Decision
Right to Know CLG and Investment and Development Agency Ireland
From Office of the Information Commissioner (OIC)
Case number: 160554
Published on
From Office of the Information Commissioner (OIC)
Case number: 160554
Published on
Whether the IDA was justified in its decision to refuse access to records in support of its claim concerning the impact of high income tax, on the grounds that further records do not exist under section 15(1)(a) and other records are exempt under sections 29, 30, 35, 36 and 40 of the FOI Act
Conducted in accordance with section 22(2) of the FOI Act by Elizabeth Dolan, Senior Investigator, who is authorised by the Information Commissioner to conduct this review
24 May 2017
References to "the applicant" in this decision can be taken to refer to Right to Know and/or its solicitor. By email dated 9 August 2016, the applicant made an FOI request for: (1) "all records relating to the analysis that support the IDA's claim that 'high income tax was making it difficult to attract foreign investment and hitting job creation' (as reported in the media)" and (2) all records submitted to the IDA by third parties in relation to personal tax and social security rates in Ireland. By email dated 19 August 2016 the applicant clarified that the scope of part (2) of his request related to records submitted from 2014 onwards to the board, committees, CEO and direct reports to the CEO, including records submitted to lower grades but received by such people.
The applicant did not receive a decision within the statutory time-frame and therefore applied for an internal review of the deemed refusal by email dated 5 October 2016. The IDA issued an internal review decision by letter dated 25 October 2016. It set out some general comments on its approach to taxation and social security issues. It granted partial access to certain records and refused access to the remaining information, on the grounds that the withheld records were exempt under section 29 (deliberations), section 36(1) (commercial sensitivity) and section 40 (financial and economic interests) of the FOI Act. On 12 December 2016 the applicant applied to this Office for a review of the IDA's decision.
In conducting my review, I have had regard to the IDA's decision on the matter; the IDA's communications with the applicant and with this Office; the applicant's communications with the IDA and with this Office; the submissions of the Department of Jobs, Enterprise and Innovation (DJEI); the content of the withheld records, provided to this Office by the IDA for the purposes of this review and the provisions of the FOI Act.
The IDA identified three records relevant to this request. It granted partial access to Record 1, withheld Record 2 and granted access to Record 3. Having regard to the parties' submissions, the question for me is whether the IDA was justified in refusing access to any further records under sections 15(1)(a), to Record 1 under sections 29, 36 or 40 of the FOI Act and to Record 2 under sections 29, 30(1)(c), 35(1)(a), 36 or 40 of the FOI Act.
Before I consider the exemptions claimed, I wish to make the following points.
First, section 22(12)(b) of the FOI Act provides that when I review a decision to refuse a request, there is a presumption that the refusal is not justified unless the public body "shows to the satisfaction of the Commissioner that the decision was justified". Therefore, in this case, the onus is on the IDA to satisfy me that its decision is justified.
Secondly, my jurisdiction under section 22 of the FOI Act is to make a new decision, in light of the facts and circumstances as they apply on the date of the review. This approach has been endorsed by the Courts.
Finally, in submissions to this Office, the applicant says that the DJEI has no right to make submissions in this review and that any such submissions must be disregarded in their entirety. He says that there is no third party procedure equivalent to section 38 in relation to documents authored by one FOI body which are held by another FOI body. I believe that it is appropriate for me to take into account the DJEI's submissions on Record 2. The fact that section 38 of the FOI Act does not apply does not preclude this Office from considering, where appropriate, third party submissions in a review. I consider that sections 22 and 45 of the FOI Act, which deal with the Commissioner's powers, procedures and exercise of discretion, together with principles of fair procedures, support me in this view.
Section 15(1)(a) - Refusal on administrative grounds
In Part (1) of his FOI request, the applicant seeks "all records relating to the analysis that support the IDA's claim that 'high income tax was making it difficult to attract foreign investment and hitting job creation' (as reported in the media)". The applicant submits that the IDA has not identified all the relevant records, as it has not identified any of the underlying information regarding its claim about personal tax as reported in the media. The IDA maintains its position that no further records exist.
In circumstances where the applicant claims that further records must exist, I consider it appropriate to consider section 15(1)(a) of the FOI Act. Section 15(1)(a) provides that access to records may be refused if the records concerned do not exist or cannot be found after all reasonable steps to ascertain their whereabouts have been taken.
During this review, the Investigator made specific enquiries of the IDA about the existence of further records and the steps which the IDA had taken in order to locate any such records. In response, the IDA submits that verbal exchanges with clients, stakeholders and business groups form a large part of the analysis underlying its claim about personal tax. The IDA says that a number of discussions were held with its Tax and Planning Division, who confirmed that no formal analysis was undertaken. It says that its records are mostly electronic, although executives also searched relevant paper files. Its FOI Liaison Officer says that in many cases executives worked with her on searches to ensure that they were being thorough and complete. The IDA says that it is satisfied that the searches undertaken were thorough and complete and that no further records coming within the scope of the request were found.
Having regard to the IDA's submissions, I am satisfied that it carried out reasonable searches for the records sought. In essence, the IDA says that the analysis underlying its claim about income tax was based on oral exchanges rather than written records. I appreciate that this may not meet the applicant's expectations but I have no reason to dispute the IDA's stated position on this. I find that the IDA is justified in refusing access to any further records under section 15(1)(a) of the FOI Act.
Section 29 - Deliberations of FOI Bodies
Section 29(1) of the FOI Act provides that an FOI body may refuse to grant an FOI request if the record contains matter relating to the deliberative process and granting the request would be contrary to the public interest. These are two independent requirements and the fact that the first is met carries no presumption that the second is also met. It is therefore important for public bodies to show to the satisfaction of the Commissioner that both requirements are met.
The public interest test contained in this provision differs from the public interest test found in other exemptions under the FOI Act. To avail of this exemption, the public body must be of the opinion that releasing the records would be against the public interest. Other exemptions require the public body to be of the opinion that the public interest would be better served by release. In my view, this exemption tends more strongly towards release of the records. This means that public bodies have a higher hurdle to overcome in demonstrating that it applies.
In its internal review decision, the IDA says that although the redacted information relates to submissions about the 2017 budget, section 29 "provides for information relating to deliberative processes to be protected even after a high level decision has been made provided the head is satisfied that the balance of public interest does not favour granting the request...on balance it is not in the public interest to release the redacted information". This is the wrong test. As noted above, section 29 of the FOI Act requires disclosure of the information to be contrary to the public interest. In submissions to this Office during the review, the IDA submits that it would be contrary to the public interest to release the records.
The IDA says that Record 1 contains requests which have not yet been fulfilled, that releasing it could impact on delivery of the benefits sought and that other countries could exploit the information, thus attracting industry away from Ireland. It submits that the records form part of an ongoing thinking process that informs tax policy which may span a number of budget cycles until recommendations are implemented.
The IDA and the DJEI submit that Record 2 forms part of an ongoing thinking process that informs tax policy deliberation and that releasing it could contaminate the integrity of tax policy deliberations and would prejudice the frankness of public servants in participating in deliberations.
The applicant submits that there do not appear to be any choices or weighing up of options since tax and social security rates are set by the legislature and are entirely outside the scope of the IDA's deliberations. He argues that the IDA conducted an incorrect public interest test.
Section 29(2) - Factual Information
The exemption at section 29(1) does not apply to a record insofar as it contains factual information (section 29(2)(b)). Section 2 of the FOI Act states that "factual information" includes information of a statistical, financial, econometric or empirical nature, together with any analysis thereof. The Commissioner regards factual information as including material presented to provide a factual background to the central topic in a record, and that factual information is distinguishable from information in the form of a proposal, opinion or recommendation. I believe that much of Records 1 and 2 constitutes factual information. This is because they contain background facts and analysis, in addition to the recommendations which the IDA and the DJEI make on foot of such facts and analysis. However, given my conclusion on section 29(1)(a) below, I do not consider it necessary to separate out the factual information from the deliberative material for the purposes of this decision.
Section 29(1)(a) & (b) - Deliberative Process and the Public Interest
I accept that Records 1 and 2 contain matter which relates to deliberations on tax policy. I therefore accept that section 29(1)(a) applies to the records. I am then required to consider section 29(1)(b). The Commissioner has found that the FOI Act clearly envisaged that there will be cases in which disclosing the details of an FOI body's deliberations - whether before or, in some cases, after a decision based on those deliberations has been made - would be against the public interest. However, this was not to say that such disclosure is always, as a matter of principle, against the public interest. Any arguments against release under section 29 of the Act should be substantiated and supported by the facts of the case. It is important that the FOI body shows to the satisfaction of the Commissioner how granting access to the particular record(s) would be contrary to the public interest, e.g. by identifying a specific harm to the public interest flowing from release.
I am also mindful that section 11(3) of the FOI Act requires public bodies to have regard to the need to achieve greater openness in their activities and inform scrutiny, discussion, comment and review by the public of their activities. I consider this to be relevant to my assessment as to whether it would be contrary to the public interest to release the records.
The IDA and the DJEI submit that disclosing the records could prejudice the integrity of the tax policy deliberations and prejudice the frankness of public servants participating in deliberations. They also identify potential harms to inward investment which relate more to their submissions under sections 36 and 40, which I deal with below. Regarding the alleged harms to the deliberative process, the parties do not substantiate their assertions, e.g. by explaining how these harms would occur. Neither is it apparent to me how releasing these particular records could impede public servants in performing their functions when deliberating on pre-budget submissions and tax policy. As a general proposal, the parties' argument seems to seek to exempt any submissions on tax policy as a class, since, as they say, tax policy is subject to ongoing deliberations and changes are only achieved over time. This position is not sustainable under section 29. In my view, the submissions amount to an argument that pre-budget submissions on tax are exempt from release under section 29(1) for so long as the relevant deliberative process is ongoing. As noted above, disclosing a record before a deliberative process has completed is not automatically against the public interest.
I am required to be satisfied that both sections 29(1)(a) and (b) apply. In the circumstances, the parties have not satisfied me that section 29(1)(b) applies. Accordingly, I find that the IDA is not justified in refusing access to the records under section 29(1) of the FOI Act.
Section 30(1)(c) - Functions and Negotiations of FOI Bodies
Section 30(1)(c) of the FOI Act provides that an FOI body may refuse to grant an FOI request if access to the record concerned could reasonably be expected to disclose positions taken, or to be taken, or plans, procedures, criteria or instructions used or followed, or to be used or followed, for the purpose of any negotiations carried on or being, or to be, carried on by or on behalf of the Government or an FOI body.
The DJEI submits that section 30(1)(c) applies to Record 2. Section 30(1)(c) is designed to protect positions taken for the purpose of any negotiation carried on by or on behalf of an FOI body. It does not contain a harm test. However, FOI bodies should identify the relevant negotiations at issue and show that releasing the records could reasonably be expected to disclose positions taken for the purpose of those negotiations.
The DJEI submits that releasing Record 2 would disclose positions taken or possibly to be taken in negotiations and deliberative processes relating to current and future pre-budget negotiations. It says that release could reasonably be expected to prejudice current and future negotiations of the DJEI and its development agencies with the Department of Finance.
The applicant submits that parties make submissions as part of the legislative process, but it is wrong to characterise this as a negotiation, as it is more akin to lobbying, which section 30(1) does not protect.
Record 2 is a pre-budget submission to the Department of Finance. I would make two observations on this: First, the Department with which the DJEI says that it is negotiating is already aware of the positions adopted by the DJEI. In other words, this is not the case of a document disclosing positions which are as yet unknown to the other party. Secondly and in any event, I agree with the applicant that the process involved cannot be classified as a "negotiation" under section 30(1)(c) of the FOI Act. Record 2 sets out recommendations by the DJEI for changes to tax policy. I do not view these as negotiating positions for the purposes of reaching some compromise, settlement or mutual agreement.
Accordingly, I do not believe that section 30(1)(c) applies and I am therefore not required to consider section 30(2) of the FOI Act. I find that section 30(1)(c) of the FOI Act does not apply to Record 2.
Section 35 - Confidentiality
The DJEI submits that section 35(1)(a) of the FOI Act applies to Record 2. Section 35(1)(a) provides that an FOI body shall refuse to grant an FOI request if the record contains information given to an FOI body in confidence and on the understanding that it would be treated as confidential and its disclosure would be likely to prejudice the giving to the body of further similar information from the same person or other persons and it is of importance to the body that such further similar information as aforesaid should continue to be given to the body.
Section 35(2) disapplies section 35(1) to a record which is prepared by a head or any other person (being a director, or member of the staff of, an FOI body or a service provider) in the course of the performance of his or her functions unless disclosure of the information concerned would constitute a breach of a duty of confidence that is provided for by an agreement or statute or otherwise by law and is owed to a person other than an FOI body or head or a director, or member of the staff of, an FOI body or of such a service provider.
As section 35(1) does not apply where the records fall within the terms of section 35(2), I should consider section 35(2) at the outset. This record was prepared by the DJEI, an FOI body, in the course of the performance of its functions. Therefore, section 35(1) will not apply to Record 2 unless disclosing it would constitute a breach of a duty of confidence owed to a person other than an FOI body/service provider etc. under an agreement or statute or otherwise by law.
During the review, this Office drew section 35(2) to the DJEI's attention and invited its submissions. The DJEI submits that Record 2 was prepared for the limited/restricted purpose of communicating its negotiating position to the Department of Finance and that confidentiality surrounds the budget process. It says that while it accepts that it was prepared by the DJEI, disclosure of it by the IDA would constitute a breach of duty of confidence provided by law. However, it does not elaborate on the legal basis for this duty of confidence. In short, neither its submissions nor the record itself identify a duty of confidence owed to a person other than an FOI body.
I therefore find that section 35(2) operates so as to disapply section 35(1) and that section 35(1) of the FOI Act does not apply to Record 2.
Section 36(1) - Commercially Sensitive Information
Section 36(1) provides, insofar as is relevant:
"Subject to subsection (2), a head shall refuse to grant an FOI request if the record concerned contains -
... (b) financial, commercial, scientific or technical or other information whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of that person in the conduct of his or her profession or business or otherwise in his or her occupation, or
(c) information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates."
However, section 36(1) does not apply if the public interest would, on balance, be better served by granting rather than refusing the request (section 36(3) refers).
The essence of the test in section 36(1)(b) is not the nature of the information but the nature of the harm which might be occasioned by its release. The harm test in the first part of subsection (1)(b) is that disclosure of the information could reasonably be expected to result in material financial loss or gain. I take the view that the test to be applied in this regard is whether the decision-maker's expectation is reasonable. The harm test in the second part of subsection (1)(b) is whether disclosure of the information "could prejudice the competitive position" of the person concerned. The standard of proof necessary to meet this test is considerably lower than the standard to meet the test of "could reasonably be expected to" in the first part of subsection 36(1)(b).
The High Court decision in Westwood Club v The Information Commissioner [2014] IEHC 375 makes it clear that it is not sufficient for the party relying on section 36(1)(b) to merely restate the provisions of the section, list the documents and say that they are commercially sensitive.
The Commissioner expects that a person seeking to rely on section 36(1)(c) would be able to show that contractual or other negotiations were in train or were reasonably foreseen which might be affected by the disclosure and explain how exactly the disclosure could prejudice the conduct or outcome of such negotiations.
The IDA (and the DJEI on Record 2) submit that the records disclose certain positions/ recommendations on personal taxation, which reveal competitiveness challenges for the Irish tax system regarding inward investment. They say that releasing the records could prejudice the IDA's competitive position to win foreign direct investment resulting in material loss and that it would prejudice the IDA's position in ongoing contractual negotiations with existing or future clients. They argue that this is critical at this post-Brexit juncture and that competing development agencies could use the information about Ireland's challenges to their advantage.
I will deal with each record separately. Part of the redacted information in Record 1 fleshes out certain unredacted information in that same record which expressly highlights a competitiveness challenge. I do not accept that releasing this redacted information could cause the alleged harms. Neither do I accept that releasing the other part of the redacted information in Record 1 could cause the alleged harms. I believe that this information points to a state of affairs upon which competitor agencies could already act, irrespective of whether this document is released.
As noted above under section 29, much of the information in Record 2 is factual information which describes rather than analyses the position. I believe that in assessing whether releasing the opinions and recommendations which it contains could cause the alleged harms, it is relevant to consider what information is already in the public domain. In that respect, I note that both the unredacted part of Record 1 and a published submission from 2015 (prepared by the DJEI and the IDA) identify competitiveness challenges in Ireland's personal tax régime. Moreover, the published document makes similar submissions on the matter to those in Record 2. During the review, this Office drew that document to the DJEI's attention and invited its submissions. In response, the DJEI submits that Record 2 was created in a separate context to the published document and was the subject of deliberations when the IDA received the FOI request. I accept that Record 2 was created in a different context. However, the fact remains that its content on personal tax overlaps with that of a submission by the DJEI and the IDA which is in the public domain.
Accordingly, I do not accept that releasing these particular records could result in material financial loss or prejudice the IDA's competitive position, or that it could prejudice the conduct or outcome of the IDA's negotiations.
I therefore find that neither section 36(1)(b) nor section 36(1)(c) applies in the circumstances. In view of this finding, I am not required to consider section 36(2) or (3) of the FOI Act. I find that the IDA is not justified in refusing access to the records under section 36(1) of the FOI Act.
Section 40 - Financial and Economic Interests of the State
Section 40(1) provides, insofar as is relevant:
"(1) A head may refuse to grant an FOI request in relation to a record (and, in particular, but without prejudice to the generality otherwise of this subsection, to a record to which subsection (2) applies) if, in the opinion of the head -
(a) access to the record could reasonably be expected to have a serious, adverse effect on the ability of the Government to manage the national economy or on the national interests of the State,
(b) premature disclosure of information contained in the record could reasonably be expected to result in undue disturbance of the ordinary course of business generally, or any particular class of business, in the State and access to the record would involve disclosure of the information that would, in all the circumstances, be premature,
(c) access to the record could reasonably be expected to have a negative impact on decisions by enterprises to invest or expand in the State, on their research activities or on the effectiveness of the industrial development strategy of the State, particularly in relation to the strategies of other states,".
Where an FOI body relies on section 40(1), it should identify the potential harm specified in the relevant paragraph that might arise from disclosure and then consider the reasonableness of any expectation that the harm will occur. The FOI body should show the link between granting access to the record concerned and the harm identified. It must go on to consider the public interest test under section 40(3) before reaching a conclusion on the application of the exemption.
In relation to section 40(1)(a), the IDA (and the DJEI on Record 2) submit that disclosing the records could cause "an adverse effect on the Government's ability to manage the national economy and the financial interests of the State, given a tax policy and budgetary change being advocated for by the DJEI and its agencies would be likely to be accorded greater weighting when considering the probability of a positive/negative outcome by enterprise and influence enterprise behavioural response accordingly". It is not at all clear to me from this submission how releasing the particular records at issue here could reasonably be expected to have a serious, adverse effect on the Government's ability to manage the national economy or on the State's national interests.
In relation to section 40(1)(b), the IDA (and the DJEI on Record 2) submit that disclosure could cause undue disturbance as the media coverage of it could potentially alter the behaviour of individuals taking up roles and companies hiring, in anticipation of a policy change. In relation to section 40(1)(c), the IDA and the DJEI submit that the records highlight some competitiveness challenges, which could negatively impact confidence in Ireland and result in a loss of investment, which in turn would negatively impact investment/expansion in the State and the State's industrial strategy.
I accept that the behaviour of those considering whether to work or invest in Ireland could possibly be altered by their comparing differences between the Irish personal tax régime and that in other jurisdictions. However, as noted above, much of the information about which the parties express concern is available publicly. Therefore, I do not consider it reasonable to expect that releasing these particular records could cause the harms identified. It seems to me that any such comparisons could easily be researched by those considering whether to invest or live in Ireland.
I find that the IDA is not justified in refusing access to the records under section 40(1) of the FOI Act. In view of this finding, I am not required to consider section 40(3) of the FOI Act.
Having carried out a review under section 22(2) of the FOI Act, I vary the IDA's decision as follows. I affirm its refusal of access to any further records under section 15(1)(a) of the FOI Act. I annul its decision on the withheld records and direct the release of that information.
Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.
Elizabeth Dolan
Senior Investigator