Official Engagements (Continued)

Tuesday, 21 October 2014

Dáil Éireann Debate
Vol. 855 No. 1

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(Speaker Continuing)

[Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin] We need to remember that the patent box we are now introducing has been in place in Britain for a number of years. It has been a significant factor in Britain now being much stronger in attracting inward investment, particularly on the research and development side, compared with ten years ago. In order to facilitate "inversions", as they are known, a number of mergers have been proposed recently. This has irked the United States more than anything we have ever done. A similar patent box is in place in the Netherlands. Irish companies have availed of Dutch tax laws. We know that Luxembourg has its own financial services regime. France also has its own regime.

  I am open to transparency across the globe. I would prefer if global agreement could be reached before we start beating ourselves up incessantly. I suggest we should be more critical and analytical about what is going on in other jurisdictions across the globe. I remind the House that many of the jurisdictions with which we are competing are not even democracies. At least we can have this debate. Having served as Minister for Enterprise, Trade and Employment, I know about the kinds of state aids that are being given to prospective companies outside of Europe. Massive inducements are being given to companies to try to locate various utilities and factories in certain locations. As a small island nation, we are competing against significant players with significant resources. We need to have some perspective on the debate. Thousands of households are depending on a particular form of investment in Ireland. We should not depend exclusively on it. Some of the growth of small and medium-sized enterprises has been borne out of foreign direct investment. In other words, many small and medium-sized companies have developed on the back of foreign direct investment by supplying into companies and developing expertise in areas like project management. For example, there is a whole range of service companies supplying the life sciences sector.

  I am all for a broad debate on this issue, but I am not in favour of the unilateral beating up of Ireland by ourselves. We should not be oblivious to the reality of what is going on across the globe in democracies and non-democracies. By the way, these issues need to be factored into the transatlantic trade deal between Europe and the United States. We are putting forward the ideal of free trade across the globe as part of a world free trade agreement, but free trade on whose terms? We need to consider basic issues like wages, which are $1 a day in many countries. This contrasts with the basic living standards we provide for in areas like health and welfare. These are very big issues. According to some analysts, most developed democracies are now going through a low-wage era. Middle classes are shrinking in societies with developed economies. This is putting the whole concept of democracy under threat as well.

  I appreciate that the Ceann Comhairle has been tolerant as I have been raising these issues. Does the Taoiseach accept our concerns about a unilateralist approach to this issues? Does he agree that there needs to be a global agreement? We have seen how difficult it is to get global agreement on the climate change issue, which is the subject of my first question. We have had all the rhetoric and all the analysis on climate change. Some significant players, like the United States, were very slow to come to the table and do what they should have done ten or 15 years ago on the issue of climate change. I salute previous UK Governments, particularly those led by Tony Blair and Gordon Brown, that embraced the idea of developing a policy on climate change and energy. They were very effective in creating a vision around how they could reorganise society in line with the realities of climate change and energy policy. It took China, the United States and the other big players a long time to realise the impact of climate change, greenhouse gases and low carbon footprints.

  I mention all of this to explain why I am sceptical about the capacity of the international order to reach agreement on tax. On a much more existential issue - the survival of the planet - they have failed to come anywhere near a deal on climate change. The result has been a worsening of the situation. That is why I am putting it to the Taoiseach that the Government has been quite lax on climate change over the past three and a half years. I get no sense of enthusiasm or vision about how we want to reorganise our society in relation to climate change. I think people are worried about the politics and the electoral consequences of it. The Government has not adequately engaged with the public on this issue. There has been an absence of engagement on the transport issue, for example, over the past three and a half years. That is one of the biggest Achilles heels we have in this country in terms of reaching our targets. The Taoiseach might let me know when the climate action and low carbon development Bill, the aim of which is to underpin national climate policy, will be introduced. We have been at it for a long time now. What level of consolidation will take place after the publication of that Bill?

  I would like to conclude by asking two questions about the undocumented Irish. It seems to me that this issue has gone into the sand. When Senator Schumer was appointed three or four years ago, there was much hope that great things would happen with regard to the undocumented. As we approach the mid-point of President Obama's second term in office, I do not get any sense that a multilateral change in migration policy that would affect everybody is about to happen. Has the Government considered pursuing a limited bilateral approach to certain schemes, along the lines of the Australian scheme? We could have a reciprocal arrangement with the United States that would allow citizens of that country to come here and vice versa. I managed to negotiate one stage of a working holiday agreement with Mr. Negroponte. This scheme allowed Irish people to go to the United States legitimately to work for a year, and vice versa. It seems to me that this relates entirely to American politics. I am not blaming the Irish Government or anybody. We can all say we will go out there to lobby for the undocumented Irish, but the bottom line is that there will be change if the American domestic political situation dictates that there should be change, and there will be no change if the American political situation dictates there will be no change. From what I am reading at the moment, I am fairly pessimistic about the prospect of change. I ask the Taoiseach to comment on that.

The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny I thank Deputy Martin for raising a number of important issues. I have referred to the circumstances in which Governor Brown made his comments. He is well aware of the situation that applies here in Ireland. I have been in the Apple plant in Cork on a number of occasions. It is a huge operation with a workforce of 4,000. It is at the leading edge of technological development globally. As I have often pointed out before, the iPhone that comes from Cork, which is where the workers pay their tax, might be sold internationally, where VAT or other taxes might apply. The intellectual property is vested in California.

When the European Council discussed the situation that has arisen in recent years, as the technological and digital world has moved so far in advance of the legislative world, there was genuine agreement and enthusiasm about the need for a global response to this problem. The OECD was mandated to deal with that. A number of European countries that were reluctant in the past to come on board regarding the global response to base erosion and profit sharing - these countries are well known to the Deputy - are now enthusiastic about doing so. As the Deputy knows, Ireland is not the only country that is being investigated in an opening position by the European Commission. A number of other European countries are being investigated. We are not being picked out here. Some cases have been publicly highlighted.

I agree that it is very important for there to be certainty about the rate of tax. When discussions have taken place at the European Council, at the European Commission and at OECD level, there has never been any mention of any requirement to change the rate of tax. As has been pointed out by the Government, including by the Minister for Finance in his Budget Statement, there will be no change in the rate of corporation tax here. It remains at 12.5%. That is the position. The Deputy correctly pointed to the need to provide certainty to the workforces of the companies that are here about the longer-term future of investment and the continuation of employment. Clearly, when something goes off-patent in the pharmaceutical area, it might not be manufactured to the same extent in the plant for the future. That is why there is always a conveyor belt under the FDA regulations for the approval of new drugs and new products.


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