Hogan Steers Council in the right Direction

Today (Wednesday 21st December) Fine Gael TD for Dublin South East Eoghan Murphy welcomed the Minister for Environment Phil Hogan’s decision to extend the contract for the cycling officer post with Dublin City Council for a further six months.

Speaking after the decision was made Deputy Murphy said “I’d like to commend Minister Hogan for today requesting that Dublin City Council extend the contract for the Cycling Officer Post with the council for six months. Having brought this to the Minister’s attention and lobbied for retention of the position it is great to see a positive result.

“It is of the utmost importance that we have someone dedicated to this role. The Dublinbikes scheme has proved to be a very popular initiative from Dublin City Council, with an annual turnover in excess of €400,000. It is crucial that we have someone with the right vision at the helm of the operation ensuring its continued success.

“A dedicated cycling officer is the very least that city needs if we are to follow in the steps of other bike friendly European cities by providing a cheap, congestion free commuting option.

“Minister Hogan has further requested that Dublin City Council consult with the National Transport Authority during this six month period to review the situation and report to him on how the promotion of cycling in Dublin should be addressed in the longer term.

“I would also like to thank Lord Mayor Andrew Montague for his work, as well as to Peter O’Brien and others for bringing the issue to the wider public’s attention.

Have your say!

The Outdoor Advertising Strategy is part of the Dublin City Development Plan 2011 to 2017 and sets out policy on the location and type of outdoor advertising structures that are best for the city. Depending on the issues raised in submissions received, the City Council will then decide whether a Statutory Variation of the Dublin City Development Plan 2011-2017 is required.

Your City, Your Space; Draft Dublin City Public Realm Strategy identifies the importance and character of the public realm and the challenges to be addressed to improve quality in the city’s spaces. The emphasis is on a collaborative approach by agreeing and defining guiding principles and setting out detailed actions to be undertaken to achieve this with all those who have responsibility in the public realm.

Both Strategies are available to view/download at www.dublincity.ie/Planning

To make submissions online go to www.dublincity.ie/Planning or via email to development.plan@dublincity.ie

To make a written submission, send to:

The closing date for submissions is 4.30 pm on Wednesday 25th January 2012.

Raising Entrepreneurs

Irish mothers don’t raise entrepreneurs.

None of my friends were pushed that way. When we were coming out of college and moving down career paths, it was towards the safety of the professions that we were shepherded. So much so that if someone said they were ‘setting something up’ or starting a business, it really meant that they hadn’t quite figured things out yet. And it certainly didn’t get you girls. (And that was important too.)

Those that had that particular spirit, and ambition, as my brother did, left for London or elsewhere. The ones that didn’t leave got in to property, and got wiped out.

Irish mothers don’t raise entrepreneurs. But then try telling that to the thousand or so people who descended on the Royal Dublin Society in October for the Dublin Web Summit and F.ounders.

There they met people like the founders of LinkedIn and YouTube. Heard inspirational stories of success and failure from many gifted speakers. And most importantly, met each other, shared their own stories over a pint or two and talked about the various obstacles and opportunities to starting a tech business here in their native country. The average age was under 30, the future of this country.

There’s something happening here. All these people. All this ambition. Is it driven by necessity, the lack of jobs say, or is it driven by possibility, unrestricted and abundant in the digital age? Or is it cultural, a “cool” factor perhaps, brought on by a Hollywood makeover and some high profile tech nerds? (Don’t underestimate the influence that ‘Wall Street’ had on creating the banker generation).

Whatever it is, we have to help it.

Ok. But how?

The Chilean government has a programme to attract tech entrepreneurs to its shores called Start Up Chile. They want to convert Chile into the innovation hub of Latin America and to do this they’re offering foreigners 40 thousand dollars, equity free, a one year visa and access to the best social and capital networks in the country. They figure that if all these high potential people (1000 in all by 2014) relocate to Chile, even for year, it can only have a positive effect on the indigenous scene.

Many will probably leave. But some will stay. Yet it’s the wider cultural benefit over the five year period that the government is banking on. They’re going to flood their own nascent market of entrepreneurs in the hope of making it bigger and better. Changing their culture with help from abroad. It’s high risk, with no guaranteed returns and with outcomes that may be difficult to measure in any meaningful way. But it’s bold. And if it does work Chile has just secured its relevance and future in the new economy.

There may not be much point in debating the merits of this policy here because we simply don’t have that kind of money. But the idea, and the fact that the politicians and the bureaucrats actually got it to happen is pretty inspiring. We need to get this investment of foreign people (and their ideas and energy and ambition) in to the mix with our own talent.

Minister Bruton recently announced a new 10 million euro fund to attract overseas start-ups. This is going to be a great support for the sector no doubt. He’s talking mostly about targeting Irish people abroad, perhaps 20 to 30 start-ups, with Enterprise Ireland administering the scheme. Good idea, and now it’s actually happening.

It’s the Taoiseach’s ambition that Ireland will be the best small country in the world in which to do business by 2016. My ambition, and it’s a little less grand, is that we’ll be the best country in Europe in which to start a tech business by 2016. Here’s some ideas, together with Minister Bruton’s, that could help make it happen:

First you have to get rid of the barriers. So that any entrepreneur from anywhere can come here to get going. That means the right visa scheme. We have ‘business permission’ criteria in place but they’re behind the times. The government is currently preparing a new enterprise and investment scheme. Good. But we also have to make it easier for founders to bring people from abroad over to work with them. So we’ll need to do more here on the standard visa front too.

Another barrier is a lack of qualified software developers. This problem isn’t particular to Dublin, and while we should try and attract foreign developers here, we really need a good pool of domestic talent from which everyone can draw. So we need to get people thinking web development. And I don’t mean in school or in university. That’s really important too but we need these guys now. People are already discussing (and in a few cases implementing) programmes that convert unemployed engineers and architects in to digital developers. It’s a really exciting idea with lots of possibilities and the government needs to give it more attention.

With the barriers down we can try and make it easier for everyone to do what they do, and at the same time make it very attractive to do it here in Ireland. That means making it more acceptable. I’m talking here about bankruptcy laws and the acceptance of failure so that people can succeed. The government is saying three years as the “discharge” period for bankruptcy. It needs to be less, like in the States or the UK.

It also means making it cheaper. Start-up companies don’t care about corporation tax rates, but they do care about the costs of doing business. And given the mobility of a lot of these enterprises they can and will go where costs are less. Here’s where we get to be really creative.

We could start with the entrepreneurial tax credit as recommended by the previous government’s Innovation Task Force, which would give a rebate of tax paid on salaries for the first three years, for every five jobs created (and capped at 100k). We could take this a little further and start to target specific people, like abolishing employer’s PRSI for software developers. Or, more radically, do away with income tax altogether for the first year. We wouldn’t be losing money because it would never have been here in the first place. But the people will spend their salaries in the country, will pay VAT, will rent apartments, eat in restaurants etc. And the real benefit in the longer term could be far more significant than the “lost” tax take.

Ultimately though the government will have to put its money where its mouth it if it’s to get serious. What money? Well there is some money, we are taking in tens of billions each year. So this would be a question of priorities. Do we connect the two LUAS lines in Dublin City, or do we give the entire country the best broadband of anywhere in the world, ever? This isn’t to knock the necessity of the LUAS interconnector, but I think it’s easy to understand which investment is more important for the future of this country. (I think we should do both and cut somewhere else, but the question remains: where?)

And then we need to sell. Like Start Up Chile or Start Up America. Decide the brand, decide the package, and get it out there. Again, the Innovation Task Force was quite good on this. I believe we’re a special place already, but bringing in some of the measures above, as well as others, could really kick things off quite quickly. Just look what one man and a dedicated team have done with the Websummit/F.ounders series.

We want to support our young tech entrepreneurs. We want it to be easier for them to do what they do, and we want them to do it better. We want to help but without getting in the way or attaching too many strings. And always keeping in mind that you don’t have to incentivise a “go-getter” to go out and get, you just have to allow them to – they’ll figure the rest out for themselves. Including selling it to their mothers.

Changes to Dublin Bus routes

Dublin Bus will be introducing service revisions for Ballycullen, Knocklyon, Terenure, Rathgar, Rathmines, Malahide Road, Clare Hall and Clongriffin areas from Sunday 18th December 2011, which will deliver more direct, high frequency and punctual bus services with improved cross city connections. Full details on the revised services can be found on the below link:

http://www.dublinbus.ie/en/News-Centre/Travel-News/Changes-on-Routes-15-15a-15b-15e-15f-65-65b-74-74a-128-

Customers will be notified of the changes via leaflet drop, newspaper advertisement, the Dublin Bus website and Dublin Bus’ Facebook and Twitter pages. If you have any further queries, please do not hesitate to contact my office on 618 3324 or by email at eoghan.murphy@oir.ie

LEAP CARD GOES LIVE: MINISTER KELLY LAUNCHES INTEGRATED TRANSPORT TICKET FOR DUBLIN

Minister for Public and Commuter Transport, Alan Kelly, together with the National Transport Authority has launched the new integrated transport ticket for Dublin.

From today, the ‘Leap’ card goes for public sale with commuters in the greater Dublin area now being able to switch between Bus, Luas, Dart and Rail services with one ticket. Public transport users will be able to purchase and top up their Leap Card at more than 350 authorised Leap Card agents (Payzone) across Dublin and online at www.leapcard.ie .

The news follows the successful public testing of the card with over 15,000 journeys completed with the new Leap card.

Launching the card, Minister Kelly, said: “The Leap Card will be among the cheapest ways to get around Dublin. It will make using public transport more attractive and make it easier to get around the city. Our testing phase produced over 15,000 successful journeys. This represents huge progress for commuters and it has been one of my biggest priorities since taking office,”

“A commitment was given in the Programme for Government to advance this project as quickly as possible and I’m delighted to have delivered on this. I have taken an active and participative interest in this project with the various transport companies and agencies since taking up my role so I am delighted to see it off the ground.

Today is only the first day of the first phase. It will be gradually built upon and developed throughout 2012 where additional functionalities will be added to include Bus Eireann services, some private bus operators, children tickets, rambler, Travel 90 and student cards. 

It is worth noting that over 17 launches of London’s Oyster card took place before it will fully operational. So while we have lift-off today, there is still huge work to be done and that will continue between the National Transport Authority and myself as Minister.”

The Leap Card offers passengers value and convenience with every transaction. It is easy to use and is hassle-free because it doesn’t require public transport users to have the correct change or lots of coins to hand. It’s also quicker with no more queuing at ticket machines for single tickets on Luas, DART and Commuter Rail Services. It’s safer because public transport users can top up online and can report their card lost or stolen so that no one else can use it. With Dublin Bus, Luas, DART and Commuter Rail Services all being on board, public transport users can travel around Dublin as it suits them, without having to buy a specific ticket in advance.

Using Leap Cards to travel by Luas is up to 17% cheaper than purchasing single tickets from ticket machines, travelling by DART and Commuter Rail using Leap is up to 19% cheaper than purchasing singles from ticket machines, while the same fares as cash apply on Dublin Bus until January 2012 when a discount of 9% will come into play, following the rise in cash fares.  Commuters and travellers are urged to buy their Leap Cards now, to be ready to take advantage of these differentials as soon as they come into effect.

Public transport users who currently hold pre-paid tickets including annual and monthly tickets on Dublin Bus, Luas and DART and Commuter Rail services can be assured that their cards will continue to work as normal, alongside the new Leap Card, until well into 2012.

“Today represents a very important day for commuters in the Greater Dublin Area and I would like to thank the National Transport Authority and the Railway Procurement Agency for their commitment and diligence in this project along with Dublin Bus, Irish Rail, Bus Eireann, HP and Payzone for bringing it to this stage” concluded Minister Kelly.

For detailed information on fares and other aspects of Leap Card, please visit www.leapcard.ie

62 million euro funding for flood risk management in 2012 says Minister Hayes

Brian Hayes TD, Minister of State with special responsibility for the Office of Public Works (OPW) today announced detail of a programme of major capital works for 2012.

Speaking this afternoon, the Minister said, “I very much welcome the allocation by the Government of €45 million per annum for flood risk management and mitigation in the Infrastructure and Capital Investment Medium Term Exchequer Framework for the period 2012-2016.  The total allocation of €225 million for capital flood relief measures over the 5-year period of the framework is greater than the total spent on such measures in the past 10 years. This allocation is additional to the related current expenditure provision for maintenance by the OPW of completed arterial drainage schemes and collection of flood flow data, for which €17m has been provided in 2012.”

“At a time when difficult decisions have to be made in order to adhere to the current severe financial constraints, this very substantial allocation underlines the Government’s recognition of the serious personal and economic impact of flooding and the importance it attaches to addressing the problem,” the Minister said.

The Minister concluded, “My Office will continue to operate in 2012 the Minor Flood Mitigation and Coastal Erosion Works scheme under which local authorities can apply for funding for small scale measures to address localised flooding and erosion problems in their areas. 

List of Schemes for 2012

Completion of current phases of major flood relief schemes at:

Clonmel,

Mallow

River Tolka

River Dodder

Mornington

Johnstown
Commence construction of the remaining phases of schemes at:

Fermoy

Ennis

Tullamore

Templemore.

Funding will also be provided by the OPW for schemes being undertaken by the relevant local authorities at:

Bray

Carlow (Phase 2)

Waterford (Phase 2)

River Wad (Dublin)

During 2012 the OPW will progress the planning and design of schemes at:

Enniscorthy,

Arklow

Bandon

Skibbereen

Ballymakeera

Raphoe

Crossmolina

Rivers Dunkellin and Clare

River Dodder (Phase 3)

Lower Lee

South Campshires (Dublin)

“The democratic ideal behind the European Union is under threat”

Eoghan speaking during Private Members Business, 8.12.2011

The Government’s amendment states that we “support efforts to secure an agreement at this week’s meeting of the European Council that fully protects Irish interests and that contributes to the restoration of stability in the Euro area.”

I might have added “and that also restores the founding principles and ideals of the European project”.

The democratic ideal behind the European Union is under threat. It is an ideal that is unique in the international system of states. Independent nations of different sizes and strengths have come together in cooperation. That cooperation is structured around the principle of equality amongst sovereigns – one Member, one vote.

The crisis in the Eurozone threatens all of this.

It threatens this, because if we do not save our currency and it breaks up it could very possibly break-up the EU and all that has been achieved before the Euro. No more equality on the continent between nations, no more common market.

At the very same time, the manner in which we attempt to save the Euro, also risks destroying the European project, as Member States and institutions seek to assert their will over others, undermining the democratic ideal and casting us back to the realpolitik of “the strong do what they will to survive, the weak do what they must”.

We have a good thing, a unique thing here in the European Union. We have a good thing, a unique thing here in the Euro currency.

If war is an extension of politics by other means, so too is economics, but at the other end of the spectrum. And with economics – the coal & steel community, the common market and then the Eurozone, people sought to make advances that war or politics could never make. But we may have taken economics too far, further than the people were willing to go.

It is clear now that we rushed with the Eurozone project, not putting in place the proper architecture for a properly functioning common currency, not heeding the many warnings from nobel prize winning economists and others that were given at the time.

We cannot go back to the past.

We stand here faced with a genuine dilemma.

• How to protect Irish interests – sovereignty and independence over our fiscal affairs;
• How to stabilise the Euro area – in a manner that is credible AND fair;
• And how to restore that fundamental principle of European Union – where no member is more equal than another.

This is the biggest decision that our government and our country will face in its lifetime. We must face in to it in a rational way. And in a calm way. A decision may not come tomorrow, but it will come. Everything will change and we must be ready for that.

Watershed moment for NAMA

The setting up of an Advisory Group is a significant development for NAMA and may just prove the ‘watershed’ moment that was anticipated following the Geoghegan review in October. But we can likely expect some friction with the NAMA board.

People will rightly focus on the tax, spend and cut elements of Michael Noonan’s speech today, but there was also some important information given about the future operation of the National Asset Management Agency (NAMA).

In October it came to light that Minister Noonan had authorised a review of NAMA’s operations and that he had asked Michael Geoghegan, former CEO of HSBC to do this. Following that review, a member of the NAMA board resigned, stating that significant changes to NAMA were on the way. The review was “a watershed in the life of Nama” he said and would result in “changes to the structure of the agency”. With no official information released, speculation in the media was rife.

The Geoghegan review had come as NAMA was completing its first phase: acquisition of its full loan portfolio of €31.7Bn. The second phase would see the Agency shifting its attention to focus fully on managing the assets in the portfolio with a view to realising the public’s ‘investment’. Before the Geoghegan review there had been much criticism, public and private, as to whether NAMA had the people or the expertise to handle this new phase successfully. Comments from the departing board member appeared to confirm that it did not.

At a meeting of the Public Accounts Committee (PAC) on the 26 October, I quizzed officials as to the outcome of the Geoghegan review, with the Chairman of the NAMA board, Frank Daly, not yielding too much. It was “confidential” he said. Mr Geoghegan had given a verbal briefing to the board of his review, with a number of suggested recommendations. He then gave the same to the Minister, but nothing was written down and no final report was prepared. This meant that either Mr Daly or the Minister would have to give it up.  

While Mr Daly remained tight-lipped, the Minister indicated separately his intentions to make some of the recommendations from the review known at a later date. Meanwhile a second member of the nine person board resigned. It seemed certain that a significant change was coming.

And it has now come, with the announcement today that an Advisory Group (AG) to the Minister on NAMA’s operations is to be established. Its purpose will be to advise the Minister on “NAMA’s strategy and its capacity to deliver on that strategy through property disposal and the ongoing management of assets.” More specifically, the AG will:

• Help identify candidates for the NAMA board (and these candidates will have entrepreneurial and property skills);
• Make recommendations on strategies for attracting international capital to Ireland; and,
• Provide advice on lessons learned from asset management agencies in other countries.

NAMA will be directed to cooperate with the AG through the establishing Act of 2009. (So, no change to legislation, as was speculated, but a new order from the Minister under the Act.)

This is a significant development for NAMA. Why?

For one, it confirms that the board is lacking the required expertise for the discharge of its duties as it enters this new phase. That’s an important thing to understand, but it’s perhaps more important that action is being taken to change that fact. It is unlikely that this would have happened in the absence of the Geoghegan review. The Minister is to be congratulated on this.

Secondly, attracting international capital to Ireland is absolutely key if NAMA is to be successful – and there is much external interest. Establishing this as a priority of the AG means that now hopefully serious moves will be made in this direction. Use of the word ‘strategies’ for attracting that investment might point to possible portfolio arrangements, whereby less desirable assets would be packaged with more attractive ones. This is probably necessary for NAMA to successfully meet its obligations.

It was also announced by the Minister that there will be a reduction in the stamp duty rate for commercial properties from 6% to a flat rate of 2%. This should also be a big help to the Agency as it begins to move more Irish properties off its portfolio.

It will be interesting to see how the AG interacts with the Agency in practice and how ‘hands-on’ the Minister will choose to be on foot of its advice. Expect some friction. Chairman Frank Daly seemed to infer at the PAC that while there would be some changes following the Geoghegan review, even structural ones, these would not be significant. This doesn’t fit in my opinion with what the AG is being set up to do. And it certainly doesn’t chime with the comments of one of the resigning board members.

The size of the AG and the formality of its structure will be important considerations. A more fluid membership than the rigid structure of the traditional board system might be an advantage here. This new dimension to the Agency’s operation also provides an excellent opportunity for increasing transparency of the Agency’s activities. At the very least, if its advice was made public, we could measure NAMA’s operation against something.

This is an opportunity to bring more expertise and more focussed direction behind the NAMA project, and it is needed. With an estimated 20% drop in property values since the transfer price paid by NAMA, the possibility that the Agency might require some form of recapitalisation at a future date is very real. The very minimum that must be recovered is €31.7Bn over the next eight years. All relevant resources should be brought to bear.

***

Separately, the Minister also announced that legislation would not now be introduced to tackle upward only rent review clauses in existing leases. NAMA had previously anticipated that such legislation would reduce the value of its Irish portfolio by as much as 20%.

This will be a blow to many, but NAMA has advised the Minister that it will publish its policy guidance for dealing with tenants experiencing difficulties arising from upward only rent reviews. The guidance does allow for NAMA to approve rent reductions, it allows for the appointment of an independent valuation of market rent, and it allows tenants to approach NAMA directly where landlords are not being cooperative.

Of course it’s not what those experiencing genuine difficulties with their existing leases were looking for, but insofar as NAMA’s operation is concerned, the publishing of the policy guidance is a welcome measure. NAMA is nowhere near as transparent an organisation as it should be and anything that sheds light on how it conducts its business is a positive.

STATEMENT OF THE MINISTER FOR FINANCE, MR. MICHAEL NOONAN, T.D. 6th DECEMBER 2011

A Cheann Comhairle,

On this day 90 years ago, on the 6th of December 1921, the Treaty was signed. The Treaty restored Ireland’s sovereignty which for so long had been lost. In the last days of the Treaty negotiations, the British conceded fiscal autonomy to Ireland. This, as Dick Mulcahy said “Gave Ireland back her purse”.

I am afraid the Fianna Fáil/Green Government gave the purse away again this time last year as fiscal autonomy was conceded to the IMF and the European authorities. After a decade of disastrous decisions the building bubble burst and a Government which was riven with dissension could no longer find anyone to lend money to it, so they were forced to turn to the IMF and the European authorities to provide funding.

The people of Ireland have paid a very high price for this mismanagement of the economy. Personal wealth has been destroyed, thousands of people are sinking into poverty, emigration has returned and unemployment is far too high.

The task of this Government is to regain control over Ireland’s fiscal and economic policies, to grow the economy again and to get people back to work.

Those that have lost their jobs and young people who cannot get jobs have suffered most. The primary purpose of this Budget is to support the creation of jobs in the short term, the medium term and the long term.

On the 25th of February 2011, the Irish people spoke and delivered a resounding mandate to Fine Gael and Labour. The mandate is to set the economy back on the road to recovery and to get people back to work. The new Government has made a strong start. We have restored political stability and have successfully renegotiated many of the conditions in the EU/IMF Programme. We have restored Ireland’s reputation abroad, a reputation which was so severely damaged by the last Government. We have restored Ireland’s international credibility and all serious international commentators now believe that Ireland’s longer term position is sustainable and that with prudent management over the next four years we will get over our difficulties.

As a small country with an open economy, the crisis in the eurozone has a profound effect on our economic prospects. We are committed to playing a full part in resolving this crisis, so that the benefit of the common currency will continue for Ireland.

In spite of uncertainty, a gradual recovery has begun to take hold. Next year, the Department of Finance is forecasting an increase of 1.3 per cent in the volume of GDP with around a 2½ per cent increase in nominal GDP, which is the primary driver for revenue growth. All forecasters agree that growth will be significantly stronger in 2013 and subsequent years. This growth is driven by the exporting sector, both international and indigenous.

Promoting International Trade

Much of Ireland’s growth at present can be attributed to the attractiveness of Ireland for inward investment. The Corporate Tax Rate of 12.5 per cent and our place in Europe are central to this. We made a commitment in the Programme for Government to maintain the 12.5 per cent rate and we will do so. The Government have successfully protected this rate even under international pressure and given our fiscal state.

The Government successfully negotiated a reduction of €10 billion in the interest rate margin that was far bigger than originally offered and made no concession on the Corporate Tax Rate.

Today, I want to say to our friends in the multinational sector who continue to invest so strongly in Ireland and Europe, there will be no change in Ireland’s 12.5 per cent Corporate Tax Rate. We promised this in the Programme for Government and we will fulfil this commitment.

While the package of attractions for inward investment has been very successful, I believe with some adjustments more jobs can be created.

As part of that strategy, I will introduce a “Special Assignee Relief Programme”. This will allow multinational and indigenous companies to attract key people to Ireland so as to create more jobs and to facilitate the development and expansion of businesses in Ireland.

After consultation with the Tánaiste, Eamon Gilmore T.D., I am also introducing a Foreign Earnings Deduction to further support our export drive by aiding companies seeking to expand into emerging markets. This targeted deduction will apply where an individual spends 60 days a year developing markets for Ireland in Brazil, Russia, India, China and South Africa – the so called BRICS countries. I will be giving details of these and additional measures in the Finance Bill.

The International Financial Services industry in Ireland has been one of the great export success stories of the last 20 years. The sector employs more than 30,000 people and contributes over €1 billion in tax to the Exchequer. However, financial services are highly mobile and we must compete within a global market to ensure that the sector in Ireland continues to grow. Our commitment to the sector has been reaffirmed in the 5-year strategy for the industry which was launched by the Taoiseach, Enda Kenny T.D., in July this year. I intend to introduce a package of measures in the Finance Bill to support the continued success of the international funds industry, the corporate treasury sector, the international insurance industry and the aircraft leasing industry.

Indigenous Industry

Export growth from the multinational sector is not sufficient to drive the full economic recovery we are seeking. The domestic sector will be the real engine for job creation across the country. Already, indigenous companies in certain sectors are expanding and growing their operations. This Government will support and enhance their efforts through targeted measures for the SME sector.

In addition to the Loan Guarantee Fund and Micro Finance Fund announced by the Minister for Jobs, Enterprise and Innovation, Richard Bruton T.D., I am announcing that:

• The first €100,000 of R&D expenditure of all companies will be allowed on a volume basis for the purpose of the R&D Tax Credit;
• The outsourcing arrangements for R&D purposes will be improved in a targeted manner to allow the greater of the existing percentage arrangement or €100,000;
• Companies will have the option to use some portion of the R&D credit to reward key employees who have been involved in the development of R&D;
• The corporate tax exemption for new start up companies is being extended for the next three years and will be available for companies that commence trading in 2012, 2013 and 2014; and
• As already announced, smaller companies will also be able to avail of the planned foreign earnings deduction where they plan to expand their export markets into the BRICS countries.

I believe that these targeted measures will provide a stimulus for SMEs as they seek to develop, grow and expand their markets. Deputies will also be aware that the Employment and Investment Incentive is in operation since 25 November last. This incentive assists in raising risk capital for firms operating in more sectors of the economy than was previously allowed under the Business Expansion Scheme. Other job creation measures will also be examined with a view to their inclusion in the Finance Bill.

Agri-Food Industry

Active, energetic and profitable farming is fundamental to the agri-food sector. Irish food is now a world brand leader and when milk quotas end in 2015 and as food prices are maintained or increased, we want Irish farmers to produce more to supply the emerging markets, where there is significant and growing demand for Irish food.

The food industry must be supported by efficient and progressive primary producers. I wish to encourage the transfer of farms to the next generation of farmers. Many young people from farming families were attracted off the land by the rewards of the building industry but they are now returning to the family farm. The agricultural colleges are full and many young men and women now see their future in farming.

Later in my speech I will be announcing significant reductions in the rate of Stamp Duty on the transfer of commercial property. The new rate will also apply to farmland and the present relief for transfers to close relatives will continue to apply.

I am also modifying retirement relief from Capital Gains Tax so that it better incentivises the timely transfers of farms and businesses before the current owners reach the age of 66. The approach is in keeping with the policy of my colleague the Minister for Agriculture, Food and the Marine, Simon Coveney T.D., of encouraging timely transfer of farm assets and improving the age profile of farming. Full details of these measures will be in the Finance Bill.

There is a growing acceptance that greater use of the farm partnership model can not only help to increase scale, but can also help to develop the sector’s skill set through attracting more new entrants to the sector. To encourage farm partnership formation, I am introducing an enhanced 50 per cent stock relief for all registered farm partnerships and a 100 per cent stock relief for certain young trained farmers forming such partnerships. Subject to clearance with the European Commission under State Aid rules, these reliefs will be made available until December 2015.

Tourism

The creation of a second reduced rate of VAT of 9 per cent and halving the rate of employers’ PRSI on jobs with earnings up to €356 per week in the Jobs Initiative has boosted tourism and stimulated employment. The 9 per cent rate of VAT will also apply to open farms which otherwise would be subject to the standard rate as a result of a European decision.

It is interesting to note, that the latest live register figures show that 125,000 people left the Live Register to take up employment this year up to the end of October. This shows the difficulty with attempting to assign the creation of new jobs to specific initiatives. However, the tourism and hospitality industry believe that the Jobs Initiative has been very effective in generating additional business.

The Government was disappointed earlier this year when Aer Lingus and Ryanair were unwilling to provide additional flights to Ireland in exchange for the abolition of the Air Travel Tax. This offer is still on the table and while the Government appreciates the contribution to the Irish economy being made by the main carriers, we want them to bring additional tourists into the country.

At the Global Irish Forum held in Dublin Castle earlier this year, it was announced that 2013 would be the ‘year of the gathering’ – a year long programme of festivals, events and other gatherings designed to encourage the global Irish to visit Ireland in 2013 and to increase tourist numbers by 325,000. A special allocation will be made in the Revised Estimates Volume early in the New Year and it will be launched on St Patrick’s Day.

All the measures I am announcing for the different sectors of the economy have one objective: to stimulate additional economic growth and to create additional jobs. As well as introducing policies to assist growth, we must also address the constraints on growth. The situation in the property sector at present represents a significant drag on growth across the country.

Restoring property transactions to more normal levels

When the development and construction bubble burst, the consequences were dire. A sector which amounted to around 20 per cent of GDP has been reduced this year to around 5 per cent. A massive hole was made in the Government finances through the loss of Stamp Duty, VAT, Income Tax, PRSI and Capital Gains. Even worse, the previous Government neglected the imploding construction sector, which has lost one hundred and sixty four thousand jobs since the first half of 2007. We cannot restore all of these jobs but we can create the right conditions for construction employment to return to normal sustainable levels.

The absence of activity in the property market and the decline in house values are also having a negative effect on the domestic economy. When the value of family homes is going down, even those with good incomes and without debt, tend to save rather than spend or invest, and consumer sentiment, albeit improving of late, will be affected by this.

All successful economies have a strong construction and development sector and a sustainable property sector. The Government has already announced a multi-annual Capital Budget of €17 billion and I am now announcing the following measures to restore some confidence and to renew activity in the construction, development and property sectors.

The Stamp Duty rate for commercial property transfers will be reduced from the current top rate of 6 per cent to a flat rate of 2 per cent on all amounts from midnight tonight in respect of all non-residential property, including farmland as well as commercial and industrial buildings. Bringing down the cost of acquiring commercial property will have a positive effect on the property sector and indirectly on jobs in construction and related activities. The current stamp duty arrangements for residential property will continue to apply with 1 per cent on transactions up to and including €1 million and 2 per cent thereafter.

I am also introducing a Capital Gains Tax incentive for property purchased between midnight tonight and the end of 2013. If a property is bought during this period and held for at least seven years, the gain attributable to that seven year holding period will be relieved from Capital Gains Tax.

NAMA Rent Reviews

I am fully aware of the difficulties that upward only rent reviews are causing for some businesses. Indeed, despite exhaustive work over the past few months by my colleague the Minister for Justice, Equality and Defence, Alan Shatter T.D., including the preparation of draft legislation, it has not proved possible to develop a targeted scheme to tackle this issue that would not be vulnerable to legal challenge or require compensation to be paid to landlords.

This is a matter of particular interest to NAMA who have to deal with the problems caused by upward only rent reviews which apply to NAMA properties. NAMA advise me that it has a policy guidance for dealing with tenants’ difficulties arising from upward only rent reviews which they have agreed to publish today. The NAMA policy guidance provides an opportunity for NAMA to approve rent reductions where it can be shown that rents are in excess of the current market levels and viability is threatened. The policy also provides for the appointment of an independent valuation of market rent where necessary. NAMA have also advised me that where a tenant is not getting satisfaction in negotiations with his NAMA landlord he can contact NAMA directly and they assure us that any queries will be dealt with speedily by them. I welcome NAMA’s realistic approach to this difficult issue.

Mortgage Interest Relief

The Government is committed to helping address the particular problems faced by those that bought homes at the height of the property boom between 2004 and 2008. Therefore, I am going to fulfil the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage in that period.

I am also confirming the decision made by my predecessor that mortgage interest relief will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018.

For those who wish to buy a home in 2012, I am providing today that:

• First time buyers will get mortgage interest relief at a rate of 25 per cent rather than the 15 per cent proposed by the previous Government; and
• Non-first time buyers will benefit from relief at 15 per cent instead of the reduced rate of 10 per cent proposed by the last Government.

Mortgage Arrears

Turning to those in mortgage difficulty, the Government is acutely aware of the increasing financial stress that some households are facing arising from difficulty in meeting their mortgage commitments. It was for this reason that the Government took the significant decision to establish a Group to consider further necessary actions and to report within a very short time frame. The Government is now progressing with the implementation of the Group’s recommendations as well as assessing other approaches as suggested by Deputies, Senators and by interest groups who made submissions. I expect to make a formal announcement on the next steps shortly.

Legacy Property Tax Reliefs

As part of this Government’s determination to develop a fairer tax code, legacy property reliefs must be reduced. My Department has undertaken an Economic Impact Assessment of the measures proposed by the previous Government. It is quite clear that these proposals were unworkable and would have done significant and lasting damage to an already distressed property market, creating real difficulties for many ordinary people. This report is being finalised and will be published with the Finance Bill.

The report also highlights the vulnerability of small investors to insolvency if they lose these reliefs; a finding backed up by recent research from the Central Bank that shows high levels of negative equity and arrears in the buy-to-let mortgage sector. Therefore, I have decided not to proceed with the proposals put forward by the previous Government in last year’s Budget.

The report concludes that reliefs to small scale investors should not be restricted but that there is scope for larger investors to contribute more. The Government also believes that large scale investors in property that attracts tax reliefs can and should make more of a contribution.

Therefore, in the interests of fairness, a property relief surcharge of 5 per cent will be imposed on investors with an annual gross income over €100,000. This will apply on the amount of income sheltered by property reliefs in a given year.

Reliefs in Section 23 type investments will not be terminated or otherwise restricted for investors with an annual gross income under €100,000 as these are at the greatest risk of insolvency.

Investors in Accelerated Capital Allowance schemes will no longer be able to use any capital allowance beyond the tax life of the particular scheme where that tax life ends after 1 January 2015. Where the tax life of a scheme has ended before 1 January 2015, no carry forward of allowances into 2015 will be allowed. The delayed implementation of this measure gives individuals time to adjust. Full details will be in the Finance Bill.

Role of NAMA

As NAMA has completed its loan acquisition phase and is now concentrating fully on the active management of the assets under its care, the NAMA Board, with my agreement, asked Michael Geoghegan, a former CEO of HSBC, to review NAMA and report his findings to me. His report was generally positive but arising from it, I am establishing an Advisory Group to advise me on NAMA’s strategy and its capacity to deliver on that strategy through property disposal and the ongoing management of assets.

In making appointments to the NAMA board, the Advisory Group will help me identify candidates with entrepreneurial and property skills. Recommendations will also be provided by the Group on strategies for NAMA to attract international capital to Ireland and to provide advice in respect of lessons to be learned from asset management agencies in other countries. I will be issuing a Direction Order to NAMA under Section 14 of the National Asset Management Agency Act 2009 setting out the work of the Advisory Group and requiring NAMA to facilitate its operation.

Banking Sector

A strong and vibrant banking sector is vital to our recovery and to any growing economy. Credit is the lifeblood of the economy and without adequate credit availability, businesses will find it difficult to maintain the jobs they have, let alone grow and create new jobs. Also, without sufficient credit, it will not be possible for the property market to stabilise.

Since taking office, the Government has completed a large scale restructuring of the sector, in which the two largest institutions will function as universal pillar banks. The more problematic institutions have been ring-fenced into a single entity.

These restructured banks must now serve the different sectors of the economy. We have set the two pillar banks ambitious SME lending targets of €3 billion each this year, €3.5 billion each next year and €4 billion each in 2013. By making this credit available, we are supporting increased activity in a key sector for job creation. The banks must also make mortgage credit available to allow people to avail of the mortgage interest relief incentives as announced.

Public Finances

The Medium-Term Fiscal Statement set out the Government’s policies on budgetary reform and the path to sustainable public finances, both of which are essential for the creation of jobs. In light of the revenue and expenditure figures for November and the other information that has come to hand, my Department now estimates the General Government Deficit for this year will be 10.1 per cent of GDP. This is less than the 10.6 per cent required by the EU/IMF Programme.

The General Government Deficit target for 2012 is 8.6 per cent of GDP. No matter what happens in the wider eurozone, Ireland needs to restore sustainability to its public finances. If the eurozone crisis recedes, we are amongst the best placed to grow quickly, as evidenced by the EU Commission’s growth forecasts. If the eurozone crisis persists, it is equally important for the State to reduce our dependence on borrowing.

To continue to improve the sustainability of the public finances, we need €3.8 billion of additional fiscal consolidation in 2012. The Minister for Public Expenditure and Reform, Brendan Howlin T.D., set out the €750 million capital expenditure consolidation on the 10th of November last and yesterday set out how the €1.45 billion current expenditure consolidation will be implemented. With regard to the €1.6 billion revenue consolidation required in 2012, the full year effect of measures already introduced is €600 million and this means that I am announcing additional new tax measures today worth €1 billion approximately.

Taxation

The Programme for Government states that there will be no increase in income tax. This is the key issue for this Budget. I want to make clear that there will be no increase in income taxes in this Budget – no increases in rates, no narrowing of bands and no reductions in personal tax credits. Wages and salaries in January will be no less than wages and salaries in December, so people will continue to have discretion on how they spend their income.

The Government has very carefully considered the options open to us. There are five main sources of taxes – Corporation Tax, Income Tax, VAT, Excise and Capital Taxes. Everybody knows that under the EU/IMF Programme, expenditure has to decrease and taxes have to increase. Direct taxes such as income tax and PRSI have a bigger impact on jobs than indirect taxes have. If you tax something you usually get less of it and income tax and PRSI are taxes on jobs. Indirect taxes have a lower impact on economic growth and on jobs.

That is why the bulk of the adjustment being made in this Budget will be through increases in VAT and in capital taxes. The Opposition have already criticised this approach but they should make clear in their replies to the Budget what their alternatives are. Are they suggesting that income tax should be increased or that we should welch on our commitment that the 12.5 per cent Corporate Tax Rate is sacrosanct? If they are, we fundamentally disagree with them.

The majority of revenue adjustments to date have been achieved through increases in direct taxation. The marginal rate of taxation on income is now 52 per cent for PAYE workers and 55 per cent for the self-employed. The OECD have concluded that Ireland has the most progressive tax system of the EU members of its organization and Revenue records show that the top 5 per cent of income earners pay 44 per cent of income tax. When the marginal rates of tax are very high jobs are lost. Indirect taxes have a less adverse impact on employment. That is why in this Budget, indirect taxes rather than taxes on income are being increased. That does not mean that the wealthy should not carry the principal burden of tax. The minimum effective tax restriction on high earners is designed to ensure this by imposing a minimum effective income tax rate of 30 per cent for those subject to the full restriction, in addition to 4 per cent in PRSI and up to 10 per cent in the USC.

This is a major and entirely justifiable change from the situation that prevailed a short number of years ago where a small number of these people paid no income tax. Reports from the Revenue Commissioners indicate that the restriction is working. I will keep this restriction under review and may return to the topic in Budget 2013 depending on the conclusions of a forthcoming Revenue report.

Universal Social Charge

In another fairness measure, we have reviewed the impact of the Universal Social Charge and I am pleased to announce that today I am proposing changes to the USC that will help the low paid, part-time and seasonal workers in labour intensive areas like the hospitality sector and in farming. From 1 January 2012, the exemption level will be raised from €4,004 to €10,036.

This will mean that taxpayers will be able to earn up to that level without incurring the USC. This measure benefits nearly 330,000 people and will assist people to move into the labour market.

The Revenue Commissioners will collect the USC on a cumulative basis next year, thereby reducing the risks of the over or underpayment of the USC, and this will offset the costs of the very positive change made for the lower paid.

VAT

The previous Government agreed with the IMF and the European authorities to increase VAT by 2 per cent: 1 per cent in 2013 and 1 per cent in 2014. We are bringing these increases forward to 2012. During the lifetime of this Government, we will not increase the standard rate of VAT beyond the 23 per cent being announced today. This fulfills a further commitment in the Programme for Government.

Other European countries have tended to place the burden of fiscal correction on indirect taxes rather than income tax. At this point 20 out of the 27 EU Member States have increased VAT in the last four years and further increases are being considered by several Member States.

It should be borne in mind that most food, children clothes, oral medicines and other goods and services will remain at the zero VAT rate. The 9 per cent rate introduced in the Jobs Initiative for certain services and the 13.5 per cent rate that applies to home heating oil, residential housing, general repairs and maintenance will remain the same.

For the majority of the past twenty years, the VAT differential between the Republic and Northern Ireland has been 3½ per cent and it was as high as 6½ per cent as recently as 2009. After the increase I am announcing today, the differential will be 3 per cent. I do not expect an increase in cross border shopping as a result of the VAT increase.

Some opponents of the VAT change claim that the increase will cost households €500 per annum on average. I am informed that their calculation is incorrect as they did not take into account that businesses contribute significantly to the estimated yield.

Ensuring a fair distribution of the tax burden

The Programme for Government is committed to ensuring that people with wealth pay their fair share. I am introducing a number of measures today that meet that objective. I am:

•  
  • Increasing the current rate of Capital Acquisitions Tax from 25 per cent to 30 per cent after today;
  • Increasing Capital Gains Tax from 25 per cent to 30 per cent after today;
  • Reducing the Group A tax-free threshold for Capital Acquisitions Tax from €332,084 to €250,000;
  • Increasing DIRT from 27 per cent to 30 per cent;
  • Broadening the base for PRSI through removal of the remaining 50 per cent employer PRSI relief on employee pensions;
  • Further broadening of the base for PRSI to cover rental, investment and other forms of income from 2013;
  • Increasing the rate of notional distribution on the highest value Approved Retirement Funds or (ARFs) and similar products to 6 per cent;
  • Increasing the rate of tax on the transfer of an ARF on death to a child over 21 from 20 per cent to 30 per cent;
  • Abolishing the “citizenship” condition for payment of the Domicile Levy so as to ensure that “tax exiles” cannot avoid it by renouncing their citizenship; and
  • I intend to keep the contentious issue of the tax treatment of tax exiles under constant review.

As a consequence of the measures above, the rate of tax applying to capital, interest and earnings, through the high earners’ restriction, are all aligned at 30 per cent.

Carbon Tax

I propose to increase the Carbon Tax on fossil fuels introduced in Budget 2010 from the equivalent of €15 per tonne to €20 per tonne. The increase will be applied to petrol and auto-diesel from midnight tonight. However, in view of the impact this increase will have on home heating costs over the winter months, the increase on other fuels will not take effect until May 2012. This increase is half of that proposed in the previous Government’s Four Year Plan for Budget 2012.

I am not going to apply the Carbon Tax to solid fuels, so there will be no increases for peat or coal.

Consistent with our promise in the Programme for Government I am allowing farmers a double income tax deduction for increased costs arising from the change in carbon tax. Farmers will also be significant beneficiaries of the reduction in the USC that I am making today.

A measure that will benefit businesses is a reduction in the VAT rate on district heating from 21 per cent to 13.5 per cent. This will bring district heating into line with the majority of heating supplies. I am also amending the VAT refund order for farm construction to provide that farmers may claim a refund on wind turbines purchased from the 1st of January 2012.

Pensions

Due to the changes in pension tax relief adopted in last year’s Budget and Finance Act 2011 and the pension fund levy required to fund the Jobs Initiative, the pensions sector is making a sizeable contribution of about €750 million in 2012.

Although the EU/IMF Programme commits us to move to standard rate relief on pension contributions, I do not propose to do this or make changes to the existing marginal rate relief at this time.

However, the incentive regime for supplementary pension provision will have to be reformed to make the system sustainable and more equitable over the long term. My Department and the Revenue Commissioners will work with the various stakeholders in the next year to develop workable solutions.

This will include consultation on whether and to what degree Pension Funds might invest more in Ireland, rather than abroad.

Household Charge and Motor Tax

The Household Charge of €100 per dwelling has already been announced by the Minister for Environment, Community and Local Government, Phil Hogan T.D. To protect vulnerable groups in society, it is proposed to provide a waiver for those on mortgage interest supplement and for those residing in certain categories of unfinished housing estates and provision will also be made to allow payment of the charge in instalments.

There have been significant reductions in revenues from VRT and Motor Tax as a result of, among other things, the consumer movement towards buying cleaner and cheaper cars. I am initiating a consultation process with the motor industry and other interested parties to commence in early 2012 to review options for the improvement in VRT and Motor Tax revenues in future years. However, in the meantime, Minister Hogan will make provision for an increase in Motor Tax effective from the 1st of January 2012. This will generate additional income of some €47 million in 2012 to be used for Exchequer deficit reduction purposes.

Export Refund Scheme

I propose to have my Departme

A Fiscal Compact

The Eurozone crisis has demonstrated clearly that the fiscal situation in one member of a shared currency area is no longer exclusively a domestic affair given their monetary union. Failure to acknowledge that monetary union alone cannot bind a common currency (or, perhaps, choosing to ignore this fact), has brought us to the present point.

It seems it was always going to be this way. And Nobel Prize winner Milton Friedman’s prescient warnings about the inadequate design of the Eurozone are now being cited widely by analysts and commentators. Thus there is a rush on to address these inadequacies with competing proposals about what route to take.

In fact it might be more plausible to say that there is only one route and the question is how far to go down it, now. National fiscal discipline, common oversight and surveillance, fiscal or political union.

There is a difference between fiscal union and fiscal discipline, as the Taoiseach has stated. But, there is also a difference between fiscal discipline that is self-imposed and fiscal discipline imposed by others.

It is fair to say that the last, realistic proposal to deal with the current crisis will come from Council President, Herman Van Rompuy later next week. We don’t yet know what this will involve but we can draw conclusions as to some minimum requirements.

A part of his proposal will surely be the introduction of debt brakes in national budgets in the Eurozone. The Taoiseach has already signaled that the government will legislate for such a measure here in the New Year. This is nothing to fear; in fact it is a welcome move to greater fiscal discipline and responsibility on the government’s part. Yet if it is matched with the threat of sanctions ‘from above’ this does present a problem.

I can’t foresee how any such sanctions would work in practice, be they financial or political. Financial measures, say withholding of structural funding, might further exacerbate the wayward behavior the sanctions were intended to correct. It is also difficult to imagine what political sanctions could entail or whether or not they would be practicable. Suspension of voting rights has been mooted, but voting over what? Any area where a vote impacted upon a member’s sovereignty would be a non-starter.

Separate from that is the principle. Self-discipline isn’t self-discipline when its observance depends on a threat from another. And what of the likelihood that future governments might absolve responsibility for certain decisions to the European Council or ECOFIN because it suited them not to take the blame.

Another key part will be oversight of national budgets at an EU wide level. There is no problem with other European parliaments or leaders reviewing, even commenting upon that which is already public in a fellow member state. It happens all the time. But the possibility of other European parliamentarians (accidentally or not) being shown budgetary proposals not yet seen by the Irish parliament must not be allowed to happen again.

In fact, the current government is working towards restoring our fiscal independence so that bodies such as the IMF, ECB and the Commission would no longer be in a position to demand a review of budgetary proposals before these were decided by Dail Eireann. This ambition must maintain through the Eurozone crisis.  

Reforms to the national budgetary process will likely continue under Minister Noonan, meaning greater involvement of TDs in monitoring the present annual fiscal cycle and preparing for the next. Should another country’s parliament choose to review these discussions that were available on public record there would be no problem with that. What would not be acceptable is a more intrusive type of oversight where external elements would be able to intervene directly in the debate (and possibly decisions taken) as proposed by the Commission. 

This leaves us then searching for proposals that go far enough, but not too far. What is required is a commitment to fiscal discipline strong enough that allows the European Central Bank to act as a true central bank for the common currency area.

To a large extent, arguments against such a role based on legal interpretations of the bank’s mandate are on shaky ground. Recent statements from the ECB head, Mario Draghi suggest that the bank is beginning to accept this.

If we look to the history of the central bank in the UK, we see that the Bank of England was never mandated as the central bank we now know, nor did its charter give it legal authority to become the lender-of-last-resort, but it assumed that role in the 1825-1826 crisis as a matter of need. That need arises now in the Eurozone. It is not the solution but it could be a temporary relief. ‘Temporary’ is an important concession here.

One expert recently put it thus: “The ECB can only be used as a bridge that allows governments to advance along the road to fiscal responsibility. However, that bridge is crucially important right now because governments have come to the edge of the cliff and cannot reach the other side without assistance.”

What point a European Central Bank without a Eurozone? The ECB must become that temporary bridge and so we have to assume that it will. Because if it doesn’t then this whole debate becomes meaningless; there will be no more euro.

What this will take remains to be seen but Draghi recently referred to a “new fiscal compact – a fundamental restatement of the fiscal rules together with the mutual fiscal commitments that euro area governments have made”.

We will know the details of the likely compact soon. And while whatever Van Rompuy proposes may well be enough in terms of meeting the ECB’s requirements, he may also attempt to take us too far, too quickly.