Dáil Éireann Debate, Thursday - 26 November 2015
1. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the actions he is taking to increase Irish competitiveness levels given the increased competition from the United Kingdom as a location to establish a business compared to Ireland; and if he will make a statement on the matter. [41849/15]
View answerWill the Minister for Jobs, Enterprise and Employment discuss the actions he is taking to increase our competitiveness in light of the competition coming from the UK, particularly in respect of non-taxation matters but also in the context of the decision to reduce corporation tax in Northern Ireland to our level?
Some of the taxation matters could probably be directed to the Minister for Finance but I will endeavour to answer the question as best as I can. Ireland suffered a sustained decline in competitiveness from about 2002 which contributed in major part to the depth of the economic crash and job loss. Reversing these trends has been a central challenge in our Action Plan for Jobs. That plan has addressed the full range of policy areas. Sustained improvement has been achieved in all key areas: the support for start-ups; the ease of doing business; the tax environment; access to finance for start-ups and small business; access to new markets; and critical skills. We have improved our ranking but there is no reason for complacency and we actively watch what other countries are doing, including our nearest neighbour in the UK.
In respect of start-ups, last year, I launched Ireland first ever national strategy for entrepreneurship, which we are more implementing through the Action Plan for Jobs
process. Specifically, we have reformed how we provide supports for enterprise through the establishment of the local enterprise offices providing a first stop shop for entrepreneurs and small businesses in every county in the country. We have launched Ireland's Best Young Entrepreneur, IBYE, competition. Enterprise Ireland has increased supports for high-potential start-ups and launched a number of competitive funding calls, focusing in particular on encouraging female entrepreneurship. We have reformed how we support commercialisation and spin-outs from our third-level institutions with the establishment of Knowledge Transfer Ireland with the central focus on making it easier for entrepreneurs and enterprises to develop new products and services and to create jobs and impact for the investments being made.
We have continued to improve the attractiveness of the tax environment for start-ups and entrepreneurs as part of budget 2016. The start-up refund for entrepreneurs scheme was announced in 2016, the rate of capital gains tax for entrepreneurs was reduced to 20% for the first €1 million of gains and the exemption from corporate tax for the first three years of a business was also extended. We have improved access to finance through a range of initiatives including the establishment of Microfinance Ireland, the introduction of the credit guarantee scheme and, more recently, the launch of a range of funding initiatives by the Strategic Banking Corporation of Ireland.
There are encouraging signs of strong growth in start-ups. Entrants to the IBYE competition are up by 40% this year. The number of self-employed people with employees has increased by 13% in the past four years. The number of companies establishing for the first time has increased by 29% in the past four years. These results, along with the very positive job numbers in general, encourage us in our conviction that we have the right policy mix to support strong jobs growth into the future. The challenges involves continuing to improve that environment and not losing that mix or drifting off course.
Let us try something different here and let us try to get an answer to the question. That is the cut-and-paste answer that is the Minister's standard speech on start-ups. What I want to focus on is the challenge we face from the Six Counties and Great Britain in respect of their competitiveness for start-ups, the package and offering they have put together and their agencies' hunger to get start-ups to locate there. All the factors the Minister mentioned are correct. People are actually starting up companies here but they are making the decision to expand them outside the jurisdiction because of the range of supports that are available. Taxation is a matter for another Minister, but taxation in the context of the corporation tax rate is something the Minister needs to be on top of and very aware of. A very significant step relating to corporation tax on this island, to which our Government has been a signatory, has been taken and will take effect in the next number of years. It will now impact on decisions by people who are making long-term business decisions. What is the Department of Jobs, Enterprise and Innovation doing in respect of this?
If the Deputy wants a different answer, he should ask a different question. He asked if I would discuss the actions the Government is taking to increase Ireland's competitiveness levels so he-----
Given the increased competition from the UK.
The Deputy asked a two-sided question, which I answered. If the Deputy wants to change his questions, he has a right to do so. I welcome the move by Northern Ireland to have a low corporate tax rate. I think it will benefit both parts of the island. We stand to gain from a more competitive offering in Northern Ireland. Of course, we will face competition for mobile projects but that has always been a feature. We have faced competition from the UK, Switzerland, Belgium and Luxembourg all of the time. The record will show that we are doing well in any competitive assessment of how we fare in winning investment.
There is no doubt that the UK has offered a tax environment that is favourable to start-ups. As the Deputy will see, this year, the Minister for Finance received a discussion paper on entrepreneurship and the tax code. In response to that, he has started a process of reform. This year, he reduced capital gains tax for entrepreneurs as well as making other changes such as those for the self-employed.
Is there a group or focus within the Department of Jobs, Enterprise and Innovation on the competitiveness of Great Britain and the Six Counties and their impact on our potential to grow jobs? Has any work been done in the Department on the potential consequences of the change in corporation tax in the Six Counties?
We have a group. The strategic policy group deals with all issues involved in preparing for the Action Plan for Jobs. The National Competitiveness Council assesses all aspects of competitive challenge for Ireland. I do not see a move by Northern Ireland to have a lower corporation tax rate as something that we should be worried or concerned about. I see it as a natural development. A stronger offering in Northern Ireland can benefit both parts of the island. We will continue to compete for projects with Invest Northern Ireland or whatever other programme exists. We continually review our effectiveness and competitiveness. IDA Ireland has been very successful at horizon scanning and positioning ourselves in skills, tax, the business environment and different ways to respond to the challenges as they emerge.
