Corporation tax hike 'number one concern' for international investors

National Treasury Management Agency chief executive Conor O'Kelly said: 'What matters is not what I think, but what investors think. They are watching developments... It is their number one concern at this moment in time.'

Ireland’s prospective move to a 15% corporation tax rate is the issue of “number one concern” to international investors regarding the Irish economy, according to the head of the National Treasury Management Agency (NTMA).

Asked about the potential move to a new rate – which would leave behind the rate of 12.5% which has been zealously guarded by successive governments – Conor O’Kelly, the chief executive of the agency, told the Public Accounts Committee he personally doesn’t “really have an opinion” on the matter.

“What matters is not what I think, but what investors think. They are watching developments,” he said.

“This has been on the cards for the last 12 months. It is their number one concern at this moment in time,” he added.

He stressed the corporation tax change, “a very complex business”, would likely have an effect on the country’s corporation tax take of €2bn a year, but said nevertheless “Ireland is a great place to do business”.

“Multinationals are here not just for tax reasons. I wouldn’t want to overstate the impact that this might have,” he said.

12,000 active claims against State bodies

The meeting heard the State Claims Agency, the NTMA’s risk management arm, is currently managing 12,000 active claims against State bodies, with a potential outstanding liability of more than €4bn.

Ciaran Breen, the head of the agency, told the hearing the clinical indemnity scheme, set up in 2002 to deal with issues of medical litigation involving State hospitals, represents a “particular challenge in terms of cost”. He gave the example of such cases involving children with cerebral palsy as having “a cost involved which is very high”.

Mr Breen agreed the removal of adversarial litigation would be “one of the great positive things” as it would mean that the “plaintiff and the hospital can meet each other in a far less pressurised atmosphere”.

“That would be a great innovation,” he said.

He added that in his experience in such problematic clinical cases the SCA “doesn’t get resistance from hospitals”.

“Generally with a damaged infant they will want us to deal with the case as quickly as we possibly can,” he said.

Davy Stockbrokers scandal

In terms of the scandal involving Davy Stockbrokers, which saw 16 executives of the famous brokerage held liable for a scandal involving the sale of Anglo Irish Bank bonds and for which the NTMA cut ties with Davy as its primary dealer, Mr O’Kelly said he didn’t believe the issue had caused the NTMA any reputational damage.

He said the first the agency had known of the scandal, which saw a €4.13m fine dealt to Davy with the company subsequently put up for sale, was when the Central Bank issued its report on the matter.

The meeting heard Ireland’s rainy day fund of €1.5bn has been exhausted by the Covid-19 crisis, and that Ireland has borrowed some €36bn since the start of the pandemic at a rate of 0.16%, with Mr O’Kelly praising the European Central Bank’s record levels of lending at low rates to EU states since the beginning of the pandemic.

He added Ireland would continue to borrow heavily, at a rate of €4bn per year, from the international markets in order to fund the Government’s newly minted housing strategy Housing For All.