Food processing firms must develop products to meet the change in demand; they must produce them to the highest standards and they must adopt a more professional approach to marketing.
One may ask what is the Government doing to encourage this activity. Obviously there is a limit to what any Government can do to stimulate activity in a particular industrial sector where, in fact, the actors are in the private sector. A very wide range of incentives and support services is provided by the State to firms in the food business. In relation to product development, for example, R and D and feasibility study grants are available from the IDA and technical advice and support is directly and readily available from the IIRS Food Technology Division. Capital grants are, of course, available for new projects and marketing assistance is provided by several agencies. May I just interpolate there that part of the problem is that although there are many State agencies assisting the food business, many are under different Ministers and do not always pursue the same lines of policy. In many ways, the problems which exist between producer and processor are mirrored by the same problems between the agencies and Ministers responsible for producers, processors and other sectors of the food industry. It is to find a practical solution to this problem that the Committee of Ministers of State on the food industry have been established. They have a number of useful recommendations already, one of which was acted upon almost immediately. I expect that they will do a lot of valuable work in the future, bringing a political impetus to an area where decision-making of the detailed kind is very necessary.
Something further which the Government can do is to ensure that all of this support and assistance is provided in the most advantageous manner possible by the various Departments and agencies involved. It is for this purpose that I have, as I said, with the approval of my colleagues, the Ministers for Agriculture and Fisheries and Forestry, established a high level group, comprising the Ministers of State at the relevant Departments, to co-ordinate and maximise the activities of the various Departments and State agencies involved with the food industry. They have had a number of meetings and I am hopeful that they will be in a position to put forward quickly some positive proposals which will strengthen the Government's contribution to the industry.
I now turn to foreign industry. Foreign industry has brought many benefits. At present overseas firms employ over 80,000 people and have increased their share of total employment in manufacturing from 27 per cent to 36 per cent in the last ten years; they produce over £5,000 million worth of goods a year; they buy goods and services in Ireland of £1,600 million per annum and export goods to the value of £3,500 million.
There has been much public debate in recent months on the level of repatriation of profits by overseas companies. Repatriated profits of overseas companies in Ireland amount to approximately 13 per cent of the sales revenue of these firms. They amount to 55 per cent of the profits earned by these companies in Ireland. The balance, 45 per cent, is reinvested here. It must be remembered that the "profits" earned in Ireland by an affiliate of an overseas company are not necessarily profits earned by the Irish company.
Thus, for example, if a US drugs manufacturer spends several hundred million pounds developing a new product which he subsequently decides to manufacture in Ireland, the Irish operation will be required to recoup the development moneys already spent before the company even come to Ireland. Thus, the so-called profits to the Irish subsidiary will not necessarily be profit to the owners, but rather will be used to cover costs already incurred in facilitating the establishment of the Irish operation in the first place.
The fact that Ireland is a profitable location for overseas companies is a major element in the IDA's overseas promotion programme. If this were not generally the case, we would not attract these companies to Ireland in the first instance.
There are several reasons why profit repatriation has grown in recent years, first, the growth in recent years of the turnover of these firms, secondly, the slow down in reinvestment anywhere by firms associated with the recession, thirdly, US tax breaks associated with purchase of parent company debt by overseas affiliates.
The policy of attracting investment from abroad will continue. The White Paper strongly reaffirms this, and there will be no sudden withdrawal of incentives. The emphasis from now on will be to award higher levels of grants to projects which incorporate key business functions and lower grants for mere production units.
The importance of the development of internationally traded services and making Ireland an attractive location for such services is also stressed in the White Paper. I have already referred to the new powers for the promotion of services given to CTT in 1983. Despite a promising start in 1982 the rate of job creation and projects approved under the IDA's new International Services Programme last year were less than expected.
One area in which there is forecast to be tremendous growth worldwide till the end of the decade is computer services. The Finance Act, 1984, extended the 10 per cent manufacturing tax to computer services which were previously liable at 45 per cent. This will give Ireland a major advantage in attracting computer services from abroad and ensure the expansion by existing companies here. Already the IDA have undertaken a major programme overseas promoting this new 10 per cent incentive.
The IDA have also recently established a National Software Centre. It has an initial capital of £1 million. It is the first time that the authority have set up an independent subsidiary. The main functions of the centre will be: (i) to provide technical assistance to Irish companies so as to ensure that they have the skills to compete on export markets; (ii) to give advanced training in software techniques, and (iii) to develop contract software to enable Ireland to compete for the development of sophisticated software for EEC and other international organisations.
The forthcoming White Paper on Industrial Policy will incorporate details of the Government's proposals for the National Development Corporation. The principal functions which the corporation will perform are as follows: (a) acting as a State investment company in new or existing ventures in the private sector; (b) assisting in the development of structurally strong Irish firms; (c) investing in projects in natural resources — related sectors such as food and timber processing and mariculture; (d) launching new projects and stimulating initiatives in the existing State industries; (e) assisting in the establishment of development companies to provide services for small firms on a commercial basis. Legislation will now be drafted to establish the NDC.
The Government see the NDC as a body which will complement existing industrial policy instruments and generate both jobs and wealth in the economy, as well as direct financial profit for the State, the taxpayer and the community. It will not be a grant-giving body or a home for "lame ducks", but will operate under rigorously commercial criteria which will be fully debated here in the House.
The National Enterprise Agency, which I reactivated in mid-1983, will continue to actively progress its work on hand pending the formal establishment of the NDC which will take over its work. The NEA has already made a small number of investments and has been allocated a capital budget of £3 million for this purpose in 1984. The establishment of the NDC, as an equity investment body, will complement the new venture capital tax incentive announced in the budget and outlined in detail in this year's Finance Act.
The scheme provides income tax relief for qualifying investors of equity in unquoted manufacturing and certain service companies. It allows an investor to write-off annually up to £25,000 against taxable income in new ordinary shares on condition that the investment is retained for five years. This is an important new scheme, and I am confident that it will attract a significant amount of external funding to developing enterprises, thereby strengthening their equity base.
There is clear evidence that too many Irish firms are over-dependent on bank borrowings, which curtails their development potential at times of recession and high interest rates. These measures to provide a source of extra equity should help to rectify this deficiency. The White Paper also deals with the promotion of small industries and the plans for providing a one-stop-shop service to these industries in the regions. This was referred to in the report by the Committee on Small Business. They referred to the confusion which exists amongst small business people in getting the type of assistance they need. I hope the reorganisation measures contained in the White Paper will provide a more comprehensible as well as comprehensive service to small businesses, particularly at local and regional level.
To improve the opportunities for small industries to gain an increasing share of the skilled supply business of foreign companies here, the IDA launched a major National Linkage Programme last November. Initially this programme is being concentrated on the electronics sector. This sector has an annual raw material-components requirements of over £400 million, of which less than 20 per cent is now being met by Irish firms. This is an important programme.
As Minister for Finance, I was instrumental in having tax concessions introduced in the 1982 Finance Act designed to promote the concepts of profit sharing or worker shareholding in Ireland.
The reaction of the business community and the trade unions in this area until relatively recently has been disappointing. The adoption of profit sharing schemes, and employee shareholding in particular, on a wide scale in Ireland would represent a radical change from our traditional thinking in the area of industrial relations. In my opinion such a radical change is now a necessity if our industry is to continue to compete successfully on world markets.
To promote greater interest in worker shareholding, the Government decided to improve the tax incentives for approved profit sharing schemes in this year's Finance Act. The limit on the percentage of company profits distributed under such schemes which may be exempted from tax has now been removed. In addition, the value of shares which may be allocated tax free to an employee in any one year has been raised to £5,000 from £1,000.
I believe the spread of more information and discussion on profit sharing and worker shareholding is essential to the successful development of these concepts in Ireland, and I have recently requested the NESC to undertake a study in this area. Also, I look forward to discussing these issues with the employers' organisations and trade unions shortly as I believe that progress on these matters will be an effective step to ensure the success and efficiency of Irish industry and the prosperity and security of Irish workers for the future.
The Government are very conscious of the distress and despondency being experienced by those who, through no fault of their own, have been made redundant, and are anxious that such people should be given every opportunity and encouragement to set up in business themselves. At the end of last year, the Government introduced a new Enterprise Allowance Scheme designed to assist those unemployed people who wish to set up their own business. The scheme, by providing the initial financial incentive which can be vitally important during the early stages of establishing a new business, has proved a very successful means of encouraging enterprise by the unemployed. By the end of last year some 1,700 people were benefiting under the scheme.
The Enterprise Allowance Scheme together with the services operated by State agencies such as the IDA, AnCO, the Youth Employment Agency and the Irish Goods Council now provide a comprehensive range of practical advice and assistance to redundant workers who are considering starting a new business. At my suggestion the IDA are currently finalising a leaflet for redundant workers incorporating details of the various services available from all State agencies in this area and have already published a comprehensive series of booklets on how to set up and run a small firm.
It is very important that people who are becoming redundant should be given an opportunity to consider the possibility of using their redundancy money to set up a small business of their own before they commit it to some other purpose. I hope this leaflet, when it is completed, will be issued to all workers who are becoming redundant, so that they can consider it in time rather than commit themselves to other expenditure.
The Government, through the Employment Task Force, are also considering ways in which encouragement and assistance can best be provided to promote a community-based response to unemployment. A number of community groups are currently engaged in initiatives to tackle unemployment in their own areas.
Co-ordinated community action, in consultation with the relevant State agencies, offers exciting potential for local interests to participate in identifying community needs and productively employing local manpower resources. In my own constituency of Meath, for example, the Navan Chamber of Commerce has established an Industrial Development Trust to promote new industry in the Navan area. In addition, self-help groups for the unemployed have been established in a number of areas. Under the new Voluntary Work Scheme for the unemployed, which is operated by the Department of Social Welfare, groups such as these can now undertake valuable community work with the asssistance of the unemployed people who will continue to receive their unemployment benefits. They will not be ruled out as they would have been hitherto under the pre-existing rules.
Other issues dealt with in the White Paper include: measures for improving the performance of the commercial State companies; the new institutional arrangements for industrial development and the steps being taken to eliminate the duplication of State services to industry and sectoral strategies.
When moving the Estimate for 1983, I referred to the work being carried out by the Sectoral Development Committee. The objectives of this work is the identification on a joint co-operative basis by representatives of workers, employers and Government bodies of how the efficiency and competitiveness of sectors and their sub-sectors can be improved in order to maximise their development potential in Ireland.
Sectoral studies on the textiles, clothing and mechanical engineering industries were published last November. The strategies which have been proposed by the Sectoral Development Committee for these sectors accords with the company development approach now being pursued by the IDA and the other State agencies.
Other sectors or studies which are being carried out or planned by the committee are: electronics and information technology; beef; construction and related manufacturing industry; chemicals and pharmaceuticals; plastics; dairy products; and fishing. In addition to these, a horizontal type of study on marketing is also in progress.
While in overall economic terms 1983 was another bleak year a review of the year indicates that a number of positive features emerged. During 1983 the rate of inflation continued to decline and the balance of payments deficit continued to be reduced. Perhaps the most significant development in 1983 occurred in manufacturing industry. Output from the Irish manufacturing sector grew by 7 per cent in volume terms. The gross value of goods produced by the country's industries exceeded £12,000 million, over £9,000 million of which represented value added to the Irish economy — an increase of £870 million in 1983 alone. This growth was a welcome change from the previous year when no growth whatever was recorded. In addition, the 1983 performance was the highest growth rate in manufacturing output of any EEC country.
The entire growth in industrial output in 1983 was attributable to the 14 per cent rise in the volume of industrial export whereas world trade in manufactured goods grew by a mere 1 per cent. This outturn represents our greatest increase in market share over the past ten years. This growth was spurred mainly by the extra output from companies with substantial IDA investment producing office and data processing machinery, chemicals and consumer goods. The increase in output and exports was also undoubtedly helped by the increase in production per worker in industry of the order of 12 per cent during the year.
During the year also the IDA actively continued the on-going task of industrial development, and over 800 investment projects involving a planned capital investment in fixed assets of over £500 million were negotiated by IDA staff. About 500 of these agreements were with small firms.
Entrepreneurs and small businesses continued to show high interest in setting up new ventures or expanding existing ones. In particular, the number of executives leaving secure employment to "go out on their own" was very encouraging. In all, 60 senior executives agreed to establish their own new projects under the IDA's Enterprise Development Programme in 1983, compared with 35 in 1982.
One hundred and ten overseas projects, including 30 small industries were approved during 1983 — similar to the level of activity in 1982. There was a relatively more rapid rate of growth in domestically-generated projects during the year. These have a planned investment in fixed assets of £300 million. They include over 30 new projects and 40 expansions being undertaken by companies already based in Ireland. In the light of the fall-off in the overall volume of international mobile industrial investment, this represents a strong performance.
A tangible result of this investment activity is the rate of take-up of IDA advance factories which improved considerably during the year when 101 units at 32 locations throughout the country were occupied by Irish and overseas companies. This represents one million sq. ft. of IDA advance factory space.
The IDA estimate that Irish and overseas firms bringing IDA-backed investment on-stream recruited 11,000 Irish people to new jobs during 1983 — a significant achievement against the backdrop of the continuing recession in Europe. This is in line with the IDA's target set at the outset of 1983. Irish firms, mainly small firms, contributed just half, some 5,500 of these jobs, with US firms accounting for 3,000 of these. Almost 1,500 of these jobs were created in firms producing computer and office machinery, almost 1,500 jobs arose in the food sector and 1,300 in clothing.
Looking ahead to 1984 the IDA estimate that output should grow again by 6-7 per cent and industrial exports by 15 per cent and, for the first time in four years, private consumer spending is set to show an increase. Investment activity is also expected to show an increase in 1984 and various measures taken by the Government will give further impetus to such investment.
The Shannon Free Airport Development Company plans to continue their job creation drive in 1984. As part of a major review of all of the company's main activities, new directions and strategies are being formulated by the company which will chart the course of development of the estate for the next couple of years. In the current year, however, the company will be concentrating a significant part of their resources on the conversion into actual jobs on the ground of projects which were approved in 1982 and 1983 and which are now at a start-up stage. The company see as one of their major objectives in 1984 the creation of a net growth in actual jobs on the Shannon industrial estate.
Under the company's small indigenous industry programme which has been running successfully now since 1978, the company have two key objectives. One is the creation of jobs and the encouragement of existing small industries to expand and create new job opportunities. The second key objective is to increase the number of exporting firms in the small industry area, thus ensuring that any expansion in these industries will be based on high quality export-oriented products which have the capacity to sustain jobs in the years to come.
The Shannon Development Company's Innovation Centre has increased its capacity to house nursery industries which are in the course of developing new products, and this additional space will ensure a larger output of new high quality export oriented firms from the centre in the current and future years. The services and advice available in the innovation centre are now available throughout the country through IDA offices and other national agencies.
I will now deal in more detail with export promotion. If Ireland is to take advantage of the open international trading system we must have faith in our ability to compete with what is best from other countries not just on price but also on quality, design, delivery dates and after-sales service. It is clear that there is no turning back to the protectionist policies of the past. The increased volume of our output, which far exceeds the capacity of the home market to absorb it, the growing size of our labour force and the need to find new outlets to absorb increases in our output, rules out a policy of protection. Our future clearly lies in having equality of access to the shop shelves of the world where the world consumer, who is always right in this case, can choose for himself what is best.
Having successfully contributed to keeping the channels of world trade relatively free of restrictive and protectionist tendencies over the past year, I am pleased to say that Irish exporters have been equally successful in exploiting the opportunities for exporting their goods and services to the markets of the world. They were, of course, assisted by a number of factors in 1983.
Possibly the most encouraging was the continued economic recovery in North America, Japan and to a lesser extent in the United Kingdom, and the way in which this recovery has been maintained and is now spreading to continental Europe. Consumer demand is now beginning to rise and world output is expected to grow in 1984. Despite this, 1983 was still a difficult year for Irish firms striving to retain competitiveness. In spite of these difficulties, total exports rose by an impressive 22 per cent to produce a new record for exports. This was a truly creditable performance and outstrips the showing of many other industralised countries. The performance gives us confidence for the future and shows what management and workers in exporting firms can achieve. Manufacturing industry accounted for 62.5 per cent of our exports in 1983 and within this sector the main impetus came from machinery, transport equipment and chemicals. Exports of live animals and food, drink and tobacco accounted for the 13 per cent increase over 1982.
Exports have contributed enormously to reducing our balance of trade in 1983. The Government through their financial policies have brought inflation under control and interest rates have been pulled down from the high peaks of a few years ago. Many reputable commentators are now saying that we have reached the turning point and that the stage is being set for a period of recovery with exports leading the way. Whichever view one may take of the short to medium term economic prospects, there is no doubt but that our export growth is still developing at an impressive rate. At the end of 1983, CTT forecast an increase of 11 per cent by volume for exports in 1984. CTT, on the basis of the latest trade statistics, now estimate that total exports will increase in value by 23 per cent with a volume increase of 13.5 per cent. This is an improvement on their prediction at the end of 1983.
While the White Paper will reflect the new dimension and direction which the Government propose to give to exports, there will, of course, continue to be an ongoing need for the present range of advice, support and services offered by CTT and adapted as appropriate to changing circumstances. We are thus in a somewhat transitional state at present. This year the Government have allocated some £17.96 million to CTT. In keeping with the new thrust of policy, there will be a need for greater selectivity to ensure that these scarce funds are being spent to maximum advantage.
There is, of course, an ongoing need in all areas of Exchequer spending to ensure that the range of programmes fully reflects the priority needs, and nowhere is this more important than in the exports area. Last year, my predecessor established a high level group comprising representatives of my Department and CTT to review policy and programmes. This group have been working on the critical question of targeting and measurement, establishing criteria for measuring the effectiveness of the board's various schemes and programmes and generally measuring the contribution which CTT make to the national export drive. To assist it in its work the high level group recently decided to acquire the services of an analyst. I believe it is indispensable that all our State agencies periodically stand back from the fray and that there is a critical review of what they are about and the means by which they set about implementing policy and achieving objectives. Meanwhile the main goal of CTT's export promotion programme for 1984 is order winning promotions that will generate immediate or medium term business for Irish companies. To achieve this Córas Tráchtála will provide national stands at 19 trade fairs across the world. CTT trade missions will go to South East Asia including Thailand, Malaysia and Singapore and also to Australia, Japan and the Far East, while store promotions will take place in many cities around the world from Macys in New York to Meyers in Berlin.
CTT with my full encouragement will also continue their employment support schemes in 1984. Started back in 1981, this scheme involves the training of specialist export marketing personnel, and it has been applied to selected companies for which it is envisaged that the sales executives will make a significant contribution to increase exports.
This employment support scheme is very important because it has enabled a number of companies who normally could not afford the services of a sales representative to acquire one initially at a relatively modest cost. The problem with smaller companies is that, very often, one person is responsible for production and sales and usually sales suffer because the person in charge is skilled in the production area. This scheme enables that deficiency in smaller firms to be remedied.
This year CTT have earmarked £400,000 for the employment support scheme and it is envisaged that this will result in an additional 38 marketing executives being placed in overseas markets. I sincerely hope I will be able to obtain more money for this next year.
The Institute for Industrial Research and Standards will be required to play a major role in helping firms to upgrade their product and production processes and thereby compete effectively on international markets. A major review of the role and functions of the institute has been carried out by the National Board for Science and Technology.
This review has helped in the process of identifying the strategies needed to be adopted by the institute to meet the difficult market conditions for indigenous firms. Heretofore, the institute have tended to provide a relatively passive service to industry providing, on request, testing, analysis and technical information. In future, the institute will be expected to assume a much more active developmental role. They will work closely with the other State development agencies — most notably IDA and CTT. Emphasis will be placed on seeking out those companies and industry sectors where product and process improvements will help significantly in competing internationally.
I envisage IIRS staff being located in some of the foreign offices of bodies like the IDA and CTT where their technical expertise could be used to assist in the importation of technology from abroad which they will be qualified to recognise as valuable. The institute will need to ensure that all opportunities for technology transfer through licensing arrangements with foreign firms are fully availed of.
The House will be aware of the major cost overrun which took place in the construction of the administration-information technology building in Ballymun for the IIRS. I have already made a detailed statement on this matter to the House. It is an unfortunate occurrence and does not reflect well on our foremost technical services institute.
The capital allocation of £1.71 million to the institute for 1984 includes £1.474 million which is necessary to complete the building. Without this allocation, the second phase of the building would have remained unusable.
Deputies are aware of the strenuous efforts made by the Government and the IDA to find a viable industrial project for Clondalkin Paper Mills. The agreement between myself, IDA and Freedman McCormack Investments International (FMI) providing for a paper-conversion project at the mills, was concluded in November 1983, following a great deal of intensive negotiation and evaluation. The company also intends to progress to paper-making and they have been given an option on the mills for this purpose, on condition that they satisfy the IDA on the viability of the undertaking. I have had carried out the renovation of the part of the premises which is being leased to the promoters of the new project and operations have now commenced at the mills.
The provision in my Department's 1984 Estimates in respect of Clondalkin is £190,000. However, significant additional expenditure was required following the Government's decision in respect of FMI. Total expenditure in 1984 is now estimated at £498,000.
This expenditure relates to my commitment, as part of the agreement, to meet the cost of the necessary renovations to the leased area of the mills as well as other substantial expenditure on the care, maintenance and security of the plant.
The Irish Film Board have been in operation for just two and a half years now and in that short time have made quite a significant contribution to the development of an Irish film industry. Since their inception in August 1981, the Film Board have financially assisted the production of some 14 films, all of which have now been completed and released. Some of these films (for example, "Angel", "Attracta" and "The Country Girls") have received considerable acclaim in Ireland and in other countries. I am hopeful that this can be followed up with commercial success in the coming years and that there can be a positive return on the State's investment in the industry. Critical acclaim will not satisfy me, we must also have profits from these films.
The original motivation for setting up the National Board for Science and Technology was the fragmentation of the national effort in science and technology and the realisation that, if there were to be an effective contribution to national development from this quarter, a more structured and better organised system was necessary. Toward this end, and in addition to their co-ordination and promotional functions, the NBST were particularly given the role of advising Government and of being a source of detached and informed technical advice, which would not otherwise be available.
I appointed a new board of directors to the NBST last December. The aim of the board which is representative of industry, higher education and the public sector has the mandate to give new impetus to the activities of the NBST and to ensure that they contribute to our industrial development drive. The new board are working very effectively and the increased emphasis which was placed on having industrialists on the board has been a success.
I would like to say a few words about the science budget. The science budget mechanism derived from an original proposal to have a central body with the responsibility for allocating all resources for science and technology in the public sector. Because this concept did not receive general acceptance, it was decided, and this was endorsed in this House in the NBST Statute, that there should be a science budget mechanism which would comprise a technical-based input of recommendations into the consideration and approval of the annual Estimates. In practice, this mechanism has not, so far, achieved the result expected of it. This has happened for several reasons, particularly because of the constriction of the time now available in each financial year for the detailed consideration of Estimates. I have, therefore, directed the NBST to adopt a new approach to this mechanism under which they will make broader based recommendations in advance of detailed Estimate proposals.
The basic problem with the NBST's science budget process in the past was that it consisted of saying what should be done after the event. It is an entirely fruitless exercise to tell people where they were wrong. I have changed the science budget process now so that they will be making suggestions in advance to the Government before Estimates are finalised about what might be done in the future rather than what should have been done in the past. This is a logical change in the science budget process and will mean that what has hitherto been largely a waste of time will now be worth while.
The old scientific research grant scheme of the NBST has now been split into two new elements. The first of these is a scientific research programme intended to promote excellence in scientific research and to promote the retention and attraction of high quality personnel and to enable Ireland to be involved in the forefront of scientific research in a limited number of areas. The second element is now the strategic research programme. The object of this programme is to promote the development of a competitive advantage for our industry in the medium term. Projects under this programme are intended to cover pre-competitive research or the development of a particular technology relevant to a group of companies or sector or the further understanding and development of a national resource. Scientific and technological infrastructure is a basic essential element in industrial development. It is in consequence of the determination of the Government to provide this infrastructure that a major effort was initiated to develop the National Microelectronics Research Centre.
In this short period since the centre's establishment in Cork it has attracted substantial business in the form of contract research work, not only from Irish based firms and research organisations but also from abroad.
In insurance, the significant event of the past year was the enactment of the Insurance (No. 2) Act, 1983 in October, 1983. The main purpose of that Act was to amend existing insurance legislation by adding to the range of actions which can be taken by the Minister to deal with situations arising in the event of uncertain solvency of non-life insurance undertakings. In particular, it provides an option which avoids the automatic and disastrous consequences of winding-up and creates an environment which can allow an insurer to be restored to a sound financial position. The High Court subsequently appointed an administrator to the PMPA Insurance Company Limited on the application of the then Minister. I think it appropriate to recall the insurance industry's comment at the time, that the action taken contributed to the security of policyholders and insurers. While the administration is proceeding satisfactorily, it is obvious that it will be quite some time before the PMPA's business is placed on a secure financial footing.
I am conscious of the concern being expressed regarding motor insurance and young drivers. Young drivers are, as evidenced by their extremely high accident and claims rate vis-à-vis older drivers, a greater risk and the premium charged must reflect that factor. The Motor Premiums Advisory Committee — a committee set up some years ago to examine such matters as loadings on age or other grounds — have indicated in their reports that the loadings applied to young drivers broadly reflect the additional risk young drivers represent. The question of loadings will, however, be further examined by a new representative board to be set up on motor insurance, which will take account of the valuable work of the earlier committee.
Another area which I will be addressing during this year is that of the regulation of the activities of insurance intermediaries. My Department recently re-examined the question of the regulation of insurance brokers, and the general outlines of four possible methods of regulation were given recently by the Minister of State and the various interested parties were asked for comments. I am accordingly awaiting the response of the bodies involved. I believe that insurance companies which accept business from intermediaries also have a role to play. Insurers should, at the very least, satisfy themselves as to the financial security and the professionalism of intermediaries with whom they do business.
On the question of legislative changes generally, in March of this year I made regulations to give effect to the 1979 EEC First Life Directive. These regulations will, I have no doubt, lead to increasing participation in the life insurance markets by new entrants, a situation which has already occurred in the non-life insurance market. Since the implementation into Irish law of the First EEC Non-Life Directive, some 18 additional companies have been authorised to transact non-life business. In fact in anticipation of the Life Regulations some five companies have already applied for, and received, licences to transact life assurance business.
I intend to introduce, later in the year, a general insurance Bill. This Bill is designed to consolidate my powers generally and will put at my disposal the legislative powers necessary to exercise the supervision required in today's insurance market.
There have already been indications of the intention to continue with the business of the amendment of company law particularly in relation to the management and direction of limited liability companies. The circumstances surrounding many corporate insolvencies in recent years have led to demands for restricting or abolishing limited liability status.
I do not believe that the abolition of the concept of limited liability would be in the best interest of our continuing industrial development. Business development in the Western world generally has taken place on the basis of limited liability companies. Moreover to expose every entrepreneur to the risk of losing all his personal assets in the event of the failure of his company for reasons outside his own control would certainly deter, or have an inhibiting effect, on business initiative. Any measure which would produce such an effect would be highly undesirable particularly at this time in my view.
At the same time, there can be no doubt that the privilege of limited liability has been abused by unscrupulous directors and managers, and this has led to widespread financial loss to creditors and employees who are thrown out of work. The Government are committed in their joint programme to curbing such abuses. That is the objective of a substantial Bill which I am now examining carefully. I am having full regard to the many submissions which have been made to me by the various interested parties. This is a measure of major importance which will, I believe, improve the business environment generally, control in a practical way the conduct of the affairs of companies, and help towards the elimination of malpractice in the management and direction of companies.
I see the promotion of this legislation as an integral part of the programme for future economic development. I will, shortly, be seeking Government approval for the formal drafting of these proposals.
There are a number of other important issues in the company law area which are receiving my attention. One such is the Fourth EEC Company Law Directive which is to harmonise the rules in all member states in relation to the preparation, publication and auditing of the individual accounts of public and private limited companies. Implementation of this very technical measure will have a major impact both by significantly increasing the level of detailed disclosure required in accounts and particularly because it will remove the present exemption whereby private limited companies are not required to publish their accounts. There are however, a number of optional provisions contained in the Directive which would allow individual member states to vary its full impact. I am hopeful that I will be able to bring forward the necessary implementing legislation early in the autumn session of the Dáil.
My Department are also preparing a measure to give effect to three EEC Directives relating to the Stock Exchange. These deal with admission of securities to official listing, prospectuses for listed securities and interim reports furnished by listed companies. I expect to sign shortly a statutory instrument giving effect to these EEC Directives.
Before leaving the area of Company Law, I would like to refer briefly to the Companies Registration Office. The changes which have occurred in company law legislation and those measures which I have outlined as being in the pipeline have a dramatic impact on the workload of the office. This is particularly evidenced by the fact that there are now well in excess of 70,000 companies on the register compared with approximately 30,000 ten years ago. I am aware of and can appreciate the frustrations experienced by members of the public at the delays which have occurred in their dealings with the Companies Registration Office. However, I am pleased to state that steps to resolve these problems are well under way.
A mechanisation strategy has been decided on which is a combination of computerisation, micro-film techniques and other ancillary office equipment. Some of the ancillary equipment has already been installed and a contract for the supply of computer equipment has been signed. The installation of the computer is scheduled to take place in July. While the process of conversion to a computerised system will hardly be concluded before the end of 1985, it is expected that significant improvements in the level of service to the public and in the enforcement of the Acts will be achieved much sooner.
In the area of competition policy I have arranged for the Restrictive Practices Commission to carry out a series of studies under section 12 of the Restrictive Practices Act, 1972 into the professions with special reference to entry barriers and other practices operated by them. The main object of this exercise is to tackle undesirable practices which give rise to increased costs to consumers of the different services. The Restrictive Practices Commission has in the past from my experience working with it as a Minister of State, and now as a Minister, tended to have peaks and valleys in its work, and in the valleys its resources were not being used to a great extent. Since 1977 I have felt that the Commission should be given a general mandate to pursue a particular area of activity on an ongoing basis, and that would more than fill any time it would have available to it between specific studies that might be referred to it by the Examiner. I have felt that the most appropriate area it should have such a general mandate on is that of the professions.
There is no doubt that professional charges are very high, that the professions themselves largely control the entry of people to their professions and hence can indirectly have an influence on the likely level of incomes and charges operating within the professions and on costs in the economy generally. This is in a sense inherent to the nature of a profession. It is very important that there should be a means of guaranteeing the public interest in regard to the activities of the professions, and this is precisely the role which the Restrictive Practices Commission can effectively discharge. That is why I have given this general mandate to inquire into the professions.
The choice of profession for first study will be a matter for the commission. I do not propose to direct them to deal with lawyers or any particular group. Naturally the commission will be prepared to take account of representations, and if Deputies have any views about professional practices which ought to be examined I would advise them to write to the Restrictive Practices Commission, who will now be in a position to respond.
I have already announced publicly my intention to strengthen the Restrictive Practices Commission and to merge the activities of the Examiner and those of the Commission. I hope to bring forward legislation to this end early in the next session.
The other major area of competition legislation for which I have responsibility is the Mergers, Take-overs and Monopolies (Control) Act, 1978. I will shortly be presenting to the Oireachtas the annual report under this legislation which will contain information on the number of cases examined under the legislation during 1983. I understand that the report will show an increase in the number of cases notified to my Department. However, the number of cases where the Act applied showed a reduction, which I believe reflects the continuing difficult trading conditions under which businesses have to operate at present. Also the number of merger proposals which could be broadly described as rescue cases continues to be a large proportion of the total figure.
Deputies will be aware that the Copyright (Amendment) Bill, 1984, which is before the Oireachtas provides for increased penalties for breaches of copyright. The increased penalties, coupled with the existing provisions in copyright legislation for search and seizure of infringing articles, will go a long way to meet the problems being caused, particularly for cinemas, film distributors and legitimate video dealers by the operations of video pirates.
I would like to turn now to consumer protection. One of the proposals which was discussed at all three consumer Councils was the draft Directive on Product Liability. This directive would impose strict liability irrespective of fault on a producer of a product in respect of injury caused by a defect in the product. In general, the injured party would simply have to prove the defect, the damage and the casual relationship between the two. The directive would give an important and additional form of protection to consumers as liability would be created whether or not the manufacturer was negligent, though some defences would be available to the manufacturer. The directive has important ramifications for manufacturers and for the insurance industry, and partly as a result of this progress has been slow and there is still some way to go before the draft directive is finally agreed. However considerable progress has been made. All member states accept the principle of strict liability on which the directive would be founded and I believe that the directive will be agreed within the not-too-distant future.
The proposal for a directive on doorstep sales was also considered by the consumer council, but there continues to be opposition to this from one member state.
An important proposal on which discussion is likely to resume during our Presidency is that for a directive on consumer credit. The Commission have now drawn up a revised proposal on this issue, in the light of the opinion of the European Parliament which was issued last July. In times of recession, there is, understandably, strong opposition from industry to having additional burdens placed upon them.
In 1983 regulations were made bringing the remaining elements of the EEC Food Labelling Directive into force with effect from 1 December 1983. The effect of the regulations has been to provide consumers with a considerable amount of important information about the food they buy — ingredient lists, date-marks and quantity declarations must, among other details, now be given on most foodstuffs.
I would also mention here the regulations which were made on 1 December 1983 and which give effect to an EEC directive relating to the indication of the prices on foodstuffs. These regulations, which came into effect on 1 June 1984, require, in broad terms, that the selling price and, in certain instances, the unit price, that is the price per unit of weight or measure, of all foodstuffs be displayed.
This information allied to the reduction in the number of sizes of various prepackaged products, including foodstuffs, should make it easier for an intending purchaser to compare the value of various products on a comparative price/weight/volume basis. Indeed these developments, together with the requirements under the previously mentioned food labelling regulations to disclose the pertinent characteristics of foodstuffs, mark a major step forward in protecting the consumer's economic interests.
Finally, on 8 November 1983 Ireland acceded to the Convention on the Control and Marking of Articles of Precious Metals. The Hallmarking Act, 1981 was introduced to enable this to be done and was brought into effect on the same day in November 1983. The advantage of accession is that Irish traders in precious metals will be able to compete favourably in the markets of other contracting states, including the UK which is the most important market for Irish exporters.
Plans to make certain regulations and orders under domestic consumer protection legislation have been mentioned before so I will only refer to them briefly here. In the near future I plan to make regulations under the Prices Act which will require comprehensive price displays to be shown by catering establishments.
The Dáil today approved a draft order under the Consumer Information Act which will require those who sell in the course of a business, trade or profession to disclose their legal status in advertisements. The aim of this is to ensure that business sellers do not attempt to avoid their legal liabilities by posing as private sellers.
The Dáil also approved today a further draft order under the Consumer Information Act relating to the marking of certain goods.
As indicated to the House previously, certain aspects of consumer credit are under examination within my Department. I am particularly concerned about the practice of showing flat-rate interest levels in advertisements, and it is my intention to have measures taken to deal with the question at an early date. Preliminary discussion has already taken place between my Department and a number of interested parties.
On the subject of prices, the downward trend in the rate of inflation was maintained over the past year. In 1983, the rate of increase in Irish consumer prices averaged 10.4 per cent compared with 17.1 per cent during 1982. Indeed, the underlying rate of inflation, which excludes the effects of indirect tax increases, was around 7 per cent, despite the effective devaluation of the Irish punt in March 1983. Indications for the coming year are for a continuation of this downward trend, and since the indirect tax increases in the January 1984 budget has added less than 1 per cent to the annual rate of inflation, there are very real possibilities for reducing our rate of inflation to EEC average levels, provided that every effort is made to reduce costs and improve efficiency.
To achieve this, the NPC will continue to apply strict criteria in relation to the level of materials, overheads and labour costs that can be allowed to firms seeking price increases. In the case of labour costs it has been evident that some firms in the sheltered sector settled for wage increases that were excessive. While market forces in the case of these goods and services may not have been a sufficiently inhibiting factor for them, the exercise of price control ensured that these excessive wage costs were not reflected in consumer prices and these excess costs had to be absorbed out of profit, increased productivity or by other cost-cutting measures.
It is an essential element of our future cost competitiveness that the level of price increases in Ireland should be maintained at or below the levels experienced by our competitors. The impact of price increases is felt not only by the ordinary consumer but also by industry. Inordinate price increases could not only lead to greater wage demands but could also affect industrial costs directly through excessive service charges, energy and raw material costs. If Irish industry is to maintain and develop its markets at home and abroad the greatest moderation in domestic cost increases is essential. The level of domestically generated costs for materials and services will be given full attention to ensure that the traded sectors of industry are not hindered by excessive costs.
The level of oil prices here has for some time been the subject of critical comment. In the past week, on the advice of the National Prices Commission, I have introduced changes in the price control system applied to oil products which are designed to create a more flexible and transparent system, assist consumer awareness and encourage competition. The main effect of the changes introduced is that the maximum prices fixed by Order now reflect more closely international market prices and will in the future move more closely in line with prices in other EEC markets. This will avoid situations which occurred at times in the more recent past when Irish prices remained excessively above those prevailing elsewhere.
I will now turn to the subject of tourism. The Government this year in recognition of the importance it attaches to tourism and, in particular, to the primary and essential promotional role of Bord Fáilte have allocated the sum of £22.45 million for tourism promotion. This allocation represents the highest amount ever provided for this purpose and is an increase of over £1.5 million on the corresponding provision for 1983. The figure I mention includes the additional £300,000 specially provided in the budget for marketing in the United States which was seen to offer the prospect of very real growth in the current year. I am very pleased to inform the House that the Government's decision to put greater emphasis on promotion is proving to have been well founded; early indications would suggest that the Bord Fáilte target of a 3-5 per cent increase in export tourism business will be achieved and, perhaps, exceeded this year.
Looking ahead, I will be anxious to see still more resources in real terms being channelled into export tourism promotion. This, in my view, should be the priority area for expenditure in so far as future Government spending on tourism is concerned. Minister of State Moynihan will be speaking later and will deal further with this matter.
While I have attempted to cover as extensively as time permits most of the principal activities within my remit, there may be some matters on which Deputies would wish to ask for further information. I will be glad to deal with these during the course of the debate. I recommend this Estimate to the House.
