companies they deal with. It will save time and cost for those who have offices in Ireland. It will improve efficiency and also Ireland's competitiveness and attractiveness as a location in which the US looks to invest.

Ireland ranks high in the IMD world competitiveness survey. It is ranked first for the availability of skilled labour, first for investment incentives and first for the flexibility and adaptability of our workforce. These are three important areas that should encourage investment in the country. In 2011, Ireland was ranked second for openness to foreign investors, another reason why we should attract investment. The strong "Yes" vote on the stability treaty endorsed the perception of Ireland as a stable country and endorsed the confidence that we are on the road to recovery. One of the priorities of the IDA is to attract more foreign direct investment to Ireland, as outlined in its strategy documents.

The US has been an investor in Ireland for a long time. It believes in the strengths and talents of the Irish workforce. This country has a good future. More than 100,000 workers are in US multinational companies and over 50% of foreign direct investment in Ireland has come from the US over the past five years. One in seven jobs in Ireland comes from foreign direct investment. This Government is determined to get Ireland back on track and to be numbered among the top five countries for international competitiveness, an ambition which is aided by the low corporation tax rate of 12.5%.

I refer to the welcome announcements in recent months by US multinational companies. Hewlett Packard announced 280 jobs in Kildare and in Galway. PayPal announced the creation of 1,000 jobs in its European, Middle East and Africa customer service headquarters to be based in Dundalk. Both Eli Lilly and Apple announced that they would each create 500 jobs in Cork. Mylan is a US multinational pharmaceutical company announced 300 jobs in the Baldoyle industrial estate in my constituency of Dublin North-East and a further 200 jobs in the Minister of State, Deputy Dinny McGinley's constituency. This announcement is much appreciated and welcomed by our constituents. The chief executive officer of Mylan stated that the availability of a skilled and a highly educated workforce with a strong work ethic and a commitment to excellence had encouraged Mylan to make this further investment in Ireland.

We need to have self-belief and be confident that we are taking the right steps to take our country out of recession. The Taoiseach recently led a trade mission to China and he was accompanied by the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney. It is hoped this visit will lead to announcements of job creation in the future. Some contracts and agreements have already been signed and the Government is working to promote and encourage foreign direct investment into Ireland.

Foreign direct investment generates 70% of corporation tax and it contributes to expenditure of €19 billion in the economy and generates €110 billion in exports. This investment should be encouraged and the provisions in this Bill will help to make Ireland a more attractive option for international companies to expand and to set up business in Ireland. It will allow US companies to prepare their Irish accounts using the US GAAP accounting standards and this will create a more efficient system and companies will incur fewer costs. Any provision that allows for lower costs and less red tape is to be welcomed.

We all want to see further foreign direct investment in Ireland and less bureaucracy for business. I commend the Bill to the House.

Paul Connaughton (Galway East, Fine Gael)
Link to this: Individually | In context

I am pleased to have the opportunity to speak on Second Stage of the Companies (Amendment) Bill 2012. Increasing Ireland's competitiveness in the global market place is absolutely essential in order to effect a reversal in the economic fortunes of the country. As more countries experience recession, the task of securing foreign direct investment becomes even more difficult. It is imperative that Ireland builds on its many advantages for foreign companies seeking a European base by ensuring that its company law is as streamlined and as easy to navigate as possible.

The amendments contained in this Bill seek to extend the period of time in which certain Irish incorporated companies can prepare and file their accounts under an accounting framework that applies in the USA, from the end of 2015 to the end of 2020.

This Government has prioritised the encouragement and facilitation of foreign direct investment and this Bill is one of a raft of measures being undertaken to ensure that the necessary housekeeping is done to smooth the way for companies considering investing here. Foreign direct investment accounts for one in seven jobs in Ireland, a staggering 250,000 jobs. What is particularly encouraging is that jobs continue to be created and to date this year, the creation of 4,000 jobs in 25 separate investments has been announced.

The ability to attract jobs, given the current unprecedented financial turbulence, is particularly commendable It is often the case that financial uncertainty creates an entrenchment which makes new investment less attractive and so the successes to date are very significant. However, every Member of this House is only too aware of the significant number of people who are currently unemployed and job creation remains a top priority. Thus, it is critical that every possible step is taken to ensure that Ireland becomes increasingly competitive in the global market.

A skilled workforce, attractive tax regime, English language usage and a cohort of multinational companies already based in Ireland, are just some of the attractions, but a pro-business environment is also extremely important and that is what this Bill seeks to effect. The WorldCompetitiveness Yearbook for 2011, ranked Ireland first in the world for business legislation for foreign investors and the attitude which underlies this first-rate ranking is reflected in this Bill.

Economic circumstances are changing at a rapid rate. The ability to adapt quickly and properly to the given circumstances will be critical in the months and years ahead. The need to meet evolving needs is a key consideration for any nation. With such a state of flux in world markets, pressure will be maintained to identify new opportunities and to create the conditions necessary to attract investment to Ireland.

The lack of uniform accounting standards is a constant headache for multinational companies and has also been an issue of international political concern, especially among G20 leaders. There is ongoing work to unify US accounting practices and the international financial reporting standards which are used in Ireland, but this work is slow and hopes that this work would have been completed by 2015 will not be realised. This Bill is necessary as it seeks to provide confidence as to the future accounting rules for companies either already located here or those considering locating here. The Bill will eliminate duplication of cost and effort for such companies as they will not be required to prepare two sets of accounts under two sets of accounting standards. This is a further common-sense measure being taken by this Government to return Ireland to the highest ranks in terms of international competitiveness and I commend all involved as their work will help smooth the financial path for American multinationals already located in Ireland and also for those considering locating a European headquarters in Ireland.

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context

I concur with the views of my colleagues, Deputies Terence Flanagan and Paul J. Connaughton. I refer to the battle to attract foreign direct investment. The template for attracting foreign direct investment which this country has used in the past has proved very successful. I refer to statistical information on Ireland's share of foreign direct investment and our share of global income which shows that the country attracts two and a half to three times more investment than our size suggests. We are doing exceptionally well in attracting this investment. It is hoped this Bill will provide the support that is required in this regard. There continues to be a great need to diversify the number of trading partners we have as quickly as possible, as well as the number of investment sources. That is why I welcome the trade delegation the Taoiseach led to China, which included the Minister for Agriculture, Food and the Marine, Deputy Coveney. We should quickly build up our trading relationships with that region. The willingness of companies there to invest in Ireland is of gigantic importance.

Both the Taoiseach and the Minister for Enterprise, Trade and Innovation have done much work to attract investment from the digital gaming and video games sector. That industrial sector is already bigger than the music industry internationally and will soon overtake the film industry. The jobs action plan recently published by the Government contains a section of action steps to be taken on that sector. I wish to flag the need for us to deliver on those action steps. It was recently reported that the company producing the Angry Birds online video game, which is an extraordinarily successful product globally, is considering shifting its European headquarters to Dublin. If that were to happen, it would be very beneficial for the signals regarding that sector in Ireland. However, we must also deliver upon the steps we have taken to support our indigenous companies in the same sector. The publication of the next quarterly update on our jobs action plan will be important in that regard.

I will end on a point that I know is close to the heart of the Acting Chairman, Deputy Mathews. It concerns the accountability of those who implement accounting practices and oversee accountancy codes. To our cost both here and globally, we have seen that companies which were meant to be overseeing the accuracy and veracity of statements of banks and other companies have let us down. Apart from one incident when a company that was involved in an American firm went bankrupt, I am still at a loss to understand what steps we have taken to improve the accountability of companies within Ireland who are responsible for signing off on accounts and ensuring they represent true and realistic estimates of what is happening within a company. While that is a theme for another day, I cannot let a Bill that refers to accounting come before the House without referring to that issue.

Dinny McGinley (Donegal South West, Fine Gael)
Link to this: Individually | In context

The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, is unavoidably absent and cannot deal personally with this Bill, so he has asked me to deputise for him.

I wish to thank all the Deputies who spoke on the Bill for their helpful and interesting contributions to the debate, and for the level of support which was evident from what they had to say. On behalf of the Minister, I will respond to some of the issues raised in the House both last night and today. To begin with, it should be emphasised that this is not a new provision as such, rather it is one which extends the timeframe provided for the use of the accounting standards in question in sections 1 and 2 of the Companies (Miscellaneous Provisions) Act 2009.

Deputy O'Dea made some valid and knowledgeable points both in relation to accounting generally and to accounting standards. In particular, Deputies O'Dea and Ross raised general issues concerning audits on which the following observations are relevant. The subject of audits is active at EU level at present. In the wake of the financial crisis, the European Commission brought forward proposals in the audit area, in the form of an interlinked draft directive and regulation. These measures are aimed at addressing perceived weaknesses in the audit process shown up by the financial turmoil of the past number of years, and of delivering enhanced audit quality. The draft audit directive and regulation are being considered by member states in Brussels at present and the Minister's Department is participating in these negotiations. The European Parliament is conducting its own parallel examination of the measures.

The proposed regulation addresses itself to the audit of systemic entities or so-called public interest entities, a category that includes many institutions which were part of the financial crisis. These audit proposals seek to address a number of concerns, including the independence of auditors from their clients; possible absence on auditors' part of professional scepticism; and lack of top-end audit competition and choice. Another theme covered is that of the expectation gap between what it was anticipated the audit would do and what materialised from the audit process. This is just a flavour of these audit proposals. The negotiations in Brussels are expected to continue for a good part of the next year. To assist in formulating its policy position on these issues, the Minister's Department has consulted with stakeholders to obtain their views and has also established a contact group with relevant stakeholders which will meet regularly as negotiations progress in Brussels.

The Department's general approach is one of seeking proportionality in the measures to be adopted, with a focus on achieving the best possible audit quality. The expectation is that some kind of common approach will be worked out arising from negotiations at Council level over the next six to nine months or so. This would parallel consideration in the European Parliament. Given that Ireland will have the Presidency of the European Union from 1 January until 30 June 2013, the Department is likely to be overseeing progress at a vital stage of these audit issues. In preparation for Ireland's Presidency, the Minister will shortly be meeting with the chairpersons of various groups in the European Parliament, which examine various legislative proposals. From this he will be able to form a clearer view of the way ahead on this and other areas relating to his overall remit. Obviously, whatever package of measures is adopted by the EU will be incorporated in Irish legislation.

Another important factor in the audit equation is that of quality assurance in respect of the audit of public interest entities. Independent quality assurance of audit firms regarding public interest entity audits is an important step to rebuilding audit confidence dented during the financial crisis. The Department is currently finalising logistical aspects of the practical implementation of such a provision based on the EU Commission recommendation in the matter, which will entail direct inspections of relevant audit firms' files by the Irish Auditing and Accounting Supervisory Authority. This will require primary legislation, and it is the Minister's intention to make a submission to Government shortly for drafting approval for this.

Deputy Tóibín raised the issue of the desirability of developing links between the domestic economy and the FDI. In that regard, I would like to point to the action plan for jobs which provides for collaboration between Enterprise Ireland and IDA Ireland on maximising procurement opportunities with multinational companies.

Deputy Healy-Rae referred to setting up a scheme whereby community groups would be able to access audits based on a competitive pricing structure. This is not a policy matter for the Minister's Department, although the idea of shopping around might be explored. However, the position regarding audit exemption for companies which have formed themselves as companies limited by guarantee - which Deputies Michael Healy-Rae, Michael McGrath and Paschal Donohoe raised - is that entities with charitable status are governed by the Charities Act 2009 under the aegis of the Minister for Justice and Equality. They are answerable to their stakeholders, shareholders and funders. Many charities which formed themselves as companies have done so as companies limited by guarantee, CLGs. Due to their public membership structure, they cannot avail of an audit exemption. The 2009 report of the Company Law Review Group examined the issue of extending audit exemption to companies limited by guarantee. It made the following recommendations. Subject in each case to consultation with the Minister for Community, Rural and Gaeltacht Affairs and the charities regulator, the audit exemption regime contained in Part III of the 1999 (No. 2) Act be extended to such class or classes of CLGs which are charitable organisations within the meaning of the Charities Act 2009 so as to bring them into alignment with charitable organisations that are not companies provided that 10% of the members with voting rights can require an audit. The audit exemption regime contained in Part III of the 1999 (No. 2) Act be extended to all CLGs which are not charitable organisations subject to a veto right by any one member of the company and further subject to the requirement that audit exemption in respect of the following year shall be an item on the agenda of the annual general meeting.

The Minister for Jobs, Enterprise and Innovation, Deputy Bruton, proposes that provisions giving effect to the recommendations of the Company Law Reform Group in this matter be included in the companies Bill which it is proposed to publish in the second half of this year. I can assure Deputy Durkan that it is the intention to introduce the companies consolidation Bill later this year and to bring it before the Oireachtas at the earliest possible opportunity thereafter. The CLRG recommendations contemplate that any proposals in this context will be subject to consultation with the Department of Justice and Equality.

Regarding the second point raised by Deputy Healy-Rae concerning the putting in place of systems to protect sub-contractors, I understand that Senator Feargal Quinn has put forward a Private Members' Bill, the Construction Contracts Bill, which is currently being considered by this House and deals with issues such as those of concern to Deputy Healy-Rae. Company law does not afford an appropriate mechanism to deal with this issue in the form in which it most commonly arises.

Deputy McGrath expressed concern in his contribution about the amount of red tape which inhibits the creation of jobs and development. The Government is to create an environment in which more businesses can be established and expanded to create the jobs we so badly need. A crucial aspect of this will be a reduction in costs faced by business. The Government is taking urgent action to address the costs which are directly within its control.

On behalf of the Minister, Deputy Bruton, I again express my appreciation for Deputies' contributions to this debate and for their manifest support for the proposal. As already stated, many of the beneficiary companies have a presence in this country and provide valuable employment and they will be encouraged to deepen and expand their activities in Ireland in future years.