Denis O'Donovan (Fianna Fail)
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I welcome the Minister to the House. We are dealing with the Knowledge Development Box (Certification of Inventions) Bill 2016.

Denis O'Donovan (Fianna Fail)
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Amendments Nos. 1, 2 and 11 to 13, inclusive, are related and may be discussed together. Is that agreed? Agreed.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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I propose to take amendments Nos. 1, 2 and 11 to 13, inclusive, together. These five amendments are related and affect sections 1 and 26, as well as the Long Title of the Bill. They all reflect the fact that the Bill will not be enacted on 1 January 2017, as originally intended at the time of its publication.Amendments Nos. 1 and 2 are to section 1. Amendment No. 2 deletes subsection 4 which provides that Part 6 of the Bill will continue into operation on 1 January 2017. Amendment No. 1 is consequential on amendment No. 2. It is intended that the entire Act will now come into operation on a day or days to be decided by the Minister. Amendment No. 11 to section 26 has the effect of replacing the date of 1 January 2017 with a reference to the commencement of Part 6. The amended provision will ensure that patent applications on hand, when Part 6 commences, will continue to be processed under the Patents Act enforced at the time the application was made. It would not be appropriate to change the patent assessment procedure midstream. Amendments Nos. 12 and 13 are to the Long Title of the Bill. Both reflect the later commencement date for Part 6.

Pádraig Mac Lochlainn (Sinn Fein)
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I move amendment No. 3:

In page 11, line 23, after “applicant” to insert “and place of production”.

The Bill provides a legislative framework for SMEs involved in research and development activities in Ireland to avail of a reduced corporation tax rate of 6.25%. My party has serious reservations about efforts to further reduce the State's income from corporation tax. The logic behind my amendment concerns the issue of the overdevelopment of the greater Dublin region at the expense of the rest of the country. If the State is intent on reducing corporation tax, as provided for in this Bill, then we need a provision in the legislation that allows the Houses of the Oireachtas to know exactly what regions, towns, etc., benefit from the reduced rate. If this controversial tax reduction goes ahead, then we must at the very least ensure there is oversight in terms of regional parity and the benefits that accrue from the legislation.

James Reilly (Fine Gael)
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I disagree with the amendment and I am sure that the Minister will speak to it herself. The Bill seeks to encourage innovators to take on research and innovation in this country and to create jobs. One cannot dictate to people where they can do so as it would further reduce the opportunities for people to develop new devices, ideas and information technology. The amendment is unwise but I understand why the Senator wants to ensure the regions are developed. We all want to see the same but we cannot interfere with the market to the extent that we dictate where someone should undertake research and innovation. That does not make sense. The amendment would undermine what the Bill seeks to achieve, which is to encourage more investment and innovation in this country.

Denis O'Donovan (Fianna Fail)
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Does Senator Mac Lochlainn wish to contribute before I call on the Minister?

Pádraig Mac Lochlainn (Sinn Fein)
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I wish to respond to the comment made by Senator Reilly.

Denis O'Donovan (Fianna Fail)
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With due respect, I suggest the Senator listens to the Minister first and then makes his comment.

Pádraig Mac Lochlainn (Sinn Fein)
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Yes. I thank the Cathaoirleach.

Alice-Mary Higgins (Independent)
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I do not see anything in the amendment that dictates which parts of the country things would take place in. The amendment says this is a substantial tax expenditure. It allows for a shortening of tax from 12.5% to 6.25%. It is a significant expense that may well be worthwhile but we need to evaluate its benefits. The amendment seeks to simply say we should have ongoing cost-benefit analysis and I have tabled similar amendments that we will reach later.

Today a Senator highlighted here that technical colleges have done tremendous work to drive research, and I have raised this matter before. I am concerned that technical colleges do not receive public funding for research. There is an overall issue with using public funding for research. Despite technical colleges not receiving public funding that would allow them to access other funding, they have developed fabulous partnerships with organisations and companies to develop innovation and technology. It would be appropriate for us to see how the benefits are spread out and how they complement and dovetail with the public research agenda.

There are questions not just in terms of geography. We must bear in mind the recent indicators from the main research bodies in Ireland about gender equality. It would be appropriate for the Oireachtas to have an opportunity to review and discuss how this provision works out, whether it is the best measure and whether we want to think about a more nuanced measure down the line that might serve the purpose.

Enterprise Ireland and IDA Ireland have a long established practice to consider and support targeted development. The initiative does not interfere with the market. We give the benefit to companies and, therefore, it is appropriate that the Minister ensures that the measure leverages the maximum possible benefit to society. I support the amendment.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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I thank Senator Mac Lochlainn for his amendment but I do not propose to accept it.

Under the KDB process before the Patents Office the place of production is not relevant. The process before the office requires that the controller examines applications against the criteria of novelty, non-obviousness and usefulness. Indeed, under the wider KDB scheme introduced in the Finance Act 2015 what is key is the place where the substantial research and development activity leading to the invention takes place. The Finance Act makes no reference to the place of production. Rather it is the substantive activity of research and development by innovative companies that the scheme seeks to entice to Ireland. It will be for Revenue, as part of its consideration of applications under the KDB, to be satisfied that the research and development that led to the invention was carried out in accordance with the Finance Act.

Denis O'Donovan (Fianna Fail)
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Senator Mac Lochlainn has indicated a wish to contribute.

Pádraig Mac Lochlainn (Sinn Fein)
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I do not understand where Senator Reilly is coming from in terms of dictating the location. My amendment seeks to identify the locations where companies avail of a reduced corporation tax. If my amendment interferes with the ability of the controller to issue a certificate, then there are other ways in which the Minister can assure this House that she will have accountability. Can she tell me if there will be a format where we can assess the localities of those who have benefitted from the certificate? Will there be a published document where interested parties can see the location of companies that have benefitted from the certificate? I will withdraw my amendment if I am sure there is accountability. The Minister knows the issue in terms of the job creation agencies, Enterprise Ireland and IDA Ireland. They have a responsibility to create jobs in the regions.I am looking to ensure that if we put in place a beneficial incentive to companies we need to know the location. If I can be assured that a document will be published with the locations of the companies who benefit from this, I am happy to withdraw the amendment.

Denis O'Donovan (Fianna Fail)
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Can the Minister give that assurance?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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No. This is simply about the content of the certificate which the controller will issue. This scheme is for SMEs, wherever they are located in Ireland. The annual report of the Irish Patents Office will show what happened in the past. I have full confidence in the controller but we will not be saying where it is produced.

Pádraig Mac Lochlainn (Sinn Fein)
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Perhaps the Minister's advisers can help her in this. When the scheme is in place will the citizens of this State be able to see what companies availed of this incentive and where they are located? Will that be public information?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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No. We have to protect the privacy of the company and of the patent. It is something innovative, novel and non-obvious and if somebody can read it in a report somebody else can steal it. It does not make sense and we will not be doing it.

Pádraig Mac Lochlainn (Sinn Fein)
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If there are issues around protecting the product surely it can be noted that X company, located in Y, received a tax write-off of X. Can that be provided?

Denis O'Donovan (Fianna Fail)
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This is Committee Stage. If the Senator withdraws the amendment he can resubmit it on Report Stage but if he pushes it he cannot.

Pádraig Mac Lochlainn (Sinn Fein)
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Based on what I have heard, I will certainly not be withdrawing it.

Alice-Mary Higgins (Independent)
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This is really unfortunate because we are going with the Minister on this. This an attempt to extend the application and to ensure that the knowledge box is not just available to international companies but to Irish companies too.

In principle, we are already recognising that it is important that there be benefit in Ireland so I find it of concern that we will not have any information whereby we can evaluate the scheme. I understand that we will get other information but it is very reasonable to ask the Minister to go back to her officials on this. I ask her to reconsider because we want to support the Bill but I would find it very hard to support if there is to be no record of where the companies that have benefitted from it are located.

Nobody is asking for their secrets or details of what is novel and so on. Maybe we could do it by county or by region. There might be 20 in Munster and 40 in the west, or something like that. It is our job as national legislators to get a sense of how patterns are working. If there is a significant public expense it is important to have a sense of how its benefits are being distributed. I urge the Minister to consider it again between now and Report Stage as it is a small piece of transparency. I am sure people will be willing to work on it to find a solution in the interim.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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The process before the Patents Office is just one aspect of the applicant's claim to the Revenue Commissioners for a 6.25% corporate tax rate. Under the KDB, it is the location of the research and development that matters. The research and development leads to the relevant invention and this is the activity that the scheme intends to entice to Ireland. The place of production really is not relevant and it falls outside the remit of the KDB scheme as provided for in the Finance Act. This is not the place for the Senator's amendment because we are dealing with the certificate. The controller will keep statistics, as has been done for years and years, on the different patents in the scheme but it will not keep details of where the production is. We are talking about where the innovation is.

Gerald Nash (Labour)
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I will try to assist. I know what Senator Mac Lochlainn is driving at but it might be useful to propose that Ireland keep a repository of this information. Senator Higgins seems to be referring to information retained on a regional basis, which would help with policy development for bodies such as Enterprise Ireland and with the development of the regional action plans for jobs. These are extremely important from the point of view of targeting investments where they are needed right across the country, for balanced growth north, south, east and west.

I understand the difficulties of identifying a particular commercial operation but perhaps the Minister could look at Enterprise Ireland holding some repository of this information as it would help it, along with local enterprise offices, to develop its policy of targeting incentives towards SMEs. I understand why we would not be able to identify individual commercial operations, though clearly the Revenue Commissioners will have that information. For transparency and public policy development it would be useful if a repository of the information was kept to allow for better and more open policy development and to ensure we target this type of incentive where it is needed most in the future.

Alice-Mary Higgins (Independent)
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Is the Minister's concern around the retention of regional or local information or is it a question of the place of production as against the location of research and development? Is she saying that this Bill relates to research and development and not to the place of production? It is important we have a sense of where research and development is taking place regionally. It may be that the Minister does not have the capacity to put the place of production into the legislation but there is a concern in research and development circles in Ireland over the current practice of encouraging people to sell their companies prematurely by giving them a 10% capital gains rate. Can the Minister find a way to capture geographical information in some way in this legislation? Can we make that available to Enterprise Ireland, which might be tracking where production is taking place? Does the research and development, that we are subsidising by halving corporate taxes in the area, lead on to production? In two, three or four years' time, when we evaluate the knowledge development box, we are going to want to see if it led to something. It may not be for this Bill but another piece of legislation. Enterprise Ireland, however, needs to have the information to allow it to carry out its evaluations.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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There are two parts to the process. One is through the Patents Office and the other is through the Revenue Commissioners. The Revenue Commissioners never publish details like this. The controller is capturing the information around research and development.The amendment I am speaking to, in the name of Senator Mac Lochlainn, is about the place of production. I do not know whether the Senator can accept my point that this is about research and development. If all the research and development takes place in Donegal and it really good and innovative in its model, so be it. It is about research and development, not about the production. That is what the controller is looking at. We have confidence in the controller, in what he has done in the past and in what he will do in the future. That is my point.

Denis O'Donovan (Fianna Fail)
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I will give the final word to Senator Mac Lochlainn.

Pádraig Mac Lochlainn (Sinn Fein)
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I appreciate that. Paragraph 12(2)(a) refers to "the name of the applicant" and paragraph 12(2)(b) refers to "the address, principal office, or principal place of business, in the State, of the applicant". That is fairly transparent. Paragraph 12(2)(c) refers to "the title of the invention in sufficient detail ...". Everything in is place. Therefore, what is the issue about the place of production? I just do not understand. This is about accountability and transparency.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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It does not-----

Pádraig Mac Lochlainn (Sinn Fein)
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With respect, I have not finished yet. There is a lot of controversy about corporation tax in Ireland. A report produced in recent days does not read well for the State. I believe in incentivising research and development considering its importance but very tight controls and accountability are needed in this regard to instil public confidence. That is what the amendment seeks to do. I will push this to a vote if we cannot reach a consensus on it.

Denis O'Donovan (Fianna Fail)
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Is there no meeting of minds?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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I cannot accept the amendment. Enterprise Ireland was mentioned. It has nothing whatsoever to do with the granting of the certificate. It could, however, keep accounts for its clients who use the knowledge development box, but it is not involved in this legislation.

Pádraig Mac Lochlainn (Sinn Fein)
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That is fair enough.

Gerald Nash (Labour)
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This is an area that would be of deep interest to Enterprise Ireland because it relates very much to the SME sector. The Minister is only too well aware of the importance of innovation in terms of accessing better markets, particularly in a post-Brexit situation, not that we are yet in such circumstances. That said, we are trying to diversify our markets all the time. Enterprise Ireland will clearly have an interest in this. I am sure Enterprise Ireland will keep information on the efficacy of this particular intervention for its client organisations and potential client organisations. It will be using this as a key policy for itself in driving innovation within the export sector. Obviously, this will be extremely important.

This initiative in general is one we should be proud of as a country because the OECD supports it. In terms of the BEPS process and so on, it is the first knowledge development box development to receive the support of the OECD. As Senator Mac Lochlainn correctly pointed out, our corporation tax system is under deep scrutiny nationally and internationally. This will be a very important development that will be closely watched but it needs to work for Irish SMEs. My suggestion was merely that Enterprise Ireland keep a close eye on this. I am sure it will have information on the efficacy of the measure for its client companies that will be publicly available and possibly a list or register of companies taking advantage of the knowledge development box incentives over the course of time.

Denis O'Donovan (Fianna Fail)
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There is no meeting of minds. If the Minister does not want to make a final comment, I will put the question.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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The place of production is non-relevant and falls outside the remit of the knowledge development box scheme, as provided for in the Finance Act 2015.

Paddy Burke (Fine Gael)
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I wish to ask the Minister a question concerning companies which set up with this great knowledge. I congratulate the many innovators involved who deserve great credit as they take a lot of risks. I do not agree with Senator Higgins, however, that we are subsidising them by charging 6.25% corporation tax. They might not set up here but for such a thing, so one cannot describe it as being a subsidy. How does it operate on the ground if somebody from another country has a patent, or may develop more patents here? Can they move here, apply for the patent and establish their business here? Does the patent they had before they came here qualify, or is it only for ones that are developed for research and development here? I am referring to start-up companies that have patents and are willing to come here.Can they avail of this or does all of the patent and research and development work have to be carried out here from scratch?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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What are we speaking to?

Denis O'Donovan (Fianna Fail)
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It is section 13. The Senator validly raised a question and is anticipating that the Minister will provide him with an appropriate answer.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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The research and development must happen in Ireland. It must be new, novel and non-obvious. If that is the case, the applicant goes to the controller, gets a certificate and takes it to the Revenue Commissioners who will decide on the basis of that certificate if it is appropriate to grant the 6.25% KDB rate. The innovation must take place in Ireland. An applicant may get a certificate and, if so, go to Revenue which will decide what the next step is.

Paddy Burke (Fine Gael)
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I thank the Minister. She has outlined that in good detail, but for the very start of it, one might have someone from the UK, France or some other part of Europe who has an idea and may have part of the work done. He or she may have applied for or have a pending patent but not yet have it. In the meantime, he or she may decide to set up a business in Ireland because he or she likes the universities and technological colleges and it is an ideal mix for the company. It may be that some of the IP is part developed. There may be a number of patents involved with one or two having been applied for and a need for more research and development. The company may not have a full mix of what it wants before it starts production. Does that mean the company has to be commercialised first? There could be a lot of people with ideas they have tried to develop who could move here. Where exactly does this start?

The person in charge could rule them out by saying that some of the work was carried out prior to the start-up in Ireland. The company may not have commercialised before it starts here. Is there a process to say that if a company starts up here, it still has more research and development to carry out. If a company has commercialised, is it ruled out? If a company has commercialised, it has a certain amount of research and development done and requires more. However, it has commercialised and it has decided to come to Ireland. Does that rule it out?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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It has to be novel, useful and it has to be non-obvious. The KDB is different to a patent so the systems are different. The research and development activity has to take place here. If the research and development activity takes place outside the country, it will not be recognised here for KDB. On the question of whether it is novel or non-obvious, where a company redesigns or adds something new to a machine it is already making and does that here in Ireland, it will quality if it is novel, non-obvious and useful. First, it will ask whether it qualifies and then the Revenue Commissioners will look at it. The IP has to be in Ireland. The new piece has to be here. It is not related to production. It is actually a question of what the new IP is, what is new about it, what is non-obvious and what is novel. I am sorry to keep repeating it, but that is what is stated in the Bill.

Paddy Burke (Fine Gael)
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That clarity is very important because the question of where it starts will be very important. Does it start with the idea and all the funding that is spent after that, even if it was spent here? Does that qualify it? If the idea was born some other place and is novel and creates change, it might be born and made but, where this thing is going to bring an awful lot of change to things, it would require other research and development here. Is it ruled out because the idea was borne in some other place?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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It is a question of whether it is new. If it is half made but the people involved come up with another idea that is innovative, non-obvious and useful and will change the machine or whatever they are developing, they can seek a KDB certificate for it. Is that okay?

Paddy Burke (Fine Gael)
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It is very clear.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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It has nothing to do with production.

Pádraig Mac Lochlainn (Sinn Fein)
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I move amendment No. 4:

In page 13, to delete line 13.

Section 17 relates to confidentiality and the keeping of records. Sinn Féin considers that line 13 as referred to in the amendment and which relates to the provision permitting the controller to keep such records as he or she considers appropriate, should be deleted so that all records would be kept in the interests of accountability and transparency.

Alice-Mary Higgins (Independent)
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I support the amendment, which is important in terms of good archival practice. The issue was highlighted recently by Catriona Crowe, the former head of the National Archives, and others. In terms of good archival practice, we must ensure that the records are kept for a future controller or in case there is a concern in relation to a controller and another has to replace him or her or if there needs to be an inquiry. It is a simple amendment and the Minister might consider it.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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The intention in section 17 is to impose a mandatory requirement on the controller to keep certain records. Records must be kept of all KDB applications, KDB certificates issued, KDB certificates refused and KDB applications under review. The section also requires the controller to respect confidential information filed with KDB applications and he, in this case, must not publicly disclose such information. Disclosure of information of a commercially sensitive nature would harm the applicant in the context of giving vital information to competitors.

Senator Mac Lochlainn's amendment seeks to delete the words "as he or she considers appropriate" from section 17(1). If the Senator's concern is that the controller is given a level of discretion that will allow him not to maintain certain of the records listed in section 17(1)(a) to (d), that is not the case. The subsection lists the mandatory sets of records that must be kept by the controller, if that is the Senator's concern. While I am not accepting the amendment, I am prepared to review the precise drafting of the section and to revert to the issue on Report Stage in the House.

Denis O'Donovan (Fianna Fail)
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On that basis, is the Senator prepared to wait?

Pádraig Mac Lochlainn (Sinn Fein)
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Yes, on the basis of the fact that the Minister is prepared to review it. She gets what our concern is.

Denis O'Donovan (Fianna Fail)
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The Senator can resubmit the amendment.

Denis O'Donovan (Fianna Fail)
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Amendments Nos. 5 to 9, inclusive, are related and may be discussed together.

Pádraig Mac Lochlainn (Sinn Fein)
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I move amendment No. 5:

In page 14, line 22, to delete "the Minister" and substitute "the Dáil".

Due to the nature of this legislation and the reduction in corporation tax, reports in writing on its operation should come before the Dáil and the Houses and not the Minister. The Minister will see clearly the intent of the amendment.

Alice-Mary Higgins (Independent)
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I have a number of amendments in this section. I anticipate the Minister's concerns over my amendment No. 6 and I will be happy to work around it. It suggests that the report the Minister receives from the controller should be made publicly available. It comes to the same crucial question. If we are to have this knowledge box and it is an expenditure, as it is, the case for it needs to be made and reviewed on a continual basis. We need to be able to stand over it as part of our public expenditure. It is about getting some information on how it is progressing. I suggest the report should be made publicly available.

There is a concern over transparency. We talked extensively about commercial sensitivity. While commercial sensitivity must be respected, as legislators we have responsibility for public accountability. I will be happy to withdraw the amendment in order to discuss what the Minister thinks might be appropriate to have a report publicly available. I can then resubmit the amendment or a variation of it on Report Stage. I ask the Minister to outline how she envisages the public accessing appropriate information on how the knowledge box is being used, its benefits and its uptake. We need ongoing transparency in that regard.

I have another amendment, amendment No. 9, in this section. I understand we will discuss amendment No. 10 separately. Is that correct?

Denis O'Donovan (Fianna Fail)
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Yes.

Alice-Mary Higgins (Independent)
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Amendment No. 9 relates to the Minister having the information I believe she needs to have. I was concerned to see that the Bill provides that the controller simply shares information on the number of reviews. It is a set of numbers that could almost be put on a Post-it. It is simply the number of applications received; the number withdrawn; the number in respect of which a certificate was issued; the number of appeals; the number of appeals that were successful; the amount of fees; and such other statistical information as may be prescribed.

The Minister will get a small page with a set of numbers which will not give qualitative information to allow the Minister to evaluate how the measure is working, how effective it has been and the trends that are emerging. That is an essential role for the Minister. It is not simply her role to sign off on expenditure and send it off into the world hoping for the best. We need to know what is happening and how it is going.

I have purposely left the wording of my amendment open in seeking that the Minister would have "general information as to the operation of the scheme including the main reasons for refusal of KDB certificate issuance and any emerging trends that may be of interest." For example, do they all relate to medical devices? Are we seeing a huge number of applications in one particular sector? The Minister needs to get qualitative information from the controller to allow her to review and decide whether we might need to revise or improve on the knowledge box in future. That is a request for the Minister to seek stronger information for herself.

I will withdraw the amendment and am happy to work with the Department in the interim. However, I will reintroduce it or a variant of it on Report Stage. I believe it is essential. It is simply not enough for the Minister to have a set of statistics with no content.

Denis O'Donovan (Fianna Fail)
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It might be prudent for the Senator to wait to hear form the Minister.

I call Senator Reilly.

Pádraig Mac Lochlainn (Sinn Fein)
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I apologise; I had not spoken to two of the amendments in the group.

Denis O'Donovan (Fianna Fail)
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We are just dealing with amendment No. 5 at the moment. It is a group. Senator Reilly may come in first. I will let Senator Mac Lochlainn in again.

James Reilly (Fine Gael)
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There are two issues. First is the issue of sensitive information, and how much of that is in the report the Minister gets and how much of it is appropriate to lay before the Houses of the Oireachtas given the implications for innovators. Second is a conceptual issue that is bothering me a bit, which is that there is an expenditure here. This is purely putative at the outset. If somebody does not come to develop and innovate, there is nothing to be saved because there is no income.

We are seeking to encourage small and medium-sized enterprises to innovate in this country. We have gone through all the details of what would qualify. It is like a pyramid. Of all those who come in at the process how many get through the process? Of those that get through the process, how many, on reflection, decide it will not be commercially viable and do not bother? At the top of the apex very few come through with something innovative that is produced either here or elsewhere and they can get a reduced rate of corporate tax on that. That is what this is about. We are seeking to encourage them to invest time, energy, effort, science and money to engage in these processes, which of itself will create jobs and help our economy, but equally will provide considerable encouragement for people to become involved in the sciences and all other areas around education that would lead to improvements in this regard.

There is continual talk about a cost implication; there is no money here until money is created.

Alice-Mary Higgins (Independent)
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There is money. Why would there not be a tax related to money?

James Reilly (Fine Gael)
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As anybody who knows anything about these areas - the same applies with venture capital - for every one that succeeds, ten fail. To encourage people to go into that group of ten, knowing that nine of them will not get anything out of it, it is necessary to create incentives and that is what this is about.

Alice-Mary Higgins (Independent)
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It is a tax measure, so it clearly has an expense.

Gerald Nash (Labour)
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There is always a cost to introducing tax subsidies. We see the ongoing subvention of the hospitality sector through the reduced VAT rate, which has cost several hundred million euro over the past five years. There is always a cost to the Exchequer when a subsidy is introduced. It is not only good practice, but it is good government and good governance to require the Minister of the day to provide a rationale for the continuation of an intervention of this nature. As I said earlier, our corporation tax rate is under serious scrutiny internationally and nationally. We should have no difficulty with that. I have repeatedly rejected people claiming this country is a tax haven; it is not. People pay tax here on goods produced here and so on. That may be an argument for another day.

I am very excited by this development, which will really benefit the country through job creation and the development of a very vibrant start-up sector. It will address one of those missing pieces, which is our performance in the private sector, at the very least in terms of research and development for companies with a small number of employees. I do not understand why somebody would have a difficulty with ongoing reviews of the scheme. It is good practice to justify the expenditure to this Chamber and to the Dáil.

It is important to have transparency in tax. It is not just a case of ensuring that people will benefit from the incentive and the job creation that flows from that, but it is also about trying to convince people of the merits of a scheme like this. I cannot understand the ongoing opposition to a very simple requirement for the Minister to provide this report - maybe it is not appropriate for such a provision to be written into primary legislation. However - I think this is what I think Senator Higgins is saying - if the Minister accepts the requirement to report to the Houses and she provides a report of some nature each year on the performance of the scheme, that would do the Minister some service, do the House some service and ensure the type of transparency the public demands on incentives such as this. I fully support the scheme.

As a Minister of State sitting at Cabinet, I was involved with the then Minister for Jobs, Enterprise and Innovation, Deputy Bruton, in helping to design this scheme. While we should be proud of it, we should spend a little time considering the transparency element.

Denis O'Donovan (Fianna Fail)
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I call Senator Mac Lochlainn.

Alice-Mary Higgins (Independent)
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May I-----

Denis O'Donovan (Fianna Fail)
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I will allow Senator Higgins speak after the Minister. There is no point in-----

Alice-Mary Higgins (Independent)
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A point of clarification-----

Denis O'Donovan (Fianna Fail)
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The Minister should be heard first. Senator Mac Lochlainn made the point that-----

Pádraig Mac Lochlainn (Sinn Fein)
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There are two amendments I have not spoken to yet.

Denis O'Donovan (Fianna Fail)
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I will let Senator Mac Lochlainn speak on the ones he did not speak on. If Members want to come back in, I will not stop them.

Pádraig Mac Lochlainn (Sinn Fein)
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I appreciate that. I will speak to amendments Nos. 7 and 8. The rationale behind amendment No. 7 is that it seeks to delete the following section, which states that nothing in this subsection shall be construed as requiring the controller to include information, the inclusion of which would in the opinion of the controller be likely to prejudice the performance of the controller's functions under this Act. We believe that all records should be kept in the interests of accountability and transparency.

The rationale behind amendment No. 8 is that it is in the interests of accountability and transparency to have not just the applications but the name of applicants so that one can see the consistent points. I agree with much of what Senator Nash said. For many years there have been calls to incentivise research and development and it is something we can do better on this island but we just need to make sure that the appropriate checks and balances are in place.

With all respect to Senator Reilly, we know that tax incentives have been introduced, for example, one need only think of the oil and gas off the coast and some of the vulture capitalists who availed of opportunities in this city that have been closed down. One must be very cautious about introducing incentives and make sure all the checks and balances are in place. We must strike a balance between incentivising people to create jobs in the area of research and development but we must have the appropriate checks and balances in the public interest, considering the number of debacles we have had in this State in the past.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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I thank the Senators for tabling amendments Nos. 5 to 9, inclusive, to section 18, which are being taken together. Section 18 requires the controller to report annually to the Minister on this scheme. Amendment No. 5 in the name of Senator Mac Lochlainn seeks that the report by the controller is to the Dáil instead of to the Minister.

Amendment No. 6 in the name of Senators Higgins and Ruane seeks to have the report made publicly available. The annual report by the controller to the Minister will provide statistical information on the office's activity on the KDB scheme including, numbers of KDB applications filed, applications withdrawn, KDB certificates granted, refused or reviewed. The process before the controller is one step in the process for a company to apply to the Revenue Commissioners for the 6.25% corporate tax rate.

The fact that a company might be successful in getting a certificate from the office does not mean that the company will be successful in qualifying for the lower corporate tax rate when it applies to the Revenue Commissioners. Given that the information contained in the report is limited and is part of a wider process, it is considered appropriate that the controller should report to the Minister as opposed to the Dáil and for this information not to be publicly disclosed. For that reason I do not accept amendments Nos. 5 and 6.

In relation to amendment No. 7 in the name of Senator Mac Lochlainn, I should point out that the controller is an independent officeholder who acts under the superintendence and direction of the Minister. The provision in section 18(2) is a necessary safeguard that allows the controller to undertake his or her statutory functions without undue and inappropriate interference by any Minister. Senator Mac Lochlainn's amendment would undermine the independence of the controller in carrying out his or her statutory functions under the Bill. The controller must be able to undertake this function without fear of interference. For that reason, I am not accepting amendment No. 7.

Amendment No. 8 which is also in the name of Senator Mac Lochlainn seeks the inclusion of the name of applicants for the KDB scheme in the report to the Minister. The names of applicants are not included in the controller’s annual reports of his or her activities for the office covering patents, trade marks and designs. Section 18 of the Bill follows this practice. Moreover, as Senators will be aware, the Revenue Commissioners do not disclose the identity of taxpayers and indeed the Taxes Consolidation Act 1997 prevents Revenue from releasing taxpayer information. For that reason I am not accepting amendment No. 8.

As regards amendment No. 9 in the name of Senators Higgins and Ruane it is the case that applications before the office will be examined individually on the basis of novelty, usefulness and non-obviousness. In the case of refusals, the office will follow exactly the same process as it does now in relation to refusals of patents, trademarks or designs. The reasons for refusal are case-specific and are not made publicly available and that is the intention also in this Bill. For those reasons I am not accepting amendment No. 9.

Alice-Mary Higgins (Independent)
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In response to Senator Reilly, it is important to say we do not need to have a divisive conversation but we need to be honest. It is straightforward; it is an expenditure. The fact that if a company is paying 6.25% because of its research and development, if it was going to pay €500,000 to the State it will now pay €250,000. It is just a straight expenditure and it may well be worth it. I will not be painted as the enemy of research and innovation. I am very passionate about research and innovation, including public research and innovation, which is another area we need to look at. That is an area I have highlighted previously. We need research and innovation from both the private and public sectors but we also need to make sure that we are getting appropriate value and that it is working out.

The Senator described how we move from the large number of companies to the smaller number who are successful in an ever-decreasing pyramid. I am very aware of that, but the bit that we tend to leave out, unfortunately, is the bit about what happens next - the small number that are successful, whom we have rightly supported at various steps of the way. We must consider what then is the benefit to society and where is the wider benefit. It is not simply enough to say some companies will succeed and we expect there will be jobs. We are asking the Minister to track the process, to join the dots. That approach relates to both my amendments. There may have been a misunderstanding of amendment No. 9. I have indicated already I will withdraw it and reserve the right to resubmit a variant of it on Report Stage. However, the key concern is whether the Minister wants to get qualitative information as well as statistical information because otherwise I do not understand what information she will be getting that will allow her to evaluate the scheme. I am just asking for that. This is simply about information. There is a separate point at which I hope the information would be publicly available. Again, my amendment No. 10, which I will also withdraw and reserve the right to reintroduce or vary on Report Stage, is about a public report. That is one issue.

Denis O'Donovan (Fianna Fail)
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The Senator cannot speak on amendment No. 10 now.

Alice-Mary Higgins (Independent)
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Okay, I am sorry. I apologise for that. I wish to state that an issue arises in respect of amendment No. 10 and I will withdraw it and reserve the right to reintroduce it on Report Stage. The public reporting is one issue but the other issue is the information the Minister will receive. The Minister for Jobs, Enterprise and Employment has a plethora of measures and wide-ranging responsibility, and she needs to know how this will fit in with what she is doing. I ask that the Minister would ensure that she is at least getting the information she needs. I am happy to work with the Minister. I am withdrawing my amendment. I will not press it at this point but I urge and suggest that she should meet with the very constructive proposals that are coming from across this House to support and ensure this measure is successful.

Pádraig Mac Lochlainn (Sinn Fein)
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I fundamentally disagree. I cannot see any reason the report cannot be released to the Dáil. Why would something be given to a Minister and it would not be considered appropriate to give it to the Dáil or both Houses? We will not agree on that.

In terms of the independence of the office, the courts are independent but one can appeal a decision. Just because a body is independent does not mean that it is not subject to accountability. In this land, even if one goes as high as the Supreme Court and one loses one's case, one can consider going to the European Court of Justice. There are courts of appeal. Nobody is beyond reproach. That is the case even with the Ombudsman. I have the utmost respect for the various sectoral ombudsman offices and the Ombudsman but one can appeal their decisions, however, and hold them to account for what they do.Who watches the watchers? Everybody is accountable so it is not a defence. Rather than going back and forth, if we are not going to reach agreement on these matters then we will have more votes.

Denis O'Donovan (Fianna Fail)
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As it is now 4.30 p.m. I ask the Acting Leader to report progress. The Senator said he wants to push this to a vote but time is against us. If he wants a vote now we can have it.

Pádraig Mac Lochlainn (Sinn Fein)
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Yes, I do.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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I want to respond.

Denis O'Donovan (Fianna Fail)
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The Senator is entitled to push it to a vote.

Pádraig Mac Lochlainn (Sinn Fein)
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I am entitled to push it to a vote, yes.

Denis O'Donovan (Fianna Fail)
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If I allow the Minister back in we must suspend or move on because 4.30 p.m was the agreed time.

Pádraig Mac Lochlainn (Sinn Fein)
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The Minister is clearly not going to accept the amendments.

Denis O'Donovan (Fianna Fail)
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If further debate is required it is not going to finish today anyway. That is the reality. We can postpone it until the next day.

Pádraig Mac Lochlainn (Sinn Fein)
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No, I would like to vote on amendment No. 5.

Denis O'Donovan (Fianna Fail)
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That will push us back another ten minutes but it is the Senator's decision.

Pádraig Mac Lochlainn (Sinn Fein)
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I know.