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Dáil Éireann debate -
Wednesday, 29 Jun 1994

Vol. 444 No. 6

Ceisteanna—Questions Oral Answers - Research and Development Spending.

Pat Rabbitte

Question:

10 Mr. Rabbitte asked the Minister for Enterprise and Employment if his attention has been drawn to strong criticism from industry of his announcement made on 14 June 1994, that Government funding for research and development is to be cut by £7 million in the coming year; if, in view of the importance of research and development for industrial development and the fact that Irish spending in this area is well below the norm in other countries, he will reconsider the reduction; and if he will make a statement on the matter.

The industry research and development initiative was introduced in 1993 on a pilot basis as part of the 1989-93 operational programme for industry. An amount of £13.4 million was initially made available for 1993. As a result of the high number of quality proposals and, in particular, because it was possible to free-up some Structural Funds, an additional £10 million was made available, bringing the total 1993 allocation to £23.4 million. This amount was fully taken up by way of 66 company project approvals. The Government recognises the importance of research and development for industrial development as evidenced in the first instance by the introduction of the scheme in 1993.

The low level of research and development expenditure in Ireland relative to other countries was a major factor in introducing the scheme and it can be expected to lead to positive growth in the overall level of business expenditure on research and development.

The Government's continued commitment is further evidenced by the £16 million which has been made available for 1994. While this is lower than the 1993 allocation it should be recognised that, as with any new scheme, an initial peak of applications can be expected while ongoing numbers of quality applications can be expected to level off somewhat.

The operational programme for industry 1994-99, which includes this scheme, has not yet received final approval from the EU Commission. Discussions are ongoing and final agreement is expected in the next few weeks.

Will the Minister agree that all industry is becoming more intensively knowledge based and that unskilled jobs are being lost? Furthermore, will he agree that manufactured goods have a shorter life cycle and that some products on the market are out of date when a newer version is at research and development phase? In that context, will he agree that a cut of £7 million in the already very low level of investment in research and development is the last thing the Government and the country should be doing in terms of industrial development policy?

I agree with the Deputy's analysis of the changing pace of industry and the need for research. As Shakespeare would put it, I have been hoist with my own petard in this regard. The figure announced last year for support for industry was £13 million. During the year it became obvious that I could get my hands on another £10 million from funds left over from other programmes. I succeeded in doing so, bringing the total to £23 million. If I had not been so active on that front I would not now be faced with what appears to be a cut in the figure. Because I obtained additional funding in the middle of last year it now appears that there has been a cut in the figure. If I had been less ambitious I would be announcing an increase now.

I acknowledged in my reply that we do not meet international standards in respect of research and development and we must endeavour to do so. In 1987 State spending on research and development programmes was just under £4 million. Last year the figure was almost £50 million, a substantial increase in six years.

I am flummoxed by the Minister's use of Shakespearean words in this context.

The best research available.

I am sure he could have thought of a dozen other quotations.

I fail to understand how the Minister could lose £7 million and still believe he did the State a service.

That was a tragedy.

I was waiting for that.

Is it not the case that the average OECD investment in research and development is approximately 2 per cent and our investment is only a fraction of that, approximately 0.2 per cent? The expenditure on industrial policy this year amounted to approximately £800 million, but we chose the area of research and development to make a saving of £7 million. It is not a good idea for the Minister to announce figures of £10 million which he does not have. Much as I would like to, I cannot give him plaudits for that.

We did have £10 million but we received it in the middle of the year. There is an apparent cut of £7 million when I should be announcing an increase of £3 million.

The Minister for Health, Deputy Howlin, might want it back.

I will recommend additional Shakespearean quotations to the Deputy at another time.

The Deputy is correct, we are not meeting international levels of spending on research and development. The State spends approximately £600 million every year under the broad heading of research and development. I recently established a science, technology and innovation council to urgently examine that figure. While that figure covers the bricks and mortar of universities, lecturers in physics, chemistry, technology and industry programmes, the overall level of spending of £600 million is phenomenal. I am keen to co-ordinate matters. That is why I asked the science council to establish priorities with regard to that figure. We are not up to international standards and we must attain them, but we have made phenomenal improvements in the past seven years.

Alas, poor Yorick was always economical with the truth.

I knew him well.

Are the figures the Minister of State quoted not somewhat misleading? Is it not the case that measure 6 is funded entirely by the European Commission with no Exchequer funding put into it? Would it not be fair to say that the Minister is playing tricks with the House by suggesting an increase under that heading was brought about by the State's good offices; was it not brought about by the European Union who pays the bills? Will he accept that the Estimates for his Department for the past three years show that State funding for research and development fell from £27 million to £20 million and it is now down to £18 million? There has been a consistent decline in funding. Will he agree that all indicators point to the fact that we are not making a decent research effort? The Minister for Enterprise and Employment, Deputy Quinn, told us that we rank 21 out of 22 in the OECD and our target is less than half that of the EU. The Commission is appealing to us to increase our commitment and the State is not doing so.

I do not accept that. The new scheme was introduced only two years ago and it artificially substantially increased the overall spending on research and development. Now that it has levelled off, it appears funding has been cut, but that is not the case. Before the scheme was introduced the funding figure was very small.

The Minister's money did not go into the scheme.

Please allow the Minister to respond.

Deputy Rabbitte's question was about a cut of £7 million and that figure refers to EU funding for measure 1 programmes on industry. I am answering the question put, I am not claiming the State is any richer or more beneficial than the EU.

Will the Minister agree that one of the fundamental weaknesses in our industrial infrastructure is the failure to develop new ideas on product development? Not alone have we not reached international standards, but last October the international science journal, "Nature", launched a blistering attack on our input into research and development and, apart from the OECD report, it categorised us in this area as 22nd of the 23 countries surveyed. Apart from a cut of £7 million last year for the science and technology development programme, the basic research programme for universities has been slashed and is virtually non-existent aside from the pressure applied by the science teachers who manage to extract from EOLAS a small amount of money. By not investing more in research and development we are amputating an essential arm of our industrial infrastructure. Of the 66 companies the Minister mentioned which received substantial funding last year from the EU, one of which was C & D Limited, in County Longford, what follow up procedures and monitoring were undertaken by the Minister's Department, EOLAS or some other agency to ensure such funding was used for research and development?

The scheme was approved and is monitored by the EU. Professional consultants and accountants were engaged and various IDA committees and so on dealt with the matter professionally. All the projects were approved and assessed in an administrative and professional manner. If I published a science magazine I would launch a blistering attack on any Government to secure more funds for science. I expect a magazine of that nature to seek more investment in this area.

That is not the point.

One of the problems is that there is widespread disagreement between academic scientists, those who plead for more investment in blue sky research, inventions and major scientific and technical breakthroughs and the opposing side who do not want me to concentrate on that, but to invest in industry as that is the area from which we will benefit. There must be a balance, there must be blue sky research even though we will not see a return on some of our investments, but we must invest in what might be possible as well as investing in industry. That is why I asked the science and technology innovation council to submit by the end of the year a set of proposals, from which I would like to draft a White Paper on science and technology so that we can set out the State's priorities and its view of where science and technology and innovation investment should be placed. I am not satisfied that some of our investment in science and technology is worthwhile. Does it make sense to spend a few million pounds building a new "ology" building of some sort without being clear about what should be put into it? Maybe we would be better spending our money on programmes to develop our products rather than in bricks and mortar and hoping inventions will follow. The world's greatest inventions did not come out of glamorous buildings, they came out of attics and basements.

Has Deputy Rabbitte a quotation?

He should quote Oscar Wilde.

The Minister betrayed his view on the question of research and development. I welcome his promise of a White Paper which will give us an opportunity to discuss those issues. In the interim does he acknowledge that in the absence of an indigenous research and development sector in our economy we are reliant on the vibrant research capacity in our institutions? In so far as multinationals carry out extensive research and development, they do so in their country of origin. Our domestic industry has not invested in research and development and both sides are in agreement that the State has not supported it. Whatever about the merits of engaging in blue sky research, we are left with supporting academic researchers and scientific people within institutions, the universities, Teagasc and so on.

I cannot quibble with that. We must undertake more research and development, particularly by multinational firms located here. The IDA is adamant in trying to encourage them not just to locate a manufacturing base here but also their research and development bases. That is why I asked the science and technology council to look at a specific area. Under our taxation system, the corporation tax for the manufacturing sector is 10 per cent. If a company writes off its research and development expenditure at present it gets a 10 per cent tax break on it. Other countries have a higher corporation tax and if expenditure is written off where corporation tax is 40 per cent there will be a higher benefit. Our tax policy is not in tune with our industrial taxation policy for manufacturing industry. If a multinational spends £2 million on research and development here it will receive a 10 per cent write off on its investment. If it invests in another country with a corporation tax of 40 per cent it will get a 40 per cent write off on its investment. Where would a company carry out its research and investment? I would be tempted to invest in research in a country where the corporation tax rate is 40 per cent.

That is a good point.

That is one of the areas I asked the science council to look at and when I receive its findings I will approach the Minister for Finance and the Minister for Enterprise and Employment about it.

I have thought of a Shakespearean quotation that will cover any question that may be asked.

Let us hear it and we will all go home.

All that glistens is not gold, often have you heard that told. That should answer any questions Deputies may wish to put to us.

I thought the Minister would have come up with a more sophisticated quotation.

It is Shakespearean.

I would be wary to use that if I came from the midlands.

Does the Deputy not know the next line? He does not know his Shakespeare.

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