Dáil Éireann debate -
Thursday, 12 Dec 1996

Vol. 472 No. 8

Shaping our Future: A Strategy for Enterprise in Ireland in the 21st Century: Statements (Resumed).

Mr. Connor

This report was prepared by Forfás and presented to the Government earlier this year. In his opening statement to the House in July, the Minister for Enterprise and Employment said the report sets out a strategy for the development of enterprise over the next 15 years. It shows what we as a society can achieve in terms of living standards, employment and quality of life in that period. The report is laudable and clearly sets down the directions in which we can go. I want, however, to raise issues concerning the west, the region I represent. County Roscommon has been worst affected by a lack of enterprise born of the ravages of emigration. The most recent census report last April gives us head counts for each county's population and takes account of the changes between 1991 and 1996. There we find that the population of County Roscommon and of the west generally has stabilised. It had grown significantly in urban areas where there is much enterprise and the highest levels of employment.

The 1991 Census is the one of which we have the best analysis. It takes the 1986 to 1991 period into account during which there was a massive haemorrhage of people from the region. It was a time of structural adjustment with severe cutbacks in public funding that affected the weaker regions to a far greater extent than more prosperous ones. Levels of development in more prosperous regions were more sustained and self-sustaining, thus employment there was held at levels which did not allow the major haemorrhage that took place in the western region.

To the extent that the Government will be involved in shaping our future over the next 15 years in terms of creating enterprise, employment and social structures, we must be careful to positively favour disadvantaged regions with resources to help enterprise. We must iron out disparities that have developed in the economy and in society also.

Part of the principles of Europe after the Maastricht Treaty was that positive action would be taken to address economic disparities in what are called peripheral, declining regions. We have one of the few regions in the European Union where there is a declining population. Scotland and Ireland are quite similar in terms of topography, etc., but the populations of the Orkney Islands and the Western Islands have remained stable or increased during the past 25 years. However, islands off the Irish coast that were inhabited up to 25 years ago are no longer inhabited. The Aran Islands are almost trampled to death by tourists during the summer months but their indigenous population is in decline.

In the light of social justice, successive Governments must consider the effect of that trend on this country. We must provide resources to assist the areas in question. Ireland was very fortunate to qualify for objective 1 status in terms of European Union funding under the Regional and Cohesion funds introduced in 1993 and under the previous arrangement that operated between 1989 and 1993. The National Development Plans prepared in respect of applications under both sets of Structural Funds clearly illustrated that if all regions enjoyed the same level of prosperity Ireland could not have qualified for objective 1 status, which attracts the maximum level of grant assistance towards infrastructural development. If we are to encourage enterprise, we must first tackle our infrastructural deficiencies.

The average income in Ireland was dragged down to a sufficiently low level for qualification for objective 1 status in 1989 and 1993 because the average income in the west was far below that which obtained throughout the European Union. This amounted to 60 per cent of the average European income and 70 per cent of the average national income. Were it not that Ireland had such a large area affected by economic disadvantage and low income, the country would not have qualified for objective 1 status. That status attracted billions of pounds for structural developments — which in turn lead to economic developments — namely, road construction, major water and sewerage projects, environmental and railway restructuring projects, etc.

Ireland was given objective 1 status but the vast share of the money was spent in the eastern region, particularly in respect of road infrastructure. Ten years ago the road approaches to Dublin were probably the most efficient of any developed capital city in the world. Ten to 15 years ago there were few motorway approaches to the city.

Mr. Broughan

That is true.

Mr. Connor

Nearly all of the major radial roads that enter the city have now been improved to motorway or dual carriageway standard. It is difficult to argue against the need to spend billions of pounds in this regard. However, on behalf of the people I represent I must state that we provided the reason for the granting of objective 1 status but we did not gain any benefits from it. It was stated that macro economic considerations indicated that traffic flows in the west did not justify major investments on infrastructural development. These considerations were used to justify such spending in respect of Dublin. As a result, the western region did not undergo the required level of development.

The National Development Plan prepared in 1989 considered the state of the country in detail and sectoral breakdowns were provided of the level of income and prosperity throughout the five regions and sub-regions. It was clearly shown that the level of income in the south eastern and eastern regions was at 95 per cent of that obtaining in the European Union. However, it was discovered that average incomes in the south western and, in particular, the western and north western regions were only at 60 per cent of that of the Union average. When the position emerged relating to people earning low incomes, such as small farmers those incomes measured at only 40 per cent of the European Union average.

I raise these points in light of the fact that this document considers the next 15 years of enterprise development in Ireland. I want to see a more even distribution of enterprise and I do not want to witness the death of the region I represent. The life of any area is measured by its population and, in that context, the region in which I live is dying. It has entered a state of lingering coma in the sense that the population recently stabilised. However, the population base has been greatly attenuated by past events. Population profiles for the region I represent show that 70 per cent of the people in some parishes are more than 60 years of age. What will happen such areas?

The Government is obviously aware of this issue because last May the Taoiseach launched the Western Development Plan at Athenry. That plan will come on stream this year and will establish a special development fund for the west which will be allocated £100 million in equity funding during the next five years. This is a significant sum and it will have an impact, but it is far from what is required. There is also no doubt that there are people living in the western region who have extraordinary entrepreneurial skills and willingness to take action and go above and beyond what people in other regions must do to achieve something. This is evident despite the attenuation of the population by the ravages of emigration, etc.

The western region requires a budget of approximately £1 billion, which is a modest estimate, which might be funded by resources from the European Union, the Exchequer or the private sector. Under the Western Development Plan, at least 25 per cent of the equity funding for development of projects in the west will be provided by the private sector. Will the Minister of State note that the £100 million allocation is not adequate to meet the needs of the region?

The IDA yesterday announced the siting of a new IBM project at Mulhuddart. I am delighted about this because it will create between 2,500 to 4,000 new jobs in that area. I am glad the colleagues now in the House all represent Dublin constituencies.

Mr. Costello

Job seeking colleagues.

Mr. Broughan

The Minister of State is probably delighted.

Mr. Connor

I have a difficulty in this regard, however, because, in recent years, only 7 per cent of major IDA projects were awarded to the western region. The remainder have gone elsewhere, particularly to the eastern region. I am aware that companies such as IBM wish to locate close to the capital city's good infrastructure and markets.

There should be Government intervention in arranging enterprise strategies for the entire country. It must ensure that a much higher percentage of that investment is directed towards regions which are in decline. There are many well educated and properly trained people with the right kind of work ethic in my region and they are only too willing to participate in these projects.

We readily accept foreign companies but never tell them about our regional policy on directing some of the investment towards areas outside the major growth centres. We should make it a cornerstone of our policy to ask foreign companies such as IBM and others which locate here whether they can do anything to create employment in areas outside the major growth centres which badly require it. This may not be appropriate in the case of the large multinationals but it may be appropriate in the case of the many small foreign investors, to whom no reference is made in the newspapers.

I hope the Minister of State will take note of my points. I represent an area in decline which for too long has not received its fair share of either public or private investment. Nobody can argue this point as the evidence is there for all to see. Deputy Costello represents a Dublin constituency but he originally comes from Geevagh, County Sligo. I am sure he will agree this area is as good an example of rural and regional decline as one will find anywhere in the country. During the period 1986-91 the population of north Roscommon declined by 10 per cent. We cannot allow this to continue. This decline was caused by a number of factors, for example, the downturn in the economy and Government policies of stringent cutbacks and squeezing as much as possible out of public spending. When the squeeze came the weakest regions suffered most and there was a mass exodus of young people to the United States, the United Kingdom and elsewhere.

I hope changes will be introduced so that my area will not continue to decline. The Forfás report will inform Government policy in this area in the future. I want to see a greater allocation of resources towards areas which are in decline.

Mr. Broughan

I welcome the Forfás report. At a meeting of the Committee of Public Accounts some months ago I was rather critical of the present structure of Forfás, Forbairt and the IDA. My colleagues and I queried the continuing role of Forfás given the distinctive role played by Forbairt, under Mr. Flinter, in relation to domestic industry and the important role played by the IDA, under Mr. McGowan, in attracting foreign industry to set up here. Following that meeting Forfás sent me a number of reports, including this one.

This report rightly highlights the unique challenges facing the country in the economic and social spheres. We are entering the period of greatest affluence in our history. In this respect, I pay tribute to the Minister for Finance, Deputy Quinn. The report refers to the critical importance of putting in place long-term planning measures across the range of issues affecting the economy to ensure our economy remains buoyant during the first, second and third decades of the 21st century.

The economic pointers are truly remarkable and the Government deserves much credit for this. According to The Economist, Ireland is poised to overtake Britain in terms of per capita income by the end of next year. After we broke ties with the world's greatest economic superpower in 1922 we went through very difficult periods right up to the 1950s. It is remarkable that we are now poised to overtake our old colonial power in terms of per capita income. It is important to pay tribute to workers, entrepreneurs and successive Governments for bringing this about. This is the background against which we must look at the report.

The report states that the debt-GDP ratio is very important in terms of economic development. Fianna Fáil and Progressive Democrats Deputies could not be bothered to attend this important debate. However, a few days ago some of them made ludicrous comments on public spending next year. The Government has kept the parameters of European Monetary Union foremost in its mind and we are on target to join European Monetary Union. The route to the introduction of the euro in Ireland will be difficult because of the number of food-based domestic industries. However, most people accept that this is an inevitable economic development, and the Government deserves great credit in this respect. It is heartening to read reports that the debt-GDP ratio will be as low as 25-30 per cent in a few years.

The report rightly stresses the absolute necessity for the economy to maintain its competitive edge. We have one of the most open economies in the world, with imports and exports accounting for approximately 70 per cent of GDP. This is better than the position in some of the larger exporting countries such as Japan where the figure is as low as 20 per cent. If we do not trade our economy will die. The maintenance by the economy of its competitive edge is related to the performance of the punt as we move towards European Monetary Union. The report recommends the setting up of a council to constantly review the performance of the economy.

We have been joined by the Minister of State, Deputy Rabbitte, who is responsible for research and scientific development. I congratulate him on his outstanding work since taking office. He has been involved in publishing the White Paper, he introduced a plan to strengthen the scientific base of our economy and to improve research and development facilities. It is frightening to learn in this report that we spend only 0.8 per cent of GDP on research and development. Our economy benefits from the electronics and computer industries. The Minister's recent speeches to industry and the educational institutions must be carefully considered if we want to remain competitive.

The report also states the importance of our green image to the economy. That is more relevant now in light of the recent problems in the food industry. Part of the growth in our economy is due to the increasing number of chemical companies located here. Industrial estates in my constituency were planned for electronics and computer companies, but chemical plants are now located there and we welcome the extra jobs they create. However, it is important that the stringent licensing measures introduced by the Environmental Protection Agency in County Wexford are adhered to by the chemical companies in north and west Dublin and in Cork city as it would be a disaster if our products lost the environmental seal of approval.

The report makes some interesting comments about the telecommunications industry, even going so far as to suggest selling Cablelink. This area of the economy is moving at breakneck speed and it is difficult for people in the industry to remain au fait with developments in the European markets, particularly in relation to deregulation. We heard recently that a third mobile phone licence may be issued. We must be aware of the increasing competition in this area. One has only to read the newspapers to realise the impact that developments in personal communications and in the computer industry have on people and the services and manufacturing sectors.

The report also looks in detail at labour market management and provides useful suggestions to reduce long-term unemployment. The solution seems to lie in education. Teachers must accept some of the credit for our economic performance. Their contribution to ensuring that young people remain in school to leaving certificate level and then continue to third level education has been fundamental to the improvement of our economy. In many urban areas, particularly those in west, north and south Dublin, there is still a low number of students doing the leaving certificate and then going to third level colleges. Dublin north-east has the second lowest level of third level access in this country. I welcome the Government's energetic attempts through the Minister for Education, Deputy Bhreathnach, to make universities increasingly accessible. The new schemes for Dublin City University and Trinity College will help to improve relations between them and the deprived areas in their vicinity. Education has been and will continue to be the key. The resources we devote to it, particularly to maintain our outstanding teacher workforce, are well spent.

My colleague, Deputy Costello, will deal with the local employment service. When the Minister, Deputy Rabbitte, was in Opposition he complained about the range of agencies we had set up, such as county enterprise boards, partnership boards, etc. Perhaps there should be rationalisation in this area. I would like all local representatives to be members of county enterprise boards, etc. For the first time, Dublin Corporation has included a significant development budget in its 1997 Estimates, which will be funded through borrowing. These agencies could be integrated with the local authorities to become district or community councils.

The report refers to employers' and employees' PRSI. We must keep this matter under close review. Approximately one year ago the Minister for Social Welfare said we were better than other countries at meeting our commitments in relation to pensions. The social insurance fund has played a fundamental role in providing significant funding for the more deprived sections of our community. We would be foolish to unravel something which has stood the State in good stead over the years. We should not join the extreme right wing slash and burn economists of the Progressive Democrats and the Small Business Association who have no remit and do not care about providing essential services, particularly for pensioners.

I welcome the report's recommendations on taxation, which will be part of an ongoing debate over the next month or six weeks. I hope we can look forward to tax cuts in the 1997 budget which would be a start in implementing the good proposals in this report.

I welcome this important report. I thank the Government for its efforts in implementing some of its valuable recommendations and we must continue to keep proposals with which we do not agree under review.

Mr. Costello

I am pleased to have an opportunity to contribute to the debate on the report, Shaping our Future: A Strategy for Enterprise in Ireland in the 21st Century. It is extraordinary there is not one Member on the Opposition benches. We are forever being lectured by the Progressive Democrats about enterprise, yet not one member of that party bothered to come into the House for this debate. That indicates the level of hypocrisy in that party.

Deputy Connor referred to regional development and the relative weakness of regions west of the Shannon. He referred to the difficulties encountered in establishing a solid infrastructure to maintain the population of County Sligo, which has decreased by 10 per cent in recent years. I recall a time when Sligo had a strong football team, but it is unable to field a good team nowadays because the young population is not being maintained. I support Deputy Connor's remarks about ensuring that provincial regions, particularly those west of the Shannon, are not allowed fall into decline. In the past the IDA initiated a policy of developing rural sites for multinational companies, but the multinational sector now wants to locate in areas where there are substantial training and education facilities, which means most of them locate in large urban settings rather than in rural areas.

Chapter 7 of the report deals with long-term unemployment. If a large number of people remain in long-term unemployment, irrespective of a burgeoning economy and low inflation and interest rates, their quality of life will remain unchanged. The high level of job creation is not percolating to the level we hoped in respect of the long-term unemployed. However, I recently attended a National Economic and Social Forum seminar where, for the first time, statisticians indicated that the adage "a rising tide lifts all boats" has validity because of the pro rata increase in the number of the long-term unemployed entering the workforce and the increasing level of job creation. It is extraordinary that only 1,000 people have signed off the live register even though 52,000 jobs were created last year. We should examine why that is the case. Approximately 80 per cent of those jobs have been taken up by women. It would be interesting to ascertain how many were created in the services industry, how many are part-time and so on.

I am delighted some of the Opposition benches are now occupied.

Mrs. O'Rourke

I have already spoken on this matter.

Mr. Costello

I hope we will hear contributions, particularly from members of the Progressive Democrats, on this issue.

Mr. M. McDowell

I spoke on the matter some months ago.

Mr. Costello

There are other people in both parties who could contribute. There has not been a Member on the Opposition benches since the debate began. My remarks were related in particular to the Progressive Democrats.

When dealing with the supplementary estimates for Enterprise and Employment I stated that I was disappointed there was not a greater uptake on the £5 million allocated in this year's budget for local employment services. A total of £2 million was not used because of tardiness in recruiting and training personnel to operate this service. Deputy O'Rourke emphasised on many occasions the crucial role the local employment service could play in respect of the long-term unemployed. We should pressurise the partnership boards to train the mediators and get this service up and running as soon as possible. That service, rather than individual schemes, was the main proposal put forward by the National Economic and Social Forum for addressing the problem of long-term unemployment.

An interesting development took place recently between the City of Dublin Vocational Education Committee, the Department of Education and Contact Point Northside Partnership. Holy Rosary college was left to the vocational education committee and the partnership as a facility for the provision of suitable courses in education and training in the context of the local employment service. Each partnership should identify a building that could be used to provide the necessary back-up and training services for those who want to get out of the cycle of long-term unemployment.

The service industry is burgeoning. In general it is not regulated or unionised and the wages are low. There are an increasing number of strikes in that sector. As this is the most rapidly expanding sector in our economy it must be examined carefully. Corporation tax is charged at the highest level, yet there is a presumption that services are not as productive as manufactured goods. We should examine the possibility of lowering the levels of corporation tax as soon as possible in that sector.

We must also address the problem of unemployment black spots, where there are major social problems, many of which involve drug-related crime. Indeed, the Minister, as chairman of the ministerial task force, has been very involved in dealing with the drug problem by establishing a local multi-agency task force structure. That must be a major part of the approach to both long-term unemployment and the quality of life in the areas which are most often neglected and disadvantaged in society. We must look at it in terms of housing, health, social economy, community development and an integrated partnership approach.

Despite all the lip service paid to a partnership approach, we have been particularly bad at implementing it in a meaningful way with the professional agencies and the community.

Debate Adjourned.