Vol. 646 No. 3
1 Deputy Leo Varadkar asked the Minister for Enterprise, Trade and Employment the status of the review of the Competition Act 2002 in view of the completion of the public consultation stage of this process; the changes he is considering at this stage; and if he will make a statement on the matter. [4414/08]
The Minister, Deputy Martin, announced a public consultation on the operation and implementation of the Competition Act 2002 last October. A number of submissions have been received and are currently being examined. During a Dáil debate on the Private Members' Competition (Amendment) Bill in December, the Minister indicated that he would welcome submissions from interested parties. I understand that a number of submissions were received in January and more are expected.
Until all submissions have been received and considered in detail, the Minister considers that it is too early to say what changes, if any, will be proposed.
The Minister of State might inform us what stage the Minister is at with regard to this matter. It is customary for the Minister to advise us, or at least advise the Chair, if he is not going to be here to take questions. As regards this specific question, will the Minister of State indicate how many Competition Authority reports have been published to date and how many recommendations have been implemented on foot of those reports? Is the Minister considering including in the competition (amendment) Bill the proposal by the National Competitiveness Council and the Business Regulation Forum to require Ministers and Government agencies to offer a reasoned response to Competition Authority reports, which is the case in the UK and other jurisdictions?
I do not have answers to those specific questions but I will obtain the details sought by the Deputy concerning the number of reports. I will pass on to the Minister the Deputy's suggestion about replying to recommendations contained in such reports.
I can give the Minister of State a rough idea and although we do not have all the answers we have managed to find some of them. There have been 11 such reports to date, excluding those made last year which, in fairness, we do not expect to be implemented at this stage. Going back to 1998, one out of four recommendations in the report on liquor licensing was adopted. One out of ten recommendations in the report on casual trading was adopted. Some 21 recommendations out of 42 were adopted from the report on non-life insurance. Fifteen of 25 recommendations were adopted from the report on banking. Six of 11 recommendations were adopted from the report on the architectural profession. None of the five recommendations from the report on optometrists was adopted. It is quite clear therefore that a Government quango is issuing reports on the lack of competition in certain sectors, while the Minister files them away and forgets about them, as he did when he was Minister for Health and Children. There is a case for the NCC's recommendations to be implemented.
What consideration has been given to making amendments to the Competition Act that would allow for contract negotiations between professional bodies, such as the IMO and the IPU, and Government agencies, as opposed to price fixing?
The Minister has said that there will be a thorough analysis of all the submissions and that consideration will be given on how best to proceed when that review process has been completed. It is too early at this stage to speculate on any possible legislative changes.
2 Deputy Willie Penrose asked the Minister for Enterprise, Trade and Employment his views on the steady increase in the number of people out of work, as recorded in the monthly live register figures and the continued loss of jobs in the manufacturing sector; the action he is taking to address this situation; and if he will make a statement on the matter. [4075/08]
3 Deputy Leo Varadkar asked the Minister for Enterprise, Trade and Employment if he will revise upwards the Government’s projected unemployment rate for 2008; the measures he is taking to reverse this rise in unemployment and under-employment; and if he will make a statement on the matter. [4415/08]
I propose to take Questions Nos. 2 and 3 together.
The total number of people recorded on the live register for January 2008 is 181,449. The live register is not designed to measure unemployment. It includes part-time, seasonal and casual workers entitled to unemployment benefit.
Unemployment is measured by the quarterly national household survey, collated and published by the Central Statistics Office. The most recent quarterly national household survey, quarter 3, 2007, indicates that employment has increased by 67,600 in the year. The unemployment rate is currently at 4.7%, down from 4.8% in the same period last year.
The predictions for the medium term are for continued employment growth, albeit at a slower pace than that experienced to date. Unemployment is forecast to average at around 5.5% over the period 2008-10.
The manufacturing sector in Ireland has evolved noticeably since 2000, in terms of the composition of industry and the nature of activities, and is likely to continue to do so. Manufacturing continues to be a significant employer accounting directly for 11% of total employment and a significant amount of associated services employment. In order to sustain and grow the sector, the Irish-based manufacturing enterprises will have to continue the progression to high value-added sectors and activities, and continue to increase productivity through investments in human capital, technology and innovation.
Many of the job losses incurred in the past number of years were in low value-added manufacturing and these losses have been more than offset by jobs created in higher value-added manufacturing and the financial and international services sectors.
The Department, in conjunction with the enterprise development agencies, has taken a number of steps in recent years to identify and address issues affecting the manufacturing sectors, particularly through implementation of the enterprise action plan arising from the enterprise strategy group report and implementation of recommendations from the small business forum.
As part of the commitments included under the partnership agreement Towards 2016, the Minister, Deputy Martin, established a high-level manufacturing group to review the challenges facing the manufacturing sector and to identify further measures to meet those challenges. This group, comprised of industry, employee, Government and enterprise agency representatives, is currently in the process of finalising a report outlining its views and recommendations to ensure that manufacturing continues to play a major role in our economy and will report back to partnership early in 2008.
For those who become unemployed, in any sector, the range of services provided by FÁS will be available. This will include active engagement with persons on the live register with the objective of helping them to obtain jobs either directly or through further training, education or work experience. It also includes access to the various training and employment programmes provided by FÁS.
FÁS is also placing particular emphasis on the training of low skilled workers in vulnerable industries. This is to ensure that in the event of becoming unemployed they will have the skills necessary to make the transition to other employment.
The development agencies, including IDA Ireland, Enterprise Ireland and the county enterprise boards will continue to promote job creation through the delivery of programmes to assist the enterprise sector to develop, thereby creating new jobs.
The position is quite clear. For almost a decade the Government has been sailing along, buoyed by the economic boom and thereby lulled into a false sense of security, smugness and complacency. The Government has been given a free ride for almost a decade but it is now faced with significant economic turbulence. The Government always claimed credit for everything that happened, with Ministers appearing on the news every evening. Every news programme in the country was bombarded by them. However, we have had 130 job losses at Grove Turkeys in Monaghan, 60 at Merriot Radiators in Clonmel, 360 at Allergan in Arklow, 220 at Jacobs-Fruitfield in Tallaght, 60 at Britvic in Cork, and 400 at the Burlington Hotel in Dublin, while 1,500 jobs are under threat at SR Technics in Dublin. The litany of job losses goes on. Is the Minister of State concerned that in January numbers on the live register increased for the fourth consecutive month? One would have to go back to 1999 in order to find worse figures for January. Was the Minister of State prepared for this? Did he put all his eggs in the one basket, hoping the construction industry would carry employment forward? Did he not anticipate that difficulties might well arise and were there no warning signs? Many small business people, who are the risk-takers in this economy, are smothered and choked by the level of bureaucracy the Government has imposed upon them. The Government is strangling the life out of small businesses but what will the Minister of State do about it?
Yesterday, the owner of a business with ten employees appeared before the Committee on Enterprise, Trade and Employment. He complained that he had to fill in 54 different forms. That sort of red tape is strangling small businesses that are the lifeblood of this economy generating jobs across the economic spectrum. What will the Government do to help those industries? The provision of foreign direct investment in parallel with support for small industries, which are important in every community, is needed. What will the Minister of State do to ensure the obstacles and impediments to growth in those industries are removed so that they can expand and be competitive in this environment? Is the imposition of a significant number of indirect stealth taxes on industry by the Government not one of its greatest problems? Is it not responsible for the significant cost base of businesses, which is leading to a lack of competitiveness? We are suffering the consequences of the Government's actions in imposing stealth taxes on companies and small business.
I do not agree with the Deputy's contention that we have been smug and unaware of what was coming down the tracks. The Tánaiste and Minister for Finance stated in his budget speech that estimated economic growth in 2007 would be approximately 4.7% and it would average 3.25% between 2008 and 2010. He also stated the economy had reached a turning point and was entering a phase of much lower growth. This is due to a combination of factors, including a weak dollar, weak sterling, interest rates and a slowdown in the housing market, which everybody acknowledges and which is having a significant impact on the economy. The budget estimated employment growth at 3.5% in 2007, which equates to 72,000 jobs, but a reduction to more than 1% in 2008 or 28,000 jobs. Employment increased between 2004 and 2007 by 247,300 and for the first time ever more than 2 million people are employed in the State.
However, we acknowledge there are problems and we must ensure competitiveness is protected and red tape is reduced. We have plans to do so and I will go into this in more detail when I reply to a later question. The Government accepts we are in a different scenario from a number of years ago but we are taking steps to ensure jobs are protected and continue to entice foreign direct investment, which has been good to this country over many years.
I agree with everything Deputy Penrose said. This is the week after the highest increase in the numbers signing on since I was one year old and it is very disappointing the Minister is not present to answer questions. Why not?
He is attending the North-South Ministerial Council in Dundalk.
I accept fully that the quarterly household survey is the most accurate measure of unemployment, but the live register is still significant. It measures both unemployment and underemployment. It is interesting that since the Minister for Enterprise, Trade and Employment took office, the number on the live register has increased by 21,000 compared to a reduction of 100,000 when his predecessor, Deputy Mary Harney, held the portfolio. By any reasonable benchmark, the Minister, Deputy Martin, has nothing of which to be proud. I also accept the Minister of State's comments on the increase in employment but there has been a greater increase in unemployment, which is best measured by the standardised unemployment rate, SUR. This has hit 4.9% and has increased by 0.5% since the Minister, Deputy Martin, took office.
Is the Minister of State proud of his line manager's record, given the increases in the live register and the SUR and the poor comparison with his predecessor's performance? Does he stand over the Government's budget projection that the SUR will increase to 5.4% this year? Does he think that figure was underestimated and the number unemployed will be even higher than anticipated by the Tánaiste and Minister for Finance last December?
For the past ten years I have listened to predictions of doom and gloom by Opposition colleagues, even though more than 2 million people are at work, the highest number in the history of the State. I acknowledge there will be a downturn, mainly due to the correction in the house building industry. However, 80,000 were employed in this industry and approximately 6,000 have been laid off. Commercial property construction is holding up. For example, a new power station is being built by the ESB in Whitegate in my constituency, which will employ more than 700 people. Bord Gais is building a power station in Aghada, which is nearby, and it will employ another 450. Workers leaving the house building industry will take up these jobs. It will be interesting to see how people who have travelled to Ireland from other parts of Europe to work in the construction industry will react. There is evidence of a reduction in the net number of immigrants in the past year and manufacturing industry is holding up.
The Minister of State has not answered either of my questions.
When the Minister of State embarks on trade missions, why do the delegations not include county managers and representatives of trade organisations and councils based in areas bedevilled by unemployment and where an IDA Ireland factory has not been built? Will he take this issue on board to ensure industry can be attracted to those blackspots? Given that competitiveness is important, does the Minister of State accept Ireland is at a competitive disadvantage because the Government has been so slow in rolling out broadband and in developing e-commerce?
Does the Minister of State stand over the Government's projection that the SUR will increase to 5.4% this year or will it be higher? Is he proud of his senior Minister's record on unemployment, which has increased by 0.5% since he took office, with 21,000 more people on the live register?
I agree with Deputy Penrose's suggestion regarding the inclusion of county managers and other development officers on trade missions, having been on many such trips in the past five years, and I will convey it to the Minister. The roll-out of broadband has not been quick enough and it has been held up for reasons we all know. However, moves have been afoot since before the Minister for Communications, Energy and Natural Resources took office to roll out the network so that we achieve parity in this regard with other member states.
The Minister for Enterprise, Trade and Employment is doing an excellent job promoting industry throughout the world. He is not at fault for the change in the building industry. Anybody who made predictions on housing output referred to a maximum of between 55,000 and 60,000 units to meet demand. Housing output reached 90,000 units and it was logical that at some stage developers would hit the wall and they would have to pull back when supply exceeded demand.
Unemployment has been on the increase since 2004 and most jobs lost are non-construction.
Unemployment is increasing mainly in the construction industry.
What about the services industry? What about Jacobs?
The numbers employed in the manufacturing and services industries are increasing exponentially.
Not in services.
4 Deputy Deirdre Clune asked the Minister for Enterprise, Trade and Employment the way he will reverse the low level of research and development activity carried out by Irish owned companies; and if he will make a statement on the matter. [4416/08]
The strategy for science, technology and innovation, SSTI, which was published by the Government in July 2006 noted that, for a country whose performance is dominated by high technology industry, there is a disjuncture between an impressive performance overall and the level of research and development conducted by indigenous and multinational firms in Ireland. The principal objective of the strategy is to address this imbalance by making Ireland internationally renowned for the excellence of its research and ensuring we will be at the forefront in generating and using new knowledge for economic and social progress.
Although growing from a low base, business expenditure on research and development, BERD, has improved considerably over the past decade. It is encouraging to see that research and development expenditure in the business sector grew strongly in 2005 and 2006. Research and development spending in the business sector rose by almost 10% from 2004 to 2005 and is estimated to have increased by a further 17.3% in 2006 to reach €1.56 billion. BERD intensity as a percentage of GNP is also growing, from 0.97% in 2004 to 1.05% in 2006. This reflects a robust research and development spending performance by both Irish and foreign owned firms. Investment support in the area of research and development has been the subject of significant financial commitments under the strategy for science and technology. This investment is already beginning to have a measurable impact, which should become more significant with enhanced investment. The most recent survey of business sector performed research and development in 2006 shows BERD in Ireland is 1.05% of GNP, compared to the OECD average of 1.54%. While Ireland lags behind competitors, bringing BERD in line with the OECD top performing partners is our goal. It must be acknowledged, however, this is a significant challenge for Ireland.
Additional information not given on the floor of the House.
In regard to Irish owned companies, the level of BERD has grown from €155 million in 1995 to €480 million in 2006. Over the period 1995-2005, the number of indigenous firms active in research and development grew from 806 to 1,025. Therefore, the trends of engagement by Irish owned companies in research and development are positive. These trends can be directly attributed to the impact of Government policy to date.
The current national development plan recognises the need for a step change increase in the investment in technology, innovation and scientific research and there is a firm commitment to a significant level of investment in this area over the lifetime of the plan. The positive trends that can be identified to date are encouraging but we will remain focused on the challenges arising from the effort to improve competitiveness through innovation. The SSTI sets ambitious targets for growth in BERD to €2.5 billion by 2013, two thirds of which should come from the business sector, and includes the following goals: the number of indigenous companies with meaningful research and development activity and annual expenditure exceeding €100,000 should increase from the 2003 level of 462 to 1,050 by 2013; and the number of indigenous companies performing significant research and development with annual expenditure exceeding €2 million should increase from the 2003 level of 21 to 100 by 2013. The programme of investment in the NDP commits €8.2 billion in the period 2007-13 for building the skills needed for a modern knowledge based economy, strengthening Ireland's research base and driving research and innovation in enterprise.
The 2008 Vote of the Department of Enterprise, Trade and Employment has provided over €326 million for the furtherance of these objectives, a 13% increase on the 2007 figure of €290 million. In excess of €640 million was allocated to six Departments in 2007 for expenditure in the area of science, technology and innovation. This funding will allow Ireland to continue to build its research base and improve competitiveness through the development of innovative products and at the same time build the knowledge base that will establish our economy as an attractive place in which to do business in a competitive climate. This funding supports a wide range of specific policy actions aimed at ensuring business can significantly increase the level of research and development undertaken.
Enterprise Ireland has a specific policy remit of supporting indigenous industry and in 2008 received a specific science, technology and innovation budget amounting to €132 million. It is delivering a broad range of programmes aimed directly at increasing the level of participation by indigenous firms in research and development. These schemes are under constant review to ensure they deliver on the ambitious goals of the SSTI. Of particular note are the revised research and development grant offering, innovation vouchers and competence centres. In January I launched the revised simplified research and development grant scheme to be operated by Enterprise Ireland and the IDA. The new scheme will see these agencies invest more than €500 million in support of research and development. The funding will be made available over the remainder of the Government's SSTI. The scheme provides supports in a more client-focused way and is easier for firms to access. The innovation voucher initiative, launched in March 2007, provides €5,000 vouchers to firms which may be used to purchase specialist innovation support from a number of research providers. This is an imaginative effort to encourage small and medium sized enterprises to take their first steps in research and development. By the end of 2007 a total of 428 vouchers had been issued. It is anticipated there will be five calls under the scheme during 2008. Competitiveness centres represent a major new initiative designed to create a number of industry led centres of excellence in research areas of key relevance to consortia of businesses with common research needs. It is expected that the first centres will be established during 2008.
On a broader level, the fiscal environment for research and development investment has been significantly improved since the research and development tax credit was introduced in 2004. The Finance Act 2007 enhanced the tax credit in a number of ways, in particular by fixing the base year at 2003 for seven years until 1 January 2010. Budget 2008 went further than this and fixed the base year at 2003 for ten years until 2013. These changes have moved the scheme in the direction of a volume-based credit and it should be noted that as the tax credit stands, expenditure on buildings is allowed on a volume basis. This represents a significant support to firms undertaking research and development and should act as a real stimulus to activity in the research and development area.
Taken collectively, these initiatives represent a significant and coherent set of policy initiatives designed to stimulate research and development in the business sector.
The Forfás survey on business expenditure on research and development which was published in 2007 indicated that funding for firms with fewer than 50 employees had decreased between 2003 and 2005. Have the barriers been identified for Irish firms investing in research and development and what measures are being introduced to overcome them? Ireland is probably more reliant than our competitors on multinationals for employment and innovation, which makes us more exposed to the downturn in the US economy and challenges from Asia. There is a low level of activity in research and development in Irish firms.
As the take-up by indigenous companies has not been as high as we hoped over the past several years, new programmes have been introduced to increase the level of participation. Enterprise Ireland has a number of programmes of particular relevance to research and development. The programmes are aimed at stimulating research and innovation among companies which are new to product, process and service development activities. These financial supports, which include research and development stimulation grants, allow companies to explore how research and innovation can drive their future development.
The research and development fund supports innovation in services, products and process in companies which are ready to progress to larger projects. Companies which want to set their own research agendas can apply to Enterprise Ireland's research and development fund, which supports market led innovation in manufacturing and services companies. Companies can also get funding for collaborative research projects.
In addition to financial supports, companies can avail of the guidance of a team of professional experts in building research projects, innovation management and creating value from intellectual property.
Is the Minister of State confident that Enterprise Ireland has the necessary skills and programmes in place to engage with indigenous firms? We have seen the fall in the figures.
I have total confidence in the expertise and skills available from Enterprise Ireland through my experience of working with the agency over the years. It has now been given other tools to ensure indigenous firms have the chance to grow and develop.
I presume the Minister of State's full reply will be made available.
I try to keep debate going but if a Minister's six-page reply is read into the record there is no time for questions.
5 Deputy Damien English asked the Minister for Enterprise, Trade and Employment his views on the Competition Authority submission to the Government’s alcohol advisory group recommending there should be no ban on below cost selling of alcohol; and if he will make a statement on the matter. [4417/08]
I welcome the establishment of the Government's alcohol advisory group by my colleague the Minister for Justice, Equality and Law Reform, Deputy Brian Lenihan. I understand this group invited public submissions on the following matters: the increase in the number of supermarkets, convenience stores and petrol stations with off-licences and the manner and conditions of sale of alcohol products in such outlets, including below unit cost selling and special promotions; the increase in the number of special exemption orders permitting longer opening hours which are being obtained by licensed premises around the country; and the use, adequacy and effectiveness of existing sanctions and penalties, particularly those directed towards combating excessive and under-age alcohol consumption.
As the group is currently considering all submissions received, I do not consider it appropriate to comment on any submission made to it. I understand the group is due to report to the Minister, Deputy Brian Lenihan by 31 March 2008.
I am disappointed with the Minister of State's answer. I did not ask him to comment on the alcohol advisory group. I asked for comment on the submission by the Competition Authority, about which I have grave concerns. Does the Minister of State agree with the Competition Authority's recommendation to allow below cost selling of alcohol? The dog on the street knows the abolition of the groceries order and the below cost selling of alcohol has increased binge drinking. It encourages the purchase of slabs of beer and people have told me they double their consumption of alcohol in order to get a deal. It is wrong of the Competition Authority to let ideology overrule common sense. Will the Minister of State speak to the authority before it is too late?
Reports in the media have suggested that the abolition of the groceries order has resulted in the wide availability of low-cost alcohol and an associated increase in consumption. The order was abolished primarily because it allowed wholesalers and suppliers to determine minimum retail prices for consumers, thereby constraining price competition in the grocery trade. It was not designed to address the issue of alcohol abuse and there is no evidence from studies to suggest it was capable of doing so.
The high level development interdepartmental committee established to examine the recommendation made by the consumer strategy group considered the issue of alcohol and its report contained a number of recommendations including the abolition of the limit on the number of pub licences, the introduction of new forms of licence designed to cater for changing consumer tastes and the interpretation of retail planning guidelines in a manner promoting competition. This is consistent across local authorities, with the result that planning regulations are not used as a barrier to entry in respect of pub and other licences.
Statistics do not support the hypothesis that the abolition of the groceries order has resulted in the increased consumption of alcohol.
I might get a reply to my question when the Minister, Deputy Martin, returns from Dundalk. I understand the groceries order was not intended to cover alcohol but the Minister received advice to the effect that it might have a negative effect on the promotion of alcohol. The Minister's agency is claiming it is not an issue but that is not the case. This matter must be given careful consideration. The Minister has taken responsibility in respect of other issues, so I hope he will not let us down in respect of this one.
The report of the Competition Authority recommends that we should increase the tax and excise duty on alcohol. I do not agree with it in this regard. Below-cost selling encourages the promotion of alcohol, which is wrong. However, increasing the tax will hurt everyone, moderate as well as binge drinkers. I would like, at some stage, to hear the Minister's opinion on this matter. I would not want to be associated with a Department that wants to penalise everyone — people who drink in moderation and those who binge drink. The Competition Authority stated in the introduction to its report that it does not want to see the introduction of mechanisms that will penalise all drinkers. As already stated, however, in its recommendations it advocates an increase in the tax on alcohol. That is strange.
I have taken note of Deputy English's comments and I will bring them to the attention of the Minister.
