Let me start by mentioning some of the new measures this Government are introducing to help create jobs. Firstly, a national linkage programme is being introduced to help sell more Irish goods to Irish industries. Secondly, three innovative schemes are being introduced by CTT to encourage export marketing by firms. Thirdly, a new scheme of grants to firms to import technology from abroad is being put in place by the IDA. Fourthly, an enterprise allowance scheme is already helping unemployed people to set up their own businesses. Fifthly, a social employment scheme to give unemployed people a chance to do useful work for the community will be introduced as indicated in the national plan. Sixthly, there will be a mixed training and work scheme to help long-term unemployed people to develop their skills so that they can compete better for jobs and overcome the grave disadvantage that people of long duration of unemployment have in finding jobs again. Seventhly, proposals to develop the natural resource sector of the economy through a mixture of private initiatives and public investment are outlined in the White Paper on Industrial Policy. Eighthly, a number of new tax measures have been introduced, culminating in the reduction on excise duty in respect of spirits, to help the cost competitiveness of the tourist industry in Ireland and, finally, there has been a new focus on industrial costs which clearly have destroyed many jobs in the past. A special monitoring group have been established and I am glad to say that our inflation rate is falling, both in absolute and in relative terms.
All these measures will be delivered in a more efficient manner than ever before. The duplication of effort between education and training is being sorted out with the assistance of the Ministers of State at both Departments, Education and Labour. The management committee on industrial policy are already at work simplifying the delivery of State services to industry. The aim is to get better value for money and more return in job creation from the funds available.
Meanwhile the Government are using their presidency of the EEC Council to create a better climate for industry, both in Europe and in Ireland and to help it develop and compete on world markets. In the past week alone, at meetings of the EEC Council which I chaired, EEC Ministers have approved:
(1) Plans to simplify customs procedures within the Community to reduce trade costs and delays.
(2) Plans to open up telecommunications markets to suppliers from other member states. This measure, approved on Monday, gives major new opportunities to the growing and efficient Irish electronics industry.
(3) A new scheme of EEC financial aid to help standardisation and research within the data processing industry in Europe has been agreed. This will provide EEC funds to help open up European markets to Irish suppliers amongst others. It will also give European industry, as a whole, economies of scale, through access to a wider market, which will help it compete with Japan and the US on world markets.
This is a major record of achievement, three major initiatives approved by the Council of Ministers in the early days of the Irish Presidency and the Council of Europe Industry Ministers and provides a basis for further work between now and the end of the year. Indeed, I would say that these achievements in the European Council, all in the last week, must represent amongst the best achievements in any such short period of time in the industrial area in Europe since the Common Market was founded. I am very glad that this took place under the Presidency of Ireland.
We are, however, aiming for further progress before the end of the year to get aid for minerals exploration in Europe. Ireland is one of the European countries where there has been least mineral exploration. Clearly, a system of EEC aid to get companies to devote funds to mineral exploration where at the moment so much of their funds is being absorbed in existing explorations would be of great advantage to us. I am hopeful that we will get agreement on that before the end of the year and also on a further range of measures to strengthen the information technology industry within Europe, which again is an area in which Ireland has a major advance interest in that we have a very large electronic sector and our exports are already growing. Clearly, if the market in Europe can be widened and strengthened, they will grow even further. There is thus a strong complementarity between the Government's national industrial policy to which I referred earlier and the work which Ireland is helping to progress in Europe during the six months of its EEC Presidency.
May I turn now to the plan. We have heard many criticisms but little in the way of realistic alternatives. Clearly, the plan is building in a sound foundation. This year and last year the Government's budget was on target, mainly because the Government's pay strategy within the public sector worked. This is in marked contrast with the performance of the previous Government in the early eighties, when it was a miracle if their budget was on target and their pay strategy never seemed to work. They made small provisions for pay and then had to add in Supplementary Estimates for substantial sums of money during the year. Clearly, it does not create a sense of credibility, either internationally with the budget or internally as far as public sector employees are concerned, if the Government can so easily be blown off course as were the previous Government in regard to their budgets. We have succeeded in the last two years in having our budget and our pay strategy on target and we shall succeed in doing both of those things again over the next three years in the context of the national plan. That does a great deal to restore confidence in the way in which the economy will work and in our ability to achieve our objectives.
It has been said that the objectives of the plan are not ambitious enough. Some complain that the plan has not reduced taxation, reflated public expenditure and created enough jobs. Some critics say that it is based on over-optimistic assumptions. Other critics say that its appraisal is too pessimistic. I would like to discuss some of these criticisms. By giving the House some of the background to why the Government chose the strategy set out in Building on Reality I would hope to assist those people who are genuinely concerned to choose how realistic are the alternatives which are said to exist.
The first objective is to halt and reverse the continuing upward spiral in unemployment. Despite the expected future decline in employment in agriculture the plan outlines policies which will lead to a net increase of about 45,000 in the numbers employed by 1987. The achievement of this objective will mean that new jobs will be sufficient to meet the growth in the labour force, a rate of growth which is exceptionally high in comparison with other developed countries.
It would be wrong for the plan to abandon the best expert advice in favour of aspirations which were not firmly based on realistic analysis. Some speakers have questioned the validity of the calculations underlining the projection of the jobs needed to meet the growth in the labour force. It is hardly surprising that there should be some confusion in this area. In recent years we have seen published various different projections of the future growth in the country's population and in its labour force. For this reason, the Government, in preparing their plan, took special steps to clarify this conflicting situation.
There are two main reasons why different projections existed: the information available at the time when the projections were made; and also the judgment of the researchers in making the projections.
As results from censuses of population, labour force surveys, passenger movements and so on became available there was an opportunity to revise and adapt earlier projections and there is nothing wrong in doing so. For example, two years ago only preliminary results of the 1981 census were available. This year we have a detailed breakdown of the population by age and marital status. This information makes it possible to make much more detailed and up-to-date calculations of the numbers likely to enter and leave the labour force.
There is, also, an important element of subjective judgment of the likely future trend of population and labour force growth. Questions arise, for instance, like the following. To what extent will married women stay in the labour force or re-enter it, and at what age? At what age will young people leave full-time education? These are all questions which require judgment and therefore projections are no more than projections. They are not certainties, they are not prophesies, but projections.
Given the potential for confusion and the different views which existed in this area, the Government, earlier this year, asked a committee of experts to advise them on future trends in the population and the labour force. This committee brought together the best expertise available among independent researchers and the civil service.
The committee's report, completed only last July, was used as the basis for the projections in the Government's plan. It is on the basis of the committee's report that the plan projects an average annual rate of labour force growth, for the next three years, of 15,000.
Although this figure is more up-to-date than previously published projections, it is, in fact, not radically different from them. There is general agreement on the key role that manufacturing industry must play in future economic growth. It will be an important source of employment in its own right and the demand should provide for the services.
A striking feature of the industrial policies pursued by successive administrations has been the widespread consensus which has existed on the approach taken. The White Paper on Industrial Policy, which forms an integral part of the overall strategy in the plan, represented a combination of a review process which included reports from Telesis, from the National Economic and Social Council, the main State agencies and extensive discussions in my Department. In this way, and in many areas of detail it has significant common ground with the recent ICTU proposals Confronting the Jobs Crisis. In that report Congress stated:
A National Plan must contain a strategy for job creation through industrial development, based on the Telesis strategy and the recommendations of NESC.
This is precisely what the White Paper does. It draws on those two documents. The industrial strategy is based on channelling grants and incentives where they will promote the biggest increase in incomes and employment to Ireland. The emphasis will be on the building of strong, competitive firms by using grants selectively. The legislation to be introduced will build a much higher degree of selection into industrial grant giving than has been the case in the past. The National Development Corporation will be given a role as far as investment in firms is concerned to help build up the strength of a number of indigenous Irish companies. This is meeting one of the objectives which has been urged on the Government by a variety of sources.
The White Paper stated that there would be a reduced emphasis on grants for investment in fixed assets and machinery and greater emphasis on grants to remove the key constraints to the development of strong exporting companies, in particular the costs of export marketing and the acquisition of technological know how. In future there will be no grants for firms which are neither exporting nor producing import substitutes unless they, at least, provide high technology inputs for internationally trading firms.
The need to strengthen the financial structure of firms and to ensure that the maximum benefits are captured by the domestic economy have also been addressed. Measures have already been taken, in the 1984 Finance Act, to improve the availability of venture capital. The development of linkages through the national linkage programme has been maintained already.
The role of the State as a direct investor is being put on a more coherent basis with the establishment of the National Development Corporation. The corporation will give a new commercial and strategic focus to public investment in industry.
Some commentators have criticised the targets for job creation in manufacturing industry. The White Paper sets out to create a net addition of between 30,000 and 60,000 jobs in manufacturing in the next decade. This is a highly ambitious target when set against the experience in other countries where the numbers of jobs in manufacturing is actually falling.
It is too facile to argue that, because the share of manufacturing in total employment is significantly lower here than in other countries either now or in the past that there is necessarily scope for even more substantial increases in industrial employment. This line of argument omits to mention that, despite our relatively short industrial tradition, our industries must compete with the industries which use the capital intensive technologies of today, and not somehow with the type of labour intensive manufacturing industries that used to exist in more advanced countries 20 years ago.