Vol. 919 No. 1
31. Deputy Niall Collins asked the Minister for Jobs, Enterprise and Innovation the actions she will take to increase Irish competitiveness given the increased competition from the United Kingdom as a location to establish a business in compared to Ireland; and if she will make a statement on the matter. [22916/16]
In light of the recent referendum result in the United Kingdom, I have framed this question in the context of Irish competitiveness vis-à-vis the competitiveness of the UK. I ask the Minister to outline our position on that because we are competing on a day-to-day, week-to-week basis in terms of attracting inward foreign direct investment.
Ireland's competitiveness has improved considerably over the past five years. Ireland has moved from 7th in the IMD’s World Competitiveness Yearbook, up from 16th. Our improved competitiveness has been central to recent strong economic growth.
However, as the National Competitiveness Council has warned in recent months, the global outlook is precarious. The recent UK referendum result adds to the uncertainty in the external environment. The key challenge for us now is to remain focused on the addressing the competitiveness policy areas that are within our control domestically. A programme for a partnership Government is committed to sustaining the focus on structural reform across the economy and to attaining a top tier competitiveness position.
As a first step, last week I brought the council's forthcoming Competitiveness Scorecard to Cabinet where it was discussed. It was also considered by Government yesterday. I will be working with Ministers on the key issues identified by the council. The Government is committed to ensuring fiscal sustainability. We will step up investment in infrastructure. We will drive the implementation of our research strategy Innovation 2020. I will be, and I am, working with the enterprise agencies, IDA Ireland and Enterprise Ireland, on consolidating our trading relationship with the UK and on broadening our trade and investment footprint in growth markets.
I thank the Minister. There are two areas I want to focus on in my supplementary question, first, the tax environment for entrepreneurs, that is, Ireland versus the UK. It is widely accepted by investors that the UK is more competitive than Ireland on taxation incentives for entrepreneurs and attracts more businesses. The UK has a more attractive income tax regime, for example, share option treatment, to attract multinationals and entrepreneurs. That is an issue we have to examine. Capital gains tax incentives for entrepreneurs are also much more favourable in the UK, as the Minister will be aware. For example, the Irish capital gains tax, CGT, rate for entrepreneurs who sell their business is 20%, limited to the first €1 million of gains.
Second, in regard to corporation tax, in budget 2015 the UK Government set a policy objective of reducing it to 18% by 2020 and it has since announced a target of less than 15%, which challenges our corporation tax environment. Given the regime for entrepreneurs and the regime for corporations, what does the Minister believe will be the effect of the reduced corporation tax envisaged in the UK on this country when we are competing for foreign direct investment?
I thank the Deputy. There is huge uncertainty around this issue. The Deputy asked me about capital gains tax and corporation tax. I can assure him that I am working with the Minister for Finance and the Department of Finance. We have put in a submission, as have other interested parties, and we will be following up that in the budget.
The Minister mentioned in her initial reply the recent recommendations of the National Competitiveness Council in its report. To rebut some of what the Minister said, in the World Bank rankings for ease of doing business across 189 economies, we dropped four places to 17th in 2016. At our highest point we were ranked 10th out of 189 and we are now behind Estonia and Macedonia in world rankings. The World Bank report states: "Ireland made paying taxes more costly and complicated for companies by increasing landfill levies and by requiring additional financial statements to be submitted with the income tax return." It went on to outline the complexities of red tape and cost of compliance, which ultimately impacts on our competitiveness. We have dropped to 17th in the rankings and we have also slipped six places in a ranking on how easy it is to start a business. What is the Minister, her colleagues beside her and the Department doing to improve Irish competitiveness, which will help our entrepreneurs and job creators and society as a whole to progress and compete better on the international stage?
I thank the Deputy. He quoted some figures which I will take on board. The World Bank's annual Doing Business report measures and tracks changes in regulations affecting business. Ireland has achieved an ease of doing business ranking of 17 out of 189 economies. That is up two places from the previous year.
The Deputy also asked about tax and, obviously, it is hugely important. UK tax issues are a matter for the UK administration and Parliament. However, we are working on it with the Department of Finance. Our competitive 12.5% corporate tax is underpinned by a competitive regime. That 12.5% rate sticks; it is absolutely written in stone. Our world class research and development tax credit and our best in class OECD compliant knowledge development box are there to make sure that we are competitive. Our low rate applied to a broad base ensures sustainable economic growth which will maintain tax revenues. Ireland's foreign direct investment policy, of which tax is but one part, has attracted real and substantive operations to Ireland - the kind that bring real jobs. We have an enviable track record. Ireland's transparent and competitive tax regime and our membership of the EU continue to provide a certainty that is valued by business. Ireland has an English-speaking business environment, ease of doing business and access to talent and consistently performs well on key international indices. Ireland has a certain, stable and competitive offering. Ireland is, and will remain, a member of the EU and the euro zone.
32. Deputy Maurice Quinlivan asked the Minister for Jobs, Enterprise and Innovation if she accepts that the section on page three of the summer economic statement that the Government will support an increase in the minimum wage to €10.50 per hour over the next five years and will put in place mechanisms that mitigate the impact on employers in order to protect lower paid jobs, pre-empts and undermines the work of the Low Pay Commission; the specific mechanisms planned to mitigate the impact on employers; and if she will make a statement on the matter. [22914/16]
In light of yesterday's publication from the Low Pay Commission, will the Minister of State indicate if he will be advising the Government to accept its recommendations and what is his view of the report?
I thank Deputy Quinlivan for raising this question. The Low Pay Commission was established last year through the National Minimum Wage (Low Pay Commission) Act 2015. Its principal function is, once a year, to examine the national minimum hourly rate of pay and to make recommendations to the Minister in respect of the rate, ensuring that all decisions are evidence-based, fair, sustainable and do not create significant adverse consequences for employment or competitiveness.
The commission submitted its first report in July 2015. Its recommendation to increase the minimum wage from €8.65 to €9.15 per hour was accepted by Government and the increase came into effect on 1 January this year.
In its first report, the commission recommended that anomalies in regard to PRSI which could adversely affect employer costs should be addressed. To that end, adjustments were made to PRSI in budget 2016, which have been provided for by my colleague, the Minister for Finance. These changes will assist employers in reducing costs, thus ensuring a continuing positive climate for job creation. Measures were also introduced to ensure that the benefit of the increase was not lost to taxation for the employee.
The Deputy will be aware that the commission’s second report on the national minimum wage was submitted to Government yesterday and the recommendation made by the commission that the national minimum hourly rate be increased by ten cent to €9.25 will be considered by Government in the context of budget 2017.
I reiterate that the independence of the Low Pay Commission is firmly established in the National Minimum Wage (Low Pay Commission) Act 2015. The commission can only operate in accordance with that statutory remit and make recommendations to the Minister in accordance with the criteria that are clearly and explicitly set out in the Act. I want to make it very clear that I cannot speak for the commission and I stress the value of its independence. Clearly, the commission has to look at the matter across all the criteria of the Act. We will look at the report over the next three months and the Minister will make a decision on it in respect of budget 2017.
I thank the Minister of State. In the summer economic statement, the Government has given a commitment to increase the minium wage to €10.50 per hour over a five-year period. How does one get from the current minimum wage rate of €9.15 per hour to €10.50 over five years with a ten cent increase? The answer is that it is impossible to do that. On the other hand, if the Government is making statements about the projected increase in the minimum wage over a five-year period, then what is the function of the Low Pay Commission? If the Government is going to set the rate, there is no need for a commission. Therefore, what is the role of the commission?
Yesterday's recommendation is an insult to workers. It is a disgrace that a commission which costs the taxpayer almost €500,000 would propose a ten cent increase to the minimum wage for low paid workers. More than 70,000 people in the State depend on the minimum wage. The living wage is €11.50 per hour. At this rate, it will take 23 years for a minimum wage worker to achieve a basic living standard. Combined with the Government's deferral of addressing the situation of zero-hour and low-hour contracts this month, this recommendation tells us two things, namely, that the Low Pay Commission is not fit for purpose and that the Government has no interest in tackling low pay, poverty and inequality.
It is clear from the Deputy's question that he does not think it would be appropriate for anyone to undermine or pre-empt the work of the Low Pay Commission. That is exactly what is laid out in the rules in the National Minimum Wage (Low Pay Commission) Act 2015, as passed in the Dáil last year. The independence of the commission must be respected and observed by all, including the Government. Obviously, all the criteria must be taken into account in the legislation but the commission is independent. It has met on 18 occasions since February 2015. It has examined the available data and the 33 responses it received. There was public consultation and it held meetings in Monaghan, Galway and Dublin and it met with a wide range of groups.
Under the Act, the Minister must, within three months of receiving the recommendation in the report, make a decision and make the necessary order. If the Minister departs from the recommendation or declines to make an order, the Minister must prepare to lay this before both Houses of the Oireachtas and state the reasons for his or her doing so. I stress once again that the commission is independent. I cannot speak for the commission nor can the Minister, Deputy Mitchell O'Connor, and that is extremely important.
The Deputy asked what considerations the commission takes on board. It takes on board a wide range of considerations when it makes decisions, which are not made lightly. The commission has looked at all the areas of concern for the employers and employees. The commission's role is to ensure the wage is appropriate and is one employers and employees can sustain, which is extremely important.
I must inform Deputies that I will start to apply the clock because we are running well over time.
The Minister of State said the Low Pay Commission met on 18 occasions. However, I received a reply to a parliamentary question yesterday which stated that there were 22 meetings, so there is a slight difference there. Is the Minister of State aware that the chairman of the commission earned €22,493 from 2015 to the first quarter of this year? In that period, according to the response we received, the chairman attended 22 meetings, which works out at approximately €1,000 per meeting. This is the person who is chairing the Low Pay Commission which yesterday recommended a ten cent increase for workers on the minimum wage. Surely to God, if there was ever an example of gross hypocrisy, this is it.
The commission is made up of nine members and the chairman is just one person of that group making that decision-----
Three of them did not agree with him.
-----and I have to respect Dr. Donal de Buitléir, an eminent academic, who has done great work down through the years. The aim of the minimum wage is to have an incentive to work, which is extremely important. A rate has to be set that is fair and sustainable to help as many people as possible without having a significant effect on the economy or a negative effect on employment. That is where the commission is coming from. It is made up of nine people, three representing the unions, three from the employers sector and three academics with expertise in the area. We must support their independence. They have made this decision based on what is fair and sustainable. It is now up to the Government.
I am sure the Deputy has seen the report. They have three months to read it and decide one way or another. It is not up to me or anyone in the Department to make a decision on that at this stage.
33. Deputy Niall Collins asked the Minister for Jobs, Enterprise and Innovation the timetable for the review of the book of quantum by injuriesboard.ie; and if she will make a statement on the matter. [22917/16]
Everybody inside and outside the House would agree that the scandal of motor insurance premiums in this country has to be addressed. The Minister will be aware that my party tabled a Private Members' motion on this some weeks ago. I have tabled this question in the context of the motion to keep the focus on the issue, to ensure there is meaningful action and progress towards achieving fair and reasonable motor insurance premiums for the public.
The Deputy tabled a question that is totally different from the one he has just asked. I will answer that in the supplementary reply. He asked for the timetable for the review of the book of quantum and that is the question I will answer now. The Personal Injuries Assessment Board, PIAB, is an independent statutory agency and, as Minister, I am not permitted in my executive function to interfere in any way with the day-to-day operations and functions of PIAB. Section 54(1)(b) of the Personal Injuries Assessment Board Act 2003 sets out the principal functions of the board: "to prepare and publish a document (which shall be known as the 'Book of Quantum') containing general guidelines as to the amounts that may be awarded or assessed in respect of specified types of injury".
The book of quantum was last produced in June 2004 and data was sourced by independent consultants on behalf of PIAB from a number of sources including the Courts Service, the insurance industry and the State Claims Agency. PIAB is reviewing the book of quantum and has engaged outside consultants to assist in this work and it is due to be published in the second half of 2016.
The book is not a recommendation for compensation levels but rather a reflection of the prevailing level of awards, compensation values awarded by the courts, settlements agreed by the insurance industry, settlements agreed by the State Claims Agency, and settlements agreed through the PIAB process.
I thank the Minister. I would have thought it was fairly obvious from my question on the book of quantum that it was linked to the very obvious issue of motor insurance premiums and the scandal of the rip off at the moment. I appreciate that PIAB is independent and I have met with it but as the Minister pointed out it has not updated the book since 2004. There are several problems with car insurance. Many claims are settled outside PIAB and the courts and the insurance company pay-outs are invisible. Implicit in the information we do have on the claims pay-outs are the injuries and the levels of awards that are visible. Unfortunately, the book of quantum seems to be very out of date.
What will the Minister do to address the spiralling insurance costs? Has she considered the model operating in the United Kingdom, care and not cash? This applies to minor injuries. The book of quantum will come up with a guide. It will not be definitive or be a blueprint but it will help I hope to force down premiums. Under the care not cash model, care such as rehabilitation and physiotherapy are awarded rather than a cash payment. Has the Minister, the Department or the Government considered that in reviewing the book of quantum and the spiralling costs?
In addressing the spiralling costs of motor insurance, the Department of Finance is undertaking a review of the policy in the insurance sector in consultation with the Central Bank and other Departments and agencies. The objective of the review is to recommend measures to improve the functioning and regulation of the insurance sector. The review will include an examination of the factors contributing to the cost of insurance. The Minister for Finance, Deputy Noonan, has established a task force in the Department to undertake the review. The first phase of that review, dealing with the framework for motor insurance compensation, has now been completed and I understand the Minister for Finance expects to publish the report in the coming weeks. The next phase of the review will focus on the factors contributing to the increasing cost of insurance. This phase of the review will be overseen by a working group chaired by Minister of State, Deputy Eoghan Murphy. The group holds its first meeting today and has scheduled further meetings for early September and the coming months. It is proposed that an interim report will be provided to the Minister for Finance by the end of 2016.
34. Deputy Bríd Smith asked the Minister for Jobs, Enterprise and Innovation if she will take action to stop companies (details supplied) which are trying to usurp the countries labour machinery and laws that give basic protections to workers such as the Minimum Wage Act and so on. [22915/16]
Given all the talk this afternoon about the Low Pay Commission and the minimum wage and the obvious argument that this is a very low wage economy, we have to legislate carefully to make sure people do not fall too far below the poverty line, but workers already do. There was an attempt last week to introduce an au pair Bill that would prevent those workers having access to the industrial relations machinery of the State. I am very concerned about certain companies establishing here and practising which are paying workers well below the minimum wage and refusing them access to the Workplace Relations Commission. I am talking in particular about Deliveroo. How can the Minister regulate that and stop these things happening?
I have forwarded the details supplied by the Deputy to the Workplace Relations Commission for examination and action if appropriate. Irish employment rights law makes a distinction between a contract of service, which applies to an employer-employee relationship, and a contract for services, which applies in the case of a self-employed person. Most employment rights legislation does not apply to independent sub-contractors with the exception of health and safety and equality.
Ireland has a well-resourced and proactive labour inspectorate, which now forms part of the Workplace Relations Commission, WRC. There are already existing mechanisms in place to tackle this issue. Inspections are undertaken on the basis of risk analysis which identifies certain areas of focus. Where the WRC inspection service receives complaints in relation to bogus self-employment or bogus sub-contracting, they are forwarded to the Revenue Commissioners and-or the scope section of the Department of Social Protection for investigation either solely by the recipient or jointly with the WRC.
In most cases, it will be clear whether an individual is employed or self-employed. Where there is doubt in relation to the employment status of an individual, the relevant Departments and agencies will have regard to the code of practice for determining employment or self-employment status of individuals. This code was drawn up and agreed in 2007 by the relevant Departments with the Irish Congress of Trade Unions, ICTU, and the Irish Business Employers Confederation, IBEC.
The Deputy will be aware that the Department of Finance and Department of Social Protection have recently conducted a joint public consultation on the use of intermediary-type structures and self-employment arrangements.
There is a convergence of interests with my Department. Apart from the significant losses to the Exchequer, the practice has serious implications from an employment rights perspective. In this respect, it is important that individuals are correctly designated so that employees are not deprived of employment rights. This is particularly the case for vulnerable workers.
The case highlighted by the Deputy is one example of the changes that are emerging in the world of work. The European Foundation for Working and Living Conditions, Eurofound, has identified nine distinct new forms of employment. The work of Eurofound reflects a common problem at EU and international level, and not just in Ireland.
This is a very old form of exploitation except that it is hyper-exploitation couched in modern facilities such as Facebook and social media to gain employment.
In fact, the contract from Deliveroo is quite similar to one I saw from a building company, Rhatigan. According to the contract, the people who work for it are self-employed, so they do not deserve the minimum wage but are on €4.25 or €4.50 an hour. They have no recourse or access to the WRC, and if any person attempts to go to the WRC or any other State machinery such as the Employment Appeals Tribunal, Deliveroo is indemnified against any costs or claims the person may make. Deliveroo is a growing company. I have a leaflet that was distributed to every home in Dún Laoghaire, not just restaurants. It exploits, in a hyper way, young people, foreign students and very young students in this country. A wage of €4.25 an hour is unacceptable, as is not having recourse to State legislation. Are we back to 1913? Can the Minister of State give us some guarantees that this will stop?
I need to remind Deputies that it is inappropriate to name organisations or individuals from outside the House.
I did not name any company but, as I said, I have referred the company to the WRC, as I explained to the Deputy. There are new forms of employment all over Europe. It is a problem for Europe, one with which Eurofound is dealing.
The Revenue Commissioners examine the taxation problems for such workers and the scope section of the Department of Social Protection has the function of deciding whether a person is an employer or an employee. It is important to point that out. In the code of practice we discussed, there are criteria in place to determine whether a person is an employer or an employee. I can send the information on to the Deputy.
The WRC has a statutory authority to share information with Revenue and the Department of Social Protection. A total of 575 joint operations took place between the two bodies in 2015 and 353 took place in 2014. Many more inspections have taken place. As the Deputy rightly pointed out, many problems arise in the food and hospitality sector. The WRC has 56 inspectors to carry out this work. I am satisfied that it has the necessary resources.
I am glad there are 56 inspectors. It is not that long ago that there were more dog wardens in the country than labour inspectors. I worked for a union, tutoring in labour law. We were acutely aware of the lack of resources for inspections.
I do not want to take up too much of the Minister of State's time, but we have to go a bit further with this. We need a mechanism in labour law which will insist that if a watchdog such as the WRC receives enough complaints from the public it can carry out a thorough investigation into the activities of any company, such as those I have mentioned, and the hyper-exploitation of young people. If we let this happen, why would all bus drivers, teachers and nurses not be on self-employed contracts? We are hurtling in that direction if we do not stop this.
This is a problem not just in Ireland but all over Europe, and that is why Eurofound is examining the issue. There is employee sharing, job sharing, interim management, casual work, ICT-based mobile work, voucher-based work, portfolio work, crowd employment and collective employment. I am satisfied that the WRC is doing its job. Problems that previously took two years to solve now being dealt with in three weeks. The WRC has the necessary resources and manpower, and we should let it do its job with the assistance of the Department of Social Protection and the Revenue Commissioners. They share information and carry out joint operations and inspections. That exercise is extremely important and uncovers a lot of non-compliance in the areas we have mentioned.
35. Deputy Catherine Connolly asked the Minister for Jobs, Enterprise and Innovation if she is aware that IDA Ireland incurred expenditure totalling €10.4 million on a lease, comprising €1 million for rent and associated costs for office space, for a property that was not occupied during 2015, and that €9.4 million was paid in 2015 to exit the lease; and if she will make a statement on the matter. [23054/16]
What awareness did the Minister, Deputy Mitchell O'Connor, have of the expenditure by IDA Ireland of €10.4 million, €1 million of which was spent on rent for a property that was unoccupied and €9 million of which was spent on breaking the lease?
I understand the Deputy is referring to Carrisbrook House, the lease on which was taken over by IDA Ireland from September 2013 on the assignment of properties from Forfás to the IDA. Prior to this, the lease had passed through number of State agencies since a 65-year lease was first taken out in 1969. Carrisbrook House was 85% vacant for a number of years, despite having been actively marketed by Forfás and the IDA. The building was difficult to sublet, partly on account of the high cost of refurbishment. The IDA also did not have vacant possession of the entire property due to an existing lease with a tenant which runs until 2025, thereby limiting its marketability further.
After carefully considering the best course forward, the IDA decided to exit the lease with effect from December 2015 as it was the least costly option for the State. The alternative was continuing to meet contractual obligations to pay rent over the remaining lifetime of the lease until 2034, together with meeting additional liabilities that arise in the context of the full repairing and insuring lease. While the payment of €9.4 million to exit the lease was a significant amount, it represents a saving to the State of an estimated €13.65 million in comparison to maintaining the lease until completion.
I thank the Minister. It would represent a saving, but how was this allowed to happen? What was the Minister's knowledge of it? When did it come to her attention or that of the previous Minister? How could something like this be allowed to happen, where €10.4 million of taxpayers' money was spent on a property that is empty?
The Minister has given me the background to the case, which I appreciate. I appreciate that she is trying to do her best, but is she standing over this waste of taxpayers' money? When did the Department become aware of it? What have we learned from it? Is this being repeated in other buildings? We had this experience with the HSE in Galway, where it had to break a lease and pay almost €1 million. There is something seriously wrong with Government Departments that tolerate this type of policy.
The decision to exit the lease was not made lightly. The IDA commissioned the services of a professional property company to review a number of options, including the early surrender of the lease. The agency carefully considered this advice, along with that of a real estate company and a financial services consultancy which also provided professional options. After almost two years of discussions, and following intensive negotiations, the agency and landlord came to an agreement in late 2015. Had the IDA decided to remain in the lease, it would have continued for an additional 19 years. A tenant was in place that could not be moved. The IDA tried to lease the building but failed to do so. The building was vacant.
At this point, words fail me. In addition to this waste of money, consultants were paid more taxpayers' money. When did the Minister become aware of the situation? What did she learn and how will this situation be avoided in the future?
This happened in September 2013 when the IDA acquired the building on the assignment of properties from Forfás. I became aware of the situation in the past number of weeks. The decision to enter into this lease was taken a very long time ago, in 1969. Given the nature of the lease and its terms, the State's hands were very much tied in terms of options to exit its contractual obligations.
Clearly, there is a need to prevent such a scenario from happening again. I am confident that through the lessons learned we will make sure that this does not happen in the future.
