Richard Bruton
Question:20 Mr. R. Bruton asked the Minister for Enterprise and Employment the reason for such a differential in the grant made available by the IDA to create a job in a small business compared to a large one.
Ceisteanna — Questions Oral Answers - IDA Grants.
Enda Kenny
Question:48 Mr. E. Kenny asked the Minister for Enterprise and Employment the reason for such a differential in the grant made available by the IDA to create a job in a small business compared to a large one.
Avril Doyle
Question:52 Mrs. Doyle asked the Minister for Enterprise and Employment the reason for such a differential in the grant made available by the IDA to create a job in a small business compared to a large one.
I propose to take Questions Nos. 20, 48 and 52 together. The objective of the IDA's small industry programme is to encourage employment growth and wealth creation in the regions in a cost effective manner by fostering the growth of sound, commercially viable enterprise.
The lower level of support to small industry reflects the implementation of changes in the small industry programme introduced at the beginning of 1988 which established a two tiered hierarchy of project support as follows: for start-up companies and firms with scope for incremental employment growth of up to 15 people, support was confined to employment grants at a maximum of £5,000 between 1988-90 and reduced to £4,000 in 1991. For companies with potential to create more than 15 jobs a wider range of incentives is available including employment, capital, management and product development grants.
Small companies, mainly labour intensive and with less structured management, tend to operate in the domestic market and through import substitution compete with international competitors on the home market. Larger companies tend to require higher levels of capital investment to enable them to build the scale necessary to compete in international markets. These companies must also develop broader management structures. It is also a fact that larger companies have a greater impact on the economy through the purchase of Irish raw materials and services than small companies.
The average IDA grant cost per job created and sustained in small industry over the period 1982-88 was £11,841 (constant 1992 prices). For the period 1986-92 it had been reduced to £8,627 (constant 1992 prices), a reduction of 27 per cent. The average IDA grant cost per job created and sustained for indigenous industry over the period 1982-88 was £15,488 (constant 1992 prices). For the period 1986-92 this had been reduced to £10,832, a reduction of 30 per cent.
The Deputy will appreciate that, in the final analysis, State support to industrial projects, regardless of size, must reflect the economic benefits and value for money deriving from such projects.
Does the Minister believe that, as the material in his brief seems to suggest, a job created in a small business should get only half the assistance of a job created in a large business? Does he agree that this bias confirms the fact that Ireland has a very small enterprise start-up group? The Secretary of the Department of the Taoiseach recently adverted publicly to the fact that had we the same number of small business start-ups there would be 20,000 additional people at work. Does he agree that if we are to have a serious commitment to small business we must remove this bias and give access on an equal basis to small companies trying to establish and gain a foothold in the market, as the small companies will become larger one day?
The Deputy's supplementary raises a totally different issue. The question I was asked to respond to was the reason for a differential in the grant made available by the IDA to different types of Irish firms. The reason for the differential between smaller and larger firms is set out in my reply. The economic cost of providing a job in a small Irish firm is less than that for a large firm. I agree that we need to create more start-ups in general and facilitate an increase in the number of new enterprises. However, that must be done in an efficient and effective manner. Is the Deputy suggesting that we should allocate more money than is required to facilitate the creation of jobs in small Irish industries, which is what the Deputy implied?
Does all the evidence not suggest that one of the matters killing off small businesses is the lack of access to long term capital? One need only take a cursory glance at any of the recent reports on the plight of small industry to recognise that. Will the Minister agree, therefore, that a bias to the extent that double the money available to small enterprises is available to large enterprises cannot be condoned? Small businesses must have access to long term capital so that small scale business start-ups are put on a proper footing.
There is an element of repetition in the Deputy's questioning.
I agree with the Deputy, but he did not ask me that question. He asked me to explain the difference between the level of grant for small and large industries and I answered that question.
What is the difference?
If the Deputy was listening to my reply he would know the answer.
I was listening, but the Minister avoided the issue.
The effective cost for job creation in small industry is less than that for large industry. Is the Deputy proposing that we become inefficient at funding jobs in the small industry sector?
I did not suggest that.
Order, please. A brief and relevant question from Deputy Bruton.
Is not the Government's interest in job creation and, therefore, should we not be willing to provide a certain amount of support for job creation to avoid the type of discrimination which enables large multinationals to tap into more substantial aid and avail of a much wider range of product development and capital grant than the Minister indicated?
We are having quite an extension of this question. Does the Minister wish to reply?
I have replied to the question. The Deputy is raising other matters which are referred to in other questions on the Order Paper.