The first item on the agenda is the minutes of the meeting of 18 September. The amended minutes have been circulated for agreement. Are the minutes agreed? Agreed. The minutes of the meeting of 1 October have been circulated. Are the minutes agreed? Agreed. Are there any matters arising?
Business of Joint Committee.
I indicated I would attend the conference in Dublin on Thursday and Friday of next week.
On what topic?
A financial topic. I have received no documentation. I have a sheet of paper here. The matter was discussed three or four weeks ago.
What is the topic and where is the conference taking place?
I do not know. I will consult my diary.
On the basis that it is a financial matter, which is relevant to the working of the committee, the committee agrees that Deputy O'Keeffe should represent the committee, or anyone else who may be interested.
Others indicated that they were interested, including Deputy Burton.
There was a conference on public-private partnerships a week ago.
It is not that.
When we have the details the Clerk will circulate them to members of the committee attending the conference. If any other member is interested in attending the conference they should contact directly the secretariat. The committee will agree to members who are interested attending the conference in Dublin. Is that agreed? Agreed.
The following items of correspondence, including the agenda, have been circulated to members. Is the copy of the submission from Bank of Scotland (Ireland) to the Competition Authority noted? Noted. Is the addendum to the presentation made to the joint committee on 4 September 2003 by St. Canice's Credit Union noted? Noted. Is the letter from Deputy Burton to the chairman noted? The letter related to section 481 and tax relief in the film industry. We had intended to deal with the issue of tax relief and tax shelters generally. That topic is dealt with in the Comptroller and Auditor General's annual report. The Committee of Public Accounts is dealing with that section of the report tomorrow. Perhaps we will await the outcome of that meeting and if there are policy matters in relation to any tax incentives with which our committee wishes to deal in advance of the budget, I suggest that we come back to them, including the tax reliefs, of which section 481 is just one of many.
We are all seeking correspondence on this matter, as is Deputy Burton. The case has been toing and froing. There has been quite a bit of exposure of the issues. It is like many of the other pre-budget submissions we have received. We will probably have to make a collective decision as to whether we deal with all or none of them, or whether this one fits into a special category. I would have to hear from Deputy Burton on that. I am aware there is a strong lobby arguing it is justified on economic grounds and the Minister for Finance has offered alternative data which disputes this. I do not know if we will have the time or opportunity to influence these decisions. Perhaps the Chairman will be able to ascertain whether the Government considers it helpful for us to do this sort of thing.
There is an issue which does not make sense, namely, the indication in the budget speech that it would be closed down. I do not know if that is now a definite decision. I have looked at the figures and there is a loss of revenue involved here. Some people would argue that the income generated for the State by the film industry is five times what it costs in tax relief. That is an overstatement. However, no one would argue that it is at least twice the cost in tax relief. It is attracting industry. The officials in the Department of Finance want to know how long an industry can be supported but that is not the issue. The issue is to get the people in the main road, as we say in Dingle. Once that happens, we can get them to spend money. It is like trying to attract industry. When they are deciding in Los Angeles where to shoot their film and they look at the deals involved, they will decide to come to Ireland if the best deal is here. They will get a deal which will cost us in tax relief, but the amount we get back will be a factor of at least 2%, 3% or 4%. It does not make sense to get rid of it. Unless there is something we are missing, I would be slow to support its elimination. We will lose jobs and income.
If IDA Ireland gives a grant of €10 million to a foreign industry, it should not give such a grant to every organisation just because it will spend €20 million. There should be some level of sustainability. I do not want to consider this issue in isolation. We said we would look at the whole area of tax relief and tax shelters, of which this is only one part. The big issue is whether we should look at that collective topic in the near future. The Committee of Public Accounts will deal with that tomorrow because it is in the report of the Comptroller and Auditor General which he issued a fortnight ago. Perhaps we can decide at our next meeting if we want to deal with all these tax shelters and tax reliefs because there are several others.
IDA Ireland applies a ratio of cost to benefit, which is 4:1 or 5:1, if my memory serves me correctly, before it grants assistance. The critical issue is whether those types of benefit returns are there. I know the Minister for Finance has taken the view that because it must be paid every year, we are not getting the type of returns which would be available from an IDA Ireland grant. That is arguable. If the ratios were 4:1 or 5:1, as Senator O'Toole suggests, they might be close to it. How much digging do we want to do to assess this? The chances of us influencing the budget are too remote to make it worth the investigation. However, other committee members may feel differently. Perhaps we should hear Deputy Burton's case when she comes here.
I broadly support what Senator O'Toole said. Reading between the lines, I suspect that the issue may be the terms on which the relief is renewed, although the stick of abolition is hanging over the scene. It is one of those reliefs which benefits the country. It cannot be looked at in isolation from the tax incentives offered in Britain or other countries. There was a period - I forget how many years ago - when our situation was substantially more favourable than that in Britain. As a consequence, we attracted much activity. However, Britain has caught up and overtaken us recently. We cannot look at it nationally in isolation. I understand the concern in the Department of Finance at the cost of the relief, but there is also a clear benefit. I would not mind having a discussion on that or on the other reliefs, which, although they are sometimes attacked, are of overall benefit to the country.
As Deputy Burton is not present, I suggest we hold this letter for consideration at the next meeting.
Another item of correspondence is the letter from the Chief Whip to myself as Chairman indicating that we have requested a Dáil debate on carbon tax. She is considering the matter. Is that noted? Noted.
I wish to bring to the attention of members two other items of correspondence. The Clerk of the Committee of Public Accounts has advised all committees that matters specifically listed in the Comptroller and Auditor General's report are matters which the Committee of Public Accounts will specifically deal with in the period ahead and, as such, any other committee of the House should not be seen to cut across work which is specifically on the agenda of the Committee of Public Accounts. That circulation was issued to every committee of the House in recent days. We are free to talk about the policy aspects of issues, but the specific details in the Comptroller and Auditor General's report are specifically on the agenda of the Committee of Public Accounts. It has the authority to discuss a topic once it is on its agenda and other committees are requested not to cut across that.
We received a telephone call which stated that it is proposed to prescribe an additional number of bodies under the Freedom of Information Act. These bodies are expected to be referred to the committee on Tuesday, 21 October for return in two weeks. If the Dáil refers them to this committee for return within a two week period, it may mean the next scheduled meeting of the joint committee in two weeks time will deal with that matter.
It will be referred by both Houses?
It will be referred by both Houses. I am also told that we may get a Supplementary Estimate for the Office of Public Works. The select committee will deal with that when it is referred to it. I do not have any further details at this stage.
On the discussion on the drafting of the report on the policy of the commercial banks regarding customer charges and interest rates, as we all know we had a couple of meetings on this matter during the summer and we must now decide on the structure and content of the report and the method we should use to produce it. There are three possibilities at present. The first is that the committee could hire a consultant to go through the work out of the allowance available to the committee. The second is that we could appoint a member of the committee who is not in receipt of any other committee allowance as a rapporteur to do the work and make an allowance available to pay the costs of any person the rapporteur decides could assist in the project. The third possibility is that we could instruct the Clerk to the committee to draft a report based on the transcripts of the meetings. The members would then have to propose amendments in the final report to be agreed by the committee. We would have to indicate to the Clerk clear recommendations and conclusions for inclusion in such a report. The three approaches are to hire a consultant, appoint a rapporteur from among our ranks who will have a budget available to assist in the work or instruct the Clerk to draft a report based on the hearings to date. Do members have any comments on the suggestions?
How quickly and easily could the committee produce a report? Of the three approaches, I do not favour the consultant route. I would favour one of the other two routes. It hinges on whether the committee has the resources to do a précis of the presentations and the points of difference and controversy and to highlight the issues on which the committee should seek to make recommendations. If that is possible for the support staff to the committee, it would be the ideal route. Failing that, the rapporteur would be the route to take.
Is there agreement to request the Clerk to commence drafting the report?
Sometimes the committees do not have the resources to do that.
We will go into private session to allow the Clerk to the Committee to speak on this topic.
The joint committee went into private session at 3.30 p.m. and resumed in public session at3.33 p.m.
In private session the committee agreed to instruct the Clerk to draft a report on customer charges and interest rates in the commercial banks, which we will consider over a meeting or two. We will then finalise a report to lay before the Dáil in the near future.
Item No. 4 is a discussion with officials of the public-private partnership unit of the Department of Finance on public-private policy.
Is that in public session?
Yes. We do all our business in public session. Before we come to that, is there any other business? I must inform Deputy Burton that we considered her letter about section 481 tax relief for the film industry and decided that in view of the fact that there are many such reliefs, shelters and so on, we will return to this issue at the next meeting and consider it in further detail.
The reason I wrote to the committee - which cuts to the heart of the functions of this committee - is that it is very difficult to obtain a reasoned explanation or response from either the Department or the Minister for Finance about this tax relief. Like a number of other issues, such as freedom of information, there genuinely appears to be two sides to the story. Three or four reports have been commissioned by the various parties who have a partisan interest in maintaining the relief. The Minister and Department officials are keeping mum except for some three-line replies with suggested figures.
I have an open mind on this issue. As the whole area of film and cultural activity is important for the country, there is a strong case for having some kind of economic evaluation of this tax relief. It is not the only factor in what has been happening to the Irish film industry but it is quite an important one. We must also consider the point of view expressed recently by the Minister for Arts, Sport and Tourism.
On the committee's consideration of this relief, I do not think this will set a precedent. The area is an important one from an economic point of view. The relief and its abolition are controversial issues. There is a genuine argument on both sides. For those reasons, this is a reasonable matter on which to hold an examination or hearing. The film industry, with its film schools and other spin-offs, is now fairly significant here. It might also be a useful exercise in terms of the status of this committee. Discussions such as these should be allowed to take place so that the Minister and the officials who feel it is worthwhile to abolish the relief or allow it to taper off can make their case. That would help us to make progress.
We had a brief discussion on this earlier.
I apologise; I was inadvertently absent due to a family issue.
We expressed support for the idea.
I am also a bit late. Should the committee not consider other reliefs as well? It might not be fair to consider one. We should also consider the racing industry, the breeding industry and the music industry. We have heard similar arguments about all of these industries - that the reliefs are vital for the retention of jobs. One cannot attack reliefs on an individual basis; one must adopt a holistic approach, although I hate to use that word.
We might not be attacking them at all, particularly the ones the Deputy mentioned.
The Revenue Commissioners have been pretty poor at estimating the costs of many of these reliefs. The Committee of Public Accounts and the Comptroller and Auditor General have rapped the knuckles of the Revenue Commissioners and their political masters for having reliefs in place of whose costs they know very little. That is an important issue.
This relief falls into a different category because the Minister has come up with very specific estimates. He has engaged consultants who have given the relief the thumbs down, stating it is far too expensive. Others have come up with alternatives and have suggested that it is valuable. I would be interested to have a hearing of this sort, but I am very conscious that a decision is imminent and I do not like engaging in famine work. If the Ministers are to carve out a deal diluting the relief but keeping it in place, as I have heard on the grapevine, we may be creating work for ourselves that will not influence the outcome. In principle, Deputy Burton is right to bring this before the committee as it is the kind of thing we should be doing, but we are now up against the possibility of an announcement by the Minister in a few weeks' time.
On balance I would have a go but it should be sharp and short and let us hear the cases. It is conditional also on having an undertaking from the Department of Finance that it will bring its consultants work, in order that we not hear only one side and just do a PR exercise. We need to have a serious look at this issue or leave it alone. On balance, if we can do it, it should be done quickly and sharply.
Following on from the point made by Deputy Lenihan, we have to look at this relief and establish a possible cost and benefit to the economy in isolation, vis-à-vis a comparison with other reliefs in the system. One can only judge whether there is a benefit if one has something with which to compare it. That is looking at one relief in isolation. I am only posing that point.
May I come back in on that point? The Comptroller and Auditor General's report has a fairly extensive section dealing with various reliefs in the Irish system, those which are costed, those not costed and so on. The Comptroller and Auditor General has actually done a certain amount of baseline work which, presumably, will go to the pack. There are approximately 80 such reliefs in the Irish tax system. I have made no secret of the fact that I think many of the reliefs are a serious distortion. Nonetheless this is a significant one in the sense that the film industry is important in terms of the cultural and worldwide projection of Ireland. For that reason, and the academic activity that has grown up around it, it is important in terms of our national self projection. Genuine cases have been put forward by all sides - the Minister, the Revenue and the Department of Finance -stating why the relief is too expensive and why it should be abolished. A fairly detailed commentary has been put forward by various groups on the industry side who say they want it retained in whole or in part. The joint committee does not have to give an undertaking to examine every relief.
In response to Deputy Lenihan, we should start on these issues somewhere. If we were to examine all the reliefs collectively - I have had a fair amount of involvement in this area down the years - that would be an enormous undertaking, whereas we could start with some of them. To start with this one would be worthwhile. I see it as very much streamlined. We should invite two to three representatives from the industry-academic activity side and similarly the Revenue Commissioners, officials from the Department, perhaps the Minister, and also an input from officials in the Department of Arts, Sport and Tourism. That might give us a sense of overview. It might also help the Minister for Finance in reaching a decision. It would be good to have that discussion.
We have a duty to support what has been said. It is not just a question of whether we are able to influence decisions; it is also a question of informing public debate on the issues. In this particular case it is not purely a quantitative issue. Our qualitative factors have again been referred to by Deputy Burton. For that reason a cost-benefit analysis is not necessarily the best approach. Of course, one can identify some of the costs and some of the benefits but quantifying some of the more tangible benefits is more difficult.
I agree with Senator Mansergh. If we are to deal with tax relief for the film industry and two others which have similar cultural projects around the globe, the horse industry and the artistic exemption, both of which are similar and are not subject to a cost-benefit analysis, can one say that because an artist - a rock artist or a visual artist - chooses to live here to avail of the exemption that there is a intangible benefit to the country in terms of publicity and the projection of Ireland abroad? A similar argument can be made in regard to Sheik Maktoum buying a stable here, that it encourages people in the Middle East to consider Ireland. Even Tony Coonan would argue that horses are about projecting our country on the international stage as well. The same argument is made there.
However, as the Chairman said there is a need for some comparators here. If we consider one relief we are committing long-term the whole committee's work to dealing with all 80 of the similar and somewhat different reliefs. In the three most similar ones in this paragon, one cannot adopt the bean counter approach; one has to take the external projection argument which has been made about the other two as well. It is necessary to include those as comparators. I am open to correction from Deputy Burton that there are other comparable reliefs. She is taking in the Hollywood factor of the film industry projecting us on a world stage at a cultural level. That is true also of the artistic exemption and the breeding exemption.
I would make one point in response. On some of the reliefs mentioned, there is no information whatever in the system. The annual return of income forms do not capture it. Therefore, a policy decision is made in the absence of any financial information to support it. I presume that in the section 481 tax relief we know the cost and are disputing the benefits, or vice versa. There is no information on some of those mentioned by the Deputy. All we could recommend is that information should be obtained as quickly as possible in these areas in order that an informed decision can be made at some stage.
Many of them are similar.
In the case of the horse breeding industry, as usual I declare an interest in that I was nominated by the Thoroughbred Breeders Association. As I understand it, in the Finance Bill a decision was made to require it to produce accounts so that the information can be obtained and collected. There is no problem with that.
We should try to bring this matter to a conclusion.
I also should declare an interest. At one time I used to audit the accounts of various stud farms——
I thought the Deputy was going to say she had been an actress in some major film that we did not know about.
No. There is a good reason to set aside perhaps three or five hours to examine this matter and hear what people have to say. We have all received the submissions suggesting it affects up to 4,500 jobs. I have an open mind on this but I would like to hear the case explained at some length. I should say to Deputy Lenihan that the regime was introduced here at a time when relationships between Fianna Fáil and the Labour Party were somewhat better.
There was a common alliance.
Senator Mansergh is right. We brought in the first regime in Europe. One might say that since then there has been competition, particularly from our neighbouring island and Eastern Europe. There is a point in retaining an active film industry here. As Deputy Lenihan is aware, very little of the industry here has to do with Hollywood, although much of it has long-term cultural implications for advertising the country, our knowledge of ourselves and so on. If Deputy Lenihan has not yet seen Intermission, I recommend that he does so as soon as possible.
This is a real example of the nanny state.
Happily the leading actor comes from my constituency.
What I have suggested is well worth doing. We could get a short sharp presentation and discussion that would help us make decisions. I have no problem about the other two schemes being discussed. They should be but there is no information about them. The horse breeders and trainers will have to produce accounts. The requirement is effectively from the end of 2004, so it is premature to hold hearings on that at this stage, unless one wants to be wildly speculative, which I would be happy to be.
I am quite happy to have the hearing, but I think we should concentrate on another aspect of this issue. It is mainly extremely wealthy people who benefit from these tax reliefs. We also need to look at the issue of equity in terms of where the benefit falls. We know that the top 400 earners in the country pay 10% of tax - far lower than most PAYE workers. The way they have done that, as the Minister for Finance, Deputy McCreevy, has pointed out, has been to exploit the various reliefs. As we need to factor that into any hearings, we may need to ask the Revenue Commissioners to give us information about where the net tax relief is falling in the income tax system. Who are the beneficiaries of this tax relief? It is relief to my personal income or whoever it is who put the money in. It is not just about supporting the film industry.
There is the argument that if the State wants to support the film industry it should be doing it above the line, with the taxpayer making a contribution, rather than siphoning it through wealthy people's bank accounts where they get a benefit. There are bigger issues in this whole area that we need to make sure we embrace and not just simply endear ourselves to the film makers or whatever. There is another side to this and we need to be conscious of it.
We will agree to proceed and, obviously, we will try to do it in a structured manner in terms of inviting people to attend. We have all received letters from representatives of the industry and letters and e-mails from our constituents. We will invite representatives of the industry to a meeting. We all have correspondence to pass on information as to who is involved. We need to meet officials from the Department of Finance and the Revenue Commissioners. The Department of Finance officials could possibly be backed up by officials from the Department of Arts, Sport and Tourism. A meeting of the committee is scheduled for 29 October. I know it may be out of sequence but perhaps we could hold the meeting the following Wednesday so as not to interrupt the usual flow of business. We would have to devote the full afternoon or early evening to it, subject to availability of accommodation.
To assist, could the committee set up a mechanism whereby whoever is making a presentation would send copies of it three working days or even a week before to the committee secretariat? I suggest the witnesses be given seven minutes maximum to make their case, with the rest of the time devoted to questions. If we have the brief before the meeting we will be able to deal with this quite expeditiously and within a reasonable time frame.
I agree with the Deputy. From the members' viewpoint, as politicians, if we want to have an input, we do not want to sit and watch one presentation of 20 minutes followed by another of the same length and so on. By the time the presentations have been completed members will be getting weary.
Legally, they do not have to read the submissions at the meeting. They can submit them and they will be part of the record. Witnesses in attendance on the last day I was present just read for an hour or an hour and a half. It was risible and it did not allow for proper cross questioning.
Perhaps the witnesses could do a very short summary for the written record of the minutes of the meeting.
Is that for the record or the report, and coverage with privilege and all the rest?
I am advised that can happen with the Committee of Public Accounts but that committee operates under different terms of reference. For all other committees if it is not said in the committee room, it is not reported. That is the basic rule that seems to pertain in the Houses and the committees are in a similar position. We will ask witnesses for the full presentation, but on the day of the hearing to summarise it. We want to get at least some element of what they have to say on the record. Subject to availability we will try for Wednesday, 5 November. Our next scheduled meeting is this day two weeks, Wednesday, 29 October. Perhaps we could deal with it the following week, subject to accommodation availability.
Would members consider meeting on a Wednesday morning?
I would be very happy to.
I know accommodation is more readily available on Wednesday mornings than in the afternoon.
Can the Chairman make that early?
There is an official start time of9.30 a.m.
Yes, perfect.
We will say 9.30 a.m. on Wednesday, 5 November, subject to availability of accommodation. We will get confirmation of that soon. If members have correspondence they wish to pass on to the secretariat, on who to invite, will they do this well in advance? We will not be inviting a whole range of groups, however.
There are two to three groups representing a small, medium and big end of the industry and of its activity. There are big films and small starter films and so on.
To conclude, we will prepare a draft timetable for the meeting to give all members an equal opportunity to put questions to the different groups.
We will move now back to item No. 4 on the agenda, which is discussion with officials of the public private partnership unit of the Department of Finance with regard to PPP policy.
Sitting suspended at 3.57 p.m. and resumed at 3.59 p.m.