I will be strict on time limits because, as stated previously, if Deputies speak beyond their allotted time, others will not have a chance to have their questions answered. I understand Deputy Butler will be taking Question No. 1 on Deputy Kelleher's behalf.
Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
1. Deputy Billy Kelleher asked the Minister for Business, Enterprise and Innovation the emergency contingencies and supports in place to safeguard small and medium enterprises, SMEs, and export businesses in Ireland from a hard-Brexit scenario if the UK leaves the EU on 29 March 2019 with no deal in place; if a formal request will be submitted to the Director General for Competition seeking changes to state aid rules in advance of the March 2019 deadline; and if she will make a statement on the matter. [4743/19]
I thank the Office of the Ceann Comhairle and the Minister for accommodating me. What emergency contingencies and supports are in place to safeguard SMEs and export businesses from a hard-Brexit scenario if the UK leaves the EU on 29 March 2019 with no deal in place?
My Department and its agencies are working to provide extensive supports, schemes and advice to ensure that businesses are prepared for Brexit. These measures aim to assist businesses in identifying key risk areas and the practical preparatory actions to be taken in the coming weeks. Brexit is one of my top priorities and was central to my decision-making on the allocation of the additional €14.2 million in current and €65 million in capital funding I secured as part of budget 2019. For example, I provided an additional €5 million to the local enterprise offices, LEOs, €3 million to Enterprise Ireland, €2 million to IDA Ireland, €1 million to InterTrade Ireland, ITI, and extra staff for regulatory bodies of my Department to help businesses prepare for Brexit, together with funding for the new future growth longer-term loan scheme and the new IDA Ireland regional property programme.
The €300 million Brexit loan scheme, which was launched in March 2018, provides working capital facility of one to three years to eligible businesses with up to 499 employees to help them innovate, change or adapt to mitigate their Brexit challenges.
The future growth loan scheme was announced in budget 2019. Its purpose is to provide a longer-term facility of eight to ten years in order to support strategic capital investment for a post-Brexit environment. This €300 million scheme is jointly funded by my Department and the Department of Agriculture, Food and the Marine. Loans of between €50,000 and €3 million will be available to eligible Irish businesses, including those in the primary agriculture and seafood sectors, to support strategic, long-term investment in a post-Brexit environment.
In May 2018, the rescue and restructuring scheme was extended to include temporary restructuring support for those enterprises with acute liquidity needs.
Enterprise Ireland, EI, has established additional supports including a Prepare for Brexit online portal and communications campaign, an online Brexit SME scorecard, a Be Prepared grant and a new eurozone strategy to help SMEs broaden their export footprint beyond the UK. In addition, the agile innovation fund provides up to 50% in support up to €300,000. EI also recently launched a customs insights online training course to help all businesses understand how customs work.
To help build the enterprise capability under the regional enterprise development fund, EI invested in seven successful projects in the Border region, with a total funding allocation of more than €10.6 million.
Additional information not given on the floor of the House
As part of budget 2019 I also allocated an additional €10 million to the IDA Ireland regional property programme, which will prioritise investment in the Border region, with new advanced units to be built in Dundalk, Monaghan and Sligo.
The ITI Brexit advisory service provides a focal point for SMEs working to navigate any changes in cross-Border trading relationships arising as a result of Brexit. ITI has organised a series of awareness events focused on improving knowledge of customs processes and procedures and identifying actions that can be taken in areas such as logistics and supply chain management. To date, more than 4,000 SMEs have directly engaged with the Brexit advisory service.
ITI also offers a Brexit Start to Plan voucher scheme worth up to €2,250, which enables businesses to obtain professional advice on how best to plan and prepare for the UK's withdrawal from the European Union, with advice on specific areas such as tariffs, currency management, regulatory and customs issues and movement of labour, goods and services.
The LEOs are the first stop for anyone seeking guidance and support on starting or growing a business. They have organised various events to enable companies to learn about the potential impacts and opportunities of Brexit. In addition, 402 LEO clients have received one-to-one mentoring focused solely on Brexit.
The LEOs engage in a number of other schemes to help companies prepare for Brexit, including technical assistance grants for micro-export, which are offered as an incentive for LEO clients to explore and develop new market opportunities. Furthermore, additional capital funding of €5 million was announced in budget 2019 for local enterprise development.
The majority of these schemes are open to all SMEs and not just EI agency clients.
On state aid, in November 2017, a technical working group was established, comprising representatives from the Directorate General for Competition in the European Commission, my Department, EI and the Department of Agriculture, Food and the Marine. The objective of the group is to scope and design schemes to support enterprises affected by Brexit in line with state aid rules.
Much has been achieved by the working group, including the development of the future growth loan scheme and the expansion of Ireland’s rescue-and-restructuring scheme to include temporary liquidity aid. The group is working on opportunities to support enterprises in the food sector.
On 24 January 2019, I met the European Commissioner for Competition, Margrethe Vestager, in my Department. The focus of the meeting was the severe challenges that Irish businesses, especially SMEs, will face when the UK leaves the European Union and the need for appropriate and timely State supports. It was agreed that Irish officials will continue to work closely with the Commissioner’s team in addressing any state aid issues that may arise to ensure a rapid and appropriate response as the ultimate shape of Brexit and its firm-level implications become known. The Commissioner emphasised that the Commission stands ready to act urgently in mitigation against the impacts of Brexit on Irish firms.
The Department of Finance estimates that a disorderly exit of the UK from the EU will reduce Irish GDP and economic output by more than 4% over five years, and that unemployment would increase by 2%, which equates to 55,000 people losing their jobs. This uncertainty is worrying and, as we all know, it is out of our hands because we are dependent on what happens across the water. Is the Minister satisfied that her Department has planned for all possible contingencies to protect against a hard Brexit that we hope will not happen? She has stated that Brexit is one of her top priorities, which is important for business, enterprise and innovation.
I accept the figures that were announced by the Department of Finance, which relate to a no-deal Brexit. They show that in the event of a no-deal Brexit, our economy would grow but at a slower rate. The Department of Finance forecasts GDP growth of 2.7% in 2019, which is down from the budget 2019 estimate of 4.2%, while in 2020 growth is predicted to be under 1%, which is down from the forecast of 3.6%.
On jobs, by 2023 total employment would increase by approximately 178,000, although that would be some 59,000 below the budget 2019 forecast. Employment in 2020 would still be higher than this year but by a smaller amount than was previously forecast.
A broad range of supports are available through my Department and its agencies. I am satisfied we are doing everything possible to ensure that businesses are prepared for Brexit.
If businesses have not identified their risks or prepared, they should do so and avail of the wide range of supports that the Government has made available.
I turn the Minister's attention to state aid rules. The Government is still refusing to seek exemptions at EU level to introduce direct supports for exposed export businesses. This falls directly under the remit of the Minister's Department. On Tuesday, the Taoiseach confirmed at the IFA AGM that the Government had alerted the European Commission to the fact that we would seek emergency aid for the farming sector in the event of a no-deal Brexit. Has the Minister's Department made a similar request to the Commission on behalf of Irish businesses and exporting companies in other exposed sectors?
I met Commissioner Margrethe Vestager last week. She acknowledged that we had the greatest exposure to, and would be the most impacted by, Brexit. The EU stands ready to act urgently. There has been a great deal of contact between my officials and a team at the Commission's office and we have been doing a lot of work in that regard. I am satisfied that the Commissioner is fully aware of the difficult situation that Ireland will find itself in if there is a no-deal Brexit. She has reassured me that she will act quickly on any request that we might make.
I thank the Minister.
2. Deputy Maurice Quinlivan asked the Minister for Business, Enterprise and Innovation the legislation and changes that will be needed in her Department to prepare for a no-deal Brexit; and if she will make a statement on the matter. [4700/19]
Will the Minister outline the aspects of emergency legislation that will be required in her Department in the event of a no-deal Brexit?
I thank the Deputy for raising this issue. On 19 December, the Government published our contingency action plan, which outlines our approach to no-deal Brexit planning. As part of that plan, the Government last week published the general scheme of a Bill that would be necessary in the event of a no-deal Brexit. The draft omnibus Bill - the miscellaneous provisions (withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill - focuses on measures protecting our citizens and supporting the economy, enterprise and jobs, particularly in key economic sectors.
Insofar as my Department is concerned, Part 3 of the omnibus Bill consists of nine heads containing legislative provisions relevant to functions under my Department. They are aimed at improving the range of supports offered by Enterprise Ireland to help companies face the challenges of Brexit and remain competitive at a global level. Specifically, the intention is to increase the ability of Enterprise Ireland to provide a competitive and flexible offering to its client companies in terms of research and development grants and to allow it to provide low-interest debt instruments.
In increasing Enterprise Ireland's power to provide lending supports to businesses, we are helping to preserve the value of the State's investments in these businesses and assisting companies through restructuring or redevelopment programmes.
In addition to the legislative provisions contained in the omnibus Bill, my Department is progressing six statutory instruments that are also required to deal with Brexit. These are largely technical in nature and will effect necessary changes in different policy areas: health and safety; company law; and the export of dual-use goods. These legislative changes are part of a wider suite of measures, both legislative and non-legislative, being undertaken by my Department to prepare for Brexit, including the deployment of new business supports, additional funding to the agencies and regulatory bodies, engagement with the European Commission on state aid issues, and ongoing direct engagement with business representatives.
I am puzzled by that response. The Dáil is 21 sitting days away from Brexit day, yet we only got sight of the heads of the omnibus Bill last week. It was my understanding that the emergency provisions contained in that Bill comprised urgent, new legislation that was being drawn up by the Government in the event of a Brexit crash-out. When I examined the section of the Bill relating to the Department of Business, Enterprise and Innovation, though, it became obvious that it was not new. In fact, it is a copy-and-paste job of the Industrial Development (Miscellaneous Provisions) Bill 2018, which the Joint Committee on Business, Enterprise and Innovation had sight of in October. I appreciate that such provisions will assist our enterprise agencies in the event of a no-deal Brexit, but these amendments to the Industrial Development Acts were not designed or drawn up in the past few months in preparation for a hard Brexit. They were on the way regardless. This looks like the Government is trying to pull the wool over our eyes by copying and pasting forthcoming legislation into the omnibus Brexit Bill in an effort to bulk it up and make the Government look more prepared than it actually is. Will the Minister clarify the situation?
Considerable work has been done with businesses through the agencies, including local enterprise offices, InterTradeIreland and Enterprise Ireland. A large number of supports have been provided to businesses.
We identified these legislative measures as being necessary to help businesses in the event of a no-deal Brexit. It means we can give them extra supports. Some 85% of Enterprise Ireland's firms are taking Brexit-related actions. A great deal of work is being done. Almost 3,500 companies know how ready they are for Brexit after using the Enterprise Ireland Brexit scorecard as a first step in developing their Brexit plans. A series of nationwide Brexit clinics have been hosted by Enterprise Ireland. The Brexit awareness campaign visited many towns and cities across the country. More than 625 Enterprise Ireland Brexit-exposed companies have completed sustainable growth plans. A great deal of work is under way across the Government.
I thank the Minister. I attended some of the meetings that she mentioned, and I commend the enterprise agencies on doing their best. However, I wish to express my surprise that no other legislation will be required for businesses.
To follow up on a question that Deputy Butler asked, what contact has the Minister or the Government had with the EU requesting emergency measures in the event of a hard Brexit? The Minister for Finance, Deputy Donohoe, announced this week that unemployment could increase by 2% in a no-deal Brexit. Would it not be prudent to prepare legislation for an employment assistance scheme to help companies that could find themselves struggling?
Is the Minister satisfied that the current Brexit business support schemes are working as well as they could? Their extremely low uptake rate suggests they need serious adjustment if we are to ensure that businesses are able to make use of them. Only 5% of the €300 million Brexit loan scheme has been drawn down to date. What is the Minister doing to ensure a higher uptake of that scheme? Does she intend to modify it to make accessing it easier for business?
I will answer the last question first. There has been a good uptake of the Brexit working capital loan facility. Almost €15 million of it has-----
Less than 5%.
Businesses have to decide what suits their financial planning. The facility is available and easily accessed and I have heard no complaints about people being unable to access it, but availing of it must be in line with their financial requirements. If someone borrows money, he or she still has to pay it back. Businesses are considering it and it is available to them. As we get closer to the Brexit deadline, more businesses may avail of it. I encourage businesses to do so just in case they need the facility. Were I a business person, though, I would first want to ensure borrowing was in line with my financial capabilities.
I met Commissioner Vestager last week. We outlined to her clearly the difficulties that Ireland would be presented with by Brexit, be it a no-deal one or otherwise. There is nothing good about Brexit for many Irish businesses. The Commissioner was very conscious of Ireland's special situation in terms of the challenges it now faces.
We had been doing a lot of work with her. She did say that the EU remains ready to assist in any way it can.
Research and Development Supports
3. Deputy Billy Kelleher asked the Minister for Business, Enterprise and Innovation if she is satisfied with the level of public research and development funding and capital expenditure in public research; if she will consider introducing a new five-year cycle with respect to the programme for research in third-level institutions; and if she will make a statement on the matter. [4744/19]
On Question No. 3, Deputy Butler is substituting for Deputy Kelleher.
My question relates to research and development. Is the Minister of State satisfied with the level of public research and development funding and capital expenditure in public research? Will he consider introducing a new five-year cycle with respect to the programme for research in third-level institutions, PRTLI?
I thank the Deputy for her important question. Ireland has developed a reputation for excellence in research and development and we continue to perform well at international level. We rose to ninth place in the 2018 European innovation scoreboard and stand at tenth in the 2018 global innovation index. Overall expenditure on research and development in Ireland has been increasing steadily since 2012 and is estimated to have reached €3.4 billion in 2017, which is the highest figure on record.
Innovation 2020 is Ireland’s whole-of-Government strategy for research and development, science, and technology, and is driven by my Department. The Government’s ambition is for Ireland to become a global innovation leader. This is the key vision of Innovation 2020. Since the publication of Innovation 2020, direct Exchequer funding for research and development has increased from €736 million in 2015 to an estimated €751 million in 2018. This is the highest level of public expenditure on research and development since 2012. My Department’s research and development budget for 2018 was €357.6 million. The Minister and I secured a further €10.74 million in negotiations during the Supplementary Estimates process.
I recognise that investment in innovation is an essential component in developing the economic and social infrastructure necessary to ensure a resilient and competitive enterprise base and to make many societal changes. Innovation is a common thread running through many Government policies, including the national development plan, NDP, Project Ireland 2040, and Enterprise 2025 Renewed.
It is estimated that businesses accounted for more than 70% of Ireland’s gross expenditure on research and development investment in 2017, which is interesting. This is the third highest level of private investment in the EU. With this investment, the multinational companies and businesses in Ireland are sending out a statement that they find our research competent, excellent, strategic, and to be at high European and world levels.
The figures can be interpreted in a different way. Ireland is ranked 32nd out of 63 countries in respect of research and development funding as a percentage of GDP. Recent EUROSTAT figures show that Ireland spends less than the European average on research and development. In 2017, just 1.05% of Irish GDP was spent on research and development, compared to an EU average of 2.07%. What is being done to ensure we reach the EU average spend? Will Ireland meet the 2020 target to spend 2.5% of GNP on research and development annually? We all understand how important it is. We are well aware of the good work that goes on in our own Waterford Institute of Technology, WIT. That institute places a strong emphasis on research and development. With the way the world is evolving, there is no doubt about it but that it will be the way forward for business, enterprise and innovation.
European statistics are based on GDP rather than GNP. The difference is that the GNP totals domestic investment, foreign investment and so on. It is unlikely that many European countries will reach the target of 2.5%. On the Deputy's question about where Ireland stands and how well we are doing, we can only go on the European and global statistics we get. Under the heading, Excellent Science, a report from Science Foundation Ireland, SFI, noted that Ireland is tenth in the global scientific ranking. A few examples of our global rankings in different areas are: second in animal and dairy, immunology, and nanotechnology; third in material science; fourth in agricultural science; fifth in chemistry; and sixth in basic medical research. Irrespective of what people might say regarding investment in innovation, we are doing exceptionally well for a small economy and a small population, although we do not have the funding we would like to have. We are involved in 2,359 international collaborations. I have been all over the world and our 18 research centres are recognised as being par excellence throughout Europe and the world. We are doing exceptionally well.
I accept that a lot of good work is being done. I draw the Minister of State's attention to the programme for research in third level institutions, the PRTLI. Since 2015, research funding for universities and colleges under this programme has been cut by 56%. This scheme is critical, as it provides for the upgrading of facilities and allows for investment in laboratories and libraries, thus promoting research. It is a major disappointment that there has been no successor scheme, as the last cycle expired in 2015. Will the Minister of State consider looking at or introducing a new five-year cycle with respect to this programme?
The Government strategy for research and innovation includes an action to scope out and develop a successor to the PRTLI, which was successful, and to support new investment in research infrastructure including buildings and equipment. The scoping of a future cycle of the PRTLI has been undertaken by my Department, working with the Department of Education and Skills. Through SFI, my Department has allocated more than €74 million for research equipment right across the higher education system since the start of 2016, which represents significant additional investment. This figure includes €24.8 million in 2018.
Through SFI, my Department has also commenced the roll-out of a new €100 million programme of investment in PhDs and research masters through new centres for research training. We are investigating the roll-out of a new tranche of PRTLI funding currently but the Department will not be found wanting in respect of investment in the research and development infrastructure of our universities and institutes of technology. We are making that investment. Since 2012, there has been a dramatic increase in the amount we have put into research equipment, universities and institutes of technology, including increases in 2016 and 2017. We will continue to put that money in.
4. Deputy Eamon Ryan asked the Minister for Business, Enterprise and Innovation the analysis undertaken on the effect on businesses here if in the event of a no-deal Brexit border controls were implemented in continental ports checking goods arriving from Ireland; and the measures she has considered to mitigate the negative impact on business here. [4872/19]
I am interested in a specific aspect of what might happen if there was to be a no-deal Brexit. Comments in the media last week suggested that not applying a hard North-South Border might lead to circumstances in which goods coming from Ireland would be checked in the ports of Rotterdam, Calais and elsewhere. What preparations or plans has the Department made for that eventuality?
I thank the Deputy for raising this issue. My Department has conducted extensive research on a wide range of issues affecting businesses with regard to Brexit. In February 2018, my Department published an independent expert study undertaken by Copenhagen Economics entitled, "Ireland and the Impact of Brexit". This study examined the implications of Brexit for the economy and trade and quantified the impact of new barriers to trade which might emerge as a result of Brexit. The suite of Brexit supports that have been put in place for businesses through the enterprise agencies under my Department's remit have been informed by this report as well as other studies and analysis undertaken across government.
With regard to exports moving directly from Ireland to continental Europe, Brexit will have no impact in terms of new or additional customs controls; the Single Market will continue to apply. For goods transiting through the UK using the landbridge, there may be implications as a result of a no-deal Brexit. To facilitate the import and export of goods, the Government’s preparedness and contingency planning for Brexit has, from the start, included issues relating to the continued effective use of the UK landbridge. This is a priority for the Government given its importance for exporters and importers as a means of access to the rest of the Single Market.
Issues relating to the optimal arrangements and necessary infrastructure for customs and related inspections at ports and airports are primarily matters for the Revenue Commissioners and for my colleagues, the Ministers for Finance and Transport, Tourism and Sport.
Retaining the effective use of the landbridge post-Brexit has been discussed at both political and official level with both the UK and the EU. As a result of these contacts, the importance of maintaining the landbridge has been recognised through the protocol on Ireland and Northern Ireland in the draft withdrawal agreement, which reaffirms the commitment of the UK to facilitate the efficient and timely transit through the UK of goods moving from Ireland to another EU member state or another country, or vice versa. In a no-deal scenario, however, it is anticipated that the landbridge, at least in the initial period, may be subject to delays. This will have a knock-on impact on goods travelling to and from Ireland.
The Minister says there is no prospect of controls going into the likes of Rotterdam or Calais for goods coming directly from Ireland. However, the papers last week quoted the Taoiseach as saying that was a possibility. Dan O'Brien in the Irish Independent has raised real concerns as to the impact of that on Irish business, suggesting it could exclude us from the Single Market. Has the Minister had any discussion with her European colleagues, or has her Department had any discussion with European officials, on that prospect? If the Taoiseach says it is a possibility, what preparations is her Department making? How can the Minister reassure us this is not a possibility should a hard Brexit come to pass? Has the Copenhagen economic study to which she referred examined the economic consequences if that did arise, given that the Taoiseach himself has said it is a possibility?
I assure the Deputy that there is no consideration of any such move within Government that there would be checks on the ports in the EU. I think there may have been some misunderstanding there. There is no consideration for that. Our issue here in terms of checks is in respect of the landbridge between us and the UK. I met Commissioner Vestager, the competition Commissioner, just last week, and discussed with her the challenges that Irish businesses, both SMEs and large firms, will face when the UK leaves the European Union and the need for appropriate and timely state supports. The Commission acknowledged the high exposure of Irish businesses to the UK market. She assured me that the necessary resources at Commission level will be available to facilitate a swift response if urgent action is required by the Government.
In terms of the ports, there is a lot of work going on currently to expand capacity at the Irish ports to address the challenges that are coming down the road for us.
If we are to have a no-deal scenario, and if it seems clear from the Government that it is determined not to see border checks coming in on the North-South Border, then where would the checks be that would reassure our European colleagues that all goods coming from Ireland are complying with Single Market rules? Would the checks in those instances take place in Rosslare before goods leave Ireland to go directly to the Continent, or would the checks more likely be done at the continental end? Are we saying there would be no checks on goods coming from Ireland to the Continent? The landbridge and UK travel are separate issues. In respect of goods going directly from Ireland to the Continent, in the event of a no-deal Brexit and if we are not applying checks on the Northern Ireland Border, where would the checks take place?
The Government has been consistent and clear in saying that we will not accept a hard border on this island. The EU and UK both accept that avoiding a hard border is essential. This has been repeatedly reaffirmed by the Prime Minister and the EU. If the withdrawal agreement does not enter into force, our objective will, of course, be more difficult to achieve. We are not planning for a hard border. Ireland and the EU have a clear responsibility for and economic interest in the protection of the Single Market and the customs union. The UK has World Trade Organisation responsibilities. There are going to be checks on the ports and at the airports. We have recruited over 400 customs officials and that continues. The Department of Agriculture, Food and the Marine has stepped up its recruitment of additional staff for SPS checks and such things. At the end of the day, we have to protect the integrity of the EU customs union and the Single Market.
So it will be on Irish ports, not continental ports.
It will be on Irish ports, yes.