Dáil Éireann debate -
Wednesday, 13 May 1981

Vol. 328 No. 13

Industrial Development Bill, 1981: Second Stage (Resumed) and Subsequent Stages.

Question again proposed: "That the Bill be now read a Second Time."

Mr. O'Toole

Last night I was referring to the statement by the Minister for Industry, Commerce and Tourism in relation to the stock exchange facilities now available. The speculation on the stock exchange was raised by the Taoiseach in suggesting in the past few weeks that an oil find was imminent. The speculation was due to such a statement coming at that level. The position in relation to the added moneys being provided to the IDA under different headings is a very welcome development and Members on this side of the House welcome this new approach. I should like to refer to one heading under which there is an increase, maximum grant for research and development. It is significant that this heading has been picked out for an increase although it is a small one. The Minister is also aware of the importance of this area within the industrial sector.

One of the problems that has arisen in the recent past relating to the closure of factories has been that in many cases they have not been carrying out the kind of research and development which is necessary for them to maintain viability. In some cases, in the case of multinationals for example, this research and development facility is not located here. In many cases it is at their home base in their native country, wherever that might be. The increase under this heading will, I hope, encourage the improvement of research and development where it exists and the setting up of research and development sectors where they do not exist but are taking place outside the country. Members are aware of the massive increase in unemployment and the tragedy that follows in relation to people who are involved in it and their families. Anything that can relieve such pressure and improve the employment situation must be welcomed by any right-thinking person. Overall, the Industrial Development Bill is welcome. Indeed, one wonders why it was not introduced before this. The signs of erosion and contraction have been evident for some time.

The second Bill, the Industrial Development (No. 2) Bill, is of great importance. The Minister devoted three pages of his speech to it yesterday. It is of significant importance in that it broadens the base for the application of grants by the IDA to this services sector. At the moment 46 per cent of our total work force are engaged in the service industries. One might think that a high figure, but when one compares it with figures for developed countries one finds it is quite low. For example, in Sweden, Switzerland and the US upwards of 60 per cent of the total work force are engaged in the services sector. In 1965 the IDA did provide for grants for the services sector and in the last 16 years since the inception of this approach one cannot jump for glee at the success this approach has had. It does represent something in the region of 6,500 jobs which is not, in terms of the success of the IDA in other fields, a great success. In 1980 roughly 1,640 jobs were created in the sector and in the current year the target for job approvals in the sector of 1,500 has been set with current grants of £6.25 million. The Minister in the course of his statement yesterday said that the number of jobs in this sector would double in the next four years. I do not think he is over-optimistic in that provided that the assistance is given and is seen to be given, because this is an area where in developed economies the job share taken up by the services sector is much larger. Therefore, it would seem now that we can make up ground in the sector with an increase in our 46 per cent share of the job-taking at the moment.

The Minister mentioned the total concept of job creation, in other words taking into account not only the provision of jobs but the maintaining of these jobs through the application of this total business concept which he referred to, taking into account things like research, development and marketing. I have already stated that in regard to research and development there seems to be some form of gap in our industrial endeavour in this country, and it can be said with much more certainty that in relation to marketing there definitely is a lack somewhere along the line. Indeed— the Minister of State will bear me out in this — recently a multinational company operating with subsidiaries in the west decided to withdraw from this country. One of the reasons for the difficulty in which they found themselves was, I would say, that they did not have in this country a marketing sector. As far as I recall that sector was in Brussels in this case. There are many more multinationals operating their services in this country with their marketing divisions in London, Brussels, Paris, Rome, Bonn and so on. Therefore, there is a need for emphasis on the development of a marketing sector to a greater degree than has been the case up to now. I hope that this Bill will provide an incentive for the further development of marketing divisions within companies and so on in this country which will ultimately redound to the benefit of the subsidiaries here.

I would also like to mention — indeed the Minister also referred to this — the idea of availing fully of exploiting to the full the new developments based on micro-technology. There is an idea abroad in some areas that unless we are very careful — I concur to some extent — micro-technology and the microchip will cause unemployment in certain quarters and unless we take corrective action we will be the losers. It is of absolute importance that we develop an awareness of this first of all, and secondly that we develop structures in this country, consultative bodies for example, for all sectors of industry where industrialists, trade unions and the public service would be involved in investigating the best ways to exploit this new technology from the point of view of its effect on industry and business in general in the public sector. There is a committee in existence investigating the effects of new technology in the public service.

We must also develop skills that would build on the very sound foundation we now have in the hardware end of the new technology. Leading from that we come into the softwear area which the Minister referred to yesterday, and I hope that this No. 2 Bill will cater for the softwear area in new technology. Having identified the areas where development is possible, having built up a framework within which the skills can be developed to avail of this technology, we must then go about selling the skills and this technology. You can go only so far in selling hardware. There is a limit to the demand for the actual machine or computer or whatever kind of sophisticated object you are selling. There is no limit to the demand for skills, for being able to provide the software packages on film, on tape and God knows on what else in time to come. The thirst for knowledge is always there. It is insatiable and, human nature being what it is, it will always be there and on the increase. In a country like ours without the capacity to develop as large economies might, our future lies in this field to a large extent, in particular if we are to ride out the rough storm of the recession and provide the kind of jobs that young people today are calling out for. That is the one area where there is a limitless demand for a particular kind of product, in some cases not yet gone beyond some person's imagination.

That brings us back again to the educational base, to prepare people for the learning of these skills, such as science subjects and subjects directly associated with technology. One must ask if there should not be parallel legislation on education to enable the incentives provided here to be taken up by the educational sector, so that people are put on the right track and are in a position to acquire of the kind of skills which must be made available to young people.

The Minister did not specify what kind of industries might be eligible for the grant, which he says will be in the region of £4,000 to £5,000 per job. I hope that discrimination will be applied here and that areas where expansion was assured — in so far as anything can be assured nowadays — will be selected as being the most eligible. Priority should be given to ensuring that we get value for money and that the broadening of this incentive base will be used for the benefit of the country and to the best advantage possible.

Mr. Horgan

The Labour Party naturally welcome any Bill which will provide money from any source for the basic development of our economy, which is the provision of jobs for those who are coming on to the labour market for the first time and for those who are also available for work because their present jobs have disappeared or because the contraction in the sales of the product which they were manufacturing has put them on short time or has otherwise imperilled their jobs.

Nobody can overestimate the seriousness of the problem at present, not least in relation to young people. There are an estimated 45,000 young people looking for work at present. They form approximately a quarter of the total unemployed. The figure of 45,000 is not my figure; it is the figure given by the Minister for Labour in a recent debate in this House. We will have tens of thousands of school leavers at the end of the summer also looking for jobs. Even though it is obvious that many of them will get jobs, nobody in his right mind suggests that there will be sufficient new job opportunities, either by the creation of new jobs themselves or by retirements, to provide adequate employment for these young people.

The irony is that time and time again young people are asked to place their trust in a system which has obviously failed and which will continue to fail to do anything more than take the pot off the boil in relation to unemployment. If you think the system is working, ask any young person who is not. They will tell you. If you are lucky, you will find they are merely bewildered and baffled. But they are more likely to become increasingly hostile, not just to the system that condemns them to a marginal life on the dole but indeed to institutions, such as this House, which they see in some sense responsible for their continued unemployment.

The Government's present policy gives us the worst of both worlds. It has to provide, naturally — and we commend it when it does so provide, even from foreign borrowing — money for job creation through the IDA. At the same time it insists that private enterprise is the engine of growth for our economy and that it is ultimately on the private sector that the vast burden of job creation will fall. When you look at the Government's own rhetoric and at the small print which follows it, you will find that the Government do not believe what they are saying themselves.

In his speech the Minister said:

In this context I might mention here my continuing disappointment with the role of the banking system in industrial development, particularly its reluctance to finance new projects without cast iron guarantees. I wish our bankers would follow the example of bankers in countries such as Japan and the US and play a more prominent part in financing industrial development.

It is a sad reflection on the Government of a sovereign State that all they can do, faced with an investment policy by the banks, which are conservative to the point of absurdity, is to wring their hands and express the pious aspiration that one of these days the banks will do better and will show a little bit more social responsibility in deciding where they put their money or where they advise their clients to put their money.

It is the belief of the Labour Party that, left entirely to their own devices, the banks will not do that. They are conservative businessmen and they are not concerned with providing jobs. They are concerned with making money. I do not criticise them for that: it is in the nature of the institutions that they are. Not long ago a celebrated conservative columnist. Mr. Hugh Munro, writing in the now defunct Hibernia, pointed out that if industrialists — I suppose you could include banks in this — create jobs it is a by-product of their investment policies, not its fundamental purpose. Anybody who sets up an industry merely to provide jobs is not in the industrial business; he is in the philantrophy business. Most industrialists are not philantrophists.

The Government have the worst of both worlds. They do their best, with necessarily limited resources, on the public side via the public sector employment and the IDA private investment. But because they choose not to exercise any effective degree of control over the investment policies on the private side, they run the risk of forever throwing good money after bad. They run the risk also of casting the public sector in the role of something which merely stops the gaps to keep the wind away, something which will come in on a fire brigade basis to pick up the tab for redundancies, to airlift in another factory where one has failed, and to apply economic sticking plaster to the wounds which were inflicted on the country by the uncontrolled and very often heartless activities of the private sector. Sooner or later they are going to have to face up to the fact, or some Government are going to have to face up to the fact, that this kind of laissez faire approach — part carrot, part stick and not a great deal of either — is simply not enough to get the country moving again. This is particularly true in relation to employment and to the whole economic strategy of the IDA.

In his budget speech earlier this year the Minister announced the extension of IDA activity into the services sector. I spoke immediately after the Minister and I welcomed the announcement. In so far as I had any criticism it was that we had taken too long to reach agriculture and its related sector where we should have started. If anything, our industrial development policy has started at the wrong end of the road. I hope that eventually we will have an agricultural development authority or some kind of institution — perhaps the IDA would fulfil the function — that will give major priority to jobs based on our greatest single resource and our major renewable resource, namely, agriculture. This does not have the energy and other implications of many industries which are based either on rapid import-export trade or on high energy consumption.

I should like to underline what has been said in relation to the need of other sectors of the economy to mesh in to the greatest possible extent with the job-creation programmes of the IDA, notably the educational sector. At the same time, we must be cautious about this. People have the most amazing expectations of the educational sector. Whether a person is on the conservative or the radical side, there is an overwhelming temptation to believe that education can solve all our problems — not only that, but that it can solve all of them tomorrow. On the conservative side people tend to believe that if the educational system can be controlled, basically we can maintain the old values that all of us hold so dear. Incidentally, nobody specifies exactly what those old values are but that is as may be. On the radical side there is the assumption that if you can manage to wrest control of the educational system from the conservatives you can revolutionise society overnight. That view is equally fallacious. Of course the educational system is important — in the long-term it is crucial — but for people to believe that its contribution to anything, including industrial development and employment, can be turned on and off like a tap is to fly in the face of facts.

There are two facts in particular that we must bear in mind when talking about the role of the educational system and industrial development. The first is that the lead-in time of any change in the educational system is immense. Ask any educationalist involved in the technical or technological area and he will reply that he sends questionnaires to industrialists throughout the country asking them to predict the kind of people they will be offering employment to in the next three to five years but he will be lucky to get a reply from them. Then, in four or five years' time there will be thunderous knocking on his door from those selfsame industrialists asking for 40 to 50 persons with a special skill. His reply to the industrialists will be that they did not answer the questionnaire he sent to them four years previously.

The second fact that must be considered is that we have a different employment market than we had 20 or 30 years ago. The idea that a person who leaves school or third level education and goes into a job for life is a fast-disappearing one. More and more we will have to educate the young people not for specific skills, whether academic, technical or technological, but for a world of work where job descriptions will change radically perhaps two or three times or even more during the working life of the young people. In this context adaptability, the power to change and to take advantage of changes in society and in the work pattern, will be of far greater significance than any specific skills.

I look forward to the implementation of that part of the legislation that is devoted to providing jobs in the services sector or to encouraging the creation of jobs in that sector. At the same time, I must warn the Minister that I do not believe it will be seen as an adequate response to the problems of industrial development and job creation.

Minister for Industry, Commerce and Tourism (Mr. O'Malley)

I should like to thank the two Deputies who have contributed to the debate and for the general support they have given to the two Bills before the House.

Deputy O'Toole laid stress on the importance of research and development and I am in full agreement with him on this matter. This is borne out by the new limit of £250,000 in respect of grants as opposed to the existing figure of £50,000. This is designed to step up activity in this area, particularly among Irish-owned firms, a great many of whom have been seriously lacking. The Deputy asked why this Bill was not introduced earlier. I considered it would be better to take the two Bills together as they are complementary to one another. The second Bill has just become available.

Deputy O'Toole said he thought employment in the services sector was 46 per cent. The provisional figure for 1980 is 50 per cent but it is worth comparing the international figures of the more developed countries. In the United Kingdom the figure is 57 per cent, in Sweden it is 60 per cent and in the United States it is 65 per cent. Therefore, it is clear that as this country develops, the percentage of our people working on the services side will increase quite dramatically. The second Bill before the House recognises that situation. It gives incentives and, to some extent, it sets targets. It is a very important Bill. It is worth reflecting that it is the first attempt ever to break away from the old system of incentives which was very much tied in with capital assets, where incentives were always thought of in terms of a percentage of fixed assets rather than of the actual jobs being created. For that reason the Bill is of fundamental importance. I suppose it has less human interest than the Bill dealing with NET and perhaps its significance gets overlooked.

Deputy O'Toole referred to the significance of marketing. I agree with him that a strategic function such as this should take place in Ireland. In my opening speech I touched on the fact that it is regrettable that such a high proportion of firms who come here have seen this country only as a base for manufacturing. Only 5 or 10 per cent of the foreign firms have seen Ireland as a base for anything other than manufacturing. They just stuck to manufacturing.

Now that we are at last making good progress in terms of infrastructural development, which is so vital to support things like marketing and servicing, and so on, we are in a position to push these aspects of development here. Those kinds of jobs can be created relatively cheaply as an adjunct of the main investment in manufacturing. A large manufacturing firm can easily absorb another 100 people in marketing or servicing or some other non-manufacturing activity.

Deputy O'Toole asked for a parallel education Bill to complement the second of these Bills. Over the past two years in particular the Government have started to gear our educational system very much to the needs of new technology particularly in electronics. New courses and conversion courses for existing graduates have been introduced in several of our third level institutions of education. The Minister for Education, the Minister for Finance, the Minister for Labour and I had a very fruitful meeting some months ago with the Higher Education Authority. We explained to them the priorities as the Government saw them in terms of new industries, and new technology and adapting to it. I am glad to be able to say to the House that the response from the HEA was positive. If they can put into practice fairly rapidly the sort of objectives on which we agreed with them that will be very beneficial to the country and to young people.

I agree with Deputy Horgan that you cannot change things overnight in terms of education and, even where you change the education, that does not have a radical effect for some time. It is a move in the right direction, even if it has to be perhaps a bit slower than any of us would wish. Some of the third level institutions in particular have responded enthusiastically to the changes in technology as they have seen them develop in recent years. Others unhappily less so.

Mr. Horgan

Would the Minister care to specify?

Mr. O'Malley

I would. I have already specified it in public on more than one occasion. I thought I might shame them into doing something but I have failed so far. I will continue to try.

Mr. Horgan

Lay the lash across their backs.

Mr. O'Malley

I always have to point to the institution at the back of this House which, as far back as 1969, as Whip I tried to get UCD to vacate because of accommodation problems in those days and in the early seventies I tried to get them out for security reasons. I was given a solemn promise in the early seventies that they would be gone out of there by 1976. We are coming towards the middle of 1981 and they are very strongly entrenched there still.

It is a pity that our largest university college should think so little of the faculty of engineering that it is the only faculty in that large college which is still reclining in mid-19 century accommodation. I urge that institution for goodness sake to face up to the realities and needs of engineering and try to expedite the movement of their engineering school into new premises where they can expand it and modernise it, and increase the number of engineers and perhaps broaden the number of courses in the more modern branches of engineering.

One has to contrast that attitude with the more enlightened attitude, I suggest, taken by Trinity College. Although under the share-out they were to lose out in engineering, they are very anxious to do all they can. Over the past couple of years at the request of the Government they have provided temporary accommodation successfully and gone to some trouble to try to make their contribution to meet the national needs in this respect.

In my opening speech I referred to the type of service industries which will be promoted under this legislation. Deputy O'Toole may have missed that. I will refer to them again as broadly being engineering and architectural services, computer services, headquarters operations, commercial testing laboratories, medical care and contract research and development services. This list will be expanded if and when it appears that high quality jobs of the type we want can be created in other service sub-sectors.

Deputy Horgan referred to the problem of youth unemployment. We all recognise that as a very serious problem. I suggest to him and the House that the second Bill before us today was formulated very much with young people in mind, particularly those leaving second and third level education institutions at the moment and over the next number of years. It recognises the reality of the sort of opportunities they will have in the years to come.

On education I have been referring mainly to third level institutions, but it is worth acknowledging with some gratitude the attitude taken by many of the more progressive second level schools. Roughly half of the second level schools in Ireland have a computer as part of their equipment. I would hope that in the not too distant future every school will be in that position. The Minister for Education is looking at the possibility of helping schools who might not be able through their own resources to acquire access to a computer.

Mr. Horgan

They may have computers but they cannot get metalwork teachers.

Mr. O'Malley

Metalwork teachers are being produced in profusion at Thomond College, Limerick. That college is expanding rapidly and will be able to meet the demand in that respect in the very near future.

Mr. Horgan

It is not producing any teachers at all in 1982 because of the change to the three year course.

Mr. O'Malley

That is a temporary hiatus which is in the long-term interests of the college and of education generally, I am sure the Deputy will agree. Deputy Horgan referred to some criticisms I made of the banking system here yesterday. He suggested that what was needed was the nationalisation of the banks in Ireland. I referred to Japan and the United States as examples of places where the banking systems play a major part in industrial development. Of course this role can very easily be played here by our banks, if they chose so to do, as do the United States and Japanese banks, without nationalisation.

Mr. Horgan

The Minister was not here for that part of my speech.

Mr. O'Malley

I was not but I have a good summary of what the Deputy said.

Mr. Horgan

Effective public control were the words I used.

Mr. O'Malley

I think in the Deputy's context that probability means nationalisation, or has the policy been changed in that respect of late? Deputy Horgan referred also to the question of our failure in this country to process many of our natural resources. This is a major, perennial problem and unfortunately is not one that is easily solved. I want to put before the House an example of one sector, even though it may not be the largest one, in which it has been solved, I would suggest, that is, in relation to timber. I recall, when I came into this present office nearly four years ago, that the timber industry was in absolute chaos. The saw milling side of it was inefficient, old, run-down and scattered in too many small units. The processing side for waste or pulp timber was on the point of collapse. In fact nearly every firm on that side subsequently collapsed. The position today is quite different. We have now approximately 30 modern, well-equipped saw mills and the saw log side of the industry has been rationalised. We are in a position in which very shortly most of our construction timber, traditionally imported, will be of Irish origin. On the processing side we have now two viable plants which will be able to use up all thinnings and waste timber that will become available in the foreseeable future. Thus we will be able to get away from the very unhappy situation obtaining in recent times of actually exporting unprocessed waste timber, which was a very regrettable situation.

The difference though between timber and some other produce, particularly agricultural produce, is that timber is available all the year round, it has not these seasonal cycles. One of the great difficulties about both beef and milk processing is the cyclical nature of their production here. For example, if one compares it with the situation in a country like Holland, there are very few peaks and valleys, there is a constant level of production. The whole of our agricultural system basically is founded on grass and, of course, there will be peaks of production when the grass tends to peak, which has created many problems for us. I think this is really the kernel of our failure as a country to develop our agricultural processing to the degree to which we would clearly wish. That is a problem not easy of solution because one cannot change the whole nature of agricultural production in this country within a short time. It is something that must be done slowly, and probably will have to be done through some kind of differential pricing whereby those who are prepared to produce in the off-season, as we would know it now, would receive a higher reward for so doing than those who glut the market when it is at its peak.

Mr. Bruton

There is nothing being done about that. Possibly the Government should be giving a lead in that direction.

Mr. O'Toole

That is the position in regard to milk, is it not?

Mr. O'Malley

Liquid milk, I think so.

Mr. Bruton

The question is what are the Government prepared to do about it?

Mr. O'Malley

We are thinking about it first; I am endeavouring to explain——

An Leas-Cheann Comhairle

We cannot get into a full-scale debate on agriculture.

Mr. O'Malley

I am endeavouring to explain why some of these things are——

Mr. Bruton

We have been thinking aloud about these things for the last ten years.

Mr. O'Malley

I am happy that my thoughts have reached a more concrete stage than the Deputy's in many of these areas. I think I mentioned these figures before; I may not have given them here. It is worth remembering that the Dutch produce twice as much milk as we do but they have half our processing capacity. That is worth thinking about because our processing capacity is geared to the peak in milk in say, June, our production being like that. The Dutch production is much smoother. They can cope with twice as much milk with half the installed capacity. It is somewhat of a drain on our resources that one must install capacity in co-operatives to meet the June peak. It is under-utilised for nine months and perhaps idle for six. These are some fairly fundamental problems. The basic problem in relation to beef is not dissimilar because, if one is producing 80 per cent of one's beef during two or three months of the year, it is very difficult to market that product. It is easy enough to pitch it into intervention as a commodity. Of course intervention is a mixed blessing from a marketing man's point of view because it encourages people not to make the effort that ideally they should. For example, to market beef as a product into a large English food chain like Sainsburys or Marks and Spencer is very difficult when one is producing 80 per cent of one's product in 25 per cent of the year. The demand for beef in, say, Sainsburys or Marks and Spencer is more or less the same all the time and their suppliers must take account of that fact.

Mr. Horgan

Does the Minister know who will peak in June this year?

Mr. O'Malley

Milk producers. I think Deputy Horgan may be referring to an event that may well take place in June 1982.

Mr. Horgan

The Minister might prefer that it would take place in June 1982.

An Leas-Cheann Comhairle

I think we shall wait until June 1982 to debate it.

Mr. O'Malley

These Bills are important and urgent. On that note I think I will resume my seat lest what Deputy Horgan thinks is going to happen happens and this House is dissolved from beneath me.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment and passed.