I am relating it in the sense that we are talking about the creation of jobs and the role of this agency is to create jobs and attract capital and enterprises into the country, enterprises that have the capacity to create jobs, and I am simply saying that in many cases, unless the actions of this agency under the powers conferred on it by this Bill, are directed in a certain way the common consensus shared by everyone here of the necessity to create jobs will not necessarily be achieved.
We would like to see the Government take a more positive and creative responsibility for job creation. We would see within the IDA a reservoir of expertise which can be tapped positively by the Government and we would hope that when this Bill becomes law the Government would give very specific guidelines to the IDA about the kind of industrial strategy the Government would like to see, the kind of jobs they would like provided and the way in which they propose to assist the IDA in its work.
Let me spell out what I mean in that context. At the moment the IDA attracts enterprises on the basis of a number of financial incentives, a package of grants, factory provision, administration skills, and so on, and, perhaps most important of all, export tax relief. The recent announcement about Alcan, for example, is one we welcome but I would suggest to the Minister—I shall be interested to hear his reply—that if the major incentive, and I assume he will agree it is tax relief for many companies, remains untouched there will be two effects. First of all, I understand it is increasingly under pressure from the EEC and therefore its duration has a question mark over it. The other effect is that I believe there is very little incentive in the package for a company to generate new work in terms of an industrial process. The maximum financial benefit it will derive will come only if it produces a product and exports it in order to gain tax relief, and so on. In other words, there is little incentive for a company to come in here to manufacture something which can be further processed down-stream by another company and added to by yet another company thereby creating jobs at a number of outlets instead of at just one outlet.
I suggest to the Minister that he might have a look into the functioning of the IDA and the common consensus of creating new work and new employment with a multiplier effect which does not exist at the moment because of the necessity to avail of the primary incentive, that incentive being to export the product immeditely. Within the competence of the Minister and of his colleague, the Minister for Finance, I suggest that if they seriously wish to achieve the objective of job creation then the whole question of taxation as an integral part of Government policy should be looked at.
There are a number of points I should like to make with regard to this specific section. Section 2 provides for the restructuring of existing industries and the rationalisation of certain sectors. This is welcome. However, I am not quite clear what active role the Government and specifically the IDA will play in ensuring that such restructuring comes about. I have in mind the background of the CIO reports in the 1960s which in many cases forecast the sort of closures industries subsequently faced in the early 1970s. These were voluntary reports. In regard to some industries, like the shoe industry, they were told long in advance that unless they did X, Y and Z, they would be in trouble. Now the climate has changed and it is no longer adequate for these kinds of reports to remain merely voluntary.
There should be some positive policy, other than simply a voluntary recommendation, to induce firms which have been identified as being in a sector that needs rationalisation and restructuring to achieve the rationalisation or restructuring outlined, and the trade unions concerned in such industries should be involved actively in the formation of any rationalisation or restructuring, because the alternative is not an acceptable one.
The alternative is that in a period of time an industry may conceal its true position from the workers, and in some cases from the shareholders. It could be in extremely difficult circumstances and apply to Fóir Teoranta, and the workers will be faced suddenly with redundancy without having received any prior waring. Therefore, when this Bill becomes law the Government should ask the IDA to take positive steps to identify sectors of Irish industry which are in need of restructuring so that they can come forward, with proposals from the IDA or other departmental agencies, and those proposals should be made known to everybody involved in the industry. In such circumstances we would not have situations like in the past, with reports collecting dust on shelves and workers not knowing they were facing redundancy until they were confronted with it.
A further major proposal is contained in section 9 which deals with equity participation, and I should like the Minister or the Parliamentary Secretary to elaborate on the Government's policy in this respect. It seems to me that some forms of equity participation are little less and little more than a form of passive banking, that there is hardly any benefit that could accrue to the IDA, the Government and accordingly to the Irish people. The capital, in the form of shares, would be tied up, unsaleable, in such undertakings.
I therefore ask the Parliamentary Secretary at some stage to indicate what the Government's attitude is to taking out a 5 per cent equity in a subsidiary of a large multinational firm established here. Five per cent gives little or no control in terms of company policy, and because the company are a subsidiary the shares are not even marketable, the capital can hardly be redeemed and any attempt at valuation of such shares is subject to considerable manipulation between the subsidiaries and the major company.
I welcome equity participation but there are two forms of it and I should like the Government to indicate their attitude to the advisability of equity participation, the situations in which such participation would be advisable and the percentage participation we are talking about. I would envisage the Government, possibly in conjunction with a local bank, taking an equity stake of up to 40 per cent in companies wholly owned here in their own right. Such a stake is big enough for the Government to have a say in the policy of the company through the IDA. Such a company would be directly accessible and there would be no need to plough through the myriad channels associated with multinational companies.
Our capacity and power to take up equity participation are to be recommended but we need clarification in regard to the functions participation will have, what expertise we will contribute to such participation and the precise benefits we will derive. I question whether giving somebody a grant in exchange for equity participation at the level of 5 per cent would be of much value because I fail to see, if a company go wallop, what benefit that company will give. If the company are successful I fail to see how the participation can be saleable or cashable.
We could have a situation in five or ten years in which the people here, through Government agencies, would have bits and shares in all sorts of companies, and unless there is some coherent plan we could have a lot of capital, as such, which would be tied up which could easily have been put to better use.
In addition to the financial implications of such participation, I should like to have clarification on the Government's attitude to the appointment of directors, where they arise, by the Government or the Minister. I should like to know if the IDA have a stake of equity in a company and being entitled to a number of directorships, whether there are any guidelines in regard to the sort of people who would be appointed: will they be IDA employees or will they be friends of the Government of the day? Governments appoint a number of people, not Members of the Oireachtas, in a quasi-political role and it is only natural that the Government of the day would appoint people who reflect or who sympathise with their policies. Is it simply enough to give a directorship to an IDA employee who is over-worked anyway, or who should be? The taking up of three or four directorships by some such person should not be allowed in certain circumstances. In regard to political friends, I have no objection provided they are competent to do the job. We now must try to acquire some sort of expertise in this field and consequently the traditional criteria that have been applied by both sides of the House should no longer be applied.
It behoves the IDA and the Government to clarify the implications of enlarged powers under this section. There should be a clear-cut understanding of the role of such directors, what their function is and the kind of people who would be eligible for appointment. Otherwise the benefit of participation is highly doubtful and hard to assess. If the capital is tied up in the form of some kind of passive banking, why call it equity participation? Why not just give a grant and be done with it? If the individual has little or no understanding of the enterprise involved he can offer little at board level to the role of that company.
Clarification is needed on the role of equity participation and some indication of the attitude of the Minister and his Department is absolutely essential. During the debate on the Bill dealing with Bula Limited the Minister in question was extremely critical of the whole nature of equity participation by the State and certainly of the scale of 49 per cent proposed by the then Minister. It is one of the core elements of this Bill and a policy description by the Minister on section 9 is required at the end of the Second Stage debate.
I am also interested, and I have been involved in a minor way, in the question of overseas aid and the export of Irish expertise to Third World and APC countries. I welcome the provision in section 4 on the grounds that it attempts to achieve a number of objectives which we all favour. The establishment of DEVCO was an extremely good idea and I would hope that the enlarged powers conferred on the IDA will be used in a positive manner in order that Third World countries may be able to benefit from the not inconsiderable experience and expertise gained by the IDA over the years.
The reason we are all in favour of such action is twofold. First, it is because of the chronic human needs within the Third World for development and job creation and the raising of living standards. That is essential in moral terms alone but it is also essential in a number of other ways. It is essential for the people of the West and the people of rich and well-fed Ireland who wish to maintain any kind of global stability towards the end of this century. We may think that relative to the golden triangle of Europe we are a very poor country but if my memory is correct we rank twentieth in the world in the table of wealth. We certainly do not rank with those who starve and have not adequate housing and sewerage. Any action taken by the Irish people at governmental level, as distinct from the work done by the voluntary organisations, is to be welcomed.
There is a specific reason why the IDA and the Government should become directly involved in such aid. It is because we are non-aligned politically and to a certain extent economically, and the advice which can be given by DEVCO, the IMI or the ESB is not simply salesmanship for an industrial concern at home. All too often, for example, German electrical consultants will not only design a system for a country but will specify German industrial plant, not because it is the best or the cheapest or the most suitable but because this is how they see their role. The British, the French and the Belgians are no different. There is a great advantage in the capacity of the Irish development agencies to offer sincere and neutral advice without commercial salesmanship overtones. I would say to the Government that they should develop their commitment to aid in the positive sense, bearing in mind the old saying that the person who teaches a starving man how to grow two ears of corn where there was previously one is doing far more than someone who gives that person a loaf of bread.
There is at the end of the day a benefit for the Irish economy in that by raising the living standards of people and enabling them to develop their own resources we are expanding the market for Irish goods in a global sense. There is a moral obligation, a political non-aligned obligation and an economic justification for welcoming section 4 and for urging that when the Bill becomes law the IDA should be encouraged to develop their activities.
I want to turn to an area that has been discussed at length by some Members who feel that because they do not represent a Dublin constituency they have a monopoly on hardship and employment and a monopoly on whatever is going in terms of factories or jobs. I am reminded of the situation not too far from this House where arguments about the allocation of space are similar to arguments about wages, in which an employer simply tells two groups of workers, neither of whom is being properly paid, that there is a certain amount in the wages pot and they can sort it out for themselves; they very quickly put their hands into the pot without having the sense to realise that the pot is not big enough in the first place. If we as Members of this House try to grab whatever is coming from an agency and do not consider what we really need as a national community we will play into the hands both locally and nationally of the people who create scarcity in the first place. The necessity to attract jobs to this country has in some cases forced us to sell ourselves short and not to value fully the resources under our command which are appreciating day by day. The fact is that the entire country needs jobs of one kind or another. Another fact is that half of the jobs forecasted—the figures of 28,000 and 38,000 have been bandied about—will be required in the Dublin area. If we talk in terms of trying to divert jobs to this sector and that sector without committing ourselves to expanding the total supply of jobs, we are playing the old game of trying to shove our hands into a pot that is too small without directing our energies towards making it larger. In other words, the squabble over the available jobs is diverting our attention from the real issue.
The IDA have an extremely difficult task in that they are trying to do two things. They have been criticised in this House and elsewhere for their failure to help small Irish firms. It is an unfair criticism. I have had personal experience of the IDA and believe that they are a competent and professional organisation. In my opinion, they have shattered all the cliches about bureaucracy in the civil service. They move fast and efficiently and are decisive and very tough. They are also very commercial. On more than one occasion my own profession have complained about the commercial toughness of the IDA in forcing firms to cut fees and to provide package deals for professional services involving architecture, engineering, quantity surveying and so on. We can discuss that aspect of their work at another time. I simply introduced it to show that the IDA are a tough professional organisation.
Let us consider how and where the expertise of the IDA has been gathered. Their energies have been mainly directed towards attracting foreign companies to this country, which involves long periods of travel abroad, dealing with large commercial companies, such as the one that has resurrected its plant at Shannon. When you are dealing with large commercial concerns you are dealing with people who have a high level of expertise in accountancy and management. You can go to a company like Merck, Sharp Dohme or Alcan and say: "What are your projections for the next five years and what is your current budget and capital structure?" You will not be given this information on the back of an envelope because such firms produce carefully calculated reports. This means that the position of such a company can be easily assessed before an approach is made. There is no doubt that the IDA have been successful in their dealings with the multi-nationals. After concluding such large business deals, it is unreasonable to expect the IDA to direct their attention to the 3,000 small Irish firms that employ no more than 20 people each. The implications of dealing with smaller firms on a personal level may not be as glamorous as dealing with large firms. In weather like this it is not a glamorous task to drive to the west or the midlands to discuss business with the owner of a small factory, when another member of the organisation could be on his way to New York in a jumbo jet to deal with a more sophisticated company.
It is easy to understand why the task of increasing employment in our small business sector has not received the same attention. By successfully closing one major deal with a company like Alcan you can announce that you have delivered 800 jobs. You would have to conclude many more deals with small Irish firms before the job total would reach 800. There is a natural incentive for those charged with delivering numbers every year to go for the big ones, the ones that are easily assessed and can deliver more jobs. When people complain of the failure of the IDA to promote our small industries they should recognise that those factors exist. I am not saying they are positive causes but they must exist in some shape or form.
If we accept that that is so, what should we do about it? We should question whether the IDA should have any responsibilities for encouraging domestic employment from small companies or whether a special section should be established to deal with small companies. It has been said that if you were to encourage the 3,000 odd Irish firms to create on average ten jobs each in any one year they would provide 30,000 jobs. That is a large increase. In many cases it could be done by simply acquiring new machinery which would only involve a small capital outlay. The failure in the past is mainly due to the fact that it has been difficult for a Dublin-based Government agency to identify the many opportunities that exist throughout the country. Every Deputy can talk about a little industry which could employ four or five more if it had this or that. We can identify them because we are on the spot. To expect someone to do that from the fifth floor of an office block in Dublin would be expecting a super-human effort.
I suggest that the powers regarding financial incentives, of giving grants, training and so on, being conferred by this Bill, on top of the existing powers, on the IDA in so far as we are concerned with the Irish business sector, have a different structure and that possibly a new agency under the overall direction of the IDA should be established. Essentially, it should be a regional orientated agency. The regional development organisations should be given the power and teeth to do at local level what the IDA are doing internationally. The capacity to provide the money, to examine, help and assist small industries should be decentralised. Until such time as it is decentralised we are not going to get the commitment to discover the opportunities.
In addition, local authorities should have a role in the regional development authorities in a way they do not adequately have at present. I am aware that it varies in different parts of the country, but in the Dublin context the input from local councillors to the regional development organisation is effectively nil in terms of the reciprocated political impact on the city council of the regional organisation. It seems to be the concern of the House to significantly expand Irish domestic industry and the employment that goes with it. In this context we must look at this stage at a Bill which proposes to confer additional powers on the IDA and ask ourselves whether the IDA is the correct agency in its present form and structure to do the job of attracting foreign enterprises— a job it is carrying out very well at present—but also simultaneously to increase domestic employment in small industries.
I should like the Minister and the Department to consider at some stage during the debate the questions I raised and give some indication of their attitude to the area of improving incentives to domestic industry and a way in which those incentives can be communicated to local businesses. In all of this the involvement of those on the shop floor in such a business is essential. Their commitment to the expension of employment is essential. Their knowledge and understanding that they will have a stake and a share as by right in the benefits that will accrue from such improvements must be made known. In this context the role of the trade union movement is essential. We will not get the commitment to expand employment and jobs within our society if those on the shop floor, at the coal face so speak, feel that moves are being taken without adequate consultation which will have the short-term effect of endangering their jobs, let alone increase employment. If we do not have the co-operation of the people in the enterprise, from the person who makes the tea to the person in management, we are not going to get the kind of lift-off in job creation we are all looking for.
We are fortunate that in many small industries—I am talking about industries employing fewer than 30 people—by virtue of the group dynamics of 30 people working together frequently there are not the sort of personal relation problems which become industrial disputes with larger concerns. If we are to interfere and intervene in the way this Bill gives the IDA the power to do so, there has to be adequate understanding taken of the position of people in such industries and their right to participate, be consulted and have a say in decision-making. As far as the Labour Party are concerned, unless the ordinary working people, and their labour representatives in the form of the trade union movement, have an adequate say in the decision-making in relation to industrial employment and industrial creation we will not get the take-off we all know is necessary. There is a consensus about the necessity to create jobs in our society and at last there is a consensus about the urgency of those jobs. There is probably also a consensus about the numbers required but that consensus quickly starts to evaporate when one looks at the way jobs are to be created.
The Bill gives the IDA a number of powers and, in balance, it must be welcomed. However, in conferring these powers on the IDA it behoves the Government, and not the IDA, to indicate their policy and position in philosophical economic terms to certain fundamental questions which will arise when this Bill is passed. The first major one is the question of equity participation. I am concerned at the lack of such clear-cut position by the Government as the result of the statements by the Minister for Industry, Commerce and Energy when in Opposition. It is pointless for the Government to introduce this Bill where such powers are proposed if they are not in a position to clarify at the end of this debate the conditions where they would refuse consent for large scale participation by the IDA in a certain firm if these powers are being given. If the Government are to be given the power to refuse such participation at certain levels then the Minister should indicate the philisophical principles which would underpin the Government's attitude to that sector.
That, in turn, reverts back to the area where the consensus of job creation here ends and where the conflict over two alternative approaches begins. That conflict is clear and explicit. As far as we are concerned the private enterprise sector, with the best will in the world, with every conceivable grant, with every Deputy for the relevant constituency lobbying and petitioning, cannot produce the necessary level of jobs we need. By private enterprise sector I do not necessarily mean the Irish enterprise sector. The multi-national private enterprise sector is equally incapable of providing all the jobs our society needs. That is not some kind of theory propounded. That is a simple analysis of historical fact. The private sector has never provided the necessary level of jobs required. Why should we expect it to do so? Yet, when the Labour Party say that private enterprise can only produce so much with all the incentives, why can we not supply the balance by getting the State directly involved in certain areas.
We have the record of the role of the State in this area and very few Deputies would say that we should close down the Irish Sugar Company, Bord na Móna, the ESB or other agencies which are the sort of models we have in mind. They have provided not only vast numbers of jobs but have also created security of employment for many people in a way that the private sector was totally incapable of doing. This is not the place or time to go into a debate on the alternatives of a private or public sector attitude to economic development. But it is the place to ask the Government to clarify their position on the whole question of equity participation in the light of the issues that arise at the back of such participation. It is only to highlight those issues that I have referred back in brief form to what I see is the essential political, economic conflict between this and that side of the House.
I am particularly anxious that the Minister for Industry, Commerce and Energy should play an active role, under the section on foreign aid, section 4, in ensuring that encouragement be given by the Department in this area, that there be active liaison between the Department and the Department of Foreign Affairs for the reasons outlined. I should like the Parliamentary Secretary, the Minister or whoever will be replying to this debate to clarify their position on this, to indicate how much capital will be made available to the IDA to pursue this activity because, having the power to do it, as outlined in section 4, will not be of much use if the money is not provided. In that context the interaction of the enlarged powers of the IDA, through DEVCo, with the role of APSO and the whole question of bi-lateral aid that we would give, and our participation in a programme such as the Lomé Convention, the EDF, is an area that must be developed by the commercial sector of the Government as much as by the foreign affairs sector. To that extent if the Government propose such power and provision in this Bill we should be given some indication, at the close of the Second Stage debate, of the Government's attitude within the Department of Industry, Commerce and Energy as to how they regard the commercial implications of foreign aid programmes.
I mentioned earlier the obvious moral and political obligations, as I would define them, of the necessity to improve our role with regard to aid. But in view of the fact that this is a specific Bill coming from a specific Government Department charged with making an honest and accurate appraisal, the commercial implications for Irish industry of such aid programmes should be clarified. From what I know of the operation of aid programmes in other countries—countries not very far away from here— they are really financial carrots or, in more precise cases, financial sticks whereby the company comes in on the basis of offering aid to a Third World country and then demands that that Third World country commit itself commercially to a whole range of products from the company, which in the initial stages appeared to be bringing gifts without strings attached. The spectrum is wide-ranging: the worst would probably be either the French or the British and at the other end of the scale we have Swedes who apply no such strings to their aid programmes. Therefore, there are commerical implications to an aid programme. Some of them are not very clean, to use a specific word for it.
The Government, in reply, should recognise that such commercial implications do exist and indicate what their attitude is likely to be or, if I am asking too much too soon, to give some indication as to when they would let it be known what is their attitude and perhaps get involved with the Department of Foreign Affairs on this and, in particular, the Confederation of Irish Industry, who are also involved.
There is a final major point I should like to revert to briefly, because I should like a reply to it. It is the whole question of the small industries and the role of the IDA. The IDA is a tough professional organisation. It acquired that expertise and position in a certain area. There is a difficulty of a very major kind being thrust on the IDA if we ask them to be good at that level and in another sphere as well. Accordingly, I question whether we do not need to regionalise this aspect of the IDA's work, to lock it in in a much more positive fashion with local authorities and the RDOs in order to get the lift-off with the 3,000 small Irish businesses who could in many cases significantly expand their employment with very little capital aid from the State.
A final proviso would be that in the granting of any such aid to any private company the whole position, to begin with, of trade union recognition, of the rights of trade unions, of access for shop stewards, all of that must— if it is not already so—be a condition of such aid being granted. Perhaps the Parliamentary Secretary would be good enough to have that position clarified for me. I am not sufficiently familiar with the practices of the IDA in this regard to be sure whether or not that is already the case; I suspect that possibly it is. Certainly, if it is not the case, we would be moving on Committee Stage to have it so.
I should like to conclude by saying that we welcome the speedy reintroduction of this Bill. We recognise that the Government have a difficult task in terms of job creation. We recognise that they are forced into playing a numbers game and frequently the numbers will be altered or changed if the game appears too difficult, as we saw yesterday for the first time. Two attitudes can be taken on that. It could be said that it was a purely cynical, dishonest political move. I would not describe it as such a motive. I would say, more openly and honestly, it is an indication from the people in charge of the steering wheel at present just how great is the crisis of unemployment here. Therefore, there is the overriding necessity to do something quickly about it. In so far as this Bill confers additional powers which the IDA themselves sought to provide such employment, I welcome it.
