Léim ar aghaidh chuig an bpríomhábhar

Seanad Éireann díospóireacht -
Thursday, 25 Mar 2010

Vol. 201 No. 12

Finance Bill 2010 [Certified Money Bill]: Committee Stage.

Government recommendation No. 1:
In page 11, line 14, to delete "one month" and substitute "three months".

On Report Stage in the Dáil the Minister for Finance agreed to accept an amendment proposed by Deputy Burton. The amendment requires that a report be prepared for Dáil Éireann on the tax forgone and the benefits in terms of job creation or otherwise arising from tax expenditure included in the finance Bill 2010. While the Minister was happy to accept the amendment, he was concerned about the timescale proposed. Having consulted officials in the Department, it is his opinion that it would not be practical to prepare such a report in the timescale envisaged without unacceptable compromises in its quality and substance, which would undermine the rationale for the provision. Accordingly, the recommendation proposes a change which will extend the time period for the preparation of the report from one month after the passing of the Bill to three.

I congratulate the Minister on her new appointment. Leaving politics aside, I do not agree with those who regard her appointment to the Department as a demotion.

The Senator should speak to the recommendation.

As the Minister is here, it is important that it be said——

I realise that, but we are discussing the finance Bill. I ask the Senator to speak to the recommendation.

——not just for the reasons articulated by the Minister. The arts, sport and tourism sectors are hugely important, not just to the economy but also to our sense of well-being and the future of the country. It is wrong for ill-informed commentators to regard the Department as a departure lounge. It diminishes and demeans the position and the office.

With regard to the recommendation——

The Senator has been given a great deal of latitude.

Thank you. With regard to the recommendation, I would prefer if the report could be prepared within one month rather than three but it is welcome that the Minister has seen fit to accept the amendment which was proposed by Deputy Burton in the Dáil and is willing to produce such a report. It is interesting to note that the preparation of a report by the Government does not of itself constitute a charge on the Exchequer, according to the Cathaoirleach. I note this because it anticipates a point I will make later. I am happy that the Minister has acceded to this sensible proposal and I will not oppose the recommendation that it be amended from one month to three.

I also welcome the Minister and, if the Acting Chairman will give me the same latitude, I hope to welcome her to Wexford for the opera festival in October.

Undoubtedly, she will attend many fantastic cultural events throughout the country in her new office. I wish her the best of luck.

I support the production of the report; it is an excellent idea. I understand there is already a provision to subject projects that cost more than €30 million to a cost benefit analysis in any case where State money is being spent. I do not know how well that policy has been adhered to in the last couple of years but I believe the provision was introduced in a finance Bill some years ago. It is only right that when millions of euro of taxpayers' money is being spent in this way, there should be a cost benefit analysis of the expenditure.

I also welcome the Minister and, with the indulgence of the Chair, echo the points made by Senator Alex White. I had already made the same points on the Order of Business today. We might have a debate some day on the Constitution in order that outsiders might learn something about the importance of the Cabinet, membership of it and how it is a collective decision making process. It is the most exalted position in our democracy and not to be rubbished by ignorant comment.

I wish to make another constitutional point. The function of a second chamber of parliament is to pick up on things that might go wrong in the first chamber. The Seanad should never pervert the will of the people, as articulated in the other House, and we have said that in all of our discussions. It should be used to change, inform, improve and do all the other things. This is a minor recommendation and it is rare to amend the Finance Bill in the Upper House. It shows one the need for a second thought on an issue. Even though this is only a small matter, the same applies. It is an important function. If there is another place to consider the issues and decide if changes need to be made, it takes pressure off the Dáil. I support the recommendation. It is important to see it in its context.

I will clarify the point raised by Senator Twomey. I thank the three Senators for their kind comments. The cost-benefit analysis to which Senator Twomey referred was only for capital expenditure, but the Commission on Taxation suggested there should be a cost-benefit analysis of all of the tax expenditure. The Minister for Finance agrees with this and is coming back to the Cabinet in June regarding the other elements.

Recommendation agreed to.
Section 1, as amended, agreed to.

Recommendation No. 2 has been ruled out of order as it involves a potential charge on the people. The recommendation relates to a financial transaction tax or a Tobin tax.

On a point of order, it does not, in fact, do that. What the Acting Chairman has just said is inaccurate. It calls for the preparation of a report.


There seems to be a misunderstanding. I raise a point of order pursuant to Standing Order 40. With respect, there is a misunderstanding on the part of the Cathaoirleach because this is not a proposal for a Tobin tax, rather, it is a proposal that a report be prepared. There are seven other recommendations before the House, from my party and others, calling for reports to be prepared. In fact, we just agreed to a recommendation which calls for the preparation of a report. Recommendation No. 2 does not propose a Tobin tax, as much as I would like to do so. I propose a report be prepared by the Government into the feasibility or otherwise of having a Tobin tax. How is that a charge on Revenue when the other reports which we have called for are not? It is completely unclear. Standing Order 40 states "An amendment to a Bill, which could have the effect of imposing or increasing a charge upon the people or upon the revenue may not be moved, save by way of Government amendment". How has recommendation No. 2 been interpreted by the Cathaoirleach as a recommendation which could have the effect of imposing or increasing a charge when we are simply discussing the preparation of a report, in common with other recommendations which have not been ruled out of order?

On a point of order, I concur completely. I read the Standing Order and I cannot see the difficulty. We may be missing something. I cannot see how recommendation No. 2, which calls for a report on a form of taxation raises the question of a potential charge on the people or State. I do not see it. The Cathaoirleach may have made an error. It may have been misread. A casual reading of the amendment may give the impression that it called for the introduction of a Tobin tax, which is not the case. In fact, it is quite the reverse. It puts the introduction of anything on hold. The recommendation asks for a report to consider a tax on financial transactions worldwide, which has been widely discussed in other places around the world. People have examined the matter and there is an international discussion on it. The proposal is that there be a discussion, following a report, on the issue. I ask the Acting Chairman to reconsider his ruling on the recommendation.

I concur with what the other two Senators have said because this is the only way this House can put in something for discussion on a financial matter. If one takes out the word "report", it would be ruled out of order as there would be a charge to the Exchequer. The only way we can raise relevant issues which may put a charge on the people is to look for a report. If the Cathaoirleach now says even that will be ruled out of order, it means there is no opportunity for us to look laterally at anything which will come into a Finance Bill. That is crazy.

I sympathise with the points made by the Senators, but the Cathaoirleach has ruled on the matter and no further action can be taken. I am moving on.

Recommendation No. 2 not moved.
Section 2 agreed to.

Recommendation No. 3 has been ruled out of order as it is outside the scope of the Bill. It relates to a financial stimulus for jobs, job creation and a household stimulus package for consumers.

On a point of order, I do want to be awkward but this is an error. This is the same idea. The Sinn Féin recommendation refers to the need to examine the introduction of a stimulus package. Can somebody tell us from where the charge comes? I am not comfortable with challenging the rulings of the Chair; it is not something which is done lightly. Would the Cathaoirleach at least undertake to re-examine these rulings for the debate on Report Stage? I do not want to hold up the business of the House at this stage. There is a fair way of dealing with this issue. I ask the Cathaoirleach to discuss it with the relevant people. I am disinterested because they are not my recommendations but, in terms of how the House does its business, I am keenly interested in this issue.

Two very important issues have been raised. One asks the Government to examine the concept of a Tobin tax, with which the Acting Chairman has dealt, and the other is the idea of a financial stimulus for job creation. There is no question of a cost.

I sympathise with what the Members have said, but the Cathaoirleach has ruled on the matter. I agree to ask him to speak to the Members who tabled the recommendations concerned. There may be a possibility of doing something but it will depend on the Cathaoirleach whether the recommendations can be introduced on Report Stage. That is as far as I can go and it is fair enough. We can discuss the point in general.

That is very helpful. I wish to establish that there will not now be another reason why the recommendations cannot be raised on Report Stage, as they have not been moved on Committee Stage.

The Senator is anticipating the ruling. I have agreed to ask the Cathaoirleach to speak with the Members who have tabled the recommendations.

That is very helpful, but I am concerned it could be a dead letter. In normal circumstances, an amendment which is not moved on Committee Stage cannot be moved on Report Stage. Another obstacle has now been created.

The Senator may raise the point regarding the recommendation on section 3. If that helps, Senator Doherty may speak to the section.

I appreciate the Acting Chairman's point on the Cathaoirleach. I attended a meeting of the Joint Committee on the Implementation of the Good Friday Agreement today. When I entered the Chamber I received a letter which stated five of my recommendations had been ruled out of order for three different reasons. One because there was a potential charge, which I contest, the second because they are outside the scope of the Bill and the third because two recommendations created a potential charge on the people and one on the Exchequer. They are worded in such a way that we can debate them in this House. Committee Stage is the appropriate place to tease them out.

I challenge the guidance which has been given, namely, that this is outside the scope of the Bill. If we are to deal with a Finance Bill we need to deal with the policies behind it and a job creation and stimulus package. We are saying the Government should introduce it at this point in time, because Sinn Féin has proposed a job creation and stimulus package and a household stimulus package. The Minister should examine it. In contrast to the Labour Party proposal, we are not asking the Government to produce a report. Rather, it is up to the Minister to examine this issue.

I welcome the chance to review the decision taken by the Cathaoirleach in ruling five of my recommendations out of order. I do not intend to speak on any of the others, but I will speak on each section and I will table the recommendations on Report Stage.

Recommendation No. 3 not moved.
Section 3 agreed to.

I move recommendation No. 4:

In page 13, before section 4, but in Chapter 3, to insert the following new section:

4.—Section 531A(1) of the Taxes Consolidation Act 1997 is amended by the substituting of the following for the definition of "aggregate income":

" ‘aggregate income for the year of assessment', in relation to an individual and a year of assessment, means the aggregate of the individual's relevant emoluments in the year of assessment, including relevant emoluments that are paid in whole or in part for a year of assessment other than the year of assessment during which the payment is made, and relevant income for the year of assessment, but excluding any amounts paid by an employer under Section 787E(1) and Section 787E(2).".

This recommendation is linked to another section. If someone has taken out a mortgage mid-way through the year, he or she will lose the full year of mortgage interest relief. This needs to be examined again because 26,000 households are in negative equity and another 26,000 are in difficulties. Every possible opportunity should be examined by the Government to give them mortgage relief.

This is an idea that is worth exploring and I completely support it.

I am sorry, but I understood that the next recommendation was on pensions. Is that not correct?

This is recommendation No. 4 and relates to a new section.

I beg pardon. I appear to have matters in the wrong order. This issue has been debated in the Dáil as well. We understand that the cost of the recommendation proposed by Senator Twomey would likely be in the order of €16 million per annum, with a total cost of €64 million over the lifetime of the proposal. It is very difficult to justify these costs in our current economic circumstances. The Minister, in setting the 2004 date, decided this was the optimum date for cut off since that was the point at which prices started to go up. It was believed that was the most appropriate date having regard to house prices at the time and the extent of benefit relief over the next few years.

We need to do more to help individuals who have mortgages because 20% of them are now in negative equity, and 26,000 are more than 90 days in arrears, with another 26,000 thought to be in arrears for shorter periods.

Recommendation, by leave, withdrawn.

I move recommendation No. 5:

In page 13, before section 4, but in Chapter 3, to insert the following new section:

"4.—The Principal Act is amended—

(a) in section 238(2) by the insertion after “yearly interest of money” of “and apart from any period payments made to a plaintiff by means of compensation or damages for any wrong or injury referred suffered by an individual in his or her person or in his or her profession”, and

(b) in section 613(1)(c) after “profession” insert “, whether by once-off lump sum or by way of periodical payment”.”.

This is an issue I have dealt with over many years. I have discussed it with the Minister on a number of occasions over recent months. I have also discussed it at length with the finance spokespersons of the other parties, Sinn Féin, Labour and Fine Gael. It was discussed in the other House as well. To put it in context, this arises from a court's decision to grant compensation to a person. The compensation might arise from a medical negligence case, a car accident or other circumstances. It involves the court being required to assess the quantum of damages or compensation to be paid to the injured party. The court makes the judgment on the basis of the life expectancy of the person concerned multiplied by the annual costs. That, in effect, is a lump sum which does not attract taxation and it will provide for the person for the rest of his or her natural life.

A number of things arise in that context. One is that enormous advances in medical science and technology mean that a person who might not be capable of independent living today could perhaps in five or ten years' time make a successful recovery. For that reason the Judiciary on a number of occasions has raised the point that if an annual quantum could be assigned by a court as opposed to one large lump sum, this would be much more efficient and would save everybody. It would save money at a time when the Government is trying to cut back on the cost of insurance, and this would be a cost on a business enterprise or insurance company so there is a real cost saving involved. In addition, there are gains to be made because sometimes money is awarded to a person who will have no experience whatever of dealing with such large sums. Consequently, an issue can arise as was raised today on the Order of Business, namely, the cost of professional charges involved in having such moneys looked after. However, if the money were to be paid annually through the court offices, it would be much more effective. That is the view of industry and all the groups I have spoken to on this. It is certainly the view of the various groups that have looked into this over the years.

That is leading to what I am seeking in this recommendation. The current legislation was brought into being by every party represented here. It was introduced by Deputy Pat Rabbitte as the Minister of State dealing with insurance in the Fianna Fáil-Labour Government and improved on by the Deputy John Bruton-led coalition Government, so the issue is well understood in terms of the fact that it should not attract taxation. The very minor issue here is the recommendation that if it is to be paid annually, equally it should not attract taxation. There is no revenue loss involved. It is just that the courts at the moment cannot grant structured compensation on an annualised basis.

I can anticipate what the Minister will say in this regard and I believe the Department lacks the confidence to deal with it. The Minister will not be able to come up with an argument against the point I am making. I have seen the little bits and pieces, this is a good, well-travelled idea and I look forward to the Minister's full support for it.

I fully support everything Senator O'Toole has said. As regards the courts this, in effect, is litigation lotto where the judge is being asked to play the role of God in deciding how long somebody might live and what his or her quality of life will be in ten or 20 years' time, which is impossible. If the judge errs on the side of the victim, he or she will be granting a large payment. Conversely, he or she may not grant sufficient moneys as might be expected to fund the life of the victim. What Senator O'Toole is saying is perfectly reasonable.

The courts can give a judgment that so much money is to be paid out annually and this can be linked to inflation to provide for any additional costs for the person involved. There is always the opportunity for the person concerned to go back to the courts if he or she believes the moneys are insufficient, in the same way as someone who might be granted a divorce can return to the courts and seek a higher settlement in, say, five years' time if the former spouse has made a great deal of money in the meantime. I do not believe this is impossible and it would certainly improve matters because some individuals who have received large pay-outs have spent the money inappropriately and have been forced to fall back on the State in any event for their continued care. What is being proposed is sensible and should have been done this years ago.

I support the recommendation and the idea behind it. It is important to make the distinction between the principle of introducing staged payments in, say, personal injuries accidents and the tax treatment of such payments. Although they are linked, these are slightly different. What I understand as being proposed is a very sensible progressive means of ensuring the tax treatment of such staged payments is appropriate and satisfactory and I agree with this as a sensible way to approach matters.

The general debate about the appropriateness of staged payments is one we still need to have. This is how they should be treated in the tax code rather than actually introducing them in this manner, as I understand it. I do not believe the change on its own could be brought about in a taxation measure such as the one Senator O'Toole rightly proposes. As a practitioner in the area I can see a good deal of merit in the idea of staged payments for plaintiffs in personal injuries actions. I would not necessarily agree that this should be the norm for all plaintiffs in those situations. Very often there is a high premium for someone who has been involved in a catastrophic road accident, a medical negligence action or whatever, and his or her professional advisers — medical, legal and financial — may need to be aware of the individual's competence to deal with a large sum in damages awarded by the courts and usually divided between general and special damages. Special damages tend to involve the biggest sum and arise where, for example, somebody needs to have his or her house changed or something done in order to accommodate their living conditions into the future. Contrary to what some might think about staged payments, there may be a high premium and people should understand at an early stage where they stand in terms of their future financial position. It is not as if staged payments would necessarily suit all requirements but, that said, very serious consideration should be given to the option of allowing judges to do this in particular circumstances, including those to which Senator O'Toole referred. Let us have that discussion and liberalise the position on this award. I would support such move. If it was done, the tax code would have to reflect it.

This is a prescient move by Senator O'Toole. If we can make such a progressive move in regard to the awards, this is the way the tax code should treat them. It would make a lot of sense.

I agree with everything the three Senators have said. The Minister for Finance would be favourably disposed towards such a move. However, Senator White put his finger on the issue in that there may be a need for legislation, regulations or, at least, rules of court to allow periodic payments to be made. The President of the High Court has already asked Mr. Justice Quirke to establish and chair a medical negligence working group to consider this exact issue. However, it would be premature to introduce a tax exemption before the legislation was actually introduced. The group is due to report by the end of November. If this was approved — we would all accept all of the arguments the Senators have made — the legislation, regulations or rules of court would immediately follow and the Minster for Finance would hope to be in a position to introduce the tax exemption at that stage.

I regret the fact that the Minister has kicked it down the line. It is not that I do not have full confidence in Mr. Justice Quirke to deal with this matter. In fact, of all those involved in the Judiciary, he is the one I would be delighted to see deal with it because he has dealt with such cases. Much of the argumentation I have made to the Minister today comes from his comments from the bench.

The point made by Senator Alex White is an important one and I should have dealt with it when presenting the recommendation. What I am proposing could only take place where both the defendant and the plaintiff agreed to structured payments. I am not suggesting structured payments should become the norm. All I propose is that they become an option.

With regard to asking somebody to examine this issue, I draw the Minister's attention to the report of the Law Reform Commission, LRC 54 of 1996. At the time the commission consisted of the former judge of the Supreme Court, Mr. Justice Anthony Hederman; Mr. Justice Buckley of the Circuit Court; Professor Duncan, barrister at law and professor of law and jurisprudence at the University of Dublin; and a few others such as Ms Maureen Gaffney. In fact, the secretary to the commission was a Mr. John Quirke, although I do not think it is the same person to whom the Minister referred.

As the Law Reform Commission went through this issue in detail, there is nothing new in what I am proposing. The report states the structured settlement scheme should be made available and that it should be permissible to operate it with certain conditions such as the ones correctly referred to by Senator Alex White. Section 16.65 of the report states:

It follows that the only way the tax system might encourage the use of structured settlements would be "to use the carrot rather than the stick". An attractive option would be to extend the availability of tax relief . . . We recommend that tax relief be so extended.

Therefore, the commission's report dealt with every aspect of the issue and recommended the extension of the tax relief to the Government at the time.

I should have noted that I am vice chairman of the Personal Injuries Assessment Board. Although the board does not deal with this type of case, I am aware of issues on the edge. However, there is nothing new about this. The Law Reform Commission report is available and Mr. Justice Quirke has no problem with it. While I do not want to put words in hismouth, it would be his view that the Government should move ahead along the lines I have suggested.

While I do not want to raise a particular case, there is a brain damage case before the courts in which the defendant has agreed to pay on an annual basis to look after a person. In that case the judge is caught. Everyone is in agreement that this should be done, including the judge, but he cannot make the award as he would wish to and the only course is for him to award a lump sum. To deal again with Senator Alex White's issue, this is a case in which everyone agrees this is the way to do it but the court and the judge are hamstrung.

The Minister should consider the position on this point. Why do we need a further examination if there is a full Law Reform Commission report in front of the Minister?

As the Senator knows, having a Law Reform Commission report and the required legislation in place are two very different things. I am not in any way at odds with the Senator, nor is the Minister for Finance. In fact, we are favourably disposed to doing exactly what he wants to do. However, given that the report to Mr. Justice Quirke is due by the end of November, I hope we will be in a position, perhaps in the next finance Bill, to do what he wants to do. While sympathetic to what we want to achieve here, the Minister for Finance considers it would be premature to do it prior to the introduction of the legislation which would underpin periodic payments that would be made. With this work, there is also a need to ensure there is an appropriate cost of care index, all of which would have to be considered. We are agreeable. It is just that the timing is not right until we have the other structures in place.

Is the amendment being pressed?

Not yet. While I accept the Minister's good intentions, this has been dragging on for 13 years. The day Deputy Hanafin was made Minister in 2002 the Government adopted a programme for Government. In the same year the Motor Insurance Advisory Board issued a report with 67 recommendations, one of which was that the system of lump sum compensation payments be reviewed on the basis that the long-term needs of the seriously injured might be better served by guaranteed annual payments. These recommendations were adopted at the time by the then Government as part of the programme for Government.

That Motor Insurance Advisory Board report led to the creation of the Personal Injuries Assessment Board and a number of other changes. It came at a time when the cost of insurance was going through the roof and many wanted to take all sorts of initiatives to deal with it, this recommendation being one of them. The commitment was given by the Government in 2002 when the Minister was at the Cabinet table. It is hard for me to accept that we should wait another year. It sounds reasonable when the Minister says: "What is the rush? Let us do it in a year's time," but I am not convinced. I could probably raise three other issues that have taken from 2002 until now to progress. I do not have a sense of confidence that this will happen. It is one of the issues that is driving up the cost of insurance. While I acknowledge it is only a small part of the problem, these are the issues we need to address all of the time. We talk about the cost to industry of many things. This would be one way of driving down costs; it would make the situation manageable and be better for everybody.

While this may not seem like a fair comment, apart from a person having to deal with a large lump of money, there is also the issue that people with a large sum of money suddenly become attractive magnets for others, including extended family members. If it is suggested the family should give €1,000 here or €2,000 there, the money will drain away very quickly because no one is used to dealing with such an amount of money.

Every argument is in favour of what I am suggesting. I, therefore, ask the Minister to grasp the nettle and pass this amendment now. She should be brave and just do it. If the Minister just takes it on and does it, we will make it work.

I may not have indicated properly that I wished to contribute earlier. Unlike Senator O'Toole in his comments that he had a good guess as to the Minister's reply, I did not. This amendment makes sense. Having listened to the full debate it is clear that as far back as 2002 the Government wanted to see it happen. I agree that the Minister's argument makes sense as to bringing in the tax exemption after the legislation. However, there is no reason this could not work in reverse. The amendment could be introduced so that everything is done when the legislation comes forward and we are not waiting until this time next year to introduce a new finance Bill to amend legislation introduced this year. I agree with Senator O'Toole. We should show courage and leadership. It is also very frustrating when people see the wheels of Government turning so slowly. I refer to the high costs of motor insurance which is an issue close to my heart. This is a sensible solution and I ask the Minister to consider supporting Senator O'Toole's amendment.

I note the Minister is shaking her head. I hope she will not let me down so grievously at this point.

Recommendation put and declared lost.

Recommendation No. 6 in the name of Senator Doherty has been ruled out of order.

Recommendation No. 6 not moved.
Question proposed: "That section 4 stand part of the Bill."

I appreciate my recommendation No.6 has been ruled out of order. However, when discussing the issue of income tax we need to deal with this section and consider examining other options. I will bring forward a recommendation on Report Stage.

Question put and agreed to.
Sections 5 and 6 agreed to.
Recommendation No. 7 not moved.
Sections 7 to 11, inclusive, agreed to.
Recommendation No. 8 not moved.
Question proposed: "That section 12 stand part of the Bill."

Section 12 deals with the abolition of relief for service charges. I will be tabling a recommendation on Report Stage to deal with the discretionary tax reliefs and the issue of harmonisation of discretionary tax reliefs. It would be a significant source of income for the State if tax reliefs were standardised and if many of the outdated property tax reliefs were abolished.

Question put and agreed to.
Sections 13 to 15, inclusive, agreed to.
Question proposed: "That section 16 stand part of the Bill."

I ask the Minister to give a briefing on what changes are being made under section 16.

This section makes a number of changes to certain pension-related tax provisions contained in the Taxes Consolidation Act. The section restates the formula used for calculating the annual notional distribution amount from an approved retirement fund which amount is subject to tax at the fund-owner's marginal income tax rate. The restatement is to clarify and to put beyond doubt that the rate to apply for 2010 and subsequent years is 3% of the assets in the approved retirement fund at 31 December each year. The section also amends the legislation dealing with the lifetime limit on benefits that can be drawn down from tax relieved pension funds. This limit is known as the standard fund threshold and currently stands at about €5.4 million. In certain cases a higher fund limit, known as a personal fund threshold, can apply.

On each occasion that an individual becomes entitled to a benefit under his or her pension scheme referred to in the legislation as benefit crystallisation event, part of that individual standard or personal fund threshold is used up. Where the total value of benefits taken exceeds the individual standard or personal fund threshold, the excess is subject to a penal tax charge. The legislation sets out the various types of benefit crystallisation events that can arise, for example, when an individual takes a tax-free lump sum, a pension or an annuity or opts to transfer the pension fund assets to an approved retirement fund. This section effectively amends the definition of benefit crystallisation event to ensure that where an individual first accesses his or her pension benefits held in a personal retirement savings account, say by taking a tax-free lump sum, and opts to leave the remainder of the pension assets in the PRSA rather than purchasing an annuity with them or transferring to a NARF, the act of leaving the assets in the PRSA will itself constitute a benefit crystallisation event in its own right. Without the amendment, those assets would not count towards the using up of the individual standard or personal fund threshold. From the date of publication of the Finance Bill, the potential loophole in the legislation has been closed. Finally, the section introduced the requirement for the electronic delivery of certain information to the Revenue Commissioners in respect of small, self-administered pension schemes which are generally single member schemes. This is with a view to improving Revenue's ability to access and extract summary data for this information for the purposes of more reliably estimating the cost of pension tax relief for such schemes.

Question put and agreed to.
Sections 17 to 19, inclusive, agreed to.
Question proposed: "That section 20 stand part of the Bill."

I raise this matter for the purposes of information. I refer to the change to the age-related tax credit for health insurance premiums. I am not raising a query in the sense that I am not opposing this measure and I do not have any basis for opposing it. On the face of it, this looks quite acceptable. However, I have two questions. What is the policy rationale for this, in terms of increasing the tax credits as the individual ages? Why is this being done? I do not wish to suggest in asking that question that I am against it being done, I just question what is the policy rationale. Am I completely off the mark in thinking whether it has any bearing on the controversy last year with regard to community rating, the breakdown of the policy approach of the Minister for Health and Children in respect of community rating and the decision of the Supreme Court? That decision sent the Minister back to the drawing board. Is this a way to ameliorate the worst effects of that unfortunate loss in the Supreme Court?

This relates to that decision. These tax credits offset the increasing charges from private health insurers as a person gets older. This goes back to risk equalisation where the older were treated as being the same risk as younger people. When that was thrown out by the Supreme Court, we went back to a risk rated insurance system where the premium increases as a person gets older. That is where the tax credits come in.

At the time, the Minister for Health and Children stated this would be a holding mechanism until she got the opportunity to get the legislation right to bring back community rating and risk equalisation. To see this arise again means either there is a problem with the legislation or we are getting lazy and will re-use this mechanism every year.

The Senator is right in the first part of his contribution. This is designed to ensure older people who would be a high risk in health insurance would not have to pay much higher premiums. It will address the issues raised in the court. It is a temporary measure for three years until other legislation on a further scheme is introduced.

Why is there such a difficulty with replacing the scheme? Does it take three years to get legislation right?

That is a matter for the Minister for Health and Children.

Question put and agreed to.

I move recommendation No. 9:

In page 25, before section 21, to insert the following new section:

"21.—The Minister may, by regulations, and after consultation with the Minister for Health, introduce specific reliefs to help equip Primary Care Centres with appropriate diagnostic and treatment facilities where he is satisfied that they bring commensurate social benefits in the more effective provision of health services."

This relates to primary care centres, an issue I raised on Second Stage. No one wants to encourage tax relief on property after the mess we got ourselves into in recent years. Primary care centres, however, are an integrated part of Government health policy. There is a specific strategy where primary care teams would be formed and, if possible, work under the one roof in primary care centres. A number of these centres have been constructed and a number are in the planning stage. Unfortunately, because the property bubble burst, the economic downturn is having an effect on this area. I would be concerned that it could affect the delivery of care to patients in the future.

When the Minister of State with responsibility for mental health came into the House to talk about "A Vision for Change", it was structured around delivering community care in primary care centres through general practice, with the multidisciplinary approach of bringing general practitioners, nurses and HSE staff together. That policy development is grinding to a halt and there is a need to do something to get it going again. I asked the Minister for Finance to ensure these health centres are targeted if tax reliefs are going to be put in place, be they for primary care, GP services, mental health services, public health nursing or any of the allied health care professions. We must make this policy work but we are slipping backwards.

I am not sure about this recommendation. The situation could be abused. To borrow Fine Gael's own line, the money should follow the patient. I look forward to the debate, however, because some GPs are making huge profits from tax reliefs and we should target the reliefs properly.

We see businesses and community and voluntary groups fund-raising locally for much needed equipment in the public health system. They donate CAT scanners and other equipment to hospitals throughout the State only to find they must pay the State money through VAT. This must be addressed in this Finance Bill and perhaps an amendment in this section would deal with that. The VAT payment causes a lot of anger for those community groups or groups of workers who participate in voluntary fund to raise money for equipment that the Government has neglected to buy because it has not invested properly in the public health system. On top of raising the money, people find they must pay the State for doing it. No one who donates money to a local group campaigning for equipment wants to see 21% of the money going to the State for other purposes.

Like the Minister earlier, I am not sure if I am on the right section. Unlike Senator Doherty, however, I would tend to support Senator Twomey. I would look at the success or otherwise of primary care centres. The Department of Health and Children had a target for a number of these centres to be strategically placed to take pressure off other service providers, particularly accident and emergency wards in hospitals. Some of the centres have been developed and have proved to be a success. There are gaps throughout the country, however, where we have not been able to establish such centres.

A business plan is necessary for centres to attract investors so those participating can support the business plan. Arising from this amendment and looking at section 43 where it refers to capital allowances, could the Minister and the Department along with the Department of Health and Children examine this aspect of the primary care centres and the allowances permitted under section 43, especially for nursing homes? I wrote to the Minister for Finance as long ago as last October. I appreciate the Department's officials will have a certain blinkered vision but when will we speak to the Department of Health and Children? When can we find out, for example, whether its targets for primary care centres have been achieved and, if not, the reason for its failure? It may be that the country's changed economic situation means investors and financial institutions are less prepared to take risks.

Financial institutions were offering up to 100% funding but now they are demanding 40:60 ratios. The investment required for primary care centres is in the region of €4 million. How can anybody in today's economic environment come up with 40% of that amount of money?

Nursing homes give rise to similar issues.

We are on section 21, recommendation No. 9.

I am speaking on the section.

We are on recommendation No. 9.

We have not dealt with the section. If the Senator wishes to contribute again on the section, he may do so.

On recommendation No. 9.

Recommendation No. 9 specifically deals with reliefs and primary care centres. It does not pertain to the provision of primary care centres. If we have Second Stage speeches on every recommendation, we will be here until next week.

I am speaking about the relief.

The Senator should speak to the recommendation. When we move on to the section, it will be a different ballgame.

On the amendment, I support the view that reliefs are necessary.

That is fine.

The economic situation of this country has changed. On the one hand, we do not have primary care units and, on the other, we do not have nursing homes. Given the State's finances, I do not believe the Department of Health and Children will be in a position to provide primary care units or nursing homes. If the policy on primary care centres has changed, perhaps the Minister will indicate the nature of the new approach. If our policy remains the same, we need to offer reliefs to ensure its delivery and I ask for a clarification on how we can marry the policies of the Departments of Finance and Health and Children.

I have raised the issue of nursing homes with the Department of Finance as long ago as last September. I simply advise it to consider the country's demographics and the number of nursing beds currently being provided, including in particular the number delivered last year. We cut off reliefs last December but we should find ways of accommodating nursing homes and primary care centres in light of our current economic difficulties.

I urge the Minister to take on board the arguments made in support of this recommendation, particularly by the previous speaker. It is somewhat unusual that an amendment is being proposed by an Opposition party in order to support a Government policy. The development of primary care centres is a specific policy of the HSE. I do not have access to accurate information but I understand it intended to establish hundreds of these centres around the country.

I am somewhat biased from a local political perspective because a primary care centre has been developed in Mitchelstown. Another centre will open in Mallow in the next month, in respect of which virtually all the local doctors have worked together to put in place a structure costing tens of millions of euro in order to transform health services in the region. Almost every citizen in north County Cork will come to regard Mallow primary care centre as the first port of call for medical needs. All types of diagnostic equipment have been purchased, including facilities which traditionally were unavailable at GP clinics.

Unfortunately, as Senator Callely has noted, the economic climate has changed dramatically since the HSE set out its policy of establishing centres throughout the country. The money is not available at a time when, ironically, tens of thousands of construction workers are idle rather than working on the 150 to 200 centres that Government policy advocates.

I understand from a presentation by advocates of primary centres that between 70 and 80 projects are ready for construction if assistance can be made available. They are seeking tax relief rather than grant aid or cash incentives but unless the Departments of Finance and Health and Children offer some level of incentive they cannot proceed. It would be a tragedy if these projects do not come to fruition because primary care centres are integral to the transformation of our health services. Their development would ensure that every citizen of the State lives within a few dozen miles of a primary medical facility and would totally change the relationship between patients, doctors and hospitals. A much wider variety of treatments could be provided locally, such as radiography services. From a health perspective, they represent the direction in which we should be moving and it is Government and HSE policy.

It is not happening because of our changed economic circumstances but if proper incentives are put in place we can get the process going again. If such incentives are provided, we will see dozens of centres being developed within the next few months. They will give short-term employment to thousands of construction workers and, more importantly, provide fantastic medical facilities which will make a huge difference to the lives of our citizens. It is the correct thing to do medically because it will reduce the workload at smaller hospitals, cut the queues at accident and emergency departments and bring first-class medical care to every community. We are not asking for a change to Government policy on health services, simply that the current policy be implemented.

I congratulate the Minister for Arts, Sport and Tourism, Deputy Hanafin, on her new appointment and hope she enjoys it for a modest length of time.

While the Minister travels throughout the country as part of her Arts, Sport and Tourism portfolio she will see the towns and centres where these facilities can transform health services if they are put in place. I am aware of how the political system works and presumably the Minister is not in a position to say she will accept what we propose, but it is important that she gives a strong indication that the Government would put some degree of help, assistance or incentive in place. Our amendment is carefully and conservatively worded. We have all been written to by the various groups lobbying on behalf of the primary care centre developers and they do not need cash or grants but tax incentives. Some of my colleagues on this side of the House, who are no longer of the left, were very insistent that the centres should be run by general practitioners. They are not seeking tax incentives for developers to build primary care centres. They seek tax incentives for GPs who have clubbed together and put their own money into these projects. This is not about tax incentives or reliefs for a developer to build a centre and lease it out to a GP. They seek incentives for GPs who are putting their own money into the project.

As front-line deliverers of the service, they know the difference such measures can make. I trust the Minister can offer some light at the end of the tunnel. If we say "No", the situation will continue as before. It will not get worse but it will continue. This superb system of alternative health provision, which is modern, scientific, dynamic, inclusive and comprehensive, simply will not take place. This system is fundamental to turning around our health service and providing a proper service for every citizen. Whether it is called private health, public health or whatever, it is about the provision of a health service. We need such modern clinical facilities. This recommendation is fundamental and I trust the Minister and her colleagues in Government will afford it the most serious consideration. If we cannot get movement this year and strong positive signals concerning these projects, I fear it will come to nought and will represent a dreadful missed opportunity. The Minister should take serious note of what we propose and try to respond as favourably as possible under the circumstances.

I fully support the arguments for having primary care centres but does this not represent taxpayer investment in a private institution? Have I misread what my Fine Gael colleagues have put forward? Does this not involve putting public money into a private hospital or health care system? I agree completely with all the argumentation on both sides of the House, especially that of Senator Twomey at the beginning of the debate in respect of the importance of the local availability of primary care centres and diagnostic and other equipment. I fully support that sentiment.

I have had a difficulty for many years with the ability of highly paid consultants to use equipment in hospitals paid for by the taxpayer. Am I being unfair to the proposers if I interpret this measure as our putting money into a commercial operation for local GPs? I do not say as much in any demeaning way and in no way do I demean the quality of the service, but how do I explain to people who work in the Passport Office that we are now prepared to put money into what is a very lucrative enterprise for local GPs? I put that spin on the proposal for the moment which is somewhat unfair to them. I accept fully the point that their objectives would be to provide the best level of care, which is laudable and something we should support. I am prepared to support whatever it takes to make primary health care available in local areas. However, I am not convinced — perhaps I have not yet heard enough — about whether taxpayers' money should be put in to what will be, effectively, locations where local punters pay €75 to get checked out. Is there any payback for the taxpayer and patient? This is what I wish to establish. If we make this available will it mean some reduction for the people who walk in the door? We all agree on the point, made very firmly and clearly by colleagues on both sides of the House, that we should have primary health care and that the State should invest in it. That is my view but this is somewhat like co-location.

Perhaps I am being somewhat unfair and I look forward to hearing what Senator Twomey says in response. I understand the objectives, which are laudable. I appreciate the outcome would be very good in terms of local areas but will one of the outcomes result in a more lucrative operation for GPs? By the way, I have no objection to or difficulty with GPs being well paid and earning money. However, if that is the only net outcome and there is no payback to the patient, why should we put money into it? Perhaps that is somewhat unfair on Senator Twomey but I wish to know where we stand.

Senator O'Toole's remarks deserve some debate. To give some indication of the position, this would not affect me greatly. Some ten years ago when I opened my own general practice, the surgery was approximately 1,400 sq. ft. in area. Since then, two extensions have been put in place and it is now approaching 3,000 sq. ft. The rates go up accordingly. The patient practice has not grown correspondingly but much of the works are done to improve the quality of care and the quality of the premises where patients are treated. It is different from the case of consultants in that they use public facilities to see private patients. The Senator is correct that we are using private facilities to give good quality care to public patients but it is the opposite of what is taking place in the hospital sector.

The theory behind the proposal is that we move general practices away from garages or where GPs had extensions on the side of their house, where patients had to queue up in corridors, and where there were privacy issues and issues related to the way in which patients were looked after. There should be treatment rooms where everything related to the way patients are looked after is as modern as possible. The situation has improved dramatically in the past 20 years but the Government policy on primary care is taking this to another level. Our practice has gone from 1,400 sq. ft. to 3,000 sq. ft. over the course of a decade. The centre under discussion in Mallow is 78,000 sq. ft. The average size of these primary care facilities is somewhere between 20,000 sq. ft. and 30,000 sq. ft. They contain HSE staff, diagnostics, proper treatment and waiting rooms, and smaller waiting rooms to treat patients who have illnesses such as gastroenteritis which may otherwise be spread to other waiting patients. It is a dramatic improvement on the way in which patients are looked after in primary care. The Senator is correct to say these are private premises owned by private GPs but they look after public patients within that system. It is true they are paid to look after patients but there would be no difference from the payment I would receive for looking after medical card patients if I never expanded my practice. If I still had patients queuing in the corridors and had substandard facilities, there would be no difference to my payment. My rates bill, insurance bill and every other bill would be down but that is not the way I envisage the direction and ethos of general practice in future. I emphasise it is completely different from the hospitals in the sense that consultants are seeing private patients in a public facility. At issue is the ethos we are trying to promote and the attempt to move health care into primary care and ensure this policy does not collapse under the current economic downturn. These reliefs would benefit all patients, public and private, but even if they did not cover everything, they would dramatically improve the service being provided. Even from an ideological point of view in the provision of health care, I can see this as being positive. From the point of view of cost, I can see that if the Minister had to do a cost benefit analysis, she would also realise this would be beneficial.

In response to Senator O'Toole, it is important to indicate that there will be a significant gain along the lines mentioned by Senator Twomey for the general public in primary care centres. On the position of the Department of Finance, it is my understanding that they are the same as the capital allowances for nursing homes.

The HSE policy runs along the lines mentioned by Senator Twomey. Primary care centres will bring not alone members of the medical profession who will rent space but the HSE under the one roof in a catchment area. The benefit for the patient is that he or she will have all of the necessary supports under the roof.

Why should a doctor leave his or her garage extension and spend €1 million or whatever sum is required to develop a primary care unit? Why should he or she want to provide extra diagnostic equipment? Why would he or she not just let a patient queue up at the accident and emergency department? There must be an incentive if one wants a doctor to move out of his or her garage extension and co-operate with other service providers.

Is there a financial gain in a doctor having his or her garage extension? He or she will probably be able to sell it on in 20 years when he or she finishes practising. There is not a real financial gain because all members of the primary care centre team who will form a limited company will pay tax at 20%. On whether they can get others to put in €1 million into the unit, whether a relief is of benefit to them in doing so and whether the bank and accountants will support such a proposal if there is a relief in place, the answer is yes. My understanding is there will be no loss to the Department if there is a company in place. That is my exact point on nursing home beds.

There will be a loss to the taxpayer.

There will be no loss because one can have a limited company with a 20% tax rate.

It merely involves privatisation of an element.

There will be no loss. There will actually be a gain. We will await the Minister's reply, but it is my understanding the State is not in a position to provide these units, whether they provide primary care or nursing home beds, because the necessary funding is not available.

Nursing homes are commercial operations. They are organised by big companies.

There should not be a discussion across the floor. The Minister will reply. There are two Senators who wish to come back in.

I welcome the Minister and thank her for being here. I wish her well in her brief.

This is an issue close to my heart because we, in Athlone, have no primary care centre and there are doctors working from inadequate premises. This is the only way the people of the town and its environs will have a service with psychiatry, psychology, warfarin and diabetic clinics all being provided under one roof. It will make it easy for a patient to be treated in his or her own community without having to go to an accident and emergency department or an acute hospital. While I accept Senator O'Toole's argument, the only way the people of the Athlone will have access to services is if doctors are prepared to invest their money with support from the Government.

With a change of Government.

That is true.

With Senators Bradford and Twomey, I have attended briefings by general practitioners. They are sincere in what they are trying to do in investing substantial amounts of money. I urge the Minister to accept this reasonable amendment. We are not advocating that we go back to giving tax-free allowances to businesses as happened in the past which, as we all know, was an abject failure. This is about the provision of diagnostic and treatment facilities and would be one way to incentivise and support general practitioners in their efforts to set up primary care units.

I have listened carefully and with great interest to the debate. There are fundamental questions that arise in the course of the discussion that deserve lengthier treatment, perhaps on another occasion. Senator O'Toole is correct to raise the overarching policy implications of what is proposed. On the face of it, what is proposed has an attraction. However, there is one aspect on which Senator Callely must be wrong — Senator O'Toole disagreed with him across the House — that is, that there is no cost. Let us be aware that tax forgone represents a cost. We need to start changing the way we analyse what has happened in the past ten or 15 years when we speak about tax incentives given all over the country for different initiatives, some of which made sense and were prudent but some of which turned out to be disastrous. If the State indicates it will give tax relief to someone, that represents a cost.

Let us start with understanding what we are doing. Senator McFadden is correct to emphasise the importance of primary care services but that is not what is at issue in this debate. Everyone agrees that we need to promote primary care services and such a policy is vital. I am not sure if I necessarily disagree with the Senator when she says the only way to achieve this is through these means but if she is correct, it is a pity we have arrived at a point where we are saying to ourselves that the only way we can promote and expand primary care services in the community is by incentivising doctors by telling them they will not have to pay the income tax that they would otherwise have to pay. Think for one minute about what that says about our public policy and approach to health care. She has stated the only way it can be done is for us to incentivise doctors in this way. I have a fundamental question in my mind in that regard. By the way, I hope it is not correct. If it is, we should be setting out as a society to try to change this.

Often I am teased by journalists and others. Mr. Sam Smyth is good at taking the line that some politicians speak about the redemptive power of paying income tax and criticising those who advocate the levying of taxes for the public good, but I do so advocate. Sometimes we must go back to the basis of taxation. We levy taxes to ensure we are able to do things that we, as individuals, could not do. As individuals, we cannot provide many of the facilities available in society and thus club together to provide health services, transport services, etc. This sounds basic, but sometimes we must go back to the basis of taxation. I have a fundamental problem with basing public policy, whether on health, education or anything else, on the notion that we incentivise people on the basis that they will not have to pay tax. Everyone should pay a fair level of tax. I agree with the provision in the Bill, on which I will not trespass, concerning an effective rate of income tax. Everyone in the community should pay a reasonable rate of income tax, while pooling our resources as a society to provide decent health services.

The problem is that in the past ten years we have gone too far down the road of thinking that, by engaging in manoeuvres with the tax code, we can incentivise people to do things that the State should do to ensure commonality of service across the community to people of all incomes, irrespective of whether they live in big towns, small towns or anywhere else, a matter about which Senator Bradford and others have spoken. I do not mind if others think this is an argument that belongs to the past and is unrealistic. Let us have that argument about whether we should be talking about creating a society in which a sufficient level of income is levied to provide the services we believe are important. I know many excellent medical people who want to improve the services they provide in the community. I was very much taken by what Senator Twomey said about many of them working out of unacceptable facilities which they want to change. While I agree this is excellent, why should the incentive be a tax cut for them? What is wrong with the incentive being the chance to earn more through more patients and to provide a better service to their patients and communities?

I said at the beginning that I was unsure about this recommendation. I am even more so now having listened to Fine Gael and the one Fianna Fáil Senator on the matter. While I accept the recommendation's objective are laudable and one to which we all want to work, this is a property tax relief. In the past, incentives to provide more nursing homes, hotel beds to increase tourist numbers or more houses in County Leitrim to boost construction were always met with tax reliefs. Now, they total 250, many of which have caused the country serious problems by overheating the construction industry.

I accept we need to incentivise certain services but it must be done in a subtle way which cannot be abused. A property-based tax relief is the wrong way to do it. Other measures can be used to encourage doctors and GPs to provide primary care centres. They have done so in the past without tax reliefs and because it was a benefit for them. I accept there are problems with getting finance from the banks but introducing a blanket property-based tax relief is the wrong course of action.

Like in all Seanad debates, we have broadened this to make it a reflection on all tax reliefs. Since the end of the Celtic tiger and the downturn in the economy, the view has emerged that all tax reliefs were wrong. Senator Doherty referred to 250 tax reliefs. Just because some of those 250 reliefs were excessive or wrong does not mean all of them were wrong. One must concede that the IFSC would never have happened if certain tax reliefs and incentives were not in place. There are hundreds, possibly thousands, of other projects across the country which have been economically beneficial and socially desirable which would not have happened without a tax relief.

It is wrong to take up the new mantra that all tax reliefs are wrong. Is it wrong that trade union membership fees or bin charges provide for tax relief? We need to be careful not to throw the baby out with the bath water.

This is a modestly worded recommendation. Had I been drafting it myself, Senator Twomey would have gone a little further. It simply states the Minister may — not shall — in consultation with the Minister for Health and Children introduce specific reliefs. When I raised this matter on the Adjournment some weeks ago, the Minister of State at the Department of Health and Children promised me his office would engage in thorough and urgent discussions with the Department of Finance on the matter. All Members want to see more primary care centres developed. It is a Government and Health Service Executive policy to see 250 such centres. The opportunity to provide them is now on a knife edge unless some type of assistance is given.

I appreciate Senator Alex White's argument about tax forgone. On other hand there is no tax at all because these developments will not happen. The Government must decide whether it will forgo some tax or collect no tax at all. I wish the economy was in a stronger position so that these primary care centres would be already under construction. It will not happen if some relief or assistance is not provided. It should be possible for the Department, in conjunction with the Department of Health and Children, to introduce a series of modest reliefs to kick-start the development of these urgently needed centres.

It is a mistake to declare retrospectively that all tax reliefs and incentives were wrong.

No one said that.

We have become fearful, like rabbits caught in a car's headlights, of examining new tax reliefs and incentives just because many of the previous ones were not well designed, were excessive or caused problems. The Minister should show flexibility on this recommendation as it provides us with a wonderful opportunity for primary care centres.

The Government is committed to continuing the primary care programme. The Exchequer is involved at all levels in so far as the Health Service Executive is directly building some of these centres or they are being built privately with the executive leasing them for its staff. Already 200 centres are under consideration for leasing arrangements with 90 in contract arrangements, of which 30 will open this year. They are progressing despite current economic difficulties.

The capital expenditure incurred for diagnostic or treatment equipment also qualifies for tax relief at 12.5% per annum over eight years, a recognition that the equipment can suffer wear and tear. That element is covered. The Minister for Health and Children has a report from the Oireachtas joint committee that sets out nine different reliefs. We do not want to examine any of these reliefs in isolation but suffice it to say we are committed to primary care centres. They provide a better quality of service to the patient, resulting in better health care and reducing pressure on hospitals. At a time when we are removing tax allowances for other capital facilities, including in the Department of Health and Children for child care facilities, it is not our intention to reintroduce them at this stage.

Recommendation, by leave, withdrawn.
Section 21 agreed to.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
Sections 22 and 23 agreed to.

I move recommendation No. 10:

In page 27, before section 24, but in Chapter 3, to insert the following new section:

"24.—The Minister shall report to the Dáil within 30 days of the enactment of this Act on proposals to introduce tax relief for costs incurred by unemployed persons in successfully completing certified training courses against income tax payments made by that person in the previous six years.".

This purpose of this amendment is to give an opportunity to people wishing to retrain to claim back taxes paid in the previous six years to pay for their retraining. There is a need to upskill considerably in these more difficult economic times and if people find themselves in a position where the jobs they have been doing are no longer applicable in the current economy, they could seek to retrain by doing another course to help their employment prospects and pay for that by claiming back the taxes paid in the previous six years.

The recommendation was tabled as a Committee Stage amendment in the Dáil by Deputy Bruton and was the subject of a significant amount of discussion at the time. The Minister, Deputy Lenihan, listened carefully to the arguments put forward at the time and subsequently in committee. The recommendation seeks the introduction of a new tax relief for retraining which would work on the basis of a refund of tax previously paid by the individual concerned in the previous six years, as Senator Twomey outlined. As outlined by the Minister on Committee Stage, there are already significant supports within the tax system for tuition fees and retraining expenses. These include tax relief for tuition fees in respect of third level courses and for certain training courses on information technology and foreign languages. It should be noted that the tax relief under these schemes is available to the individual who pays the associated fees, which does not have to be the student undertaking the study or retraining. In addition, a benefit-in-kind tax exemption is available for the retaining of employees in the event of redundancy.

The tax reliefs I have mentioned are all available in addition to considerable support measures provided by the Government through expenditure programmes operated by the Department of Social Protection, the Department of Education and Skills and FÁS. These support measures include the back to education allowance which allows individuals in receipt of social welfare payments for a specific period of time to attend full-time second and third level courses and to continue to receive the equivalent of their social welfare payments. Immediate access to this scheme is provided for persons made redundant as long as they were entitled to statutory redundancy and qualified for social welfare payment.

For training allowances that do not qualify under the back to education allowance, such as ECDL courses, there is also the scheme for education, training and development courses. This scheme allows individuals to continue to receive their social welfare payments while they attend such courses. A broad range of courses are approved from personal development or basic education to general training or acquiring job skills. All these supports are provided and many of the courses run by the Department of Education and Skills or its agencies are generally available free of charge and grants for maintenance, subject to means test, are also available.

While the Minister did not accept the amendment during the debate on Committee Stage, he undertook to examine the proposal further. An initial examination of the issues involved in the introduction of the new incentive along the lines proposed by Senator Twomey has raised further questions that need to be considered on a cross-departmental basis. These include how a tax refund scheme would fit in with the existing expenditure schemes and educational policy, how much such an incentive would cost, who the target beneficiaries would be, for example, those made redundant or those in receipt of jobseeker's benefit or allowance, what the likely take-up would be, what the capacity of individuals to obtain benefit under the scheme would be depending on tax paid in previous years, whether such a scheme should focus on areas where there is a skills deficit or whether it should be more broadly based, how qualifying schemes would be certified and by whom, what the effect of a new incentive would be, if any, in terms of increasing places if places are limited, whether such incentives for retraining schemes would be better provided through the public expenditure system, and whether there are other more effective incentives that could be considered.

As announced in the Minister's Second Stage contribution, he will ask each of the colleagues in Government to assess the effectiveness of tax expenditures as they relate to their specific responsibility. This will also be the case where new tax expenditures are proposed. Given that there are already significant State supports to help the unemployed retrain, we are reluctant to accept an additional tax incentive in this area without proper and careful examination of the issues involved such as I have outlined. For that reason I cannot accept Senator Twomey's recommendation.

I want to make two points in response to what the Minister of State said. He said the Minister wants to examine all the different options in terms of to whom the incentive would be given and how broad it would be. Is the Minister considering doing a report on that or is he just getting the views of different Ministers on that basis alone? If that is the case, does he intend publishing that report?

The Minister of State outlined a range of options currently available to a person who has lost their job but wishes to go back to work. He asked whether this measure would be broadly based, if places would be limited and so on. Perhaps the Minister of State would put together for people an information pack on all of those aspects. Much of what the Minister of State speaks about is dealt with at cross-departmental level. Such information pack, which might be useful not alone for people in receipt of it but for individuals like me and others who offer guidance to people, could be similar to the two page sheet in regard to people's entitlements published by the Minister for Arts, Sport and Tourism, Deputy Hanafin, when Minister for Social and Family Affairs. The Minister of State might consider providing information which would enable people to understand what grants are available and to what they might be entitled.

We will consider the Senator's proposal. I must also point out that the reconfiguration of the Department of Social Protection to include FÁS training courses and the FÁS training unit will considerably assist and enhance the effectiveness of our response in this area. I will bring the Senator's proposal to the attention of the Minister, Deputy Ó Cuív.

I must also point out a similar proposal to that contained in the Senator's recommendation was in the Commission on Taxation report and the analysis is going on in that context.

Recommendation, by leave, withdrawn.

I move recommendation No. 11:

In page 27, before section 24, but in Chapter 4, to insert the following new section:

"24.—That the Minister will consider making available designated tax incentives for the Limerick regeneration project as already recommended in the Limerick regeneration masterplan and Mid-West task force report.".

I am interested to hear the Minister of State's views on this recommendation in the context of the Limerick regeneration project given the dramatic changes in the economy since the masterplan was first published. Does the Minister of State have any new ideas in regard to how the regeneration of Limerick city may come about? There would be nothing worse for Limerick city than if this project were to be stalled mid-way turning Limerick into a NAMA building zone.

I can assure Senator Twomey and the House that the Government continues to demonstrate a strong commitment to the Limerick regeneration project. In December last, the Government considered the ten-year regeneration project for Limerick and reaffirmed its commitment to the vision outlined therein. We have asked the Limerick regeneration agencies to complete their work on the programme and to prepare a phase 1 implementation plan by the end of the first quarter of this year, following which the Government will consider the matter again. The agencies are currently developing that plan with expert advice from the National Building Agency which will lay out the planning issues, the projected costings and value for money considerations associated with the housing and other key elements of public investment involved in phase 1.

The economic development options and opportunities-incentives to secure the essential private investment required are also under examination. Some €1.4 billion of private investment and €1.65 billion of public investment was originally envisaged as required to deliver on the masterplan objectives. Tax incentive measures generally have provided a vital stimulus to the economy in Ireland but we must recognise this has a heavy cost on the Exchequer. We must achieve savings in the region of €3 billion in each of the years 2010, 2011 and 2012. There are many conflicting demands on Government as it strives to build on the very little shoots of recovery that are evident in the economy. New, innovative and imaginative thinking is required in tackling projects such as the Limerick regeneration masterplan. However, the inclusion of tax incentives within such plans requires careful examination given the current difficult Exchequer situation.

I reassure the Seanad and Senator Twomey that in any event the Limerick regeneration masterplan will continue to be a priority for Government in the years ahead. Accordingly, I cannot accept the recommendation.

I support Senator Twomey's recommendation which is timely and important. The points made by the Minister of State are important. I do not disagree with the fundamentals of what he has to say. However, there are two other issues to be considered. The Government is having trouble finding money for the Limerick regeneration project. There are ongoing arguments in regard to whether it is slowing it down to stop it, but I do not wish to get into the political argument on this matter. There is no doubt that the Government is experiencing difficulty finding the money for this project. Also, there is currently no private investment in that area. All that is happening in that area is being done through the regeneration project.

The proposal put forward by Senator Twomey would not result in a loss of revenue to the State. All it could do, perhaps, is make attractive to developers the benefits of investing in the area thereby creating employment and helping with the regeneration, two pluses for the Government. This proposal would not result in a loss of revenue to the State. There is no possibility of private investment in the areas under the regeneration plan. It is just not happening and will not happen as there are no incentives to encourage it.

If the Minister had argued with Senator Twomey that even if this were done it is highly unlikely anybody would take advantage of it, that would be a valid point but I cannot see where this proposal would result in any loss to the State. This is a good idea, which will result in no cost to the State. The only tax incentive that would be lost would be tax incentives which were not going to be provided in the first instance. This proposal would assist in the creation of employment and the regeneration project and would at the same time relieve the pressure on Government. I believe this proposal is worthy of a second look. It is a sensible proposal.

I would like to follow up on a point made by Senator O'Toole. It does not appear as though in the current economic climate the €1.4 billion private sector investment required to enable the Limerick regeneration project to get up and running will be forthcoming. The €1.65 billion to be provided from the public coffers is also under serious threat owing to budgetary problems. There will be no private sector investment without some form of tax incentivisation. We have a long history in this regard.

The big problem with tax breaks is the manner in which they are used, which in the past number of years has been badly. We all have a phobia in regard to property tax breaks. However, the Limerick regeneration project will grind to a halt if the private sector is not incentivised to get involved. The funding required is not available in the public sector. If the private sector does have funding it is being extremely cautious given the current economic climate. Perhaps the Minister of State will consider the inclusion of some incentives to provide hope to people in the mid-west that the Government may be able to achieve something. It must be acknowledged that the targets set when the masterplan was first published will not be achieved in the timescale envisaged. There is no point in us speaking about this in a manner similar to Hitler moving around the eastern front tank divisions that did not exist. We must accept the new reality in terms of our economy.

It must be acknowledged that the masterplan as envisaged in 2008 will not happen and that we need a new way of thinking and a new plan.

The social implications of disbanding or cutting back on the regeneration project in Limerick would be serious. There is a socially disadvantaged group of people in the regions concerned, some of which are littered with crime. I previously worked supervising students at the college in Limerick. It is important to these communities that we deliver on what was promised. The Limerick regeneration project has given huge hope to people. I concur with Senator Twomey that we need to find creative ways to deliver the moneys required be it through the private or public sector or by way of incentives. If necessary, the plan should be reframed over time and not left on the books or remain undelivered.

I appreciate the Senators' concerns on the matter. I must reiterate that the Government has requested that an implementation plan be delivered by end of March, at which time all issues will be considered. Some €25 million has been this year allocated for expenditure on the programme. A programme of works is underway. There are also a number of other projects underway in the area. We have taken on board people's comments.

Recommendation, by leave, withdrawn.

Recommendations Nos. 12 and 13 are related and may be taken together by agreement. Is that agreed? Agreed.

I do not propose to move recommendations Nos. 12 and 13.

Recommendations Nos. 12 and 13 not moved.
Section 24 agreed to.
Question proposed: "That section 25 stand part of the Bill."

While I appreciate there is no recommendation on this section, on Second Stage when the Minister for Finance, Deputy Brian Lenihan, was in the House, I made a point which I would like to repeat to the Minister of State, Deputy Calleary. Senator Twomey has proposed a recommendation on section 26. Regarding the 80% windfall tax, while there is no question that we would wish to require agricultural land to be zoned for residential, commercial or industrial purposes and while I agree with the 80% windfall tax in that regard, it does not give appropriate consideration to brownfield sites in urban areas. We should have an open mind on the matter. Obviously, there is no market or demand now but there will be in due course. As I mentioned yesterday, the mix of social housing within the borough or city boundaries of Limerick, Sligo and Cork would come to more than 30%, whereas the national average is 15%. It is conceivable that areas zoned for commercial purposes might be better served in the future by being zoned for residential purposes. While there may not be such a market now, there may be in the future. It would be prohibitive, therefore, if we were to state that in those instances an 80% tax on notional profits that might be made by rezoning from retail or commercial to residential purposes or other use should apply. It is short-sighted and a reaction to what has happened in the past 20 years. With the benefit of hindsight, introducing an 80% windfall tax might have served better 15 or 20 years ago. While it is certainly fine in the case of agricultural green belt space, we need to be cognisant of brownfield sites. I, therefore, ask the Minister to take this point on board.

I congratulate the Minister of State, Deputy Calleary, on being given additional responsibilities and wish him well.

I listened with interest to the previous speaker. While I have not read the Bill in great detail, I have read the explanatory memorandum. Section 25 deals with the disposal of what might be described as small sites. It states that, for the purposes of the exemption which is being allowed, I presume, to landowners selling a site to a neighbour, son, daughter etc., a small site is one which does not exceed 1 acre and whose market value at the time of disposal does not exceed €250,000. Those of us who represent rural constituencies, including the Minister of State, are aware of a significant number of planning applications, in respect of which there may be an obligation on an applicant to develop a single site which may be more than 1 acre in size. With a small field of 2 acres, it is often a provision of planning law that the application for planning permission cover the entire site or field in order to ensure a second site will not be sold by the landowner. That will often be a clause in planning permission that the minimum size of the site be greater than 1 acre, depending on the circumstances of the landowner, the land-holding and how the farm is structured. I recently came across such a case. The planning applicant brought to my attention a rather difficult application involving a field of approximately 5 acres, where in order to ensure there would not be a second application, the client's engineer and I advised him to include the entire field as a strong assurance to Cork County Council that there would not be a second planning application. We then learned that he could not do so because in order to come within the terms of the exemption, he had to cut back to 1 acre.

While I do not expect the Minister of State to resolve the matter now, it is one that needs to be reviewed. He will know that with rural planning applications there are many occasions when the planning authorities will deem that a site should be bigger than 1 acre in the interests of proper planning and development to ensure a second or third site will not be developed. In these cases the field will need to become the site, even though it might be 2 or 3 acres. If the Bill is as the explanatory memorandum suggests, there will be difficulties in that regard.

I hope the departmental officials are giving the Minister of State helpful advice but I would like to hear his views on the matter. The provision stipulates that a site must be one acre or less, while the market value must be less than €250,000. Without any deliberate ill intent on anyone's part, we could be causing a difficulty for certain planning applications by way of the definition of the size of a site.

The one-off site is designated as being 1 acre in size, a restriction that is in line with the site size restrictions already in place in taxation law in respect of capital gains tax and stamp duty exemptions on disposal of a site to a child and in line with normal tax practices. Similar to the site size restriction, it is also necessary to restrict the value of a one-off site which would not be subject to the 80% windfall tax. A value not exceeding €250,000 has been applied rather than €500,000, the value used in the case of capital gains tax and stamp duty exemptions, on disposal of a site to a child. The reason for the reduced value threshold is the significant drop in land values. In the current economic climate we believe €250,000 is a more realistic value.

I am content with the valuation aspect. While I might not have been listening as intently as I should have been, what is the position on the one acre limit? Perhaps it has come from somewhere else. It is my understanding that if my next-door neighbour wanted to provide a site and the field in question was 1.5 acres, he or she would not be exempt from the windfall tax. Is that correct?

The one acre limit is in line with current tax policy on capital gains tax and stamp duty exemptions. The purpose is to be consistent across the board.

Perhaps this matter might be reviewed because many local planning authorities require that where a farmer is selling or transferring a site to a family member, the entire field which could be 2 or 3 acres must become the site rather than the site of one acre. Once there is a monetary valuation on the property, I suggest it is not necessary to be prescriptive about the size of the site. I understand the Minister's objective to ensure proper planning and development in the new environmental and economic place in which we find ourselves. However, I ask the Minister of State to investigate whether we can flexible on the size of the site. At the end of the day the €250,000 value of the site needs to be deemed to be reasonable, to which I do not object. However, I am concerned that we are writing into law something that might cause a difficulty. If a farmer has a holding of 1.5 acres beside an old cottage and wants to sell it as a site, it is ridiculous that he or she must keep half an acre and sell one acre simply to come within the terms of this proposal.

I can ask that a detailed note be prepared for the Senator. This tax only applies in cases where land has been rezoned and to the profits that accrue from that rezoning. In some of the cases the Senator has mentioned rezoning might not be involved; it might only involve a simple planning issue. However, I shall ask for a note to be sent to the Senator.

Question put and agreed to.

I move recommendation No. 14:

In page 32, before section 26, to insert the following new section:

"26.—Section 644AB and 649B of the Taxes Consolidation Act 1997 shall not apply where a change in the zoning of lands was contained in a draft development plan or a draft local area plan published prior to 30 October 2009 and adopted after 30 October 2009. The zoning of lands in the draft development plan or a draft local area plan published prior to 30 October 2009 and adopted after 30 October 2009 shall be deemed to be the actual zoning of the land on 30 October 2009 for the purposes of section 644AB and 649B of the Taxes Consolidation Act 1997.".

I move this recommendation in the brief absence of Senator Twomey. I believe it proposes to address a small number of specific problems, of which the Minister of State is aware. It is a reasonable amendment and I ask the Minister of State to consider it favourably.

I am aware of the specific case. The recommendation concerns the new 80% tax rate that applies to the profits or gains from certain disposals of development land. This rate applies where profits or gains are attributable to rezoning decisions that are made on or after 30 October 2009. The proposal has been brought forward from the Committee Stage of the Bill in the Dáil. The Senators' intention in making the proposal is that the 80% tax rate will not apply in situations where a rezoning decision that is made by way of adopting a revised development plan on or after 30 October 2009 does not alter the zoning that existed in the form of a draft development plan before that date. A similar amendment was proposed on Committee and Report Stages in the Dáil and was not accepted.

The proposal envisages a situation where the zoning proposed in a draft development plan is unchanged in the actual development plan. However, the Planning and Development Act 2000 contains provisions for a lengthy and extensive public consultation process on a draft development plan that may result in amendments to this plan. I am given to understand that it would be unusual for a draft development plan to remain unchanged following the consultation process. I am also concerned that certain amendments to a draft development plan arising from the consultation process could have the effect of further increasing the value of land above the value pertaining following publication of that plan. In such circumstances it would not be appropriate to deem the zoning of land in a draft development plan to be the actual zoning of the land, as requested by the Senator. Such a deeming would enable some of the profits or gains that should properly be chargeable at the 80% tax rate to avoid this charge.

On Committee Stage of the Bill in the Dáil, Deputy Richard Bruton was concerned about land that was being rezoned as part of a draft development plan prior to October 2009 but which would not be formally adopted until after 30 October 2009 and would therefore be affected by the new windfall gains provisions. He wondered whether this was likely to be an isolated case that would not have knock-on effects on other cases. The Department of the Environment, Heritage and Local Government has advised that it is far from being an isolated case and that a significant number of both development plans and local area plans would have been at draft stage prior to 30 October 2009 and been finalised after that date or have yet to be finalised. Even within the development plan in question, lands other than the so-called heritage site mentioned previously are proposed to be rezoned from a non-development land use to a development land use. The case the Senators have in mind is far from being an isolated case, either within that local area, that local authority area or the country as a whole.

While we have not been persuaded to accept the Senators' proposal, I wish to point out that not all the profits or gains arising from a land disposal would be attributable to the actual rezoning decision and subject to the 80% tax rate. The publication of a draft development plan with a stated intention to rezone land would have the effect of increasing the market value of land at the time of publication rather than at the time of adoption of the plan as there would be an expectation that the draft development plan would subsequently be adopted as the actual development plan and the rezoning thereby implemented. Thus, any profits or gains attributable to this part of the increase in the value of the land would not be subject to the 80% tax rate. Therefore, it is not clear that all of the profits or gains arising in the situation envisaged by the Senators would be chargeable to tax at the 80% rate. Any profits or gains that are attributable to the actual rezoning of the land after the adoption of the plan, where thatplan is adopted after 30 October 2009, would be quite properly chargeable to tax at the 80% rate.

Recommendation put.
The Comittee divided: Tá, 17; Níl, 27.

  • Bradford, Paul.
  • Buttimer, Jerry.
  • Coghlan, Paul.
  • Cummins, Maurice.
  • Doherty, Pearse.
  • Donohoe, Paschal.
  • Fitzgerald, Frances.
  • Hannigan, Dominic.
  • Healy Eames, Fidelma.
  • McFadden, Nicky.
  • Norris, David.
  • O’Reilly, Joe.
  • Phelan, John Paul.
  • Regan, Eugene.
  • Ryan, Brendan.
  • Twomey, Liam.
  • White, Alex.


  • Boyle, Dan.
  • Brady, Martin.
  • Butler, Larry.
  • Callely, Ivor.
  • Carroll, James.
  • Carty, John.
  • Corrigan, Maria.
  • Daly, Mark.
  • Dearey, Mark.
  • Ellis, John.
  • Feeney, Geraldine.
  • Hanafin, John.
  • Keaveney, Cecilia.
  • Leyden, Terry.
  • MacSharry, Marc.
  • McDonald, Lisa.
  • Mooney, Paschal.
  • Ó Brolcháin, Niall.
  • Ó Domhnaill, Brian.
  • O’Brien, Francis.
  • O’Donovan, Denis.
  • O’Malley, Fiona.
  • O’Sullivan, Ned.
  • Phelan, Kieran.
  • Walsh, Jim.
  • White, Mary M.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Maurice Cummins and Liam Twomey; Níl, Senators Niall Ó Brolcháin and Diarmuid Wilson.
Recommendation declared lost.
Sections 26 to 42, inclusive, agreed to.
Question proposed: "That section 43 stand part of the Bill."

I am not sure whether I should raise this point on this section or when we reach the end of Chapter 4. I take the opportunity to bring to the attention of the Minister and his departmental officials an issue which I have been raising with the Department for some time, that is, capital allowances which are dealt with in Chapter 4 — section 36. It includes corporation tax which are dealt with in Chapter 45 — section 43. There was a cut-off date for nursing homes of December 2009 in respect of planning applications where building works were to commence in June 2010. I bring to the attention of the Minister and his departmental officials the fact that the demographics are clear on the need for the provision of nursing home beds. The Minister's colleague in the Department of Health and Children will be able to give him the actual figures identified as being required.

Because of the economic, financial and banking situation that prevailed in 2009, people with nursing home proposals were unable to secure the required liquidity and as a result some projects did not proceed. Thus, some of their proposals did not succeed. I am simply putting a marker down at this stage of the debate in asking the Minister of State to revisit the representations I have made on this issue and hopefully come back to me on Report Stage. Perhaps, in the intervening period he might have the opportunity to discuss the matter with his colleagues in the Department of Health and Children. All I am simply asking is that in light of the economic and financial situation that prevailed in 2009, the cut off period for capital allowances for nursing homes, which was December 2009, should be extended to December 2010, for building to commence from June 2010 to June 2011.

I have no doubt a number of arguments could be presented with the blinkered vision of the Department of Finance focusing purely on the financial aspects. However, Government policy as regards the Department of Health and Children is to try to encourage the provision of nursing home beds. Clearly, in relation to north Dublin, while I am not too sure about the rest of the country, there is a lack of long-stay facilities. To use the term familiar to hospitals, we have "bed blockers" in every one of our acute hospitals. We have not had any level of investment in nursing homes throughout 2009.

I do not have to explain this to the Minister of State, but I shall take the opportunity to stitch it into the record. A person who wants to develop a 100-bed nursing home would require approximately €10 million. The banking position last year was not favourable for anybody applying for that level of funding. I understand that whereas in the past there may have been 100% funding for the development aspect of such a project, since the liquidity crisis the same level of funding has not been available. I am talking about just the development, not the site and fit-out costs. We are talking, perhaps, about a 40:60 ratio. If that is the situation all the more reason that capital allowances are needed.

I would welcome clarification from the Department in this regard, but my understanding is that it is really not a case of capital allowances being of great benefit to the owner operator of the nursing home because it is likely the concern will be a limited company with a 20% tax regime. However, for somebody who has to raise 40% of the €10 million I have mentioned, it will encourage him or her to be able to draw down money via an accountant and the bank if the capital allowance facility is in place. It is really an incentive to get the required equity needed for those types of projects.

Having said all that on the financial side——

The section we are dealing with is about computerisation.

We are dealing with the chapter that deals with capital allowances and section 43 deals with corporation tax, which I have just referred to, as regards the matter of a limited company.

I was concluding on what I understand to be the financial aspect. I want to tell the Minister of State that if we read the Department of Health and Children policy with regard to the provision of long-stay accommodation, it is clear that it is simply a matter of supply and demand. The answer to the supply and demand issue for those in the Chamber who do not know, is that we do not have the supply to meet the demand and this is an incentive to try and get there. Rather than putting the Minister of State on the spot, perhaps this could revisited. I have put this matter clearly, in written submissions to Department of Finance officials and it is being treated from a financial viewpoint. However, I am asking that it should be viewed from a Government policy aspect. All I am simply asking is for an extension of the existing scheme.

The existing scheme referred to by Senator Callely was terminated in the previous Finance Act in 2009. We have had no representations from the Department of Health and Children as regards a need to revisit that decision. Any revisiting of the decision to terminate the scheme, as outlined, would require Government approval.

The Senator has referred to specific shortages in north Dublin and we would not get the go-ahead under EU state aid rules to introduce a specific geographic scheme. I believe the last scheme drove the development of a great many nursing homes, perhaps, in areas where we possibly did not want them. They did not necessarily respond to the demographics. At this stage there are no plans to revisit the scheme, but I shall get the Senator a detailed note on this and will forward it to him next week.

Question put and agreed to.
Section 44 agreed to.

I move recommendation No. 15:

In page 76, subsection (1), between lines 22 and 23, to insert the following:

"(e) by inserting the following after subsection (12):

"(13) The provisions of this section shall apply to a sole trader in the same manner as they apply to a company.".".

As the Minister of State is well aware, this was extensively discussed on Committee Stage in the Dáil. The argument was, in effect, that it was easier to regulate companies than sole traders. I accept that is the case. However, if this type of thing is to work we must try to get people involved with it. If the Minister of State cannot accept my recommendation, perhaps he might go back to what we talked about earlier and make it easier for people to register themselves as companies. It is a bloody awkward process to try to register oneself as a company at present. There is a certain amount of cost and time involved. That may be all right in the case of a reasonably big project, or if it is in the interests of people with the wherewithal and knowledge to do this.

At the Fine Gael Ard-Fheis in Killarney at the weekend we were talking about how to get the knowledge economy working and how to get innovation going to make things work. One of the examples I gave was the case of my brother. My brother has an engineering qualification and set up a wireless broadband company. He needed to understand not just the software required to make the initiative work but also the hardware which is the infrastructure of the company, namely, the masts used to transmit signals. On top of this he needed to have the business wherewithal to make the company work. He needed a broad range of specialist knowledge, in other words, to make the company work.

This section in the legislation is aimed at a much smaller level than that. If the Government is serious about what it is talking about it must make it easier for people. I run a business and know that some of the aspects of this Finance Bill that we are discussing make it awkward to do this successfully. A great deal of knowledge is required as regards how to make a business work.

Being a sole trader is much easier than running a company, but if the Minister of State does not accept this recommendation, perhaps he could use his new office to put together information that will make it easier for people to register themselves as companies, showing them how to keep their costs down and making them aware of their responsibilities in an easy to read fashion. I am not talking about a 40-50 page booklet that reads like the Finance Bill. Rather, it should be a booklet that is incredibly easy for people to understand. There should be a strong movement towards an easy-English campaign in every single thing we do in business, but unfortunately that is not how it is.

I shall allow the Minister of State to respond, but if he cannot accept the recommendation, perhaps he might give a clear commitment to putting together an information package through his Department that will make it simpler for people to register themselves as companies and to understand what their responsibilities are in this regard. He might do something about keeping the costs of this to an absolute minimum so people do not need to seek too much legal, financial or other specialist advice until such time as this can be justified.

I thank Senator Twomey for his sentiments. I should point out that we provide a great deal of information through the country enterprise boards and area-based partnerships on starting up businesses and how to get involved in such processes. However, I will take the Senator's suggestions on board.

I empathise with the sentiment, in terms of encouraging and making it easier to set up companies, but I am not convinced the changes as proposed in Senator Twomey's recommendation represent an appropriate use of resources towards that end. This incentive is aimed at stimulating new activities and employment in the productive sectors of the economy and much employment in this economy is created and maintained by small and medium-sized companies. For reasons explained in the Dáil debate, the operation and impact of this incentive is better targeted, monitored and controlled by confining it to corporates. It is also less open to unintended manipulation.

It would be much more difficult to control the application of the incentive if it was extended to sole traders, where there would be much greater scope for blurring the lines between when a new trade started and who started it. The incentive in its current form can be more effectively monitored as it only applies to companies registered after 14 October 2008 and which commenced a new trade this year or last.

While my concerns about this recommendation are not primarily on cost grounds, it remains the case that the incentive in its current form is more cost effective than would be the case if it were extended to income tax liabilities. Where resources are scarce, we have to seek to invest them in areas where we believe we will get the best return. Following the approach of this proposed change — to provide income tax relief to individual taxpayers who are start-up sole traders — it might also be argued that a similar income tax exemption should be provided to individual first-time employees. The rationale for such an approach in our current fiscal circumstances does not stand up to significant scrutiny.

There is a further important reason for maintaining the provision of this relief through the corporation tax system. Any additional funds or savings arising through the relief and retained in the company structure can be used to re-invest in the business, which is the intention behind the incentive. If, on the other hand, those additional funds or savings are paid out by the company for the benefit of directors or shareholders, they will be subject to income tax in the normal way. This safeguard on the use of savings generated, as intended by the incentive, would not be available if it were extended to the income tax liabilities of sole traders or other non-corporate entities. In contrast to the situation for start-up companies, there would be no tax charge to be paid as a result of drawing funds out of the sole trader or non-corporate business.

As I noted, there are various grant aid and other supports available to persons setting up a new business from Enterprise Ireland and the county enterprise boards, CEBs. The role of the CEBs is specifically to provide support for the micro-enterprise sector in the start-up and expansion phases and to stimulate economic activity and entrepreneurship at local level.

In addition, as I stated in regard to the previous amendment, there is a back-to-work enterprise allowance scheme to encourage people in receipt of certain social welfare payments to become self-employed. Individuals taking part in this scheme can keep a percentage of their social welfare payments for up to two years. Grants received from the various enterprise agencies do not affect entitlement to this allowance. There are other appropriate channels for providing support and encouragement to individuals who wish to become self-employed.

It has also been suggested that the tax incentive should be extended to sole traders in particular sectors of the economy or that the enterprise agencies might have some role in controlling who should benefit from it. I believe, however, that the targeting of specific sectors for the promotion of new business start-ups is best achieved through the supports provided by our various enterprise development agencies, to which I have already referred. Where there is a particular focus in assisting new businesses in areas of high potential, for example, businesses which are export-oriented or businesses which are based on a technical advantage or innovation, Enterprise Ireland provides excellent support.

For the reasons I have outlined, I consider the effects of the recommended change could not be adequately targeted or controlled and would not, therefore, represent an appropriate use of resources. Accordingly, I cannot accept the recommendation.

While I will not push this to a vote, the point is that we should not simply go drily through the Finance Bill. The Minister of State should consider how easy it is for someone to decide to walk out of his or her office. The Minister of State has professional training and I have a number of years experience in this area, so it would be different for us, but it is more difficult for many others to register as a company. We must consider all the difficulties they would encounter in doing this in order that the Minister can ensure all of the blockages are removed and can streamline this process as much as possible.

There will still be difficulties for people because even when they go to the county enterprise boards for assistance, they are sent here and there. We need to be serious about this, tighten up the system and try to make these boards do as much as possible for such people. I am not talking about babysitting them or developing a nanny state to make this work. However, there is a serious need to streamline the processes so this can be achieved quickly. That is the only way we will get people in this country back to work.

Recommendation, by leave, withdrawn.
Section 45 agreed to.
Sections 46 to 51, inclusive, agreed to.
Question proposed: "That section 52 stand part of the Bill."

Will the Minister of State explain the thinking behind section 52?

Section 52 amends section 80A of the Taxes Consolidation Act 1997 so as to enable a leasing company engaged in the leasing of short-life assets by way of an operating lease to elect to be taxed on the accounting profit from these leases in certain circumstances. The amendment extends a similar tax treatment to operating leases as already applies for finance leases.

Question put and agreed to.
Section 53 agreed to.

Recommendations Nos. 16 to 18, inclusive, are related and may be discussed together. Is that agreed? Agreed.

I move recommendation No. 16:

In page 90, subsection (1), between lines 22 and 23, to insert the following:

"(b) in subsection (1)(a) in the definition of "group expenditure on research and development" by inserting the following after subparagraphs (i) and (ii):

"(iii) expenditure (in this section referred to as ‘relevant expenditure') on research and development incurred by a company which is a member of a group in developing intellectual property within the meaning of section 291A that is transferred to a company incorporated in the State that complies with section 495 shall not be included in group expenditure on Research and Development in relation to that group. The relevant expenditure will be treated as a separate Research and Development activity distinct from all other R&D activities carried on by the group for the purposes of this section.",".

I congratulate the Minister of State on his new responsibility and wish him the best of luck.

I commend the recommendations to the House. They relate to a subject that is frequently discussed in this House and is one on which all parties agree, namely, the need to create a more thriving and dynamic high-tech and smart economy in Ireland. The key to achieving this will be to get ourselves to a place where an increasing number of companies find themselves in innovating and creating new wealth and new jobs on the back of technologies that are competitive and that they can sell in the marketplace.

This is very important to the Bill and the discussion we are having for two reasons. The particular area on which these recommendations focus is that of spin-out or spin-off companies. As an example, I will take a company that has a particular area of competitive focus. As it is delivering that competitive focus in the marketplace, it comes up with a technology or a service that helps to deliver that service and be competitive but one which is not actually part of the company's core competency. It is not what the company is all about but is something it develops in order to help it go about its business and be competitive.

What is increasingly happening is that within such a company, a group of staff decide the technology which is not core to the company for which they are working could be better applied by the creation of a separate company utilising that technology to employ people and create wealth. This is why it is called a spin-off or spin-out company.

It is estimated that in the US approximately 8% to 10% of all start-ups that take place in the high-tech parts of the economy come out of this process. A point I found amazing when I began to research this area was that many of the colleges here in Ireland that are focusing on and doing well in research and development are themselves becoming hubs of these kinds of spin-out enterprises and companies. Probably the most famous example we have of this is Iona Technologies, which itself was a spin-out of research and development that was taking place within Trinity College. These recommendations propose a way of changing the tax regime relating to research and development credits in order to create an incentive for this kind of spin-out process to take place. There is significant support for research and development programmes in companies and colleges. However, a concern expressed in this House and elsewhere is how to ensure the research and development which is being funded by billions of euro will be commercially viable and will create jobs. While the agenda of research for its own sake needs to be supported, it must be ensured that taxpayers' money is hitting the sweet spot, so to speak, and that this research and development will create jobs and generate wealth.

I refer to the example of AIB which developed a technological product to deal with the issue of disputed credit card transactions. This was very helpful but it was not vital to the bank's core business. A group of people within AIB founded a company called Peregrine which was very successful and which created jobs and generated money resulting in the company being bought out a few years ago. There are many such examples across the marketplace, particularly with regard to college campuses.

I worked on these proposals in partnership with Deputy Richard Bruton and he spoke to this amendment on Committee Stage in the Dáil. I will elaborate on some of the points he made. These three recommendations could be a blueprint for something similar in the future. Such proposals would provide a short-term gain for these companies along with providing stability for their forecasting which will allow them market a product and create jobs. The mechanism contained in these recommendations is to allow these spin-out companies to claim the credit on research and development expenditure for a period longer than the 12 months currently allowed. These companies could have a piece of technology or could propose a service. However, they may be outside the 12-month window and the company might not have claimed the tax credit. There could be an amount of work for them to understand with regard to the technology and the parent company and whether the tax credit has been claimed. The recommendation of itself might not stimulate new research and development but that is not the purpose of the recommendation which is to do with existing work. It is a means of creating an incentive for that research and development and for people to create jobs. It is important to provide an incentive to create jobs and it is a question of whether such a recommendation would provide a mechanism for a company to reduce its tax liability on work and business already in hand. This recommendation puts in place a safeguard which will ensure this does not happen. The recommendation stipulates that the corporate spin-out must meet the criteria currently mandated for firms applying for the business expansion scheme. The purpose of these recommendations is not to reduce the tax liability of a company but rather to create jobs and new companies. Recommendation No. 18 specifies that the original firm must have a capital gains tax exemption from the liability created by it disposing of this proprietary technology or service. We need to ensure any credit or gain given is not offset by the liability created on the disposal or sale of the proprietary technology.

The recommendations recognise the thriving spin-out culture in companies and campuses and the work which is integral to the innovation economy which we are committed to creating. The Government produced what appears to be an excellent report a couple of weeks ago and we all need to implement it. My recommendations provide a way, albeit small but important, to do so.

I consulted with other people with regard to this recommendation. Chris Horn has done very well in this area and he has endorsed these recommendations. He is one of the key people in drafting and producing the innovation task force to which I referred earlier. In his view this recommendation will help the people in Maynooth, Trinity, DCU, UCD and all the colleges who are looking to create the next Iona Technologies, who will create jobs and wealth and who will be a tangible example of the smart economy which we are all committed to developing.

I await the Minister's response to these recommendations. I have put a lot of work into this practical contribution as to what can be done to move forward on the smart economy in a tangible fashion.

The greatest rate of failure for any business whether a restaurant, a hairdresser or an IT company, is seen in the first two years. Anything that can be done to help companies come through the difficult patch at the beginning should be done. It is not a case of looking for another Iona Technologies but rather an attempt to develop 10,000 smaller companies, each with a small number of employees and so create a thriving, innovative economy. This is the future for the economy. We should enact legislation that makes it easy for these individuals. We do not have to understand every single thing about what they do. They could be IT companies or companies involved in bio-pharmaceuticals or engineering. It is often the case that these individuals do not understand the legislation or the finances. We should do everything we can to facilitate those individuals to get this country moving in a high-tech way for the future.

We are indebted to Senators Donohoe and Twomey on this issue. This is the kind of thinking we need in industry. In 1492, Columbus set out from Spain to find the Indies, as he thought, and he discovered the great continent of America, by accident. Many of the great developments have happened as a result of serendipity, finding something by accident. The best example is the discovery of penicillin; they were looking for something else and discovered it by accident in the stuff they had thrown outside the back door. This is similar and fits well with the Irish psyche. Where I come from, there was always someone who owned a steelworks. If something broke and it was obsolete or no longer available, he would say he would make something up. He filled the gap with an intellectual bridge from the obsolete to the useful. That fits the Irish psyche.

There is a design competition every year in Britain and it interests me because I like the simplicity of great creations. A student who was working on something else, using his slim Apple MacBook, noticed that he was using an awkward, large three pin plug that is a real pain when travelling abroad. He asked himself why he was using such a big plug when his computer was less than half an inch thick. He stopped what he was doing, looked at the plug anew and developed a collapsable plug that fitted beside his computer. It won the design competition.

How is that relevant? It is precisely the point Senator Donohoe is making. People are focused on a core objective and along the way must create new strategies to reach it. In doing so they create something outside their core work. In business the norm is to focus on the core and not spread out when one risks losing focus. The idea brought forward by Senator Donohoe — that spin-off ideas can be used — should be considered. There are those who say such ideas distract us from the main job; therefore, a parallel sub-company could be established for an idea to be transferred in such a way that, according to the amendment, there would be no capital gains arising from the transfer and the new spin off company would be able develop the product while claiming the research relief for what was done for whatever length of time.

Why is this important? During the boom Ministers spoke about the need for investment in research and development. I do not know how many times I was in negotiations with the social partners when we pleaded with people to get involved in research and development. In fairness, IBEC did the same. However, people were too busy making money; they did not need to waste their time on research and development that would take too long to show a return. Therefore, they did not focus on it. Now, however, there is spare intellectual capacity in the country and these ideas are still coming through. They have intellectual added value, with a job creation focus. In business terms, we are talking about a near-market idea that needs incubation and marketing, skills that might not be available in the core company which discovered the possibility at the earlier stage. We have a duty, therefore, to encourage and develop this idea.

I cannot see how we could object to this. I already know what the Minister of State will say. I keep saying this to his officials who are the crème de la crème of the Civil Service, but they are afraid to take a chance. The Minister of State should stroll over to the Department of the Taoiseach to say he has made his first decision, that he has decided to accept an amendment and will argue to back it up. He will be a better man for it and his officials will be able to say they did the State some service this week.

We are looking for the encouragement about which Ministers talk every day. This is an idea that has come from the milieu the Minister of State is trying to develop. These topics come up in conversation regularly, when someone tells us he or she is working on something new and we are curious about the problem he or she might face and how to solve it. People talk about politics being confrontational and negative but this is completely positive; there is no downside, and there would be no loss to the Government in accepting it.

This is no longer a manufacturing country of real note and never will be again; therefore, we must become involved in other aspects of manufacturing. This covers one such aspect. Another is the management of manufacturing in order that we manage it from Ireland while a product is manufactured elsewhere, creating jobs in the ideas field here. There are ways by which we can go about doing this. Is there anything more valuable than a good idea? The answer is no. This is a good idea the Minister of State could make happen; one word would do it: "Yes". He should try it and he will get a great sense of satisfaction. Also, his officials would never let him out on his own anymore and he would always have help beside him.

This is the sort of development we must encourage. I know what the Minister of State will say in reply, but he must remember the discussions we had in Belmullet when we were looking at the development of industry in the area. The county manager, the Minister of State and I discussed building a 500 megawatt power generating station in Bellacorrick and connecting to the grid. The Minister of State's attitude that night would allow him to take this on board.

I congratulate the Minister of State on his new position and welcome him to the House.

I have a difficulty in adding to what has been said because Senator Donohoe explained it so well and Senators Twomey and O'Toole have both added to it. We must find a way to identify research and development that are not at the core of the business. In my own business some years ago the primary focus was on the selling of food and the running of supermarkets. When the plastic bag levy was introduced, we wondered what we should do. We developed a bag that was so novel it is now being used right around the world. There are millions of them in Australia, South Africa and elsewhere. That was not at the core of our business. Right around the country there are examples of research and development planned not for the core business but for a different aspect that has been hugely successful. This is intellectual added value that we must encourage.

Senator O'Toole touched on the issue; we will not be involved in manufacturing again in the future. This means, however, that we can manage manufacturing from here. It is highly unlikely the amendment will be accepted at this point but we should consider it. It is worthy of consideration because it does exactly what we want in terms of encouraging start-up companies that would otherwise not be in a position to establish themselves owing to the constraints they face. I urge the Minister of State to accept the recommendation on the grounds that it is worthwhile and will give an incentive to those who might not otherwise establish companies.

I thank Senators for their good wishes. Senator O'Toole's advice that it could be "done, gone, out of here" stuck in my mind because that is probably what would happen to me if I accepted the recommendation. There is nothing to disagree with it in respect of the principle of the recommendation but the Minister stated when a similar amendment was proposed in the Dáil that he wanted more time to consider it. By moving responsibility for fourth level innovation to the Department of Enterprise, Trade and Innovation, the Government is paying serious attention to this area.

Last week I had the pleasure of visiting Massachusetts Institute of Technology and meeting Irish students there. As Senator Donohoe noted, some of the concepts they are developing are mind blowing. We need to encourage this type of innovation but I remind Senators that significant supports are already in place.

The Minister required more time to establish whether the Dáil amendment would fit into our existing arrangements for encouraging research and development as well as the broader development of the knowledge economy. Our tax code already provides for a tax credit of 25% of incremental expenditure on certain research and development activities over expenditure in a base year. A successful outcome to research and development activities, such as the development of commercially valuable intellectual property, is not a requirement to qualify for this tax credit. The credit is equally available to projects which fail and those resulting in commercialisation. Research and development is a risky business and the purpose of this incentive is to encourage companies to increase their research and development activities despite the risks involved. This is achieved by effectively reducing the costs of such activities in so far as it is possible over the time in which they are being incurred. The introduction of payable credits has significantly improved the cash flow of research and development projects.

It has been incorrectly argued that while we provide incentives when research and development activities are being undertaken, we do not incentivise for any ensuing commercial activities. The new scheme of capital allowances for the acquisition or provision of intangible assets was introduced in the Finance Act 2009 for that very reason. This significant measure has the specific aim of encouraging commercial expectation of intellectual property in Ireland. Companies that incur capital expenditure and the provision of intellectual property for the purpose of trade are eligible for writing down allowances in accordance with the accounts-based depreciation of the intangible asset concerned or else a fixed write-down period of 15 years. Under the scheme, capital allowances are available for offset against the trading income arising from the management, development and exploitation of such intellectual property but not against other income or profits. This is to ensure the relief is focused on companies which actively utilise intellectual property in their operations. In conjunction with our 12.5% corporation tax rate and enhanced research and development credits, this scheme encourages reinvestment in research and development and the commercial exploitation of intellectual property arising from such activities.

It could be argued that the incentive proposed by Senator Donohoe will encourage companies to dispose of intellectual property arising from their research and development activities to make a once-off windfall gain rather than take the commercial risk of developing and exploiting intellectual property themselves, thereby generating further activity and employment. A capital gains tax exemption along the lines proposed by the Senator would provide no guarantee that the intellectual property would be commercialised or result in employment or economic benefits. On the other hand, the scheme for capital allowances on intangible assets which focuses relief on the active use of intellectual property encourages companies to exploit the commercial potential of intellectual property assets, whether purchased or developed internally, thereby giving rise to activity and, ultimately, employment. For this reason, the new tax relief scheme for intellectual property is a more focused and effective way of incentivising thecommercialisation of intellectual property than would be the case for a capital gains tax exemption.

In light of the generous incentives already available for research and development and the scheme of tax relief for the acquisition of intangible assets which facilitate commercial exploitation, we are not inclined to accept the specifics of the recommendation proposed by Senator Donohoe. We intend to consider the proposal further and will engage with the Senator in the context of the range of incentives available to encourage and support innovation in the economy.

I thank the Minister of State for his response. I was amused when he said he agreed with everything in the recommendation but could not accept it. I agree with all that the Minister of State has said, other than his refusal to accept the recommendation.

He sounds a bit like Senator Donie Cassidy.

We were doing so well until this point. I want to address some of the points raised by the Minister of State. This recommendation will help people to progress their ideas and encourage them to commercialise work that is under way. I know it is a good idea because people involved in this area have spontaneously suggested that it would help them do the kind of work we believe is important to the economy. I am grateful to hear that the Department of Finance is prepared to consider the proposal. If the Government is not in a position to accept this specific recommendation, the Minister of State has committed to consider the thinking behind it with a view to finding an alternative means of implementing it.

In preparing the amendment, I have worked with experts in this area and I would like to connect them with the Department. If we find in a few months' time that the matter has not been progressed, I will prepare a Private Members' Bill reflecting our deliberations on it.

I wish to respond to the Minister of State's comments on the potential for this recommendation to create windfall gains. We do not believe that would happen because the new venture will only be able to purchase the transferable technology at or below market price. The recommendation stipulates that the venture shall comply with section 495, which typically requires it to be approved by Enterprise Ireland. It would therefore have to follow the procedures put in place for it by that agency. Furthermore, the recommendation requires the venture to have shareholders, who will not invest in a company acquired at a price that does not reflect market value. This would ensure a windfall gain created by a tax manoeuvre could not be achieved.

I appreciate the broadly generous response to my recommendation. Rather than press it at this stage, I will reserve it for Report Stage and work with departmental officials to link up with the experts in this area.

The claim about shifting from one company to another has been thoroughly addressed by Senator Donohoe. One of the problems that arises in assigning innovation to a Department is that people will think the matter can be addressed in one place. A Department with responsibility for innovation should simply be an additional extra to innovation taking place everywhere else. There is a Commissioner in Europe whose main focus is innovation. To be fair to the Minister of State, he referred to what the Government has put in place to encourage research and development by tax and other means and the Government can take credit for that, which I have acknowledged many times. This Government and previous Governments have bent over backwards to make a variety of supports available for innovation. I do not support this recommendation with any sense of criticism towards the Government, which has done very well in this regard. It is simply that there has not been a pick-up in the area. This is an extra measure, something new which has not been done before. It is innovative in dealing with innovation and in this regard it has a certain attractiveness. The situation saddens me and were it up to me I would push the recommendation to a vote because we must keep making the point to each other about the importance of these issues. I understand the remarks of the Minster of State and I welcome the generosity of his response in that sense but I regret these issues take too long to come through from start to finish.

I echo the comments of the Minister of State, Deputy Calleary, in respect of what the Government has done in the area of research and development. Senator Donohoe raised a very important issue and I welcome the response from the Minster of State indicating he will consider the matter. As Senator Quinn stated, it is possible to trip over things of this nature. Senator Donohoe appears to have several people working with him and this strikes me as an area that merits and warrants revisiting as indicated by the Minister of State, Deputy Calleary.

I refer to the general area of research and development and I take this opportunity to bring to the attention of the Minister of State the matter of intellectual property protection. I refer to Irish companies involved in licensing their technology in Ireland. The treatment of intellectual property in the area of insolvency is not the same as that of property. The licence is a contract which may be disclaimed by an examiner or liquidator. This means the licensee may be deprived of an asset into which he has already made a vast investment and into which he has put considerable resources.

I raise this as a practical matter because it surfaces in the course of negotiations for a licence and I wish to draw it to the attention of the Minister of State and his departmental colleagues. In the USA, there is a provision which states that in certain circumstances the licensee is entitled to retain the licence and hence it is a valuable asset. I am simply inquiring if the Minister of State would examine this issue with Department of Finance officials to provide a level playing pitch similar to what is in place in the USA.

At present if a company in liquidation owns intellectual property, the liquidator can treat its licence to a third party as a mere contract and disclaim it. The effect is to confiscate the intangible asset for which the licensee has paid and invested vast resources, time and so forth. In practice, Irish intellectual property owning companies are less attractive than others. I am unsure of the measures in place in Europe but in the USA there is a mechanism that deals with the matter. If the Minister of State wishes, I will put the mater to him formally in writing. I gather from his body language he would like me to do so. I will try to get the material to the Minster of State as quickly as possible and if something can be included on Final Stage it may be helpful.

I wish to respond to a brief point. Senator O'Toole has raised a good point to which I refer. I wish to be generous on this matter because I sense from what the Minister of State has stated that there is an understanding that this could work. I wish to explore the matter to determine if progress is possible.

I take a strong view of such matters and I have a love and appreciation of innovation and technology and what they can do for our country. I believe some version of this measure would help and we have a real duty to investigate and make this happen. If we cannot bring it to a conclusion in the coming four to six weeks and if I remain satisfied of the merit of the proposal, we will introduce a Private Members' Bill and debate it for two hours before experts with an interest in the area before the summer recess. We should draw this issue to a close and determine if it is a good idea and, if so, the Government should adopt it because this will help people. If it is not a good idea and it is unlikely to work, we will simply take it off the table.

Senator Callely's point on the treatment of intellectual property in insolvency situations is a company law issue. I would be pleased to bring the Senator's concerns to the attention of the Minister of State with responsibility in that area, Deputy Kelleher, for examination.

I reiterate that we wish to pursue the proposal but it may not occur within the Senator's timeline because it is a Finance Bill issue. Officials from the Department will pursue the issue with the Senator in the coming weeks and work with him on it. I have no doubt about the Senator's genuine commitment to the proposal. We all share the ambition to try to develop this sector as much as we can.

Recommendation, by leave, withdrawn.
Recommendation No. 17 not moved.
Section 54 agreed to.
Section 55 agreed to.
Recommendation No. 18 not moved.
Sections 56 to 64, inclusive, agreed to.

Recommendations Nos. 19 to 22, inclusive, are related and may be grouped together by agreement.

I move recommendation No. 19:

In page 102, subsection (1)(a)(i), to delete line 19.

I raised this issue on Second Stage yesterday. The Minister gave some indication that he may be able to resolve this issue. I will wait to see what the Minister has to say but I believe there may be a solution to the matter.

I do not propose to accept the recommendation. As previously indicated, the only reliefs from the carbon tax are inrespect of those companies within the EU emissions trading scheme, ETS, where a carbon pricing mechanism is already in place. It is not intended to offer reliefs for sectors outside the ETS.

I refer to recommendation No. 20. Those installations within the ETS that use combined heat and power, CHP, technology will be relieved from the carbon tax, subject to payment of the minimum rates required under EU law. However, CHP used outside the ETS will not be relieved from the carbon charge. Notwithstanding this, the Government acknowledges the environmental benefit that can accrue from the use of high efficiency CHP technology and this is why the Finance (No. 2) Act 2008 provided that expenditure on CHP technology is allowable under the scheme of accelerated capital allowances. The scheme allows companies to claim 100% capital allowances on expenditure on certain energy efficient equipment in the year of purchase. Therefore, I do not believe it is appropriate to put in place a further tax subsidy. We must ensure the carbon tax has a broad base and I have no wish to undermine that principle. I point out that a long-term impact of the carbon tax will be to incentivise energy efficient processes such as CHP.

I refer to the remaining three recommendations, which are concerned with a full exemption for mineralogical processes from the carbon charge in the case of gas and coal. The Finance Bill provides that a full exemption would apply to ETS installations in the power generation sector and for consistency with a long-standing policy position, which is the subject of ongoing legal action at EU level, the only other exemption applies to "use for chemical reduction or electrolytic or metallurgical processes". The latter exemption already applies in mineral oil provisions and is being maintained for coal and extended to gas. Not applying the EU minimum rates could raise state aid issues. ETS installations in other sectors will be required to comply with EU minimum rate provisions.

In practice, no additional charge arises in the case of mineral oils, as the existing mineral oil tax rates all satisfy the EU minimum rates and those companies within the ETS continue to pay these minimum rates. However, implications arise in the case of gas and coal because these products have not been taxed up to this point. The carbon tax, therefore, brings gas and coal into the tax net for the first time. Consequently, the EU minimum rate is being applied. In the case of gas, the EU minimum rate is about one sixth of the carbon tax rate, that is, 54 cent per megawatt hour. While the introduction of a carbon tax in respect of coal and the other solid fuels remains subject to a commencement order by the Minister for Finance, when coal becomes subject to the carbon tax, the EU minimum tax rate will apply to ETS installations, that is, €4.18 per tonne which is approximately one ninth of the full rate.

The recommendations in respect of mineralogical processes are not being accepted. However, in the case of solid fuels, the application of the tax is subject to the making of a commencement order. The Minister for Finance and his officials have had meetings with representatives of the sector and propose to continue the discussions prior to a commencement order being made to discuss further their concerns.

There are some things one must take on trust. I will withdraw the amendments because I believe the Minister is still actively negotiating on them.

Recommendation, by leave, withdrawn.
Section 65 agreed to.
Sections 66 to 70, inclusive, agreed to.
Recommendations Nos. 20 and 21 not moved.
Sections 71 to 81, inclusive, agreed to.
Recommendations No. 22 not moved.
Sections 82 to 87, inclusive, agreed to.

Recommendation No. 23 has been ruled out of order as it involves a potential charge on the people.

Recommendation No. 23 not moved.
Question proposed: "That section 88 stand part of the Bill."

In any case, the Minister has decided to make significant progress on the issue raised.

Question put and agreed to.
Sections 89 to 105, inclusive, agreed to.

Recommendations Nos. 24 and 25 are related and may be discussed together.

I move recommendation No. 24:

In page 152, before section 106, to insert the following new section:

"106.—The provisions of section 134(15) of the Finance Act 1992 shall be suspended pending a review to be carried out by the Minister on the impact section 134(15) will have on the car rental industry.".

On Second Stage I highlighted a problem related to car rentals during the summer months of which I had been made aware. There is serious concern that there might not be enough cars available for rent. It is a short period of time in which the number of visitors to this country peaks. If there is anything that might cause problems as regards the availability of cars for rent, we must look at that issue. I do not know whether the Minister can come up with a solution to this problem, but I have received representations from persons involved in the tourism business. It is part of the Minister, Deputy Hanafin's brief and I am sure she is well aware of the matter. Perhaps she has a view on it.

As the Senator will be aware, I am here on behalf of the Minister for Finance who does not propose to accept the recommendations, primarily because there was evidence of a scheme being abused in the past and he wants to stamp out such abuse and because of the difficulties that would arise, for example, in allowing car scrappage in the case of some cars but not all, etc. It is an issue of major concern to the tourism industry, but, on the other hand, tourist numbers have fallen and I am not sure whether we can directly relate one to the other. As I said, the Minister for Finance is not willing to accept the recommendations at this time.

I am sure the Minister has been made well aware of the issue.

Recommendation, by leave, withdrawn.
Section 106 agreed to.
Recommendation No. 25 not moved.
Sections 107 to 111, inclusive, agreed to.

Recommendation No. 26 has been ruled out of order as it involves a potential charge on the Exchequer.

Recommendation No. 26 not moved.
Sections 112 to 116, inclusive, agreed to.
Recommendations No. 27 and 28 not moved.

I move recommendation No. 29:

In page 160, between lines 33 and 34, to insert the following subsection:

"(2) The Minister shall within one month from the passing of this Act prepare and lay before Dáil Éireann a report on the estimate of the VAT likely to be charged by local and public authorities annually under this section and an estimate of the amount such authorities will be likely to recover in respect of their inputs."

This recommendation would provide for the preparation and laying before Dáil Éireann of a report on the VAT likely to be charged by local authorities. It is another one of the recommendations which provide for the preparation of and the laying of a report before Dáil Éireann. I note that this recommendation has not been ruled out of order as it involves a potential charge on Revenue pursuant to Standing Order 40 in the same way as a certain other recommendation has. I am still at a loss to understand why one recommendation in precisely the same format is ruled out of order, while another is not.

On the substance of the recommendation, it largely speaks for itself. Senators will be aware of the background to the introduction of this change in the finance Bill in the charging of VAT by local authorities. It is not unreasonable for us to look for some information, not only for Members of the Oireachtas but also for the public, on the amount of VAT likely to be charged by local and public authorities under this section and also the amounts they are likely torecover in respect of the relevant inputs. I wonder what is the response of the Minister to this proposal.

I do not propose to accept the recommendation. However, the Minister for Finance wants to point out that the full Exchequer revenue implications of the application of VAT to the activities of public bodies, including local authorities, are difficult to estimate, even after the tax has been applied for some time. Whereas there will probably be a positive revenue yield for the Exchequer, it will be far lower than was initially envisaged. While yield will accrue from the VAT being applied to services that were up until now exempt, any VAT charged to business customers will be reclaimed by them in the normal manner, resulting in a Revenue-neutral position in so far as those customers are concerned.

Public bodies will be in a position to claim VAT input credit in respect of VAT paid on the inputs they use in providing their services which they cannot do at present. Consequently, any Exchequer gain from VAT being charged by public bodies will be reduced by VAT on input claims by public bodies and also by the business recipients. Many Exchequer funded bodies which continue to remain exempt from VAT may face increased charges for the services they receive from public bodies due to the services becoming subject to VAT from 1 July 2010.

In such cases, these exempt bodies may require their funding to be increased. Where the public bodies reclaim significant VAT input credit and do not pass it on in prices charged for services, the Exchequer funding could be reduced.

In this context, officials from the Department of Finance, the Revenue Commissioners and the Department of the Environment, Heritage and Local Government have undertaken surveys of the nature and extent of services operated by local authorities, Departments and agencies under their remit to determine what level of services will become subject to VAT on 1 July 2010.

Outside of the local authority area, no other significant services have emerged. Revenue will assist public bodies in understanding their obligations under the new provisions. Discussions have already taken place with local authorities in this respect. Consequently, it was not possible to estimate properly the value of VAT charged and claimed by local and public authorities and report the information as requested by the Senator.

The recommendation did not seek the information today and I accept the Minister's point that it is not easily ascertainable. Given the complexities she just set out, I even accept it might not be possible to ascertain the information in a month. I would be amenable to a suggestion similar to the Minister's earlier recommendation for a provision from one to three or more months to ascertain the amounts involved. If the Minister is in a position to claim it will be less than what was originally envisaged, there must be some sense in the Department as to what the yields will be. Will the Minister give some indication as to whether this information could be provided to the Oireachtas and the public?

It will be a lot less than anticipated when it is considered the public bodies and the businesses will both be able to recoup the moneys involved. The amount of moneys coming into the Exchequer will be quite small. I am not in a position to commit to a report on the yield but the Department of Finance will be keeping an eye on it.

Recommendation, by leave, withdrawn.
Section 117 agreed to.
Recommendation No. 30 not moved.
Sections 118 to 122, inclusive, agreed to.
Recommendation No. 31 not moved.
Sections 123 to 134, inclusive, agreed to.

Recommendation No. 32 has been ruled as being outside the scope of the Bill.

Recommendation No. 32 not moved.
Question proposed: "That section 135 stand part of the Bill."

While it may be outside the scope of the Bill, a quarterly report on residential property prices would be useful. Does the Minister agree?

The Minister for Finance indicated he is not clear on the purpose or the intent of such a report. A commitment under the renewed programme for Government is to move on the introduction of a site valuation tax for non-agricultural land. However, considerable groundwork will have to be done on this before the tax can even be introduced. The starting point for this would be establishing the necessary valuation and registration process.

Stamp duty is not payable on new houses below 125 sq. m. bought by owner-occupiers or any property bought by a first-time buyer as a sole and main residence. While the documents relating to the conveyance of such properties would still have to be stamped, the fact no duty is payable on these documents could complicate the compilation of house price information. Certain transactions involving the transfer of a house such as a deed of asset transferring property from parents to children, the purchase of a local authority house and certain transfers between spouses also do not require the presentation of a document for stamping.

The Department of the Environment, Heritage and Local Government already publishes statistics on house prices on its website showing average prices per quarter of new and second-hand houses and apartments. The data is broken down by region and city areas and there are other non-governmental statistics on house prices such as the Permanent TSB/ESRI house price index. The Minister of State at the Department of the Environment, Heritage and Local Government with responsibility for housing, Deputy Finneran, recently announced several bodies and agencies are in talks to establish a national house price register.

A report based on the stampable value of property transactions will not be of significant additional benefit. There will also likely be data protection issues on disclosing details of individual property transactions which would have to be addressed.

Question put and agreed to.
Sections 136 to 144, inclusive, agreed to.

Recommendation No. 33 has been ruled as being outside the scope of the Bill.

Recommendation No. 33 not moved.
Sections 145 to 148, inclusive, agreed to.
Recommendation No. 34 not moved.

Recommendations Nos. 35, 36, 38 and 39 are related and may be discussed together by agreement.

I move recommendation No. 35:

In page 210, before section 149, to insert the following new section:

"149.—The following section is inserted in the National Asset Management Agency Act 2009 after section 1:

"1A.—(1) For the purposes of this Act, ‘the Oversight Committee' shall mean a committee of the Houses of the Oireachtas, or a sub-committee thereof so enjoined and appointed by a Resolution of the Houses, consisting of specified persons not being members of the Houses of the Oireachtas to report to the Houses of the Oireachtas every 30 days on the operation of this Act and the activities of NAMA.

(2) The Minister, NAMA, and any other body or person having functions under this Act shall be required to co-operate with the Oversight Committee in the performance of its functions."."

During the debate on the NAMA legislation, many Members were calling for some element of Oireachtas oversight to be introduced as part of the arrangements. On different Stages, the Minister for Finance said he had some sympathy for such a proposition. Since the legislation has been passed, we have had to rely on the information leaked to the media as to what is happening with the agency and its work. For example, we hear of rumours about the imminent passing of certain large loans from the banks to NAMA. I do not know whether it has happened or if it is in the process of happening — Members of the Oireachtas should not have to ask such questions. There should be greater clarity about what is happening in our name, in the context of such important and enormously expensive commitments being given on behalf of the taxpayer by the Oireachtas. In the circumstances we thought it prudent to introduce a recommendation on the issue at this stage of the finance Bill. It was aired here before but not satisfactorily dealt with by the Minister. I am prepared to accept that the Oireachtas cannot expect to look over the shoulders of professionals on a daily or hourly basis. The people concerned have been retained to carry out this work. I do not refer to that level of scrutiny, which would not be practical. While I understand this, I do not understand the apparent unwillingness to provide for any element of Oireachtas oversight or scrutiny of what is happening in NAMA. This should be possible because it happens elsewhere in public life and public policy where there is reasonably regular scrutiny of important Government activity but little or none is provided for here. In other jurisdictions, where major bodies such as this have been set up, there is provision for the equivalent of the Oireachtas to receive a flow of information, if not actual scrutiny of their workings. That is the basis on which we tabled the recommendation, which has merit. It chimes with what the Minister for Finance said. I cannot remember precisely what he said and did not have time to find the quote but it was my understanding that there would be an element of oversight by the Oireachtas of these important matters.

Recommendation No. 36 concerns the provision of a six-monthly report by NAMA for the Houses of the Oireachtas setting out details of its operations, including the identities of the owners and particulars, including any assets acquired by it during the period in question valued at over €100,000, as well as a corporate operational plan and budget.

Rinne mé dearmad comhghairdeas a dhéanamh leis an Aire ar maidin faoin Roinn úr. Guím gach rath air san am amach romhainn. In line with Senator Alex White's comments, I refer to recommendations Nos. 38 and 39.

Recommendation No. 38 deals with oversight and the accountability of NAMA to the Houses of the Oireachtas. It envisages the establishment of a cross-party committee, to which NAMA would report on the purchases made by it. Recommendations from that committee could be made to NAMA in respect of its portfolio based on economic and social needs. We expected accountability and are arguing for the presentation of a report on a quarterly basis. It is important that for bodies such as NAMA there is a proper set of accountability and reporting measures. The recommendation strives to achieve this. I ask the Minister to agree to it in spirit, as it is in line with the recommendation tabled by the Labour Party. An increased level of oversight, reporting and accountability to the Houses of the Oireachtas would be acceptable.

Recommendation No. 39 deals with the remuneration of NAMA board members. The Minister will be required to place all decisions relating to the remuneration of NAMA board members before the Houses of the Oireachtas for approval. In the past two weeks my party colleague, Deputy Morgan, revealed that within a couple of weeks of NAMA being established, 12 days after public sector workers had their wages cut in last December's budget, decisions were taken to increase the remuneration of its board members from €38,000 to €50,000 and of the chairperson from €100,000 to €170,000. The chair of the finance committee receives €150,000 for what is expected to be a three to four day working week. There are serious questions to be answered and serious anger. It does not wash that the Government now realises there is more work to be done than was originally envisaged. People took these jobs for the rates of pay on offer. The Minister can tell this to the lower paid workers in the passport office. This is what causes some of the anger among the public. People have seen low paid workers being asked to an accept cuts in pay of 13% over the course of last year, while the board of NAMA was hardly in place a wet week when the Government decided to provide the chairperson with a 70% increase. We do not know if board members are up to the job or doing a good one, which is not to say they will not. They have not been there long enough. The Minister should place the rates of remuneration of NAMA board members before the Houses of the Oireachtas for approval. He should also reverse his decision to increase their pay. We need to consider this measure for the time ahead.

There is a need for some Oireachtas oversight of NAMA's work. It has been described as a socialist solution to a capitalist problem, which has now the added Stalinist desire for secrecy. When those moving properties to it are having a jolly good time, there is a sense in Government circles that discussion about NAMA raises the ire of taxpayers. For the job to be completed properly, with the massive transfer of junk bonds to the taxpayer, there is a need for clarity and the public to believe they are engaged in the process. The only way that will happen is if there is an Oireachtas committee overseeing the work of NAMA. Individuals, no matter how competent they are, are insufficient because if the public sense secrecy or that the Government is covering up something in respect of NAMA, they will have no confidence in it. To say the least, they are pissed off about NAMA. It would help, therefore, if there was a mechanism in place to provide for proper Oireachtas oversight. One of the recommendations should be accepted by the Minister.

The issues of reporting and accountability were discussed during the debate on the National Asset Management Agency Bill. At the time the Minister made it clear that he was in favour of effective Oireachtas oversight of the work of NAMA. For that reason he ensured substantial provisions were included in the NAMA Act to provide for oversight by the Oireachtas. Further to the quarterly reports requirement included in section 55 — normally two reports per year — section 59 of the NAMA Act provides for the chairperson and CEO of NAMA to appear before a committee of the Oireachtas to examine matters relating to NAMA, if requested to do so. This provides for such an appearance at least four times per year in the first instance. The NAMA Act provides for NAMA to submit annual accounts to be audited by the Comptroller and Auditor General and for the Committee of Public Accounts to examine NAMA on the audited accounts. There are five opportunities. Substantial provisions are included in the NAMA Act providing for transparent reporting by NAMA and oversight by the Oireachtas. Arising from the debate on Committee Stage of the NAMA Bill, the Minister introduced an amendment to increase the requirement to report on a quarterly basis. Previously bi-annual reports were required. Section 55 makes extensive provision for quarterly reporting. It provides that NAMA shall make a quarterly report. The first quarterly report will be for the quarter ending 31 March 2010. It will be submitted to the Minister on or before 30 June 2010. He shall lay copies of the quarterly reports before each House of the Oireachtas and send a copy to the committee appointed by the Oireachtas to deal with NAMA. The Act provides that the quarterly report shall include a range of specified information and any further information the Minister for Finance directs. The Act also provides for NAMA to report on a range of matters, including details relating to loans. These reporting arrangements allow for transparent reporting that does not breach the agency's obligation to respect the confidentiality of customers.

The Senator proposes that all decisions by the Minister regarding the remuneration of board members should be approved by the Houses of the Oireachtas. Related issues were debated extensively during the passage of the National Asset Management Agency Act 2009 through the Houses of the Oireachtas and the Minister made it clear during those debates that he was in favour of the Oireachtas scrutiny. He had put in the provisions I have mentioned. He has indicated that he is willing to explore the way the role could be strengthened through the establishment of a dedicated Oireachtas committee or a sub-committee on NAMA. That can be achieved without an amendment to the legislation and, therefore, the Minister is not prepared to accept the amendment.

In light of the reasons outlined above, we will not accept the amendments because they are unnecessary. We have confidence in the robustness of the NAMA legislation and we will ensure the agency achieves its objective of achieving the optimum financial return for the State.

I am a reasonably active Member of the Oireachtas and I have not spotted any oversight going on around here in the past three months. If anybody else has seen any they might speak up because I have not seen a single item of oversight of NAMA in a committee or on the floor of this House, and there has not been any in the other House. That is my response to the Minister's first point about the extraordinary amount of oversight allegedly happening or about to happen.

What the Minister said about the quarterly reports is reasonably helpful except that the first quarterly report is for the period to the end of March 2010. It is to be published by the end of June 2010, which will leave little time, if any, for these Houses to debate that report in July, if there will be any time in July for it to be debated. That may well lead to a position where it will be almost a full year before it is debated, if we consider that in normal circumstances the Houses of the Oireachtas reconvene towards the end of September and have other business, that is if it lasts that long. If matters go according to how the Government plans them, it appears it will be September or October at the earliest before there is any opportunity for any debate of any seriousness on NAMA by these Houses. That is the reality of it.

On the third point in regard to a committee or sub-committee, I appreciate what the Minister said, namely, that the Minister is in favour of it, but the real power resides with the Minister, not just the power in regard to the management of the State's finances but also, it should be said, in regard to the business, and the management of the business of these Houses reposes more or less completely with the Government. If the Government wants a committee or a sub-committee to be set up in these Houses in regard to NAMA, it could have it in the morning. I do not see it.

I will address recommendation No. 39 first. From the response the Minister gave we seem to be on the same page but in reality we are on two different chapters. We have the quarterly reporting which is done to the Minister for Finance. The Minister said that the Minister is disposed to the idea of a cross-party committee or sub-committee on NAMA. If what we are talking about is executing what the Minister is saying the Minister for Finance is in favour of, let us have the quarterly reports but instead of them going to the Minister, they must go to the sub-committee. There must be cross-party support on this issue because regardless of whether we support NAMA, it will be with us for the foreseeable future and this Government might not be. We must get cross-party and proper oversight on it. When will this happen? The Minister talked about confidence but I do not have confidence in the Minister for Finance to carry out his duties in regard to NAMA in an appropriate fashion without the support of a cross-party sub-committee that can assist him in that work and ensure the committee can make recommendations on the basis of the reports being forthcoming from NAMA.

If there is a real intention and commitment on the part of the Minister to set up a sub-committee on NAMA there is no reason not to accept recommendation No. 38. There is no timeframe proposed in the recommendation. It does not propose that the sub-committee must be established tomorrow or next week but that quarterly reports will be made. We are aware from the legislation we amended that quarterly reports will be made, but those reports should go to the sub-committee.

I ask the Minister to review that decision. I welcome the comments she made on the Minister's commitment regarding the approach of a sub-committee but we need it now. We are about to see in the region of €17 billion in assets and debts transferred to NAMA in the coming weeks and we do not have that structure in place. The first action we should have taken was to put in place the oversight and accountability measures.

I want to tease out the issue of the remuneration. The Minister said that the Minister is in favour of oversight but that does not deal with the question because the reality is that the remuneration of NAMA board members has already happened. We have seen the increase. The Minister might explain to me who took the decision to increase the chairperson's salary from €100,000 to €170,000. What consultation was done with other parties in that regard? Was it discussed at any committee or was it solely a decision for the Minister for Finance? Obviously, the Minister for Finance will retain the responsibility but there would be a requirement on him to place that decision before the Houses of the Oireachtas for approval. It should not be left to the position that happened just over a week ago where Sinn Féin, by tabling a parliamentary question, found out that 70% wage increases had been given to the chairperson of NAMA and that board members' salaries had increased substantially as well. The Minister might explain that to me because in terms of remuneration of NAMA board members, she mentioned that the Minister for Finance is in favour of oversight. What oversight was in place when he had already taken this decision at the end of last year? Who made the decision? What consultation took place? If I got answers to those questions it might allay my fears or negate the necessity to press this amendment.

These recommendations are important because while the legislative debate on NAMA has concluded and the agency is now in place to some degree, the political debate and the public concern continues. By any fair assessment there is probably greater concern now about NAMA's role, future and impact on every citizen than was the case at the time of the passage of the legislation. At that time, and it would have been the Minister's colleague, Deputy Brian Lenihan, who would have been here, I felt that every household in the country should have received correspondence from the Government following the passage of the NAMA legislation outlining clearly how it would work, what it was designed to do, its possible timeframe, etc. There was a need to instil some degree of public confidence, but that did not happen.

I do not expect that all of my suggestions will be taken on board but one of the difficulties with NAMA is that, stemming from the major public debate and divide on its creation, there is little public confidence in the agency. Admittedly, the agency can go about its work without the support of the public in an opinion poll but it would be in everybody's interest if there was a greater degree of support for the concept.

The recommendations before the House are reasonable and would help to instil public involvement and knowledge and some degree of public participation via the political system. I hope the Minister will look favourably on them because it is in all our interests that the project works. One shudders to think what will happen to the country and what our future is economically if NAMA does not work. As a first step, it is a little like any project in that a degree of public acceptance followed by a degree of public confidence is necessary. Public acceptance has not yet happened and public confidence has waned. These recommendations, which would show a clear link between the agency and public voice, namely, the Oireachtas, would be a step in the right direction. This would bring an additional layer of transparency and accountability, which is important.

I hope the Minister will respond favourably to the recommendations. Currently, the public's view of NAMA is weak and this needs to be addressed given the entire economic future of our banking system, property portfolios and the country is at risk. While parties on this side of the House opposed and voted against NAMA, it is now a legal entity which is up and running but it has not in any way achieved the degree of public confidence, acceptance or understanding it should have and needs. These recommendations seek to redress some of the current difficulties.

I take this opportunity to congratulate the Minister on her appointment to the new Department of Tourism, Culture and Sport. I note the change and will watch for it at the head office in Killarney. I hope the Minister will have an opportunity to visit Killarney while not frequently, sufficiently often. Killarney is a wonderful place. The Minister has certain other responsibilities there too given Fáilte Ireland is under the aegis of her Department.

Senator Coghlan is a member of the Industrial and Commercial Panel.

I did not mention anything.

More friendly fire from the Acting Chairman.

I am looking forward to this contribution.

I do not wish to disagree with any of my colleagues on this side of the House but I have been a supporter of NAMA from the outset. I understand that difficulties have crept in and that delays have occurred although these were not the fault of this country but of Brussels from whom we had to await necessary clearance. I do not believe all the necessary clearances are as yet in place. I am speaking in this regard of the major systemic banks' own particular plans for the future in terms of addressing their difficulties.

Deputy Richard Bruton has amazing credibility. We all know that Anglo Irish Bank has been nationalised. We all know that in addition to NAMA we will need Deputy Bruton's good bank-bad bank concept. As stated in today's headlines it is the best option and the only way we will work out the difficulties of that nationalised institution. I do not disagree with the recommendations. However, I do not believe that we should at this stage be attacking NAMA, which in the national interest and which we need to succeed.

I commend the recommendations before us. If we need anything, we need openness and transparency. Above all, we need accountability. These recommendations seek to provide that accountability which is absolutely necessary. The public must be kept informed of all that is going on in NAMA. It should not be seen as a secret-type institution designed to look after developers and everybody else. All of the details must be spelled out as requested in the recommendations before us. I believe this should be done. The public should be informed of the names and loans of the people involved so as to ensure confidence in NAMA.

I am not a major supporter of NAMA. There is a need for this type of openness and transparency and, above all, accountability if the people are to have confidence in this body established by the Government. I hope the Minister will accept some of the recommendations in this regard.

It is premature, even for those who oppose NAMA, to criticise the lack of information in respect of that body which has barely commenced its work. It will be only when NAMA is up and running that we will see the extent of the oversight already written into the legislation.

We did not know about the 170% increase. That information had to be dragged out of the Government.

These recommendations seek to increase the oversight provision in respect of NAMA. However, such provision is already contained in the NAMA legislation. I accept the point in regard to the first report being published just as the Dáil and Seanad go into recess. The legislation states "on or before" the 30th. I am sure the Minister could suggest it comes in good time to enable the Oireachtas to debate it. I believe that would be important, in particular in respect of the first report of NAMA's work for the first quarter. I will suggest to the Minister that he do this.

It is only following completion of four quarterly reports and the audited accounts — the Minister indicated he is open to the idea of establishing a sub-committee — that the Oireachtas can have real accountability, which is what we all want and I fully accept that. The Minister for Finance also accepts that. However, he does not need new powers in this legislation to enable him to do so as he already has those powers under the NAMA legislation.

On the remuneration, the Minister answered a parliamentary question on this matter on 10 March last. Parliamentary questions are another avenue for Deputies to obtain information and this mechanism also provides accountability. The Minister set out in his reply the details of the remuneration of the board members. The chairperson will receive an all-inclusive fee of €170,000 per annum on the understanding that the incumbent is available without restriction. The chairperson of the credit committee, who is expected to work no less than three to four days per week, will receive an all-inclusive fee of €150,000 and the five remaining ordinary board members will each receive a fee of €50,000 per annum. The chair of other committees will receive a fee of €10,000 per annum in addition to his or her ordinary board member fee subject to a maximum of one per member. The Minister indicated in that reply in setting the fees account was taken of the critical importance of the work to be undertaken by the board and the fact that its workload will be by normal standards excessive in the first year of operation. The Minister has stated he intends to review the fees after one year. The first year will obviously be a particularly busy one.

In so far as the recommendations seek to give powers of oversight that already exist in other legislation, I am unable to accept them. However, I do accept the argument that the Oireachtas should have an oversight role. I believe this will come into play once the quarterly reports are laid before the Houses of the Oireachtas.

I agree that there is a level of oversight in the NAMA legislation and that there is Oireachtas oversight. We do not deny that because a report will be laid before the Houses of the Oireachtas. As the Minister correctly stated, these recommendations seek to increase the level of oversight. The Minister also stated that the Minister for Finance is open to the idea of establishing a sub-committee. However, the reality is we are a number of weeks away from receiving the first report of NAMA, which could include the transfer of billions of euro in debt into a State agency, yet no sub-committee has been established to address that issue. What we will see is a set piece in the Dáil and Seanad rather than a real and proper debate to thrash out the details of what is contained in the report. The best way to deal with this matter — I presume this is the reason the Minister is open to the idea — is by way of sub-committee to which the reports could be sent to be digested in a full and proper manner and on which the sub-committee could make recommendations.

These recommendations seek to expedite what the Minister tells us is the possible intention of the Minister for Finance, namely, the establishment of a sub-committee. We need that sub-committee now not in the autumn when the first report will be old news. On remuneration of NAMA board members, I have a copy of the parliamentary question referred to by the Minister. The Minister appeared to be suggesting that parliamentary questions provide Members with another avenue in terms of finding out what is happening in NAMA. The reality is that we do not have that option. A Deputy should not have to think if there is any likelihood that, during a time when the Government has cut wages across the public sector, slashed dole payments and all the rest, the Minister decided to increase the fees of the board of NAMA, including increasing the chairman's fee by €70,000 for doing exactly the same job — his terms and conditions did not change. It is nearly a fantasy conversation that a Deputy would need to have with himself or herself and in the likelihood that fantasy becomes reality table a parliamentary question, only to be shocked to find on 10 March that the Minister gave approval in the previous month after discussions with the National Treasury Management Agency to increase the remuneration by €70,000.

That is not fair. This is our money and people should be fully aware if members of the board of NAMA are to get increases. Their terms of employment did not change one iota. The Minister indicated he recognises that they have an additional workload. I do not understand why he did not recognise that when the fees were set only a few weeks before that at €100,000 and then had to be increased to €170,000. We all knew of the workload the board of NAMA would have. We have seen the reports and know the debts that exist and the assets that need to be transferred. We know the difficult job the board has. Others may argue that it may be right to give the chairman of NAMA a 70% increase; we can have that argument at a later date — I do not believe it was right. However, what is completely and utterly wrong is that the Minister for Finance has the power to increase without discussion with Members of the Houses of the Oireachtas the remuneration to NAMA board members as he has done.

If we are serious about accountability and transparency, what does the Government fear from accepting this recommendation which compels the Minister for Finance, if he were to increase or decrease the remuneration of the NAMA board members at any future date, to seek the approval of these Houses? Refusal to accept the recommendation leads me to believe that the type of action the Minister for Finance took last month, which was against the spirit of everything he said in the run up to the budget, will happen again. It indicates the Government is afraid of accountability to the Dáil and Seanad in the damn knowledge that if the Minister for Finance came before either House and said: "Listen boys and girls, the chairperson has been in the job for the past couple of weeks and I'm going to give him a €70,000 increase. Don't worry that we cut everybody's wages in the budget. He needs another €70,000 because he is the chair of NAMA and the person who is working a three-day week chairing the finance committee is getting a €50,000 increase. By the way their terms and conditions are the same — they are doing the same job but we have somehow realised that they are actually doing more work. We never understood how much of a workload the board of NAMA would have even though we only set up the board a couple of weeks ago.", the reality is that Deputies and Senators on this side of the House would have voted against it. I am sure the Government Members would have voted it in but at least — this is what the Government really fears — the public would have known. If it was not for a parliamentary question tabled by Deputy Morgan, we would still be in the dark that this happened just a few days after the budget.

It is normal practice for a Minister to oversee all the activity of the State agency, including the fees etc. In the same way as I outlined that those fees would be reviewed at the end of the year, they can decrease at that stage. However, the fees are initially set prior to the work of NAMA commencing and it was only then that they realised the extent of the time and work that was going to be involved. For that reason they were increased with the proviso that they would be reviewed at the end of the year.

There is no need for legislation to set up the committee, which is why I am not accepting the recommendation at this stage.

Was the Minister's approval required? Did he need to sign off on increasing the fee of the chairperson of NAMA by 70%?

Recommendation put and declared lost.

I move recommendation No. 36:

In page 210, before section 149, to insert the following new section:

"149.—The following section is inserted in the National Asset Management Agency Act 2009 after section 2:

"2A.—Every 6 months NAMA shall report to the Houses of the Oireachtas setting out details of its operation including the identities of the owners of, and particulars (including value) of, any assets acquired by it during the period in question valued at over €100,000 and including a Corporate Operational Plan and Budget."."

Recommendation put and declared lost.
Section 149 agreed to.
Question proposed: "That section 150 stand part of the Bill."

I shall be tabling a Report Stage recommendation in this section.

Question put and agreed to.
Sections 151 and 152 agreed to.
Recommendation No. 37 not moved.
Section 153 agreed to.

I move recommendation No. 38:

In page 235, before section 154, to insert the following new section:

"154.—The following section is inserted in the National Asset Management Agency Act 2009 after section 2:

"2A.—In the first year of its establishment, NAMA shall report to the Houses of the Oireachtas quarterly and set out a detailed report of its activities. All purchases acquired by NAMA will be put before a subcommittee of the Houses of the Oireachtas, established on a cross party basis, which will examine and make recommendations for NAMA's portfolio based on economic and societal needs.".".

Recommendation put.
The Committee divided: Tá, 18; Níl, 26.

  • Bradford, Paul.
  • Buttimer, Jerry.
  • Coffey, Paudie.
  • Coghlan, Paul.
  • Cummins, Maurice.
  • Doherty, Pearse.
  • Donohoe, Paschal.
  • Fitzgerald, Frances.
  • Hannigan, Dominic.
  • McFadden, Nicky.
  • Norris, David.
  • O’Reilly, Joe.
  • O’Toole, Joe.
  • Phelan, John Paul.
  • Quinn, Feargal.
  • Ross, Shane.
  • Twomey, Liam.
  • White, Alex.


  • Boyle, Dan.
  • Brady, Martin.
  • Butler, Larry.
  • Callely, Ivor.
  • Carroll, James.
  • Carty, John.
  • Cassidy, Donie.
  • Corrigan, Maria.
  • Daly, Mark.
  • Dearey, Mark.
  • Feeney, Geraldine.
  • Hanafin, John.
  • Keaveney, Cecilia.
  • Leyden, Terry.
  • MacSharry, Marc.
  • McDonald, Lisa.
  • Mooney, Paschal.
  • Ó Brolcháin, Niall.
  • Ó Domhnaill, Brian.
  • O’Brien, Francis.
  • O’Donovan, Denis.
  • O’Malley, Fiona.
  • O’Sullivan, Ned.
  • Phelan, Kieran.
  • White, Mary M.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Pearse Doherty and Alex White; Níl, Senators Niall Ó Brolcháin and Diarmuid Wilson.
Recommendation declared lost.
Section 154 agreed to.

I move recommendation No. 39:

In page 236, before section 155, to insert the following new section:

"155.—The Minister will be required to place all decisions relating to the remuneration of NAMA board members before the Houses of the Oireachtas for approval.".

Is the recommendation being pressed?

Recommendation put.
The Committee divided: Tá, 19; Níl, 27.

  • Bradford, Paul.
  • Buttimer, Jerry.
  • Coffey, Paudie.
  • Coghlan, Paul.
  • Cummins, Maurice.
  • Doherty, Pearse.
  • Donohoe, Paschal.
  • Fitzgerald, Frances.
  • Hannigan, Dominic.
  • McFadden, Nicky.
  • Norris, David.
  • O’Reilly, Joe.
  • O’Toole, Joe.
  • Phelan, John Paul.
  • Quinn, Feargal.
  • Regan, Eugene.
  • Ross, Shane.
  • Twomey, Liam.
  • White, Alex.


  • Boyle, Dan.
  • Brady, Martin.
  • Butler, Larry.
  • Callely, Ivor.
  • Carroll, James.
  • Carty, John.
  • Cassidy, Donie.
  • Corrigan, Maria.
  • Daly, Mark.
  • Dearey, Mark.
  • Ellis, John.
  • Feeney, Geraldine.
  • Hanafin, John.
  • Keaveney, Cecilia.
  • Leyden, Terry.
  • MacSharry, Marc.
  • McDonald, Lisa.
  • Mooney, Paschal.
  • Ó Brolcháin, Niall.
  • Ó Domhnaill, Brian.
  • O’Brien, Francis.
  • O’Donovan, Denis.
  • O’Malley, Fiona.
  • O’Sullivan, Ned.
  • Phelan, Kieran.
  • White, Mary M.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Pearse Doherty and Alex White; Níl, Senators Niall Ó Brolcháin and Diarmuid Wilson.
Recommendation declared lost
Sections 155 to 161, inclusive, agreed to.
Question proposed: "That section 162 stand part of the Bill."

I have a few questions about section 162. This is the first time I have heard of the capital service redemption account. Just looking at some of the figures for these annuities, is this the amount we are paying back on the national debt? Has that figure been increased from €350 million to €400 million per year? If that figure had to be changed it means we are paying back an additional €1.5 billion. Could the Minister please explain the relevance of some of those other sums, if she does not mind, because the explanatory memorandum does not give a clear account of them?

I understand this has been in every Finance Bill since the establishment of the State and that it is standard procedure. It was introduced to establish the capital services account, also known as a sinking fund. This was established on foot of a decision that borrowings for voted capital services should be amortised over a period of 30 years so that they would involve no permanent addition to the public debt. Each year a new annuity is calculated designed to provide an annual sum which, when accumulated over 30 years, will amortise the expected borrowing in respect of expenditure on voted capital services for that year.

Section 153 provides for the annuity to be charged on the Central Fund in 2010 and for the following 29 years to cover the projected borrowing from voted capital services this year. It has also been the practice to adjust the annuity in the previous year's Finance Bill to take account of the actual outturn for the borrowing requirement in respect of voted capital services in the previous year. The Finance Bill 2009 provided for an annuity of €403,709,206 and this has been amended to €350,635,638 to take account of the actual 2009 outturn. It is a standard procedure with every Finance Bill.

I shall follow it up afterwards.

Question put and agreed to.
Sections 163 to 165, inclusive, agreed to.
Schedules 1 to 4, inclusive, agreed to.
Title agreed to.
Bill reported with recommendation.

When is it proposed to take Report Stage?

Today, at 7 p.m.

Sitting suspended at 5.50 p.m. and resumed at 7 p.m.