James Lawless (Kildare North, Fianna Fail)
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8. To ask the Minister for Jobs, Enterprise and Innovation her views on the introduction of a scheme to incentivise small businesses to innovate without risking scarce capital reserves (details supplied); and if she will make a statement on the matter. [43135/17]

James Lawless (Kildare North, Fianna Fail)
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Before I introduce Question No. 8, I refer to Question No. 25, tabled prior to the budget, which refers to Ireland joining the European Southern Observatory. I acknowledge that Ireland has commenced the process of joining the body. This is a welcome and positive step for Ireland's astronomy community and presents many commercial opportunities. I thank the Tánaiste and her Department for their role in this matter.

Question No. 8 refers to the possibility of introducing an innovation scheme that would provide Government support to allow small businesses, with their limited reserves and cashflow but unlimited energy and enthusiasm, to innovate.

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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I thank Deputy Lawless for his remarks on Ireland's decision to become a member of the European Southern Observatory.

In December 2015, the Department published Innovation 2020, Ireland's five-year strategy on research and development, science and technology, which sets out the roadmap for continuing progress towards the goal of making Ireland a global innovation leader. Funding has been provided to Science Foundation Ireland for additional research centres, including the research centre announced in the budget.

The Deputy is correct that there is a need to drive up the innovation capability of Irish companies in order that they can compete internationally. I would go so far as to say that if they do not innovate and diversity, Irish companies will find it difficult to compete in the current trading environment. Advance manufacturing centres have an important role in allowing manufacturing companies to adapt to new technologies, which are dramatically changing the face of manufacturing.

While the benefits of innovation to firms in terms of increasing new products and services are well understood, innovation can involve upfront expenditure. As the Deputy pointed out, this can impact on cashflow for firms. The research and development tax credit specifically recognises this issue and has been improved to help address this cashflow issue for companies.

Enterprise Ireland operates a range of supports to help companies mitigate the issues associated with undertaking innovation by providing funding and support to undertake these activities in-house, where appropriate, or helping them to engage with third level researchers.

Enterprise Ireland's innovation supports help companies of all scales and capability levels. Even the smallest firm can avail of an innovation voucher, with 418 such projects completed to date under this scheme. They can also engage with academic research groups which are aligning more closely with industry and business. Enabling small companies to make links with the various research centres is a positive development. We are seeing very positive engagement in the manufacturing centres.

James Lawless (Kildare North, Fianna Fail)
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The Tánaiste referred to Innovation 2020. I am very concerned about progress on this strategy, although I acknowledge that it is a national strategy and my question is directed at a lower level. We learned during the week that Ireland spends approximately 1.45% of GDP on research and development whereas the figure is supposed to be 2.5%. I am very concerned about this. I reviewed Innovation 2020 last night and we are very far from meeting the objectives set out in the strategy.

The Tánaiste also referred to Science Foundation Ireland's research centres and the funding provided in the budget for a new research centre. While these centres do great work, they are not applicable to small business, which is the focus of my question.

I met representatives of the Small Firms Association and ISME recently. As a former chairman of a small business association, I know that small firms find it difficult to access supports, particularly high-level supports such as Science Foundation Ireland's research centres and fiscal measures such as the research and development tax credit and knowledge box tax credit, to which I had amendments made earlier in the year. We must try to assist small businesses to avail of these schemes. Small business groups inform me that while such initiatives are fantastic and make sense, large companies with significant reserves can take the risk of receiving a tax credit or having a tax audit done in later in the year, which may involve a clawback. However, a small firm struggling daily with cashflow will find it much more difficult to do this because it cannot risk this type of capital expenditure upfront in uncertain circumstances.

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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11 o’clock

I take the Deputy's point about companies taking the risk of putting time and money into innovation. We have an important role to play in supporting companies in that regard. Many companies tell me they get so caught up in their challenging day-to-day work that it is difficult to take any time out to innovate. Sometimes, companies do not use the available range of supports. We need to publicise further the research and development fund as well as the innovative high-potential startup fund, which has received a large allocation from Enterprise Ireland.

While I take the Deputy's point that the big research centres are more connected to large-scale business, there is potential for collaboration. Enterprise Ireland will connect companies with particular researchers and institutes in order to develop their products, and its commercialisation fund provides supports for academic researchers to pursue research outputs with commercial potential. There are a number of schemes.

Cashflow can be an issue for firms undertaking research and development. In this context, the research and development tax credit has been amended to meet the needs of SMEs.

James Lawless (Kildare North, Fianna Fail)
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Indeed, those supports and schemes are useful. I will propose two potential practical solutions if the Tánaiste is minded to adopt or consider them, the first of which addresses difficulties experienced by small firms. Some of these can be startup enterprises of one to ten people, so we are not discussing established companies with capital and reserves. Under the JobsPlus scheme, a person is hired from the live register and the employing company receives a cash credit for every month that he or she remains in employment. Would the Department consider an "R&DPlus" scheme? Along similar lines as JobsPlus, where demonstrable innovation takes place, an actual cash credit or financial advance would be made to the company to support that work. It is a real measure and companies would not have to wait until the end of the year or face the uncertainty of it being clawed back. Rather, they could avail of it in the same way that employers do under JobsPlus.

My second proposal is the idea of a mentoring scheme in which lean processing, such as Lean Six Sigma, and other advanced business practices can be brought to bear on smaller companies that may not be aware or availing of them. This could be done simply and cheaply. It would involve pairing up retired industrialists with SMEs in their sectors through local enterprise offices, LEOs, and education and training boards, ETBs. This could solve the problem without requiring significant capital investment.

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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The Deputy might write to me about those two initiatives. I would be happy to raise them with Enterprise Ireland and consider them within my Department to determine whether we can progress them.

I would encourage small businesses to use another somewhat underused scheme, namely, the innovation voucher. The budget has allocated €4 million for it. It promotes a transfer of knowledge between Ireland's public knowledge providers and small business companies. Vouchers worth €5,000 each are provided to enable small businesses to seek assistance, be it in terms of skill or knowledge, from publicly funded researchers to address problems or proposals in respect of their business activities. This could be an important initiative for the small businesses of up to ten employees that the Deputy mentioned. It is meant to get them started. They may have ideas about how to innovate or diversify their businesses but do not know where to start. The innovation voucher is useful, but somewhat underused. It is important, in that it helps smaller companies to deal with the cashflow issues the Deputy mentioned. The amount is small, but it might have a good impact if used.

Pat Gallagher (Donegal, Fianna Fail)
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To explain to Deputy Ó Cuív, Question No. 9 was taken with Question No. 6, which was the Minister of State's prerogative. However, I understand that the notification of the questions being grouped went out yesterday at 4.40 p.m. Obviously, Deputy Ó Cuív did not get that notification.

Éamon Ó Cuív (Galway West, Fianna Fail)
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May I explain exactly what happened? Yesterday evening, we got a list of the questions that were being grouped. On yesterday's Order Paper, my question was not No. 9, but No. 4. I read the list, which referred to Nos. 6 and 9, and thought that I was fine because I was No. 4.

When Deputies are given the groupings, do they refer to the numbering on the Order Paper at the time the listing was received or do they refer to the Order Paper that will be issued at midnight for the following day? That is where the confusion arose. I was careful to check.

Pat Gallagher (Donegal, Fianna Fail)
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Obviously, the grouping was for today's Order Paper, on which the Deputy's question is No. 9, but he would not have been aware of that. We will have this matter clarified to ensure that, in future, Members will know in advance if they are being-----

Pat Breen (Clare, Fine Gael)
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On a point of order-----

Pat Gallagher (Donegal, Fianna Fail)
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What is the point of order?

Pat Breen (Clare, Fine Gael)
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It could not have been No. 4 because No. 4 would have been a Priority Question.

Éamon Ó Cuív (Galway West, Fianna Fail)
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It was No. 4 on yesterday's paper because there were no Priority Questions on that list.

Pat Breen (Clare, Fine Gael)
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I do not know.

Pat Gallagher (Donegal, Fianna Fail)
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If it was No. 4 yesterday, then it was No. 4 and we should not doubt that. This is not a matter for the Minister of State. It is a matter for the-----

Pat Breen (Clare, Fine Gael)
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I would have no problem answering the question again.

Éamon Ó Cuív (Galway West, Fianna Fail)
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No, we are running out of time.

Pat Gallagher (Donegal, Fianna Fail)
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It has been taken already and the Minister of State got four minutes to speak on it at the time because it was grouped.

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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The Deputy wants it to be answered.

Pat Breen (Clare, Fine Gael)
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If the Deputy wants it, I will do it.

Pat Gallagher (Donegal, Fianna Fail)
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No. It has been taken. The Minister of State had four minutes at the time, so we will have to-----

Pat Breen (Clare, Fine Gael)
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It is not a question of me getting four minutes. It is the Deputy's Priority Question he wants-----

Pat Gallagher (Donegal, Fianna Fail)
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Hold on. We have to move on to Question No. 10 in the name of Deputy Niall Collins. At least when there is clarification, this situation can be resolved in future.

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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Yes.

Pat Breen (Clare, Fine Gael)
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I will ensure that Deputy Ó Cuív gets the additional information that I said I would forward to Deputy Broughan.

Éamon Ó Cuív (Galway West, Fianna Fail)
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It does not answer the question that I was going to ask, which related to a much more fundamental point.

Pat Gallagher (Donegal, Fianna Fail)
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The Members can have a one-to-one later.

Pat Breen (Clare, Fine Gael)
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If the Deputy wants a one-to-one, I would have no problem answering his question for him, if that is okay.

Pat Gallagher (Donegal, Fianna Fail)
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I thank the Minister of State.