Written Answers Nos. 186-205
186. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which Ireland remains an attractive investment location from the point of view of international investors; and if he will make a statement on the matter. [51760/23]
View answerIreland remains an attractive location for international investors, with the stock of FDI in Ireland at over €1.3 trillion at the end of 2022. I am conscious of the need to maintain our competitive position globally, given the important contribution that this FDI makes to the domestic economy.
Indeed, the IDA reported the highest ever increase in FDI-related employment last year, with a 9 per cent increase in employment on 2021. The IDA estimates that the multinational sector directly employs more than 300,000 people, approximately one-eighth of our labour force, with further spillovers for jobs in the domestic sector. Furthermore, multinational enterprises contribute to the domestic economy via income and corporation tax receipts.
Despite challenging headwinds, modified investment – i.e. investment adjusted for globalisation related distortions - increased by 16 per cent in 2022 alone, with contributions from both the domestic and multinational sectors. In particular, we have seen the large scale investment in expanding production capacity in Ireland. This investment will bring increased employment and exports in the years ahead.
It is important that we continue to invest in key infrastructure and skills, in order to retain Ireland’s competitive advantage in attracting FDI. Our strong legal and regulatory landscape, talented and flexible workforce, membership of the European single market, and our reputation as a stable economy will help us to remain competitive in this regard.
As a small, open economy, Ireland is particularly exposed to risks in the global economy, including further shocks to energy supplies and heightened geopolitical tensions, and continued investment will be crucial in supporting the domestic economy. This Government will continue to monitor risks to our competitiveness and to support sustained investment in the year ahead.
187. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied that EU competition rules are not set to invade the competency of national governments to retain control of tax policy; and if he will make a statement on the matter. [51761/23]
View answerIreland has always been, and continues to be, a strong proponent of unanimity in tax matters at EU level. Tax Sovereignty is an area close to the heart of Irish citizens and was one of the reasons the Irish people initially rejected the Lisbon Treaty. A subsequent Protocol to the Treaty provided guarantees in relation to tax sovereignty, which paved the way for the Treaty's approval in Ireland.
Ireland has shown that we are willing to engage with and agree EU tax directives that seek to implement agreed international best practices in a consistent manner across the EU. Through negotiations, Ireland always maintain the principle that matters of direct taxation remain a Member State competence under the treaties, and tax harmonization is contrary to that principle.
Taxation remains one of the most effective policy levers available to any Government, and each Member State has developed a tax mix appropriate to their particular economy. We fundamentally believe that tax competition is an important policy tool, particularly for smaller Member States, provided that competition is fair and based on substance.
Ireland’s participation in global and European tax reform does not indicate that we are conceding any sovereignty in tax matters. Ireland is a proponent of multilateralism being the best solution to global tax problems and this is what underpins our position on EU tax matters and our decisions to join international consensus on the Two Pillared Agreement at the OECD.
On this basis I am satisfied that taxation is, and will continue to remain, a national competence for EU Member States.
188. Deputy Bernard J. Durkan asked the Minister for Finance whether it might be advisable for the EU to examine its policies in relation to state aid /competition rules, where such rules might be seen to undermine rules in relation to taxation, which remain within the competence of national governments; and if he will make a statement on the matter. [51762/23]
View answerState Aid, within the meaning of Article 107 TFEU refers to any advantage, granted by a Member State or through State resources, on a selective basis, to any undertaking that could potentially distort competition and trade in the European Union, and can take the form, inter alia, a tax advantage. As regards general taxation policy measures applied to individuals or open to all enterprises, such measures do not constitute State Aid under the Treaty and therefore falls outside the area of State Aid policy.
Ireland has always been, and continues to be, a strong proponent of unanimity in tax matters at EU level. Tax Sovereignty was one of the reasons the Irish people initially rejected the Lisbon Treaty. A subsequent Protocol to the Treaty provided guarantees in relation to tax sovereignty, which paved the way for the Treaty's approval in Ireland.
Ireland has shown that we are willing to engage with and agree EU tax directives that seek to implement agreed international best practices in a consistent manner across the EU. Through negotiations, Ireland always maintain the principle that matters of direct taxation remain a Member State competence under the treaties, and tax harmonization is contrary to that principle.
Taxation remains one of the most effective policy levers available to any Government, and each Member State has developed a tax mix appropriate to their particular economy. We fundamentally believe that tax competition is an important policy tool, particularly for smaller Member States, provided that competition is fair and based on substance.
189. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which confidence in the Irish economy remains strong in the international sphere; and if he will make a statement on the matter. [51763/23]
View answer190. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he is confident that Ireland continues to compete on the international stage, with particular reference to any potential threats; and if he will make a statement on the matter. [51764/23]
View answerI propose to take Questions Nos. 189 and 190 together.
I am confident that Ireland continues to compete on the international stage. At the end of the first half of this year, the stock of foreign direct investment stood at €1.1 trillion, while 300,000 were employed in the multinational sector here at the end of 2022. Ireland’s talented and flexible workforce, strong legal and regulatory landscape, and reputation as a stable economy all contribute to our competitiveness in encouraging both indigenous and foreign investment. Continued investment in skills and infrastructure will help Ireland to remain competitive on the international stage.
Indeed, Ireland’s economy is expected to remain resilient going forward. In its latest forecast published last week, the European Commission projected modified domestic demand growth – my preferred measure of domestic economy activity - of 2.3 and 1.9 per cent in 2023 and 2024 supporting continued employment growth across the economy. This compares favourably to more subdued growth among other Member States. In the Euro Area as whole, economic growth of 0.6 and 1.2 per cent is expected this year and next.
However, the Commission is forecasting negative growth in net exports, driving negative GDP growth of 0.9 per cent for this year. This is reflective of factors including a fall-off in demand for covid-related pharma-chem exports and a decline in demand among key trading partners demonstrating the sensitivity of our economy to global shifts. Indeed, the global economy is facing into another year of considerable uncertainty, posing potential threats to our economy. That said, the Commission expects a return to growth of around 3 per cent next year.
Further sector-specific shocks in multinational-dominated sectors such as the post-Covid adjustment in the pharma sector this year would potentially impact output and incomes. Risks associated with geopolitical tensions remain with wars in Ukraine, and more recently the Middle East, threatening to put upward pressure on global commodity prices. Geopolitical fragmentation also poses the risk of fracturing global value chains and weakening global trade. Continued persistence of underlying price pressures could erode real incomes further, while potentially prompting further interest rate increases.
Despite these challenges, however, Ireland’s economy is well placed to remain competitive. A record 2.6 million people are in employment while supports that this government have put in place will continue to protect those still impacted by the cost of living crisis. This government will remain steadfastly committed to investing in our workforce and infrastructure to ensure continued prosperity.
191. Deputy Mairéad Farrell asked the Minister for Finance the number of companies with a registered address in Galway that availed of temporary business energy support scheme; and the value of the total value of support received; and if he will make a statement on the matter. [51477/23]
View answerThe Temporary Business Energy Support Scheme (TBESS) was introduced to support qualifying businesses with increases in their electricity and natural gas costs over the winter months of 2022-23 arising from the Russian invasion of Ukraine. Finance Act 2022 (as amended) made provision for the TBESS. The scheme fell within the terms of the EU Temporary Crisis and Transition Framework.
The scheme ran from 1 September 2022 to 31 July 2023, and the final deadline for eligible businesses to submit claims for relief was Saturday, 30 September 2023. The scheme is now closed.
€9.06 million was paid out to 1,442 businesses in Galway, with over €150.5 million paid out to 25,132 businesses across the country.
192. Deputy Jackie Cahill asked the Minister for Public Expenditure, National Development Plan Delivery and Reform further to Parliamentary Question No. 179 of 17 October 2023, if the new civil service arbitration board has yet been finalised; and if he will make a statement on the matter. [51707/23]
View answerIn line with the terms of the C&A Scheme for the civil service, I brought a Memo to Government on 7th November and a Government Decision was made to appoint a new Arbitration Board with effect from that date.
The board members have been notified of this decision by letter.
193. Deputy Brendan Smith asked the Minister for Public Expenditure, National Development Plan Delivery and Reform if a vacant property will be made available to a community group (details supplied); and if he will make a statement on the matter. [51786/23]
View answerOfficials in my Department have advised me that the property referred to by the Deputy is not surplus to requirements and is currently being considered for alternative State use and therefore cannot be made available for use by a community group.
Should the property become surplus to requirements the property will be dealt with in accordance with the OPW's Disposal Policy.
The OPW's Disposal Policy with regard to vacant State property, is to:
1. Identify if the property is required/suitable for alternative State use by either Government Departments, Local Authorities or the wider public sector.
2. If there is no other State use identified for a property, the OPW will then consider disposing of it on the open market if and when conditions prevail, in order to generate revenue for the Exchequer.
3. If no State requirement is identified or if a decision is taken not to dispose of a particular property, the OPW may consider community involvement (subject to detailed written submission, which would indicate that the community/voluntary group has the means to insure, maintain and manage the property and that there are no ongoing costs for the Exchequer).
194. Deputy Paul McAuliffe asked the Minister for Public Expenditure, National Development Plan Delivery and Reform the supports, financial or otherwise, available to houses and businesses that are flooded at a location (details supplied) which are included in the CFRAM flood area while they wait for the works to commence. [51802/23]
View answerThe Department of Social Protection operates a humanitarian assistance scheme to assist households in the immediate aftermath of emergency events including flooding. The purpose of this scheme is to prevent hardship by providing income-tested financial support to people whose homes are damaged from flooding and severe weather events and who are not in a position to meet costs for essential needs, household items and structural repair.
In addition, the Department of Enterprise, Trade and Employment is responsible for an emergency humanitarian support scheme to support businesses, community, voluntary and sporting bodies affected by flooding. Under this scheme, emergency humanitarian contributions may be made available towards the costs of returning business premises and community, voluntary and sporting bodies to their pre-flood condition including the replacement of flooring, fixtures and fittings and damaged stock.
195. Deputy Ruairí Ó Murchú asked the Minister for Enterprise, Trade and Employment to provide an update on the increased cost of business grant; at what point the details of this scheme will be finalised; the process by which eligible SMEs will apply to local authorities; and if he will make a statement on the matter. [51251/23]
View answerThe Increased Cost of Business Grant (ICOB), announced as part of Budget 2024, will be targeted at Small and Medium sized businesses who operate from a rateable premises. Firms who do not have a rateable premises are not within the scope of this scheme. The total allocation for this scheme is €250m
It is important that I be clear that this scheme is a once-off grant aid provision and not a commercial rates waiver. It will have no bearing on the commercial rates paid by firms. Firms should continue to pay their commercial rates as normal.
The grant will be paid through local authorities and will be paid in the first quarter of next year. It is envisaged that the grant will be issued without the need for an application process. The grant is intended to be paid at a rate of up to half the enterprise’s commercial rates bill, subject to a prescribed limit and the grant will be based on the commercial rates that firms were billed in 2023. The grant is intended to aid firms but is not intended to directly compensate for all increases in wages, or other costs, for every business.
I am conscious that many smaller rateable premises may have had greater difficulty negotiating the application process for previous schemes such as the Temporary Business Energy Support Scheme (TBESS). With the ICOB, however, it is envisaged that the administrative burden for firms claiming this relief will be minimal.
My Department will continue to work with the Department of Housing, Local Government and Heritage and the Local Authorities to finalise the details of the grant and I am planning to bring a Memo forward in due course.
196. Deputy Ruairí Ó Murchú asked the Minister for Enterprise, Trade and Employment to outline what flood relief schemes are available to businesses that are not eligible for the emergency flood relief scheme as they have over 20 employees; and if he will make a statement on the matter. [51252/23]
View answerThe purpose of the Emergency Business Flooding scheme on its establishment was to support small businesses, employing up to 20 employees, (whole-time equivalents), community, voluntary and sporting bodies, who through no fault of their own, cannot secure flood insurance. According to recent CSO data this accounts for over 95% of all businesses.
For the purposes of the scheme the Department define the 20 employees referred to in the Scheme as 20 full-time equivalents (FTEs) based on a 40 hour working week. Therefore, in certain circumstances businesses employing in excess of 20 employees may be eligible to apply if their total staffing complement does not exceed the equivalent of 20 full time employees.
To clarify, it measures the total amount of full-time employees working at any one organisation. It is a way of adding up the hours of full-time, part-time and various other types of employees into measurable 'full-time' units. For example, a part-time worker employed for 20 hours a week where full-time work consists of 40 hours, is counted as 0.5 FTE.
197. Deputy Danny Healy-Rae asked the Minister for Enterprise, Trade and Employment to give serious consideration to an effective package of support for businesses, as the current small business support scheme proposed by the Government will go nowhere near addressing the issues businesses are facing (details supplied); and if he will make a statement on the matter. [51657/23]
View answerIt is understandable that businesses – particularly SMEs – are concerned about the impact of rising costs. While the Government is continuing to monitor the situation regarding the costs of doing business, no new measures are currently under consideration.
Inflation in Ireland – although still elevated at 5.1 per cent in October – is generally declining. Recent forecasts from the Central Bank of Ireland indicate that inflation will continue to moderate to 3.2 and 2.3 per cent in 2024 and 2025, respectively. Wholesale price inflation has also been levelling off in recent months.
The Government has provided significant support to business throughout the period of increasing costs and has been proactive in limiting the fallout from higher rates of inflation in input costs and prices. However, it is not possible to insulate every business from the total impact of these costs.
Over the two-year period prior to Budget 2024 a total of €12 billion – 4½ per cent of national income – was provided in cost of living and doing business supports, comprising a mix of permanent and one-off measures, to ease the burden of inflation on households and businesses. The main programme introduced by Government to alleviate cost pressures for small businesses was the €1.3 billion Temporary Business Energy Support Scheme.
Budget 2024 also contained several measures which will support businesses facing increased costs. This includes, among others:
• The 9% VAT reduction for gas and electricity was extended for an additional 12 months, until the 31st of October 2024;
• The temporary excise rate reductions applying to auto diesel, petrol and marked gas oil were extended until the 31st of March 2024; and,
• There was an increase in VAT registration thresholds for SMEs to €40,000 for services and €80,000 for goods.
The Increased Cost of Business Grant was also announced and will be targeted at Small and Medium sized businesses who operate from a rateable premises. This scheme is a once-off grant and not a commercial rates waiver. This grant is intended to aid firms but is not intended to directly compensate for all cost increases for every business.
My Department, in collaboration with the Department of Social Protection, is also assessing the cumulative impact of forthcoming changes to working conditions, including Pension Auto-Enrolment, Parent’s Leave and Benefit, Statutory Sick Pay, the Additional Public Holiday, the Living Wage, and Remote Working. This follows a recommendation by the National Competitiveness and Productivity Council that a cumulative impact assessment be undertaken. The report is due for publication later in Q4 2023 and will inform public policy in this area.
This Government has adopted an active approach in supporting Irish businesses across multiple crises over the last number of years, including the introduction of unemployment supports during the COVID-19 pandemic, the provision of financial supports to firms facing the implications of Brexit, and more recently, through the period of increasing overhead costs. My Department is fully committed to serving the SME sector and the measures included in Budget 2024 reflect this.
198. Deputy Fergus O'Dowd asked the Minister for Enterprise, Trade and Employment to respond to queries raised by a person (details supplied) following the most recent flooding event; to outline the supports in place; if the emergency flood relief scheme can be accessed in such circumstances; and if he will make a statement on the matter. [51672/23]
View answerUnder the emergency business flooding schemes the Government has made provision to provide up to €100,000 for small businesses, community, voluntary and sporting bodies directly affected by the severe weather events in Counties Cork, Waterford, Limerick, Louth, Wexford, Kilkenny and Galway. The flooding schemes apply to buildings, contents, fixtures and fittings necessary for the operation of the business or activity only. Roadways are excluded from the scheme.
It is claimed that the impacted road is owned by the Government and it may therefore be more appropriate to engage with the relevant state or local authority.
The Department of Housing have responsibility for Local Authorities and the improvement and maintenance of regional and local roads is a statutory function of each local authority under the Roads Act 1993, as amended, with works funded by local authorities’ own resources supplemented by State Road grants.
199. Deputy Denis Naughten asked the Minister for Enterprise, Trade and Employment his plans for the establishment of a consultative group of key external stakeholders to support the work of a referendum on the Unified Patent Court; the membership of this committee; the timeline for such a referendum; and if he will make a statement on the matter. [51711/23]
View answerIn June 2022, the Government reaffirmed its intention to participate in the Unitary Patent System and the Unified Patent Court (UPC) and to hold a related referendum.
An amendment to the Constitution is required before Ireland can ratify the Agreement on the UPC (UPCA), as the Agreement entails a transfer of jurisdiction from the Irish courts to an international court. The timing of the Referendum is a matter for Government to decide and I anticipate a decision will arise in the coming months.
My Department’s officials are currently advancing referendum preparations. The work underway includes the drafting of a Constitutional Amendment Bill with assistance from the Office of Parliamentary Counsel. The establishment of a consultative group of key external stakeholders to support the work of a referendum is not considered advisable therefore my Department will not be establishing such a group. An Interdepartmental Group was convened in September to assist in advancing potential post-referendum preparations. The Government proposes to establish a local division of the UPC subject to the outcome of a Constitutional Referendum.
200. Deputy Claire Kerrane asked the Minister for Enterprise, Trade and Employment the reason businesses using diesel gas are excluded from the business users support scheme for kerosene, given many businesses utilise diesel gas; and if he will make a statement on the matter. [51725/23]
View answerOn 6th September this year, Minister Coveney launched the Business Users Support Scheme for Kerosene to provide support to businesses that were impacted by significant increases in the cost of this fuel following the Russian invasion of Ukraine in 2022. The scheme provided eligible businesses with a payment to reimburse them for half of their increased costs in the period from 1st March to 31st December 2022, compared to the equivalent period in 2021.
The implementation of this scheme delivered on a commitment made earlier this year to ensure that businesses that rely on kerosene for heating purposes are supported in the same manner as those that have already received support in respect of increased electricity and natural gas costs under the Temporary Business Energy Support Scheme.
As part of a review of the operation of TBESS, my Department carried out a series of consultations regarding the possibility of extending supports to businesses that use energy sources other than electricity or natural gas for heating.
The result of these consultations was that cost increases in Kerosene and LPG were identified as being of greatest concern to businesses. The possibility of including LPG in the scheme was considered, but the available data showed that the cost of this fuel only increased by 19% during 2022.
Data on Kerosene usage showed that the price increased by an average of 89% in 2022, which justified the development of a scheme for businesses that rely on kerosene. Cost increases in diesel gas were not raised as a concern during the consultation process and no representations were made to my Department in respect of this fuel during the development of BUSSK.
201. Deputy Bernard J. Durkan asked the Minister for Enterprise, Trade and Employment his satisfaction or otherwise with Ireland’s ability to compete with all others for already established or potential export markets; and if he will make a statement on the matter. [51745/23]
View answerEnterprise Ireland, the state agency of the Department of Enterprise Trade and Employment responsible for helping Irish companies to enter and expand in international markets, saw exports by companies it supports increase by 19% to a record €32.1bn in 2022.
This is the highest ever level of growth for Enterprise Ireland-backed companies in export value. Growth occurred across all overseas regions and in individual industry sectors.
Exports to the Eurozone increased by 28% in 2022, with the Eurozone now representing 25% of all exports by Enterprise Ireland backed companies. Expansion in trade with the Eurozone has taken place in tandem with strong Irish exports to the UK post-Brexit.
Exports to the UK increased by 13%, reaching €9.2bn. The UK now accounts for 29% of all exports by Enterprise Ireland backed companies.
Exports to the Eurozone increased by 28%, reaching €7.9bn.
Exports to North America increased by 13%, reaching €5.5bn. North America now accounts for 17% of all exports by Enterprise Ireland backed companies.
Increases in exports were recorded across all sectors with Food and Sustainability increasing by 23%, Technology and Services increasing by 18% and Industrial and Life Sciences increasing by 14%.
The very positive results reported by Enterprise Ireland are a testament to the resilience and vision in the Irish enterprise sector and the Government’s policy to assist Irish business in that vision. Irish business has recently faced numerous challenges, with energy costs, inflation and supply chain disruption impacting the trading environment. However, with a record €32bn in export sales, Irish business has demonstrated its ability to absorb global economic disruption and continue to compete and win in international markets.
Regional growth is a major pillar of my Department’s strategy to support our economy. Enterprise Ireland-backed companies now employ more than 218,000 people in every region and county in Ireland. The record export sales which show a 19% year-on-year increase in export value and increased employment is proof that our enterprise policy is working well.
The Government is determined to continue to assist Irish companies to compete and win in international markets. It is important that Irish businesses are supported as they adapt to a rapidly changing economy, from the challenges posed by digitalisation to the reduction of emissions and the opportunities presented by a low-carbon global economy. Enterprise Ireland does such important work to guide businesses through these challenges and I look forward to continuing to work with them to benefit Irish businesses.
202. Deputy Bernard J. Durkan asked the Minister for Enterprise, Trade and Employment where Irish exports are likely to meet the greatest level of competition in the short, medium and long-term; and if he will make a statement on the matter. [51746/23]
View answerMy Department’s White Paper on Enterprise to 2030 sets out an ambitious vision for Ireland’s enterprise policy, to protect Ireland’s strong economic position, and respond to challenges and opportunities that have emerged because of wider economic and geopolitical developments, digitalisation, and an increased urgency to decarbonise industry. It provides for a sustainable, innovative and high-productivity economy, with rewarding jobs and livelihoods in the period ahead.
Irish-manufactured products continue to compete very well on world markets. With continued funding and assistance from my Department and, despite the challenges of the pandemic, inflation, the illegal war in Ukraine, and global supply chain disruption, the most recent figures illustrate 2022 was a record year for Irish-owned business in terms of international sales. Companies supported by Enterprise Ireland (EI) achieved export sales of €32.1 billion, an increase of 19% on the previous year, and growth occurred across all overseas regions and in individual industry sectors. Exports to the UK increased by 13% and the Eurozone increased by 28%. The Eurozone now accounts for 25% of all exports by EI client companies to a value of €7.9 billion.
In the UK, which is and will remain EI clients’ largest market, exports increased to €9.2 billion or 29% of total exports despite the continued challenges of volatility and uncertainty. The North American Market remained strong during the year with a growth rate of 13% of exports and now accounts for €5.5 billion or 17% of total exports. Food and Sustainability, Technology and Services, and Industrial and Lifesciences were the fastest growing sectors, increasing by 22% to €16.258 billion, 18% to €7.397 billion and 14% to €8.525 billion respectively.
Total sales by companies supported by EI (domestic and export sales) totalled €62.4 billion, with total spend in the Irish economy by EI backed companies exceeding €30 billion.
These are significant exports results and reflect the incredible innovation and ambition of the Irish enterprise sector. While the record 19% year-on-year increase in exports is influenced by inflation in certain sectors, most notably in the dairy industry, the results demonstrate the continued strength of Irish products and services in international markets. This is due to Ireland’s hard-won reputation for quality, service and innovation.
203. Deputy Bernard J. Durkan asked the Minister for Enterprise, Trade and Employment the extent to which he anticipates levels of investment here to adequately cater for the employment needs of the country; and if he will make a statement on the matter. [51747/23]
View answerIreland continues to be a location of choice for new investors and long-established companies who choose to reinvest in substantial expansions of their operations here. Foreign Direct Investment (FDI) plays a significant role in Ireland’s economy and the flow of FDI into the country is strong. Numbers directly employed in the multinational sector in Ireland reached 301,475 at the end of 2022, the highest FDI employment level ever, and a 9% increase on 2021.
The IDA’s mid-year results show that the Agency has performed very strongly so far this year. At mid-year, the IDA has secured 139 investments which have the potential to create almost 12,000 jobs. Almost half, 67 of the 139 investments, were secured for locations outside Dublin. It is particularly encouraging to see that there were 52 new investments in the first half of the year from companies investing in Ireland for the first time.
These record results demonstrate not only the resilience of the FDI sector in Ireland, but also the strength of Ireland’s value proposition and attractive business environment, which enables global companies to successfully invest and expand in Ireland.
Nonetheless, as we face a challenging and competitive global environment, Ireland will continue to strengthen its attractiveness for FDI. Efforts in this area are guided by IDA Ireland’s Strategy, "Driving Recovery & Sustainable Growth 2021-2024". The IDA's Strategy seeks to consolidate and build on the positive impact of FDI as Ireland pursues a jobs-led pandemic recovery, as envisaged in the Programme for Government, while seizing the opportunities of the green and digital transition.
The continued promotion of FDI in Ireland is further supported by our Trade and Investment Strategy 2022-2026: Value for Ireland, Values for the World. Priorities set out by that strategy are focused on the promotion of Ireland’s investment ecosystem and reaping the benefits of the EU Single Market.
Moreover, the White Paper on Enterprise published by my Department sets the strategic direction for job-creation and growth for the years ahead, addressing changes in the international trading environment, vulnerabilities in our enterprise sector, and the need to integrate climate change commitments and the digital transition into enterprise policy over the decade ahead. My Department is working with IDA on implementation of the White Paper and Government’s strategic objectives of decarbonisation, digitalisation and regional development in the context of the IDA's overall mandate.
I am confident that Ireland is well positioned to respond to the challenges arising from an increasingly uncertain and changing global environment but Government is not complacent and keeps policy under review, especially in terms of the biennial White Paper on Enterprise Implementation Plans.
204. Deputy Bernard J. Durkan asked the Minister for Enterprise, Trade and Employment the extent to which he has identified any potential threats to the manufacturing and services sectors here likely to arise from continued inflation or competition; and if he will make a statement on the matter. [51748/23]
View answerMany of the risks from inflation have been identified, or indeed have been realised, in particular those associated with energy costs. While the rate of inflation in these areas has declined in the past year, that is not to say that there is still not an ongoing significant cost to the Irish economy – as the level of energy prices remains higher than previously.
Ultimately, the risk of ongoing excessive inflation will be its impact on price stability, which in turn can impact macroeconomic stability. The reduction in the rate of inflation is welcome in this context. Although still elevated at 5.1 per cent in October, it is generally declining and is down from 9.4 per cent in October 2022.
Cost inflation can have significant impacts on Ireland’s ability to compete internationally. However, Ireland has shown its strong ability to compete internationally, evident in our ranking of 2nd in the IMD World Competitiveness Rankings this year from a total of 64 countries. This ability to compete is also evident in the continued resilience of the Irish economy at a challenging time for the global economy.
My Department continues to monitor risks to economic activity and employment to the manufacturing and services sectors of the economy. With an unemployment rate of 4.8% in September, the Irish economy has been operating at a level close to full employment for quite some time. The risks to employment in these sectors will depend on the risks to the economy, more broadly. Added to this, Irish GDP grew by 13.6% in 2021, and 9.4% in 2022, therefore, a moderation in economic growth might naturally be expected. A moderation in growth is also forecast in the Economic and Fiscal Outlook published as part of Budget 2024 which projects Real GDP growth of 4.5% for both 2024 and 2025.
Continued inflation will also mean that interest rates may also remain elevated for an extended period. With the ECB not expected to cut rates before Summer 2024, this may in turn dampen international economic growth rates. Given the open nature of the Irish economy, a slowdown in international growth may lead to more moderate rates of growth domestically. Cyclicality in demand can also have implications for sectoral economic growth - such as demand for pharmaceutical products which had seen significant growth during the COVID-19 pandemic and bolstered Irish exports during that period. As an open economy we are also aware of the risk which any rise in protectionism internationally presents.
Over the two-year period prior to Budget 2024 a total of €12 billion – 4½ per cent of national income – was provided in cost of living and doing business supports, comprising a mix of permanent and one-off measures, to absorb some of the impact and ease the burden of inflation on households and businesses. Budget 2024 contained a number of measures which will support businesses facing increased costs of doing business, including the Increased Cost of Business Grant will be targeted at Small and Medium sized businesses who operate from a rateable premises, with a total allocation of €250m and an extension of the 9% VAT reduction for gas and electricity until 31st October 2024, among other measures.
As set out, my Department continues to monitor sectoral economic activity and risks to this activity. However, no new measures are currently under consideration beyond what has already been announced. As with the supports which were provided to help businesses with rising inflation, there is a limit to how much direct support Government can offer firms to shelter them from international economic developments and associated risks.
The Government’s approach to enterprise policy continues to be guided by the priorities set out in the White Paper on Enterprise 2022-2030 – published in December last year. This review of Enterprise Policy was the first since 2018 and was motivated by an awareness of a changing enterprise landscape posing new challenges, including shifting patterns of globalisation driven by geopolitical change, disruptive technological innovation, and lagging productivity in parts of the indigenous sector of the economy.
205. Deputy Bernard J. Durkan asked the Minister for Enterprise, Trade and Employment the extent to which innovation continues to be utilised to assist in job creation in this country; and if he will make a statement on the matter. [51749/23]
View answerMy Department is acutely aware of the importance of innovation in the performance of Irish based firms and their capacity for growth, exports and job creation as reflected in the Enterprise Policy White Paper. Companies which invest in RD&I often achieve greater levels of growth, drive societal benefits, and produce solutions to global challenges such as climate change, sustainability, and digital transformation.
Over 25 years, Ireland has gone from a base of 800 RD&I active firms with a research spend of €300 million to almost 1,800 RD&I active enterprises spending of €3.88 billion in 2021. Enterprises in Ireland reported a 19% increase in research and development (R&D) expenditure to €3.88 billion in 2021, compared to €3.26 billion in 2019. Labour costs accounted for the largest proportion of R&D expenditure, rising to €2.05 billion in 2021 from €1.7 billion in 2019. This reflected a growth in employment of R&D staff to 32,961 in 2021 from 27,755 in 2019.
Irish-owned enterprises reported a 22% increase in R&D spend between 2019 and 2021, up from €963 million to €1.18 billion. In 2021, there were 32,961 persons engaged in R&D in Ireland. Of this total, 50.8%, or 16,739 persons, were employed as researchers, of which 2,491 were PhD qualified researchers. In addition, there were 8,690 (26.4%) technicians and 7,532 (22.9%) support staff.
The number of R&D personnel engaged in small enterprises in 2021 was 9,338, accounting for 28.3% of all R&D personnel. Medium enterprises had 8,659 (26.3%) persons engaged, compared with 14,964 persons or 45.4% of R&D personnel engaged in large enterprises.
Enterprise Ireland (EI) plays a particularly important role in supporting indigenous job creation in Ireland. In 2022, EI created 19,660 new jobs, growing net employment by 5%. Support for innovation and technology through investment in RD&I played a crucial role in delivering this result. To this end, EI’s RD&I programme budget of over €136 million for 2023 is being utilised to fund the full suite of RDI activities which includes: the direct R&D Grants and Equity; and collaborative measures such as Innovation Vouchers, Innovation Partnerships and commercialisation of research.
This year, my Department supported the establishment of four new European Digital Innovation Hubs (EDIHs) with an allocation of €27 million until 2026. The hubs have been designated by the European Commission as part of a European wide network to act as one-stop-shops for SMEs to strengthen their digital capabilities. All four hubs are now operational and are an important initiative in the Government’s objective to drive digitalisation within Irish SMEs and also broader society.
To support my Department’s Smart Specialisation Strategy for Innovation 2022-2027, additional funding of €117m over the period to 2027 has been secured by my Department from the European Regional Development Fund (ERDF) for the delivery of three innovation programmes through Enterprise Ireland:
1 Knowledge Transfer Boost programme – which aims to bridge the knowledge transfer gap between industry and academia by funding Tech Transfer specialists in the university system across Ireland.
2 Technology Gateways programme – which launched earlier this year has funded 17 Tech Gateways in each Technological University (TU)
3 Innovators’ Initiative programme – which aims to build on existing international and national best practice in immersive-based, needs-led innovation training programmes connecting with industry sector clusters in a particular region.
My announcement this month of the 48 successful projects awarded funding of €16.5 million under the EI Capital Equipment Call to our Technology Centres and Technology Gateways also demonstrates this Government’s ongoing commitment to providing the infrastructure needed to drive innovation and collaboration between industry and academia. This new state-of the-art equipment across the network will help companies become more competitive and resilient and will address important needs within all sectors which should have a positive impact on job retention and creation.
Other supports available through my Department and Enterprise Ireland, include the Disruptive Technologies Innovation Fund (DTIF), which is a €500 million challenge-based fund established under Project Ireland 2040 and set up under the National Development Plan (NDP) 2018-2027 for investment in the development and deployment of disruptive technologies and applications on a commercial basis. To date, €306 million has been approved for 91 collaborative projects under the first five Calls of the Fund, and I expect to be able to announce the results of DTIF Call 6 shortly. The projects emerging from Government investment through this Fund align with our Enterprise White Paper objective to step up enterprise innovation and will help to provide valuable high-quality employment opportunities for graduates emerging from our higher education institutions.
