Alice-Mary Higgins (Independent) | Oireachtas source

I move amendment No. 11:

In page 15, between lines 8 and 9, to insert the following:

“Review and scrutiny

19. (1) The Minister shall, as part of the annual Budget process, produce a report on the operation of the KDB including a consideration of the intersection of the KDB with other tax expenditure measures and its impact on the delivery of an effective tax rate for corporations.

(2) The Minister shall ensure appropriate annual information exchange between the Department of Jobs, Enterprise and Innovation and the Office of the Revenue Commissioners in order to facilitate the publication of information on the cost of this initiative, including the cost to date for the Exchequer in revenues forgone, as part of the annual budgetary process.”.

The Minister did not get a chance to answer my questions about the meaning of amendment No. 4 which is now part of the Bill, but I am sure he will do so at the next opportunity he gets.

These amendments contain two different sets of proposals. Amendments Nos. 11, 12 and 13 are variations. In all these amendments I have tried to put forward several variations. The Department met me to discuss these matters, which I appreciate. Would the Minister consider whether there is any version of these amendments he could take on board? The amendments are in respect of the annual budgetary process. We know that tax measures such as the certificate issued to companies which allows them pay 6.25% on research and development versus 12.5% has potentially a high value but is also a significant cost to the Exchequer. It is very important for us to have information about the cost of the knowledge development box. The figures are available from the Revenue Commissioners.

In amendment No. 13 I ask that "The Minister shall ensure appropriate annual information exchange between the Department of Jobs, Enterprise and Innovation and the Office of the Revenue Commissioners in order to facilitate" our having specific "information on the cost of this initiative". I understand that the cost-benefit analysis may take place within the Department of Finance or the Revenue Commissioners but in this amendment I ask that the Minister ensure the exchange of information happens and is made publicly available as part of the annual budgetary process to enable us to assess the cost of the knowledge development box certificate, whether it is €20 million, €200 million or €2 billion, and rank that and set it against other measures we may wish to consider and their potential cost-benefit outcome. My colleague and I, for example, support the idea that we need to invest in third level and research institutions, particularly the institutes of technology which are very underfunded for research. We may wish to support greater partnership for innovation in those areas, especially at a key moment of opportunity and change in the world of higher education globally. This is to ensure we, and all those who support the knowledge development box, can stand over the value it gives and its cost when we make budgetary decisions.

One of my amendments concerns the information exchange and the other refers to a report, but I would be willing to withdraw that if necessary because I understand there is another report. I recognise that in amendment No. 18 the Government is going some way towards a report but I am concerned that the amendment refers to accounts of moneys received and paid under this Act but does not cover revenues forgone in respect of the value of the tax reduction measures from 12.5% to 6.25%.We are speaking ahead to amendment No. 18 but it relates very directly to this amendment. If the Minister of State's interpretation of amendment No. 18 is to ensure we would have that information, it would make it easier for me not to press amendment No. 12.

Amendment No. 11 is a combination of the two. I am asking the Minister of State to indicate if he will support amendment No. 11, which includes both of these proposals, amendment No. 12 or amendment No. 13, which is a very mild amendment in terms of pure information exchange.

Amendment No. 14 is in respect of the report, which I acknowledge the Government has included in amendment No. 18. It provides that the report would be presented to the Joint Committee on Jobs, Enterprise and Innovation and that it would be discussed at that committee. That is a very useful and appropriate forum for scrutiny of it. I am not demanding that we have full Oireachtas debate on this report annually but it is appropriate to have it discussed at the Joint Committee on Jobs, Enterprise and Innovation. It is not clear in amendment No. 18 if the report will include a consideration of the intersection of the KDB with other tax expenditure measures and the delivery of effective tax rates for corporations, which is an ongoing area of concern for the Government as it has made clear. It is important, especially since we have sought and achieved OECD compatibility in terms of this measure, to ascertain how it relates to other measures and how we can ensure it becomes part of a wider standard-setting narrative in terms of all of our tax expenditure measures and pushing it forward.

The proposals in amendments Nos. 15, 16 and 17 are almost a separate topic. I apologise for speaking at such length but the grouping of the amendments by the Bills Office requires it. Amendments Nos. 15, 16 and 17 are three variants of the same essential demand. I would appreciate if the Minister of State would indicate if he can support any of them. I have tried to frame this as widely as possible to give as much scope and discretion to the Government in respect of it. This is part of the Action Plan for Jobs, which we talked about earlier, and the fact that as a small nation we need a joined-up approach in what we do in the areas of enterprise and innovation. We need to make sure that every major cog in the wheel, especially a cog that has potentially significant costs, such as the KDB, fits into the wider strategy and picture and the action plan and the kinds of measures the Government claims to be very committed to in the action plan. If we have an absolute lacuna of knowledge of where a KDB fits in to things and if we do not have a joined-up approach, it is hard to track what is happening with our companies and with our investment in enterprise and innovation. These amendments ask that any companies applying for the KDB certificate should indicate whether they are in receipt of other grants, subsidies, tax incentives or any similar enterprise or research and development supports from a public or semi-State body. We are not asking for detail on what supports, where and how they were applied for or the amounts. This is a very simple request to know whether they have received those supports in the past. The second part asks that companies applying for such supports in the future and other enterprise and development supports would indicate if they had previously received a KDB certificate. It is a two-way measure. It is about joining the dots. We want to know if companies receiving enterprise grants into which we are putting money are then going on to deliver research and development, thereby benefitting from the KDB. It will be valuable to the Government to know whether companies that go to Enterprise Ireland or the IDA and move into a phase of production, for example a scaling up of operations, had previously benefitted from the KDB certificate. It will strengthen the hands of anybody who wants to defend the KDB certificate if they can show a connection between companies whose research and development has been supported and the fact they are now being supported to move into a period of production. To my mind, that information is very simple and valuable information that allows us to chart the route.

The proposals in amendments Nos. 15, 16 and 17 are almost a separate topic. I apologise for speaking at such length but the grouping of the amendments by the Bills Office requires that. Amendments Nos. 15, 16 and 17 are three variants of the same essential demand. I would appreciate if the Minister would indicate if he can support any of them. I have tried to frame this as widely as possible to give as much scope and discretion to the Government in respect of it. This is part of the action plan for jobs, which we talked about earlier, and the fact that as a small nation we need a joined up approach in what we do in the areas of enterprise and innovation. We need to make sure that every major cog in the wheel, especially a cog that has potentially significant costs such as the KDB, fits into the wider strategy and picture and the action plan and the kinds of measures the Government claims to be very committed to in the action plan. If we have an absolute lacuna of knowledge of where a KDB fits in to things and if we do not have a joined-up approach, it is hard to track what is happening with our companies and with our investment in enterprise and innovation. These amendments ask that any companies applying for the KDB certificate indicate whether they are in receipt of other grants, subsidies, tax incentives or any similar enterprise or research and development supports from a public or semi-State body. We are not asking for detail on what supports, where and how they were applied for or the amounts. This is a very simple request to know whether they have received those supports in the past. The second part asks that companies applying for such supports or other enterprise and development supports in the future would indicate if they had previously received a KDB certificate. It is a two-way measure. It is about joining the dots. We want to know if companies receiving enterprise grants, who we are putting money into, are then going on to deliver research and development, thereby benefitting from the KDB. It will only be valuable to the Government to be able to know that if companies go to htEnterprise Ireland or the IDA and they move into a phase of production, for example a scaling up of operations, did those companies previously benefit from the KDB certificate. It will certainly strengthen the hands of anybody who wants to defend the KDB certificate if they can show a connection between companies whose research and development has been supported and the fact they are now being supported to move into a period of production. To my mind, that information is very simple and valuable information that allows us to chart the route.

We have limited time on Report Stage. I still have serious concerns about the end stage in our current trajectory for companies. I have also mentioned this to the Minister, Deputy Mitchell O'Connor, in respect of the 10% capital gains tax rate for those who are selling their companies. I worry we are taking companies on a long journey and then encouraging a cash-out culture. It is a kind of start-up to cash-out culture, which is a real danger. If we want to encourage real innovation, not simply entrepreneurship and speculation, but entrepreneurship that is innovation, we need to encourage companies to move to production and grow. That is the practice we should be rewarding and supporting. Prizes for innovation have recently been won in Europe by long-established companies. Skytek has been established since the 1990s and has now moved to a new phase of innovation. Companies that are long-established are often also capable of innovation. It is companies such as Skytek that are winning European innovation awards 20 and 30 years into their existence on this island. They are the kinds of companies we need to be nurturing. I worry that under the current regime, companies like Skytek could have been sold and would have been encouraged to be sold at an earlier stage and would not have reached the scale where they are now one of the main companies used by NASA and others. That is a wider point.

Information on the level or frequency of the intersection with the knowledge development box or the other enterprise or research development initiatives might be made available to the Minister. I do not mean that it should be publicly available but it should be made available to the Minister for Jobs, Enterprise and Innovation in order to inform overall jobs, enterprise and innovation strategies. I am asking that the Minister will have the information he or she needs on where the overlap is between the many schemes administered in this country in respect of enterprise and innovation so that will inform the big picture and form part of a national strategy.

These are extremely reasonable amendments. If there is a problem with the third part of that amendment, it is separated. I would appreciate an indication from the Minister of State as to which of these amendments he wishes to support and in which form he wishes to support them. I do not really see how there can be any case against having this information in a useful manner.