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General Schemes of Regulation of Artificial Intelligence Bill 2026 and Data Bill 2025: Discussion (Resumed)

An Cathaoirleach

Apologies have been received from Senators Fitzpatrick and Conor Murphy.

Before we proceed, I have a few housekeeping matters to go through. I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards the references witnesses make to other persons in their evidence. Witnesses are protected by absolute privilege in respect of the presentation they make to the committee. This means that they have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty as Chair to ensure this privilege is not abused. Therefore, if a witness's statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

I advise members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate where he or she is not adhering to that constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask members participating via Microsoft Teams to confirm, prior to making their contribution to the meeting, that they are on the grounds of the Leinster House campus.

Members and witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

I propose that we publish the opening statements and submission received from our witnesses on the committee's website. Is that agreed? Agreed.

I suggest that we invite our witnesses to speak for approximately ten minutes. We will then allow our members to ask questions and make comments for approximately seven minutes. If time permits, we may have a second round of questions where members will be allowed to ask questions or make comments for approximately four minutes each. Members may be called as they appear on the week 2 speaking rota. Committee members may substitute within their party or group. Members not being members of the committee or substitutes may speak only after committee members or their substitutes. Is that speaking arrangement satisfactory? Agreed.

First on today's agenda are the general schemes of the regulation of artificial intelligence Bill 2026 and the data Bill 2025. The committee has decided to carry out pre-legislative scrutiny of these schemes. We have had a large response to our call for submissions on these draft Bills.

I am delighted to welcome the witnesses. From IBEC, we have: Mr. Erik O’Donovan, head of digital economy policy, and Ms Áine Clarke, digital and AI policy executive. I now invite Mr. O'Donovan to make his opening statement.

Mr. Erik O'Donovan

I thank the committee for the invitation to appear today on behalf of IBEC, which is the group that represents Irish business. I am joined by my colleague, Ms Áine Clarke, from IBEC's digital policy team. We welcome the opportunity to discuss the general schemes of both the AI Bill 2026 and the data Bill 2025.

IBEC recognises that building trust and excellence in AI is both an imperative and an opportunity for Ireland. We see investment in our AI readiness and an effective national implementation of the EU's AI and Data Acts that enables shared policy ambitions and our digital ecosystem as being central to boosting the long-term competitiveness of the economy. While we acknowledge the overarching objectives of these Bills, we wish to highlight three areas of refinements that we believe should be considered in the finalisation of these proposals.

First is enabling regulatory coherence. Both Bills propose distributed, multiregulator frameworks. The proposed AI Bill envisages a central AI office of Ireland co-ordinating 13 market surveillance authorities. Similarly, the proposed data Bill empowers the Competition and Consumer Protection Commission, CCPC, the Data Protection Commission, DPC, and ComReg with various enforcement roles. While IBEC understands this model and the advantage of leveraging existing domain knowledge, we are keen to avoid any potential fragmentation that leads to duplication or divergence in sanctions procedures or uncertainty for business. In this context, we recommend a one-front-door policy for complaints and regulatory engagement. It is essential that the Bills harmonise market surveillance authorities' supervisory powers in the case of the AI Bill and include formal co-operation mechanisms and clear guidance to delineate the roles of respective authorities to ensure a streamlined environment and engagement for business.

Second is ensuring proportionality and certainty. We believe that the successful implementation of both the AI and Data Acts depend on a balanced enforcement regime. Regarding pre-adjudicative sanctions under the proposed AI Bill, prohibition notices could be issued based on an authorised officer’s opinion of a breach without completing a full investigation or providing an opportunity for an operator to take corrective action. We urge that pre-adjudication processes be aligned with Article 79(5) of the EU AI Act and that more proportionate timelines in terms of appeals be in place. We also urge the inclusion of an automatic presumption of suspensive effect and protection of Article 18 on market surveillance rights during appeals.

Regarding liabilities and fines, we are concerned about the proposal in the AI Bill to impose penalties on parent or subsidiary companies rather than just the investigated entity. In the data Bill, we recommend the exclusion of criminal liability for procedural infringements, as this risks stifling proactive co-operation with regulators.

To ensure confidentiality, we should ensure regulators’ access to sensitive materials like source code is restricted to clearly defined, exceptional circumstances to protect trade secrets and manage cybersecurity risk.

The third area is safeguarding innovation and competitiveness. The AI and data Bills both introduce mechanisms for statutory levies on industry. We acknowledge the importance of well-resourced and efficient regulators. However, we have competitiveness concerns about the potential layering of regulatory levies and the cumulative impact of such levies on the digital ecosystem. If applied by 13 different authorities, these costs could become untenable and may place Irish-based entities at a competitive disadvantage within the EU. IBEC recommends that the Government commits to primary Exchequer funding for regulators with proposed industry levies used only in limited, co-ordinated, proportionate and transparent circumstances that consider relative competitiveness. We support regulatory efficiency and transparency. Any proposed levy should therefore be underpinned by a mandated annual work programme and ex-post accounts to ensure fairness and certainty for operators. It is a transparency point.

We would also like to emphasise the importance of supporting AI innovation. The AI Act is obviously about safeguarding people but it is also about encouraging innovation. Only two pages of the 180-page AI general scheme refer to innovation. We encourage and we need a workable regulatory sandbox accessible to all enterprises, not just SMEs, to encourage responsible AI deployment, innovation and regulatory knowledge. Lastly, implementation of EU rules must be matched by investment and engagement in capacities, including skills, that enables trust and excellence in our AI ecosystem and effective AI adoption.

In conclusion, IBEC supports the ambition of these Bills to create a robust framework for the digital economy. However, we must ensure that national implementation of EU rules is coherent, proportionate, and safeguards people, innovation and competitiveness. We must also invest in capacities including skills that enable trust and excellence in AI across our economy. We look forward to discussing these matters further with the committee.

Deputy Albert Dolan

I thank Mr. O'Donovan and Ms Clarke for being with us today to discuss the merits of this AI Bill, where they see things that could change or be improved and to tell us what the general feedback on it is to this point. Is the regulatory model clear enough for businesses? Is there a fear that firms will be left dealing with overlapping regulators? We have Coimisiún na Meán, the Data Protection Commission, the Workplace Relations Commission and Revenue. There are so many different bodies already in the State to deal with. We would hate to see the AI Bill essentially creating another regulator, albeit it is vital that we have the expertise to handle AI-related issues that will arise, no doubt. The question is whether this model is clear enough for IBEC's members.

Mr. Erik O'Donovan

One of the areas where we feel that refinements could be made is in this area of coherence. We fully understand the idea of a distributed model. The logic behind the distributed model is that there is domain knowledge that already exists. If we think about the AI Act, it involves product safety as well as protecting fundamental rights. We have existing regulators in market surveillance. The logic is to leverage that regulatory domain knowledge. We acknowledge and accept that. However, what we point to in our written submission and in our opening statement is that there are areas where that could be refined. I will go through a few of them.

There is a mechanism in the data Bill, for instance, about a co-operation forum. There is also a mechanism in the AI Act for a co-operation mechanism as well. That is for the regulators to talk to each other. What we are recommending is that there should be a one-door policy. It does not seem very clear to us that we could actually engage with that co-operation forum. To answer the Deputy's question, it is not clear to us. We do feel that there should be a mechanism by which there is one door we go to to get the answers.

Deputy Albert Dolan

On that, does Mr. O'Donovan believe that the likes of IBEC or other entities should have a seat at the table on that forum with the regulators? For example, IBEC has a seat at the Labour Employer Economic Forum, LEEF, and that gives it a position to engage from. Is there a fear that IBEC does not have a mechanism to engage?

Mr. Erik O'Donovan

The fear is for the people who are actually obligated or regulated. Who do they talk to? It is not clear from reading the proposal, in the case of AI, which regulator takes a case and what happens if two regulators do not decide to take a case, and so on. There are a few areas that we point to in our submission where a bit more certainty is needed. What we are really saying here is that these co-operation mechanisms and so on need to be more formalised. Also, we point to the basis of the powers in the law. There are existing regulators and they are going to depend on existing powers. We are not sure whether those existing powers exceed what is in the AI Act in respect of market surveillance. That is why we are also saying that supervisory powers should be harmonised. The key takeaway that we would leave with the committee is this harmonisation idea. We are not against the idea that there could be 13 regulators involved; we just want to make sure there are mechanisms in this Bill making it clear they are talking to one another and are talking to those who are actually obligated. It is less of a concern that IBEC is at the table and more of a concern for those who are regulated. There could be several different regulators. The question is which regulator you go to.

Deputy Albert Dolan

On the other side of it, for companies and particularly SMEs that IBEC represents, what compliance risks exist and what practical supports should the Government put in place to help firms adapt and ultimately mitigate those risks?

Mr. Erik O'Donovan

In the actual Bill, what we are talking about here is more to do with the actual regulatory sandbox. The sandbox is going to be important as it allows an SME, although we also think it should be broader, to field-test an AI idea of innovation in a safe environment. Regulatory sandboxes exist already in certain sectors. The idea is that they are working with the regulator in field-testing the innovation they come out with so it is AI Act-ready. For us the regulatory sandbox is going to be really important for SMEs but also enterprise in general. We have to think of AI as not just a tech issue but a horizontal business issue, because AI is a horizontal technology that is going to be used by a lot of different sectors.

Deputy Albert Dolan

My understanding is that the Central Bank has an active sandbox already. That is an example where fintech can flourish without the fear of being reprimanded. There is always this opposing narrative that we need to be very careful with AI and we need to protect our citizens. It is always at the forefront of our minds as legislators to make sure that we protect our citizens and put them first. How can we make sure that we do that without slowing down AI? Ireland is a place that has benefited greatly from innovation and technology over many years. How do we make sure we can have a collaboration between the two whereby we can protect people but can still accelerate the rate at which we adopt AI and utilise it to its full potential?

Mr. Erik O'Donovan

That is the second part because it is not just going to be sandboxes that are necessary; it will be a policy action as well. It is not just legislative. Part of this is really to do with AI literacy across the population and across the economy. The National Economic and Social Council, NESC, has designated AI literacy as infrastructure. As we are a modern economy, investment in the right skills is going to be key to making everybody resilient in order that we safeguard people but also encourage the innovation.

Deputy Albert Dolan

I thank Mr. O'Donovan.

Senator Ollie Crowe

I thank the guests for this morning, Ms Clarke and Mr. O'Donovan. The witnesses noted that the implementation of EU rules should be matched by investment and engagement in capacities, including skills, to enable trust and excellence in our AI ecosystem and effective AI adoption. Will the witnesses expand on this and maybe explain how they would like to see that investment being set up and structured in practice?

Mr. Erik O'Donovan

I thank the Senator for the question. The basis for that point is that lifelong learning rates in Ireland are around 16%, which is only 2% over the EU average. The number one country in Europe is Nordic and they are around 42%. The reason I mention lifelong learning is because the AI concept has been around from the 1950s but the advances in the technology have accelerated only in recent years. Therefore, there are quite a few people in the existing workforce, and then those coming through the pipeline, who will need these skills. That is the actual competitive imperative. We are competing with other digital front-runners on skills. It is about readiness. That point is not anything to do with the proposed Bill; it is a policy question. The number one country is Sweden, by the way, followed by Denmark at around 32%.

To answer the Senator's question about structuring this we have four asks. Some of these are provided for in the new national digital and AI strategy, which we welcome, but some are not. The first thing is this idea of a coherent national skills observatory. Within the Department of Further and Higher Education, Research, Innovation and Science there will be an observatory that looks at skill needs in the economy related to AI. Within the Department of Enterprise, Tourism and Employment they will look at how AI is being adopted. We are saying that this needs to be coherent so that we market intelligence on the demand for skills in terms of AI. Rather than looking at old data, we need up-to-date data. That is the first thing.

The second thing is to leverage part of the National Training Fund that employers contribute to in order to provide agile, digital and AI pathways. We acknowledge that the National Training Fund has been unlocked but while technically it has been unlocked, we would actually like to see it tangibly being directed towards AI and digital skills. We would welcome support from this committee on that point.

The third thing would be to raise awareness of the opportunities out there in terms of skilling and to expand curricula across education and training pathways in digital and AI. The adoption of AI nationally last year was about 14%. This year it is about 20%. The adoption is higher in bigger companies than in small to medium sized enterprises. There is a difference in terms of preparedness between the SMEs and larger companies. Cost and time are features of that and this is why we need to allocate some of the National Training Fund towards digital and AI skills on that. That is the approach we would recommend on that.

Senator Ollie Crowe

On concerns about the proposed sanctions and enforcement provisions in the general schemes of both Bills, will the witnesses give us other examples of how the current proposals might negatively affect Irish businesses? What would the witnesses recommend to limit that risk?

Mr. Erik O'Donovan

In the submission we talk about pre-adjudicative sanctions. What we are driving at here is that if we are issuing prohibition notices before the full investigation is complete, it means that systems where there might be an appeal could actually be withdrawn and then after the appeal it may not have been the case that they needed to withdraw. Premature withdrawal of systems would be a challenge. On that particular point we are looking at an amendment of head 63 - we are actually saying that we want it to be more in line with Article 79 of the AI Act. Also, the timelines of appeals seem a bit short to us. We would recommend longer timelines than we see in the proposed Bill. We say this given the technical complexity of some of the questions that may be involved in these cases. That is the reasoning behind it.

There is another piece we are talking about in terms of publishing notices. Notice of non-compliance should be published after an investigation has been completed to ensure there is proportionality in the treatment of suspected non-compliance. We want a bit of proportionality in the pre-adjudicative sanctions that are applied but it is also about fairness in the investigative stage. This is what we have recommended in the submission.

With regard to the data Bill, we have recommended that for procedural infringements, it should not be criminal liability and that it should be more administrative. We see this in certain other countries like Germany and the Netherlands.

Senator Ollie Crowe

I have a final question about the proposal in the AI Bill to impose penalties on parent or subsidiary companies rather than just on the investigated entity and how this could be limited. Could Mr. O'Donovan expand on that for us?

Mr. Erik O'Donovan

We do not think there is a basis for that proposal in the actual AI Act. That is the first thing. It refers to head 91(3) of the general scheme. We are worried that it exposes entities who may have had a limited connection to the impugned conduct. Again, it is a proportionality point we are making there.

Senator Aubrey McCarthy

I thank the witnesses for being here today. The speed of advancement of AI is amazing. I was at a party over the weekend and they were discussing how you can tailor AI to your own personality. You go in, give your height, give your personality, give your likes and all of that to ChatGPT or Claude or whatever. I would not be the most tech savvy. While Ireland is a global tech hub and I think we can play a huge role regarding AI because we are open to it, how do ordinary people like myself make sure that there is not misinformation and that it is not seen as surveillance or as something that is beyond us? How do we become part of it rather than something that is done to us?

Mr. Erik O'Donovan

In terms of the technology, it could be the technology that helps with the predictive element of decision-making, for example spotting patterns that would take you and I a lot longer to spot, which could be used in fraud detection and so on.

Also, it is used in generating content, which is probably the area that has captured people's imagination.

On the safeguards and the risk of something being done to us rather than our being part of it, the AI Act on which this Bill is based is very much risk based. In other words, it is based on the risks associated with either the development or deployment of this technology. There are certain prohibitions, which I believe the committee discussed with the officials from the Department of enterprise when-----

Senator Aubrey McCarthy

We had them in last week.

Mr. Erik O'Donovan

Yes, when they were last in with the committee.

Prohibitions are related to practices like surveillance, which the Senator pointed to. These are quite Orwellian uses. There are prohibitions in this area in Europe, so there are no arguments about that. Then there is high risk, which relates to either the use of AI in a product or in the likes of employment or decisions that have impacts on people's lives. With regard to the high-risk category, there are obligations on providers, deployers and so on.

The Act itself has to be welcomed. It is taking a risk-based approach and it is ultimately about safeguarding people's health, safety and fundamental rights.

Senator Aubrey McCarthy

The inputs will determine the outputs. I heard a Minister say the other day that he uses AI to summarise Bills. It gives him feedback. However, if the input is biased in favour of men, for example, the summary of the Bill could be biased of favour of them. Is that naive of me?

Mr. Erik O'Donovan

Bias is a concern but it is not the full picture. You also have to check the output. That is part of the process in using AI. We should remember it is a tool. What is put into it will influence what is got out of it but the output has to be checked. You do not only check the output because you then have to choose whether to act on it. Human agency is not gone when using AI. “Human in the loop” is the phrase those concerned would use in this regard. In fact, human judgment will be increasingly important using this technology.

Senator Aubrey McCarthy

Okay.

Another question I wanted to ask concerns the fact that much of the discussion on AI, even last week, focuses on large operators. We had the unions in and they were talking about how many of their members are very worried. I am just wondering what practical supports IBEC has for SMEs regarding how they can safely adopt AI rather than leave it to larger firms.

Mr. Erik O'Donovan

Since last September, IBEC has had a campaign called Work Just Got Smarter. I do not want to give it a cheap plug now. We have a dedicated AI hub and there is guidance on that website on what the opportunity of AI is. It tries to explain the technology. That is one part of it. The second part is all to do with governance, so it is actually about how a company would comply with the AI Act and those types of questions. The third aspect is how to get started because that is one of the biggest challenges. We are very conscious that it is a bigger challenge for SMEs in terms of resources, cost, time and so on. There are examples in the guide of what should be in an AI policy and how the technology is used.

The last point is that there are case studies. There is quite a lot of information in these and it is free. It is not just for our own members; it is open. We have been holding regional roadshows with the Department of enterprise and the European digital innovation hubs, EDIHs, that are dotted around the country. They are designed to help SMEs.

In our submission, we pointed out we are not just a group talking about policy or legislation; we are actually trying to advise our members on adoption and the opportunity that exists. There are risks, too, but what we want to try to do is explain the opportunity and how to adopt the technology because we cannot ignore the fact that it exists. We compete with other digital front-runners and they are also adopting it, so there is an imperative.

Senator Aubrey McCarthy

It is the way we are going. It is very positive but governance is very important.

Mr. Erik O'Donovan

Governance is part of it but skills are also a massive part of it.

Ms Áine Clarke

AI literacy across the population is also required.

Senator Aubrey McCarthy

I am learning.

Mr. Erik O'Donovan

We all are.

Senator Linda Nelson Murray

I am always a little nervous when talking about AI because it is so new. I am glad to hear Mr. O'Donovan saying it is new to us all and that we are all learning. I have just started using it to a small extent but there is always a fear as to the accuracy of the information. You kind of second-guess when looking things up.

The notes available to us state Ireland is home to eight of the leading providers of foundation AI models. How does that compare with other countries in Europe? I am aware Mr. O'Donovan mentioned Sweden and Denmark but I think he was mentioning them in terms of how businesses are using AI. I looked at the figures in this regard before and saw that about 41% of SMEs in Denmark have integrated AI models. Where would Ireland be by comparison with other countries?

Is the EU's AI Act making Ireland a safer place to deploy AI or a less attractive place to build it? How can Irish businesses, especially SMEs, realistically comply with the Act without facing disproportionate costs? What specific supports should the Government introduce to prevent Ireland from losing its competitiveness? There are three questions to be answered.

Mr. Erik O'Donovan

The first was on the adoption rate. It is a bit of a movable feast because it is changing every day. The overall percentage of enterprises using AI technology in Ireland last year was around 14.9%. CSO figures show it is now roughly 20%. The leading country in terms of the percentage of enterprises using AI technology has a figure of around 27.6%. The issue is that larger companies are adopting AI at a faster rate than SMEs, so SMEs need supports. There are supports available. To be fair to the Department of enterprise, it launched a new campaign called AI Works for Business. Information on it is available on the Department's website and there are a number of links there to supports that exist for SMEs.

Senator Linda Nelson Murray

That is good to know.

Mr. Erik O'Donovan

A key point, however, relates to the skills aspect and Ms Clarke's point about literacy. It is a matter of ensuring everybody has access to the required skills. What we are recommending is that part of the National Training Fund, while it is being unlocked, be directed towards digital and AI skills across the economy.

When I think about the digital aspect, I am not just thinking about the big tech companies. Rather, I am thinking about digital being embedded across our economy. We have the medtech, pharmachem and financial services sectors. These, and even our sector of professional services, are all part of the knowledge economy. The numbers of people employed in those sectors are actually quite large and have grown.

In terms of what we would call digital employment, where 80% of the inputs to a job are digital in nature, that grew by some 87,500 to the current figure of approximately 350,000 from 2019 to 2023. That includes ICT and the broader economy, so it is quite a lot. Employment in the ICT sector grew from 129,000 to 187,000 in the period from 2019 to 2024.

Senator Linda Nelson Murray

Does Mr. O’Donovan think this Act makes Ireland a safer place to use AI?

Mr. Erik O'Donovan

There is also an omnibus process that seeks to improve this. The AI Act is all about making AI safe in Europe. I do not think that is up for debate. We are not here to debate that today. We are here to say-----

Senator Linda Nelson Murray

Yes, to support it, but also to say that these are a few of the things we should be considering.

Mr. Erik O'Donovan

There are refinements that we feel could be made in the three areas of proportionality, regulatory coherence, which is very important, and the idea of safeguarding innovation and competitiveness. They are the three points. That was the question on the adoption of AI. The last piece was the SME skills.

Senator Linda Nelson Murray

Yes. How can Irish businesses, especially SMEs, realistically comply with the EU AI Act without facing disproportionate costs? What specific supports should there be? Mr. O’Donovan has answered that to some extent. The idea that AI is good for business is a good point to get out to SMEs.

I am conscious of the time. From reading the notes, the witnesses referred to the "one front door" that they would like to see happen. The notes state that the establishment of the new statutory independent body, Oifig Intleacht Sharoga na hÉireann, or the AI Office of Ireland, is to act as a single point of contact and central co-ordination authority, empowering the 13 designated market surveillance authorities with the right powers and functions to supervise and enforce the AI Act. Is that not what this is already? Is it not the same thing that IBEC is looking for?

Mr. Erik O'Donovan

What we are referring to is that under head 34 of the AI Bill, there is a group called the co-operation forum. It seems to us that those regulators will talk to each other. We have to think of the AI office not necessarily as a regulator but as a co-ordinator. It is not clear to us if that "one door" is there. That is what we are emphasising. We are not clear if we have the opportunity to talk to that co-operation forum, and we are also not clear about the co-operation agreements between the various regulators. They will be talking to each other but will they talk to the people who are-----

Senator Linda Nelson Murray

It comes back to IBEC wanting to have a voice there.

Mr. Erik O'Donovan

Essentially, it is that they are talking to the people who are obligated. It is not a voice for me.

Senator Linda Nelson Murray

I know. It is for the people IBEC represents.

Mr. Erik O'Donovan

It is for the people who are actually going to be obligated by this. The people who will be obligated are going to be across the economy because it is not just tech. As I pointed out, there is also the digitalised economy, and the people who will be using AI are not just in the tech sector.

Deputy Tony McCormack

I thank the witnesses for coming in and for their opening statements. We can all agree that the challenge with AI legislation is that we are regulating a technology that is still very much in its infancy. None of us can fully predict what it will look like in ten years’ time. In the past, we had industrialisation and mechanisation back in the 1700s. We are now in the digital age, and we can see what is happening. We must legislate, which is why the witnesses are with us today, and the legislation has to be flexible, proportionate and kept under continual review. We must protect citizens while also ensuring that Ireland remains globally competitive for enterprise and innovation, as the witnesses noted earlier. That balance is a real complexity at the heart of this discussion, and it is why today's engagement is so important.

It depends on who you talk to: there will either be a huge number of job losses or a huge number of jobs created. Looking at the history of the world, at every stage where we have had such a big change, people talked about job losses but they never materialised. In fact, what happened is that we ended up having more jobs as a result. For Ireland, because we have a highly educated workforce, it leaves us in a unique position as long as we do the upskilling and reskilling to make our workers viable for the AI companies that will be looking for employees.

What businesses and industry groups regularly warn about are the dangers of over-regulation, yet the experts, researchers and even AI companies warn about the risks of unchecked AI. In striking that balance, where does IBEC believe the line should be drawn between innovation and strong public safeguards?

Mr. Erik O'Donovan

Again, the Act on which the Bill is based touches on this idea of trust, which is that it is lawful, ethical and robust, which means it is safe and protects health, safety and fundamental rights. The second part, which maybe does not get as many headlines, is what is called excellence, which is that we build capacities within it. That is the innovation piece. As to where we lie on both of these, we support trust and excellence. We have been quite consistent on this. Going back a number of years, even before the first national AI strategy, we have supported trust and excellence. It is not a case of one or the other; it is both. We are here today, talking about the three parts: the proportionality, the coherence and, not to forget, the competitiveness piece. The skills are the non-legislative part of that. This is the policy piece.

Where do we lie on it? We are very comfortable supporting both trust and excellence. There are no issues with that.

Deputy Tony McCormack

On trust and excellence, is that not self-regulation? Have we not learned in the past that self-regulation sometimes does not work, and that there needs to be more than trust and excellence? There need to be mechanisms in place that are able to keep an eye on these companies, so we are not just depending on their trust and excellence but we have some foresight into what is actually happening.

Mr. Erik O'Donovan

That is exactly what the Act is all about. I agree with the Deputy that the Act is going to provide for that. The point is that through our Bill, we will drive it through 13 market surveillance authorities. I do not think there is an issue with that. What we are here to talk about today, from our perspective, is that we want to make sure it is coherent. That is the point. It is not that anybody is against safeguarding health, safety or fundamental rights. It is more on the point that we need to be coherent in how we do it, so there is no divergence in the sanctions, and there is certainty.

Deputy Tony McCormack

I appreciate that. I am sorry to cut across Mr. O’Donovan but I have another question. The Irish public is increasingly interacting with AI in the workplace, healthcare, financial services and public services. From IBEC 's perspective, what rights and protections should citizens have when AI systems make harmful or biased decisions? I do not expect Mr. O'Donovan to have all the answers, and I know that is a tough question.

Mr. Erik O'Donovan

The rights are provided for under the Act. The Act itself is risk-based law.

If there are risks in terms of fundamental rights or someone's health and safety, that is what the EU AI Act is all about. That is what it provides for. It provides for protections in those areas not just for the public and workers, as the Deputy has mentioned, but also for organisations.

Deputy Tony McCormack

Let us look at social media and how it has taken over the world. We have the good players and the bad players. We have the influence coming from bad governments across the world and from individuals and companies operating in nefarious ways right across the whole network of social media platforms. In some cases, these may decide who enters government in a particular country. They are putting out fake news that goes unchecked. In IBEC's view, how can we make sure a similar situation does not arise with AI? We really need to legislate for what is going on in social media at the moment. For whatever reasons, governments right across the world seem to handle it with kid gloves. They do not seem to want to seriously take it on. In ways, it has been very good for our planet and our world but it has been terribly bad in other ways. That is a long-winded way of asking what protections IBEC believes we should put in place.

Mr. Erik O'Donovan

Safeguarding people online from everything the Deputy has just mentioned is obviously important. That is not up for debate. We also have to remember that there are existing EU online safety rules, for example, through the Digital Services Act. As I have said, the AI Bill itself will take a risk-based approach to protecting health and safety and fundamental rights in the development and deployment of AI. For anybody who does not know, the EU omnibus proposal is about streamlining some of the rules and so on. However, there is also talk of extending prohibitions. That is part of the discussions. The answer to the Deputy's question is that when talking about online safety and AI, you have to make sure there is coherence in developments to avoid fragmentation. If the question is whether we need to provide further online safety protections through the AI Bill, quite a lot of law on online safety already exists. What I am trying to say is that we have to be cognisant of that and to be coherent. Otherwise, you risk fragmentation.

Deputy Brian Brennan

I apologise for being a bit late. A lot goes on here on a Wednesday. One thing is certain; AI is coming. That is the only certain thing that is going on. Making rules up as AI evolves is a concern. Obviously, we need to put rules in place because AI is coming. I totally respect IBEC. I come from a business background. Was IBEC consulted in any way as part of the process of drawing up this legislation? There is fear out there but there is also opportunity out there. There is a huge divide between those. There is a fear of losing jobs but there are also huge opportunities to increase the number of jobs and to create new jobs in the system. Did IBEC have any engagement in this because it knows what is happening on the ground? It is listening to what I am listening to every day.

Mr. Erik O'Donovan

The way to think about it is that, for the last ten years, the European Commission has been legislating in the digital space and we are now at the stage where it is about implementing a lot of those rules. As with many other interest groups and, I am sure, groups across Europe, IBEC has been engaged on these proposals. We absolutely engaged in public consultations on the AI Act and so on. Again, it goes through an EU process. The EU law takes a risk-based approach, which is good. It is good because it is about both safeguarding people and encouraging innovation.

The Deputy spoke about fears and excitement, the two sides of the coin. On that issue, there is going to be near-term disruption. That cannot be avoided. However, a lot of the reports say that in the long term, there will be net job creation. This comes back to what we said at the start in our opening statement. It is not just about implementing the rules in an effective way. Reading over our opening statement or listening back to what we have said, it is clear that we see the law and making the refinements we have mentioned as being about giving people certainty in a framework that both safeguards people and encourages innovation. From a policy point of view, the capacities must also be provided. That comes back to skills. I know it sounds like I am hammering that point but IBEC has been quite consistent in what it has said about directing part of the National Training Fund towards AI and digital skills for a number of years. I do not think this year is going to be any different. Anything we have said in consultations regarding AI is up on our website. We are pretty open about what we have said in this area.

Deputy Brian Brennan

To box that question off, I am very interested in Mr. O'Donovan's comment regarding net job creation. How did he come to that synopsis?

Mr. Erik O'Donovan

I did not come up with it. A number of bodies, including the International Labour Organization, the OECD and the World Trade Organization, have said that.

Deputy Brian Brennan

Wearing the green jersey, does Mr. O'Donovan see that being replicated here in Ireland?

Mr. Erik O'Donovan

I would hope so but it will depend on the policy decisions we make. Skills will be an important feature of that. Being positive and wearing that green jersey, we do have a national digital and AI strategy. That is positive and a credit to the people who worked on it. Many people had an input. The debate has now moved on to implementation. We have plans for roadmaps on skills and so on but it all has to be funded. In the submission we have made, we mention relative competitiveness with regard to levies and so on. The point is that we need to direct some of the National Training Fund towards digital and AI skills. There is a demand there.

Deputy Brian Brennan

I absolutely agree. Bearing in mind that health, safety and fundamental rights are the three key issues and that we are looking at 13 sectoral bodies overseeing this, my fear is whether they are funded. Mr. O'Donovan mentioned this a couple of seconds ago. We meet these bodies here and they are overloaded with what they are doing at the moment. We are now bringing in extra work for them. What is Mr. O'Donovan's view on that?

Mr. Erik O'Donovan

In our submission, we say that we believe the regulators should be resourced for the task. We are raising a concern. The AI Bill and the data Bill will both involve a structure of multiple regulators.

Ms Áine Clarke

The NIS2 directive, the cybersecurity law, is also federated.

Mr. Erik O'Donovan

It is federated as well. With regard to levies, I ask Deputy Brennan to bear with me because we have said that we think primarily we should use Exchequer funding. The logic behind it is, as we have described, and it is not me saying it but the CSO and the Central Bank have made this point already, our digital economy is a big economic contributor so there is a danger we would end up layering levies. The question then is what the cumulative impact of these levies would be on relative competitiveness. This is the concern we have. If there are going to be levies, they should be co-ordinated so they do not duplicate. The point is that they should be transparent. It is not necessarily that a levy is a bad thing but it needs to be transparent and co-ordinated.

Deputy Brian Brennan

A levy is a bad thing for SMEs at the moment. They are being hit with enough and their margins are being crucified, as we well know.

Mr. Erik O'Donovan

I will not disagree with Deputy Brennan on that. We are pointing to relative competitiveness. We also need to watch what other jurisdictions are doing in this area and, if they have levies, whether they are as high as what we have here. This is the point we are making. It is the potential challenge. We layer this and we have to keep an eye on competitiveness but, at the same time, we have to be transparent in it.

An Cathaoirleach

We have two guest speakers offering, Deputies Gibney and Ó Cearúil. They will each have seven minutes and they are very welcome.

Deputy Sinéad Gibney

I thank the Cathaoirleach. The witnesses are very welcome and I thank them for their contributions. I do not see it quite through the same perspective as some of the views that have already been shared. I will touch on the two areas of governance and labour. I will set it out and ask the witnesses for their responses to these areas. I have major concerns about the governance and the fact that the AI office is being built in the Department of enterprise and will remain under its aegis. This presents to me a series of conflicts around the fact that, as is stated in the general scheme, there will be a mandate in the organisation to promote AI and innovation. This matches very well with the Department of enterprise but the office is also supposed to be charged with the implementation of the guardrails, safeguards and ethical concerns we all have about AI. To me, the competence for this does not sit in the Department of enterprise. I have great concern, not only at domestic level but at European level, about the fact that AI and its regulation, and the framework supporting this, is being viewed through the lens of enterprise alone.

I do not believe the board created under the EU AI Act has this competence because it is staffed with officials from departments of finance and enterprise across Europe. There is nobody there to represent the rights and protections picture. I have great issues with that and with the independence of an organisation being set up in the Department of enterprise. I have been at the head of an independent State agency so I know that where it comes from matters. I would love to hear the views of IBEC on that.

I also want to touch on the digital omnibus with regard to governance. I hear what has been said about simplification, and I appreciate that small to medium enterprises in particular have huge demands placed on them and have to provide, for example, duplicate documents in some areas, but I believe the digital omnibus goes way too far towards self-regulation. I am keen to hear the comments of the witnesses on the removal of Articles 6 and 49. These are areas where I have real concerns. I also believe the omnibus will roll back the GDPR protections we have enjoyed for 11 years.

I also want to touch on the issue of labour because I do not hold such a rosy picture about labour displacement. I do not think there will be a net gain. I charge anybody to go out tomorrow at 1 p.m. and speak to the 700 Covalen workers who will be protesting. They have trained AI agents to take their jobs. This is in the same week that in China two laws have been introduced to penalise companies, so they will not be able to introduce redundancies on the basis of AI development. There is an interesting juxtaposition between the treatment of workers as contractors for Meta through Covalen, who are being discarded now they have built AI agents, and a country where the seriousness of labour displacement is at a peak and needs to be regulated.

I do not share the optimism that has been expressed but, having said all of that, I am a tech enthusiast. I believe that AI needs to be harnessed and that it can be a good force in society. However, as long as these issues are not addressed in a serious manner, which I do not believe they are through the AI Act, the trust will not be there and AI will never reach its economic potential or any of the societal potential it brings. Those are my concerns. I would love to hear the thoughts of IBEC on them.

Mr. Erik O'Donovan

I thank Deputy Gibney. In terms of whether the AI office resides in the Department, I do not think it is part of what we have raised as a concern on our side. The Deputy spoke about a concern that it just mandates innovation but innovation is part of what the Act is about. I understand-----

Deputy Sinéad Gibney

It is the other side I have more concern about. I realise innovation is tied to the Department.

Mr. Erik O'Donovan

I am just trying to reply to the question and the statement. I would also say Deputy Gibney must think of the office as a co-ordinating body. It will co-ordinate 13 market surveillance authorities, including fundamental rights authorities. It is not as if it will not be covered in the framework. That is my response on governance.

With regard to the omnibus simplification, I believe Article 6 is about the timeline for compliance. Where this all came about, and I suppose this is a very-----

Deputy Sinéad Gibney

Article 6 is about high-risk systems.

Mr. Erik O'Donovan

Yes, it is about high risk but the timelines for the high-risk systems.

Deputy Sinéad Gibney

It is around the limited tasks and Article 49.2 is the timeline.

Mr. Erik O'Donovan

In terms of the omnibus and the timeline, how it all came about is that to implement these rules we need to have standards in place. We would all agree with that. This is not just business but also the regulators. Extending timelines, which is part of the debate in the omnibus, makes sense with regard to aligning the timelines with the timeline for the standards-----

Deputy Sinéad Gibney

It is not necessarily the timeline I have an issue with; it is the fact that the high-risk systems will now be able to be flagged by the tech companies themselves, with no external reporting requirements placed on them. That is what I have an issue with. It is a direct swing right back to self-regulation, whereas the EU AI Act did at one stage have a promise of potentially greater regulation of the tech sector.

We spoke about social media platforms earlier. I appreciate the Digital Services Act exists and that today we had a great announcement that Coimisiún na Meán will use it in its powers but social media is a wild west. We have had Grok and no enforcement of the comeback to it. I do not believe the regulatory framework is working. My concern is this brings it back to self-regulation. Does Mr. O'Donovan believe that is the case?

Mr. Erik O'Donovan

My understanding is that Article 6 is regarding the timeline for compliance of high-risk AI. The article is not deleted but the timeline is extended. Article 49 is regarding the registration of systems on a database. Is that right?

Deputy Sinéad Gibney

Basically, Article 6.3 and 6.4 of the AI Act allow providers to claim certain AI systems are not high risk if they are for limited tasks-----

Mr. Erik O'Donovan

If they are able to prove-----

Deputy Sinéad Gibney

-----and Article 49.2 requires the providers to register such systems in a public EU database before deployment, which creates transparency about what AI systems are being used. Article 114 of the omnibus on AI proposes deletion of Article 49.2. It will delete the obligation on reporting. It really does swing it right back to self-regulation. Nobody will admit that in any exchange I have on it but it is the case.

Mr. Erik O'Donovan

My understanding of Article 49 in terms of registration of the system is that it would not be registered as high risk if it is proven not to be high risk. Would that not be sensible?

Deputy Sinéad Gibney

There is no obligation for providers to externally prove that, though. I can develop a system, a high-risk product, and decide for myself. The issue I have is that it is self-regulation. Perhaps this is something that IBEC could re-examine and take another look at. I agree with Mr. O'Donovan that we need these systems, but for me they are not robust enough. Certainly, the digital omnibus is pulling back on them.

Mr. Erik O'Donovan

In terms of the omnibus, it is still, by the way, under debate and has not been agreed. To me, an awful lot in that omnibus makes sense, in respect of realigning the application of timelines and the delivery. The GDPR omnibus was touched on as well.

An Cathaoirleach

We have gone over the time by 90 seconds. That is our biggest overrun today. I apologise.

Deputy Sinéad Gibney

My apologies.

An Cathaoirleach

I call Deputy Naoise Ó Cearúil.

Deputy Naoise Ó Cearúil

I thank Mr. O'Donovan and Ms Clarke for being here. We know the Bill explicitly states that the AI office will not be a regulator. Rather, there will be a distributed model with the 13 market surveillance authorities, MSAs. For the sake of clarity, is IBEC saying that the AI office should be a regulator or should not be a regulator? What would be IBEC's preference?

Mr. Erik O'Donovan

No. We are happy enough that it is a co-ordinator and so on. The point that we have made in the submission in terms of regulatory coherence is around making sure there is no divergence in sanction procedures. Additionally, these co-operation forums seem to be aimed at just the regulators and so on, and we have not been clear how that will then work for the businesses obligated in respect of how they will talk. That is clarified for us by having this aspect.

Deputy Naoise Ó Cearúil

Would reserve functions for the AI office, for example, help in terms of compelling an MSA to take on a particular case or complaint?

Mr. Erik O'Donovan

Yes. Formalisation of that coherence would be welcome.

Deputy Naoise Ó Cearúil

As part of that reserved function, would it be helpful to have binding guidance or decisions? One of my biggest concerns is the lack of teeth and powers afforded to the AI office. What I am trying to understand from the perspective of the industry and in general is what powers or authority we could give to the AI office as this Bill proceeds to ensure it does not have just the signposting position and role but can also ensure there is clarity when a complaint or case arises.

Mr. Erik O'Donovan

My understanding is that the teeth are with the market surveillance authorities. I do not think there is an issue with that. It is more about ensuring there is no divergence between the two. We are worried that where there is divergence or fragmentation, we could have a situation where AI is used in a cross-sectoral-----

Deputy Naoise Ó Cearúil

It could be the Workplace Relations Commission and the Central Bank, for example.

Mr. Erik O'Donovan

Yes, in HR. It was not clear to us from the general scheme what the procedure would be if there are two competent authorities and either or both wish to investigate the same operator or both refuse to initiate the investigation. It is about clarity on this aspect and formalising it. If it is said there is a co-operation forum, the question for us and our members is how formal it is.

Deputy Naoise Ó Cearúil

That is my point. From speaking to a lot of people, I do think the AI office needs compellability to ensure an MSA takes action. An example was given earlier of where there may be a transcendence across two competent authorities and neither or both of them might want to take up an issue. It is about ensuring there is that clarity in such a situation. Would IBEC be of a similar or same mind that the AI office should have that capacity and power to compel one of the MSAs to take on a case or a complaint?

Mr. Erik O'Donovan

I do not think we put it in the submission as bluntly as that, but I think some sort of formal mechanism where there is co-operation-----

Deputy Naoise Ó Cearúil

That is why we get to ask questions.

Mr. Erik O'Donovan

No, that is reasonable. I think a more formalised approach would be welcome.

Deputy Naoise Ó Cearúil

Moving to the enforcement architecture, Deputy Brennan raised some questions about this area. Source code access by regulators is described in the Bill as the last resort. IBEC's submission said it should only be used in exceptional circumstances. Should the legislation, as it stands, have a statutory threshold of prescribed prior steps before source code can be compelled?

Mr. Erik O'Donovan

What we are asking for here is that it be consistent with whatever the EU AI Act says. I think that is Article 74 - a lot of facts and figures are running around in my head now. As long as it is consistent with that, we will be happy with it. The issue here is just to maintain confidentiality and protect cybersecurity and IP requirements. That is why we put it in there. The last resort investigative tool is in an explanatory note, but we want to make sure that is aligned with Article 74. As this finalisation process proceeds, if that is confirmed, I think we will be happy with it.

Deputy Naoise Ó Cearúil

Moving on, the Bill gives the Minister the power to expand the AI office's statutory powers by statutory instrument. Does IBEC think the Oireachtas, either through this committee or the AI committee, should have some powers in respect of having an expanded statutory role in assessing the expansion of the AI office's statutory powers?

Mr. Erik O'Donovan

Honestly, I do not know.

Deputy Naoise Ó Cearúil

That is fine. Again, I raise this issue because I think it would give this committee and the AI committee the capacity and ability to ask questions about why particular powers are being expanded.

While I have time, I will go back to the enforcement architecture. The Data Protection Commissioner has a track record of issuing substantial GDPR fines, and we know all that, while the AI Act penalties can reach 7% of global turnover. Regarding the 13 MSAs being empowered to sanction, I think it was mentioned by IBEC that there is a double jeopardy situation possible if two MSAs were to fine a particular SME or large corporation. Has IBEC quantified the worst cumulative penalty that a company could get?

Mr. Erik O'Donovan

We have not put a number on it but, again, the point of coherence is the key takeaway from our side. We have not quantified that yet.

Deputy Naoise Ó Cearúil

That is fine.

An Cathaoirleach

To reflect on this briefly, it is interesting that we have a full Oireachtas Joint Committee on Artificial Intelligence. Of course, when this committee is the line committee for the Department, even Committee Stage scrutiny cannot be done by that AI committee. It is one of those funny things. It would make an awful lot of sense, given the enormous workload in this regard. I acknowledge Deputy Ó Cearúil's interest in the topic and he is very welcome to come in here at any stage as our body of work is under way, as we are effectively working on the same thing. It is quite an interesting situation. I thank the Deputy again for being here.

Before we begin a second round of questioning, I note Deputy McCormack and Deputy Brennan would like to contribute. We will take a short sos.

Sitting suspended at 1.59 p.m. and resumed at 2.02 p.m.

An Cathaoirleach

I thank the witnesses very much for their contributions and their opening statement, which were very interesting. I will not lie, though, because they were heavy going as well. For the general public, it takes a bit of reading into this matter.

I have more general questions. I have an obligation as Cathaoirleach of the committee to try to make things here as inclusive as possible. What the public at home are seeing at the moment is the potential for the expansion of AI to have a further impact in terms of the current level of employment in certain sectors. We saw much reporting over the weekend that there had been a significant drop in the number of people working in the tech sector in Ireland, for example. It is always interesting to get feedback from IBEC or other organisations with respect to their view of the direction of travel on this. Does IBEC see the disruption that is potentially on the way for us in Ireland as a cause for concern? What is the pace of progress with respect to how we are preparing for the adaption of artificial intelligence within government and wider society?

My next question is one I always ask when discussing this topic. I have met some extraordinarily talented young graduates and people coming into their final year of their undergraduate degrees. They are telling me that there are major struggles to try to get into the likes of the big four and other companies that would previously have been quite generous with placements that do not seem to exist any more. It is a major cause for concern. If we think of the past ten years and what it has been like to be a young person in Ireland, we have had a cost-of-living crisis and we have had the Covid-19 pandemic interrupting people's flow of education and having a remarkably dark impact on people's lives. It is something that concerns me that AI is now coming along the tracks so fast. On those three generic and general points, I would be appreciative if the witnesses would give us an oversight. We will then proceed to the second round of questions.

Mr. Erik O'Donovan

We have to remember that employment in the ICT sector grew from 129,000 at the end of 2019 to around 187,000 by the end of 2024. That was a level of spectacular growth and it is accepted that it was driven by some trends that did not last as well as a mix of factors. Geopolitical uncertainty, higher interest rates and, perhaps, overhiring during the pandemic were features. Maybe AI has also contributed. We had 175,000 workers at the end of 2025, so there were almost 50,000 more workers in the sector than there were five years ago.

I was not being glib earlier when I said that we must expect short-term disruption. We are aiming for net job creation. These choices are within our hands. It is not a passive thing. We have to invest in the capacities. That brings it back to the skills piece. It is not just a question of graduates, but also upskilling and reskilling people who are already in employment. There are going to have to be a lot of different pathways involved in this. There are a number of factors at play here that I have mentioned. I am not sure it is all down to technology. Labour costs are another factor. While I accept the concern and we are seeing moderation, the sector is still very strong. We have choices in our hands about skills that will offer that resilience.

Regarding progress on adoption, we would look to figures from Eurostat. They are reported annually. I believe the next set of figures will come in June. It is called the digital economy and society index, DESI. In terms of where we are at, the number of enterprises using AI technology amounted to 14.9% according to last year's figures. That is above the EU average. In the CSO's reporting, it has jumped to 20%. We have to compete with other digital front-runners, who were at 27% last year. We have a bit of work to do. We have made a lot of progress. We are well placed. I am not trying to paint a picture of doom and gloom, but there are choices that we have to make. The skills piece is going to be very important in this.

An Cathaoirleach

I thank Mr. O'Donovan very much. I appreciate the information on that. It was definitely food for thought. We will now begin our second round of questioning. I call Deputy McCormack.

Deputy Tony McCormack

I thank Mr. O'Donovan and Ms Clarke very much for their forthright answers. They represent IBEC, which is a business organisation and a body that should have an input into the AI legislation that we are bringing forward.

These are challenging times, whether it is the geopolitical situation or AI. I will pick up on something Mr. O'Donovan said in response to the Cathaoirleach's question with regard to income and pay. In the ICT sector, are we out of kilter with the rest of Europe or even the world? Have we gone ahead and made ourselves less competitive? Is that something IBEC is seeing in the marketplace?

Mr. Erik O'Donovan

I do not have information to hand on that. We have colleagues in our economics department who could follow up on that. There have definitely been policy-led increases in labour costs around PRSI and auto-enrolment. IBEC has talked about that - it is more to do with the speed and co-ordination of those measures – but that might be part of a broader discussion.

Deputy Tony McCormack

Ireland’s economy depends heavily on remaining competitive, as I have said previously, and remaining attractive for investment. When we look at the number of people employed here in foreign direct investment companies, there are also the spin-off add-on jobs that are created as a result of that. We have to remain competitive. What practical changes would IBEC recommend to ensure this legislation protects consumers and builds trust in AI without creating unnecessary barriers to innovation and enterprise?

Mr. Erik O'Donovan

We touched on it to a certain extent in the earlier discussion. Regulatory coherence produces the certainty that is important to foreign direct investment. I would also mention an old report where the CSO said it was 60:40 in terms of the number of people employed in the tech sector who were indigenous. We have a strong indigenous tech sector as well as foreign direct investment. It is very important. When I am talking about what I have talked about today, I am also thinking of the broader economy that is digitalised.

Certainty is important. Ensuring there is proportionality is definitely a second thing that will help competitiveness. The third piece, which we touched on, is that of levies. The point is to watch in case there is layering of the levies but also that any levies are co-ordinated and transparent. That helps competitiveness, too.

Deputy Tony McCormack

We talked about upskilling and reskilling the workforce. In IBEC’s engagement with companies around the country, what have they said they require from colleges or courses to be put on for school leavers now? My colleague, the Cathaoirleach, said that he was finding many graduates who might once have picked up jobs with the big four or similar no longer being in that position. I am finding that as well. What kinds of course have companies indicated to IBEC that they would like to see colleges run? Through IBEC's negotiations, have the colleges been implementing such courses?

Mr. Erik O'Donovan

When we talk about directing money from the National Training Fund, we recommend that it be directed to a number of different pathways. One that is well known is Skillnet. We are involved in several of those pathways. They are sectoral in nature and have a digital element. Skillnet is a positive model because it brings the provider or educator with business. It is bringing the supply and demand together to fill that.

On the types of course, micro-credentials are quite popular. The reason they have grown in popularity comes back to the point we were making earlier about the barriers for people being cost and time. It is about not necessarily doing a very long course but doing things in bite sizes, especially for SMEs.

Deputy Tony McCormack

Especially for people who are re-educating or upskilling.

Mr. Erik O'Donovan

Exactly. There is Skillnet and a new one was launched recently - the name has gone out of my head now – through SOLAS. It is a new initiative we should give a shout out to as well. A lot of good stuff is being done. We are just asking for more. We are not here to criticise or anything like that. We are here to encourage.

An Cathaoirleach

We now go to Deputy Brennan.

Deputy Brian Brennan

It really is not so long ago that we were hugely concerned about the level of unemployment in this country. Sometimes, we forget that, yet here we are sitting as a proud country with almost full employment. I do not want to be negative but that is where the fear is coming from in a lot of people. That is why I am so keen to hear more about the reactions IBEC is getting on the ground at the coalface, not only in Ireland but also in Europe. What is the opinion of similar organisations to IBEC in Europe? It brings up the fundamental question of whether there was anything extra that IBEC would seek were it drawing up this Bill. I understand what it is worried about but what needs to be added?

Mr. Erik O'Donovan

I do not mean to flog it to death, as we have already talked about coherence and proportionality. A lot more could be put in the Bill on the innovation side in terms of the regulatory sandbox. That would be welcome. The sandbox will be helpful to companies in making them AI ready. The skills piece, which I may have talked to death, is a policy decision. What the Bill can do to support innovation and help companies be AI ready has more to do with the regulatory sandbox.

The regulatory sandbox has a dual function, in that it makes regulators AI Act ready as well. They are working with companies and see the kinds of issue and so on, and that helps them build up their knowledge. I would see the regulatory sandbox as being pretty important. Perhaps there could be an increased focus on that in the Bill. However, as we said in our submission, most of it is about refinements. The sandbox would help make organisations and people in them AI Act ready.

Deputy Brian Brennan

On IBEC’s discussions with people on the ground, we are dealing with major companies that are very large employers. Mr. O’Donovan said that he felt they were getting ready for it far more than SMEs were.

Mr. Erik O'Donovan

According to the CSO, yes.

Deputy Brian Brennan

How can we help the SMEs? How can we support levelling that off?

Mr. Erik O'Donovan

I do not mean to plug everything we do but we did a skills survey in 2025, which was published this year. It points to a preparedness gap between larger and smaller firms. Cost and time are the two big pieces. For IBEC, it is about incentivising training. One of the ideas we put forward was the idea of training vouchers. Also, diverting some of the National Training Fund to skills in this area will help the resilience piece.

Deputy Brian Brennan

I thank the Chair.

An Cathaoirleach

I thank the Deputy. Our last speaker is Deputy Clendennen.

Deputy John Clendennen

I also thank the Chair. He is very good to have given me a couple of seconds to catch my breath before I contribute.

An Cathaoirleach

Unfortunately, we have run out of speakers.

Deputy John Clendennen

No worries. I thank the witnesses for joining us. On the point Deputy Brennan raised about the impact at different levels, do the witnesses see any particular sector or size of organisation that will be disproportionately impacted by this?

Mr. Erik O'Donovan

Does the Deputy mean impacted by the Bill?

Deputy John Clendennen

Yes.

Mr. Erik O'Donovan

I have to stress again the concerns we have brought today around proportionality, coherence and competitiveness are not just for larger companies but for everybody. The reason for that is AI is a horizontal technology and therefore it is fair to say the comments apply across the ecosystem. Whether it will impact one company over another, I really cannot say but my comments are from a horizontal point of view.

Deputy John Clendennen

What about an economies of scale perspective? Is there a benefit for larger operations?

Mr. Erik O'Donovan

As we said, cost is going to affect SMEs more so anything we can do in terms of this Bill that will enhance competitiveness is going to benefit them more, is the point.

Deputy John Clendennen

Should we be looking at this almost through a different lens? I do not have the answer here, but should more of an onus be put on the likes of the local enterprise office to work on achieving compliance with its clients? Is there a role or some way the witnesses could see that working?

Mr. Erik O'Donovan

With the LEOs.

Deputy John Clendennen

As one particular lever.

Mr. Erik O'Donovan

Yes. To be fair to the LEOs, they are not actually regulators. The regulators are outlined in this Bill, in the sense of the market surveillance authorities, and then we have the new AI office that will act as the co-ordinator. The LEOs have a very important role in helping SMEs adopt the technology. They would be driving the uptake of innovation supports and so on. That is the role they have. Again, that is more on the policy side than the legislative side, with respect to the scope of this Bill but LEOs have an important role. I want to be fair because LEOs are doing work on this and play a very important role. We mentioned earlier the campaign on AI being good for business. This will be rolled out through the LEOs too. I have talked about skills and encouraging adoption means supports to help people adopt the technology but there is an awareness piece too because when it comes to SMEs studies have been done that show knowing where to start is a challenge. It comes back to our campaign called Work Just Got Smarter, which we touched on earlier. With it, we are trying to talk to all our businesses. We have different sectors and in our membership we have businesses that are big and small. A lot of the information we have produced on our AI hub is available to the public and to all business, so we are trying to do our bit as well to try to boost awareness and adoption because this is an economy-wide challenge.

Deputy John Clendennen

On the complaints mechanism or the regulation piece that is there, I fully appreciate what Mr. O'Donovan said about the LEOs and where they can fit in as an element of assistance at that level. However, he can correct me if I am wrong but there is the CCPC, ComReg and the Data Protection Commissioner. There is a lot of oversight of this. Has he any concern about overlap or flaws given the reliance on so many different stakeholders?

Mr. Erik O'Donovan

It is not so much that there are a number of different regulators. We understand there is a certain logic behind the distributed model from the point of view of leveraging regulatory expertise in sectoral domains. The challenge we touch on in our paper is ensuring the coherence in the delivery of that. We understand the AI office is a kind of co-ordinating body and there are going to be co-operation forums for the market surveillance authorities under head 34 of the general scheme and a co-operation agreement between competent authorities under head 10 of the general scheme of the data Bill. However, and we touched on this earlier, we would like to see those being formal and that there is an opportunity for businesses that are regulated by the entities to engage through what we call a one front door policy for the complaints and regulatory engagement. Maybe there could also be guidance that delineates the roles of the different authorities to ensure there is no overlap, as the Deputy said. If that can be clarified in the final Bill, it would be welcomed by our members.

Deputy John Clendennen

I have a final question on the adoption of the EU rules in this area. Sometimes, especially at the infrastructure committee, we hear examples of other member states having adopted one page but we have adopted the full book. Where does Mr. O'Donovan think we lie on the adoption of these EU rules compared with other member states?

Mr. Erik O'Donovan

I have not seen how other member states have fully implemented this yet. With most member states there is a timing issue in terms of August this year to try implement the Act. That is part of it. I do not have a direct comparison against all the other member states yet. All I can really point to is the issues we have highlighted in this. These are within our control and it is about ensuring relative competitiveness. That is the third area we touch on in our paper as well.

An Cathaoirleach

I thank Mr. O'Donovan. That concludes everyone's contributions.

It has been brought to my attention that in the Dáil Chamber my name came up during Leaders' Questions. As Cathaoirleach of the committee, I have to be here when Leaders' Questions takes place on a Wednesday. It is long-standing parliamentary procedure here that if an item - or I suspect an individual - is being raised by a leader of an opposition party, that such a Deputy would be given notification, which I did not receive. I understand it was done by Deputy Bacik, which is very disappointing. As somebody who lectures in law, I am sure she is very well aware of the long-standing precedent and the acts of courtesy and decorum in how we do our business here, so it is disappointing and I wanted to put that on record before we conclude the meeting. It was in respect of nuclear energy. I wish everyone well. I had better get to the Dáil Chamber.

The joint committed adjourned at 2.29 p.m. until 12.30 p.m. on Wednesday, 12 May 2026.

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