Deirdre Clune (Fine Gael)

I welcome the Minister of State to the House. This Bill will enact the provisions of the jobs initiative about which we had a discussion last week in the House. Many speakers said that the Government does not create jobs, rather it creates the environment in which jobs can be developed and provided. Labour costs are extremely high and need to be reduced. We need to address competitiveness issues around labour costs. It is true that in the private sector generally the unit cost of labour has reduced through necessity.

The reduction in employers PRSI contributions which will be available from 1 July 2013 will make it easier for employers to take on additional staff. The reduction in VAT to 9% will be very important, in particular in the restaurant and catering sector which are very valuable tourism products. The travel tax will be abolished. I do not understand why a small island nation would tax people to come into and leave the country. It does not make sense when we are so dependent on air travel.

I will focus on the research and development proposals which are very important and have been widely welcomed. They give flexibility, particularly to multinationals who avail of corporation tax rates, in terms of how they account for their research and development and spend. Companies such as Dell, Intel, Pfizer, Hewlett-Packard and many more have set up research and development centres here. It is an important statement from those companies. When one speaks to their representatives from Ireland and Irish employees who are fronting their operations in Cork they are always proud of the companies and point to the investment they make in research and development. It is a vote of confidence and an endorsement of this country. It also gives security to the investment that many international companies have made here. It means they are setting down firmer roots here.

The proposals in the Bill for accounting for research and development tax credits are very important. In the programme for Government there will be an emphasis on small and medium size enterprises, particularly indigenous companies. There will be a facility whereby they can avail of research and development tax credits. I know that the Minister, Deputy Noonan, mentioned this previously. A cost benefit analysis is to be carried out.

The annual report of Forfás provides data on the number of companies across the economy that invest in research and development and have become innovative, increased productivity and the number of products they are selling across a range of areas from bread making, to producing cement and software and financial services. Many companies invest in research and development. The figures for 2010 show that the spend on research and development for companies who operate here was €1.8 billion, which is very strong compared to previous years. The level spent on it was maintained if one examines the figures for it in 2008-2009. It is a positive figure, given the state of the economy. The temptation is to abandon it but it is very important for companies. The money spent by businesses and Government on it is an important indicator of our knowledge economy, how we invest in it and how strong the country will appear on international indicators. I understand about half the money is spent on labour costs and the rest on capital costs, computers and so on.

The jobs programme has to be funded from somewhere and the issue has been addressed by numerous speakers. I wish there was another way, but the pension levy is preferable to a tax on income or indirect taxes. There is no easy way to pay for the initiative. The jobs initiative is and has to be cost neutral, transparent and open. We can see where the money is coming from and where it is being spent.