Vol. 558 No. 6
10 Mr. Howlin asked the Tánaiste and Minister for Enterprise, Trade and Employment the reason for the cuts of 18% in the allocation for Enterprise Ireland grant to industry; the reason for the cut of 84% in the allocation for IDA Ireland grants for building operations; the implications of these cuts for job creation and industrial development; and if she will make a statement on the matter. [24853/02]
The reduction in Enterprise Ireland's allocation for grants to industry must be viewed in conjunction with Enterprise Ireland's overall capital grant budget. Enterprise Ireland's capital grant budget is made up from three different elements, namely, Exchequer moneys from subhead D on grants to industry; Exchequer moneys from subhead F on grants for R&D and own resource income. In 2002 the estimated total for these three elements stands at €165.075 million. The estimated total amount of expenditure by Enterprise Ireland in 2003 will increase to €168.283 million. The reduction in the Exchequer contribution to Enterprise Ireland's grants to industry is balanced by the increase in grants for R&D in line with Government policy in this area. The shift in focus will be reflected in the 2002 out-turn whereby €6.7 million was moved from Enterprise Ireland's grants to industry to grants for R&D. The €6.7 million was available due to less than expected draw downs in 2002, partly as a result of decreased draw downs by Enterprise Ireland clients of approved employment grants.
The reduction in Enterprise Ireland's grants to industry for 2003 will result in a reduction of new approvals of grant aid and equity as well as some re-prioritisation of other measures. As can be seen from this year's draw down however, it is expected that the impact on job creation in Enterprise Ireland client companies will be minimal as companies are generally making the business decision not to increase staff numbers in order to better protect themselves in the current economic environment.
The cut of 84% in the allocation for IDA Ireland grants for building operations is somewhat misleading as is it made up of two elements, these being the completion of the payments for a specific project for the provision of interconnectivity capacity and a cut to the industrial property budget of €517,000.
The 2002 provision included non-recurring expenditure in respect of the development of broadband infrastructure, amounting to a total of €15.529 million. The contract for the investment in expanded large bandwidth telecommunications assets foresaw that payments should cease in 2002, obviating the need for further allocation of Oireachtas grants in 2003.
Additional informationThe grant for the building operations aspect of the budget amounted to €3.517 million in 2002 and will amount to €3 million in 2003. This is a cut of 15% in the Exchequer allocation to the budget. An Exchequer grant is provided on an annual basis for cash-flow purposes, given the uncertainties of the conveyancing process. However, the building operations budget of IDA Ireland is mainly funded from own resources, through the buying and selling of industrial property at market rates. As such, the consequences of the cut of 15% in the allocation for building operations are not significant in view of the fact that most of the needs of building operations are met from the sale of industrial property – own resources.
Does the Tánaiste accept that we need to be particularly vigilant now in terms of providing infrastructure not only for job maintenance but job supports in a time of worsening economic fortunes globally? One of the most important measures we can take is to ensure that our broadband infrastructure is adequate. The contract for the roll out of broadband in the six major towns in the south-east was to be signed in January but I understand it is now on hold. Will the Tánaiste intervene to ensure that basic technology which allows for employment to be generated on a regional basis, which is the intent of the spatial strategy, will be fulfilled? That is a critical element. Will she further accept that cuts in programmes like that and in building projects, particularly for vulnerable areas, are a major attraction in getting an employer to come to areas where they are needed?
I agree with that. That is why we have been so involved in building community enterprise centres. I recently announced a package of €24 million for incubation centres in the IT colleges throughout the country.
There is no money for next year.
I announced that it was for next year.
Where is it? Under what subhead is it?
I will have to revert to the Deputy on that but I assure him it is there and it will be drawn down because there is a lot of interest from the 13 colleges involved that have been approved for the funding.
Is it under the science foundation heading?
No, it is not under that heading. It is from Enterprise Ireland's budget. The number of venture capital funds we have got involved in with the private sector in recent times was a new initiative introduced precisely for the reason mentioned by Deputy Howlin, namely, to make it easier for small companies to access the finance, which is often one of the main obstacles to starting a business. Infrastructure is key. I do not have responsibility for broadband but I share the view expressed. Recently the Government asked Ira Magaziner to help and advise in this area and he has just reported to the Cabinet sub-committee on infrastructure so perhaps some new insights have been provided on the most effective way a small country like Ireland can roll out the necessary broadband infrastructure for the country at large.
The Tánaiste has responsibility for employment. Will she undertake to talk to her colleague with responsibility for broadband roll out about this matter? Broadband enters this country at two points through County Wexford. It actually ends at the end of Wexford bridge and there is a project to simply roll it out on a loop across the town. A small investment of €2 million is now in jeopardy. It is absolutely daft that potential development in employment would be put at risk for that hap'orth of tar. Will the Tánaiste undertake to talk to her colleague to ensure that the projects for the south eastern towns and the other areas for broadband roll out will go ahead as planned?
I note in the Minister for Finance's Budget Statement that the level of unemployment for which he is budgeting will increase from 4.2% to 5.25%. What level of unemployment does the Tánaiste expect to be budgeting for in respect of that percentage and what level of employment creation will she budget for in view of the reduction in the assistance that is given to some of the statutory bodies mentioned in the question?
On Deputy Howlin's question, I sit on the Cabinet sub-committee with the Minister, Deputy Ahern, who is committed to ensuring that the broadband is rolled out. I am active in making that happen and I will undertake to discuss the particular needs of Wexford with the Deputy. Obviously everything is subject to budgetary provision.
In regard to Deputy Hogan's comments, it would be wrong to assume that grant aid is a crucial factor in job creation. In the mid-1980s we spent a lot of money on grant aid and we were very unsuccessful at generating employment.
That is not the question I asked.
In fact, of the approximately 100 manufacturing companies that were given grant aid in 1973, none of them exist today. The strategy now is to help sustain companies, not just to help start them. Deputy Howlin made the point that with the current global economic downturn, sustaining existing companies is a crucial part of the current focus because there have been a large number of early warnings. Many companies are under pressure and many employees are taking wage cuts to save their jobs in this economy.
That is because we are not competitive. The Tánaiste failed to keep us competitive.
