I move that the Bill be now read a Second Time.
The detailed provisions of the Bill are explained in the memorandum which has been in Deputies' hands for some time. Before proceeding to discuss its objectives, I feel it is appropriate that I should, at the outset, make some general comments on what has been achieved in the industrial sector.
The progress of our industrial development in recent years has been remarkable. The First Programme for Economic Expansion recognised that the real potential for development lay largely in producing goods for export. Our own home market could not support expansion on the scale necessary if the aims of full employment and a better standard of living were to be achieved. Since then we have moved ahead and have made significant progress towards achieving those goals.
1968 was our best year ever in terms of industrial promotion. It saw the approval of 120 new projects which, when in full production, will employ 11,000 workers of whom 7,500 will be men.
During the first six months of this year the picture was even brighter. 172 grant-aided projects were approved or were under construction or commenced production. These enterprises have an employment potential of 9,800 at the end of the first year and 17,800 at full production. It is also most heartening to see that, in June, 1969, the estimated number of persons engaged in manufacturing industry had increased by almost 11,000 over June 1968. This increase conforms with the employment target set by the National Industrial Economic Council for the whole industrial sector, including manufacturing industry, as a requirement for the achievement of full employment by 1980.
Our progress is dramatically reflected in the increase in our industrial exports from £33 million in 1958 to £184 million last year and a doubling of the share of total exports bringing it to more than 50 per cent. Other valuable aspects of our development are less dramatic because they are less obvious. They include the spread of technical and managerial skills. The expansion of our industrial exports provides evidence of our rapid improvement in these skills and also a growing opportunity for their acquisition.
New industries have resulted in a new infusion of technology and technical design, have raised the level of industrial skill and increased the demand for home produced goods and services. Not least they have increased the utilisation of our resources human and physical.
The extent of the international scale on which this operation is working can be seen in a breakdown of the projects I have mentioned plus others currently under negotiation. Approximately 25 per cent are British, 20 per cent are Irish, 20 per cent American, 15 per cent German and there are others from Holland, France, Austria, Norway, Denmark, Sweden, Italy, India and Spain.
I am particularly pleased to see an increasing number of Irish-based projects figuring in this list and can further report that the small industries programme which I inaugurated such a short time ago is also showing very worthwhile results. In the six months ended June of this year 119 projects were approved under the scheme and they have a potential employment of more than 700 people. It is possible to measure the potential of these projects in terms of numbers of jobs but the potential they have to keep initiative at home, to provide outlets for the enterprise of our young men and women and to confirm our rapidly growing self-confidence is so great as to be of immeasurable value.
Increasing attention will be paid in the small industries division to the provision of a range of services to small industry. Such a service, while aimed primarily at small firms, would not, of course, be confined to them.
It is heartening to note the progress being made at the industrial estates in Waterford and Galway to date. Factories have been constructed on these estates at a capital cost of £2.4 million. These factories are all either occupied or reserved for specific projects and a further area of 252,000 sq. ft., including two special type factories, is under construction. There are now 21 firms operating on the estates and a further three firms will take possession of their factories before the end of the year. Employment in these factories amounts to 812 persons at present of whom almost 73 per cent are men and a projected employment for the 24 firms is in excess of 1,700 of whom 63 per cent are expected to be men. There is every reason to believe that each of these estates will provide direct employment for at least 2,000 persons and a sizeable increase in the volume of employment in service industries can also be expected. There is a tendency sometimes to overlook the multiplier effect of industrial employment in creating additional jobs in distribution, transport and services generally.
The achievements of the Galway industrial estate together with the grant differential built into the Bill in favour of the designated areas will accelerate the rate of progress in the designated areas and will be a further valuable instrument in the task of ensuring a distribution of industry in conformity with the nation's needs and the Government's stated policy particularly with regard to the West of Ireland.
To me the most heartening feature of recent development is the progress of industrialisation in the west and north west. To the pioneering development at Shannon has been added the rapid progress of the Galway estate. These and the large-scale Snia Viscosa project at Sligo and certain other substantial projects that are in train for this area will, I believe, put sinews into the growth of industry in the west and have a powerful effect in raising confidence in its future both inside and outside the area. Linked with the establishment of further small and medium size industries this remarkable progress is, I believe, the beginning of the solution of the problem of underemployment and emigration which has for so long resisted all efforts to solve it. We will press on with vigorous efforts to build on this success.
This then is an exciting stage in the history of our industrial development. Very broadly, it is true to say that the high level of our present development has been reached through the efforts exerted to attract viable worthwhile industries from abroad coupled with a more pragmatic and adaptable approach to incentives. More recently a programme has been initiated by the IDA to stimulate by aid and expert advice the home-based manufacturing industries that have a capacity for growth.
Since the mid-60's not only has technology been developing more rapidly in traditional industries but new industrial development has been entering areas of more advanced technology and the number of large-scale projects requiring high levels of skills has been increasing. To meet these requirements additional facilities for education and training are being provided on a substantial scale. Training centres for semi-skilled workers and the retraining of adults have recently been established in the Shannon, Waterford, and Galway industrial estates. The demand for this training has been so strong that the centres are already being expanded considerably. The efforts of these training centres will complement those of the nine new regional technical colleges being built to increase the output and variety of skilled workers and, of course, the efforts of our universities and technological institutes. The best prospect of a solution to changing requirements for skills in industry is probably a high level of general education and flexibility in adapting skills to requirements.
I want to pay a tribute to the pioneering regional planning work on the Shannon Free Airport Development Company in completing in so short a time the programme for the industrial development of the mid-west region. The Industrial Development Authority has been given the task of preparing programmes for the other regions. On my instructions they are establishing offices in all the regions other than the mid-west. Work is now being completed on preparing guidelines to ensure uniformity of procedures and methods in each region, and this preliminary work will not only ensure comparability between programmes but will help to speed up the work of programming.
In the regions the regional manager of the IDA will work closely with the regional committees and the local authorities and will draw heavily on the considerable local experience and knowledge of the county development teams. Work in the regions will be done under the guidance and with the assistance of a steering committee in the IDA which will include representatives of the Departments of Local Government and Labour and will have a skilled staff at their disposal.
Because of the success achieved to date in our industrial drive and as larger and more complex projects become feasible it is increasingly necessary to be selective if new projects are to fit into the structure of a growing industrial sector and provide a base for further development and close links with established industry. Industries using or developing local materials, agricultural products or other natural resources have a special importance.
A very welcome feature of some recent large industries attracted here has been the extent to which they will use home materials. Industries based on home materials alone would fall far short of providing sufficient opportunities for employment. Nor need we be disturbed at this. Many countries such as Switzerland, Denmark, Japan and nearer home, Britain, have very limited natural resources to support highly developed industries.
The extent to which new industries open up linkage possibilities with existing concerns or with further new industries is of prime importance in building an integrated industrial structure. The criteria embodied in the Bill for the higher grant level will facilitate the giving of priority to such industries. An approach to a product policy based on the establishment of criteria rather than by specifying particular products is desirable at a time when technology is evolving rapidly.
At the same time, however, there must be a policy aimed at identifying and examining possibilities for particular products or product groups. Product policy will need to be reviewed frequently to take account of developments in technology and marketing and the growth and change in established industry. The resources of the authority in this area are being considerably augmented.
I have already referred to the work being done in this direction by the small industries division of the IDA towards increasing the linkage between older established industries and new industry. Two other sections of the IDA, the home industries division and the project development unit, examine opportunities for linkage at an early stage, as projects come to the IDA. The Institute for Industrial Research and Standards is doing valuable work in assisting manufacturers in developing products and is embarking on a scheme to provide information on the capabilities of firms, commencing with engineering industries.
If we are to advance as rapidly as we would wish, it is desirable to have some large capital intensive projects. Large projects have a number of attractions. They provide high quality employment for highly skilled staff; they have an inbuilt tendency to expand rapidly; they can have a substantial impact on other industries and services and they can provide resources to attract ancillary industry. Such projects, however, can be costly in terms of infrastructure and of the incentives that must be offered in the face of the sharp international competition for them. Their cost to us would limit the number we could seek to attract but in any event we could not at this stage of our development accommodate more than a limited number of them. It is, therefore, particularly important to secure first-class projects with a significant impact on the economy promoted by leading companies which are capable of providing the resources, financial, marketing, technical, and research, necessary to sustain and develop them.
Monitoring industrial progress at home and abroad and keeping an eye on newly emerging growth industries and industries whose prospects are likely to worsen will be a function of an economic and statistical unit in the IDA.
It is of great importance that home based industry should attain a level of development at least comparable with that of foreign based export industries. I am certain that this can be achieved. Indeed, the development of foreign based industries should naturally assist in facilitating home based development. In the new factories young Irishmen at management level are gaining experience in the most modern methods and workers are being trained in new techniques. Irish enterprise and innovation in industry and, indeed, in business generally is our best assurance of long-term growth and an essential corollary of increased skills.
It can be said of this Bill that its objective is to up-date, integrate and to clarify the incentives available for manufacturing projects over the whole country. It has been drafted after the views of the various interests concerned had been considered and the best advice available had been taken.
A.D. Little, Inc., an international firm of consultants, were engaged to review the structure of our promotional bodies dealing with industrial development and the scope of and effectiveness of our incentives. Their findings pointed to the fact that increases in employment, reduction in emigration, improved services and better standards of living require accelerated industrialisation.
The main recommendations of A.D. Little, Inc., as approved by the National Industrial Economic Council are carried into the Bill.
This is an amending Bill. Briefly, it provides in the first place for an expanded and more sophisticated structure for industrial promotion. The expertise and functions of An Foras Tionscal will be merged in the Industrial Development Authority which will be outside the Civil Service for staffing purposes. The authority will offer a career to the qualified and expert staff who will be needed to operate, in a flexible way, the sophisticated promotional and advisory services required in a climate of competitive and freer trading. The House will notice three new forms of grant assistance, namely, the rendering eligible of leased assets for grant assistance, the subsidisation of interest rates and the giving of guarantees for loans and the provision of grants for industrial research and development. In addition, the Bill contains revised provisions for new industry grants and training grants and a scheme of re-equipment grants comparable to the adaptation grant scheme which has lapsed since September, 1967.
A grant differential of 10 per cent will apply in favour of the designated areas, formerly undeveloped areas, under the sections relating to re-equipment, modernisation and expansion. This is a departure from the former adaptation grants scheme which provided a maximum grant of 25 per cent throughout the whole country.
I have instructed the authority that payments made on and after 1st March, 1968, in respect of fixed assets for re-equipment may be considered for grant purposes and 460 grants have been already approved on this basis.
The rates of ordinary or new industrial grants also provide a differential for the designated areas—in this case 15 per cent. The basic rates of grant which may be paid on satisfaction of specified and clear criteria are 40 per cent in designated areas and 25 per cent elsewhere. For cases which meet higher standards a further grant —up to 20 per cent of fixed assets costs—may be paid. A package of incentives suited to the particular project can now be offered and may include grants towards fixed assets purchased or leased, towards interest payable on loans for fixed assets, towards reduction of rents on factories leased or guarantees of loans. This flexibility will meet the needs of those special cases which may not derive maximum benefit from a direct grant system. The promoters will, of course, be required to have a substantial stake in the undertaking.
The desirability of the package offered will be enhanced by the authority's new power to provide factories for purchase or leasing in any area. A reduction of rent below the economic rent in such cases will count as a grant.
Apart from the specified criteria and the percentage grants limits, Deputies will notice certain limitations on the amount of assistance which may be offered. Grants for fixed assets and towards rent reduction may not exceed in total the appropriate percentage of asset values. While the Government may authorise grants for an undertaking under these provisions in excess of the limit of £350,000 binding the authority, the percentage grant limits may not be exceeded. The issue of moneys by the Minister to the authority is fixed at £100 million. Almost £50 million have already been issued in respect of the various current industrial incentives.
Housing for key workers is essential to many new industries and the necessary social and other priorities of many local authorities do not always permit of their meeting this need promptly. The authority is being empowered to provide or procure the provision of houses for this purpose, normally, I expect, acting through the National Building Agency, and to subsidise rents as appropriate.
The Bill also contains various necessary ancillary provisions following the merger of the IDA and Foras Tionscal in relation to pensions, staffing, procedures and the manner in which the value of assets and grants will be calculated.
From what I have said it will be readily evident that the general activities of industrial promotion and development have already led to very significant and tangible results for our people in terms of employment, living standards, and reduced emigration and to well-founded hopes for the future.
Before I conclude I should mention to the House that the amount of money which may be issued by An Foras Tionscal is very close to the statutory limit and it may be necessary for me, depending on the progress of this Bill, to introduce a short Bill to increase the statutory limit. Otherwise, unless this Bill is enacted or the short Bill to which I have referred, before the recess, An Foras Tionscal might not have enough money to meet its existing commitments to the middle of January. I want to give the House notice of that situation. I think we can be confident that we are approaching the objectives that we all have in mind with some success and this Bill will assist us to get further faster. I confidently recommend it to the House.
