Skip to main content
Normal View

Dáil Éireann debate -
Thursday, 5 May 1977

Vol. 299 No. 3

Industrial Development Bill, 1976: Second Stage.

I move: "That the Bill be now read a Second Time."

The provisions of the Bill are explained in the memorandum which was circulated to Deputies on 26th November last. I would like first to discuss the objectives of the Bill and then to make some comments on industrial development generally.

The objectives of the Bill are, first, to introduce two new incentives dessigned to encourage new enterprises and to facilitate sectoral restructuring; secondly, to provide an additional function to the Industrial Development Authority concerning technical assistance to developing countries and, thirdly, to make a number of technical amendments to the existing legislation mainly in the matter of limits on certain incentives.

I am pleased to introduce a new initiative to encourage first time entrepreneurs to set up industries. Native entrepreneurs have not been coming forward in sufficient numbers. This means that a vital spark is missing from Irish industry, despite the good results being achieved by the overall development programme and more particularly the very welcome upsurge in the development of small industries which was one of the more noteworthy and encouraging aspects of industrial development in 1976. I have no doubt that there is a great deal of latent business talent which could be tapped with the right encouragement. Many Irish people, both in this country and overseas, have the qualifications, the experience and the ideas to make successful industrialists. The authority have informed me that they have had contact with a number of people who had ideas for seemingly viable industrial projects, but who were unable to raise the working capital to get the projects off the ground. Such people, with the talent and ability to become successful manufacturers, should be given every encouragement to get into industry; there is a clear need for a new initiative to help provide that part of the financial package which the first time entrepreneur cannot supply on his or her own.

Accordingly, this Bill proposes that the authority's power of loan guarantee and interest subsidy be extended to working capital borrowed for such ventures. Of course, facilities relating to fixed assets will continue to be available in the ordinary way. Projects assisted would generally be small in size initially and the financial package would be determined in the light of the needs of the project, and of the finance available from outside sources. The House will note that the new guarantee facilities are limited to £150,000 in any one case, but the Government may permit a higher figure. This type of scheme is new in this country and is frankly experimental, but the indications for its success are good and the Minister has every confidence that it will become a useful generator of new industrial activity.

The enterprise development programme will complement the present small industry programme in that it will develop projects which in time will move into the small industries category. I should add that the small industry programme has been remarkably successful especially last year when projects approved under the programme had an employment potential of 3,000, the highest level ever. But the number of projects established by first time entrepreneurs has been small. The new facilities proposed in this Bill will help to fill this gap in our incentive system.

It is an essential part of our industrial strategy to strengthen and develop our existing domestic industry. In this way we will be able to get the maximum possible number of jobs from existing firms and to reduce our dependence on prospects generated abroad. Therefore, every effort must be made to assist the home sector and especially the weaker parts of it. The re-equipment grants scheme for example is geared to promote investment in new plant and machinery to enable industry to become more efficient. Re-equipment, however, is only one aspect of modernisation. For some sectors re-equipment alone is not the answer; there is also a need for reorganisation and restructuring. The proposal in the Bill concerning sectoral restructuring is designed to meet this need which has been accentuated by the recession.

I do not propose to examine in detail how specific industries might be restructured, but it is obvious that the present powers of the authority are inadequate to encourage desirable amalgamations and acquisitions in problem areas. The existing financial incentives are confined to projects involving new fixed asset investment. In many cases of amalgamations and acquisitions no new assets are required, merely financial reconstruction. The additional measures to aid restructuring of industry proposed in the Bill would extend the powers of loan guarantee and interest subsidy to capital required for amalgamations and acquisitions. It is just the type of enterprise that the Bill is directed at, which often has difficulty in raising finance from the commercial institutions. I would hope that the new measures will encourage the financial institutions to be more forthcoming in financing industrial restructuring.

The Minister believes that the benefits in the form of savings to the Exchequer would be significant. When firms close down which might have become viable under stronger management and more secure financing, the cost in capital grants to the State of creating substitute jobs in new industry is considerable. On the other hand, the new incentives in themselves are unlikely to demand extensive financial commitments by the State. The industries for which the proposed scheme would operate are not capital intensive and units within those industries tend to be medium to small scale in size. The Bill would set a limit of £500,000 on the amount of borrowings the authority could guarantee without Government permission. This limit is the same as that introduced in 1975 for ordinary guarantees.

The second objective of the Bill is to provide an additional function to the authority, that of giving assistance of a limited nature to developing countries. I would like to stress at the outset that the kind of assistance I have in mind is of a purely technical nature. Furthermore, there is no question of this work interfering in any way with the principal functions of the Industrial Development Authority. The demand for this assistance has developed in a rather ad hoc manner. In the past, visiting groups and individuals from developing countries have been provided with information and data concerning various aspects of industrial development organisations such as the World Bank and the EEC Development Fund award development contracts under which technical assistance is provided to developing countries by bodies possessing the appropriate skills and experience. The Industrial Develment Authority have extensive expertise in the promotion of industry and in the assessment and planning of projects. They have also been involved in the assessment and planning of labour requirements, infrastructure and services. This knowledge and experience could be valuable to developing countries.

The authority have no legal power to undertake work of this kind and to enable them to provide such services the Minister proposes that the functions of the authority as set out in existing law be amended to provide that the authority may, with his approval, give assistance of a technical and advisory nature to developing countries. The cost of this assistance is expected to be met, in practice, from funds already available to international institutions, such as the World Bank and the EEC Development Fund, to buy consultancy services for developing countries.

The third objective of the Bill is to make a number of technical changes to the existing legislation, particularly in the matter of limits on some of the present incentives.

Expenditure and financial commitments made under the present Bill are brought within the scope of the present limits in the existing legislation, that is £400 million for grants of a capital nature, which includes interest subsidies, and £100 million for loan guarantees. In addition moneys spent on equity, which formerly were not covered by any ceiling, are also brought under the ceiling for grants of a capital nature.

For the avoidance of doubt, the term "current expenditure" for borrowing purposes is defined to cover all types of expenditure by the authority. I should add that such borrowings are exceptional and have arisen mainly from the exhaustion of the maximum amount the authority have been entitled to draw upon from the Exchequer pending further legislation.

The authority have been empowered to give training grants. These have proved very useful in direct industrial promotion. A more important aspect is that they have helped to upgrade the level of skills in the community.

Existing legislation imposes no limit on the amount in training grants that can be paid to any one undertaking. Recently, however, single grants for training have become much larger, partly due to the scale of enterprises, and partly also because of the IDA's programme for services or non-manufacturing industry. All other types of financial incentives are subject to a maximum limit per individual case which can be exceeded only with Government approval and so the training grant provision is now being brought into line with the limit which applies to fixed asset grants, that is, £850,000.

Investment in research and development to improve or develop products or processes is essential if Irish industry is to remain competitive in free trade conditions. Over-dependence on one product or on a limited range of products can leave a firm vunerable to changing market requirements. New production methods can reduce manufacturing costs significantly and many Irish firms have been reexamining their production techniques in the light of rapidly escalating costs of labour, energy, and raw materials.

Since 1970 the IDA have approved R + D proposals for over 350 projects. In the last three years the authority have tried to convince firms of the need to get new products or to adapt existing ones, and the response from Irish industry has been very positive. In many cases too, overseas parent companies are now delegating R + D work to their Irish subsidiaries. However, per capita investment in R + D in this country remains low by European standards: it is roughly one-quarter of the EEC level. The authority have found that because of inflation and technological change the upper limit of £15,000 on grants for a specific R + D project is now inadequate. These grants cover the personnel, equipment, buildings and materials mainly for commercially-oriented product development programmes of Irish companies. Accordingly, it is proposed to increase this limit to £50,000. Grants in excess of this figure will require Government approval but the absolute maximum of 50 per cent of the total approved costs will continue to apply. The Minister thinks the new limit is a realistic one and will help to advance technological development in Irish industry.

The authority in the past have taken equity stakes in a number of industrial projects of particular commercial interest. Since, however, it is sound principle that the total commitments of the Exchequer should be quantified and planned for, the Minister proposes a limit of £1 million on the amount the IDA can commit without Government approval. I should stress here that provisions which bring the limits of various IDA facilities, without Government permission, into line with one another are simply in accordance with good administrative practice and do not in any sense imply a criticism of the scope of the authority's functions or of the manner in which they have been discharged.

The proposal regarding sealing of documents is, quite simply, based on the authority's experience that the required presence of two members of the authority to seal hundreds of documents per year leads to practical difficulties and delays. This applies particularly when documents have to be sealed at short notice to facilitate urgent transactions. In a recent two-year period, over 1,000 such documents had to be sealed and, since the members of the authority are fairly busy in their own right it is easy to see that some change in the present provision is necessary. It is intended to give the Industrial Development Authority power to delegate to two of their officers authority to authenticate the seal.

I have outlined the provisions of the Bill. Planning and promoting industrial development is a dynamic process, and the authority must be able to adapt their methods to changing needs and economic conditions.

The Industrial Development Authority have performed well during the seven years of their existence in their present form. In the period 1970 to the end of 1976 they approved grant assistance to projects with an employment potential of about 110,000 new jobs at full capacity. The Minister is pleased to see that for 1976 the authority exceeded the target of 17,000 new job approvals by more than 1,000 jobs.

I have already mentioned the importance of getting the maximum contribution to job creation from existing domestic industry. This task is not of course confined to the IDA; progress in the industrial field depends on the combined efforts of many different organisations at national and local level. In the context of this debate, however, we are discussing matters relating to the authority and in that connection I would like to mention the principal activities that are especially directed towards domestic industry. These are the re-equipment scheme, the small industries programme, joint venture unit, product and process development, and the service industry programme.

Since the re-equipment scheme was introduced, 2,700 re-equipment projects have been approved and assisted. The total approved investment was £330 million and the total of grants approved was over £78 million. The money spent on re-equipment does not immediately translate into jobs, but in terms of maintaining jobs and strengthening our industrial fabric to create more jobs it is a very important incentive. It ensures that enterprises remain efficient and competitive and provides a strong basis for future expansion.

The Minister is especially pleased with the development of the small industries programme. As I mentioned earlier, the programme had a record number of 3,000 job approvals last year. The success of the small industries programme is perhaps one aspect of industrial development that is insufficiently appreciated. Since its introduction about 1,400 enterprises have been supported with a job potential of about 15,300 jobs. Many of these industries have developed by taking advantage of the ancillary business created by foreign industries established here. In this connection it is appropriate to mention project identification. This is a new approach in which the IDA take the initiative and identify manufacturing opportunities for Irish firms. There are many opportunities to supply materials, components and services to the new industrial firms setting up plants in Ireland as well as to a large number of Irish firms expanding their production.

In the past 18 months the IDA have gone to about 400 Irish firms with specific propositions. Many of these projects are aimed at an initial import substitution market, but they have strong export potential. About 20 projects have been brought to the final approval stage; in the case of 50 others negotiations with Irish manufacturers are taking place.

Joint ventures is an area of considerable opportunity for Irish manufacturers. In 1973 the authority set up a special unit to help Irish firms seeking further opportunities through partnership arrangements with overseas companies. This unit acts as a broker in matching suitable Irish firms with an overseas partner who has a good product idea, the technology to make the products and access to markets. Since April, 1973, 19 joint venture projects representing 1,500 jobs at full production have been approved for grant assistance.

Since 1973 the IDA have been actively promoting product and process development in Irish industry. There has been a very positive response. In 1975 alone, the number of proposals from industry doubled to almost 150, half of them for product development, the other half for more efficient manufacturing processes. This progress was maintained in 1976 when 151 projects were approved. Grant commitments under the scheme have increased rapidly from £100,000 in 1970 to almost £1 million in 1976.

Since the introduction of the service industries programme in 1973, 38 projects with an employment potential of almost 2,900 new jobs have been approved for grant assistance. The aims of the programme are to create jobs for highly skilled people many of whom might otherwise emigrate, and to generate extra invisible earnings from export work. By encouraging Irish companies selling export services to expand their operations overseas very significant opportunities are being created for graduates, professional and technical personal and people with commercial and business experience.

One of the encouraging results of these and other initiatives is that the share of industrial investment by existing industry is increasing. The share was just over 50 per cent of the total planned investment in industry between April, 1972, and December, 1976. In the food industry, for example, approved investment during the past five years totalled £152 million the greater part of which was committed by Irish firms. Domestic industry has also featured prominently in new investment in the drink, tobacco, paper and printing, chemicals and engineering sectors.

Our industrial base has been strengthened and extended during the last few years. This is reflected in the volume and variety of the products which we now export and in the range of technologies which we possess. Nevertheless, an integral part of our industrial policy will continue to be the attraction of overseas investment.

Foreign firms have contributed 43,000 actual jobs in Irish manufacturing industry since 1960. New overseas projects approved for grant assistance between April, 1972, and December, 1976, have an employment potential of over 44,000 at full production. Overseas firms which began production here between 1960 and the end of 1976 invested over £548 million in fixed assets. It is particularly significant that the vast majority of the firms which in 1973 and early 1974 announced plans to set up factories in Ireland have carried out those plans. The fixed asset investment of overseas industries which began production here last year is about £200 million.

Although we still rely to a considerable extent on the attraction of overseas investment, we are selective about the kind of investment which we want to attract, in terms of the quality of jobs created, use of our resources, protection of our environment, new technology, marketing strategy creating work for existing firms and downstream manufacturing opportunities. The attraction of overseas investment also involves keeping under constant review the effectiveness of the instruments of our industrial policy.

We can be under no illusion as to the magnitude of the task with which we are faced. Our population and labour force will grow significantly in the years ahead. Added to this there is the need for the expansion of employment to absorb those who lost their jobs from the severe cyclical downturn of 1974 and 1975, and to make progress in tackling our long standing problem of structural unemployment. All of this is in the context of net immigration far removed from the emigration pattern of recent decades and centuries.

The achievement of even medium term employment targets up to 1980 requires a variety of policies and methods. A high level of investment in productive projects, both in the private and public sectors and by way of joint ventures will be of central importance. Training and infrastructure are also vital elements and it will be essential to ensure an adequate level of industrial training so that new industries can draw on skilled workers without poaching on existing industries and to ensure that our physical infrastructure keeps pace with the needs of industry.

It is well recognised by the Government that adequate profitability throughout industry is essential if sufficient funds are to be ploughed back into employment-creating projects. The taxation provisions of the budget demonstrate our serious intent in this regard. We will maintain an environment that encourages enterprise —what we need is more of the type of enterprise that will evolve into viable manufacturing businesses with a potential for employment expansion. In turn, we now look to existing industry for investment in Irish projects to make a major contribution to the generation of employment. Indeed, the Minister hopes that the entire work force, employers, employees and service agencies, can organise themselves to work effectively for the benefit of the economy. If we are to make progress towards the solution of our problems, rapid economic growth is essential in the years ahead, and this cannot be achieved without maximum growth in manufacturing industry. The Government, I can assure the House, will continue to encourage vigorously the development of Irish industry. Ultimately, however, even with significant State aid, the ability of industry to expand will depend on its competitiveness in terms of wage-costs, management performance, marketing skills, customer service and capacity for innovation and technical adjustment. The challenge before us is immense; there will be need for shared sacrifices and a common determination not to take out today in incomes and other rewards what today's performance cannot sustain.

The new level of technology, managerial skills and investment in plant throughout the entire spectrum of Irish industry inspires reasonable confidence for the future. We now have the emerging opportunity for the rational planning and development of industries based on our mineral resources.

Our structures and policies will be designed to accommodate this. There has been, in addition, a definite recovery in industrial output and exports from the latter part of 1975. Our performance in 1976 was remarkably encouraging; manufactured output increased by more than 11 per cent and the volume of manufactured exports increased by some 20 per cent. The over-riding requirement is for investment in projects that will stand the test of time in competitive home and export markets. It will require a major input of resources and skills from domestic Irish industries, foreign industry, public sector companies and State agencies such as the IDA.

The IDA, as they have shown in the past, are capable of responding in a flexible and coherent manner to the changing industrial scene. This Bill adds to their range of instruments in support of industrial development. I am confident that the passage of this Bill will be facilitated so that the authority can better carry out their increasingly demanding task of creating new employment. I accordingly recommend the Bill for the approval of the House.

The Parliamentary Secretary can be assured that anything proposed in this House which would lead to an improvement in the employment position will meet with our support. This Bill to give the IDA further powers is understandable and welcome. I want to take this opportunity to congratulate the IDA again on the work they have being doing in difficult circumstances. This organisation is like a gem set in a base metal. It is working against mighty odds and without the necessary support services from the Government and without the necessary co-ordination from the other institutions which could lead to the planned development of our economy which is now more necessary than ever.

Industrial incentives in the form of grants are useful, but they are not the whole answer to our problems in attracting industries, expanding existing industries, and developing new techniques and processes for the further expansion of our industrial arm. More significant than anything which can be provided by way of monetary incentives is the environment in which industry is set. What is necessary to encourage and attract industry is much more than to pass legislation which merely places at the disposal of the IDA the necessary funds to provide capital for industry.

The complete failure of the Government to produce an economic plan, the absence of any reference whatsoever to such a plan in the Minister's statement which the Parliamentary Secretary has just read is, in itself, to say the least of it, most discouraging. It is appalling to think that, at a time when economic planning and planning for industry was never so essential as it is now, we have not even attempted at this late stage to come up with any sort of plan.

We hear a lot of rhetoric which is a poor substitute for action. Recently somebody on the Coalition side of the divide referred to a State development board as the panacea for all our ills. I am not in a position to know what was envisaged for such a board and I will not comment on whether it would be useful or otherwise. At least it showed some recognition that people on the other side of the House were conscious that some type of plan was necessary. That was the only feeble reference we had to any move towards an overall plan.

Presumably this State development board would be charged with responsibility for doing what the Government and other agencies of the Government have failed to do up to now, that is, the responsibility of monitoring or planning the economy. I am not sure but I think that was the intention. It was part of the cosmetics we have been getting in lieu of action over the past four years. When we talk about the absolute necessity for a better industrial environment we can only conclude that these sort of half-hearted statements thrown out and not pursued must have the opposite effect to planning and must create a good deal of frustration in the minds of the people.

When we in Fianna Fáil talk about the necessity for a plan we have not in mind, as some people try to insinuate at times, a straitjacket, or some sort of magical formula which would in itself provide the necessary industrial expansion and guide us into channels of prosperity without the necessary follow-up of action. A plan without action is not of much use, but action without a plan is even more useless.

That is what we have had most of the time since the State was founded.

There is no action and no plan. We have people sitting back, moralising, criticising, estimating, guesstimating and making statements from day to day in accordance with what they think are the political requirements. We find ourselves in a labyrinth of industrial indecision and there is a complete lack of direction on the part of those responsible. A plan provides the framework within which society can work. It must be flexible but it must also indicate the policy and thinking of the Government of the day. It is a guide for those who wish to invest, both domestic and foreign, and without it real progress cannot be made. We are not going to have such a plan. The Government could not provide £1.5 million for a census which would form the basis of any proper planning and they can ill-afford to make excuses for what has gone wrong in the past few years. The right economic environment is most important but this is lacking at the moment. The Government must take responsibility for monetary and fiscal policy and since they take so much of the people's money they cannot avoid accepting responsibility for its proper use.

The IDA have powers to deal with many aspects of industry and, to some extent, this Bill extends those powers. What we need most at present is a service to rescue industries that are short of working capital in order to keep them in existence until a better economic environment will enable them to make progress again. This is not being done.

In the 1930s we set out to industrialise this country and we encountered much opposition to our radical proposals. It was frequently pointed out by those responsible, particularly by the then Minister for Industry and Commerce, that the main requirements of industry were, first, to have a product; secondly, to have a market; thirdly, to have the know-how to produce the product. The fourth requirement was capital but this was the easiest of all the requirements.

If somebody has the technical know-how to produce a product and a market in which to sell it, he should not be deprived of the means of financing it. With regard to small industries, this Bill is a step in that direction and for that reason I commend it. Although the criteria are not set out with regard to qualifying for the proposed assistance—up to £150,000 —it is a step in the right direction provided the requirements which I mentioned are filled. When we were in office, we ensured that if an individual could produce and market a profitable product he was not deprived of the necessary finance. Many industries went into production and continued quite successfully, even though they did not have adequate working capital at the outset. I should like the Parliamentary Secretary in his reply to refer to the criteria necessary to qualify for the grants or financial assistance by way of guaranteed loan interest for the promotion of industry by private entrepreneurs. The House would like a more definite idea of what the Minister or the Parliamentary Secretary has in mind with regard to such criteria.

As was admitted by the Parliamentary Secretary, our small industries programme has been an outstanding success despite the fact that industry has been grouping in the dark for some considerable time. There is one type of industrial development that has found it difficult to get any support by way of capital from any source and the IDA did not take a favourable view of them in the past. I am referring to the kind of industry where a person or a number of persons in a small, primitive way manufacture a particular commodity or article and by their dedication and effort the business expands and is the basis of a viable industry.

When these people approach the IDA or the local development team they are looked on as people seeking capital to expand an existing industry. Better recognition should be given to efforts of that type. Many industries which began as workshops became factories. The most outstanding example of this is in the joinery and woodworking industries and in concrete products. These find great difficulty in getting capital when they have proved that expansion is possible and when something has grown from what might have been a quarry operation to an important source of employment for male labour as a result of a small beginning or something which has grown from a carpenter's shop into an outstanding woodworking industry.

Those things are not favourably looked on by any of the people administering the scheme at present.

This is just simply requiring more faith and confidence in our people to do something well. The scheme which the Minister proposes here is merely an extension of our small industries programme which he calls the enterprise development programme. Does that scheme take cognisance of this particular type of industry which grows out of small beginnings into an important industry?

I would like Deputies on the other side of the House, particularly Deputy Halligan if he speaks on this Bill, to tell us more about the State development board to which the Taoiseach referred at the IMI conference recently. Has this been a bone of contention among the conflicting ideologies of the Coalition? What did it envisage in the first instance? Is it to replace existing organisations? To what extent is it a dead duck now? Was it originally intended that it would promote the nationalisation of industries? Would it be charged with doing what the Government have failed to do, produce an economic plan? Will it be inimical to private enterprise? What type of agency is proposed? Will it get off the ground? These questions remain unanswered. The Taoiseach's reference to the State development board at the IMI conference was indecisive and left industry wondering if it would come about and what it would be about.

I would like the Minister to clear the air and let us know if we are not to have this State development board, will we have a plan. Are we to continue groping our way in the dark waiting for something to turn up in world affairs that might give us a tailwind for the next election? We expect action not comment or rhetoric of which we are utterly sickened at the present time. Action can only come if a proper plan is formulated to point the way. A planned programme for economic development is an essential framework within which industry and every sector of the economy may work. The target set may not be attainable but the necessary flexibility in a programme at least shows what the economic thinking is for those who invest their capital in the future. I believe the necessary progress cannot be made without this.

I believe that at one stage the excuse was given that due to the international economic climate it was not possible to have a plan. That is a ridiculous statement because this is a time when a plan is most needed. We should set a course for ourselves. We had economic plans in the past which were the main source of expansion in our economy. They may not always have been achieved. We may have had to change course but flexibility was permitted to do so. At least those plans provided a framework within which every Department of State knew what was expected of them. It enabled those responsible for providing capital, whether personal capital, that provided by financial institutions or by the Government, to know the direction in which we were going and they could invest accordingly. It is an essential blueprint and guide for any economy without which no civilised country can make progress.

We talk about the incentives and grants available to industry at the disposal of the IDA and other ancillary agencies. But these are of little relevance if the overall industrial environment is not right. In the past few years industry had been in the position of not knowing from one day to another what would be the effects of inflation. I should like the Parliamentary Secretary to quantify for us the extra charges on industry as a result of the increases in postal and telephone charges, in ESB charges and in the cost of other fuels as well as the increase in rates on premises. Can he tell us what has been the overall effect on industry of the inflationary spiral with which they have had to contend and which was created mainly by the new taxes introduced by the Government? At least one quarter of the 20 per cent inflation rate in 1976 was due to the budget of that year. There are statistics to prove this.

During the past three and a half years the Minister has placed every obstacle possible in the way of industrial development making it virtually impossible for any expansion to take place. Then, on the eve of the final budget before the general election he tells the Dublin Chamber of Commerce that we are too highly taxed and in the budget he endeavours to undo some of the hardship inflicted on us since this Government came to office. To this end a small contribution was made but this was after Fianna Fáil had issued their policy document on the way to deal with the economic emergency. Anybody who doubts what I am saying would do well to read our economic policy document of September, 1976, and, in addition, to read the comments of the Minister for Finance a couple of days after the publication of that document when he sneered at us. However, he implemented some of our suggestions in this year's budget. That was the best example I can think of in the history of government here of a poacher turning gamekeeper. To the taxpayers the Minister said: "you have been banging your heads against the wall for some time: it would be nice to give you some relief".

Instead of voting money to the IDA for the purpose of providing for other industries, our first priority should be the provision of working capital for those industries which, although viable, are tottering on the brink of ruin. I appeal to the Parliamentary Secretary to endeavour to locate the Minister for Industry and Commerce in whatever part of the world he may be with a view to requesting him to come home and have a serious look at the industrial scene.

It takes a lot of money to keep even one person in industrial employment but let us not forget what it costs in terms of redundancy and social welfare payments as well as in terms of the amount of money required to create alternative employment in a new industry when workers are made redundant. The Minister would be well advised to request the IDA to examine those industries that have endeavoured to come through the crisis of the past few years and to give them some degree of assurance that they will be enabled to maintain at least most of their existing complement of workers. There is not much point in saying that industrial output increased last year while there are no signs of any impact being made on the serious unemployment situation. The Government blame the world recession for the difficulties we have been experiencing but what have they done to offset the effects of that recession? What action have they taken to control that part of our inflation that is due directly to domestic causes? These are the matters with which we should be concerning ourselves. Instead of asking the IDA to give more money to somebody who may have an idea about a new industry, we should be creating an environment that is conducive to investment, thereby making possible the more rapid provision of jobs for the almost 200,000 people seeking employment.

We look forward to hearing what the Minister, through his Parliamentary Secretary, has to say in reply in regard to planning for the future.

Although there were difficulties on the international scene during the past few years there was some compensation for our exporters to the extent that the weakening £, compared with non-sterling currency, gave them a decided advantage but they were unable to profit to any great extent from that advantage by reason of the increasing costs of production at home.

With unit costs rising any advantage they might have enjoyed in that direction was eroded and outbalanced by the extra costs. In the face of this and of the serious unemployment situation we have a Government who say it is not possible to have a plan. They do not even provide a census of population because it would cost £1.5 million. We have spent considerably more than that in promoting missions abroad to talk about industrial development in the future. Here I refer to globe-trotting generally.

The Parliamentary Secretary says we have a strong industrial basis. We must have a very strong industrial basis to withstand what industry has experienced in the last four years. If it were not for the fact that the Minister for Finance saw fit to undo some of the damage he did during the last four years industry would be in a state of despair at present. Industry does not just encompass what comes within the the sphere of the IDA activities alone. All industry is complementary. One of the greatest industries is the construction industry. It has more spin-off than any other industry. It responds immediately to an injection of funds. It is sensitive to the industrial climate to a greater degree than any other industry. It is the one industry that has been totally neglected. If the Government were serious about tackling the unemployment problem, even in the absence of a planned economy, the building industry could now be employing twice as many. I am talking now only of the employment directly in the industry. When one builds houses, offices, factories, schools, harbours and so on many other things are required. A house requires fittings and that gives a fillip to many other industries. If we were giving the necessary thought to what the overall economic position will be in the years ahead we should be giving more consideration to keeping the construction industry and complementary industries in a virile state.

When we became a member of the EEC, membership opened up new possibilities for us. We were aware it would create some difficulties but, on balance, the opportunities were far in excess of the difficulties likely to arise. When one looks back on what has happened since one must come to the conclusion that we went in at the deep end without being conscious of what was necessary to exploit and take full advantage of the things entry made available to us and we did not take the necessary steps to counter the difficulties which were inevitably going to arise as a result of entry.

When I was last in Government, sitting around the Cabinet Table we had advice from different institutions and agencies. There were many such available to the Government. They had their finger on the pulse of the economic situation. Well in advance we were made well aware that we were facing a period of world inflation and certain action was required to ensure that that inflation would be kept to a minimum in so far as it was domestically controllable and, secondly, that our main objective should be to ensure that it did not affect our employment situation except minimally. We were talking action accordingly.

The present Government on taking over the reins did all the wrong things to arrest inflation and the fact that they did all the wrong things is amply demonstrated by the action of the Minister for Finance in his last budget. He admitted then that the obstacles he threw up and the difficulties he created over the previous three years were all wrong. Things had gone too far then to take really effective action and so he went about things in a half-hearted way. Can anyone explain to me why the Minister for Finance imposed taxes on industry, making it difficult for industry, and then suddenly, in 1977, he announced that industry is too highly taxed? Has he at any time apologised for his mistakes? Has he at any time admitted he was misled? The people will have their own comment to make on his behaviour when the time comes.

It is with that background we are here today discussing a little Bill to give the IDA some extra powers to do things within the framework of a rather serious economic set-up. There are things which would certainly make the provisions of this Bill acceptable to industry if the Parliamentary Secretary would tell us now that the Government are going to produce a plan. Call it a "State Development Board", if you like, who, in lieu of the Government's lack of effort, will produce a plan to point the way to what was their proposed programme for future development. That is not known. Many industrialists today do not know whether it is the socialist element or the conservative element of the Coalition that will prevail ultimately, and in that ideological dilemma you cannot expect the progress which should have been made.

That is the important point in relation to development in the years ahead. The Government must give some guidance. They cannot just sit back and say: "That was a good year. The American economy is improving. There are better times ahead. Things are improving in some other countries." This is Ireland. We have our own cultural, social and fiscal policies, or should have. We are taking from the people a huge amount of their income and while we do we should be able to do more than just say: "Wait and see what happens abroad. We will get a tail wind yet for the next election. Things will improve on the international scene". The Government must do what is necessary to do here. There is a great deal that could be done and is not being done and which the Government are not even attempting to do. Micawber-like, they are waiting for something to turn up and hoping that it will. The Minister covered many matters in his statement, but mineral sources are barely mentioned, as follows:

The new level of technology, managerial skills and investment in plant throughout the entire spectrum of Irish industry inspires reasonable confidence for the future. We now have the emerging opportunity for the rational planning and development of industries based on our mineral resources.

That is the total reference in an IDA Bill dealing with industrial development: "the emerging opportunity". The opportunity has been here for the last four years and in the greatest do-nothing atmosphere, the people have been wondering what is happening. The Irish people are expecting something more when the opportunity presents itself, and that is now with the introduction of this legislation. It is an opportunity for the Minister to indicate to what extent planning for our future development has advanced both in relation to mineral resources and manufacturing industry generally. I do not know to what extent the Parliamentary Secretary will be able to speak for the Minister in respect of that, but that is what we want to know, not just the provisions of a Bill which makes available some new monetary adjustments in regard to the provision of industry.

I notice that in any part of the Minister's speech where favourable figures were required in connection with the establishment of industries or the starting of new projects, he takes the period 1970 to 1976, and in one case he takes the period from 1963 to 1976, a fairly safe period to take because it overlaps one of the good periods. I would like him to have confined himself to the period during which he has been responsible for the mismanagement of the economy and give us factual figures for that.

When we entered the EEC it was generally accepted that as far as industry generally was concerned this country would become a desirable place for non-member states to establish industry. There was a huge number of inquiries. I would like to know from the Parliamentary Secretary if one per cent of them materialised. We were entering on a new era as a suitable place for industrial development. This applied particularly to a number of things, mainly to the fact that people based here would have free entry to the 250 million consumers in the EEC, but it was also concerned with the industrial environment here, particularly the tax free holiday and the fact that our taxes were not then, in relation to other countries, so high, that we did not apply all the schemes that have since been applied to industry.

There was also encouragement to be found in the fact that we were proceeding in an orderly manner with national wage agreements. This held out the prospect of industrial peace. Why has all that been blown sky high in such a short time? We did not turn out to be the desirable venue for investment by other countries in industrial development. Only a fraction of what we anticipated came here. That is due to one thing only, to the attitude of the Government then in power. I am totally opposed to individual examples of personal experience in debate, but I know of a firm which was negotiating a formidable industry here two years ago, and they may be still interested. I will not mention their name but they can be easily identified if I say they are a major industry. They made approaches to us. They had naturally to contend with the long-term position and their attitude was then, and now, that the attitude in Ireland was not very encouraging when the Government were comprised of different factions; what was the Opposition's view with regard to the long-term position? An essential part of any Government is their likely stability. I should repeat that because we had two Coalitions here previously. This is the third one. Coalition Government is not new to us. That absolute ruination did not result in the industry I refer to was due to the fact that there were adequate people to take over and man the works. That happened and it will happen again.

Of more importance to the industrial environment than the Bill we are discussing is the attitude to the future of the present caretaker Government. That is why we propose to outline to the people our plans and programme for the future in black and white. They are not a straitjacket in which one must work. They are no magical formula which will bring about prosperity overnight but they will be the essential guideline. People will realise the philosophy of the Government and the direction in which they propose to go and the desirable goals they hope to obtain. This programme will be supported by the necessary action and fiscal assistance to support it and only by that means will we take up the slack of our increasing population which is contributing to the huge, devastating line of employment at present.

I want to refer to training. I was considerably concerned about and deeply involved in the improvement of training facilities, but when we set about to expand the scope of AnCO we foresaw the need for training at all levels in relation to both the services and industrial manufacturing. We knew that training would be only as good as those to whom it was entrusted as trainers and we set about securing the best. We had to be content with what was available for a start, but it rapidly improved and expanded and we got tremendous co-operation from industry who were the first to identify the areas where advanced technology called for better training and better realisation of the need for improved skills if unit costs were to be kept down and quality was to be of the standard required to compete with the difficult conditions of free trade. In that knowledge and with that background we set about improving the facilities provided by AnCO. There was the question of what degree of co-operation they should have with the technical schools and colleges of technology generally, and at least we succeeded in steering a course where conflict was avoided.

The Deputy is moving a bit away from the Bill.

The Parliamentary Secretary dealt to a considerable degree with training and the Bill makes extra provision for it. It sets a limit to the amount that can be allocated to training and for that reason I thought training was very relevant. I submit to the ruling of the Chair.

I was pointing out the importance of getting the base laid, and I was afraid that there would be conflict between the different people charged with training in the different directions —the colleges of technology, the technical schools, AnCO and other agencies—but we succeded in avoiding any conflict. There is still room there for greater co-operation. I believe a number of institutions are doing the same thing, perhaps in a different way without the necessary co-ordination. In the matter of the technical schools we succeeded in having a block release scheme to AnCO from these schools and there is liaison there. The universities have their own schemes in the higher education plane in relation to training, particularly in management, and I do not think they are properly co-ordinated with institutions like the colleges of technology and with the IMI. Some co-ordination is still required there. These are some of the fundamentals in relation to training to which the Minister should apply himself now. A high degree of co-ordination could easily be achieved to the benefit of technological skills in the immediate future.

We are at the moment training many people for whom there is no work, but it is desirable to train them now. I am on record in this House as saying that years ago, when we were being taunted by the then Opposition, "What are you training people for? To emigrate?". Today it can be said, "What are you training them for? To draw the dole?". My answer to that was that skills are no burden no matter where one goes after obtaining them. The trained person has an accomplishment, has achieved something and when circumstances make it possible for him to apply his training, he is equipped to go into a world which has little place for an unskilled person and will have less place in the future. We are right to go on. We provide people with the skills.

In the serious unemployment situation, particularly in relation to young people, it is better that they be involved than that they be on the streets in desperation which would lead to a serious social problem. I have covered most aspects of what comes within the ambit of the IDA and the Minister's speech. The monetary incentives that we may provide in this Bill to enable the IDA to do something more are infinitesimal and of little relevance in relation to what the real inducement to industrial development should be. We should create a better industrial environment. The Parliamentary Secretary should ask the IDA to use some of the funds at their disposal to help Irish industry instead of concentrating on getting people from Japan to come here. That is all very well in its own way but we must get our priorities right. We must make sure that those in production at the moment will be kept in production and we must reduce the number of redundancies. Industry has gone through difficult times and has only got a little relief in the last budget. We will await the Minister's reply with greatest interest.

I am in support of the extension of the functions of the IDA. The IDA have recently received considerable commendation from various international publications in respect of their work, not least in The Economist survey of a month ago. It also received commendation in The Financial Times survey which preceded the other by some weeks. While I may have some tough things to say about Irish industry generally, I do not wish to denigrate the work of the IDA. Their work has proved absolutely vital in the maintenance of an industry base and in securing employment.

An industrial development Bill should be considered in the context of the existing economic background. This debate is taking place in the week immediately after the IMI conference in Killarney which was entitled "Opportunity". At the close of that conference the President of the IMI said that never at any time had there been better opportunities for industrial development, that never was the climate better and that never was there more capital available. This debate comes also on the trail of the CII and the ESRI survey of the Irish economy which shows that industrialists have never been more optimistic than they are now. We are talking about industrial development in the context in which the climate for industrial development has been shown to be very favourable.

The picture which the previous speaker painted does not correspond with reality as industry sees it. We must also remember that we are talking about an industrial development Bill in the context of 114,000 people who are unemployed and in the context of a population explosion which is unique not just in terms of magnitude. It is unique for this country because the population are staying on the island. We now have a problem in respect of immigration. This desirable turnabout cannot be credited either to the previous Government or to this Government. It is a profound sociological trend for which there is no immediate explanation but for which there must be rapid economic solutions. This Bill must also be considered in the context of a continuing world recession. I will not be as sanguine as the previous speaker in dismissing the severity of that recession or its impact upon our economy and others nor am I sanguine about its continuation.

This weekend there will be an economic summit in 10 Downing Street which the nine major industrialised countries in the world will attend and will, in effect, decide the future of the industrialised nations and in the long term will decide whether or not parliamentary democracy as we know it is viable. This Bill is for an economy which is linked more closely than any other comparable economy with a partner which has suffered from severe depression which has had most deleterious effects on our industrial performance. It is an economy which has seen a tripling of its unemployment rate and which has seen its inflation rate gallop into double figures. This has had inevitable spin-off effects for us in terms of industrial development and inflation. This Bill was not brought in in the context of past success which has somehow temporarily disappeared but in the context of past national failure. There has never been a successful industrial development strategy here and there is not yet one in train. Statistics will bear out the unreality of the picture painted by the previous speaker in respect of the sixties. During most of the decade he was in office the industrial labour force grew, but it did not grow at such a rate as to permit the total number at work to grow. We suffered from the indignity that our industrial development was so poor that the number at work in the economy at the end of the decade was precisely the same as it was at the beginning of the decade.

When we come to consider industrial development in the context of this Bill, it is absolutely futile to do so against the supposition that in the past we had success which has temporarily evaporated for whatever reason one likes to advance. The reality is that we did not have and never had a successful development policy, whether it was in the 1920s and the early 1930s under the system of free trade, or from the 1930s to the 1950s under protection, or during the 1960s under a process of free trade again during the Lemass era.

There are a number of features in this Bill I want to comment on specifically. They are valuable in themselves and conceivably can add up to an important package which will provide part of the answer but not the whole answer. The Minister said he was introducing a new initiative to encourage first-time entrepreneurs to set up industries. He said there were not sufficient entrepeneurs in the past and "this means that a vital spark is missing from Irish industry". That in itself is a very revealing comment. It makes the point I have consistently made in an analysis of the Irish economy that the reason why the Irish economy failed where others succeeded was the lack of enterprise from indigenous industry.

A singular characteristic of Irish industry and of Irish private enterprise which separates us out from others is a complete lack of enterprise. The Minister made the point that the State has to encourage enterprise to be enterprising. In other words, the system is built on the theory that, if left alone, people will be enterprising. Yet here we have this Bill before us and the State has to use the taxpayers' money to encourage people to be enterprising and to engage in industrial activity. The State is not doing this because it sees any value in the products this enterprise may produce. We do not know what they are. The State is not doing this because it sees any value in enterprise in itself, but because it wants to encourage the creation of employment. That is why the State is being empowered through the IDA under this Bill to invest money to create employment.

We must see that there is a conflict of interests in this Bill from the beginning between what the State actually wants and what is going to happen. What it wants is employment and what will happen is the attempted stimulation of enterprise which, hopefully, will lead to an increase in employment. The increase in employment becomes merely a secondary by-product of people establishing industries for the primary purpose of making money. As Ian Morrison said at the IMI last week, as industrialists and business people we are not in business to create employment but to create money. The State has a different objective.

The State has the social objective of seeing to it that people have work, and seeing to it that so far as possible they are not unemployed. The State has a social objective which is completely different from the financial objective of those who run enterprises and decide that they may be set up at the outset. In so far as the private enterprise system has had any justification at all, it has been that at all times in an economy there is sufficient latent enterprise to employ everybody who wishes to be employed. Yet, we have here in respect of our own economy a statement by the Minister that in this vital regard that element has been missing from the Irish private enterprise system. The vital spark has been missing. The rush of first-time entrepreneurs has not been sufficient to keep the flow of new employment prospects.

The reality has been that Irish private enterprise unaided by the State has been lamentable in its performance, and has been completely pathetic. Even aided by the State under the most generous system of grants and aids, and so on, it has only provided about half the jobs we require if we are to provide full employment. There is probably no system of private enterprise anywhere in the world which is so cosseted, so helped, so aided and assisted, as private enterprise here. Yet, it is probable that there is no private enterprise in any economy which has failed so lamentably as it has here.

If this initiative, which is to be welcomed, will lead to an increase in employment, I most certainly welcome it wholeheartedly, and I do so without reservation. I also welcome the initiative in the Bill in respect of working capital which, as the Minister rightly points out, has been an inhibition on economic development and growth. The decision to provide loan guarantees and interest subsidies and to expand that to working capital is an imaginative one, and will be welcomed generally by industry and industrialists. The Minister said it is frankly experimental. My response to that is: good. It is a pity we have not been a little more experimental in the past, and that we have not identified some of the key inhibitions on the development of enterprise which the Minister quite obviously wishes to see fostered and encouraged. The lack of facilities for working capital was a serious inhibition in the past, particularly when it was matched by a banking system which was inordinately conservative in respect of industrial development, not in commercial transactions or straightforward trading, but in respect of risk taking in the industrial field.

One must ask why the financial institutions, and the banks in particular, did not do more in the past. The Minister asks that question later in his speech on another aspect of industrial development. It is a question which it is worth while asking in this regard. Why have they not been more forthcoming with Irish capital? Why have they not been more willing to invest in Irish industry? Why have they not been willing to partake in the risks which are necessary for growth and development? In that regard the Bank of Ireland are to be commended on their most recent innovation. They decided to participate at equity level with certain industries provided they do not compete with home manufacture and provided they have a major employment content.

I hope the initiative in this Bill will stimulate them to extend their scope in that direction and will also encourage the other banks, particularly the other Irish banks, into similar activity. As the Minister said, the essential part of industrial strategy is to strengthen and develop domestic industry. That is the key point of this Bill and it is something to which I will return later.

Debate adjourned.
Top
Share