Feature Article
Untitled article
 
Dear member

The new Programme for Government is fresh off the press and sets out important commitments in areas such as enterprise, education, housing, investment and regional development. It is vital that objectives are matched with firm spending commitments.

The government needs to think big, plan for the long-term and invest accordingly. It is up to political parties and TDs across the spectrum to ensure that the political dynamic of a minority led government does not curtail ambition and result in a series of insipid policy compromises.

This update provides a comprehensive business perspective on the Programme. I hope you find it useful.

Best wishes,

Danny McCoy


NEWS ARTICLES
A new political landscape
 
Seventy days after the general election, in a historic Dáil vote, Enda Kenny became the first ever Fine Gael leader to be elected to a second consecutive term as Taoiseach.

Seventy days after the general election, in a historic Dáil vote, Enda Kenny became the first ever Fine Gael leader to be elected to a second consecutive term as Taoiseach. This is a minority led Government, supported by a number of independent TDs. The Government has the lowest level of parliamentary support in the history of the Dáil, in contrast to the outgoing administration which commanded the largest parliamentary majority. This will dramatically change the process of policy-making and legislating in the new term.

An agreement with Fianna Fáil will facilitate the operation of the minority government. This includes provision for a new commission to make recommendations on the funding of water services, the continuation of the Lansdowne Road agreement on public service pay, and acceptance of the principle of a two-to-one split in extra resources in favour of public services over tax cuts.

As part of the deal Fianna Fáil has agreed to abstain in the election of Taoiseach, the nomination of ministers and also the reshuffling of ministers if and when that arises. The party will also facilitate the passing of budgets and will vote against or abstain on any motions of no confidence in the government or its ministers.

The new cabinet includes some notable changes from within Fine Gael and a number of independent TDs have been given key ministerial portfolios. This presents a new dynamic for those, Ibec included, whose objective it is to influence government policy. The reliance of the Government on the support of independents, along with the additional obstacles to securing parliamentary support for legislation, will undoubtedly create difficulties when it comes to agreeing and implementing coherent government policy.

However, the new Government is broadly business friendly and Ibec is optimistic that it will work closely with business as a stakeholder. There is a concern, however, that populist and local priorities will take precedence over important strategic but often more divisive issues, where it is more difficult to garner the necessary Dáil support.

The genesis and nature of the new government provides a particular opportunity to reform how the parliamentary process works. Dáil committees, which will be announced over the coming weeks, look set to play a more pivotal role. The terms of reference and composition of committees will be critical in how they operate, and they will be an important focus of Ibec lobbying work. The Government has committed to allowing all opposition (non-money) Bills that pass second stage to progress to Committee stage within 10 working weeks. While many will not proceed further, they may well benefit from the public platform offered by a committee hearing.

It is likely that Bills will be open to amendment more than ever before and the minority-Government will be less likely to oppose all changes due to the difficulty in ultimately getting legislation passed in the Dáil. The Seanad is expected to have a reduced role due to a lack of a Government majority. However, it can still delay bills. 

 

The Cabinet

Fine Gael: Unchanged


Enda Kenny remains Taoiseach, the first ever Fine Gael leader to be elected to a second consecutive term. The Taoiseach will also take on the role of Minister for Defence. Michael Noonan remains in Finance and Charlie Flanagan in Foreign Affairs. Frances Fitzgerald remains as Justice Minister and has also been appointed Tánaiste.  Heather Humphreys portfolio has been extended to Regional Development, as well as Arts, Heritage and the Gaeltacht.


Fine Gael: Changed

Simon Coveney has been given responsibility for housing with the creation of a new ministerial portfolio of Housing, Planning and Local Government. Leo Varadkar has been appointed as Minister for Social Protection. Richard Bruton is Minister for Education and Skills. Paschal Donohoe is Minister for Public Expenditure and Reform and Simon Harris is Minister for Health. 

First time Fine Gael Ministers

Mary Mitchell O’Connor has been appointed as Minister for Jobs, Enterprise and Innovation.  Michael Creed has been appointed to Agriculture, Food and the Marine.

First time Independent Ministers

  • Department of Transport, Tourism and Sport: Shane Ross
  • Department of Children and Youth Affairs: Katherine Zappone
  • Department of Communications, Climate Change and Natural Resources: Denis Naughten 
Influencing a minority government
 
The danger that the political dynamic of a minority led government will lead to the avoidance of difficult decisions is very real. Political expediency may undermine important policy priorities.

The danger that the political dynamic of a minority led government will lead to the avoidance of difficult decisions is very real. While political reform is a key part of the government’s programme, political expediency may undermine important policy priorities.  Also, the dynamic for those influencing government policy has changed dramatically with the new imperative to engage with a broader range of public representatives, as well ministers, advisors and civil servants. This will include Fianna Fáil, the largest opposition party.

The Committee structure has also become an important part of the new political architecture. It is likely that Bills will be open to more amendments than previously. The Seanad it is expected to have a reduced role this time due to a lack of a Government majority. However, it can still delay bills. The programme’s commitment to make panels of outside experts available to committees is positive and should increase business relevant input. The Government has committed to allowing all opposition (non-money) Bills that pass 2nd stage to progress to Committee stage within 10 working weeks. While many will not proceed further, they will be debated publicly. This is important in the context of retaining a pro-business legislative environment.

It is unclear how broader policy issues which do not require specific or immediate legislation will be handled by government.  Previously, on significant policy issues where deliberations were required, a specially charged committee was established from which a report and recommendations were issued.  It is likely that there will be further consultations by government on these recommendations in order to gain political support from a broader range of parties and independent deputies.


Fianna Fáil/Fine Gael agreement


The key features of Fianna Fáil’s commitment to Fine Gael are:

  • Abstain in the election of Taoiseach, nomination of Ministers and also the reshuffling of Ministers;
  • Facilitate Budgets consistent with the agreed policy principles attached to parties’ agreement;
  • Vote against or abstain on any motions of no confidence in the Government, Ministers and financial measures (eg money bills) recognised as confidence measures; and pairing arrangements for EU Council meetings, North South meetings and other Government business as agreed.


Key features of Fine Gael’s commitment to Fianna Fáil are:

  • Accept that Fianna Fáil is an independent party in opposition and is not a party to the Programme for Government;
  • Recognise Fianna Fáil’s right to bring forward policy proposals and bills to implement commitments in its own manifesto;
  • Publish all agreements with Independent Deputies and other political parties in full.
  • Allow any opposition Bills (that are not money bills) that pass 2nd stage, proceed to Committee stage within 10 working weeks;
  • Implement the agreed policy principles attached to this document over a full term of Government.
Programme for Government overview
 
The Programme runs to over 150 pages with over 90 priorities. It contains lots of sensible ideas and commitments in areas such as enterprise, education, housing, investment and regional development.

The programme runs to over 150 pages with over 90 priorities. It contains lots of sensible ideas and commitments in areas such as enterprise, education, housing, investment and regional development, many of which Ibec advocated in our pre-election campaign. If implemented, these will help support sustainable and balanced economic recovery.

The programme mentions that government will take advantage of the flexibility in the rules for capital investment in order to increase exchequer capital funding by €4bn out to 2021. This is about one-third of the increase needed to reach the Ibec recommendation of 4% of GDP. Currently, fiscal rules are restricting us from undertaking the capital investment which is urgently needed to meet the demands of a rapidly growing population.

This capital expenditure is essential for enhancing the productive capacity of the economy and ensuring sustainable growth in the future. Ibec will continue to support government to argue for flexibility at a European level and to ensure that Eurostat rules and definitions align with the ambition to leverage private investment at a national and EU level. A more flexible approach is needed, one that distinguishes between running costs and capital expenditure.  The implementation of a saving and investment scheme could enable the use private savings for PPP’s which would provide off-balance sheet funds for investment projects which could address pressing infrastructure and investment gaps in the regions.

In a change to patterns in recent budgets, there will be a ratio of 2:1 between spending increases and tax reductions. The tax policies outlined are largely in line with the pre-election manifestos and focus on reductions to the USC for low and middle income earners, enhancements to the capital gains tax regime and greater tax equity for the self-employed.

While the programme commits to publishing a medium-term income tax reform plan, there is no evidence that this government plans any meaningful reductions in the marginal income tax rates of high skilled workers. The programme also sets out a number of additional tax raising measures such as higher excise on tobacco, a new tax on sugar sweetened drinks and the absence of indexation of tax credits and bands, which will push more workers into the marginal tax rate.

Planned reforms in education policy are particularly welcome and should help support skills supply over the coming years. The housing reforms appear largely positive but it will be crucial to see specific measures implemented reduce the cost of private sector housing supply. Unfortunately, the programme makes no explicit reference to the Digital Single Market (DSM), its importance to Ireland or a need to engage internationally on it. It remains to be seen if a junior ministerial appointment will be made to oversee this important policy area.

There are a range of measures in the programme aimed at supporting regional, rural and local development and the increased focus on achieving more balanced regional development is very welcome. Ambition however needs to be matched by firm spending commitments. It is unclear within the programme which Minister has responsibility for the roll out of regional broadband.

The programme refers to the introduction of measures to address precarious work and increased casualisation of employment. Overall though,  there is no recognition that government is facing a climate of increased industrial discord and pay claims that are outside the norm which risk undermining some of the positive economic progress of recent years. On pay expectations and the potential for industrial disputes, pay rises and budget tax cuts mean workers will get the equivalent of about two weeks additional pay this year. Compared to 2014, the average worker will be better off by almost one month’s pay by the end of the year. This is at a time of historically low inflation. This reality needs to be reflected in wage expectations. There is no appetite for a national pay agreement but there is merit in establishing open channels of dialogue between government, Ibec and the trade union movement to manage expectations and safeguard competitiveness.

What was delivered for business?
 
The Programme for Government included a number of Ibec recommendations outlined in our Business Manifesto, launched last year.
The Programme for Government included a number of Ibec recommendations outlined in our Business Manifesto, launched last year.


Finance and the economy
 

The dual finance ministries of the Department of Finance (DOF) and the Department of Public Expenditure and Reform (DPER) remain in place. DOF retains Michael Noonan as Minister while Paschal Donohue is the new Minister in DPER.


What has changed?
  • The dual finance ministries of the Department of Finance (DOF) and the Department of Public Expenditure and Reform (DPER) remain in place.
  • DOF retains Michael Noonan as Minister while Paschal Donohue is the new Minister in DPER.
  • The budgetary process is likely to see significant changes under the new Government.
  • Central to this will be a new Budget Office and a year round budgetary process which will be significantly more consultative with far more opportunities for input by the Oireachtas.


Positives for business

  • A clear commitment to fiscal stability is more than welcome although it is apparent that room for sensible long term investment is limited by the fiscal rules. The Government should seek more flexibility in the EU fiscal rules to allow ambitious investment in productive infrastructure.
  • The commitments to maintain the 12.5% corporation tax rate and to engage with Base Erosion Profit Shifting are positive steps.
  • Ibec welcomes the changes to entrepreneurs tax such as the EITC for self-employed and a commitment to examine a share options scheme.
  • Non-indexation of tax credits at the entry point to the tax system is sensible in broadening the income tax base.
  • A new Public Procurement SME advisory group with a commitment to continue to develop more measures to assist SME's access to public contracts.


Outstanding issues and missed opportunities

  • Reductions in personal tax rates such as the continued phasing out of the USC for low and middle income earners may be welcome for workers. However, abolishing the USC would be a step in the wrong direction. Its abolition would narrow the tax base and put more pressure on a smaller numbers of tax payers.
  • Rather than abolition, part of the USC should be converted to a contribution for workers to a defined contribution pension scheme. Reform should see the marginal income tax rate down to 45%, moving it in line with competitor economies.
  • As things stand, workers enter the top tax rate at too early a stage. Half of workers already pay tax at the 49.5% marginal rate or above. In this context non-indexation of the top rate entry point will cause serious employment issues. The entry point to the top marginal rates should be linked to above the average wage.
  • Removal of the tax credits for higher earners is an unwelcome development. Ibec recommends that tax reform should be targeted at areas where we are out of line with international competitors. While Ireland is a high tax country for high skilled employees, too many are paying little or nothing at all. Removing tax credits will only exacerbate this differential and damage our attractiveness for high skilled workers.
  • The additional €4 billion in capital spending is welcome but this level of investment will fall well short of what is needed in the coming years. Ibec advocates 4% GDP per annum.

Contact Gerard Brady, Economics and Taxation policy at gerard.brady@ibec.ie
Political reform
 

Substantial reforms have already been introduced since the general election, with the election of Ceann Comhairle by secret ballot and the establishment of an all-party committee on Dáil reform.


What has changed?

  • Substantial reforms have already been introduced since the general election, with the election of Ceann Comhairle by secret ballot and the establishment of an all-party committee on Dáil reform which will sit throughout the lifetime of the 32nd Dáil.
  • The programme sets out a number of specific proposals for Dáil reform such as: establishing an Independent office to assist members and committees on budgetary matters, strengthened legal adviser to Oireachtas, introduction of a Parliamentary Investigations Unit, a relaxed application of the party whip system and more technical groups within the Dáil to allow smaller parties and independents to play a fuller role.
  • A number of initiatives are outlined to reform committee business including: a more focussed committee structure, committee chairs voted for on proportional basis and a move to have each member of Oireachtas sit on a committee. Panels of outside experts are to be made available to committees.
  • Several changes are proposed to reform conduct of Dáil business: a Dáil Business Management Committee would allow cross party input into the Dáil weekly agenda, programmes for enactment will give structured timelines to passage of bills, grouping of votes at fixed times would support more family friendly working arrangements, the introduction of abstentions and proposals to guillotine a debate would need certification from the Attorney General, approval from Ceann Comhairle and Dáil vote.

 Positives for business

  • The move to make panels of outside experts available to committees is very welcome. This would increase the input industry-related expertise.
  • A strengthened legal adviser to Oireachtas will improve the drafting of legislation.
  • Structured timelines to passage of bills via a Dáil Business Management Committee will bring more certainty to potential changes for business.
  • A Dáil that enables more family friendly working arrangements shows leadership and reflects an evolving work environment. 
Education and skills
 

The Programme has the potential to deliver an education system that works closely with business to ensure graduates are acquiring skills that are valued in the jobs market.


What has changed?

  • Creation of a cross party Oireachtas Committee to consider findings of the Expert Group on the Future Funding of the Higher Education Sector and to outline a proposed plan.
  • Support for new flexibility for universities within strict budgets, transparency and accountability agreements to address their own staffing and work practices to address issues for their improvement.
  • Technological Universities are supported with priority given to institutions with clear ambitions and plans for the furthering of industry-relevant research and education.
  • Together with the Apprenticeship Council and industry, the number of apprenticeships will be doubled by 2020. Also the number of traineeship places will be significantly increased.
  • Various measures  to change the education structures: increasing flexibility in course attendance, introduction of mid-degree “sandwich year” courses with industry experience in third year, supporting the path to quality employment for those unemployed or underemployed and review and reform of Further, Adult and Community Education  to ensure its effectiveness.
  • A significant number of initiatives were identified to promote new approaches, innovation and enterprise engagement among teachers in schools alongside additional investment in continuous professional development for teachers and preparation courses for new principals.


Positives for business

  • With effective implementation, the programme has the potential to deliver an education system that works closely with business to ensure graduates are acquiring skills that are valued in the jobs market. This availability of talent will make Ireland an attractive location for companies of all sizes and types, and provide a strong basis for a prosperous economy and society.
  • The commitment to address staffing issues will help Irish education institutions attract and retain highly qualified teaching and research staff. This should boost Ireland’s attractiveness to R&D investment and enhance the learning environment for students.
  • Young people will be better equipped to succeed in the workplace, a new generation of dynamic, responsible, cultured and ethically-minded citizens who can realise their potential in an increasingly complex world.  
  • The promotion of creativity and entrepreneurial capacity in students will prepare students to think critically and provide them with the skills to succeed in a global, technology driven economy, whether in a role they are employed in or one they create for themselves.
  • Ibec welcomes the commitment to review the forthcoming STEM report by committee. STEM subjects are essential for Ireland to achieve its economic ambitions and develop the foundations for future growth.


Outstanding issues and missed opportunities

  • While there is a commitment to reintroduce guidance counselling to secondary schools, it is imperative that the review proposed in the National Skills Strategy is undertaken to ensure a service that is fit for purpose.
  • Full implementation of junior cycle reform was not addressed. This needs to be a priority for Government. 

Contact Tony Donohoe, Education and Social policy at tony.donohoe@ibec.ie
Labour market and employment
 
A commitment has been made to prioritise quality affordable childcare, including the publishing of an independent review of the costs of childcare provision in private and community settings.
What has changed?
  • An increased focus on mental health, looking to the education system to develop awareness and encourage cultural change.
  • A commitment has been made to prioritise quality affordable childcare including the publishing of an independent review of the costs of quality childcare provision in private and community settings.
  • A number of initiatives have been identified to encourage greater female participation. These include an updated National Women’s Strategy published by the end 2016, further promoting women’s participation in decision-making and locally delivering training and development for women returners to the labour market.
  • In addition to the implementation of the “Pathways to Work” five year strategy which will help 50,000 long-term unemployed people into jobs, a dedicated “Pathways to Work” strategy for jobless households will also be published to support those in jobless households into employment and reduce child poverty.
  • Introduction of a new Working Family Payment that promotes work over welfare by supplementing, on a graduated basis, the income of a household, while at the same time incentivising more hours and full-time work.
  • The multiple Departments with responsibility in the area all have new ministers; Department of Jobs, Enterprise and Innovation; Department of Social Protection; Department of Justice and Equality; Department of Children and Youth Affairs.


Positives for business

  • Ibec welcomes the Government’s commitment to implement the mental health strategy “Vision for Change” which will support people to remain active in the workplace and reduce absenteeism. A comprehensive approach to wellbeing will contribute to healthier, well-motivated workplaces with reduced staff turnover and increased productivity.
  • An affordable childcare strategy would allow parents to return to or stay in work rather than facing the unfair trade-off between loss of income and childcare costs. This would increase participation in the labour force, particularly among women.
  • Increasing the participation of women in decision-making is a strategic business, economic and leadership necessity which allows us harness the full talent within the economy and society.
  • It will encourage greater numbers into the labour force and off welfare payments in a supported way, enabling greater uptake of available quality job opportunities, tackling the threat of structural long-term unemployment, lasting poverty and social marginalisation.


Outstanding issues and missed opportunities

  • Although there is a commitment to implement the “Vision for Change” mental health strategy, it is 10 years old. It is essential that the proposed review acts quickly on the provision of 24/7 service support and new and innovative mechanisms to increase the effectiveness of the service are provided.
  • Government spends €2.2 billion on direct family payments, Ibec believes better targeting of this expenditure would provide a more effective national childcare scheme, including the subsidising of before and after-school childcare costs.
  • The proposed gender wage reporting, which was recently introduced in the UK will be an additional regulatory burden on companies. Failure to address the lack of data on gender leadership across the economy, sector and industry is a missed opportunity.
  • While attention is given to the fact that over the next 30 years the number of people over 65 will double and there is mention of increasing the state pension, Ibec recommends the introduction of an entry level universal retirement saving scheme for workers not currently part of an occupational pension scheme.

 
Contact Kara McGann, labour market and employment policy at kara.mcgann@ibec.ie

Infrastructure
 

Irish Water will now be more dependent on exchequer funding than previously expected. This reduces the potential for increased capital expenditure on water, wastewater and transport infrastructure.


What has changed?

  • Irish Water will now be more dependent on exchequer funding than previously expected. This reduces the potential for increased capital expenditure on water, wastewater and transport infrastructure.

Positives for business

  • The Government promises to ‘protect’ existing capex commitments, including water services and broadband, and to conduct mid-term review of the capital programme in 2017.
  • The Government will seek to streamline the planning process.
  • Better transport links to our ports and airports remain a priority.
  • Ibec welcomes commitment to apply, in the first three months, to the European Union for the revision of the TEN-T CORE Network, including applying for the reinstatement of the cross-border Western Arc.

 Outstanding issues and missed opportunities

  • It is now unlikely that Irish Water’s debt finance can be moved off the national balance sheet.
  • The artificial constraint on public-private partnership finance for new road projects has not been relaxed.

Contact Neil Walker, Infrastructure policy at neil.walker@ibec.ie
Regional and rural
 

€500 million in funding for Enterprise Ireland, Udaras Na Gaeltachta and the IDA is a positive development. Initiatives to revitalise rural Ireland with New Town and Village Renewal Scheme are also welcome.


What has changed?

  • The Department of Arts Heritage and the Gaeltacht is now the Department of Regional Development, Rural Affairs, Arts & the Gaeltacht. Heather Humphreys, TD (FG) remains as Minister.
  • There is a commitment to reach full employment, with 68% of new jobs created outside of Dublin.

 Positives for Business

  • Ibec welcomes the creation of export led jobs outside of Dublin with €500m in funding for EI, Udaras Na Gaeltachta and the IDA.
  • Initiatives to revitalise rural Ireland with New Town and Village Renewal Scheme.
  • Ibec welcomes the maintenance of three year tax relief for certain start-ups until the end of 2018.
  • Maintaining the 9% VAT rate for Tourism is a positive move for the regions.
  • Investing €100 million capital in the Wild Atlantic Way and Greenway.
  • Development of an Atlantic Economic Corridor is a needed initiative for the West.
  • Consideration will be given to directly elected mayors in cities which will help co-ordinate and drive policies to make our cities more liveable.
  • Implementation of the Valuation (Amendment) Act 2015 should speed up revaluation process for commercial rates.

 Outstanding issues and missed opportunities

  • Completion of the motorway network.
  • The Atlantic Economic Corridor must be backed by funding and infrastructure development and should ensure complementary growth between Dublin and cities such as Waterford, Cork, Limerick and Galway in terms of size, infrastructure, population and other resources.
  • Programme says Government will look into reducing the size of electoral areas but this will increase costs and complicate the commercial rates system further.

Contact Fergal O'Brien, Director of policy at fergal.obrien@ibec.ie
Housing
 

The Department of Environment, Community and Local Government (DECLG) has been replaced with a Department of Housing, Planning and Local Government with Simon Coveney as the minister responsible.


What has changed?

  • The Department of Environment, Community and Local Government (DECLG) has been replaced with a Department of Housing, Planning and Local Government. Simon Coveney, TD has been appointed as Minister from Agriculture, Food and the Marine.
  • The most significant change is the elevation of housing and planning policy to a Cabinet Minister. Formerly these were dealt with by a Junior Minister in DECLG.
  • An Oireachtas Committee on Housing and Homelessness has been created and there will be a Cabinet Sub-Committee on Housing.
  • The Programme for Government commits to the publication of an action plan for housing within the first one hundred days.

 Positives for business

  • The creation of the new ministerial post, especially the linking of housing and planning at cabinet level.
  • The Action Plan for Housing; Construction 2020 – the last strategy for the sector – was widely seen as being aspirational rather than practical and resulted in only limited engagement between government and business.
  • There is an emphasis on engagement and collaboration with stakeholders.
  • Exploration of the reduction of VAT from 13.5% to 9% on new affordable homes.
  • Collaboration with the Central Bank on a Help to Build scheme for the private sector.
  • Incentives for refurbishment and change of use of existing vacant buildings from commercial to residential use.
  • Introduction of a town and village renewal scheme.
  • A "root-and-branch" review of the planning system to reduce uncertainty and delay.
  • Improved co-ordination in the supply of social housing between approved housing bodies and local authorities.
  • Reform of taxation relief for landlords who accept rent supplement and HAP tenants.
  • The development of a cost-rental model for the rented sector.
  • Re-prioritisation of the public capital programme towards unlocking development sites.
  • Expansion of the targeted capital contribution rebate system.
  • Review of the vacant site tax and an audit of land held by the public sector.
  • Support for mortgage holders who are in arrears.

 Outstanding issues and missed opportunities

  • There is an ongoing review of An Bord Pleanála which needs to be concluded as part of the “root and branch” review of planning policy.
  • The review of mortgage lending policy by the Central Bank of Ireland will be vital in the context of delivering new housing output.
  • The clear commitment to fiscal stability is more than welcome although it is apparent that room for sensible long term investment is limited by the fiscal rules. The government should seek for more flexibility in the EU fiscal rules ending the bias toward current over capital expenditure.
  • The addition of €4bn in expenditure to the existing capital plan is welcome, but it is significantly less than what will be needed over the coming years. Ibec believes that at least three times the addition amount would be required over the course of the plan to come close to meeting a 4% of GDP target.
  • If, as indicated, this expenditure is delayed until after a mid-2017 capital plan review it will be 2018 at the earliest that additional money can be allocated. In addition, given average timelines for large projects it could well be 2020 by the time any actual activity takes place.
  • The increase in expenditure would raise average capital spend as a proportion of GDP over the 2016 - 2021 period from 1.9% to 2.2% and well below the 3.1% which would be necessary to deliver on a target of 4% of GDP by 2021.

Contact Peter Stafford, housing policy at peter.stafford@ibec.ie
Enterprise
 

While there is no substantial change in brief with most of enterprise policy staying within the Department of Jobs Enterprise and Innovation, there is a new Minister, Fine Gael's Mary Mitchell O’Connor.


What has changed?

  • No substantial change in brief with most of enterprise policy staying within the Department of Jobs Enterprise and Innovation.
  • There is a new Minister appointed – Mary Mitchell O’Connor, TD (FG).
  • The successful ‘Action Plan for Jobs’ (APJ) format of policy making will be continued along with the regional action plans and a new element – county level jobs targets.

Positives for business

  • Positive outlook on overall business tax with a commitment to maintain the 12.5% corporation tax rate and engage with BEPS.
  • Several Ibec suggestions on reform of the taxation of entrepreneurs have made it into the draft programme including:  A reduced 10% CGT rate for new start-ups and expansion of the EITC for the self-employed and a commitment to explore options for an employee share options scheme for SMEs
  • For business in the regions there are commitments on funding for Western Development Commission, including an extension of its remit to include the North West, and regional capital funding for LEADER, Údarás, LEOs, Enterprise Ireland and the IDA.
  • The programme also suggests investigating the possibility of community banking through post offices and credit unions.
  • Commitment to introduce a PRSI scheme for the self-employed.
  • Commitment to step up the use of impact assessments across Government.
  • Ibec welcomes the commitment to progressively increase funding to the arts, including the Arts Council and the Irish Film Board, as the economy improves.
  • Government will conduct a consultation on the merits of establishing a Procurement Ombudsman. If implemented, this would be a low-cost and effective alternative appeals mechanism to the High Court.

 Outstanding issues and missed opportunities

  • Although the continuation of the APJ format is welcome, it is primarily a short term initiative. The programme is missing a long term plan for economic growth centred on a new national growth commission and is therefore lacking in real vision.
  • Although there is a commitment to new non-bank forms of credit within the document this part is short on detail. Government must improve the attractiveness of measures which support funding for small businesses.
  • Key schemes include the Employment Investment Incentive Scheme and the R&D Tax Credit. In addition the introduction of a Seed Enterprise Investment Scheme (SEIS) would encourage investment in small and start-up businesses.
  • The programme supports an increase in the minimum wage to €10.50 per hour over the next five years. This would be equivalent to just over 2.5% per annum. Increases must be competitive, affordable and appropriate while taking the cost of living into account.
  • Despite a general commitment to provide a supportive tax regime for entrepreneurs and the self-employed, there was no specific mention of the 3% surcharge for self-employed incomes over €100,000, which is one of the main areas of discrimination against entrepreneurs and the self-employed in the tax system.
  • The initiatives aimed at improving access to public procurement for smallerbusinesses fail to distinguish between small and medium size enterprises. The crux of the problem relates to small firms (<50 employees) accessing public contracts, and grouping these companies with medium businesses (51-250 employees) conceals the scale of the problem and hampers efforts to design targeted solutions.
  • No reference to the restoration of the redundancy rebate – a key measure which previously gave small businesses the confidence to take on staff.
  • There is no mention of Innovation 2020, Ireland’s new strategy for research and development in science and technology. This strategy needs to be fully implemented if Government is serious about building a smart, sustainable and competitive economy.

Contact Aidan Sweeney, enterprise and regulation policy at aidan.sweeney@ibec.ie
Agrifood
 

'Food Wise 2025' will remain the blueprint for the development of the agri-food sector. The Programme indicates a new tax on sugar sweetened drinks will be introduced, a move opposed by Ibec.


What has changed?

  • There are no substantial changes in the programme.
  • Food Wise 2025 will be the blueprint for the agri-food sector.
  • A new tax on sugar sweetened drinks will be one of the methods of funding reductions in personal tax rates. Ibec recommends that this tax should not be introduced.

Positives for business

  • Acknowledgement that development of agri-food is a fundamental priority for the future of the country.
  • Continuation of implementation of FoodHarvest 2020 and FoodWise 2025.
  • Agriculture acknowledged as having a very significant role to play in meeting our climate change targets.
  • A priority for the new Government will be to safeguard Ireland's defensive and offensive interests in the context of any future international trade agreements.

Outstanding issues and missed opportunities

  • Taxes on sugar sweetened drinks taxes are ineffective, regressive in nature and purely fiscal with no health benefit. The focus should be on effective public health measures to reduce obesity rates such as portion control and product recipe reformulation.
  • Limited focus on the processing sector which with the full implementation of the national agri-food strategy will continue to deliver export growth and create jobs.
  • Ibec recommends that the focus on attracting new investment is widened to sustaining and growing successful medium and large enterprises rather than just small businesses.
  • Grocery sector regulations should focus on their effectiveness and on ensuring efficiency in the grocery supply chain.
  • Ibec recommends that the development of new market opportunities also address the issue of market access. This requires dedicated resources at regulatory, policy and diplomatic levels in addition to marketing.
  • The commitment that state enterprise bodies will review viable business plans to rebuild a sugar industry with a view to considering state supports is welcomed but is inconsistent with the proposal to tax sugar sweetened drinks.
  • Promotion of live exports undermines value-add and job creation.

Contact Paul Kelly, Food and Drink Industry Ireland at paul.kelly@ibec.ie
Digital agenda
 

The Programme does not explicitly make reference to advancing the digital economy. There is no reference to the digital single market, its importance to Ireland or a need to engage internationally on it.


What has changed?

  • There is a renewed commitment to implement the National Broadband Plan (NBP).
  • The programme proposes a "single entity" to manage all states communications contracts, including the NBP contract under tender.
  • Cabinet committee to be updated on NBP progress. It remains to be seen how the new structures will work in practice.
  • Establishment of a mobile phone and broadband coverage taskforce within the first 100 days, involving Government Departments (Communications, Environment, and Transport), CommReg and telecoms industry to investigate how to provide better services.

 Positives for business

  • New sources of finance to be examined to supplement offerings to SMEs and startups.
  • Continued support for digital agenda in education e.g. remote learning in classrooms, continuous professional development of teachers, STEM skills, coding at junior cycle, computer science at leaving certificate and technological.

 Outstanding issues and missed opportunities

  • The programme does not explicitly make reference to advancing the digital economy as a strategic objective or an overarching governance structure that engages stakeholders in achieving that aim.
  • There is no explicit reference to the Digital Single Market (DSM), its importance to Ireland or a need to engage internationally on it.
  • Ibec recommends transforming all public services with digital.
  • Ibec recommends investing in our digital security both at a national level and with importance to FDI.

 
Contact Erik O'Donovan, Digital policy at erik.o'donovan@ibec.ie

EU affairs
 

Although referring to the “beneficial” nature of the UK maintaining its membership of the EU, there is no further detail or discussion of Brexit and the significant potential implications.


What has changed?

  • There is no clarification on cabinet appointment for this area. Currently Minister Dara Murphy (FG) has responsibility for EU Affairs and Data Protection (out of Department of the Taoiseach).
  • Much of trade policy remains within the remit of Mary Mitchell O’Connor (FG) within the Department of Jobs Enterprise and innovation.
  • Charlie Flanagan (FG) is remaining as Minister for Foreign Affairs and Trade.
  • Digital economy - awaiting clarification. Currently Minister of State, Dara Murphy (FG) has responsibility for EU Affairs and Data Protection (out of Department of the Taoiseach). New Department of Communications - Denis Naughten. Old DCENR portfolio will now include communications and responsibility for energy and the environment, including climate change. New Department of Regional Development - Heather Humphreys will also be assigned responsibility for the rollout of rural broadband.

 Positives for business

  • Ireland will continue to play its role in the European Institutions in “resolving the many external conflicts” impacting the EU.
  • Support expressed for maintaining UK membership of the EU and a pledge to “use appropriate avenues to express the Irish Government perspective on UK membership of the EU.”

 Outstanding issues and missed opportunities

  • Minimal overall reference to European Affairs and Ireland’s place in Europe.
  • Although referring to the “beneficial” nature of the UK maintaining its membership of the EU, there is no further detail, discussion or treatment of Brexit and the significant potential implications.
  • No reference to Single Market completion and the significant untapped economic potential
  • Absence of support or proposals for EU reform.
  • Programme is silent on reducing European regulatory burden and measures to boost competitiveness and growth.


Contact Shane Lyster, EU policy at shane.lyster@ibec.ie 

Trade and international affairs
 

The Programme indicates that new trade strategies for the Asia-Pacific and Americas region will be developed.


What has changed?

  • The programme indicates that new cross sectoral, whole of government trade strategies for the Asia-Pacific and Americas region are to be developed. Ibec believes the development of trade and diplomatic relations with these regions is key to maintaining the competitiveness of Irish business on the global stage.
  • The programme states that Ireland’s mission network abroad is to be evaluated to ensure its capacities are consistent with Ireland’s strategic priorities with a view to expansion in line with the proposed strategies. Ibec maintains positive links with Irish missions abroad and supports the promotion of Irish trade and economic interests through the Embassy network.
  • Ibec welcomes the strong commitment to safeguard Irish offensive and defensive interests in Agriculture and Marine trade negotiations with a particular focus on beef and food safety standards.

Positives for business

  • Minister led trade missions are to continue. Strong export figures for Ireland indicate the success of these missions in the past.

 Outstanding issues and missed opportunities

  • No reference is made to the Trade in Services Agreement (TiSA) at international level or the transatlantic trade and investment partnership (TTIP) agreement between the EU and the US.
  • It is disappointing not to see a strong statement recognising the importance of free trade to    the Irish economy. Free trade agreements (FTAs) contribute to export growth in goods and services. The European Commission is currently negotiating several FTAs and the government should engage with partners at EU and international level to ensure that Ireland can benefit from the final agreements.

Contact Pat Ivory, International and Trade policy at pat.ivory@ibec.ie
Climate change
 

Additional funding for the promotion of clean energy technologies in heating and transport is welcome.


What has changed?

  • Responsibility for climate change mitigation and waste policy has moved from the Department of the Environment, Community and Local Government to the reformed DCERN: The Department of Communications, Climate Change and Natural Resources.

Positives for business

  • A commitment to additional funding for promotion of clean energy technologies in heating and transport.
  • Incentives for afforestation.

Outstanding issues and missed opportunities

  •  The replacement of Moneypoint Power Station seems increasingly likely to be a political decision, instead of a commercial one.
  • A second review of wind planning guidelines is promised – it does not bode well for renewable investment. Government needs to show leadership rather than pandering to populist views.
  • Ireland’s share of the greenhouse gas target for 2030 remains to be negotiated at European Council – need to hold the line for a fairer deal. Agreeing a far tougher target would result in Ireland giving lots of money to other EU member states.
  • A new round of feed-in tariffs (financial support for renewable electricity) need to be consulted on and state aid approval needs to be obtained for them.
  • Revised targets for energy efficiency should not place undue burdens on energy suppliers – much of the emphasis is on alleviating fuel poverty, which should be funded by other means.

Contact Catherine Joyce-O'Caollai, Energy policy at catherine.joyceocaollai@ibec.ie
EVENTS
Ibec Policy + Business Series, 27 May
 
The next session in our Policy + Business series will take place on Friday 27 May at 8am in Ibec. We will examine new Ibec research on changing demographics and its impact on national and regional consumer trends plus analysis on the new government's priorities and the implications for business.

You are invited to attend the next session in our Policy + Business series which takes place on Friday 27 May at 8am in Ibec.

This month's briefing will examine new Ibec research on changing demographics and its impact on national and regional consumer trends. We will also provide a comprehensive analysis on the new government's priorities and the implications for business.

Ibec Director of Policy Fergal O'Brien and Ibec Economist Alison Wrynn will present on this topic, followed by a round table discussion.

The Policy + Business series takes place on the last Friday of the month. We will cover a range of topical policy issues, providing you with a business perspective and updating you on our lobby on these issues.

Dates: 27 May, 24 June
Time: 7.30am breakfast, 8am start, 9.30am close
Venue: Ibec, 86 Lower Baggot Street, Dublin 2

Please follow the link to register your attendance at this link.

We look forward to seeing you then.

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