Vol. 359 No. 12
I move:
That a sum not exceeding £295,210,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1985, for the salaries and expenses of the Office of the Minister for Industry, Trade, Commerce and Tourism, including certain services administered by that Office, and for payment of certain loans, subsidies, grants and grants-inaid.
On a point of order, I presume a script will be provided. I take it this is a revised Estimate because it is in excess of the Estimate published earlier in the year.
The Deputy will have an opportunity to contribute——
I do not have a copy of the revised Estimate the Minister is speaking to. That is the least I could expect.
I understand it is in the Book of Estimates.
Would the Minister give the total figure?
It is in the motion before the House £295,210,000.
Is that in accordance with the revised Estimate——
My Department's Estimates are coming before the Dáil at a time when the basic economic climate is healthier than at any time since the seventies. We are confronted in this country by major economic challenges. The first and most important of these, as far as the Government are concerned, is to come to grips with unemployment and to provide jobs for our people, particularly our young people. That cannot be done unless there is in this country a climate which favours enterprise, individual initiative and strong industrial growth. By these criteria, the economic climate — thanks to the work of this Government and thanks to its nerve and courage in confronting unpalatable realities — is healthier now than it has been for many years.
This change for the better has come about because the Government in the national plan, Building on Reality and in the White Paper on Industrial Policy analysed our economic problems, decided their priorities and got down to work. Short term political popularity was not among those priorities. The national interest, our long term economic security and the future of our young people were the priorities which we chose.
Since the late fifties when the first Programme for Economic Expansion was issued many plans and programmes have been issued by various administrations. It has been the fate of many of those programmes and plans that, following a flurry of publicity when they were launched, they quietly faded away to gather dust on departmental book shelves. How many of these ambitious and vaunted programmes are now remembered? In contrast, the national plan and the White Paper on Industrial Policy are being put into practice. They are the work manuals which already guide the day-to-day activities of those engaged in the work of administration. It is because this is so that the way is now clear in this country for steady and enduring progress in the growth of industry and exports and for the creation of jobs that will be real and that will last.
Let me list some of these achievements. I will discuss them in some detail later on.
—Inflation, which only 3 years ago was almost in orbit at 17 per cent is now down to 5 per cent. This is lower than the British figure and the lowest we have seen in 17 years.
—In 1984 merchandise exports were up 28 per cent over 1983. Again this year, we expect a further increase of 18 per cent over that record 1984 figure.
—Industrial output grew by 13 per cent.
—Last year over £800 million in new industrial investment was negotiated by the IDA. That is double the figure for 1983.
—Last year over 500 overseas companies visited this country to investigate the possibility of investing here. That is 11 per cent up on the 1983 figure.
—An industrial area of great importance for our future — small industries —last year brought 565 new projects, an increase of 10 per cent on the previous year and the pace of activity is being stepped up in 1985.
—Tourism, a major foreign exchange earner and source of jobs shows very encouraging growth — an 11 per cent increase in US visitors in the first four months of this year. There are very welcome indications of recovery in the British tourism market. Inquiries from British tourists about holidays in Ireland are up 45 per cent on last year.
All these are clear indications of a new dynamism in the Irish economy. They also reflect the new sense of realism in all sectors of the economy and a new realisation that success is not a God-given right but something that has to be earned and won in a competitive world. The Government have charted the course ahead. These figures that I have just quoted demonstrate that this country has shaken off the lethargy of depression and taken the first sturdy strides towards a better future.
The Estimate before us this morning provides for gross expenditure of £300.264 million for the year 1985 as compared with an out-turn of £273.2 million for corresponding services in 1984, an overall increase of £27.064 million.
The Estimate contains the major share of the public expenditure allocations to the development of industry and tourism. It represents 4.6 per cent of the total Estimates for the Public Service and can be broken down under four main headings: Departmental administration accounts for 4 per cent; tourism for 9½ per cent; industry for 80 per cent and other items for 6½ per cent. The biggest single item in the Estimate is the grant-in-aid for IDA grants to industrialists. This will come to £142 million, or nearly 60 per cent of the total expenditure in the industry area.
While the total increase of 10 per cent in the Estimate over 1984 is similar to the average for all the Public Services Estimates, there are some important changes within the gross figure. These changes reflect the implementation of the policy framework in the national plan, Building on Reality and the more detailed strategy outlined in the White Paper on Industrial Policy. The Estimate provides for significant increases in the areas of marketing support and tourism promotion and it provides for the establishment of the National Development Corporation.
The key objective of the national plan is to tackle the problem of unemployment by ensuring that the economy is put on a strong and vibrant path of growth. Manufacturing industry and tourism are key sectors in the achievement of this objective.
The environment faced by manufacturing industry has been difficult during the first half of this decade. These difficulties originated with factors both outside and within our control. Abroad, the opportunity to attract new foreign firms was adversely affected by the decline in the amounts of new foreign investment, in particular from the US. Added to this, the deteriorating economic performance in Europe served to increase the competition from other European countries for the investment that was taking place extra-nationally.
The difficult international conditions, which are likely to endure for some years, accentuated the importance of indigenous firms and firms already established in Ireland. These firms faced two major obstacles to their competitiveness. First, there were excessive domestic cost pressures. Secondly, many firms were structurally ill-equipped to compete on international markets. Many Irish firms were weak in areas such as product development, technology and marketing. Over the last three years there has been major progress in addressing these two obstacles, cost price structures and structural deficiencies. There has been an unprecedented improvement in our domestic cost situation. Inflation which was over 17 per cent during 1982 is now close to 5 per cent. While this decline is very welcome in itself, its benefits are even greater for two further reasons.
First, we have effectively wiped out any disadvantages associated with rates of inflation higher than those of our main trading partners. In 1982 only Greece, of all the EC members, had a higher rate of inflation than Ireland. At that time our rate of inflation was more than twice the rate faced by British firms.
Our rate of inflation is now lower than that of Britain. In fact, within the EC, only Germany, Luxembourg and the Netherlands have lower rates of inflation.
A second and perhaps even more beneficial effect is that firms can now invest and plan with greater certainty. Last year, the national plan set down targets for low inflation for the period of the plan. These targets are being met and investments can be made with confidence that the targets will continue to be met.
The growth in industry that we are looking for is ambitious. In other countries there are reference to de-industrialisation and the gradual decline of the industrial sector as a whole. We cannot adopt this attitude if we are to address the employment problem faced in a period of rapid structural change and continued fast growth in our labour force. We must continue to have ambitious targets for the growth, not decline, of manufacturing industry, both in output and employment terms.
The removal of excessive cost pressures is a necessary condition for this industrial growth. It will not, of course, in itself be sufficient. Successes in this area must be accompanied by measures to address the key weaknesses of and constraints faced by Irish industry.
The White Paper outlined a strategy for the more selective allocation of State assistance to overcoming these weaknesses. The Estimates which I am putting before you today contain concrete provisions for this selectivity. There is an increased allocation for initiatives aimed at strengthening the marketing skills and capacity of firms. These include the market entry and development scheme. A pilot scheme for 1985 has already commenced. The employment support scheme provides grants for recruitment of marketing personnel.
Later this year, I will be bringing the Industrial Development Bill, 1985, before the House. This will give a legislative basis to the shift of IDA assistance from blanket grants for fixed assets to the more selective focusing on aid for the establishment of key business functions in Ireland. Already, the IDA are operating within the spirit of this approach.
Already, we have witnessed a strong recovery in the growth of industrial output, reaching an annual rate of over 13 per cent in 1984. The main contribution to this growth has come from the new high technology sectors of electronics and chemicals. The very high levels of productivity recorded in these sectors has meant that there has not yet been an overall increase in total manufacturing employment, although there have been related increases in employment in the services sector.
There are now signs that the recovery in industrial output is becoming more broadly based and this will act to improve the employment situation within manufacturing industry. To take full advantage of the opportunities there must be a continued structural change in industry, particularly in indigenous firms.
The key structural weaknesses in Irish industry identified in the White Paper could not be remedied overnight. Initiatives taken in areas such as linkages, marketing and the Company Development Programme take time to bear fruit.
There has been a decline in the rate of job losses in manufacturing industry. Up to last year, however, loses were still greater than the new jobs coming onstream and there was an overall net decline of 6,000 in the numbers in manufacturing industry.
The outlook is now more favourable. The opportunities include not only the renewed growth in our export market but also in the potential growth of the domestic market. Currently, Irish industry depends on imports for a disappointingly high two-thirds of its raw material and component needs. It can do much better in terms of purchasing locally. The Government has set out, both in the White Paper and in the national plan, targets for manufacturing employment. In the White Paper an increase of between 3,000 and 6,000 jobs per year in manufacturing employment over a ten-year period is envisaged. The National Plan, Building on Reality, envisages an increase in net employment of the order of 12,000 to 14,000 in manufacturing industry by 1987. These targets are attainable and I and my Department will ensure that the IDA and other agencies give them primacy amongst their objectives.
An improvement is not there for the asking. It is there for the winning. It will be won by Irish firms which can ensure the consistency of standards, quality and reliability demanded of modern exporting firms.
The year 1984 marked a turnaround for industrial growth in Ireland. Output increased by 13.5 per cent and exports grew by 17 per cent. The bulk of these increases have resulted from an increase in output by new overseas firms located in Ireland but there has also been an increase in output in the more traditional sectors such as food and clothing, albeit a modest 2.5 per cent.
During the year some 10,000 jobs came onstream in IDA-supported industries. While the numbers employed in manufacturing industry decreased, the rate of decrease was one-third that of 1983.
In terms of new investment the outlook is very good. During 1984 over £800 million in new investment was negotiated by the IDA. This is double the equivalent planned investment of £400 million in 1983. In addition, over 500 companies visited Ireland.
The renewed optimism stems from a good performance during 1984 in almost all sectors of industry. In particular, it is pleasing to note the continued good performance of the small industry sector. I have already given the figures. A great boost to the small industry promotional effort was provided by the regionalisation of the programme in Cork during 1984. In the Cork pilot area, which comprised Cork city and east Cork, over £4 million was committed by 93 new and expanding small industries during the period July 1983 to December 1984. This represents a 50 per cent increase in investment. From January of this year the decentralisation programme has continued and is now almost complete throughout the whole country.
Another indication of the buoyancy of small industries at present can be gleaned from the 800 feasibility grants approved by the IDA for investigating new ideas during 1984, coupled with early indications of a high conversion rate of these studies into actual projects creating jobs. Other sectors to do particularly well during the year were electronics and international services.
During 1984 the IDA negotiated investment on a number of highly significant projects which are designed to put Ireland to the forefront as an electronics producing country. An added bonus to this investment is the fact that a number of these projects are concentrating their R and D and marketing efforts in Ireland so that the Irish operations are more and more becoming stand alone projects which will be able to operate almost independently of their overseas parents. The strategy will intensify this year and new industrial development legislation will empower the IDA to provide technology acquisition grants towards the cost of acquiring new product or process technology from abroad for Irish resident firms.
Some 135 product and process development grants were approved in this sector alone, representing over 30 per cent of the IDA's commitment to R and D in 1984.
In order to provide key infrastructural support for the rapidly developing micro-electronics industry, the National Micro-electronics Research Centre was established at University College, Cork, in 1981. The centre was able to commence its operations very quickly because of the very considerable expertise in this area. The centre, which receives funding from both my Department and the Higher Education Authority, has three main activities: education and training, co-operative projects with industry, and contract research. In a relatively short period of time, the centre has made considerable progress in developing these activities. On the educational front the centre caters for undergraduates in electrical engineering and also runs MSc and PhD degree courses in microelectronics.
The centre has also built up strong links with industry and can offer design and development tools which would be beyond the scope of many individual companies working in this field. Further developments are planned for 1985 in the application-specific integrated circuit area which will be of particular benefit to small indigenous firms.
It is a measure of the stature which the centre has achieved that it now sources a considerable proportion of its current income from research contracts, people who put their own money into the centre in Cork. These contracts have been undertaken for industries and research institutions both at home and abroad.
One of the areas in which the NMRC are particularly involved in is the development of Gallium arsenide, a new material for use in chips in place of silicon. I understand that is one of the technology areas identified in the Eureka programme being considered in Milan at the moment by the heads of State. I hope this will mean that Ireland will be able to avail in a big way of the opportunities arising in the Eureka programme through the work of the NMRC in Cork.
International services which are seen as an area with great growth potential throughout the world, with a projected annual average of 23 per cent per annum over the next five years in the computer services sub-sector alone. In this sector the IDA agreed to back 35 projects during 1984. The IDA have also set up a special section within their International Services Division to deal exclusively with domestic companies so as to provide the essential catalyst to maximising of growth in international services among indigenous operations.
Another area in which Ireland, and in particular the IDA, will be concentrating its efforts in the coming year with the new incentives outlined in the White Paper is technology transfer. During 1984 the IDA sought through their overseas offices foreign companies who were interested in setting up joint venture and licencing arrangements with Irish manufacturers. Over 80 companies visited Ireland and over 80 Irish companies travelled overseas under the IDA aegis during 1984 to discuss joint co-operation. Although these projects generally take considerable time to start up, it is very encouraging to note that from the initial contacts 25 licences or joint ventures have been finalised during 1984 and a further 20 are under serious negotiation. These span the full range of sectors. Particular interest has, however, been shown in engineering, agri-business, consumer products and small industries sectors.
The Government, as set out in the White Paper, are committed to a national linkage programme. This is now being implemented by the IDA and it will concentrate initially on the electronics industry which it is estimated has an annual raw material component requirement of £400 million.
The IDA expect that the increase in the pace of investment proposals from Irish and overseas sources will be sustained in 1985. However, much will depend on the rate of recovery in the US and Europe. It is reasonable to expect, with the increase in output and exports, an improvement in the trend in industrial employment and a significant increase in service jobs.
In moving the Estimates for 1984, I referred in detail to the White Paper on Industrial Policy which was then about to be published. As the House is aware, the White Paper identified employment growth in industry and the maximisation of value-added as the primary objectives of Government policy in this area. In giving priority to the problem of unemployment, the national plan Building on Reality acknowledged the importance of the White Paper strategy. Specific measures to achieve these objectives were: more selective application of State aid; exploitation of the potential for linkages; more rapid development of natural resources based industries; and increased private investment. As I said earlier, the Government's job targets are now the primary objectives of all job creating agencies, and all strategies must and will focus on these targets. It is against these targets that the success of the State agencies will be measured.
My primary task during 1985 is to ensure that the White Paper decisions are fully implemented. In order to do this and to ensure co-ordination of the activities of the various industrial agencies involved, a management committee on industrial policy was established under the chairmanship of my Department, comprising the chief executives of the principal industrial development agencies and a senior representative of the Department of Finance. The committee has reviewed a wide range of activities such as the company development approach and the linkage programme and has made good progress in many respects.
Much emphasis was placed in the White Paper on co-ordination of activities of State agencies. I was, therefore, anxious to see the one stop shop concept in place as quickly as possible. This is the idea of providing one place in each region for all the services of the various agencies which are available. The management committee was given this task. This turned out to be quite difficult. A nationwide network of phase 1 of these shops, which provide under one roof, comprehensive information on State aid and services for small manufacturing industries, has been in operation since 1 April this year.
The "one-stop-shop" centre as currently operated will make it easier for people who want to start up their own small industries to find out what help they can get from the various State agencies without making a pilgrimage to various offices in Dublin. By providing as much information as possible in one office, people will be saved the frustration of running around trying to find out what help the next agency can offer.
The centres will be staffed by people with a knowledge of the services and incentives available to small manufacturing business from agencies such as the IDA, Shannon Development, AnCO, CTT, IIRS, ICC and IPC.
It is envisaged that the centres will arrange for staff from the different agencies to attend at pre-arranged times to meet people interested in setting up small industries.
Finally, in relation to these centres I would again stress that the foregoing is only Phase I. It is my intention that the executives dealing with small industry in the agencies for which I am responsible will, in the foreseeable future, be housed in one building in the regions, all the staff as far as possible, this being Phase II of the operation. I hope to have that implemented by the end of this year or in January 1986 with one or two exceptions where there are problems with leases and so on.
In order to give effect to the new policy directions and incentives for industry set out in the White Paper, I propose to publish the Industrial Development Bill, 1985. This will provide for new selectivity criteria for grant assistance to industry; the provision of technology acquisition grants for industry; and three yearly reviews of industrial performance.
The Bill is also being availed of to consolidate all existing legislation relating to industrial development into one single comprehensive code. There are 20 Acts dealing with industrial development on the Statute Books and it is my intention to rationalise these Acts so that information about our industrial incentives will be easily accessible to the industrialist, potential entrepreneur and perhaps solicitors and others who want to consult them from time to time.
An important element of the Government's policy for industrial development is the encouragement of a greater level of equity type risk investment in the productive sectors of the economy. My Department are at present pursuing a number of important initiatives aimed at stimulating and increasing the flow of venture capital type funding to industry. The business expansion scheme, introduced in the Finance Act of 1984, provides a very generous incentive to individual to invest in manufacturing industry and to internationally trading service companies. This has been an important initiative and a new departure in terms of past activity.
The scheme has an enormous potential to contribute to the financing needs of Irish industry. The incentive has been greatly enhanced by the introduction of some key amendments in the 1985 Finance Act. In particular, the change being introduced to allow investments by brothers and sisters — one would hope to have a wealthy brother or sister — and other relatives will provide a major boost to the scheme.
In addition, legislation to remove investment funds established for the purposes of the scheme from the scope of the Unit Trusts Act, 1972, is currently before the Oireachtas and will be enacted with the co-operation of the opposition, before the end of the present session. We have responded willingly and constructively to the demand for such changes and I am confident that we will now see an upsurge of interest in this scheme.
As part of my overall examination of the problems of industrial investment, I asked consultants employed by my Department to undertake a study into the development of an active market in the stocks and shares of Irish industry. In doing so I was promoted by the need to create a greater liquidity in our capital markets. Arising out of this report I have already called for the setting up of an over-the-counter market in order to provide a mechanism for trading in the shares of small industrial companies. I think this would be an extremely desirable development as many small companies have neither the resources nor the maturity to contemplate a listing on the Stock Exchange. I would like to emphasise, however, that I fully recognise the importance of a thriving Stock Exchange to the development of a healthy equity base in Irish industry. I am pleased to say that the Exchange have responded positively to my call for new initiatives and I hope to have discussions with them in the very near future in order to discuss further our mutual objectives.
The consultants also recommended an amendment to company law to allow companies to buy back their own shares. I am very much in favour of such a move. I hasten to add, however, that this is an extremely complex area of company law and will have to be carefully examined before amending legislation can be introduced. Initially I thought it would involve a one or two section Bill but I understand it will require a Bill of 15 or 20 sections. We are in the process of carrying out a series of reforms in company law and I intend to give this a high priority in the programme.
As part of my Department's programme for the promotion of venture capital generally, I propose to renew the dialogue I have had previously with major institutional investors such as the pension funds, the insurance industry and the venture capital community. I want to review progress in the past 18 months or so since my initial meeting with them and to discuss the potential for new initiatives to promote the growth of venture capital in Ireland. I hope to meet these people in the summer.
The major venture capital markets are, of course, in the US, and to a lesser extent in the UK, and I consider it important that we keep a close eye on developments in these countries and in Europe in order to maintain a progressive and enlightened policy in the development of our venture capital business.
Legislation to establish the National Development Corporation is at an advanced stage and will be introduced in the very near future. I am confident that the NDC can be a significant source of equity capital for new and developing companies and a major force in the Government's battle against unemployment.
I am also anxious to see the development of profit sharing and employee shareholding schemes on a wide scale in Irish industry as I believe that this would greatly enhance our prospects for an efficient and profitable industrial base capable of competing sucessfully on world markets. Winning out on these markets is vital if we are to maintain existing employment and generate the new jobs urgently required by our young population.
By giving workers a direct share in the ownership of industry and thereby ensuring that part of their income comes to them in the form of dividends, we can build a sound foundation for the successful development of industry. There will be greater commitment and innovation in an industry in which the workers and management share a joint financial interest, as all will want to ensure the profitability of the firm to consolidate employment and to maximise their dividends.
If Irish workers are to share in the prosperity of industry, they must be able to derive their income from it not only in the form of wages but also in the form of dividends. The profit sharing scheme which the Government have introduced represents a major opportunity for business and employees to come together in a common endeavour to make this country more prosperous. I intend to discuss these matters with employer and union bodies when the profit sharing study, which is now being finalised by the NESC, is published. I commissioned that study a year ago.
The provision of £1.7 million in my Department's Vote for 1985 in respect of Clondalkin Paper Mills arises from my obligation to carry out refurbishment of the mills in preparation for the resumption of paper manufacturing.
As Deputies are no doubt aware, the agreement reached in November 1983 between IDA, FMI Ltd. and myself, provided not only for the establishment of a paper conversion operation at the mills, in an area leased to the company for that purpose but it also gave FMI an option to purchase all the mills assets if they could convince the IDA of the viability of any proposals submitted in respect of paper manufacturing.
The Government recently approved the commencement of paper manufacturing at the mills and the refurbishment of the relevant assets to that end. That is now commencing.
I am particularly pleased that the new project allows for participation by the workers, through ownership of 10 per cent of the company shares. As I said earlier, worker shareholding has a key role to play in the regeneration of Irish industry. Clondalkin is a good example of this.
I should now like to turn to the subject of international trade and in particular to the question of exports which are so crucial to the Irish economy.
As 70 per cent of our exports go to the the EC, it is appropriate to say something about that market. The key point is that further exports to that market are hampered by the failure to free up the internal market of the EC and bring about the single large market that was the objective so long ago of the founding fathers of the EC. While general progress has been achieved on many fronts, the failure by member states to develop the internal market is a significant blot on the character of the Community. Members of the House should be in no doubt that, so far as trade is concerned, the EC is not a very cohesive entity. National markets divided by differing standards, bureaucratic customs procedures and nationalistic procurement policies are much in evidence.
One statistic that is not in my script but which I might mention is that about 7 per cent is added to the delivered cost of goods merely for the purpose of complying with the customs formalities in relation to movement from one EC country to another. One can imagine how much more competitive Europe could be if those formalities could be dispensed with.
The additional cost is greater than the margin of profit that some of the people concerned are making.
Exactly. The Summit meeting of Prime Ministers at Milan is invited by the Commission to set 1992 as the target date for the removal of all intra-European frontier formalities. I am uneasy that the target date is so distant but, of course, I recognise that what is involved is a massive task. I hope it will be possible to organise definite stages of progress at definite times along the route to 1992.
I am happy to be able to report to the House that we were able to achieve some little progress on this front during the Irish Presidency of the Community. I had the honour of chairing two Internal Market Councils and perhaps the outstanding success was the agreement for the introduction of a single administrative document which will simplify formalities in trade between member states. Instead of five or six forms, only one will be required. We also achieved progress on a number of other issues and I am happy to see that the present Presidency of the Italians is continuing to work at internal market issues. It is certain that this work must be intensified if the target date of 1992 is to be achieved.
The economies of the member states, if they are to prosper and grow, depend very much on exports to third countries and so are critically dependent on the preservation and development of the existing open multilateral trading system. A very high proportion of world trade is governed by the rules of the General Agreement on Tariffs and Trade, known as the GATT. That system has stood up reasonably well to severe protectionist pressures in the past few years but is being increasingly subjected to more and more pressures.
The huge and growing USA trade deficit, largely attributable to the high value of the dollar, has brought a torrent of proposals to the US administration and Congress for increased protectionism. Reciprocal trade deals between the US and single, or groups of, countries, as opposed to operating under the GATT system is being strongly advocated by some interests in the US. In addition to the pressures in the US there are also protectionist tendencies in some member states of the EC because of the big trade deficits with Japan. The deficits, as the House well knows, are a measure of the continuing success of Japan as an industrial and trading force. It is generally recognised that the GATT system is trundling along too slowly. It is pulled and dragged in one direction by the bigger developed economies in their particular interests and in another by the least developed countries which are unhappy with the trading opportunities provided to them, particularly as many of them have crippling debt problems. The USA, in an effort to appease their protectionist lobbies, and other developed countries such as Japan and those in EFTA, are seeking a new round of multilateral trade negotiations in an effort to resolve the tensions in existing international trade relations and to set up rules for trade in services.
I am happy to inform the House that the EC Trade Ministers, after some deliberations, have already expressed their willingness to participate in a new round and there are similar indications from other countries at the OECD Trade Ministers meeting which I attended in April last in Paris. At that meeting I confirmed Ireland's critical interest in a new round of negotiations.
I made specific proposals as to what might be included in the new GATT round involving institutional changes within GATT and the possible enforcibility in domestic law of GATT norms in the same way as the norms of the Treaty of Rome can be enforced in domestic law by way of citizens taking their own Governments to court rather than relying, as in the case of GATT, solely on political action. GATT have carried on their work far too long in an atmosphere of political horse trading with insufficient application of objective legal norms. If the proposals I put forward are adopted we can ensure that GATT will be placed on a more sound footing in future.
I should now like to turn to the question of our export performance. Córas Tráchtála are responsible for the promotion and development of exports and for 1985 the grant-in-aid is £23.464 million representing an increase of 32 per cent on their 1984 allocation, a much bigger increase than the increase in any other agency in my Department. This is at a time when many other activities had to be contained at existing levels or cut back. It is a clear indication of the importance of exports and of the priority in the White Paper.
Our export performance in the past few years has been creditable. In 1984 merchandise exports amounted to £8,897 million representing an increase in value of 28.3 per cent over the 1983 total of £6,936 million. The 1983 figure itself had represented a growth of 22 per cent on the 1982 figure.
The volume growth rate achieved in 1984 was 18 per cent, one of the highest growth rates ever recorded. The volume growth rate in 1983 was 12 per cent. Deputies will appreciate that the real significance emerges when they are compared to the average annual volume growth which in the period 1973 to 1983 was only 8.1 per cent. That is more than twice the 1984 figure.
Prospects for the future are also encouraging. It is predicted that in 1985 total merchandise exports will reach a record £10,500 million which would represent a value increase of 18 per cent over 1984. At a time when, internationally, world trade is forecast to rise by about 5 per cent such a growth would be very spectacular. I am happy to tell the House that the official trade figures covering the first four months of the year are in line with the projections to which I have referred.
It is quite clear that if exports are to develop there will have to be special emphasis by all Irish manufacturing and service firms on a market-led approach. The need for this emphasis has been the subject of much comment in recent times.
Moreover it was recognised in the White Paper on Industrial Policy and reaffirmed once more in the recent report of the Sectoral Development Committee on marketing. The necessary market led approach implies precise identification of customer needs and setting out to meet them as regards design, quality, pricing, promotion, sales, distribution and after sales attention to goods and services. More importantly, it implies doing all those things more efficiently than our international competitors. The specific marketing initiatives listed in the White Paper to be implemented by CTT are the Government's method of attacking the deficiencies in marketing.
One of the most innovative of the White Paper initiatives is the new market entry and development scheme designed specifically to help exporters with the various expenses which arise in connection with breaking into a new export market, a new country or undertaking major developments in existing markets. The scheme takes the form of a ministerial guarantee which enables financial institutions to advance the necessary funds to exporters. It is envisaged that the funds advanced would be repaid from increased sales. The pilot scheme for 1985 involving ten firms has already commenced and, if experience warrants, it will be extended in 1986.
CTT are continuing their efforts to build marketing strengths in firms by the extension of the employment support scheme which provides grants to export firms for recruiting marketing managers and trainees and market researchers. CTT also participate with the CII and others in the European Orientation Programme, which in addition to training and study courses in the area of export marketing, also includes study and practice in the main European languages. Our lack of proficiency in German is a big problem in exporting to the EC.
CTT have also initiated a new drive in the area of market research for firms which develop a specific export development programme. The purpose is, of course, to try to ensure that the export marketing decisions of these firms are based on the most reliable and up-todate information. Accordingly, they are producing improved sectoral over-views in relation to marketing and increasing the flow of reliable marketing information.
CTT have also increased their group marketing programme for small firms to encourage the development of their export potential and to enable them to get established and gain experience in export marketing. It is the intention that the group marketing projects would serve as a model and lead to the spread of the notion of group marketing activities.
A critical factor in winning new markets for exports is the ability to keep turning out new and imaginative products. Accordingly, CTT have embarked on new product development and design projects with 30 to 40 exporters. Totally new product ideas are being developed for ten companies in the food sector. There is also special action in the sectors of home furnishings, giftware and houseware, womensware, apparel and fabrics. It is expected that all these White Paper initiatives will benefit over 1,000 firms during the course of 1985.
To try to assist with the attainment of maximum cohesion in each company's activities, CTT were also given additional resources to enable them to link up with the IDA in so far as marketing assistance was desirable for those firms included in the company development programme of the IDA, that is, specially selected firms.
In addition to all those new initiatives which I have touched on, CTT, of course, will continue to provide its normal wide range of services and incentives to exporters. Deputies are generally aware that these activities include the like of sectoral marketing projects, promotions in major department stores in cities throughout the world and co-ordinating and developing national stands at various international trade fairs. Already this year I have taken part in a CTT trade mission to Spain. It is proposed to have further missions to places such as Australia, China, Japan and South East Asia later on this year. I shall not be going on all of them by any means myself.
The Minister might ask the Opposition spokesman to go in his place.
The latter area which is developing rapidly is one where I have encouraged CTT to try to develop new markets.
I might make one or two observations extempore about marketing. Probably the most important means of developing marketing — which is not mentioned in the script — is improved education in marketing. I was very glad to be present at the first graduation of students from the NIHE's new marketing programme in Dublin where major emphasis is being placed on continental languages. We are particularly weak in this country in our competence in German. The number of students taking German in the leaving certificate is extremely low in comparison with those taking French. Yet Germany is perhaps a more buoyant market for us. There will arise opportunities, on foot of the Spanish accession to the EC, which we shall only be able to grasp along with others in the Latin American market if we have competence in Spanish.
Under the export credit insurance scheme the Government provide Irish exporters with the facility of insuring their exports against political and commercial risks in the buying countries. It will also assist them to avail of export opportunities even in the more difficult world markets. This scheme is required to break even, taking one year with another, in other words, it does not involve a subsidy.
In 1985, I estimate that premiums amounting to at least £1,264,000 will be collected. This level of premium shows a slight increase over last year and reflects a projected greater usage of the scheme.
In 1985 the amount of claims to be paid is calculated to be £1,222,000. However, this figure will include money which is blocked in various debtor countries due to a shortage of foreign exchange. On the basis of past experience I am satisfied that this money will eventually be received when the foreign exchange problems facing these countries ease.
Export credit finance is provided by the four associated banks, 15 non-associated banks and the Industrial Credit Corporation on the security of those export credit insurance policies. This scheme allows Irish exporters of capital goods to offer concessionary interest rates to foreign buyers and to maintain a competitive position against international competition. The range of the rates is settled internationally. An interest subsidy is payable by the concessionary interest rates and the actual cost of funds to the bank. It is estimated that such subsidy payments in 1985 will amount to £1.5 million which is a slight increase on last year's figure of £1.422 million. The increase is due primarily to changes in interest rates. This subsidy does not apply to intra-EC trade. It applies to capital goods, not to non-capital goods.
The short term finance scheme caters for non-capital goods. This scheme continues to work satisfactorily and is of considerable help to exporters in meeting their working capital needs. Again funds are made available on the security of export credit insurance policies and there is no State subsidy involved.
While on the subject of marketing, it is appropriate that I should say something about efforts to strengthen the marketing ability of companies supplying the home market. The activities of the Irish Goods Council are geared towards providing a sophisticated marketing service for small firms engaged in the domestic market. The council through their sectoral and retail marketing activities, marketing support services and industrial sub-contract work, are endeavouring to counteract one of the principal weaknesses of indigenous firms, namely lack of marketing expertise. Independent commentators, such as Telesis, have specifically identified this area as a significant factor in the non-competitiveness of Irish industry.
The council are continuing their successful marketing initiative known as "marketplace" in conjunction with the Youth Employment Agency, whereby young graduates in sales and marketing are placed for a minimum period of one year with small firms who could not otherwise afford to employ such a person. The scheme is funded by the YEA, who pay 60 per cent of the graduates salary for the first year and operated by the Irish Goods Council. The success of the scheme can be gauged from the fact that of the 46 graduates placed in the first year, 42 have been retained by the host companies after the initial period, when the firm itself must pay their full salary.
The Council have been given special responsibility for following up my initiative in meeting with the multiple supermarket groups and independent wholesale and retail interests with a view to getting them to stock more Irish goods. The purpose of these meetings was to discuss means for greater involvement by Irish firms in the development of the domestic food market. While it is early days yet to be assessing the results of these initiatives, the indications are that, as a direct consequence of these meetings, additional orders in the region of £2.2 million have been secured for Irish business. As well as involvement with the individual store groups, the council have organised a major food import substitution exhibition and actively participated in a two-day seminar where the requirements of a major supermarket group were outlined to Irish manufacturers. The council hope to involve the other major food groups in similar seminars over the next year or so.
Earlier this year, I announced a major new initiative to promote Irish furniture in new overseas markets. This programme, devised by Córas Tráchtála, is being implemented under the overall control of the Furniture Industry Task Force chaired by my Department. This brings together the State agencies and industry representatives involved in the furniture industry. Under the programme the Danish market company, Link International, are using their expertise to identify appropriate products and market openings, particularly in the US. The first-hand market information provided by Link has been used by a selected group of Irish manufacturers who will manufacture to specific designs. Link will market the products on a commission basis, using their considerable experience of the relevant markets.
They had their first exhibition of their product in Dromolin Castle about six weeks ago. There were a number of Irish firms there ranging from large firms to firms employing two or three employees. All of them came away with very substantial orders as a result of the new initiative using a professional marketing expert to identify products which the firm might not already be producing but for which there was an opening in the US market. This approach of firms coming together to produce products for different segments of the market is the way in which other traditional sectors can take off.
Coming from a county in which furniture is very important, I regret that the participation of many firms who might have been expected to take part in this programme was rather low. It is hard to get people interested until they see that a thing is successful. I can tell them from my discussions with the firms who took part that it has been a great success. I hope many Irish firms will now set up similar joint marketing operations because that is the way to break into foreign markets.
I will now turn to the question of tourism for which I have fairly high hopes in 1985. The Government's national plan, Building on Reality, identifies tourism's potential to make a significant contribution to economic growth over the next few years. In accordance with that view and notwithstanding pressing demands for funds for other areas of activity, the Government increased to £26.819 million the allocation to Bord Fáilte Éireann for 1985. This represents an increase of 13 per cent over 1984.
Within that allocation the key element is an increase of £1 million in the Board's promotional budget. It is not unreasonable to expect that this boost to the promotional and marketing drive in 1985 will result in bigger numbers of tourists and increased revenue in that and following years. The national plan underlined the Government's commitment to the further development and expansion of tourism and pinpointed key factors which will determine future growth. As with many other economic activities in this country, cost competitiveness was highlighted as one of the more crucial issues affecting our overseas performance. The fall in inflation rates is obviously of big benefit to tourism.
Everybody should be very clear that the Government can only do so much in this industry but at the end of the day increased business, more employment and higher profits will only be achieved by a greater contribution from the different sectors of the business community involved in tourism. As with so many other activities I would like to see a change in the balance between what is expected of Government and the effort put in by the business interests concerned.
The strategy of the Government's plan is directed towards reducing inflation and, as far as tourism was concerned, bringing us to a level more like competing tourist destinations. Deputies will recognise that there was positive action by the Government for tourists in this year's budget to reduce the VAT rate on accommodation, car and boat hire from 18 per cent to 10 per cent and to preserve the VAT rebate system on goods exported by tourists. These measures supplementing Bord Fáilte's increased promotional activity in all major markets, particularly in the US, have created a climate conducive to the expansion of tourism and cannot but be helpful to the industry generally.
It is only fair to expect, as I do with confidence, that all engaged in the industry will respond in a positive way to the Government's initiatives. They can now invest with greater confidence in marketing and developing the product in the knowledge that the prospects for an acceptable return on investment have been enhanced. In my recent contacts with the Irish Tourism Industry Confederation and with other sectors of the industry, I have stressed the necessity for all involved to put much greater emphasis on marketing their products overseas. to insure success they must go to these markets and do some selling themselves. They should also think out and initiate new and inventive marketing programmes in major markets where there must still be good opportunities for generating increased levels of business. The tourist industry would do well to analyse the inherent factors in target markets such as the age distribution and seek to provide special attractions and consideration for the different age groups. I hope that from here on there will be a development of mutual trust and co-operation which will result in far greater emphasis being placed on group marketing by small and medium sized operators. This will enable many regional undertakings whose limited resources inhibited participation in overseas marketing in the past to become more actively involved in the future.
I have already mentioned in the House that I am at present working with the Minister of State Deputy Moynihan, on producing a comprehensive tourism policy statement. This statement, which will be approved by the Government, will be by way of a new departure. While there have been various inquiries and surveys of the industry in the past, no former Government have produced a policy statement assessing all aspects of the industry and proposing a planned approach by all concerned for further development. The aim is to bring together all the considerations involved in the hope that it might encourage new thinking about future action. It may well be that, because of the seasonal nature of many aspects of the industry, those involved tend to repeat the activities of earlier years without giving sufficient attention to the question of new and different courses of action.
In particular, the policy statement will identify the key roles of different Government Departments, other State agencies and commercial interests within the industry and the contribution which will be expected from all. It would be desirable, and I will be proposing a policy in which the responsibility for tourism will not be simply a matter for one Department and their agencies. It should be the responsibility of all those Departments and State agencies whose activities impinge, in any way, on tourism. Who can say that the activities of the Department of Communications or of the Office of Public Works should not impinge on tourism or that the activities of the local authorities should not impinge on tourism? It is important that each authority should see themselves as contributing to tourism. Tourism should not be seen as something for which Bord Fáilte alone are responsible.
For example, it is easy to see that the activities of transport companies can, in the pursuit of particular objectives, overlook the real needs of tourism. Deputies will appreciate that the cost of access transport is a critical element in the holiday expenditure of a tourist coming here. Bearing that in mind, I am a little uneasy about some fares into Ireland particularly where they affect key tourism markets. I am looking closely at this question. Air transport from Europe to Ireland is rather expensive in comparison with transport on other routes, or with other means of transport.
Similarly I would hope that clarification of the tourism policy would be helpful to the interests involved in the industry other than Government Departments and State agencies. There will have to be much greater active participation by these interests in promotion and marketing in the world market place.
Quite simply, they will have to support and complement Bord Fáilte's work overseas to a much greater extent than they have done in the past. Apart altogether from the benefits to their knowledge and attitudes about the tourism industry which this greater participation would involve, there is the simple fact that in the stringent financial circumstances which lie ahead the resources of Bord Fáilte, in common with all State agencies whatever their area of operation, must, of necessity, be limited. There is also the impeccable business logic that the more the various interests put into tourism the more they will get out of it.
As it is an obvious aspect of expansion I would hope that there could be progress in extending the tourist season into the off-peak period. In recent contacts with them I have been assured by those involved that specially priced holiday packages specifically aimed at increasing offseason traffic will be vigorously marketed. The perennial problem of seasonality will only be solved with new approaches and new strategies.
I should mention that I availed of the relative euphoria in the tourist sector following the reduction in the VAT rate from 18 per cent to 10 per cent to call in the tourist confederation and ask them what they were going to do about making sure that this would turn into increased revenue. What we agreed upon was that they would initiate new packages with reduced prices for all the various ingredients in a holiday aimed at the off-peak season, basically at the shoulder season, the period in summer outside the peak months of July and August. I hope that the VAT reduction will not only have the effect of rendering a holiday less expensive in Ireland, but will also have the effect of getting tourist operators to try consciously to use their facilities more intensively by extending the season in this way.
My information is that prospects for growth in export tourism in 1985, and indeed over the next few years, are considerably better than at any time in recent years. I am happy to report that overseas earnings increased in real terms by over 5 per cent in 1984. In the North American market the improved competitiveness of the Irish product and the welcome introduction of competitive access air fares together with the enduring strength of the dollar may lead to an increase of between 8 per cent and 12 per cent over 1984 in US tourists or from about £140 million in 1984 to about £163 million in real terms of receipts in 1985.
Our improved competitiveness should also greatly assist the promotional drive in Continental Europe and the UK. In general I sense a feeling of cautious optimism in the industry and my recent first hand experience of participation in Bord Fáilte overseas promotions and trade workshops make me confident that the board's revenue targets of a 5 per cent increase can be achieved in 1985.
The Government tax reductions can reasonably be expected to provide some initiative to our own people to holiday in Ireland. The importance of the home market as an element of the industry's infrastructure must never be overlooked. Indeed in the past, the performance of the home segment at times provided some compensation when the industry generally was experiencing difficulties abroad. Signs of weakness in the home market which were beginning to emerge should now be reversed and our people are still being encouraged to discover Ireland.
I would like to mention the rationalisation of institutional arrangements at regional tourism level which has been a matter of great interest to many Deputies. I should explain that the only objective of the moves is to maximise the effectiveness of these regional activities at minimum cost. All regional tourism activities are being examined on a continuing basis so that the greatest level of resources may be devoted towards promoting and marketing Ireland abroad. After all, if the numbers coming from abroad cannot be maintained and increased the ultimate regional tourism organisations will have no existence.
I turn now to insurance. The Government's determination to combat the problem of uninsured driving and insurance costs is clearly illustrated by the action taken in this area of late.
The Motor Insurance Advisory Board were established to advise me on matters relating to motor insurance generally including premium rates, loadings and the availability of cover. The questions of insurance for young and disabled drivers and age loadings on road haulage vehicles have been referred to the board which will submit their first report at the end of the year.
Many of the measures relating to motor insurance announced by the Government in October 1983 have been implemented, for example, increased fines for road traffic offences and compulsory windscreen insurance discs which will be issued by insurers from July next. To ensure that all the measures are brought into force as quickly as possible, a working group on motor insurance, comprising the Ministers of State at the Departments of the Environment, Justice and Industry, Trade, Commerce and Tourism have recently been established and have reported to the Government.
There have, of late, been difficulties in the liability insurance market. Some companies have had problems in trying to get cover for their employees. Agreement has been reached with the Federation of Insurers in Ireland, the representative body for most insurance companies in Ireland, that they will look into any case of non-availability of insurance cover. This should help ease problems of availability of cover in the liability area but, of course, the premiums quoted will have to reflect the risk.
At EC level in insurance, discussions continued under the Irish Presidency on the draft directive on freedom of services in non-life insurance. Certain limited progress was recorded. In the related area of community co-insurance Ireland, in common with Denmark, France and Germany, was referred to the European Court of Justice for alleged incorrect implementation of the 1978 Directive on co-insurance. The case against Ireland is not expected to be heard until later this year.
To safeguard the security and stability of the banking and insurance sectors, the Government took over the Insurance Corporation of Ireland on 15 March last and it was placed under administration by the High Court. The relationship of the Insurance company to a banking group created a special sensitivity in dealing with the matter. The link with the bank was not, of course, the cause of the difficulty but the existence of the link had consequences far beyond the extent of the problem itself when it came to light.
Since his appointment, the Administrator of ICI has been addressing the many problems facing the company and has been making considerable progress in tackling these. The administrator has been keeping me informed on matters affecting the company generally as well as the progress in establishing their precise financial position. It is clear that it will be some time yet before a definitive assessment of the company's position will be available. For this reason the audited accounts will not be available by the due date of 30 June. In the meantime any speculation on the matter would be most unhelpful to the administrator's efforts and I hope that Deputies will resist any temptation to indulge in such speculation.
The administrator is taking steps in accordance with his mandate to place the business on a sound commercial and financial footing. One of these steps was the profitable sale in the past week, with the approval of the court, of the ICI Life subsidiary. There is no doubt that the administrator is tackling the job facing him with considerable skill.
I turn now to life assurance. Important new developments are also taking place in the area of supervision of life assurance undertakings. In March 1984 I introduced regulations to facilitate entry to our market by Community based life assurance companies and this opening-up of our market has necessitated a strengthening of the relevant supervisory powers. My Department are currently engaged in the preparation of regulations which will introduce a series of more stringent controls over such matters as the solvency and reserving practices of such life assurance undertakings. In addition, new accounting disclosure requirements will be introduced in order to enable the supervisory authority to satisfy themselves in relation to these matters.
I would now like to say a few words on the subject of price control.
The National Prices Commission have the function of keeping under review the prices of commodities and charges for services and of advising me in relation to those prices and charges. The commission publish details of their recommendations in their monthly reports, thereby demonstrating to the general public the strict criteria applied in their examination of price increase application in order to ensure that only unavoidable increases in costs are passed on to the consumer.
During 1984 the commission considered 205 detailed proposals claiming increased costs totalling £433 million on an annualised basis of which £200 million was allowed to be passed on in increased prices — about half of what was sought. In addition the commission monitored and reported on prices and charges of a wide range of products and services which are not subject to detailed price control. While possibly not all of the costs claimed in the detailed proposals would have been implemented in consumer prices if price control did not exist, it is clear that the operation of price control during the past year played a role in moderating the pace of price inflation solely in the more sheltered sectors of the Irish market.
The price of petroleum products has been a very sensitive public issue in recent years and in June 1984 on the recommendations of the National Prices Commission, a new price control system, involving monthly reviews, was introduced. While we can have little influence over the major international factors affecting oil prices, particularly dollar exchange rates and international market prices for oil, the new system, by basing Irish prices more on international market prices than on official selling prices, enables the consumer to benefit earlier from the lower dollar prices for oil that prevailed in the past year. We would have to wait much longer if we waited for official prices. This alleviated considerably the effects on Irish prices of the dollar's inexorable rise.
The number of applications considered in detail by the National Prices Commission in 1984 at 205 represented a 30 per cent decrease over the total for 1983 and was about 50 per cent of the yearly average of the past ten years. The reasons for this reduction are two-fold; the continuing moderation in the rate of inflation and the increasing numbers of sectors and firms that have, either on the recommendation of the National Prices Commission or my own decision, been exempted from detailed price control.
The easing in inflationary pressure has reduced the number and amounts of price increase applications submitted to the National Prices Commission. During the last year the National Prices Commission also recommended exemption from detailed price control for 45 firms. In addition, they recommended that the maximum prices order for a number of products such as sugar, margarine and baby foods should be revoked. This illustrates the gradual change in emphasis of price restraint in many areas, where circumstances permit, from one of strict policing to one of surveillance and consumer information.
When the current regime of price control was introduced in 1971 the Irish market was still very well protected from external competition and price control provided an essential mechanism to limit inefficiencies in the Irish economy. In recent years the level of competition in many sectors of the Irish market has increased substantially, obviating the need for the continuation of detailed price control. Free competition in the market-place is the most effective influence for price moderation and I will continue my policy of removing detailed price controls on a case by case basis once I am satisfied that competition is sufficient. I recognise, however, that the Irish economy is comparatively small and that there will remain areas where the existence of dominant firms or monopolies will require the maintenance of a regulatory role to ensure that the consumer interests are protected.
As indicated in the national plan, the Government consider that competition is the best way to prevent inefficiency. I am at present examining the work of the various agencies of my Department involved in this area, to see how best greater competition can be brought about.
I have on my desk the heads of a major reform of the restrictive practices legislation and I expect to send this to Government within the next two days. It involves streamlining the number of agencies involved in policing competition policy. One could almost say that if one had set out to design a mechanism for dealing with competition which was slower and more inefficient, not because of the individuals involved but because of the legal procedures under which it operates, one could not have done better than the Restrictive Practices Act, 1972. This is the slowest and most cumbersome piece of administrative machinery I have had the experience of dealing with in any ministry I have held. That is no reflection whatever on the people involved; it is simply a question of the way in which the mechanism was designed. The Government will be bringing forward legislation to change this.
A very important recent development has been the publication of the Companies (Amendment) Bill, 1985. The purpose of this Bill is to give effect to the Fourth EEC Company Law Directive which deals with the preparation, publication and auditing of the individual annual accounts of public and private companies. The implementation of this measure will have a major impact both by increasing the level of detailed disclosure and particularly because private limited companies will, for the first time, be required to publish their accounts through lodgment in the Companies Office. Ireland, along with some other member states, is behind schedule in implementing the Fourth Directive and this has been the subject of a complaint by the EC Commission to the European Court. Now that the necessary Bill has been published, I am anxious that the House should have an early opportunity of discussing this measure so that its passage into law can be completed as quickly as possible early next session.
In accordance with the Government's commitment in their joint programme, work has continued on the reform of company law in order to deal with abuse of limited liability. In January of this year the Government approved a comprehensive series of proposals, the heads of a Bill, in this area and authorised the drafting of appropriate legislation. The Bill runs to about 150 draft sections, so it is no small drafting task. The proposals will, in my opinion, go a long way towards creating a healthier corporate environment, promoting confidence among investors and attempting to remove unscrupulous company operators from the business scene without, at the same time, holding back genuine enterprise.
The proposed legislation is both comprehensive and complex. It is essential that the greatest care be taken in its drafting. For that reason it is not possible to give a precise timetable as to completion of drafting and circulation. However, I am pleased to say that the Attorney General has made special arrangements to facilitate the drafting of this legislation.
Before concluding on company law, I would like to refer briefly to the Companies Registration Office. There has been a massive increase in the number of companies being incorporated in recent years. There are now in excess of 80,000 companies on the register compared with approximately 30,000 ten years ago. As a result, some bottlenecks have appeared in the manual systems currently employed in the Companies Registration Office. These are mainly in relation to the updating of records, in the pursuit of companies which default in submitting returns and in retrieving files for inspection by the public and for use by the staff of the office. In response to these problems a major upgrading of the service provided by the Companies Office has been undertaken based primarily on computerisation of the system. The computer has been installed and is currently undergoing appropriate system testing. It is expected that there will be a significant improvement both in the level of service to the public and in the enforcement of the Companies Act by the end of the year.
My intention is that there should be vigorous enforcement of the statutory duty of companies to file annual returns when the new computerised system is operational. It would, of course, be in the interests of all concerned if companies would submit their annual returns in advance of the new regime.
While I have attempted to cover as extensively as time permits most of the principal activities within my remit, I am also conscious of the number of Deputies wishing to intervene in the debate.
I thank the House for its attention.
The Minister's opening remarks were extraordinary in their content in that the statistics quoted were selective and misleading, to say the least, and certainly cannot be regarded as accurate, whatever significance the Minister would attribute to them. It shows a reluctance to recognise reality, particularly outside this House where the Government performance is seen as dismal, tired, uninspired and sluggish. That performance has been condemned by the electorate as well as by representatives of all the political parties in the House. It is difficult to understand why the Minister should persist in trying to justify the mismanagement of the economy by him and his colleagues. It appears that the Government are destitute of any worth-while policy initiative to tackle our economic and social problems. The Minister sounds demoralised and this obviously reflects lack of confidence in the Government about their own future.
The Deputy is changing his arm.
We were expecting that the Minister might have used the vehicle at his disposal this morning to show some of the new dynamic initiatives he has been promising. That is not the case and this speech shows no Bruton input. It is a fairly good piece of bureaucratic scriptwriting and a nice piece of background reading for a ministerial brief on going into a Department for the first time. It is hardly a response from the Minister or the Department in control of industry, exports, jobs and tourism. These are all the areas of potential growth where the population's hopes of survival and recovery reside. This speech must have been written over the past couple of months in preparation for the long, dull day spent in debating the Estimate for the Department of Industry, Trade, Commerce and Tourism.
The Deputy has a chance to brighten it up.
I intend to, and I am quite sure that Deputy Kelly will have some harsh things to say to the Minister also, in his customary fashion.
The Deputy said enough on one occasion in my county to ensure that an invitation to return will never be forthcoming again. I refer to his "little piglets" contribution.
The Deputies should stick to the Estimate.
Deputy Kelly's remarks were made in Claremorris. The Minister referred to the working group on motor insurance and, although the script said that the report would be with the Minister in about three months, the Minister corrected it by saying that the report was already with the Government. That indicates that the Minister had no input to the script. The disappointment with the performance of the Government is acute at present——
It shows that I know what is happening.
The Minister's response has not minimised the anxiety of the elec torate in regard to the future. It does not give me any pleasure to have to identify the failure of the Government in the area of economic development as it only adds to the country's dilemma. The Minister's speech was tired. The Government and the Minister are also tired. They are worn out by internal strife and ideological skirmishes between the two segments of the Coalition. The kindest thing I can suggest is for the Government to slip quietly away, to take time to look at themselves and, hopefully, to call it a day.
The Minister is obviously not aware of the magnitude of the unemployment problem in the industrialised world today. The OECD suggested in a recent survey that 20,000 new jobs per day are needed for every day of the year for the next five years to get back to the level of employment of the late seventies. These are the harsh facts of life with which we have to contend. In view of the Government's complacency towards unemployment, I should like to ask them what the acceptable level of unemployment is. The acceptance of 250,000 people unemployed is a kind of creeping paralysis which is destroying the confidence of the workforce and making emigration a family inevitability. In the old days we had migration from certain parts of the country, but that will not return. Whole families are now leaving the country and that will be the accepted norm in the emigration pattern. These families will not come back. They are a great loss to the country although the Minister does not recognise or identify the problem.
The question of allowing unemployment to become a permanent feature of Irish life is unacceptable. It is anti-national and socially unjust. The policies being followed by the Coalition are unpatriotic, and indeed one might go so far as to say they are unconstitutional in that they offend the dignity and sacredness of family life. They condemn Irish people to being a modern day nomadic tribe. Exporting our people with no job permits, which means they must take up menial employment, is a sad reflection on the Government, and they must be condemned for their lacklustre performance in job creation. Putting in Deputy John Kelly to try to defend the indefensible is grasping at straws.
Nobody puts Deputy Kelly anywhere.
Deputy Kelly's attitude is well known and his response is the same as it has been over the years — to create a situation where emigration would be supported by Government action. No alternative is being suggested, and obviously the Government are unaware of the alternative Fianna Fáil proposals which could deal with the problems.
We are sick looking at Fianna Fáil Governments failing to put proposals into practice.
The electorate and many of the Fine Gael Deputies recognise the foolishness of present Government policies. If they are unable or unwilling to respond to the demands of the population, there is an honourable alternative and they should do that now before permanent damage is caused.
We are not that foolish.
Our problems are not insoluble and the Government should have taken the opportunity today to outline their response to creating worthwhile economic developments in job creation instead of the 60 pages of claptrap and bureaucratic nonsense to which we had to listen this morning.
Present reports indicate that there is an international emergence from the recession and that unemployment levels are easing in Europe and the United States. To participate in that emergence, we must change direction in regard to our economic and taxation policies. Lessons can be learned from the performance of other economies and the means which they adopted in emerging from the recession. The recession will not end of its own accord and the Government must create the proper economic environment to defeat the recession. Business will not take risks in investment and expansion programmes unless there is a more favourable climate created by the Government. No business is prepared to take a risk unless there is a potential reward which is substantial and attractive. We must change the attitude towards success and successful people. Jobs, growth and success will only occur in an atmosphere of understanding of profits and investment protection and enterprise. That attitude does not exist in this country.
Hear, hear.
I should like to join the Minister in trying to create that type of climate and environment because, if we did it once, we could then make magnificent strides. The Minister referred to inflation and took some comfort from reduced rates. We are delighted to see this trend, but we must not be too complacent because, while inflation has been falling, it is still almost double many of the rates existing——
It is the third lowest in the EC, for God's sake.
It imposes great cash flow problems, it is a disincentive to business and it undermines the long term planning for job creation.
I think the Deputy is reading the 1982 statistics.
We must not get oversmug in this regard. We must pay particular reference to the high levels of taxation, and the Minister did not refer to this. He obviously prefers to let the Minister for Finance take all the brickbats. The high levels of taxation are the real bugbear of the economy. When one considers that our income per capita is the second lowest in Europe and that our personal taxation levels are the highest, one gets some idea of the distance we have yet to travel. In Ireland it does not pay workers, management or executives to perform. Workers are reluctant to take on overtime, even to meet production targets when requested to do so by management, for the simple reason that there is no gain for them in take-home pay that would warrant doing that type of overtime.
An executive I spoke to during the week told me he was offered promotion with a sizeable increase in salary; but, having considered all the tax implications, he came to the conclusion that it was not worth his while promoting his own prospects within his company. There is not much point in offering a sizeable salary to a person when in fact one is asking that individual to work a little harder for the Revenue Commissioners. The Minister should realise that the best of our managers are leaving the country by the plane load. I spoke to executives in the property and development market yesterday and they told me that many of their offices have decreased their staff complements. I was told that many executives have taken up residence in other countries and do not propose to return while we continue to have this tax regime.
Our taxation regime is an active ingredient to fuelling the black economy, which is now estimated at something in the region of 15 per cent of GNP. There is no doubt that the Government have not honoured their commitment and promise to deal with taxation. They are in fact creating an expansion of the black economy.
We will not emerge from the recession without a radical change in our taxation policy. That same policy is causing great rift between employers and employees. Employers have rising wage costs, most of which is being pinched back by the Revenue Commissioners on a day to day basis while employees get less and less in take home pay. The disposable income allowed to ordinary workers is being seriously reduced and we have real poverty. We always had to cater for people who were less off but we now have a new poor, people in the middle income group, and they include public servants as well as those working for private enterprise. Many of those people cannot afford to maintain their existing standard of living because of the Government's taxation policy. There is no doubt but that the party that produces a realistic taxation system will get electoral recognition in the future.
It is no comfort to us to be criticising the taxation policy on a day to day basis. The economy is continuing to decline and the recession here has not bottomed out. There have not been any initiatives from the Government to try to relieve the tax burden on employers or employees. Workers cannot be motivated to meet production targets if their extra efforts are continually penalised by the taxation system.
We also need new incentives to develop new projects. More venture capital should be applied to industry and we need a willingness by business and the Government to take on risk. There must be a less cumbersome bureaucracy to get projects launched and processed. The Minister made reference to one stop shop locations to deal with this matter, but they have not worked. It is time the Minister took an active interest in some of the projects he elaborated on today. I am afraid they are only paper responses to the problem that exists on the ground.
Many enterpreneurs are put off by the amount of paper work involved in getting any new project launched here. Facilities should be available for the individual or small investor anxious to initiate a small project. That person should be given a chance and not smothered by paper work, questionnaires, investigations and so on. Cumulatively speaking, all the losses of the associated banks last year would more than cover the losses over the next ten years by small industries who would like to take a chance. We need the right climate for high risk capital investment. High capital gains liability here, together with the substantial risks involved in initiating new projects and setting up companies, discourages investors. Venture capital is not penalised in other countries, particularly in the United States. As a result in the US millions of jobs have been created. If a more enlightened attitude was adopted to the question of venture capital here, I am satisfied that thousands of much-needed jobs would be created. Until rich and successful businessmen are welcomed and respected in every town in Ireland we will not have any long term prospects for lasting durable job creation.
We only have to take a look at the number of closures and liquidations that the Minister and the Government have supervised and overseen in recent years to get an indication of how bad the recession has hit us and how difficult it has been for people to maintain their existing standard of living. Last year 800 factories closed and the same number closed the previous year. The same figures are running this year. There is no doubt that our capital base has been brutalised in the last two or three years and we will not see any worthwhile recovery in the economic sense, with job creation as its offshoot, until such time as the capital base here has been restored.
I am satisfied that we have the necessary ingredients to do the job. The fact that we have a young, educated and flexible workforce is regularly mentioned. Our population and our workforce are getting more accustomed to computerised living and thinking, but it is scandalous to think that we are educating our workforce in all disciplines for the benefit of our competitors. Our well educated and disciplined managers have to take refuge in other climates in order to support themselves. If the proper investment climate was provided by the Government and if the proper attitude existed in regard to the question of personal and corporate taxation, then, taking into account our skilled workforce, we could restore confidence to business. That would lead on to increased living standards and the restoration of the economic fortunes of the country.
We have wonderful opportunities here. Goods worth almost £2 billion are imported each year and £470 million of those imports are electronic parts. However, identifying products and areas of import substitution is not good enough. We also have the problem of the technical ability to supply the product and meet the deadline. We have not been excellent in that regard in the past. We also have a great difficulty in quoting expertise.
The Minister dealt with the national linkage programme operated by the IDA — a programme I welcome. I am satisfied it can go a long way to redress some of our difficulties. It is one thing having a programme, but we are smothered here with fancy names attached to programmes which at the end of the day do not add up to anything. The linkage programme has a future and can go a long way to rectifying quoting difficulties and meeting deadlines. However, it is not enough for the IDA to have their commitment in place. It is also necessary to have a commitment from industry. If there is the necessary commitment from both sides concerning project appraisal, a proper data base, training and technical support, I am satisfied that many new and existing companies will create more employment for our young people.
The Minister made considerable references to exports. Considerable joy is being expressed by the Minister and others as to what is termed as Ireland's export boom. There has been a spectacular growth in exports in the past four years, it could be cumulatively stated to be about 115 per cent. We have the benefit of huge export earnings but it is not evident to me that those huge export earnings have been utilised to the best advantage to create new job opportunities. I do not see that they have generated any great investment over the past few years. If we are to have these huge export earnings and if this huge amount of money is coming in, then more of it should be retained in the economy for future and better investment.
We talk about exports increasing each year but one is inclined to become complacent. We should be continuously vigilant because of our over-dependence on multinationals. This is recognised by all concerned, both in the pharmaceutical and high technology areas. In a sense we are dependent solely on foreign research and development to maintain that share of export growth. While we all welcome the multinationals and the contributions they have made to this country, we should be thinking of creating our own research and development expertise. In our approaches to these multinationals, which have been very successful here, I see no reason why we should not ask them to allow some of that research and development expertise, which they have in their own countries, to be developed here. We have the workforce, the technical skill and educational training to support that kind of initiative. Recently preferred locations for certain multinationals necessitated the closing down of certain firms. This might not have happened if we had had research facilities and back-up services here. This is an area to which the Minister should pay particular attention when formulating any new arrangements or agreements with multi-nationals setting up here for the first time.
Our agricultural exports, which have been the traditional mainstay of the economy, have been on the decline. In 1972 agricultural exports represented some 40 per cent of our total exports, in 1984 that figure has been reduced to 18 per cent, hardly a cause for complacency. Industrial goods account for about 80 per cent of total exports, with electronics running at 18.6 per cent, chemical and pharmaceutical industries at 13.9 per cent. The United Kingdom market has fallen drastically over the years and we should pay some attention to that. In 1972, exports to the United Kingdom accounted for 60 per cent of our total exports; in 1984 that figure was reduced to 34 per cent, hardly an area for complacency. We must take into account that the United Kingdom is still our main supplier of imports. The balance has gone wrong in certain areas of our exports.
While I am satisfied that our exports have been on the increase, this has only happened in very select areas which could become vulnerable because of exchange rates and preferred locations for some of our multinationals being the order of the day. Our multinationals could be put under pressure and if there was any decline in that area of activity I can assure the House that our export growth would not be as healthy as it is at this time. This is just a marker for the Minister to seek to bring about a situation where no difficulties would arise in that area.
Strategic marketing has been identified as the fundamental weakness in our marketing performance. We all recognise the importance of marketing so far as exports and domestic sales are concerned. We must reduce imports. It amazes me that as an agricultural country we spend up to £800 million a year on food imports. Marketing will play a very important role in maintaining existing jobs and creating new employment. We are very dependent on foreign trade. Over 50 per cent of our gross national product comes from foreign trade — we are the second highest in the European league of nations with Belgium heading the league at 64.7 per cent.
Our imports have been sluggish but they are taking an increasing share of the domestic market. It appears that the food industry is not being brought into line to improve the situation. Industry must have a strong commitment to developing an effective marketing function, but the State must take a guiding role in providing support and assistance for both large and small operators.
The report of the sectoral development committee, April 1985, set out the broad recommendations needed in developing a proper marketing strategy. Many of those recommendations should be implemented immediately. I understand the principal institutional recommendation was that the Minister should have the primary responsibility for all overseas and domestic marketing development and that duplication of effort by various State agencies should be eliminated. I am pleased that the Minister referred on a few occasions to this and said he would seek to remove that duplication of effort but it would want to be something more tangible than a paragraph in the Minister's dull speech which we heard today.
Clear objectives should be outlined for all the agencies under the Minister's control and all those involved with overall responsibility. CTT have a very admirable record in the area of marketing. Small manufacturers should get help to increase their sales and profitability. CTT and the other agencies under the Minister's control should help smaller companies develop their plans for increased activities. The Minister referred to group marketing as it affected one case but this should be applied to many other activities because group marketing could make available to the smaller operators the type of expertise which is available to the larger operators. The Minister would be well advised to give that his direct and personal attention.
I will.
So far as product development is concerned, when small manufacturers talk to me about the present situation they tell me they never know which way to turn or which agency to go to. There should be an agency nominated with overall responsibility for dealing with that matter so that, once and for all, people involved in new product development and existing manufacturers who want to diversify into new areas will know where to go and not have this extremely cumbersome method of going to regional and national offices and different agencies whose roles are not specifically defined. This causes considerable difficulty for the small operator who has not the staff management complement necessary to allow him to do all this ferreting out for himself.
That is being done.
The one stop shop method has not worked.
It has worked.
It has not worked as the Minister expected it to work. Perhaps some refinement could bring about a better situation there and I should be pleased to support that.
As far as the larger multinationals are concerned, the time has come when we must get them to release some of their international marketing expertise. They have that in their home base and could, as a start, allow it to be applied to their downstream suppliers here, so that those suppliers would recognise the opportunities for new markets which could be identified for them by the home base marketing regime of the multinational, thereby getting into new areas of providing supplies, not just to the company itself but to other related companies, both here and abroad.
I particularly ask the Minister to have another look at the question of incentives for overseas personnel involved in marketing at this time. There is no doubt that there is a shortage of personnel engaged in foreign marketing activity. Unlike our competitors, our tax code allows for no incentive to executives who spend part of their time overseas. We must recruit new export executives. If there is one area where the Minister should stick his neck out and ask his Government colleagues to forget the public embargo, it would be in the creation of increased numbers of export executives. It can be positively stated and proved that for every extra executive in the market place operating on behalf of CTT, or indeed of their private company, the return has been quite extraordinary in the identification of new product and of new market and in the creation of new product lines and jobs at home.
The employment support scheme which was initiated in 1982 has been a success and should be strengthened. I understand that to date about 117 sales staff have been recruited, at a cost of somewhere in the region of £1.7 million. It has to be stated, also, that this minimal cost in the recruitment of those executives has resulted in some £53 million being created in increased sales. Firms should be encouraged to appoint new staff and new international marketing managers. They should be given the funds to take on trainee marketing graduates. If we are not going to take the initiative in so far as the employing of new graduates who are coming out trained in marketing, is concerned, then we are not really showing confidence in the future development of our exports.
The export credit insurance scheme as operated by the Department is very worthwhile in relation to the working capital situation for exporters and enables them to exploit very difficult markets. The Insurance Act of 1953 ensures that the Minister underwrites the export credit insurance. It is administered by the ICI, but has a limit placed upon it. I understand that the insured exports for 1983-84 were estimated at some £450 million — about 7 per cent of all total exports. This arrangement provides cover for commercial and political risk. However, it operates at no cost to the Exchequer. For that reason and because the claims in administration are met from the premiums, the Minister should take the initiative of increasing the levels and thresholds attached to export credit insurance. This would have a very beneficial affect on those who would seek to exploit new and particularly difficult markets.
Most of the banks offer funds to exporters at pretty preferential rates against the security offered by the export credit insurance, but the banks could do more. They could make increased finance available and at lower interest rates, certainly. I am of the opinion that the climate is now right for an approach to the associated banks and some of the other non-associated banks to make available more money at cheaper rates to enable our exporters to open up new, more difficult and perhaps high risk markets. Certainly, from the experience gleaned from the operation of this scheme in the past, there has been no cost to the Exchequer. That is identified today by the Minister when he says that the £1.25 million outstanding will, according to all reports, be restored in due time when the exchange bills are more readily available. We should create new markets by having a greater threshold in that credit insurance field. It would reduce the exporters' need to make such excessive provision as they have for bad debts at this time.
There has been and continues to be a very serious situation in so far as dumping is concerned. There is no doubt that dumping into here is rampant, from both inside and outside the EC. It is no use talking about free market forces; that takes no cognisance of our vulnerability. We have the peripheral status as far as the EC is concerned and I am asking the Minister to take the immediate initiative in so far as the multifibre arrangement is concerned, to protect our home market and also to provide some stability for the clothing industry. I understand that there is some disquiet amongst the people in that industry, which employs 18,000 full time staff and about 7,000 part time staff, exporting £167 million worth of goods each year, with wages to their employees of about £120 million and a return to the Exchequer of some £50 million per year. I urge the Minister to take the initiative in so far as the renegotiation of that multifibre arrangement is concerned.
The last five years in the general insurance industry has shown that that industry has come the full cycle from the point where it was difficult to get insurance to the position where companies were under cutting each other to get premiums on their books, with very few underwriting criteria being applied. The situation has now returned to the point where people in business are unable to get various insurance covers at any premium. I heard in the last two days of the experience of a businessman who had an annual insurance cover premium indicated to him last year of £8,000, now increased to £63,000 for this year. That is the kind of insurance premium policy which is closing down businesses and causing such great difficulty.
The insurance industry here went through an extremely tough trading period in 1983 and 1984 and the figures show that losses could well be in excess of £115 million per year. This crisis situation in the market is reflected in the expectation that of the 34 non-life companies operating, only four are expected to have recorded any growth in 1984. The natural progression from that crisis has been the massive premium hikes and the availability of cover being limited, or even unobtainable for many types of risk.
In so far as the motor insurance side is concerned, the problem of insurance premium costs is not new to many. They have been rising steadily since the early seventies, to the extent that members of the public are now quoted figures of up to £2,500 for comprehensive cover on an average saloon car. At a time when the average industrial wage is about £8,000 per annum, this figure can represent up to 25 per cent of the wage package in the year, with the insurance being as expensive as a person's house mortgage. At the moment the amount of mortgage on one's house is the same as the premium on one's car and that should not be the case. The industry will blame excessive losses on the high jury awards made to those injured and also on the long legal delays which mean that cases can take years to be heard with a corresponding rise in legal expenses and settlements.
The problem of high damage awards was highlighted in 1983 when there was an award of almost £1,500,000 where the 25 year old plaintiff sustained severe injuries in a motor accident. That award was reduced to about £500,000 by the Supreme Court. The award by the jury for general damages of £800,000 was reduced to £150,000. This reflects the view of many people in the industry that the assessment of general damages by the jury system lacks all sense of reality.
Ireland is the only country in Europe where compensation is assessed by juries in these type of cases. As we know, the High Court is the legal vehicle used by the great majority of personal injury cases. We must recognise that premiums are related to the levels of compensation paid at present. The jury system has resulted in inconsistencies. It is unreliable and unpredictable and has resulted in many expensive appeals to the Supreme Court. The system is recognised by all as cumbersome, involving professional witnesses, long cross-examinations, lengthy addresses to juries, interminable delays, hardships to claimants and difficulties for insures and insured alike. There is no doubt that the system has led to very expensive administration, with witnesses' expenses often reaching to 20 per cent of the total paid in claims. That is unacceptable and is leading to higher premium costs so far as motorists and those who have to pay PL and EL premiums are concerned. It is a wasteful system and we will have to do something about it.
While the debate goes on and while we are expecting that the Minister for Justice will introduce legislation to deal with the matter, the case will have to be well worked out to see which of the new systems we should adopt. We will have to consider if we are to dispense with the jury system entirely, whether we should have it with the judge empowered or entitled to direct them in a particular way or whether we should have a panel of professional assessors to advise the judge. I consider that the jury system has served the country well. Certainly it should not be contemplated to do away with it so far as criminal cases are concerned — that would be totally unacceptable to us — but a new arrangement where the jury system would be minimised so far as personal injury claims are concerned would be acceptable. We look forward to an early initiative from the Government in that regard.
We also have to take note of a situation that causes increased premiums, namely, the number of uninsured motorists on our roads. The attitude of many young and not-so-young motorists is that it pays to take the risk and one out of every six motorists is uninsured. I am satisfied when the public realise that the Motor Insurance Bureau has to carry some £50 million of outstanding claims because of uninsured motorists and that this is adding significantly to insurance premiums, then there will be a greater reluctance on the part of the public to pay the high costs of insurance.
We are a long time waiting for the introduction of the insurance disc. Why it should have taken two years to have a disc placed on the windscreen of a car, setting out the name of the insured and the date and level of insurance, is beyond comprehension. In no circumstances are we prepared to tolerate that the date of implementation of that policy should be extended beyond 1 July of next year.
I am satisfied that if there were a proper alignment between registration, taxation and insurance, which should be possible with the advent of new technology and computerisation, we could go a long way towards ridding the country of the number of uninsured motorists who travel on our roads each day. It is obvious that the legal profession are very conservative in this matter. They will not be enamoured of any curtailment of the current highly lucrative system but if the rise in premiums is to be controlled there must be amendments to the present legal system. Such amendments are long overdue.
The problem of liability insurance is somewhat akin to motor insurance in that the problems of claim settlement costs are uppermost. The high settlement and legal costs have forced premiums to totally uneconomic levels for some businesses. Unlike motor insurance, both employers' liability and public liability insurance are not required by law. Therefore, with premium costs rising by up to 300 per cent and 400 per cent at renewal date each year and with the pressures of the present depressed economy, many employers are forced to go without insurance. This will result in employees being forced to take action against their employers if they are injured. This may lead to companies going into liquidation if the awards are high and certainly it will cause friction within the working environment. This crisis is affecting many builders, hotels, public houses, dance halls, fish processors and metal workers. They are finding the premiums required for liability insurance escalating out of all proportion.
To regulate and control this problem the Department should propose legislation to make employers' liability and public liability insurance mandatory to protect individuals and the companies concerned. As with motor insurance, the award system must be amended if premiums are to be regularised. Rates for builders have increased to the extent that now a firm will have to pay up to 20 per cent of their wages bill to get the proper level of insurance cover. Steel workers who erect structures find they have to pay premiums amounting to 25 per cent of their wages.
As is common in recessionary times, crimes against property increase as people are unwilling to cut back on their accepted standard of living and many turn to theft to supplement their reduced incomes. This increase in crime is affecting many areas but it has hit crisis proportions in Dublin. The huge increase in premiums for household insurance shows the extent of the problem. Recent statistics show that £11 million worth of goods were stolen in the city. There is hardly one of us who cannot relate a story of a theft in his own home or in his place of work. However, the more serious aspect is the number that are accompanied by violence. We saw an example of that last year in a shooting that took place in Ballyfermot during the course of a burglary. Dublin is the area worst hit by this problem, with £7.5 million worth of goods stolen in 1983. Unless this rising trend is stopped there will be greater pressure for further increases in premiums and more than likely there will be confrontations such as that which we witnessed last year between a law-abiding citizen and law breakers.
The Minister just touched on the ICI matter in his statement. There is considerable disquiet in that the Minister's time limit has not been reached as regards giving the estimate of total ICI liabilities. It had been expected that the deadline of 30 June would have been adhered to. I put it to the Minister that the preliminary figures for the total liabilities of ICI have been with him for some weeks and that he should provide the House with them. They have been indicated to him in the figures issued by the administrator and those carrying out the investigation.
The Minister of State indicated that the figures have been with the Department for some weeks and, considering the commitment given by the Minister when introducing the administrator to the company, it is only right for him to live up to the promise given: that it would take six weeks to do an analysis of the liabilities. It is unfortunate that the Minister does not intend to adhere to that promise because it can only lead to further speculation. Speculation does harm and the insurance world both here and in London are speculating about the possible outfall of that liability. The figure being talked about is far in excess of the total figure given by the Minister in his speech to the Dáil last March. It is being said that the figure of £120 million will be surpassed and that it is more likely to be in the region of £500 million.
While we do not wish to speculate as that could have a damaging effect on the Government's financial position, at the same time, if the Minister has the figures he should put them before the people and say how he proposes to deal with the matter. The only talk that is being listened to outside is that the inevitability of liquidation must be an option the Minister is considering. If the Minister would indicate that is not the case I would be happy to allow him to do so.
There is no doubt but that the Government and the taxpayer are now regarded by the London reinsurance world as a soft touch and that the sudden death reinsurance contract clauses are being utilised against the ICI liability. That allows them not to make payment of any reinsurance outstanding in certain circumstances. The certain circumstances have been complied with in so far as no sudden death reinsurance contract clauses can be operated in the event of a change of ownership or insolvency. There has been a change of ownership as far as they are concerned and reinsurance recoveries will be minimal. If some of the larger reinsurers operate those sudden death contract clauses, there is no doubt that the final liability figure will be hundreds of millions of pounds more than that estimated by the Minister earlier this year.
I asked the Minister if he would provide me with a list of ICI reinsurers. I would have been able in 48 hours to estimate if the companies were in a position to honour their reinsurance recoveries, or if they were the type who would leave it to the taxpayer and the Government to pick up the tab. The taxpayer must not be regarded as a soft touch to satisfy the appetites of some of the international operators in this area. The policyholders of ICI in Ireland must be protected as the major liabilities of ICI were in the international market and Irish policyholders had nothing to do with them. I ask the Minister to say, as a matter or urgency, how he proposes to deal with the liabilities of ICI and if the promise given in the Dáil earlier this year will be lived up to, in other words, that no penalty will be attached to the taxpayer.
Rumour is rampant that the figure is not as indicated by the Minister and that hundreds of millions of pounds will have to be picked up. The interesting question is who will pick them up. Will the Central Bank take over whatever liability is necessary, or will they fall back on the compensation fund which is already stretched at this time trying to deal with the PMPA position and cannot withstand any further contraction of their funds? They are only making £10 million a year in premiums and their borrowing capacity is severely restricted. There is only one other way under the 1964 Act and that is if the Minister for Finance puts in taxpayers' money to meet any liability shortfall that exists following the debacle of ICI. If the Minister is in a position to state that the figure of £120 million will not be reached he should do so positively now and put the rumours at rest. It would restore some confidence to the financial institutions and the insurance industry generally.
The Minister referred to the question of price control and in particular mentioned petroleum prices. As far as the sales of petroleum are concerned, in 1982, 1,280 million litres of petrol were sold. In 1983, 1,187 million litres were sold and in 1984 the figure was reduced to 1,147 million litres. That is a 14 per cent drop in petroleum sales since the Minister took office with responsibility for the control of prices. In Northern Ireland the reverse is the case. The market was up by a 7.6 per cent increase in sales of petroleum in 1983 and a 1.1 per cent increase in 1984 giving a total percentage increase of 8.7 per cent in two years. The slump which has taken place here in petroleum sales is reflected in the increase on the other side of the Border. That revenue has been lost to Northern Ireland. It could have been remedied if the Minister had a more enlightened attitude towards petroleum pricing.
When the Minister took office in 1982 the price was 226.8p per gallon. The inexorable rise in the price of petroleum has continued unabated in the Minister's term of office. It was 268.6p in 1983 and it rose to 283.2p in 1984 and is now 289.1p per gallon. Today the cost of premium petrol at the pump is 311.4p per gallon. The revenue to the State from each gallon of petrol now is 174.4p per gallon. The dealers' margin has been reduced from 5.4 per cent in 1982 to 4.9 per cent in 1985. The price of a gallon of petrol today in Northern Ireland is 256p per gallon and the duty and VAT attached to it is 135p per gallon.
It can be easily seen from these figures that the price of petrol has not been controlled by the Minister, and that his new arrangements have not had the desired effect of controlling the inexorable increase in the cost of motoring. This being the case, it is difficult to understand the Minister's failure to devise some initiative in an effort to bring about a situation in which not so much hardship would be inflicted in respect of transport costs and on the tourist industry generally. That could have been arranged by better purchasing contract control, by making better deals internationally in purchasing on the spot market and by better storage facilities. If we had taken the initiative as requested by me two years ago and purchased Bantry Bay storage capacity, we would have had a holding capacity which would have maintained a floor price for petroleum products and which would have allowed us to provide petroleum to the economy at a low cost when the spot market price was high. We could have maintained the floor price system to our advantage. Instead, the Minister has allowed a situ ation to develop in which the cost of petroleum products has had damaging effects on industry generally and in particular on the tourist industry.
We understand now from some of the retailers that the newest impact to affect them and which will reduce further their margins of 4.9 per cent is that all servicing and maintenance of pumps at the filling stations will now have to be undertaken by a new service. The accounts in this respect will have to be settled by the retailers directly with Pump Services Limited. Up to recently the service was provided free of charge by the oil companies. This change indicates the lack of control on the part of the Minister in relation to maintaining and stabilising proper prices for petroleum products.
Finally, I should like to deal with the question of tourism but not in the order in which it appears in the title of the Minister's portfolio, that is, as the backmarker. Tourism warrants a much higher profile than the back pages in anyone's speech or merely the secondary area in so far as the Minister's attitude is concerned.
The front man in that respect will be dealing with the subject in great detail later.
If he deals with it as speedily as he has dealt with everything else in the tourist industry, he will be long gone before the first possible initiative he might have taken is undertaken because the Minister of State has had nothing to say for the past two years other than that a new programme and a new plan is on the way. That same claptrap is reiterated in the Minister's statement today. It was repeated ad nauseum at every Question Time during which tourism was discussed in the past couple of years but apart from the initiative taken by the Minister for Finance by way of the reduction of VAT this year, there has not been any initiative. The reduction in VAT in this respect had been requested continuously by me.
It was a hell of an initiative.
It was only at the end of the day when the Minister for Finance saw the light, when figures were put before him to justify this reduction and which indicated that it would result in the generation of increased revenue for the State that he acted.
The tourist industry can make a significant contribution to the recovery of the economy and to its development but there is, regrettably, a strong air of complacency in this regard in the Minister's brief reference to tourism this morning. Our aim should be to recover our loss in relative terms of what our market share was ten years ago. We must face the fact that we have lost market share in the industry in that time. It is pointless trying to create a smoke screen to suggest that we are on some tourist boom this year. This is a labour intensive industry which has high added value but it is not being given a high priority in Government thinking. We must provide for this industry competitiveness in quality and cost and we must conserve and develop our environment. That requires major Government involvement as well as total community involvement but when the Government do not have a policy and do not indicate how their involvement is to be seen, how can we expect the total community involvement that is necessary to make tourism what it should be, that is, a major innovator of new development and also a major attractor of revenue? There seems to be no recognition in Government circles of the economic importance of tourism, an industry in which 40,000 people are employed while 50,000 others depend on tourism for a livelihood. Despite this, there is nothing but a brief reference in the Government's plan, Building on Reality, in this regard. This reference is on page 47 and it is the only indication of what the Government's attitude might be to this industry.
Last year, earnings from tourism were of the order of £1,000, million but yet only one and a half pages — and these are made up of generalities — are devoted to the subject in the national plan. The pious hopes of the Government make no sense to those involved in trying to make a worthwhile contribution in this area. Today the Minister tells us he is involved in trying to provide us with a new policy and with new direction but there is no indication in the national plan of any innovation or change. The only indication is that the Government are very concerned with the extension of the licensing laws and with the licensing of restaurants. There is no demand in Ireland today for the extension of licensing hours during the summer period to midnight or, as was suggested by a Minister of State recently, to 2 a.m. Any such move will be resisted by this side of the House because an extension on those lines would lead to further difficulties on the roads in terms of excessive drinking. The major number of fatal accidents and other serious accidents occur between the hours of 11 p.m. and 1 a.m.
This would be more appropriate to a debate on an Estimate for the Department of Justice.
In Building on Reality
there is a heading relating to the role of tourism and this would be the direct responsibility of the Minister who is dealing with this Estimate.
A passing reference is in order.
The public have indicated that they have no wish to have the laws changed in this way. I trust that in summing up this afternoon the Minister or the Minister of State will indicate clearly that they do not want this change.
Dún Laoghaire): Would the Deputy prefer to have drinking shebeens after hours instead?
The Minister will be used to shebeens. There is no need for that kind of interjection. The Minister this evening should acknowledge that the proposal was misguided. I am aware that after the setback in the elections, the Minister of State is somewhat touchy this week but if his intention is to come here and make a brief statement in an effort to cajole me or to act as a barracker, he will have a difficult time because I am in good form today.
(Dún Laoghaire): I am not in bad form either.
We must acknowledge that, while the Government do not recognise the economic importance and potential for development available within the tourism industry, they are recognised on this side of the House. There is a great interdependence between the tourist industry and other sectors of our economy. In his new plan the Minister should consider ways of achieving the linkage about which he spoke so eloquently this morning in the manufacturing industry.
He should endeavour to achieve that linkage between the State agencies, the various Government Departments and others concerned in the tourist industry even in a peripheral way. There is no doubt but that we have lost out on duplication.
I agree fully with what the Deputy is saying; that is one of the key elements of our policy.
If the Minister's plan achieves that kind of elimination of duplication it will have my full support.
Thank you very much.
Deputy Flynn should be allowed to make his speech without interruption, comment or endorsement.
The endorsement is most welcome. I would have to put on record that it is not the first time in this House that the Minister has taken on board some of the attitudes expressed by me and I am glad to see that he is doing so.
Quite right; thank you very much.
Expected growth in tourism is expected to be at the rate of 5 per cent per annum. I say to the Minister of State Deputy M. Moynihan that we cannot capitalise on that unless there is substantial investment in the industry. I hope that the new policy plan will encompass an investment structure to be followed over the next decade and will be clearly outlined. There is no doubt that capital investment and taxation in the tourist industry have been discriminated against quite blatantly by a Government who have shown preferential treatment in favour of manufacturing industry, considering the every £ spent on the tourism product returns more in real terms to our economy than every £ spent on manufacturing industry.
These are the hard facts of life. There has always seemed to be a massive availability of money for our manufacturing industry but we have been penny pinching with regard to providing the necessary investment in the tourist industry. I would hope there will now be a change of heart in this respect.
The tourist industry makes a huge contribution to our economy with very little subsidy or incentives. When one considers the present position vis-à-vis every £ spent in the tourist industry, one sees the realism of what I am saying. Twenty three per cent of every tourist £ spent here goes back to the State by way of VAT in every area except hotel accommodation. Sixty per cent of every tourist £ spent here returns to the State by way of duty on drink, petrol and cigarettes and 45 per cent of employees' wages are returned to the State through PAYE and PRSI contributions. Therefore, the Government taxation policy——
I am afraid that a full dress discussion on taxation is not in order on an Estimate.
I accept that. However, the Government taxation policy is an active disincentive to the generation of tourism growth in that we generate our lack of competitiveness here. We must recognise that Ireland carries second location status by way of international tourism. We shall never break through into the numbers necessary to attain the full potential available unless there is a new tax regime for the whole industry. I hope the Minister will outline his intentions in that regard also.
As a means of devising a more equitable system, the Minister might take into account the following few hints. He should allow incentives, available to export manufacturing industry, to be applied to another export industry, tourism. He should allow the business incentive scheme money to be applied to the tourism industry. The levels are about £25,000 for five years applied in a taxfree situation. I am satisfied that there is an enormous amount of good will and Irish money that could be invested in the tourism industry if the business incentive scheme provisions were applied to it. It would help to keep an awful lot of money in this country. If we are to believe all of the reports we read — and it is not always possible to do that — then the £200 million invested in some banks in the Isle of Man may be attracted back and put to work here in aid of a worthwhile industry.
The Minister might consider the question of corporation profits tax at 10 per cent to be applied to the industry, which would provide increased levels of revenue and profit-making to an industry at present starved of the money to maintain and refurbish itself. The level of corporation profits tax applied to the industry is at present some 50 per cent. One would think that hotel losses alone would so dictate to the Minister. Since half our hotels lost money last year and while they are having a slightly better season this year, there are many complaints about the shabbiness of some existing hotel stock and the need for refurbishment and renewal of some of the plant in existing hotels.
The Minister of State closes his eyes and prays I will not continue about this because he gave a promise in this House 18 months ago that he had a renewal and refurbishing grant scheme available for that hard-pressed industry. Unfortunately he has been directed from somewhere else and has reneged on that promise. Obviously he is not going to announce such a scheme today since he is looking at me so solemnly at present.
The Deputy has about seven or eight minutes remaining.
I could devastate the Minister of State in seven seconds if I wanted to on that promise but I will leave it there.
The Minister might also consider the VAT situation as it applies to the whole of the tourist product. He could increase the amount of money to the State if there were more reasonable food costs in restaurants. I am satisfied that there would be increased mobility of the domestic tourist as well if selective tax cuts were applied to certain areas of the industry. I believe such cuts would not result in a reduction in revenue to the State but rather would lead to increased activity and mobility of tourists.
The Minister might again review the question of a VAT rebate scheme in respect of purchases by foreign visitors where the threshold is too high and now applies to the very wealthy tourist only.
They are cumbersome procedures and the Minister is relying too much on the co-operation of individual retailers. It is working well with regard to large purchases of items such as jewellery, and so on, and I thank the Minister and his Government for having introduced it there. But a better system could be devised whereby ordinary tourists could have VAT recouped to them in cash at exit points from this State sufficiently close to duty free shops so that whatever reimbursement of VAT was due might be spent again before they left the country. A little initiative there and we would be on to a winner. Certainly I shall support the Minister if he implements that idea.
We have been losing out on our market share in the international tourism area.
We could change that by serving market needs at home and abroad and by being more competitive. We have the products and the services but they must be rendered as attractive and competitive as those of our competitors. The days of the leprechaun and misty Ireland tourism are over. It is foolish to be still talking about it in that fashion. We must have the exacting standards being talked about and expected by international travellers. We must ensure quality of service. The guarantee of continuing success is the satisfied customer, which travels more by word of mouth in the market place than all of the more expensive advertising often engaged in by many of the agencies promoting tourism.
I am sometimes critical, as is the Minister, of the level of cleanliness in some of our public places. This is a glorious opportunity for the Minister to incorporate in his policy a new system of cleaning up Ireland. The Minister could use the existing arrangements of the special employment schemes to bring about a situation where there would be a planned co-ordinated improvement of our environment. The advantages of tourism are myriad but progress can be achieved in just one season, new employment can be created directly and indirectly in the industry and the spin-off to linked industries would be of considerable importance to all our interests, particularly our craft industry. All we have to achieve there is good quality in design, presentation and packaging. If the Minister would give his attention to that many thousands of jobs could be developed.
Access transport is of vital importance to the potential growth of this industry.
We are an island location and that puts us at an initial disadvantage. There is a momentum for cheaper air fares. Less regulated aviation services in Europe will be the order of the day in the not too distant future. It is accepted that European national Governments operate tightly regulated and protectionist policies in regard to air transport. These policies are now under threat and the easing of these policies will lead to easier and more competitive air fares which are essential if we are to increase our share of international air tourism. If a protectionist policy is followed it will be to the detriment of the tourist industry and aviation generally.
We have difficulty with our sea links.
There is uncertainty in the south-west concerning the continuation of sea links to our nearest neighbour. The sea corridors are fundamental to motorised tourist traffic development. We must have cheap easy access if we are to recapture the lucrative UK market and the new European markets. Specialist tourism should have the Minister's special attention in the new document which should be based on regional development showing the different advantages which exist in each region. I would ask the Minister to give special attention to tourist areas involving business conferences, angling, shooting, sailing, and the development of inland waterways where we could have the biggest holding capacity of any inland waterway in Europe for the expenditure of a small sum which could be made available from the EC Regional Fund if an integrated programme to have them developed was put forward. Education and leisure activities have been neglected. Cultural and archaeological pursuits have a great following in the US and Europe and we could promote those pursuits here. These areas should be marketed and developed with interested groups at home and abroad so as to attract and retain tourists for as long as possible in the one region. To retain tourists in one region is the way to maximise the spending and the potential and to create a desire for a return visit. We must get away from the view that if one comes to Ireland for a week or two one has seen it once and for all. We should attempt to keep the tourists in one region for as long as possible. This leaves the right impact and they will come back, and another region will benefit from their return.
A Cheann Comhairle have I a few minutes?
The Deputy has about a minute and a half.
Any new tourism plan must take note of the change in market trends.
There are changing social characteristics in the world and we need to fully research social trends and respond accordingly.
We have a shorter planning cycle now in international tourism. There is a demand for instant and comprehensive information by international tourists. There is unnecessary duplication in our tourist agencies. The information should be pooled and duplication eliminated. There is no point in trying to sell Ireland with an outmoded marketing strategy which does not recognise the change in social trends and tastes.
We are still heavily dependent on the UK for merchandise exports, so the business link already exists for major tourist development in the UK. We have not penetrated that market to the extent possible. We have an over-reliance on the US tourist market. We talk about the US market as one that will maintain the industry's buoyancy. This is dangerous talk. The advantage lies with the US now because of the advantage of the exchange rate position, increased American mobility and the current ethnic pull but any significant shift in the strength of the dollar would have devastating effects on tourism. To prepare for any such eventuality we should target a certain percentage of our US marketing money to new interest groups there, to deal with specialised areas of tourism which would survive whether or not there was a recession and whether or not there was a change in exchange rates.
The Deputy should conclude now.
It is vital that we concern ourselves also with the multi-destination tourist. We must target the European market, particularly the German market which is our second largest overseas market. We have made no effort to tackle the Far Eastern market. Hundreds of thousands of Japanese tourists come to Europe every year and not one thousand of them make their way, on their multi-destination tour, to this island. If the proper marketing strategy was employed in the Japanese market we could have a favourable share of that market. It would add enormously to the potential growth of tourism. All sectors of the economy would benefit from a sustained increase in tourism returns. The emphasis must be on a policy of investment and effective marketing with the proper tax regime which will take cognisance——
The Deputy is now in full flight and it is well over his time; he must conclude.
——of what is recognised as the major growth industry in the world and of which we are not getting our full share.
I am grateful for the opportunity to contribute to the debate.
This industry is relevant to industrial development and job creation especially in times of serious unemployment. When there is a substantial investment in 1984 of £800 million by the IDA we must ensure that we get the best value for money and that the country should be seen to benefit.
From the Minister's speech it is apparent that the serious unemployment is not entirely due to the international recession. I am puzzled that despite the export boom the jobs are still not available.
Something has gone wrong and that is something which the Government must address. We have a restless educated young population with low prospects of permanent work. This should be a case for national concern. Recently we had a Dáil debate on the abortive Hyster project. We had contributions from what I might call our Opposition mid-western choral society, ably conducted by Deputy Albert Reynolds strongly criticising the Government as to their alleged indifference to the jobs crisis in Limerick city.
According to them, a further £1 million of Government investment would have meant that 800 people would have been taken off the unemployment register within a matter of weeks. What a misleading, mischievous statement. The projected figure for this industry was based on an eight to ten year development programme.
Here I must take the IDA to task on the misleading long established description "job creation and job potential".
This terminology might suit them to dress up their annual report, claiming success in creating so many thousands of jobs, but it is poor consolation to the many disappointed workers. In my experience these projected figures have never been achieved. I recollect a typical example of this job potential syndrome which, unfortunately, occurred in my town, Nenagh.
In 1980 an Opposition TD, who was then a Minister, officialy opened an industrial project in our town with great pomp and ceremony and welcomed up with a hearty céad míle fáilte. He gave us great hope in his speech that the maximum job factor in this project was employment for 511 people. Five years later, only four months ago, it closed down having reached the magnificant figure of 40 employees. This is a matter for record lest we forget. Some industry! Some projection! It created further grave disquiet, greater disappointment and depression in my area.
On the Hyster debate the regional Opposition Deputies strongly criticised our Government on their neglect of the mid-west region. This was not justified, even though I detect in the recent past a change in IDA emphasis, now switched to the eastern seaboard as clearly emphasised in yesterday's media. That Opposition Deputy contributed to the chorus of Government criticism, but he ignored completely the fact that in our constituency, North Tipperary, part of this region has been neglected for the past 20 years and completely ignored by the IDA during which time he has been a Minister on several occasions and no major development has been located in our area in all that time.
The IDA and many Governments stand indicated for their neglect of my constituency. We do not exist on the IDA national priority list. Up to June 1982 we had four major industries based on national resources: the sugar factory in Thurles, two meat factories in Roscrea and the mining concern outside Nenagh, all established with very little Government support. Unfortunately, the mining project closed down in 1982 with 600 job losses, creating further serious unemployment and economic problems for my town and its hinterland.
In the intervening three years I have vigorously and continuously emphasised to the Minister and especially to Mr.
White, Director General of the IDA, the importance of having industry located as a matter of urgency in my area to relieve the ever increasing job crisis, in my opinion pro rata greater than in the disaster areas of Cork, Limerick, Castlebar etc., but all to no avail. My calls have been ignored and we have now 1,600 registered unemployed in the town of Nenagh and surrounding areas.
The IDA stand indicated for this wanton neglect, and I speak for all organisations in my area. We are the poor relations of the mid-west region and all emphasis over the years has been laid on the LimerickEnnis-Shannon complex which, I am sure, can be attributed to former and existing Ministers in the counties of Clare and Limerick, but not so in North Tipperary, the peripheral and neglected portion of the region. We have suffered many disappointments in the past couple of years. Last year we lost an industry because of an inferior industrial bay built in Nenagh which even I as a layman would not have sanctioned for erection so near a river. It created serious flooding problems and, let me say, resulted in the cost of repairs and remedial works equalling and surpassing the original building cost for the bay. It is still idle, and the IDA must stand guilty of bringing about this serious mess.
At present the longest established industry in my town, Castle Brand Limited, which has been closed for the past ten months, still lies idle with a prospective buyer standing by awaiting the resolving of a pension crisis. We received a public commitment on this on two occasions from the Minister for Labour. Mismanagement of this firm in recent years has caused great hardship to the workers many of whom have given 40 years of service, some of them 50 years, since 1935. Now at the end of their days they find that through mismanagement their pension fund has been so under-financed that 50 per cent of their contributions will not be repaid.
North Tipperary is in revolt over this long standing indifference and neglect of our industrial needs by the IDA. We have a fast growing and educated young population. We have ministerial commitment to the provision of an RTC in Thurles, we have a substantial landbank for industry. We contribute our rightful share to the Exchequer. Therefore, we affirm that we are entitled to and we demand a substantial allocation of industrial development for our area. I promise the IDA and the Minister that I will relentlessly pursue and embarrass them at every opportunity until they recognise our urgent needs and locate the much needed industry there to relieve our serious unemployment crisis.
However, in conclusion I must compliment SFADCo and their officer in my area, Tomás O Domhnaill on his continual and persistent efforts to instil and create ideas for local projects. Even though his achievements are not comparable to the so-called IDA successes, they are real and genuine and regarded by all in North Tipperary as a real contribution, though small, to creating and assisting small industries and getting people back into employment. This agency are an example to all concerned with industrial development and I have nothing but praise to give them for their efforts in our region over the years.
I am not quite sure of the time allocation.
The Deputy is entitled to an hour if he wants to avail of it.
I will avail of it and more if I can get it. I am somewhat disappointed at many aspects of the Minister's speech today. While it was a reduction on last year's contribution, I am concerned about the brevity of his reference to the much vaunted and highly publicised NDC. He gave them one short paragraph and, being such an important element of Government as we have been hearing over the years, it surprises me that the Minister saw fit to included just one small paragraph on them. I would like to give my views on that, as I have said, much vaunted and publicised NDC.
We are all aware that that the establishment of the NDC was motivated ideologically rather than by pragmatic considerations of how best to get the economy rolling again and more people into jobs. Whatever the explanation offered, the real reason for the NDC is an ideological commitment to State ownership by one of the Coalition parties. The issue is: how is commitment to financial rectitude by the other Coalition party to be measured? In that light, searching questions must be asked as to whether the NDC have any economic justification at present when over 230,000 people are — I emphasise — registered as unemployed. We are all aware that many more unemployed are not registered. The registered number indicates 17 per cent of the total labour force.
Any undertaking which professes to offer sustainable jobs should be considered carefully. The essential question is whether the NDC can deliver the jobs in a reasonable time. On historical trends, and with average cost to the State of new sustainable jobs given at about £10,000, this essential question can be posed in specific terms. Is there a reasonable chance that the £200 million of Exchequer money invested in the NDC will lead to 20,000 new sustainable jobs in Irish owned enterprises by 1987 or, if you wish, 1990? The NDC are to be a State venture capital company, that is, they will be organised to invest in projects, to sell them when they are ready, but not to manage them as on-going concerns. Like our proposed NDC, State venture companies in other countries emerged from good intentions but everywhere the resultant picture is the same.
There are three essential conditions for success. First, the tax system must be such as to stimulate new and risky ventures. Secondly, there must be a social tradition which stimulates those who are sharing new ventures to sell equity in those ventures to venture capitalists to enable growth, rather than to hold on to total ownership at the cost of growth. Thirdly, the financial infrastructure must include an appropriate capital market, since without an appropriate capital market to sell the shares of successful ventures or start up companies the seed capital tied up in these companies cannot be released and recycled to newer ventures. None of these conditions for successful venture capital companies exists at present here.
The current tax regime is more geared to making rogues out of honest men than stimulating new and risky projects.
Moreover the existing tax structures stimulate the owners of successful ventures to hang on to 100 per cent equity ownership rather than sell part of the equity to venture capitalists. Also no appropriate capital market exists in Ireland. The NDC are extremely unlikely to realise their existing investment within the time limit because we do not have a capital market where equity shares can be sold at a fair price just when the venture is ready for sale. The NDC will not be equipped to manage a host of projects.
The necessary conditions for the success of the NDC do not exist. If established as proposed they will be like a car in the middle of the Sahara Desert where there are no roads, no petrol pumps and none of the thousand other things that make car ownership useful. Why were these factors not seen? There is reference on page 97 of the recent Government White Paper on Industrial Policy to an analogy between the proposed NDC and Holland's MIP, a Dutch state venture capital company. That analogy is totally misleading because Holland has the necessary conditions for a sizeable venture capital company, state-owned or private, but we do not. It is not a practical proposition to establish at this time an effective £200 million State venture capital company here. Effectiveness requires many things which do not now exist.
The actual design of the proposed NDC is all wrong. There are many defects which an expert on venture capital companies could detail. I am no expert in this matter but I have opinions. I wish to highlight two defects which are particularly obvious and show the irrelevance of the proposed NDC to current problems and finally to indicate a workable alternative.
The proposed NDC are defective in that they are to be unfocussed. Secondly, they are defective in that they are to give both equity and loans. The requirements for gaining equity are quite different and rarely compatible with those for loans.
The essential question is the creation of 20,000 new sustainable jobs in 1987 or 1990. On experience elsewhere it takes from eight to ten years for venture capital to come on stream in the way of jobs and profitability. If against all the odds the gamble on the proposed NDC pays off, it would be 1994 at the earliest before 20,000 new sustainable jobs were created, and this date argues that all the £200 million is invested before December next. In view of the current unemployment crisis that date in the future must be seen as pie in the sky. Unless there is a focus on jobs over the next few years for the mass of unemployed, any discussion about jobs in 1994 must be seen as totally unreal.
As a result of the unemployment problem we see crime getting worse and emerging symptoms of social unrest. A programme on television last night clearly indicated how people are affected by the economic situation through industrial and other types of unemployment. The proposed NDC will do nothing for those now unemployed. They simply constitute a flight from reality by the ideologically committed. However, if for ideological purposes there must be an NDC, let us have an NDC of a kind which is less costly to establish and more likely to succeed.
The first step should be small and sharply focussed to keep the scale and range of the operation within reasonable bounds.
A sharp focus could be directed to several areas such as the produced goods sector, the traded area, special projects in machine tools or special components, perhaps with the possibility of competition with imports for subsidiaries of multinational enterprises here. The list is endless but without a focus there is a danger of the NDC not having the hoped for effect.
In Ireland's present condition there is much to be said for heavy State investment in well considered, low risk projects, many of which can be identified in industry and would offer immediate jobs and a short pay back. There is also much to be said for light State investment in high risk but high pay off projects. There should be a grant-aid requirement that a specified proportion of all supplies to the public sector should be for enterprises below a certain size. The NDC as proposed by the Minister will involve heavy State investment at high risk but low pay off. It is a gamble which is totally out of tune with the needs of the day.
The people deserve better than the scheme proposed by the Minister, which satisfies the Labour Party because the NDC will be State owned, satisfies Fine Gael because the NDC will prove unworkable, but offers nothing to the 230,000 people now unemployed. Of course, it was neatly timed to enable Deputy Spring and his parliamentary colleagues to take the kudos at their annual conference in my native city; but the uneviling of the NDC will evoke cynisism, if not anger, from large sectors of the public. The very idea of the State body grasping opportunities which no other organisation, private or otherwise, have taken up will surely provoke horse laughs.
The popular consensus is that, if there are useful job creation industrial and service enterprises to be tapped by the NDC, then surely people like Smurfits, Guinness's, Carrolls or the banks would have snapped them up long ago? Advocates of the corporation are very strong concerning their possibilities in the natural resource sector — mariculture, forestry and food — but we have BIM to develop the fishing industry, a forestry Department and a massive Department of Agriculture. Furthermore, we have a plethora of other State agencies such as CTT, the Irish Goods Council, the IDA, the ICC, NBST, and the ESRI, to mention a few, which are charged with providing all the financial marketing, technical and other assistance that any entrepreneur, large or small, could possibly need. The taxpayer is entitled to ask what has been done to get all the existing relevant State Departments and agencies to deliver on their mandate, and probably one of the biggest problems facing the proposed development corporation will be to keep out of the path of their sister State agencies. It must be noted also that the external borrowings of existing agencies now stand at about £2 billion.
The NDC may well represent a better way for the State to create jobs and of getting a better return to the Exchequer.
However, the Government have demonstrably failed to make a case for such a dramatic move. We are all aware that there has been an intensive Cabinet huddle with regard to the corporation, but has there been any open public debate on the merits of the NDC versus private venture capital and their proposed co-existence with all the other bodies crowding the jobs — or the jobless — field? The evaluation of the NDC has been secret and confined, which can be fully understood when we consider briefly the case of the National Enterprise Agency. The NEA have been fully operational for 16 months, they have invested about £1 million and are currently examining about 300 projects seeking capital assistance.
The NEA experience clearly suggests a number of things. Some projects benefit from assistance of State capital — although, of the 300, only a handful may be feasible. The NEA have a capital allocation this year of £7 million whereas the proposed NDC will have an allocation of £200 million. Was the battle for the NDC nothing more than a trumped up piece of ideological showmanship? Will they be doing anything that the NEA are not currently able to do? More practically, from the point of view of the 230,000 registered unemployed, the NDC will be no overnight cure-all nor does it appear that the Coalition partners are even yet agreed on what the NDC will be doing.
The Minister's Department will be overseeing the NDC, and he said recently that their main activity will be to take an equity stake in projects. That is one point of view, but quite a different view was expressed by a spokesman for the Minister for Energy who said that the main aim will be the creation of the maximum number of viable jobs and that the principal way of doing this was for the NDC to initiate new employment creation enterprises. He said that the NDC are not simply another venture capital agency for the private sector. These are just two comments about the much-vaunted NDC and they are clearly at variance with one another.
Because of the seriousness of the unemployment crisis, I am reluctant to dismiss any project which is clearly intended to tackle the problem; but all the indications now point to the NDC being at worst created for political expediency and at best amounting to an illconceived, unjustified further State agency in an arena teeming with such entities. The allocation for industrial investment is unlikely to prove sufficient in order to sustain the rate of the economic growth which is required. We currently require a rate of economic growth which would be two or three times greater than the EC average in order to have some success in increasing employment and improving our living standards.
The high growth rate in manufacturing output referred to by the Minister over the last two years was made possible only because we have invested substantial sums of money in industry during the preceding years. To prove that point an analysis of the figures shows that since 1981 there has been a major drop in planned industrial development here. It has been indicated by the drop in the level of grants for investment from £121 million in 1981 to £48 million in 1984. The Government's economic plan only envisages that this will be increased to £52 million by 1987. Of course there is a need for continued expansion of industrial production capacity in Ireland as implied in the White Paper on Industrial Policy.
Currently there is very intense competition for mobile international investment which means that Ireland must intensify its efforts to obtain a greater share of that investment. We must also ensure that a sufficient fund is available for the making of grants to encourage the investment. It seems that in order to reach the employment and living standard targets which we should have it would be necessary that the IDA grant allocation be about £250 million per annum, in terms of 1984 punts, up to 1987. That is double the allocation being made at present.
It is essential that each grant should meet the more stringent return on investment criteria now being applied but there is little point in having those criteria if we do not have the objective of attracting enough investment funds here to meet the requirements of growth in our economy.
One of the most important aspects of industrial development is to ensure that there will be a sufficient number of high calibre marketing executives available to sustain an intensive export marketing campaign. Greater use should be made of embassies in helping that marketing campaign. Maximum possible use should be made of the employment support scheme operated by CTT in order to encourage additional firms to employ more export marketing staff. The increase in the grant-in-aid to CTT is welcome but there must be a further development of resources within this enlarged grant-in-aid for the recruitment of staff.
I hope the embargo on the recruitment of staff is not given as a reason for a failure to adopt my proposal. A minimum objective should be to use £5 million for the recruitment of up to 200 additional export marketing staff in 1985. Industry sources have calculated for me that each additional marketing executive recruited under the employment support scheme has to date generated sufficient additional sales to maintain at least a further seven jobs in the economy. That is the criterion we should use. We should not permit the embargo on recruitment to stand in the way of our efforts in the export market that would help create jobs here.
The Minister devoted some time to the Unit Trusts Act and the Designated Investment Funds Bill. The major point about the operation of designated funds is, however, not contained in the Bill, Second Stage of which has been completed with remaining Stages to be taken before the Summer Recess. The major issue is that designated funds should be operated in such a way as to provide a mechanism for extending the base of shareholding in the economy on as wide a scale as possible throughout the country. The successful operation of a designated fund requires expenditure on promotion in order to attract investments and it also requires the employment of expert personnel to assess applications from companies and monitor the performance of the companies in which the designated fund has invested. For this reason the lifting of the ceiling on charges which can be made by a designated fund to cover essential expenses is welcome.
One major point of principle which is probably more relevant for inclusion in a Finance Bill rather than in the one I have referred to is of such fundamental importance that it should be mentioned in the debate on this Estimate. As currently established an investor does not obtain tax relief until the designated funds are invested in a qualifying company. A small investor may not be able to finance the waiting period which might be for any length of time, it may be months, and that could mean that such an investor would be unwilling or unable to make such an investment. I will deal with that point in greater detail during Committee Stage of the Bill. I hope the Minister takes my suggestion on board and when we debate Committee Stage he will introduce an amendment to cover that contingency.
One of the basic principles should be to extend shareholding to small investors. The Minister should look once again very closely at the possibility of changing the rules so that investors in unquoted securities are eligible for tax relief immediately on investments in the designated fund. That would be similar to the immediate relief currently given for investment in insurance based unit trusts. There are many ways in which safeguards could be introduced to ensure that a designated fund would not unduly delay the making of investments. That is an extremely important point in that it would streamline the system and make it more understandable to small investors, be less cumbersome to operate while still retaining all the elements required for investments to be made by the designated funds in qualifying companies at the earliest possible opportunity.
The greater emphasis of the debate on the Estimate ought in my view to be on industrial employment. We should examine the record of the Government in this important area of industrial employment and job creation. Is the statement by the Minister, Deputy Bruton, on 30 April last in the course of a debate on Private Members' Business, as reported at column 2180 of the Official Report, correct? He said:
There has been an unacceptably large increase in unemployment in Cork in the last year due to a number of factors but, unfortunately, there is nothing we can do about that.
That statement was made about a specific area but it could be applied to the whole country because not alone has there been an unacceptably large increase in unemployment in Cork — it is 5 per cent more than the national average — but the same applies to the entire country. Is it not also true that on assuming Government when they accepted that unemployment was the major problem facing the country, the Programme for Government stated quite clearly that they would halve and reverse the growth of unemployment? The record today speaks for itself and represents the total failure of the Government in this respect.
Unemployment has climbed to a catastrophic 234,000 people registered unemployed — I emphasise "registered unemployed". One in every six of the labour force is now out of work and we can add to that the estimated 35,000 people who have emigrated in the last two years. They have been the most disastrous two years in the history of the State. Closures and bankruptcies continue unabated and redundancies at 31,290 in 1984 were the highest figure ever recorded.
The Taoiseach, the Government and Members even now ought to stop this political posturing and acknowledge that the rising unemployment figures signal the danger of a total economic collapse. The already discredited document which we came to know as Building on Reality projected 220,000 people unemployed at the end of 1984 when the figure stood at 234,000. Even their own calculations are out by several thousand. This is the greatest indictment of this Government's policy since they assumed office.
They have now reached mid-term, although many believe that they could be nearing the end of their term in office because of the strains in the Government parties arising in particular from the thrashing they got at the polls during last week's local elections. Up to now we were saying rigor mortis was setting in in this Government but today I must say that decomposition is replacing rigor mortis.
Government is about action in areas of need and producing policies to solve them. We have had plenty of talk, reports, task forces, handlers and consultants at enormous cost but no action. Industrial policy is non-existent and there is clear evidence of inactivity and a paralysis of action in this Government. We have long argued that one of the quickest and surest ways of getting economic activity going is to boost the building trade by every possible means. Not only does such a course provide instant employment, but it has the advantage of generating even more downstream jobs among suppliers and service industries.
The Government appear to be ignoring this very important aspect of the econnomy. Their imposition of a 10 per cent rate on housing in the 1985 Budget, contrary to the usual argument, is not being offset by the grant-aid. It has only compounded the dire problems facing the industry. The Government may produce all the statistics they like but, while doing so, they ignore the growing anger and frustration felt by the people concerned, and they do so at their peril. The construction industry is in the doldrums. Fifty per cent of operatives are unemployed. So seriously is this matter being viewed by the industry that a spokesman has been moved to comment that they would welcome a general election in the hope that the situation might be improved. That may appear to be an extreme comment but it represents the frustration which these people feel and it should not be ignored by the Government.
Let me briefly give some reasons why the industry is suffering this frustration. Construction output during 1984 was expected to have fallen by in excess of 7 1/2 per cent in volume and the outlook for 1985 was a further 6 per cent decline, much of which would be as a direct result of the already mentioned VAT rate increase from 5 per cent to 10 per cent; by the end of 1985 construction activity would be over 30 per cent lower than it was in 1981. At the end of March 1985 50,000 of the industry's labour force were registered as unemployed — and that figure has grown by 22,000 over the last couple of years. The industry says one out of every five people currently out of work is a construction worker. Those comments were made in a recent CIFEC survey and are based on fact. By any standards this picture reflects a very serious situation which requires urgent attention.
The Minister rightly compliments the micro-electronic centre in Cork. This centre was approved and set up in 1981, and is playing a tremendous role in that field of operation. In Cork we are well aware that other locations sought that micro-electronic centre. He acknowledged that Gerry Wrixon's outfit was set up in Cork with the full support of the present leader of the Fianna Fáil Party, Deputy Haughey. That was another of those wise decisions and the proof is reflected in the Minister's well earned compliments to Gerry Wrixon and his staff.
Our RTCs should establish an enterprise resource centre for local industry. This could be achieved by a reallocation of existing resources within the colleges. In each RTC there is a pool of technical knowledge and of administrative expertise which should be brought together to bring forward ideas to start new enterprises locally and to supply management research and other high level services for local firms.
It is my view that we have had enough studies, investigations, papers, analyses and reports. A recent NESC report listed as many as ten such investigations, analyses and reports but what are needed now are decisions and actions. This Government no longer have the will or the capacity, and the next Government, which will be formed by this side of the House, will decide that our salvation lies in our hands.
Prophesies are unlucky.
What we need is positive action and leadership. We are in a selfdefeating, vicious circle of business closures, rising unemployment and under-utilisation of productive resources, all of which result in a diminishing tax base allied to a rising bill for social welfare causing further Exchequer difficulties, and more borrowing than ever before for day to day spending. What is needed is to break out of this trap by reversing the downward trend. This Government's mistaken policies, lack of direction and incompetent performance have created a national emergency. Mass unemployment threatens the very fabric of our society and community life. This Government have ceased to be an effective administration. They have fallen apart, the Taoiseach no longer even nominally in control as he fumbles his way through crisis after crisis. Everybody knows that this is the situation and for a nation depressed by the present and anxious about the future, it is a very frustrating and annoying spectacle to have to watch. People are becoming increasingly angry that this Government are hanging on to office, getting things wrong, making mistake after mistake. There is a mood of sullen anger and resentment today that is different from anything ever known before. I ask the Taoiseach, members of the Government, Members of the parties in Government to listen to what the people have said, only last week in particular. They want to get rid of this Government and it is morally wrong for them to continue to use the artificial majority they have in this House to prolong their discredited administration.
The Minister talks about the White Paper envisaging increases between 3,000 and 6,000 jobs per year. The national plan, Building on Reality, talks about an increase of net employment in the order of 12,000 to 14,000 in manufacturing industry by 1987, while at the same time he acknowledges the decline in manufacturing industry of 6,000 — I claimed recently that it was nearer 7,000 — in 1984. Is this the sort of credibility that this Government have been talking about? Is this the sort of reality that they are asking us to believe in, when even in the Minister's own speech there is a definite contradiction — unless, of course, out of the hat or from the waving of some magic want he will produce between now and 1987 the 28,000 jobs that have been lost over the past couple of years in manufacturing industry.
I was more than surprised to read that in the Minister's contribution, because Minister Bruton, to be fair to him, is not one to be involved in projecting that sort of unreliable, misleading image. That is more in line with what the national handlers are doing and that is why I am surprised to see it there.
One thing that I must refer to, as well, is the reference about one stop shops. I can recall his mentioning the same item last year. I came across a publication recently which had an interesting reference to the one stop shops. The writer of the article is "hopeful", which I thought would be a nice way of putting it, about the Minister's intentions on these shops. Minister Bruton is also quoted in Business and Finance as follows:
... that he is adamant that integration will be achieved. Our intention is that in some cases the entire staff of various organisations should be amalgamated into one office. There may be delays as they disengage from existing leases and so on, but a firm and irrevocable course of action will have too be set in every region within the next month or so. The Minister admits that as of now the shops are really a lot of literature spread on a table. That is not much use at all, but there will be improvements, quickly, he pledges. The larger regions will see amalgamations. The smaller ones will have clinics where agency staffs will attend regularly.
I thought for a while that it was the Deputies who are going to do it.
There would be no point sending staff out to the smaller centres to twiddle their thumbs.
Those are not my words, but the Minister's.
Private sector spokesmen are more outspoken about the present state of the one stop shops. A director of British Small Firms' Association said that they are no more than a rack of information, a telephonist and a list of telephone numbers. This is a clear reflection of what the White Paper and the Oireachtas Small Businesses Committee wanted. The businessman is faced with a plethora of agencies offering services. A lot of time is being spent going from one place to another, time which is not any value down the line. It should be made as easy as possible to get a successful idea into operation. Definitely, they will give you a brochure, but is this the Spring Show syndrome?
There is no doubt that everyone must know there is an overlap, but one senior IDA executive admits that people get mixed up between the different agencies. Sometimes agencies run the same programme. You will get a note saying that AnCO are running a seminar and then National Manpower will run another one next week for the same people. There is so much duplication that it is difficult to avoid the conclusion that there is a substantial waste of the taxpayers' money involved.
The case for streamlining and cost cutting is backed by a chorus of complaints from businesses about confusion, duplication and waste. Looking at the proliferation of agencies, the budding entrepreneur who hopes to give birth to a viable project must feel like an expectant mother who is confronted with 14 rival maternity services. All of them are clamouring fiercely for her business but one deals only with pre-natal care, another with delivery, another with weighing the baby and another with feeding the baby. Moreover, some are located 50 or 100 miles apart. In such a situation it would be hardly surprising if the number of healthy babies born would be less than it should be. A parallel could be drawn with all the agencies that exist under the aegis of this Minister.
I do not know if the Minister or his Department received a copy of a communication from the Small Firms' Association which was sent to Deputies. The latter was dated 24 June 1984 and I should like to read some of it for the benefit of the Minister. It stated:
It is generally recognised that the smaller business has the greatest potential for job creation. That fact has been confirmed by the Association's two latest quarterly surveys of "Trends in the Small Business Sector".
However, because of the massive drain on the smaller firm's cash flow and the abuse of credit terms, the embryonic recovery in the sector is in danger of being snuffed out for want of sufficient working capital.
The letter also stated: The owner/manager will be asked to give a Personal Guarantee for funds borrowed — usually the family house. It is unacceptable that those who invest their own finance and in doing so create jobs are the only profession where this demand is universally required.
The letter also continued as follows:
The Working Capital Loan Scheme (£50 million) is due to terminate in July of this year and, as yet, it would seem that the matter has not been considered at Cabinet level. We believe the scheme to have been more than self-financing in terms of output and in maintenance and creation of new jobs in the small manufacturing sector.
I ask the Minister to take serious note of that request from the Small Firms Association.
At present the environment as it affects industry here is disastrous. The two principal factors are high taxes and high unemployment. When there is high unemployment there is little spending power in the economy and that affects industry. There is also the high cost of public services, poor infrastructure throughout the country and there is a lack of business confidence. All of this is entirely due to poor political leadership. This Government were elected to office on the pledge that they would improve the nation's finances and get the people back at work. We have pointed out repeatedly that they have failed miserably in their declared mission. We have more public service agencies whose task is to assist and establish industries than any other country in the western world but in spite of that fact there is a noticeable dearth of enterprises setting up new businesses or expanding existing concerns.
Why should this happen? If the Government do not know the answer they must seek it out and take the necessary action. In 1983, with a flurry of publicity, the Minister, Deputy Bruton, met the boards and senior executives of the public agencies under the aegis of his Department. The agenda for these meetings was widely publicised by the public relations machine of the Government. We were told the agencies would be given a new purpose and mission so that they would have a greater impact on industrial growth. The question must be asked what is the situation two years later? What have this Minister, the Government, the national handlers and all the PRO people to show with regard to what was said at those meetings?
I listened carefully to a good speech made by Deputy Lyons and I also heard part of the speech by Deputy Flynn. With the exception of the appeal Deputy Lyons made for rationalisation of what he rightly thinks are too many agencies, both speeches were simply sounding boards for demands that the State should spend more money. Everything that was said, down to the letter quoted by Deputy Lyons from the Small Firms Association, would mean a further expenditure of Government money. Yet, neither Deputy made any suggestion or gave even a faint hint of how that money is to be found, how it is to be financed — as we have not got it, it has to be borrowed — and the implications for the Government who are here in three or four years time. At the moment the national debt is at the horrific figure of £15 billion and it will be that much greater. That is not good enough. In fact, it is worse than not good enough coming from a party whose spokesmen proclaim with what I can only regard as an unlucky habit of prophesying — I have seen many of their prophesies come unstuck — that they will from the next Government. If they have any claim on that honour they should be able to outline even in a general way where the finances for their programme will be found. Although Deputy Lyons' speech was good and interesting in other respects he produced 60 minutes of talk that was absolutely innocent — clean as a new born baby — of any suggestion that what he had in mind costs money or that he wished to share the responsibility or odium of raising the money.
A further complaint I have in regard to the two Opposition speakers whom I heard relates to what Deputy Flynn said. He made what sounded like a good debating point and no doubt it would raise a cheer on a windswept parking area beside a country church when he spoke about this country having the lowest incomes in the EC and yet having the highest tax levels. Broadly speaking, that is true although it is not literally true. Our incomes are not lower than those in Greece, in the southern part of Italy or in Spain and Portugal. I do not want to quibble with him and I accept that by and large what he says is correct. If the comparison was to be restricted to the north-western part of the EC it would be correct. I also accept what he says about the tax levels being higher. In that peculiar manner of his, which is familiar to Deputies, he succeeded in insinuating, even if he did not say so in so many words, that the situation, as if it had not existed three years ago when Fianna Fáil were in power, had obvious causes. Deputy Flynn did not advert to any of them. Had they been adverted to by someone else in such a way that he was forced to take cognisance of them, I believe from everything I know of him he would have run away from facing the consequences.
Half of the reason why this country with a low average income has a very high taxation rate is because we insist on a European level of services. The other half is because we have a huge population growth, marriage fertility rate and other demographic factors which knit into each other and result in a young, dependent population several times greater than any comparable country in northern Europe. For example, when did they last need to build a school in the Federal Republic of Germany? They are trying to find uses for the old schools because there are no children. People who come from there to visit Ireland say it is marvellous. They do not use the word "chisler" but they say wherever one looks there are children running around the streets and one can hear the sound of children's laughter and so on. That is something they do not hear at home. I know that part of Europe very well and can vouch for the truth of that. That is one very conspicuous difference between there and here. I travelled home by DART the other day and could barely hear myself think for the delighted screaming of about 200 children who were having a trip on the DART. That is a sight one would never see in Germany or Holland unless it was a school outing but here it is an everyday occurrence with children coming home from school. There is a different population structure in those countries.
We have been led to believe by politicians that we are entitled to a level of services which bear no relation to what they should be and instead of doing what people do in their private lives, which is relate the services which they give themselves at home in terms of household equipment, the number of cars, holidays and so on, to their income, we encourage the people, especially at election time, to suppose that they are entitled to something which only the malice of the other side is withholding from them, namely a level of services which is more appropriate to a population which does not have to sustain a huge young population for whom schools, medical services and so on must be provided. Even if such a population had the same average income as we have it would have a capacity to provide tax relief.
We cannot have it every way and Deputy Flynn knows that. I have no doubt that if he was in office he would find some "sluthery" excuse for the fact that the position had not changed. However, the situation will not change because we have a huge dependent population and high expectations which are more appropriate to a rich country. This puts demands on school building programmes, housing, transport and so on which other countries do not have to carry. Why do we build 25,000 houses a year none of which has fewer than three bedrooms? It is because families are that size. They do not have this problem on the Continent. The degree of municipal housing which is engaged in in Germany, Holland or Austria is tiny compared to here. It is done by a different method.
The two Opposition Deputies complained about unemployment. Deputy Flynn concentrated on this. He spoke about the enormous gap between the achievements made in the areas the Minister is responsible for and the towering unemployment figures. Perhaps I provoked him by interrupting him but he went on to say that Deputy Kelly's solution was emigration. I do not advocate emigration but I observe that many people emigrate voluntarily. It is not necessarily for ever. They come back as far more useful members of the economy than before they left. Deputy Lyons seems to have the mark of someone who had some gumption about what the outside world was like and it would not surprise me if he had earned his living abroad for a few years. If he did, it did not do him a hap' worth of harm. It is not exactly a solution but I suppose we must conclude in a sober way that the industrial investment policies which we have been pursuing since the IDA were set up in 1950 are inherently incapable of generating as many jobs as will take up the entire unemployment stratum. People must make these calculations about themselves in the same way as a man realises he has come to a certain age, when he realises he will not get a life insurance policy because he has not got that many working years left.
We must be realistic. Let us take party politics away from the matter. If we come to a sober conclusion that our industrial investment policies are not capable of ever filling the gap what conclusions are left to us? Suppose we have to take as a fact that the IDA will never be able to create that number of jobs and that the State cannot create them because they cannot pay for them, what are we left with? We cannot run away from that question. It is all very well for the whining and sneering to go on about Deputy Kelly's solution. I do not like the solution. I do not want people to be forced to leave their native country. If a man wants to live in his own town all his life then good luck to him. I did not create this situation so suppose we face up to the fact that we have this fast growing young population and an industrial development policy which no amount of ingenuity will bring up to the level where it would generate a quarter of a million new jobs within a length of time which would be of any use to us. It cannot be done.
We talk about the sixties, the year of Seán Lemass and the rising tide lifting all the boats. During the course of the sixties there were marginally some thousands fewer people at work than at the beginning. I do not deny that there was strong industrial expansion but it did not match the fall-out in agriculture which was heavier during that period. There were fewer people at work in 1970 than there were in 1960 although we look back on the sixties as the industrial swinging sixties. The Confederation of Irish Industry drew attention to that fact in their newsletter on 16 April 1985 when they said that total employment in the economy is over 15,000 higher than it was in 1973 despite the impact of two major international recessions.
There was no increase in employment during the so-called boom years of the sixties. If that was the case and if between 1973 and 1985, despite the gigantic irresponsible and reckless expansion of the public service, a factor that is the source of all our troubles and which accounts for the best part of the 50,000 jobs, we have not succeeded, despite all the brilliance and ingenuity of the IDA, in increasing net employment in the private sector, then in those circumstances what chance is there for the 230,000 who are on the live register? I am not trying to evade the responsibility of answering that question but I pose it in an effort to make people face reality and to stop calling on the Government, as the Opposition are calling on them, to spend more money, to put more money into the building sector. Money invested in building is fine for the length of time required to complete the building. It is like a wave of prosperity that passes through the economy but the wave breaks and is dissipated so that after a two-year period there is a return to the previous situation.
I am not trying to evangelise that fact. It is well known. I am not even trying to draw attention to its notoriety. Were there not almost limitless sums of money put into everything that anyone could think of in the past 25 years? Yet we are no different in terms of our problems from the rest of western Europe. This week we debated the question of European integration and Deputy after Deputy in Fianna Fáil drew attention to the huge increase in unemployment in the EC generally. I do not know whether those Deputies realised that in that way they were weakening their case for a domestic debate. When we joined the EC there were 3 million people unemployed in the Community as a whole. That figure has increased to 14 million. From where do we get this leprechaun mind that makes us think that, after engaging all our lives in this kind of seafóid we will survive the next election and the one after that and then be lowered into an honoured grave as distinguished public representatives who have given 30 or 40 years service?
Our problems cannot be resolved by traditional methods. Obviously, if we did not try to tackle the problems the matter would be far worse but we must be sober enough and realistic enough to accept that industrial development policies and State generated investment schemes in building and so on and additional jobs in the public service will not and cannot bridge the gap we need to bridge. We are not unique in this respect. Other countries have the same problem. What, therefore are we to do? These are the questions about which one would have expected spokesmen on the benches opposite to have given us some clues. When I was in opposition I considered myself entitled to speak as frankly about these matters as I am speaking now and I do not think that I lost any votes on that account nor that it resulted in the loss of any popularity for my party. Why can people like Deputy Flynn and Deputy Lyons not have the guts to face facts instead of whinging about what the Government are doing? There are limits to what any Government can do and any Government reached those limits a long time ago. One of the reasons for the difficulties has been our failure to recognise the natural limits of our own capacity to create prosperity.
I have already spent 15 minutes on these introductory remarks and I should not have done so if I had not been present to hear the contributions from the Deputies opposite.
There are four or five points generally that I wish to make on the Estimate. As I have said here before, there is a lot to be said for a smaller Government in the sense of the Cabinet consisting of fewer Members than the 15 who have now become the rule. That is the maximum number permissible under the Constitution. Of course a smaller Cabinet would have to be complemented by a second line row of Ministers with departmental responsibilities. The Cabinet should be a smaller and more compact committee who could work more easily and in which absences proportionately would be likely to be fewer. We might think, for instance, of a return to the size of Cabinet we had in 1937 when the late Mr. de Valera's Government consisted of ten or 11 members. The total of 15 was not reached until the term of office of the second Coalition Government in 1956. I consider 15 to be too many so I would favour fewer Ministers with large clumps of responsibility.
I drew attention the other day to the fact that there are a couple of Departments which should be amalgamated with other Departments. In the context of this Estimate, one thinks of the Department of Labour because, though the Department of Industry, Trade, Commerce and Tourism is already large, the connection of Labour with these headings ought to justify its inclusion with that group. I do not wish to be taken as saying this in any disparaging sense. Up to about 20 years ago Labour was regarded as part of that complex. Up to about 1963 it was simply a division of the Department of Industry and Commerce and that should still be the case or, if it must have Department status, it should be a sort of satellite Department because many of the dimensions of the work of the Department of Labour are intimately connected with and are vital to the success of any kind of industrial policy. I have already expressed reservations about the extent to which industrial policy alone can make any serious difference to our problems.
Not a word has been said today about industrial relations and industrial practices though I accept that these are now part of the remit of the Department of Labour but that bolsters the argument I am trying to make, that is, that if so they should not be divorced from the main function of the Department of Labour which is the efficient and fair deployment of labour in industrial, commercial and agricultural operations. Industrial relations and practices are central to the success of industry and are very relevant to our success or otherwise in attracting industrial development. Neither has there been a word today about absenteeism. Though there were several references to Cork there was none to some of the causes which are commonly believed to have been at the root of the very bad experiences suffered by Cork in terms of closures in the past 18 months. Again, it is a case of not grasping the nettle. No one wishes to be heard saying too loudly that in a number of these cases the workforce to some extent threw away their jobs and no sooner does that happen than the Government are being lobbied to step in and produce substitute industries. That attitude is not good enough.
Neither has anything been said about the ill effects on industry of the proliferation of trade unions and the effect of militant competition as between one union and another. This has been a factor in impeding industry and in closing down concerns in some cases. It is unreal and is not facing up to our responsibilities. The connection of labour with this area is part of what we are talking of today.
Regarding the matter of the National Development Corporation I, too, have spotted the very small role this played in the Minister's speech where he devoted six lines to the issue in a 60 page script. It may be that that reflects the Minister's ideological suspicions of the corporation and if that is the case I am declaring that I share those suspicions fully. I have had the same suspicions since the predecessor of this corporation, that other spook, in the form of the industrial development consortium, was established, though "established" may be too grand a word to use for something that had no existence. However, though that consortium was established while Deputy O'Malley was Minister — it was foisted on him — he had as many suspicions of the development as Deputy Bruton is said to have in respect of the NDC. I am still waiting to hear what this thing will actually do. I am told in general terms that it will have a budget, that it will get into meaningful cross-fertilisations of this and that. Whether it will then pass on successful enterprises by selling them off, which is the obvious thing to do — if such enterprises emerge — and recycle the money or whether it is to be regarded as the parent of perpetual semi-State babies I am not so much interested in now. What really concerns me is that we seem to be talking — unless the Minister can stop it — of a very large sum of money which will be devoted to something of which I am still awaiting to hear an example. What is going to be put into it? Have we not got a plethora of bodies, some of them with commercial dimensions, which are already engaged in exploiting natural resources, developing this and that? Will it not start off under the danger of duplication?
I have no ideological bias either against or in favour of a State-run scheme except this, that if the thing had been done by the private sector probably it would have been done more efficiently because the man's money is his own. If he fails he goes down and that is that; no one is going to bail him out, whereas State money is administered by people — well-meaning and dedicated though they are in virtually all cases — and is not risk money in that sense. It is no skin off the nose of a public servant in the Civil Service or in the semi-State service if the thing goes down, if money is lost, because he knows that the poor old sow will be there to be milked again, to be savaged again, for the extra few hundred million necessary to keep the thing on its feet. On balance the private method would appear to me to be likely to be the more effective.
But I admit that there have been economic tasks in this State over the last 60 years which could not be done by private enterprise, in which private enterprise was not sufficiently experienced, had not the courage to undertake and which required, if they were to be done at all, the involvement of the State. Therefore I could not and never have opposed the operation of bodies like Bord na Móna, the ESB and so on. These were largescale operations which otherwise never would have been undertaken by private enterprise. I do not deny that it is possible but it may be there are still a few such areas around the place that a national development corporation, if it is set up, could get to work on.
I will mention a few such areas. I do not want to be entirely destructive about this thing. I have mentioned it sarcastically very often; I do not want to be destructive about it — but I will mention three things——
Deputy Kelly, the Chair thinks that this corporation will be the subject of a Bill in the House which has been promised and a discussion on it then would be appropriate.
Well, the Minister——
The Minister made an appropriate passing reference to it in which he said that legislation was being introduced.
It is the very passing nature of his reference that I think is so interesting. Deputy Lyons spoke for 25 minutes on this subject. I am trying to get through in a hurry because I want to leave some time for Deputy Brennan——
That is what I am trying to do too. If we had a full scale debate on the national development corporation now we would be anticipating another debate which we understand will be forthcoming in the House.
I shall be as quick as I can. I will mention just three areas in which I think there might be a role for the national development corporation. One is the area of forestry and forest-based industry which is admittedly, by everyone's consensus, in a quite unsatisfactory condition under the administration of a Government Department whereas our climatic conditions, those in the west particularly, are peculiarly suitable for the exploitation of this natural resource. Private enterprise does not want to go into forestry. It is not perhaps even let into forestry very much; I know there has been that complaint too. Because of its relatively high labour content and its very important potential in the area of import substitution and thereafter of exports — because the EC generally is short of soft timber and of hardwood too naturally — this has to be an area in which there is a future. It may be that the national development corporation could do something here. I notice that the timber industry itself has suggested an authority. They have even been kind enough to save the State the trouble of inventing a name for it because they have suggested the setting up of a thing to be called an tÚdaras Adhmaid. I do not think we need an tÚdaras Adhmaid but we certainly could admit that, if we are to have a national development corporation casting round for some suitable area of economic activity in which to undertake exploitation which the private sector has been shy of, this is one.
Another one is fish farming and mariculture. I know we have An Bord Iascaigh Mhara. I know there is a good deal more mariculture, production and processing of shellfish here than there was ten years ago, and there was more ten years ago than there was 20 years ago. I admit that some progress has been made. But, when one considers the bottomless market there is in the land-locked but rich areas of northern Europe for seafood, this seems to me to be an obvious area in which again private enterprise — because of lack of experience, tradition, or willingness to take risks, the discomfort of the thing and so forth — has fought shy of. Possibly there is a role for the national development corporation in mariculture and fish farming; it may be so.
The third suggestion I would make — and it will chime happily with Deputy Lyons's please about the building industry — is in regard to the maintenance of old buildings in our urban areas. I complained here the other day in a different connection about the appalling condition of Dublin. When we talk about the appalling condition of Dublin most of us are speaking about the inner city or the area between the canals. Anyone who knows anything about the suburbs will know that while one may whizz past them in a car and they look all right, perhaps even attractive, when one gets up close one will find that areas in, say, Rathgar, Rathmines or on the north side in Drumcondra and Clontarf are not perhaps dilapidated but they are within shouting distance of being so. It will be no time until——
The Chair cannot see the relevance of that argument to the Estimate before the House.
One of the problems I have, Sir, when I am on my feet and you are there — I say it with respect — is that you behave like a particularly short-tempered sheepdog trying to keep in a small flock of really rather obedient sheep. Sometimes then, Sir, you go away and your place is taken by a much more genial animal who allows——
I regard that as a compliment but I think I would want to have a shepherd's whistle to control the Deputy.
We had appeals made here an hour ago for the building industry. I want to second them, not in the way they were intended by Deputy Lyons, which was that the State should——
I cannot see what the building industry has got to do with this Estimate.
Well, Deputy Lyons spoke about it here for a quarter of an hour, Sir. I mean, Sir, the Chair is supposed to be — I do not mean this as an insinuation, of course, but impartially——
The ice is getting thin.
There is supposed to be no difference in the quality of treatment between one tenant of the Chair and the next. The Chair, looked on as an institution, is blowing hot and cold with Deputies because, on your criteria, Sir, Deputy Lyons was way out of order for nearly all his speech, and he spoke for a full hour plus a few minutes——
If that is so Deputy Kelly could have raised an appropriate point of order at that time.
Well, Sir, I did not like to be making trouble or to be wasting Deputy Lyons' time. This is all cutting into Deputy Séamus Brennan's time and I genuinely want to let him in.
Let me say it in a sentence: the practice conducted in some cities, not in this country, whereby the municipality buys up old buildings, refurbishes them and sells them off again in a condition in which they will last for another hundred years — thus providing itself with a profit and capital for going in and doing more of them — is something which the national development corporation may not regard as a very grand function but it would be socially useful, would have a relevance to the tourist industry and would provide employment.
The Deputy will have an unlimited time to speak on the National Development Corporation Bill when it is introduced——
If we ever see it in here. In his speech the Minister mentioned marketing in a couple of contexts. I should like to briefly advert to these. I should like to know what is the record of the system which was introduced in my short time as Minister for Trade whereby the State put a relatively modest amount of money — I think it was £1 million — into subsidising the recoupment of foreign based export marketing executives. I understood at the time when I left office, and I made inquiries since, that it has been a great success. Will the Minister say if that scheme is being continued by his Department and if so how it is working?
The Minister adverted to the importance of modern language training in the context of marketing and did not say enough about it. The Minister mentioned the small number of children taking German in secondary school although Germany is our major continental trading partner. The Minister adverted to Spain and the importance of Spanish because of the Spanish accession, and its existing importance with Latin America. The Minister might have gone further because the real markets of the future will be found with the milling populations in the eastern world. We should divorce at least one dimension of language training from the Department of Education and allow the Minister's Department to have an input. There should be a section or a school attached to some existing institution, such as the NIHE, which would specialise in teaching out of the way languages, not for academic but for entirely practical, industrial and commercial purposes. It is lamentable that we are so insular here and afraid of being laughed at. So far as I am aware, not one Irish person is learning Arabic, Japanese or Chinese, or any other language which would give us access to the distant worlds of Asia, except, if they exist at all, within the strictly academic confines of departments of oriental languages in one or other of the universities.
The Minister talked about sending trade missions to China and Japan but he did not mention the Arab world. It is vital to understand that the Arab world is immensely rich and that the Chinese world will be immensely rich. There is an economy starting there which will leave us all behind. The Japanese world is already immensely rich. These are worlds into which we have made next to no penetration. It is true that we have a large trading partner in Iraq which happened through a combination of circumstances, some of them political, but we are only scratching the Arab speaking market compared with the success even of the English who are no great shakes linguistically or any other way when it comes to trying to understand what foreign people are like. This policy should be introduced now. It is no good just talking about German and Spanish. The German and Spanish markets will be peanuts in the time of our children and grandchildren compared to what is growing up at the far side of the world. Now is the time for us to make the appropriate contacts and to train the personnel to inaugurate contacts. Everybody is afraid of being laughed at if the Government cannot arrange for the collection of the dustbins but are teaching Japanese in Glasnevin. However, in the long run that would be the more important function.
In relation to tourism and in relation to restaurants, we are always hearing about the intention to provide full liquor licences for restaurants. We were talking about it when I was Minister and before then. During my time in Government I got the Government to look favourably at the proposal although I did not get to the extent of getting the Minister for Justice to draft a Bill. We are still talking about it. Why has it not happened? It is because of the opposition of the existing licensed trade, who are afraid that we would not be capable of drafting a Bill which would not throw the whole thing open to fast food joints. That is not my intention.
I do not believe fish and chip joints should have full liquor licences but bona fide restaurants ought to have them. We are the only country in Europe without them and our tourist industry must suffer as a result. The whole question of general restaurant standards and prices is something which should be looked at. Our prices are ridiculously high partly because it is not looked on as a family trade except in few places and partly because restaurant owners think that they will not attract a clientele except by producing ridiculously elaborate food. That is not true. If the NDC are really looking out for things to do, I would not mind experimenting in this area. I suggested this to Bord Fáilte when I was Minister and they did not take it up but they introduced a scheme for advertising restaurants which guaranteed a meal at less than £5 or less than £3. I have not heard much of that scheme recently so I do not know whether it has been a success. If we are serious about tourists we will have to take some serious initiative in this area. If we are going to have an NDC and if the private sector do not seem interested, it is something which should be done by the NDC. I had many other things to say but I do not want to squeeze out Deputy Brennan so I will keep them for some other day and perhaps some equally appropriate occasion.
I thank Deputy Kelly for letting me in but regretfully I must start with a protest. This, arguably, is the most important debate facing us——
Hear, hear.
—— the attempt to create wealth here. We spent 95 per cent of our Dáil time debating about how we distribute the dwindling pool of wealth we possess. We rush madly through, on odd occasions, debates as to how to create some activity and lift the country off its knees. I protest about the short time available for this debate.
I will clarify the position. This was agreed by the unanimous vote of the House.
This is a general protest, I am not pointing the finger. This is an important debate and it is a pity that the time is short. I will try to condense what I have to say into the ten or 12 minutes which I have left.
I wish to put forward a ten point programme which the State should tackle. We should drop the distinction between services, agriculture and industry. That is a radical proposal which if I have time I will expand upon. I want to drop the one in three rule in regard to CTT so that we can attack in a vigorous way world markets, so that we can create wealth by earning some foreign revenue. Thirdly, we should consciously, as a national effort, set out to make this country the services capital of Europe. There is no reason why we cannot do that. If time permits I will elaborate on that. Fourthly, we should have a venture capital fund for small industry, not the type of venture capital which is a sort of blue chip type of venture capital, which is presently available, but a venture capital fund for small first time companies. I will also expand on that if time permits. Fifthly, this country desperately needs to adopt a new national ethos, a new national philosophy of wealth creation instead of the paranoia obsession which we now have with the creation of wealth. We talk of equality time and time again. Unfortunately, that type of equality will become a type of equality where we are all equally poor instead of the type of equality where we are all equally well off. The former is not the type that I would aspire to.
My sixth proposal concerns tourism. A major role is to be played in tourism by the army of educated, trained, unemployed people that we have. I know of many countries which I can put before the Minister when time permits to suggest to him how the trained, educated, unemployed people can find a role in the services industry, particularly in the tourism industry. There is a clear role for them in all sorts of areas in tourism which again I will lay out at another time.
My seventh proposal is to ask for clear Government action in regard to interest rates. It does not make sense to have inflation at 5 or 6 per cent and interest rates at 15 or 16 per cent. Who would invest or borrow money at 15 or 16 per cent when inflation is 6 per cent? If you do not do it, industry does not expand, there is no investment and we get no employment. A Government can do things about interest rates which, again if I had a full hour in this debate, I would be glad to lay out.
I have an eighth proposal, which I have put before this House time and time again, and I am now more convinced than ever that it is the right way forward. That is a reduction in PRSI taxation which simply puts 20 per cent tax on the gross pay of any worker. Can you think of any more crazy policy than a 20 per cent levy on the wages of everybody who works? You are saying to employers that the more people who work the more 20 per cents we have to collect from the employer and his employee. That crazy State policy is not designed to create employment and is a major disincentive. I have been asked every time I put this forward where the money is coming from. I have produced figures from time to time to show that, if PRSI is basically an insurance system, if that is commercially and properly funded it will more than pay for itself; yet I cannot get the Government to look at this proposal. I will continue to try to get them to do that.
I said I had ten proposals to put forward in a wide ranging speech but I will have to pick them out in the time available. The ninth proposal is that this country, very consciously, starting today, breeds some new entrepreneurs. I agree with Deputy Kelly in this regard. He says that the State cannot create jobs, that it cannot be done by traditional methods. Where I disagree with him is when he throws his hands in the air and says that it just cannot be done. That is where I part company with him, but I agree with him when he says that just the State alone cannot create the jobs. He seems to be saying that it will not be done. I am saying that it can be done, but if it is not to be done by the State then it can be done only by the rank and file of the people of this country, and they will do it only if we breed a generation of entrepreneurs. It is not a dirty word. It has become a little bit fashionable to decry it; but we need a new type, a new breed of entrepreneurs in order to tackle the creation of employment.
In that regard I support what I think the Minister, Deputy Bruton, said in a speech some time ago when he suggested that the whole area of foreign languages might be addressed in primary schools. I am not quite clear if that is precisely what he said, but generally I support his thinking in that line. There is a huge market, a big world out there. For example, the Chinese market is four or five times the size of America; it has been westernised, it is beginning to take in consumer products and it is wide open for Ireland. We have a Chinese Ambassador in Dublin now and there is no reason why Ireland cannot attack that market in a very progressive way. If that is what the Minister is getting at in proposing that foreign languages might be taught in primary schools, then I support it wholeheartedly. I would much prefer to see our young people being mobile, not minding travel, being comfortable with foreign languages — and why not languages like Chinese? I would prefer to see them in that frame of mind, feeling part of a new generation of entrepreneurs, than to see them with high academic qualifications in mathematics or physics — not that I am decrying them — which do not serve the national need today.
My tenth proposal is that we find a new, dynamic role for our semi-State companies. I have been misinterpreted on this time and time again. I am not saying that we should indulge in massive privatisation of semi-State companies, but if they are in areas that can be more successfully operated by the private sector, then the private sector should operate them. The Government should not be in business just for the sake of being in business. The Government's role is to create the environment for business. In that regard I have said time and time again that I see the role of any Government as creating the atmosphere, the environment, leading, pointing directions, giving incentives. I do not see them as being in business themselves. That is not the main role of Government. They should stand back and create the environment and not themselves be a business person. If they have to do that then to an extent it is an admission of failure, an admission that the entrepreneurs in the private people are not there to do it. That is largely what happened in the sixties when we had massive State involvement in our industries. It was mainly that the private sector was not geared up to do it and the investment was not there at the time.
I have spoken in this debate to propose ten areas that I think need to be addressed with our industrial policy and I put them forward as succinctly as possible. One could progress to argue each of them individually but I do not think that sort of time is available.
Having agreed largely with the Minister, Deputy Bruton, and Deputy Kelly in regard to what needs to be done——
I am calling the Minister at 3.30 p.m.
The Deputy can have five minutes of my time if he wants it.
I thank the Minister. Turning to a more critical approach, I wonder if the Government understand what is happening in the Irish economy and what makes it tick. In that regard let me give two examples. The first is the venture capital scheme. I do not think that the Government could be satisfied with the response to that scheme. I called it a blue chip scheme earlier and I still think that is what it is. The US, Britain and some of the continental countries have got the mix right. We seem to have got the mix wrong in the venture capital area. Without making a political point out of it, it is absolutely crucial that we get the mix right. Why is it that 18 months after we brought in the venture capital scheme we still have little or no interest in it? It is not that the money is not there. I think it is something to do with the scheme itself. I ask that be radically overhauled; and, if a few people get rich in the process, let us take the risk because not to take the risk is more damaging.
Another area of lack of understanding of the economy on the part of the Government is the question of the black hole. The Government's response to that was to say that they would offer the multi-nationals a tax free investment in Government bonds, in Government debt, if they leave their money in Ireland. That fails to understand that what is needed in Ireland is not to supply the State with more money, which this system would but to get the money from these companies directly into State investment and State projects. In that case I would not have told them that they could have a tax free investment if they invested in Government bonds. I would have told them that they could have a list of taxation benefits if they invested directly in State projects — in other words, if they put their money back into other investments in Ireland there were all sorts of benefits and pluses which we could work out to give them — instead of telling them that if they lent their money to the Government we would give them special tax breaks. Here again is a misunderstanding of what the economy needs.
The Minister has made a very genuine effort in the White Paper and so on, but I have come to the conclusion that there is too much planning, too much politics and too little implementation. We have talked about the NDC for years but they have created not even one job yet and they will not in the Minister's time in office create one single job. We have talked about an industrial relations policy for three or four years and where we can get better mobility, American type flexibility, in employment. Despite all that talk we have not made any progress on it. There is a whole list of other areas in the national plan and in the industrial White Paper and we have a plethora of committees, all of which may some day help the Irish economy — and I am not decrying them — but they are not helping it immediately, and we need that kick-off urgently.
In the area of oil exploration, it is quite clear that it is too muddled, too complex, too protective, too timid, too cautious and, in effect, useless, because courage is not being taken in one's hands with the idea of getting the oil, the gas, out of the ground, and improving the intensity of the search. Let us take some big risks there, as we had to do in the past.
We must sort out some policy conflicts in the tourism area between Bord Fáilte and Aer Lingus. We cannot afford contradictory policy goals between these two very fine organisations at a time when we need a national effort. I would ask the Minister to consider this point.
I am putting forward these ten proposals as an indication of the type of thinking this country needs. I had thought about coming in today and listing the national debt, unemployment, the collapse of industries and the falling apart of our domestic position. Then I wondered if that would do any good other than satisfying party political needs. I decided it was not the right approach, although all those factors are very worrying and the Government do not understand the economy in the way it needs to be understood. I decided instead to select eight or ten key proposals which should be put forward and acted upon by the Government.
Deputy Kelly's contribution worried me somewhat. He referred to things which were not done in the sixties and seventies and will not be done in the eighties. Although he did not quite say it, his conclusion was that there is not much hope here for anybody who wants to get on and other countries should be considered. He left it hanging in the air, implying that there were not any answers and anybody seeking an answer should do so elsewhere. I share his worry and concern but I do not share his pessimism about things which cannot be done. They can be done if we commit this country to a wealth creation programme, a venture capital programme and a programme to make this country the services capital of Europe. We must commit the country to Government action on interest rates, tackle the question of PRSI, drop the distinction between services, agriculture and industry and launch a national programme to breed in our schools and colleges — and perhaps in an entrepreneurs' school — a whole new generation of entrepreneurs and let them breathe.
This country seems to have given up on winning its share of the huge potential market which exists. I mention the Chinese market in particular. If we could increase our sales by half of one per cent we could transform this country in a few short years. What are we doing about getting that extra share of the market? We have the "one in three" embargo in CTT. They have three people in China when they should have perhaps 50 or 100 people there. Does it make any sense as a national policy to have highly trained people sitting at home when the handful of Irish people in China should be augmented by many more?
If this country is to survive we must think in terms of "Ireland Limited". It is an island off another island on the edge of Europe and nobody owes us a living. We must sell abroad, earn foreign revenue and break into world markets in an aggressive way. Why can we not mobilise our national assets to earn that wealth abroad instead of continually carping and criticising and depressing ourselves that there is nothing we can do and nowhere we can go? There is no point in saying that one Government are better than another Government and that at the end of the day a couple of pence here or there in taxation will make the difference. It will not make a difference. What will make a difference is the realisation that the ethos of this State, even if we have to consider it in our Constitution, is to create wealth by imaginative export policies.
I would ask the Minister to study the ten points I have put forward. I would appreciate a reaction to them at a suitable time.
Our aim as a country must be to create more jobs. We will do that only if we can produce excellent goods and excellent services on which people overseas are prepared to spend hard earned money. If there is a message I should like to convey at the end of this debate it is that excellent service in whatever area of work we are employed is the key to solving our nation's problems. Unless we can provide excellent goods and services we will not be able to solve our unemployment problem.
Excellence must be seen in our ability as a people to turn up in time for work every day, to work to ensure the highest quality of goods and services, to ensure if we are working in a profession that we provide excellent services at minimum cost rather than use restrictive practices to protect our income. If we are engaged in the public service excellent service at the minimum cost to the taxpaying public, aimed at reducing the level of taxation, must be our watchword. As a country we have far greater potential than we are realising, a better future than most countries in Europe for the simple statistical reason that we are a younger country. We are a better educated country by comparison with any other country in Europe and have more people at school — twice as many between the ages of 16 and 17 than are in full time education in Britain. We have the people whom everybody who addresses industrial problems says are the most important raw material for industrial success. We have them in abundance and they are of the highest quality. Our task as politicians is to convey a message of hope, not a message of hope from politicians to the people but of hope by the people in themselves and in what they can achieve.
It is fair to say that the attitude which has been generated by debates in this House in the past that somehow the Government — any government — can provide a solution has engendered more hopelessness than hope. Ultimately the expectation that Government rather than the people can solve the problem is bound to fail because Governments have neither the organisational nor the financial means to solve every problem in the economic field. People working in firms in their own communities have that capacity and we as a country have greater capacity in the most important ingredient for industrial success, a young, vigorous, well educated population, than any of our competitors.
My ambition, which is shared by many others, is to create a society in which everyone owns a share directly in some productive activity. If they do not own a share in their own firm they should at least own a share in another firm producing goods or services for export or the trading market. As long as we have a situation where one section of the community own a share of the productive assets and another section are simply labour for those who own the share, we will have industrial strife, which has caused and continues to cause so much loss in terms of strikes, foot-dragging and inefficiency. If we could create a society in which everybody saw wealth creation not just as the enrichment of the few but of the entire community then we could really achieve our full potential. That must be done on an individual, personal shareholding basis.
I do not hold the view that the Government can buy shares for the people and somehow create a sense of common interest and identity. The Government are too big. Their organisational procedures are too cumbersome and they are too much subject to political and sectional pressures of all kinds for them to be able to take the right economic decisions in important, individual economic sectors. The Government are not composed of 15 people — of whatever political persuasion — sitting around a table in Merrion Street deciding whether they should invest in oil shares or in a shoe company. Governments are not qualified to make that kind of decision, and, even if they were, there would be so many pressures from the shoe industry, the oil industry, the football boot industry and many others that the Government would be unable to make a decision. It is not an ideological question as to where share ownership should be, it is a question of practicalities and the practicalities are that individuals should buy or be given shares in the company in which they work or in other companies and that is why the Government and I have put so much emphasis on tax incentives for profit sharing for workers' shareholding.
It is also why the Government have put so much emphasis on the development of an over the counter market for shares so that individuals would have an opportunity of buying a share in a small company in their own towns. That is why we have introduced a business expansion scheme which will encourage Chambers of Commerce, if they so desire, to set up investment trusts so that people in Castlebar or Navan will have the opportunity to invest in the establishment of an industry in their own towns. That is why we want to create a situation in which companies can buy back their own shares, through changes in company law, so that if you do buy a share but you find after four or five years that you have to sell it to buy a car or to pay for children going to university, there will be someone to whom you are able to sell that share.
Obviously, unless there is a capacity for companies to buy back their shares and that there is an active market in the shares, people will not want to put money into companies, especially if they cannot get it out easily. Therefore, it is very important not alone to give incentives to people to put money in but also to provide machanisms whereby they can get the money out whenever the need arises. My vision is of a country pursuing excellence in what it sells abroad as a means of economic salvation and in which everyone owns some share in the productive capacity.
I should now like to react to the points made by Deputy Séamus Brennan. He referred first to the business expansion scheme being a blue chips scheme. The venture capital industry here is a blue chip industry and many of the people who describe themselves in their logos as venture capitalists are merchant bankers. They are not really keen to take big risks and one of the reasons for a national development corporation is that we need a body that will be prepared to take a slightly longer view and perhaps a riskier view that someone borrowing money from a bank can take. If the national development corporation can go in there with 30 per cent it might encourage other people to put up the rest. If the NDC did not go in there, the others would assume that it was too risky and they would not invest.
We all know that the projects which lead to the greatest success are the risky ones. One does not need to be a genius to find a safe place for an investment. Even in these troubled times there are plenty of safe places for money. However, we really need people who are prepared to take risks, to back a hunch, who do not always believe what accountants tell them, who do not always believe that something in a binder with a plastic cover is gospel and who believe that having a hunch that something is going to work is more important than paying an expensive accountant to tell you that it will not work. I am not advocating financial irresponsibility but we must have some of that mentality in the productive sector and those who are assisting industry must be prepared to recognise that sometimes there are geniuses who cannot convert their ideas into balance sheets in advance for grant or equity giving agencies.
I did not hear all the points which Deputy Brennan made but I heard him say that Ireland should become the service capital of Europe. I should like to agree but we face the difficulty of being an island off an island off the mainland where most of the business for this service will be generated and we must overcome that disadvantage. The advances in telecommunications, particularly in broad band telecommunications, which allow visual messages, as distinct from words, to be conveyed over the telephone lines, are a great opportunity for us to become a service capital of Europe in the next decade, not in this decade, because, unfortunately, the infrastructure does not exist to provide for that.
I also agree with Deputy Brennan and other Deputies, including Deputy Flynn, that we must put more money into tourism. I indicated in my speech that the proportions of the amount spent by my Department on tourism as against that spent on industry, are quite disadvantageous to tourism. I want to bring out a policy on tourism in the near future, not because it will contain any miracle solutions to our tourism problems, nor will it represent an immediate injection of funds — since such funds are not there — but because it will be designed to create a foundation for future policy initiatives and, by publishing a White Paper on tourism, the Government will create an awareness in the entire administrative system of the country and this House that tourism is an industry with massive potential if we can only tap it.
Deputy Flynn was a little dismissive of the significance of the reductions in VAT on car hire, boat hire and hotel accommodation. The VAT rate has come down from 23 per cent to 10 per cent and the response of the tourist industry has been highly enthusiastic. They feel they are being listened to and they now want to get on and do something about it themselves. If we can bring out a tourist policy in that environment it will crystallise a sense of enthusiasm that is there already.
Deputy Flynn will be interested to know that tourism related projects will be covered by social employment schemes. I will be publishing in the fairly near future a list of the tourism projects already approved under the social employment scheme for aid. Admittedly, these projects are difficult to draw up, and difficult to identify, but the scheme will be there to finance them in the future. I hope Deputies who are interested in tourism will try to avail of that scheme to the full and have the patience to overcome the difficulties that stand in the way of getting any new scheme off the ground and getting people to comply with the various bureaucratic requirements. Deputy Flynn referred to the question of cover for, I believe, motor liability insurance rising from £8,000 to £63,000.
It was employers' liability.
I share very much the Deputies concern about this. It is a form of tax on employment. However, the decision of the Government to review the operation of the jury system applies to all liability claims, not just to motor claims, and it will have the effect of relieving this. It is also very important that employers do not allow their insurance companies to settle claims without a fair amount of scrutiny by the employer. I know that some employers have found that a company settled over-generously, over-easily, and then presented a very substantial increased premium demand to the employer the next time his insurance fell due for renewal. There are many things employers can do to keep the cost down, such as by contesting claims and, through normal industrial relations procedures, trying to eliminate the occasion for some of the claims. Of course, they can help by having proper safety procedures in their plants. The House will be aware that the Minister for Labour is initiating steps in that direction to improve industrial safety. Undoubtedly, that will help and certainly pay in terms of reducing employers' liability premia. I am told that the Fianna Fáil Party will oppose an extension of the licensing hours.
Will the Minister state positively that that is not on?
I will not. It is a matter for the Minister for Justice.
Will the Minister say that he will not be proceeding with it? There is no demand for an extension of the licensing hours.
The Minister has very little time to reply.
I thought he would at least put that bit of foolishness to bed.
Maybe I should not have made the statement. Deputies Flynn, Lyons and S. Brennan referred to the embargo on CTT. I do not know that it is all that bad. My impression is that CTT are getting on with their job quite well. I know that a certain number of complaints are received and, naturally, everybody believes that their little office should have one or two extra staff. Undoubtedly, there would be something for them to do if they were employed, but my view is that the export problems of the country will not be solved simply by increasing the staff of CTT. They will be solved by firms employing staff on export marketing either individually or on a group basis.
Frankly, I would prefer to see CTT using their money through the employment support scheme to give grants to companies to employ their own export market staff rather than necessarily increasing the staff of CTT. The House will be aware that the Estimate provides, in very difficult times, for an extremely large increase in the CTT budget. It is for CTT to use that budget to the best effect. One way it could certainly use it to good effect rather than trying to increase their own staff, would be, to give groups of firms, more so than individual firms, the finance to employ an export marketing person.
Are there not countries like China where a State effort is needed?
Yes; but, on the other hand, the business is done, even in countries like China, by individual businessmen rather than officials of CTT. What a ministerial visit does, or CTT would do, is to open doors, but somebody else has to walk through them. The person concerned is the Irish business person. That is true of Iraq, Libia and the other countries I have visited.
Deputy Flynn referred to our emphasis on research and development and felt we were unduly dependent on foreign research and development. That is not strictly true although I would tend to say there is a lot of truth in it. We have an excellent micro-electronics research centre to which I have paid credit. I would not say that all the credit is due to this side of the House by any means. That centre is doing outstanding work. There is a growing programme run by the National Board for Science and Technology to grant-aid joint research projects between universities and individual firms. We have a micro-electronics centre in Limerick. I agree that we have not got enough of our own firms using the generous R&D grants available from the IDA. Most of those grants are used, unfortunately, to top up grant packages for foreign industries rather than to support free standing research projects by existing industry. Part of the reason for that is that companies have not been sufficiently profitable here in the past to be able to set aside whatever would be their share of the cost of the research. I am glad to say that the profitability of industry is beginning to improve. The reduction in the rate of inflation and the substantial reduction in industrial costs, relatively speaking, this year as against two or three years ago means that companies should be more profitable. It is important, if they are profitable, that that money is not all handed out in dividends but is used to support research related to the needs of the particular firm. I hope we will make great use of the Eureka programme which, hopefully, will be endorsed at the summit in Milan. It could give big opportunities to Ireland.
Will the Minister try to involve multi-nationals, as I suggested?
I agree. One of the problems with existing programmes such as the SB programme, which we are using quite well, is that those who are using it are our universities. In other words, we have Trinity College doing work for a firm in the Netherlands. The research is done here but the wealth is created in the Netherlands. I accept that a certain amount of money stays here in the form of salaries and so on and that there are better educational opportunities for students going to Trinity in that they are working on real industrial programmes, but for every three Irish universities participating in the SB programme only one Irish industrial firm participates. We must reverse that ratio if we want to achieve the maximum results.
Deputy Kelly referred to absenteeism. I should like to state that the Government will be making a major statement on the subject of absenteeism from work in the near future. Ministers of State, under the chairmanship of Deputy Eddie Collins, met in a task force on absenteeism and produced a report with a number of recommendations. They have been agreed by the Government and I will be making an announcement on our decisions on that matter in the near future. We recognise that absenteeism from work is a big problem.
Deputy Ryan was concerned about the position of Castle Brand and I am glad to say that a package, involving the IDA, SFADCo and Fóir Teoranta, has been put together. Hopefully that will lead to the early acquisition of the industrial assets in Nenagh and the early resumption of activity by the company.
I regret very much, a Cheann Comhairle, that this debate was so short because it does not reflect the magnitude of the subject.
Every Member addresses the Chair on that but there was unanimous agreement in the House to it without one dissenting voice.
The point I wanted to make was that a great deal of time was wasted because we had a series of long speeches, including my own, rather than a dialogue about the individual parts of the Estimate. Last March the Government made proposals to the Committee on Procedure and Privileges for a new form of Estimates debate which would allow a succession of five minute interventions with the Minister having to reply each time——
That would be a nightmare for the Ceann Comhairle.
——and Deputies could speak any number of times. That proposal was referred to the parliamentary parties. It was approved by my own parliamentary party but, I am afraid, the view of the party opposite is still awaited. I hope the new system will be in operation next session. It will certainly make Estimates' debates more difficult for the Government, but it will make them more informative for everyone. I hope that proposal can be cleared by the Fianna Fáil Party——
Is the Minister sure it was sent to us?
Yes, last March the Committee on Procedure and Privileges agreed that this proposal would be brought before each party by the Whips. Our party considered it about two months ago and approved it. We cannot have another meeting of the Committee on Procedure and Privileges until we get a response from the other parties because we do not want to go ahead on any basis other than agreement. I hope that proposal, which would be very beneficial to Opposition and Government back benchers alike, because it will make Ministers answer more questions than they would wish to do, will be cleared. It would improve this type of debate. It would mean that ten or 15 Deputies would be in the House at any time because they could all hope to get in very quickly rather than having a series of monologues which we have here at the moment. I hope the Deputies opposite, who are quite influential in their party, will be able to get this proposal agreed so that we can implement it.
It is not quite as glamorous as it is portrayed by the Minister.
