Knowledge Development Box (Certification of Inventions) Bill 2016 [Seanad]: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

It is hard to move from the previous debate to this one. A colleague spoke today about moving from the sublime to the ridiculous, which is not quite fair because the Bill being discussed is important. However, the Minister will understand we need a minute or two to collect our thoughts in order that we can consider this legislation and get back to our day-to-day work.

With every fibre of my body, I support this legislation because its aim and the excellent intention behind it are very much akin to my own - that we start to develop our own indigenous industry and support, in particular, smaller innovative technology-based industries throughout the country and research and development that will help these companies and the economy to grow. The Minister's intention is absolutely right in that regard. However, the mechanism used in the legislation to achieve this is the wrong one. It is not making the optimal use of our resources and not in tune with what we need to be doing to really stimulate innovation, research and development and the development of patents, copyright and inventions. I will use this chance on Second Stage to outline some of that thinking.

People have a keen interest in developing appropriate tax policies and innovation in Europe, but, from what I have read, it seems that the OECD and the European Commission have come out against the approach adopted in this legislation. They do not believe it to be targeted and I imagine they are concerned that it may be seen as a continuation of mechanisms such as the double Irish tax mechanism whereby intellectual property rights were often traded between Ireland, Holland and the Bahamas. I imagine it is feared that these mechanisms may, in a sense, be a variation of the loopholes that have been closed in trying to gain a competitive advantage over other countries in the application of tax law. I also think there is, rightly and validly, a real lack of evidence that they will have the desired effect of radically improving levels of research and development and innovation and that there are other mechanisms that could achieve that objective far more successfully.

As I understand it, the original application of a knowledge box mechanism for larger companies in the 2015 Finance Bill is already costing us some €50 million a year in tax forgone. Yesterday I was in my alma mater, UCD, where I once worked in the innovation space in the business faculty. I was there for a debate on the national planning framework. As the president of the college had a Minister in front of him, he availed of the occasion, even though it had nothing to do with what was being debated, to point out that in 2008 UCD had a staff-to-student ratio that placed it 80th in the world. It was based solely on the staff-to-student ratio, which is fairly easy to measure as it is not one that is subject to distortions that sometimes are controversial. As I understand it, in 2016 UCD's placing was 501 in the world. If we have €50 million that we are willing to forgo because we want to invest it in research and development and innovation, I would prefer if the money was allocated to universities and for the provision of support for research and development at third level in order to improve the staff ratio and quality and standing of higher education.

I say this as a former Minister in a Department that was connected to innovation and the commercial sector. I was in office before many of the recent cutbacks were imposed. The most common complaint I used to hear from large multinational companies seeking to develop extensive research and development and indigenous companies was that investment in universities needed to increase and the quality of their output needed to improve. A broad question arises as to what we should do in that regard and I would ask it of the companies concerned, both large and small. Any company that meets the criteria to apply for the knowledge development box is successful because it has got out of the valley of death of development and innovation. As anyone who has established a company knows, once a company makes a profit, it has made it and will survive unless a strategic mistake is made.

The companies which meet the criteria should invest in third level education. Rather than introducing tax cuts, we should seek to generate additional revenue and hypothecate this income for the third level sector, even if the Department of Finance hates hypothecation. Many of the companies in question are making profits from patents and intellectual property. It is inappropriate that, according to figures provided by Professor Jim Stewart in Trinity College Dublin, American companies located here are paying effective tax rates of as little as 2%. It is wrong that the State does not achieve a return from companies that make money from intellectual property, especially as it is third level education, a public good, which creates intellectual property. Rather than giving tax breaks, we should invest in research and development.

Recently, the chief executive of Science Foundation Ireland, whom I strongly support, briefed Members of the Oireachtas in Buswells Hotel on SFI's activities. Not all of our past decisions were bad mistakes. In 2004 or 2005, the then Minister for Enterprise, Trade and Employment, Mary Harney, made the strategic decision to refocus industrial strategy on investment in science research, specifically the biomedical-biopharma and digital sectors. The Green Party in government provided the third leg of this stool when we added clean energy, although this is still the weakest of the three legs. This strategy worked and was the right approach. Rather than introducing tax breaks, we should pursue this strategy further and use the revenue we would forgo as a result of the tax break to invest in Science Foundation Ireland and the range of other infrastructure required to support innovation. This does not always mean significant financial investment. It may be providing access to data and managing our resources to create innovation communities, cultures and connections. This is where innovation is taking place. The reason the silicon docks area of Dublin is working is not that certain companies have located there as a result of tax breaks, although that should also be acknowledged, but that a community of smaller companies is being supported by a network of angel investors and other non-formal investment mechanisms. It is this that creates innovation. Tax breaks will not do it, especially for the types of small companies the Bill seeks to benefit.

As I stated, we are already backing winners. If we want to support research and development, we must back losers. Most research and development does not reach the commercialisation stage. We are targeting the lucky few projects that have proved commercially viable and successful and will create a profit. We are handing a direct capital gain to companies that have already made it and ignoring the vast majority of small Irish companies whose profits are below the thresholds provided for in the Bill and which need investment in research and development if they are to emerge from their current unprofitability. The mechanism in the Bill, by its very nature, is not targeting in the right way.

It was interesting to listen to Deputy Richard Boyd Barrett speak about copyright yesterday. I pointed out to him that the original copyright law came from St. Columba when he said, "To every cow belongs its calf; to every book, its copy." I presume this statement, which is often cited as the first copyright decision, dates back to the seventh century. We need to start reconsidering copyright and many of the principles around the new and evolving Internet digital economy.

The State needs to invest in getting the principles right, not only on copyright but also on rules of privacy, open access to data and data sharing. Rather than providing €50 million for the tax break proposed in this Bill, we should invest a similar amount in attracting the best digital and legal thinkers to advise the State on digital principles and how to make this country a safe and secure location to store digital information. This would set alight industries across different areas which are seeking such a location, particularly in a world of fake news where there is uncertainty about the protection of privacy and copyright. These are the issues in which we should invest to create the environmental culture in which the economy will flourish, rather than sticking with the old ways of providing tax breaks, which may have worked when the Shannon industrial development zone was established 50 years ago. We must be more sophisticated and thoughtful in terms of how we seek to develop an innovative environment.

I recently attended a conference organised by the Goethe Institute on surveillance, which is a major issue in terms of privacy and data protection. As an English speaking nation and a common law country that is subject to European regulation and has a strong, stable and democratic political system, an independent Judiciary and connections to American technology companies, Ireland is primed to become a safe haven for ethical, trusted digital industries. Denis Jennings, the former head of the computer science centre in University College Dublin, addressed the conference and made the case for what could be described as a digital Bill of Rights. He set out ten principles, proposing, for example, that citizens should have an ability to opt in to a State digital identity where their information would be stored or managed in a way they could trust. If anyone were to seek to use or interact with these data, this activity would be logged and audited and the process would provide the security that is currently absent on the social platform networks on which we all engage. People want a digital platform that guarantees security. The State should invest in this system rather than giving tax breaks in the belief that it is the clever approach.

Patent law tax breaks have been introduced in 12 other countries and London is probably ahead of the game by a couple of years. The tax break option is not enough, nor is it the best or wisest use of resources. It is not even in tune with the culture we need to adopt. We must invest in innovation and become one of the best places to locate on the basis of our judicial rules and support for education, culture and community, rather than tax breaks.

If the Bill is passed, as I presume it will be, we must try to achieve some of the cultural change that will be important in the way we implement the legislation. It will be interesting to have an opportunity to make inputs on Committee and Report Stages on how we operate. As I stated, we must create a safe, secure, open, transparent and well-regulated environment for enterprise and innovation.

Everything we do in regard to this particular tax break and the application of the knowledge box for the large multinationals should be done in as transparent a manner as possible. There should be an obligation for reporting on an annual basis stitched into the budget cycle in terms of the number of jobs created, the inventions, patents and copyright mechanisms that have been supported in the different sectors, the timelines, and the connections to other grants or supports we provide to ensure that we are not giving double tax advantages and grants via a whole range of different measures such that certain countries are accruing them. We also need to know who are the real beneficiaries and how this fits into the new European Commission and OECD rules around measuring tax where business activity takes place. Whatever one's views of the Apple tax judgment and whatever one thinks about the ethics or efficiency of our system or the appropriateness of it, in a vast majority of key places such as Brussels, London, the United States and elsewhere we are not seen in a favourable light in terms of how we have applied corporate tax breaks in recent years. We are seen as a tax haven.

If the world needs to move - I have a strong sense that it does - towards a more ethical version of capitalism, one not based on bending the rules and having favourable connections which allow companies effectively to get away without making any contribution to society, which I think it will do despite what is happening in Britain and America, then we need to be cleaner, more transparent and more ethical in everything we do. We should do that in the application of this particular tax break so that we work out what exactly we are gaining, where that gain is going and what we are losing in terms of what we could be investing in those other arms of innovation development that we badly need to address.

I studied business in UCD in the 1980s. I also worked in UCD in the same decade and I have had a consistent interest in the college and in the development of business innovation here. I am old enough to remember the Telesis report, the Culliton report and the Enterprise Statutory Group report. There are many reports which point to the need to develop Irish indigenous industry to ensure we are not over-reliant on foreign direct investment. We are still over-reliant on foreign direct investment. We need to change. We need a new innovative enterprise strategy that is based on confidence in our commercial companies and their ability to grow, prosper and develop. They are as important a part of this country as are other communities, including the communities we saw here tonight. We need to support that community. The Green Party believes that this community will flourish in a green Ireland. We should do this by supporting our education system, creating cultural community supports around innovation and development, by investing in Science Foundation Ireland, by putting in place a set of digital rules in this country that are best practice in the world that are neither corporate nor State controlled and by providing an alternative to the excessive power and hegemony of some of the international social media companies which, I think, will lose the trust of the people because of the inappropriate controls and level of surveillance in which they are engaged. If we do that at the same time as we are doing this, our economy will fly.

I understand Deputy Fiona O'Loughlin is sharing time with Deputy Eugene Murphy.

I welcome the Bill which I believe is very important. There is no doubt that our small and medium business enterprises are the backbone of the country. They are the backbone of the economy and they are of key importance to the development of towns, cities and regions. There is no doubt that entrepreneurs play a vital role in our society. It must be acknowledged that they kept the country going throughout the recession. They were the ones who worked hard, provided employment, took the risks and were able to pay their bills so that the State in turn could pay our gardaí, teachers, nurses and so on.

We need to develop a full set of policies that are strongly supportive of our SME structure. We need fully functioning support mechanisms for them. It is good to see that the economy is evolving. The business assets produced by investment in knowledge based capital such as intellectual property are becoming a significant driver of economic growth not only in Ireland but in all of the OECD countries. The overall aim of this legislation is to encourage Irish SMEs to invest in research and development activities by providing for a reduction in the tax they pay on earnings for the intellectual properties they create. There is a significant amount of research funding available for this measure. We need to encourage our businesses to avail of it, where possible. Currently SMEs in this country employ over 900,000 people, which is a decrease of 16% on the number of people employed in this sector ten years ago. Ten years ago, in 2007, there were 1.09 million people employed in this sector. The population is growing and developing yet our SME sector is down 16%. That is something for us to reflect on in terms of all the different areas in which we can develop supports for SMEs.

This Bill will help SMEs to avail of the knowledge development box taxation scheme on profits relating to research and development activity. It is worth reiterating that the reduced corporation tax rate will be 6.25%, which is half the current 12.5% rate. That is to be welcomed. When this scheme was announced in October 2014 the main target was multinationals. It is a shame that we have had to wait until now for the Government to come forward with primary legislation to enable SMEs to access that tax scheme. Fianna Fáil believes that we should not be focused only on the multinationals and that we need to have a balanced and equal approach to incentivising job creation in all sectors. This includes the indigenous sector as well as foreign direct investment. Given how exposed Irish exporters are to a hard Brexit this is yet another example of a slow response on the part of the Government before and after the UK referendum in taking every measure at its disposal to safeguard Irish SME business and employment, which is very dependent on the United Kingdom.

This Bill amends the Irish Patents Act 1992. From 1 January, patent applications must be accompanied by a report incorporating a written opinion as to the patentability of an invention. It is noteworthy that this extends the knowledge box definition of intellectual property beyond patents and copyrighted software to what is known as the intellectual property equivalent of a patentable invention. It is good that this will permit Irish SMEs to include inventions that are certified as novel, non-obvious and useful.

With the United Kingdom planning to reduce its corporation tax to 17% by 2020, there is no doubt that the Irish Government needs to use every available tool to make the current regulatory landscape here more attractive to new businesses and entrepreneurs. Regrettably, budget 2017 failed this test. Fianna Fáil is disappointed that the United Kingdom will still have a more attractive CGT relief which applies 10% to entrepreneurial gains of up to £10 million sterling or €10.9 million, which is far in excess of our €1 million limit. In the meantime, Ireland has continued to plunge in the World Bank's rankings in terms of ease of doing business, having dropped to 18th place across 190 economies in the World Bank's 2017 report. The Taoiseach's target for 2016 was to make Ireland the best small country in the world in which to do business. Sadly, he has failed to achieve that. That said, Fianna Fáil welcomes this Bill and will support it. We look forward to making amendments to the Bill on Committee Stage to ensure what is provided for in it becomes a reality.

I welcome the opportunity to contribute to the important debate on this long overdue Bill. It is helpful to discuss these issues with the Minister and share our ideas. The proposed taxation scheme for small and medium enterprise owners is a positive development, particularly given the challenges we are facing as a consequence of Brexit. For the past six to eight months, I have repeatedly highlighted these challenges which will have to be met by the Minister, the Government, every Member of this House and, above all, by small business owners throughout the State. Schemes like these, which offer small and medium enterprises a tax incentive, are excellent. The new measure offers a means of protecting jobs and potentially adding to overall employment levels, which is badly needed throughout the country.

Irish exports are under serious threat at this time. The Central Statistics Office figures for 2016, which were published last week, show that exports to Britain were down by almost €500 million. That has a lot to do with the fluctuations in sterling and, as a result, there are many small food businesses, in particular, whose owners have found recent months extremely difficult. The Government must come on board as quickly as possible with schemes and strategies to save them. In the coming months, unfortunately, we will see many of those businesses struggling greatly to survive. The fall in exports of €500 million is all coming from the food and drink sector. What is happening in this country as a result of Brexit is akin to a green light and red light situation. There is no doubt that some banks and insurance companies may decide to relocate to Dublin, Cork, Limerick or Galway. That is the green light aspect. The red light situation is the losses business owners in the west, midlands and Border counties will suffer because of all the difficulties created by Brexit.

It is important to acknowledge in this House, as I am sure the Minister and my party colleagues will agree, the contribution made by the SME sector to employment in this country, which amounts to in excess of 900,000 jobs. In this Chamber yesterday evening, however, we had an appalling attack on small business owners by Deputy Richard Boyd Barrett. Many of those business owners employ ten people or fewer. Right through the crash and the several crashes that came before it in this country, those people had to come up with a wage packet for their employees every week and had to pay their rates, VAT and tax every year. Does Deputy Richard Boyd Barrett have any idea of the challenge small and medium-sized enterprises have faced over many years? I applaud SME owners, who have faced extremely difficult challenges at times, especially in the past six to eight years. Moreover, just as the tide seemed to be turning, we have ended up in the unfortunate situation where the United Kingdom is preparing to exit the European Union, with huge consequences for hundreds of thousands of small businesses in Ireland.

Deputy Richard Boyd Barrett seemed to argue in his contribution last night that many small entrepreneurs have co-opted ideas from universities. That is simply daft. Anybody has a right to patent an idea he or she has come up with, and nobody can subsequently lay claim to it. We must be very careful in what we say about people, whether we are on the right, left or centre politically. Deputy Richard Boyd Barrett, as we all know, is on the left. Most of us are personally acquainted with a small business owner and are aware that he or she has most likely struggled week after week, month after month, year after year, to survive the great challenge of recent years. It is unacceptable that those people should hear what was said about them last evening from any Dáil Member, irrespective of his or her political position. I am sure there are many small businesses in Deputy Richard Boyd Barrett's constituency, which is also the Minister's constituency. I have had people coming to my clinics in Roscommon-Galway whose food sector businesses are selling entirely into Northern Ireland, Wales, Scotland and England. These are not big players like Glanbia or the Kerry Group and their market is confined to the British Isles.

As Deputy Richard Boyd Barrett was making his attack, I felt how wrong it was to be saying things like that in our Parliament about people who have served our country well and made huge sacrifices in their own lives. Many small business owners will talk of how they worried during the recession about how they would find wage packets for their eight, ten or 11 staff and also pay their bills to the Revenue Commissioners. Many of them ended up with very little money for themselves. In many respects, they are true heroes. As my colleague, Deputy Fiona O'Loughlin, noted, if not for them, the recession would have had a more negative effect on the country. Perhaps Deputy Richard Boyd Barrett needs to be reminded that, as I said, more than 900,000 people are employed in the small and medium enterprise sector in this country. I am a great believer in fairness for everybody. I support fair treatment of workers and everybody else in society. Deputy Richard Boyd Barrett, however, seems to have a difficulty with anybody who tries to make a few bob. That is not how the system works in any country. I support all the small business owners who faced so many difficulties in recent years but always persisted. During the recession, when they could have let three or four workers go, they chose instead to keep them on because they were loyal workers who had been in their employment a long time. In many cases, they made personal sacrifices to avoid letting any of their workers go.

I understand there are 170 different supports for the SME sector. Some of them are very useful while others are less effective. Support for research and development is crucial because the world moves very quickly and products evolve all the time. If business owners cannot finance research, they will end up falling behind their competitors and may eventually go out of business. The amendment to the Patents Act 1992 is very important and offers a broadening of what may be patented. Meaningful supports for small business owners are very much welcomed on this side of the House.

We must give every support possible to that sector.

I will give an example of the enterprise boards, which were replaced by the LEOs, from the small county of Roscommon. While I acknowledge the multinationals and large firms in Ireland, the backbone of our industry is the SME sector. The enterprise board in County Roscommon existed for approximately 17 years. In that time, it created 1,700 part-time and full-time jobs. Were an employer to come to Roscommon, Galway, Longford or Westmeath and announce 1,700 full-time and part-time jobs, we would think that all of our Christmases had arrived together. It would be a fantastic announcement. I am making this point to prove how important small business has been for years. That is why I want to champion its cause. Many people employed in the sector would be supportive of what I am saying. The business is local, people do not need to travel a long way to get to work and it gives them an opportunity to work in their localities. In many respects, such workers take a greater role in the running of SMEs. Yesterday, Deputy Richard Boyd Barrett made a criticism of the SME sector, but it is crucial that Members stand up, call a spade a spade and say that his contribution was nonsense, given how many people are employed in the sector.

I welcome the Bill and those on this side of the House will support it. I hope that it will work positively for the sector, particularly as regards research and development. Let us continue to champion the SME sector. In some rural and isolated parts of the country, those eight, ten, 15 or 20 jobs are crucial, not only in terms of providing employment, but for the local economy.

Before I call the Minister, I note that Deputy James Lawless has indicated that he would like to make another contribution. Unfortunately, the Standing Orders do not provide for a second contribution.

I welcome the supportive interventions from a number of Deputies, including Eugene Murphy, James Lawless and Fiona O'Loughlin, who indicated broad support for the content and aims of the Bill. Support for the Bill was not unanimous, however, and I wish to respond to a number of the points that have been raised. I will clarify Deputy Eamon Ryan's reference to an historical judgment. The fifth century judgment on copyright decreed, "To every cow belongs its calf; to every book its copy." This important and early decision was given by St. Columba.

During the debate, the knowledge development box, KDB, was referred to as a tax loophole and tax avoidance measure. It is neither. The KDB is a measure aimed at supporting and encouraging investment in research and development in Ireland and has been in place for patents and copyrighted software since 1 January 2016. The Bill will open up the KDB to SMEs.

The definition of an SME was referred to by some Deputies who were concerned that the levels involved - €7.5 million income and €50 million global turnover - were outside the reach of Irish SMEs. The Finance Act 2015 laid the groundwork for the application of the KDB to companies with income arising from intellectual property of less than €7.5 million. The levels are upper limits and were set independently by the OECD. In order to qualify for the KDB, a company, be it a micro, small or medium-sized enterprise, must have research and development spend that gives rise to intellectual property. The lower rate of corporation tax will apply to income specifically arising from that intellectual property. The focus of the certification scheme provided for in the Bill is specifically on SMEs. The KDB will support our smaller companies in being innovative, which I hope will in turn lead to further job creation.

During the debate last night, Deputy James Lawless referred to the research and development tax credit scheme and pointed to the learning that could be drawn from it as it related to SMEs. He mentioned that guidelines would be useful. Revenue will include a chapter on the KDB scheme for SMEs in its guidance notes. These detailed guidance notes are designed to assist companies in understanding how Revenue will apply the KDB legislation and avoid claw-back from Revenue.

Deputy James Lawless also referred to the programme for research in third level institutions, PRTLI, and his concern that the budget for 2017 was €14.4 million, which is a reduction on previous years' budgets. My Department's allocation in 2016 for the PRTLI was €30.4 million, which included a Supplementary Estimate of €20 million in December 2016. The planning and design of a successor to cycle 5 of the PRTLI is an action in Innovation 2020 and is being progressed by my Department, working closely with the Department of Education and Skills. My Department is preparing a proposal to seek funding for this successor in the context of the mid-term review of the capital plan. There will be more clarity on a successor to cycle 5 when the review is concluded and the funding envelope for this and other projects is finalised.

Regarding concerns about the level of tax forgone to the Exchequer under the KDB, the report on tax expenditures published with the budget in October 2015 provided an evaluation of the KDB scheme. The evaluation outlined the basis of the best estimate of tax forgone of €50 million. This amount is in respect of all aspects of the KDB, including the certification scheme aimed at SMEs.

In response to Deputy Eamon Ryan, all tax expenditures are reviewed on a regular basis in line with the Department of Finance guidelines on tax expenditure evaluation, which was published in October 2014. These rules apply to the KDB and an evaluation will take place within five years of the scheme's introduction.

Evidence from various studies shows that investment in research and development increases economic productivity and competitiveness and improves health, social and environmental outcomes. Firms with a persistent research and development strategy outperform those with no or irregular research and development investment programmes. Research and development is crucial for creating and maintaining high-value jobs and attracting new business. Depending on the product or process, however, research and development can be expensive and not all research and development is successful. A company may experience many failed attempts before it sees results from investment of time, money and resources, which can be considerable. The extension of the KDB to indigenous SMEs is expected to incentivise greater levels of creativity.

Deputy Richard Boyd Barrett was concerned that large companies would set up small companies to avail of the KDB for SMEs. I understand that such a restructuring is not possible under EU law. The Deputy should note that the KDB is open to all corporate taxpayers. However, the 6.25% corporate tax rate provided by the KDB only applies to income that is the result of substantive research and development carried out in Ireland. Deputies Richard Boyd Barrett and Eamon Ryan made the case that tax forgone on the KDB would be better put into universities to ensure the continuity of publicly funded research. I point to the fact that Science Foundation Ireland, SFI, an agency of my Department, invests approximately €160 million each year in academic researchers and research teams who are most likely to generate new knowledge, leading edge technologies and competitive enterprises in the fields of science, technology, engineering and mathematics.

Approximately half of SFI awards are investments in programmes for individual researchers and the other half is invested in collaborative awards with industry. In 2015, SFI directly supported 1,220 collaborations with industry. There were 711 multinational company, MNC, collaborations and 509 collaborations with SMEs, involving some 372 MNCs and 437 SMEs. Therefore, it is evident that smaller indigenous enterprises are also benefiting from SFI industry collaborations. When a researcher collaborates in a project with industry, both parties benefit.

Enterprise Ireland also facilitates access by industry to academic researchers. That encourages the academic research community to respond more effectively to industry needs. Each year, approximately 1,500 such industry-academic research development and innovation, RDI, engagements are supported by Enterprise Ireland. Through those supports, researchers are exposed to industry needs, market considerations and commercialisation necessities and are encouraged to adopt those principles into the research they perform. As such, they are made more industry ready and are primed to be even more useful if and when they leave academia for work in Irish companies.

I will turn now to a secondary part of the Bill relating to patents. It is important our legislation and practice keep pace with international developments in the area of patents. Patents are important business assets in world economies. By amending our patents legislation to introduce substantive examination, Irish patents will be granted in line with international best practice. Deputy Maurice Quinlivan commented on the Patents Office relying on the UK patents office to provide a search report for patent examination. There is a long-standing arrangement with the Intellectual Property Office in the United Kingdom and it is common practice within the patenting world that smaller offices avail of the search facilities provided by bigger and better resourced offices. The Patents Office has three patent examiners and one senior examiner. The industry standard for a patent searching authority in the modern world of complex engineering and pharmaceutical patent application requires a patents office to have a minimum of 100 experienced patent examiners. The arrangement with the UK office will not need to be reviewed in light of Brexit as patents are not harmonised at EU level. Each national patents office is independent. The search service offered by the IPO in the United Kingdom can and will continue after Brexit.

Deputy Maurice Quinlivan also raised the issue of third parties making written observations on patent applications. Again, that is standard practice in patent regimes operating substantive examination. It is part of the robust assessment of patent applications and offers, for example, existing patent holders the opportunity to comment if they consider their patent is impinged upon by the application under consideration.

The Bill will place Ireland at the forefront of developments to build a strong base for innovation. It will also act as a stimulus for business. It sends a signal that the Government recognises the value of intellectual property, IP, and is committed to providing a supportive environment for the development of IP. On the issue of future costs of patents under the new regime, no decision has yet been taken but I assure the Deputy that the current practice of State subsidisation to encourage patenting by indigenous companies will continue. That is best practice and in line with international norms. We are supporting innovation at the early stages and not just when companies make profits, for example, by means of research and development tax credit grants and support through SFI and Enterprise Ireland collaboration between the universities and industry. I thank Deputies for their engagement and very useful contributions and for the informative debate on this Bill. I look forward to further constructive engagement on Committee Stage.

Question put and agreed to.