Reform  for  Growth  

                 Ógra  Fianna  Fáil  Budget  Submission  November  2010  Prepared  by  Conor  King  &  Declan  Harmon  

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Introduction    At  this  stage,  no  citizen  needs  to  be  reminded  of  how  difficult  the  current  economic  situation  is.  We  have  all  become  far  too  familiar  with  the  many  frightening  statistics  that  bombard  us  on  a  daily  basis.      The  scale  of  our  present  difficulties  is  particularly  worrying  for  young  people.  Not  only  are  we  the  generation  that  are  embarking  on  our  careers  in  an  incredibly  tough  jobs  market,  but  we  are  also  the  people  who  will  have  to  carry  the  heavy  burden  of  paying  tomorrow  for  the  borrowed  money  being  spent  today.    Our  core  principle  is  one  shared  by  the  vast  majority  of  citizens  and  political  opinion  –  that  the  gap  between  exchequer  income  and  expenditure  is  far  too  great  and  must  be  reduced.    We  agree  with  the  government’s  strategy  to  reduce  the  deficit  to  3%  of  GDP  by  2014.  We  believe  that  the  primary  means  to  achieve  this  should  be  through  large-­‐scale  reductions  in  spending  coupled  with  targeted  measures  to  introduce  new  forms  of  indirect  taxation.  We  believe  that  the  scope  for  increases  in  employment  related  taxes  to  be  extremely  limited.  However,  we  argue  that  on  both  economic  and  societal  grounds  the  tax  base  must  be  widened  significantly.    This  submission  is  practical  in  its  focus.  It  does  not  shy  away  from  proposing  reforming  ideas.  The  time  for  soft-­‐option  politics  has  gone.  Politics  today  and  into  the  future  ought  to  be  about  a  competition  of  ideas.  Ógra  Fianna  Fáil  is  determined  to  show  that  it  has  the  capacity  to  put  forward  challenging  and  substantial  ideas  and  has  the  courage  to  lead  reform.  The  generation  we  represent  simply  can’t  afford  more  of  the  same.  

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Summary  of  Recommendations      Taxation:  

• Introduction  of  Universal  Social  Contribution  to  bring  more  income  earners  into  tax  net  

• Positioning  of  Ireland  as  European  hub  for  customs  and  trade  related  tax  clearance  –  with  major  potential  for  revenue  raising  and  job  creation  

• Continue  preparations  necessary  for  speedy  introduction  of  residential  property  tax  and  water  rates  

 Expenditure:  

• Emphasise  and  encourage  the  McCarthy  report  recommendations  as  starting  point  for  expenditure  reductions  

• Introduction  of  optional  pension  pause  for  public  servants  • Review  rate  of  jobseekers  payments  in  order  to  ensure  that  disincentives  

to  work  do  not  arise  • Standardisation  of  the  rate  of  child  benefit  so  that  the  rate  paid  to  each  

child  is  the  same    Public  Service  Reform:  

• An  increased  emphasis  on  private  sector  involvement  in  the  provision  of  administrative  and  processing  services  

• A  review  of  the  role  of  the  Department  of  Social  Protection  so  that  it  becomes  a  policy  driven  department  

• A  stronger  link  between  a  reformed  and  renamed  State  training  agency  and  the  Department  of  Social  Protection  

• Greater  sharing  of  services  and  pooling  of  resources  by  local  authorities,  including  involvement  of  the  private  sector  

 Employment  and  Job  Creation:  

• The  introduction  of  a  structured  public  sector  work  experience  programme  

• The  introduction  of  a  scheme  for  jobseekers  to  utilise  their  skills  by  contributing  to  community  and  voluntary  projects,  with  penalties  for  those  who  refuse  to  make  themselves  available  for  suitable  work  

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Taxation    The  primary  role  of  a  tax  system  is  to  raise  revenue  to  fund  government  expenditure.    This  should  be  done  on  a  basis  that  is:  

• Equitable  and  progressive  • Flexible  to  the  needs  of  the  economy  • Able  to  provide  a  stable  revenue  base  • Easy  to  understand  • Not  distorting  to  the  economy.  

 As  has  been  seen  since  the  onset  of  the  economic  crisis,  the  tax  system  that  was  built  up  during  the  boom  years  was  over  reliant  on  ‘fair-­‐weather  taxes’  related  to  consumer  spending  and  construction  and  could  be  said  to  have  failed  to  meet  at  least  two  of  the  above  criteria.        Income  taxes    There  have  been  significant  increases  in  the  levels  of  taxation  in  recent  budgets  with  the  introduction  of  the  income  levy,  health  levy  and  changes  to  the  rates.      This  has  contributed  to  a  significant  increase  in  Ireland’s  overall  marginal  rate  of  tax  to  such  an  extent  that  it  is  very  close  to  reaching  the  tipping  point.  It  is  likely  that  any  further  increases  in  the  marginal  rates  of  taxation  will  lead  to  a  disincentive  to  work  and  will  negatively  impact  on  entrepreneurship  and  job  creation.    While  the  wisdom  of  how  other  sections  of  the  taxation  system  were  designed  during  the  boom  is  open  to  debate,  nobody  could  credibly  accuse  the  government  of  failing  to  meet  the  equitability  test  in  personal  taxation.    However,  this  has  been  pursued  to  such  an  extent  that  the  tax  base  has  narrowed  significantly  and  the  personal  taxation  burden  is  now  disproportionately  loaded  onto  those  on  higher  incomes.  For  example,  a  person  earning  €100,000  a  year  pays  46  times  more  tax  than  someone  on  just  above  the  minimum  wage  despite  earning  just  over  5  times  that  workers  salary.    Ógra  Fianna  Fáil  does  not  believe  in  high  rates  of  personal  taxation.  We  believe  that  we  share  this  view  with  the  vast  majority  of  Irish  people.  Fundamentally,  most  citizens  believe  that  they  can  do  a  far  better  job  of  spending  their  own  money  than  the  government  can.    In  2010,  it  is  estimated  that  the  top  6  per  cent  of  earners  will  contribute  approximately  48  per  cent  of  all  income  tax  takings.  To  raise  an  additional  €1bn  in  tax  from  people  earning  in  excess  of  €150,000,  the  marginal  rate  of  tax  would  have  to  be  increased  to  67  per  cent.  This  is  simply  not  possible  or  desirable.    By  contrast,  over  one-­‐third  of  income  earners  will  pay  no  income  tax  at  all  in  2010.  While  it  is  important  that  low-­‐income  earners  and  their  families  continue  to  be  supported,  it  is  no  longer  economically  feasible  or  socially  desirable  for  so  

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many  workers  to  pay  no  income  tax.  It  is  now  clear  that  in  order  to  fight  our  way  out  of  our  current  difficulties  we  need  everyone  to  make  a  make  a  contribution  to  the  cost  of  running  the  state.      In  light  of  this,  Ógra  believes  in  the  introduction  of  a  new  universal  social  contribution  (USC).  The  USC  would  significantly  simplify  what  is  currently  a  very  complex  PRSI  system  and  would  merge  PRSI,  the  health  levy  and  income  levy  into  one  overall  contribution.  This  could  then  be  used  to  widen  the  tax  base  and  bring  everyone  into  the  tax  net.    The  full  introduction  of  the  Universal  Social  Charge  from  2011  would  be  a  considerable  achievement  given  the  size  and  complexity  of  the  task.  However,  it  is  possible  that  the  reform  could  be  phased  in  with  initial  changes  announced  in  Budget  2011.      Opportunities  for  Ireland  in  Customs  and  Trade  Related  Taxes  Ógra  Fianna  Fáil  believes  that  there  are  major  opportunities  for  Ireland  to  become  the  European  hub  for  the  centralised  clearance  of  customs  formalities.    These  opportunities  arise  as  a  result  of  changes  to  the  EU  Community  Customs  Code,  which  allow  companies  to  benefit  from  simplifications  in  customs  rules  if  they  meet  certain  criteria,  resulting  in  the  awarding  of  Authorised  Economic  Operator  (AEO)  status.    In  practical  terms,  these  simplifications  allow  companies  to  complete  all  their  customs  obligations  in  one  Member  State  and  then  import  directly  into  any  other  Member  State.  This  is  a  significant  change  from  the  status  quo,  where  companies  must  complete  separate  customs  procedures  in  each  Member  State,  each  with  differing  levels  of  bureaucracy  and  efficiency.    In  2007,  183  million  customs  declarations  were  completed  in  the  EU  -­‐  5.5  every  second.  With  so  many  declarations  taking  place  across  so  many  different  jurisdictions,  each  with  their  own  individual  rules,  errors  and  omissions  are  frequent,  resulting  in  higher  costs  for  businesses.      The  economic  advantages  for  Ireland  positioning  itself  as  Europe’s  customs  hub  are  two-­‐fold.  Firstly,  it  helps  our  competitiveness  by  reducing  the  costs  of  customs  compliance  for  multi-­‐national  companies  by  completing  all  their  customs  obligations  in  Ireland  rather  than  under  27  separate  processes.  Secondly,  having  companies  complete  their  customs  obligations  through  the  Irish  authorities  can  have  significant  advantages  for  the  exchequer.    Ógra  estimates  that  a  minimum  of  500  high  value  jobs  could  be  directly  created  and  an  additional  250  jobs  secured  in  ancillary  service  provision,  such  as  export  licensing  and  VAT  services.  The  State  would  also  benefit  from  an  additional  €25  million  in  customs  taxes  and  duties.  The  total  benefit  to  the  exchequer,  between  customs  duties  and  employment  taxes,  could  be  €38  million.    The  opportunities  in  this  area  are  also  being  explored  by  other  Member  States,  particularly  the  Netherlands,  and  so  it  is  imperative  that  Ireland  move  quickly  to  

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put  the  administrative  framework  in  place  to  exploit  these  advantages.      Residential  property  tax  Ógra  believes  in,  and  endorses,  residential  property  taxes,  as  a  general  principle.    To  aid  the  introduction  of  this  scheme,  Ógra  believes  that  local  government  should  be  empowered  to  levy  property  taxes  as  they  deem  appropriate.  This  would  not  only  give  local  authorities  greater  autonomy,  but  would  also  allow  the  direct  transfers  from  the  Department  of  the  Environment,  Heritage  and  Local  Government  to  be  reduced.      Residential  water  charges  Ógra  welcomes  the  endorsement  of  residential  water  charges  by  the  two  main  opposition  parties.    Ógra  believes  that  the  government  should  move  forward  to  immediately  install  residential  water  meters  and  begin  charging  as  soon  as  possible.      

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 Expenditure    Ógra  Fianna  Fáil  believes  that  reductions  in  spending  should  be  the  primary  means  used  to  close  the  gap  in  the  public  finances.  The  sad  reality  is  that  politicians  of  all  parties  have,  for  many  years,  peddled  the  myth  that  spending  can  keep  on  increasing  without  corresponding  measures  to  increase  revenue.  Our  party  must  take  its  fair  share  of  the  blame  for  that  myth.    However,  we  readily  acknowledge  that  in  order  to  keep  taxes  down,  expenditure  must  be  kept  to  a  moderate  and  affordable  level.      McCarthy  Report  In  seeking  to  identify  areas  where  expenditure  can  be  feasibly  reduced,  we  believe  that  the  government  should  again  examine  the  report  of  the  Special  Group  on  Public  Service  Numbers  and  Expenditure  Programmes  (‘the  McCarthy  group’).  Ógra  is  dismayed  that  so  little  progress  has  been  made  in  implementing  the  recommendations  of  the  report.  Indeed,  various  members  of  both  the  government  and  the  parliamentary  party  appear  to  have  gone  out  of  their  way  to  criticise  and  dismiss  various  elements  of  the  report.    The  McCarthy  report  presents  a  menu  of  options  available  to  government  in  the  quest  to  reduce  spending.  Clearly,  the  menu  is  not  exhaustive  and  it  is  possible  to  identify  alternative  areas  to  cut.  However,  having  commissioned  the  report  and  attached  such  a  high  level  of  importance  to  it,  Ógra  believes  that  the  government  should,  at  the  very  least,  explain  why  options  presented  in  the  report  have  not  been  selected  for  implementation.      Pension  Pause  for  Public  Servants  Public  servants  should  be  given  the  option  of  undertaking  a  ‘pension  pause’  as  an  alternative  to  paying  the  pension  levy.    Under  this  scenario,  the  worker  would  no  longer  pay  the  levy  and  the  State  would  not  put  in  any  pension  contributions  for  that  worker  for  however  long  they  opted  to  partake  in  the  ‘pause’.  Service  years  would  be  reduced  as  a  result,  which  would  be  reflected  in  the  level  of  pension  the  worker  eventually  retires  on.    This  would  be  beneficial  to  workers  who  have  found  themselves  in  financial  difficulties  due  to  the  effective  cut  in  pay  that  the  pension  levy  represents.  Workers  partaking  in  the  pause  would  trade  an  effective  7.5%  gross  ‘increase’  in  pay  for  a  reduced  return  in  their  final  pension.    The  pause  is  also  attractive  for  the  State  as  it  reduces  both  the  immediate  cost  of  pension  contributions  and  future  pension  spending.            

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Welfare  spending  Social  Welfare  accounts  for  over  one  third  of  current  government  spending.  Social  Welfare  rates  have  increased  by  over  60%  in  real  terms  in  the  last  decade.      Given  both  the  situation  in  the  public  finances  and  the  clear  evidence  that  overall  labour  costs  in  the  economy  have  gone  down,  there  is  a  clear  case  for  social  welfare  rates  to  be  reduced.  This  should  also  be  seen  in  the  context  of  decreases  in  the  cost  of  living.    In  particular,  consideration  needs  to  be  given  to  the  rate  of  job  seekers  payments  so  that  it  reflects  the  fact  the  greater  proportion  of  income  earners  will  be  brought  into  the  tax  net  so  as  to  ensure  disincentives  to  work  do  not  arise.    Given  the  very  high  cost  of  child  benefit,  and  the  difficulties  in  means  testing  or  taxing  the  benefit,  Ógra  recommends  that  the  rate  should  be  standardised  so  that  the  rate  paid  for  each  child  is  the  same.  

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Reform  of  the  Public  Service    In  proposing  public  service  reforms,  Ógra  Fianna  Fáil  is  guided  by  the  principles  set  out  by  the  Delivering  Better  Government  Report,  published  10  years  ago,  which  was  based  on  the  need  for  civil  servants  to  do  a  number  of  tasks  better,  namely:  

• To  support  the  government  in  achieving  its  objectives  in  relation  to  national  development  

• To  make  more  effective  use  of  resources  • To  provide  a  high  quality  service  to  all  customers  

 Ógra  Fianna  Fáil  wishes  to  concentrate  on  the  last  of  those  objectives  in  this  submission.    A  customer  centered  approach  Ógra  Fianna  Fáil  feels  that  the  key  element  in  delivering  public  sector  reform  is  to  generate  a  culture  where  the  taxpayer  is  viewed  as  a  customer.  The  mission  of  the  Civil  Service  is  “the  achievement  of  an  excellent  service  for  government  and  the  other  institutions  of  State  as  well  as  for  the  public  as  citizens  and  users  of  public  services,  based  on  principles  of  integrity,  impartiality,  effectiveness,  equity  and  accountability”  (  The  Civil  Service  Code  of  Standards  and  Behaviour  ).    Public  service  is  a  noble  calling  and  Ógra  wishes  to  acknowledge  the  civic  minded  commitment  of  many  public  servants.  However,  it  is  impossible  to  ignore  the  deep  sense  of  unease  among  a  large  number  of  the  general  public  with  the  recent  disputes  in  the  public  service  and,  in  particular,  the  manner  in  which  such  disputes  have  the  capacity  to  cause  disruption  to  important  public  services.    The  public  service  needs  to  become  more  flexible  and  adaptive  to  changing  needs.  A  recent  example  of  inexplicable  inflexibility  arose  when  significant  delays  arose  in  the  transfer  of  staff  from  the  Department  of  Agriculture  to  the  Department  of  Social  Protection  in  order  to  deal  with  the  increase  in  applications  for  jobseekers  benefits.  Such  delays  result  in  significant  difficulties  for  the  customers  concerned,  ill-­‐will  building  between  management  and  staff  representatives  and  contribute  to  a  negative  image  of  the  public  service  in  the  public  debate.    It  should  be  noted  that  the  vast  majority  of  public  servants  simply  wish  to  be  treated  fairly  and  work  to  the  best  of  their  ability  –  they  represent  the  silent  majority  of  public  servants  for  whom  disputes  run  against  the  grain.      Structure  and  staff  allocation  in  the  Department  of  Social  Protection  This  should  become  primarily  a  policy-­‐focused  department  with  a  small  number  of  staff  to  perform  core  administrative  functions.    There  is  significant  scope  for  application  and  payment  processing  to  be  put  out  to  tender,  with  incentives  for  the  successful  bidder  to  reduce  fraud  and  penalties  for  delayed  payments  or  processing.  Consideration  could  also  be  given  to  other  areas  of  the  public  service  with  significant  processing  or  administrative  functions  to  be  put  out  to  private  tender,  

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for  example  grant  processing  in  the  Department  of  Agriculture  and  the  functions  of  the  Passport  Office.      Linking  the  State  training  agency  and  the  Department  of  Social  Protection  Ógra  Fianna  Fáil  feels  that  there  is  an  urgent  need  to  link  the  functions  of  the  State  training  agency  and  the  Department  of  Social  Protection.  There  is  significant  scope  to  merge  local  offices  of  the  training  agency  with  local  social  welfare  offices  so  that  the  link  from  welfare  back  to  work  is  more  closely  integrated.  This  also  has  the  potential  for  cost  savings,  however  it  should  be  done  regardless,  on  the  grounds  that  it  makes  good  policy  sense.      Local  Councils  Internationally  there  is  a  trend  towards  a  greater  provision  of  shared  services  involving  two  or  more  local  authorities.  The  logic  behind  this  is  to  take  advantage  of  efficiencies  and  economies  of  scale  as  well  as  making  better  use  of  scarce  or  expensive  expertise.    There  are  many  examples  in  the  United  States,  France,  Britain  and  New  Zealand  where  this  has  been  carried  out  very  successfully.    There  is  particular  scope  for  greater  collaboration,  between  some  of  the  back-­‐office  functions  among  local  authorities,  these  include:  •  Payroll  •  Financial  services,  such  as  accounts  payable  •  Procurement  •  HR  functions  and  personnel  administration  •  Facilities  and  asset  management  •  Records  management  •  Legal  services  • Grants  and  payments  processing    

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 Job  creation    The  debate  on  the  issue  of  job  creation  in  this  country  has  tended  to  be  disingenuous.  The  idea  that  has  been  propagated  by  many  is  that  the  State  can  create  significant  numbers  of  jobs  without  an  expensive  stimulus  plan.  This  unfortunately  is  untrue.  Given  the  fiscal  position  of  the  country,  it  is  not  the  role  of  government  to  provide  mass  employment  but  rather  to  encourage  business,  support  people  through  retraining  and  education  programmes  and  allows  them  to  gain  experience  where  possible.    A  recent  survey  carried  out  by  the  Association  of  Higher  Education  Careers  Services  (AHECS),  indicated  that  45pc  of  2009  graduates  went  into  employment,  with  another  44pc  going  on  to  further  study  and  6pc  seeking  employment.  The  AHECS  survey  also  found  that  in  a  recessionary  environment  some  graduates  are  opting  to  undertake  unpaid  internships.  For  new  graduates,  these  internships  can  be  an  opportunity  to  develop  employability  skills  and  gain  a  foothold  into  the  world  of  work.    Ógra  Fianna  Fáil  believes  there  are  a  number  of  opportunities  for  unemployed  young  people  

• Third  Level  loans  to  allow  them  to  fund  further  education  • Reform  of  employment  and  training  supports  • Public  Sector  Work  Experience  Program    • Work  Experience  and  Placement  • Society,  Community  and  Voluntary  Experience  

 Third  Level  loans  If  recent  graduates  cannot  find  employment,  it  is  essential  that  they  return  to  or  continue  with  further  education.    The  Department  of  Education  should  establish  a  graduate  and  part-­‐time  student  loan  scheme,  which  would  allow  students  to  borrow  at  a  low  rate  of  interest.  This  could  possibly  be  financed  using  the  National  Pension  Reserve  Fund.  Pressure  should  also  be  brought  to  bear  on  the  banks  to  ensure  that  they  are  catering  for  this  market.        Reform  of  employment  and  training  supports  In  the  past  we  spent  over  €1  billion  on  skills  training  and  development  through  FÁS.  Despite  this  large  expenditure,  major  concerns  have  been  raised  as  to  the  suitability  of  some  of  the  training  courses  on  offer.    Ógra  Fianna  Fail  recommends  that  there  should  be  one  single  State  training  agency,  replacing  the  current  FÁS  and  the  VECs.    As  we  have  stated  earlier,  this  agency  should  have  a  strong  link  to  the  welfare  system.          

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Public  Sector  Work  Experience  Programme  It  is  quite  clear  that  graduates  need  to  gain  experience.  Ógra  Fianna  Fáil  is  proposing  a  new  public  sector  work  experience  programme  to  support  college  graduates  and  unemployed  young  people.    This  programme  aims  to  be  more  than  just  an  internship  in  the  public  service,  and  is  aimed  at  the  personal  and  professional  development  of  Irish  graduates  who  want  to  gain  experience  in  the  public  sector.    Participants  can  be  placed  across  the  civil  and  public  service  to  gain  firsthand  experience  at  the  work  of  government  departments  or  public  service  bodies.    This  intensive  programme  would  aim  to  equip  the  participants  with  team  working  and  leadership  skills,  as  well  as  work  experience  in  their  chosen  area.  The  participants  will  be  teamed  up  with  senior  staff  within  each  department  or  body.  They  will  work  independently  and  undertake  job  sharing.    Participants  would  also  work  in  teams  with  other  participants  on  a  group  project,  which  would  form  an  integral  part  of  the  Scheme.      Work  Experience  and  Placement  Ógra  Fianna  Fáil  has  made  two  previous  submissions  to  the  Department  of  Enterprise,  Trade  and  Innovation  regarding  work  placement  schemes  in  the  past.        We  believe  that  there  is  still  significant  scope  to  increase  and  expand  the  current  scheme  and  make  it  more  widely  accessible.    Work  placement  and  internships  are  the  cheapest  and  most  effective  way  of  providing  real  experience  to  graduates  who  would  otherwise  be  idle  while  seeking  work.      Society,  Community  and  Voluntary  Experience  Ógra  Fianna  Fáil  strongly  believes  that  the  skills  and  talents  of  many  unemployed  and  under-­‐employed  young  people  could  and  should  be  used  for  the  betterment  of  the  community  through  community  groups  and  schemes.    We  strongly  endorse  the  proposals  of  the  Minister  for  Social  Protection  in  this  regard  and  hope  to  see  them  implemented  without  delay.  We  also  believe  that  where  unemployed  people  refuse  to  take  opportunities  to  work  with  schemes  or  projects  where  their  skills  could  be  usefully  employed  that  their  entitlement  to  benefits  should  be  examined  and  reviewed.      Supporting  Private  Enterprise  It  is  the  view  of  Ógra  Fianna  Fáil  that  cutting  business  costs  and  the  associated  costs  of  doing  business  in  Ireland  is  the  best  way  to  support  private  enterprise.    The  best  solution  to  unemployment  is  sustained  economic  growth  and  more  competitive  industries.  The  only  basis  for  long-­‐term  job  creation  can  be  a  strong  

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economy.  The  creation  of  a  climate  in  which  economic  and  employment  growth  will  occur  must  remain  the  government’s  highest  priority.    Steps  taken  by  the  Government  over  the  past  year  to  promote  investment,  to  enhance  Ireland’s  competitiveness,  and  to  improve  the  fiscal  position  of  the  public  sector  are  welcome  steps  forward.  Success  in  achieving  these  objectives  is  the  best  guarantee  of  future  jobs  in  Ireland.    Ógra  Fianna  Fáil  supports  the  National  Assets  Management  Agency,  the  Bank  Guarantee  Scheme  and  bank  re-­‐capitalisation.  Getting  our  banks  lending  to  private  enterprise  must  remain  a  priority  for  the  Government.    The  government  has  initiated  the  Employment  Subsidy  Scheme  to  support  the  retention  of  full  time  and  part  time  jobs  in  viable  enterprises  that  might  otherwise  be  made  redundant  as  a  result  of  the  impact  of  the  global  and  financial  economic  crises.    Employment  subsidies  of  up  to  €200  per  week  per  full  time  employee  and  €120  per  week  per  part  time  employee  are  available  for  the  first  26  weeks  and  then  on  a  reducing  scale.  Ógra  Fianna  Fáil  recommend  that  this  scheme  be  broadened  to  include  other  specific  sectors  of  the  Irish  economy,  including  those  engaged  in  supply  to  exporting  firms  and  those  with  a  highly  trained  workforce.    Ógra  Fianna  Fáil  welcomes  the  proposals  made  by  the  Commission  on  Taxation  regarding  the  R&D  tax  credit.  We  believe  businesses  should  be  allowed  to  offset  the  credit  against  their  corporation  tax  or  employers’  PRSI.  The  lack  of  flexibility  regarding  the  tax  credit  should  be  addressed.      Job  Sharing  Scheme  Ógra  Fianna  Fáil  proposes  job-­‐sharing  scheme,  similar  to  WorkShare,  which  exists  across  the  US  and  in  Germany.  Under  this  scheme,  an  employer  could  opt  to  hire  existing  workers  on  a  reduced  hours  basis  to  meet  the  needs  of  the  business  rather  than  introduce  redundancies.  This  reduction  in  hours  would  take  the  form  of  shorter  working  weeks  or  longer  holidays.  This  would  allow  the  employer  to  retain  an  experienced  skills  set  within  the  business  and  avoid  training  costs.      Employees  who  have  hours  and  wages  reduced  would  receive  a  top-­‐up  using  their  social  insurance  (PRSI)  contributions.  Employers  who  reduce  workers’  hours  rather  than  laying  them  off  could  also  receive  a  financial  incentive.  Such  a  job-­‐sharing  scheme  could  be  adapted  to  allow  for  business  employing  new  staff  as  businesses  expand.    We  believe  that  the  social  costs  of  making  one  in  five  workers  in  a  firm  unemployed  is  greater  than  having  all  workers  being  underemployed  by  20%.  The  total  gross  wage  being  received  by  the  employee  would  not  exceed  €450  under  this  scheme,  and  taxes  would  be  paid  on  the  total  amount  of  pay  (wage  &  contributions  top  up).  The  businesses  would  be  required  to  prove  they  are  facing  a  difficult  environment  and  capable  of  surviving  the  downturn  in  business.    

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Benefits  would  last  for  12  months,  and  be  reviewed  every  3  months.  Employees  would  not  have  to  file  a  claim  or  report  to  an  unemployment  office  each  week  to  show  they’ve  been  looking  for  work,  since  they  are  still  employed.