Micheál Martin TD, Minister for Enterprise, Trade & Employment

Minister for Enterprise, Trade and Employment, Micheál Martin, today announced the launch a €500 million support package to promote private sector spending on research and development (R&D).

The new R&D scheme is made up of  grants, tax breaks and other incentives for Irish and foreign-owned companies. It will be administered jointly by Enterprise Ireland and IDA Ireland and is designed to streamline the process whereby firms can access Government supports.

Currently support for R&D is via a tax credit based on the increase in investment over the amount a company spent in 2003. In last month's Budget, 2003 was fixed as the base year for the 20% credit for a further four years until 2013.

However, the move met with criticism from lobby groups,  who argued that the system only rewarded an increase in spending and not the overall investment. The new funding regime will address that issue.

It will also seek to encourage collaboration between private companies and third-level institutes. Research published earlier this month by two UCC economists said third-level research "has a limited effect" on business innovation and questioned why it was Government policy.

Martin said the investment will ensure Irish companies remain at the cutting edge of research and development into the future.

He added that in line with government policy to cut red tape for business, the new grant scheme will be streamlined to make the application process as straightforward as possible.

“Ireland has developed a reputation as being a top location for groundbreaking research. Collaborations between our third level institutions and companies are at the core of this. Projects already underway are researching how to combat disease, improve communication technology and develop products of the future.”

“These collaborations ensure Ireland remains a location where companies can rely on expertise to develop new products, many of which will ensure we remain a base for high tech quality jobs in the years ahead. I am delighted our scheme encourages such co-operation,” said Martin.

Funding will be available to companies of all sizes and stages of development with a focus to encourage investment by firms who had not carried out R&D.

Ireland has committed to spending 3% of gross domestic product (GDP) by 2010, under the terms of the EU's Lisbon Agenda. In 2006, the Republic's gross spend on R&D as a proportion of GDP was 1.3%, while the EU average is 1.8%.

Irish GDP is unique in the EU given the dominance of foreign-owned firms who are responsible for more than 90% of Ireland's exports. This is a big caveat when comparing Irish R&D data with that of other EU countries.

The €500 million is part of the €8.2 billion spending on R&D to which the Government committed under the Strategy for Science Technology and Innovation, which has a goal that: “Ireland by 2013 will be internationally renowned for the excellence of its research, and will be to the forefront in generating and using new knowledge for economic and social progress, within an innovation driven culture.”