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Seanad Éireann díospóireacht -
Wednesday, 30 Nov 2016

Vol. 248 No. 13

Commencement Matters

Teacher Exchange Scheme

Cuirim fáilte roimh an Aire Stáit go dtí an Teach. The Minister of State is very welcome and I thank him for his attendance. I raise the teacher exchange scheme which is designed to facilitate primary school teachers to temporarily exchange their posts for educational purposes. The minimum period for which they can do this is one year and the maximum period is five years. I understand more than 230 teachers are currently taking part in the scheme which, by and large, works very well.

Teachers on exchange for up to five years develop ties with the area to which they have relocated. Some may find that their circumstances change and they may wish to remain in the exchange school. After a five-year period, some will have met a partner, settled down, had children and become embedded in the exchange school community. The schools, by extension, are also pleased to retain a teacher who has become an integral part of the school's staff and life. Unfortunately, the rules set out in the circular under which the scheme operates are rather rigid. I ask the Minister of State to examine the circular with a view to providing a degree of flexibility to those who wish to remain in the exchange school on a permanent basis after the five-year period has elapsed. Such a change would be cost neutral to the Department.

Some flexibility is required. I accept that all parties must be in agreement on any proposal to make the exchange post permanent. In other words, the exchange teachers, the respective schools and their boards of management would have to agree to it. If such agreement were reached and everyone was happy with the position, the five-year cap should be removed. As I indicated, the change I propose would be cost neutral and would proceed only where everybody was satisfied with the proposal. I ask the Minister of State to issue a circular to school boards of management advising that the five-year cap may be removed and those who wish to make the exchange permanent may do so.

I thank Senator Robbie Gallagher for raising this matter and affording me an opportunity to outline to the House the position with regard to the teacher exchange scheme.

The provisions of the scheme are set out in Circular 17/2015, the contents of which were agreed under the auspices of the Teacher Conciliation Council. The Teacher Conciliation Council is part of the scheme of conciliation and arbitration for teachers and was established to deal with claims and proposals relating to the terms and conditions of employment of teachers. The council is composed of representatives of teachers, school management, the Department of Education and Skills and the Department of Public Expenditure and Reform, and is chaired by an official of the Workplace Relations Commission.

The teacher exchange scheme is open to primary teachers who are registered with the Teaching Council, have completed probation and wish to exchange their posts for educational purposes. Educational purposes include enabling teachers in primary schools to gain experience of teaching in different types of settings. For example, a teacher could seek an exchange from an urban school to a rural school or vice versa; a large school with a single class per teacher to a smaller school with multi-grade classes; a junior school, namely, a school were infants to second class are taught, to a senior school where third to sixth class pupils are taught; a single gender school to a mixed gender school; an ordinary school to a special school; or from a DEIS school to a non-DEIS school.

The concept is that teachers will gain a different experience, enrich their knowledge and understanding of their professional work and share this understanding with colleagues. The minimum period for which an exchange may occur is one year and the maximum is five years. In the current year, the issue of this limit and the purpose of the scheme was reviewed under the auspices of the Teacher Conciliation Council. Having considered the matter in detail and taking into account all circumstances, both the trade union and management partners considered that their preferred option was to retain the existing scheme for educational purposes. Available teaching posts are to be filled by redeployment, in the first instance, in accordance with the redeployment schemes or with the recruitment and appointment procedures, as agreed and published in the Department's governance manual for primary schools.

To facilitate this review and in an exceptional matter and without prejudice to Circular 17/2015, it was decided to extend the maximum period of exchange for teachers who were in their fifth year of the scheme for one further year. I have set out precisely what has occurred. The Department asked the various governance bodies associated with the teacher exchange programme to review the scheme. Discussions were held among the various bodies and they recommended that no changes be made. That is the current position.

I thank the Minister of State for his response. Most teachers who have taken part in the teacher exchange programme for five years will have set down roots in the area. If the school, local community and teacher in question are happy, it would seem fair and reasonable that a mechanism would be put in place to allow such exchange teachers to make their positions permanent.

The issue appears to be with trade unions and management. Perhaps the Minister of State will use his good offices to arrange a meeting to ascertain if we can make progress on this issue. He stated that, without prejudice and all things being equal, he would, subject to the trade unions and management being satisfied with any resolution, examine the option I have proposed.

Yes. I intended to point out that I received views on the scheme from the Catholic Primary Schools Management Association, CPSMA, and the National Association of Boards of Management in Special Education, NABMSE, and the Irish National Teachers Organisation, INTO. A major effort was made to bring on board all the relevant bodies when we decided to review the scheme. The final decision was not made by the Department, which sought to ensure that all bodies associated with education would have a say on the matter. I suggest that Senator Gallagher seek a meeting with the Teacher Conciliation Council which is, as I stated, composed of representatives of various bodies. If I can facilitate such a meeting, I will be pleased to do so. If the Senator lets me know when he will be available, I will discuss the matter with the council. I am sure its representatives will meet the Senator.

The Senator made some relevant points. The difficulty facing me and the Department is that, having asked the relevant authorities, namely, the trade union movement, schools and school management, for recommendations and advice, we have little option but to accept their advice. The group we appointed reviewed the scheme and indicated it was satisfied with it. Nevertheless, I am sure it would be open to discuss the issue, particularly individual cases. As I indicated, teachers who are in the fifth year of the programme may have the exchange extended by another year. If the Senator wants me to arrange a meeting with the Teacher Conciliation Council, I would be delighted to do so.

Northern Ireland

The Minister of State will be aware that the British Secretary of State, Mr. James Brokenshire, in response to a parliamentary question recently asserted that the whole of Lough Foyle was within the UK. Eighteen years after the Good Friday Agreement, it is unacceptable for language that is so clearly arrogant and provocative to be used. It flies in the face of the establishment of the Loughs Agency, which develops and manages the fisheries and the potential of Lough Foyle and Carlingford Lough. Carlingford's status has been resolved and there is a North-South division, but why has it taken all these years to resolve how we share Lough Foyle? Why must we still deal with such pronouncements?

We are post-Brexit and the British Tories have stated their wish to gain control over all their waters. If that includes Lough Foyle, as they assert, there will be a major problem for its fishing and tourism. We need to deal with this issue urgently. It has not been resolved because the British Government regards Lough Foyle as a strategically important naval and military point. It has ongoing operations in the area. Our Government must explain what it has done to try to resolve the situation and who is at fault. I believe that the British Government is at fault.

This issue has been ongoing for years. I have been raising this matter in all of my time in the Houses. The Loughs Agency is also raising the matter. Under the Good Friday Agreement, it is tasked with managing the lough's resources. It wants the two Governments to resolve the ownership question so that it can achieve its potential in partnership with those who fish on the lough and those who utilise it for tourism. It is a beautiful location with real potential, if only we could resolve the ownership issues.

I thank Senator Mac Lochlainn for proposing a Commencement matter on this important matter. I apologise for the Minister for Foreign Affairs and Trade, who cannot be present.

The Government's response to the recent assertion by the Secretary of State for Northern Ireland has been twofold. First, we have made unequivocally clear Ireland's position and the Government's rejection of the UK's claim regarding Lough Foyle. Second, we have sought to return the focus of discussion and of work on the matter to dealing in a positive and pragmatic way with the matters that have arisen from the differences on jurisdictional issues.

I will briefly outline the Government's approach to the House. Ireland has never accepted the UK's claim to the whole of Lough Foyle. Uncertainty concerning the extent to which each side exercises jurisdiction within Lough Foyle has created practical difficulties for the conduct of a number of activities there, as the Senator outlined. This includes a difficulty in creating a system for the licensing of aquaculture by the Loughs Agency in accordance with the intentions of the two Governments under the 1999 agreement establishing the North-South implementation bodies. The Government wishes to see the Loughs Agency working to its full potential, which is in the interests of everyone on this island.

Following discussions in 2011 between the then Minister for Foreign Affairs and Trade and British Foreign Secretary, both Governments agreed to seek to address and resolve jurisdictional issues relating to Lough Foyle and Carlingford Lough. Since then, a series of meetings have taken place at official level between the Foreign and Commonwealth Office and the Department of Foreign Affairs and Trade. The issues in question are complex and involve a range of different actors, including the Crown Estates.

As regards the specific issue of the parliamentary reply on 16 November by the Secretary of State for Northern Ireland, the position of the Irish Government was clearly outlined by the Minister, Deputy Flanagan, in his public comments immediately afterwards. He set out Ireland's long-standing rejection of the UK claim and the Government's wish to focus on finding practical resolutions to the consequences of ongoing jurisdictional issues in Lough Foyle. He also raised the matter directly with the Secretary of State, Mr. Brokenshire, in the course of a telephone call on 23 November. Again, the Minister conveyed the Government's surprise at the Secretary of State's statement, in particular the fact that it did not refer to Ireland's position or acknowledge the ongoing negotiations between the two Governments that seek to address all jurisdictional issues on the island. The Minister noted that the stark statement on Lough Foyle at Westminster had also raised understandable concerns on both sides of the Border, but particularly in the north west. He noted that such absolute statements on jurisdiction did nothing to advance the practical co-operation and progress on the issues that require a pragmatic solution. Similar messages have been conveyed at official level to the Foreign and Commonwealth Office, which leads on this issue for the UK side.

Progress is in the interests of both Governments and the people of the island of Ireland. Therefore, this work will be taken forward in the continuing discussions between the Department of Foreign Affairs and Trade and the UK's Foreign and Commonwealth Office under the political oversight and direction of the Minister and his British counterpart.

I appreciate the Minister of State's confirmation that the Minister has conveyed the Government's concerns about the language used. I was alarmed when it was brought to my attention. I have been aware of the negotiations down the years, but the main concern is the post-Brexit situation. Some will desire to put a wall around Britain. As an Irish republican, I want a united Ireland but, in the interim, we need to share Lough Foyle to the benefit of everyone on both sides of the lough.

It is the opinion of people in the area that the British are not doing a deal on Lough Foyle because of its strategic naval and military importance. Access to Foyle Port is another issue. Were the lough split down the middle, a navigational channel would fall on the State's side. These matters are all resolvable if the will is there.

In the context of the Good Friday Agreement and the Loughs Agency, which is tasked with managing the resources for everyone, I do not understand this situation. The only thing that makes sense to me is military strategic importance. If that is the case, our Government needs to say it out loud and call out the British for playing games with the livelihoods of those in the area.

In light of Brexit, I am asking for urgency from the Minister for Foreign Affairs and Trade and a resolution of the issues at stake at the earliest opportunity.

Brexit was mentioned, but the question of the division of jurisdictions on Lough Foyle has been with us since partition. There was a political commitment in 2011 on the part of both Governments to resolve the jurisdictional issues at Lough Foyle and Carlingford Lough. That commitment is being pursued in ongoing discussions and negotiations between the Department of Foreign Affairs and Trade and the Foreign and Commonwealth Office, with political oversight and direction by the Minister and his counterpart, the Foreign Secretary, Mr. Boris Johnson. This work will continue, with a particular focus on the objective of ensuring that the Loughs Agency can operate to its full potential as envisaged when it was established under the Good Friday Agreement. Therefore, the matter is not something that we currently envisage as forming part of the negotiations on the UK's departure from the EU.

The Government's approach has been clear, consistent and constructive. The UK Government's assertion that it has jurisdiction over the whole of Lough Foyle is rejected and has never been accepted by any Irish Government. To progress from this difference of view, the Government strongly remains committed to the agreement with the UK in 2011 on seeking to resolve all jurisdictional issues related to both loughs. This is where our focus will remain and the Government will seek practical solutions that can address licensing and other practical issues that arise and allow the Loughs Agency to work to its full potential, which is in the interests of everyone on the island.

Senator Boyhan was due to make a contribution next. Unfortunately, due to personal circumstances, he is unable to be present. I apologise to the Minister of State.

VAT Payments

I welcome the Minister of State at the Department of Finance, Deputy Eoghan Murphy, to the House.

I thank the Minister of State for coming to the House to discuss this important issue of a cash basis threshold. I have been told about this matter by business people who pay on a receipt basis because now that their business approaches a €2 million turnover, they must use a cash basis threshold. I refer to small businesses that are trying to grow and recover from the devastating effects of the recession. As we all know, it is Government policy to support small business and undertake measures to further increase job creation, which this issue affects.

It is simple to understand the cash basis. If one has a small growing business and one's invoices approach the €2 million mark, one may not be paid for months. Some invoices might end up as bad debts and not be paid at all. Having to pay VAT on an invoice issue basis will seriously affect the cashflow of small businesses thus affecting job creation, particularly for small businesses located outside of the capital and throughout rural Ireland.

Paying VAT in advance totally militates against growth and job creation simply because it damages cashflow and has a huge negative impact. Is it possible to increase the threshold from €2 million to €3 million? Such a small increase would encourage new employment across the country and VAT would still be paid to Revenue. The only sectors to be affected by the increase would be the small business community and, ultimately, job creation. I have been informed that the measure affects a significant number of businesses and two specific businesses have approached me about the matter. A modest change could satisfy everyone and act in the interest of further job creation. I look forward to hearing from the Minister of State.

I am pleased to have the opportunity to speak on the question of the VAT cash basis system, on behalf of the Minister for Finance. I thank the Senator for raising the issue.

VAT is an EU tax and Irish VAT law is governed by the EU VAT directive. In respect of accounting systems, the VAT directive provides that VAT must generally be accounted for on an invoice basis, that is, VAT is payable on the total sales invoiced in a relevant period regardless of whether the trader has been paid for the supply in that period. EU VAT law also allows member states to introduce simplification measures for small and medium-sized businesses such as the cash receipts basis of accounting, where the trader is not required to pay VAT until payment for the supply is received. Availing of this option assists businesses in the critical area of cashflow.

In order to avail of the cash basis, a business must either supply goods or services to mostly unregistered persons or have an annual turnover of less than €2 million. This threshold was increased on 1 May 2013 from €1 million to €1.25 million and again on 1 May 2014 from €1.25 million to €2 million. It is worth noting that currently a total of 161, 000, or 66% of all businesses, benefit from accounting for VAT on a cash basis. The retail, accommodation and restaurant sectors are among those businesses that qualify automatically for the cash basis, as the majority of their supplies are to non-registered persons. The type of businesses that benefit from the cash basis threshold on the basis of the €2 million turnover threshold are manufacturing, technology, professional and administrative services. Due to variations in their treatment for VAT purposes, the cash basis system would not apply to the construction, motor and financial services sectors. The cost to the Exchequer of operating a cash basis system is significant as these businesses can claim back the VAT they are charged on their purchases and overheads, irrespective of when they pay for them. They also have no obligation to pay over the VAT they charge on their sales until such time as they receive payment from their customers.

I shall speak directly to the Senator's proposal. Increasing the threshold to €3 million would cost the Exchequer €45 million and would benefit only 636 businesses. This breaks down as a cost of €70,000 for each of the 636 businesses that would benefit from this increase. The Minister, Deputy Noonan, did not increase the cash basis threshold in 2015 or 2016 because of the cost of extending the limit beyond €2 million and because a very small number of businesses would actually benefit from such a change. Article 66 on the EU VAT directive provides that the cash basis system can only be used for “certain transactions or certain categories of taxable persons”. It cannot be used to replace the normal VAT arrangements.

A range of simplification measures is available to businesses in Ireland, including a facility to make VAT returns on a bi-annual or annual basis, as well as VAT registration thresholds that are among the highest in Europe. The success of these measures is reflected in the recent PwC-World Bank Group report that highlights Ireland's taxation strengths. For the eighth year running, Ireland continues to be the most effective country in the EU in which to pay business taxes and is the fifth most effective worldwide. In the circumstances, there are no plans to review the cash basis accounting threshold.

Senator Paul Coghlan: I can see how it is advantageous for Revenue because the initiative means Revenue can borrow from or lean on businesses. It is unfair that one must pay in advance of being paid oneself. One is totally out of pocket in advance. A business might not be paid for months and might never be paid for some invoices that have been issued. The system lacks equity and cries out for redress.

Does the Minister of State wish to comment?

I understand the Senator's point. I appreciate that he tabled his proposals in the best interests of businesses. The Government is conscious of the needs of business, particularly at present. However, increasing the threshold would cost the Exchequer €45 million but would benefit only 636 businesses. A cost of €70,000 for each of those businesses cannot be justified given the competing demands on Government at present. I shall reiterate how the Government supports businesses. For the eighth year running, Ireland continues to be the most effective country in the EU in which to pay business taxes and is the fifth most effective worldwide.

Sitting suspended at 11.07 a.m. and resumed at 11.30 a.m.
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