Priority Questions

Brexit Issues

Niall Collins


1. Deputy Niall Collins asked the Tánaiste and Minister for Business, Enterprise and Innovation the contingencies and supports in place to safeguard Irish businesses and exports from a hard Brexit scenario including revision of state aid rules; and if she will make a statement on the matter. [43201/17]

I want to ask the Minister to outline the contingencies and supports in place to safeguard Irish businesses, exporters and exports from a hard Brexit scenario that may transpire from the ultimate conclusion of the Brexit process, and also any measures she is taking regarding the revision of state aid rules.

The first thing the Department has been doing is engaging extensively with business and working cross-departmentally to deal with the challenges posed by Brexit, as well as continuing to provide support for diversification, development and innovation. We have been working with the Strategic Banking Corporation of Ireland, SBCI, to develop tailored and targeted supports to address the needs of businesses impacted by Brexit. We have the new Brexit loan scheme, which will provide affordable working capital financing to Irish businesses that are either currently impacted by Brexit or could be in the future. This is €300 million that will be available to SMEs employing up to 500 and it will be open to all businesses, not just to State agency clients.

I am also looking at the development of a longer-term business development loan scheme which would assist firms in long-term investing for a post-Brexit environment. All of the discussions with the Commission and other member states have centred around Brexit. Last autumn, officials of my Department initiated discussions with DG Competition to sensitise the Commission to potential difficulties likely to be encountered by Irish firms. This has been central to any discussions I have had with Ministers from the UK and, indeed, I raised it with Mr. Barnier when I met him earlier this year.

Much can be done within the existing state aid framework. As a precautionary measure, however, we recently filed a rescue and restructure scheme for approval under state aid rules. Once approved, this scheme would allow for grants or equity supports of up to €10 million to SMEs in severe financial distress as a consequence of Brexit. Our new loan schemes are also being developed in the context of EU rules. However, should the situation change, it may be important to negotiate some Brexit-related flexibility in state aid rules with the Commission. It is also possible that, if the trading situation worsened, it might be necessary at that point to make a strong case to the Commission that flexibility on State aid is needed. We are developing that case and working on it.

It will not come as any surprise to the Minister that a recent survey of up to 600 Enterprise Ireland client companies found that, in the past six months, just 38% had taken measures to respond to Brexit, with the remaining 62% effectively doing nothing. The Minister outlined in her reply that she has set up a €300 million loan scheme. Can she give us more detail in that regard? All we are hearing is what flowed from her press conference in recent days. What type of loan scheme is it or is it a guarantee scheme? We understand that, effectively, the Minister is allocating €23 million of Exchequer funding and the remainder is to come from other sources of funding. Where will it come from and what criteria will apply in terms of a maximum and a minimum? When and where can companies apply? Can they apply as of today? How long will it take this scheme to get up and running?

It is a loan guarantee scheme for SMEs that need extra liquidity to cope with working capital challenges brought about by Brexit. Obviously, we want to support businesses that would be viable if they had access to that capital. It will give affordable working capital financing to Irish businesses that can demonstrate they are currently impacted by Brexit or will be in the future. It will be delivered through the Strategic Banking Corporation of Ireland and through commercial lenders to get much needed working capital into Irish businesses. The aim is to make up to €300 million available but the total cost to the Exchequer will be, as the Deputy said, about €23 million. My Department will contribute €14 million and the Department of Agriculture, Food and the Marine will contribute €9 million, and SBCI will use this budget to leverage the overall fund up to €300 million. It is open to all eligible businesses with up to 499 employees. The minimum loan size will be about €25,000 and while the maximum loan size is still under review, it will be in excess of €1 million. SBCI will have a website towards the end of this month where businesses can register an interest and SBCI will then develop the various criteria and engage with the businesses. It will be the new year when it gets up and running. It is an important scheme in the context of Brexit.

The Minister will be aware from her Department that, previously, when the country faced a crisis, the then Government introduced a number of measures, including in 2009 an enterprise stabilisation fund that allocated up to €100 million over two years to support exporting companies. There was also an employment subsidy scheme which at the time helped employers to support over 90,000 jobs. They were very innovative schemes at a time when people needed supports. Has the Minister given any consideration to introducing similar measures and, if not, why not?

Following on from the Minister's earlier comments on the relaxation of state aid rules, and what we perceive as the need to relax the application of state aid rules, given the current ceiling for companies is €200,000 over a three-year period, does the Minister not feel a more robust and active engagement is needed with DG Competition and with the Ministers she meets at the Council of Ministers meetings in order to address these issues? It is hugely important that we have all the defences available to us, rather than arriving at the problem juncture before deciding we have to work on relaxing state aid rules. Let us have it sorted and bring it in, if necessary.

I and my officials in the Department are very alert to these issues, and we have to be in the context of Brexit. This is an enormous challenge for business and one of the greatest challenges Irish businesses have ever faced. We want businesses to get involved with supports that are there at present.

As I have already said, we have filed a rescue and restructure scheme under the state aid rules, but that is another initiative that is well under way. A number of other countries have done this and I reassure the Deputy that we are working with like-minded countries in relation to the challenges posed by Brexit.

My officials are actively having the kind of discussions the Deputy mentioned should the need arise to put the case on state aid rules as I have outlined it. We are very alert to the issues. I encourage all businesses to get involved with the supports that are there, to work with Enterprise Ireland and to engage with the agencies. There are various supports, including the €5,000 be prepared grant to begin the process for smaller businesses, which could be taken up more than it is at present. A new hub for businesses will be provided next year, which will also give some financial support to help them continue the process of preparing. The Deputy is right that we need to see more companies examining precisely what the impact of Brexit will be on their businesses. More and more companies are engaging on the issues and preparing their own plans to deal with the challenges they face, especially those companies that have a high dependency on the UK market.

Office of the Director of Corporate Enforcement Legal Cases

Maurice Quinlivan


2. Deputy Maurice Quinlivan asked the Tánaiste and Minister for Business, Enterprise and Innovation when the report into the failings of the Office of the Director of Corporate Enforcement in a trial (details supplied) will be published, having been delivered to her office in July 2017. [43200/17]

My question pertains to the report into the failings of the Office of the Director of Corporate Enforcement in the Seán FitzPatrick trial. Will the Minister indicate when this report will be published, the report having been delivered to her office last July?

I can confirm to the Deputy that I received a report under section 955(1)(a) of the Companies Act 2014 from the Director of Corporate Enforcement on 23 June. This report addresses the issues highlighted by Judge Aylmer in his ruling in the case of DPP v . Seán FitzPatrick. The report sets out the facts relating to the case and does not purport to be an investigation or an inquiry. It covers the main issues directed at the ODCE by Judge John Aylmer in his ruling on 23 May 2017. This includes the coaching of witness statements; late disclosure of documents; a perceived bias by ODCE investigators; and the shredding of documents.

I have sought the advice of the Attorney General, specifically as to whether there are any legal impediments to publishing the report and discussing its contents in the Oireachtas. While it is crucial to identify and learn from any shortcomings in the investigative process in one particular trial, it is also important to recognise the very valuable role the ODCE has played, and continues to play, in facilitating compliance and enforcement of company law. Between 2012 and 2016, investigations by the ODCE have resulted in the restriction of 886 company directors. This means that they are prevented from being appointed or acting in any way as a director or secretary or being involved in the formation or promotion of any company unless it is adequately capitalised which, in the case of a public limited company other than an investment company, means a capital requirement of €500,000 in allotted paid up share capital, and in the case of any other company, the capital requirement is €100,000. ODCE investigations in the same period also resulted in the disqualification of 65 directors by the High Court. There have also been 971 instances of securing compliance with the Companies Act through the exercise of the director’s civil powers.

With regard to the Deputy's question, I would like to publish the report. It would be my intention to publish it, subject to ongoing clarification of the legal advice. There are quite a number of parties involved in this, as the Deputy is aware, and a range of legal work needs to be done before I can get to that point. The publication of the report will always be subject to the final advice of the Attorney General.

Additional information not given on the floor of the House

Since the establishment of the ODCE, there has been a sharp increase in the restriction and disqualification of directors. In 2004, only ten directors had been disqualified whereas by the end of 2016 that figure stood at 3,955.

The ODCE has also been successful in recent prosecutions. In 2014, two people were convicted for the giving of unlawful financial assistance by Anglo for the purchase of its own shares. In 2016, a person was convicted for fraudulent trading on foot of a plea of guilty. In 2016, a person was convicted for failing to maintain a licensed bank’s register of loans to directors on foot of a plea of guilty. In late April of this year, a person was arrested and charged with fraudulent trading based on an invoice discounting fraud and entered a plea of guilty. It is important that any actions we take are done with full knowledge and in line with fair procedures, due process and natural justice. It is my intention to publish the report subject to the advice of the Attorney General.

I thank the Minister for her response. I appreciate the sensitivities that could be contained in the report but why has the work not yet been completed by the Office of the Attorney General? It seems that an incredibly long time has been taken. Will the Minister indicate how many months on average she would be waiting for advice from the Attorney General on a report?

When is the Minister expecting the report to be published? She might say that it is soon but perhaps the Minister could put a date on it. I am quite disappointed with the response I have received from her today. I understand that the number of staff in the Office of the Director of Corporate Enforcement has declined from 53 in 2010 to 40 in 2016. These numbers were provided to me by the previous Minister. Apart from that unacceptable 26% reduction in staffing levels, it is quite bizarre to think that just 40 people were assigned to investigate and prosecute white collar crime in Ireland in 2016. This shows how seriously the Government takes this issue and its lack of concern. From reading the report, can the Minister tell the House if lack of resources, staff or funding was highlighted as possible reasons behind the shambolic investigation conducted by the ODCE that led to the collapse of the subsequent Seán FitzPatrick trial?

This trial and the various issues it has thrown up is a complex situation. Some of the issues have been examined in the report. It was a very complex trial, as the Deputy is aware, in terms of the issues that were dealt with and it was one of the longest in the history of the State. I would certainly like to publish the report but when I publish any report I have to be conscious - the time varies as to when reports are received in Government Departments - that it is not a question of one piece of legal advice and it is over. It is a question of teasing out the relevant legislation, what the legislation has to say about publication, and whether or not there are rights relating to publication and are there limitations on that right. We have to also examine the impact on other parties who are affected by the report. Where that is the situation, it is normal procedure to make the other parties aware of the impending publication and so on. There will be no delay in publication but a range of issues have to be dealt with. As soon as they are clarified, and if it is feasible to publish the report, I want to be in a position to publish it and bring it before the Oireachtas for discussion. I am sure the committee will want to examine it also.

Once again, I thank the Minister for her response but the delay from the Office of the Attorney General is very disappointing.

Will the Minister outline the additional funding and staff that will be made available to the Office of the Director of Corporate Enforcement and other offices that fall under the regulation section of her Department? In the expenditure report yesterday, on page 52, funding is mentioned but it is not broken down into how much is going to each of the offices, such as the Health and Safety Authority, the Irish Auditing and Accounting Supervisory Authority or the Office of the Director of Corporate Enforcement. Perhaps the Minister could give a breakdown of what each office will receive in additional funding.

The ODCE budget in 2017 is €4.895 million. This comprises pay of €2.834 million and non-pay of €2.057 million. The spend up to 31 August 2017 is €1.844 million. We are supporting the ODCE. The Deputy referred to staff and recruitment. The people the ODCE wishes to recruit, such as forensic accountants, have been recruited. There was an issue around making sure that it could recruit those staff. It was not a funding issue; it was a question of recruitment. I reassure the Deputy that we are supporting the ODCE in the needs of the office and recruitment. Obviously, some of those issues will probably be dealt with in the report that we have received.

Motor Insurance

Niall Collins


3. Deputy Niall Collins asked the Tánaiste and Minister for Business, Enterprise and Innovation the position regarding introducing legislation to enhance the powers of PIAB in view of the recommendation in the cost of motor insurance report; and if she will make a statement on the matter. [43202/17]

As the lead Government Minister with responsibility in this area, I ask her for an update on the introduction of legislation to enhance the powers of the Personal Injuries Assessment Board, PIAB, given the recommendation in the cost of motor insurance report. Perhaps the Minister will tell the House what progress has been made on this.

On 27 June 2017 the Government gave its approval to the drafting of the personal injuries board amendment Bill 2017 along the lines of the general scheme. The purpose of the personal injuries board amendment Bill 2017 is to amend the existing legislation, to strengthen PIAB in terms of operational issues, to ensure greater compliance with the PIAB process and to encourage more claims to be settled through the PIAB model.

The heads of Bill have been sent to the Office of the Parliamentary Counsel for drafting. This is technical and complex legislation and it will require careful consideration during drafting in conjunction with the Office of the Attorney General. It is hoped to have the drafting of the Bill completed in the first quarter of 2018 and published thereafter. There is ongoing work on the Bill, in recognising the importance of it. We hope to have it in the first quarter of 2018.

The 2016 PIAB annual overview highlights the major benefits of the organisation, including its providing a low cost, quick and fair option in injury compensation.

According to the overview, just over 34,000 new personal injury claims were submitted to PIAB with processing costs in 2016 at 6.4% of awards, a fraction of the costs that would have accrued had the claims it handled required litigation. It is a very important organisation, which is cost efficient and does its work in a timely way. The new legislation will further facilitate that.

In June 2014, a public consultation was held on the operation and implementation of the Personal Injuries Assessment Board with 29 submissions being received from a range of stakeholders. The outcome of the public consultation process has informed the general scheme of the personal injuries assessment board (amendment) Bill 2017. The submissions are available to view on the Department's website.

There is no doubt but that we all agree that PIAB needs to be reformed and that its legislation needs to be updated. There are approximately 30,000 personal injury claims per annum of which only 12,000 go through PIAB. That indicates that there is huge room for improvement and to improve the throughput of work PIAB can perform. One of the underlying problems with the rising cost of insurance has been that many claims are settled outside PIAB and the courts, which has led to a lack of transparency and visibility. The costs associated with claims are borne ultimately by all of us as insurance premium payers. Costs of claims processed through PIAB are in the order of 6% whereas they can be in the order of 50% of a claim if they go through the courts.

Will the issues of unsustainable and fraudulent claims be addressed in the legislation? Will the Bill, which I am sure the Minister has had sight of, cover that area sufficiently? Can the Minister update us on the work being undertaken by the Competition and Consumer Protection Commission in its investigation into the insurance sector as mentioned in the media?

I ask Deputies and the Minister to keep an eye on the clock. I hate to have to intervene all the time. The Tánaiste has one minute.

The PIAB was established to remove unnecessary personal injuries cases from litigation. Estimates indicate that 70% of cases are now either resolved through the PIAB or settled directly between the parties. In accordance with the Acts, all personal injuries claims must be submitted to the PIAB. In some situations, however, the parties are happy to settle a claim at an early stage and without the need to refer it to the board. The PIAB assesses independently claims for compensation arising from personal injuries sustained as a result of motor or workplace accidents or in circumstances of public liability. An independent assessment is made and it is a matter for the parties as to whether they wish to accept the award. The PIAB does not address liability. Where liability is an issue, a respondent can refuse to consent to a PIAB assessment. Where the respondent refuses consent to an assessment or where either party rejects the award proposed, the board will issue an authorisation to the claimant to allow him or her to take legal proceedings.

There are two bodies working on issues relating to insurance at present. There is a commission to examine the issue of fraud chaired by Mr. Justice Nicholas Kearns. All relevant legal stakeholders are represented. The commission had its first meeting in February and has had eight meetings to date.

We have to move on.

Question No. 4 replied to with Written Answers.

Regional Development

Seamus Healy


5. Deputy Seamus Healy asked the Tánaiste and Minister for Business, Enterprise and Innovation her plans to seek a change in enterprise policy in order that the south-east region can attract a more proportionate share of foreign direct investment and high potential start-ups in view of the fact the region has historically lagged behind; if the region will receive its fair share of the ten-year national investment plan; and if she will make a statement on the matter. [43252/17]

In view of the fact that the south-east region has historically lagged behind in both economic and regional development, will the Minister ensure there is a change in enterprise policy in order that the region attracts a more proportionate share of foreign direct investment and high-potential start-ups? Will she ensure the region gets its fair share of the national investment plan coming soon?

My Department published Enterprise 2025 in 2015. It sets out the strategic framework for coherence across Departments to focus our resources to foster a better future and to deliver sustainable enterprise growth and jobs. As a small open economy, we rely on external demand and international markets for growth. Since its publication, there has been continued global economic uncertainty, including, for example, Brexit. That is why my Department is currently undertaking a review of Enterprise 2025. That is our vision. We are examining any adaptation that is required to deal with current economic uncertainty, the challenge of Brexit and changes in policy in other countries.

We continue to maintain our focus on the regions, in particular through the regional action plan for jobs process. Through these regional plans and processes, we have a focus on balanced regional development. Later in the year, the Government will publish the national planning framework and the national capital investment plan, which will focus strongly on balanced development. Inclusive of growth in our urban areas, these measures will also focus very much on balanced regional development.

The south-east action plan for jobs is the key policy response for supporting employment growth in the south-east region with public and private stakeholders actively engaged together to make progress on jobs. The core objective of the plan is to see a further 25,000 at work in the region by 2020 and to reduce the unemployment rate to within 1% of the State average. The first two progress reports on the implementation of the Action Plan for Jobs show that progress is being made. I have had the opportunity to meet with the members of the action group. I note that 13,000 jobs were created in the south east since the regional action plans for jobs initiative was launched and implemented in January 2015. The unemployment rate in the south east has fallen from 12.8% in 2015 to 8.1% by the second quarter of 2017. However, there is still work to be done.

Those responsible for the south-east area action plan for jobs briefed Oireachtas Members from the south east last Thursday. They brought with them a number of industry champions from the area who are involved in driving the region forward. Significantly, the group included the five CEOs of the local authorities in the region. The group is very concerned that the area has lagged behind historically and that unemployment levels in the region are the second highest nationally, while the region is second lowest in foreign direct investment. It is 4% in the region and 6% nationally with approximately 7% of these jobs as against a population of 11%. High potential start-ups are similarly 4.5% as against a population of 11% in the region. There is also, of course, a huge brain drain from the region with 67% of students leaving the region to study. Unfortunately, 40% of them fail to return. We ask for a genuine focus on the region and for real balanced regional development. There must at least be no further incentivisation of growth in the Dublin area. We further call for preferential treatment for the regions, in particular the south east.

I have given the Deputy the figures on the improvements in job creation, including the reduction in the unemployment rate. It is good progress. However, I accept that more needs to be done and that the unemployment rate is higher than the overall national rate. It was more than 1% higher in the second quarter of 2017 than the national average of 6.4%. The building blocks are in place, however, between the work of the regional action plan, the industries that are there already and the IDA's property programme, which is supporting development in the area.

The development of the technological university will make a difference in respect of the issue of young people leaving the area, which was mentioned by the Deputy. We want to focus on making sure that young people who are educated locally can get jobs in their own area. I refer to the Bausch and Lamb development in Waterford recently and other initiatives. The first tranche of the regional enterprise fund is €35 million and applications are being examined currently. Regional development is one of the key criteria that must be used.

I refer to two projects that are vital to the future economic development of the region, one of which the Minister mentioned. Will she support and push forward proposals for a technological university in the south east? It has been in the mix for the past number of years but there seems to be a hold up. It is vitally important. The second is the upgrade of the N24 motorway for the south-east region. It would be a huge driver of economic and social activity in the region and it needs to be included in the capital investment programme that will be announced in the near future by the Minister for Public Expenditure and Reform.

The establishment of the proposed technological university for the south east clearly will be important in supporting advanced education and the skills enterprise and industry need. A great deal of good work has been undertaken by the two institutes of technology and we are keen to move ahead with the planned amendments to the Technological Universities Bill 2015. They have given a momentum to the south east technological university project.

I take the Deputy's point that there needs to be a continued focus on regional development and we will publish two important national programmes towards the end of the year - the national planning framework and the national capital investment programme. It is important to align the two of those in order that the point the Deputy made about transport is addressed whereby there is alignment regarding the road infrastructure in the context of regional development as well. The reason we want to publish the two programmes together is to ensure co-ordination between the planning framework and capital investment. The two have to go hand in hand as is exemplified by this case.