Vol. 428 No. 6
7 Mr. Durkan asked the Minister for Enterprise and Employment the plans, if any, he has to encourage multinational corporations to retain maximum employment in this country having regard to Ireland's status within the EC; and if he will make a statement on the matter.
26 Mr. Durkan asked the Minister for Enterprise and Employment if his attention has been drawn to any impending job losses arising from rationalisation by multinational corporations; if so, the action, if any, he proposes to take in this regard; and if he will make a statement on the matter, having regard to recent events.
110 Mr. Durkan asked the Minister for Enterprise and Employment if his attention has been drawn to any impending job losses arising from rationalisation by multinational corporations; if so, the action, if any, he proposes to take in this regard; and if he will make a statement on the matter.
I propose to take Questions Nos. 7, 26 and 110 together.
The IDA advises me on a regular basis of impending job losses and rationalisation plans in grant-assisted multinational corporations operating in Ireland.
Where rationalisation involving a substantial reduction in employment in its Irish plant is contemplated by a multinational company in order to secure the continuation of the Irish operation, I am prepared to provide very possible assistance to find a solution which will not result in a decrease in employment. Where necessary, especially where substantial reductions in employment are being considered, I am prepared to meet senior management of the companies concerned to explore all options for retaining and securing the maximum number of jobs in Ireland.
While rationalisation and restructuring of manufacturing operations in Ireland are a consequence of international competition, so too are the expansion and development of the Irish operations of multinational companies operating successfully here. This is evidenced by the fact that multinational corporations are currently employing some 92,000 Irish workers at their Irish locations. Last year, more than 6,000 first-time jobs were created here by overseas companies.
Over the past two years, multinational corporations operating in Ireland had 89 expansion projects approved and 188 greenfield projects were also approved for overseas companies in various locations outside the Shannon free zone.
In addition to the 92,000 direct jobs, multinational companies operating here also make a significant contribution in supporting jobs throughout the economy through their purchases of Irish materials and services, the value of which now amounts to £2.4 billion annually. The national linkage programme is aimed at maximising the job creation impact of multinational company activity in Ireland by promoting closer links between multinational plants and indigenous suppliers.
Would the Minister agree that Deputies raise the question of company closures in their constituencies on a regular basis? What fire brigade mechanism is in place to ensure that this does not happen? Would the Minister agree that in the case of Digital — there is a specific question on the extra concessions that were made available to that company — the fire brigade action was too late? Does a mechanism exist to prevent this happening again?
What effect will the tax changes that President Clinton introduced have on the U.S. multinational mobile investment that we need to attract?
Which question would the Deputy like me to answer first?
Both have an impact on multinationals coming to this country.
I will respond first to the Deputy's reference to fire brigade action and to motions raised on the Adjournment. By the time the call is made for fire brigade action, it is in all probability too late and for that reason we are trying to establish, as I indicated in an earlier reply, a job protection unit whose primary function would be to provide an early warning system to prevent the fire breaking out in the first instance. In response to the Deputy's question on what happens to companies who get into trouble, if the IDA can be satisfied that a substantial contribution would result in a change in the way the company functions so as to ensure its continued survival or diversification in operation to provide new jobs within the criteria laid down by the IDA, it can negotiate with the company if it gets sufficient time to do so to see if new industrial activity, technology or product can be produced to ensure that the existing employment is maintained. The IDA has set criteria in relation to this.
On the question of the implications of the changes in US tax, the proposals for changing the law in relation to US tax deferrals for US companies operating outside the United States are a matter of concern to the companies in the first instance, to the IDA and the Government. We are aware of the position. We are monitoring it very closely and taking an active interest in what is an internal US matter.
As the impact of taxation could have serious implications in relation to multinationals and future investment in this country — I know the Taoiseach expressed his concern in this regard on St. Patrick's Day — has the Minister made direct contact with the US authorities in relation to our extreme concern on this issue?
As the Deputy will be aware, taxation in the United States is a matter for Congress and is not an executive function of the White House. To that extent the Irish Government and our representatives in Washington, and indeed throughout the United States, have been in contact with the relevant persons on whom ultimate responsibility rests in relation to the way in which the US organises its tax affairs. The companies have raised this matter more vociferiously than anyone else. Most US companies who might be affected by changes in the US tax deferral system are companies which recognise that if they want to prosper locally they will have to expand globally. They believe that changes in the US tax system may affect their ability to prosper in the manner they so ordain. That is the point we wish to support because it will have the greatest impact on the decision-making process of Congress.
May I ask the Minister whether he intends to implement the recommendation in the Culliton report that the budget available to the IDA to support the activities of multinationals should be progressivly squeezed? This would be a reversal of what has been happening in the last five years.
I am not sure it would necessarily be a reversal of what has been happening in the last five years. In effect, Culliton proposed that we should shift the emphasis from grants to equity, and we endorse that recommendation. As to whether the budget should be squeezed so as to reduce the amount of money available to attract inward investment, I would not agree with that proposal if as a consequence we were to forego investment by companies who might otherwise come here but we were simply not prepared on a competitive cost-per-job basis to attract that investment into this economy.
On the question of retention of maximum employment in the State, does the Minister acknowledge that a factor that massively impacts on this is the scale of repatriation of profits to the countries of origin? Does he think the tax code could be revised with a view to encouraging these companies to invest a portion of their profits in Ireland?
I agree with the Deputy's suggestion. These are matters that have to be considered with a view to making Ireland an attractive place to which people will come and, more importantly, will stay and invest their profits.
Deputy Martin Cullen is offering. Let us not dwell over long on this question. All the questions on the Order Paper are of equal importance to the Chair.
I welcome the Minister's replies. Would he agree that the recent fashionable exercise of bashing multinationals is ill-conceived and damaging and should be discouraged? As regards taxation arrangements between the United States and Ireland, I would point to the example of Denmark, who is a member of the EC and is also part of another economic bloc with Finland. Given the relationship between Ireland and America, which is quite unique, is it not possible to enter into a trade agreement which may overcome the taxation difficulty while also giving us an advantage in attracting multinationals to this country? With the globalisation of markets multinationals are going to locate throughout the world and we must ensure that a number of them are located here. The opportunity surely exists for the Minister to talk with his colleagues in the United States with a view to reaching an agreement that would be similar to but would not impinge on our EC arrangements, as Denmark has done with Finland and Scandinavian countries.
In respect of our attitude towards multinationals, there has been certain adverse comments about what the Deputy referred to as the bashing of multinationals, which has been very unhelpful. Utterances by many people have been misinterpreted. It has to be clearly understood that at the end of the day——
It depends on what side of the House you are on.
——the loyalty of a multinational must be to its shareholders, its immediate workforce and, in all probability, its country of origin. To that extent we have to recognise that multinationals make decisions from time to time which are not necessarily to the immediate benefit of certain overseas locations — tragically that was the case in recent times.
As regards the special trading relationship between Denmark and Finland, I do not know the full details of that relationship but I suspect, because of the position taken by the Nordic Council and Scandinavia, it predates Denmark's entry to the European Community. The Commission has responsibility for the negotiation of trade on behalf of the 12 member states. That is why Commissioner MacSharry negotiated the terms of the agricultural components of GATT rather than the Irish or French Minister for Agriculture. I suspect — I will come back to the Deputy on this point — we cannot negotiate separate trade agreements for the Irish economy with, for example, the United States. I understand that would be a matter for the Commission. However, I will inquire into the matter and come back to the Deputy on it.
May I ask the Minister, given that he indicated earlier that he rejects the first Culliton recommendation in relation to grant support — namely, to squeeze the budget for foreign multinational companies — would he not accept that in the last recorded year multinationals provided 40 per cent fewer gross new jobs than did the Irish industry, but on a larger budget? What is the Minister's reason for throwing out what was a fundamental recommendation of the Culliton report?
The Deputy should consider the overall picture. We are specifically providing for the first time in this year's budget £25 million for domestic indigenous industry by way of moneys for the county enterprise partnership boards. From memory I think the grant in overall terms for the IDA is between £80 million and £100 million — I would have to check the records in respect of that matter. The budget will be reduced in effective terms and the focus will be shifted from grant to equity, but not at the risk of losing jobs that would otherwise be created here but could not be attracted here because we decided arbitrarily or abstractly to simply squeeze the budget as a result of a particular recommendation. The Culliton report contains many recommendations and I will be dealing with them at a later date when the response of the Government to the Culliton report and the report of the Moriarty task force is published.
My question relates to the early warning system referred to by the Minister. Prior to his finalising the job protection unit, would the Minister not agree that when a question is put to his Department regarding a change of jobs and contact with the IDA a reply should be given? Several questions in my name have been disallowed because the Minister's office said the Minister has no responsibility to this House for the actions of the IDA. For example, I put down a question to the Minister about a company situated opposite my house which is losing 40 jobs, but I was told the question could not be answered because the Minister has no responsibility to the House in this matter. Surely the Minister should utilise this House to reply to questions put to him by Deputies.
I note the Deputy's comments and will consider how information given to Members of the Oireachtas on all sides of the House by their constituents as to the vulnerability of a person's employment can be fed into the early warning job protection unit system in a confidential and constructive manner rather than raising it as an adjournment matter. That is not to say they would be precluded from so doing, but if concern is expressed to a Deputy by his or her constituent that their job is at risk I am open in principle to the suggestion that Members of the Oireachtas who are in touch with ordinary people should be afforded an opportunity to communicate on a confidential basis — or on any other basis — with the job protection unit to say that they have been informed that jobs may be at risk. That is a valuable contribution and I welcome it.
