A business perspective
Political
landscape
Ibec commentary
The new political landscape offers a unique
opportunity to reform Irish politics.
•70 days after the general election, Enda Kenny has been elected Taoiseach and we now
have a Fine Gael minority led Government, supported by a number of independent TDs and
Fianna Fáil from the opposition benches. The Government commands the lowest level of
support in history, in contrast to the previous which enjoyed the largest majority.
•While political predictions are hazardous it is probably fair to say that the number of
independent TDs appointed to Cabinet will likely cause difficulties in agreeing coherent
government policy.
•A Cabinet has been appointed with 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, who’s objective it is to influence government policy.
•Dáil Committees will play a pivotal role in this government. These committees will be
announced over the coming weeks. The Committee terms of references and composition
are critical for this Government. The Government is likely to favour implementing change
and reform through secondary legislation. Committee agendas will be closely observed
and an important pivot for those who lobby. There is a commitment to draft in external
expert panels to advise on committee policy deliberations. Importantly, two committees
were established in the weeks preceding the formation of government: Housing and
Homelessness and a sub-committee on Dáil Reform.
•It is likely that Bills will be open to amendment more than ever before and the minorityGovernment will be less likely to vote against for fear of alienating support of independent(s).
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 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 could benefit from the public
platform offered by a committee hearing. This is important in the context of retaining a probusiness legislative environment.
The Programme for Government
01
The
Cabinet
In a historic Dáil vote, Enda Kenny is Taoiseach, the first ever Fine
Gael leader to be elected to a second consecutive term.
Unchanged
Enda Kenny
An Taoiseach and
Minister for Defence
Michael
Noonan
Charlie
Flanagan
Frances
Fitzgerald
Heather Humphreys
Minister for Finance
Minister for Foreign
Affairs
Tánaiste and
Minister for Justice
Minister for Regional
Development, Arts, Heritage
and the Gaeltacht.
Leo Varadkar
Richard Bruton
Paschal
Donohoe
Minister for Health
Changed
Simon Coveney
Minister for Housing,
Planning and Local
Government
Minister for Social
Protection
First time Fine
Gael Ministers
Mary Mitchell
O’Connor
Minister for Jobs,
Enterprise and
Innovation
02
Michael Creed
Minister for
Agriculture, Food
and the Marine
Minister for Education
and Skills
Simon Harris
Minister for Public
Expenditure and Reform
First time Independent
Ministers
Shane Ross
Minister for Transport,
Tourism and Sport
Katherine
Zappone
Minister for Children
and Youth Affairs
Denis Naughten
Minister for
Communications,
Climate Change and
Natural Resources
The Programme for Government
The Programme
for Government
Ibec commentary
The programme runs to over 150 pages and
contains lots of sensible ideas which business
had advanced in the pre-election discussions.
If implemented will help support sustainable
and balanced economic recovery.
•There are numerous commitments in areas such as enterprise, education, housing, investment and
regional development which will help improve the broader business environment.
•Despite the commitments to increase spending and investment, however, we believe that the new
Programme for Government lacks ambition and in particular it comes up short in allocating sufficient
resources to meet the country’s future investment needs.
•The intention to increase capital investment by €4 bn by 2021 will deliver about only one-third of the
additional amount required to reach the Ibec ambition of 4% of GDP.
•In a change to patterns in recent budgets, there will be a ratio of 2:1 between spending increases and
tax reductions.
•With current spending expected to grow by €6.75 bn, the net tax changes over the coming five budgets
are estimated at circa €3.4 bn.
•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.
•The programme makes no explicit reference to the Digital Single Market (DSM), its importance to Ireland
or a need to engage internationally on it.
•The housing reforms appear largely positive but it will be crucial to see concrete measures implemented
which will reduce the cost of private sector housing supply.
•Planned reforms in education policy are particularly welcome and should help support skills supply over
the coming years.
•There are a number of measures aimed at supporting regional, rural and local development and Ibec
greatly welcomes the increased focus on achieving more balanced regional development. Many of
the measures are fairly small scale, however, and it will be important to see commitments such as the
Atlantic Corridor ambitiously resourced.
The Programme for Government
03
What the Programme for Government says
Policy area
Finance and
Economy
What has changed?
•No change in brief with dual finance ministries Department of Finance (DOF) and Department of Public
Expenditure and Reform (DPER) staying in place.
• DOF retains Michael Noonan as Minister while Pascal Donohoe is the new Minister in DPER.
• The budgetary process is likely to see significant change under the new Government.
•Central to this will be a new Budget Office, a year round significantly more consultative budgetary
process 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.
04
The Programme for Government
What the Programme for Government says
Finance and Economy (Continued)
•As things stand, workers enter the top tax rate at too early a stage. Half of all income tax payers already
pay 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.
Policy experts
Gerard Brady
Alison Wrynn
[email protected]
[email protected]
The Programme for Government
05
What the Programme for Government says
Policy area
Education
and Skills
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.
06
The Programme for Government
What the Programme for Government says
Education and Skills (Continued)
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.
Policy expert
Tony Donohoe
[email protected]
The Programme for Government
07
What the Programme for Government says
Policy area
Labour market
and Employment
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 fulltime 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.
08
The Programme for Government
What the Programme for Government says
Labour market and Employment (Continued)
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.
Policy experts
Kara McGann
Maeve McElwee
[email protected]
[email protected]
The Programme for Government
09
What the Programme for Government says
Policy area
Regional
and Rural
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 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.
10
The Programme for Government
What the Programme for Government says
Regional and Rural (Continued)
Policy experts
Fergal O’Brien
Helen Leahy
[email protected]
[email protected]
The Programme for Government
11
What the Programme for Government says
Policy area
Housing
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.
12
The Programme for Government
What the Programme for Government says
Housing (Continued)
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.
Policy expert
Peter Stafford
[email protected]
The Programme for Government
13
What the Programme for Government says
Policy area
Agrifood
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 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.
14
The Programme for Government
What the Programme for Government says
Agrifood (Continued)
Outstanding issues and missed opportunities
•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.
Policy expert
Paul Kelly
[email protected]
The Programme for Government
15
What the Programme for Government says
Policy area
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.
•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.
16
The Programme for Government
What the Programme for Government says
Infrastructure (Continued)
Policy expert
Neil Walker
[email protected]
The Programme for Government
17
What the Programme for Government says
Policy area
Climate change
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 DCENR: 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.
18
The Programme for Government
What the Programme for Government says
Climate change (Continued)
Policy expert
Catherine Joyce O’Caollai
[email protected]
The Programme for Government
19
What the Programme for Government says
Policy area
Enterprise
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.
•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
– 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.
20
The Programme for Government
What the Programme for Government says
Enterprise (Continued)
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 selfemployed, 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 selfemployed in the tax system.
•The initiatives aimed at improving access to public procurement for smaller businesses 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.
Policy expert
Aidan Sweeney
[email protected]
The Programme for Government
21
What the Programme for Government says
Policy area
EU affairs
What has changed?
•At the time of publication no Minister of State had been appointed to the role of EU Affairs. In the
previous government, Minister of State, Dara Murphy had responsibility for EU Affairs and Data
Protection (out of Department of the Taoiseach). The new Department of Communications will be led by
Minister Denis Naughten, Independent TD. 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.
22
The Programme for Government
What the Programme for Government says
EU affairs (Continued)
Policy experts
Aoife Doyle
Shane Lyster
[email protected]
[email protected]
The Programme for Government
23
What the Programme for Government says
Policy area
Trade and
International
affairs
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.
•
New cross sectoral, whole of government trade strategies for the Asia-Pacific and Americas region
are to be developed.
•
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.
•
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.
24
The Programme for Government
What the Programme for Government says
Trade and International affairs (Continued)
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.
Policy experts
Pat Ivory
Kathryn O’Donovan
[email protected]
[email protected]
The Programme for Government
25
What the Programme for Government says
Policy area
Digital
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.
26
The Programme for Government
What the Programme for Government says
Digital (Continued)
Policy expert
Erik O’Donovan
[email protected]
The Programme for Government
27
What the Programme for Government says
Policy area
Political 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.
28
The Programme for Government
Engagement
with a minority
government
Ibec commentary
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 is expected to have a reduced role this
time due to a lack of a Government majority. However, it can still delay bills. 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, so too is the commitment for drafting in panels of
outside expertise to advise on committee policy deliberations.
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.
The Programme for Government
29
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.
30
The Programme for Government
What the Programme
for Government
delivered for Business
Ibec’s pre election campaign set out an ambitious
vision for the country. We looked to all political
parties to take this on board and reflect the priorities
of business in their manifestos.
We held face to face meetings with all key members of the Oireachtas, worked behind the scenes with advisers
and party staff and hosted a series of regional grassroots meetings with TDs and business. We highlighted
the need for sensible tax policies that better reward work and explicitly warned of the dangers of the rise of
anti-business protest parties. We were relentless in our objective to have a business voice heard in the debate
and our lobby is now reflected in the Programme for government which captures many of our priorities and
demonstrates the success of Ibec’s campaign (see table).
Ibec preelection asks
The Programme for Government says
Finance and Economy
Take advantage of the flexibility in the rules for capital investment in order to
increase exchequer capital funding by €4bn out to 2021.
Commitments to maintain the 12.5% Corporation Tax rate and to engage with
Base Erosion Profit Shifting.
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.
Public Procurement SME advisory group with a commitment to continue to develop
more measures to assist SME's access to public contracts.
The Programme for Government
31
What the Programme for Government
delivered for Business
Education and Skills
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.
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.
Labour market and Employment
Commitment to implement the mental health strategy “Vision for Change” which
will support people to remain active in the workplace, 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.
Encourages 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.
Regional and Rural
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.
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 coordinate and drive policies to make our cities more liveable.
32
The Programme for Government
What the Programme for Government
delivered for Business
Housing
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.
The 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.
Re-prioritisation of the public capital programme towards unlocking development
sites.
Expansion of the targeted capital contribution rebate system.
Agrifood
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.
Infrastructure
Promises to ‘protect’ existing capex commitments, including water services and
broadband, and to conduct mid-term review of the capital programme in 2017.
Streamline the planning process.
Better transport links to our ports and airports remain a priority.
Application, 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.
Climate Change
A commitment to additional funding for promotion of clean energy technologies in
heating and transport .
Incentives for afforestation.
The Programme for Government
33
What the Programme for Government
delivered for Business
Enterprise
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,
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.
Commitment to introduce a PRSI scheme for the self-employed.
Commitment to step up the use of impact assessments across Government.
Progressively increase funding to the arts, including the Arts Council and the Irish
Film Board, as the economy improves.
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.
EU affairs
Ireland to 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”.
Trade and International affairs
Minister led trade missions are to continue.
New cross sectoral, whole of government trade strategies for the Asia-Pacific and
Americas region are to be developed.
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.
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.
Digital
Renewed commitment to implement the National Broadband Plan (NBP).
Establishment of a mobile phone and broadband coverage taskforce.
New sources of finance to be examined to supplement offerings to SMEs and
startups.
Continued support for digital agenda in education.
34
The Programme for Government
Outstanding priorities
of business
What next?
The goals set out in the Programme for Government
now need to be matched by increased investment
spending commitments.
This will require a greater level of ambition from government, along with a new deal in Europe to allow for
more flexibility in the application of EU fiscal rules. The government needs to think big, plan for the long-term
and invest accordingly and that its priorities are matched with firm spending commitments. The government
needs to urgently seek more flexibility in the application of EU fiscal rules so it can significantly ramp up
investment expenditure. The current rules place inappropriate and unnecessary restrictions on investment.
Irish business supports a sensible rules-based approach to the management of day-to-day spending and
taxation, but spending on vital capital investment projects should not be curtailed.
We can be up-beat on the economy, but an increase in industrial discord risks undermining this positive
economic progress. The suggestion that wages should increase to make property more affordable suggests
one of the big lessons of the crisis has been forgotten. A major and far-reaching new approach is needed
to improve the supply and affordability of new housing, but wage hikes are not part of the solution. If labour
costs spiral and we lose our competitive edge, we will pay for it in jobs.
So what next? While its formation proved less than straightforward and its make up is certainly different from
previous governments, Ibec is already working with government ministers, their advisers and civil servants
will be fully aware of the needs and aspirations of Irish businesses and the important role the business
voice has in national political discourse. There now remains a number of important priorities that have been
omitted from the Programme for Government and on which Ibec will continue to lobby (see table).
There is insufficient ambition in the Government's investment plans. The planned
increase of €4bn in the capital investment budget by 2021 is totally inadequate to
meet the needs of a rapidly growing economy and population. Unless this issue is
revisited, the under-investment problems already so evident in the housing sector
will become equally apparent in other parts of the economy
The plan fails to address the skills attraction and retention problems associated
with Ireland's very high marginal tax rates. Future income tax reform must focus on
making Ireland a more attractive location for mobile skills
There is little or no reference to risks posed by a more challenging industrial
relations climate. The Government needs to urgently consider how best it can
preserve Ireland's competitiveness while ensuring a stable and productive industrial
relations environment
The Programme fails to demonstrate sufficient commitment to enhance Ireland's
competitiveness and overall business environment. The Government must do more
to deliver effective regulation, enhance the financing environment for firms and
ensure that Ireland's cost base is competitive
The Government has a great opportunity to more effectively embrace the digital
economy opportunities for Ireland. The Programme contains insufficient reference
to the digital economy, the Digital Single Market and digital security.
The Programme for Government
35
Notes
36
The Programme for Government
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