Denis O'Donovan (Fianna Fail)
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I welcome the Minister of State, Deputy Breen, to the House. He is becoming a frequent visitor. Before we commence, I remind Senators that a Senator may speak only once on Report Stage, except the proposer of an amendment who may reply to the discussion on the amendment, and that each amendment must be seconded on Report Stage. There is nobody here to move amendment No. 1, in the names of Senators Mac Lochlainn and Devine.

Denis O'Donovan (Fianna Fail)
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Amendments Nos. 2 and 3 are physical alternatives and may be discussed together. If amendment No. 2 is agreed, amendment No. 3 cannot be moved.

Pat Breen (Clare, Fine Gael)
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I have reflected on the concern expressed on Committee Stage by Senators about the keeping of records by the Controller of Patents, Designs and Trade Marks. I am seeking to address this concern in amendment No. 2, which clarifies beyond doubt the intention that the controller must keep records of all knowledge development box, KDB, applications received, issued, refused and reviewed. The only discretion available to the controller relates to the form and manner in which records will be kept. For example, they may be kept in hard copy or electronically. I trust that this amendment facilitates the withdrawal of amendment No. 3 in the names of Senators Mac Lochlainn and Devine. When Senator Mac Lochlainn raised this issue on Committee Stage, the Minister, Deputy Mitchell O'Connor, said she would seek clarification and come back to the House with an amendment to ensure all records must be kept. In that context, I suggest that this amendment should satisfy the Senator.

Denis O'Donovan (Fianna Fail)
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I remind Senator Mac Lochlainn that amendment No. 3, in his name, is being considered with this amendment. If amendment No. 2 is agreed, amendment No. 3 cannot be moved. That might have some implications for the approach the Senator chooses to pursue.

Pádraig Mac Lochlainn (Sinn Fein)
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Can I clarify whether the House has moved on from amendment No. 1?

Denis O'Donovan (Fianna Fail)
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Yes. We had to move on. I cannot go in reverse.

Pádraig Mac Lochlainn (Sinn Fein)
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That is okay.

Denis O'Donovan (Fianna Fail)
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I usually try to facilitate Members, but I would be setting a dangerous precedent if I were to do so in this case.

Pat Breen (Clare, Fine Gael)
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Does the Senator have any concerns about these amendments?

Pádraig Mac Lochlainn (Sinn Fein)
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We will agree to disagree and move on. It is my fault. I should have been here on time.

Denis O'Donovan (Fianna Fail)
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No problem. We can all be tied up. I can understand that the Senator is a busy man.

Denis O'Donovan (Fianna Fail)
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As amendment No. 2 has been agreed, amendment No. 3 cannot be moved.

Denis O'Donovan (Fianna Fail)
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As amendments Nos. 4 to 10, inclusive and amendment No. 18 are related, and as amendments Nos. 5 to 10, inclusive, are physical alternatives to amendment No. 4, amendments Nos. 4 to 10, inclusive and amendment No. 18 may be discussed together. If amendment No. 4 is agreed, amendments Nos. 5 to 10, inclusive, cannot be moved.

Pat Breen (Clare, Fine Gael)
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Amendments Nos. 4 and 18 are designed to combine and align the annual reporting requirements under the Bill with earlier reporting requirements on the Controller of Patents, Designs and Trade Marks under the Patents Act 1992. The effect of amendment No. 4 will be to replace the existing section 18 of the Bill in its entirety. This amendment and amendment No. 18, which amends section 103 of the 1992 Act, deal comprehensively with the reporting requirements on the controller under all enactments under his supervision.

Senators will recall that during the Committee Stage debate on this Bill, concerns were raised that the controller's annual report will be submitted to the Minister only. The Minister, Deputy Mitchell O'Connor, indicated in response that she would introduce an amendment to ensure the wider circulation of the controller's annual report on KDB activities. The effect of amendments Nos. 4 and 18, which align all the controller's annual reporting requirements, will be to ensure the Bill provides for the controller's annual report on KDB activities to be submitted to the Minister in the first instance. Importantly, the Minister in turn will lay the report before both Houses of the Oireachtas. I believe these amendments address the concerns behind amendment No. 5, in the names of Senators Mac Lochlainn and Devine, and amendment No. 10, in names of Senators Higgins and Black.

Alice-Mary Higgins (Independent)
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Perhaps the Minister of State will be able to give further clarification regarding amendment No. 4 because I think it is important. I recognise that amendment No. 2 was introduced in recognition of the valid points that were made by Senator Mac Lochlainn on Committee Stage regarding the importance of keeping records. I appreciate that there was some recognition of that. I recognise that amendments have been proposed in a few areas of this Bill. I thank the Minister of State for that.

I am concerned about one aspect of amendment No. 4. I would like the Minister of State to elaborate on the key changes he is making in this amendment. How does he consider that they are addressing the concerns we raised on Second and Committee Stages? As I see it, the key change is that the KDB report: "shall include statistical information in a form, and regarding such matters, as the Minister may direct". Does the Minister of State believe this provision will address the geographical and regional distribution question that was raised by many Senators on Second and Committee Stages and which is the subject of amendment No. 9 in my name?

I have also tabled amendment No. 10, which proposes that the KDB report will include: "such general information as to the operation of the scheme as may be appropriate or relevant".Will the Minister of State indicate how he sees his amendment will address the concerns of amendments Nos. 9 and 10?

Does the Minister of State believe the statistical information could cover amendment No. 7 also? Amendment No. 7 reflects the fact that, under our patents regulation, when they are filed, they are categorised. There is an extraordinarily detailed set of categories in the national report in respect of patents. We may not necessarily need to take on board those same categorisations but what I am attempting to do in amendment No. 7 is to ensure information is collected as to the sectors. If pharmaceuticals or medical devices are key areas of growth or if we are looking for innovation in food production, it would be useful and necessary if the Minister knew research and development was taking place under those sectorial headings. Nobody is looking for precise information as to the exact areas of innovation. Instead, they want to know the areas in which research and development is taking place to ensure sectors prioritised by the State under the Action Plan for Jobs and other initiatives receive funding. It would also ensure research priority areas in our higher education institutions are being complemented. The amendment provides for the collection of useful information which can help in planning and providing the bigger picture as to what is happening in the State. I have left it very wide as an amendment to allow it to be incorporated in the legislation, even in the Dáil.

Amendment No. 9 is also open in seeking figures in respect of the geographical or regional distribution of applications. Today, the Government launched the Action Plan for Jobs. One of its key points is regional distribution. To grow business, as well as an active and vibrant economy leading to employment, we must ensure there is a regional distribution and an all-Ireland approach without parts of the country being left behind. To ascertain whether the knowledge development box is proving to be complementary to that goal of regional action, it would be useful if we had geographical and regional information as to where research and development is taking place.

Those are two key points. These are reasonable amendments. I understand they may fall, so this is my opportunity to speak to them. I apologise for speaking to them at some length. Will the Minister of State clarify how he sees these specific points being addressed? Does he see them falling under the remit of statistical information? Will the statistical information the Minister will be able to direct or require be qualitative as well as quantitative?

Denis O'Donovan (Fianna Fail)
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I call on Senator Mac Lochlainn. Once the Minister of State comes back in, there cannot be further debate.

Pádraig Mac Lochlainn (Sinn Fein)
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I did not protest the issue of the first amendment because we are revisiting the issue now.

It is desirable to incentivise and encourage innovation. Today, there was a presentation in the Oireachtas on innovation hubs in different parts of Ireland. The problem is when reduced corporation tax and responsibility is introduced. We have seen where this has, unfortunately, been abused in the past with loopholes emerging. The taxpayer and the citizen want to see the maximum level of accountability on this matter.

Coming from the regions, the Minister of State will appreciate that balanced regional development is a significant issue for people from there. When significant tax incentives are given to companies, we must ensure the benefits and job creation are spread geographically across the State. In fairness, the Government’s amendments show it has listened to the concerns expressed on Committee Stage and has attempted to address the issues raised.

The wording, however, in amendment No. 4 is too vague. It states, “The KDB report shall include statistical information in a form, and regarding such matters, as the Minister may direct.” On the last day we debated this, the Minister stated the Government did not want to give away some of the sensitive commercial information about some of the companies applying. Accordingly, one might not want to give a specific address, for example. However, if one used one’s imagination, there is a way of identifying how this incentive benefits the region without giving away sensitive commercial information. It has not happened.

Our core concern has not been addressed and I cannot support the amendment. It is too vague and will not give us the information we require. If the Minister of State indicates he would be willing to address this issue in the Dáil to ensure statistical information is provided which clearly demonstrates how this incentive will be availed of across the regions, we could look at that measure. However, if no such guarantee is made, unfortunately, we cannot support this amendment.

Lynn Ruane (Independent)
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For clarification, why do amendments Nos. 7, 9 and 10 fall if the Government’s amendment is passed? Can it be explained why they are not complementary?

Denis O'Donovan (Fianna Fail)
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I understand from the Clerk that they physically overlap. If the Government amendment is agreed, it removes the provisions the other amendments address.

Alice-Mary Higgins (Independent)
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As amendments pass, line numbers and so forth change in the legislation as otherwise, every later amendment should accordingly fall. Amendments Nos. 7 to 10, inclusive, are not amending text but are inserting it. We often have a case where a new section is inserted in a Bill on Report Stage and subsequent amendments are accepted.

Denis O'Donovan (Fianna Fail)
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I understand that if this amendment is agreed, then all this block falls.

Alice-Mary Higgins (Independent)
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I am not clear as to why that is the case. I do not believe that is correct.

Denis O'Donovan (Fianna Fail)
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That is the expert advice.

Alice-Mary Higgins (Independent)
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It is important. I would be quite happy to support the Government’s amendment but I would like the opportunity to vote on the insertions in the other amendments. I do not believe they need to be contradictory but can be complementary.

Denis O'Donovan (Fianna Fail)
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If amendment No. 4 is agreed, it removes the text the other amendments in question address.

Alice-Mary Higgins (Independent)
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These are insertions.

Denis O'Donovan (Fianna Fail)
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Let us suppose the Government amendment that has been moved and on which the Minister spoke is agreed. Let us suppose the House agrees to that.

James Reilly (Fine Gael)
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There is no text to amend or add to.

Denis O'Donovan (Fianna Fail)
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I ensured the Government amendment was moved and that was my duty. The amendment deletes lines 18 to 39 on page 14 and lines 1 to 8 on page 15. If the amendment is agreed to, all those lines will be gone.

Alice-Mary Higgins (Independent)
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Will my amendment not then go in between the new lines 27 and 28?

Denis O'Donovan (Fianna Fail)
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My learned Clerk tells me that it is addressed-----

Alice-Mary Higgins (Independent)
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I obviously have great respect for our new and wonderfully esteemed Clerk so I will bow on it, but I believe this is inconsistent with some other practices.

Denis O'Donovan (Fianna Fail)
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I know what you are saying. There is some logic to your argument, Senator. However, the amendment you have tabled later in this group refers to certain lines.

Alice-Mary Higgins (Independent)
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It refers to line numbers.

Denis O'Donovan (Fianna Fail)
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It is not necessarily line numbers, but certain sections and line numbers. If those lines are gone, which is purpose of the Government amendment, then your subsequent amendments have no function. They are already gone, provided the Government amendment is agreed to.

Alice-Mary Higgins (Independent)
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I am unconvinced, but obviously I will bow to the expertise of the House for now. I am keen to have clarification on the point afterwards. I am surprised at that.

Denis O'Donovan (Fianna Fail)
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The Clerk has said he will talk to you later if you want to go through it.

Alice-Mary Higgins (Independent)
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That is fine.

Denis O'Donovan (Fianna Fail)
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Is the amendment agreed?

Pádraig Mac Lochlainn (Sinn Fein)
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Not agreed.

Denis O'Donovan (Fianna Fail)
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Amendments Nos. 5 to 10, inclusive, cannot be moved.

Denis O'Donovan (Fianna Fail)
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Amendments Nos. 11 to 17, inclusive, are related and may be discussed together by agreement. Is that agreed? Agreed.

Alice-Mary Higgins (Independent)
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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.

Denis O'Donovan (Fianna Fail)
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Is Senator Mac Lochlainn seconding amendment No. 11?

Pádraig Mac Lochlainn (Sinn Fein)
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Yes, and I support all of these amendments. I commend Senator Higgins. One of the primary responsibilities of legislators is to scrutinise legislation and strengthen accountability. I cannot see how the Government can object to any of these amendments. Regardless of the Government's position on Apple and other things that have come before, there is serious concern in Ireland, Europe and globally about how tax incentives materialised and how accountants who work for companies or corporations influence decision making and legislation. The evidence is there internationally. It is the responsibility of us in the Houses to be sure of the intent. The intent to incentivise businesses looking at research and development to create jobs, which are very important to an economy, is good but the balance needs to be there. The legislation, as it is presented, does not have that balance. The legislation goes further than the original but the commitments are too vague. Senator Higgins has done tremendous work in trying to ensure as much as possible that the intent of the legislation and the initiative achieves its objectives and that companies are using it well.

I look forward to the Minister of State's response. I assume he will support all of these amendments.

Pat Breen (Clare, Fine Gael)
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Before I speak on amendments Nos. 11 to 18, inclusive, I wish to reassure Senator Higgins in light of the comments she has made. One does not want to be too descriptive regarding the issues about which she spoke. That is important. If one is too descriptive, one confines oneself. Two years down the road, things could be very different and different information could be needed. In this regard, I draw her attention to the catch-all situation about which I have spoken and which is provided for in section 18(2). Subsection (2) provides for the KDB Bill report to include information on such matters as the Minister may direct. In addition, section 18(4)(h) provides for the KDB report to include such other statistical information as prescribed by the Minister. I wish to allay fears about this because I know Senator Higgins has done much work on the Bill and has been in constant contact with the Department.

I move to amendments Nos. 11 to 17, inclusive, which are quite interesting. I have listened to the rationale for the amendments tabled by Senators Higgins and Black but I do not propose to accept them. I will explain why. It might be useful to remind Senators of the intention behind the Bill. The Bill proposes the introduction of the KDB certification scheme for SMEs. The scheme is to be administered by the Patents Office. The process before the office involves the examination of applications to ensure that the invention, the subject of the application, meets the criteria of being novel, non-obvious and useful. At the end of this process, if the application meets these criteria, the office will grant a certificate. If not, the office will not issue a certificate. A certificate provides the gateway for SMEs to apply for the 6.25% corporate tax rate on profits arising from the invention. Granting of a KDB certificate does not, however, guarantee that the SME will qualify for this lower rate of corporation tax. The Revenue Commissioners will have to consider taxation returns on the basis of the provisions that apply to the KDB scheme introduced by the Minister for Finance in the Finance Act 2015, which came into effect on 1 January 2016. Revenue will, as always, have the ability to obtain the necessary information about the KDB to provide reliable information to the Government on the use of the KDB, including information on revenue forgone to the Exchequer.

I fully understand the Senators' desire to ensure ongoing monitoring and evaluation of existing schemes in the areas of research, enterprise and taxation. This is necessary to protect taxpayers' money and ensure that new schemes introduced provide the State with value for money. It is extremely important that we get value for money. I assure the Senators that the process of monitoring and evaluating all our research, enterprise and taxation schemes is ongoing with regular reviews. It must be as it is in the interest of taxpayers to have that transparency. In the case of the KDB, I remind Senators that the report on the taxation expenditures published with the budget in October 2015 provides for an ex anteevaluation of the KDB scheme. The evaluation outlines the basis of the best estimate of tax forgone of €50 million. The €50 million is in respect of all aspects of the KDB, not just the certification scheme aimed at SMEs.

On 18 January, my Department published a report on the economic and enterprise impacts from public investment in research and development in Ireland. The study presents evidence that points to a clear link between company engagement in research and development and stronger sales, exports and employment performance. This includes both Irish and foreign-owned firms supported by our enterprise agencies.

I remind Senators that this is a good Bill because it will increase Ireland's attractiveness for foreign direct investment, which is extremely important. I have just come back from a two-day trade mission to Dubai this morning, and the interest in Ireland regarding foreign direct investment and the interest in our indigenous companies is second to none. Research and development, which Senators have spoken about, is extremely important in every area because of the types of industries we have in Ireland, whether in med-tech, IT or whatever. The Government is investing in research and development. The Bill is important because it benefits our small businesses, about which Senator Mac Lochlainn spoke. Small businesses are very important in his constituency in Donegal. They are the backbone of the economy in rural Ireland. Giving small businesses this access is extremely important because we must ensure that innovation is the top priority. I have seen in my job that entrepreneurship is ripe. If all these elements are in place - this Bill, the companies that come in, irrespective of where they come from - it will increase investment in the country. What is also very important is that this will create jobs, which I think most Senators want. I can go into a little more detail afterwards if Senators have further questions about this.

Alice-Mary Higgins (Independent)
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I refer to jobs that would be created so that we can have evidence-based policies, which I believe is a priority. I am literally looking for evidence. I ask the Minister of State to address how the evidence might be tracked.

Pat Breen (Clare, Fine Gael)
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I might as well read the rest of the response out now.

Denis O'Donovan (Fianna Fail)
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Yes. The amendments are grouped. Nobody will be allowed to speak again on them, except the proposer.

Pat Breen (Clare, Fine Gael)
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I have also taken some notes.

All tax expenditures are reviewed regularly in line with the Department of Finance guidelines for tax expenditure evaluation published in October 2014. These rules apply to the knowledge development box. The evaluation will take place within five years of the introduction of the scheme, and that is important for Senators. I think it was a concern for Senator Higgins specifically. It is also important to point out that the review of the overall KDB scheme will be a matter for the Minister for Finance.

Regarding amendments Nos. 11 to 14, inclusive, I remind Senators that the controller will publish annually information on the activities of the Patents Office regarding the KDB certification scheme. This information will be laid before the Houses of the Oireachtas and will therefore be in the public domain, which is something about which I think Senators had concerns. Revenue will therefore have access to the controller's report to the Minister. The information, however, will be statistical and not financial in nature and will relate to the KDB certificates only. Information on linkages with other tax measures and revenue foregone will not be known to the controller or the Minister. Such matters are, I believe, the responsibility of the Minister for Finance.

I move to amendments Nos. 15 to 17, inclusive. Given the nature of the process I have just described before the Patents Office, these amendments do not have any place in the Bill. It is open to SMEs to avail of support and incentives that apply under various research and enterprise programmes. As Minister of State with responsibility for employment and small business, I fully encourage SMEs to avail of the available supports in place, build capacity and provide jobs, which is what we are talking about and which is very much central to the Bill.

As I mentioned, evaluation of research and enterprise effectiveness occurs on an ongoing basis. This is the appropriate manner in which to undertake such evaluations. Requiring a company to indicate if it has ever received a grant subsidy or other support is part of the KDB certification scheme. The amendments would add to the burden of such companies and would not add value. The reality is that the focus should be solely on the project in front of the controller. If the project is good enough, it will be approved on the evaluation of the controller. The facts in front of the controller should be sufficient for him or her to decide if the project should get a patent and a certificate. The less of that-----

Alice-Mary Higgins (Independent)
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To clarify, these amendments were not suggested as criteria for consideration under the KDB scheme; rather, it is simply a question of knowing whether KDB certification has been previously received, etc. It is not for the controller but for the Minister to have that information so that they can-----

Pat Breen (Clare, Fine Gael)
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However, it is important that the information before the controller is the information that he or she should work on. That is important. As these amendments are not appropriate to the Bill, I do not propose to accept them.

Denis O'Donovan (Fianna Fail)
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Does Senator Higgins wish to respond? She moved the amendments.

Alice-Mary Higgins (Independent)
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I will respond very briefly. I heard the Minister of State say something which is of concern. Am I right in saying the Minister said that a cost-benefit analysis of the knowledge development box scheme would be considered within five years? I wish to clarify if that is correct.

Pat Breen (Clare, Fine Gael)
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Yes. It will take place within five years of the introduction of the scheme - "within".

Alice-Mary Higgins (Independent)
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I believe five years is far too extensive a period and is also somewhat contradictory to the Government's own commitments regarding equality budgeting, for example, because-----

Pat Breen (Clare, Fine Gael)
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It will take place within five years.

Alice-Mary Higgins (Independent)
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Perhaps the Minister could follow it up and indicate the current policy of the Government in terms of when it envisages carrying out that evaluation. If it is in five years, that would be of concern. I again point out there is a real concern about the commitment we have to equality budgeting and ensuring we know the cost-benefit balance to which we have committed. Even the Government has committed to a two third to one third ratio, for example, in respect of expenditure, tax measures and so forth. I presume that information will be made available annually, even if a full cost-benefit analysis takes longer. I was concerned by that and would like clarification on it. Obviously, we would need to know if, for example, the knowledge development box was to result in billions being taken out of the Exchequer, because that would be of high relevance to our annual budgeting process, both in terms of the ratio between expenditure and tax measures and the equality budgeting commitment. That is important to clarify.

I appreciate that the Department has come some way to meeting us and that it is putting forward the report. Again, I would suggest that before this goes to the Dáil, it may be good to give an indicative list. Unfortunately, our group is not represented in the other House but I think it would be valuable to produce an indicative list of the kind of statistical information and other information the Minister would require or expect in that annual report. It is certainly not comforting to me that the Government would regard it as excessive to have a simple test. It could be as simple as a box to be ticked which states "Yes" or "No" with regard to whether a company has received previous expenditure measures.

When we talk about jobs, we need to be rigorous. I want jobs and I want this to translate into jobs. The Minister, Deputy Mitchell O'Connor, was very clear that this is for research and development and is not directly related to jobs, but that it is believed it has that outcome. However, we are denying ourselves the evidence to show there is a link between the knowledge development box and the creation of employment. If people go to Enterprise Ireland or the IDA and say they want to open a factory and produce a device, we currently have no way of knowing that the factory and that production has in any way benefited from the knowledge development box. I know I will be told the knowledge development box has contributed to the creation of employment and enterprise, but I will be told it hypothetically and not based on evidence. It is a bad sign if a company's commitment to research and development is so slight that the idea of ticking a box to indicate it previously received grants is too onerous or a disincentive, particularly given the supposed commitment to working with Enterprise Ireland and all the many robust and important benefits and systems we have to encourage companies to grow. It is a very mild measure.

I note for the record that when the Government seeks to defend the knowledge development box in the future by refusing these amendments, it has denied itself the evidence on that. It will not be good enough to say research and development leads to jobs based on some figures from other countries when we have a significant research and development initiative that we are funding and subsidising from the Exchequer but we have not bothered to make a link between other areas of employment or enterprise and anything that leads to production or jobs. The knowledge development box will be floating, separate from any joining of the dots with other enterprise measures. Any Minister who says we believe the knowledge development box led to this or that employment has denied himself or herself the evidence for that. The hypothetical will not be good enough in the future.

It is unfortunate the Minister of State and the Department seem to be willing to deny themselves evidence for this important platform. If we are serious about the economy, enterprise and innovation, we need to be serious about the evidence and about the measures. We need to ensure the building blocks fit into each other and work together. I want Ireland to be a centre for research, development and innovation, but to achieve that, we cannot simply be throwing pennies into a wishing well and accrediting good things that may or may not happen to the pennies we have thrown in the wishing well. This is an important and simple proposal which would strengthen the hands of the Minister of State and future Ministers who support it. I regret the Minister of State is not able to support the amendments, in particular any one of amendments Nos. 15 to 17, inclusive, which I believe are very reasonable.

Denis O'Donovan (Fianna Fail)
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Before I call the Minister of State, I welcome to the Visitors Gallery seven lovely young people who are studying for their masters degrees in Queen's University, Belfast. They are doing a project as part of their placement in Stormont. I am sure some of my colleagues would be interested in something similar happening in this Parliament. I met the delegation earlier today. I hope they enjoy their visit to Leinster House and that they will find some benefit from how this House and the Lower House work. I call the Minister of State to respond.

Pat Breen (Clare, Fine Gael)
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Senator Higgins said she wants Ireland to be a centre of excellence for innovation. Ireland is already a centre of excellence for innovation. This is why Ireland has been so successful on the world stage and why entrepreneurship is alive and well. This is why The Wall Street Journalhas said Ireland is now the best centre in the EU for entrepreneurship. That is something we should be very proud of. It is that entrepreneurship and innovation which is driving jobs in the country at present. The research and development that is ongoing, whether at indigenous company or multinational level, is extremely important.

This Bill will complement what we are all talking about. We should keep talking up our country because we have a good thing to talk about. Our reputation is enhanced all over the world, wherever we go. We are the fastest growing economy in Europe. Our unemployment figures have come down to 7.1% today and I believe they will continue to fall. The 2017 Action Plan for Jobs was published this morning with the aim of creating 45,000 jobs this year. This will be done through the innovative companies that continue to strive, even with the challenges and difficulties in the economy at present.

With regard to accountability, the Senator asked that the annual report would go before the Committee on Jobs, Enterprise and Innovation. I suggest the proper place to scrutinise such things is the Committee on Finance, Public Expenditure and Reform, and Taoiseach where there would be an opportunity to scrutinise it with the Minister for Finance, given this relates to taxation.

With regard to amendment No. 15, I reiterate that we are trying to cut down on red tape and bureaucracy. We have to put faith in the Comptroller and Auditor General, who has vast experience. It is only right that he would see what is on paper in front of him and make his evaluation on the information that is available. Some of this information could be on that but it is important we keep it as tight as possible.

Alice-Mary Higgins (Independent)
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I want to clarify I have not suggested this would be part of the Comptroller and Auditor General's evaluation.

Pat Breen (Clare, Fine Gael)
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That is fine. That is where I am coming from in this regard. I hope this Bill will progress further because it is important legislation and it is an important part of the vision we have for Ireland. We need to ensure we have more research and development and that we encourage more people to get into research and development, particularly in the patent and invention sector.

Alice-Mary Higgins (Independent)
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I move amendment No. 12:

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

“Review and scrutiny

19.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."

Pádraig Mac Lochlainn (Sinn Fein)
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I second the amendment.

Denis O'Donovan (Fianna Fail)
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Does the Senator wish to move amendment No. 13?

Alice-Mary Higgins (Independent)
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I move amendment No. 13:

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

“Review and scrutiny

19. 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.”.

Pádraig Mac Lochlainn (Sinn Fein)
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I second the amendment.

Alice-Mary Higgins (Independent)
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I move amendment No. 14:

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

“Committee Scrutiny

19.An annual 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 should be presented and discussed by the Joint Oireachtas Committee on Jobs, Enterprise and Innovation.”.

Pádraig Mac Lochlainn (Sinn Fein)
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I second the amendment.

Alice-Mary Higgins (Independent)
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I move amendment No. 15:

In page 15, between lines 15 and 16, to insert the following:

“Intersection with wider enterprise and innovation strategy

20.(1) Companies applying for the KDB certificate should be asked to indicate at the time of application whether they are presently or have been previously in receipt of grants, subsidies, tax incentives or other enterprise or research and development supports from a public or semi-state body.

(2) Companies applying for grants, subsidies, tax incentives or other enterprise or research and development supports from a public or semi-state body should be asked to indicate whether they are presently or have been previously granted a KDB

certificate.

(3) Information on the level or frequency of intersection between the KDB and other enterprise or research and development initiatives is to be made available to the Minister for Jobs, Enterprise and Innovation in order to inform overall jobs, enterprise and innovation strategies.”.

Pádraig Mac Lochlainn (Sinn Fein)
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I second the amendment.