That a sum not exceeding £240,035,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1992, for the salaries and expenses of the Office of the Minister for Industry and Commerce, including certain services administered by that Office, and for payment of certain subsidies, grants and grants-in-aid.
Last week, the people of Ireland made clear their determination that this country should form an integral part of the European Community that will develop in the final years of this century and into the next. The debate leading to the referendum was, unfortunately, too often sidetracked away from the substantive economic elements of the Maastricht Treaty. In the event, the electorate cut through peripheral issues to the heart of the matter. The endorsement of the Maastricht Treaty by the Irish people was a recognition of the benefits which have already flowed to Ireland from our membership of the Community and an acknowledgment that the future development of our economy will best be secured in a Community where trade barriers will continue to be eliminated and we move further towards a single market in the true sense of the word.
Membership of the Community has been good for Ireland, and without it we would be left in splendid isolation on the edge of Europe with no voice to influence the forces which will largely determine the economic and social development of our country in the decades ahead. It is true that unemployment is at an unacceptably high level here and poses the single greatest economic and social challenge we face as a people. But our position would be far worse outside the community. It is simply not possible for a small, less-developed country today to attempt to build a modern economic structure which has the best possibility of providing adequate employment opportunities and living standards for its people if it remains apart from the mainstream international co-operation and co-ordination which is at the core of the European Community ideal.
For Ireland, one of the most important developments within the Community has been the recognition of the need to promote economic and social cohesion in the member states. This has led to a reform of the Structural Funds with a commitment to Ireland of some £3 billion over the 1989-1993 period. These funds have supported investment at a far higher level than would otherwise have been the case. Programmes sponsored by my Department have been major beneficiaries in this regard.
The Operational Programme for Industry represents the single largest programme supported by the Structural Funds here. It also represents a welcome partnership between the Irish Government and the Commission of the European Communities for the development of Irish industry. The programme, and the funding made available under it, has supported the creation of over 20,000 jobs per year on average in manufacturing industry and international services since 1989. It has also contributed to achieving greater cohesion and intergration between the various industrial promotion measures undertaken by the mainstream development agencies such as the IDA, ABT, SFADCo, Údarás na Gaeltachta and EOLAS and the industry-related measures undertaken by the Department of Labour, FÁS, the Department of Education and the various educational institutions. Most importantly, the increased funding made available to improve the marketing and technological capacity of Irish industry will pay dividends in later years in the form of increased output and employment from the industrial sector.
As the House is aware, several important commitments on cohesion are contained in the Maastricht Treaty. These include a review of the level of funding for structural reform purposes and the application of greater flexibility so that specific needs not at present covered by the funds can be met. These commitments are particularly important for Ireland.
Deputies will note that in Part II of the Estimate, as published, the costs of "Administration" and "Other Services" are now shown separately. Administration expenses relate to those subheads covered by the three year administrative budget agreement between the Minister for Finance and myself and the Secretaries of our respective Departments.
Essentially, they cover the cost of running the Department of Industry and Commerce, for which in 1992 there will be a budget of £14.4 million. Salaries account for some 70 per cent of this amount. I might mention, however, that these costs are offset to a significant extent by a number of income generating areas which are expected to yield some £9 million in 1992. The bulk of this income will come from the services provided by the Patents Office and the Companies Registration Office.
I have already mentioned how programmes sponsored by my Department benefit from Structural Fund support. It is expected that this support will amount to over £90 million in respect of expenditure on my Vote — almost half in respect of the industrial promotion activities of IDA and SFADCo. These moneys are transmitted directly to the Central Fund so that the figures shown in my Estimate represent the gross cost.
In the past year there have been a number of changes in the structure of agencies responsible for industrial promotion and marketing. The Irish Goods Council was merged with Córas Tráchtála to form An Bord Tráchtála, while NADCORP was merged into the Industrial Development Authority. There have also been fundamental changes in the organisational structure of the Department.
Prior to November 1991 this structure was based primarily on four line divisions, three of which dealt with functional aspects of industrial development, each with responsibility for one or more State agencies. The main attraction of this organisational structure was that it provided for a logical and clear-cut division of responsibilities. However, it also had a number of significant disadvantages from the point of view of the responsibility of the Department as a whole for industrial policy: programmes tended to be developed and evaluated from a functional perspective rather than from the perspective of the firms the programmes sought to support; The activities of each of the divisions tended to mirror the separate and sometimes conflicting requirements of the agencies for which they were responsible and effective evaluation of the different functional programmes and agencies and of their overall impact was made more difficult.
Responsibility for the main industrial promotion agencies and associated programmes has now been brought together under one division, with separate divisions dealing with industry, commerce, and trade and EC affairs. A separate, strengthened planning function is also in place. Industrial policy in a broader sense has become the primary focus of departmental activity and the new structure has improved the Department's internal capacity to develop and review policy for their own programmes and to better influence public policy generally in favour of development needs.
I am confident that the revised organisational structure will add to my Department's effectiveness and will enable them to better carry through the approach to industrial policy recommended in the report of the Culliton group.
I have expressed the view on a number of occasions since taking responsibility for the Department of Industry and Commerce in 1989 that a fundamental review of industrial policy is required to bring a new and more effective approach to a policy area which is so important in providing employment opportunities and improved living standards for our people. For that reason I established the Industrial Policy Review Group in June of last year and asked them to report within six months on public policy generally as it affects industrial development and to identify measures for adoption which would form the basis for the development of the indigenous sector of Irish industry over the medium to long term with a view to increasing employment and wealth creation.
We have had the opportunity to debate the report of the group on a number of occasions in this House. The group did all they were asked to do and more. They spelt out in broad terms the main elements of a new industrial strategy for the 1990s and beyond. Their recommendations generally have received generous and widespread support from all sections of this House and from various interests outside, particularly industry.
The central theme of the recommendations of the group is that industrial policy needs to be defined widely. It needs to encompass not only the grants and supports of development agencies, which for too long have masqueraded as industrial policy here, but also other areas of public policy which directly impact on investment decisions in the industrial sector and on the output, productivity and additional value created within Ireland from this investment.
The recommendations of the group are set within such a comprehensive approach to industrial policy. These recommendations are sensible, practical and mutually supportive. They cover not only the traditional scope of industrial promotion instruments in the form of grants and incentives but also taxation, education, training, transportation, infrastructure, competition policy and the institutional arrangements for industrial policy formulation and implementation. The logic and force of the recommendations are such that I believe they will be readily adopted in large measure by the Government Departments and State agencies concerned. The Government have already given their support to the approach adopted by the group.
A task force comprising the heads of the main Government departments on whom responsibility falls for the implementation of the bulk of the recommendations, together with private sector representatives and an independent chairman, has been established to follow up on the recommendations. I am glad that the task force has worked very well in carrying through the Culliton recommendations and I expect very soon to have specific decisions from the Government arising from the work of the task force.
Under the Programme for Economic and Social Progress, the target is to create 20,000 gross jobs in each year of the programme in manufacturing and international services. Despite the difficult trading environment, we came close to meeting this in 1991 with the creation of more than 18,500 jobs between the three State agencies — IDA, Shannon Development and Údarás na Gaeltachta.
Some 12,500 new first time jobs were created and recruited in new and expanding IDA-backed companies around the country, while a further 3,500 jobs were filled in companies bringing their employment levels back up to their previous peak levels. The new jobs have arisen equally in Irish and overseas companies. One thousand four hundred jobs were created in the Irish industry sector in the Mid west region, which is the responsibility of Shannon Development, along with 552 new jobs in the Shannon Free Zone.
During 1991, the IDA succeeded in securing more than 92 new greenfield investments — 42 of these in manufacturing and international services and 50 in financial services. This considerable achievement resulted in the IDA substantially maintaining their market share of internationally mobile new business. The improved competitiveness in companies, and in the economy, has also helped the manufacturing base increase its share of international markets resulting in a 3.3 per cent growth in output and an 8 per cent growth in exports, in real terms, during the last year.
Overseas industry in Ireland continues to deepen its involvement and importance to the economy, with a total annual spend in the economy of almost £4.1 billion, an increase of over 50 per cent in real terms since 1983, while linkages into Irish-owned companies continue to strengthen, with well in excess of £1 billion per annum now spent on Irish raw materials and components and almost £1.3 billion on Irish services. Many of the project announcements in 1991 were for expansions, demonstrating that overseas companies are deepening their roots in Ireland.
Irish-owned medium and large companies, in the non-food sector, are also showing substantial growth in Irish economy expenditures — since 1987 they have increased their spending in Ireland by 23 per cent to nearly £1.8 billion. This contrasts sharply with the stagnant trend in the early and mid-eighties. It also shows the effect of the improved competitiveness of these companies and of the Irish economy in recent years.
In a number of industry sectors traditionally dominated by Irish companies, a more focused segment approach to business development and marketing has continued to lead to increased exports, despite the general decline in those markets. For example, furniture exports from Irish companies mainly to the UK increased by 8 per cent over the past year, despite a substantial decline in the UK market.
SFADCo's key results for 1991 included: 1,419 new jobs were created in the Irish industry sector in the region; 552 new jobs were created in the Shannon Free Zone; the company assisted 50 new business start-ups, which together have an employment potential of up to 700; 27 firms at Shannon and in the region's indigenous sector were supported by Shannon Development to carry out expansion programmes, which are expected to result in over 550 new jobs, and infrastructural work commenced on the 110 acre Shannon world aviation park, and work continued on the expansion programme at the national technological park, Plassey.
In relation to the commerce area, I would like to refer briefly to developments in two areas, legal metrology and investigations under the Companies Act, 1990.
Legal metrology relates to the activities of the weights and measures office of my Department and the enforcement of weights and measures legislation through the inspectorate, which in the case of Dublin and Dún Laoghaire, is provided by the local authorities concerned, while in the rest of the country, this task is performed by Garda sergeants.
The weights and measures office of my Department is responsible for the approval of new designs of metrological instruments, the provision of national standards, the regular recalibration of inspectors' standards, the general direction of the inspectorate from a technical perspective and generally ensuring that the law is enforced throughout the country. It has become clear in recent years that while the checking procedures are reasonably satisfactory, some of the equipment is inadequate, while the fragmented organisational structure is almost certainly not the most efficient method of enforcement.
At my Department's request, a detailed examination of the structure and organisation of the service was undertaken last year by the German Metrology Institute with a view to making recommendations as to how best the service could be modernised. The report of the institute has been received and is currently under consideration. I would hope to be in a position to take final decisions soon on the revamping of the service.
I instigated three investigations under the new provisions of the Companies Act, 1990. One of these is still ongoing and is to investigate and report on the persons who have been financially interested in the success or failure of Hoddle Investments Ltd., and Chestvale Properties Ltd., arising from the purchase by Telecom Éireann of the former Johnston Mooney and O'Brien site at Ballsbridge, Dublin. The investigation has been subject to an abnormal amount of litigation, including three judicial review proceedings, the judgments on which were in the inspector's favour. The inspector continues to endeavour to pursue his task vigorously, despite continued litigation, the most recent involving yet further injunction proceedings taken against the inspector. As I indicated previously, I believe that procedurally the investigations which have taken place so far have substantially stood the test they faced and have, in practice, demonstrated the usefulness of the 1990 Act.
The year 1992 is the first full year of operation of An Bord Tráchtála — the Irish Trade Board which was created by the Trade and Marketing Promotion Act, 1991. The board resulted from a merger of Córas Tráchtála and the Irish Goods Council and was established to ensure that the State provides marketing support to Irish companies from a single source. The circumstances that face Irish companies both in the local market-place and the wider European market are changing radically. To survive in these new circumstances, and especially to thrive, our companies must develop and deepen their marketing efforts. The role of An Bord Tráchtála is to assist companies in this area in the most efficient and costeffective way possible.
The 1992 Estimate allocation for An Bord Tráchtála of £33.3 million is some £900,000 higher than the 1991 outturn. While the 1992 grant-in-aid is somewhat less than the proposals published in the Programme for Industrial Development 1989-1993, it nonetheless represents an ongoing and continuing commitment by the Government to support the marketing efforts of Irish firms.
The strength of our successful Irish exporters will lie in differentiation, quality and service. Successfully following these strategies requires a commitment to marketing, a commitment to identifying customer needs and a commitment to meeting those needs at a profit. The focus of An Bord Tráchtála's work is about identifying market opportunities for Irish companies and helping them in a developmental way to avail of those opportunities. A good example of this approach is the regional markets programme which was initiated in 1989 and focuses on the most dynamic and fastest growing regions of Europe and the United States of America. It aims to achieve an intensive involvement for Irish companies in these regions by facilitating marketing alliances, joint ventures, technology transfers and other forms of co-operative business alliances.
The application of science and technology to industry is, today, an important element of every successful country's industrial development strategy. In Ireland, the area was identified as deserving of special attention in 1987, when the Government initiated the special science and technology development programme with a budget for that year of just over £3 million. Since 1987, this programme has been expanded considerably. Last year, the allocation for the programme was £22.163 million, and this year £27.336 million is being provided to further expand the scope of the programme. The programme is supported at the maximum EC support rate of 75 per cent, which is an indication that the EC shares our concern at the need to improve in this area. The science and technology development programme comprises a number of different measures, including programmes in advanced technology, higher education — industry linkages and regional infrastructure development.
The first priority for industrial development must be the maintenance of an internationally competitive operating environment for industry. If we can combine the competitive advantages gained through the social partnership programmes of the past four years with a more sharply focused national approach to key industrial and international service sectors, I believe that companies can continue their structured programmes of growth in European and other world markets. Increasing Irish companies' market share in Europe is the only way forward to sustainable job-creation in Ireland. One of the most important conclusions of the Industrial Policy Review Group was that there are, "no single policy actions that can ensure a quick solution to the problem of unemployment". Our emphasis will be on building skills and competitive strengths as far as possible in and throughout the markets. The role of the State will be to support and facilitate that process by helping firms to upgrade their capabilities to serve and compete in defined markets and to help create the environment which encourages the investment in industrial projects necessary for firms to achieve their potential for growth and development and which will sustain existing employment and create new job opportunities throughout the economy.
I apologise to the House for the fact that I have to leave the debate to attend a Cabinet meeting that started at 11 a.m. It is not my wish to leave and I apologise particularly to the Deputies who will be contributing. I will be more than ably represented by the Minister of State, Deputy O'Rourke, who will reply, and I will read the proceedings of the debate later.