I thank the Chairman for inviting us to this meeting. I also thank the joint committee for its support for the technology visa proposal, on which I made a presentation to members last year. The Government introduced a technology visa programme in April 2013 and has made a number of improvements to the scheme in the months since. We have seen the impact of this measure in the continued growth and vitality of the high-tech sector. Figures from the Department of Jobs, Enterprise and Innovation indicate that the policy has created hundreds of new jobs and perhaps more than 1,000 indirect jobs in the nine months since it was implemented. I am certain that tens of thousands of jobs will be created if this and similar policies are continued and expanded. I applaud the Government for its quick action on that front.
Last summer, I was asked by the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, to chair a forum for the purpose of making recommendations on the issue of entrepreneurship. I drew together a group of entrepreneurs, academics and Government officials and we consulted hundreds of stakeholders from every part of society and the business community. The forum consisted of volunteers who were pressed into service through a sense of duty and honour. I thank them all for the countless hours they spent in and out of session. We produced a report entitled Entrepreneurship in Ireland: Strengthening the Startup Community, the overall purpose of which is to support the Government's development of the first national entrepreneurship policy.
When the forum on entrepreneurship convened, the statistics on entrepreneurship in Ireland were bleak. Members are undoubtedly aware of the fine work done worldwide on producing the Global Entrepreneurship Monitor, GEM, report, in which Ireland has participated for many years. The GEM report for 2012 revealed some startling statistics. Ireland ranked 22nd of 22 European Union member states in terms of the percentage of the adult population - 8% - who aspired to be entrepreneurs. It also ranked 17th of 22 countries in terms of the number of people - 2.3% - who were early-stage entrepreneurs. Despite the strong and welcome presence of multinational companies, we know that the majority of jobs are created by indigenous businesses in their first five years of operation. If we are to attack the problem of unemployment, we must therefore attack the issue of a community of people who do not appear to be either interested in creating jobs or in the process of doing so. We must work on the supply of entrepreneurs and start-up companies if we hope to create a supply of jobs in the economy.
When the GEM report for 2013 was published last month it indicated that the climate in Ireland had improved since last year. At best, however, we remain in the middle of the pack. We have a higher goal and much higher need as a country. The Taoiseach has repeatedly stressed that he wants Ireland to be the best small country in the world for business. Government cannot lead the start-up economy or community. This is not a communist country with a command-and-control economy but a market economy made up of thousands of interchangeable parts that must look to each other and the world as opposed to the Government. Nevertheless, the Government can create an environment in which start-up companies thrive.
The title of our report features the words "start-up community" because to create an environment in which many people are thriving in the creation of businesses, we must improve our learning and sharing and replicate the successful start-up communities found in the dynamic, job-creating hubs that exist in many countries, including the United States, which, at 12%, has nearly twice the rate of early-stage entrepreneurship as Ireland.
The report contains 69 recommendations, including recommendations on improving community - for example, through physical co-working centres; culture - for example, by facilitating employee stock ownership programmes; competency - for example, by requiring science, technology, engineering and mathematics, STEM, students to take a course on commercialisation before graduation; and capacity - for example, by improving sources of finance. Many of the recommendations help three or four elements at the same time. Officehours, for example, is a programme in which experienced entrepreneurs and experts volunteer a few hours of their time every week or month interlinking the community, demonstrating a "give before one gets" culture and improving the competency of the population by providing links to capacity for finance and staffing. Dozens of entrepreneurs are already volunteering their time online at officehours.ie, providing hundreds of hours of free mentoring every month to people who are searching for it.
We propose to bring to the attention of the joint committee a few of the specific recommendations we consider to be the most pressing, which require active intervention by the Government. We will focus on two areas. The first area is people. This includes tackling unemployment by getting more people to become entrepreneurs, targeting the unemployed, women, youth and third level graduates, and developing peer mentoring networks. We must get more people off the dole and encourage them to be entrepreneurs. One way of achieving this is by reducing the time a person is required to be on the live register before being eligible for the back-to-work enterprise allowance. This is recommendation No. 6 in the report. If we want more people to start businesses, we should reduce the favouritism shown to employees over business founders and enable more women to engage as entrepreneurs rather than employees. The maternity leave scheme should be amended to enable a woman to transfer a portion of her maternity leave and benefits to the father of the child. In addition, qualifying weeks for PRSI payments should be the same for female entrepreneurs as female employees. There is an expression that women hold up half the sky. We are not using half of the population to its full capacity to help develop the economy. We hope, through some of the measures we have proposed, to improve the economic environment. While one could view this in some ways as a civil rights issue, I regard it solely as an economic issue.
JobBridge is an effective programme for giving greater competence to our workforce, especially those who are young and inexperienced. JobBridge gives a leg up the employment ladder for the unemployed. We should seek to expand it by a factor of ten. Up to 50,000 people on the dole should be on JobBridge instead. Can we create an internship programme for our youth, based on the JobBridge programme, that can be funded by corporations rather than the Government? This could be another way of extending the employment ladder to the unemployed at no cost to the Government.
We should commercialise the work of our research institutions and give competence and cultural awareness to our technical talent, who create the most scaleable and highest-economic-value enterprises. In particular, we believe that STEM students should be required to take a commercialisation course before graduation. I am an engineering graduate, and in the semester before graduating from college I took a principles of entrepreneurship course. From that, I created a company that ended up employing thousands of people in the little community of Troy in upstate New York. These are the kinds of opportunity that we could be taking advantage of all the time. STEM students are not being trained in the skills they need to have in order to start businesses. If they were being trained in this way, we would be creating more jobs.
Much of the work that needs to be done in Ireland does not need to be led by the Government, and the Government should be aware that it should not be looked to for solving our problems. The start-up community itself needs to deploy more activities for start-up events, and not everything should be in Dublin or Cork. We need the start-up culture and community to spread throughout the country.
Peer mentoring networks need to grow, as set out in recommendations 20 and 21 of the report. Officehours is only a small piece of this. Programmes such as Techpreneur in Dublin or EO Ireland are great models for peer mentoring and should be led by the private sector on a voluntary basis.
The second and final area I wish to cover is that of finance. We believe that money follows structural advantages. For example, Ireland has a capital gains tax exemption in respect of property held for seven years, whereby capital can flow into physical assets now without being subject to any capital gains tax. Therefore, money will flow into these assets and not be available for investment in Irish enterprises. Despite all the lessons we have learnt in the past that housing estates do not produce jobs, and that capital increases in cost of living do not help our competitiveness or people's prosperity, we continue not to have a capital gains policy that attracts financing to start-up businesses. If we want money to flow into job creation we must encourage the creation of a capital gains tax programme whereby it is an advantage for money to be placed in start-up businesses. Such a programme does not exist in Ireland today. Ireland has one of the highest rates of capital gains in the EU and twice the OECD average rate of capital gains tax. This is an abysmal deterrent. Ultimately, the Government must find a way to lower the capital gains tax. We know it is difficult in this environment, but we need jobs as well. This is the conflict we face. In the short term, failing a change in the overall capital gains tax rate, our specific recommendation is to allow roll-over investment relief on capital gains into Irish companies in various forms, which we mention in the report.
We need to improve employee stock ownership programmes, ESOP. We want to create incentives for employees who are loyal to a start-up company. Amending the ESOP programme would address the issues of both people and finance by promoting strong teams and creating a financial environment that which is conducive to start-up growth. Keeping with the report's emphasis on people and finance, we strongly recommend creating incentives for peer-to-peer lending, as set out in recommendation 58. These programmes build community and capacity, enabling tax-free interest income from loans to start-up businesses that are less than six years old.
As I have said, the Government cannot lead the start-up community but it can help create an environment in which start-ups thrive. Some of these recommendations will be long-term changes while others can be made with a few bold legislative changes in the short term. We need to build on Ireland's positive momentum and gains in the international GEM ratings, while recognising that there is still a long way to go.
Most important, we need to act now. Last week we saw the launch of an exciting entrepreneurial initiative involving a combination of NAMA buildings, venture capital funds, hot desks and potential high-growth start-ups. More initiatives like these will help change our economy and our country. We welcome the Government's initiative in convening the entrepreneurship forum and thank the committee for its time today. We would welcome any questions.
