Dáil Éireann debate -
Thursday, 9 Jun 1983

Vol. 343 No. 5

Estimates, 1983. - Vote 49: Industry and Energy (Resumed).

Debate resumed on the following motion:

That a sum not exceeding £213,365,000 be granted to defray the charge which will come in course of payment during the year ending on 31st day of December, 1983, for the salaries and expenses of the Office of the Minister for Energy, including certain services administered by that Office, and for payment of certain loans, subsidies, grants and grants-in-aid.

—(Minister for Industry and Energy.)

Minister for Industry and Energy (Mr. J. Bruton)

Though the primary responsibility for the well-being of any enterprise rests — and must be seen to rest — with the owners and managers of the enterprise, every effort is made, within the constraints of the law under which they operate, by the IDA and Fóir Teoranta, in particular, to ensure that no enterprise that can reasonably be preserved is allowed to go out of business. This rescue activity is a matter in which I and my Minister of State are actively concerned on a day-to-day basis.

In that respect I am looking at the possibilities of improving the present early warning system even though I am satisfied that it works reasonably well. The "hands on" or interventionist approach which the IDA intends to adopt under the new Strategic Plan, which they have for fostering the further development of existing companies, will also improve that agency's capacity to detect early signs of incipient weakness and will put the IDA in a better position to urge on individual companies where necessary the need for timely attention to the problems identified.

But again I must emphasise that the role of the State, and the State agencies in relation to firms in difficulties, is to assist, to whatever extent they consider appropriate or necessary, the efforts of management to rehabilitate the company. This, of course, presupposes that the managements are ready and able to implement the measures needed, including the ability to utilise to good advantage such assistance as may be offered by the State services.

In view of the diversity of the activities of the commercial State bodies and the varying reasons for their incorporation into the State sector, little serious attention has been devoted by past Governments to developing a properly structured relationship between these bodies and central Government. Ad hoc arrangements have been in existence and there has been insufficient reflection on developing the optimum procedures to encourage the successful commercial development of these bodies, while ensuring that they are run in the most professional and efficient manner.

The difficulty has been to devise means of achieving the elusive balance between freedom and control, that is, the legitimate freedom of the bodies to pursue their operations within a commercial framework and the need to safeguard the interests of the public who are their ultimate shareholders.

The present financial position of the commercial State bodies collectively is very bad. Instead of being a source of strength to the economy and the Exchequer, they are a growing burden on both. While most commercial State bodies meet their interest and loan repayments, the average rate of return on share capital and repayable advances from the State is estimated at 4 per cent — a grossly inadequate figure considering the present cost of funds, even allowing for the socialstrategic nature of some of the activities involved. Interest rates are 16.75 per cent and a return of 4 per cent is very inadequate against that background.

The Government wish to see a major improvement in the performance of the commercial State bodies and a continuing reassessment of their operations in the national interest. While acknowledging that a significant improvement in performance will be a difficult task, particularly in view of the Exchequer's inability to provide the levels of equity investment being requested by some of the bodies, I feel that this could be facilitated by the State bodies themselves becoming more commercially orientated and being more openly accountable to their ultimate owners through central Government and the Oireachtas.

With this in mind, I have invited the chairmen, chief executives and directors of the seven commercial State bodies operating under the aegis of my Department to meet me on Saturday next for a full day of discussion on the rold of these bodies in the national economy and their relationship with my Department. I will be accompanied by the Minister of State.

This meeting is designed to facilitate an exchange of views on a wide range of general issues. It is not — as has been suggested in certain media reports — an exercise to criticise the performance of individual bodies but to explore means of making these bodies more commercially orientated and more openly accountable to central Government. I will, of course, be highlighting to the State bodies my concern about their overall financial position and my determination to ensure that they are professionally run.

The aim in these discussions is to call on the expertise of both the executives and the board members of these companies to draw up generally applicable guidelines for their operation, to learn from their experience as to how they can be better supported by the Department in their work and how the Department in turn can lay down guidelines for their work, such as corporate plans against which their performance can be measured, better control of capital projects and so on. The aim will be to get general guidelines of general applicability rather than to go into the problems of the companies individually. That is something which is more properly done in discussion with each of the boards concerned.

Control of capital projects by commercial State bodies is an area that has caused major concern and controversy in recent years. Experience in relation to a number of projects suggests that in the crucial areas of planning and feasibility studies, execution, project control and commissioning, potential weaknesses have emerged on the part of the commercial State bodies which have had profound financial implications later, both for the bodies themselves and the State.

The Minister for Finance has recently reviewed the procedure for planning and controlling public capital expenditure. He wishes to ensure that effective procedures, at present employed in some areas but not in others, are consolidated and employed by all public authorities. His aim is to encourage a more systematic approach to the appraisal of all capital expenditure projects and programmes and to improve the quality of information available to decision-makers at all levels. The Minister has recently issued detailed procedures for the planning and control of public capital expenditure by Departments and all bodies under their aegis. The Government expect that the implementation of these procedures will mitigate a considerable proportion of the cost overruns which have been experienced on overall public sector investment, in particular in respect of some of the bodies under the aegis of my own Department.

Although primary responsibility for the vetting and overall control of capital projects in the commercial State-sponsored sector rests with the boards of the bodies, the Government, as part of their responsibility for ensuring that investment in the public sector is productive and soundly based, are reviewing a number of capital projects in the energy area in consultation with the bodies in question.

Other than in a small number of cases, there are few readily identifiable corporate plans or other planning targets in existence relating to the commercial State bodies. The fact that these are not specifically required by the shareholder means that there is little impetus for the bodies to draw up such plans or targets. Their continued absence means that the performance of the commercial State bodies cannot be assessed in any meaningful or effective way. Such plans normally include financial particulars (e.g. projected profit and loss accounts, balance sheets, cash flow statements, projected rate of return on investment, financing details), production targets, marketing and organisation strategies, operating efficiency targets, details and justification for proposed capital expenditures, cost reduction proposals, etc.

The plans could cover a five-year period and be on a ‘rolling' basis with a detailed budget for the first year. They would have a flexible format to accommodate the range and diversity of the State bodies to be covered. The Government are at present considering the introduction of such plans in the commercial State bodies.

The re-establishment of the Joint Oireachtas Committee on State-sponsored Bodies will result in an increasing interest in, and awareness, on the part of the Houses of the Oireachtas, of the activities of the commercial State bodies. I also intend to take specific steps to improve the format and content of the annual reports and accounts of the State-sponsored bodies under my aegis to facilitate a better comparative appraisal from the viewpoint of public policy of the operations of such bodies and generally make available more information to the members of the Oireachtas and to the public of their operations and financial performance.

I turn now to the subject of energy. An arrangement has been agreed so that the Minister of State at my Department will contribute to the debate and he will cover in more detail a number of energy areas, including, in particular the oil sector and minerals and petroleum exploration and development. I will, therefore, confine my remarks to a few major issues.

I have already drawn attention to the Government's concern about energy costs and I have recently taken action for the monitoring of industrial costs and a review of electricity costs and prices in particular. Apart from what can be done by Government in the area of supply and distribution of energy, costs can also be abated by consumers by using less energy through the adoption of conservation measures and efficient use of energy. The trend of energy consumption in the economy has shown a welcome decline since 1979 and I would like to see this continued.

The excessive dependence on imported oil which existed some years ago is now well on the way to being resolved and a more balanced pattern of supply is now emerging. Indigenous natural gas and peat are replacing oil and the ESB's programme for coal-based electricity in the latter eighties will continue this trend.

In the present comfortable supply position it is easy to become complacent about the security aspects of energy supply but this must remain a dominant factor in long-term planning. There will always be pressures when easier supply and price conditions in the oil market prevail but a balance which is critical in the long term must be maintained so that development of indigenous resources is not thrown overboard.

The development of our natural gas resource is central to the Government's policy to strengthen energy security, to keep down costs from what they otherwise would be and to generate resources for the Exchequer. Bord na Móna directly and through the administration of the private bog scheme are increasing peat production at competitive prices.

The public sector agencies are the dominant producers and suppliers in the area of electricity, natural gas, peat and more recently in oil procurement and refining. The general level of efficiency of these bodies' activities has a major impact on energy prices and on the return on the substantial capital investment, more than £1,000 million, and new capital investment now at £300 million a year.

Even though only a relatively small part of the ESB's activities are assisted from the Exchequer it is, nevertheless, important to look at the role of electricity in meeting a vital part of our energy requirements. The central strategy of policy in relation to electricity has been to diversify generation away from excessive dependence on oil which reached more than 70 per cent in 1979 and to maximise the utilisation of our economic basis of indigenous energy resources, particularly natural gas and peat. This is complemented by a programme to utilise imported coal in the future. This objective has required a very large investment programme, one of the largest in the public sector.

The diversification programme has been successful to the extent that, by the end of this summer, the proportion of generating capacity solely dependent on oil will have fallen from 60 per cent to 33 per cent and the amount capable of using native fuels, or dual fuelling, will have risen to 70 per cent.

A consequence of this programme, however, is that the amount of capacity surplus to normal requirements has grown substantially and this is aggravated by the stagnation in demand for electricity. The adverse effect of capital charges arising from a surplus capacity is a matter of concern and I have asked the Board of the ESB to review the timing and further progress of certain aspects of their capital programme which are not essential to meet demand in the rest of this decade.

The cost of electricity has now become a matter of considerable concern to the ESB themselves, to the Government and to industry and other consumers. I recently announced the setting up of an inquiry into electricity prices which has been welcomed by the Board of the ESB. The last major inquiry into ESB costs was done by the Fletcher Committee in 1972.

The action of the Government and other public sector bodies of course, affects electricity costs. There have, in recent times, been significant increases in the price paid by the ESB for peat and gas. These price increases have been a reflection of the general increase in energy market prices triggered off by the upward movement of oil prices. The price of peat has been increased to about the same level as imported oil prices prevailing last year and the earlier part of this year in order to enable Bord na Móna to continue development of our peat resources.

As well as increasing natural gas prices the Government have also, over the last two years, more than doubled the quantity of gas available to the ESB. This has displaced about ¾ million tonnes of imported oil which would have been significantly more expensive than the cost of the gas which replaced it. The Cork-Dublin gas pipeline, completed last December, will enable the ESB to utilise part of their gas allocation more efficiently in Dublin than elsewhere.

I might also add that gas and peat prices are not subject to the uncertainty and fluctuations, as are oil prices, arising from international market movements and the dollar exchange rate. The net effect of these decisions is to keep the ESB's fuel costs below the level which they would otherwise have to pay if they relied on imported oil. The effect of taxation on electricity prices has been alleged to be a major factor in price increase. The Government in their budget this year reduced the contribution in lieu of rates by £15 million and exempted electricity prices from increases in VAT and fuel oil which saved consumers a further £16 million a year.

It could be argued that the net sum total of Government decisions in recent years, both negative and positive taken together, have actually held ESB prices at a lower level than they might otherwise be.

Deputies will have noticed the provision made in the Estimate for FEOGA — Western Aid Electrification. This scheme commenced in August 1981 with aid amounting to £16 million over a ten-year period being provided jointly by the Exchequer and EEC funds. The aim of the scheme is to alleviate the special problems of the farming community by making aid available toward the cost of connecting and improving electricity supply.

To date there have been 1,650 approvals at a cost of £3,599,717. This money has been spent on new and increased supplies, three phase supplies, network improvements and a number of marketing and processing plants. It is anticipated that a further 850 farms will benefit under the scheme in 1983 and that almost 7,000 farms will benefit during the scheme as a whole.

Bord Gáis Éireann have responsibility for the development and transmission of our natural gas resource. The Government's policy is to supply natural gas for distribution by efficient and forward looking town gas companies in our major cities and towns when a supply can be economically provided, and to underpin the security and cost of electricity generation to which I have already referred and to develop remunerative export markets for natural gas. The completion of the Cork-Dublin pipeline in December 1982 on time and within budget, marks a major milestone in the development of this strategy, and all involved are to be complimented.

The supply of natural gas to the Dublin Gas Company has enabled that company to reduce their prices to consumers substantially and to plan an ambitious development programme to expand the sales of gas in Dublin for domestic and industrial use. The terms of supply are at present under discussion between Board Gáis Éireann and the company.

The next stage of development will be to consider supplies to towns when a supply proposal is economic and can be regarded as having an acceptable prospect of commercial success. Urban areas with existing gas distribution systems such as Limerick, Waterford and Clonmel, have made considerable progress in putting such projects together. The extension of supply to other population centres and industries, especially those near the Cork-Dublin pipeline, which do not have a town gas supply will also be considered. The preparedness of such centres themselves to distribute and market the gas will be an important factor in any decision.

BGE's capital programme for 1983 amounts to £22 million about 30 per cent of which will be funded from their own revenue and the remainder from borrowings. The programme covers residual expenditure on the Cork-Dublin natural gas pipeline project, the construction of a loop line to the north of Dublin and the possible expansion of the grid to other centres, such as Clonmel. Provision has also been made for some expenditure in connection with the Dublin-Belfast pipeline. Negotiations on a supply of gas to Northern Ireland are continuing and I expect to conclude these with the incoming British Government as soon as possible. In this regard we had made an amount of progress in the few weeks before the British general election was called. It was a matter of regret for me and my counterpart involved in these negotiations, Mr. Adam Butler, that it was not possible for us to finalise the discussions before the election. Obviously, during the election it was not possible to progress with the discussions any further. I should like to take this opportunity to express my appreciation of the manner in which Mr. Butler conducted the discussions. I hope it will be possible to conclude these with whoever will be negotiating on the other side of the table after the Government is formed in Westminster in the next few days.

Peat production has always played an important part in our energy supply and security and I expect that it will continue to do so in future. Peat production is possible at prices that are currently competitive with imported solid fuels for domestic and commercial use and oil for electricity generation and as long as that can be maintained Bord na Móna is making a positive and valuable contribution to the national economy.

The task now facing Bord na Móna is to continue a further development of our peat resources on a basis that will remunerate capital investment and keep energy costs competitive. The capital resources available to the board for this purpose in 1983 are £36 million and most of this expenditure is to complete long-term bog development work now well advanced under its third development programme. Where new projects are in the early stages I have asked the board to review these investment projects to ensure viability on acceptable norms. I have stressed the need to remunerate capital investment.

While Bord na Móna will remain the dominant force in bog development and peat fuel production, the efforts of private enterprise in the development of smaller bogs must continue to supplement the board's achievements. Such has been the response to the private bog development scheme that last year's allocation has been fully taken up and I have increased the amount available this year to £1 million to provide for the demand expected during 1983. The scheme provides an incentive to private developers, who have established a local market for fuel but who would otherwise be deterred from developing the smaller tracts of bogland by the high cost of drainage, access roads and turf cutting machinery.

To date 312 schemes covering 17,524 acres have been approved at a total cost of £3.8 million, of which grants amounting to £1.8 million have been approved. I am advised that turf production under the scheme is leading to savings of £17 million a year on fuel imports and is increasing and maintaining local employment in rural areas.

My remarks on the topics which I have covered reflect the priorities which I have set for myself for the next few months. As I indicated at the outset, they are: establishing the framework for future industrial progress; making a start on securing financial control over, and rationalisation of, the State commercial enterprises which are under the aegis of my Department and addressing the problems of uncompetitive energy costs which are having serious effects on our industry and the economy generally.

These are challenging objectives which have always loomed large in our economy. They have never been more vital than now. Surely if we have learned anything in the past couple of years it is that there is not an easy way out of our difficulties. These easy ways have been tried and the cost of their failure is part of the price we now have to pay.

I have spelled out many of our serious problems. It is necessary to face reality. It is equally important to avoid an undue sense of pessimism about the future. There is no need for such pessimism. We have many strong advantages on our side. It is up to us to make the most of them. What we must do now is to equip ourselves to grasp the opportunities already on the horizon.

There is encouraging evidence of a recovery in the international economy and in business activity. It will be up to us to conduct our own affairs in a manner that will ensure that we benefit from that recovery, using the many plus factors we enjoy.

The industrialists I met in my recent promotional visits in the US, Britain and on the Continent all regarded Ireland as an outstandingly profitable location for modern industry. This is regarded as much as a function of Ireland's young productive and adaptable labour force, as of the industrial incentives offered by the State agencies.

This means that so long as we continue to act resolutely to improve the fiscal and business environment here, we will benefit largely from economic recovery. As an export nation Ireland can expect to get disproportionate benefits from that recovery. But we must always remember that we must compete on cost, quality and delivery with tough competitors who are more anxious than ever before to enlarge their share of the market at our expense.

The most forcible message that I got from a recent visit to the United States industrialists who have invested in Ireland was that they came here because we have a better work force than other locations in Europe. As a result of this, and other factors, we have got almost half of all the new green field United States investment coming to any location in Europe in recent times.

We have made a major investment in higher education facilities, particularly in the technological area, and these are now paying dividends. While world markets are declining, Irish industrial exports are growing. Our industrialists, particularly the new ones, have been able to beat the international trend. Unlike Britain, Germany, France and most other European countries, Ireland has new industrial capacity. They have older and obsolescent industries. As a result we are better placed to avail of the economic recovery than they are.

We have a large young population. Whereas in Germany, the number of people in the age group 15 to 19 is set to collapse from 4.9 million in 1985 to 3.4 million in 1990, the number of Irish people in that age group is likely to grow. Obviously it makes much more sense for investors to come to an expanding market where there are many young people than to a declining one. Our high proportion of young people also means that Ireland provides a rapidly expanding home market for Irish industry. We should not see the number of young people we have here simply as a problem; we should also see it as a market and a source of dynamism for growth in our economy.

Some people looking at our population statistics, would tend to despair about the possibility of getting our employment situation back under control. But let us get the problem into perspective. It is predicted that there will be about 100,000 more people seeking employment in 1990 than are now seeking jobs. But they will be young, adaptable, and educated people. Modern industry has become much more skill-intensive than was the case in the past. Irish workers, being young and well educated, must have advantages in attracting industry to this country over workers in other countries who are older, and possessed of redundant and inflexible skills.

In the past we have proved that it is possible to get a national consensus that is necessary for and conducive to rapid economic growth. The Government have taken essential, though temporarily unpalatable steps to get the basics on the right track. The next stage is that of building on a sounder basis of national financial stability and industrial stability and planning and that stage must command all our support and commitment.

I recommend this Estimate to the House.

Mr. Reynolds

I should like to point out to the House that while industry and energy forms the total responsibility of the Minister, on this side of the House we have divided responsibility with industry and employment on one side and energy on the other. I should like to inform the House that my colleague Deputy O'Malley will deal with energy when the debate resumes on Tuesday and I will deal with the industrial side. I am sure Deputy O'Malley will not mind if I refer to a few minor matters in the energy field, ones in which I had a particular interest. There was a reference by the Minister to negotiations in relation to Kinsale gas for Belfast and Northern Ireland. I listened attentively to what the Minister said, that negotitions were still in progress, but we have now passed the first birthday of these negotiations which were finalised not started — in May of last year between Mr. Adam Butler and myself, as Minister for Industry and Energy. Like the Minister I should also like to express pleasure at the manner in which those negotiations were conducted. However, I fail to understand why after two long evenings, one in Iveagh House and the second at Stormont Castle, the matter has not been finalised. We reached agreement on all heads for the supply of gas. It is understandable that the agreement had to be put into contract form but it is important to record that we reached full and final agreement on all aspects of the supply of natural gas, the quantities asked for, the price, the escalator clause, the mix of currencies to be applied in payment for the gas and the energy components making up that complex area of negotiations. I do not underestimate the problems that had to be dealt with and I should like to pay tribute to the officials in the Department who were involved in the intricate negotiations for their untiring efforts in the negotiations.

It is important to record that around the table at Stormont Castle we reached agreement. Not alone that but we shook hands on that agreement. At Mr. Butler's request we proceeded to the steps of Stormont Castle for him to announce that agreement had been reached. It was then only a matter for the Irish and the British Governments to approve the terms of the agreement. I do not know of any situation where two Ministers of two sovereign Governments reached agreement and announced it in public before the television cameras and in the media in Belfast. Naturally enough I was only too delighted to join with Mr. Butler in the same announcement. It baffles me to think what we have all been at over the past 12 or nearly 13 months. Before I left the Department I went through all the final telex messages and there was no doubt that it was only a matter of getting together and signing the documents.

Have the negotiations been reopened? What has happened? The British Minister had officials with him from the Treasury in London. I can understand those officials trying to get a better deal and taking advantage, as they saw it, of an incoming Government. Perhaps they thought they could upset the deal and get better terms. At the first meeting with Mr. Butler in Iveagh House he gave the clear impression — probably good tactics in negotiations — that he thought the price we would be looking for the gas would be a lot lower than the price I was talking about. He said that impression was given to him clearly by my predecessor. I have no knowledge of that. Perhaps there was some element of truth in it and perhaps not. I do not know.

If they are trying to upset the deal and looking for a cheaper price, applying all the pressures for which British Governments are well known in negotiations and in tactics, I expect the Minister to stand firm on the terms. They are related to the price at which the gas will be sold in Dublin. I believe it was an excellent deal. Obviously they thought it was too good a deal for us if they tried to upset it. Where agreement is reached at ministerial level, with nothing remaining but the formal rubber stamping at Government level, I would expect the agreement to be implemented. Everybody attending these negotiations had plenipotentiary powers. I had from the Government here, and the Government had no hesitation in endorsing what I said.

We still do not know what the present position is. The Minister said this matter went on right up to the time of the British election. There was an interesting announcement during that election campaign from John Hume. He said he had it from the highest authority in Dublin that the deal was over and done with. Listening to the Minister today one would not get that impression. When questioned in more depth about it John Hume was absolutely adamant that that was the true position and he had it from the highest authority in Dublin. I would expect that the Minister opposite would be the highest authority in relation to this matter.

Mr. J. Bruton

He did not get it from me.

Mr. Reynolds

One does not know who to believe. I am saying to the Minister that he should not sell it any cheaper than I was selling it. If they made a bad deal, so be it. You cannot always make a good deal. You have to take the good and the bad, and roll on from there. I am sure Deputy O'Malley will not mind me mentioning that matter in the energy area to get clarification from the Minister.

There are many omissions from the Minister's long speech. There is another area which worries me slightly. I am always worried about development being postponed, especially having regard to the experience we had before in the energy area. The Minister did not mention the peat briquette factory in Ballyforan. Is it going ahead? I do not know what the problem is. Recently I heard there is some sort of bureaucratic argument going on between Bord na Móna, the Department of the Environment and Galway County Council. I do not know whether the Department of Industry and Energy are involved. In straight and forceful terms I want to say to the Minister that he should not tolerate any nonsense from any semi-State body standing in the way of development. I came across many instances of that. At coffee next Saturday morning the Minister should take a message from me to the gentlemen who sit around that table. As Minister he should tell them that he will not tolerate this nonsense of bureaucratic arguments holding up development.

On various occasions in this House I tried to raise another problem because it illustrates this bureaucratic opposition and nonsense when we are trying to get something done, and get it done fast. The people will want us to tell them in this debate what we intend to do about the 188,000 people who are unemployed, not counting the 19,000, approximately, young people who are not included in that figure and the 19,000 to 20,000 small farmers who are available for work. We are reaching a national crisis in unemployment. People want to see positive action from the Minister, the Government and this House. I will not be destructive in my criticisms. I know the tough job that has to be done. After six months in Government people will be looking for little more than they are getting here today.

To get back to the point I was making about the bureaucratic opposition which arises from time to time, I am a little more patient than other Deputies but I tried to raise a matter three times and I was told I would have another opportunity to raise it. I am raising it now. On my last visit to Germany on an industrial promotion tour with the IDA, I met two German brothers, industrialists who wanted to set up peat moss factory here. They were short of approximately 200 acres of bogland which would have enabled them not only to carry through their original proposal but to double it and to provide 70 jobs in a very rural area, actually in my own constituency.

I did not pick the place, they did. They asked for assistance and I pledged them that night in Germany that when I came home — they gave me a list of people — I would try to arrange a sale for them. I arranged a sale for them, I got them their bogland but when that sale came up to be approved by the Land Commission the most strenuous efforts were made by Bord na Móna to block that sale. I could understand that if Bord na Móna had plans for the development of that area of bogland. When I asked them for their plans they had none. In my view they had no right whatsoever, when they had no plans for development, to object to a private development and deprive a rural part called Rathowen in County Westmeath on the Longford—Westmeath border of 70 jobs.

Mr. J. Bruton

Will the Deputy give the name of the firm?

Mr. Reynolds

It is Midland Peat. That is the Irish name and there are two German brothers. I have not their names with me now. With the help of officials of my Department and with all the to-ing and fro-ing we had with the Department of Agriculture and the Land Commission — Bord na Móna had no right under the Land Acts to object to it, as transpired when we made full inquiries in my Department, — finally the Land Commission overruled the objections and this sale took place. Within two weeks of my leaving office a compulsory purchase order was put in the local newspapers to acquire that bogland. What sort of dictatorial, bureaucratic approach is that by a semi-State organisation towards development, their Minister, their Department and breaching the faith which the Minister and I know one carries with one when one goes abroad on industrial promotion? The chief executive of the IDA was present on the night in question. What did those two German industrialists think of me as Minister, of Mr. White as the chief executive of the IDA, or of Ireland when one section of a Government in a country would get in the way of development for which there was no logical basis? It is a national disgrace.

I tried to raise the matter three times in the House and I was ruled out of order by the Ceann Comhairle each time. I was told there were different ways and means of raising the matter. When the German people came to Ireland they came looking for me. I arranged a meeting for them with the IDA and I told Mr. White to let Bord na Móna know in no uncertain terms from me that if there was not agreement on this I would have to do something about it. I realise that Bord na Móna had mapped out certain areas of bog in this area but those people only wanted 200 acres and they did not care if it was that 200 acres or some other 200 acres. As far as I was concerned, I wanted Bord na Móna either to leave them alone or exchange this 200 acres for another 200 acres. As far as I know this has been tossed around between the two of them. I believe at this stage Bord na Móna are seeing the light and I believe we will have a resolution. I am putting it to the Minister in the interests of the credibility of Irish Ministers going abroad, in the interests of the credibility of the IDA and the Government to take the strongest action possible in relation to that situation. The Minister will meet more of that as he goes along the way, although perhaps not as glaring as that.

Mr. J. Bruton

If the Deputy has a problem of that nature he is welcome to come to my office and discuss it with me.

Mr. Reynolds

I would have thought, having brought it to the attention of all the people concerned, that I should not have to do that.

Mr. J. Bruton

I agree that the Deputy should not have to.

Mr. Reynolds

I know that. I did not think it was possible. That is the sort of thing which happens. Those are the two areas in energy I wish to deal with. I would like to go on with other areas in energy but my colleague will be dealing with them. The Estimate presented today is, by and large, the Estimate I prepared when I was Minister for Industry and Energy and published last November in the general election situation. Very marginal changes have been made, so it is for all intents and purposes the same Estimate. It reflects the job done in approaching the Estimates in the Department of Industry and Energy and reflects the conviction and the commitment of the previous Fianna Fáil Government to getting down expenditure. When one looks at the overall figures, a reduction of approximately £57 million from the outturn of 1983, which, in effect, is approximately a reduction of 20 to 21 per cent in overall expenditure, in the context of a very considerable contribution to the July cutbacks, one gets a distinct impression. It is a clear impression which has to be given, in fairness to the officials in the Department of Industry and Energy of how hard they worked in getting down expenditure which the Minister and I agree is fundamental to the development of the economy. It is a clear reflection of the commitment there was there to do the job properly.

It is worth stating that on the outturn of 1982 and the figures which were estimated for current Government expenditure in the March budget that not alone were they reached and kept within the limits but there was a saving of approximately £53 million, which is not generally recognised. I have heard time and time again in debates in the House people on the other side trying to label the previous Fianna Fáil Government as a spendthrift Government. The facts are there, the commitment was there. There was natural resistance to it and always will be when one tries to cut current Government expenditure. If the will and the commitment are there they will go right down through the system and you will find you will get the response from the various Departments.

There was a time in Irish politics when the successful Minister was the man who could go to the Cabinet table and get the most money for his Department. That was always the way he was judged, that was the strongest man around the table, that was the man who had the muscle, that was the fellow who could get the biggest allocation. I believe the criteria of success of future Ministers around the Cabinet table will be those who can go in and manage their Departments, show savings from year to year and show that they are prepared to take the courageous and honest decisions to get rid of services that are no longer really necessary in today's climate. They will be the people who are prepared, as I was in the short time I was in this Department, to take unpopular decisions, to get rid of services that are not wanted or to shut down activities that have no possibility of being viable. They made their contribution to the reduction in expenditure this year.

I would like to mention Ardmore Studios in Bray. I remember the "hollering" there was in the House time and time again by two Ministers of the present Cabinet and the way they talked about taking it over, putting State money into it, without caring where it was got. The question is always asked over here every time we talk, "Tell us where we will get the money". Nobody on the other side was concerned about where we were to get the money to nationalise Ardmore Studios and keep it going, even though at the time there was no way that a viable future could be seen for it. The board of Ardmore Studios were the very first people to admit it.

The same applies to the closure of Avoca Mines. I feel a bit aggrieved about how the Government handled that situation when they came into office. Avoca Mines was not a State-owned company. Avoca Mines was a privately owned company for which a certain amount of money was provided in the Estimates by the previous Coalition Government. I was running out of money in the summer. I looked at the overall position in relation to Avoca. There was no question of any more viability in it. There might be another couple of months in it but the money was not there for it. I did not howl, as did other Ministers, come into this House and howl from the roof tops: Oh, there were no allocations made by the previous Government. I took my decision and I took it on the chin. For four solid weeks pickets were placed by the same Avoca miners who refused to let a receiver into that mine. Not alone did they pillory my Department with telephone calls and pickets on the offices at Clare Street and everywhere else but they used the maximum pressure to get extra-statutory redundancies to which they were not entitled. That was not a State company. Indeed in the present situation it is debatable — because of extra statutory redundancies and the problems the Minister will have — whether that whole area should be examined in more detail. I was not prepared to bend to that pressure. Yet during the same election campaign the present Taoiseach, Minister for Education and Minister for Labour, one after the other, gave commitments that if they were in Government they would pay that money. If I was there yet I would not pay it because I do not believe that Governments should bend to that kind of pressure.

I had a different view of that prospective government. Within a week or ten days, one of the first acts of this Government was to pay that almost £1 million of taxpayers' money to those people who refused to obey the law and would not let in a receiver. I noticed that the payment of that money was not announced by the present Minister for Industry and Energy. I do not believe he believes in that sort of thing, but he did not have any option because his Taoiseach and two Cabinet colleagues had given the commitment and it had to be paid. He did not announce it. It is quite clear that he does not agree with it — I am sure he does not —and I would be surprised if he did.

Then we had the howl about the school buses, the Minister for Education asking where she was supposed to get the money. But she did not give any thought to the school children who had to be put off buses when she threw away £1 million of taxpayers' money just to buy off pressure and a few votes in the Wicklow area. So be it.

Those are the sorts of decisions that will be necessary, have been necessary in the past and will be more necessary in the future to produce the savings on current expenditure and not waste taxpayers' money badly needed in the future. It reflects what was our approach, mine as Minister and that of the Fianna Fáil Party, to putting our scarce resources into areas of economic development and job creation.

There are areas I shall go through one by one in relation to the Estimate. I notice the Minister has picked out a few but there are many omissions from his statement. Though he may have picked three particular areas on which to home in, nevertheless it is rather strange that other areas have not been mentioned, areas of very large expenditure, problem areas which, perhaps for one reason or another, he may have chosen not to mention. Perhaps it is good politics not to mention them at this stage. Perhaps it was felt better to make a good, strong speech, full of philosophies, full of ideas about more committees and so on than to home in on some of the difficult areas in that Department, and there are plenty of them.

We have heard nothing of what will be the future of Clondalkin Paper Mills, which the Minister purchased in the early hours of the morning not in his offices but in a city centre establishment to make sure that the budget would go through. I notice the Leas-Cheann Comhairle is smiling. There was probably a commitment on the part of his party to ensure that Clondalkin Paper Mills was bought over for £1.760 million. We have not heard anything about it since. A lot of taxpayers' money has been invested there. What are the plans for it? Does the Minister propose to run it as a semi-State body, or is he going to sell it off again, as some people have suggested since? Will the Minister set it up and run it on a management contract with particular people, or what? Plenty of people whose money has been spent on it want to know. They want to know what will happen it. Will it lie idle or what? Perhaps the Minister would let us know when replying.

Then there is Nitrigin Éireann Teoranta. When the Minister talked about value for money in overruns, this must be one of the greatest scandals of wastage of public money in the whole of the political arena in recent years. It was an operation started with something in the region of £30 million to £40 million; there has probably been a £100 million overrun or something to that effect — I have not the figures before me — but it is in that region. When the Minister talks about overruns, when he talks about committees and so on, I would like to know what is his view of accountability for that type of financial recklessness that was carried on in NET. What are the Government of the day going to do about this sort of operation, where one is presented with a semi-State body, with plans for a project estimated to cost £X which, by the time it was finished, costs three times £X? That is the pattern of the day and was in relation to NET; nobody seems to be held accountable or responsible. I ask this House, and everybody concerned, if this was the people's own money — the people responsible for allowing that situation to develop — would they do it? If they were working in private enterprise would they not pay a price for it? But no, no accountability; out the door.

The Minister has another one on his desk which I spotted in the short time I was over there and in respect of which I initiated an inquiry before I left — the overrun on the bill for the Institute for Industrial Research and Standards. That was another one that started at approximately £2,500,000, estimated, no fixed price contract — probably the same kind of situation as NET — no accountability, no monitoring process, which I agree is needed and which I established in areas when I was over there. I agree with the Minister that such areas must be monitored very closely. That is now finishing up somewhere in the region of £7 million and, included in that £7 million, is £1 million on professional fees, architects' fees — it may be a few shillings less but not a lot — with again no accountability. Who is going to carry the can of responsibility for this type of operation? Somebody has got to do it. I was not very long in Government — one-and-a-half years in Posts and Telegraphs and seven months in Industry and Energy — but it frightened me to see the lack of control there was on the spending of public money. I fully accept that the Government of the day have the right to decide to undertake whatever project they feel collectively should be built. That is their decision; all right. It is after that that the operation and control of the expenditure is involved.

I have yet to see, with one exception in my short time, that there has been sufficient control. As the Minister correctly says, there has been sufficient control on the project of the Cork to Dublin gas pipeline. It proves one thing, that it can be done. It should be done in every single exercise. I want to pay tribute to everybody concerned in that project. It was a hallmark for what can be done in the public sector as well as in the private sector with proper controls, proper management expertise being applied to the job. It is an excellent job and a shining example to the rest of the public capital projects to be undertaken in this country. There is there the blueprint that can be followed. It proves it can be done if only the right people and management are deployed on it. Perhaps that is where the question arises, as to where the right management is to be obtained. In fairness to the civil service, I should say — and there are excellent people in the civil service — there is a trend of thought in some of the higher echelons, in some places, that frowns on private enterprise. Perhaps it is because they have been enclosed in that system, a system of accountability for how money is spent. I suppose they have no real, I should not say commitment because they have a commitment, but no real purpose in asking, as would somebody in private enterprise: are we getting value for money? The system is geared towards accounting for all the money that is spent but the question is, do we get value for that money. In my view there is little difference between managing a Government Department, managing the country and managing a business. The same basic principles apply. Have we the expertise in all sections of the civil service? Government Departments are geared towards doing a certain amount of capital development. I accept that there is expertise in some areas but the question is whether it exists in all areas. I rather doubt that it does.

There must be a new approach to the management of Government expenditure. There is need for an inter-change of experts from the hard commercial world outside into the civil service and vice versa. I welcome the decision regarding the National Board for Science and Technology. There is a wealth of experience there and also in the Institute for Industrial Research and Standards and the Irish Productivity Centre, although I have not noticed the latter figuring very much recently. There are also approximately 16 semi-State bodies. There is a wealth of talent available to the Minister in all of these bodies but there is no point in leaving people in these areas merely to produce more reports. What we need is action, expert management and advice. People have to be moved out of those areas. I do not think they should spend their whole lives in one organisation. A new approach should be adopted that they would not stay for longer than, say, three years. I am putting that forward as a practical suggestion. Excellent graduates, the cream of the country, wind up in many of those bodies and they go to seed eventually. This happens because they do not have the challenge to take the action that is necessary. I say they should be given a contract of three years and then they should return to the hard world of industry.

I agree with the Minister's statement that the level of management is very poor. When I was in the Department I found that 50 per cent of the failures were due to bad management. We can talk about the workers but the standard of management must also be questioned. The question arises where will we get management? Many old firms are afraid to employ the experts coming out of our universities and elsewhere. These businesses cannot grapple with new technology; it has passed them by. They are afraid to take in these new people because they do not understand them and they cannot control them and many business people are afraid they will take over their firms. The Minister has a wealth of talent available to him that should be used to develop new projects. That is the only way we will build up indigenous industry. As the Minister said in his speech, the level of development by indigenous industry has been poor by any standards. We owe our success to the fact that we attracted foreign industrialists and investment.

We have been criticised for such investment and so have the IDA. However, what would this country be like if we did not have the IDA during the past 25 years? They have been criticised for the policies they have pursued but who is to blame for that? Successive Governments are to blame. The IDA wrote their own industrial policy. There has not been a White Paper on industrial policy since the foundation of the State: this is the first time it has been done. I thought I would have the opportunity of making history but the Minister can have that honour. I look forward to reading the paper.

I should like to take the opportunity of welcoming the setting up of a food processing enterprise in Limerick. I understand the Minister will give SFADCo responsibility for that operation. This should have been done years ago. If we want to develop indigenous industry surely we should start with our natural resources. It is a complicated and difficult area, where we need expertise for the development of new products and for new approaches to marketing. Marketing, delivery, presentation and design are great weaknesses in Irish industry.

I am glad to see that the opportunities that exist in the food processing area are being tackled at last in a co-ordinated way. I hope the Minister will see it through to the bitter end. He will get opposition from the Department of Agriculture and other vested interests. However, he should say loud and clear that he is going ahead with this operation. The country cannot afford the bureaucratic agrument that goes on between Departments. The matter should be settled at Government level once and for all. It should be stated firmly that one Minister will be responsible for the development of our food industry and he should be allowed to get on with the job. There have been many reports on this matter, as there have been on all the problems that ever afficted this country in the past ten or 15 years. These reports would fill offices. If these is one criticism I have of the 44 pages of the Minister's script it is the talk of more committees, reports and so on. We all know what are the problems. It is time that we had action. In the food processing area there should be one Minister responsible and he should be in the development area of the economy.

The Department of Agriculture do a fine job for the farmers. The Minister for Agriculture does his best to get increases for them in Brussels but that is where it stops. To get added value for our products and to create wealth we must start with our natural resources. For most of industry the raw materials have to be imported and we have no control over their supply or their price. We are subject to currency and price fluctuations. Running a business in those circumstances can be very difficult. We have the best grassland in the world and we have the opportunity to produce the best food. If we, as a small nation of 3,500,000 people, cannot put our act together on that score, we deserve to fail.

I know of the problems for small business people. Eleven years ago when I came to various Government Departments they did not want to know about me. They told me the small enterprise I had in mind did not have a hope of succeeding. I was told there was no place for me in the market place, that I could not compete with the multinationals. How many more small business people are being told that today? I have no doubt there are many. We can do the job as well as anyone. We have proved it in the past and I cannot see any reason why we will not do it again.

The same applies to the home market. The penetration of imports into the Irish market is a national scandal. We should be ashamed of ourselves that we cannot take on those people. As the Minister said, import prices during a period of years far exceeded price increases in Ireland. There was no excuse at that time for Irish manufactures not to hold their share of the market. What went wrong? The attitude was that delivery on any day would be good enough, that the package was all right and we did not have to change that. We would produce what they should sell, not thinking about what the customer wanted to take off the shelf. For too long much of Irish industry has been production orientated and not market orientated. In that marketing the design, presentation and delivery — all those elements in the competitiveness everybody talks about — are as important a factor as the wage cost that the Minister talks about. Wage costs can affect some industries more than others, but the wage that you pay a guy does not matter as to its size as long as he produces enough for it, and the sooner we adopt that approach the better. We talk about how far out of line we are in wage costs with our competitors in Europe, but where we are really out of line is not in the wages we are paying; it is in the production for the wages we are paying. We know what the wage costs plus the social costs and everything else are in Germany. They are only about half our wage costs plus the social costs and everything else; they are only about 55 or 60 per cent, but there is a hell of a difference between what one unit of labour produces in Germany and what one unit produces in Ireland.

We must get away from trying to screw down everybody and begin to realise that it is a big wide world out there. There are 250 million customers in Europe. If you can produce X you can be paid Y. That is the criterion we must adopt. At the end of the day the Irish worker, given the proper incentive, is interested in how much money he has in his pocket going home on Friday evening. If he can see that by producing more he can get more — here is where the other important element comes in — there is no point in telling him that on the other hand Mr. Taxman will come along and say, "The more you do that the more I will take". Everybody becomes fed up with that.

When the Minister talks about his industrial strategy, policy, White Paper and so on, he is wasting his time in the sense that the best industrial policy designed and implemented will fail if it is not part of a total national economic plan. He talks about wanting competitiveness, investment, this and that; but it is quite clear that the way to get investment is to create the climate for investment, and surely nobody on that side of the House would stand up and say barefacedly that the climate for investment has not been seriously damaged and worsened by the recent Finance Bill. Apart from the areas that were changed, it sounded a note of warning in the advance corporation tax, for instance. It sounded a warning to foreign investors and industrialists of what we in the taxation area were thinking of here.

The Minister knows as well as I do that when he was in America, Germany and wherever else he was, one of his high sales pitches was political stability in Ireland irrespective of what Government are in power. Whether the Government change or not, one common theme running through Governments in Ireland is that the taxation climate is right. That is more important than what other people in Ireland seem to think, that it is the IDA incentive, the grant, that brings investors here. It is not. It is political stability. It is being able to plan their finances properly for the future and to make their financial arrangements and do financial borrowing. The Minister for Finance started with an advance corporation tax without realising the repercussions of it and what it would do to the financial budgeting of any financial company. Very quickly he took it out when he realised what damage it would do, but in doing so what did he do? He created clear discrimination against good, strong Irish companies who were in a position to invest here. He took away an incentive from them.

Where does that cut across the philosophy being expounded by the Minister, his Government, Telesis, the NESC and so on? On the one hand he is expounding a philosophy to say that strong and indigenous firms must be built up here, but when a few of them go to invest, as one did, to the tune of £177 million the Government come in immediately with a Finance Bill containing a section that destroys that. They create the suspicion and they breach the confidence that has been there. Time and time again they turn back the clock. We have certain things going for us. For heaven's sake do not destroy them. That is what I am trying to say in relation to the Government's industrial strategy and industrial White Paper. They can be the best designed and implemented but if the Government do not get the economic climate right the venture capital that they talk about, that very necessary adjunct to investment in industrial development, will not be forthcoming. From what I have seen they will not get it.

I will tell the Minister how to get venture capital, although I am sure he knows. He knows the risk. You must pay. If somebody wants to take a risk with investment money you must pay the going rate for that. If you do not you will not get that money. It is as simple as that. I do not care what country you talk about, any private enterprise economy, capitalist state or whatever, that is the name of the game. Are we doing it? We are not. Out of £350 million or £400 million available for private investment in Ireland is any of it going into the industrial area? No. The Minister talks about the attraction of gilts as against industrial investment and the attraction into housing against industrial development and so on. Until we take the bold, radical step of developing the venture capital market in the right way we will not get it. The Minister was in the US, as I was, and he knows how it is got there.

Mr. J. Bruton

I agree fully with everything the Deputy says.

Mr. Reynolds

It is said that professional people here are making a great deal of money on the side. I do not know whether they are. If they are, for heaven's sake let us get it back into use in the economy. Give them a tax credit. If they put in their money and it wins and shows a profit, tax them at capital gains. If it loses give them a write-off. Let them put in their excess earnings — if they have it. Good luck to anybody who can make money, but for heaven's sake let us create the environment to get it all back working. Do not run around corners like the Department of Finance for the last while, saying, "Let us find out if such and such a person has another £1,000 more than we thought he had". That mean approach is nonsense. If you want to get money to work, create the environment to get it to work. If you do not do that it will not be here. I am sure that the Minister met people running across the Border with suitcases. There was great sale there for a few weeks and suitcases full of money were brought up there.

Let us not fool ourselves. We must not hide our heads in the sand. The thinking in the Department of Finance is that because they have exchange control with the EMS they can control everything. They are not living in the real world and the Minister knows that as well as I do. The Minister talks about taking away money from gilts. Fair play to him but they will not like it. Until the Government get a co-ordinated plan at national economic level so that the Minister knows what the Minister for Finance is doing and the Minister for Finance knows what the Minister here is doing, the right hand knows what the left hand is doing, until you get that cohesion which at the moment is lacking all that the Minister is trying to do here will be negatived on the other side by the Department of Finance.

Some areas within the Minister's responsibility are the question of energy costs and the impact that they have on industrial costs. We turn over to another Department and ask how much they charge for communications and postage stamps and we find they are the most expensive in the world. I was part of that development, but if I was I can say that the people in the Department of Finance view the Department of Posts and Telegraphs as revenue collectors. They will come along and say that they will write £30 million increase in charges. That is all the consideration they give to whether the traffic can bear it, whether it is right for industry, whether industry can afford to pay it. All across the board various Government services are being charged at the price at which they have to get to satisfy the Department of Finance. This is undermining the whole industrial development area because those added costs which can be collected by public services or whatever cannot be recouped by the people engaged in the exposed sector of the economy. In order to do it they must either improve their productivity or increase their price. The Minister knows that prices in the export market cannot be increased on a whim in the way that public services or some companies can do it here under the National Prices Commission. They can get a recoupment, others cannot. Until you get the whole system linked so that a decision taken by any other Department is known to everybody concerned, then industrial policy or strategy will not go anywhere.

I support fully the bringing together of the type of co-ordinated plan that I have talked about. We did it in The Way Forward which was scorned and frowned upon.

Debate adjourned.