Adjournment Debate. - County Enterprise Boards.

A blunder by the Minister of State and the Department has left county enterprise boards without their full allocation for 1999. There are 35 city and county enterprise boards which were established on an informal basis in October 1993 and on a formal basis under section 10 of the Industrial Development Act, 1995. They get 25 per cent of their funding from the Exchequer and 75 per cent from the European Union under the Local Urban and Rural Development Programme, 1994-1999.

When the county enterprise boards were established a fund of £100 million was set aside for their use until the end of the operational programme. They were given a commitment that money would be available to them until the end of 1999. It has now emerged that, as a result of a blunder or, to use the Department's euphemism, a misinterpretation of the legislation, the Department assumed that there would not be retrospection and that the fund would last until late 1999. As a result the full £100 million has been allocated because the fund applied from 1993.

This blunder will have a devastating effect on county enterprise boards. When one considers their role – to deal with the promotion of small enterprises with ten employees or fewer at local level – one can appreciate immediately how promised jobs may not emerge because of the lack of a small grant. Capital grants are available up to a maximum of 50 per cent of the cost of capital or £50,000, whichever is the lesser. An employment grant of up to £5,000 may be provided in respect of each full-time job created in an eligible enterprise. It is also possible to obtain a grant of up to 75 per cent of the cost of preparing a feasibility study. These grants are in jeopardy in 1999.

I have been informed that the Minister of State will have to bring forward amending legislation which will not be ready before 3 April to make more money available but that may be too late for some projects. For example, Fingal County Enterprise Board had plans to take £45,000 preference shares in an innovative information technology business but it will not now be in a position to do so with the result that the company will be left in limbo; it may find its future threatened. The board is £166,000 short for the first quarter.

Because of the mistake made by the Department I call on the Minister of State to immediately make the same amount of funds available as would have been available if the misinterpretation had not happened. It should be possible to find a mechanism, in liaison with the Department of Finance, whereby the money can be guaranteed for 1999, if necessary through a Supplementary Estimate, so that we do not have to wait for the amending legislation to be enacted. A second choice would be to give county enterprise boards permission to raise bank loans with a commitment that the Department will guarantee them and cover full interest payments on them.

I pay tribute to all involved in county enterprise boards. During the period 1994 to 1997 they supported the creation of 11,000 full-time and 2,250 part-time jobs. The approximate cost per job is less than £4,000. This is tremendous value in ensuring family run businesses continue to thrive.

How did this blunder happen? When did the Department become aware that there was a misinterpretation of the Act and that the money would run out at the beginning of 1999? What actions have been taken to ascertain why the information was not available in time to amend the legislation before the Dáil broke up in December? Has action been taken to identify the responsible section or person and ensure a similar problem will not arise?

The Minister of State loses no opportunity to claim full credit for the establishment of county enterprise boards. He must, therefore, take responsibility for this blunder. I hope I will not receive the answer that has been given to county enterprise boards, that is, that legislation will be introduced by April. I want a different answer so that I will be able to tell them they will get their money before April.

I take a slightly different position. The Minister of State cannot allow this to happen. It is preposterous. It is the kind of unpardonable blunder that demonstrates that nobody has their hand on the tiller in the Department. One can understand how the Tánaiste is preoccupied with other matters but who is watching the legislation while the Tánaiste is watching the Taoiseach?

The Minister of State, Deputy Treacy – Mr. Enterprise Board himself – claims to be the progenitor of the county enterprise boards. Did he issue the circular to the chief executive officers of the boards or was it issued without his approval?

There are 35 city and county enterprise boards, many of which have meritorious projects approved and many more in the pipeline. I cannot believe that a circular was issued stating, "Happy New Year fellows. By the way, I want to tell you that there is no money in the till; we made a mistake, we misread the Act and the Department of Finance has now informed us what is in it. Do not bother me with telephone calls because nothing can be done without amending legislation which will be enacted in April or May.".

I am being kind in paraphrasing. The circular states, "However, the Department of Finance has informed us that our interpretation of the Act is incorrect, i.e., that the £100 million limit applied retrospectively from 1993".

He has to take responsibility for it.

I am surprised that the Minister for State, who never lets his attention go far outside east Galway, in a local election year, left the boards without any money. Maybe the problem was that he was roving wider than east Galway. Maybe the circular went out and he did not approve it.

Trying to get all the boards in his constituency.

As Deputy Owen said, he had to take responsibility for it, and I presume he is not going to tell us that he will have to wait until the Finance Bill is passed in April to put it right. If the statement he made last night to The Irish Times is correct, I hope he will inform the House under what authority money will be made available immediately, as I hope. It would appear from the letter that went to the chief executives wishing them a happy new year and no money that legislation is necessary. If amending legislation was necessary on 20 January, why is it not necessary on 27 January? I hope the Minister of State can tell us tonight that the many projects that are already approved, that are awaiting finance, that are about to be approved and that are creating jobs, will not be stymied because of this blunder in his Department. The way we operate in this democracy is that the Minister takes the responsibility, and I hope the Minister of State does so. I hope he tells us precisely the terms in which he hopes to set this right and when the amending legislation will be before the House.

I wish to record my personal appreciation of the record of job creation by the city and county enterprise boards nationally since I established the first board in the city and county of Galway in October 1992. In the meantime 35 city and county enterprise boards have supported the creation of over 14,000 jobs in the manufacturing, tourism and service sectors.

The average cost per job is approximately £4,000, thus demonstrating that the Irish people are getting very good value for money. Equally encouraging is the failure rate to date, which has been less than 5 per cent of original start ups.

To demonstrate this Government's commitment to the continued success of the efforts of the enterprise boards, £22.7 million, including a supplementary provision of £1.6 million, has been provided in Exchequer funds to the boards during 1998. Contrast this with the figure of £9.755 million for 1994, the first full year of activity for the boards, or the original figure of £75,000 for local enterprise boards in 1992. This year the boards will receive an additional £21.8 million which will enable them to meet their administrative expenses and maturing contractual grant and other financial obligations. Thus there is no question of staff layoffs, redundancies or approved projects not proceeding for want of grant assistance.

Section 10(3) of the Industrial Development Act, 1995 – Deputies Rabbitte and Owen were members of the Cabinet which cleared it – stipulates that the maximum in Exchequer money which I, with the prior consent of the Minister for Finance, may make to the enterprise boards is £100 million. Until very recently the understanding of our Department was that the commencement date for computing the drawdown of money by the boards for the purposes of the £100 million specified in the Act was November 1995, when the Act first came into effect. This was based on the reasonable and long held belief that legislation could not be retrospective. So much for those in charge of legislation at that time.

What sent the Minister of State to the Attorney General?

Maybe Deputy Owen did not like to consult him, but she over-consulted him in this case. However, advice has been given by the Attorney General's office to the effect that the commencement date in computing the drawdown of Exchequer money for the purposes of this Act is October 1992 and not November 1995. If 1995 rather than 1992 had been the commencement date, the £100 million limit in the Act would not have been reached until next year.

When the gross expenditure was recently reviewed after the outturn for 1998, departmental records showed that the boards had received in excess of £96 million. This left a balance of £3.5 million for advancement to the boards to meet their administration and other requirements. On this basis £2.8 million was advanced to the boards this month with a reserve of some £0.6 million being retained to meet contingencies and emergencies.

At all times the Department recognised that the level of money advanced could create temporary cash flow problems for a very small minority of boards – a maximum of three. In an attempt to find a solution to this short-term problem, the Department, at my request, over recent days undertook a detailed analysis of all money advanced to the enterprise boards since their inception. The undertaking revealed that in 1994 £1.3 million was used from the enterprise board subhead for community enterprise schemes operated by FÁS.

Fair play; well done.

Thus this amount is now available to add to the total money which can be made available to the boards during the first quarter of this year.

The FÁS milk cow.

This is £0.2 million more than they received during the first quarter of 1998. It is intended that the new financial limit of £200 million for the enterprise boards will be given effect by an amendment to be incorporated in the forthcoming Finance Bill, which will be enacted by the end of March next. This amending legislation will enable the enterprise boards to continue in funds to meet both their job creation and enterprise development functions into the year 2000 and beyond.

I regret very much that the very small minority of boards which could but will not now be affected by short-term cash flow difficulties found it necessary to resort to the media and others in the first instance rather than contacting me first.

They got the Minister of State's letter.

Deputy Rabbitte asked if I sent out the circular. He read from the circular he got from the South Dublin Enterprise Board and Deputy Owen faxed the Fingal Enterprise Board letter to the media with her statement of 26 January. She said that she was to raise this matter in the Dáil through parliamentary question and on the Adjournment and that she would be calling on the Minister to bring in an immediate Supplementary Estimate. Deputy Owen has been around a long time. Under the Constitution, no Department can bring in a Supplementary Estimate at any month of the year apart from the Department of Social, Community and Family Affairs.

The Minister of State should not impute to South Dublin Enterprise Board the furnishing of this—

I know the four people who communicated on this issue. One official of one board walked into the Department before lunchtime yesterday and handed in a letter without talking to the senior officials. The same board gave Deputy Owen a document which she faxed to the media. I know the person; I know Deputy Owen's contact. Not one of the other 35 boards complained; just one complained. Some people love the media and like to fax papers which might be looking for news. The boards are in good hands and there is plenty of money available.

The Minister of State had to find the money. He made the mistake.

I do not like hypocrisy. When I came up with the idea of the boards Deputy Owen's party opposed it on national television the day the boards were launched and said they would make no contribution to the country. She should not be hypocritical.

The Minister of State should be man enough to admit his mistake.

I made no mistake. A cautious, honourable, decent official in my Department, doing his job, consulted the Attorney General and the Department of Finance. Based on that he issued a circular.

Do a better job in Europe.

There was a small hiccup as a result. Deputies can be certain that the boards will be well looked after.

Europe is safe.