Enda Kenny
Question:1 Mr. Kenny asked the Taoiseach when he will next convene a meeting of the Ireland America Economic Advisory Board; and if he will make a statement on the matter. [19724/02]
Ceisteanna – Questions. - Ireland-America Economic Advisory Board.
Trevor Sargent
Question:2 Mr. Sargent asked the Taoiseach when he intends convening another meeting of the Ireland America Economic Advisory Board; and if he will make a statement on the matter. [21308/02]
I propose to take Questions Nos. 1 and 2 together.
I last met the Ireland America Economic Advisory Board on 13 March and reported to the House on 20 March. It is likely that I will next meet with the board in the course of my visit to the United States over the Saint Patrick's Day period next year.
Will the Taoiseach indicate the number of times the Ireland America Economic Advisory Board has met in the past 18 months? Is the Taoiseach happy with the prospects for further American investment in industry here given that the placements of a number of largescale and high profile industries have been postponed in the past 12 months?
The economic advisory board normally meets at least once but sometimes twice a year, usually in the spring and autumn session. Sometimes the board meets here or we may travel to the United States, although members of the board frequently travel back and forward. This year they put most of their effort into the meeting attended by the Tánaiste, which was a very successful US-Ireland business summit from 4 to 6 September involving political, business, academic and official figures from the United States, Northern Ireland and here. It focused on developing a US-Ireland alliance in terms of investment and trade. The investment this year and last year has not been as good but there were some welcome announcements during the year, the latest concerning Abbott Laboratories which will create approximately 700 additional jobs over the next few years in Cavan and Galway, in addition to its new plant in Sligo. I understand there will be others also.
Overall foreign direct investment on a global basis is well down from $1.5 trillion, the figure just 18 months ago. There has been an enormous drop in US investment outside the United States – in Europe, Canada and Latin America – which is creating problems in many parts of the world.
Given that American investment abroad may alter quite substantially depending on what emerges in the context of Iraq in the next fortnight, the nature of ongoing contacts between Irish and American business, and following the economic conferences that have been held subsequent to the initial one during President Clinton's regime, is the Taoiseach prepared to lead a formal delegation which would include the Tánaiste in her capacity as Minister for Enterprise, Trade and Employment, to explain to American business interests and investors that our country is not actually in a shambles but that there is quite a deal of scope for good American investment? Will he do that next year in order to expedite or clinch a number of these investments?
Americans look at us slightly differently – they see that we are the one country that has higher economic growth than anywhere else in Europe. Last week the Secretary of State for Health and Social Security was here with a high-powered delegation examining the bio-tech area. An international conference took place with attendance from many countries including our EU partners and significant figures from the United States and many other countries. They examined the future of the bio-tech area. I had the pleasure of opening the conference. There was an upbeat and positive atmosphere. I hope they are correct because that industry is taking a slightly different view to many of the other areas.
I will outline some of the key outcomes of the summit in September. It was agreed that a partnership task force would create a strategic plan with specific action steps for the next meeting in March of the Ireland body to promote further technology transfer between Ireland and the United States and the island of Ireland. It is to identify new avenues of collaboration and to promote and foster world-class capability for research and development in ways that are mutually beneficial. That partnership group includes the chief executive officers of US corporations on this island, Irish chief executive officers, university presidents, Science Foundation Ireland and other representatives from relevant State agencies North and South. It also includes the US Department of Commerce. They will drive the partnership task force and build a research and development and business co-operation plan.
In the second major initiative it was agreed that the US council on competitiveness would explore future collaboration with the Northern Ireland Centre for Competitiveness and with the National Competitiveness Council and this has already commenced.
The third initiative was the promotion of US-Ireland collaboration in financial services. It was agreed to create a US-Ireland financial services forum to discuss trade restraints, regulatory reform, emerging trends and other issues of joint concern in the financial services area.
The fourth initiative was a US-Ireland business summit representing important milestones in US investment which are based in this country. This is similar to what Deputy Kenny suggests. We wish to maintain our position among small economies and continue to press for direct foreign investment from the United States. It was agreed that there would be a special emphasis on US companies to locate and operate profitably here. The ones that are still here are pro-enterprise and pro-investment attractions and continue to be promoted very actively by our investment agencies. Many people involved in the Ireland-America Advisory Board have an ability to open doors for us and they have been doing so for the last decade.
Will the Taoiseach agree it rings alarm bells for Irish business to see foreign direct investment plummeting by 60% in 2001 and the downward trend continuing? For the first time in 15 years, we saw unemployment growing by 3% in IDA Ireland-backed businesses in 2001. Will the Taoiseach agree a very radical and immediate response is required to what the chief executive of IDA Ireland, Sean Dorgan, has referred to as a shift to a post-Celtic tiger environment? How does the Taoiseach propose to shift policy to take account of the post-Celtic tiger environment given the drop in numbers of students choosing science and engineering and the low level of research and development? Will he convene any more meetings of the Ireland-America Economic Advisory Board, or any other meeting with IDA Ireland to ensure there is a more immediate and urgent response than we see currently?
It is a fact of life that foreign direct investment has declined all over the world, particularly sharply from the United States, from $1.5 trillion down to $700 million at the beginning of 2002, and it is still declining. That is an enormous drop, probably the biggest since the 1960s. We have been lucky enough to hold a good share of this investment, even if nothing like the share we got in the years 1998-2000. We are still perceived as pro-enterprise and pro-business and as having an attractive tax regime and particularly a good education system.
The money we have put into research and development, linking universities with business and giving business an input into the curricula that are being devised, is a very positive development. Deputy Kenny referred to the situation in Iraq, and we can see clearly what is happening with the United States. Many people are holding back on projects to see how this situation pans out – many big corporations have stated so in this month alone. That clearly has an impact.
One would normally expect that large businesses in particular would activate projects on the basis that low interest rates are one of the driving forces of the economy, but low interest rates in the United States this year have done little or nothing to alter any of the economic fundamentals. This is a fact, not an argument. We have to look to research and development with business, ensuring that businesses themselves contribute, as well as our educational bodies. We must also pay attention to the issue of competitiveness. The one concern I have is that when fortunes turn – they will, even if the position is not as strong as before – we must be in a competitive position to benefit from that and not to lose our place.
We have lost a few percentage points in terms of the competitiveness league and we have to deal with this for when the economy is back on the up-turn and investors are looking to us again. This fall in investment is happening around the globe. I had the opportunity of speaking to the President of Mexico, which is very close to the United States, and its foreign direct investment has stopped almost completely, creating huge problems. We have to deal with the initiatives we have put forward, which are very useful for business here. The most important thing of all is to maintain as much of what we already have and sustain it.
The Taoiseach expressed the hope that things will not be as bad as Mexico, for example, but will he say whether there is a plan B in relation to the continuing problems with foreign direct investment which, it has to be acknowledged, are worldwide? Will investment be spread in a more balanced way around the regions? Will a more proactive role be taken in regard to research and development rather than waiting for companies to engage in it? Americans register 16 times as many patents as Irish people. Will we try to improve ourselves in that regard, given that what is at issue is not only a matter of competitiveness but a matter of initiative. Rather than relying on competitiveness, will the Taoiseach indicate what initiatives will ensure that we will go up the league in terms of research and development and in terms of spreading investment around the country?
There are many initiatives. I spoke earlier about the biotech conference last week, arising from which there are enormous opportunities. It was well reported and documented. This country, as a European location for biotech advancement, is attracting a good deal of interest. We have to wait for the investment to follow from the initiatives that have been taken. The people in this industry are buoyed up by the fact that they think they have got it right, in that, from a European perspective this could be a real centre of activity.
Equally on the pharmaceutical end, we have already received one large development which is almost ready to open in this city. The IDA has been working hard on a number of other such developments which it believes will come to Europe. One has gone to Scotland and a number of others will come to Europe. Such developments involve large investment and high employment of mainly, but not only, graduates.
We are spending historical rates of resources on research and development. The partnership task force has set out a strategic plan in this regard. Those are three large initiatives that have been taken.
With regard to the Deputy's point of spreading investment, the national spatial strategy in near completion. While the strategy looks forward in terms of a 20 to 30 year period, it is important that a large proportion of the jobs created in the next five years are located outside the greater Dublin area – that there is a spread of such jobs to the regions. That is a challenge to the system. The Deputy mentioned not only foreign direct investment but investment by companies here. Regardless of from where the initiatives comes, about 90% of our start-up indigenous companies want to operate in the greater Dublin area. The challenge to the spatial strategy is to make sure in the short-term, over the next five years, it will ensure that the majority of employment is created outside the greater Dublin area. The strategy will be finalised and published shortly.
What is the Taoiseach's assessment of the value of this body? I take it that it is nothing more than a group of American businessmen well disposed towards Ireland coming together on an unofficial basis to give advice from time to time? Is it more significant than that?
With reference to the wish of foreign direct investment to locate in Dublin and the need for a spatial strategy, have any meetings of this body or businessmen concerned with it raised with him the constraint on such a spatial strategy or such an industrial strategy in terms of the location of foreign direct investment – the extent to which such a strategy is constrained by the Government's failure on the roll-out of broadband further exacerbated by the Book of Estimates last week? When the Taoiseach talks about technology transfer and the location of FDI, is it not the case that what I have outlined is a serious constraint on the future possibility of attracting foreign direct investment, especially to the regions?
This group has operated for the past decade or so. It is an advisory board. It does not have a statutory, formal role. It is a group of businessmen, some of whom are retired and some of whom are very active, but most of whom are prominent in the United States and are regular visitors to Ireland and supporters of what is Irish. They use their positions and resources to help organise many functions and occasions to open doors for Irish business people and educationalists. I am not saying Deputy Rabbitte said it but one could say they are no use. One member has supported third level education over the past ten years and it would be very different were it not for him. I think Members know the gentleman to whom I refer and his sensitivity about his name being mentioned, so I will not go into that. One of the largest concentrate plants in the world, with the exception of that in Puerto Rico, is located in Ballina. The decision to locate there was taken by a member from Ballina who wanted to do something there. When the financial services centre started up—
Unlike Padraig Flynn who never wanted to do anything in Ballina.
That could be true. In terms of the financial services centre and many other areas, I would not like to overstate their abilities and uses but they are good friends when required to gain access to people, whether in the sciences or business. In the telecommunications area, one of them, Mr. Thompson, chaired meetings on where we should go. Many of them have changed and new people have been brought in with the recommendation of the embassy, including people who are known by Irish universities and others. It is a useful and helpful group but I would not like to overstate its role.
I asked the Taoiseach about broadband.
Broadband is important. The roll out of broadband to central locations and towns has commenced. If one was to ask me about what these groups normally ask, it is not about broadband. Air links are what worry these people. When they are given the price of air links, it is the main issue they raise.
Has the Ireland America Advisory Board a view on the future and on the levels of investments which will continue to be made by US firms? Does the Taoiseach agree there is a serious danger of this State becoming over-reliant on US multinational corporations to make up for high levels of investment and employment given that the changing global economic situation may mean that many of these companies will retrench quite brutally and security of employment of Irish workers will not be paramount by any means in their considerations? There is also a great danger of this Government being compromised in taking an independent position on US foreign policy for fear of offending many of these powerful multi nationals. Does the Taoiseach believe it should be a question of encouraging indigenous and publicly owned industry over which we can have democratic control?
What is good for this country is that we have employers. It would be good if we could have more of our own employers, particularly indigenous companies building on the back of multinationals, something which tended to happen a great deal in the past decade. There are many examples in the areas of implementation, technology and software development where Irish companies and entrepreneurial individuals with innovative ideas who were working in multinationals have branched out on their own to open up successful companies, in many cases supplying the components and technology to multinationals while also exporting. That is a good thing.
Obviously, it is not a good idea to have all one's eggs in the one basket. We should try to seek investment from whatever source, whether the European Union, the United States or elsewhere, but we should also try to develop our own industries as much as possible. The Deputy would agree there is a benefit to this country attracting US investment to Europe. It will go to Europe anyway, either to one of the applicant countries or to one of the 15 member states. If we attract our fair share of that, it adds value.
The same is true for exports. If the companies here are producing and developing new products and exporting to other countries, which happens to a great extent, then there is great potential for business. We have developed in a range of areas, both with our indigenous companies and multinationals. We are one of the biggest exporters of software products in the world – we are certainly far ahead in Europe. We are also the biggest exporter of pizzas in Europe. We have managed to extend our range from the high-tech area to food items and that employs many people which is good for the country. I would not get too excited or hung up about us being too much into the pockets of the United States. We should not go out of our way to have a go at the US at every possible opportunity – and I know the Deputy would never do that.
There is no fear of that ever happening in the case of the Taoiseach.
I am struck by the Taoiseach's remark on the importance of broadband. It is a bit like Dan Quayle saying that outer space is very big. His comments on the roll-out of the spatial strategy being 20 or 30 years hence appear to be somewhat contradictory when its very fundamentals were dispensed with last week in the Book of Estimates, in terms of major road and infrastructure projects. Traffic jams this year will cost €600 million to the economy.
Did the Government, or the Department, carry out an analysis of the fall-off in tax revenue and, if so, how much of that can be attributed to the loss of overtime payments, particularly in regard to American-based IT companies?
The Deputies' questions are about the Ireland-America Economic Advisory Board. Questions regarding this area to the Minister for Communications, Marine and Natural Resources will follow immediately. I wish to call two other Deputies and then have a final reply from the Taoiseach. The next set contains 18 questions and, in fairness to the Members who submitted them, time must be allowed for them to be answered.
In view of the recent criticism of the Government in The Wall Street Journal, with regard to the lack of infrastructure in the west of Ireland, how does the Taoiseach propose to address it if the Ennis bypass is shelved? American companies that have set up there cannot do business and this will stifle the growth of industry in the west of Ireland. The Wall Street Journal does not criticise the Government lightly, but it has done so—
The Deputy has asked his question.
Will the Taoiseach outline how we will bring investment to the area if we do not have the infrastructure to allow companies to take the merchandise to Shannon Airport in time for delivery?
A brief question from Deputy Gilmore.
The Taoiseach referred to the national spatial strategy. Will he confirm to the House that the Government has agreed the national spatial strategy and when will it be published?
The Deputies seem to be wandering a bit away from the questions that were submitted.
With regard to Deputy Kenny's point, in the past few years, and currently, we are spending an enormous amount of money on broadband. It is unfortunate that so much is being left to the State. It is a pity that the ICT companies would not invest more in it. They are reluctant because they got badly stung in other areas. It is the same in regard to the 3G licences. The State has been stuck with an undue burden which we continue to address.
With regard to infrastructure, the figure is still over €5 billion and when compared, relative to any other country, we are spending far more than anybody else.
Apart from in the west of Ireland.
The Deputy is correct in saying we need it and we are still spending vast sums of money on the capital programme.
Not in the west of Ireland.
Work is fairly well advanced with regard to the national spatial strategy and it will be published shortly. I do not have a date but it may be in the next two weeks or so. I do not want to be held to that but it should not take much longer than two or three weeks.
Deputy Kenny asked me about the breakdown of taxes. I do not have precise figures but there are companies in the high-tech area that are still doing well, which is not the case with chemicals or pharmaceuticals. Some hi-tech sectors are still doing well but sales in sectors such as software and PCs, which are driven by consumer demand, are down. Exports averaged 16% per annum for the past four years whereas this year they will reduce to 4%. That has had a knock-on effect on production and employment and the position is similar throughout Europe.