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News : Innovation Last Updated: Dec 10, 2012 - 7:56 AM


Innovation Ireland & Inconvenient Facts: Sherlock and spin on Irish science
By Michael Hennigan, Finfacts founder and editor
Dec 7, 2012 - 7:58 AM

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Innovation Ireland & Inconvenient Facts: In this week dominated by Budget 2013 gloom, the Department of Jobs, Enterprise and Innovation has an ostensibly positive story on its website, titled: 'Ireland ranks in top 10 EU countries for R&D investment - EU Commission.' It is what is generally called spin but more accurately, it should be termed disinformation. Meanwhile, Seán Sherlock, minister of research and innovation, a junior minister in the department, issued two press statements Thursday on Budget issues related to science policy. One is titled: 'Sherlock welcomes increase in R&D tax credit threshold': the other: 'Minister Sherlock warmly welcomes Government's on-going strong commitment to research and innovation as a driver of economic recovery.' In a department struggling with the challenge of creating conditions for sustainable employment, if he really believes what he signed off on are the facts, he should resign.

On the R&D tax credit, he said: "The measure announced by Minister Noonan sees a doubling of the amount of expenditure that qualifies for the R&D tax credit for SMEs from €100,000 to €200,000." This is wrong as it implies that from 2013, the credit will only apply to a limit of €200,000 of spending.

What was doubled is the base 2003 threshold eligible level to avail of the 25% credit on actual expenditure from 2004. It's a €25,000 gift to a company such as  Microsoft. The first €200,000 of qualifying R&D expenditure of all companies will benefit from the full 25% tax credit on a volume basis, irrespective of whether or not there is an increase on the base 2003 year R&D expenditure. However, it is not relevant for companies that commenced spending on R&D after 2004. There is no upper limit on expenditure and the credit applies to incremental annual expenditure.

What is interesting is that when Finfacts sought information on take-up and application refusals, it took about 2 months for it to be supplied. It was apparently not an issue of importance to ministers. If it was, it would have been readily available

There are no refusals as the credit is claimed via self-assessment on the annual Corporation Tax return. An issue about the claim would only arise in a rare situation where there was a tax audit.

So there is no worthwhile feedback on the flagship tax incentive of public science policy.

In the second statement, Sherlock is quoted: "More and more, IDA Ireland’s foreign direct investment wins-capacity is being underpinned by a strong research capability in various sectors where Ireland is competing, and winning, against some of the best global competitors. There is a demonstrable link between research funding and job creation.”

It adds: "The Minister highlighted the near six-fold increase in IDA’s foreign direct investment wins that are RD&I related. Such wins were valued at €120m in 2004 and had risen to €700m in 2011."

Last September, the Department of Jobs, Enterprise and Innovation confirmed to Finfacts that IDA Ireland, the inward investment agency, has no minimum level for the R&D 'component' of new projects.

So an actual R&D centre is ranked along with a finance firm that is dubbed a centre of excellence because it produces some financial models to support its product sales.

According to official data, only a third of foreign companies are engaged in Irish R&D activities.

Sherlock's claims do not have credibility and what you will not hear from him or is he likely to be asked by journalists covering this area of policy, why patent applications at the Irish Patents Office were at a 30-year low in 2011. Finfacts was the first media outlet to report this information.

Spin has a toxic impact on public policy which we discussed recently in relation to the public finances.

Irish Budget 2013: Debt and the cost of addiction to spin

The story, 'Ireland ranks in top 10 EU countries for R&D investment - EU Commission', came from an external website and relates to the European Commission's report: 'The 2012 EU Industrial R&D Investment Scoreboard' - - which contains economic and financial data of the world's top 1,500 companies ranked by their investments in research and development (R&D). The sample consists of 405 companies based in the EU and 1095 companies based elsewhere. The Scoreboard data are drawn from the latest available company accounts, i.e. fiscal year 2011 for most companies.

The Department's hosted story says: "Following the Commission's analysis, Ireland has managed to make it into the top 10 EU countries in terms of industrial R&D investment, as part of a list of the top 1,000 EU companies by R&D investment, with 14 of the top-spending companies for R&D based in the country.. .Three companies based in Ireland were responsible for 68pc of the country's R&D investment. These companies were Seagate Technology, at 15pc; Covidien at 23.9pc; and Accenture at 31.2pc."

In 2010, Irish business spending on R&D was €2.0bn. These 14 companies spent €2.7bn.

The facts are that 11 of the 14 are foreign companies with headquarters in Ireland. Most of their operations are not in Ireland and 6 of them are Irish companies with significant operations in Ireland.

The foreign companies account for 88.5% of the spending attributed to Ireland.

Seagate Technology spent €1bn on R&D in 2010. What purpose is served by the attempt to give the impression that it is an Irish company? It may not even have spent one cent on R&D in Ireland. The spoofery is a discredit to both public office and the public interest.

Seagate did once operate a hard disk plant in Clonmel that was later occupied by Guidant, a medical devices firm and is currently owned by Boston Scientific.

If you wish to check the facts rather than be beguiled by propaganda, check here. A Finfacts PDF paper is linked to from the lower end of the page:

Irish Science Policy: 2020 replaces 2013 as target to be 'best country in...world for scientific research'

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

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