Dáil Éireann debate -
Tuesday, 27 Nov 1990

Vol. 403 No. 1

Fóir Teoranta (Dissolution) Bill, 1990: Committee and Remaining Stages.

Section 1 agreed to.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Mr. Noonan

(Limerick East): I am opposing section 2. This section is what the Bill is all about, dissolving Fóir Teoranta, and, therefore, to oppose section 2 is effectively to oppose the Bill. In April 1989 the Minister stated his intention to abolish Fóir Teoranta. At that time he said the company were not required any longer because, first, the new Companies Bill would bring forward procedures which would enable the functions carried out by Fóir Teoranta to be carried out in an alternative manner. Since then we have had the collapse of the Goodman Group. The Dáil was recalled in August and a Chapter of the Companies Bill was introduced as separate legislation. We know now there is a way whereby, following certain procedures, the court can provide an examiner to examine the assets of a company in difficulties. When the examiner has reported, the courts are empowered to allow a company, which on the face of it would be destined for liquidation under the old legislation, to continue to trade themselves out of difficulty.

Already, even though there is very limited experience of the new legislation apart from the Goodman Group of companies and I understand a small textile company, it is quite clear that certain difficulties are arising with it. There are, for example, doubts about the constitutionality of the legislation. Secondly, there are doubts about the cost of the procedure, particularly as it relates to smaller companies. There are so many occasions on which the examiner can return to court that there is a doubt whether what is effective legislation theoretically will in practice be of benefit for the rescue of small companies. There is a school of thought in the accountancy profession which suggests that such a dent will be made in the assets of a small company by the involved legal procedures in the appointment of an examiner, his reporting to the courts and making recommendations, they will be whittled away in the attempt to rescue it.

I intend, in the course of Committee Stage of the Companies Bill to raise this matter. I received correspondence recently which I would like to draw to the Minister's attention. It relates to a company in one of the Border counties which went into liquidation in 1984. The liquidators have now brought in their final report and are to distribute the assets. After the liquidators finished, out of assets of £59,000, there is only £13,000 left to distribute to creditors. When, under fairly straight-forward procedures involving liquidation, a major firm of accountants in this city can be called in and whittle £59,000 of assets down to £13,000, leaving the unfortunate creditors with less than one-quarter of the assets at the time the company got into difficulty, is it any wonder there are doubts about the Companies Bill introduced in August, with the involved legal procedure of an examiner having recourse to the High Court on so many occasions before he can bring in his report?

I draw attention to these facts because the major plank on which the Minister based his decision to abolish Fóir Teoranta was that they would no longer be necessary when the new Companies Bill was on the Statute Book. The Minister referred to that Chapter of the Companies Bill which is now law as a result of the emergency recall of the Dáil in August arising out of the Goodman affair. We know that that legislation, and the procedure which has been referred to in the debate as being along the lines of Chapter 11 legislation in the United States, is not an effective substitute for the activity carried out by Fóir Teoranta over so many years which resulted in the saving of many companies and thousands of jobs.

The Minister also on that occasion said there was now no great pressure on companies because interest rates have come down. Of course interest rates had come down in April 1989 but they shortly went back up again.

Minister for Finance (Mr. A. Reynolds)

They came down again.

Mr. Noonan

(Limerick East): They went up four points and came down one point. Therefore, the Minister is still about three points on the wrong side of the argument since he made it. If the second plank in the Minister's argument for the abolition of Fóir Teoranta was that we would have permanently lower interest rates and that the cost of money to companies would be permanently at a low level, which would obviate the necessity for an organisation such as Fóir Teoranta being involved in the rescue of companies, he certainly has not justified the decision he made based on that plank of policy.

In passing, and arising from that, I would like the Minister to comment on something else when replying. For the last five or six months the Central Bank, I presume on the advice of the Department of Finance, have been following a very strict monetary policy. When we entered the exchange rate mechanism of the EMS in 1979 the basket of currencies varied against each other to plus or minus 2½ per cent which, when one looks at the relative positions, allowed a fluctuation of about 3 percentage points for an individual currency. Over the last five or six months the bank have been following a policy of pinning the Irish pound to the German Deutsche Mark. There has been little or no fluctuation in that time of the Irish pound against the Deutsche Mark — it stayed at a rate of about £2.68. All of a sudden in the middle of last week the bank changed that policy. Such a change in policy, allowing the punt to fluctuate again within the EMS band, is a contradiction of everything the bank have been doing for the last five months.

I would like to ask the Minister why the very firm monetary policy which was being followed has now changed. Will this change lead to higher interest rates? It seems that it will. Could it be that the bank have less confidence now in the Government's fiscal policy than they had four or five months ago? Could it be that the bank know now that the Minister is having difficulty in getting his Book of Estimates agreed. It will be several weeks later than was promised and expected. The Taoiseach said today it would be ready in nine or ten days, sometime towards the middle of December. If it has taken so long to prepare a Book of Estimates, and if the projections now are that the Minister will have difficulty in bringing in a budget in January which will increase borrowing rather than reduce it, could this be the reason the Central Bank are no longer as firm on their monetary policy as they have been for the last five or six months? Could it be that the Minister, by failing to control public expenditure last year, sowed the seeds of a difficult budget in 1991? Are we facing a softer monetary policy which will lead to higher interest rates? Be that as it may, certainly interest rates are three points higher than when the Minister made his statement on the future of Fóir Teoranta in April 1989. At that time he firmly based his decisions on a number of policy planks, one of which was that interest rates were down and that, consequently, there was no need for a rescue agency along the lines of Fóir Teoranta.

The Minister also argued at the time that, because of the introducton of the business expansion scheme, there were now opportunities for companies to acquire finance from the private sector and individual taxpayers and that they did not need to have recourse to a rescue agency like Fóir Teoranta. The Minister made changes in the business expansion scheme to extend it to tourist activities and we know that hotels, some of which had pretty bad balance sheets, refinanced themselves by recourse to BES funds. While some of the funds supplied through the BES to hotels were spent on extending facilities, putting in a swimming pool, jacuzzi and sauna, sporting facilities and extra bedrooms, quite a lot of the money went towards improving the balance sheet of hotels who were not doing very well. That was a legitimate use of the money.

On Second Stage the Minister said that we probably would not need Fóir Teoranta for a number of reasons, one being that companies in difficulty in the future, instead of coming to a State agency, could go to the private sector and get business expansion scheme funds which would be the injection of capital they needed to get their balance sheet right. He said that we would not need Fóir Teoranta and yet, the week before last, we were circulated with a report of the Comptroller and Auditor General who cast very serious doubt on the efficacy of the business expansion scheme or its desirability as an ongoing policy. He drew attention to the fact the one company which had attracted £25 million of BES funds created seven jobs. It is normal, in discussing SFADCo, the IDA and Údarás na Gaeltachta and evaluating their activities, to look at the cost per job. However, £25 million for seven jobs works out at £3.5 million per job. That is some cost per job. The business expansion scheme is up for renewal.

An Leas-Cheann Comhairle

Will Deputy Noonan accept that maybe he is using a rather broad canvas for a Committee Stage debate?

Mr. Noonan

(Limerick East): No, I do not because the Minister——

An Leas-Cheann Comhairle

I would be surprised if the Deputy agreed with me but——

Mr. Noonan

(Limerick East): I agree with you quite frequently but on this occasion I must explain the position. The Minister, in making the initial statement that he was abolishing Fóir Teoranta, said that one of the reasons we no longer needed them was that money would be available to companies in difficulties from the business expansion scheme. I am showing that there are so many holes in the business expansion scheme at present that the water is coming through in all directions. It is unlikely that the Minister will renew the scheme in April when it is up for renewal. That is a legitimate point to make when I am opposing section 2 which, effectively, is the whole Bill because it says that the company is hereby dissolved. Effectively, therefore, this is very like a Second Stage debate on section 2 because it abolishes Fóir Teoranta.

An Leas-Cheann Comhairle

Nevertheless, the Deputy will have to accept that one cannot ramble with the same freedom as one could on Second Stage debate. The Deputy has convinced the Chair already in the matter of his taking issue with the Minister's statement and he need not use it to embrace a whole lot of other material as it is perhaps gilding the lily in respect of the point he was making.

Mr. Noonan

(Limerick East): I accept your advice, a Leas-Cheann Comhairle, but I do not ramble on Second Stage or on Committee Stage.

An Leas-Cheann Comhairle

You will have to delve into your vocabulary and give me a verb more suited to what you are doing.

Mr. Rabbitte

He ranges widely over the subject.

Mr. Noonan

(Limerick East): I debate the principle of the Bill which is contained in section 2 which says that the company is hereby dissolved. I am examining the Minister's case for the dissolution of Fóir Teoranta. One of the four planks he advanced two years ago — and maintained when the Bill was introduced on Second Stage — was that, in some way, business expansion scheme funds would substitute for the activities of Fóir Teoranta. I am now illustrating the point——

Mr. Quinn

The Minister could not give the real reason.

Mr. A. Reynolds

What was that?

Mr. Quinn

I am referring to the September massacre when all Ministers were asked to surrender one victim. The Minister for Finance chose Fóir Teoranta.

An Leas-Cheann Comhairle

Is Deputy Quinn hoping to further widen the range of Deputy Noonan's contribution?

Mr. Quinn

I apologise for the interruption.

Mr. Noonan

(Limerick East): I would have been finished, a Leas-Cheann Comhairle, if you had not become involved in this. You are delaying the procedures of the House.

An Leas-Cheann Comhairle

The Chair might be regretting that he had not drawn attention to the fact that the Deputy could have concluded effectively at an earlier time.

Mr. Noonan

(Limerick East): Is it the Minister's intention to renew the business expansion scheme next April? Will it be announced in the budget or will he take the advice of the Comptroller and Auditor General who stated that it is not an effective scheme and that it should be looked at again? He advised that if the Minister and the Government want a particular economic response from a certain sector in the economy, it is more effective to target it by way of grant than to broaden the target by involving the investor in very wide schemes where the main benefit is tax relief and the main loss — untargeted — is the tax foregone to the Exchequer. The business expansion scheme is not an effective vehicle for rescuing companies. If a manufacturing company is in difficulty I would take a lot of convincing that the investor, who is principally motivated by a tax break, will put his hard earned savings into it. If it is a tourist-type industry — a hotel or a scheme of cottages and holiday homes — and in difficulty it would also be hard to convince me that a tax break scheme is an effective way of stimulating activity in that area and that we get value for money, pound for pound, in circumstances where there is no targeting of the investment or evaluation of the benefit. I know that the company which attracted £25 million of BES money and created seven jobs was not a tourist-type endeavour but it certainly is open to question and the Minister, in basing his case on it, has a major difficulty.

The Minister also said — this was his fourth point — that NADCORP would also be a new vehicle for venture capital. On reflection, two years later, the Minister will realise that even though the NADCORP portfolio is quite good, they are not inclined to lend to companies in difficulties and they certainly do not see themselves as some kind of rescue venture capital agency. It would be a very foolish manager who would look at a range of options and deliberately select companies in difficulty for investment, especially when the original intention of NADCORP was to provide venture capital to high risk start-up companies but not to companies in difficulties. When we discussed the alternative arrangements introduced by the Minister when bringing forward part of the companies legislation which was proceeding through the House when the Dáil was recalled in August, the Minister claimed that this would be the alternative procedure which would make Fóir Teoranta unnecessary.

Secondly, the Minister said that Fóir Teoranta were unnecessary because interest rates had gone down and the competitive climate for industry was now much better. Not alone have interest rates gone up, but the actions of the Central Bank last week were a clear signal to all of us that they are losing confidence in the Minister's fiscal policy, and that they see rain clouds ahead over the January budget. One would not need to work in the Central Bank to know that the Minister will have problems in the January budget. It is clear that the BES will not provide an alternative means of rescue for companies in difficulty. It seems that the case made that NADCORP would carry out this function is a very spurious one indeed. That was never the intention when they were set up and whatever difficulties they are experiencing now, they do not arise from the fact that they acted as a rescue agency. If they attempted to act as a rescue agency they would be going beyond their remit.

As I did on Second Stage, I am opposing the Bill. Once this section is passed the rest of the Bill is consequential, a matter of little conflict. The principle of the Bill is in section 2. I disagree with the principle and I am opposing section 2. I will be calling a vote on it. We may spend some time debating the consequential sections, but once section 2 goes through, that is the guts of the Bill and everything else is of little debating consequence.

Mr. Quinn

Section 2 contains the net point of this legislation. I was not responsible for finance in the Labour Party when this Bill was taken through Second Stage but I have read the Second Stage debate. As I said earlier on, I suspect that the reason for the abolition of Fóir Teoranta was related to the time when every Government Department were asked to surrender victims in order to frighten people in the public service generally and shake out some of the quangos, some of the extended sections of the public service which needed to be pruned, or so it was termed in the eyes of the economic advisers at the time. Every Department surrendered some of their outposts. The Dublin Transportation Authority was surrendered, An Foras Forbartha was surrendered, and it was logical for the Department of Finance to surrender one of their outposts, in this instance Fóir Teoranta. While Deputy Noonan was right to take apart the spurious arguments put forward as a justification, the Minister should be able to indicate that there was some connection between the timing of the announcement of that decision to abolish Fóir Teoranta and the other decisions made at that time.

There is certainly a need for the restructuring of Fóir Teoranta. For that reason the Labour Party opposed Second Stage of this Bill and we will maintain that position when the vote is called. We should retain some kind of positive interventionist mechanism above and beyond what is already there. Since Fóir Teoranta were established, the capital market and the taxation system have been transformed and, to a lesser extent, the advent of NADCORP provides venture capital for certain areas of activity. Without going into the history of Fóir Teoranta too deeply, their advent related to circumstances in Ireland after the Anglo-Irish Free Trade Agreement, and the opening up of free trade, when traditional manufacturing industries not used to the brunt of competition found themselves in difficulties. Fóir Teoranta were introduced by the late George Colley when there was a need for this kind of interventionist agency and they were supported by everyone at the time.

We are now facing a similar period with the advent of 1992. The detailed studies, are not being disseminated certainly to the workers in the various enterprises, on the impact of the single market on sectors of our economy which were previously not exposed to the full brunt of free trade and competition, particularly in the services area, show that, notwithstanding the pro-active advice being given by the EUROPEN campaign, certain companies in those sectors will be very vulnerable and will go to the wall. We have accepted the reality of that argument.

I suggest that we should have a restructured Fóir Teoranta in anticipation of companies in certain sectors having difficulties if they do not modernise. We have the historical precedent of the Reports of the Committee on Industrial Organisation prior to the 1967 Anglo-Irish Free Trade Agreement. Certain sectors of our manufacturing industry were identified by the Civil Service as being vulnerable and yet those companies did not modernise or diversify in anticipation of free trade and, consequently, went to the wall.

During the debate on the EUROPEN campaign, and on 1992, I made the point that there will be a need for a pro-active State agency to anticipate companies or sectors which will be vulnerable, to approach them in advance of the difficulties with the offer of assistance to find partners to merge with to strengthen them, or help them to get additional capital to diversify out of their product range into something that will be economically more secure. That is the type of positive State intervention we need in an open mixed economy.

An instrument available to the Minister, although wrongly constituted at present, is Fóir Teoranta. That instrument in principle exists in the body we are being asked to dissolve today. For that reason I am proposing to the Minister that there is no need to dissolve Fóir Teoranta but that there is a need to reconstitute them effectively. If the Minister looked at the detailed reports that the EUROPEN campaign are getting on the various sectors he would see that the Irish economy between now and the end of 1992, even allowing for a certain amount of drift into 1993-94, will need this kind of intervention. Getting rid of Fóir Teoranta is removing from the Minister's array of possible instruments for intervention a very effective instrument. For that reason I support the amendment.

Mr. Rabbitte

My party will support the amendment but not with as much conviction as the main proposer. The amendment addresses whether or not we should have a Fóir Teoranta or Fóir Teoranta as we know it. I am very ambiguous on this question because in too many cases in the past Fóir Teoranta were a milk cow for inefficient businesses. At the same time I recognise, where there is a potentially viable enterprise, that in the interests of saving jobs we have been left essentially without any rescue agency or mechanism and that in individual and isolated cases we may well live to regret that decision.

I do not wish to retrace my Second Stage speech on this issue in which I traced the history of Fóir Teoranta which was very uneven. They had a very inconsistent record in many respects including the publishing of accounts. I specifically referred to the decision in the early eighties to discontinue publishing information on the companies who benefited from the decisions made by Fóir Teoranta. I gave some specific instances in my Second Stage address and I do not wish to revive that information now but I must say I find some of it disconcerting. I do not think any genuine audit of public moneys spent down through the years by or through Fóir Teoranta could leave us satisfied that the public got value for money and that no questions were raised about the manner in which some decisions were taken.

We are of course having this debate in an artificial atmosphere in as much as the decision has effectively been taken and implemented. I do not see any practical hope of saving Fóir Teoranta but I hope the debate on Deputy Noonan's amendment may give cause to the Government to rethink whether there is a necessity for a rescue agency. That is one of the odd things about this decision. It is extraordinary that, at a time when this House will sooner rather than later be confronted with a major debate on the direction of our industrial policy, we find ourselves on a number of occasions pre-empted in the decisions we can take.

I ask the Minister for Finance again why it is the second triennial report on industrial performance has not been published. The Minister's colleague told me as long ago as last February that it was due for publication within a couple of weeks. When I asked him the same question last week he gave me a similar reply, even though some ten or 11 months have elapsed in between.

I think we know the reason: the report has concluded that in many respects our industrial strategy is a costly failure, that there is a need to change direction, that very specific conclusions are targeted and that not all Ministers in Cabinet are agreed on what that change in direction would mean. Consequently, the Minister for Industry and Commerce is not in a position to publish the report. Meanwhile we are suffering the cost of the inadequacy of that industrial performance through endemic unemployment and levels of emigration not seen since the fifties, yet for some reason the Government seem to be paralysed in terms of giving us the benefit of that report which, fortunately, because of a decision of a previous Minister for Industry and Commerce they are statutorily obliged to produce. It is very probable that they have come up with some very germane conclusions indeed.

We find ourselves in a situation where on an ad hoc basis the Minister has proceeded in any event to take certain decisions and this is only one of them, but it is a very pertinent one. It leaves us in a situation where a potentially viable enterprise, which could be reconstructed, does not have an agency to which it can make its case on its merits. We know that, given the track record of the Irish commercial banks, with some exceptions depending on who you know and how large you are perceived to be, there is no point in going along with cap in hand to the commercial banks to say “if only you would give me a bit of extra credit I might turn the corner and things are looking better for the year ahead”. We know the kind of reply that one will get especially if there is nobody easing one's passage to the door.

I am also sceptical whether Chapter 11 as a mechanism is going to provide the comfort in the Irish industrial scene that was advanced by the Minister when introducing the Bill. I am not so sure that it will do other than stave off the evil day for companies confronted with that possibility and perhaps give them a temporary respite. It is not necessarily going to put them back on the road to recovery. I also think that to some extent it pre-empts our freedom to have this discussion. If a change in direction is necessary in industrial strategy then let us see if we can agree on it. In the document which my party published, for example, we recommended greater emphasis on this kind of assistance being given through the Industrial Development Authority as the main promotional agency, the quid pro quo being that the Industrial Development Authority would take a stake in that enterprise, not necessarily a stake for all time, and provide the necessary investment at that juncture for a period which would be reviewed. That is but one possible solution.

As I said, the decision has already been taken to effectively shut down Fóir Teoranta and I see little point in prolonging the obsequies. However, if Deputy Noonan's amendment gives rise to some fundamental questions which need to be addressed by the House I am happy to support him.

Mr. A. Reynolds

The reason for this amendment is not at all clear. Basically what this amendment says is that we should stop the dissolution and go back to where we were. We debated this matter at length on Second Stage, the House voted on it and made a firm decision to abolish the agency and that decision stands. I have tried on many occasions since then to have the Committee and Final Stages of this Bill taken but at all times I was told by my Whip — the Deputy should correct me if I am wrong — that Fine Gael were not anxious to take the Committee Stage of this Bill until Chapter 11 was incorporated in the Companies Bill and put in place. Well, Chapter 11 is now in place and therefore I am not clear on why this amendment has been put down at this stage.

It is interesting to note that Chapter 11 was recommended to me when Minister for Industry and Commerce by Fóir Teoranta from their experience in the marketplace. It was their experience that people were coming to them too late in many instances and in others when they did arrive the rug could be pulled from under them at a moment's notice by the banks, creditors or anyone else. Therefore they are the organisation who recommended to me when Minister for Industry and Commerce that I should consider incorporating Chapter II in a new Companies Bill, and that is precisely what I did.

The proof of the pudding is always in the eating and the best test is to examine what has happened in the marketplace since the winding down of Fóir Teoranta. There was a net decline in manufacturing employment during the period 1980-86, but as is clear from the labour force survey, there has been a net increase of 5,700 jobs in the period 1987-90, clearly showing the case I made on Second Stage, that when we improved the competitiveness of the economy jobs were created. Jobs were being lost faster in 1987 than we could produce them because we were uncompetitive, but since then we have made this economy very competitive; our inflation rate is half that of the European average and about one third of the British market where 40 per cent of our total trade takes place.

Deputy Noonan makes the point that interest rates went up since the Second Stage debate took place, but interest rates came down by 1½ per cent; however, the differential between the interest rate here and the Deustche Mark has been narrowed by one third in that period. To try to put a lot of weight on a small blip in last Thursday's exchange rate markets when about a pfennig of a differential appeared and to say this is the new change in exchange rate policy is absolute nonsense and, of course, Deputy Noonan is well aware of that. He also knows that the Central Bank have done an excellent job recently in marking and tracking the Deutsche Mark and getting us into a position where we would be able to take our place with the narrow band countries in the very highly competitive future that lies ahead of us in Europe.

Whatever evaluation one wants to carry out in relation to what has happened since the decision to effectively close down Fóir Teoranta was taken, the situation has improved dramatically. I thought for a moment we were having a discussion on the business expansion scheme or on next year's budget. For some time I was not quite sure what we were discussing. To try to elicit from me at this stage the evaluation of a BES scheme——

An Leas-Cheann Comhairle

I hope the Minister is not going to give any other Deputy an excuse for following that line.

Mr. A. Reynolds

I have no intention of announcing what decisions may or may not be taken by the Government in relation to a certain scheme, but the example given by Deputy Bruton is not representative. Over 600 companies, as the Deputy knows, were helped by that scheme. No scheme is ever perfect and I think he and his party, and the parties opposite who participated in Government when introducing the business expansion scheme — to which they claimed so much credit — might take some of the criticism, if there is criticism, because the Comptroller and Auditor General was not carrying out an evaluation of the scheme. He was merely talking about the structures that were in place. If they were so far sighted in Government, why did they not put in some of the structures about which they now complain and for which they were quite happy to take credit, and I give them credit for it? I took action to stamp out any abuse, and I will leave it at that.

Deputy Quinn raised the question of the impact of the Single Market. It may well be when we get to that stage and examine industrial incentives in this country, we may have to remove even more of the incentives, the props for industry which Fóir Teoranta was. I do not believe in crutches. The day is gone when we can rely on crutches. We will have to live by our own means in the highly competitive market after 1992. The decision of the Government, which incidentally was taken in February 1989 when I was Minister but I am not arguing about it, was the correct one. At that time we were preparing the economy for a highly competitive position.

I do not accept what Deputy Rabbitte said — that finance is not available even if viable projects existed. One can criticise the banks, which I have done from time to time, and there are many other financial institutions, besides the commercial banks. I cannot accept the point that finance is not available to people who have viable projects.

Mr. Rabbitte

Nobody would hand it out like Fóir Teoranta did.

Mr. A. Reynolds

Can the Deputy make up his mind which side of the argument he is on. I am not sure if the Deputy is saying we should dissolve Fóir Teoranta and that if there are fundamental issues involved he may support Deputy Noonan's amendment. I cannot understand what his amendment is about because we now have Chapter 11, which Fine Gael were seeking. Deputy Quinn has nailed his colours to the mast and said: "I want an interventionist agency". That is his view and that of his party, but it is not one I share. I do not understand where Deputy Rabbitte stands, on which side of the fence he stands or whether he is trying to sit on the centre of the fence.

There is one thing I would like to correct, and I am glad I got the opportunity because the Deputy raised the question of a full debate on industrial policy. I saw attributed to the Deputy — rightly or wrongly — in last weekend's newspapers that he was of the view — mistakenly, I might add — that I was blocking the publication of a document on industrial policy. I am surprised Deputy Rabbitte would even make that suggestion.

Mr. Rabbitte

I never mentioned the Minister, that was editorialising.

Mr. A. Reynolds

I see, total inspiration by somebody writing an article on industrial policy, and the only Deputy mentioned is Deputy Rabbitte and then he accused me. I want to put it on the record of the House——

Mr. Rabbitte

I was only talking about the fundamental dispute at the heart of Government on industrial policy.

Mr. A. Reynolds

If the Deputy listens to what I have to say he might change his mind.

Mr. Rabbitte

The Minister is probably a major player in that.

Mr. A. Reynolds

I want to put on the record that I am not in any shape or form holding up the publication of the document referred to by Deputy Rabbitte.

Mr. Noonan

(Limerick East): Tomorrow's meeting has upset the Minister.

Mr. A. Reynolds

I am surprised he should make that accusation because I, as Minister for Industry and Commerce, commissioned a report——

Mr. Rabbitte

What is holding it up?

Mr. A. Reynolds

——to find out how vulnerable or otherwise sectors of Irish industry were.

Mr. Rabbitte

The Minister got his information from Frank Roche.

Mr. A. Reynolds

I know he is aware of that report.

Mr. Rabbitte

I have seen it.

Mr. A. Reynolds

I can tell the Deputy that at the time the Deputy was talking to the said journalist I had not even seen a copy of the document to which he referred. I hope the Deputy will accept in good faith what I have said, and correct the statement by one of his contacts in one Sunday newspaper, that I was not holding up the publication of the document.

Mr. Rabbitte

Why is it not being published?

Mr. A. Reynolds

Ask the Minister concerned, do not ask me. I am telling the Deputy now where I stand. The Deputy should get his facts straight.

Mr. Rabbitte

I did and he hinted very strongly that it was the Minister himself who was holding it up.

Mr. A. Reynolds

I hope the Deputy will accept that that is the position. That prop was never intended to be a rescue agency. It is an agency that takes preference shares or equity shares in a company. I hope I never gave any hint that it might involve itself in this area. In relation to what has happened, on the competitiveness of the economy, on any examination as to whether this economy can stand on its own feet on the industrial side without Fóir Teoranta I think the case has been clearly proved and consequently I oppose this amendment.

Mr. Allen

I want to say a few short words, even though I may be upsetting the schedule. I oppose the dissolution of Fóir Teoranta because I had a very personal experience of a company in Cork, Sunbeam, that went to the wall but 450 jobs could have been saved had Fóir Teoranta intervened. I cannot understand at a time when we are spending lots of money producing new jobs, that we are dissolving a rescue agency which could save jobs when companies are in difficulty. I have learned the very hard lesson of a company in my own constituency, in a very deprived area where in some places unemployment is up to 70 per cent, which was crying out for a rescue attempt by Fóir Teoranta in the spring of this year, but no help was forthcoming. As this legislation is going through I want to put on record, in a sharp way, my opposition to the dissolution of Fóir Teoranta.

Question put and declared carried.

Sections 3 to 8, inclusive, agreed to.

SECTION 9.

Mr. Noonan

(Limerick East): I move amendment No. 1:

In page 4, subsection (1), line 43, to delete "£2 million" and substitute "£1 million".

I simply want to query the sanctity of the figure of £2 million. Can the Minister justify the necessity of including the figure of £2 million in the Bill rather than the figure of £1 million, £3 million, £1.5 million or any other figure? What liabilities have been brought to the Minister's attention which give rise to the need for the figure of £2 million?

Mr. A. Reynolds

Section 9 (1) entitles the Minister — it does not require him to do so — to advance up to £2 million to ICC to meet liabilities incurred by Fóir Teoranta which had not been discharged as of the transfer date. These are liabilities which arise from the general statutory functions of Fóir Teoranta as set out in their founding legislation.

The provision of £2 million is designed to cover known liabilities, for example, the £242,000 outstanding to five client firms and deposits from receivers which under certain circumstances may have to be repaid together with interest thereon. It is an enabling provision; it does not require the Minister to use up the £2 million. This will enable ICC to more than adequately meet the statutory liabilities which are known to exist.

Amendment, by leave, withdrawn.

Section 9 agreed to.

Sections 10 and 11 agreed to.

SECTION 12.

Mr. Noonan

(Limerick East): I move amendment No. 2:

In page 5, subsection (2), line 23, after "order" to insert ", but not until such changes in industrial policy as the Minister for Industry and Commerce considers necessary have been accepted by the Oireachtas".

This amendment deals with the point made by Deputy Rabbitte. I find it difficult to understand the principles on which industrial policy are now based as we are awaiting the publication of the three year review on industrial policy. There has been one review since Deputy Bruton introduced legislation in this House requiring the Department of Industry and Commerce to carry out such a review. The Minister for Finance said that he has not seen the report and implied that he is putting no pressure on the Minister for Industry and Commerce. Yet, we have been told widely that the report is ready and at Government.

I would have thought such a report would take into account the main aspects of industrial policy. Yet, in the middle of last year out of a clear blue sky, the Government announced, through the Minister for Industry and Commerce, that the 10 per cent tax regime was being extended to the year 2010. There was no review; it was simply a matter of thinking of a number. In last year's budget the Minister for Finance proceeded with further reductions in section 84 lending and of free capital depreciation. One of the major planks of industrial policy, the rescue bank for industry, is now being abolished. Yet, in parallel, contemporaneously with these major decisions about industrial policy there is supposed to be a review going on which will make recommendations to the Government on the future of Irish industrial policy. It is difficult to understand the Government's industrial policy when on the one hand a review has been completed and the report which makes certain recommendations is before the Cabinet while, on the other hand, the Minister seemed to change industrial policy without putting forward convincing supporting arguments and we do not know if it runs counter to what is recommended in the review report.

Mr. Quinn

Maybe it is only a temporary little arrangement.

Mr. Noonan

(Limerick East): Possibly. I put down this amendment to draw attention to the illogicality of industrial policy at present. This Bill should not commence until industrial policy is clarified in the House and until the Minister for Industry and Commerce brings in whatever amendments he thinks are necessary to industrial policy. If, in the course of his recommendations, he tells us that an interventionist agency to rescue industry, a State rescue bank, is no longer required then so be it, we will accept such a proposal then. However, I strongly object to industrial policy being enunciated in a piecemeal fashion without any overall framework or indication of the direction in which we are going and in a fashion which may be counter to the trend of the people who have examined industrial policy and reported but whose report has not been published.

Mr. Rabbitte

For the reasons I gave on section 2, I support this amendment as being sensible, logical and coherent. We cannot tackle something as serious and fundamental as a change in industrial policy by making it up as we go along but that is what we have been doing for the past 15 months or so.

This House knows that the triennial report on industrial performance has been concluded since the beginning of this year. I cannot verify off the top of my head that it was 15 February but it was certainly in February when the Minister for Industry and Commerce told me in the House that the report was concluded, it required a preface by him and it would be published within the next couple of weeks. I would not mind if we were talking about something which was incidental or peripheral but this issue goes to the heart of Government economic policy.

No matter how one looks at the critical economic questions of the day unemployment remains our greatest problem. The Government ought to be given credit for having got a number of the other economic indictors relatively right but how permanently they have done so remains to be seen. Certainly, some of the economic indicators have been got right but tragically unemployment is a desperately serious problem, seems to be endemic in this economy and, of course, would be so much more horribly and horrifically worse were it not for the safety valve of emigration.

This goes back to the question of industrial policy and industrial strategy. Deputy Quinn and I, as well as the new Fine Gael, have some ideas on the distribution of wealth but the main problem we have is in creating the wealth in the first instance. If we do not have a vibrant manufacturing sector we will not have the wealth generating capacity in the economy.

An Leas-Cheann Comhairle

Deputy Rabbitte will accept that this is not the appropriate opportunity for dissertations on the distribution or the retention of wealth.

Mr. Noonan

(Limerick East): The rush to the right is embarrassing.

An Leas-Cheann Comhairle

They cannot rush to the right on section 12 so we will take a brief passing reference to that.

Mr. Rabbitte

In passing I agree with Deputy Noonan or Deputy Bruton, but would it be parliamentary in passing if I referred to them as the "hazards of Dukes" for brevity? It does not mean that there is a permanent lurch to the right on this issue; it is mainly common sense that if we do not generate wealth we cannot distribute it more equitably. That is fundamentally what the question of industrial policy is about.

Deputy Noonan's amendment makes perfect sense. The Minister for Finance on a hotch-potch basis is making up industrial policy as he goes along without any regard to the man who is charged with the framing of industrial policy and to the fact that there seems to be a general acceptance except in Government that we are going to have to change direction on industrial strategy. The IDA are already——

An Leas-Cheann Comhairle

Not only does the Deputy know that he is not entirely in order but he seems to be taking pleasure in being out of order. He cannot do that on Committee Stage and I would ask him to desist and let us get on with ordered debate.

Mr. Rabbitte

I would be very reluctant to persist in being disorderly but the amendment we are addressing simply requires that the Bill should not be brought into force until such time as the Minister for Industry and Commerce has put forward whatever proposals he has for a revamp of industrial policy. That makes sense. The Minister asks where I stand. I will tell him. If I could see a set of proposals from the Minister for Industry and Commerce which addresses my fear about a potentially viable enterprise finding itself in temporary difficulty and not having an agency to look to for support, I would support the dissolution of Fóir Teoranta which served a role in saving employment in certain circumstances. I have direct personal experience of them. They did so at quite a cost and in many cases boosted up inefficient business at great cost to the taxpayer. One simply could not say in all cases that it was money well spent. In many cases the problems were not financial but were due to managerial incompetence. It is not possible to argue in an era of stringent economic considerations that we could persist in that. However, we do not have an alternative and it is a pity to pre-empt what could be a major debate in this House on a new policy for industrial strategy wherein the taxpayer would get better value for money.

Deputy Noonan instanced the decision in last year's Finance Bill concerning the extension of the 10 per cent tax regime to the year 2010. The IDA were in all probability crying out for that. Why was it considered so urgent, while the wider question of a comprehensive revamp of industrial policy is not considered urgent and can be postponed? It is very pertinent that the Opposition parties should put pressure on the Government to publish that report and have that debate. It is not off the point. The Minister for Finance is at the heart of this dispute in Government.

Mr. A. Reynolds

I contradicted that long ago and the Deputy should not repeat it.

An Leas-Cheann Comhairle

The Chair is not directly concerned with anything that might exist between the Deputy and the Minister. The Chair is concerned that no Deputy is entitled to use a Committee Stage debate for far-reaching statements on different aspects of industrial policy or matters that would be more appropriate to the budget. However meritorious the points he is making might be in the Deputy's own estimation, he is not entitled, because of the strictures on Committee Stage debate, to so ramble. It is no pleasure for the Chair to remind the Deputy of the position that one would expect every Deputy to know and accept.

Mr. Rabbitte

I accept that, but I repeat that Fóir Teoranta is an instrument of industrial policy and it is proposed here that we should dissolve it. The amendment provides that it should be dissolved only when we have seen the proposals which the Minister for Industry and Commerce will bring forward. I cannot see how that is off the point. Whether we like it or not, Fóir Teoranta is at the heart of the debate about the future direction of industrial policy. The amendment makes perfect sense. We would all be in a much better position to voice an opinion on the wisdom of shutting down Fóir Teoranta permanently if we knew what the Minister proposes to put in its place and the thrust of the new proposals. This debate might help to bring forward those proposals at an earlier date.

Mr. A. Reynolds

I cannot accept this amendment. To do so would mean that the policy decision of the Government that Fóir Teoranta should be wound up and its assets and liabilities — mainly its portfolio of loans and investments — be transferred to the ICC would for its implementation have to await changes in industrial policy, of an unspecified nature, which might be put before the Houses of the Oireachtas at some time in the future. I can see no point in that. Essentially it would frustrate the basic purpose of the Bill.

The Government, including the Minister for Industry and Commerce, have decided that the policy in relation to Fóir Teoranta is that the company should be abolished. Industrial policy considerations were taken account of at the time and there is no change in the position in this regard. Any common sense evaluation of what has happened in the industrial sector, with the provision of increased numbers of jobs, would lead to the reasonable conclusion that we can succeed without Fóir Teoranta. All those matters were taken into consideration by the Government before they made their decision, and that decision stands. Fóir Teoranta have been closed for business for the past 21 months. What useful purposes would be served if this amendment were to be carried? Would it help any firm in difficulty? It would not, for the simple reason that Fóir Teoranta is no longer in business except in relation to cases which were in hand as of February 1989. I could not accept a postponement to some unspecified date in the future.

Mr. Noonan

(Limerick East): The specification of the date is entirely in the hands of the Government. The report on industrial policy which is required by law is now ready. The Government are not publishing the report, they are not bringing it before this House and they are not taking the decisions which arise from the report.

Mr. A. Reynolds

The Deputy is anticipating everything.

Mr. Noonan

(Limerick East): I am not anticipating anything. The Minister and the Government are already on the wrong side of the law in respect of the obligations in the industrial Act which require this report. It should have been available well before the summer recess but we still have not seen it. Decisions have been taken involving industrial policy which are being announced on a piecemeal basis, while at the same time we understand there is available to the Government a review of industrial policy over the past three years which contains major and radical recommendations.

This is not an attempt to defer the completion of the Fóir Teoranta legislation to an unspecified date. It is an attempt to get the Government to specify industrial policy. For some reason there is total reluctance to specify the policy. This session has about three weeks to run and a Book of Estimates will be published in December. The budget which will take other decisions on industrial policy will be introduced on the first day of the next session, yet we are still awaiting proposals on industrial policy. This amendment is meant to be a lever on a reluctant Government to make them come forward with an industrial policy or, alternatively, explain to the House why they are so reluctant to publish the review of industrial policy which has been available for a long time.

Mr. A. Reynolds

Publication of industrial policy is a matter for the Minister for Industry and Commerce and it is not for me to anticipate when it may be published. I want to confirm to the House, and in particular to Deputy Rabbitte, that I am not holding up the report but that I am not a traditionalist in the sense in which he described me. I know exactly where the problems are. I might add that I was not put off in any way by the various suggestions. I approached the Bill on the basis of ascertaining what were the real problems and the best solutions to them.

Amendment put.

The Committee divided: Tá, 55; Níl, 68.

Tá

• Allen, Bernard.
• Belton, Louis J.
• Boylan, Andrew.
• Bradford, Paul.
• Browne, John (Carlow-Kilkenny).
• Bruton, John.
• Byrne, Eric.
• Carey, Donal.
• Connaughton, Paul.
• Connor, John.
• Cotter, Bill.
• Creed, Michael.
• Currie, Austin.
• D'Arcy, Michael.
• Howlin, Brendan.
• Kavanagh, Liam.
• Kemmy, Jim.
• Kenny, Enda.
• McCartan, Pat.
• McCormack, Pádraic.
• McGahon, Brendan.
• McGinley, Dinny.
• Mac Giolla, Tomás.
• McGrath, Paul.
• Moynihan, Michael.
• Nealon, Ted.
• Noonan, Michael. (Limerick East).
• Deasy, Austin.
• Deenihan, Jimmy.
• De Rossa, Proinsias.
• Doyle, Joe.
• Dukes, Alan.
• Durkan, Bernard.
• Enright, Thomas W.
• Farrelly, John V.
• Finucane, Michael.
• FitzGerald, Garret.
• Gregory, Tony.
• Harte, Paddy.
• Higgins, Jim.
• Hogan, Philip.
• O'Keeffe, Jim.
• O'Shea, Brian.
• O'Sullivan, Gerry.
• Pattison, Séamus.
• Quinn, Ruairí.
• Rabbitte, Pat.
• Ryan, Seán.
• Sheehan, Patrick J.
• Sherlock, Joe.
• Spring, Dick.
• Stagg, Emmet.
• Taylor-Quinn, Madeleine
• Timmins, Godfrey.
• Yates, Ivan.

Níl

• Ahern, Dermot.
• Ahern, Michael.
• Andrews, David.
• Barrett, Michael.
• Brady, Vincent.
• Brennan, Mattie.
• Brennan, Séamus.
• Briscoe, Ben.
• Browne, John (Wexford).
• Burke, Raphael P.
• Calleary, Seán.
• Callely, Ivor.
• Clohessy, Peadar.
• Collins, Gerard.
• Connolly, Ger.
• Coughlan, Mary Theresa.
• Cowen, Brian.
• Cullimore, Séamus.
• Daly, Brendan.
• Davern, Noel.
• Dempsey, Noel.
• Dennehy, John.
• de Valera, Síle.
• Fahey, Jackie.
• Fitzgerald, Liam Joseph.
• Fitzpatrick, Dermot.
• Flood, Chris.
• Flynn, Pádraig.
• Gallagher, Pat the Cope.
• Geoghegan-Quinn, Máire.
• Harney, Mary.
• Haughey, Charles J.
• Hillery, Brian.
• Hilliard, Colm.
• Hyland, Liam.
• Jacob, Joe.
• Kelly, Laurence.
• Kenneally, Brendan.
• Kirk, Séamus.
• Kitt, Michael P.
• Kitt, Tom.
• Lawlor, Liam.
• Leonard, Jimmy.
• Lyons, Denis.
• Martin, Micheál.
• McDaid, Jim.
• McEllistrim, Tom.
• Molloy, Robert.
• Morley, P.J.
• Nolan, M.J.
• Noonan, Michael J. (Limerick West).
• O'Connell, John.
• O'Dea, Willie.
• O'Donoghue, John.
• O'Hanlon, Rory.
• O'Keeffe, Ned.
• O'Rourke, Mary.
• O'Toole, Martin Joe.
• Power, Seán.
• Reynolds, Albert.
• Roche, Dick.
• Stafford, John.
• Treacy, Noel.
• Tunney, Jim.
• Wallace, Dan.
• Wallace, Mary.
• Walsh, Joe.
• Wyse, Pearse.

Tellers: Tá, Deputies J. Higgins and Boylan: Níl, Deputies V. Brady and Clohessy.

Amendment declared lost.

Section 12 agreed to.

Title agreed to.

Bill reported without amendment and passed.