I move:
That a sum not exceeding £200,522,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1988, for the salaries and expenses of the Office of the Minister for Industry and Commerce, including certain services administered by that Office, and for payment of certain loans, subsidies, grants and grants-in-aid.
The Estimate before us, provides, as indicated, for net expenditure of just over £200 million in 1988. This compares with an outturn of £217 million in 1987, an overall decrease of £17 million. The reduction must be seen in the context of our overall budgetary situation. The situation was such that, when we came into office, cuts, and severe cuts, in virtually every area were unavoidable. I am satisfied, however, that taking all factors into account the reductions made in my area of responsibility were achieved in such a way as to ensure that the areas of highest priority from a developmental point of view were least affected.
The progress made over the past 15 months in controlling public expenditure has been a major factor in the transformation of the environment for private sector investment — including that for the manufacturing sector. The evidence of the improved climate for investment over the past 15 months is clear-cut: our rate of inflation is now below the average of our EC partners and is at its lowest level for a quarter of a century; interest rates have fallen by up to 6½ percentage points; each fall of 1 per cent is worth about £16 million in reduced annual interest payments to the manufacturing sector alone; electricity prices have been reduced for industrial users and are now lower for Irish industrialists than for many of their EC competitors; telecommunications charges are coming down later this year; the public finances have been brought under control for the first time in years and the budget projections have been on target in stark contrast to the situation that had prevailed in recent years; considerable progress in the rationalisation of the State industrial promotion agencies has been made and these make the promotional efforts of the State more efficient and cost-effective; and I have initiated a new programme to cut the bureaucracy with which business firms have to contend in dealing with Government Departments and agencies.
These developments, together with a reasonably favourable international economic situation, have brought about a real change in our economic prospects: investment in IDA grant-aided enterprises increased by some 14 per cent in 1987 after a 4 year period of continual decline; manufacturing output increased by over 10 per cent last year, one of the largest annual increases over the past 20 years; exports have soared to record levels and the balance of payments on current account showed a surplus in 1987 for the first time in 20 years; the upward spiral in unemployment has been halted and levels are now at their lowest for 19 months; and fuelled by the record export performance real GNP increased by 5 per cent — the highest rate of increase in economic activity for almost 20 years.
The progress achieved in 1987 is only the start. We have put in place, in consultation with the social partners, a pragmatic framework — the Programme for National Recovery— within which our economic and social problems can be tackled in a coherent and balanced way. The programme charts the way forward for the public finances, taxation reform, social equity and economic development with a mutually consistent set of practical measures, which are now being implemented.
We are on course to achieve the employment targets set out in the programme and the most recent review of progress undertaken in consultation with the social partners indicates that almost 20,000 new jobs will be created in manufacturing and international services this year.
In the Programme for National Recovery, we have set ambitious but realistic job targets. At the same time the public finance resources available will remain limited. The industrial promotion agencies — IDA and SFADCo — have restructured their organisation and approach to reflect the new realities. Greater selectivity in approving projects for State aid will be the key to securing better value for money. Grant payments will be matched tightly to the achievement of specific job performance targets. There will also be a stronger repayable dimension to State assistance in the form of preference shares, equity stake, royalties or repayable grants.
We will continue to aggressively promote the suitability of Ireland as a location for foreign companies — of which there are 900 at present employing 80,000 people — and to strengthen the base of these companies in Ireland by encouraging their further expansion. We will encourage, in particular, investment in the areas of research and development, linkages and marketing. We will continue to seek investment projects from Europe and the United States and will intensify our efforts to secure additional investment in Ireland by Japanese and other Far Eastern countries. The IDA have targeted a 20 per cent increase in new job creation by overseas firms over the period of the Programme for National Recovery and on the basis of trends to date are confident of their ability to achieve this.
For indigenous Irish firms the policy changes which I announced in April will result in a new emphasis on management development, strategic planning within companies and product and market development. These changes are designed to prepare Irish industry for the completion of the single EC market by 1992. In line with these changes a new directorate has been established by the IDA to promote more intensively the development of mainstream Irish industry which has the potential for growth.
In small industry too we have revised the incentive package to distinguish between projects which have genuine prospects of creating significant job numbers and export potential and those which will involve relatively small job numbers. Projects with significant employment creation potential will continue to be eligible for the full range of incentives. Projects, with more modest projections for growth, will be eligible for employment grants of up to £5,000 per employee and payments will be directly linked to actual job creation. Management development grants will also be available where justified by the need to upgrade management expertise. The objective is to ensure that scarce resources are concentrated on those small firms with real growth potential.
Indeed, with the reduction in the level of direct support for industry, grant assistance will, in all areas, only be paid where it is necessary for the project to proceed and where projects can be shown to have a direct benefit for the regional development of Ireland. Also, grants will only be paid as and when projects come on stream. In implementing this policy, no action will be taken which discriminates against goods and services originating in the other member states of the Community.
As a further means of assisting the development of industry, I recently announced the designation of Counties Louth, Wexford, Wicklow and Offaly and an eight acre site at Mayfield in Cork for the higher rate of industrial grant for a period of three years. Industries in designated areas may benefit also, at the discretion of the local authority, from a two-thirds remission of rates for a ten year period. The formal approval of the EC Commission under the Treaty of Rome will be required before the designation of these new areas becomes fully operational.
Since the beginning of this year, Shannon Development have been given responsibility for the promotion and development of medium and large industry in the mid-west region in addition to their existing responsibility for small industry. SFADCo were also given responsibility for all aspects of tourism development in the region. This major innovation is a step towards opening up for the first time real prospects of integrated regional development at local level.
One of the most imaginative new development initiatives promoted by the Government in 1987 was the establishment of a financial services centre at the Customs House Docks site. The IDA are responsible for marketing the centre. So far 24 projects have been approved by the financial services certification committee and have been sent to the Minister for Finance for certification as eligible for the 10 per cent corporation tax rate. These projects have the potential to create approximately 1,000 jobs.
A major element of the Government's strategy of improving the cost environment and creating the conditions under which enterprise can flourish is to ease the administrative burden of Governmentimposed regulations on industry and business. The Government have taken the first step in addressing this problem through the recent launch of a major programme throughout the public service aimed at reducing the legislative and administrative burdens that modern-day Government pose for industry and business generally.
The new programme requires a methodical examination in all Departments of existing requirements which affect industry and business generally. The objective is to do away with those requirements no longer necessary and to simplify those that remain. A senior officer has been given responsibility for the programme in each Department. All new proposals which would give rise to any additional paper work for the business sector will be critically examined to see if their introduction is genuinely required.
The National Development Corporation is now in its second full year of operation and has maintained its momentum in fulfilling the active, innovative and developmental role envisaged in its legislation and in the Government's Programme for National Recovery. The reduced level of grant-in-aid allocated to the corporation for 1988 reflects an increasing level of own resources and the fact that it is required to be self sufficient for administrative purposes by 1992. By end December 1987 £11.5 million was provided to NADCORP by way of capital for investment purposes and the provision this year is £6 million. To date NADCORP has approved investments totalling over £12 million in its own right as well as completing over £1.5 million of investment commitments taken over from NEA. The corporation's current investments in over 40 separate enterprises is valued at close to £15 million.
Science and Technology is continuing to receive a very high priority from the Government in 1988. The manufacture and use of high technology products and processes now represents the greatest potential source for new industrial employment in all developed countries. We have brought together, since the beginning of this year the combined resources of the NBST and the IIRS in a new Irish Science and Technology Agency called EOLAS. The new agency will bring a fresh impetus to the urgent task of raising the technological capability of Irish industry. I will leave the details of the science and technology programme to my colleague, the Minister for Science and Technology to elaborate more fully later in the debate.
The Government have allocated £20.862 million to Córas Tráchtála to enable them to carry out their activities in 1988. The figure reflects the need to cutback on Government spending overall but the level of the reduction which is not as large as for many other sectors, also shows the continuing importance attached by the Government to export marketing. Of this figure £19.612 million is being allocated to CTT promotional and strategic marketing schemes and £1.25 million is being allocated to the market entry and development scheme which provides assistance to small and medium sized companies with the initial marketing costs associated with breaking into and developing new markets. The assistance is in the form of guaranteed loans to companies which are repayable to the Exchequer on the basis of additional sales generated over a period of five years. The 1988 allocation, together with the recent more commercially focused redirection of CTT, reflects the Government's commitment to improving the marketing capability of Irish industry and is a clear indication of our recognition of the central role of export growth in our national development.
The work of CTT in developing exports is complemented by that of the Irish Goods Council which provides marketing support for small manufacturing firms in respect of the home market. The council undertake this important work through marketing programmes and trade shows, the provision of marketing advice and the operation of an industrial subcontract service. Irish manufactured goods account for a low share of the domestic market by the standards of our European partners. If we were to improve on this by a relatively modest amount it would generate many thousands of additional jobs. These are objectives well worth striving for and the council have a key role in this. My colleague, the Minister for Trade and Marketing, will elaborate further on the activities of the council later.
Ireland's economic fortunes are highly dependent on the European market, as a purchaser of our goods and services. The growth and further liberalisation of that market for our exports under the Community internal market programme is vital for our future prosperity.
The price paid by the Community for its failure to capitalise on its enormous economic and human potential has been high. The performance of its major competitors, the USA and Japan, in regard to output, research and development, application of new technology and employment, is far ahead of that of the Community. In the period 1973 to 1986 the USA created 20 million jobs and Japan 7 million. In the EC, however unemployment continued to rise and today 16 million of the Community's labour force are out of work. A major cause of this problem is the fragmented Community market of 12 countries.
The Commission's White Paper on Completing the Internal Market sets out a programme and detailed timetable for the achievement of that target by 1992. Physical, technical and fiscal barriers are being systematically and progressively removed and the free movement of goods, services, capital and people throughout the Community, ensured. A recently published study undertaken for the Community — the Cecchine report — estimated that up to 5 million additional jobs could be created throughout the Community in the medium term together with an increase of 7 per cent in GDP if the completion of the internal market is achieved and actively built upon.
The completion of the internal market is the most important single factor that will affect Irish firms over the next four to five years. It will create opportunities but there are no guarantees. Every business firm in the country must examine in detail what the completion of the internal market, and specifically the 300 or so proposals which the Commission has put on the agenda to achieve this, will mean for them.
The Government have already been active in bringing this message home to firms in speeches which the Taoiseach and I and other Ministers have given over many months. A number of conferences have already been organised by State agencies on the theme. We are co-operating very fully with the representatives of business and with the other social partners in assessing the implications of the completion of the internal market and in getting the message across to the business sector. This campaign of information and awareness will be stepped up further through a national launch at which the Taoiseach will preside shortly.
As a follow-up to this and the work already underway I will shortly be starting a nationwide campaign to personally make every firm in the country aware of the major implications of the steps being taken now towards the completion of the internal market. The objective will be to ensure that every Irish company knows what lies ahead and what it must now do to prepare for both the major opportunities and the very real threats that will arise.
The Government have had considerable success over the past year in reducing the costs faced by the business sector. High insurance costs is an area where further progress must be made. The Government are seeking to have insurance costs reduced by the measures set out in the Programme for National Recovery. Our court and legal procedures are being changed and a drive to improve safety in the workplace is being undertaken. I will be pressing to ensure that the benefits of the steps now being taken to reduce costs are passed on quickly to policy holders.
The Companies (No. 2) Bill, at present in the Seanad, is the culmination of many years of hard work. It aims to tackle the many abuses that have eroded confidence in the business community. The Bill tackles existing problem areas by introducing a wide range of new procedures to deter abuse under company law. On the positive side, the Bill proposes a radical new form of company rescue and reconstruction to help put firms having temporary difficulties back on an even keel and remove any excuses for trading while insolvent.
In the area of consumer protection, there have been a number of significant developments over the past year as a result of action which I have taken. These include: the restructuring of Government agencies involved in competition and consumer protection to give a more effective and efficient use of resources as well as an overall improved competitive environment and an increased level of protection for the consumer; the requirement that the true cost will now have to be given in advertisements which make reference to the cost of credit; the requirement for manufacturers to provide more detailed information about food additives on food packets and labels.
Other new consumer protection measures which I will be bringing forward include: the EEC Directive on Product Liability, which imposes legal responsibility on producers of products for injury or loss occasioned to any person due to a defect in the product, if it is shown that the defect existed when the product was put into circulation; and a right to a cooling-off period, not less than seven days, in the case of what are known as "doorstep sales". During this cooling-off period the consumer will have a right to cancel the contract.
The past year will, I believe, go down as a watershed in our economic development. It was the year that we drew back from the path that led to economic insolvency through decisive and coherent Government action. We have done a great deal to recreate the conditions for significant economic development and made a degree of progress in a relatively short period that few could have foreseen 15 months ago. We have started but not yet finished the task that requires to be done.
The development of our industrial and services sectors lies at the heart of the Government's Programme for National Recovery. Government activities are geared specifically to recreating the conditions within which investment, output and employment in these sectors can resume significant growth. The progress which we have achieved to date shows what can be done. We are determined to build on this and in the process to restore again confidence in our own economic future.