It is a few months since this Bill was introduced——
Industrial Development Bill, 1985: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time".
It should be noted that neither the Minister for Industry, Trade, Commerce and Tourism nor his Minister of State is present.
There is a Minister here.
The Bill is an attempt to end the five year debate which commenced with the preparation of the Telesis report and the NESC report which indicated the direction our industrial policy would take in the coming decade. I wish to comment on the performance of the Industrial Development Authority since its inception in 1952. At that time the formation of the Authority was opposed by the Opposition. However, its formation was a very important step forward in the history of industrial development.
Some of the proposals, targets and objectives set out then are still relevant and important today. It is interesting to read what the then Minister, Deputy Morrissey, said on Second Stage, that the Government were certain that in the national interest the development of industry should not be left to follow a course set by the unco-ordinated activities of individuals, companies and groups working to cater for market requirements as termed by themselves. That was the most important aspect of the Bill. The Government saw the need for specialised autonomous organisation and they set up the IDA to advise and assist the Government in the intensification of industrial development on the best possible lines.
The primary function of the Authority, therefore, was in planning new industries, bringing forward proposals and schemes for the creation and development of industry and the expansion and modernisation of existing industries. In 1952 we also saw the enactment of the Undeveloped Areas Act which gave an advantage to certain parts of the country. In the context of the wider European development since the early seventies one could justifiably make a case for the extension of disadvantaged areas to all parts of this country when one compares it with Europe. Nonetheless, the idea was that industrial firms should undertake the establishment of factories in undeveloped areas and this was of particular advantage to the less well off parts of the country. Of course the eastern part of the country is still the best place for industrial development in its proximity to the European market but all parts of the country have benefited.
The 1952 Act established An Foras Tionscail and their special powers included the ability to acquire land either by agreement or compulsion. They were also empowered to set up advance factories, grant aid people to acquire land, and to give 50 per cent of the cost of plant and machinery, training and so on. This was all extremely important in the development of industries. There were a series of amendments to the legislation in 1959 when a new industrial development Bill was introduced which provided for an expanded and more sophisticated structure for industrial promotion. The expertise and functions of An Foras Tionscail were merged with the Industrial Development Authority which would be outside the Civil Service for staffing purposes only. Incentives were included in the Bill to equalise the advantages which industry might have in any one part of the country over another. Industry has developed in a series of stages, very quickly in the fifties and sixties. The Authority now have to compete with much more sophisticated similar-type job creating organisations in more developed countries than us and, consequently, policy had to be reviewed for the eighties and nineties.
In July 1984 the Government published their response to the Telesis report, an investigative study into industry, which has and will have very serious implications for the development and growth of industry and investment in it in the future. The other submissions included the comments of NESC on Telesis and the IDA's strategic plan for 1983 to 1993. The Government recognised the need to give a new impetus to industrial development and faced the daunting task of job creation in the turbulent economic environment of the eighties. They also had to take account of the nineties and well into the next century. The White Paper set out what it perceived as the main industrial challenges facing us in the eighties and nineties. There is slow growth internationally relevant to that of the sixties and seventies. Competition in the marketplace is far more intense. We have to be far more cost effective and competitive to ensure our survival.
The mobile investment market on which Ireland has traditionally been heavily dependent will not be growing as fast as it did some years ago. The cost therefore of attracting a greater level of mobile investment will be higher and will need a greater degree of sophistication and investigation on the much wider market scene.
The Minister set out the main objectives for industrial policy as specified in the White Paper. The White Paper suggests three key direction changes. This has arisen because there are strong compelling arguments for the development of industry along the lines set out by the experts in this field. The first suggestion is the selectivity in granting State aid to industry with particular support for linkage development and import substitution. We have heard a great deal about import substitution and the products which are on sale in our markets but which could be produced at home. This demands very careful consideration and should attract investment to change that trend. If that cannot be achieved the possibility of our being able to provide key indigenous projects will be under attack. A new policy direction would be the movement away from investment in fixed assets and instead towards market research and development and so on.
Reference has been made to the orientation of overseas investment projects which are capable of self sustainment in both business activities and manufacturing projects. A wide range of policy measures designed to achieve the desired objective was specified as follows — closer monitoring, closer control, new industrial relations guidelines and action on absenteeism. This is a very important area. Recently I was in contact with an industrialist who has returned from Europe. To a large extent he has been able to control the level of absenteeism by vigilance on the part of management. It was a pleasure to see the way that industry functioned, providing 100 permanent and 50 additional jobs. That type of control and approach should be encouraged. Many jobs are lost because there appears to be some type of barrier between employers and management on the one hand and workers and trade unions on the other. It is only now, when we have such a high level of unemployment, that people are beginning to realise that they must change their attitude towards work practices.
Companies must be updated technologically and there must be a much greater investment in marketing. Financial aids to assist companies in these areas are essential. This is particularly true in the meat processing area. Earlier this morning we were dealing with a Bill relating to compensation for slaughtered animals and related problems. We have relied far too heavily on intervention in the meat processing business without taking into account how to present products in a more acceptable way to the consumer. We are learning from experience when we see how imported goods are presented by producers who do not have the same advantages as our producers; yet, these foreign producers are able to take a share of our market.
The IDA small industries programme has been fully regionalised and great credit is due to the Minister, the Minister of State and the Department who ensured that this development took place. I would like to comment on this programme because therein lies the greatest possibility for future job creation. Recently I had a communication from the Minister in connection with the establishment of additional small industries throughout the country creating a small number of jobs, about 128 or 130 jobs, real sustainable jobs. From the Minister's speech it was obvious that all those companies exceeded the target set. If the target set was 15, they employed up to 25, while others with targets of ten employed 12 or 13, with the possibility of additional growth. That is encouraging and demands additional investment by the State particularly to ensure that these small companies will be assisted in carrying out the necessary market research. This Bill provides for that and for that reason alone is to be welcomed.
The national linkage is particularly focused on the electronics sector which has been launched under the auspices of the IDA. It is designed to maximise the level of raw materials and services, linking overseas and indigenous industries by bringing together potential purchasers and suppliers. The recently enacted National Development Corporation will act as a State vehicle for investment in productive enterprises. That is one of the reasons why I was pleased to see the evolution of the National Development Corporation within the lifetime of this Government. People may have the doubts about the ability of the corporation to come up with the level of jobs which one feels is possible, but nevertheless it will provide equity capital rather than than having firms pay high interest rates. Hopefully that money will be used effectively, will be properly monitored and will be successful in meeting the challenge of job creation which we have to face in the eighties and nineties. There is no easy formula for success.
The Department's role as the primary policy making body is reaffirmed in this legislation, and that is to be welcomed. I realise that the Government of themselves cannot create jobs. They can creat the climate for job creation but the ultimate responsibility if there is an abuse of taxpayer's money must lie with the Minister. Therefore it is important that he holds on to that function. A linkage team consisting of representatives of Government Departments and chief executives of semi-State bodies has been established to ensure speedy and co-ordinated implementation of policy. That too is to be welcomed.
The Bill will provide an opportunity for reviewing the jobs created and maintained, the cost of these jobs in relation to their output, the productivity and growth of these jobs, the rate of industrial investment, the share of the domestic market on the one hand and the overseas market on the other, and the value being added to the product. That is vital. We hear much about value added; therein lies the key to industrial promotion and growth. Even now we export a considerable number of cattle on the hoof. Sides of beef are being exported but they are not boned or properly marketed to cater for markets that are crying out for good quality products. In the Bill there is a provision with regard to monitoring weaknesses in industry and endeavouring to provide remedies.
The White Paper on Industrial Policy promoted by the Minister has been an effective instrument in determining our development and the manner in which we will grow from the industrial point of view. Of course is has not been without criticism. It has been suggested there is a specific lack of policy instruments to achieve the stated objectives, particularly in relation to developing indigenous industries in the agricultural sector and finding added value for these products. Recently I read in a document from the NIHE, Limerick, of somebody who was given a major award for producing a quality cheese. Production of such a commodity could eliminate some of our cheese imports. That is the kind of value added that is required.
For a long time we have done little to develop our forestries. I hope the National Development Corporation will invest in private and State forests so that we can develop in this area. Up to 10,000 jobs could be created within a short period if we developed this important national resources. If we have to sell off State forests let us do so provided we get a good return so that we may reinvest to ensure further growth. There is nothing wrong with that. We should not be put off by comments that the State is selling off this valuable resource to private individuals who will make a profit while the taxpayer will lose. We should not put this idea in the minds of taxpayers because nothing could be further from the truth. I am certain the Government would not subscribe to that type of policy.
The White Paper has been criticised because it has not set out specifically how it will attract overseas industries that have key business functions. If an industry comes here and offers 1,000 jobs there should be an equivalent number of jobs in the service area. The White Paper has been faulted by the trade union movement because of its lack of emphasis on job creation and the high Exchequer cost of our industrial policy. It has not tackled that point.
In the White Paper a series of major schemes have been suggested including marketing and a national linkage programme. The latter is very important. If an industry setting up here has to import raw materials that is a big loss to the State. Linking up will be to the advantage of companies. Arising from the linkage programme there will be a company development approach. There is also the matter of technology acquisition grants and the regionalisation of the small industries programme which is well in train.
The NDC have the specific remit of investing in and developing indigenous industries and that is to be welcomed. With regard to the alleged lack of emphasis on job creation, we realise that any major increase in net manufacturing employment is going against the international trend which has seen a continuous erosion in industrial employment in recent years. In all the European democracies, in America, Canada and even in Japan, they are experiencing the greatest difficulty in maintaining growth and employment. By comparison we are a poor country and we do not have their resources and consequently it will be more difficult for us. There is no easy solution with regard to the unemployment problem, irrespective of what the so-called experts may think.
The Opposition Party may claim they have a formula for job creation about which the Government know nothing. The man in the street may think that formula is viable but he is misled if he thinks it is possible in the short term. I regret to say I do not believe it is possible, even though I should like to think otherwise.
Inflation has been reduced considerably in the period this Government have been in office and this has been an important contribution so far as industry is concerned in that undertakings are now much more competitive. I say to industrialists that this has been of great advantage to them.
The concessions given with regard to PRSI in the last budget should attract people back to work. I agree there is a disincentive to work because of the high levels of taxation, whether industrial taxation, PRSI or the levies. These have had the effect of creating a disincentive for people to obtain jobs. In addition, there is the point that once a person is in a job it is exceedingly difficult to get rid of him. That matter has to be looked at if we are serious about creating sustainable jobs.
I was heartened to read this week in a national newspaper a call for an economic forum in connection with the economy. Trade unions, business people, the Government and other groups all have a formula but in many cases they do not appear to be sustainable. Let them together formulate a policy with which the Government would be obliged to stay even though it may be politically suicidal to continue along certain lines. If the people are convinced that a Government would act sensibly, positively and effectively on their behalf, the rating of politicians would rise.
Investment in industry is of the order of £720 million. I do not think it can go much further with regard to tax incentives and so on to stimulate industrial growth. We have legislation on the stocks in relation to strikes which I shall be watching carefully. If it makes it easier for people to go on strike and to disrupt industry we will be on the slippery slope. I would support the protection of workers where there was unjust treatment but where there is an attempt on behalf of workers or management to destroy, that must be totally resisted by the Government.
Linkage appears to be the key to new manufacturing employment. The IDA have been given a specific responsibility here. I am pleased to note that Dr. William Chambers has been appointed to spearhead the programme in the electronics sector.
Another area of great potential is the health care sector. At present we have a most unsatisfactory position in which only 33 per cent of industry inputs are manufactured locally. If that could be changed the spin-off effects from the purchasers of the important firms attracted to Ireland would be attained within Ireland. This is an area in which we can make a strong contribution.
Recently the OECD suggested that a strong growth occasioned by export orientated foreign firms was not creating significant linkages to indigenous industry in this country. If we are to create sustainable jobs that situation must change. Therefore, the new selective approach to State aid which is incorporated in this Bill is the most important change in industrial policy arising from the White Paper. In other words, we will not continue putting good money after bad money. There will be a much closer examination of how industries are developing. The Government have introduced a whole range of services and incentives geared largely towards the encouragement and development of the indigenous industrial sector but has that been matched by an equivalent growth in employment? I do not think so. It is a matter of concern that we should be putting taxpayers' money into industry and not getting a return.
In a book by Owen O'Malley on the performance of Irish indigenous industry in the eighties, the analysis for industrial growth is very pessimistic. Mr. O'Malley is not a politician. He is merely viewing matters as he sees them developing. He criticises indigenous industry on the basis that it has failed to take account of the changes necessary for the inevitable competition of the late eighties and the nineties. This is true particularly of the agricultural sector though the dairying sector at least is endeavouring by way of investment to come to grips with that competition. Mr. O'Malley suggests that Irish indigenous industry has remained dormant while foreign industry has expanded and thrived.
In another book by Kennedy and Healy the question of small industry in Ireland is dealt with. The authors are clearly of the view that our real future lies in investment in and development of small industry. They make some very important comments. They point out that small firms have represented good value for State money and have had an impressive record in the generation of employment in recent years. As the Minister said recently in some instances there have been growth rates of 50 per cent and sometimes up to 100 per cent above the projected target in the small industry sector. Kennedy and Healy say that small industry is the only sector of industry in which employment has increased within existing firms between 1973 and 1980. That increase was 22 per cent. Another important statistic is that the cost per job in small industry is 40 per cent lower than the amounts being given to some of the multinationals. The small industry programme has been successful by comparison with other programmes and has a less capital intensive way of providing jobs. Kennedy and Healy indicate the importance of joint marketing and the need for a greater co-ordinated regional support effort to encourage the development of small industries. That is being done and I congratulate the Government on embarking on that programme. I trust it will have the success it deserves.
It has been suggested that the number of small firm creations will be fewer if the selectivity grants criteria are introduced. In a book dealing with the import dependence of the Irish economy in terms of implications for industrial policy, statistics produced by Grey and Kelly suggest that import penetration in the manufacturing sector increased by 6 per cent between 1977 and 1980. There are people who suggest that we return to the pre-1972 position and embark on a degree of protectionism but Grey and Kelly oppose that view totally. They say that protectionism is not the answer and suggest that a move to industries is less vulnerable to competition from low cost countries. They say that a much greater level of investment should be made available for research, development, marketing and for the gathering of information regarding the level of imports and on how these imports might be substituted locally. Basically, that is the thrust of the Bill we are discussing.
The IDA in their industrial plan for 1978 to 1982 set a target of 68,000 new jobs in firms backed by the authority. During the period of the plan that target was achieved to the extent of 87 per cent. However, the 1980-81 performance was below expectations. In the 1978-79 period the great majority of the new jobs were in the services area, in the public service particularly. The cost of paying for these jobs has been much too high. In the past three and a half years the Government have been endeavouring to reduce that level while trying to maintain the same quality of service though with a reduction of 8,000 people. We should all like the State to be able to employ the maximum number of people possible but when employment is not planned, as was the case in those earlier years of the 1978 to 1982 programme, the effects are disastrous. Any attempt, therefore, to embark on a job creation programme of that kind in the future should be resisted strongly. In 1983-84 the downward trend continued despite ever-increasing output growth. Total employment in Irish manufacturing has declined since December 1977. The growth of 16,000 between December 1977 and December 1979 has been off-set by a net decline in the subsequent years as the international recession took its toll of weaker industries.
On 26 November 1985 in reply to Deputy MacSharry, the Minister pointed out that the overall target set for job creation in the White Paper on Industrial Policy is in the growth of manufacturing employment of between 3,000 and 6,000 jobs per year. That would seem to be a very ambitious target in the light of past trends both here and in other countries. The Minister added that all Government agencies concerned with manufacturing, whether in the investment export or technical export areas were being required to use their resources in such a way as to ensure the achievement of these targets in the ten year period of application of the White Paper. One gathers from that reply that there will not be any significant increase in manufacturing employment in Ireland during the next decade. There are about 240,000 people unemployed and having regard to the sort of target to which I have just referred, there is no point in trying to convince these people that we will be able to create the necessary jobs. There is a new found socialist theory that it is preferable to have people working as opposed to their being on the dole.
What is wrong with that?
Of course it is preferable that people would be at work but jobs cannot be sustained in the absence of a level of profitability. No one can continue to survive on an overdraft. The day of reckoning is reached eventually. The taxpayer is crying out for reductions in taxation levels because a small select number of people appear to be carrying the burden throughout the economy and Governments have lacked the stomach to tackle that problem. That type of projection must be regretted. There are a number of problems that apply. Based on the analysis in the Telesis report the average cost per job between 1978-1984 was £15,790. It costs £19,860 per new job in major industry and £8,000 for each new job in small industry. Obviously the cost of producing jobs in smaller industry is far lower. A sectoral breakdown of these costs is also interesting. The cost per job in the chemical engineering international services is £16,000; in the food, drink and tobacco industry, £18,000 in the traditional sectors of clothing, timber and footwear — the intensive areas — about £14,500. These figures do not make very good reading for the taxpayer. If we were to give these people the money we might be better off but of course there is a service involved.
These figures are not just picked out of the hat. They are based on a survey of 6,500 firms in the period 1978 to 1984. They are reasonably accurate. The cost of providing one job lies somewhere between £20,000 in the bigger units to less than £10,000 in the smaller units. This is why the new policy is directed towards the latter.
The IDA have achieved much since their establishment in 1952. They have also been criticised — and perhaps rightly so — especially when the Telesis report was published. However, the recent White Paper has vindicated the IDA's efforts in trying to achieve additional jobs. Their 1984 annual reports states that a turning point has been reached in the fortunes of industry in Ireland. I am not yet clear as to what exactly is meant by that conclusion and how fortunes have changed in regard to unemployment.
The managing director of the IDA, Mr. White, has welcomed the new White Paper on Industrial Policy. He knows exactly what is involved in job creation. In a recent interview in the August-September issue of Industry & Commerce he states that the main impact of the industry of the future will be spending more on what it buys into the company in terms of goods and services than the company will actually spend on a direct wage bill. He further suggests that the concept of value-added to the Irish economy is uppermost in the strategy to meet the demands of the White Paper and the national plan. He goes on to state that the essence of industrial policy is that it recognises that the direct manufacturing workforce will increase only marginally in the coming years as a result of automation, technology, competition and sub-contracting. That is the view of the “prince” of job creation through the IDA.
If we are saying that the majority of jobs and the greatest economic impact will lie outside the factory through the extra wealth which the manufacturing company can generate and spend within the economy, then the key question is: what economic value added is left within the country? The public, however, will continue to judge the effectiveness of the IDA by their ability to create more jobs each year than the number of jobs lost and their ability to reduce the numbers on the live register. Even though 9,870 first-time jobs were created in 1984, nonetheless when job losses were taken into account we arrived at a net loss of 7,900 jobs. The IDA justifiably talked about a turning point in fortunes, given these figures. The national economic plan suggests that under the new industrial policy manufacturing employment will rise by 2,227 by 1987. Can that target be realistically achieved now? I do not believe it can. From projections, it seems that the IDA can inject about 10,000 firsttime jobs per annum into the economy, at the most optimistic. Any recession will reduce that figure. If they succeeded in generating 10,000 per annum that would generate a further 10,000 jobs in the service sector, giving an overall increase of 20,000.
This Bill is important in that it consolidates all existing industrial development legislation into one comprehensive code. The Minister might elaborate on how he intends to implement section 4. A detailed and objective analysis of the relative strengths and weaknesses of the designated and non-designated areas is essential if designation is to be used as a more flexible policy instrument for the future. The Minister has commissioned the NESC to prepare a report on the whole question of designation and I hope this will have the effect of not allowing people to concentrate in certain areas, thereby causing many problems. That has happened in the major cities, particularly in Dublin, where there is a far greater level of poverty than there would be in many of the other urban areas. People living in rural communities want to see industry brought back and this can be done through the small industries programme.
Section 6 provides for periodic reviews of national industrial performance. The Dáil should be made aware of what is happening in that area. Section 11 deals with the future role of the IDA, which will be to act under the direction of the Minister. That is a change, but it is only right that a Minister should retain a certain level of discretion and authority to direct the IDA in a certain way. The Department are re-establishing their primary role in regard to the formulation, evaluation and monitoring of industrial policy, including sectoral policy as set out in the White Paper. Furthermore it confirms that the IDA, together with other agencies, such as the IIRS, Córas Trachtála have executive responsibility for the implementation of industrial policy devised at Government level. That constitutes a new power being given to the IDA. The functions of the IDA should also reflect national concern about the gravity of the present unemployment situation. The ultimate focus of industrial development must be on net job creation in the manufacturing and service areas. In this regard the IDA have a vital role to play. As politicians, as Government backbenchers, we are answerable to the electorate, just as the IDA will be answerable to the Government and the Government to backbenchers in that regard. We want to see proper return from the high level of investment in this area.
Section 6 provides for the triennial review of national industrial performance. There is provision for selective criteria under which the authority would provide grant assistance to industry in respect of fixed assets, leasing grants, rent subsidy grants.
I have here a recent newsletter of the Confederation of Irish Industry, dated 12 November 1985. It is interesting to note what they have to say under the heading: "Lower industrial electricity prices necessary to protect employment". I might draw the Minister's attention to some of the remarks contained in that article, and here I quote:
The Government recognised the concern of industry as far back as 1983 regarding high electricity prices and consequently established a major Government inquiry into the situation in that year. However, over twelve months have elapsed since the report was completed and only one minor adjustment — a reduction of 2-6 per cent has been made. The report contained a very detailed analysis of the reasons for high electricity tariffs for industry in Ireland. The Confederation would strongly urge that the Government take immediate steps to reduce cost impositions on the ESB within its own control in order to ensure that the serious competitive weakness of high industrial electricity prices is eliminated. International competition is ferocious.
One would have to agree with that comment because there is such sophistication in competition for the same markets. This article continued on to say:
As one major Irish exporter stated recently, "it's dog eat dog and survival of the fittest in a way that Darwin never imagined". It is for this reason that every firm needs to minimise its costs in order to remain in a competitive position, retain market share and arrive at decent profit margins. Firms can negotiate better raw material contracts, they can modernise their equipment, they can produce more with less man hours but, unfortunately, Irish firms are finding that they are up against an uncontrollable obstacle, one which they cannot overcome, one which only Government action can alleviate: the large differential in energy costs in Ireland when compared to those prevailing in other EEC countries and indeed the world at large. Production costs for Irish firms suffer most markedly under the heading "Energy", particularly where most Irish exporters find themselves paying from 20 to 40 per cent more than their European counterparts.
It is clear that Irish industry is getting a raw deal on electricity prices and this was confirmed by the Committee of Inquiry into Electricity Prices.
Surely that constitutes a level of unfair competition? The fact that other countries can subsidise energy costs means that we operate at a distinct disadvantage in that regard.
In the context of investment, in terms of expertise and taxpayers' money, in an endeavour to render industry competitive, the Minister should carry out a critical analysis of the report of the Confederation of Irish Industry. It would be of considerable importance to do so.
I hope the provisions of the Bill will far exceed expectations. There is a particularly difficult period ahead in terms of employment. We do not appear to have been able to make any real, positive effort in controlling or reducing the level of unemployment. I thought we were perhaps near the point of holding its present level so that in better times we could hope for the creation of additional jobs. But because of the automated, technological advances made in industry we must now live with a much higher level of unemployment than would have been entertained, say, 20 years ago. In the course of the 1977 general election campaign the present Opposition added somewhat to the general confusion in that they were advocating a large scale industrial promotion and job creation programme that many people thought was achievable. It was not. There was heavy borrowing for that purpose. We are now paying the price in terms of £2,500 million of taxpayers' money to service the debt, not necessarily created by that programme but which was created over a period. That is the dilemma in which the present Minister for Finance finds himself. I hope he will have some good news for us this afternoon, I am anticipating good news. We must face the electorate, if not in the short term——
That is not in the Bill, Deputy.
I hope there will be some recognition of the enormity of the problems confronting the country in the Minister's Budget Statement this afternoon.
I congratulate the Minister for Industry, Trade, Commerce and Tourism and his Minister of State on the manner in which they and their officials have committed themselves to arrive at what I regard as a very useful Bill.
First, I must say I was disappointed when the Government White Paper on Industrial Policy was published in July 1984. The provisions of this Bill give effect to the proposals of that White Paper. Hence, I am disappointed with the Bill itself.
Deputies on this side of the House — and, I am sure, others too — were hopeful that with unemployment now standing at almost 250,000 the introduction of this Bill would have an impact on the present level of unemployment. The provisions of this Bill talk about the creation of between 3,000 and 6,000 net manufacturing jobs per annum as being totally inadequate. This demonstrates the failure of the Government to attract investment in manufacturing industry. The relevant figure for 1983 represented a drop of 13,000 jobs in that sector, clearly demonstrating the failure of the Government to date to attract investment.
One objective voiced in conjunction with the publication of this Bill was that the National Development Corporation would play a role in the co-ordination of the commercial semi-State bodies and become involved in job creation. I do not foresee that the provisions of the Bill will lead to the National Development Corporation having any real involvement in job creation, or that it constitutes a task that could not have been undertaken by the National Enterprise Agency which had formerly undertaken that task.
In regard to the White Paper, I am concerned that some of the industries that previously would have been supported by the IDA will no longer be eligible for grant aid. I notice a bias against the west in that the Bill and the White Paper lay great emphasis on high technology, export based products and import substitution. It is unseemly, when we are losing a great number of manufacturing jobs in the western region in what we call the designated areas, that such a high emphasis should be placed on the technological area. By all means I would like to see small business becoming involved in technology and in export markets, but the first concern is that there should be help for small, local entrepreneurs who would eventually become strong enough to become involved in the export market and in high technology. At least while innovation and development are occurring in any of the designated areas they should be supported fully by the IDA and by the county development teams, who up to now have been doing an admirable job in supporting them.
One welcome feature in the Bill as regards national and domestic policy is the aspiration to contain our domestically generated inflation. The Government are doing a good job on that, we all agree; but I am vague about some of the other recommendations, particularly where the Government state in the Bill and in the White Paper that conditions must exist to reward risk, investment and innovation. I agree totally with that aspiration but I find in the Bill a great deal of contradiction to it, especially with regard to the IDA's involvement in the west. We all want incentives to encourage a faster rate of growth than would otherwise occur, according to the White Paper, but the emphasis is the worrying thing.
The breakown of targets between native industry and foreign industry is not spelled out in the Bill. The White Paper has none of the detailed targets that had been set previously by Governments and Ministers of the day, so there is very little by which to measure performance. The White Paper proposes to terminate the re-equipment grants. I feel that they should be given on a selective basis possibly restricted to certain areas, but I cannot understand why a decision would be made to abolish them completely.
Another cause for concern is the section that deals with the need for competitiveness. The whole area of how reduced electricity prices for industry would be dealt with is not spelled out here. That issue is fudged in the Bill and we do not know the Government's intentions in this area. Perhaps the Government have not agreed completely on policy as regards electricity prices.
Another area of the Bill that is disappointing is the section that should be dealing with natural resources. There is very little mention of marine resources. The paragraph on forestry is very ambivalent. We can only take it that the Department of Fisheries and Forestry will continue to retain the management of our forestry resources as there is no mention in the Bill of any possibility of a semi-State body dealing with their development. The very important question of bog development in the western area has not been dealt with. In my constituency the Government and Bord na Móna have spent much money on developing the Derryfadda bogs. Now Bord na Móna are paying £4.5 million each year on loan charges and the only thing that has been done there is a road made into the bog to be developed. Really we are talking about dead money being paid back with no employment or development there.
The same is true for the sugar industry. The Government have not given the resources to the Sugar Company — they have admitted this — to provide capital for our four sugar factories. One reason why at this time of the year two more sugar factories are laying off workers, in the case of Thurles for a month and in the case of Tuam for two months, is that that type of capital investment has not been made into those factories. That should be dealt with in this Bill and the White Paper should deal with the development of our natural resources. I ask the Minister to look particularly at those two areas: the development of our bogs and of our sugar industry, which is basically the development of our food industry. We had a discussion in the House yesterday on the need for strong emphasis on our food industry.
I have referred to the designated areas. We have an imbalance between the various areas of this country. We have an EC concern about regional disparities, yet this Bill indicates no intent in regard to what the Government would do about that. Regional policy is important. The type of help given by the IDA and the county development teams in the past should be continued. If the selectivity for grants which was mentioned here is implemented, the situation of the counties in the designated areas will be bleak. For example, if grant assistance is to be confined now to firms who satisfy certain criteria, how will the designated areas be affected? We are told that firms now will get assistance if they produce products for sale primarily on the overseas markets. Again we are back to emphasis on exports. I should like the Minister to consider small firms being helped on to their feet with the hope that they would export when strong enough and I would see an important role in this for CTT. At present small industries are fighting a case with the IDA and the Department of Finance. CTT are brought in at a very late stage and they should be brought in right from the start. Firms may be able to get advanced technology if given a chance and the Minister should consider this.
One section of the Bill dealing with import substitution gives the impression that the onus of proof will be on the firms seeking grant assistance. They are being put in a very difficult, almost impossible situation if they have to prove that the product is based on import substitution. I should like greater assistance to be given by the various agencies in making that kind of information available to small industries.
Obviously this Bill will pass because the Government have a majority, but what would have been the situation if it had come in ten years ago? Would projects that have been grant-aided in the past ten years have obtained any assistance at all? We have new criteria now on the selectivity of grants. As other Deputies have mentioned, we should look at the actual cost to the Exchequer rather than the job losses that would have resulted if projects had not been eligible.
The areas to be helped by these new proposals in the White Paper and the Bill will include Dublin where there is very high unemployment and areas where there are serious job losses, such as Cork, Waterford and Limerick. Naturally, we would welcome the creation of jobs where they are needed. We had in the past a towns grouping system within every county, with a jobs target. This was very successful and measured how areas could be helped. For example, there could be the provision of IDA land and advance factories, which would help an area or a group of towns to provide the necessary employment.
Regarding the designated areas, in eight of those 13 counties there are no third level colleges. This is important in the context of the use of technology. We might consider also the infrastructural problems of those designated counties. Will there by any incentive to offset the extra transport costs arising in the western counties because of their distance from our markets and from ports? Any attempt made in the west of Ireland to improve the infrastructure — and transport in particular — appears to be looked at very cynically. One has only to consider the Connacht Regional Airport to illustrate my point. That development in County Mayo for the Connacht region will be of immense benefit, especially if we can get the type of development which has happened at Shannon and in other industrial estates. All credit is due to those who have been involved for a long time in trying to provide that type of infrastructure and that transport access which is needed.
I mentioned at the outset that unemployment is a very serious problem with us, the figure reaching nearly 250,000. It is particularly acute in the west and the figures give great cause for concern. I am sure that the Minister saw an article in a newspaper last Sunday which reported on a football team from Lettermore, Connemara, which had won a junior championship title some years ago. Half of that team have emigrated and it has been estimated that 200 people have left the parish of Lettermore. That is a new phenomenon in that area, on top of the serious unemployment experience there. There is need for a special approach to the development of the designated areas and we could look at what has been done in other EC countries. In the UK I understand that three categories were named for assistance under the original policy there. There are special development grants, development grants and intermediate grants. We might consider some system like that, rather than selectivity grants, as mentioned in this Bill, for certain areas.
In the North of Ireland, there is a local enterprise development unit with a staff of 72 people. In 1984 they were able to commit a total of £18 million to help small business people. That is a most welcome development. I appeal to the Minister to have the same type of approach to our county development teams, to give them more discretionary powers rather than less. They are being undermined with the publication of this Bill. I welcome the fact that recently the level of grants through those teams has been increased. When I compare the situation here with that in the North of Ireland and the UK, I notice that in those countries half the grant is paid to a small company when they are approved and the other half is paid at a later stage, perhaps six months or a year later. Here one has to spend the money and come back with one's receipts to the county development team and try to get the 60 per cent paid as quickly as possible. There could be a better way of doing that if we look at what is done in other countries.
The phrase "track record" is always used by the IDA and by the county development teams when people come to them for assistance. I do not believe that the track record is as important as it is madeout to be. It is probably more important that the business is not involved in over-production of an item or product. It is also important that the commitment of the people gets through to the IDA personnel or the county development team involved. If we spent all our time looking up records we would never start any business.
I hope the Minister will tell the House what has been happening since the regionalisation of the IDA. We were hoping for more prompt decisions from them in regard to regional projects, but that has not been happening: small industrialists are still being referred to head office for final decisions. As well, although they have got their IDA grants they are unable to get loan assistance. We do not have an ICC office in the west and small industrialists there must go either to Limerick or Dublin to get loans at favourable interest rates after receiving IDA grants. This problem is caused by lack of co-operation between the two bodies. If such co-operation existed we could have earlier decisions.
There has been publicity about the way the associated banks should be helping small business people and about involving them in the provision of risk capital for small industry. During the Christmas holidays I was amazed to hear that banks are now imposing what they call money transition charges. The matter was referred to particularly on the Gay Byrne Hour on RTE radio. Apparently they charge 12p on each cheque they receive for cashing. That may not seem to be much, but when it is added up it comes to a sizeable sum, which the banks can invest. That 12p can also be aggregated with charges on bank drafts, cheque cards, travellers' cheques, copies of statements, credit transfers standing orders and the Government duty of 7p per cheque. All these charges militate particularly against small industries.
I hope that when the Minister for Finance introduces the budget this afternoon he will take into consideration many of the problems being faced by industrialists in the designated areas. There is great concern about the provision of new jobs and manufacturing employment. Many of our traditional industries like textiles, clothing, footwear, furniture, printing and motor assembly have declined. Food processing is growing, showing some growth, but that level of growth is disappointing in an agricultural country. I should have liked to have seen in this Bill more commitment to the food industry and more investment incentive in that industry so that there could be greater development of our natural resources, and more employment. I had hoped that the Bill would help employment generally. On the contrary, it can be summed up in the final section which states that the Bill will not involve any increased costs to the Exchequer or the recruitment of additional staff.
I hope the Minister will take into consideration the very good work being done by the county development teams and the good framework being laid down by the IDA at local level. I hope he will try to have more co-ordination between the ICC and the IDA, particularly in regard to loan facilities, in the interest of job creation. The Minister must give a particular commitment to small industries in their early years before they can graduate to more advanced technology and marketing. It would be very difficult to expect small industrialists to aspire to these in their early years.
I welcome the Bill as an attempt to introduce an effective policy on new industrial employment. The editor of one of the great English newspapers, J. L. Garvin, said that opinions are free but facts are sacred. One of the things that has saddened me since I became a TD is that I have listened to Deputies here talking on subjects on which obviously they have not done any proper research. There is an obligation on every Deputy contributing to a debate to study the facts before starting to pontificate on every subject from theology to toothache.
I heard Deputy Dowling earlier admonishing the trade union movement on the need for unions to adopt a more up-to-date attitude to industrial policy. I have the greatest and warmest personal affection for him but I suggest he should have done more research into the relationship between the trade union movement and industry. I worked in an industry in Limerick for 30 years. You could be sacked there at a minute's notice: you did not even get your second week's holidays. All one got was a Mass card and a bed rest in Barrington's Hospital from one's employer. In the fifties the owner of Shaws factory in Limerick stood outside the gate at 8.5 a.m., when times were bad and counted the men who were late and told them to go home. That was the policy of employers here. This is very important in this Bill. Due to the action of the trade union movement today we have protection from unfair dismissal, a measure brought in by a Coalition Government, a five day, 40 hour week, proper holidays and entitlement to representation in grievance procedures. Up to the time when that industrial policy was introduced as a result of Deputy Sweetman's outlook, the policies here were barbarian and primitive on both sides of the social divide. No more than other human institutions the trade union movement have not a monopoly on morality. They have to fight their own corner. Some people will dishonour the noble objectives of the trade union movement but by and large the trade union movement has made a magnificent and worthwhile contribution to the development of civilised attitudes.
When I hear people talking about strikes and what causes them, I would point out that the most up-to-date figures indicate that for every day lost through strikes 30 days are lost through absenteeism. I spoke to one of the top sociologists last Monday morning about the need to have a survey on the causes of absenteeism and said that there is a grave national need for such a survey to define absenteeism on four counts, as between male and female, rural and urban, white collar and blue collar and management and general employees. The policies of the Government have a direct and indirect impact on this. I know what I am talking about as I have worked among people in industry all my life. I invite any sociologist or economist to look at the pattern of absenteeism. The times of the highest peak for absenteeism are generally between October and February. There is not much absenteeism at the start of the tax year. People realise that they are paying too much taxation and they try to redress that imbalance. It is very important for the Government to realise that taxation policy has a direct bearing on industrial policy because of the subsidisation involved.
Deputy Dick Dowling remarked that there are some socialist Deputies who would see employment as being more important than being on the dole. I certainly do and the party which I represent do. I heard my colleague, Deputy John Kelly, expressing views which I hope will be printed by the Labour Party and circulated to every section of workers for impact. John Kelly's viewpoint I would place somewhere in the political spectrum to the right of Ghenghis Khan——
Deputy——
——but they should be printed——
It is Deputy John Kelly.
They are very relevant to the debate.
I am asking the Deputy to refer to him as Deputy John Kelly.
I am talking about his views.
I am talking about procedures.
With respect to the Chair, I know the procedures and I am speaking to the principles here.
Just one moment, please. I just asked the Deputy to refer to the Deputy as Deputy John Kelly. That was my only indication.
I will gladly do so. I totally and utterly disagree with Deputy John Kelly's views and I hope the Labour Party will have his views printed and circulated to every group of workers to show what we have tried to do in this Government to cushion the impact of those views.
This Bill is to give statutory expression to the policies outlined in the Government White Paper on Industrial Policy published in July 1984 at page 108, chapter 1, section 1.2, which says that the primary objectives of industrial policy are to create and maintain the maximum number of sustainable jobs in manufacturing and international services, to maximise value added in industry and to retain the wealth created for further employment creating investment, to develop a strong internationally competitive industrial sector made up of both Irish and foreign industry, to promote the rapid development of our natural resource based industries, to integrate foreign industry into our economy through greater linkage with Irish industry and the educational institutions and to improve the rate of return to the commercial State companies. They are highly commendable objectives.
It is high time this Parliament got their act together and started doing something as a parliament rather than on a partisan basis. We live in a democracy and oppositions must oppose but we should not play games with employment and taxation which constitute two major economic and social problems which we have. Pressure groups are playing the Opposition off against the Government. We should lift ourselves above that. An all-party committee should be set up to deal with taxation and industrial policy. Employment and taxation are too important to be the subject of partisan politics and policies. We can decide on our approach when we get that scene corrected.
Having listened to the comments of Deputy Dick Dowling, I have already talked about the attitudes of old Irish employers and I will refer to the attitude of some of the multinationals. Clearly, some of the best companies operating here are multinational companies. We have many of them in the mid-west region who have an enlightened policy on industrial relations. We welcome that, but there are others. I have heard Members rebuke workers and trade unions in the House. I should like to recall for them the attitude of one company — I will not name it in the House — that was heavily subsidised by the taxes of workers. The turnover of that multinational company internationally in 1979 was greater than the gross national product of this country However, the company refused to give lockers to the staff who were working in a very heated steam treatment area. I attended a meeting where the employer said "Let them put their clothes on the floor". That night the workers, who were saturated with their perspiration, walked out and said "To hell with this. We are not putting up with this any more". A work stoppage resulted and the workers were branded for having stopped work, but nobody highlighted the cause of the dispute.
I do not like to hear Members perpetuating the myth about industrial relations here. That is damaging. Jack Lynch, before he was pushed sideways by his own party, when interviewed at Shannon on his return from an industrial promotion tour in the US was asked about industrial relations here. He said it was not put to him that industrial relations here were bad. In the course of the construction of Alcan, before they closed down in May 1985, the media ran a scare that there were 16 stoppages. That figure was quoted in a morning newspaper but in the evening newspaper it was reduced to 12. The following morning a newspaper said the figure was eight but within two or three days the truth emerged — that there were two stoppages and not 16 as had been bandied about by the media. Such reporting helps to drive off foreign industries. We should be careful about how we tend and help to perpetuate damaging myths in regard to industrial relations.
The NESC report, No. 82 of December 1985 on Manpower Policy in Ireland states:
However, the unemployment problem has deteriorated further and while a cyclical upturn may now be occurring in a general economic sense, the prospects of anything even approaching full employment in the medium term have now faded. Manpower policy has, therefore, to operate in the context of significant unemployment for the foreseeable future.
That is a dreadful admission for a responsible body to have to make. It is a very frightening statement.
Certainly, it is very distressing, not just for the many thousands of young people coming on to the labour market whose families in many cases have made real sacrifices to enable them pursue their education but also for the breadwinners of many a home where that person is unemployed. Unfortunately, I am only too well aware through my extensive constituency work and as a trade union official of the feeling of dejection and rejection in many a home where previously dignity and pride were a reality through employment. It is easy to discuss in a macro-economic sense the adverse effects of unemployment but at an individual level, be it in an urban or rural home, its real impact is difficult to comprehend by those who are fortunate to be at work. In this regard I genuinely commend what I describe as the discipline of the deprived, deprived not only in relation to employment but also in relation to the dignity of being a self-provider. That is the real cost of unemployment.
I do not like to hear Members pontificating here who have not known what it is like to have water squelching in their broken shoes — I am not being dramatic — or the humiliation of signing on at a labour exchange, as I had, anxious and mad for work and feeling ashamed. Many Members do not know what it is like to be down at that level of society. Like standing for a church gate collection for a political party, it is very good for one's ego to have to go through that. People might be much nearer the bone if they experienced that before they start lecturing people at that level.
Deputy Dowling referred to the cost of unemployment. All sociologists — I will not refer to economists because I have long dismissed them as any kind of credible group; they cannot agree among themselves — are now identifying the real cost of unemployment, the psychological damage, the increasing level of suicides, alienation and the return to vandalism. While unemployment may not be contributing directly to those problems there is no doubt that it is a big factor. It is important that we devise a proper industrial policy, irrespective of the party or parties in power. It is crucifying to sit here listening to speeches to the effect that we have to live with a high level of unemployment. I accept that there is no easy answer to the problem. For 15 months prior to the European elections I worked on a committee with the Socialist group in Europe preparing a policy on employment and I can accept that there is no easy answer from trade unions, Governments or anybody else. But some small countries have succeeded in tackling the problem. Countries such as Austria, Norway, Finland and Switzerland, who are like us in macro-economic, in output terms, are managing nicely without a great dependency on anybody else. It is important that we get together on this. I agree with the suggestion from the other side of the House that somebody should convene a meeting to discuss the problem of unemployment.
We must remember that two things create employment: the provision of services and the production of goods. That brings us back to another problem which the Government are faced with at present — public sector pay. People in the public sector such as teachers, nurses and gardaí do a fantastic job. They are all productive in the sense that they fulfil important needs; but, by and large, the public sector does not generate extra disposable income. It is extra disposable income that pays for jobs when the money circulates. Therefore, we must look to the production of goods to generate the money that helps us buy these services.
I should like to give a minuscule example of what I am talking about. It was interesting to read the comments of a number of people who visited the Blasket Islands. A beautiful film on the islands, "An tOileánach", was shown on television recently with a great translation by Liam Ó Murchú. A lecturer from University College, Galway, an Englishman, who visited the Blasket Islands, said in the course of an interview in Irish that the islands in the thirties were a supreme example of what a pre-capitalist economy was. Goods were not being produced and the level of services was very low. Raised to national level it is an indication that we must produce goods to survive. We cannot pay for the services unless we get money for goods. That is where our industrial policy comes in. In this regard I should like to commend the Minister for Industry, Trade, Commerce and Tourism, Deputy Bruton.
Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.