Dáil debates

Thursday, 10 July 2014

Ceisteanna - Questions - Priority Questions

Enterprise Ireland Funding

9:40 am

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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2. To ask the Minister for Jobs, Enterprise and Innovation in view of the fact that just a small number of American firms account for two-thirds of Irish headline exports and that they directly employ about 72,000 persons here, his plans to re-balance employment distribution on a sustainable level. [30183/14]

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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Foreign direct investment is good and my party welcomes it. The Government must do all it can to ensure we will continue to win high levels of it. However, over-dependence on it is a major source of concern, especially when it is based on a small number of factors such as the bargain basement corporation tax rate used by the State. A number of years ago a senior adviser to US President Barack Obama stated we had an over-dependence on foreign direct investment. I am asking what the Government will do to bring to an end that over-dependence.

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
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Is Sinn Féin now proposing that the corporation tax rate is too low? Is that the inference of the Deputy's question when he says we have a bargain basement corporation tax rate? I do not accept the Deputy's inference that US foreign investment in the economy is at an undesirable level. The activities of US owned companies represent an important source of exports and employment. They are spread across 500 companies in a wide range of sectors and have strong links with the economy. Exports from foreign owned enterprises are an important and sustainable element of the economy, as they are in other small globalised economies.

While IDA Ireland client companies play an important part in the economy, it should be remembered that employment in such companies represents less than 9% of total Irish employment. The majority of employment comes from the activities of Irish owned companies and enterprises and these are the key focus of much of our enterprise policy. Many of the proposals developed in An Action Plan for Jobs have been designed to assist the start-up, scaling and internationalisation of Irish owned enterprises. Measures include the roll-out of the local enterprise office, LEO, network, the establishment of the potential exporters divisions, the increase in staff assisting Irish companies to develop in overseas markets, the increase in the number of trade missions, the creation of new instruments to facilitate access to finance and the development of sectoral strategies in areas such as tourism, software and food.

There is solid progress being made. Exports by Enterprise Ireland companies are up by €3.5 billion in the past three years, while employment has grown by 14%, from 146,419 to 166,184 higher than the total employed in IDA Ireland client companies.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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The effective corporation tax rate is too low. It is an international joke. It is a serious issue when, during the Taoiseach's travels to California, senior politicians joke that Ireland is considered to be an international corporation tax haven. Our reputation is low as a result. The Minister of State is correct in stating that, comparatively, there is a small number of employees working in the FDI sector, but this small number of firms account for two thirds of headline exports. We should know by this stage that when we localise the entire economy in a small sector, when we put all our eggs in one basket, as the previous Government did in the case of the property market, it causes problems. A healthy economy is a balanced one. It is one in which a large volume of exports come from the indigenous sector.

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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A question, please.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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What will the Government do to rebalance the economy to ensure a far larger volume of exports will come from the indigenous sector?

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
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If the Deputy thinks the effective corporation tax rate is too low, he should tell us what his party thinks it should be, rather than merely express it as a platitude.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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It should be 12.5%.

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
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Enterprise Ireland client companies have continued to generate increased jobs growth. They recorded the highest overall rise in employment levels in the past decade, with 5,442 net new jobs, some 3,620 of which were full time, at the end of 2013. Moreover, they provide employment for 175,750 persons, comprising 149,718 full-time and 26,032 part-time workers. We recorded export sales of €17.1 billion in 2013 and have set a target of €17.5 billion for Enterprise Ireland supported companies for 2014. There are 100,000 persons employed in 500 US companies here and we export goods and services worth €26 billion to the US market. Total trade between Ireland and the United States - the question relates to the US market - amounts to approximately €55 billion.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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The effective corporation tax rate should be 12.5%, but it is not; it is far lower than this. The point is that a foreign direct investment economic model is normally seen as transitional for an economy. Normally, a country uses the FDI model to start to build its indigenous economy. While the Minister of State indicates some increase in net jobs through Enterprise Ireland companies, it is minuscule compared to what is necessary. It has been the policy of the Government to outline some successes, but these successes are small in comparison to what is needed. What is needed is far more energy in ensuring indigenous businesses are successful. The Government can do this by increasing demand in the economy and this can be helped with taxation and stimulus measures and also by a reduction of costs. Will it ensure the slide in funding, both for Enterprise Ireland which has been experienced in the past few years and the successors to the county enterprise boards, will stop and that we will see significant funding for these two organisations?

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
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Enterprise Ireland's network of international offices now extends to 30. We opened two new offices during 2013, in Istanbul and Austin, Texas. Some 815 new overseas customers were secured for client companies, 38% of which were in high growth markets. In addition, 111 of Enterprise Ireland's high potential start-up companies secured their first new international reference company in 2013. There were 18 Minister-led overseas trade missions, in which more than 1,000 Enterprise Ireland client companies took part, and a further 67 international events in major target markets. We are making significant progress. There is a strong policy prerogative, since the creation of the LEOs, to support the SME sector at a local level and ensure those companies that have export potential through Enterprise Ireland will be supported. There is a broad range of supports available. I reiterate that there was €65 million in equity and venture capital, a figure of €92 million for technology and scientific infrastructure, €27 million for capability building and €19 million in capital for employment support and capacity expansion. This is taxpayers' money being invested effectively through Enterprise Ireland to support the indigenous sector.