Industrial Development (Amendment) Bill, 1991: Second Stage.

I move: "That the Bill be now read a Second Time."

The purpose of this Bill is threefold. By its enactment, the National Development Corporation will be amalgamated with the Industrial Development Authority, and its assets, liabilities and commitments will consequently be transferred to the IDA.

The Bill also makes provision for a number of amendments to the Industrial Development Act, 1986. These will allow the Industrial Development Authority to hold or dispose of stocks, shares and securities transferred from the National Development Corporation. The proposed amendments will also increase the financial limits relating to the aggregate amount of grants which may be made to the IDA by the Exchequer, as well as extend the applicability of employment grants to all industry. Additionally, the IDA are being given greater power in relation to the holding of preference shares, and the power to hold shares in their own name.

Finally, the Bill will increase the aggregate financial limits applicable to SFADCo which are contained in the Shannon Free Airport Development Company (Amendment) Act, 1986.

It is the second and third of these objectives which makes it a matter of some urgency that the Bill be enacted before the Christmas recess. One of the amendments which I propose making to the Industrial Development Act, 1986, has to do with the aggregate amount of capital grants that I can make to the IDA so that they can, basically, carry out their mandate. This aggregate limit was set by section 14 of the 1986 Act at £700 million. The capital grants concerned are used by the IDA to meet their administrative expenses and to discharge their obligations or liabilities of a capital nature and are, of course, the basic resources used by the Authority to fulfil their statutory functions.

The difficulty is that the IDA will, by the end of 1991, have utilised £688 million of the limit, and it is expected that the £700 million limit will be exhausted in a few weeks' time — certainly before the Dáil reconvenes in January. It is, therefore, critically necessary that the limit be raised now, so that the Authority can continue to carry out their statutory functions without interruption. The proposal in section 9 of the Bill is to raise the aggregate limit to £1,200 million, which will enable the IDA to continue assisting industry, without recourse to the Oireachtas for legislation for a further period of five years approximately.

The same difficulty arises in the case of Shannon Development. The last occasion on which legislation increasing the company's financial limits was enacted was June 1986, and the limits concerned were actually reached in Shannon's case at the end of last month. Thus, it is equally urgent that the aggregate limits applicable to SFADCo should also be raised as soon as possible.

As far as SFADCo is concerned, section 10 of the Bill provides for: (1) an increase from £130 million to £150 million in the aggregate amount that the Minister for Finance may subscribe in taking up shares in the company; and (2) an increase from £105 million to £150 million in the aggregate amount of grant-in-aid, voted annually, which may be made to the company.

Share capital subscribed to the company is used for capital expenditure on the industrial estate at Shannon and in the mid-west region. The main elements of expenditure are land acquisition, construction of factories and ancillary works. The grant-in-aid moneys are applied towards meeting the company's running expenses and providing financial assistance to companies on the Shannon Industrial Estate.

Turning back to more general issues, Deputies will be aware that the Industrial Policy Review Group which I established last June are due to complete their report very shortly. I assure the House that I intend to take all appropriate action open to me once it becomes available. Deputies should not confuse this Bill with any measures which the review group may recommend as I propose to deal with these swiftly at a later stage. The reason for proceeding with the Bill at this time stems from the fact that the statutory limits on the grant-giving powers of both the IDA and SFADCo are just about exhausted, and new legislation is required to extend them. Furthermore, by amalgamating the National Development Corporation with the IDA, I am continuing the process of rationalisation and refinement of the State's industrial promotion activities.

The Review of Industrial Performance, published in December of last year, drew attention to the large number of promotional measures undertaken by different State agencies, the increasing use of equity by the IDA in assisting companies, and the move to a situation in which up to 50 per cent of financial supports to medium and large indigenous industry would be in the form of equity or other remunerating forms of aid. The review also pointed to the improved flow of equity into Irish industry through private venture capitalists, the smaller companies market and the Irish Stock Exchange generally.

Such developments have lessened the justification for a separate State agency mandated to promote equity investment. It has become difficult to distinguish NADCORP's developmental role from that of the IDA. Furthermore, with the IDA increasingly taking equity in projects it supports, as well as imposing stricter conditions relating to job performance and repayability of grants, any distinction between the two agencies on the grounds of commerciality is somewhat nebulous. By 1993, IDA shareholdings are likely to be considerably greater than anything to which NADCORP could aspire.

The review concluded that in order to provide a more cohesive and integrated approach to State equity investment in enterprise, the activities of the corporation and the Authority should be more closely integrated.

The legislation now before the House is the latest in a series of significant developments which have taken place since 1987 in the restructuring of the State agencies involved in industrial development and promotion. Other such restructuring included: the establishment of FáS to take over the functions previously undertaken by AnCO, the Youth Employment Agency and the National Manpower Service; the merger of the National Board for Science and Technology and the Institute for Industrial Research and Standards to form Eolas, a single agency with responsibility for the development, application, co-ordination and promotion of science and technology in Irish industry; and the merger of Córas Tráchtála and the Irish Goods Council to ensure that the State provides marketing support to Irish companies from a single source.

The integration of the activities of the National Development Corporation with those of the IDA is a logical step in this process of restructuring of our industrial development mechanisms. I should now like to trace some of the history of the corporation and the changing circumstances within which its continued existence as a separate entity no longer remains appropriate.

The National Development Corporation was established under the National Development Corporation Act, 1986. Its primary objective, as set down in section 10 of that Act, was to establish, invest in or manage any enterprise which the corporation considered to be profitable and efficient, or capable of becoming so. It was also mandated to establish an investment fund, known as the "Revolving Investment Fund for Employment", into which was paid any money realised on investments, dividends and any profits earned by the corporation. The fund was intended to be used to fulfil any investment objects of the corporation.

To date, NADCORP have invested approximately £26 million and currently hold shares in 57 companies which employ around 2,000 people. Their performance has, however, fallen below expectations, with the corporation rarely drawing down their budget allocation. It is generally accepted that State support is necessary to encourage new developments and to help offset the various dis-economies facing Irish industry. However, State support can take a number of different forms, such as grants, equity or repayable advances. The only essential distinguishing factor of the different forms of State support is whether the aid is "free" or remunerating.

In January 1990 I took the opportunity, at the launch of a promotional video, to emphasise NADCORP's developmental role, with the corporation participating as an integral part of the Government's overall industrial development strategy. While the private venture capital market was relatively underdeveloped when NADCORP was established, in the intervening years there had been a significant growth in venture capital support mechanisms. I pointed out that it was necessary to reassess NADCORP's role with a view to increasing the focus on developmental and strategic projects.

I expressed the view then that there was a need for a switch in emphasis, with NADCORP becoming more developmental while retaining a long term commercial objective. There was, and still is, a pressing need for the development of certain indigenous sectors of strategic national importance, such as indigenous electronics and software. I indicated that an important objective for me, as Minister for Industry and Commerce, would be to integrate NADCORP's operations more fully into the central focus of industrial policy.

As of 30 September of this year, the IDA held both ordinary and preference shares in some 113 companies amounting to a total value of £21 million. This amount is likely to increase significantly in the next few years as the IDA, in order to ensure a better return for the State's investment in the development of industry, are increasingly using this form of support to indigenous industry.

I believe, in the light of these considerations, that there is no case for the continuation of NADCORP as a separate entity. One of the purposes of this Bill is to merge their activities with those of the IDA. This will provide a more coherent and integrated approach to State equity investment. Allied to this are the proposals contained in the Bill to allow the IDA to hold or dispose of stocks, shares and securities transferred from the National Development Corporation. IDA will be permitted to hold more than 50 per cent by way of preference shares and will also be given the power to hold shares in its own name. Such shares were previously held in the name of the Minister for Finance.

In merging the activities of the two agencies I do not propose to extend the IDA's existing remit, which enables it to invest in industrial and international service activities. While NADCORP's mandate was somewhat broader, allowing them to invest also in most commercial undertakings, their investments were in the main concentrated in manufacturing companies. Nevertheless, section 7 of the Bill will allow IDA to invest by way of the purchase or taking of shares in enterprises where NADCORP currently have holdings to which the IDA's remit does not extend. It is intended that all NADCORP's property, rights and liabilities will transfer in the first instance to IDA. Subsequently, insofar as SFADCo and údarás na Gaeltachta are charged with responsibility for development in regions where certain NADCORP holdings are situated, such holdings will be transferred to SFADCo or údarás na Gaeltachta as appropriate.

The Bill also provides for the preparation of the final accounts of NADCORP and their presentation to the Houses of the Oireachtas. As is usual in legislation of this sort, there is a provision in the Bill to exempt the IDA from the payment of stamp duty in respect of the properties and rights transferred to them under this Bill. There are also provisions to ensure the continuity of any contracts and agreements entered into by NADCORP and to ensure that any legal proceedings to which the NADCORP is a party will not be brought to a halt on account of the transfer of NADCORP's assets and liabilities to the IDA. The rights and liabilities transferred by the Bill may be sued on and recovered by and from the IDA.

As I mentioned earlier, I propose, with the agreement of the House, to make a number of amendments to the Industrial Development Act, 1986. I have already referred to the urgent need to raise the aggregate grant giving limits permitted by law. In addition to these, and amendments stemming directly from the amalgamation of NADCORP with the IDA, I also intend, for example, to extend eligibility for employment grants from the current restriction to small industry to all industry. Small industry is defined for this purpose as companies employing fewer than 50 people and with fixed assets of less than £800,000. The IDA have found that employment grants, which are more targeted on employment per se and less on the acquisition of fixed assets, can provide a useful additional flexibility in their industrial promotion activities. This is also in accordance with the commitment made in the Programme for Economic and Social Progress to widen the use of such grants.

The Bill also amends the provision of the Industrial Development Act, 1986, which requires that shares purchased or taken by the IDA shall be registered in the name of the Minister for Finance. This requirement does not exist in relation to the existing NADCORP portfolio. I believe that the provision in the Industrial Development Act, 1986, concerned acts as a disincentive to the increased use of investment by IDA in their industrial promotion activities. Consequently, the Bill provides for the transfer to the IDA of shares which have been purchased by the IDA but are currently held in the name of the Minister for Finance. The IDA will also be given the power to retain all amounts representing the dividends from these shares.

I would emphasise to the House that industrial policy must be seen in its broadest sense as including all of the factors through which public policy can influence industrial development. It is not just a question of Government and State agencies providing industrial incentives but must of necessity include the active participation of all players in the economy — employers, employees and consumers. As I pointed out in the preface to the Review of Industrial Performance last December, I will continue to make further changes in our industrial policy as are required. The full range of promotional and advisory activities must be subjected to a continuing system of objective evaluation which relates expenditure undertaken to defined objectives and measures of performance. I will be keeping under consideration the possibility of further refinement of our policies with particular emphasis on the need to develop a strong indigenous industrial sector.

I mentioned at the outset that I established the Industrial Policy Review Group last June to examine all aspects of public policy which impinge on industrial development, including the taxation system, PRSI, manpower, education, training and industrial supports. The group have been concentrating on the development of Irish-owned companies and examining how policy could be adjusted to boost the development of indigenous industry in the medium and long term. I expect to receive their report shortly and I will act on it with all necessary speed.

The actions which I am now proposing do not in any way detract from whatever actions may be necessary as a result of the group's report. They are very relevant and will ensure further progress in refining our range of industrial incentives. They will also ensure that we can maintain a flexible response allied to securing the best possible value for the expenditure of scarce State resources.

Finally, I would just re-iterate the particular difficulties which make it necessary to have the Bill enacted as soon as possible — in other words, the issue of the exhaustion of the aggregate grant limits applicable to both IDA and Shannon Development.

I commend the Bill to the House.

In over 20 years in this House I have not witnessed more incompetence or a more undemocratic procedure than is attached to the introduction of this Bill. As the House is probably aware, the Whips meet on a Thursday and agree among themselves the business to be conducted in the following week. The Whips met on Thursday last and agreed business for this week. I do not know whether it is with the Minister, his Department, or where the incompetence lies, but on Friday last they decided they wanted this Bill in a hurry and insisted on the Whips agreement being changed. This House cannot operate on the basis of diktat from Government. There must be agreement between the Whips as to what business is to be conducted on whatever are the number of sitting days the following week. I do not think I blame Deputy Dermot Ahern, the Government Chief Whip, too much in this respect, because he is new to the job. However, if he allows himself to be bullied by Ministers and — or Departments in this manner into breaking his trust with other party Whips within 24 hours, he is on the road to ensuring that no progress will be made in relation to legislative matters in this House.

This Bill is entitled an Act to provide for the dissolution of the National Development Corporation Limited and the transfer of its assets and liabilities to the Industrial Development Authority, to amend the Industrial Development Act, 1986, and so on. The Minister must take the blame for the incompetence in his Department. We are told the Bill is urgent because the IDA would otherwise run out of money before the resumption of the Dáil. This is a State company on which we are depending to attract industry. We give them £700 million and the Minister discovers within a fortnight of the end of the year that they will run out of money within six weeks. He has done nothing about it until the last moment and he is obstructing the normal democratic arrangements for the taking of legislation by insisting on the Bill being rushed through under guillotine. Obviously, the prime function of this Bill is not to dissolve NADCORP but to cover up the incompetence of the Minister in running his Department. It must have been clear for the past 12 months that the IDA would need further funding before the end of the year. We are constantly lectured by this Minister's party about reforming the Dáil, the supremacy of Parliament and the protection of democratic institutions.

And the efficiency of industry.

Exactly. This is absolutely disgraceful. If Deputy Ahern continues to whip the Fianna Fáil Party in this manner I hope he has a very short reign; otherwise, this Parliament will quickly get into disarray.

The Bill is primarily about covering up the incompetence of the Minister and his Department. An advance copy of the Bill was posted to me in Cork on Friday last. It shows contempt for this House and its elected Members on the part of the Minister. There is no excuse for it. It shows indifference in regard to the democratic process. It is all designed to cover up his mistake in not getting extra capital for the IDA earlier in the year.

Fine Gael are opposing this Bill, which aims to provide for the dissolution of the National Development Corporation and the transfer of its assets to the IDA. I did not understand until I heard the Minister's speech why there should be such urgency as to demand all Stages within a few hours. The Bill was sent to me by special post and arrived on Monday morning. It had not been mentioned at the Whip's meeting last Thursday. Why is there such haste? The Minister must have known that the IDA would run out of money before the end of the year. Obviously, the Bill to abolish the National Development Corporation was in the course of preparation and sections 9 and 10 were tacked on to deal with IDA and SFADCo funding. It is a patchwork designed to cover up incompetence. It is a year since the Minister first indicated changes in this area. The provision of such little time for Opposition speakers to prepare for the debate does not augur well for the Minister's commitment to improve the role of Parliament in framing legislation. Opposition speakers were treated with similar disdain by him and his Department in relation to the Competition Bill, which was also guillotined without adequate time for debate. All this is from the Department who are supposed to be seeing to efficiencies in business. It seems the Minister is motivated more by opposition to anything that did not originate with Fianna Fáil than by an objective assessment of NADCORP and their potential.

Last December the Minister published the Review of Industrial Performance and added his own preface to that review. The review was carried out within his Department but obviously the conclusions reached did not meet with the Minister's approval. There is nothing wrong with that. I too felt that the review focused too much on the institutions involved in industrial development and not enough on policy addressed to the strenghts and weaknesses of industry and services. The least the Minister could do is to give us the rationale for his rejection of the Civil Service review of industrial performance.

The Minister should also give us the rationale behind the Bill before us. I had not realised until today that the primary purpose was to get extra money for the IDA. In the preface to the Review of Industrial Performance the Minister stated that the activities of NADCORP and the IDA would be more closely integrated. He did not explain adequately what he meant by this or why he was adopting this policy. Now he has gone further than closer integration by abolishing NADCORP and transferring their functions to the IDA. Again, the Minister has not shown the basis on which he is taking that decision and why he is opting for the abolition of NADCORP rather than closer integration between the IDA and NADCORP.

Since the Review of Industrial Performance was published last year the Minister has set up the Industrial Policy Review Group and is awaiting their report. I welcomed the establishment of that group. All those involved are people of very high standing and all are in the private sector. As that group are due to report by the end of this year, is it necessary to introduce this Bill now, or could it await receipt of the review group's report? Decisions on the future of NADCORP could then be taken within a co-ordinated approach to industrial policy.

The terms of reference of that committee state that they are "to review and make recommendations on industrial policy in Ireland and on public policy generally as it affects industrial policy". Surely this means that the Industrial Policy Review group will be looking at all State agencies and making recommendations on them. Suppose the review group decide that NADCORP should be kept and their role expanded. In that case, are not the members of this group entitled to think that when the Minister set them up he was engaging only in window dressing? Before they report to him he has made a decision on industrial policy which is reflected in this Bill. There will not be many people of the calibre of those on this review group who will be anxious to serve in the future when they see the contempt with which the Minister treats them.

The Minister has made piecemeal and haphazard changes in the institutional arrangements for industrial development agencies. This year he introduced a Bill to merge CTT and the Irish Goods Council into An Bord Tráchtála. The Minister, in his preface to the Review of Industrial Performance, said he was looking at the marketing bodies for beef and fish, namely CBF and BIM, and he indicated that he might place their fuctions within the ambit of An Bord Tráchtála. What is the Minister's current thinking on this? Is he awaiting the report of the new Industrial Policy Review Group before acting? If so, why did he decide to abolish NADCORP? If he is not awaiting the report, does he intend to bring in another Bill to amalgamate all the export marketing bodies and produce marketing agencies? If so, when does he intend this? If not, have his views changed? Have the Department of the Marine and the Department of Agriculture and Food warned him off on the basis of what they have, they hold, whether it is in the national interest or not?

On what basis has the Minister assessed the performance of NADCORP and decided that they no longer serve a useful purpose? Why does the Minister believe it is better to incorporate NADCORP's activities with the IDA? Are there not different sets of objectives and criteria used in deciding whether to give grants or invest equity? Who will make the decisions within the IDA under the Minister's proposed structures? Will the same people who make the decisions to give grants now also decide what equity the IDA should invest in the future? If so, is there not likley to be a conflict of interest in so far as the IDA staff are concerned and the possibility of delays from the point of view of investors? I understand there are approximately six employees left in NADCORP. Presumably the people who had the expertise and experience of making decisions during the five years NADCORP were in existence have now been employed by other institutions outside the public service sector. I do not know if the experience of those people will be available to the IDA or whether they are employed by the IDA already. Somehow I would doubt this.

The staff of the IDA could be placed in an invidious position in deciding whether to give priority to grants or equity funding. Whose interests will the staff of the IDA have foremost in their minds, that of the IDA or the business, when deciding between equity investment and grants? Furthermore, different skills are likely to be needed in deciding on a grant as opposed to an equity investment. As I said, I understand that three-quarters of the staff of NADCORP have now left. Therefore, their expertise has gone with them. Despite the fact that the State had already trained, through NADCORP, a body of people with this expertise the IDA will have to again start building up a body of people with expertise. Different criteria may also have to be applied in deciding between grants and equity investment. I hope the Minister will fully explain these issues so that we can evaluate properly what he is proposing.

The only information I have on NADCORP's performance is contained in their annual reports. These show that the portfolio of investments held on 31 December 1990 was valued at £19.2 million, compared to cumulative State funding of £5.246 million for sales out of its portfolio of investments. This is not a bad record given the high risk nature of investments which NADCORP were expected to undertake. Indeed it is particularly good when one compares their portfolio value of almost £20 million after five years in operation with that of the Allied Combined Trust, the venture capital arm of the Allied Investment Bank, of £40 million after almost 25 years in operation. To have been able to fund the cost of failures in the first five years of their existence and to have contributed to the maintenance and growth of over 60 projects which were still surviving in March 1991, is a creditable performance. Rumour has it that the attitude towards NADCORP within the Department of Industry and Commerce altered dramatically after the change of Government in 1987. Any enthusiasm for the corporation which existed there before the change of Government certainly did not exist there afterwards. The impression was given that the Department and Government of the day were anxious to see NADCORP run down and abolished, as is being proposed here today.

Even more important than the financial performance of NADCORP is the role they played in helping to develop elements of the capital market in Ireland which were not very well developed when NADCORP were set up in 1986. This point was also made by the Minister. Venture capital is a relatively recent form of financing available in Ireland. In a country where familiarity with business activity in financial institutions is not as well developed as in larger, more developed countries, there are often difficulties in obtaining funding from banking sources. The venture capital market route can be used to help business which would not be able to get off the ground or would not survive because of under-capitalisation.

I should like to know if the Minister has carried out an assessment of the venture capital market operations and facilities available in Ireland. Does he believe that the present market — he seemed to indicate in his speech that he does — is sufficiently developed to maximise the performance levels of business? Does he believe the present venture capital market potential is being met by existing private sector sources? I do not believe this is the case because over the past 15 years there has been pressure from institutions, the public and some politicians to have the large funds accumulated by banks, building societies and pension funds, put into venture capital companies so that they can re-invest this money in the future in companies who would otherwise find it difficult to obtain capital.

It seems that many of these companies — I know of three but there are probably many more than that — have changed in the past 18 months or two years and are no longer venture capital companies interested in investing in manufacturing industry to create jobs or help manufacturers who could not obtain the capito get off the ground. These venture capital companies no longer seem to be interested in doing that. Rather they seem to be investment companies who invest in existing businesses and have shares, a practice purely motivated by profit. They are entitled to do that and if their directors and shareholders believe they should change their method of operation from venture capital to investment that is a matter to be decided by the board of the company. However, this means there is now a hole in the venture capital market which previously was filled by NADCORP. A number of bank funded venture capital companies — I do not want to name them here but they are quite well known — are now more interested in investing in existing businesses and the distribution sector than they are in helping manufacturers. The one strong point in favour of NADCORP was the amount of money they invested in manufacturing which, as the Minister said, helped to create over 2,000 jobs. Their record in this area compares favourably with that of any other State agency.

Does the Minister envisage a real role for the IDA in taking over the activities of NADCORP or is he purely using the IDA take-over of NADCORP activities as a backdoor means of abolishing any role for the State in the venture capital area? If he does envisage a continuing role for the State in this sphere, what grounds does he have for taking the view that the State's role would be fulfilled more efficiently and effectively through the IDA than through NADCORP?

The IDA's existing role in equity involvement in business appeared to be a means of topping up funding for projects which had exhausted capital, and training grants, low rent facilities, cheap loans and other forms of assistance. That type of equity investment, which really is a means of disguising State financial assistance, is surely very different from the venture capital role fulfilled by NADCORP? I believe this is a mistake as the IDA are too big, too impersonal and too grant-orientated to fulfil NADCORP's role. NADCORP could also undertake investment in projects in which other venture capital firms might have been reluctant to get involved because of the long pay back period. It is important to point out that NADCORP's pay back period was much longer than that of normal venture capital companies. I should like to know the guidelines and criteria the Minister has set out for future IDA operations in this area.

Is there not a possibility that the different roles the IDA are being asked to undertake will be clouded by asking them to get involved in venture capital as well as investment promotion through grants and other incentives? In this regard I want to refer to a brochure entitled European Investment Regions which I recently received from The Economist Intelligence Unit. They said they were pleased to announce a new series of reports examining Europe's most dynamic regions. They refer to Wales, two regions in France, Catalonia in Spain, and Portugal but do not make any reference to Ireland. There may be a good reason Ireland is not included in reports examining Europe's most dynamic regions for investment. I would like to have an explanation from the Minister or the IDA, as I think we are entitled to have it.

One cannot help thinking that the Minister has fallen prey to the civil servants in this Bill. The review of industrial performance which he published last year was written from a Civil Service point of view. It seemed to be based on the objective of what institutional arrangements would best suit the Department of Industry and Commerce as the Department to which agencies report. Hence, the report emphasised the desirability of one big agency in industrial development. I am not convinced that this is the most desirable way to handle the multifaceted issues facing businesses in different parts of the country. The Minister, last December, did not equally appear to be convinced by the review. Now he has gone back, no doubt because of pressure from his Department, to dissolve NADCORP and put it in with the IDA which, apparently from the review of industrial performance last year, was not his original intention.

Another inconsistency which I detect within the Minister's operation of industrial policy is the contradictory stance he takes on regional industrial development agencies. If the Shannon Development Authority and údarás both do a good job in promoting development in their respective regions then similar bodies should be established for other regions. If they do not do an efficient and effective job then something should be done about that? Why should the mid-west have its own regional agency when other parts of the country, with similar circumstances, do not? The Minister in this Bill is extending the enabling legislation to further grant-aid the mid-west Shannon Development Authority.

I do not wish to apologise for raising this matter under this Bill. The argument for regional development can be extended to different regions of the country. For reasons of familiarity with the region, and also because it is part of my constituency, I could see where an equivalent organisation to the Shannon Development Authority, through redirection of IDA resources, could develop a co-ordinated plan for the Cork-south west region based on Cork Port, Cork Airport, Cork Harbour, the educational institutions in the area and the general background of industrial development which has been there for centuries. I would like to hear the Minister's views on the issue of regional agencies. There is no doubt, given the high level of unemployment in the Cork region that it needs special attention. In the mid-eighties a special task force was established by the then Government to help overcome the high unemployment at that time. Now unemployment is far higher and there has been no response from the Government. A locally based and managed development authority with all the power of SFADCo should be established to promote and develop the Cork region. If the Minister does not take steps to establish regions like SFADCo in Cork and other parts of the country then Dublin will certainly continue to over balance industrial development in Ireland.

In the Programme for Economic and Social Progress which the Minister endorsed earlier this year it was stated that the job targets for the duration of the programme in manufacturing and industrial services would be 20,000 jobs a year. I do not know what progress has been made towards that figure but I cannot see that this Bill will be of any assistance in helping us to reach that target.

In conclusion, Fine Gael are opposing this Bill because the Minister has not shown any basis as to why it is necessary to abolish NADCORP and have their activities transferred to the IDA. The Minister has not produced an objective analysis of NADCORP's activities and the reasons the IDA would perform better. The Minister has not shown whether he believes the State should have a role in equity investment. The Minister has given no indication of his assessment of whether private venture capital markets are operating efficiently and effectively and no longer require a State input. The Minister has changed his mind on NADCORP since last year when he published the review on industrial performance, when he talked of closer integration with the IDA and now he proposes the abolition of NADCORP. No justification has been put forward for that change by the Minister.

The Minister is awaiting the report of the industrial policy review group and has taken an isolated decision on NADCORP without the benefit of the report. Since coming into office over two years ago the Minister, as I indicated earlier, has done nothing to develop a new industrial policy. He has re-arranged deck chairs like amalgamating CTT and the Irish Goods Council but there have been no initiatives of an imaginative nature. We have no information from his Department on GATT and its likely impact on business. We have had nothing from the Minister on how economic and monetary union will affect business. We have had nothing from the Minister on new approaches to State industrial policy. New approaches are needed now more than ever. We have heard nothing in the last 24 hours from the Minister for Industry and Commerce on the effects the single European currency will have on the other effects the decisions taken at Maastricht will have on this country except that in his role as leader of the Progressive Democrats, he welcomed what was agreed at Maastricht.

I hope the report of the review body makes up for the lack of policy development within the Minister's Department. For these reasons Fine Gael are signalling their dissatisfaction by opposing this Bill. Furthermore, the unseemly haste with which the Minister wanted the Bill debated and passed suggests an unwillingness to want to hear views on State industrial policy being advanced, an overly defensive attitude but one, given the Government's poor performance in this area, which is, perhaps, understandable.

I prepared these notes yesterday before I understood the real reasons for the Minister's haste in looking for this Bill. I repeat the point I made in relation to the incompetence of the Department and the Minister coming in here with a Bill when they must have known for 12 months that the IDA would need more money before January 1992. They left it almost to the last day and upset arrangements in this House which have been traditional for over 70 years — where there was agreement between Whips on business for the following week — and bulldozed this Bill through the House in a short space of time under the cloak of abolishing NADCORP instead of doing their business properly and bringing in an IDA (Amendment) Bill which would increase IDA capital and that of SFADCo. That would have been the correct procedure but it should have been done long before now.

As Deputy Barry has rightly pointed out there are two distinct aspects to this Bill. The first is to provide the additional funding for the IDA and SFADCo which is understandable and acceptable. It should have been the subject of a separate Bill and not drawn in with a disconnected and very serious matter so far as the Labour Party are concerned, the final abandonment of what NADCORP was supposed to have been all about. There was no necessity to rush through the NADCORP element of this Bill. Funding for the IDA and SFADCo could and should have been dealt with in a separate measure.

Consequently, the Labour Party are totally opposed to this legislation. The decision of the Government to abolish NADCORP is both obtuse and shortsighted. The dissolution of NADCORP is a totally retrograde step and an abandonment of the commitment implicit in the Programme for Economic and Social Progress to have an active interventionist industrial policy in the development of indigenous Irish companies and the creation of employment.

However, I should say the dissolution of NADCORP comes as no surprise, as all the signs were there since the beginning of this year that the Minister for Industry and Commerce was set on abolishing this corporation. Earlier this year decisions were taken at Government level which included a cut of nearly 50 per cent in the allocation decided for NADCORP in the 1991 Estimates, reducing the company's financial allocation for investment purposes from £3.5 million in the abridged book of estimates to £2 million in the budget. It became clear to the Labour Party that the Minister for Industry and Commerce had decided, literally to starve NADCORP to death.

The decision now to finally abolish NADCORP is an ominous and in many ways a tragic development. Although NADCORP were never given the opportunity to grow as we originally envisaged, they have played a valuable and useful role in the risk capital market especially in terms of helping indigenous Irish companies to get off the ground, to grow and develop. They were established at a time when there was a demand for risk capital to help enterprises get established and thus to help the process of job creation. Subsequent to their establishment, more venture capital was needed in the economy, coinciding with some economic growth, an easing of bank credit and tax concessions via the BES scheme. All of these trends are now in reverse and the demand for risk capital is on the increase, precisely at the very moment the Government have chosen to abolish the National Development Corporation.

In the years in which it existed NADCORP invested successfully in a wide range of industrial sectors and projects, including high technology, engineering, food manufacturing, natural resources, health care and tourism. They became a key player in the development of indigenous industry and they should have been encouraged rather than decimated.

The IDA have an on going programme to develop 100 selected indigenous companies intended to reach a turnover of in excess of £5 million a year. Unfortunately, past experience with such successful companies tells us that they are likely targets for acquisition by international companies. The IDA have highlighted this weakness in our industrial policy. NADCORP, with the necessary political will and funding, could have had strategic equity participation in these companies and helped them through long term finance to reach the next critical stage of development. If this Government were not driven by a blinkered opposition to a policy of targeted intervention by the State in industry, the Irish food sector, for example, with NADCORP acting as the change agent would now be transformed into two or three companies that could have sales in excess of £1 billion per annum. Instead we are left with the legacy of the Goodman and Greencore scandals without any Government policy instrument for the food industry.

Since the publication of the Telesis report in 1981 we have had a total failure by the conservative parties to implement its recommendations. There seems to be an urge to get new reports and to commission new review bodies to no end. The reports are discussed in the House, questions were asked in the Dáil; but at the end of the day the recommendations are not adopted and all the effort and energy given to drawing up the reports fall by the wayside. The Telesis report pointed out that the resources of the State devoted to industrial investment were far too concentrated on foreign manufacturing firms, the majority of which were not stand alone facilities with a research and development capacity. Telesis suggested that over a ten year period the £18 million pounds a year of State money for industrial development should be switched towards the growth of strong indigenous companies with sufficient size and scale of operations to generate an increase in sustainable long term employment.

If we recall the hostility of the apostles of the new Right who attacked the concept of the State having any policy on intervening in industry except to create the so called correct climate for investment, despite its manifest failure, is it not a condemnation and an indictment of this Government that they are persisting with this failed policy?

Employment in manufacturing industry is forecast to decline over the next five years according to the medium term economic review of the ESRI. The bankruptcy of the "hands off" approach is privately accepted by a number of Government Ministers and former Govenment Ministers. Indeed, the former Minister for Finance, Deputy Reynolds, publicly stated, while still Minister for Finance, that the employment strategy we should adopt is that followed by Sweden and the Nordic countries. Yet the revised Programme for Government, negotiated recently states as the first plank of Government policy on job creation, the maintenance of an economic climate conducive to growth and investment. Deputy Reynolds accepted that our reliance on foreign inward investment was a short sighted approach.

The Labour Party see the National Development Corporation as a possible agent for change in restructuring Irish industry, with a dynamic and co-ordinated role for the State sector in a holding corporation. Given the failure of the EC to take action to force the richer member states to reduce their incentive packages for industrial investment, We must have a "hands on" approach with a coherent Government strategy to nurture, encourage and sustain the growth of selected indigenous companies in the private sector and in the State companies.

The real problem is not that the Fianna Fáil wing of the Government believe in relying on the market to generate jobs. Indeed the Taoiseach was out at Maastricht looking for legally binding commitments on wealth and resource transfers to Ireland. Even the Progressive Democrats are socialists when it comes to the question of regional and social policies to address the failure of the market mechanism to distribute wealth, income and jobs evenly. However, at home the fundamental handicap this country faces it the business veto. Despite the commitments which the ICTU secured in the Programme for Economic and Social Progress on the development of indigenous industries, the Government have the nerve to come in here and propose the abolition of the very established to carry out those very very objectives. The business veto operates in Ireland in this way:— all free money such as grants are to be kept in place, while total opposition is expressed to the very idea of State equity participation either on sound investment or value for money criteria, or more particularly for strategic and employment considerations.

Politically, this Government, and indeed successive Governments, have had changes in industrial policy vetted by the IDA to stop any incentive opposed by the multinationals. It is only the intervention of the European Commission that secured the introduction of the modest 10 per cent tax on corporation profits. Five weeks ago the Taoiseach said that everything in the state sector was being examined for privatisation. Since 1987 employment in the State commercial companies has declined every year. So much for the commitment to the ICTU to develop the State sector. This Bill is clearing the way for the privatisation of the remainder of the State sector.

The Minister in his speech says:

I will be keeping under consideration the possibility of further refinement of our policies with particular emphasis on the need to develop a strong indigenous industrial sector.

The Minister wants to fine tune what we have. The economy, the degree of employment it provides and the degree of unemployment it tolerates are not matters for refinement or fine tuning. This is a crisis, and the Minister and the Government should recognise the crisis in employment and in the economy. In response to that crisis we get only review bodies talking about refinement.

We have the highest unemployment percentage rate in the Twelve. Is that really necessary? Do we have to have it? Why does the Minister not admit that we need a radical change in direction, a change in our policies for job creation? Why does he not admit that this is a crisis and come up with major proposals? Instead there is this whimper, the statement that he will bring in a refinement, a fine tuning. A fine tuning of a disaster area? One does not fine tune disasters. One avoids them, having realised in the first instance that something is rotten in the system.

What is it that is wrong? It is the whole basis of the approach of the three Right wing parties in the State to the economy. The National Development Corporation concept was a Labour Party concept. Unfortunately, when the Labour Party were in Coalition Fine Gael were not enthusiastic to see the National Development Corporation operate in the way that the Labour Party envisaged. It is interesting to hear Deputy Barry say he is opposing the abolition of NADCORP. It is regrettable that at that earlier time his party did not nurture it and, through the then Minister for Industry, give it the resources and backing to achieve the dynamic that we knew, and still know, it could achieve.

Let us face the fact that the provision of employment can only come from either of two possible wings of the economy, the private sector and the public sector. There is none other. We have heard so much about the atmosphere and the climate. They have been building up the climate from the days of former Taoiseach Lemass all the way up to Minister O'Malley. With what result? We have 300,000 unemployed, the highest percentage unemployment rate in all the 12 EC countries. What happened to this climate? With all this work and all this attention to the climate we have become top of the unemployment league. Can somebody explain why that should be so after all the efforts at climate control that have been the directing force and the dynamic of economic policy through the series of Governments we have had and culminating in this present one?

If there was at least a recognition of the fact that what we have is unacceptable, that it is a disaster and that there must be a major change of direction, it would be something. For decades we have relied on the private sector to provide the employment we need here. Economic development in this country, in Europe and in the world is cyclical. There are booms and slumps. If we were honest with ourselves we would have to concede that never in the history of this State did we ever provide anything approaching the level of employment we need, and as the years go on the numbers get worse in actual terms and in percentage terms. From having the third highest unemployment rate in the EC we went on to have the second highest, and now we have the dubious role of having the highest unemployment rate in the EC. Still, nobody says that there is something wrong here and that it does not have to be that way. But what do we do? We close our eyes, the blinkers come on and, like Mr. Micawber, we hope that something will turn up, that we will get something from the EC, that there will be emigration or whatever. We carry on in the same old way. That is what we have been doing year after year. The unemployment rate goes higher and higher and we now have the highest rate in the EC.

I am sorry to have to say it, and I wish it was not so, but the private sector has failed and continues to fail to provide the employment we need. That is not a political point. It is not an argumentative point. It is a simple fact. The statistics show that the reliance placed on the private sector to come up with those jobs has got us nowhere. With all the grants they have got, all the encouragements and all the tax concessions, they have never been able, for one reason or another, to provide the employment we need. Facts are facts and one cannot get away from that.

What do the Government propose to do about it? What does the Minister propose to do about it? He may ask what do the Labour Party suggest about it. Our philosophy on the issue is different. We accept that the private sector has a very important role to play and deserves every reasonable encouragement. We are not saying that the private sector should be knocked or put down in any way. I and the Labour Party heartily wish that the private sector had provided jobs. More power to them if they did. However, they have not; so there has to be a different way if we are not to accept the present situation and go on as we have done for decades tolerating the situation, providing social welfare, hoping for emigration. That is an approach, if one wants to adopt it. But we in the Labour Party say that it does not have to be that way and that an active interventionist policy developed and built up over a period could make a major impact for good on unemployment and the economy.

The sad fact is that it has never been tried. There was never a Government, including the one in which the Labour Party was a minority party, that was committed to giving its all to developing an interventionist policy. By that I do not mean gross nationalisation and that kind of thing; I mean a National Development Corporation that would be given full backing by the Government and by the Minister for Industry and Commerce, which would be funded and given the personnel, properly paid and provided with the resources, to get into the marketplace and stir it up. The number of opportunities out there are legion. There is no shortage of products to be made, no shortage of services to be provided. Since the private sector has failed to provide them, we have allowed foreign firms to come in and do it, and when they see the profits to be made they are not slow to do that and have done it in their hundreds.

If one looks around the shops for products which could be made or developed here — everyday commodities — it is very had to find them. That is a reflection on our private sector at a time when there are people who are ready, willing and anxious to work in factories to provide a service and product those items.

The Minister said he is considering whether he should further refine our policy. Quite frankly, a refinement is not needed but rather a major change in approach. We should take the National Development Corporation and use it to change things, create employment and set up new industries. If needs be, this is what they should do. Is that such a terrible thing? The new Right shudder with horror at the idea that a State enterprise should intervene in that sacred marketplace which must be protected in its entirety for the private sector. They almost have a heart attack at the concept, thought or idea that a State or semi-State company or a National Development Corporation should get involved — the horror of it all.

They create this aura or atmosphere that it must be left to private enterprise who they say will do it at some stage, but these are the policies of failure and disaster which have resulted in 300,000 people being unemployed, and the number continues to rise. As I said, if a private sector company are going well, more often than not they are sold off to a multinational, or merged with another company in the group. When the multinational company concerned close down workers are laid off. That is the reason the numbers have been shoved up to the 300,000 mark.

The Minister said that it has become difficult to distinguish NADCORP's development role from that of the IDA and that any distinction between the two agencies on the grounds of commerciality is somewhat nebulous. If one accepts his policy it is very likely that is the position but the Labour Party would draw a major distinction between the role of NADCORP and the IDA. They have a very important role to play and are doing some wonderful work. Let them continue with that work and, indeed, more but the role we envisage for a National Development Corporation is quite different. We see them being given an active interventionist role, if need be, on a majority, minority or parity basis — there would be no hard and fast rule — with each project being examined on its own merits. I am not suggesting that they should throw money away on useless projects but there are dedicated people of skill who would be prepared, given Government and ministerial backing, to give projects their all. They could do wonders if given that backing.

I do not know whether the private companies involved in the scandals and in the privatisation process are holding back the Government from intervening — perhaps they are exerting political and other pressure on them to make sure that this does not happen — but the Labour Party and I have no doubt, this forms a key integral part of our policy, that there is a very important, essential, major role for State and semi-State companies to play in the marketplace where the opportunities to substitute imports, let alone to increase exports, in the context of 1993, are immense.

I fear for us in the run up to 1993 as we have had it bad up to now. As you will remember, a Leas-Cheann Comhairle, as I am sure other Deputies will, motor assembly industries were big employers in my constituency. Thousands of people were employed in those industries, many of whom have not worked since. This came at the intermediate stage of the development of the EC. A further belt around the head is to come after 1993. What will happen then? My colleague has just reminded me that the textile industry has been very badly hit. We want to hear what the Minister is going to do for that industry in the light of the recent recommendations.

If we are to address our serious, critical problems a tremendous effort on the part of the private sector will be required along with a major input by the public sector. We cannot expect a mish-mash, joined up company to do this given that the role played by the IDA is different. A high degree of expertise and specialisation will be required, in a separate corporation. That is the reason NADCORP were set up. More importantly, the enthusiastic backing of the Government of the day, in terms of personnel and resources, will be required. It is useless leaving NADCORP as a shell. We might as well merge or dissolve them because up until now they have not fulfilled the role envisaged for them by the Labour Party. It is tragic that we have come to this, that we have failed to recognise what is needed and that we are now putting the final nail in the coffin of what was a first class concept in throwing NADCORP into the dustbin of history. The Government and the Minister will live to regret this.

I find it difficult to generate enthusiastic opposition or, indeed, sentiments about this measure. Even though it seems there is a role for the National Development Corporation to play, as originally intended, they have never been allowed to function in the manner envisaged. Deputy Taylor is correct when he says there is a logical argument in favour of doing what is proposed here because they were strangled at birth. Since then the influence they have exerted on the economy has been minimalist.

Deputy Taylor, quite properly, claimed authorship of the idea and concept for the Labour Party but it had an unhappy conception in that their then partner in Government did not agree with it. Indeed, we had to wait a long time before legislation came before the House. If I recall correctly the then Leader of the Labour Party was not exactly clear, at the famous press conference at which it was announced, as to what their purpose was. It was difficult to hold his concentration at times but, ultimately, once the opposition of the Fine Gael Party was overcome the legislation was eventually introduced in the House in 1985. Although the intention to establish the National Development Corporation was announced in 1981, it took until 1985 to introduce the legislation. It was reported at the time that the legislation was very strongly opposed by Deputy John Bruton in particular.

Debate adjourned.