DTTAS Report to the NCADF Steering Committee on Government Departments' responses to NCADF Report Recommended Actions
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DTTAS Report
to the NCADF Steering Committee
on
Government Departments’
responses to NCADF Report
Recommended ActionsTable of Contents Section 1: Overview of Government response to NCADF Report and Recommended Actions ............. 2 Section 2: Responses to NCADF Recommended Actions for Regulatory Framework for Aviation ........ 6 Section 3: Responses to NCADF Recommended Actions for Aircraft Leasing and Finance .................. 12 Section 4: Responses to NCADF Recommended Actions for Aircraft Maintenance, Repair and Overhaul (MRO) and related enterprises ............................................................................................. 16 Section 5: Responses to NCADF Recommended Actions for Aviation Training, Skills and Education .. 21
Section 1: Overview of Government response to NCADF Report and
Recommended Actions
The NCADF Report was brought to Government by the Minister for Transport, Tourism and Sport on
31 January 2017. The Government in noting the Report and its Recommended Actions designed to
remove barriers to the competitiveness of the Irish aviation sector agreed to endorse the
continuation of the collaborative approach of the Forum. There was general recognition of the
achievements of the aviation sector to date and of the merit of building on that success to create
further aviation-related employment in the context of the anticipated growth of aviation at the
global level.
DTTAS subsequently advised the Steering Committee, on 3 March 2017, of the need to follow up
with other government departments on the report’s recommendations for actions that require a
cross-governmental input if they are to be progressed. It was explained that in order to build a
deeper understanding of respective positions than was possible during the Cabinet process for
submitting the Report to Government, a good deal of engagement with those Departments was
required. While most Departments in considering the Recommended Actions prior to submission to
Cabinet expressed openness to engaging directly with the Forum, there was a general preference for
an initial dialogue with DTTAS. Accordingly, there followed a period of engagement between DTTAS
and other Government Departments, aimed at building an enhanced understanding of the Forum’s
positions, at teasing out the policy responses and at exploring possibilities for advancing the Forum’s
recommended actions where possible.
The process involved the identification of relevant policy areas across a number of Government
departments, meetings and communications with those policy areas, further research and
interrogation of policy responses and follow-up communications before the drafting of this report
and verification of the draft by the Government departments concerned. This process has taken
some five months to complete. The NCADF Conference held on 20 February was useful to the
process in that it raised the profile of the Forum within Government departments and highlighted
the concerted input and commitment made at the highest level and across the range of Irish aviation
stakeholders. There is a strong willingness on the part of Government departments to engage
directly with the industry in relation to specific areas.
The detailed response, based on the consultation to date with departmental officials, to each Forum
Recommended Action is detailed in Sections 2 - 5 below. DTTAS’ proposed next steps are also
detailed against each Recommended Action.
By way of context for the specific responses, it should be noted that a number of key issues emerged
during the process which present challenges for the realisation of the Forum’s ambitions. These are:
1. There is a need for more detailed, evidence-based evaluation to underpin some of the
Forum’s recommendations and to justify government supports for further development of
the sector. This view was expressed in relation to the recommended taxation actions in
particular, but also more generally in relation to claims for the job-creation potential across
the sector.
22. The skill needs of the aviation sector are not currently evidenced or analysed in any
systematic way that allows for a targeted response within the framework of relevant State
strategies.
3. The pilot training sector largely falls outside the scope of regulation by the State as regards
provision of recognised standards of quality assurance i.e. those standards required for
inclusion on the National Framework of Qualifications (NFQ). The risk for the sector is that
foregoing formal recognition leading to inclusion in the higher education sector will
undermine the Forum’s ambitions to promote Ireland as an international centre of aviation
training excellence.
However, there is scope to address these issues and this report proposes some measures for further
work either by the Forum itself or in collaboration with State entities. Among the proposals made,
DTTAS considers the following represent significant and real opportunities to tackle the general
deficiencies noted above:
1. An independent, detailed evaluation of the MRO sector is recommended by Department
of Business, Enterprise and Innovation (DBEI)1. Such a study should assess the current
value of the sector in Ireland as well as its potential to expand, in line with other sector-
specific studies previously carried out with DBEI assistance, and could form the basis for
the strategic policy recommended by the Forum. If agreed by the Forum, DTTAS could
commission the study to be overseen by a Steering Committee to include DBEI,
representatives of State airports and representatives of the MRO Working Group.
2. There is an opportunity to engage with the Expert Group on Future Skills Needs (EGFSN)
to conduct a specific study of the skills needs of the aviation sector, as recommended by
the Department of Education and Skills (DES). This body is best positioned to identify
skills gap and to advise on strategies and supports to address them. DTTAS has initiated
a request to the EGFSN to carry out a detailed skills needs-analysis of the aviation sector
including the MRO industry, which is to be considered by the group in quarter four 2017.
3. A number of supports are currently available to assist the industry and training providers
to help improve the quality of training provision and move towards formal validation on
the National Framework of Qualifications (NFQ). Proposed new legislation to introduce
the International Education Mark (IEM) presents a valuable opportunity for the sector
and there already exists an opportunity to engage with Quality and Qualifications Ireland
(QQI) to begin a process of developing a “quality assurance relationship” with a view to
future integration with the NFQ.
In addition, a number of concrete, positive initiatives and developments in response to a number of
the Forum’s specific recommendations process are noteworthy. In some cases, these are direct
responses to the recommendations; in others, DTTAS has positively influenced the direction of
initiatives already in development. These main developments are detailed in this Report and, in
summary, are:
The Department of Housing, Planning, Community and Local Government (DHPCLG) has
secured approval for Heads of a new Commercial Rates Bill to modernise the legislative
framework governing powers of local authorities in relation to commercial rates. DTTAS
1
Formerly Department of Jobs, Enterprise and Innovation
3participated in the inter-departmental consultation on the Bill, contributing to a useful
provision (reflecting the perspective of the Forum on the issue of commercial rates for
hangars) to allow local authorities introduce rates alleviation schemes to support local and
national policy objectives;
Following DTTAS discussions with the Irish Naturalisation and Immigration Service (INIS) of
the Department of Justice and Equality (DJE), it is considered a framework model might be
developed for streamlining student visa applications from non-EEA citizens intending to
undertake pilot training studies in Ireland, potentially mirroring the current Interim List of
Eligible Programmes (ILEP) structure used for intending Higher Education Authorities (HEA),
Professional and English Language Teaching (ELT) students, and based on fulfilment by
training providers of the ILEP criteria.
A cooperation arrangement between the DTTAS and the Department of Communications,
Climate Action and Environment (DCCAE) has been agreed with regard to the current and
future negotiations regarding the future of the EU-ETS2 and the global Carbon Offsetting and
Reduction Scheme for International Aviation (CORSIA scheme);
Improvements have been made to the application process for a Dependent/Partner/Spouse
Employment Permit by DBEI, aimed at making the process more convenient for the
applicant, and that Department has offered to engage directly with the Forum to address
outstanding concerns;
Plans to open an 800-pupil international school in September 2018, offering the
International Baccalaureate, have been confirmed with an invitation to aviation sector
employees/employers to express interest in individual or en-bloc enrollments;
SOLAS, the statutory body with responsibility for administering apprenticeships (and
traineeships) is in the process of conducting a review of all current apprenticeship
programmes, and this will include a review of the “aircraft mechanic” programme,
commencing with a consultation process with the industry;
A call for proposals for new apprenticeship schemes was announced on 4 May 2017. As
already advised to Forum members on 13 April, DTTAS discussions with DES on this topic
were positive about the opportunities for the aviation sector, including the pilot training
sector, to avail of this scheme; and
The DES has published an action plan to expand Apprenticeship and Traineeship in Ireland
2016-2020. The action plan indicates an intention to amend the policy in 2017 to enable
wider participation in traineeship over the lifespan of the plan.
A number of other proposals to progress other Recommended Actions are also detailed in the
report.
In relation to the range of recommended actions requiring taxation measures (Air Travel Tax, SARP3
scheme, pilot-training related VAT and tax treatment), the Department of Finance (DOF) did not
accept those recommendations for a number of reasons which are detailed further in the report and
which include constraints under EU and State Aid law. While that Department may have discretion
2
EU Emissions Trading Scheme
3
Special Assignee Relief Programme
4to adopt measures for Air Travel Tax and SARP, it was considered that the underlying evaluation to
the recommended actions was not sufficiently robust to merit consideration at this point. However,
the Department of Finance has indicated that a more detailed evaluation conducted according to its
Guidelines for Tax Expenditure Evaluation could be conducted and used to underpin any future pre-
budget submissions made for changes in these areas.
In conclusion, DTTAS considers the response of other Government departments has been positive,
there is a willingness to work with the Forum membership to progress implementation of many of
the recommended actions, and there is an opportunity to deliver significant improvements in some
areas if the Forum membership decides to proceed. That is particularly the case in relation to the
MRO and the Training and Skills sectors. However, there is more work to be done if the Forum’s
aspirations are to be translated into tangible progress, and much of this work will have to be driven
within the industry itself. It is essentially for the Forum itself to decide on whether an additional
commitment is merited.
Finally, this report does not address the Recommended Actions which fall within the remit of DTTAS.
Those actions continue to be progressed within the framework of the Regulatory Framework
Working Group, and DTTAS is committed to continue working collaboratively in the policy and
regulatory areas for which it has a deciding role.
5Detailed Government departments responses to NCADF Report
Recommended Actions (those requiring additional engagement by
Government Departments and Agencies Section 3 of NCADF Report to
Government)
Section 2: Responses to NCADF Recommended Actions for Regulatory
Framework for Aviation
2.1 Aviation Taxation (EU and National)
NCADF Action No. 1: Subject to the completion by the European Commission of its report on the
impact of aviation taxes, consider targeting a discussion on this topic in the appropriate European
Council formation. This will be subject to agreement by Department of Finance.
NCADF Action No. 2: Provide to national policy makers and those involved with European
institutions evidence-based materials outlining the impact of existing aviation taxation and
estimated benefits of removal, having regard to the Irish experience.
2.1.1 The Minister for Finance rejected the recommended actions in relation to the Air Travel Tax
(ATT). The ATT introduced in Ireland on 30 March 2009 is still considered by the Minister and the
Department of Finance (DoF) to have been a useful tool for raising much-needed revenue at the
peak of the recession. However, once the economy showed clear signs of recovery and such
measures were deemed no longer to be necessary, the ATT was removed on 31 March 2014 by way
of The Air Travel Tax Abolition Order (SI 130 of 2014). The DoF would want to retain the option of
reintroducing such a tax if required in the future. In discussions with DTTAS, it was clarified that it is
not on the DoF agenda to do so at present. DoF asserted that the presence or absence of an
aviation tax provision on the Statute Book was immaterial in this regard, as legislation to introduce
such a tax could be made very quickly in any event, most likely in the context of the annual
budgeting exercise and through the Finance Act.
DoF also suggested that such a tax might be conceivable in order to deal with the externalities
associated with air travel, such as emissions and noise pollution. This is the rationale for the ATT in
some jurisdictions, taking account of the fact that there is no excise duty on aviation fuel. The DoF
did not accept that the EU-ETS system constituted a tax on externalities, citing the current failures in
the carbon market. DoF pointed out that commercial airlines enjoy a complete exemption from
excise on aviation fuel as well as VAT exemptions on tickets, and expressed a general view that the
industry may be considered to be undertaxed, notwithstanding the fact emphasised by DTTAS that
airport and air navigation charges paid by airlines fully covered the industry’s infrastructure and
regulatory costs while also delivering significant direct and indirect benefits to the economy.
DoF also rejects the opinion that the existing incidence of aviation taxation has a detrimental impact
on the aviation industry. In DTTAS discussions with DoF, available data correlating the increase in
6air passenger numbers with the abolition of the ATT in 2014 was considered by DoF not to imply a
clear causal effect. DoF considers the analysis is incomplete because it fails to take other factors into
account, notably the effects of economic recovery.
In relation to the recommendation to promote the removal of aviation taxation from the EU, the
DoF emphasised that the power to levy taxes is central to the sovereignty of EU Member States,
which have assigned only limited competences to the EU in this area. The development of EU tax
provisions is geared towards the smooth running of the single market, with the harmonisation of
indirect taxation such as VAT and excises to the fore in this regard. Accordingly, Member States are
free to exercise their powers of taxation in the area of Air Travel, subject to compliance with EU law,
as it is not harmonised. The sovereign right of each Member State, regarding taxation, is the key
principle of the tax code.
DTTAS has consistently made it known the DoF position in relation to taxation, namely that it is a
sovereign right of each EU Member State to apply taxation measures such as travel-related taxation.
However, it is open to the Forum membership to continue to provide evidence-based proposals in
respect of such taxes and to contribute to any discussion of the issues at national and/or EU level
having regard to the Irish experience.
2.1.2 Proposed Next Steps
Should the industry wish to pursue the removal of the ATT principle entirely from the Statute Book,
the DoF confirmed that it is open to the industry to make a (pre-budget) submission which provides
more robust and conclusive evidence of the detrimental effect of the ATT on Irish aviation. (DoF
Guidelines for Tax Expenditure Evaluation could usefully be followed. Refer to section 3.1.2 for a link
to this document).
2.2 Social Issues and Competitiveness
NCADF Action No. 3: Canvass (NCADF) position in European Parliament, Council and Commission
to ensure that no impediments are introduced to the labour mobility and flexibility required to
support the full range of legally compliant business models in the aviation sector. Ensure case is
strongly empirically supported as required.
2.2.1 The Minister for Business, Enterprise and Innovation (DBEI) acknowledged that aviation is one
of Ireland’s most successful internationally trading sectors, particularly in the areas of air services,
aircraft leasing and maintenance, repair and overhaul (MRO) activities. In respect of Action 3
however, DBEI indicated in response to the Memorandum for Government circulated by DTTAS, it
could not endorse the recommended action as it stands as it considers the action too broadly
worded. That Department considered that, taken literally, the action could be interpreted as
meaning that no measure impacting on labour mobility or flexible work practices should be
introduced, however reasonable or desirable those measures might be from an employer or
employee perspective or indeed from a Government perspective. Accordingly, DBEI suggested that
an element of balance should be introduced to the recommended action, to the effect that "...no
unreasonable impediments are introduced to labour mobility and flexibility required to support the
full range of legally compliant business models in the aviation sector”. In DTTAS discussions with that
Department, it was clarified that DBEI’s policy is to consider proposed employment rights measures
7on a horizontal, cross-sectoral basis, rather than on a sector specific basis. Where a sector specific
approach is deemed appropriate at EU level, e.g. in the application of EU working time provisions to
the transport sector(s), the practice has been for sector specific rules to be developed within the
relevant transport forum (by DG MOVE and the relevant Council of Ministers or in certain cases by
agreements negotiated between EU social partners in the transport sector).
The DBEI response to the Recommended Action 3 should be understood in the context of a
Programme for Government (PfG) commitment to strengthen the regulation of precarious work and
to tackle problems caused by the increased casualisation of work. DBEI pointed out that, as currently
worded; the action could be interpreted as being at odds with that commitment. The suggested
revised wording takes the Government commitment into account. In response to the PfG
commitment, the Government recently approved for priority drafting the Heads of a Bill which
address zero hour contracts, low hour contracts, banded hours and related matters. The draft
legislation aims to address key issues which have been identified as being areas where current
employment rights legislation can be strengthened to the benefit of employees, particularly low-
paid, more vulnerable workers, without imposing unnecessarily onerous burdens on employers and
businesses. The draft legislation has been referred to the Attorney General’s Office (AGO) for
drafting. The draft Heads have also been referred to the Joint Oireachtas Committee on Jobs,
Enterprise and Innovation for consideration and to determine if it wishes to engage in pre-legislative
scrutiny of the proposed Bill.
In discussions with DBEI, it was considered that the legislation was targeted predominantly at the
health, education, retail and hospitality sectors. However, the draft legislation will apply to all
employers. Accordingly, care has been taken to ensure the proposals do not impose unnecessarily
onerous burdens on employers. DBEI officials indicated they would be willing to brief the Forum
(Regulatory Working Group) on the draft legislation.
The Department of Employment Affairs and Social Protection (DEASP)4 also engaged with DTTAS in
response to this Recommended Action, in the context of that department’s role vis-à-vis the formal
determination of the jurisdiction under which social insurance is paid, and the collection of
contributions that is determined as being due in this State. The boundaries within which the DEASP
operates in that respect are prescribed by EU Regulations and national legislation, so its role is to
ensure compliance with the regulations and legislations in place. DEASP noted the Forum’s
recommended action and recognises that new and legitimate forms of working arrangements are
emerging as the labour markets generally adapt to the opportunities presented by digitalisation,
broadband communications and globalisation. DEASP reserves its position to bring forward
proposals for legislative changes that may be necessary to respond to such rapid changes in the
labour market.
In that context, DEASP advised that it has been participating in an interdepartmental working group,
also including the Department of Finance and the Revenue Commissioners, which was established to
examine the issue of disguised employment. To inform the work of that group, a public consultation
exercise on the use of intermediary-type employment structures, such as managed service
companies (MSC) and personal service companies (PSC), and other self-employment arrangements
and their impact on tax and PRSI, was undertaken in 2016. 23 submissions were received from
4
Formerly the Department of Social Protection
8interested parties including employers, trade unions, professional bodies and individuals. The
working group is now finalising its report for presentation to Government. DEASP confirmed it
would be happy to meet with the Regulatory Framework Working Group of the NCADF in relation to
this report at the appropriate time, or any other matter emerging, in any manner within its powers.
2.2.2 Proposed Next Steps
The aviation industry should continue to canvass at EU level to ensure that no unreasonable
impediments are introduced to labour mobility or flexible work practices. In particular:
(i) Industry to promote and provide evidence of high-quality employment, training and
opportunities in the sector.
(ii) DTTAS to continue to advocate liberalisation, innovation and consumer welfare at EU
and ICAO5 level, to resist protectionism and erosion of safety-specific rules via
introduction of unrelated employment issues.
(iii) Regulatory Framework Working Group to arrange for
(a) DBEI to meet group, to discuss Programme for Government commitment and
legislative proposals to strengthen regulation of precarious / casual working,
with a view to identifying any possible impacts on the aviation sector; and/or
(b) DEASP to meet group, to discuss outcome of report of Interdepartmental Group
on intermediary-type employment structures and self-employment
arrangements.
2.3 Brexit
NCADF Action No. 4: Pursue (BREXIT) solution through all channels of influence, including inter-
Governmental agreement, Council, Commission, and European Parliament, supported with
lobbying through industry and consumer groups specifically to:
Ensure aviation sector is accorded priority as a crucial economy-enabling infrastructure in
Ireland’s preparations for Brexit negotiations.
Prioritise early conclusion of separate Brexit aviation agreement ensuring maintenance of
the Common Travel Area and full liberalisation of market access and ownership rules, in
effect maintaining the current Single Market for aviation and full integration with the
existing regulatory framework, including areas of safety, security and the Single European
Sky (the latter of which is subject to reform under the current European performance
review process).
Promote Ireland as a key facilitator in the EU’s negotiations with the UK, reflecting
uniquely embedded and substantial proportion of UK aviation sector accounted for by
Irish companies.
2.3.1 The Department of the Taoiseach has overall responsibility for managing Ireland’s response to
issues arising from the decision of the UK to withdraw from the EU. Representatives of the
Regulatory Framework Working Group met with senior officials from that Department in December
2016 and it was subsequently agreed that an Aviation sub-group would be represented on the Brexit
Economy and Trade Group which is chaired by Department of the Taoiseach. The position of the
5
The International Civil Aviation Organization
9Forum has been noted in that context and is reflected in detail in the Report to Government of the
Economy and Trade Group, as well as in the comprehensive document published on 2 May 2017,
Ireland and the negotiations on the UK’s withdrawal from the European Union under Article 50 of
the Treaty on European Union6.
The Department of the Taoiseach has indicated that the Government will now intensify its focus on
the economic implications of Brexit, including on domestic policy measures to reinforce the
competitiveness of the Irish economy, to protect it from potential negative impacts of Brexit, and to
pursue all possible opportunities that might arise. In order to underpin this, Government will
prepare a further paper on economic implications of the Brexit challenge. This will draw on the work
to date across Departments, including the Department of Transport, Tourism and Sport (DTTAS)
which incorporates the input of the Forum, and will reflect the core economic themes of the
Taoiseach's speech to the Institute of International and European Affairs (IIEA) on 15 February last.
In that context, the Department of the Taoiseach emphasised to DTTAS that aviation will be given
appropriate priority and there will be continued consultation with stakeholders, including ongoing
direct contact with the sector, to ensure Ireland’s concerns are reflected in the EU negotiating
position as it evolves.
2.3.2 Proposed Next Steps
(i) Regulatory Framework Working Group of the NCADF to continue to input through all
channels including to the Department of the Taoiseach’s Economy and Trade Brexit
Group.
(ii) Facilitate ongoing, direct contact with relevant Departments, through the Aviation
Sub-Group, to the extent possible.
2.4 Aviation Emissions
NCADF Action No. 5: Government actively represents the NCADF policy in EU institutions and
other relevant fora in the work to design and implement a global aviation emissions offsetting
scheme to commence in 2020 and to replace the existing EU- ETS.
2.4.1 The Department of Communications, Climate Action and Environment advised of a proposal
for Phase Four of the EU-ETS (all sectors), which will run from 2021 to 2030, currently being debated
in the relevant committees and working parties of the European Parliament and Council. A wide
range of proposed amendments are currently under negotiation in this context, including a proposal
relating to aviation emissions to take account of the future global market-based mechanism agreed
by ICAO to apply from 2021.
This proposal is for the continuation of the reduced scope application of the EU-ETS (i.e. only to
flights between aerodromes located within the EEA, as set out in Regulation No 421/2014) beyond 1
January 2017. Once there is more clarity about the nature and content of the legal instruments
adopted by ICAO for the implementation of the Global Market-Based Measures (GMBMs), as well as
about the intentions of international partners regarding the implementation of the GMBMs, it is
6
Available at:
http://www.merrionstreet.ie/en/EUUK/Key_Irish_Documents/Government_Approach_to_Brexit_Negotiations
.pdf
10intended that the Commission will carry out a further assessment and review of the EU-ETS for the
post-2020 period.
Further to DTTAS engagement with DCCAE on the NCADF position, the Departments agreed to
cooperate on current and future negotiations on the future of the EU-ETS as well as on the
development of the global scheme in ICAO. Discussions on the EU-ETS are held in the Environment
Working Group formation in the EU Council, on which DCCAE takes the lead, with DTTAS input.
Development of the global scheme in ICAO with EU regional coordination is led by DTTAS, with
sharing of information with DCCAE and with the Environmental Protection Agency (EPA) as
administrators of the EU-ETS registry for Ireland. The priority for DCCAE is to ensure that the final
approach to Irish aviation emissions is in line with Government policy on the EU-ETS. The DTTAS
priority is to work towards an ambitious global scheme in ICAO that is capable of matching the
environmental integrity of the EU-ETS and therefore could justifiably be agreed by the co-legislators
as a replacement for the EU-ETS post-2020.
2.4.2 Proposed Next Steps
(i) DTTAS to continue to engage with DCCAE to monitor negotiations on Phase Four of the
EU-ETS generally and specifically on legislation to extend stop-the-clock mechanism, to
ensure NCADF position is upheld.
(ii) DTTAS to continue to participate in the development of the CORSIA in ICAO, and report
on progress to NCADF, with a view to ensuring the viability of a single global scheme
from 2021.
(iii) DTTAS to consult on draft ICAO Standards and Recommended Practices (SARPs) when
available (ICAO State Letter to issue December 2017.)
(iv) Industry to participate in development of the CORSIA through representative
organisations such as International Air Transport Association (IATA) and Airports Council
International (ACI).
11Section 3: Responses to NCADF Recommended Actions for Aircraft Leasing
and Finance
3.1 Removing constraints for attracting and retaining talent from overseas – taxation
NCADF Action No. 6: Seek adjustments to terms of the Special Assignee Relief Programme (tax
relief programme) as follows:
The requirement that an employee works for the Irish company in an overseas location for
six months prior to taking their assignment in Ireland be removed.
The current limit of five years relief be extended.
3.1.1 The Department of Finance (DoF) told DTTAS that these proposals have been considered
previously, some months before the Report to Government, and while officials are willing to
consider these again, the introduction of the proposed changes to the the Special Assignee Relief
Programme i.e. the SARP scheme, arenot supported at this time.
DoF reminded DTTAS that the aim of the SARP programme is to “reduce the cost to employers of
assigning skilled individuals in their companies from abroad to take up positions in the Irish-based
operations of their employer, thereby creating more jobs and facilitating the development and
expansion of businesses in Ireland”. The role envisaged for SARP from the outset was to attract
individuals from abroad who would establish new business (lines) in existing companies, i.e. with the
express result that sustainable jobs were created locally. It was envisaged that the individuals
themselves would remain for relatively short periods in the country, i.e. no more than 3 or 4 years,
in order to complete the work of establishing new business and local employment.
Finance officials considered that the Forum’s proposal to extend the scheme to new hires could,
contrary to the objective of the scheme, displace Irish jobs and put Irish based workers at a
disadvantage to foreign based workers. The proposal to extend the scheme beyond 5 years would
also increase costs, without any evidence that this would yield any benefits in terms of additional
jobs or employment.
A Revenue Commissioners report on the scheme notes that since its introduction in 2012 and up to
the end of 2014, the SARP scheme cost €8m and 180 new jobs were created. This number of new
jobs created is not significant relative to overall employment growth in the economy.
In discussions, DTTAS emphasised the aviation leasing sector’s critical need to attract specialist, high-
skilled individuals to come to Ireland and suggested the scheme’s eligibility criteria could usefully
reflect this priority in conjunction with the proposed changes. The relevance of this was emphasised
in the context of Ireland’s high marginal income tax rate, the short-supply of such skills globally, and
attractive income tax incentives available in other jurisdictions. The notion of a special arrangement
within the SARP for a specific sector was rejected by DoF however, on the basis that it would
contravene EU State Aid rules. Moreover, a review completed in 2014, had already concluded that
targeting specific skills is unnecessary because the minimum qualifying salary of €75,000 already
inferred the assignee has a skill and is more likely to be a decision maker in respect of creating
jobs/generating investment. In relation to availability of more attractive personal income schemes
in other jurisdictions (the new Hong Kong measure was discussed), DoF did not accept that this
materially undermined Ireland’s competitiveness as a base for aviation leasing generally, citing other
12advantages such as Ireland’s double-taxation treaty network as being of much greater relevance for
companies choosing to locate in Ireland.
DoF suggested that the industry is free to consider the possibility of a formal budget submission in
support of the adjustments sought, backed by an evaluation meeting the requirements described in
the DoF Guidelines for Tax Expenditure Evaluation. These Guidelines prescribe a full financial costing
as well as economic impact analysis. In this regard, the financial and wider economic return to
Ireland in attracting high-skilled individuals was discussed, and it is suggested the wider benefits of
the aviation leasing sector to the Irish economy could usefully be quantified. DoF referred to a range
of incentives for the aviation leasing sector which minimised its tax liability to the State, including
the straight-line 12.5% tax depreciation on assets over 8 years, specific stamp duty and withholding
tax exemptions, Section 110 securitisation vehicles, and the net repayment position for the sector in
respect of VAT.
If the industry decides to make a formal submission in advance of the next budget, such an
evaluation of the benefits of aviation leasing to the Irish economy should focus on wider economic
benefits, quantifying (local) jobs created directly or indirectly, and value of induced benefits
generated by assignee spending in services sector, etc. While there is no specific deadline for
receipt of pre-budget submissions, such a submission should be made certainly no later than the
first week in September.
3.1.2 Proposed Next Steps
The DoF suggest that the aviation industry is free to make a formal budget submission in support of
the adjustments sought to the SARP, backed by an evaluation meeting the requirements described in
the DoF Guidelines for Tax Expenditure Evaluation, available at:
http://www.budget.gov.ie/Budgets/2015/Documents/Tax_Expenditures_Oct14.pdf
3.2 “Spousal working visas” – i.e. Employment Permits for non-EEA persons accompanying
jobholders
NCADF Action No. 7: Provide an expedited framework for spousal working visas.
3.2.1. A “spousal working visa” as described in this recommendation refers to an employment
permit for a person (a non-EEA or Swiss national) who is a dependant/partner/spouse of a Critical
Skills Employment Permit holder or Hosting Agreement Researcher. Responsibility for policy and
processes in relation to this and other employment permits rests with the Department of Business,
Enterprise and Innovation (DBEI). However, a parallel process for issuing visas for persons from
visa-required countries, which is the responsibility of the Department of Justice and Equality (DJE)7,
may also be relevant in the context of this recommendation.
There are currently nine different types of employment permit. In the aviation leasing sector, a
jobholder might typically be eligible to apply for a so-called Critical Skills Employment Permit where
7
Within the Department of Justice and Equality, the Irish Naturalisation and Immigration Service (INIS) provide
visa services.
13the remuneration is over €60,000.8 This permit is designed to attract highly skilled people into
Ireland and is considered particularly attractive because of the automatic access to the employment
market that it also affords to the permit holder’s/researcher’s dependant/partner/spouse, who may
avail of a Dependant/Partner/Spouse Employment Permit or Researcher. In discussions, DBEI
stressed that a non-EEA person accompanying a jobholder with a Critical Skills Employment Permit
should not encounter difficulties in securing such an employment permit once they meet the
scheme’s general terms and conditions. Key requirements for such non-EEA nationals is that they
are: 1) legally resident in the State on the basis of providing evidence to DJE as the immigration
authority that the individual is a dependant, civil partner or spouse of the Critical Skills Permit
holder/Researcher and 2) have secured an offer of employment. In relation to the two examples
cited in the NCADF position paper of difficulties experienced, it could not be established on the basis
of the information supplied if the difficulties arose on account of non-compliance, or delays in
proving compliance, with one or either of those criteria, or if the difficulties were in relation to the
application process itself.
In recent months DBEI has introduced a number of improvements to ensure that the process of
applying for a Dependant/Partner/Spouse Employment Permit is convenient for the user.
Since September 2016 applicants may apply for employment permits through DBEI’s Employment
Permits Online System (EPOS). The online application system for employment permits is intended to
reduce processing time for applicants by enabling applicants to work on their applications
intermittently9, by facilitating the online submission of supporting documentation and by alerting
applicants to the relevant mandatory fields. Applications can take between 5 and 40 working days to
process depending on whether or not the prospective employer is a member of the Trusted Partner
Initiative10. DBEI reported that since its introduction in September 2016, 95% of applications are now
processed online.
In April 2017 DBEI updated their website to include the most up-to-date information on the different
types of employment permits. It is envisaged that these measures will result in a clearer process thus
minimising any difficulties experienced when applying for a Dependant/Partner/Spouse Employment
or Researcher Permit. DBEI has a dedicated mailbox for specific queries, and also engages regularly
with applicants and employers in order to assist with the process if required. DBEI has indicated it
would be happy to engage directly with the Forum to address concerns in more detail if requested.
In relation to the residency criterion, the INIS website details the most up-to-date information on
visas (for visa-required countries), including application conditions and eligibility. INIS currently
8
To be eligible for a Critical Skills Employment Permit (a) the occupation must be on the highly skilled list, the
remuneration is €30,000 and the foreign national has a degree; or (b) the occupation is not on the ineligible
list, the remuneration is €60,000, and the foreign national has the necessary experience (not required to have
a degree).
9
Applicants can work on their applications intermittently for up to 28 days. After that time the draft and any
associated attachments which have not been submitted to DBEI are deleted.
10
The objective of the initiative is to ease the administrative burden on employers/connected persons/EEA
contractors in expansion mode and to remove the requirement that they replicate the same
employer/connected person information in respect of each employment permit application made for grant or
renewal.
14operates a targeted and streamlined approach which allows Critical Skills Employment Permit
holders to apply immediately for family reunification on behalf of their family members.
3.2.2 Proposed Next Steps
DBEI is available to meet with the aviation industry if further information is required. In the
meantime, the aviation industry should promote the use of the Employment Permits Online System
(EPOS).
3.3 Availability of International Baccalaureate (Schools)
NCADF Action No. 8: Increase the availability of international schools and schools offering
international baccalaureate programmes.
3.3.1 A number of Government departments are aware that the current gaps in provision of the
international baccalaureate programme are impacting on Ireland’s ability to attract high-skilled
individuals and new business to Ireland. The Department of Education pointed out that some fee-
paying schools do provide limited modules of the International baccalaureate programme, but
confirmed no one school in Ireland is currently providing the full programme for students from age 3
through to age 17. The matter has been discussed at an inter-departmental level to consider the
issue in the context of Foreign Direct Investment (FDI) needs as well as opportunities for companies
relocating to Ireland from the UK in the post-Brexit scenario.
In parallel, there was some engagement with private sector parties interested in establishing an
international school in Ireland on a private fee-paying basis. These discussions culminated in the
announcement by a consortium comprising international private education providers Rise Global
and Nord Anglia, of plans to open an 800-pupil international school in September 2018 offering the
International Baccalaureate. Planning permission for the school has been granted for a site in South
County Business Park, Leopardstown. DTTAS met with Rise Global and discussed the plans for the
school, as well as projections for possible other international schools in Ireland. The school is
already taking enrolments from companies and individual parents, and would welcome expressions
of interest from employees/companies in the aviation sector.
A related development in the framework of the International Financial Services (IFS) Sector 2020
Strategy is a commitment that “relevant departments and agencies will continue to monitor the
provision of international schooling in Ireland. The IFS 2020 secretariat within the Department of
Finance will operate as a point of contact for interested parties”.
3.3.2 Proposed Next Steps
(i) Promote the availability of the new baccalaureate capability. This facility is available
online at www.nordanglia.com/dublin.
(ii) DTTAS will maintain contact with the IFS 2020 secretariat within the Department of
Finance in relation to the ongoing monitoring of the provision of international schooling
in Ireland.
15Section 4: Responses to NCADF Recommended Actions for Aircraft
Maintenance, Repair and Overhaul (MRO) and related enterprises
4.1 Develop a Strategic plan for growth of MRO and related enterprises
NCADF Action No. 9: Prioritise a strategic plan for growth of the MRO industry in Ireland and
reflect this in Government policy, led by senior officer reporting to the Minister of Transport,
Tourism and Sport.
NCADF Action No. 10: Ensure the strategic plans of Government, state bodies and all commercial
aviation entities pro-actively promote the growth of MRO activities at Irish airports.
4.1.1 These actions include a role for industry and a range of Government departments, including
DTTAS. In the NCADF Report to Government, the specific interest of DBEI was also suggested, since
that Department’s remit is most closely aligned with industrial development, and because it has the
tools and experience of supporting and growing industry generally. While a senior officer reporting
to the Minister for Transport, Tourism and Sport could indeed be envisaged as driving a strategic
plan for the MRO industry, it would be unrealistic to proceed with such a plan without significant
input, involvement and buy-in from DBEI and its supporting agencies.
In responding to the Forum’s report and in subsequent DTTAS engagement with DBEI, there was
strong recognition by DBEI that the aviation sector is one of Ireland’s most successful internationally
trading sectors, including MRO activities. The supports of both Enterprise Ireland and IDA Ireland for
client companies was emphasised: to develop capability in areas such as supply chain management;
to support entrepreneurship in the sector through supports such as a dedicated call of the
Competitive Start Fund; to promote companies from the aviation sector at international events and
trade shows; and to attract additional international investment. However, DBEI noted that, in the
absence of a detailed, evidence-based and costed strategic plan, it was difficult to identify precise
responses or actions to support the broad aspirational objective to grow the MRO sector. Also,
notwithstanding the potential for government policies to promote the MRO industry, DBEI noted
that, based on some the barriers identified previously, airports have a lead role to play in this regard.
DBEI also advised that it was general policy to build capability and capacity across all sectors through
horizontal supports e.g. R&DI, Lean, management development etc. While acknowledging the
potential of the sector to contribute to job creation and regional development DBEI believes that
further research and analysis is required to determine: what, if any, additional measures are
required; the potential cost of those supports; and the potential economic impact of the additional
supports. DBEI has led similar work previously, particularly when assessing new and emerging
opportunities for growth.
Accordingly, DBEI recommended that a detailed study be conducted on the current value of the
MRO sector in Ireland, the scale and contribution of the sector in terms of economic activity and
employment levels, and the potential for the sector to expand. Such an evaluation could identify
potential measures – fully costed – as the basis for the strategic policy recommended by the Forum,
for support by the development agencies and for the strategic plans of relevant airports. In
16discussions with DBEI on the need for such a detailed study, that Department agreed it could provide
expertise and assist with the shaping and oversight of same.
4.1.2 Proposed Next Steps
The MRO Working Group is to consider the merits of a DTTAS-commissioned, independent, detailed
evaluation of the MRO sector, with a view to developing an overall strategic plan for the expansion
of the sector. The study is to be managed and overseen by a Steering Group to include DBEI,
representatives of State airports and representatives of the MRO sector.
4.2 Support of practical training to feed growth of MRO
NCADF Action No. 11: Balance, accelerate and increase the promotion and support of the practical
training (traineeships and apprenticeships) to feed the growth of the MRO industry at all levels.
4.2.1 In discussions with DES, it was advised that the skill needs of the aviation sector generally, and
of sub-sectors such as MRO, had not previously come to its attention. DES noted the position paper
of the MRO group with interest and welcomed additional views from DTTAS as to the potential for
growth across the full spectrum of aviation enterprises.
In this regard, DES advised that the Expert Group on Future Skills Needs (EGFSN) was the specialist
group which advises Government on labour market issues and in particular on a skills deficit in
sectors that may impinge on enterprise and employment growth. It has a central role in ensuring
that labour market needs for skilled workers are anticipated and met. DES suggested that detailed
consideration by the EGFSN of the skill needs of the aviation sector would be the appropriate next
step in developing medium to longer-term plans for practical training to support the growth of the
Aviation sector overall and including the MRO industry. The DES indicated that the identification
and recognition of aviation skill needs within the framework of this Group would facilitate easier
access by the industry to the suite of available resources, advices and supports in the State (see
further details in Section 5).
DTTAS acknowledges the progress already made over the last number of years in elevating the
aircraft mechanic license to a recognised qualification on the NFQ with various 3rd level courses
available relevant to aviation technology, aircraft maintenance and aeronautical engineering. DTTAS
has initiated a request to the EGFSN to carry out a detailed skill needs-analysis of the aviation sector.
In the shorter term, DES also advised that various supports to industry were in place and available
regarding training provision and these include the Education and Training Boards (ETBs), the
Regional Skills Fora (RSF) and Skillnets. (See further details in Section 5). The following current
initiatives are also suggested by DES as being of potential interest to the MRO sector:
(i) Skillnets is actively accepting applications directly from industry to establish a new skills
network. The deadline for such applications is 23rd November 2017, and Skillnets is available
now to industry to assist and advise on making such an application. Skillnets provides co-
funding for training typically to groups of companies in the same region and/or sector.
Employer needs are addressed through both the preservation and growth of jobs, focusing
17on skills to maintain businesses and protect jobs as well as the enhancement of new skills to
create new jobs.11
(ii) The DES has published an action plan to expand Apprenticeship and Traineeship in
Ireland 2016-2020. The action plan indicates an intention to amend the policy in 2017 to
enable wider participation in traineeship over the lifespan of the plan.
(iii) SOLAS, the statutory body with responsibility for administering apprenticeships (and
traineeships) is in the process of conducting a review of all current apprenticeship
programmes, and this will include a review of the “aircraft mechanic” programme,
commencing with a consultation process with the industry.
4.2.2 Proposed Next Steps
(i) DTTAS has initiated a request to the EGFSN to carry out a detailed skill needs-analysis of the
aviation sector and formulate recommendations to enhance training provision.
(ii) The MRO Working Group membership to consider an approach to coordinated engagement
with relevant bodies currently offering supports, such as Skillnets, RSF and ETBs.
(iii) The MRO Working Group membership to engage with the SOLAS consultation on the aircraft
mechanic apprenticeship when launched.
4.3 Review of tax and rates structures
NCADF Action No. 12: Ensure the rateable valuations of hangars reflect the limited use of hangars
and the non-competitive nature of hangar rents.
NCADF Action No. 13: Review tax structures and owner/operator models to help stimulate
infrastructure growth and investment.
4.3.1 The valuation of hangars, as with all relevant properties, is a function of the Valuation Office
(VO). The basis of value for rating purposes is Net Annual Value (NAV). NAV as defined in the
Valuation Acts 2001 to 2015 is, broadly speaking, the annual rental value that a property could be let
for at a specified valuation date and forms the basis of the calculation of rates payable. The legal
provisions which govern this are set out in Part 5 of the Valuation Act 2001, as amended by the
Valuation (Amendment) Act 2015. Within existing legislation, there are two potential mechanisms
for reviewing rateable valuations by the VO:
(i) A "Revaluation" of an entire local authority area. A revaluation is the production of an up-
to-date Valuation List of all rateable property, as defined in the Valuation Acts 2001 to 2015,
for Commercial Rates purposes, within a local authority area, by reference to property rental
values at a specified valuation date. This results from the carrying out of a new valuation of
every relevant property in a particular rating authority area. Revaluations are carried out
periodically and DTTAS has been informed that a revaluation is due to be completed in 2019
for Fingal County Council. The Valuation Office advises that a revaluation of Clare County
Council is not due to be completed until 2021. At the commencement of a revaluation
project the VO contacts all ratepayers in that local authority area and briefing sessions are
11
Skillnets has already established two networks within the aviation/aerospace sector namely the Aviation and
Aerospace Network and the Aviation Finance Finuas Network.
18offered free-of-charge to all stakeholders involved. During the revaluation process Proposed
Valuation Certificates are issued by the VO to individual ratepayers who are given an
opportunity to make representations to the VO as part of the process prior to their valuation
being finalised. There is provision for the final valuation to be appealed to the independent
Valuation Tribunal.
(ii) A revision of an individual property on the request of the local authority or an
owner/occupier. It is possible for ratepayers to apply for a “Revision” of a rateable valuation
through the Valuation Office website. For a revision of valuation to take place a “material
change of circumstances” (MCC), as defined in the legislation, must have taken place. The
various criteria for an MCC are the development of a new rateable property, the
structural/physical alteration to an existing rateable property, the amalgamation of two or
more rateable properties or the subdivision of a rateable property into two or more rateable
properties. As in the revaluation scenario above a Proposed Valuation Certificate is issued to
the ratepayer prior to the valuation being finalised. There is also provision for the final
valuation to be appealed to the independent Valuation Tribunal.
At present there are proposals by the Department of Justice and Equality (DJE) to create a new
agency, to be known as Tailte Éireann, merging the Valuation Office, Ordnance Survey Ireland and
the Property Registration Authority of Ireland. The legislation establishing the new organisation is
currently being drafted. While in theory this might represent an opportunity to lobby for a more
nuanced approach to rateable valuations, DTTAS was advised that any proposal to apply a particular
method of valuation to a particular property usage for rating purposes would require a complete
rethink in relation to section 48 of the Valuation Acts 2001 to 2015 and which would have
consequential, unintended repercussions across the fundamental principles of rating law. The basis
of valuation is the same for all rateable properties and this is the starting point for a system which
endeavours to achieve “correctness” and “equity and uniformity”.
Instead, it was considered that the type of measure recommended by the Forum is more
appropriate for a strategic decision by a local authority to provide alleviation on the rates levied for
specific types of property. DTTAS accordingly engaged with the DHPCLG on this issue in the context
of work underway in that Department for new legislation to modernise the legislative framework
governing the powers of local authorities in relation to commercial rates. DTTAS detailed the MRO
sector and the provision of hangar space as a practical example of how rates alleviation could
actively support enterprise development in line with the goals of the National Aviation Policy and to
enhance the competitiveness of the sector in line with the mission of the NCADF. The draft Heads of
Bill now approved by Government includes a useful provision to allow local authorities introduce
rates alleviation schemes to support local and national policy objectives. The draft Heads of Bill
provides for the option to introduce such alleviation schemes by inclusion in an authority Local
Economic and Community Plan (LECP).
DTTAS will monitor the progress of this new commercial rates bill to ensure, as far as is practicable,
that it has the potential to deliver on the needs of the aviation sector. It is proposed that the MRO
Working Group membership would also consider how best to influence the new legislative measures
as they are developed. DHPCLG has indicated its willingness to engage with the NCADF if requested.
19State Aid considerations, including de minimis rules would be an important factor in the decision
making and DBEI will have a role in that context.
In relation to the recommendation for a review of tax structures and owner/operator models, it was
suggested that such a review should form part of the overall strategic review referred to in the
response to Recommended Action 9 (See Section 4.1.1 above). Departments that commented on
this recommended action also noted a lack of clarity in the MRO position paper about the role
played directly by airport authorities in deciding their approach to hangar provision. It was
suggested that airport authorities could also review and apply new owner/operator models with a
view to ensuring the continued presence and growth of MRO based at Irish airports and also with a
view to delivery of other infrastructure requirements over time.
Additionally, the Department of Finance advised that there is provision for allowances under an
accelerated capital allowance scheme which applies specifically to the construction and
refurbishment of certain buildings or structures used in connection with the maintenance, repair or
overhaul of commercial aircraft, to operate for a period of 5 years from commencement of the
scheme.
4.3.2 Proposed Next Steps
(i) Relevant airports and MRO entities to continue bilateral discussions on the provision of
future provision of hangars in line with growing infrastructure requirements, with a view to
informing capacity plans of airports.
(ii) Options regarding owner/operator models to be further explored as part of strategic study
of MRO sector.
(iii) DTTAS to monitor the progress of the new commercial rates bill to ensure, as far as is
practicable, that it provides the potential to deliver on the needs of the aviation sector.
(iv) Industry to consider coordinating an approach to lobbying DHPCLG and local authorities on
strategic value of alleviating rates on hangars.
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