I move:
That a supplementary sum not exceeding £13,866,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1980, for the salaries and expenses of the Office of the Minister for Industry, Commerce and Tourism, including certain services administered by that Office, and for payment of certain subsidies, grants and grants-in-aid.
The major factors giving rise to this Supplementary Estimate are the additional provision for capital expenditure by the Industrial Development Authority and the impact of the first phase of the agreement on pay policy within the framework of the second national understanding and of other increases on the pay elements of the expenditure by my Department and the many bodies under their aegis — those pay commitments could not have been foreseen when the Estimates were prepared originally.
Some adjustments in the amounts provided for a few services operated by my Department are also necessary. Under subhead A.1 — Salaries, Wages and Allowances — the sum of £127,000 sought is required to meet the cost of implementing the terms of the national understanding. Although some unbudgeted for payments also arose on foot of special or grade awards which have been approved by the Department of the Public Service it was possible to meet those costs from savings within the subhead due to a delay-time factor in filling certain posts which yielded the necessary savings.
Under subhead A.2 — Public Service Pensions — the additional sum is required to meet the cost of higher pensions because of the impact of grade awards on the level of pensions payable to the limited number of pensioners concerned and as provided for under subhead A.2.
The additional £100,000 sought under subhead A.3 — Consultancy Services — is required to meet the cost of some consultancy projects which arose during the year and for which provision had not been made in the original Estimate. Another factor giving rise to the need for more funds is that there was a degree of carry-over of expenditure from 1979 due to a delay in receipt of claims for payment because of the effects of the postal dispute.
The extra £160,000 under subhead B.1 — is required to meet the increased cost of air fares, subsistence rates and mileage allowances which have a significant impact on the expenditure under this Department which has such heavy commitments in relation to travel on EEC and other matters and in relation to prices inspectorate activities on price control.
Under subhead B.2 — the additional £15,000 is required because of the need to replace obsolete machinery, the increased cost of machinery supplies and the need for some additional items of equipment.
In regard to subhead C.1 — Post Office Services — due to the postal dispute there was a "carry over" of some £37,000 from 1979. The balance of £25,500 is required to meet the increased cost of telephones, telex, telegrams and postage from 1 July 1980.
In the tourism area, the House will be aware of the many difficulties faced by the industry this year. Many factors, at home and abroad combined to produce a dampening effect on travel. The impact of the deepening economic recession and political uncertainty in many of our main markets, was exacerbated by industrial unrest at home which interrupted services by our air and sea carriers with a resultant loss of business. The industry responded well to the challenges facing it by drawing up a range of initiatives and special offers designed to regain lost bookings and generate new business in the remainder of the season and into 1981.
This type of positive response was essential if the industry was to capitalise on the late booking pattern trend which was evidenced in many countries this year with holidaymakers not deciding until late in the season where they would go. The Government showed their confidence in the ability of Bord Fáilte with the support of the rest of the industry to win their share of an increasingly competitive market by providing the funds to finance the additional promotional programme.
I am glad to say that this confidence was not misplaced. While it is still too early to predict the final outcome for the year, preliminary indications are that total revenue from out-of-State tourism and home holidays will be in the region of £540 million as against £465 million last year. This represents an increase of 16 per cent in revenue or a drop in real terms of not more than 2 per cent on 1979 which, it must be remembered, was our best year ever for tourism. An even better outturn might have been expected but for the further setback occasioned by the recent disruption of petrol supplies. The Government's prompt action in making arrangements for supplies to out-of-State tourists helped offset the worst effects of this and restore confidence as a tourist destination. Research carried out by Bórd Fáilte during the peak months shows that tourists were happy with their holiday and would like to pay a return visit. Resistance to price became evident during the year and I am confident that as a result of industry-wide discussions which have taken place under the aegis of Bord Fáilte there will be a determined effort for 1981 to contain price increases as much as possible. I am sure this will give a positive boost to tourism in 1981.
The special promotional and marketing programmes necessary to overcome the problems which beset the industry all cost money. The net cost amounted to an additional provision this year of £300,000 to which must be added the cost of salary increases to which I referred in my opening comments, producing the total sum of £532,000 now required.
An additional sum of £825,500 for administration and general expenses is being provided to the Institute for Industrial Research and Standards under subhead F.1 to meet the cost of the national understanding and other special salary awards.
On subhead H.1, the original Estimate provided £7,975,000 towards the grant-in-aid for Córas Tráchtála, who now need an additional £87,700.
Of the £87,700 now being sought, £64,700 is required to meet increased pay costs following on the recent national understanding and £19,000 is in respect of certain grade pay awards as recommended in the Devlin Review report. The balance of £4,000 is needed to meet increased expenditure caused by the increased cost of employers' pay related social insurance contributions.
In 1979, Irish exports reached the highest volume and value levels ever recorded. Total export value rose by 18.1 per cent over 1978. In the first nine months of 1980 the total value was up 21.6 per cent on the corresponding period in 1979 and the prospects are that the out-turn for 1980 will measure up to Córas Tráchtála's target for the year, that is, £4,200 million.
The House is well aware of the most vital importance of exports to the national economy. Our ability to increase the national wealth and to increase and maintain employment opportunities depends to a large extent on a sustained expansion in our exporting activity. The House is also well informed of the part played by Córas Tráchtála in attaining the present satisfactory state of our export activity. I have no doubt that Deputies will agree that there can be no diminution in the service which Córas Tráchtála offers to our exporters, particularly at a time of worldwide recession. Likewise, there must be pay levels maintained for the staff of Córas Tráchtála consistent with movements in pay levels generally throughout the public sector.
On subhead H.2, the Estimate for 1980 provided £549,000 grant-in-aid for Kilkenny Design Workshops Limited. An additional amount of £65,000 is now required to enable the company to meet their financial commitments for 1980.
Of this sum, £11,000 is needed to cover wage and salary costs arising from the implementation of the first phase of the 1980 national understanding.
The remaining £54,000 is needed for general expenditure, the principal item being the cost of the Designer Development and Irish Book Design Award Schemes. Both schemes are aimed at increasing in a positive way the level of design and design awareness in Ireland. The Designer Development Award Scheme helps our most promising young designers broaden their experience, while the Irish Book Design Award Scheme creates a greater appreciation among publishers and the public of the need for high design standards.
On subhead I.1, the original allocation to the Industrial Development Authority for administration and general expenses for 1980 was £10.569 million. An additional £631,000 is required to meet the Authority's current expenditure needs; £161,000 is to meet the cost this year of the first phase of the recent national understanding and £320,000 is in respect of the cost of special pay increases. The balance of £150,000 relates to a special promotional programme being undertaken as part of the Government's proposals under the national understanding for the acceleration of job creation.
On subhead I.2, the original allocation for the IDA capital grant-in-aid for 1980 was £145 million. An extra £11.7 million is now being provided. Of this, £4.2 million is to cover the cost of additional job creation and job maintenance measures which are being implemented in line with the Government's commitment under the national understanding. These measures comprise the intensification of the IDA's advance factory and site acquisition programmes and proposals aimed at the rescue or replacement of firms in difficulty. the balance of £7.5 million is the result of a more rapid investment than expected by industrial promoters in fixed assets, with the consequent rise in claims for the reimbursement of eligible expenditure.
On subhead J.1, the Estimate for 1980 provided £815,000 grant-in-aid for administration and general expenses for the Shannon Free Airport Development Company Limited. An additional £59,500 is required in the current year.
Of this amount, £34,500 is required to meet wage and salary costs arising from the implementation of the first phase of the 1980 National Understanding and certain special grade awards.
The remaining £25,000 is being used to intensify industrial promotional activity as provided for in the national understanding.
Under subhead K.2, £805,000 was provided in the original Estimate for credit financing of capital goods exports. This relates to the scheme which provides export credit finance at concessionary interest rates, currently ranging from 7.75 per cent to 8.75 per cent, for exports of goods of a capital nature manufactured in Ireland. This scheme is operated by the associated banks in conjunction with the export credit insurance scheme and with the aid of an interest relief which is provided out of voted moneys. The amount of this interest rate compensation depends on the amount of export credit finance drawn down by exporters and on the gap to be bridged between the concessionary interest rates charged to exporters — 7¾ per cent to 8¾ per cent — and the cost of funds to the banks. Due to the world-wide increase in market interest rates from mid-1979 to mid-1980, the gap to be bridged by way of subsidy increased from 6-6½ per cent to 10½-11½ per cent, which gives rise to a resultant increase of £232,900 in the subsidy amount paid to the banks.
Despite the adverse movement in market interest rates over the past few years, my commitment to fostering exports of capital goods is evidenced by the increase in recent years in interest rate compensation paid to the banks under the export credit finance scheme — from £101,000 in 1978 to over £1 million in the current year. Since mid-1980 the interest gap to be bridged has narrowed due to (i) a 5 per cent to 0.75 per cent increase in concessionary rates which came into effect on 1 July 1980; (ii) a substantial reduction of 3½ per cent in market rates due to three successive decreases in the bank's lending rates.
However, as the above changes occurred after 30 June 1980, this welcome development does not affect the subsidy amount being paid to the banks in 1980, as payments are made on the phased basis of six-monthly periods in arrears.
On subhead O.1, the additional £191.200 is required to enable payment to be made of a further instalment of a subsidy to Verolme Cork Dockyard in respect of the loss incurred by the yard on the costruction of the B & I carferry Connacht.
As Deputies are aware, subsidies have been paid from time to time to the yard in respect of ships on which the company had incurred a loss.
In regard to subhead P — Irish Goods Council — the intensification of the use of domestic products and services formed part of the Government's commitments in the proposals for the second national understanding. For this reason it is now proposed that an extra £203,000 be made available to the Irish Goods Council for the intensification of the programme for the promotion of Irish goods. Together with some savings from within the subhead the council will have about £270,000 to devote to an intensive promotion of Irish-made products in the vital buying period up to Christmas.
The council's main promotional emphasis is in the area of public advertising reaching mass audiences through the media of television, radio, newspapers and a nationwide outdoor poster campaign.
The second main area of emphasis is in the retail sector where a significantly improved commitment to Irish manufacturers has been secured in recent months.
The pace of industrial import substitution is also being stepped up considerably. Additional personnel are being recruited to increase the calling rate on industry and three further industrial import exhibitions have been arranged before the end of the year.
On subhead O — Miscellaneous Payments — the original Estimate made provision for expenditure of £19,690 in relation to prepackaged goods average weight inspections. A further £28,000 is needed now in respect of an activity of a kindred nature, as we were obliged to set up a service for the examination of weighing machines manufactured in this country and intended for export to Germany. Such machines are not acceptable on the German market unless they bear the stamp of EEC initial verification. It is intended that the service should be selffinancing by way of a fee charged for the service.
Subhead R.1 refers to the bread subsidy. The amount already allocated for the bread subsidy for the current year is £14 million. There had been a gradual increase in the consumption of standard bread by the public. This, together with the "carry forward" for payment in 1980 of 1979 claims delayed by the postal dispute, has resulted in an excess estimated to amount to £325,000 in the current year for which provision is now necessary.
On subhead Y — Currency Exchange Loss on Certain Industrial Credit Company Foreign Borrowings for Industrial Development — the supplementary provision of £9,000 under this subhead is to cover the cost to the Exchequer of the exchange loss arising from foreign borrowings by the Industrial Credit Company who on-lend for fixed asset investment by small and medium-sized firms. In any year in which there is a gain on these borrowings the exchange gain is paid to the Exchequer.
The total amount of the increased expenditure is £15,356,300 but there is an offset of £1,222,000 in savings mainly made up of £700,000 on subhead E.2 — Development of Holiday Accommodation — which arose due to certain difficulties encountered by the grantees, including problems with planning permissions, difficulties in arranging loans and some uncertainty about tourist trade, with the result that the planned developments did not take place to the extent that payments could be claimed this year; £332,000 on subhead O.2 — Interest subsidy to Shipping Finance Corporation Limited, mainly because a shipbuilding order which was expected to be placed in 1980 did not materialise — the level of the corporation's financing for shipbuilding and, consequently, the interest subsidy which would arise therefrom was not as high as originally anticipated. Other savings on the voted provision includes £65,000 on subhead G — Subscriptions to International Organisations; £75,000 on subhead R.2 — Flour and Wheatenmeal subsidy and £50,000 on subhead T.2 — Administration expenses for the Irish Film Board, which will not be operative this year.
There will also be a surplus of £268,300 in appropriations-in-aid, mainly arising from increased receipts under the Patents and Trade Marks Acts — £172,500 — because of higher fees having been introduced; extra receipts — £35,000 — under the Export Guarantee Premiums scheme due to increased volume of business and £36,000 repayment of travel costs of certain EEC journeys. The net amount needed is, therefore, £13,866,000.
I have explained in the case of each subhead the reason for the increased expenditure but, if Deputies wish to raise any points in relation to them, I shall deal with them as far as possible in my reply.
I recommend this Supplementary Estimate to the House.
