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Dáil Éireann debate -
Wednesday, 12 May 2010

Vol. 708 No. 4

Priority Questions

Enterprise Stabilisation Fund

Leo Varadkar


40 Deputy Leo Varadkar asked the Minister for Enterprise, Trade and Innovation the reason funding for the Enterprise Stabilisation Fund was cut without an announcement; the amount by which it was cut; the number of companies that were eligible for funding who will not receive support as a result of this decision; the amount paid in total in 2009 and the amount budgeted for in 2010; and if he will make a statement on the matter. [19232/10]

Willie Penrose


43 Deputy Willie Penrose asked the Minister for Enterprise, Trade and Innovation the number of companies that have applied to date for assistance under the €100 million Enterprise Stabilisation Fund; the number of applications accepted; the amount paid out to date; the reason the fund was cut by €22 million; the further reason the cut was not publicly disclosed; and if he will make a statement on the matter. [19459/10]

I propose to take Questions Nos. 40 and 43 together.

The enterprise stabilisation fund, ESF, was established by Government in 2009 as a two-year scheme to support viable but vulnerable exporting companies experiencing difficulties because of the current economic climate. Some €78 million is currently being provided under the ESF for 2009 and 2010. At 30 April 2010, a total of 227 applications had been reviewed and 197 projects from 193 companies had been approved for €72 million under the ESF, of which €64 million has been paid out to date.

As with any budget process, the 2010 budget exercise necessitated taking account of emerging priorities as regards enterprise support. In this context, priority is being given to a wide range of financial supports for SMEs, including research and development grants, supporting companies which are resuming a growth path and providing assistance in developing lean manufacturing processes. Prioritisation is always necessary and in this instance it was clearly appropriate.

The Irish economy is now entering a recovery phase and we must take this into account in the allocation of funding across the range of Enterprise Ireland programmes. The companies Enterprise Ireland is now assisting include those that are still vulnerable, but just as importantly those that have shown their potential for high growth and increased export sales. This balance between supporting those companies which are still vulnerable and those which are ready to grow is the key to stabilising the position of some companies while facilitating others to take advantage of the opportunities presented by the recovery in global markets.

The overall funding allocated to Enterprise Ireland for company supports in 2010 amounts to €278 million, which represents a 26% increase on the outturn for 2009. This increase is a reflection of the Government's commitment to supporting enterprise in whatever form is necessary as our priorities shift over the coming year. Allocations to particular schemes are kept under constant review and adjusted to meet our economic needs at any given point in time.

I was very concerned when I read the story in the newspaper about the reduction in the budget for the enterprise stabilisation fund, because the fund is one of the more effective measures introduced by the Government to stabilise viable companies during the recessionary period. Does the Minister agree that the Government has a budget strategy — with which I largely agree — and a banking strategy — with which I profoundly disagree — but has no strategy when it comes to jobs and competitiveness? It seems that every time the Government announces measures, they do not address the scale of the unemployment problem and when introduced are only introduced half-heartedly or late. We had such a situation with the work placement programme, which had few participants and few beneficiaries, the enterprise stabilisation fund, which we discussed already today, and the temporary employment scheme.

One scheme about which I would particularly like to ask, and on which the Minister may wish to comment, is the commitment to introduce a PRSI holiday for employers who take on new employees. I was the first to propose this almost two years ago and it is also supported by the Labour Party. It was announced in the budget, five months ago, that the Government would introduce this scheme to give employers a two-year holiday from PRSI payments for new employees. However, five months after the budget it has not been introduced. Will the Minister explain why?

I take issue with the Deputy with regard to the Government not having a jobs strategy. Governments do not create jobs, but create the environment in which jobs can be put in place. I am satisfied the Government has a strategy that will create jobs. Take for example the IDA Ireland programme, Horizon 2020, which will create a number of jobs through a programme that will run from 2010 to 2014. It is specific with regard to the number of jobs and projects it will create. More than 67,000 jobs will be created over this short period of time, but the agency is confident it can meet its targets and is going about its business in a professional manner. Enterprise Ireland also has a strategy to create jobs leading to 2014. Therefore, we have synergised the foreign direct investment and the growth and promotion of the indigenous sector.

We have also introduced the stabilisation fund and the employment subsidy scheme. All of these measures have had a massive impact during what has been an extremely trying period. If the Deputy looks at the indications——

There will be supplementary questions. I call Deputy Penrose.

With respect, I asked the Minister a specific question about the Government promise to introduce a PRSI holiday——

As the Deputy knows, I have no control over the reply. However, I will allow Deputy Varadkar to put his supplementary question now.

My supplementary question is the same as the question I asked. The Government announced in the budget more than five months ago that it would introduce a PRSI holiday for employers who took on new employees, so that taking on a new employee would cost 10% less than previously, which would tip the balance in favour of job creation. This was my idea and was supported by the Labour Party.

This is an extension of the specific question, which is about the enterprise stabilisation fund.

The Government subsequently adopted the idea. Why, five months later, has it not been introduced?

This is a question appropriate to the Department of Finance. Obviously, this has been put in place. If the Deputy puts down a question to the Minister for Finance, I am sure he will get the appropriate answer.

I have asked the Minister to answer it.

I have no problem giving the exact details of it, but it is not specific to this question. I do not have the relevant data, but I know they are available and I would have no difficulty in getting the information from the Minister for Finance and making it available to the Deputy.

I want to allow Deputy Penrose put his question as he has also tabled a priority question on this matter.

Is it correct that €22 million has been cut from this fund? The Minister said he is reviewing the situation and that like all expenditure allocated in his Department, the fund must be subject to review. The €58 million spent up to end 2009 supported approximately 7,500 jobs. Up to the beginning of March this year, some 26 applications had been received, from which nine companies were approved, supporting 200 jobs. If there is a cut of €22 million, some 50 companies — based on the average of €415,000 support for each company — will apply but will not get job support. This cut is just being flagged now. There was no announcement about it, which makes it a stealth cut. Is the Minister not concerned that if there is a cut, this will have serious consequences for these companies? In the context where these export-led companies are vulnerable but could return to profitability, is it not the position that our way out of the recession is through export-led growth? We must get away from dependence on property bubbles etc.

Most of the aid has been given in terms of redeemable shares and repayable grants. Why, therefore, would the Government contemplate cutting or reviewing something that is making a significant contribution to sustaining companies, particularly in the export sector which is important for maintaining employment? How many companies have applied for assistance to date and how many of these will now find their applications for financial support rejected if there is a further review or cut in the enterprise stabilisation fund?

It is important to give the Deputy the facts and details before me. There was additional demand and some €58 million was paid in 2009 to 180 projects, which supported approximately 7,500 jobs. The remaining €20 million has been allocated to the fund for 2010. Therefore, from the launch of the scheme in 2009 to date, some 197 projects from 193 companies have been approved for funding. No company to date which has qualified and met the criteria has been left without a grant. Those companies that were rejected did not meet the criteria. We estimate in the Department that we have approximately 30 applications waiting to be assessed and we have approximately €6 million still in the fund. The 30 applications are now being evaluated and will be dealt with over the next couple of months.

There is €6 million left. If these companies receive the average support given to the other companies, approximately €450,000 or €420,000, they will require approximately €13 million. The Minister will be short of money, assuming they all qualify. Why would any curtailment be put on this sector, in particular? It is export led, there is growth in that area and it is sustaining employment, with the potential for future employment. Is there any restriction in this context? The stabilisation fund and the employment subsidy were announced as a package. I hope there is no review of the employment subsidy taking place along similar lines to the review that is taking place in this case. Surely the one sector that should not be curtailed is one that sustains, maintains and promotes employment opportunities. I remind the Minister that only for the emigrant aeroplanes and ships there would be 75,000 more people on the live register today. Let us not discount that.

I also said there was €278 million available to Enterprise Ireland, which is a 26% increase in the overall funding to enterprise. The mechanisms in place in Enterprise Ireland are diverse and varied to suit various applications. If a company does not meet the criteria for the stabilisation fund, it is possible that it could be supported under a further mechanism under the aegis of Enterprise Ireland. That is what happens. The Deputy mentioned €30 million as the cost for 30 projects. That is wide of the mark.

No, it is €13 million.

We will not get an absolute evaluation of that until we have examined all the projects and seen their size. They could all be quite small projects which might not demand as much money as previous projects. Supports are available in diverse areas of expertise from Enterprise Ireland. If a company does not get support under the stabilisation fund, it is possible that it could get support under a different mechanism.

Grocery Industry

Willie Penrose


41 Deputy Willie Penrose asked the Minister for Enterprise, Trade and Innovation when he will implement the commitment contained in the Revised Programme for Government 2009 to introduce on a statutory basis a code of practice for the grocery goods sector; and if he will make a statement on the matter. [19458/10]

The renewed programme for Government contains a specific commitment to "implement a code of practice for doing business in the grocery goods sector to develop a fair trading relationship between retailers and their suppliers" and "to review progress of the code and if necessary to put in place a mandatory code". The Government will give effect to this commitment by including a specific provision in the legislation currently being prepared to merge the National Consumer Agency and the Competition Authority which will allow for the introduction of a statutory code of conduct in the grocery goods sector. I expect to publish this legislation later this year. In the interim period, until the legislation is enacted, the opportunity will be taken to explore with all relevant stakeholders the possibilities of agreeing a voluntary code. I have appointed Mr. John Travers as facilitator to engage with stakeholders regarding the drawing up of a voluntary code. Mr. Travers previously served as chief executive officer of Forfás and as acting chief executive officer of Science Foundation Ireland, SFI, at its inception.

The Government recognises the importance of ensuring that there is a fair balance in the relationships between the various players in the grocery goods sector, particularly given the importance of this sector to the national economy. The introduction of a code, as provided for in the programme for Government, is intended to achieve such a balance, taking into account the interests of all stakeholders, including the interests of the consumer, and the need to ensure that there is no impediment to the passing on of lower prices to consumers.

Is it fair that some commercial companies are abusing their strong or dominant position in the grocery sector by exerting undue and unfair pressure on other commercial companies with which they have business relationships or transactions? That is clearly an imbalance of power in the supplier-retailer relationship in the grocery trade which leads to unfair practices being employed. Outrageous sums are being demanded by some of the big players in this sector — it is not the small or medium-sized shops that are doing this — in exchange for the privilege of getting products onto supermarket shelves. This is bad for both suppliers, including the farmers who cannot get their produce onto the shelves of major supermarkets, and consumers.

Is the Minister aware that the primary producers, farmers and agriculture-related industry, and the key providers of food are not getting fair play in the food supply chain? Their viability is being seriously undermined. The country will end up with no basic primary producers. Is the Minister further aware that the committee on enterprise, trade and employment produced a report which stated that a statutory code of practice, to be overseen by the Ombudsman, would have to be put in place? That is the position as a result of the third report from the UK competition authority. The UK authority is anxious to investigate issues, unlike ours which only investigates small concerns. It is time the Competition Authority took on the big operators in this country, not chase small shops and the like.

With regard to "hello money", there are specific provisions in the Competition (Amendment) Act 2006 that prohibit both retailers and goods undertakings from being involved in the compelling of another undertaking. The Act also specifically prohibits retailers from compelling suppliers to make payments for providing space. I am aware that the committee has done much excellent work, but we have not yet received its report. It is due to produce a report by mid-summer.

Yes, a full report. We have sent the Minister the interim report.

I look forward to receiving that report in the context of the voluntary code of conduct that we hope will now be facilitated by the appointment of Mr. John Travers. Obviously, we will feed recommendations from the report into that process. However, it is important to stress that even though the legislation is still in place, nobody has come forward to state that they were compelled by a particular group to pay money or to do anything else that is prohibited under the Competition Act. That makes it very difficult for us to act.

Surely the Competition Authority can go into a concern and carry out a investigation, as the UK competition authority did. We learned the plain facts in the course of our investigation. We do not know who was involved because it was carried out anonymously and in confidence so we do not know who the players were. However, the position is clear. People are afraid to come forward and give evidence in case they are de-listed and lose their opportunity to sell their goods in the market. Prime quality produce is produced in this country by our farmers and others and they are entitled to a fair price, as is the consumer. Ultimately, however, if the primary producers in this country go out of business, everybody will suffer, including the consumer. While we should not forget the importance of the jobs in the major retail stores, there are also jobs at primary production level that are important and provide a living for people throughout rural Ireland.

The legislation will allow the competition body to investigate complaints and will provide for sanctions. It will give extensive powers to the competition body to search premises and remove documents.

The UK model, as the Deputy knows, still has a deficiency in that it is still trying to find an efficient and effective way to deal with the issue of how one compels. We are hoping that through the voluntary code and the interaction between both sides there will be a fair balance between the stakeholders. This will form the basis for a mandatory code that can be put in place as part of the legislation. We hope Mr. Travers, with his experience, will be able to bring the two together and that it will be possible to put a voluntary code in place.

Departmental Bodies

Deirdre Clune


42 Deputy Deirdre Clune asked the Minister for Enterprise, Trade and Innovation if he will accept all the recommendations contained in the report of the Innovation Taskforce; if he will publish an implementation time line for each of the key and supporting recommendations presented by the Innovation Taskforce; if there are any recommendations contained in the Innovation Taskforce Report which are not accepted by him and the reason for same; and if he will make a statement on the matter. [19641/10]

The Innovation Taskforce has identified an ambitious set of recommendations to transform Ireland into a global innovation hub and drive job creation in innovative export-focused sectors. Recent changes in departmental structures have brought innovation to the fore in my new Department of Enterprise, Trade and Innovation, and the Deputy will be aware that the Government has asked that I personally chair a high-level implementation committee to oversee implementation of the report of the taskforce. The implementation committee is composed of top industrialists and Secretaries General of key Departments. CEOs of State agencies and officials from other Departments will also participate in the work of the committee as required.

The Taoiseach has asked all Ministers to prioritise the implementation of recommendations from the Taskforce report for which they are responsible. In that context, I have asked my ministerial colleagues to review the current state of play on each of the recommendations for which they have lead responsibility. This review will enable an initial stocktaking by the implementation committee to ascertain those issues where we can move immediately to implementation, where we need to work in the first instance through expert working groups as specified by the taskforce and where we need to engage closely with agencies and other Departments to progress implementation.

Some recommendations are already being worked on. For example, the taskforce made a number of recommendations relating to the management of intellectual property, IP, and access to state-supported IP. A review has been under way to determine whether the current IP arrangements for publicly-funded research in Ireland were optimum. The implementation of the recommendations arising and specific recommendations of the taskforce are being progressed through the harnessing of the expertise and goodwill of practitioners and experts who have contributed to this work. I will be making further announcements in the coming days on how these skills will be harnessed to progress this agenda.

Implementation of other recommendations will require reprioritisation of resources. These will need to be considered by Government and I will be bringing any such proposals to the Cabinet Committee on Economic Renewal for consideration. Tax proposals will be considered in the context of the budgetary strategy.

In December 2008 the Government produced its Smart Economy framework, in June 2009 it set up the Innovation Taskforce that reported in March 2010 and this week the Minister established the implementation group for the taskforce recommendations. This is another implementation body, another review group. The Minister stated this implementation group will, first, review the recommendations to determine where implementation is possible.

Of the review group he announced this week, eight were already members of the taskforce on innovation. The taskforce on innovation has produced many recommendations. It has given a time line, in terms of immediate, short-term and long-term recommendations, and has given the cost implications. I suggest that much of the review has been done. Let us not have any more reviews. Would we not have immediate implementation because people are frustrated by what they see is yet another body to oversee and to implement?

Another talking shop.

I would remind Deputy Clune that I when announced the establishment of an implementation group — it is an implementation group, not a review group——

In his statement, the Minister stated that it would review the recommendations.

No, my statement stated, "... the next decade by implementing the report of the Innovation Taskforce". That is what was announced.

The composition of the implementation group includes a majority of private sector persons — nine as against eight — and the idea is that private sector involvement will drive it. The Taoiseach has indicated clearly that it is a cornerstone of our jobs strategy into the future. We are absolutely intent, by me chairing the group, to ensure that there is joined up action and joined up thinking across departmental boundaries and that such will be further advanced by the participation of the persons who are on the taskforce who brought in the recommendations and who are still on that taskforce to drive the implementation.

Returning to the Minister's first point, his statement states, "The committee will first review the state of play". Let us leave it there.

Will the Minister accept all the recommendations of the taskforce? Are they subject to funding? The Minister mentioned, in his first response, a re-prioritisation of resources.

Returning to his initial response, I welcome what the Minister stated about looking at the IP area, that he set up a review group immediately. That was one of the immediate recommendations of the taskforce.

In another area, the taskforce could create 117,000 jobs over the next ten years. The Minister also said it this week; he supported it. In reply to Deputy Varadkar earlier, he mentioned the Horizon 2020 strategy of IDA Ireland involving 57,000 jobs. Are these separate jobs? Is that 117,000 plus 57,000 or is there an overlap?

The taskforce as such was looking at a particular aspect of industry and how it could grow that industry. Certainly, its report would be seen as separate. They will merge because IDA Ireland will drive the foreign direct investment and Enterprise Ireland will be involved in the indigenous sector.

What is important from my point of view is that there are parts of the strategy that can be implemented immediately. That is why I have written to my colleagues, the other Ministers, asking them to come back immediately with what areas of the taskforce recommendations apply to them and to show exactly when they can implement those. That is the first aspect.

They know it applies to them, but it is the time line.

The second aspect is that there are cost implications in some of the taskforce report recommendations. I am entering into discussions with the Minister for Finance in terms of a capital budget rolling out over the next number of years to take account of the extra costs that will be involved in that report.

Then there are other issues that have budget implications. That will be a matter for Government to decide, but given the fact that the Government has accepted this report——

All its recommendations?

——as a cornerstone of its job strategy, then one can only conclude that we are committed to it.

Question No. 43 answered with Question No. 40.

Work Permits

Denis Naughten


44 Deputy Denis Naughten asked the Minister for Enterprise, Trade and Innovation his plans to review work permit and green card schemes; and if he will make a statement on the matter. [19642/10]

Since 2004, a key element of our labour market policy has been to ensure that general labour and skills needs are met from indigenous labour and from within the workforce of the European Union. For strategic skills or labour shortages in designated occupations in key economic sectors, our policy is to issue employment permits for the employment of non-EEA nationals for specific vacancies and in response to employer demand. The various schemes that give effect to such policies — green cards, work permits, spousal and dependant work permits and permits for intra-company transferees — were introduced following enactment of the Employment Permits Act 2006 and came into effect on 1 February 2007.

Currently, employment permit holders constitute approximately 1.2% of the total labour force. Given that our current employment permit arrangements were designed to be vacancy-driven, the number of permit applications and, consequently, the number of permits issued over the last two years have been showing a consistent downward trend.

In early 2009, we undertook a review of employment permit arrangements to ensure their ongoing relevance to the needs of the Irish labour market. As an outcome of this review, more stringent eligibility criteria were implemented for prospective new entrants to the work permit schemes from 1 June 2009 onwards. The main features of the new measures included expanding the ineligible list of occupations for which permits can be issued; increasing by 50% the fees charged at renewal stage for new permits issued after 1 June 2009; and a reduction in the number of occupations for which green cards are issued.

The Employment Permits Act 2006 allows for regular review of our economic migration policies and our Department keeps these policies under review, in line with the emerging needs of the labour market, on an ongoing basis.

I put it to the Minister of State that the lazy approach that has been taken on the reform of work authorisations, whether permits or green cards, is costing the Irish economy and costing potential Irish jobs. Is it not the case that three years ago there was a shortage of labour to fill job vacancies and now there is a shortage of jobs, and we need to attract people into this country who will create jobs?

I also put it to the Minister of State that what we have now is enterprising inaction within the Department rather than innovation. Is it not the case that his Department, along with the Department of Health and Children, has failed to reform the visa and work authorisations for non-consultant hospital doctors that is leading to a situation where accident and emergency departments will close this summer? Is it not the failure by the Minister of State and the Department of Justice, Equality and Law Reform to reform the international education sector that is costing us a potential 6,000 new jobs?

I congratulate the Minister, Deputy O'Keeffe on his appointment. One of the key recommendations of the Innovation Taskforce report is that incentives be provided to highly qualified students to remain in Ireland post qualification. What steps are being taken under the green card system to allow that to happen?

Can the Minister of State explain why a document published on the Department's website this month about green cards does not carry the correct title of the immigration service and nor does it show a link to its website?

I am not aware of the specific document to which the Deputy refers and I will revert to the Deputy. Our green card system is still very responsive to the areas mentioned by the Deputy. Green cards are still issued for ICT professionals such as computer systems managers, analysts, programmers and testers. Green cards continue to be issued for health care professionals, for all medical practitioners and for those working in areas in the health system where there are vacancies. This continues to be Government policy. For the information of the House, a total of 775 green cards were issued in 2009, which is one third of the number issued in 2008. All those permits were for occupations for which there were strategically important high level skills shortages. Green cards are issued according to enterprise priorities if those priorities cannot be filled from within the indigenous or EU labour force.

Why are green cards not issued for non-consultant hospital doctor posts? Why are green cards not issued for highly qualified PhD graduates, as recommended by the innovation task force?

I have two supplementary questions about work permits. In a parliamentary question on 9 February I asked the then Minister for Enterprise, Trade and Employment to supply the statistics on new work permits issued. I have not received a response as yet. Is it the case that the Minister of State is not monitoring the situation? Last month, the number of work permits increased by two thirds in the service industry in April of this year compared to last year, the highest recorded increase since December 2008. The Minister of State is asleep regarding what is happening.

I reject the assertion. We are continuing to monitor and to work with the Migrant Rights Centre of Ireland, MRCI, and a range of Government agencies with regard to work permits. The target for processing correctly completed applications — these are the three key words — is 15 working days. Green cards, inter-company transfers and health care sector applications continue to be processed within this timeframe. There has been a delay in processing other employment types. It is generally taking 12 weeks to issue such type of permits——

I did not ask that.

——which is due to the reprioritisation of resources within the Department. A large number of staff were moved from the employment permits section to the redundancy section.

Why is the Minister of State unable to furnish basic statistics that should be used on a daily basis by the Department to see what is happening? They are not available three months later.

The Deputy will be aware of the industrial relations difficulties.