Vol. 558 No. 6
16 Mr. Morgan asked the Tánaiste and Minister for Enterprise, Trade and Employment the reason the funds for Enterprise Ireland, Shannon Development and county enterprise boards, are to be cut by 18%, 30% and 13% respectively; and her views on whether indigenous development strategies should be a priority of the Government's job creation strategy. [25106/02]
The Estimate for enterprise development in 2003 has been structured specifically to encourage growth in the economy while at the same recognising the overall imperative of reducing the growth in public expenditure. While we must acknowledge the changed economic circumstances in which we are currently operating, it is equally vital that we protect our economic competitiveness and retain the capacity to generate employment in key sectors. The estimate achieves that balance.
The reduction in Enterprise Ireland's allocation under subhead D2, grants to industry, must be viewed in conjunction with Enterprise Ireland's overall capital grant budget, which will increase from €165.075 million in 2002 to €168.283 million in 2003. Enterprise Ireland's capital grants budget is made up from three different elements, namely; Exchequer moneys from subhead D2 on grants to industry; Exchequer moneys from subhead F1 on grants for research and development and own resource income. The amount allocated to grants to industry has decreased and will result in a reduction of new approvals of grant aid and equity as well as some re-prioritisation of other measures.
However, 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 the agency's D2 subhead is balanced by the increase in the F1 subhead, which is aimed at increasing support for research and development in industry, in line with Government policy in this area. The new shift in focus will also be reflected in the 2002 outturn whereby €6.7 million was moved from D2 – grants to industry – to F1 – support for research and development. The vast majority of Enterprise Ireland's activities are focused on developing indigenous industry.
While the proposed cuts in the Exchequer contribution to Shannon Development's budget are unfortunate, the company's view is that with careful management and targeting capability programmes for indigenous industry clients, the direct impact of the cuts on the company's Irish enterprise client portfolio can be minimised. Shannon Development also has overall responsibility for the promotion and development of the Shannon Free Zone, which is largely made up of multi-national companies. While the proposed cuts in grant expenditure will require careful management of the grant budget in the course of the year, it is not expected that the cuts will impact negatively on the new investment promotion effort.
