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Dáil Éireann debate -
Wednesday, 24 Apr 1991

Vol. 407 No. 4

Ceisteanna—Questions. Oral Answers. - Agricultural Price Trends.

Joe Sherlock


12 Mr. Sherlock asked the Minister for Industry and Commerce if his attention has been drawn to the recent report produced by the Irish Farmers' Association which shows that the gap is widening between the price farmers get for food and the price consumers pay in the shops; if his attention has further been drawn to the call on him by the Irish Farmers' Association to investigate the reasons for this trend; if he intends to initiate any such investigation; and if he will make a statement on the matter.

I am aware of the report referred to by the Deputy which was published by the Irish Farmers' Association in September 1990. Following receipt of the report I suggested to the Irish Farmers' Association that they might consider making a submission to the Fair Trade Commission in the context of the commission's review of the 1987 Restrictive Practices (Groceries) Order, which relates to competitive conditions in the grocery distribution sector. I understand that the commission's review is currently proceeding.

Will the Minister comment on the fact that the three largest supermarket chains control 60 per cent of the market in Ireland which is quite unique by international comparisons? Will he indicate how he thinks the new competition Bill will affect that situation?

While the Deputy's supplementary may be very interesting and important, it is totally outside the scope of Deputy Sherlock's question which relates to the profit margins on food. Nonetheless, I am aware that the two largest supermarket chains control approximately 50 per cent of the market. I regard that as too high and I have said so. I cannot prejudge the matter but it may well amount, in the view of the competition authority to be set up when the competition Bill is passed, to a dominant position. The question would then arise as to whether there was an abuse of that dominant position. An aggrieved party who feels there is a dominant position and that it is being abused will be able to have the matter examined and, if necessary, litigated. Such persons do not have that opportunity open to them at present.

Michael Bell


13 Mr. Bell asked the Minister for Industry and Commerce if he will outline the revised package of Government-IDA support for new industry, with particular reference to his recent statements which indicate the level of reduction in the support to be granted for new job creation; and if he will make a statement on the matter.

Richard Bruton


22 Mr. R. Bruton asked the Minister for Industry and Commerce if he proposes to carry out a reappraisal of industrial policy.

Jim Higgins


27 Mr. J. Higgins asked the Minister for Industry and Commerce if he will outline the special measures, if any, which are envisaged to bring about the commercial and industrial regeneration in various areas of the country; and if he will make a statement on the matter.

Pat Rabbitte


31 Mr. Rabbitte asked the Minister for Industry and Commerce the changes, if any, the Government intend to make in national industrial policy following the publication in December 1990 of the Review of Industrial Performance; and if he will make a statement on the matter.

Proinsias De Rossa


34 Proinsias De Rossa asked the Minister for Industry and Commerce the anticipated level of job creation in 1991; and whether the Government are planning any new job creation initiatives, especially in the light of the unemployment figures for March 1991.

I propose to take Questions Nos. 13, 22, 27, 31 and 34 together.

I do not see any need for a change in the fundamental objective of industrial policy which is to develop a strong competitive industrial sector in Ireland which makes the maximum possible contribution to employment and living standards here. I believe, however, that the instruments of that policy have to be continually reappraised so that the aim of more jobs and wealth in Ireland can be attained most effectively and efficiently.

It is my view that industrial policy has been too narrowly defined here. There has been too great a concentration on incentives, in the form of both grants and tax breaks, and on agencies. This concentration has diverted attention from the critical importance of good economic management and other structural aspects of industrial development.

Industrial performance in the period 1987-90 was substantially better than in the earlier eightes primarily because of the greatly improved economic conditions brought about by stricter control of public expenditure and better economic management. The continuation of that approach must have the highest priority.

The attainment of effective competition throughout the economy is of fundamental importance to the lowering of costs for the traded sectors. I regard the early enactment of the competition Bill as a key contribution to industrial policy objectives for this reason.

Our physical infrastructure and our educational, training and manpower policies are also critical to industrial development. We are embarking on a major programme to develop our science and technology capability. There are changes occurring in global markets, in the process of European intergration, in technology and in the organisation of manufacturing which have implications for our industry over coming decades. All these inputs to industrial progress and our reaction to them must be advanced in a coherent way.

The points I have referred to are the essence of industrial policy. The State's industrial agencies are instruments of that policy and they contribute to industrial investment, and to technological and marketing development, through various programmes. The impact of those programmes can be seen in the strength of the industrial sector which we now have, in the jobs in industries which set up here over the past 30 years and in the growth of our industrial exports.

Arising from my Department's Review of Industrial Performance and consistent with the aim of achieving greater efficiency in agency programmes, I have announced a number of changes in relation to the level of grant assistance to be made available to industry, the merging of the marketing support services provided by Corás Tráchtála and the Irish Goods Council, and the amalgamation of the activities of NADCORP and the IDA. Details of the grant changes are set out in the review, copies of which have been placed in the Dáil Library.

As regards job creation, the House will be aware that under the Programme for Economic and Social Progress, the aim is to create 20,000 new jobs each year of the programme in manufacturing and international services. After initial uncertainties in the first quarter of the year due to the hostilities in the Gulf, a much more positive trend is now emerging and I am confident that the target set out in the programme will be met. Underpinning the target is the need for sustained economic stability through the successful implementation of the programme.

I agree with a number of the Minister's comments. Would the Minister agree that it is equally very expensive, and not value for money, to keep people on unemployment benefit and unemployment assistance? Would the Minister not agree that at this stage we are somewhat uncompetitive in the international market having regard, for example, to the package on offer in Northern Ireland and in certain parts of the UK?

I agree with the Deputy that it is important to try to get people off the dole. The reason in some cases, but not in all, is the interaction between social welfare and net pay. Our laws on income tax and on PRSI at any given time are crucial to that. I hope more can be done in that regard. So far as incentives generally are concerned, there are parts of Europe, including some of those mentioned by the Deputy, where some grant levels may be higher than those available here, but I am confident that our incentives as a whole are more attractive than anywhere else in Europe, particularly when one bears in mind our taxation incentives.

Will the Minister acknowledge that we tend to concentrate our industrial development policy basically in agencies such as the IDA and Údarás na Gaeltachta to the virtual exclusion of county development teams, who because of lack of finance are unable to fulfil their developmental role? Will the Minister consider a scheme to allow county development teams to have a fund of about £200,000 from which they could give low interest loans to various small enterprises in their counties, with a view to providing a revolving fund? It is something worth considering.

As the Deputy will be aware, under the enterprise development programme it is possible for the IDA and other appropriate agencies to give loans and guarantee interest on loans. The question of extending those powers to companies that do not come within the enterprise development programme is at present under consideration and I hope that that will be done as it would be beneficial and less costly than payments of non-repayable grants.

Does the Minister not agree that we have largely failed to create in the Irish economy an indigenous sector capable of trading internationally and that there is a necessity for us to refocus our industrial policy to try to create such a thriving indigenous sector?

I agree that that is a fact. The triennial review of last December makes that point at some length and regrets the fact. We will concentrate over the next number of years on trying to build up that sector — the large indigenous sector which certainly in terms of employment creation has been the least successful of all our sectors of industry.

The Minister, I am sure, has been told on many occasions by industrialists that given the choice between employing a person and buying a machine, they will almost invariably buy the machine, because of the flood of legislation with which they have to deal to employ somebody and because of the costs involved. This is what the Minister should address if the indigenous companies are to be encouraged to employ more people and take them off the unemployment register. We must make it easier for employers to take people on. If we do that indigenous companies will grow.

I already made that point in reply to an earlier supplementary on those questions. A lot depends on the interaction between social welfare and our tax laws.

There is more to it than that.

So far as the choice between a machine and a person is concerned, it is usual for people offered the choice, whether here or anywhere else, to tend to choose the option which is least expensive in the long run. That is one of the penalties of the times in which we live.

That is right and if we make it less expensive to employ a man, they will employ people. That is the point I am making.