Tanaiste taking control in taxing times
Tanaiste Frances Fitzgerald is in the frontline as Ireland defends its tax policies, writes Group Business Editor Dearbhail McDonald
When she meets with Margrethe Vestager in Brussels this week, Tanaiste and Minister for Business, Enterprise and Innovation Frances Fitzgerald will need all the charm and steely resolve at her disposal.
Vestager, the European Union's Commissioner for Competition, is widely portrayed as Ireland's bete noire in Europe, not without some justification - and not just by the aggrieved Irish.
Vestager first struck in August 2016 with her excoriating €13bn Apple tax ruling. And last month she raised the stakes once again when the European Commission threatened to take Ireland to the European Court of Justice (ECJ) for its failure to recover the €13bn of tax due from the American tech giant.
"There are a couple of sharp ends to that debate," says Fitzgerald, the fourth woman in the history of the State to serve as Tanaiste and the third to occupy 23 Kildare Street, home of the Department of Business, Enterprise and Innovation.
"It's a sharper debate than it has been for some time. But we have been to the forefront in the OECD debate and I don't think we need to make apologies to people in Ireland in terms of tax redistribution."
In the wake of the latest Apple rebuff, Taoiseach Leo Varadkar cried foul and railed that the Commission's decision was "wholly unnecessary and unwarranted at this time".
The Department of Finance, meanwhile, desperately scrambling for fund managers to set up an Escrow account - and for someone to manage the money until the European Court of Justice decides who it belongs to - said the threat was "disappointing" and "extremely regrettable".
Only time will tell if Vestager, the outspoken Danish politician, is the Eliot Ness of tax avoidance or the Helen of Troy of tax harmonisation that the larger players in the EU so desperately crave.
For now, it is to Vestager that the Tanaiste must turn to for approval, under state aid rules, for an ambitious rescue and restructure scheme for Irish firms to deal with the potential fallout of Brexit.
If approved, the scheme - separate from the recent €300m Brexit loan scheme announced in Budget 2018 - would allow for grants or equity supports of up to €10m to SMEs in severe financial distress as a consequence of Brexit.
Fitzgerald, one of Irish politics' great survivors, is hoping Vestager will accede to some Brexit-related flexibility to navigate Britain's exit from the EU.
But if trade deteriorates significantly, she is willing to go to battle and defend Ireland's red lines on taxation amid a European and global row on protectionism and tax policy.
Fitzgerald, who says she will fight for increases in tax relief for entrepreneurs and foreign assignees in next year's Budget to improve Ireland's competitiveness and to attract key talent, says a sharper debate is required to recognise that Ireland needs to support risk-taking entrepreneurs who create jobs that help fund vital public services.
"We're up-front about taxation and our corporation tax rate and we're determined to maintain it," says a defiant Fitzgerald.
To simply focus on tax is to miss the depth of Ireland's reputation as a world-class inward-investment destination, she says, pointing out that this country is the European home to some 700 companies, representing 10pc of the Irish workforce.
Is the minister, who worked as a social worker and family therapist, chair of the National Women's Council and vice-president of the European Women's Lobby before entering politics, worried about the twin tax threats from US President Donald Trump and those agitating for tax-harmonisation debate?
She replies: "As trade is ever more internationalised, we are going to see more of these debates. But we have to hold firm to the position that it isn't accidental that we have these companies here. Our economic policy has depth and substance to it."
Despite the weight bearing down on the Irish economy in the event of a hard Brexit, Fitzgerald is remarkably upbeat, if realistic about the challenges that lie ahead. She has read voraciously into the brief and has, it seems, a boundless energy that would rival that of the younger, male members of Cabinet emulating the keep-fit fanaticism of Canadian Prime Minister Justin Trudeau.
Last week, Fitzgerald presided over three major job announcements, was the keynote speaker at two conferences and launched new measures to tackle white-collar crime in the wake of the collapse of several high-profile trials.
The Tanaiste has also undertaken a gruelling international travel schedule. She just returned from a four-day trade mission to Japan and Singapore, as well as accompanying President Michael D Higgins on his State visit to Australia, where she attended 170 business meetings in eight days.
If Fitzgerald is wearing the burden of not one but two senior offices well, it may reflect the bearable lightness of no longer carrying the burden - as Minister for Justice - of a succession of controversies involving An Garda Siochana.
From whistleblowers to breath tests, controversies involving the force have claimed the careers of two garda commissioners, one former minister and a host of senior officials.
Fitzgerald is generous towards former commissioner Noirin O'Sullivan, who has secured a new international policing post with the International Association of Chiefs of Police (IACP) just weeks after stepping down. In her role as director of strategic partnerships for Europe, O'Sullivan will be tasked with promoting best practice, a role some of her fiercest critics may find ironic.
"I wish her (O'Sullivan) and her family the best," says Fitzgerald, her tone cautious as O'Sullivan's tenure comes into sharp focus at the Charleton Tribunal. "I think the gardai are close to the people in Ireland, they were starved of resources."
Returning to the subject of business, the Tanaiste says that Brexit is the biggest challenge that Ireland Inc has faced in decades.
Irish firms must think through carefully their dependence on the UK market, irrespective of whether Brexit is a hard or soft one, she advises.
But she also says Brexit has forced Irish businesses to confront a much bigger reality, namely the need to diversify models and markets as we move to a digital economy, which will render many manufacturing enterprises obsolete in the future.
"Brexit is the lens through which we're viewing the discussion on innovation," says the married mother of three from Dublin, "but the broader lens is the new digital economy, it's part of the world we live in."
Brexit and the election of Donald Trump have accelerated a paradigm shift away from dependence on Ireland's traditional trading mainstays - the US and the UK - that had commenced long before last year's seismic political disruptions.
The US remains Ireland's key source market for foreign direct investment, at some 70pc, with 20pc from Europe and growth markets at 10pc.
But since the global financial crisis, the IDA and other State agencies have been looking East to China and other Asia-Pacific nations, including Japan, India, Australia and Japan.
The FDI diversification, largely centred in the areas of tech, financial services and life sciences, is slowly but surely paying off. And Bank of China's decision last June to open a corporate banking service in Dublin was widely hailed as a post-Brexit win to add to Ireland's reputation in aviation leasing, where 10 Chinese companies - including five of China's top six banks - have established leasing operations here.
Next June, Cathay Pacific will operate direct flights from Dublin to Hong Kong four times a week, with a potential game-changer - flights between Dublin and Beijing (via Edinburgh) - preparing to launch with Chinese carrier Hainan.
The scale of business opportunities in Asia-Pacific - the region accounts for 40pc of global GDP and is home to the world's largest and growing middle-class populations - will fall centre stage at this week's Global Asia Matters Business Summit.
"These aren't markets that you dip in and out of," says Fitzgerald, who met the chief executives of several major banks during her recent trade missions to Australia, Japan and Singapore and says she has had several "significant" meetings, with some deciding to have a presence in Ireland.
"These are markets where you build relationships over time," she says, adding that Brexit is forcing Ireland to build new strategic alliances in Europe.
Fitzgerald adds: "It's about getting to know people. But it also takes intense market research and support on the ground. Brexit also opens the door because of the uncertainty around the UK. Increasing our global potential is going to be essential."
The Global Asia Matters Business Summit, held in association with the Department of Business, Enterprise and Innovation, and supported by INM as its media partner, takes place this Wednesday at the Shelbourne Hotel in Dublin. Gold sponsors include IDA Ireland and A&L Goodbody. Book tickets at www.asiamatters.eu/summit2017/
Sunday Indo Business