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Dáil Éireann debate -
Tuesday, 22 Jun 1993

Vol. 432 No. 6

Written Answers. - Industrial Projects Evaluation.

Pádraic McCormack

Question:

57 Mr. McCormack asked the Minister for Enterprise and Employment his views on whether criteria should be introduced for a minimum percentage Irish wage and materials content in the gross output of any industrial undertaking which receives grant aid; and if he will make a statement on the matter.

The evaluation of individual projects in the manufacturing and internationally traded services sectors for the purposes of determining eligibility for grant assistance is a day-to-day matter for the State development agencies, and is not a matter in which I have a direct function.

To specify a mandatory level of domestic purchases in order that a firm be eligible for grant assistance would be contrary to EC competition rules.

Expenditure by a company within the Irish economy is, however, of central importance in analysing the effectiveness of industrial development. The IDA determines the pattern of the expenditure in two ways:

—a cost/benefit analysis, including expenditure in the Irish economy, is undertaken at the project appraisal stage;

—an annual survey of Irish Economy Expenditure tracks the contribution of grant aided industry to the economy.
IDA's cost/benefit analysis seeks to identify the benefits to the economy associated with IDA expenditure on a particular project. The aim of this analysis is to determine whether such expenditure of Exchequer funds represents appropriate value for money, and also aims to ascertain the timeframe over which the Exchequer outlays will be recouped in terms of benefits to the economy. A minimum benefit to cost ratio of 4:1 is normally required by IDA's Board. The benefits include in each individual case the amount spent in Ireland on wages and salaries, purchases of Irish raw materials and purchases of Irish services.
The survey of Irish Economy Expenditure is carried out each year by the IDA. The purpose of the survey is to collect data on the sales, profits and expenditures on wages and salaries, raw materials/components and various services of grant aided firms with an employment of over 29 persons. The data is then used to ascertain the proportion of such expenditures sourced from Irish producers or accruing to the Irish economy, and in this way acts as an indication of the employment and wealth impact on the economy of the manufacturing and internationally traded services sectors.
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