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Dáil Éireann debate -
Tuesday, 24 Nov 2015

Vol. 897 No. 3

Finance Bill 2015: Report Stage

Amendments Nos. 1 and 2 are related and are to be discussed together.

I move amendment No. 1:

In page 8, line 9, to delete “and” and substitute the following:

“(iii) to insert the following after subsection (4):

“(5) Subject to subsection (7), where relevant emoluments are paid on 31 December in a tax year or, if that year is a leap year, on 30 or 31 December in that year (referred to in this section as the ‘relevant date’) to an individual who is paid weekly or fortnightly, the part of aggregate income specified in column (1) of Part 1 or column (1) of Part 2, as appropriate, of the Table to this section shall be increased by—

(a) where the individual is paid weekly, one-fifty second of the amounts referred to in the appropriate column, and

(b) where the individual is paid fortnightly, one-twenty sixth of the

amounts referred to in the appropriate column, but where the relevant emoluments paid on the relevant date is less than the increase provided in paragraph (a) or (b), as appropriate, the increase in the part of the aggregate income shall be limited to the amount of the relevant emoluments.

(6) Where subsection (5) applies in respect of an individual, each amount of aggregate income referred to in subsections (1) and (3) and section 531AM(2) shall be increased by—

(a) where the individual is paid weekly, one-fifty second of the amount, and

(b) where the individual is paid fortnightly, one-twenty sixth of the amount,

but where the amount of the relevant emoluments paid on the relevant date is less than the increase provided in paragraph (a) or (b), as appropriate, the increase shall be limited to the amount of the relevant emoluments.

(7) Subsection (5) shall not apply where the normal day on which relevant emoluments are paid to an individual, who is paid weekly or

fortnightly, during a tax year changes either during that year or the preceding year.”,

and”.

The purpose of these amendments is to address an issue whereby an employee may suffer a fall in net income in his or her last payment of the year in a week-53 or fortnight-27 year. USC rate bands for employees are divided equally across the year, assuming a 52-week and a 26-fortnight year. However, a calendar year consists of 52 weeks and one day, or 52 weeks and two days in a leap year. As a result, once every five or six years for weekly paid employees, the additional day will be a payday, resulting in 53 paydays falling within the calendar year. Similarly, once every ten or 12 years, a fortnight 27 arises for fortnightly-paid employees. As no USC rate bands remain for that year, the full amount of the pay is liable to higher rates of USC, resulting in a lower net income for the employee in that week or fortnight.

The same issue arises for income tax purposes. The regulations provide for an additional set of credits and rate bands to be allowed in a week-53 or fortnight-27 year. This amendment will bring the application of USC into line with that of income tax, ensuring employees do not see a reduction in net pay as a result of the date on which their salary is paid. The amendment also ensures that those who are exempt from USC due to low income do not become liable solely as a consequence of having an additional payday in a year. It similarly provides that those who benefit from the exemption from the higher rate of USC, including those over 70 and medical card holders whose income does not exceed €60,000, will not inadvertently become liable at the full rate of USC as a consequence of the additional payday within the calendar year.

These amendments will come into effect for the current year, which means that individuals affected by this issue or who are due to be paid on 31 December this year will benefit from the changes.

Amendment agreed to.

I move amendment No. 2:

In page 8, to delete lines 25 and 26 and substitute the following:

“(2) (a) Subsection (1), other than subparagraph (iii) of paragraph (b), applies for the year of assessment 2016 and each subsequent year of assessment, and

(b) Subsection (1)(b)(iii) applies for the year of assessment 2015 and each subsequent year of assessment.”.

Amendment agreed to.

I move amendment No. 3:

In page 14, between lines 5 and 6, to insert the following:

“Amendment of section 97 of Principal Act (computational rules and allowable deductions)

15. (1) Section 97 of the Principal Act is amended by inserting the following subsection after subsection (2J):

“(2K) (a) In this subsection—

‘Board’ means the Private Residential Tenancies Board;

‘household’ has the meaning assigned by the Housing (Miscellaneous Provisions) Act 2009;

‘housing authority’ has the meaning assigned by the Housing (Miscellaneous Provisions) Act 1992;

‘Minister’ means Minister for the Environment, Community and Local Government;

‘lease’ means any lease or tenancy in respect of a residential premises required to be registered by the person chargeable under Part 7 of the Residential Tenancies Act 2004;

‘qualifying lease’ means a lease granted by the person chargeable to a qualifying tenant;

‘qualifying tenant’, in relation to a qualifying lease, means—

(i) a household in respect of which rent is payable by a housing authority—

(I) in accordance with Part 4 of the Housing (Miscellaneous Provisions) Act 2014, or

(II) under a contract under section 19 of the Housing (Miscellaneous Provisions) Act 2009, between the housing authority and the person chargeable,

or

(ii) an individual in respect of whom a rent supplement is payable by, or on behalf of, the Minister for Social Protection;

‘register’ means the private residential tenancies register maintained by the Board under Part 7 of the Residential Tenancies Act 2004;

‘relevant borrowings’ means borrowed money employed in the purchase, improvement or repair of a premises or a part of a premises which, at a time interest accrues on the borrowings, is a residential premises let under a qualifying lease;

‘relevant interest’, in relation to relevant borrowings and a specified period, means the amount by which the aggregate deductions authorised by subsection (2)(e) are reduced by the application of subsection (2J) in respect of that part of the chargeable periods (within the meaning of section 321) that falls within the specified period and, for the purposes of this definition, interest shall be treated as accruing from day to day;

‘relevant undertaking’, in relation to a residential premises, means an undertaking under paragraph (b)(i);

‘rent supplement’ means any payment under section 198 of the Social Welfare Consolidation Act 2005 towards the amount of rent payable by an individual in respect of a residential premises;

‘specified period’ means a continuous period of 3 years commencing on or after 1 January 2016 but not later than 31 December 2019.

(b) (i) The person chargeable shall submit to the Board, in such form and containing such information as shall be prescribed by the Minister for the purposes of this subsection, an undertaking to the effect that the person chargeable will let a residential premises under a qualifying lease for the duration of a specified period commencing on—

(I) in the case of a qualifying lease commencing on or after 1 January 2016, the date of commencement of that lease, or

(II) in the case of a lease that commenced prior to 1 January 2016, which would, if the lease commenced on that date, be a qualifying lease, 1 January 2016.

(ii) The Board shall register the relevant undertaking in the register, and the provisions of Part 7 of the Residential Tenancies Act 2004 shall apply to information regarding a relevant undertaking registered in the register as they apply to information regarding a tenancy registered in the register, subject to any necessary modifications.

(iii) A relevant undertaking shall be submitted to the Board under subparagraph (i)—

(I) in the case of a lease referred to in clause (I) of that subparagraph, at the time the person chargeable is required to make an application to register the tenancy under section 134 of the Residential Tenancies Act 2004, and

(II) in any other case, by 31 March 2016.

(iv) Where the person chargeable submits a relevant undertaking in accordance with this paragraph and, following the end of the specified period (in this subparagraph referred to as the ‘first period’), submits a relevant undertaking (in this subparagraph referred to as the ‘subsequent undertaking’) in respect of a subsequent specified period (in this subparagraph referred to as the ‘second period’), the second period shall commence on—

(I) in the case of a qualifying lease commencing on or after the day following the end of the first period, the date of commencement of that lease, and

(II) in the case of a qualifying lease that commenced before the end of the first period, the day following the end of the first period, and the subsequent undertaking shall be submitted to the Board—

(A) in the case of a lease referred to in clause (I), at the time referred to in subparagraph (iii)(I), and

(B) in any other case, not later than 3 months after the second period commences, and subparagraph (ii) shall apply to a subsequent undertaking as it applies to an undertaking.

(c) For the purposes of this subsection, where a lease has commenced before 1 January 2016, which would, if the lease commenced on that date, be a qualifying lease and a relevant undertaking is submitted to and registered by the Board, the lease shall be deemed to be a qualifying lease commencing on 1 January 2016.

(d) (i) For the purposes of this subsection, where a qualifying lease (in this subparagraph referred to as the ‘first lease’) terminates during a specified period the currency of that lease shall be deemed to include a period immediately following its termination (in this paragraph referred to as the ‘intervening

period’) if—

(I) at the end of the intervening period, the person chargeable grants a subsequent qualifying lease in respect of the residential premises (in this paragraph referred to as the ‘subsequent lease’), and

(II) during the intervening period—

(A) the premises was not let under a lease that was not a qualifying lease,

(B) the person chargeable immediately before the termination was not in occupation of the premises or any part of the premises but was entitled to possession of the premises, and

(C) a person connected (within the meaning of section 10) with the person chargeable was not in occupation of the premises or any part of the premises, and the first lease and the subsequent lease shall be taken together and treated as one qualifying lease.

(ii) More than one subsequent lease may be granted in respect of a premises under and in accordance with subparagraph (i).

(e) For the purposes of this subsection, where a qualifying tenant ceases to be a qualifying tenant during a specified period, the lease shall nonetheless be treated as a qualifying lease for so much of that period as the tenant occupies the premises under the lease.

(f) This subsection shall apply where the following conditions are met:

(i) a residential premises is let under a qualifying lease for one or more than one specified period, and

(ii) a relevant undertaking in respect of that premises for each specified period is submitted to and registered by the Board.

(g) (i) Subject to this section, a person chargeable who meets the conditions referred to in paragraph (f) may, after the end of the specified period, make a claim to have a deduction authorised by subsection (2)(e) in respect of the residential premises referred to in paragraph (f) computed as if the relevant interest for the specified period accrued on the day immediately following the end of that specified period, and subsection (2J) shall not apply to that relevant interest.

(ii) The relevant interest referred to in subparagraph (i) shall not be included in any computation of relevant interest for a specified period subsequent to the specified period referred to in that subparagraph.

(h) Any claim under this subsection shall—

(i) contain a statement to the effect that the conditions referred to in paragraph (f) are satisfied, and

(ii) be furnished to the Revenue Commissioners by electronic means and through such electronic systems as the Revenue Commissioners may make available for the time being for the purpose of a claim, and the relevant provisions of Chapter 6 of Part 38 shall apply.

(i) Where a premises in respect of which the person chargeable is entitled to a rent is let in part under a qualifying lease and in part under a lease other than a qualifying lease (in this paragraph referred to as the ‘other lease’), the amount of deduction authorised under subsection (2)(e) by reference to interest on borrowed money employed in the purchase, improvement or repair of those premises shall be computed on the amount of interest on that part of the borrowed money which can, on a just and reasonable basis, be respectively attributed to the parts of the premises which are let under the qualifying lease and the other lease.

(j) Notwithstanding section 886, where a person chargeable makes a claim under this subsection, the period for which the linking documents and records (within the meaning of that section) relating to the claim are to be retained by the person required to keep the records under that section shall commence on the final day of the specified period in respect of which the claim is made.”.

(2) Subsection (1) shall come into operation on 1 January 2016.”.

This amendment introduces a new section 15 to the Bill, which amends section 97 of the Taxes Consolidation Act 1997, relating to the rules applying to the computation of rental profits. The purpose of the new section 15 is to give legislative effect to the tax relief measure for landlords that was announced as part of the package of measures and reforms to the private rental sector announced jointly by the Minister for the Environment, Community and Local Government and me earlier this month. The aim of this package of reforms is to support housing supply and provide rent stability for both tenants and landlords. Deputies will be aware that the deduction against rental profits of interest on borrowings used to purchase, improve or repair a residential rental property has been restricted for several years now to 75% of the relevant interest incurred. With a view to incentivising landlords to rent or to continue to rent their properties to tenants in receipt of social housing supports, I am providing for the reinstatement of the full 100% interest deduction where the landlord undertakes, for a period of at least three years, to provide accommodation to such tenants and registers such undertakings with the Private Residential Tenancies Board within certain time limits.

The social housing supports involved include rent supplement, payable by the Department of Social Protection, and the housing assistance payment and rental accommodation scheme, which are administered by certain local authorities. The landlord will be able to avail of the increase in interest deductions from 75% to 100% after the end of the three-year undertaking and where other conditions have been fulfilled. It will be provided on a retrospective basis in that the additional annual 25% deduction for the three-year period will be rolled up and allowed as a deduction against rental profits in year four. This will be in addition to the 75% interest reduction that will be available to the landlord in year four in the normal way.

The new scheme includes a sunset clause specifying 31 December 2019 as the latest date by which a three-year undertaking period to rent to social housing support tenants can commence. The aim is to encourage landlords to buy into the scheme as early as possible so that they may be in a position to commit to a second three-year period and avail of a second tranche of additional rolled-up interest reduction. In essence, a landlord will be able to avail of the scheme for a maximum period of six years, but this will be the case only where the first three-year undertaking is commenced not later than the end of 2016.

The legislation includes provisions to ensure a landlord will not necessarily lose the additional interest reduction if, say, a tenant ceases to qualify for social housing supports or a tenancy in respect of a social housing tenant ceases before the three-year commitment period ends. This caters for cases where a relevant tenant might find employment during the period of the tenancy, for example.

Landlords can evaluate what is on offer from this scheme and decide if the expected rate of return from availing of the scheme in terms of tax savings outweighs the expected rate of return in the form of potential additional rents for remaining outside. Obviously, the additional interest reduction is unlikely to have any impact on those landlords with little or no borrowings. However, it must be remembered that 70% of landlords have outstanding debt on their property and therefore could benefit from the measure.

I would not for a moment suggest that this incentive will, on its own, solve the current crisis affecting the rental sector in so far as tenants seeking accommodation with the aid of social housing supports are concerned. However, I am convinced it will help in some way as part of the overall package of measures that have been introduced by the Government to tackle the problems being observed in the housing market.

I commend the amendment to the House.

The amendment is quite detailed and runs to four pages, so it requires some analysis. I know it flows from the joint package announced by the Minister, Deputy Noonan, and his ministerial colleague, Deputy Kelly. The backdrop to this is the fact that there simply is little or no availability for tenants who are dependent on State support, including rent supplement and the housing assistance payment. They find it increasingly difficult, if not impossible, to access rental accommodation not just in Dublin but throughout the country because it is now a landlord's market. Landlords can, in effect, choose the type of tenant they want to sign up for a lease.

It remains to be seen what effect this amendment will have. I do not believe it will have any impact on supply, nor is the Government suggesting it will. What it may do, however, is divert some accommodation in the private rental sector from tenants who are not dependent on State supports to those who are. As we know, many of those people are ending up in emergency accommodation, especially in Dublin but elsewhere as well.

Perhaps the Minister can clarify the issue in paragraph (c) where there is a pre-existing lease in place prior to 1 January 2016. If my reading of this is correct, that lease should be deemed to be a qualifying lease on 1 January. Does the landlord need to renew or roll on that lease to benefit from the additional taxation relief which is provided for in this amendment?

To put it simply, this is a tax break for landlords. This is a long and detailed amendment. If it is being included to strong-arm landlords somehow or coax them to make it more beneficial to rent to people in receipt of rent supplement, I do not think it will have that effect. Surely it would have been far better to stamp out the practice, common with landlords, of refusing to take on tenants who are on rent supplement. They are doing so for a number of reasons. One is that in some areas they can get a higher rent from tenants who are not in receipt of rent supplement. That is because the rent supplement caps are so low. The amount set by the Department of Social Protection that one is allowed to rent for does not bear any resemblance to the price in the local rental housing market.

The other reason is that many landlords are not registered with the PRTB. That is the problem and therefore they will not take tenants or prospective tenants who are in receipt of State support for their rent. That is the bigger issue because I think this will miss the target. It is a bit like the rent control proposal. The latest report on the rental market from daft.ie shows that prices jumped by 3.2% in the last three-month period that is available to us. That is the biggest jump since 2007 and one could say it was in anticipation of the proposals that came two weeks ago.

Has the proposed measure been costed? If so, how much will it cost the Exchequer? Would it not have been better to channel what it will cost the Exchequer, whatever figure that may be, into the social housing budget for the construction of local authority houses? I know the Government inherited an economy that was in bad shape, but there have been only 1,270 local authority house completions since 2011. One must compare that with the 1992 to 1996 period, when a Government of which the Minister was a member was in power, when 10,600 such houses were built. In the five years from 1997 to 2002, 15,900 were completed. In the 2003 to 2007 period, there were 21,000 social house completions. The figure over the past four years has been very small. Surely that is where the problem is in the housing market. I do not like referring to the housing market, however, because we are talking about people's homes.

If we are trying to do something about housing, it should be noted that the shortfall is in the supply of social housing. If there were more social housing, there would not be as many people in receipt of rent supplement trying to rent from private landlords. In addition, the amendment misses the target. We should be looking at legislation to try to stop the practice of landlords refusing to accept tenants in receipt of rental subsidies for the reasons I have outlined. That is what we should be doing.

We are dealing with the bitter fruit of the Government's abysmal failure to deal with the housing crisis over the past four years. There has been spectacular inaction by the Government as well as misguided policies, most notably the decision in the summer of 2011, months after the Government took office, to instruct local authorities that council housing construction was to cease for the foreseeable future. We are now faced with an emergency due to that policy failure.

Subsequently, a lunatic proposition was made by the Minister for Social Protection, Deputy Burton, when she cut rent allowance in 2012. She claimed it would lead to rents going down. I remember laughing, more fearfully than humorously, at her confident claims that reducing rent allowance would see rents fall. That is what she said. It was the most extraordinary misjudgment imaginable when one considers the consequences of rents subsequently going through the roof. It led directly to a homelessness emergency. It is not something the Minister for Finance simply inherited. He certainly inherited a mess, but he compounded that mess at every hand's turn with the policy decisions he made.

Faced with this catastrophe, the answer is tax breaks for landlords. It is quite extraordinary.

Faced with this suggestion, we are in the invidious position of knowing that in the absence of a major council house construction programme, which the Minister is not promising and which, despite all the trumpeting of announcements here, there and everywhere, is not actually happening, the total capital budget for social housing as against money going on leasing arrangements, rent allowance, housing assistance payments and so on is small. The capital budget for physical council house construction is €360 million, approximately the same as it was in 2006 when we already had a major problem. At approximately €100,000 per house, the figure corresponds to 3,600 houses. We were speaking to the relevant Minister today and he admitted that the number will be far less than that. It will probably be in the region of 2,000 at best. That is what will derive from a capital budget of €360 million.

This is against a background in which we do not have figures on how many people have joined the council list this year. It is extraordinary. We have seen the worst housing emergency in the history of the State but we do not know how many people joined the housing list this year. The Minister acknowledged this was something of a lacuna, to put it mildly, and that we should have that information. Again, that is on the long list of promises.

This is Report Stage and we are on an amendment. It is not time for a Second Stage speech about housing. Will the Deputy stick to the amendment, please? He should also remove the piece of paper in front of him. He is not allowed to display material in the Chamber.

There are notes on it. On a point of order-----

There is no point of order. This is Report Stage. We are dealing with an amendment, not Second Stage speeches.

It is. The amendment relates to an incentive for landlords to deal with the lack of social housing. That is what the Minister is bringing in. That is what it is about. I am pointing out that we would not even need this amendment-----

We have the amendment. That is the point.

I am allowed to argue on the amendment.

We are discussing the amendment.

I am discussing the amendment.

The Deputy cannot make a Second Stage speech on the amendment.

This is the first time we have seen this amendment.

That is not my problem.

Yes, but it is something we are allowed to comment on.

The Deputy is allowed to comment on the amendment and the content.

I am commenting on the amendment. This is the first-----

He cannot go back into the housing crisis of the past four years.

This amendment is supposed to be an effort to address it. I am pointing out that it does not address it. It repeats the mistakes of the past. Having failed to do what was necessary to deal with the housing crisis, in other words, build council houses or control rents, we are left in the invidious position whereby the only proposal being put before the House is an amendment to give new tax breaks to landlords. Tax breaks to landlords and developers were precisely what caused the economic collapse. That is where we are.

It is difficult for us to know what to do with this. Faced with the emergency that surrounds us, anything that even marginally improves on the disaster surrounding us cannot be opposed. In the medium to long term, however, this compounds the problem because it diverts money from the real solution into tax breaks for landlords. It gives landlords and developers even greater control over the market. We need to move in the opposite direction.

Some of the biggest beneficiaries of this, I suspect, will be the vulture funds that have bought all the NAMA properties. Perhaps the Minister would like to comment on that. It is bad enough that the NAMA properties were not given lock, stock and barrel to the local authorities to provide social housing and instead were sold to the funds at knockdown prices. They have made a killing at the expense of NAMA, which we paid for. Now, they are going to make a killing again by renting those properties back to the State which has only recently sold the properties to them. It is extraordinary. We are going to give tax breaks to the people to whom we sold the properties at knockdown prices. One could not make this stuff up. The Mafia would be greatly impressed at the ingenuity of it. The bottom line is they are going to be vastly enriched by this.

It is difficult to know what to say. If even one extra property were made available to people on the social housing lists, I would welcome it, such is the disaster. It is nauseating in the extreme that to provide the extra social housing that is so desperately needed, these funds have to make a killing. Would it not have been better for us to make the up-front investment in social housing construction? Would it not be better now? That would not be money down a deep, dark hole.

The Deputy is straying again. Stick to the amendment, please.

I am suggesting that is what the Minister should propose as an alternative to this amendment.

We are dealing with an amendment. Do you understand?

I am talking about the amendment.

We are not dealing with alternatives. We are dealing with an amendment.

I am opposing the amendment.

You are opposing it? That is fair enough.

I am opposing the amendment. I am suggesting what the Minister should have done instead. In so far as it is supposed to deal with the issue of rent, a serious regime of rent control should have been introduced. For example, I will set out how it works in Scotland. Representatives from the local authority go to a property, measure it up and examine how it ticks various boxes, including insulation, general quality and so on. The local authority decides that a given amount is what the landlord is allowed to charge and the landlord is not allowed to charge any more. It does not matter where the property is. The issue of profit for the developer or landlord simply does not come into it. That is the way it should be, particularly faced with the current situation. Instead, it seems we have to enrich these people by coaxing or luring them into providing social housing. We are effectively rewarding them for their rack-renting and discrimination against social housing tenants.

I do not know what to say. It is a pity we have come to this. Given that this is going to pass, will the Minister give the House a guarantee that this will be a short-term measure, the need for which will be removed by major investment in social housing? That would be cheaper and more efficient than this measure from the point of view of the State. This is money down a black hole. We are literally giving money away to these people.

I support the Minister on this amendment. Deputy Boyd Barrett has put on the record many of his objections to what is happening and has quoted the position in Scotland. I am keen to put on the record that there are many people in Sweden who maintain rent controls there have not worked. They say it stops the development of new apartments and houses for people. The controls there have restricted the market and caused more problems than they were worth.

Deputy Boyd Barrett promotes some alternatives. We can look around and find appropriate jurisdictions where such alternatives have not been the panacea to the crisis that Deputy Boyd Barrett suggests they are.

Only a short number of years ago we were not making our own decisions on our economy. Now things have recovered but, unfortunately, this is part of the legacy of the collapse in our economy. Deputy Boyd Barrett is acting as if money falls from the sky and everything can be sorted. I have not read Deputy Boyd Barrett's proposals, but a party similar to his, Sinn Féin, has recognised that-----

Those in Sinn Féin claim to be socialists as well.

Speak through the Chair, please.

They are republican.

There are republican socialists of some sort.

We have socialists who oppose property taxes.

We oppose home taxes.

They are funny socialists.

Please proceed, Deputy.

Speak to the amendment, for continuity purposes.

We use a different word from "continuity".

Will the Deputy please speak through the Chair rather than across the floor?

My apologies, a Cheann Comhairle. Deputy Doherty will understand that when those in Sinn Féin were passing the budget in Northern Ireland, they ran into many of the same problems with regard to housing and the environment. Indeed, I must try to make more sense of why they handed control of social welfare benefits back to Westminster.

I thought that was something that was supposed to be very dear to their hearts when it was discussed.

It is always a bit of a fillip when somebody so manifestly enjoys his or her work. As I watch Deputy Boyd Barrett, he is like Willy Wonka in the chocolate factory because he is so delighted that every day he has a new target.

Is Deputy Rabbitte speaking on the amendment?

Having spent some 30 years on the back of a tar barrel in some corner of Dún Laoghaire raving and ranting, he cannot believe he has the Minister for Finance in his sights. He goes on and on and lectures us. He has things the wrong way around. This is a modest measure, designed to alleviate and make a contribution to solving our current problems. He is correct in that in the previous 20 years inadequate social housing was provided and we transferred social housing need to the private sector. That drove the building programme and suited the politics of the day. However, the current Government has announced the largest social housing provision since the 1970s. It is wrong to present this modest amendment as the total response to the housing situation.

If this Government had discussed building houses in 2011 when it came into office, the people in white coats would have been sent for. There was an overhang in housing everywhere, including Dublin. Things have changed quickly-----

There are 70,000 people on the list.

-----due to changing demographics, including the revival in the economy. There is an acute housing shortage in some urban areas. Despite what Deputy Boyd Barrett would like the House to believe, one cannot go to Tesco and buy a housing estate off the shelf. It takes some time to build housing. In the interim, this is a modest measure designed to make a contribution.

It is entirely wrong to misrepresent the remarks on the level of the housing supplement in 2011 and 2012. It helped to reduce rents at the time but, of course, rents have increased since then because of the housing shortage. The social housing package announced by the Minister for the Environment, Community and Local Government is designed to make a serious impact in that area.

Housing is the subject today. Every time I watch Deputy Boyd Barrett's contributions, which I enjoy, he deals with a different subject. He seemed to ignore the fact that we have come through the worst financial crisis in the history of the State. If we could do all the things he wants us to do, there would not have been a crisis. We are where we are. It will take some time to get-----

It is an accurate phrase. It will take some time to develop building output. In the interim, one does what one can. I do not think any economists in Ireland, including the small number who agree with Deputy Boyd Barrett's analysis, dispute the fact that if the Government's response was to raise the rent supplement cap, as advocated by the Deputy, it would be absorbed in the pricing arrangements by landlords within months and would only drive rents higher. This is a measure designed to make some contribution. It will do so and I support it.

This amendment deals with the supply side of the housing crisis. The way to deal with it is not through tax breaks for landlords, but rather by building additional houses. Deputies on the Government side have veered into Sweden and the Stormont House Agreement, which the Minister for Foreign Affairs and Trade supports, as I am sure the Government does. Through Sinn Féin's efforts, an additional €700 million has been secured for social welfare recipients whose payments were cut by the Government's sister party in the Tory Government.

Let us stick to the facts. The Government swallows its own spin so often it starts to believe it. Deputy Rabbitte referred to the most ambitious housing building programme in the history of the State, or words to that effect. The reality is that there have been 1,270 social housing completions under this Government since 2011. People who have watched me in the Chamber know I am no supporter or cheerleader of previous Fianna Fáil Governments, but between 1992 and 1996, 1997 and 2002, 2003 and 2007 and 2008 and 2010, a total of 10,600, 15,900, 21,000 and 9,594 social housing units were built, respectively.

There is a housing crisis because of the policies of the Government, which did not invest in social housing. Deputy Rabbitte referred to oversupply and said that anyone who had mentioned building houses would have been dragged away by people in white coats. However, even when there was an oversupply of housing in the State, tens of thousands of families were on social housing waiting lists, because the oversupply was not in social housing but rather in private housing in areas that were tax-driven. Some measures that were introduced originated under the Labour Party when it was in government to meet certain purposes and were enhanced and developed under subsequent Administrations.

This is a half-arsed attempt to try to deal with the issue of 100,000-----

A half-arsed attempt.

That is not parliamentary language.

It was a terrible attempt to try to deal with the fact that more than 100,000 individuals are on the housing waiting list.

What analysis has the Minister done to determine how this measure will address the crisis? It will not put another brick on a site, a slab of mortar in between bricks or build any homes. Given that there is a supply-side problem, not only in social housing but also in private rental accommodation, how will this amendment alleviate that pressure? What are the estimated costs to taxpayers of this additional relief for private landlords? How many individuals does the Minister believe will avail of this tax break? What will be the cost to the State?

The Government has done some type of analysis on this relief. The Minister has information on those who are already in receipt of payments from local authorities or payments to support their housing needs, in terms of how many individuals and landlords will benefit from the measure and the total amount involved.

I asked the Minister to address the question of landlords with multiple units, such as apartment blocks with five apartments or old houses that have been split up into five units. The cost of refurbishment may be €5 million, yet under this measure only two of the apartments may be let to recipients of social housing. Can the Minister outline how the overall loan will be subdivided? How will we know that the refurbishment was done in flat 2B instead of 2A, which is rented by a private individual?

I ask the Minister to refer in particular to the cost of the measure, the number of individuals he expects to avail of it and how he expects it to deal in any way with the supply-side problem. What effect will it have on private renters in the market? We know about the Minister's other half-baked - it is a better term - attempts to deal with rent controls. Figures from www.daft.ie show that rents increased by 3.2% in the last quarter because of the mess the Government made of the rent control issue.

That is the biggest increase in any quarter since early 2007. This is the incompetence of the Government. Letters are being sent to renters to state rents are increasing dramatically, in some cases by more than 50%, because of the Government's half-baked attempts. The question is whether this has been really thought out. Has the Government done a proper analysis of it? What impact will it have on other areas of the market?

I congratulate Deputy Pearse Doherty on being able to say what he just said with a straight face. It requires a great deal of conviction and commitment. I like him because he is a very nice fellow, but he has been speaking a lot of rubbish. What he failed to recognise when he quoted the period from 2006 to 2008 and the availability of finance in the country, and it should be clear to all and sundry who have listened to the debate since then, was that the period from 2002 to 2008 was the peak of a boom when money was flowing from the trees and one Minister said the Government had so much money it did not need it. These are not my words but those of a Minister at the time.

The Deputy compared this era with the era the Government inherited, when there was no money anywhere, not even for the essential needs of the country and its people, the entire economy had imploded and we were the laughing stock of the world. Nobody was coming to our aid and saying we were great guys. If what Deputy Pearse Doherty and others have said is to be taken seriously, we should not have been speaking about the number of houses that were built during that period, because they were short of what was required given the building boom that was taking place in the country. It was an appalling dereliction of duty that after a building boom we now have a shortage of houses never known before in the history of the State.

While I fully understand and appreciate that the Opposition wants to avail of every opportunity to show the Government in a poor light, surely somebody on that side of the House has a little bit of cop on and might come forward and honestly say the Government that took over in 2011 had no money or support to get money anywhere, had a broken and derelict banking system and a derelict economy with thousands of people leaving the country on a daily basis. This era is being compared with the boom period before it. Let us be serious about this. There comes a time when we say things that either we mean or we know are wrong.

I ask the Deputy to speak to the amendment, please.

I am sorry for coming in, but I was moved almost to tears when I listened to and watched what was on the screen over the past half an hour.

I thank all Deputies who participated in the debate on the amendment. They will recall that the Minister, Deputy Alan Kelly, and I made a joint announcement on a series of measures to deal with the problem of rents, rental property and the lack of supply and housing market. There was a range of measures and I am sure Deputies can recall some of them. They included everything from NAMA's commitment to build 20,000 houses over the next five years to the commitment of the Minister, Deputy Kelly, to confine rent increases to limited periods.

This is a proposal I brought forward in response to a case made by some Deputies in the House, but more particularly by the voluntary organisations. They were very concerned about increasing homelessness, particularly in Dublin. The case made to me was that as the economy grew and as more people got jobs, people in work could pay more rent than people in receipt of rent supplement or assistance from the local authorities, and some landlords were replacing people on rent supplement or those getting assistance from local authorities with tenants who were economically viable and could pay more rent. This was the case made and presented to me by the voluntary organisations and many Deputies in the House as a key driver of homelessness, particularly in this city.

The amendment is not a big issue and is designed in the first instance to incentivise landlords to hold onto their tenants who are in receipt of rent supplement or financial assistance from the local authorities, and to incentivise them to look at a more even playing pitch when choosing a new tenant because they will get this extra benefit in terms of a tax break on their interest if they select a tenant on rent supplement rather than a tenant from the labour market in the private sector. This is its purpose. Of course it is not designed to solve the housing problem. It is not even designed to solve the rental problem. It is designed to make an impact on an issue related to homelessness, which was explained in great detail by the voluntary organisations involved, and their arguments were taken up by a number of Deputies in the House. This is the position and it is why we are introducing it.

Existing tenancies registered prior to 1 January can qualify, once the landlord registers an undertaking to continue to make the accommodation available for three years on or after 1 January 2016 but no later than 31 March 2016. This is the question Deputy McGrath asked and it was a very good question. If this was not allowed, it would not work as intended. There is also a sunset clause, which provides for a three year permanent tenancy, which must be given before the additional part of the interest rate, between 75% and 100%, is rebated to the landlord. It is an incentive built in for this reason. It allows the landlord to roll it over again and give security of tenure for a six year period, and to avail of a break on 100% of the interest rather than the 75% available at present.

It does not apply to all landlords because some landlords do not have any mortgages. This only works as a tax incentive if one has borrowed to the point where there can be a tax break on the interest. Of course many landlords are very indebted. There is a case to be made that it should be a deductible expense at 100% for all landlords. This case was made by representative groups, including IBEC. It would cost €180 million and would be mostly dead weight because it would not incentivise any additional supply or progression towards extra tenancies at least for two years. I decided not to go that way but to have a very narrow focus on this aspect.

Deputy Pearse Doherty asked how it would be apportioned if a property was divided into a number of living units. The legislation provides for the interest deduction to be apportioned on a just and reasonable basis between various properties or between parts of one property let under qualifying and non-qualifying tenancies. The increased interest deduction will be allowed on interest relating to qualifying tenancies only. If there are five units in a house and it costs €1 million in total, that is €200,000 apiece, and if two are rented to people on rent supplement only the interest which runs from those two apartments will be covered. It will be apportioned justly and fairly.

I do not think the Deputies want me to go through the range of measures already announced, but it is true to say the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, announced €3.7 billion in the capital programme for social housing up to 2021. We all know we went through times when the country was bankrupt, in effect. Any money we had to spend we had to borrow from abroad, from our colleagues in Europe or the IMF. We lived on the charity of our friends because the country went bust under the previous Administration.

It took a lot to repair it. I would be the first to say that many of the decisions made were tough, hard to make and implement and unpopular. Nevertheless, they had to be made. I see Deputy Paul Murphy shaking his head up there at me, as he always shakes his head, but on television I saw him on the streets of Athens, cheering on Syriza as the revolution was coming. He was trying to apply the same formula to Ireland.

I saw the Minister stabbing them in the back and the Irish people as well.

Six months later the banks were closed by the same Greek Government and withdrawals from ATMs were restricted to €60.

The Minister wanted them closed.

The Deputy did not help the Greek people.

It is part of the Trotskyite dialogue to always blame some outside force, but there is a connection between the policies that were followed and the results that were achieved. The policies followed by the Greek Government ended up with the country on the brink of disaster. The Greek Prime Minister of the day realised this and sacked his finance Minister, and a different set of policies have been followed since. The Deputy should not shake his head when a country that applied a successful formula is now growing very rapidly.

One of the reasons for the housing crisis is the fact that the country is growing very rapidly. One of the reasons for the housing crisis is that so many young people have jobs in this city and they want to form families. That is where the demand is coming from, by and large. It is also coming from some emigrants coming home and migrants coming in. That is the way it works. It is very hard, as Deputy Rabbitte says, to flick a switch and get 10,000 houses overnight. It is going to be difficult because the building and development industry, of all the sectors in the economy, was the most fractured. It is still fractured, but we are working very hard to remediate it and get traction on this issue.

I would be first to admit that the amendment is narrow in its focus, and it is intended to be so. It will be narrow in its results and it is intended to be so. It is designed specifically to deal with an issue raised by the voluntary organisations. Landlords found it more profitable to rent to tenants other than tenants on rent supplement, and this was leading to homelessness. People had their leases discontinued and they could not get new leases from other landlords. I hope it works, but it is one of those cases in which we will have to see what happens in practice. It has been welcomed and there is sufficient traction for it to work as intended. Of course, it will not solve the housing problem, as it is one contribution. The Minister for the Environment, Community and Local Government, Deputy Alan Kelly, and I have announced a series a measures.

As the Minister knows, finance Bills generally contain the taxation measures set out in the budget, with a costing provided in the budget booklet for all the other taxation measures. Will the Minister address the question about the expected cost of this measure by way of tax forgone and the number of landlords that the Department anticipates will take up this proposal? Some of them will already have tenants in receipt of State supports and they will be entitled to this particular tax break.

With regard to the overall package, the really important missing piece of the jigsaw for supply in the housing sector is the lack of a sustainable financing model for builders and developers. The Minister announced some time ago a €500 million joint venture fund under the Ireland Strategic Investment Fund, with an interest rate in the region of 14%. The Minister knows that the main banks in Ireland are risk-averse - understandably so, given what happened - and when they are prepared to finance development projects, they might give 60% to 65% of the overall cost. Builders and developers are finding it exceptionally difficult to put a viable financing model in place and the State has failed so far to deliver that piece of the jigsaw. More could be done in that area, which might help kick-start supply, which is the root cause of the problem.

I rise for the second time to ask the Minister to answer the questions I put. Deputy Michael McGrath has just repeated them. What is the cost of this measure? How many individuals does the Minister expect to avail of this measure? There are obviously existing tenants and landlords who will be able to avail of this, so what will be the cost? Has there been any examination of the knock-on effects on the rental property market?

I very much regret bringing a tear to Deputy Durkan's eye earlier, but I was just rubbishing Deputy Rabbitte's point by putting on the record of the House - I was not saying it was good, bad or indifferent - the indisputable fact covering five Governments, including the current one, which only completed 1,270 houses in the past five years. The Deputy focused on the boom period, but let us compare that with the time between 1992 and 1996, which saw 10,600 homes built. I recognise that there are different economic circumstances to consider, but the Deputy should not peddle the spin that this is the biggest house-building programme in the history of the State.

I thank the Minister for the clarification regarding subdivision. My particular questions are how many individuals are expected to participate and whether there has been any analysis. Will the Minister commit to doing a quick follow-up analysis? As I noted, the half-baked attempt at dealing with rising rents certainty had a major detrimental effect for many renters by pushing up rents over a very short period. Will the Minister commit to this? He is giving a three-year commitment for landlords, with a possible three years afterwards. It is difficult to swallow because there is no other solution. I agree that we cannot go to Aldi and get 10,000 houses, but the Government has been in office for five years. This Finance Bill gives €180 million in tax breaks to the top 14% of earners but the Government will not put bricks and mortar on the ground to build houses. That is the problem.

As I stated, we are in an invidious position in which we cannot really oppose this. If it stops even one eviction, it is better than allowing the eviction to take place. In a finance Bill, we would hope the Government would look for the best, most efficient and most sensible expenditure of public money. It is a pity that in order to deal with a problem that the Government failed to address for four years, the only way to stop further evictions is to line the pockets of developers and landlords. We are back to where we started because of the emergency.

Will there be an investment programme in social housing from public capital expenditure accompanying this amendment in order to do away with the need for this approach to delivering social housing? If not, this will be a recipe to repeat the mistakes of the past. Perhaps the process could be time-bound, phased out and replaced with the provision of council housing that should have been built, as the process should not have been stopped for the past four years. In reply to Deputy Durkan, I say that although we did not have cash, we had NAMA, which had the biggest property portfolio in the history of the State. Effectively, we gave this away.

Will real estate investment trusts, REITs, and big property speculators who borrowed money to buy stock from NAMA, such as big residential properties, benefit from this? Will they be able to write off the interest payments on big purchases involving tens of millions of euro and large numbers of properties? That would be scandal that I would really worry about.

It is difficult, when language loses its meaning, to have a reasonable debate. There is no point in Deputy Pearse Doherty taking four different periods in history and asking us to look at housing output during those years compared with the period between 2011 and now.

Where, in 2011, was the Government supposed to source money to build houses? Where, in 2011, was the Government supposed to find builders? There were no builders left standing, and those-----

There were lots of them on the dole.

-----who were, as Deputy Michael McGrath has observed, were unable to get credit. The Government has announced its house-building programme. There are going to be tens of thousands, literally-----

No. Three hundred and sixty million euro this year.

-----of construction workers employed over the next two years in this economy. The €3.8 billion announced for social housing provision, I repeat, is the largest allocation since the 1970s.

It is €360 million this year.

That is the fact of the matter. If Deputy Boyd Barrett is supporting this amendment, he has a very funny way of demonstrating it. If, like Deputy Boyd Barrett, his colleague in the other splinter group and Deputy Pearse Doherty in Sinn Féin, one has invested everything in things getting worse and in generating more misery in order to get more votes-----

You have done your fair share of that.

That is one approach to politics.

We have been appealing for housing for four years.

Sinn Féin has done well from austerity; that is true. Unfortunately for Sinn Féin, the game has changed. Austerity is no longer the central issue in Irish politics. It is now about people getting back to work and looking for accommodation. The Deputy is right: we have a supply-side issue, but that is going to take some time to deal with. I do not know what the Minister for Finance is going to say to the question about how many landlords he thinks might benefit from this and how much it will cost. I imagine it is difficult to cost it and I do not think a great many landlords will be able to avail of it for a variety of reasons, including that many of them are not holders of mortgages on properties traditionally let, and so on. I do not think it is the be all and end all of housing policy. If it makes a contribution on a particular aspect, it is welcome, and it does not seem to me to be the central focus of the Finance Bill.

Something was said by Deputy Pearse Doherty that he might clarify for me. If the deal with Westminster was so good, why did Sinn Féin abandon social welfare recipients in Northern Ireland?

Are you serious? You are pathetic. Honest to God.

If there is nobody else offering, could I call the Minister?

You are the one who said it.

Engage in the debate. There is a housing crisis.

Please. The Minister is on the floor.

I am listening to the hypocrisy.

We cannot all go to Westminster.

Could we have some order, please? The Minister is answering.

You are embarrassed even sitting down. It is pathetic. That is schoolboy debate stuff.

The Minister is replying to the debate. Please listen.

Answer the question, since you are so good at answering.

Behave yourselves, lads.

He is bringing a tear to my eye now. I know what it feels like.

You know how it feels now.

We will keep asking it. You will answer it.

Many Deputies are looking for background and general information, so I will give them that first and then I will try to answer some of the specific questions that were raised. At present it is estimated that approximately 87,500 households are in receipt of social housing supports. This is made up of the following: 62,900 are in receipt of rent supplement; 20,000 are in the rental accommodation scheme, RAS; and 4,600 are in receipt of the housing assistance payment. It is estimated that approximately 70% of landlords have debt outstanding on their properties and may therefore be in a position to benefit from increased interest deductability. However, some landlords with outstanding debt would also have losses to carry forward. In these cases, there would be a reduced incentive to avail of the scheme.

At present, according to the PRTB figures, there are 170,000 registered landlords and 320,000 registered tenancies. Revenue has estimated that a full restoration of the 100% interest deductability for all residential tenancies, both private and social housing, would have an Exchequer cost in the region of €80 million per year. I think I inadvertently said €180 million earlier, so I would like to correct that. As this scheme will be demand-led, it is difficult to estimate the potential cost. However, it is tentatively estimated that should 10% of all landlords avail of this scheme, the potential cost would be approximately €8 million per annum. As the incentive operates on a three-year arrears basis, the first costs would be due to be borne by the Exchequer in 2019 for tenancies in the period 2016 to 2018. The potential cost in 2019 in respect of a three-year look-back is, therefore, tentatively estimated to be in the region of €24 million, but of course it will depend on what the take-up is. I think it was Deputy Doherty who looked for a further assessment. I am informed by my officials that an ex ante economic assessment of the measures using the tax expenditure guidelines is being finalised currently. A comprehensive assessment of the proposal has already indicated that the benefit would outweigh the cost. I can publish or provide Deputy Pearse Doherty with this when it is completed.

Deputy Boyd Barrett talked about multi-millionaires and those with massive investments benefitting from this. The trigger for this measure is that the tenant must be in receipt of rent supplement or one of the other types of assistance for social tenants. It is not about multi-million investments. Landlords can claim the interest tenancy by tenancy. REITs-----

No. REITs are excluded. Deputy Boyd Barrett probably understands the REIT system. They are exempt from tax within the REIT on condition that they distribute 85% of profits to their shareholders. As they do not pay tax within the REIT, there is no tax deductability on the interest within the REIT, so they are excluded.

What about funds that buy stuff from NAMA?

It does not really matter who the landlord is. The test is whether he is prepared to rent to somebody on rent allowance. If so, he or she gets the interest tax break of 100% rather than 75%, but only on the unit that is rented, not on the block. The scheme does not depend on the background or nature of the landlord. It does not distinguish between wealthy landlords and poor landlords, but it does distinguish between tenants, and it is because of the tenant that the landlord might qualify. It is an incentive to the landlord to rent to tenants such as I have described and to reduce in the first instance the potential for them to lose their lease and become homeless, but the intention is also to even the playing field somewhat, so that it would be as worthwhile for the landlord to rent to a tenant who is being assisted in the way I have described as to somebody who has not been assisted in the way I have described.

The registration of a three-year commitment is with the PRTB. The fact that landlords who are availing of the scheme have to register will allow us to do a running tot and see how many landlords are actually availing of the rent allowance. After the three-year period we will have very good data, but since it is demand-led, it is very hard to be absolutely accurate on it. I am not building it up as a solution to the rental problem; I am simply saying it is one measure among a range of measures announced by myself and the Minister for the Environment, Community and Local Government, Deputy Alan Kelly. This particular one is on the tax side, so it is appropriate for the Finance Bill, but it is based on the potential arguments about homelessness, rather than fixing the rents or anything like that.

Deputy Michael McGrath raised another interesting point about the present funding model for the building sector. As any of the Members who have been around for ten years or longer will be aware, the model was that a small builder built 60 or 70 three-bedroom houses, usually semi-detached, with the odd four-bedroom house studded into the scheme, and then he sold them and moved on to the next site to build another 60 or 70. The funding model was that between 60% and two thirds of the cost was funded by the bank, but the equity piece was the profit on scheme A rolled into scheme B. That is how it was done. When the small builders went bust, they had no equity. The banks are still prepared to give a good builder 60%, but where does he get the other 40%? This is the point Deputy Michael McGrath has addressed, and he is absolutely right.

We have tried a number of schemes. The Ireland Strategic Investment Fund put a fund of €500 million together. The equity is expensive. They were charging 15% on it, but there has been take-up. I understand there will be a second tranche of funding, the interest rate on which will be slightly lower, but that may not make a dramatic difference.

A model that some builders are using now to reduce the interest rate on the equity is to offer profit-sharing on the up side. For example - I am not sure whether these figures apply in real life - funding is made available at 7% provided the lender gets 40%, 30% or 20% of the profit on the scheme. There are different models being tried.

The cheapest funding is in publicly quoted companies. For instance, both Cairn Homes, which now has an interest in Dublin, and Hines from Texas, probably the biggest developer in the world, which has the Cherrywood land with sites for 4,500 houses, can get funding on the market at 3.5% or 4% because they are publicly quoted. The movement is in that direction because if a developer can fund through the banks to the tune of 60% or 66% - two thirds - and if he or she can fund on the markets at 3.5% or 4%, that is a working model.

What we trying to do in all directions is to repair a sector that was badly damaged. The builders were damaged and the funding model was damaged, and morale was shot to bits. Then, on top of that, as we came through the recession, the sectors that were most scapegoated, for good or bad reasons, were builders and developers and banks. We need a combination of the two to fix housing supply. If one talks to small builders, many of them will say they would get out if they could. Some of the courageous ones are going back in. No doubt it will take a while to rebuild it.

Deputy Michael McGrath will probably come back at me when I say it, but we are quickly moving towards the economic and social problems of success rather than of failure. No doubt housing will be an issue in the lifetime of the next Government, but traffic and transport are becoming increasingly pressing issues as well. It is getting more difficult to come in from west Dublin off the M50, and that is directly related to an economy growing at 6%. All sorts of decisions will have to be made.

All I would ask is that the Deputies stop the sloganeering. They do not have to do it. There is a lot to be done and there is a lot can be done constructively. If the debate is reduced to slogans, it is great fun but it gets nowhere.

Amendment agreed to.

I move amendment No. 4:

In page 39, between lines 18 and 19, to insert the following:

"20. The Minister shall, within nine months from the passing of this Act, prepare and lay before Dáil Éireann a report on options available with regards to ensuring that the new Petroleum Products Tax applies to all earnings from all petroleum revenue within Irish territory, regardless of discovery date at the taxable field.".

We had a short discussion on this on Committee Stage. It is a different amendment but it goes to the same core issue. It relates to the oil and gas that has been found but also the new taxation rates the Minister introduced in the Finance Bill. I must say we welcome the change to the petroleum products tax, but it falls short of the overall change that is required.

This amendment, given the limitations on the Opposition in terms of tabling amendments that pose a charge on the State, is framed in such a way as to provide that the Minister shall, within nine months from the passing of this Act, prepare and lay before Dáil Éireann a report on options available with regard to ensuring that the new petroleum products tax applies to all earnings from all petroleum revenue within Irish territory, regardless of the discovery date at the taxable field.

The tax, now that the Minister is introducing the increase, will only apply in the case of any discover of oil or gas after 18 June 2014, which will result in the exclusion of significant finds, such as the Corrib gas field, from this tax. We would like to see this tax applied to all future earnings on any discovery, regardless of when the discovery was made. It is not about changing the rules and trying to apply a tax for years that have passed, but about applying a tax on profits that will accrue from the production of fields that have been discovered in previous years.

I note that the report issued by the committee, which enjoyed all-party approval, went away beyond what the Minister is proposing in the Bill. The Minister hired a consultancy firm to examine that, and suggests the model that the firm suggested.

The core of the proposal here is that it should apply to all profits, regardless of discovery date.

I support the amendment proposed by Deputy Pearse Doherty.

The context of this is one of the major political scandals in the State over the past few decades, which was accurately called "the great Irish oil and gas robbery" by The Workers' Party even before the giveaway took the form it took in the 1990s. It was carried out by the former Minister for Energy, Ray Burke, and the former Taoiseach, Bertie Ahern, and was accurately described by the former Tánaiste, Dick Spring, as an act of economic treason. I refer to the giveaway of significant oil and gas resources, estimated by the companies themselves as the equivalent of 20 billion barrels of oil, worth €600 billion at today's prices. It resulted in a system which has yielded among the lowest levels of tax in the world, according to a report commissioned by a previous Government from Indecon. This proposal from the Government goes a tiny way towards remedying that but, in reality, would leave Ireland still at the very bottom of the pile in terms of the tax take from oil and gas and would continue to allow our oil and gas effectively to be given away, with no security of supply guaranteed and no control over what happens to it under these major oil multinationals, with the kind of behaviour that we saw over the past decade in the west by both Shell and Statoil at the expense of a local community. I agree with the amendment, which provides for the preparation of a report from the Government about how even this minimal measure could be applied to all finds. I do not accept the argument made by the Minister on Committee Stage that this would somehow amount to retrospective taxation, because it clearly would not. We are talking about tax from now on as opposed to tax applied retrospectively. It is simply a question of when the oil and gas was discovered. I do not see how a case can be made about legitimate expectation, etc., that rules us out of going there. It is clear, if the Government is serious in any way about tackling the giveaway that has taken place, that it should apply at least to all finds. Presumably, the Minister will oppose the amendment. I am interested in hearing his response as to why we cannot even have a study on this.

To demonstrate how minimal the Government's response on these issues has been, it may be noted that in 2012 the Oireachtas committee all-party report recommended a take of 40% on smaller discoveries and 80% on larger discoveries.

Instead, we have 30% and 55%, which is clearly completely and utterly inadequate. I am interested in hearing the Minister defend the continuation of the giveaway.

As Deputy Pearse Doherty said, the focus of the amendment is on making the application of the new regime retrospective. The one thing the all-party committee agreed on was that there should be no retrospective application. I thank the Minister for keeping faith with the proposals I brought to the Government following the Wood Mackenzie report. The debate took place in the House with a very diverse range of views, and some entirely unfeasible propositions were advanced, but everybody agreed there would be no retrospective application.

The challenge is to put in place a tax regime that will bring a fair return to the Exchequer without frightening away the exploration capacity we need. Ireland does not have the resources to go drilling offshore. We do not have the kind of investment that can afford to spend €100 million per offshore well. Way back in the 1970s, there was a brief period of optimism when it looked as though we might imitate some of the great finds in Norway and the North Sea. However, since the 1970s, we have made no oil find. Despite all the talk about giving away €600 billion, or whatever figure people want to pluck out of the sky, we have never had an oil find. We have had three gas finds that gave rise to the optimism of the early 1970s, and the find off north Mayo is the fourth. This has been the entire result of prospecting in offshore Ireland. While the well off Belmullet is small, it has the capacity, at peak, to meet 60% of Ireland’s needs. The peak will probably be brief, probably less than a decade.

The challenge is to increase prospecting and attract those who have the expertise, drilling capacity and, above all, resources to increase the level of exploration off our shores. We have not even managed to drill two wells on average during the past decade. At this rate, it is like trying to find a needle in a haystack. The Department directly concerned has assimilated a great deal of scientific and geological data that was not available earlier and it shows positive promise, but only if we can increase the exploration rate. The challenge was to strike a balance between a fair return to the Exchequer and not scaring away the exploration companies that we might attract here. Out of the blue, oil prices fell from more than $100 per barrel to half that price. There are more lucrative areas in the world for drilling than Ireland. If there is one area in which the ultra left of Ireland believes in poppycock and fairy tales, it is offshore exploration.

We got all our ideas from the Deputy.

I welcome Deputy Paul Murphy's announcement that he is paying his local taxes.

I am not paying my water charges.

It is very important in my constituency in view of the fact that, after the protests about the bin charges, they left the residents with huge bills and moved on to the next protest.

Is this relevant?

We can talk all we like about €600 billion in oil revenues. The problem is, we have not found any oil. I thank the Minister for giving expression in legislation to the new regime, which will last for a decade and will give certainty to the industry. It will also ensure there is a return to the State on a field-by-field basis. A company will not be able to drill in offshore Ireland and write off its profits on a particular find against a range of drillings elsewhere. Tax will be charged on each particular field. It is a reasonable balance and is likely to last for a decade. It dates from immediately after I got Government approval at the time. All parties agreed that there would not be retrospective application and, therefore, we should broadly welcome it and move on.

Deputy Rabbitte is always entertaining.

We might say the same about Deputy Boyd Barrett.

Whether there is substance behind the entertainment and quips is another matter. There is a deep irony in the fact that the Deputy is adopting the stance that any claim that there is a major resource of gas and oil offshore in Ireland is fantasy and poppycock.

I did not say either of those things.

Deputy Rabbitte was a leading voice in the past in writing pamphlets demanding that we ensure the people of this country get proper benefit from their offshore resources and that there should not be a giveaway. It was not just Deputy Rabbitte. The late Justin Keating, a former Minister, had a very different approach and was critical of what happened under the Fianna Fáil regime of the former Taoiseach Bertie Ahern and former Minister Ray Burke - the tax regime that effectively meant a giveaway of our potential gas and oil resources.

We should be well aware that gas and oil companies operate, in their offshore and onshore gas and oil exploration, in a very similar way to property developers, in that they are happy to sit on assets until the moment is opportune for them to make a killing. They are not remotely interested in the benefit to the State, the people or the environment, any more than the developers and land bankers were interested in how their land could contribute to housing our citizens or maintaining the economic stability of the country. They do not give a damn about any of those things. They sit on assets for the long term and wait for the opportune moment when they can make a killing. This is why there has been a chorus of voices protesting, campaigning and demanding that a regime that amounts to a giveaway must be changed in order to guarantee that when these companies decide it is profitable to start producing from these fields, we get what is ours.

I brought in a jar of oil to Deputy Rabbitte one day. It was taken from the Connemara field. He said in this House one day that there had never been a drop of oil taken from the Irish offshore. I got a call from someone who worked in the Connemara field. He said to me it so happened that he had a drop of oil from the Connemara field.

I referred to commercially extractable oil.

Deputy Boyd Barrett has the floor.

We are changing now.

One voice, please.

I brought in a jar of this oil.

Was it from the sump of a motorbike?

The interesting thing was that this jar was from-----

The boot of the Deputy's car.

It was from the engine or the sump.

It filled a tanker, which was then taken off to Norway.

Was it from an oil barrel in Dún Laoghaire?

It filled a tanker from the Connemara field.

Have they been back since?

I want to explain this to the Deputies opposite.

We are very interested.

I was told by a person who worked on the rig in question that we do not have anybody on these rigs to see what they are doing. He explained that we are relying on the information given to us by the oil companies. That is in contrast with what was done in Norway. In the initial period, the Norwegian authorities had to make deals with the oil companies because they did not have sufficient expertise. However, they shadowed every employee of the multinationals so they could oversee what those workers were doing and, in the process, develop the knowledge and expertise to enable them to develop their own state company. In the case of our exploration rigs, this State does not have a clue about what is going on. The reality is that we are listening to what the oil companies are telling us about what is or is not down there and whether it is commercially viable. I put it to Deputy Rabbitte that we do not really know what is down there. However, it is estimated that it is very substantial. If there is even a tenth of what is estimated, it would be a hell of a resource and would be worth a great deal of money. It is absolutely right, therefore, to insist that this royalty tax, at least, should have to be paid in respect of any drop of oil or bit of gas that comes up or is produced from now on. I think that is what Deputy Pearse Doherty is saying. It is not about retrospection; it is about saying anything that comes up from now should be subject to this payment. That is an entirely reasonable thing to say, given that there is such a generous regime for these guys anyway. Even if this small measure is accepted, we will still have one of the lowest tax takes from oil and gas production of any country in the world. In that context, could we not say this payment will have to be made in respect of anything which comes up from here on?

I could not resist the temptation to contribute to the debate on this amendment. The Leas-Cheann Comhairle knows how it is. We have had this debate on many occasions during my time in this House. It has certainly been a regular debate during the past ten years. I remember a very tortuous debate that took place in 2005 or 2006 when I was a member of a committee that dealt extensively with oil and gas exploration and its potential. It is all very fine to refer to what was done in Norway but they have a different seam there.

That was not the case at the beginning.

In Norway, one in seven explorations is a commercially viable strike. That is the difference. In this country, the strike rate is somewhere between one in 40 and one in 47. I cannot be sure. I cannot remember exactly but there is a distinct difference. Given that reductions in the use of oil and other fossil fuels will be debated at the climate change talks in Paris next week, I cannot understand for one moment how it is presumed that the oil companies have hidden resources off our shores that are waiting to be tapped at some stage in the future. Are the oil companies going to cod the Irish people?

They are waiting for the price to go up.

As Deputy Rabbitte said, this is for the fairies. When we were kids, we used to hear stories from the older generation about the little people. They talked about the fairies who lived in forts up on the sides of hills. We were told that if we went out at night, we were liable to be accosted by them.

I was wondering what happened to Deputy Durkan.

We were told that we would be dragged away down to the bowels of the earth never to be seen again.

That is a very attractive solution sometimes.

I do not object to Opposition Deputies talking wildly, throwing figures around with gay abandon and saying there are billions to be made. A figure of €600 billion has been mentioned. Why hit on a small sum? Why not come up with something big?

That is the company's figure. We did not make it up.

I think those opposite have got their papers mixed up. Their papers are definitely mixed up when they are talking about Norway. The oil, gas and coal resources that are directly offshore in Norway are up to 12 times greater than the known resources. That is a fact that has long since been established. The problem is that we have to move inexorably towards a programme of dealing with climate change. We need to be thinking about what we want to do. Are we going to live in cloud-cuckoo land in the future? Are we going to pretend there is no such thing as climate change at all?

That is a good point.

Are we going to have billions and billions of gallons and barrels of oil coming out of the ground and spewing up black smoke?

That is a reason to tax them 100%. The Deputy is dead right.

I want to mention another matter for the benefit of the Deputies opposite who pointed out that the late Justin Keating correctly criticised the regime that was applied in a certain period. Deputy Rabbitte has already cleared that up by referring to the expectation in the 1970s that having struck gas on a number of occasions, we would have a plentiful supply in the future. It did not happen that way. The number of potential prospectors was not what was expected. The very good regime that was drawn up by the Government in the 1970s remained in place, but the bottom line is that there were no takers. We can have all the grandiose plans we like.

This is like the Government's housing strategy.

We could talk about silver linings on every cloud and about billions of barrels of oil pumping up out of the ground until we are all blue in the face. However, the fact is that we would not be dealing with reality. The only way to deal with reality is to look at the number of commercial finds that were determined during the period in the 1970s that I mentioned and measure it carefully by reference to the period between then and now.

Deputies should be prepared to focus on the need to deal with the reality relating to banking as well. When I was on the committee that dealt with this issue a few short years ago, numerous people proposed how they would resolve the energy problems that were facing this country at the time. I remind the House that the economy was growing on a daily basis at the time. Annual growth rates of 10% or 12% were being achieved and much more was being anticipated. There was no doubt that there was going to be an energy problem. Given that the economy needs to expand if we are to ensure some form of economic sustainability for our people, please God we will have the situation where there will be an energy problem again. Proposals came from different quarters. I will not name those who made the proposals to be fair to them. It would not be fair at all. Some of the proposals that came before the committee involved this commercial enterprise being done on a not-for-profit basis. Can I ask the Leas-Cheann Comhairle if he would explore off our shores on a not-for-profit basis? Can I ask the Members who are so enthused by the whole idea of things being done on a not-for-profit basis if they would like to spend a couple of years or maybe ten years exploring off our windy shores with the waves breaking over their heads?

How long would they like to spend exploring on a not-for-profit basis?

The ESB and Bord Gáis did that.

Can I ask a further question?

How would Deputy Paul Murphy, who lives on the eastern shore of this island, like to delve into the depths of the Atlantic on a not-for-profit basis? He could then pray that we found the 600 barrels of oil and the billions of which he speaks.

There are 20 billion barrels of oil.

We could then go to a lending institution and borrow the money to carry out the exploration on the basis of hope. It does not work that way. It never did and it never will.

I put the speaking note on the record on Committee Stage so I will do so as a courtesy to those who are here this evening. The amendment, in the names of Deputies Pearse Doherty and Tóibín, proposes that a report be prepared on options available with regard to ensuring that the PPT will apply to all earnings from all petroleum revenue, regardless of the discovery date of the taxable field. This amendment seems to indicate that the Deputies recognise that the new regime is a suitable measure to ensure that the State will receive a reasonable and equitable return from the discoveries. The overall objective of the new legislation is to ensure that the State will get a higher return in the case of more profitable oil and gas fields while continuing to encourage the industry to invest in exploration for oil and gas in offshore Ireland.

There is a balance to be struck in revising the taxation policy as it applies to these activities. To apply the new regime to existing authorisations would be ill advised because it would give rise to reputational damage and generate fiscal uncertainty, undermining efforts to attract exploration investment to the Irish offshore. If we change once, how can people have faith in a new regime or be assured that we would not change again in a couple of years' time? The new fiscal regime provides industry with certainty and clarity. It allows industry to forecast and prepare detailed business plans. It allows it to evaluate the risks involved in exploring the Irish offshore and the potential returns. Given that the cost of a single exploration well in the Atlantic can be in excess of €100 million, a key element of the State's strategy for this sector is that industry, rather than the Exchequer, should carry the financial risk associated with exploration. Exploration in the Irish offshore is heavily capital intensive, particularly in the Atlantic margin with its deep waters, its distance from shore and adverse weather conditions. Ireland also faces competition for exploration investment from established and proven oil and gas provinces and from emerging provinces with similar exploration profiles. The maximum degree of certainty on the stability of the fiscal system encourages industry to make those high-risk, high-cost, long-term exploration investment decisions which are necessary to realise the oil and gas potential of the Irish offshore. The implementation of new fiscal terms for existing authorisations would undermine that certainty. Any decision to alter the fiscal terms for existing authorisations would impact on exploration investment in such authorisations, many of which are at the stage at which exploration drilling has yet to be undertaken or even committed to.

The Oireachtas joint committee report into Ireland's offshore oil and gas regime, published in May 2012, recognised that retrospective changes to fiscal and licensing terms can risk long-term reputational damage and it recommended that existing agreements should be adhered to irrespective of changing circumstances. The Wood McKenzie report also recognised that making retroactive changes to fiscal terms is not a policy that should be pursued in Ireland. Ireland's strategy for the exploitation of indigenous oil and gas resources aims to maximise the level of exploration activity and increase the level of production activity while ensuring a fair return to the State for these activities. The new PPT achieves this. It is only through active exploration that the potential of the Irish offshore will be proven.

I am not accepting the Deputies' amendment. Deputy Rabbitte has put on the record the background to this legislation. The proposals were brought to Cabinet by Deputy Rabbitte when he was Minister for Communications, Energy and Natural Resources. The Cabinet made decisions and those decisions are now being reflected in this Finance Bill. I congratulate and compliment Deputy Rabbitte on bringing such an important item of work to conclusion. He spoke with authority on the subject today and he has much expertise in the area.

There was some debate on the ability for discovery and on drilling wells in different jurisdictions. The probability of discovery in drilling a well in Ireland is one in eight but the possibility of a commercial discovery on drilling that well is one in 32. In the UK, the probability of discovery when drilling a well is one in four and the probability of commercial discovery is one in six. In Norway, the probability of discovery on drilling a well is one in two and the probability of a commercial discovery is one in seven. The source of this is a PwC report entitled "Making the most of our natural resources" from May 2013.

I acknowledge the fact that the Minister actually spoke to the amendment. The quality of debate from his backbenchers is appalling. It is no wonder the country got into the state it is in. We are dealing with the Finance Bill and it is a very simple amendment about whether profits accrued from now on should apply to all oil and gas licences. Whether Deputy Paul Murphy paid his household charges is not relevant to this. Deputy Murphy had very little to say when others close to him were accused of not paying their taxes in previous years. This type of debate does not add to the Finance Bill whatsoever.

The Minister answered to the effect that he believed there would be reputational damage and there have been reports saying that would be the case but other jurisdictions have looked into the revenue that could accrue from oil and gas finds from changing the tax rate. Is the Government saying that the rates that are applied to existing finds will continue to apply even if they are still producing after 50 years? Is he tying the hands of this Chamber when it comes to changing taxation rates? If we did the same for motor taxation, the Minister would only change the taxation rates for cars purchased after 18 June 2014. There would be a higher rate for them and a lower rate for everything purchased before that date. The certainty of which he spoke does not exist anywhere else. A grown-up debate would be on whether there was enough counter-evidence to suggest that reputational damage would not be so great.

The rates should at least be kept under advisement. This is not a radical proposal and it does not go as far as what the Minister's own party colleagues signed up to in committee. Deputy Rabbitte said it should be for future finds but this amendment does not even propose the 80% rate for future finds. It is a simple question - should it apply before or afterwards?

As for the standard of the debate, some Deputies should be embarrassed about their carry-on in this Chamber today.

It is sad to see how far Deputy Rabbitte has travelled from being the rumoured author of the pamphlet I mentioned earlier to being the apologist, the excuser, of the continuation of the giveaway of oil and gas resources to major multinational corporations. The figure of 20 million barrels of oil equivalent, which includes gas, is not made up but is from the companies' own estimates in a pamphlet which replaced Deputy Rabbitte's as the essential work in the area of liquid assets. The writers compiled all the companies' estimates and, with the current price of oil, that amounts to some €600 billion. I am not in favour of taking this oil and gas out of the ground, given the crisis we are in.

That is reassuring.

However, the answer is not to hand it over to multinational corporations, which will do precisely as I have outlined whenever it makes commercial sense. The responsible thing to do would be to place production in public ownership and leave the vast majority in the ground.

On the detail of the amendment, I do not accept the notion that applying an increased taxation rate on oil and gas discoveries that occurred in the past amounts to some form of retrospective action. That is not the case and the same logic does not apply when ordinary people are simply expected to pay water charges, even if the majority still do not do so. Two, three and four years ago, people did not expect to have to pay water charges. The Government, however, felt free to impose these charges and citizens did not have the right to argue that they did not expect to have to pay them. Double standards are being applied. It is the right of the Government to propose and of the Dáil to agree to increase taxation rates regardless of when things were founded or discovered. At a minimum, we should have a report that explores the possibilities of doing so.

I wish to establish again that the all-party committee, including Deputy Pearse Doherty's party colleague, Deputy Martin Ferris, agreed that we would not apply this measure retrospectively. In addition, there has never been a commercial oil find in Ireland.

I hope the news will be more positive in the case of Barryroe. The challenge facing Barryroe is to prove that it is commercially viable.

It was declared commercially viable in 2012.

It is not a question of Deputy Murphy coming to the House with a jar of oil and stating that there is oil out there; of course there is oil out there. The question is whether it is commercially extractable. It would take a further two or three drillings to establish whether Barryroe is commercially viable, and I hope those drillings are successful. The company involved has been seeking for some time to farm in investment because it does not have sufficient funding to determine whether Ballyroe is a commercial find, which I hope will be the case.

The net point is the one Deputy Durkan made about the strike rate. The reason things are the way they are in Norway is the country's unique geology. Whether one sets the tax rate at 55%, 80% or 100%, it will not change the geology of Ireland.

I am glad that we were able to secure all-party agreement on this measure, given the point at which we started. I welcomed the agreement at the time as it represented considerable progress. The measure before us is likely to last for a decade or so.

To answer Deputy Doherty's question, there is nothing to prevent the Minister for Finance of the day, as the Minister of a sovereign Government, from introducing whatever proposals he chooses. However, we have regard to our reputation in this area, and when contracts are entered into on particular terms, they should apply until they are changed in the way that we have changed them in this Bill. I am proud of this particular change, as recommended by Wood Mackenzie following considerable debate among colleagues in the House. I hope it will lead to an increase in the level of prospecting offshore in Ireland and, as a result, provide more gas for the spanking new terminal off north Mayo. I also hope it will result in an oil find.

Notwithstanding the clowning around, Deputy Durkan made one serious point on the environmental question and the merits or otherwise of bringing gas and oil onshore. He is absolutely correct in that regard. I believe most of it should not be taken out of the ground. For this reason, the State must have complete power of decision making in this area. If any of this oil and gas is brought onshore, every single cent of profit and revenue that is generated should be channelled into and ring-fenced for the development of non-fossil-fuel energy sources, rather than handed over to oil companies to be used to dig up oil and gas elsewhere. Deputy Durkan has made an argument for the complete nationalisation of this resource.

On the geological issue, the liquid assets pamphlet to which Deputy Paul Murphy referred helpfully includes a map of the basins. The basin that provides most of the gas and oil to Norway, which Deputy Rabbitte claimed has a unique geology, is continued in the Faeroe-Shetland basin and the Hatton Rockall basin. These basins are a continuation of one another. The basin that has produced Norway's gas and oil and the high strike rate to which Deputy Rabbitte alluded continues along the Irish coast, notably in the north west, and on to Newfoundland, where Canada produces most of its gas and oil. It is the same basin and, as such, the suggestion that Ireland and Norway are completely different cases is simply not true.

At the beginning, when Norway did not know how much gas and oil it had, the Norwegians stated that they would ensure the regime they established before the industry took off would mark and shadow the multinational companies.

That is not true.

While accepting that they had to co-operate with these companies to get the industry going, they committed to using the country's resources to develop a state company that would deliver all the benefits to Norway in the medium to long term. We have not done that.

They only did that after the big find.

It is very difficult to deal with this subject in two minutes. Deputy Boyd Barrett made some positive comments, with particular reference to climate change and the responsibility on all of us to make alternative arrangements. However, he is not entirely correct in citing the various geological surveys, as the cost of drilling off the coast of Ireland is different from the equivalent cost in Norway. I referred previously to information that was made available to the committee in its previous incarnation to the effect that what would be viewed as commercially viable and worth drilling off the coast of Norway would be viewed completely differently by a commercial enterprise in terms of attracting the necessary investment to drill off our coast.

While I have no difficulty with the concept of taxation, it remains the position that exploration companies must have funds from some quarter if they are to drill. If they carry out an exploration test, they will also have to carry out a drill, and if the drill is deep, as is invariably the case off the coast of Ireland, they will have to have more money to spend. They will not do this unless they have some degree of confidence that they will at least get some of their money back or be compensated for their activities.

This returns me to my comment that it would be nice to get exploration companies and hard-headed bankers to operate on a not-for-profit basis. I would love lending institutions to offer funding to various exploration agencies on a not-for-profit basis, but they do not do so. I would love to be introduced to some such institution, because it would be of great benefit to the economy, particularly given the position it has been in for some years.

The reason we introduced the sections that provide for a new regime for drilling for offshore oil and gas reserves is, as Deputy Rabbitte pointed out, that Wood Mackenzie recommended against retroactive impositions, as did the all-party committee. The Government relied on the Wood Mackenzie report and Deputy Rabbitte's advice. I am very pleased that no one moved an amendment to change the rates that are enshrined in the Bill.

That suggests to me that all of the Deputies are happy that we have the right rates and that the only issue is the one raised by Deputies Pearse Doherty and Peadar Tóibín.

Assumptions are very dangerous and I would not assume anything in relation to the rates. The Minister knows that on Committee Stage we pointed out that his own party colleagues - Deputy Rabbitte's party colleagues - believed a larger tax take should be for future discoveries and licences that have been granted from now on. Let us make that clear. This was a very modest amendment.

Going back to the core of this and forgetting about all of the other side issues which are important in terms of whether it is State oil or not for profit, we are dealing with a specific issue. The point I was trying to get to is that relying on a report from the Oireachtas all-party committee which says the licences and tax regimes should not be changed retrospectively and then dismissing the rest of it is not good enough. The Minister relies on that one line but refuses to introduce the other tax increases that the committee suggested. He then relies on a consultancy report which says the same thing. Where is the other evidence of reputational damage? What has our closest neighbour done, for example, in terms of the PRT? Has it not increased it year on year for the last number of years up to 2013? Has there been reputational damage as a result of that for Britain? What about other countries that went a lot further and renegotiated the contract? Maybe the Minister will enlighten me. I have never seen the contract, but when these oil and gas contracts enter into Deputy Rabbitte's former offices in Government Buildings, do they sign a contract with the Government saying it will not increase the tax rate from then on? It is not about changing the contract on them, it is a matter of changing the rate of tax. I presume that when someone opens a business, there will always be a concern that taxes may go up or down. It is one of the risks one takes. We talked about the great sell off which many people believed was treason. A lot of other words could be mentioned, but they would probably be ruled out of order by the Chair. In relation to this, were side deals done with a nod and a wink to say the Government would never raise taxes on finds entered into before 2014? Is that what the Minister is telling us? It does not make sense.

If the Minister was saying that what I was putting forward would result in the loss of revenue to the State, I would say the ideological issue is that these major companies have made serious gas finds and got away with unbelievable things in the deals they entered into as a result of the previous Fianna Fáil Administration. Outside of trying to rectify that, I would not put this forward if I believed it was going to result in less tax for the State. However, if the Minister relies on saying it would cause reputational damage, I want to see the case study on that. How does it compare to other countries which actually changed the rates? Did they suffer reputational damage or is this just a cop out by the Government? Is it a question of the Government saying "Ah, we will say it will cause reputational damage and let Shell and whoever else has made finds off with the lowest rates and the best deal in the world". It is unbelievable. I am not convinced on this and will press the amendment.

The amendment is being pressed.

I would like to hear the Minister's response.

The Minister has spoken twice like everybody else.

He spoke in anticipation.

Amendment put and declared lost.
Amendment No. 5 not moved.

I move amendment No. 6:

In page 60, between lines 32 and 33, to insert the following:

“32. The Minister shall, within nine months from the passing of this Act, prepare and lay before Dáil Éireann a report on the expected impact of the Knowledge Development Box, including its expected beneficiaries, expected tax take and cost to the Exchequer.”.

This amendment is on the knowledge development box, which is a matter my colleague, Deputy Peadar Tóibín, teased out with the Minister on Committee Stage. I have published legislation on this which has been voted down by the Dáil and it makes a mockery of the Finance Bill that we cannot put forward amendments in opposition, not that we would have any expectation of them being passed, due to the constitutional provision that only allows the Government to propose motions or amendments that would result in a cost to the State. There needs to be a constitutional referendum on that. It is not a contentious proposal and it is something the Irish people would support.

The amendment proposes a requirement for a report within nine months of the passing of the Act on the expected impact of the knowledge development box, including the expected beneficiaries, expected tax take and the cost to the Exchequer. Sinn Féin is concerned about this measure and the effect of having corporation tax repayable for those availing of this relief. We already have large companies not paying anything close to the 12.5% corporation tax rate in the State despite Government assertions that the effective rate of corporation tax is 11.8%. We have already teased this out on Committee Stage and we know that the model which came up with that figure is so unique in relation to a company that it does not reflect the types of companies we have here. We also know that Professor Jim Stewart, a lecturer in Trinity College Dublin, has recently estimated that the corporation tax rate paid by foreign firms based in Ireland was 2.2% using data provided by the US Bureau of Economic Analysis. We have other reports from multinational companies of arrangements even lower than this and some of them are very notable.

The question is whether the Department of Finance has done any impact assessment in relation to the impact of this measure on indigenous businesses. Is there a report? I have not had any SMEs knocking on my door saying this measure will benefit them given that very few of them produce and sell high value patents or other intellectual property. Given that it is geared towards the patent heavy industries such as technology and pharmaceuticals, has the Department considered how the measure will assist SMEs? Has a report been done and has a cost-benefit analysis been carried out on the measure given that the cost outlined in budget 2016 is €50 million? We will not know whether it is one company that avails of that €50 million or five or if it is the existing top ten companies because there will be confidentiality in relation to Revenue. I am interested in the type of analysis that has been done and whether the Department has conducted any risk analysis in particular in relation to our reliance on foreign direct investment and the potential for those companies to move from the State. Everybody likes to see extra tax coming into the State's coffers when it is not being peeled off households in terms of water or property tax. In terms of the corporation tax increase, something is going on there. One cannot just have a year where tax receipts increase by 50% or 60%. Something is happening and we have our own ideas of what that is. Some of it is down to BEPS and attempts by companies to get their houses in order before country-for-country reporting comes in. There may be some issues there but in any event it shows the volatility in the sector.

Has a risk analysis been done on foreign direct investment and our reliance on it? The knowledge development box again puts huge emphasis on foreign direct investment, reducing corporation tax by 50% for certain expenditures. It is a risky thing that we are doing. We have been here before. We are completing the banking inquiry process and much of the evidence we heard was of the over-reliance on property, VAT and corporate tax at the time of the property boom. The questions need to be asked in real life today. We need genuine debate instead of a throwaway remark and an assertion that there is nothing to see here.

Have we done a risk analysis? No one wants to see a flight of foreign direct investment, but it is highly mobile. When there is a year in which taxes from foreign corporations have increased to that level, it shows how volatile the sector is. I will listen to the Minister's response, but we are very concerned about the knowledge development box.

The amendment I submitted on the knowledge development box has been ruled out of order for being a potential charge on the people, which is the new formulation. It used to be "a potential charge on the Exchequer". The new formulation is ironic in this case. If we eliminated the tax loopholes that benefit multinationals and allow them to aggressively avoid paying large amounts of tax, far from being a charge on the people, it would be of major benefit to them. That is what we should be doing but have failed to do. For this reason, I am opposed to what is a new tax avoidance mechanism that will allow multinationals to replace - progressively, between now and 2020 - the "double Irish" tax scam with the knowledge development box tax scam. The whistle was blown on the double Irish and outrage was expressed across the world and by growing numbers in this country at the manner in which a small number of considerably profitable multinationals were aggressively avoiding making fair tax contributions. Even 12.5%, one of the lowest corporate tax rates in the world, was too much for them. They did not even want to pay that. No, we must have a mechanism that allows the largest, most profitable multinationals in the world to pay approximately 2%, which is what the US Bureau of Economic Analysis and the US Congress, which held hearings on this matter, estimated that the large American multinationals, particularly those in the IT sector, were paying in Ireland. According to the Revenue Commissioners, the average is approximately 6%. These figures are unbelievable. The European Commission was forced to investigate. The preliminary indication is that it believes we agreed a special tax deal with Apple and other beneficiaries in the IT sector. Were Apple forced to pay the tax that it should have paid, it is estimated that we would receive an extra €18 billion or €19 billion. Imagine what that sort of money could do for the housing crisis, rehabilitating our water infrastructure, investing in our universities and schools or dealing with the disastrous situation in the health service.

I stated something on Committee Stage and will keep trumpeting it at every opportunity. If one shouts long and loudly enough about scandals like this, one eventually forces the situation. For example, it took us four years to get an acknowledgement of the housing crisis. We kept going. Similarly, we will continue shouting about the corporate tax robbery by these multinationals.

The so-called abolition of the double Irish tax mechanism was much trumpeted, but it was not abolished. It will remain in place for the key culprits in this story until 2020. They will continue to benefit from that tax scam so that, by essentially handing money to themselves, they will be able to avoid paying billions of euro in tax. Trying to explain in simple terms to the public just how cute these multinationals are in avoiding paying their tax and the efforts to which they go to do that is almost preposterous. This amounts to people such as Bill Gates having conversations with themselves. Bill Gates says to himself that he has a great idea. He asks how much he will charge himself for that idea and decides on $500 million. Bill agrees to pay himself the $500 million, takes it out of one pocket and puts it in the other. In that one action, he saves himself tax on 80% of the $500 million. This is how it works. Multinationals pay money to themselves through subsidiaries to avoid paying tax. We allowed this to happen and will continue to allow it until 2020.

The scale of what we are losing is shocking. As I told the Minister on Committee Stage, it stretches credibility past any point of belief to claim that the Government was not aware of the scale of what the multinationals were doing and the way in which they were doing it. I referred to a certain document then. If people have the time, they should read it. It is the technical paper produced by the Department of Finance on effective corporate tax rates. From table 3.2.5 of the Revenue Commissioners' corporation tax statistics, it is as clear as day that the multinationals began to take advantage of the tax loophole more aggressively from approximately 2008 onwards, robbing the Exchequer of tens of billions of euro in the process. In 2007, for example, there was €63 billion in total corporate income, the bulk of which was generated by a small number of multinationals. In that year, the deductions, or write-offs, on that income amounted to €6 billion. In 2011, total income was €61 billion but the write-offs had almost quadrupled, to €21 billion, because companies were charging themselves for the use of ideas. Bill Gates came up with another idea, upgrade or whatever the hell it was. An idea, so-called intellectual property, is intangible, which means that it cannot be measured and is impossible to chase down.

The knowledge box that the Minister is proposing to replace the double Irish scam over a six-year period will give tax breaks on intellectual property - that is, the management, development, creation and processing of intellectual property, which is the technical term for someone coming up with an idea. A multinational comes up with an idea, wonders how much it will cost and decides on $500 million, $700 million, $300 million or whatever it wants to charge. Based on the claim that it came up with the idea in Ireland, it will be able to write off most of its profits and avoid paying tax on them. The knowledge box will facilitate that.

Just in case the companies have to work it a bit to get used to the new method through which they can avoid tax, we are going to phase out the existing tax scam up until 2020. Therefore, between now and 2020, they will have two mechanisms to avoid tax, namely, the double Irish and the patent box. Patent boxes are being investigated in many other countries for precisely this reason. They are being abused by multinationals as a way to avoid tax. We are now copying other countries instead of simply demanding that multinationals pay corporation tax at a minimum rate of 12.5%. We should stipulate that any other tax breaks, incentives and research and development measures should kick in only after they pay at that rate. If we just insisted on that and if it were in this Bill, we would have €4 billion extra in revenue for the Exchequer next year. Imagine what we could do with that annually. I just do not see why we cannot do what I propose. If we did so, we would still have a lower effective rate than most of our so-called international competitors. However, the Government will not do as I propose. This is really quite shameful when one considers that the multinationals use our infrastructure also. When we talk about the water infrastructure that needs to be rehabilitated, we should realise the multinationals use a large amount of our water. Should they not pay for the rehabilitation of the infrastructure?

Multinationals' employees need houses. At present, they cannot find or afford them. Should the multinationals not contribute towards their employees' housing? Guinness used to be involved with providing housing in the Liberties. It was not the most benign capitalist in the world in the 19th century but even it understood that it had to build parks and houses for its employees because in order for those employees to make money for it, they had to have somewhere to live and a semi-reasonable environment in which to live. However, the multinationals now do not believe they have any responsibility to the country, infrastructure, society or their employees who generate all the profits for them. Should we not force the multinationals to make some sort of reasonable contribution instead of facilitating them yet again in avoiding tax?

I am utterly opposed to the Government's proposal. Given that our amendment to delete it has laughably been ruled out of order on the basis that imposes a so-called charge on the people, we must support the amendment that calls for a review, at the least. Can we at least have an analysis in six months of the real cost of the measure and its impact?

Even very mainstream voices are now seriously questioning the Government's measure. In the business section in The Irish Times today, Mr. John FitzGerald of the ESRI refers to the folly of relying so heavily on the FDI sector and so-called tax competition in the corporate sector, based around multinationals, for a sustainable economy in the future. He does not use the phrase "race to the bottom" but effectively makes the same argument, that is, that Ireland has spearheaded a race to the bottom in the corporate tax area such that every country is now starting to do the same. Soon they will be outbidding us. The North is now doing it, Britain is reducing the tax take from the corporate sector and countries in Eastern Europe are even trying to underbid further. It is a dangerous strategy that we are pursuing. We are putting all our eggs in one basket such that our policy will come back to haunt us. We should be developing indigenous SME and public enterprise sectors that are sustainable in the longer term. This would contrast with the dangerous dependency on multinationals that do not pay their taxes and that could flit off at any moment or be hit by some big external shock. It is a dangerous, unjust strategy. I am absolutely opposed to the knowledge box and the whole economic strategy that lies behind it.

We live in a corporate welfare state that has not developed accidentally. It is the developmental model of successive Governments, driven by Fianna Fáil and Fine Gael. It is an ideology to which the parties are absolutely wedded. It is based on the notion that the only way to attract investment into the country is by winning the race to the bottom, be it through tax competition, in respect of which the only winners are the big corporations, or data protection, labour regulation or other means. The issue that epitomises this most, and which I believe will cause a scandal among people, is that which relates to Apple and to which Deputy Boyd Barrett referred. If the people knew the position of the Government is to say to Apple that it does not want €17 billion in tax seemingly owed to the Irish taxpayer and that we are to join the company in a fight against the European Commission to ensure taxpayers do not get that revenue - which could wipe out the housing crisis, for example, by building enough homes for everybody on the housing waiting list - they would regard it as an absolute scandal. This epitomises the approach of the Government, which is to say corporations and multinationals should pay nothing based on the idea of trickle-down economics. This idea, which informs all of its thinking, is based on the belief that another benefit will somehow accrue eventually.

The knowledge benefit box is a precise replacement for the double Irish arrangement. The phasing out of the latter began in last year's budget. The knowledge development box began to be phased in with last year's and this year's budgets and it will begin to take effect next year. It is what it is. Ireland has not invented the knowledge development box. It is just a version of the patent box regime that exists in a number of countries. I referred in a previous debate to a paper by PricewaterhouseCoopers that asks the Minister directly whether it is time for the country to consider the patent box. The paper contains the telling observation that "Countries without a patent box regime generally have higher effective tax rates which may make it difficult to adopt the patent box.” The purpose of the patent box is to lower the effective corporation tax rate. It is a tax scam to facilitate multinationals in avoiding as much tax as they can possibly avoid. It is at the expense of our society and societies across the world as the Government drives the tax competition model in respect of which it is a major culprit.

I have some questions for the Minister. The estimated cost of this provision next year is €50 million. That seems low for a measure that is to replace the double Irish arrangement. Is the figure to increase, as I suspect it will, over a number of years? Is the knowledge development box's cost expected to rise from the €50 million mentioned in the budget to €100 million, €150 million, €200 million, €250 million and €500 million as it replaces the double Irish over time and becomes the main tax scam that multinationals in this country will use? How did the Minister come up with the figure of €50 million and does he expect it to increase?

As far as I can tell, the scam is a two-way process from the point of view of the corporations in terms of investment in so-called research and development. At present, the corporations receive tax relief for expenditure on research and development. There is a 25% refundable tax credit. The corporations get a tax benefit or credit based on expenditure but, as far as I can tell, they will also benefit from a half rate of corporation tax on the income. They win both ways, that is, in terms of expenditure on research and development and on the income on the other side.

My final question relates precisely to the point that this is an intangible. How on earth does the Government propose to establish that ideas are produced in Ireland and that the tax break should consequently apply here? What is to stop multinationals simply funnelling all their so-called innovations through this State in order to avail of the lower tax rate and keep the double Irish scam rolling, which, I presume, is the purpose of what is happening here?

Ireland is a small, peripheral, island nation on the edge of Europe. In order to attract investment, a lot of guile and ingenuity are required. The facts that 100,000 people are directly employed in FDI companies in this country and that we can attract and retain FDI companies comprise a remarkable testament to the stability of our country, taxation system and legal system. One of the multinationals to which the Deputies opposite have such an aversion actually invested €1 billion in the Irish economy last year. It was not expenditure on salaries or taxation but an investment in the economy.

It is a huge sum of money. I do not think we have even one Irish-based enterprises that could come up with that sort of investment within the economy. That is just one multinational.

Debate adjourned.
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