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
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
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
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
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
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