Seanad Éireann díospóireacht -
Wednesday, 31 May 2000

Vol. 163 No. 12

Technology Sector: Motion.

Mr. Ross

I move:

That Seanad Éireann urges the Minister for Finance to introduce further measures to encourage the development of Ireland's high-tech industries and in particular, to allow further tax concessions to employees of software businesses to enable them to compete with international software companies.

This motion addresses an issue of great concern to many people who are employed in Ireland's new economy. I refer to high-tech industries in general, but particularly to the software packaging industry. I received representations from the Irish Software Association and from young people involved in the software industry which expressed the view that even though the industry is prospering it is in danger. This country has profited enormously from the software industry and benefited greatly from the presence of multinationals. We have capitalised on and exploited the great investment that has been made but, due to our current tax regime, the industry is in danger because it will not be able to expand in the future and is currently unable to attract and retain the personnel it requires.

What is ironic about this industry and the new economy is that neither lacks financial capital. There is plenty of money available for investment but there is a lack of intellectual capital. The software industry in Ireland is facing a human resources crisis. One need only consider the staff turnover rate of 20% to realise that the industry is incapable not only of attracting young talented people but also of retaining them. The reason for this is difficult to define. However, if the software industry is to flourish, we must ensure that companies are in a position to retain the staff they attract.

One of the problems the industry faces is the fact that it is losing competitiveness. Wages are rising by 15% and, as the Minister of State will be aware, those involved in high-tech industries quite rightly do not give two hoots about the Minister for Finance's partnership agreement or the national pay deal. As a result of the skills shortage in Ireland, wages are constantly on the increase and we are losing competitiveness and personnel because people are moving abroad and staying there. Despite the high salaries on offer in Ireland, the peripheral attractions are not as great as those abroad.

The software, computer and other high-tech industries are global in nature and cannot be treated in isolation. Multinationals do not remain in a country any longer than necessary. If these companies do not like the circumstances in which they are obliged to operate, they do not announce that they are departing but merely cease operations and leave on slippered feet at dawn.

The major difficulty in attracting and retaining suitable personnel revolves around the question of shares and share options. We must find a way to match the rewards on offer overseas if we are to retain the people who work in these global industries. I refer to the rewards offered by Microsoft, Oracle, Symantec and other multinationals which move their operations around the world in search of cheap and efficient labour. In the United States these companies reward their employees by giving them stock options.

I do not wish my intentions to be misconstrued. Stock options have been totally abused by the banks in Ireland and by people who work at the highest level in companies here. They have been given willy-nilly to people at the top and they have not been distributed on a democratic basis to those at lower levels. The Government cannot direct that stock options should be given to employees, but it is in a position to make the giving of such options easier. If stock options are democratically distributed among the workforce they will provide people with a great incentive to remain in the industry. Between 98% and 100% of Microsoft's Irish staff possess stock options. These provide them with a great incentive to work, they offer them an opportunity to profit and they tie them in to the company because of the possibility of future rewards.

The concept of offering stock options is good provided those options are distributed on a democratic basis. There is nothing the Government can do to force companies to introduce stock option schemes but it can alter the tax regime to make them more attractive to employees. The difficulty with stock options in Ireland is that they are subject to income tax at the top rate of 44%, whereas they are taxed at a much lower rate overseas. It is not a great incentive to offer someone in Ireland stock options to take up employment or to remain in their job, particularly in view of the rate of tax which applies to them.

The Minister for Finance will have been lobbied ad nauseam by the Irish Software Association and others on this matter. I suggest that the rate of tax which applies to stock options should be reduced from 44% to the capital gains tax rate of 20%. That makes a great deal of sense because once they are exercised stock options become shares. I am aware that various Ministers are in favour of doing this. If we reduce the rate of tax which applies to stock options, we will put an end to the extraordinary haemorrhage of labour out of the software industry. If stock options were taxed at 20%, there would be no incentive for employees to move to the US or another country with a far more benign tax regime.

The main problem the software industry faces involves the shortage of labour. I understand that 24,000 people are employed in this industry, which makes a contribution of £4 billion to the economy. The fact that 40% of technological investment in Europe last year occurred in Ireland is evidence of the importance of this sector. It is vital for our economy that this sector is nourished and nurtured and that we do not risk companies moving because they cannot get staff or staff moving because they cannot get companies. This is a real problem.

After the US, Ireland is the second largest producer of software packages in the world. We are in a particularly strong position in this area but the danger is that because our tax policy is forcing companies to remain small, they will move out of the country because they are unable to make that jump of scale.

There would be great spin-off benefits from the Government making a concession of this kind. We would certainly attract Irish emigrants back into the country. I am aware of many cases in which Irish people working abroad have been offered jobs here with stock options but they will not come back because of our tax regime.

If this concession were made, we would be able to compete globally and companies' cash-flow would improve. Stock options do not have immediate cash-flow or profit implications for a company. The manner in which they are treated in accounting terms is very controversial because there is a dilution of certain shares; stock options do not go through the profit and loss account as many people think they should. Stock options offer companies a very cheap method of financing their employees.

We should start to look at more radical ways of paying our employees rather than at national pay deals. Anyone who has worked in a software company, either at management or staff level, will know that the global situation is so critical that it is the people who are out of work who are dictating the pace to management. If a job is advertised in this industry, it is the prospective employees who will decide the job conditions, not the employers. The situation has become so critical that prospective employees are interviewing employers. The first question they ask is not about the salary as that is peripheral, rather they ask whether they will have car parking, share options or other benefits. These benefits are critical in this industry which is experiencing staff shortages worldwide.

Microsoft, which is based in Stillorgan Industrial Park, had 180 vacancies for very well paid jobs at one stage this year. It now has 60 vacancies. The company offers stock options to all its employees but, because of the tax position, that is not even a sufficient incentive to attract or retain employees. Microsoft even recruits at the airport and the fact that it finds it difficult to fill vacanc ies is a prime example that stock options do not necessarily mean access to the gravy train. One of the criticisms made of offering stock options to employees is that they get on the gravy train but that is really only true of the people in top positions.

Microsoft employees are "out of the money" because they were given share options at very high levels and will not actually make money for a long time until the shares climb to the price at which they were allocated. Microsoft shares have fallen in value since its employees were given share options. Share options do not necessarily lead to the gravy train but they are a means of keeping employees on board, providing them with an incentive and making the industry a more permanent element of our booming economy.

The principle advanced in the motion should not be exclusively applied to the software industry. It should be applied to all sectors of the e-commerce and computer industry and there is no reason it should not be extended to all industries. There is nothing wrong with providing tax concessions to boost these industries and there is nothing wrong with paying people in a different way to the rigid straitjacket we have imposed on ourselves through the pay deal.

I understood that preparations were being made to provide for a concession of this sort in the Finance Bill but, for reasons of which I am unaware, that did not happen. I thought there was a real possibility that the concession would be included in the subsequent Finance Bill and perhaps that may yet happen. However, I do not think it was necessary for the Government to introduce an amendment of this kind, the tone of which is so unhelpful and wishy-washy that it leads me to believe that the Government is perhaps still being dictated to by the so-called social partners rather than following its own ideological, thrusting and sometimes refreshing attitude to the economy.

The amendment reads ". . . acknowledges the support the Government already gives to industry generally. . . ". That is so nonsensical, meaningless and unnecessary as to be insulting to the House. The phrase is complete hogwash. It goes on to read ". . . including the high-tech sector, and supports the work being undertaken on the tax treatment of employee financial participation by the Consultative Committee. . . ". The answer to all our problems is some consultative committee established under the Programme for Prosperity and Fairness. We are back to the social partners. The Government wants to let IBEC and ICTU consider this matter and arrive at a solution to which the Government will agree.

We need a decisive Government decision on this issue. All we need is for the Government to decide that this would be good for the software industry, its employees and the country as a whole. Yet, the Government is incapable of accepting this type of motion without sending it off to Peter Cassells, John Dunne or someone else who will come back with some sort of solution in November. That is a ridiculous attitude and is uncharacteristic of the Minister for Finance who is usually capable of making a decision and sticking to it. To refer an issue as important as this one to such a neutered committee is shameful. We need to look after the software industry and allow it the opportunity to compete. Its hands are currently tied by our punitive tax laws which are worse than those anywhere in the world and it will not be able to compete if we continue along this road.

Mr. Norris

I second the motion. Senator Ross is to be congratulated for tabling this motion which, although it may not have wide popular appeal, certainly addresses a significant element in our economy. I share Senator Ross's dismay at the Government's amendment although he may have attacked it in a more trenchant manner than is politic. I would hope that the Government might at this stage be prepared to reconsider its amendment, as has happened on a number of occasions in the past when it listened to the case made on this side of the House and decided that it was to the national advantage not to move a divisive amendment.

Senator Ross has analysed the amendment and has shown that it is really rather weak. It betrays the insecurity that anything which might be construed as mildly critical must be bad. In fact the motion does not tie the Minister to anything. It only urges him to do something for which there is an unbeatable argument. I do not wish to be as trenchant as Senator Ross, but the amendment is fairly vapid. It does not really betray a genuine anxiety on the part of Government other than a feeling that it must amend the motion. This may be the case because there is an innate conservatism, to which I refer without ill will, in the Department of Finance.

The motion is important because, as Senator Ross stated, Ireland is in an extraordinary position in the software business. Ireland is the second largest exporter of software after the United States of America. When I was told this the other day, I could not believe it.

Mr. T. Fitzgerald

Ireland is No. 1.

Mr. Norris

It is a remarkable phenomenon. I knew that Ireland is the largest contributor in Europe – Ireland produces 80% of the software products for Europe. It is an astonishing phenomenon. It is part of the Celtic tiger economy.

Only today I heard somebody on the wireless say that perhaps the Celtic tiger might start suffering from mad tiger disease. Perhaps this may happen. There are vulnerabilities and we would be foolish if we were too cocky to acknowledge them. This a perfect industry for this island nation because the product is so easily exported electronically. Even if it is exported physically, these elements of the industry are light and the transport difficulties of an island are obviated. In addition, Ireland has a highly sophisticated workforce, but we could easily lose them and Senator Ross brilliantly demonstrated exactly how this could happen.

Unlike Senator Ross, I have not been lobbied extensively. I have been lobbied by one person, Senator Ross. To show what a remarkable mind he has, I have actually been led to understand all this stuff about share options and the difficulty under which we are ignorantly placing our people by taking a negative attitude towards share options. It is simply the practice of allocating shares to employees in a company in order that they become part-owners. That is obviously good for morale. As the value of the company increases the value of the shares increase, although, as Senator Ross pointed out, sometimes because of the stock market fluctuations one can appear temporarily at least to have backed a loser. If one makes people owners, they will behave differently and will tend to stick around because they have a vested interest in the success of the company.

In many countries the situations are different because share options are taxed much more leniently. This will act as a vacuum, sucking people away from Ireland. Coupled with that is the problem of wage inflation, which can be addressed partly by the concealed benefit of share options. Staff turnover rates in the industry in Ireland are running at 20%, and annual salary inflation is more than 15% in the average case and significantly higher for key staff. One can compare this to some rather interesting and curious statistics form some other countries which surprised me. Ireland's salary inflation of 15% compares with levels in Italy of 6% in 1998 and 6% in 1999 also, and similar rates of inflation applied in France and Germany. If we do not use this mechanism to correct that disparity, Ireland will place itself at a disadvantage.

Although companies require capital, nowadays it is far easier to get because the capital markets are fairly fluid. Many companies in this sector find that financial capital is easier to secure and retain than the right kind of human capital. The software industry believes correctly that the remuneration of staff needs to be restructured in such a way as to reward innovation and commitment and to encourage longer tenure in companies. We must secure Ireland's capacity to compete globally. Senator Ross did not quite put a price tag on it but, as I understand it, the Irish Software Association has been looking for a reduction in the tax on share options from 40% to 20%. This would allow the sector to compete globally.

Fruit of the Loom used to be based in Donegal and it was a big employer – Senator Bonner would know about this. I have just returned from Morocco and the Moroccans are delighted with themselves because due to low wage costs they have been able to attract Fruit of the Loom there. We have lost it. This is already starting to happen in the software industry and that is the first indication that something may be going wrong.

We have already had a parallel experience. The lowering of corporation tax for multinational corporations, for example, has led to a huge boom in Ireland and it is obvious that the lowering of tax on share options might well have a further significant impact on this important industry. In the old days I was so involved in the tourism industry that to give it a boost I used to say that it was one of the most significant engines driving the economy and I am glad to say that has turned out to be the case. It is obvious that now the most significant engine driving the economy is the software business. An American is quoted as saying that Silicon Valley is the economic engine of the world and options are the fuel. We ought to learn from them. The Americans are not sentimentalists. They know exactly what they are about when it comes to business. They recognise that if they want to develop the industry they need to give an appropriate reward.

As Senator Ross said, most of the greatest names in the information technology business are located in Silicon Valley – Hewlett Packard, Netscape, Yahoo, Sun, etc. In 1997, they got £3.6 billion in venture capital investment and Silicon Valley accounted for $40 billion in exports or 40% of that nation's electronic exports. It has actually surpassed Detroit as the leading exporter in the nation. It has grown this industry largely because it has given this benefit of share options where a penal tax code is not in operation.

I like to think of myself as something of a socialist.

Mr. Ross

A champagne socialist.

Mr. Norris

I do like champagne. I also like smoked salmon so I suppose I am a smoked salmon socialist. It might appear that we are giving to the rich but that is not necessarily the case. We are certainly not taking from the poor in order to give this tax break. We are creating a situation which allows us to compete with the rest of the world. This is one of the most valuable things the Government could do.

If this tactic is permitted by the Government, the software industry believes it will be able to double employment in the sector to 40,000 by 2002, there will be a five-fold increase in indigenous exports to £2 billion and there will be software exports of £10 billion. The industry's ability to harness the necessary human capital to fulfil this potential for growth is undermined seriously by escalating pay rates. If the biggest threat to the industry goes unchallenged, Ireland's ability to achieve the national goal set out for the sector will be limited.

I have great pleasure in supporting this important motion. This is a significant industry. There are 24,000 people employed in it and it contributes £4 billion to the economy generally. Over 40% of technology related foreign direct investment in Europe has come to Ireland. I thought Ireland was the second largest exporter of software but I have obviously been overtaken by events because Ireland is now the largest. Despite the example of the lowering of corporation tax rates in a parallel industry, we are perhaps allowing our innate conservatism in these matters to put a splinter in the paw of the Celtic tiger.

I congratulate Senator Ross on this foresight in putting this motion before the House. In the light of the fact that there is so little competitive language between the motion and the amendment, I hope the Government will be able to withdraw the amendment so that the motion can be passed. The motion merely urges the Government. It ties it to nothing. I saw the grim little shake of the head which passed between the Minister and Government Senators – let us have that on the record of the House. The Government may rue this day.

I hope we do not have to put this matter to a vote. In any case, thanks to Senator Ross we have fired an opening shot in an important battle to ensure that this aspect of the Celtic tiger continues to thrive.

Ms Cox

I too welcome this debate. It is also my hope that we do not have a division on this question and that the Opposition Senators will support the amendment when they hear why we propose it.

I am saddened to hear Senator Norris refer to the Minister for Finance and the Minister of State as conservative. One of the reasons for our opposition to this motion is that tax concessions to employees of software businesses would not be sufficient. Our challenge in the software industry is to look at the overall picture.

A survey of e-business has been carried out by ISME, the organisation which represents small and medium sized businesses. Of the 16 recommendations arising out of the survey, none refers to profit sharing or share option schemes as being necessary to retain employees. Senator Ross may argue that this is because ISME members are mostly small private companies. However, there are many other measures which the Government has taken, is taking and proposes to take to support the industry in recognition of its importance.

The Taoiseach has established an interdepartmental committee to oversee the area of e-commerce and the software industry. The Department of Public Enterprise, the Revenue Commissioners, and the Departments of the Taoiseach, Education and Science and Enterprise, Trade and Employment have participated in putting supports in place to encourage the development of high-tech industries. The Department of Public Enterprise has undertaken a huge programme of investment in infrastructure. It has been involved in the liberalisation of the telecommunications market. We have been successful in setting up global crossing deals and many advanced communication infrastructure projects and corporate infrastructure projects are under way, with an advisory committee on tele communications. We have recognised that without the infrastructure in place, Ireland cannot retain high-tech industries. This is one of a number of measures we have initiated under the Department of Public Enterprise.

The Department of Education and Science has introduced the IT 2000 project which is running in schools in partnership with businesses. This project will educate young people, starting at the beginning and giving young people the information and knowledge necessary to become the software programmers, systems analysts and business analysts who will be needed to run this business. Some 95.2 million were provided for additional third level places in e-commerce and software development.

The Department of Enterprise, Trade and Employment has worked very closely with overseas enterprises and with IDA Ireland, SFADCo and Údarás na Gaeltachta in attracting businesses and maintaining very strong links with businesses which have been in place in Ireland. I cite the example of Digital, which was established in Galway 28 years ago. The company has since been taken over and still operates as a software house based in Galway, providing employment to almost 1,000 people. At one stage as many as 1,700 people were employed in Galway in that industry.

This debate is not merely about tax concessions for employees. That may hold employees but if companies are not there, tax concessions for share options will not make a difference. The tax implications are only part of the question. One of the nice things about the software business and the high-tech industries is the possibility they afford of businesses operating in a very flexible manner. This flexibility will allow working tele-working, working from home or from remote locations, flexible working hours, mothers' hours, job sharing and a partnership approach which can tailor the workplace into something which is more family-friendly and, therefore, more employee-friendly.

Many people who choose to return home to Ireland do so because of our quality of life and because they want to bring up their children in the environment in which they grew up. They want to bring their children to their local schools and local areas. We must encourage the additional supports necessary – and not just in the taxation area – to extend the environments in which employees can work.

We are not simply looking at tax concessions to employees in software businesses. Tax concessions will not be sufficient to attract and maintain business or the human resources necessary to keep our competitive edge. We must look at the broader issue. The Government and the Minister for Finance are doing that. To call the Minister a conservative is a joke, but I am glad Senator Norris has found another way of bringing humour to the debate.

One of the reasons for our success in this area has been our openness to change and new ideas. The Government, through the consultative committee and in the commitment given in the Programme for Prosperity and Fairness, intends to ensure that we will look not only at the way tax treatment of employees' financial participation can be improved but also at the wider picture. We must examine the opportunities to mould new ways of working and to develop the market so that the people who would work in this industry will stay in Ireland, regardless of tax concessions. As with any investment which people choose to make, a tax concession is never a good enough reason.

We are not taking a narrow focus. Our approach will be broad and we will be open minded. We will use our opportunities to develop family-friendly workplaces and an environment which allows families to grow up with the quality of life which those who live and work in Ireland have come to expect.

Mr. J. Doyle

I have witnessed the growth of the software industry from very humble beginnings in the early 1980s. This has been a unique experience. I have happy memories of visiting San José, the capital of Silicon Valley and the birthplace of dozens of the most powerful and successful companies, such as Hewlett Packard, IBM, Intel and so on. Thousands of smaller companies which are also successful in their own right have been established there.

When I visited the valley in 1985 I was part of a delegation led by the then Lord Mayor of Dublin who is now Taoiseach. Dublin had been twinned with San José in 1984. At that stage we had no great knowledge of the computer industry. Before we went to San José we went on a fact finding mission and visited three companies in Dublin that were mostly involved in hardware. I did not know the difference between hardware and software then. That shows how little knowledge we had.

The delegation was aware that computer graduates from Trinity were finding employment in the valley. We hoped that when they became decision makers in their industry that they would remember Ireland and establish a base here. That was the delegation's main objective during our visit to the valley.

I will give the House a flavour of how far behind Ireland was in the software industry. We had no IDA representative in San José. IDA representatives were based in San Francisco. On a number of occasions the IDA had endeavoured to secure an interview with the management of IBM, one of the major players at that time, but they were completely ignored. Fortunately, the mayor of San José was very favourably disposed towards Ireland and he arranged a lunch where the Taoiseach and I sat at the same table as the vice-president of IBM. During lunch the vice-president told us that he was responsible for all of IBM's business in North and South America. That put us in our place. We were there to make a case for this very small island. We told him about the progress we were making and that a number of our graduates had found employment in Silicon Valley. To our amazement he said, "If what you tell me about Ireland is true then why have you not joined the Common Market?" Ireland joined the Common Market 13 years earlier in 1972. He was a bit embarrassed when we told him that. But then he took out his business card, handed it to the IDA representative and said we could have an hour of his time whenever we wished. IBM is now one of the biggest players in the Irish software industry. On the last occasion President Clinton visited Ireland he went to Gateway 2000 and announced that there were 200 American firms operating out of Ireland. From a very humble beginning our computer industry has mushroomed.

The software industry has grown to become one of the most important sectors of our economy. As Senator Ross said, it employs 24,000 people and contributes £4 billion to the economy annually. We are now the second largest producer of packaged software, just behind the United States. This is an amazing achievement. Silicon Valley grew from a small apricot farming community to be the powerhouse of the world's computing industry. Who would have thought that, at the start of this millennium, Ireland would be the second largest exporter of software in the world?

At present the industry is facing significant challenges and that is what this motion is about. The average turnover in employees is approaching 20%. The percentage is significantly higher in key staff areas. I have some experience of the financial sector and I am aware that it too has a huge turnover in staff. Companies are giving people bonuses so that they will still be with them in six months' time. Measures must be put in place to keep staff in key industries. As Senator Norris has said, it is now easier to secure financial capital than to retain the type of human resource capital that is needed. Who would have thought that this could happen in Ireland, that human resources would be a problem rather than capital? This is what is happening in the computer industry.

Remuneration of staff must be constructed in such a way as to reward innovation and commitment and to encourage longer tenure in companies. The Irish Software Association recommends that this could be done through the effective taxation of share option schemes at 20%, the rate of capital gains tax. Taxation of share options should be a single event taking place when shares are sold off. If this measure is not put in place then it will seriously hamper the growth of the Irish software industry by encouraging the movement of employees and development to lower taxation economies.

Share options are widely believed to have played a huge part in the success of Silicon Valley. Granting share options is the practice of allocating shares to employees in a company so that they become part owners. As the value of the company increases the value of the shares can increase dramatically. Employees have a vested interest in the success of their own company.

If this measure can lead to the continued success of Ireland as a major player in the software industry then I concur with the sentiments expressed in the motion.

Minister of State at the Department of Finance (Mr. Cullen)

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

"acknowledges the support the Government already gives to industry generally, including the high-tech sector, and supports the work being undertaken on the tax treatment of employee financial participation by the Consultative Committee established for that purpose under the Programme for Prosperity and Fairness."

I thank Senator Ross for raising this important issue this evening. I would be surprised and disappointed if Senator Ross, in the context of what he said earlier, considered me to be a conservative. Not much has been said about my senior colleague, the Minister for Finance. Some things have been said about me. Conservatives are afraid of being innovative and we are not afraid of that.

Mr. O'Toole

Whoever is in charge is automatically conservative.

Mr. Cullen

I have listened to what Senator Ross has had to say about a number of things over the past three years since the Government came to power. The Minister and I have talked to every group and organisation that wanted to meet us. We have looked at the opportunities that exist in the hi-tech industry and we have made many changes over the past three budgets. I am not saying that we have done everything. Perhaps we can give more consideration to the industry. I have an open mind on this matter.

I firmly believe that the more ownership an employee feels he has within an organisation the greater the success potential for that organisation. This principle works. It is one mechanism we can use to move from State owned monopolies to the more competitive arena.

I welcome this opportunity to outline the supportive stance which this Government is already taking in the case of Irish industry, including the high-tech sector, both through direct expenditure and via the tax system. Successive Administrations over recent years have facilitated the creation of a positive business environment for industry in Ireland which is attracting an increasing level of private investment. I know that a Senator was not happy with this development earlier in the debate.

In comparison to other European countries, Ireland offers an attractive package of financial incentives combining a supportive tax policy and the provision of grants towards start-up costs. The Government is also conscious of the need, in an increasingly competitive and global business environment, to adopt new ideas to maintain Ireland as an attractive location for investment and also to encourage an enterprise culture. All of this is relevant in the context of what we are discussing here. We must look at the overall picture.

Apart from attracting overseas investment, the Government is committed to supporting the development of the indigenous sector through Enterprise Ireland which provides a one-stop-shop for industry. Over the life of the national development plan a total of £3.8 billion will be spent on measures to ensure Ireland remains an attractive location for investment under the Productive Sector Operational Programme. Some £1.9 billion will be spent on research, technological development and innovation and £1.9 billion on industry.

The recently launched £560 million technology fund will support advanced research in strategic technologies, particularly the development of world class capabilities in niche areas of information technology and biotechnology. This investment should ensure that Ireland remains one of Europe's most attractive locations for knowledge based and innovative high-tech investments.

In July 1998, following detailed negotiations, the Government reached an agreement with the European Commission for the introduction of a single 12.5% rate of corporation tax across the board. The timetable to achieve this rate is set out in domestic legislation. Members will be aware that the rate from 1 January 2000 will be 24%, from 1 January 2001 it will be 20%, from 1 January 2002 it will be 16% and from 1 January 2003 it will be 12.5%. These rates apply generally to trading income. A 25% rate applies in the case of non-trading income.

In order to assist small and medium-sized enterprise the Government decided in the recent budget to bring forward the 12.5% rate for small and medium enterprises. The 12.5% now applies to small and medium-sized enterprise whose total trading profits do not exceed £50,000 per annum. This is a significant benefit for such enterprises, many of which would include firms in the software sector. Successive Governments have supported the policy of reducing the tax burden on labour and capital and this has helped us to achieve the vast growth rates we see today. It is, of course, only one of the many factors that have made our economy competitive, the most important being the skills and acumen of our businesses and employees.

It is important to note that EU considerations have begun to impinge more and more on the national tax policy initiatives of member states. The most direct impact arises from the EU treaty on state aids. While these treaty provisions have been in existence since the treaty was signed, the European Commission has in recent years begun to take a more active role in its application to taxation matters. State aid, as such, is not prohibited as the Commission may grant exemptions or clearance for certain schemes, for example, for areas lagging behind in terms of their economic development.

Consequently, in relation to the intent of the Senators' motion, which calls for the provision of specific tax reliefs for the high-tech sector, one must be mindful of EU state aid rules. Any proposal for a tax concession will have to be considered in the context of a relief that will have general application rather than specifically applying to the software sector. I appreciate, however, that the Senator was driven by particular difficulties arising in the software sector.

Mr. O'Toole

Not at all, he was driven by his constituents.

Mr. Cullen

The principle of what he says applies across the board.

Income tax reductions are an important part of the Government's strategy to maintain and improve competitiveness and to encourage the take up of employment. The last three budgets have seen major progress made in taxation policy. The standard and top rates of income tax have been reduced to 22% and 44% respectively and the Government is committed to reducing these rates further. The Government also recognises the need to focus the tax system on the low paid and a national minimum wage of £4.40 per hour was introduced in April. A commitment has been made as part of the Programme for Prosperity and Fairness to exempt, over time, all of those on the minimum wage from tax. Increases in the personal and PAYE allowances since 1997 have also removed approximately 176,000 low paid persons from the tax net, including 40,000 elderly people. This ensures that no income tax is paid on incomes of less than £110 per week. These income tax changes have resulted in very significant increases in the net pay of all employees, including those in the software area.

The Irish tax system already contains a number of supports for employee share schemes and recent Finance Acts have significantly improved these tax reliefs. The aim of providing tax concessions for employee share schemes is to encourage such schemes, thereby increasing the level of partnership in the firm, improving the performance of the company, its profitability and widening share ownership. The Government is fully committed to employee share schemes and profit sharing as means of fostering partnership at the level of the enterprise. I share the view that greater employee share ownership and profit sharing can also be ways to help Irish industry to be more flexible and to meet the challenges of the global economy by tying wages more closely to performance.

There are currently three main types of tax relieved employee share relief schemes – the approved profit sharing schemes, employee share ownership plans and save as you earn share option schemes. Tax relief for approved profit sharing schemes has been available in Ireland for the past 18 years. There are 343 such schemes in existence. These profit sharing schemes must be approved by the Revenue Commissioners and an employee may receive from his or her employer up to £10,000 of shares per annum free of income tax. One of the major conditions of the scheme is that the shares should be held for at least three years. These schemes have become increasingly popular in recent years and 47 new schemes were approved by the Revenue Commissioners for the year to 5 April 2000.

Employee share ownership trusts are intended to operate in tandem with an approved profit sharing scheme. Shares must be made available from the employee share ownership trust via an approved profit sharing scheme. The employee share ownership trust, however, can obtain finance by borrowing from the employer company or from a bank, receive dividends and sell shares, as well as take contributions from the employer company. The ESOT can hold shares for much longer periods – up to 20 years – than an approved profit sharing scheme, which must distribute the shares to participants within 18 months of receiving them.

The amount of shares that can be appropriated to each employee tax efficiently from an employee share ownership trust is generally a maximum of £10,000 per annum. In certain circumstances this figure can, on a once off basis, be increased to £30,000 where shares have been held as security for borrowings. To date there is one approved share ownership trust – Eircom. The Revenue Commissioners also have a number of other applications on hand.

The Finance Act, 1999, introduced tax reliefs for savers who are in share option schemes. There are two aspects to this relief. The first element is an approved savings related share option scheme which is offered by employers and can include a discount of up to 25% on the price of the shares when the option is granted. There is no income tax liability on the discount. The second element is a certified contractual savings scheme which is the means used to save the money to buy the shares. Members of a scheme must save for a three or five year period. Individuals who save for a five year period may leave their savings on deposit for a further two years. Employees can save between £10 and £250 per month and any bonus or interest on the savings is paid free of tax. The save as you earn legislation does not require employees to purchase the shares at the end of the savings period. This ensures that employees would not be forced to buy shares where the price of the shares had fallen below the offer price. To date, 32 companies have been approved by the Revenue Commissioners to operate the SAYE schemes and these companies employ 35,000 people. In addition, 29 companies have submitted preliminary documentation to the Revenue Commissioners for consideration and these are currently being examined. It is not as bleak a picture as Senator Ross suggests.

Recent Finance Acts have improved the attractiveness of employee share schemes and the number of such schemes has increased substantially. The amount of shares that can be appropriated to each employee tax efficiently was increased from £2,000 to £10,000 per annum. The period for which shares must be held to avail of tax reliefs has been reduced from five years to three years. The Government also made significant changes to the tax rules on share options in this year's Finance Act. The main change that employees in the computer industry are seeking is to remove entirely the income tax charge on share option schemes in order that the only tax liability would be capital gains tax charged on any gain on disposal.

Under current rules, where a share option is granted to an employee, he or she is charged income tax at the marginal rate on the difference between the price paid and their market value at the end of the exercise. Following the enactment of the Finance Bill, 2000, on 23 March, this income tax liability can now be deferred until the shares are sold or for seven years, whichever occurs earlier. This deals with the situation in which employees were forced to sell shares to pay the tax. The tax change makes it easier for employees to acquire and hold shares. When the shares are disposed of the individual may also be liable to a capital gains tax charge of 20% on the difference, if any, between the market value of the shares at the exercise of the option and the sale price.

It has been said on a number of occasions that the Government is prepared to consider further tax concessions for other forms of employee financial participation. In this context, however, it must be borne in mind that providing tax breaks for profit sharing can, as with all tax breaks, create opportunities for tax planning and tax avoidance. Without being negative, we must be as fair to all as is practicable.

Senators will be aware that the Programme for Prosperity and Fairness states:

The Government and the social partners acknowledge the role of . . . ESOTs, gain sharing, profit sharing and other financial employee incentives in developing a deepening partnership and in increasing performance and competitiveness.

A consultative committee involving the ICTU, IBEC and appropriate Departments and agencies will be established to prepare proposals for consideration in the budget later this year. I am not dismissing his point but Senator Ross's remarks were unfair. The Minister is taking the lead, as is the Department of Finance, but we live in an age of consultation and it has worked very well in many areas. There is an understanding of the potential of share options and what can be achieved. I do not see anything wrong with involving the social partners directly to ensure the maximum is achieved. That is good. The targets for conclusion being set in the Department of Finance are short and defined and are being delivered upon. I could say that it will happen without placing a timeframe on it which would mean waiting three or four years, as used to happen with a range of issues and where committees were used as a mechanism to do nothing. That has changed in many ways in Government and in different Departments, so I do not agree with the Senator. We need to deliver and, if the way to do it is in consultation with the social partners, then so be it.

The committee in question has already been established and has held meetings on 16 February and 23 May and is due to meet again on 21 June. It is examining all aspects of employee financial participation, including the tax treatment of profit sharing and share options. Important issues are involved which need careful consideration and the committee is the appropriate place to carry out such an exercise.

In the end, the Senator is right in saying that it is the Government which will decide on what measures should be taken in the public interest. The House will be aware from the debates on the Finance Bill that there is a wide measure of support across parties for new thinking and new proposals in this area. The considered views of Members of both Houses as expressed in those debates and this evening will inform the Government's deliberation on these matters. This is the democratic way to proceed and I assure the House in that regard and especially Senator Ross who is listened to.

Therefore, I urge Senators to support the Government amendment which recognises the efforts and achievements made so far and our firm intention of making further progress on this issue with the support of both Houses. Perhaps Senator Ross would consider and understand why the Government thinks it necessary to table an amendment. It embraces the point he is trying to make. If we do not deliver within the timeframe I outlined, it might be opportune to revisit the issue. If the Senator is serious in achieving the aims of his motion, I have provided him with the means to do so in what I have said.

Mr. O'Toole

I thank the Minister of State for his input and his consideration of this issue we have raised.

I support the motion moved by Senator Ross. There is a broader picture and I will return to the issue of taxation and its impact. We should recognise that we are debating a software industry which is uneven. To regard Ireland as the second largest exporter of software in the world is a classic example of how facts can mislead. While it is true and a statement of fact, much of the software we export has little added value. It is not much more than putting products in boxes before exporting them. That may sound demeaning but much of it is questionable and it does not mean we have a thriving computer software industry merely because we are the second largest exporter in the world. Many of those exports have had little intellectual or added value from this country. That is a huge problem for the future.

I would prefer to see the research and development end of the computer industry locating here than the assembly lines. Apple in Cork would be much better off if it dealt with the technical and support or the research and development ends rather than the assembly end. That is the future and this country could suffer badly. I remember ten years ago speaking on employment and unemployment and making the point that Fruit of the Loom was an unsustainable industry in the long term because the work done there was not attractive to parents as a future for their children. Many aspects of the computer industry are the modern equivalent of the Industrial Revolution in that they involve putting pieces together.

All that I have said is reinforced by the fact that we have the worst record in Europe in terms of investment in research and development, and that is a fact. Next to us is Belgium and it is twice as good as us. I know I am pushing an open door in that it is Government policy and I have heard Ministers make that point. I have argued the point with IBEC, during pre-budget discussions with the Minister and in consultation discussions on taxation during the negotiations on the Programme for Prosperity and Fairness that there should be a double tax break for reinvestment by companies in research and development.

A great deal more is involved than merely giving a break to people working in the industry. We need an industry which will develop on the basis of our intellectual input and added value. To do that, we need qualified people who will be paid to do simply that. Companies need to hold their nerve, take stock of the situation and invest the time, money and intellectual resources to develop their products rather than sourcing them from other ends of the world and basing an industry on other people's research and development.

Conceding the proposal in the motion would make coming to, locating and remaining in Ireland much more attractive for multinationals. Ireland is the country in Europe which would gain most from doing this. We are in the euro zone – I am not sure Senator Ross agrees with that – and that is attractive to the American market especially. American software geniuses hate being located in a country where English is not the spoken language. There is a huge attraction in coming to Ireland. If they must locate in Europe, Ireland is an attractive venue. Granting the added attraction of what is suggested in the motion would also make it more attractive for emigrants to return and, more importantly, taking the longer and broader view, the economy would gain from the greater input of these people. That must be the future.

Nothing is more likely to keep future Ministers for Finance awake than the stark figure of the percentage of GDP which is dependent on a handful of multinational computer companies which have locations throughout the world and which could move their operations out of the country to the Far East or wherever on the basis of a board decision. We have seen elements of that and more could happen in future. These people are obviously driven by market considerations and they will go wherever they get the best value. They get that here at present for a variety of reasons. While research and development is an expensive option for any multinational company, it would mean we would not be undercut by other countries because we would be able to deliver as cheaply as anywhere else. It would also mean we would have a substantial educated workforce to add that value and to participate in industry. That is hugely important.

The motion deals with employees but we should also examine the issue in terms of the broader economy. I shiver every time I hear people say that we have the most educated and computer literate population in Europe or wherever. Just as companies need to reinvest in research and development, the education system needs to continue to reinvest in computer literacy. The Government's decision to introduce Schools IT 2000 as an investment in computers in different levels of education has proved to be a huge success. Nonetheless we cannot rest on our laurels. We now need to progress that. Three years ago, the idea that every school in Ireland should be connected to the Internet and that pupils, classes and schools should have e-mail addresses sounded like something from Jules Verne, such as Twenty Thousand Leagues Under the Sea or Journey to the Centre of the Earth or the time machine. That has happened and we must now look to the next step. We need to do a great deal more. We need to harness that, bring it to bear and ensure people in education at whatever level, first, second or third, experience and interface with the most modern technology and the newest software and that teachers at whatever level are trained and encouraged to do that.

Senator Ross always likes to hear something pro-teacher in the debates on the motions he proposes. The teaching profession over the past three years, in its own time and voluntarily, has had almost 80% of its members retrained in computer skills. That has been done at no cost to the State. In the UK, the US and in western Europe, education ministers are trying to devise methods to achieve the same result. It is an example of what can be done through the consultation process which I am glad to see the Minister reinforced and restated in his contribution. Senator Ross will be delighted that there will be further consultation and that the Minister of State has listened to me and the other Members to ensure that the input of politicians will go right through the consultation process so they will not have to waste their time going to the partnership meetings under PPF. I support the motion.

Mr. Bonner

I welcome the Minister of State back to the House for the second time today. I welcome the content of the motion which we are debating and the amendment in particular. I was delighted to see Senator Cox taking part in this debate because she is our expert on e-commerce and on computer technology. She explained to Senator Ross the reason for the amendment which was reiterated by the Minister. I also concur with much of what Senator O'Toole said, particularly on the type of industry we have attracted to date and where we should be going from now on. He mentioned the computerisation in schools which Minister for Education and Science, Deputy Martin, introduced in his first year in office.

One of the problems we might have in the future is that while we are making a great effort to educate our young and make them computer literate, more needs to be done at national school level, particularly on the training of teachers and the availability of people to teach in the schools.

Only last week a national software conference was held in Ireland. It was clear that the growth that the sector has achieved in a relatively short time has been phenomenal. There are now over 750 software firms in Ireland employing over 23,000 people. We can reflect on the fact that except for the great work done by the IDA in the 1970s and 1980s, when unemployment was so high, that without the jobs created in telecommunications related industries at that time, our economic position would have deteriorated to an even greater extent.

Ireland has been active in the past 30 years in enticing inward investment in the telecommunications and related sectors to set up in this country. We have targeted industries with a high knowledge content as to the way to develop our economy. Notwithstanding the fact that the enlargement of the European Union is just around the corner, Ireland will continue to win a large proportion of future e-commerce business. Our third level institutions are producing top grade graduates and this does not go unnoticed by foreign investors. Many employees in software companies receive excellent wages simply because of the economic nature of supply and demand. I heard an interview with a number of employees who were employed in Northern Ireland who had moved to Dundalk and Dublin because of the higher level of the wages they were earning here in the e-commerce and computer industries compared with the wages they were earning in Britain and Northern Ireland. One of these employees doubled his wages by moving here.

This Government has also invested much in putting a world class telecommunications network in place. The Government has adopted a broad based approach built around the development of the following key priority areas: telecommunications infrastructure and cost, education and upskilling in the existing business sector, effective regulation, research and development. I note with interest the proposals included in the IDA Ireland annual report in 1999 which stated that achieving success in the e-commerce business in Ireland in the coming years is as important as attracting the electronics companies to Ireland was during the 1970s and 1980s. A number of key reasons are included in this report why e-commerce companies should set up in Ireland as a base for world-wide activities. The key incentives in this regard include the deregulation of the telecommunications sector which will ensure the development of a more competitive telecommunications market. There are currently over 30 licensed operators, 12 of whom are active in the marketplace. The enhanced connectivity from Global Crossing will provide Ireland with a state of the art network and virtually unlimited bandwidth at highly competitive prices. The network provides access to the major cities of Europe, the Asia-Pacific region and the US. Other incentives include the substantial investment in the telecommunications infrastructure in all regions and the Copyright and Related Rights Bill, which has been passed by the Seanad and is currently before the Dáil. This will provide Ireland with one of the most business friendly environments for the development and distribution of intellectual property rights.

A Bill is also set to give legal effect to electronic signatures and the writing of electronic contracts. This Bill is being sponsored by the Department of Enterprise, Trade and Employment. In this regard, I take this opportunity of congratulating our European Commissioner for Consumer Affairs, Mr. David Byrne, for setting in train the process for the regulation of contracts on the Internet. Commissioner Byrne has started the process of looking into mechanisms to govern consumer protection rights for people who enter into contracts over the Internet. The Commission wants to bring forward proposals to regulate procedures and dispute mechanisms for contractual arrangements entered into via the Internet. Entering into contracts on the Internet must bring with it regulatory procedures and dispute regulation mechanisms so that consumers who enter into contracts on the Internet are protected. Currently, the US Congress is also examining ways to protect consumer contractual rights for Internet business.

It is important that the EU and the US work closely together on these issues in an effort to bring about a common and uniform approach to deal with contractual arrangements on the Internet. The Government is also working with the education sector and the private sector to ensure that our future skill needs in the software sector are met. A wide variety of measures initiated by the Government include more than doubling the output of software engineers, the creation of over 5,000 new third level places, predominantly in computer science, engineering and software and the development of new network management programmes. Enterprise Ireland will also be looking for partnerships with other countries to help our software industry to continue with rapid growth. A total of £411 million has been allocated to various educational initiatives designed to develop appropriate skills to promote innovation and provide additional third level college places in high technology courses over the next four years, to which I referred earlier.

The Government has always assisted industry in general with its grants structure. Originally there was export sales relief and that is followed now by manufacturing tax relief, which will be expanded into all service industries as well. I am delighted that in obtaining Objective One status, the BMW region will retain the lucrative grants structure because the BMW region, particularly the west, has suffered greatly from a lack of investment and jobs created by Enterprise Ireland and the IDA. Their record in the west of Ireland has been dismal to date, but I am delighted that the Government has given a commitment that over 50% of the jobs created by the IDA will be in this region. The computer industry in general is easy to set up in places such as the west. It is easy to export the product afterwards. I remember reading with interest some time ago about a doctor in America had employed a secretary in either Mayo or Kerry, which shows the effect of the computer industry.

Senator Norris referred to Fruit of the Loom and the difficulties experienced with some of the manufacturing industries relocating in Morocco. The Government has made a great effort to replace those jobs in east Donegal, in particular, and has attracted two companies in the past year, providing over 300 jobs. One of those companies is Pacific Healthcare. At the official opening I thought all the employees would be highly educated with computer skills but I was amazed to find most of them had only come through a fast training course. The computer industry can cater for all types and levels of education.

I hope that the consultative body set up will deliver, in conjunction with Minister for Finance, Deputy McCreevy, and the Minister of State, Deputy Cullen, what Senator O'Toole seeks. I appreciate that has to be looked at. We cannot bring in schemes and improve existing schemes for one type of industry; we must be fair to all the other types of industry. The Government is tackling this problem and I hope the consultative body will deliver the incentives to which Senator Ross referred.

Dr. Henry

I welcome the Minister of State to the House. I hope he takes notice of what is said from the Independent benches tonight because many of those about whom we are talking are constituents of ours. Our great prosperity has been built on the information technology and pharmaceutical industries. It is important we recognise that and make sure the foot soldiers within those industries are given the rewards they need.

I have to express a personal interest in this debate because I have one son involved in this industry. I regret to say he is not in this country, not because of a lack of jobs or, indeed, the financial situation but because a large number of the jobs in this industry are very routine. As I am sure the Minister of State is well aware, young people like challenging jobs. We must make sure we keep enough of the information technology industry involved in research and development to give the challenge to those people who want to work in this area and the interface they need to stay here. When I ask my son about the jobs in Ireland, I am told there is nothing at the moment which would give him the challenge he is getting in his job in London. I suppose that is probably true.

Shortly after I was elected to this House, the Digital firm in Galway closed down. I remember saying to the then Minister, Deputy O'Rourke, that if we were able to hold on to the research and development cohort there, which was very good, we were bound to replace the industry very shortly. She made huge efforts to hold on to it and within months Boston Instruments came in.

It is important to recognise that we have to make a huge effort to hold on to the innovators in these areas. Iona Technologies was built up by three constituents of mine, Senator Norris and Senator Ross. These people have been extraordinarily important in building up these industries. They have to be able to see that there will be something for their employees so that they will stay with them.

Senator Cox made a thoughtful contribution regarding the position of women in the information technology industry. Sometimes I believe the Government will have to introduce conscription to keep women in their 30s and 40s in the nursing profession and in information technology because they are very badly needed. They comprise about 50% of the graduate workforce and are an even greater percentage in the operatives area. The Government would be well advised to re-open the issue of child care. Each year when the budget comes around, there is much mumbling about what must be done about child care but, alas and alack, nothing really concrete is done. I await with anticipation the opening of a crèche in this establishment. The situation has become so serious that if we want workers in a certain place at a certain time, one has to accommodate those workers. I suggest to the Minister of State that the lip-service given to improving child care provision is not enough. We must see some concrete action in that area.

I supported individualisation when the Minister for Finance brought it in. I thought it was a good idea and a move in the right direction, having suffered from the opposite for almost 30 years. I told the Minister, Deputy McCreevy, that I was once described by a tax official as being like a wholly owned subsidiary of my husband. I very much appreciated what he did in at least making me an individual operation. There has been too much lip-service in this area. We have to look at the employees we need and see what will facilitate them. Senator Ross put forward one area in which we could be supportive and I support the motion.

Mr. Ross

I thank all those who contributed to this debate, particularly those whose speeches were not scripted. I would also like to thank the Minister of State for his reply, which was disappointing. If I was critical of the Minister of State's attitude and that of the senior Minister to this matter in my original contribution, I make the point that I do not wish to withdraw those criticisms, even in the light of what the Minister of State said. While the Government is probably sympathetic to the sentiments in this motion, it shows a marked indifference to doing anything about it and it is very disappointing that it has done so.

The Minister of State's reply was basically a list of the tax concessions and incentives now available to people in various industries, particularly the software industries, and the profit sharing schemes. It contained much information of which we were already aware. His response to the plea to do something about the software industry and the dangers in that industry was inadequate.

As I have said before, I am little tired of coming into this House and hearing the Minister say something is a great idea but that we have to consult the social partners. I do not give two hoots about the social partners. What the Minister of State said tonight was that we are basically sympathetic to this idea, which is quite enterprising, but that we have to get permission from IBEC and ICTU before we do anything. That is what is happening. We do not need ICTU and IBEC to tell us whether this is a good idea.

Mr. Cullen

I agree.

Mr. Ross

It is either a good idea or a bad idea. Why can the Minister of State not tell us whether he will or will not do it? I am sick and tired of Ministers coming in here telling us there is a great committee which will decide and that they will come back to the House to tell us what the committee will allow us to do.

Dr. Henry

Hear, hear.

Mr. Ross

Senator Bonner said he hoped that committee comes to the conclusions in this motion. As it happens, so do I. The implication of what Senator Bonner said is clear, if the committee says "no", the Government will say "no". Why should the Government be dictated to on something like this?

The danger here is greater than the Government acknowledges. If the Government had been listening to the people who have been lobbying it, it would realise there is a real danger that some of these multinationals will go. These multinationals will go while the Government is telling us not to worry, that IBEC and ICTU are telling it what to do and that they will take a year to decide whether it is a good idea or not. It is a very simple operation to change a tax rate in this way. It is needs quick legislation – an amendment to the Finance Act. It could be done any day and it certainly does not need these people, who have only held two meetings and have another one coming up, to tell us whether it is a good thing or not.

It is not acceptable for a Minister of State to tell us a parliamentary committee is sitting outside this House without, as far as I know, any politicians on it – I am open to correction on that – but with various State agencies which have nothing else to do anyway telling us whether the enterprise economy will work. The last people who should be telling us about enterprise are IBEC, ICTU and the State agencies, the people with the safest jobs going. Even if every multinational disappears, they will still be sitting in safe jobs. It is ridiculous and it is not acceptable. It is not a way to govern this country and it is wrong. It is very easy for a Government to kick something aside to these people but it is not the way the country should be run. It is a complete cop-out.

I do not want to exaggerate the dangers and I want this motion to have a positive impact and tone. I want the Minister to extend this principle of giving tax allowances on share options throughout developing industries. Let us give them to workers in Intel, Dell and the other great multinationals and to the Iona Technologies and Baltimore Technologies, publicly quoted companies to which Senator Henry referred, but let us also give them to privately quoted companies. The liquidity in such companies makes it harder for them to release some of their capital. Let us extend this principle as a way for rewarding people. It works not just for the individuals but for the companies because it makes us competitive in a global industry and if we do not compete the dangers will be there.

I wish to conclude on a positive note. I hope the Minister of State leaves the House with a message for the Minister for Finance and the Government that this House will not put up with obstructive amendments but also that there is a real need for this enterprise economy to flourish courtesy of the Government, not the social partners.

Amendment put.

Tá

Bohan, Eddie.Bonner, Enda.Chambers, Frank.Cox, Margaret.Cregan, JohnDardis, John.Farrell, Willie.Fitzgerald, Liam.Fitzgerald, Tom.Gibbons, Jim.

Glynn, Camillus.Kett, Tony.Kiely, Daniel.Lanigan, Mick.Mooney, Paschal.Moylan, Pat.O'Brien, Francis.O'Donovan, Denis.Ormonde, Ann. Walsh, Jim.

Níl

Burke, Paddy.Caffrey, Ernie.Coghlan, Paul.Coogan, Fintan.Cosgrave, Liam T.Cregan, Denis (Dino).Doyle, Avril.Doyle, Joe.Henry, Mary.

McDonagh, Jarlath.Norris, David.O'Dowd, Fergus.O'Meara, Kathleen.O'Toole, Joe.Ridge, Thérèse.Ross, Shane.Taylor-Quinn, Madeleine.

Tellers: Tá, Senators T. Fitzgerald and Gibbons; Níl, Senators O'Toole and Ross.

Amendment declared carried.

Question put: “That the motion, as amended, be agreed to.”

The Seanad divided: Tá, 22; Níl, 16.

Tá

Níl

Tellers: Tá, Senators T. Fitzgerald and Gibbons; Níl, Senators Ross and Norris.

Question declared carried.

Bohan, Eddie.

Bonner, Enda.

Cassidy, Donie.

Chambers, Frank.

Cox, Margaret.

Cregan, John.

Dardis, John.

Farrell, Willie.

Fitzgerald, Liam.

Fitzgerald, Tom.

Gibbons, Jim.

Glynn, Camillus.

Kett, Tony.

Kiely, Daniel.

Lanigan, Mick.

Lydon, Don.

Mooney, Paschal.

Moylan, Pat.

O'Brien, Francis.

O'Donovan, Denis.

Ormonde, Ann.

Walsh, Jim.

Burke, Paddy.

Caffrey, Ernie.

Coghlan, Paul.

Coogan, Fintan.

Cregan, Denis (Dino).

Doyle, Avril.

Doyle, Joe.

Henry, Mary.

McDonagh, Jarlath.

Norris, David.

O'Dowd, Fergus.

O'Meara, Kathleen.

O'Toole, Joe.

Ridge, Thérèse.

Ross, Shane.

Taylor-Quinn, Madeleine.

An Cathaoirleach

When is it proposed to sit again?

Mr. Cassidy

Tomorrow at 10.30 a.m.