Dáil Éireann debate -
Wednesday, 13 May 1981

Vol. 328 No. 13

Industrial Development (No. 2) Bill, 1981: Committee and Final Stages.

Section 1 agreed to.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Mr. Horgan

Section 2 (3) states:

The amount of an employment grant shall be subject to such financial limit as shall be fixed from time to time by the Minister with the concurrence of the Minister for Finance.

In his speech yesterday the Minister referred to the fact that he envisaged that there would be effectively an averaging clause here so that the employment grant would in its first year be fixed at a limit at an average of £5,000 per job created. Does this refer to an average across the scheme, to an average within the firm, an average within the category of jobs created within the firm, or what does it refer to? Secondly, is there any understanding in the mind of the IDA or of the Department as to the appropriate salary level above or below which a grant might not be paid? If somebody wanted to create a service job, perhaps on a part-time basis and decided to pay only £2,500 a year, he could effectively get the full cost of that job for two years out of the £5,000 grant subject to all the certifying conditions being reached. In relation to jobs not in existence at the end of the second year is there any proposal about possible recoupment of finances advanced under the scheme in the first year for firms which may not maintain their employment into the second year? I am well aware that firms run into difficulties and that they cannot maintain employment regardless but is the Minister satisfied that the scheme is fairly watertight in relation to possibilities of abuse?

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

The average that is proposed for the first year by agreement between the Minister for Finance and myself is £5,000 per job across the whole scheme. There is no limit in terms of salary but the IDA envisage that the average salary in respect of the kind of job that they are trying to create and assist here would be £10,000 so that in percentages it would be about 50 per cent. On the question of recoupment I understand that the position is that there is full recoupment of the grant if the job fails at any time within five years. That is not more onerous on the firm, as the Deputy will appreciate, than would be the case in a capital grant because that seldom, if ever, operates on a sliding scale over a ten-year period. For every year that the firm survives the liability to repay the grant decreases. But the situation here is that the whole grant is repayable if the job should fail or be lost within five years.

Mr. Horgan

I am still not quite clear about the mathematics. If the Minister gives the IDA a certain sum to provide for these service-related jobs at an average £5,000 per job created, it is possible that the scheme might run out of money before the end of the year because of the averaging effect. What does the Minister see himself doing if over the first six months of the scheme the average per job created turns out at £6,000 or £7,000? Would that mean effectively that there would be less money in the kitty at the end of the year and that the scheme would dry up?

Mr. O'Malley

The IDA will have to try to keep the average at £5,000. If the average was higher than £6,000 in a period of six months they would have to reduce the level of assistance in the latter part of the year to perhaps £3,500 which would be less attractive. They will have to monitor the scheme on a monthly basis to ensure that they stick closely to the £5,000 average. In terms of the amount of money, the situation will be not that a particular sum will be designated for it, certainly in the first year, because it will be difficult to judge how much will be taken up, but that the IDA will pay this out of their capital allowance. I am sure they have good accountancy reasons to justify that. It is a substantial amount of money, £196 million this year from the Exchequer plus about £20 million from their own resources.

Mr. O'Toole

In relation to the Minister's last remark it seems that the number of £5,000's payable would be open-ended but it will be taken from the capital grant of the IDA.

Mr. O'Malley

That is as I understand it at the moment. If after a year's operation of the scheme it was found to be more advantageous to do it in a different way I have no doubt that administrative arrangements can be made to change it. It is not covered by the legislation which is in broad terms.

Mr. O'Toole

Criteria are laid down in relation to eligibility for payment of the grant, one of them being that the job would not be developed in the absence of an employment grant. The average industrialist can prove conclusively for himself that without this grant he could not create this extra job. Who will decide on whether or not this is so?

Mr. O'Malley

The IDA, not the opinion of the promoter. The IDA are in a good position to judge what the market will bear in terms of what will happen.

Mr. Horgan

Does the Minister know whether the IDA have in mind any pencilled in upper limit? To get an average of £5,000 per job there will obviously be a number of jobs over or under £5,000. The House might be reassured to know that large amounts of money would not go to the people who are in fastest with the most attractively packaged submissions for very expensive jobs leaving comparatively less for people who will come in under the £5,000 level. I envisage that there could be a fair amount of administrative costs incurred on the IDA side in the administration of the scheme, which would involve fairly detailed assessments of the job proposals from individual employers, and the monitoring of the scheme, which would possible be on a monthly basis. Is the Minister satisfied with the cost-effectiveness in administrative terms?

Mr. O'Malley

The answer to the first question is a figure of approximately £9,000 and that is set out under the principles of co-ordination of regional aid systems in the Community.

Mr. Horgan

I see.

Mr. O'Malley

In terms of cost to the IDA, they anticipate either three or four additional members of staff over the next two to three years. They have, of course, some people working already on this side, but I do not know how many. There are not many, because the scheme has not yet got off the ground. It is much easier and cheaper to administer this than to administer industrial manufacturing development. There are far fewer inspections of premises and there is not all the hassle of building sites or anything else. It is good value. It is cost reflective.

Question put and agreed to.

SECTION 3.

Question proposed: "That section 3 stand part of the Bill."

Mr. O'Toole

I shall be very brief. In relation to the introduction of orders for the specifying of industries which would avail of this, what has the Minister in mind in relation to such orders — broadly speaking, anyway?

Mr. O'Malley

I gave a list of the sectors which would be regarded as priority in my opening speech. I gave it again when I was replying. They would be the main sectors in respect of which orders would be made.

Question put and agreed to.

Sections 4 and 5 agreed to.

Title agreed to.

Bill reported without amendment and passed.

An Leas-Cheann Comhairle

The two Bills just passed are certified as Money Bills in accordance with Article 22 of the Constitution.