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Dáil Éireann debate -
Wednesday, 12 Mar 1986

Vol. 364 No. 8

Private Members' Business. - Industrial Development Bill, 1985: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Deputy Carey is in possession.

I had already pointed out that the thrust of this Bill was to redirect the aims and objects of the Industrial Development Authority. I commended the Minister for his efforts to consolidate existing industrial legislation, to bring these matters up to date and try to formulate a policy for the future. In particular, the Bill gives effect to the value of the greatest asset that we have now, which is an educated young workforce. This means that there will be greater stress laid on keeping apace with modern technology and, on the other hand, recognising the value of the old traditional industries for this economy.

The IDA for a number of years have followed the glamour industries. The Minister in his appointment to the board of the Authority has included new members who will give recognition to the old and the new. He has appointed people well known in traditional industry and also a director from a company established in the town of Ennis, a company which utilises well the facilities offered by the State. Joint work has been done with the universities and the workforce. Much research and development have been completed jointly. New products have been patented which are first in their field. This should provide additional jobs in the future and put Ireland at least on the way to improving its position in the technological league.

When examination is made of our industrial tradition we find that investment has been made by the State and to some extent there has not been a review of how the funds have been utilised or whether any additional progress can be made. In this Bill the Minister has taken cognisance of this and has provided for a review within the Department which will examine from time to time the progress being made by the Industrial Development Authority. That is a progressive proposal and I was surprised that Deputies on the other side said that no fundamental examination should be made of the way in which that Authority are proceeding about their charge. Whether that examination is done in Kildare Street or, if decentralisation of the Department goes through and the work is done in Limerick, the taxpayer at least has a cushion in that the Department of Trade and Commerce will in the future examine the progress being made on the industrial development front.

This State cannot be totally dependent on an agency like the Industrial Development Authority. We must make our own efforts to resolve the huge unemployment problem. We must have confidence in ourselves. This Government have made strenuous efforts to get economic conditions right. They have reduced inflation. It is hoped that costs will come down for such major items as electricity and fuel and that the cost of funding will be reduced, especially because of international trends, and that interest rates will fall. Those who lend money to this country have confidence in the economy, otherwise they would not continue to allow us to borrow at the rate that we have done.

For the future, the combination of policies pursued by the Industrial Development Authority, the Department of Finance and any of the other agencies, such as the Department of Labour, who assist in providing manpower policy will in the long run see us through the next century. Our future lies in a mixture of the traditional and the new. I appeal to the Industrial Development Authority, as newly constituted, to formulate in their policy a greater combination of traditional industries and small indigenous industries. When Deputy O'Malley first proposed a greater emphasis on indigenous industry there were many sceptics. I am afraid that I was one of those because I believed that much of the progress that had been made here on the employment scene in the sixties was a result of the investment made by the State in the Industrial Development Authority and its back-up. The people were not able to take advantage of the liquidity which the new industries brought into certain areas and many people invested in the promotion of their social status rather than in manufacturing industry, and that was a distinct loss.

I hope this Bill and the powers it gives to the Minister will be the jumping off point for greater progress for the country as a whole. I do not believe the Authority need more independence. This House should have some means of updating the plans of the Authority from time to time. I wish the Minister well and I know the IDA will prove itself in the years to come.

I welcome this opportunity to contribute to this debate and I hope Deputy Carey's final remarks on the IDA turn out to be true. There has been a dearth of knowledge and ability in the field of job creation over the past number of years. To all intents and purposes, it seems that the IDA, at a critical stage of development, have practically thrown in the towel. They are ensconced in a £26 million building on the banks of the canal populated with people who do not know how to create jobs.

The main problem facing the Government over the next 18 months is that of job creation on a massive scale. We need a whole generation to work for the benefit of the country. During the seventies the present Taoiseach and the present Leader of the Opposition were constantly telling us how great an asset our young people were, but that is not being said now because the truth is that that asset has become our greatest liability and we do not know how to deal with it. For the first time since the famine we have a chance to get the whole population working together, the young, the old and those in between. We used the sluice gates of emigration to solve our problems prior to 1922, when we had no control over our destiny, and since then, even though we had control over our destiny. We turned a blind eye to the cream of our population going all over the world building other economies because we did not know how to put them to work here. Very conveniently we forget about that.

In this House today we had Members bragging, as they usually do, about the spread of our population, our missionaries and so on, all over the world but few seem to realise that that is a story of the failure of successive Governments since 1922. Successive Governments have failed to provide employment for the whole population. Another tragedy of the unemployment situation is that we have invested huge amounts of money in third level education, high technology industries and preparing young people through the institutes of higher education for the world of high technology. We have some of the best qualified people in that area but we are preparing them for emigration. We are giving them free, gratis and for nothing to countries which are short of labour and skills and which have not had to invest huge sums of money in education. In 95 per cent of these cases, these people never come back.

Members of this House have encouraged people to emigrate and to get experience. Many semi-State companies and private companies send their employees abroad for experience. There is no need to send people abroad because most people who go away, particularly those who have to go away because they need employment and cannot afford to stay at home, are not likely to come back. Deputies who give this advice are usually referring to middle and upper middle class people who are going away for a few years to sow their wild oats and get experience. They then come back to Ireland to take over daddy's business, or to continue in a specific profession.

Disadvantaged people suffer from lack of opportunities and lack of education. Because so many of our young people emigrate, in the long run the country is the loser. Young people are the life blood of the nation. Without them the nation loses its vitality. Most people in this House have experience of this. We have all seen the depopulated parts of the country, particularly in the west and north-west. These areas are denuded of their young people and the country has lost vitality. Journalist John Healy in his book No One Cried Stop, serialised in The Irish Times in 1967, described what it was like when he grew up around Charlestown. He spoke of the number of houses which had been closed up and the families and young people who had left our shores never to come back.

No one cried stop in the fifties. In fact, many politicians were very happy to see their problems being solved in this very unsavoury way. The question to be asked now is: will anybody cry stop in the eighties? In the fifties we lost the uneducated labouring class to the building sites in Britain, but nowadays that class of people are not emigrating because they will not be taken in other countries. We are losing the educated classes. A reason for the slowdown in the growth of the left wing parties may be that their natural support is no longer here. The numbers of discontented people are growing.

In the past week we have been discussing the Combat Poverty Bill and today the Social Welfare Bill. We discover from statistics that 25 per cent of our population are in receipt of some form of social welfare benefit, that there is an unbelievable number of people existing below the poverty line and an increasingly large number who are unemployed who will never work again. Indeed, the employable age is falling from the sixties down to the fifties so that even people now in their forties are thinking that they might never hold down another job.

The importance of this Bill must be seen in perspective. We must not hide from the problem of emigration if it is recurring. Equally the IDA must not hide from their failures. They must spell out exactly what are their plans for the future and what have been their successes over the past few years. Three or four years ago it was the habit of the IDA to announce their job targets for the ensuing year. As far as I know their last announced target was for a figure of 18,000 jobs which they failed to achieve by a figure of 8,000. That practice was dropped. It was announced that no longer would the IDA give job targets for the ensuing year because those targets could not be met realistically.

Over the past 18 months there has been the most recent innovation, the announcement of jobs in clusters. One sees a Minister announcing on behalf of the IDA the creation of 150 jobs in ten different counties. For example, two weeks ago there was an announcement of 1,100 jobs, when people everywhere were delighted, thinking there was a huge number of jobs being created again. But those 1,100 jobs were announced all over the country in tens, fifteens and twenties. The truth of the matter is that the IDA erred in going exclusively after the multinationals in the seventies, to the extent of investing tens of millions of pounds in multinationals like Ferenka in Limerick, Mostek in Blanchardstown and Fieldcrest in Kilkenny. Then these places were closed down creating what can be described only as a haemorrhage in those areas. The workers in those plants had invested, had married, bought houses, committed themselves to mortgages and suddenly they were left with nothing.

While that was the policy of the IDA, in America — to which we look for so much — it was not recognised that most of the jobs in America arose from small industries and businesses, an extraordinary figure of the order of 70 to 80 per cent. The then Prime Minister of Britain, Mr. Harold Wilson, had changed his Government's policy, investing heavily in small businesses there. The IDA have endeavoured to catch up in the last few years. They should have admitted their earlier mistakes. That is why we have experienced this public relations exercise over the last two years with radio and television advertisements showing, say, Johnny Murphy standing up and saying, "I am Johnny Murphy, I received a grant from the IDA. I started this little business and look at me now", that kind of thing. All of us have received copies of the annual reports of semi-State bodies. Enormous amounts of money are spent in the preparation of such glossy reports, showing how successful they have been. If one were to judge from these reports it would appear that each one has been a rip roaring success, at least according to their authors.

The fact of the matter is that we have a problem. It is not insurmountable but we must first recognise that we have a problem, the most serious we have faced since we took over control of our own destiny. Successive Governments have failed — we are not blaming them — but they have failed. In the fifties we closed our eyes——

Would the Deputy relate his remarks to the Bill before us?

I am relating them to the White Paper on Industrial Policy which is about job creation, the bringing together of all of the different strands in that area. We have been closing our eyes to the loss, through emigration, of much of our workforce. In the fifties there were 500,000 people, out of a population of 2,275,000, a phenomenal number of people, but it gives the House an idea of the extent of the problems we experienced then and also of the extent of our failure to overcome it. In the sixties we lost people through emigration at a rate of 20,000 per annum. We have now the largest youngest population pro rata of any country in Europe. That can be a liability or an asset depending on one's approach. Industrial policy will solve some of the problems. The White Paper on Industrial Policy, which gives rise to this Bill, is laudable in that it advocated a new direction, a new method of solving our employment problems. But, of itself, it will not be sufficient. We will not create sufficient jobs through industry and certainly not through manufacturing industry because workforces have been trimmed down. For example, we were told in the last few days that 380 people out of a total workforce of 520 in Rowntree Mackintosh will lose their jobs through lack of competition and the state of our economy. We must look elsewhere for these jobs. We need imaginative schemes to put these young people to work. We need to do something not attempted before. In an area like Dublin, where there is one-third of the population, we need to put tens of thousands of people to work. One might ask, how does one do that? We must devise some imaginative schemes that will put as many as 50,000 people back working. We have a young generation seeking work, through whom we must regenerate our economy, giving them their heads. To do that we should regard Dublin as a city well situated — in the midst of 60 million people on the islands of Britain and Ireland — making it the most attractive city for people to visit, a tourist, shopping, entertainment mecca. To do that we need the co-operation of Aer Lingus because nobody will travel from any part of Britain to Ireland — certainly they will not come from London to Dublin — when they can travel to Amsterdam for £49. We need the co-operation of the Irish Tourist Board, of the hotels federation, the shops and entertainment people. What some people have not realised is that not only do we have the youngest population but we have enormous talent; we have the most talented young population of any country in Europe. We lost practically everything, including our language, but what we did save were our music and folklore. There is in our universities the best folklore collection of the entire world. We must use those people as components of this project. In order to do so we should start to rebuild the city of Dublin which is in tatters, about to crumble into the Liffey.

In the past few weeks people have started to look at the city. It may not be too late to start. If we get projects going in Dublin we will be able to attract tens of thousands of tourists from Britain on package holidays. Aer Lingus have a lot of capacity at week-ends because their business schedules do not operate then and that capacity could be used to bring visitors here. However, because Aer Lingus are a very successful and go ahead company they have managed to use up that spare capacity at weekends by providing package holidays to Spain and the Canaries. Other airline companies in Britain are prepared to fill that gap. We can have people coming here for three or four day week-end holidays. Those with more time to spend can tour the hinterland of Dublin, go to the garden of Ireland which is Wicklow, or visit Meath or Kildare. Such people could hop down to Cork, Limerick or even Knock.

Such a venture has been very successful in North America. I am aware that in one area they created as many as 50,000 jobs. One may ask: what is there to attract people to Dublin bearing in mind the high VAT rate and drink charges? The Government have made a good job of many things. They have set the base for development and expansion but they have not tried to do the job of businesses. We have to have some trust in the business community. I accept that some elements of the Bill provide for incentives. The hotel industry have week-end packages costing, for example, £29. Recently in Dublin we had a rugby match and a boxing match on the same day and because of the huge influx of visitors 452 extra jobs were created that week-end.

If we rebuild our city, make our transport system work better, make the city more accessible to those who live in the suburbs and attract people from British cities we will create tens of thousands of new jobs. While we are progressing with the inner city development programme we could create a lot of other jobs in the construction sector and the supply industry to that sector. For example, it is worth stating that 95 per cent of all materials in the construction sector are manufactured in Ireland. We manufacture everything from blocks to fabrics, curtain materials, carpets, glazing, plumbing needs, air conditioning and so on. We can have a spin-off into the service sector, into the hotel industry and the area of entertainment. They all feed off each other. We can create an atmosphere of confidence that will get young blood flowing. We can motivate each other, as happens in America.

At the moment we are dragging each other down because 35 per cent of the population are on social welfare. Many people are depressed because they do not see any prospect of getting another job. They do not have any confidence in the future and eke out a living from one week to another. That is why we cannot depend entirely on the elements in the White Paper on Industrial Policy. However, we must recognise that the up-dating that has taken place is essential.

In the Bill there are provisions for new selectivity criteria for grant assistance by the IDA, new technology acquisition grants and the triennial review of national industrial performance which is very important. At the same time we are taking advantage of consolidating all existing industrial development legislation in this Bill. The Confederation of Irish Industry made positive comments about the White Paper on Industrial Policy. The Minister picked up a lot of the suggestions made by that organisation and listened to complaints made by members of his own party. On many occasions he was told about the atmosphere in business, in industry and some of the suggestions made have been taken on board. Provisions in the Bill increase the degree of certainty by which industries can plan for the coming years.

In 1984 the CII asked that the White Paper be complemented by policies to curb inflation and reward effort. They said that if those two things were done and the new international recession was avoided the industrial growth targets were attainable. The interesting thing is that looking at that comment two years on one will realise that one of the targets has been achieved extraordinarily successfully. Inflation has been reduced not only to the level of the comparative inflation rates in Europe but below them and we expect inflation to be below 4 per cent in the coming year. We are in the process of rewarding effort. It started with the budget. It may be very small but the important thing is that we have begun the process. We have also avoided the international recession. The industrial target is to double the level of industrial output over the next ten years, almost twice the rate obtained in the past ten years. That growth will depend on international trading conditions and domestic policies.

We are on target to achieve that industrial output. Time did not enable me to obtain information on that but I will do so before Committee Stage. I am anxious to know the type of targets we are aiming at and the effect a doubling of the level of industrial output will have on our unemployment figures.

The CII asked for the containment of domestically generated inflation to a rate no higher than our trading partners. That has been achieved and, all things being equal, will hold for the coming year. They outline the conditions that must exist to reward work, risk, investment and innovation at a personal level. We have made a start on that road and we hope further improvements will be made during the year. I hope considerable progress will be announced in the next budget. It is worth noting that the high levels of personal taxation were caused by excessive public spending and that they have in turn reduced the incentive to work. I do not think anybody can deny that.

Public spending is another area that must be tackled. It is another thorny subject and the Government have had to contend with many of those over the last number of years. We have not closed our eyes to the problem and we have been criticised by this side of the House in many instances. I criticised many things also, but that is the benefit of belonging to a party which can absorb critics who have the interest of the country at heart.

Coalition Governments have often been criticised, and Deputy Lyons is the latest to do so. He said that coalitions do not benefit the country and that we must be got rid of so that Fianna Fáil can get back to office to show us how the job should be done. He said that there is lots of money to be invested and that the country is only waiting for them to come back. However, he did not say how they would create jobs. If Fianna Fáil are returned to office, it may be in the form of a coalition Government. Having been in office for 16 years at one time, they could not cope with being the Opposition and they have not learned the art of being a good Opposition. I hope they will make a better fist of being in a coalition Government then they did when they were a single party Government. There are balances in a coalition Government and usually when conflicts arise the country is put first because, if one party tries to dominate another, it would not be in the interest of the country. That is why there have been such good increases in social welfare payments and why we have managed to keep ahead of inflation.

The only thing left to tackle now is job creation on a massive scale. The IDA must rethink their policies and the Minister must use the powers which he is asking for in this Bill to be critical of them. We have sacred cows which cannot even be discussed, and I was slated three or four years ago for daring to criticise the policies of the IDA. I was merely pointing out that they had been going in the wrong direction and that they should switch from trying to attract multinationals and concentrate on small indigenous businesses. They have been doing that now for some time, although they have been slow in realising the potential in this area. There is nothing better than having people at the helm of business or industry running something which is the flagship of their operation. If you are depending on a multinational company which has scores of other branches and similar industries in different countries they will be very quick to close down.

We should also be very careful about the type of industry which we allow into the country and we should not be soft touches for industries which are not acceptable because of falling standards in Britain and the United States. Often they will only locate in places like Puerto Rico and Third World countries where they can get away with low standards. I refer particularly to chemical companies who would not set up here except for the fact that they get an easy ride. I am talking about the Merck, Sharp and Dohmes of this world and the deleterious materials which emanate from these places. I am also referring to the dangerous chemicals which they use and it saddens me that many people have prostituted themselves by pleading for these factories to be maintained around the country even though it costs the lives of humans and animals and is destroying the environment. If that happens, there will be nothing left.

Part of job creation has a lot to do with the environment and with tourism. If tourism were being debated tomorrow half the Members would participate because of the areas they represent, and rightly so. The reason we have a beautiful country is because there are not enough people to destroy it. If there were enough people to destroy it our country would be in ruins and there would not be any fish on our rivers and lakes. The countryside would be in ruins and there would not be any fish in our rivers and lakes. The countryside would be polluted and destroyed and, if you do not believe me, the next time you drive around the country look into the ditches and dumps behind the beauty spots in every picturesque little town and village. It is unbelievable. We are a most destructive and unappreciative people in regard to our environment. It is incredible that we are living in the capital city beside one of the most picturesque cesspools in Europe which was described by George Bernard Shaw as more beautiful then the Bay of Naples ——

The Deputy should stick to the Bill.

I refer to Killiney where there is raw sewage ——

Acting Chairman

I do not think we should have a discussion on the environment now.

I will just finish that sentence by saying that Dublin Bay is a cesspool which must affect tourism. We have destroyed whole stretches of our countryside such as the Liffey Valley in my constituency. It is one of the most beautiful valleys in the country through which the Liffey flows to the bay and we are using it as the main dump for Dublin city and county. The intention is to fill it up to the top from Chapelizod to Lucan. It is an absolute disgrace and a comment on the future of the country. Big investment has been poured into the tourist industry and incentives have been given in the budget to encourge it, yet we are doing our best to destroy it. I was glad that before the Minister left the Department he brought this Bill to the House and now that he is in the Department of Finance he will be able to appreciate better the programme that is ahead of us.

At last the message has got through that personal taxation was crippling individuals, ruining incentive and preventing expansion in industry. We must be very careful about manufacturing and not rely too heavily on any one area. Incentives are needed to encourage the faster growth rate that is needed to absorb the huge numbers who are unemployed. We have learned the lesson about being competitive. Because inflation has been reduced and there is a decrease in interest rates and in energy costs we have a chance of achieving a faster growth rate. The reduced energy costs should be passed on quickly to the consumer generally and to industry. While we must not rely totally on these factors, we must be prepared to take a chance.

There is a good deal of expertise available to the Government but while there might be an economic theorist in every Government Department it must be said that not many of those holding PhDs in economics become successful entrepreneurs, builders, developers or industrialists.

In a short space of time there has been a miracle in terms of endeavour, concentration and unselfishness in sorting out everything, to the stage where we can create jobs on a massive scale but the Government have not told us how this can be achieved. I am not saying this by way of criticism of this Bill. The reason the advisers and others have not come forward with the answers is that they do not have the answers. The new Cabinet task force who have been set up by the Government, while bearing in mind what they have to offer and being humble about their backgrounds, should be prepared to listen to those who have some experience in that area and listen to people from both inside this House and outside it who have practical experience.

The books are in good enough order, inflation rates are low enough and interest rates are falling sufficiently to enable us to take the chance we must take. This involves an imaginative scheme that will be fantastic enough to capture the imagination of the young generation who are crying out for the leadership that is necessary if we are to rebuild our country. In this endeavour we are to spend hundreds of millions of pounds. Despite the devastation that Belfast has suffered in the past 16 years it is ahead of us in terms of what we are to spend in rebuilding this city. Up to £300 million has been committed to rebuilding Belfast.

We have a policy that has been formulated fairly quickly in respect of industry. The Government with an input from backbenchers from the parties have decided to provide a package of incentives in relation to saving Dublin. While I wish every success to the effort to develop Mountjoy Square and the docks area, I do not think the package is attractive enough to bring about the desired success. Despite the tax concessions and so on there is not enough incentive for people to become involved in the project. Despite the tremendous pressure exerted by the housing construction sector to invest all the money in that industry the Government courageously refused, saying that that industry should not lead, that the infrastructure should come first. It has been accepted that the policy of building 1,000 or 2,000 houses in an area, moving out and leaving behind 2,000 people without work was not sensible.

The Opposition when in Government tried to stifle the incentives that existed by way of local authority housing and the Housing Finance Agency. We have solved the housing crisis in this city.

Acting Chairman

The points the Deputy is making would be more appropriate to a housing Bill.

It is important to expand the incentives that have been outlined in the matter of industrial policy because these are not sufficient to encourage people to risk their capital especially in intensive capital industry. The rewards are not sufficient to encourage people in the manufacturing area to become involved. Home based business and industry should be given much more encouragement. The IDA should have an open arm policy towards entrepreneurs. In the past number of years we have proved that we can stand shoulder to shoulder with the best anywhere. One need only have regard to the success abroad of Irish trained executives and business people.

The two pronged approach of continuing to attract new overseas investment while assisting strong indigenous companies, whether large or small, has proved successful. We need to keep ahead in terms of marketing and development. The policy of developing simultaneously Irish owned and foreign enterprise has worked well. Since 1975 we have had a more rapidly growing output than has been the case of any other EC country or of the US or Japan.

Unemployment is our biggest problem. Perhaps we would have been able to contain the problem in this regard to an acceptable level if our population had not been so big. However, tremendous efforts must be made to solve the unemployment problem. The State must be concerned to get the best return on the investments it has made and the National Development Corporation should become active immediately in order to fill the gap in the area of equity participation. There was a lack of interest among the banking sector in providing risk capital or going into the risk area at all. It is a disgrace that the Bank of Ireland, through their chairman, should have tried to adopt the 3 per cent premium for small businesses who wished to expand, but due to an outcry from Members of this House and from businesses they had to withdraw that suggestion. It is very important that the Government should become involved through the setting up of the National Development Corporation but it now needs money to get it going.

It is good to see this Bill before the House and to see that the policies set out in the White Paper on Industrial Policy have worked in such a short space of time. All things are going well for us as far as the dollar is concerned and the staving off of the international recession. I agree with the policies outlined in the paper. I know it is important, although we stressed it too much at one stage, to concentrate on the maximum number of jobs in manufacturing and services. I do not want to list the objectives of the industrial policy but I will mention a couple of them such as maximising the value-added in industry and retaining the wealth created for further employment creating investment. This is a factor the Minister stressed many times in different fora and he incorporated it in his policy. It is absolutely essential. We might be thinking about the infamous black hole and the repatriation of profits and we need to give incentives to people to keep their money here, reinvest and create more jobs. In the sixties and seventies we had a policy of attracting foreign business, giving them tax free incentives in order to get jobs. We hoped that we would be able to learn the skills and set up our own businesses. This formula, although it was criticised then, has actually worked quite well and we are reaping the benefits now.

It is good to see that we have developed an internationally competitive sector. That was the biggest worry of all when we joined the EC and before we had started exporting to any great extent. We had been used to the protection of tariffs on the small number of industries we had. It was mentioned in regard to the National Development Corporation that they were to encourage the rapid development of natural resource-based industries and the natural resources themselves. It is unfortunate that we have not really got going in that area but the Minister should take maximum advantage of the job creation opportunities available. If natural resources are involved, they should be used. Five hundred jobs could be created immediately if the Bula ore body were used. There were 23,000 jobs created as a result of the North Sea oil programme and we could create thousands of jobs in that sector. The road programme is creating jobs but there are huge infrastructural projects where jobs could be created. We could create a large number of jobs by building the proposed tunnels in Cork under the Lee. We could create 3,700 jobs by undertaking city centre projects, building bus stations, developing the city, putting in a tunnel in Dublin. Probably another 5,000 or 10,000 spin-off jobs would be created. I do not know why the reasons we are shy to take on the afforestation programme have not been published, since 12,000 jobs could be created in that programme. One of the Ministers of State had been pressing for a long time for this to be done. It is now time to look at all these different prospects and get involved in them.

In chapter 7 of the White Paper the development of industries based on agriculture and natural resources is mentioned but it goes on to mention only agriculture and processing, leaving out resources. I realise that we could not get into the area of smelters and so on but there are dormant mines which could be reactivated.

I know there is plenty of venture capital available outside this country for investment within it but there is a shortage of projects in which to invest. If we could identify projects of that nature there would be no shortage of money in the venture capital area to get jobs going.

I welcome the Bill. I also welcome the encouraging reviews of the national industrial performance. I ask the Minister to take stock of the performance of the IDA and at the same time remember that we must have a massive job creation programme alongside the industrial programme.

I thank all Deputies who contributed to the debate. It is inevitable in the case of such a broad subject as industrial development that the contributions from Deputies will be varied and wide-ranging. A number of suggestions and ideas have been put forward and these will be taken into account. The debate reflects the broad concensus in approach to industrial development that exists among the major political parties. This has been advantageous in maintaining a stable environment for industry and in supporting the efforts of our industrial promotion agencies to attract overseas industries here.

As the former Minister said in his opening speech during this debate, the purpose of the Industrial Development Bill is to give effect, where appropriate by statute to the policy changes set out in the Government's White Paper on Industrial Policy and to consolidate existing legislation in the industrial development area. While the aims and future direction of our industrial policy have been clearly set out, the present Minister and I are anxious that policy must be dynamic, reflecting the changing needs and realities in relation to industrial development and its potential for maximising sustained employment and output growth.

In fact, a policy review of developments since publication of the White Paper is already under way within my Department. Under section 6 of the Bill this will have to be completed and the conclusions arising from it will have to be laid before both Houses before the end of 1986. The review group is addressing at present a number of important areas such as how direct employment can be maximised from the industrial sector and what further steps can be taken to develop indigenous industry. Triennial reviews will be a feature of industrial policy for the future.

A number of common areas of interest and concern were highlighted by Deputies during the debate and I would now like to deal with the principal issues raised. Some of the more technical points may be taken up on Committee Stage. There was an understandable emphasis by Deputies — which I share — on the need to enhance the employment impact from industrial development. This is acknowledged, of course, as the first objective of the new policy at paragraph 1.9 of the White Paper as follows:

...to create and maintain the maximum number of sustainable jobs, as many as possible of them high-skilled, in manufacturing and international service industry.

The employment targets in the White Paper for an average net increase of 3,000 to 6,000 jobs per year in manufacturing over the period 1984-1994 are ambitious ones. These targets are based on a doubling of industrial output over that period. Like most Deputies, I would hope that we could achieve a higher figure but in the Government's view it would have been dishonest, given present circumstances, to set higher targets simply to make them more politically palatable.

In attempting to increase direct employment in manufacturing, we will have to achieve results which are in stark contrast with the trend in most other western European countries. Reductions in manufacturing employment have resulted from the continuing advances in technology, improving productivity and the decline of many traditional employment-intensive sectors. For example, between December 1979 and March 1983, 1.5 million manufacturing jobs were lost in the UK. Even in the US where overall employment has been showing a steady improvement, 220,000 manufacturing jobs were lost in the first six months of 1985.

This is not to say that we should not aim to maximise the direct and indirect employment spin-off from industrial development. Indeed, following an active dialogue between the former Minister and the Industrial Development Authority, the central focus of the IDA in 1986 will be to get a better employment and value-added performance from the existing industrial sector and every encouragement and feasible resource backing will be given to initiatives involving significant or quantum leaps in terms of direct or indirect job impact. Moreover, some new ideas are being developed and will be the subject of discussion at the next meeting of the management committee on industrial policy which, under the chairmanship of my Department, includes representation by all the major State agencies associated with industrial development.

Industrial output increased by 4 per cent and exports rose by 8 per cent in 1985. The annual production of manufactured goods is now estimated at about £15,000 million and 11,000 new jobs were actually created and filled in 1985 in companies receiving IDA support. Despite these encouraging trends, there was a net reduction in manufacturing employment but this reduction has continually decreased since 1983. While factory closures attracted most attention, the IDA estimate that two-thirds of the job losses in 1985 were due to existing companies trimming their workforces. This resulted, in part, from a trend among firms to contract out services such as distribution, catering and cleaning, previously carried out in-house. The transfer of such jobs to private services formed part of the employment growth in that sector during 1985. I will turn to the outlook for 1986 at the end of my contribution.

Many Deputies highlighted the importance of accelerating the development of our natural resources sector, in particular food. The recent appointment of myself as Minister of State with special responsibility for the food sector and the imminent establishment of the National Development Corporation emphasises the Government's commitment to developing this area. Among the positive developments that have already taken place are: (a) the co-operation between the supermarket multiples and the State agencies to capture more of the Irish food business, of which £1,000 million was represented by imports in 1985; (b) the identification and quantification by the State agencies of specific opportunities and niches in the Irish food market; (c) an increase in the number of companies negotiating investment proposals with the IDA in this sector. In 1985, the number of projects being supported had risen to 147 and involved an investment of over £84 million, (d) the recent decision by the IDA to support three projects in the grading, storing and packing of fresh fruit and vegetables in order to improve the quality and presentation of Irish produce; (e) the recent IDA Food Fortnight designed to highlight opportunities specifically directed at small companies or individuals thinking of starting up a food business; and (f) the pilot experiment in the food sector being conducted by Shannon Development in a purpose-built centre at the Raheen Industrial Estate in Limerick. These developments will continue at full pace and represent a determined effort on the Government's part to make progress in this matter.

In the course of the debate, Deputies raised a number of questions in relation to designation of areas for purposes of the higher rate of fixed asset grants. At the request of the former Minister, the National Economic and Social Council completed an independent objective review of the use of designation as a flexible policy instrument. No such review had been completed since 1952. The council published their report in December 1985 recommending objective criteria, based on labour market imbalances, to determine designated status on a needs basis for the future. Following receipt of the NESC report, the Economic and Social Research Institute were commissioned by my Department to advise on the implications of implementing the NESC recommendations to enable the Government to consider the matter further. I should stress, however, that no decision has been taken as yet by the Government on any changes in designation. Section 4 of the Bill is designed to allow Ministers, following the enactment of the Bill, to use designation in a more flexible manner.

As far as regional industrial development is concerned, Deputies will be aware of the regionalisation of the IDA's small industries programme which was completed during 1985. This involves a decentralisation of promotion, negotiation, evaluation of projects, payments and after-care service to seven regional small industry boards. The local authorities and the county development officers are involved in the process. In addition, one-stop shops have been established in nine regional centres to eventually bring under one roof all of the services of the State agencies with an involvement in small business such as the IDA, CTT, IIRS and so on. These are radical initiatives designed to provide a locally-based service to maximise the potential for small industry projects. I am glad to be able to report to the House that the policy is providing to be effective. In 1985, IDA-backed small firms created 3,700 jobs, an increase of over 20 per cent on the 1984 level. The IDA expect that an even better performance will be achieved during 1986.

There has been some ill-informed criticism of the information available on the cost per job in industrial projects. I am concerned about this as my Department and I are anxious that we get the best possible return on our investment in job creation. Indeed, this was one of the principal objectives of the industrial policy White Paper. Some commentators have not only ignored the amount of information already available on this topic in IDA annual reports and elsewhere, but they have also made far-fetched claims regarding the supposed lack of expenditure control by my Department and the agencies under their responsibility.

There are many ways of defining cost per job. Any discussion must therefore be based on a careful definition of what is included and what it is intended to measure. The need for careful definition reflects the uncertainty attaching to projects, the different nature and timing of the assistance provided by the industrial promotion agencies, the duration of employment in specific projects, etc. We must also remember that cost per job is only one of a number of mechanisms for ensuring that the best possible return is received on the State's investment in job creation.

In negotiating for a new industrial project, a level of grant assistance must be agreed on the basis of expected performance in terms of sales, employment, investment in assets, etc. The actual performance of a new plant inevitably will not follow a smooth and certain progression of increasing sales, employment and investment in assets. A priori, there are risks and uncertainties attaching to any industrial investment. Just as a company may not reach its sales and investment target, however, so also it may not receive the total grant-aid agreed at the outset.

Every project is thoroughly examined by an IDA board, and where appropriate the Authority and the Government. Every project is appraised from a commercial, technological, economic and managerial point of view. The appraisal process takes account of the cost per job in each project. A review of the actual jobs resulting from job targets some years ago did show a degree of over-optimism with regard to targets. This problem has now been addressed by the putting in place of a more accurate method of estimating the number of jobs associated with each particular project. As a further control mechanism, the former Minister instructed the IDA to include in their annual report details of jobs approved for every sector in each year, and the number of jobs that have actually come on stream in succeeding years. This information is included in the 1983 and 1984 annual reports of the IDA.

In summary, every effort is made to minimise the risk to the taxpayer associated with each individual project. In the final analysis there is direct control over the payment of grants. Grants are only paid after investments have taken place.

At this point I would like to refer to certain inferences during the debate that IDA grant assistance in the past may have been related to party political affiliations. I must unequivocally refute any such inference. I have certainly received no complaints of this nature during my period at the Department and I would be glad — as I am sure the IDA would be — to investigate any such allegations.

To return to the issue of cost per job, my Department have got the agreement of the management committee on industrial policy to an approach which measures the average cost per job sustained over a six year period. This is similar to the approach adopted in the Telesis report. Only sustained first time jobs are counted, that is jobs still in existence at the end of the period. A first time job is defined as an increase in employment over and above the previous peak employment level. Costs are measured in constant 1985 prices. Using this method the average cost per job sustained in the period 1978-84 was £15,790.

Grant payments show only the direct costs involved. The administrative cost of the IDA and the other promotion agencies, the cost of advice provided by other agencies such as Córas Tráchtála, the Institute of Industrial Research and Standards, the cost of infrastructure to improve and facilitate industry and any tax revenue foregone are not included. There are also indirect benefits, however, such as the increased demand in the economy arising from new industries starting up and the benefits in terms of technological and skill development in the economy.

Question put and agreed to.
Committee Stage ordered for Wednesday, 19 March 1986.
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