I welcome this Bill, whose intention is to make it easier for companies and people to set up businesses. It also provides solutions to the many difficulties currently encountered, such as the weakness and lack of vision evident in existing legislation. I would like to acknowledge the companies that are doing well and providing worthwhile employment in my home county for many people. I would like to see more companies come to the midlands and particularly to Longford and Westmeath.
Every day, businesses and companies are being driven out of business here due to the excess of bureaucracy and red tape and the failure of the previous Government to change things during its 20 years or so in office. The Bill before us today outlines a process that will help us move forward by cutting down on costs, waste and inefficiency. This will favour the development of businesses. The Bill is a common-sense revolution of company law that will help cut the cost of starting a company and will help make this country the best small country in which to do business. It deals with issues to do with the creation and development of jobs and also aims to create companies that are more focused on output, performance and a strong culture of service. The changes proposed in this Bill will give companies the ability to handle the daily challenges with less red tape and will make company law obligations easier to understand. This landmark course of action will bring significant benefits to businesses and companies of all types throughout the State.
The Government, since taking office, has had a clear and credible jobs plan, but it must be spread evenly throughout the country. Longford-Westmeath, although perfectly situated in the centre of the country, with equal access to east and west, is losing out on major international investment due to the state of its infrastructure, to the detriment of its economic development. There is a moral obligation on the State to ensure that the midlands area gets employment opportunities, just like the east and west coast and our cities. It is imperative that additional incentives and funding are put in place to encourage indigenous industry in the area.
This is important legislation and is necessary in order to increase employment opportunities in the business sector. It is the key to supporting and giving Irish companies a competitive advantage. It will also open up the way companies do business and make them more accountable.
We are fortunate that the Government has been able to assemble an economic team under the chairmanship of the Taoiseach. The team is flexible and highly committed to the development of a jobs economy. I understand that staff supporting this team work until 10 p.m. or 11 p.m. without being asked, which demonstrates huge commitment. This level of commitment is important for the Government to succeed and it also demonstrates that morale among staff is very high. People co-operate and support each other as in a well-functioning family. We are living in interesting and exciting times and this motivates people. I am aware that in the long term tensions and problems will occur unless we change and update company law to address issues and ensure that proper procedures are established.
A striking feature over the past 18 months or so has been the number of foreign companies establishing their European headquarters in Ireland. I found it a moving experience recently to visit Capitol Hill and be told that our new Government is getting things right and is moving in the right direction and that, as a result, more American companies will be seeking to invest in Ireland. That is a good news story. It drove the message home to me that it is now more important than ever for us as a nation to be able to create the climate and conditions necessary for investment and to improve on what we have, such as our 12.5% rate of corporation tax. We should ensure there will be no tax increases in selected areas so that there is a minimal impact on jobs.
In a modern economy it is important that the boundaries of company guidelines keep moving all the time. In recent years, for example, the Government has increasingly considered education in economic terms.
It has put forward the idea that the primary purpose of education is to produce one of the community's most valuable economic assets - a competent, educated and adaptable workforce. To an increasing extent, school policy is being considered as a facet of economic policy. This was reflected in the most recent renaming of what used to be the Department of Education as the Department of Education and Skills. The same thing can be seen in the naming of the Department of Jobs, Enterprise and Innovation.
One of the primary features of company and economic policy is that it has wide and constantly changing boundaries. Indeed, the machinery of economic policy will be able to steer the economy towards jobs as a result of this change in company law. Economic freedom - the freedom to be able to buy, sell and employ - is the foundation of all freedom. This is particularly important for companies. To that end, this Bill cuts out the nonsense and allows businesses to use their energy and ingenuity to meet the needs of customers who will create prosperity. When companies and markets are allowed to work properly, they benefit everyone. Too much regulation destroys freedom and efficiency, just as too much red tape controls and squeezes companies. This has harmful effects on employment. The cost of starting a company will be cut considerably as a result of this reform of company law. By strengthening best practice in small business, we can show investors that Ireland is the best small country in which to do business. When this landmark Bill becomes law and other supports are put in place, people will be enthusiastic about setting up businesses. Many quality projects will be very useful as we grow our economy and create jobs.
At a time when the effectiveness of international development law is being more critically scrutinised, it is important that we move forward with 21st century company law. As I said earlier, it is encouraging that international companies have continued to develop and set up here in recent years, despite the regular problems with communications and broadband in this country. We need to deal with such problems on an ongoing basis. This legislation is a prerequisite to sustainable development for small businesses, which are contributing millions to the growth of the economy. It is about enabling companies to become what they wish to be. We are trying to strike a balance by taking away a great deal of expensive baggage and replacing it with measured pragmatism. The jobs and mortgage crisis is the greatest challenge facing our people because of the social misery it is causing. We cannot allow the emigration of mostly young and well-educated people to be a permanent feature of Irish life. If we are to stop it, we have to get the economy growing. The billions of euro pumped into the banks by the previous Government were mentioned on Leaders' Questions. If we had that money now, we could pump it into jobs.
We need to reform the scandalous upward-only rent review system and the penal rates regime, both of which are costing thousands of retail jobs throughout the country. One has to go no further than the midlands to see how businesses in our towns are being affected. We need to reform the upward-only rent review system that applies to commercial property by giving tenants the right to have commercial rents reviewed regardless of any upward-only or other review clause. A commitment to do so is in the programme for Government. It must be acted on before it is too late. The retail industry has lost thousands of jobs in the past five years. The maintenance of the upward-only rent review system will increase this number greatly. There is clear evidence in every part of the country - we witnessed it in the courts recently - that some landlords have no interest in reducing costs. There have been limited rent reductions of a few percentage points in recent years, at a time when sales have been decreasing by between 25% and 33%. We must take action in this area immediately. We cannot stand idly by and continue to allow what used to be one of Ireland's largest industries go further down the tubes.
I welcome the Minister of State with responsibility for small business, Deputy Perry, to the Chamber. I hope he is taking note of what I am saying. I ask him to examine what is happening in town centres across the country. As we welcome this Bill, we need to work hard to find solutions to these issues. We cannot ignore what has happened and is continuing to happen to our rural towns and villages. They are haunted by the substantial volume of ill-thought-out legislation that has been enacted. A hackney service needs to be provided in every small town and village in the country. As several Deputies have said, rural Ireland is dying on its feet. We urgently need local enterprises in our villages and small towns. By shopping locally, we can ensure local businesses thrive and local jobs are retained. It has never been more important to keep our shopping local. I have referred to this issue time and again in the House. We need to bring a new spirit to our rural towns and communities. In hard times, people need to stick together by looking out for their own and for one another. This means thinking about the community in which we live.
This Bill represents a new start. It sets out a series of simple procedural measures and landmark changes. It should improve company law in the best interests of the public. It will encourage entrepreneurs to explore new business ideas, invest and take risks. One of the functions of the Bill is to support new business by encouraging people to take the brave step of starting a new company. It will also encourage people to invest in existing businesses so that they grow. We have put actions and stimulus plans in place for the microbusiness sector. We have offered financial supports through the seed capital scheme to those who are starting their own businesses. Those who start their own companies and work full-time in them can claim back the income tax they paid for the previous six years in order to invest equity in their companies, as long as those companies are involved in a qualifying trade. The three-year corporate tax exemption scheme provides relief from corporation tax on the trading incomes and certain gains of new start-up companies in their first three years of trading.
Many of the schemes that help people to develop their businesses will be helped by elements of this legislation. The research and development tax credit, for example, is a valuable tax-based incentive that is designed to encourage investment in research and development by companies in Ireland. A 25% tax credit for qualifying research and development expenditure is available to companies that are engaged in qualifying research and development. The accelerated capital allowance scheme allows companies to write off 100% of the purchase value of qualifying energy-efficient equipment against their profits in the year of purchase. A person who owns or manages a small limited company and who wants to explore a business opportunity can apply for an innovation voucher worth €5,000, which is a great deal of money these days.
All of these incentives will encourage people to set up in business and this reform of the companies Bill favours the development of business going forward. We have to be positive and sell the advantages of this country abroad. I have said in the past we should be tapping into our ambassadors and other personnel working outside Ireland to try to keep at the top of the agenda that Ireland is open for business.
This is a ground-breaking Bill and, hopefully, it will meet expectations. As I said, Ireland is the best small country in which to do business and long may it remain so. There are a number of important changes in the Bill. It will mean that many of the 12,500 private companies limited by shares which are established every year will be able to incorporate more easily, resulting in average savings of €1,300 to €1,400 in professional fees in each case and leading to many improvements in the ease of doing business in Ireland by comparison to our competitors.
The Bill consolidates the existing 16 Companies Acts, which date from 1963 to 2012, into one Act and it also introduces a number of reforms which are designed to make it easier to operate a company in Ireland. Set out across 25 Parts to ease the accessibility of the law for each different company type, the Bill contains 1,429 sections and 17 Schedules. For private companies limited by shares, the Bill contains a number of significant reforms. It will now be possible for such a company to have only one director and there will no longer be a requirement to have a second director merely to comply with a requirement of the law. The company will be permitted to have a one-document constitution. Mr. Albert Reynolds, the former Taoiseach from my constituency, always said he liked a one-page document.