Vol. 503 No. 3
1 Mr. J. Bruton asked the Taoiseach if he will make a statement on the strategy document recently launched by him on the International Financial Services Centre and the role his Department will play in implementing and monitoring the strategy. [6598/99]
I launched the Government's strategy for the development of the international financial services industry in Ireland on Monday, 1 March. Copies of the strategy have been laid before the Dáil.
The IFSC is now established as a successful and reputable financial centre. More than 6,500 people are employed directly in the centre and in associated back office projects. The creation of a vibrant financial services industry has also helped to reposition Ireland as a centre for knowledge-based industries.
The IFSC is now facing into a period of change. In particular, the corporation tax agreement with the European Commission will fundamentally change the nature of the IFSC as the preferential tax regime will no longer apply with the introduction of an across the board 12.5 per cent rate of corporation tax. The introduction of the euro and advances in technology will also impact on the centre.
In the light of these factors, it is necessary for the Government to articulate and implement a new vision for the development of the international financial services industry in Ireland, building on the success of the IFSC.
The strategy sets out this vision and an implementation plan based on 19 priorities which include holding a seminar in June to launch the new vision and promoting the docklands as the hub for the longer-term development of the industry in Ireland. The location of back office activity elsewhere will also be facilitated where necessary to maintain competitiveness; the docklands authority will implement a development strategy for accommodation and infrastructure for international financial services in the docklands area; IDA Ireland will implement a revised marketing plan for the promotion of the industry; measures will be taken in response to the education and training needs of IFSC companies; taxation issues affecting the industry will be addressed having regard to EU and domestic constraints; company law will be amended to improve the competitive position of the industry; measures are being introduced to eliminate the inappropriate use of IRNR companies; a proactive approach to ensure Ireland is well placed to capitalise on opportunities for electronic commerce in financial services; and new development opportunities will be pursued.
The strategy was prepared through the IFSC clearing house group and working groups in my Department. These groups bring together industry representatives with the different Departments and agencies involved. While implementation of individual commitments remains a matter for each responsible Department or agency, a public sector group chaired by my Department has been convened to co-ordinate and monitor progress. The IFSC clearing house group will submit a progress report on implementation of the strategy to the Government at the end of the year.
Are firms in the IFSC experiencing difficulties in recruiting Irish personnel?
They have certainly not highlighted that issue to me. In some areas of the economy there are skills shortages. For some years IFSC companies have targeted senior people abroad who are mainly – though not always – Irish. Recently when I was in California I saw advertisements from IFSC companies seeking Irish people who live there. I have been in the IFSC at least ten times this year and the companies there have not highlighted any critical position.
Can the Taoiseach assure me that firms located in the IFSC have not been advised informally by the Irish authorities that they should not seek to recruit in Ireland in particular skills categories as this might drive up the salary levels in those specialities to the disadvantage of existing Irish financial institutions?
I have no knowledge of that. Private sector companies, particularly in the financial sector, are known to use fairly aggressive marketing tactics, even in bad times, to source employees from competitors. This is not new and is certainly not bad – it gives people opportunities to advance their careers. Clearly, there are skills shortages in the economy, including in some senior areas, but I do not think the IFSC is having anything other than the normal problems.
Does the Taoiseach agree it would be wrong for statutory authorities to advise companies coming to the IFSC that they should recruit in areas other than Ireland, for fear recruiting in Ireland might cause difficulties for existing operators in terms of driving up salary levels?
It would be wrong as we have a great number of young people who are still not paid enormous salaries in the financial services sector. We tend to hear about the most senior positions which are highly paid. However, while people are well paid in the financial services sector, in general I do not believe the pay rates are exorbitant and people are always trying to improve themselves. This is the way it should be in a good economy. It would be wrong to tell companies they should not employ Irish people.
Will the Taoiseach make inquiries to ensure the scenario I described does not happen, as I have received information to the effect that it has occurred?
I certainly will. I glean from what Deputy Bruton has said that he has some information. I would find it extraordinary and unnecessary if Irish agencies were saying what he has suggested.
Why is the IFSC requiring that only front office facilities be located in Dublin and that back offices can be located anywhere? What is the basis for the distinction between front and back office employment?
The current position is that the compulsion which previously existed will no longer apply, and certainly will not apply when the various arrangements concerning tax rates pertaining to location of services in the docklands are introduced. The strategy report tries to ensure the hub of activity for financial services will be located there.
There are opportunities for many back office industries to locate elsewhere. The Government, the centre and the agencies are anxious that these should be located anywhere around the country and not in expensive offices. Both I and my Government colleagues, and I am sure everyone in the House agrees that we should, where possible, locate these around the country given the development of technology. That is the thinking.
The Taoiseach in his initial reply referred to the docklands becoming a hub for the financial services industry and further referred to the Docklands Development Authority, which is the landlord for the IFSC. Is the Taoiseach satisfied the authority is receiving the support it requires from Government Departments and agencies? Is he satisfied with the progress of the authority since it was incorporated?
I am satisfied with the work of the authority which has excellent expansion plans and which the Minister for the Environment and Local Government supports. I attended a number of meetings with the authority in recent months. It is trying to progress developments as much as possible. It wants to see action, especially for its social housing proposals, and has pressed some agencies to achieve that. The Minister for the Environment and Local Government has been more involved than have I and has supported the authority's efforts to assist it in achieving its ambitious plans.
