Vol. 429 No. 5
5 Mr. Rabbitte asked the Minister for Tourism and Trade if he will give the growth in the value of exports during 1992 and the anticipated growth during 1993; if any study has been, or is proposed to be, carried out to help determine the reason this growth has not resulted in more jobs being created; and if he will make a statement on the matter.
19 Ms. Keogh asked the Minister for Tourism and Trade if his attention has been drawn to the fact that a significant portion of our nominal export trade is represented by transfer pricing; if his attention has further been drawn to the extent of transfer pricing; and if he will make a statement on the matter.
I propose to take Questions Nos. 5 and 19 together.
In 1992, exports increased by nearly 11 per cent to £16.625 billion. For 1993, An Bord Tráchtála estimates further growth of 4.3 per cent, which will bring our total exports to £17.1 billion.
As to the subjects of correlation between growth and employment and transfer pricing, I draw the attention of Deputies to report No. 94 of the National Economic and Social Council (NESC) entitled "The Association between Economic Growth and Employment Growth in Ireland", which was published in December 1992. The report is the first of two by the NESC on the links between economic growth and employment growth. It describes, inter alia, the historical association between the growth of output and employment in Ireland and in other Western economies over the past 30 years and highlights the way in which this relationship has varied over time. In the second leg of the study, the NESC will focus on interpreting and explaining the different development patterns which the report describes and on identifying the policy options open to Ireland in seeking to secure an improved employment outcome in the future. On the subject of transfer pricing, the report says that, by its nature, this is a hidden activity and that precise quantification of its significance is impossible. The report does acknowledge, however, that the very high proportion of recent economic growth accounted for by the manufacturing sector and its exceptionally rapid rates of productivity growth have been overstated due to the effects of transfer pricing. At the same time, the report indicates that, even without transfer pricing. At the same time, the manufacturing output and productivity remains high relative to other countries. On the subject of a correlation between growth and jobs, the report concludes that the concentration of overseas industry in the rapidly growing high-tech sectors of manufacturing industry and the higher than average levels of productivity in overseas firms may have served to reduce the employment impact of Irish growth relative to that obtaining elsewhere.
The need to develop indigenous industry has been recognised in successive reports from Telesis to Culliton. Within my area of responsibility this has been given practical expression since 1989 by significantly increasing, with the assistance of the Structural Funds, the annual Exchequer grant in aid to An Bord Tráchtála to enable it to provide an expanding range of export promotional support services for indigenous industry. Surveys conducted by An Bord Tráchtála of its target 1,200 companies indicate that they have achieved significant increases in exports and employment in recent years. Its survey for 1992 indicates that target companies increased exports by 11 per cent to £3.7 billion and increased employment by 3 per cent to 97,600.
I call Deputy Rabbitte for a very brief supplementary question.
Does the Minister accept that it is one of the great puzzles of our time that, from a position in which Ireland had a trade surplus of just over £300 million in 1985 to one in which there was a trade surplus of £3.5 billion in 1992, the jobs are still not coming? I have read the report to which the Minister refers. Will the Minister not agree that we are engaging in self-delusion in continuing to profess that the fundamentals are sound, when, in relation to this one major fundamental of trade, both the NESC report to which the Minister refers and the recent CSO revision of methodology have shown that much of the trade in question is illusory and due to transfer pricing by continuance?
The Chair has allowed a lot of latitude today, but that does call into question the Standing Orders.
I am sure that Deputy Rabbitte and I could have a long debate on some of the matters raised. The Deputy referred to the CSO figures. The trade figures were not in dispute in the recent adjustments made by the CSO.
That is correct.
The question raised did not concern trade figures, for which I am responsible, but related to other matters which have been spoken about in the House on other occasions. As the NESC report concludes, transfer pricing has had an effect. When I was a back-bench Deputy I referred to this matter in the House on a number of occasions. From the point of view of my Department, the figures in which I am most interested are the export figures from indigenous Irish firms which amounted to £3.7 billion of last year's total export figure of more than £16 billion. Transfer pricing arrangements have an effect, as concluded by the NESC report, and which have been known for a long time by everybody in business. The NESC report could come down with any hard and fast statement in relation to the effect and I agree with the Deputy, it has been a matter of mystery to and concern of successive Ministers and politicians — and to people outside — that we have achieved very high growth figures which have not been translated into jobs. It is one of the mysteries of our time. As someone who has always advocated what I term a climatology view of economics, I am considerably concerned that although we are getting the fundamentals right there has not been a necessary correlation in employment growth. I am afraid we will have to wait for another day to pursue other aspects of it. It is something that is of concern. I am interested in getting indigenous firms to increase their exports, which should lead to a spin-off in jobs.
We must now go on to other questions. I am calling No. 6.
A Cheann Comhairle, may I just put a question?
I am sorry, Deputy, I have called Question No. 6.
May I draw your attention, Sir, to the fact that five questions have fallen under the priority question procedure? To highlight the absurdity of the priority system, I might point out that we shall not finish this Question Time. Yet there are very fundamental issues here we cannot tease out with the Minister. It is most unsatisfactory. I am not attaching any blame to you, Sir.
I trust the endeavours of the Chair will be appreciated——
Very much, Sir.
——since he has given quite a lot of latitude here today which must not be taken as a precedent of disregard for our Standing Orders to which the Chair is obliged to adhere and which is his function.
