Willie O'Dea
Question:1 Deputy Willie O’Dea asked the Minister for Enterprise, Trade and Innovation his plans to reform employment regulation orders, registered employment agreements and the joint labour committees. [10087/11]
Priority Questions
Employment Rights
Richard Boyd Barrett
Question:3 Deputy Richard Boyd Barrett asked the Minister for Enterprise, Trade and Innovation his plans to ensure the protection of workers’ rights, including premium pay for Sundays and anti-social hours, in view of the forthcoming review of joint labour committees and registered employment agreements. [10156/11]
I propose to take Questions Nos. 1 and 3 together.
The programme for Government contains commitments to reverse the cut in the national minimum wage and to reform the joint labour committees and registered employment agreements. We need to ensure statutory wage fixing mechanisms work effectively and efficiently and that they do not have a negative impact on economic performance and employment levels. Any such mechanism in a modern economy must be responsive and fit for purpose in the context of the challenges being faced by employer and employee alike.
An independent review of the statutory wage setting mechanisms was initiated on 8 February last and was undertaken jointly by Kevin Duffy, chairman of the Labour Court, acting in an ad hoc capacity, and Dr. Frank Walsh of the School of Economics, UCD, under specific terms of reference. The review is a commitment under the EU-IMF programme, which provided not only for agreement with the European Commission services on the terms of reference but also for follow-up discussions on the programme of actions arising.
The report of the independent review team has been completed and was received by me last Thursday, 28 April. I am currently examining the report and it will be published and made available to Members of the Oireachtas, following consideration by the Government. It is proposed to have early discussions with the European Commission services on the main findings of the review, in line with the provisions in the EU-IMF programme. Arising from these discussions, I will present a time-bound comprehensive action plan to follow up on the report's recommendations, setting out proposals for any legislative action that may be necessary to give effect to reform measures. Consultation with, and the co-operation of, relevant stakeholders will also be sought to ensure the required reforms can be progressed as a matter of urgency.
I congratulate Deputy Bruton on his appointment, and his sidekick Deputy John Perry. Their appointments are well deserved and I did not have the opportunity before now to congratulate them. A number of questions arise from the Minister's reply. When will the changes the Government decides to make be in place? There was a great deal of urgency expressed by both Government parties in the lead-up to the election. This was seen as central to improving competitiveness. It is unfair that 250,000 people have the sword ofDamocles hanging over their heads for an indefinite period. I would like to have a timescale on this.
The programme for Government states that the examination of these agreements will include the rate of pay for atypical hours. That can only mean one of two things, that the Government will abolish special arrangements for those with atypical hours or that it will reduce the rate of pay for those with atypical hours. People in this category are, by and large, poorly paid, including those in the hospitality and tourism industry. Will changes proposed by the Government cover existing employees or will it be confined, as it should be, to new entrants?
High Court proceedings, on which a judgment is imminent, are challenging the JLCs. Does the Minister have a contingency plan in the event of the challenge succeeding?
I thank the Deputy for his generous words of congratulation and I look forward to a fruitful exchange with Deputy O'Dea. He has immense experience and I am sure he will bring that to bear on our work at this important time. Legislative proposals will be needed and the timescale hinges on getting the drafting done and getting the necessary legislative time. That rules my ambition to get this through as quickly as possible. I have an advantage in that the previous Government had some legislation prepared dealing with some elements prior to this review being initiated. That is the vehicle that can be used with suitable amendments. Hopefully it will shorten the period.
The inconsistent approach to atypical hours has been raised as an issue. The terms of reference were set by the previous Government and explicitly referred to anomalies, obsolete provisions and inflexibilities. It also considered whether there was a need to move to a more streamlined approach in many of these areas. There are proposals to make changes in these areas and we must make decisions on their implementation. I will not be indicating these until I discuss it with my colleagues, publish a report and get reaction generally.
Wherever there is change in respect of JLCs and REAs, it will apply generally rather than only to new entrants. These tools set employment orders for an entire sector. It does not follow that they would only apply to new entrants. It is a way of making the system more flexible. I am conscious of challenges to the system, and clearly some of the legislative proposals prepared were with a view to making it more robust. There has been criticism of the way the system operates. We must respond to any finding in the High Court appropriately.
The joint labour committees and the registered employment agreements are the main mechanism through which the lowest paid workers are protected. This affects 400,000 of the lowest paid workers in the State, who have already been hammered by child benefit cuts and the universal social charge. They are really struggling. Can the Minister give reassurance to those workers, who are deeply anxious about what the review means in terms of further attacks on their wages and conditions? Does the Minister have the review, when will it be published and will there be a chance to debate it in the Chamber before the summer or as soon as possible so we can see what is proposed and the Minister's response and so the workers affected can have their say on it? Can the Minister guarantee these workers they have no reason to fear the review of wages and conditions for the lowest paid being considered will result in an attack on the structures that allow some regulation in these sectors? In many cases, these are casual or part-time workers in difficult employment circumstances and are contract cleaners, retail workers and people in the catering industry. The anxiety is justified given that it is part of the conditions of the IMF-EU deal to examine these agreements. Everything else from that deal has meant cuts, austerity and attacks on existing wages and conditions. Can the Minister guarantee this will not result in attacks on wages and conditions of the lowest paid workers in the State?
The first act of Government will be to restore the national minimum wage. The most vulnerable workers on the lowest rate of pay will be protected by the action we propose. That is a significant reversal of the position. Wage setting mechanisms must be fit for purpose and must be sensitive to the conditions in these sectors. The main sectors affected are retail, catering, hotels and construction. In the past three years, we have seen a 60% loss of employment in construction, 15% in retail and wholesale and more than twice that in the lower paid occupations. The figures are similar for hotel and catering, with over 20% of jobs lost. We must be sensitive to the relationship between wage setting mechanisms that, as the terms of reference mention, have anomalies, obsolete provisions and inflexibility. Against a background of such job attrition we must ensure the wage setting mechanisms are fit for purpose. There will be changes in the way these systems work. There is a call for reform coming from the report and reform proposals will be brought forward, but they will be designed to create more and better employment opportunities to give people more opportunity to work in these sectors against a background of huge attrition. I am conscious that there is considerable pressure on employers in these sectors as well. The pay rates here are much higher than north of the Border. There are real pressures in these sectors and real job losses occurring, and the system of wage setting must be sensitive to those pressures also.
A Cheann Comhairle——
I will call Deputy O'Dea and then the Deputy. There is only one minute remaining for this question.
The Minister has confirmed that this will not be confined to new interests. I urge him to fast-track the legislation in view of the fact that this will be hanging over people, so to speak. Also, can the Minister confirm at this stage that, inevitably, this will result in some diminution in pay for at least some of those workers?
On a point of order, a Cheann Comhairle, can another Member come in on Priority Questions?
Two questions were taken together.
Apologies. I am slightly worried by the Minister's answer. In so far as job losses are taking place in these areas, I and many reasonable people would argue it is the lack of demand in the economy that results in people's incomes being slashed. What I and the workers in this sector are looking for is an assurance that while there may be anomalies, and the unions and so on involved recognise there are some anomalies, straightening out anomalies will not result in an attack on the pay, conditions or mechanism that guarantees the reasonable and basic minimum pay and condition standards for some of the lowest paid workers in the State who have already been hammered with cuts. Can the Minister give that assurance and can he indicate when this legislation will be published——
We are running out of time on this question.
——to allow us have a proper debate?
I would hope to publish this soon and I would hope to follow it up rapidly with legislative proposals to ensure there will not be a long hiatus. I accept we must be conscious of the needs of people who are on low pay, and that is the reason we have increased the national minimum wage, but we cannot have systems regarding, for example, varied approaches to overtime and Sunday working that are common across different regulations. These create inflexibilities, and we must see greater order and standardisation in the approach in different areas.
Levelling up or down?
Commercial Rates
Peadar Tóibín
Question:2 Deputy Peadar Tóibín asked the Minister for Enterprise, Trade and Innovation the discussions he has had with the Department of Finance or the Department of the Environment, Community and Local Government on the issue of commercial rates; if he has carried out an assessment of the way flat commercial rates are affecting businesses; if he will conduct a review of commercial rates and their impact on businesses; if he will examine the prospect of progressive commercial rates for business based on business size and income; and if he will make a statement on the matter. [10090/11]
The setting of commercial rates is a matter for local authorities, which come under the remit of the Minister for the Environment, Community and Local Government. Local authorities are under a statutory obligation to levy rates on any property used for commercial purposes, in accordance with the details entered into the valuation lists prepared by the independent Commissioner of Valuation. The levying and collection of rates are matters for each individual local authority. The annual rate on valuation, ARV, is applied to the valuation of each property to obtain the amount payable in rates. The ARV is decided by the elected members of each local authority in the annual budget, and its determination is a reserved function of the local authority. The issue of changing the basis on which rates are charged, from a flat rate to a progressive rate, would be a policy matter for the Minister for the Environment, Community and Local Government, in consultation with the local authorities and the Minister for Finance.
While we have not commissioned any reports into commercial rates charges, the Government is aware that the cost of commercial rates is often cited as an area of concern by business interests. Preliminary results from a review carried out by the Department of the Environment, Community and Local Government on commercial rates for 2011 show that 32 of 88 local authorities have decreased their annual rate on valuation this year, while 53 kept the same rate as 2010. This follows a similar pattern to last year, when 31 local authorities reduced their ARV and 55 maintained the same ARV as 2009.
The Minister, Deputy Bruton, has had detailed discussions with the Minister for the Environment, Community and Local Government on how we can work together to maximise opportunity for local business development and to keep all costs which impact on business as low as possible. This work will continue and will include the exploration of options for further reducing local authority charges to business, which the Minister is keen to develop.
It is important to remind ourselves that main street Ireland is closing down. There has been a shocking trend in recent years of businesses being unable to function. The Small Firms Association reckons that 62,000 businesses are in danger of closure and that 200,000 jobs are in danger of loss. There is an urgency in those numbers that no one can ignore. The major reasons for those closures is a shrinking of the amount of money within the system which I and many Members on this side of the House would say is because of the austerity measures being employed. The deficit has increased from €7 billion to €9 billion this year.
Will the Deputy ask a question?
I have a question. Also, there is a movement throughout the State to introduce some level of fairness into the rates system. While local authorities develop the rates, the rates system under which they work is decided by the policy of the Minister's Government. Sinn Féin is a promoter of progressive taxes no matter where they happen. In other words, the more one earns the more one pays. It is ridiculous that businesses——
This is Question Time. Does the Deputy have a question?
——that are hardly able to survive are being forced to pay the same rates as businesses that are very profitable. I ask the Government to meet the urgency of this case. Will the Minister develop a rates base that purely takes into consideration the profitability of the business concerned and the value of that business to society, be it an exporting business, a business with substitute imports or a business with a research and development capacity? There is a great deal of opportunity for the Minister's Government to incentivise the way business is structured in this society, and it is not good enough to say it will be reviewed.
The Deputy will not get a reply because time is almost up.
Given the urgency of the matter will the Government give strong consideration to the need for these types of progressive rates?
The Minister has just over a minute to reply.
While no reports have been undertaken to date examining specifically the effects of local authority rates on business, Forfás compiled a report in 2008 on the cost of running retail operations in Ireland. The report found that local authority rates constitute up to 4% of business costs on the retail sector.
I take on board the Deputy's valid point on the costs associated with doing business and the number of vacant commercial properties. We are conscious of that. The Minister, Deputy Hogan, has undertaken a review to study closely the cost of doing business and how best we can reduce the cost of doing business. The implementation of a local government efficiency review is being taken on board now as well in terms of how we can ring-fence the costs of doing business in local authorities. That is very much at the behest of the local authority members. It is our intention to ensure the cost of maintaining a business and the percentage of the cost of retail sales should be reduced.
We are also conscious of the huge amount of excess retail floor space currently closed in main street Ireland. That is due to the boom and the unprecedented development of the tax incentives during the previous Administration which propelled a huge level of development way beyond the requirement. It is all about getting cost competitiveness and reducing the cost. We are focused on the impact of rates on the cost of doing business and it is our intention to move decisively to reduce those costs.
The progressive nature of rates and the model of how rates are charged is a technical area. It is not fully justified as to how that will create a benefit as against reducing the actual cost.
A Cheann Comhairle——
No, Deputy. The time is up. We are moving on to Question No. 4. I remind Members that there are six minutes for each question — two minutes for the Minister to answer and four minutes for supplementary questions and an answer from the Minister. Everyone is clear on that. The longer Members take in asking a supplementary, the less time is available for a reply.
Departmental Funding
Willie O'Dea
Question:4 Deputy Willie O’Dea asked the Minister for Enterprise, Trade and Innovation the extra funding he will make available to the Industrial Development Agency, Enterprise Ireland, Science Foundation Ireland and the county and city enterprise boards between 2011 and 2015 to enable these agencies to expand their activities. [10088/11]
For the current year 2011, a total allocation of just over €631 million has been provided in funding for the IDA, Enterprise Ireland, Science Foundation Ireland and the county enterprise boards. This allocation comprises both current and capital funds and is provided for ongoing agency activities, including the attraction of foreign direct investment, enterprise development and support programmes, the development of science and technology programmes and promotion activities of these enterprise agencies.
These enterprise agencies have a crucial role to play in supporting economic recovery and driving sustainable employment growth in the years ahead. They will support the enterprise base from micro-scale enterprise to the largest multinational and help our enterprises build a competitive edge to compete in the global marketplace.
I am determined to ensure that every euro spent by these agencies is achieving the maximum possible impact in pursuing the central Government objective of maximising employment opportunities. I am examining all programmes and priorities to evaluate their performance in meeting this challenge. The Exchequer allocations to the respective agencies cited by the Deputy in his question for 2011 are as follows: the IDA has been allocated €124.577 million, of which €86 million is capital and €38.577 million current funding; Enterprise Ireland is in receipt of €304.482 million from my Department, of which €203.89 million is capital and €100.589 million current funding; Science Foundation Ireland has a budget of €175.142 million, of which €160.8 million is capital and €14.342 million current funding; and county enterprise boards have been allocated €27.242 million, of which €15 million is capital and €12.242 million current funding.
The Government has announced that it will undertake comprehensive spending reviews of existing capital and current spending in the months ahead and consequently allocation of funding for future years, 2012-15, will be considered as part of that process. The purpose of the review is to find efficiencies, to undertake reforms and to align spending with the priorities set out in the programme for Government. My Department will be fully engaged in that spending review. The activity and expenditure of enterprise agencies will be examined by my Department in the context of the expenditure review and the findings will determine the level of future funding.
It is my aim to provide the level of support necessary to enable the enterprise agencies deliver on their remit to help enterprise to flourish and provide sustainable jobs.
I thank the Minister for his response. He seems to be saying that these agencies will not be exempt from the general spending review, which I accept. However, that would indicate that the rate of spending on those agencies is not going to increase, indeed it is possibly going to decrease. How does the Government hope to achieve its optimistic job-creation plans if it is possibly reducing funding for the very agencies on which we depend to create jobs, including attracting foreign investment?
The Minister will be aware that last year, for example, the IDA created only approximately 1,300 jobs in net terms. The record over the last four years shows that these enterprise agencies lost about 50,000 jobs more than they created, so in net terms that was a job creation record of minus 50,000. I am not underestimating the difficulties they have had nor the tremendous work they have done but nevertheless I fail to see how these agencies will do their job if neither funding nor resources are being increased. The Minister wants them to do a better job but how can they do so with less?
Today it was announced that there will be a €3,000 finder's fee for members of the diaspora who come up with ideas that will create jobs that last for at least two years. Will that fee be included in the budget for those agencies and, if not, what budget will it come from?
We have inherited a situation where spending is running 40% higher than the revenue we are taking in.
I accept and understand that.
Therefore the need for a comprehensive spending review, including an examination of every programme, has not been created by this Government. With the greatest respect, I must tell the Deputy that the policies pursued in recent years destroyed competitiveness in the economy. The previous Government saw exporting market share fall consistently for six years in a row. It built up unsustainable spending programmes on the basis of revenues that could not last and it undermined the competitiveness of businesses that we are now looking to rebuild our future.
To focus on how much we spend on these agencies is part of the problem of the last Government. We must now ensure that any spending gets maximum impact, which is my first priority. Of course, I will be seeking to expand every programme that is delivering high performance. My Government colleagues, who have set jobs as their top priority, will support that. It does not mean, however, that every programme is immune from scrutiny just because it is under the rubric of an enterprise agency. We must get the best value from them. Perhaps there was not enough scrutiny of the performance of different programmes in the past, but we cannot afford that any more.
The pilot scheme will have to be funded but, as the Deputy knows, these are normal IDA supports where the return is something like 14 to 1 in terms of the cost benefit. It is a handsome return to the State.
Will the Minister accept that there has been a substantial improvement in competitiveness in recent times, as well as a substantial improvement in our export performance, as a direct result of the policies of the previous Government?
Does the Minister definitely intend to transfer the functions of county and city enterprise boards to local authorities?
The Deputy is raising a different point there.
It is a fair question.
Export performance is improving, but it is effectively doing so on the back of superhuman efforts by companies that are competing in a market where the price of their exports is falling. There has been substantial cost cutting and less is being paid for labour across the board. People have become more competitive and more resourceful, but the contribution of Government policy is not the main feature. There has been a common approach to developing export capacity. Nonetheless, the previous Government was in office for 14 years and only 10% of our exports come from indigenous industry. We have not made the breakthrough to having a sustainable business engine from indigenous sources. We must closely examine how well we are doing in indigenous enterprises. Some sectors are doing well but the aggregate suggests there are grounds for improvement.
We are examining the county enterprise boards issue with both the Minister for the Environment, Community and Local Government and my own Department's Minister of State, Deputy John Perry, who has responsibility for small businesses. We are examining the best way to provide coherent and effective enterprise support at local level. We will bring forward decisions in due course.
Is it the case that there has been no final decision to transfer the county enterprise boards to local authorities?
No, but the programme for Government suggests that there will be a local business unit wherein there will be an integrated one-stop-shop approach. We hope to find a way to deliver that effectively.
Job Creation Projects
Finian McGrath
Question:5 Deputy Finian McGrath asked the Minister for Enterprise, Trade and Innovation the job creation projects he has in mind for the north side of Dublin. [10180/11]
Maximising the opportunities for employment is central to the programme for national recovery drawn up by Fine Gael and the Labour Party. Our Government plans to introduce a jobs initiative next week, which will be an important first step to restore confidence and support economic recovery. These measures will be supportive of job opportunities on Dublin's northside and throughout the country.
I am currently reviewing our jobs strategy on a comprehensive basis to evaluate how programmes can be better focused to maximise their impact on employment. I am examining the adequacy of policy support for business start-up and expansion, particularly into export markets. I hope this will bring greater focus on sectoral opportunities in different regions and on the potential of small and medium enterprises.
There are many worthwhile programmes that are already helping to develop job opportunities on the northside. Dublin City Enterprise Board and Fingal County Enterprise Board are supporting enterprise start-up and development throughout the northside of Dublin, through the provision of both direct and indirect assistance. These two boards currently support 113 companies that employ 3,077 people on a full-time basis and 859 on a contract or part-time basis. I understand that the Dublin City and Fingal enterprise boards have already approved €337,440.00 in grant assistance so far in 2011. Enterprise Ireland has 1,055 client companies in Dublin City employing 22,235 people on a full-time basis with a further 4,187 people on a contract or part-time basis.
The community enterprise centres, funded through Enterprise Ireland, are providing enterprise space to cater for micro-enterprises in Ballymun, Coolock and Darndale. In 2005, Enterprise Ireland has earmarked €2.54 million in capital support for the construction of a campus business incubation centre at the new DIT campus at Grangegorman, as well as €158,000 towards the costs of a centre manager.
The new centre will provide the first phase of incubation facilities on the campus and will be the first new building on the site. During the lifetime of this five-year operational plan it is expected that 129 new businesses will be incubated, leading to the creation of up to 1,500 direct high-quality jobs.
Additional information not given on the floor of the House.
In terms of attracting foreign direct investment, north Dublin now confidently hosts world-class companies such as Citibank, Hertz, eBay and PayPal, among many others, across a range of industrial parks. Recent announcements include decisions by Citibank and PayPal to expand their Dublin-based operations, which have the potential to create 250 jobs at Citibank and 150 at PayPal. I was also pleased recently to announce that Asset Control, a global provider of data technology for financial institutions, based in East Wall, is expanding its financial technology operation in Ireland with the creation of 50 new IDA-supported jobs.
I am determined that Dublin's northside will build on these strengths to become a strong base for emerging and innovative businesses. I am impressed by the An Slí Glas initiative which I recently launched in Dublin City University, DCU. This alliance of businesses, academic institutions and local authorities includes Ballymun Regeneration, Dublin Airport Authority, DCU, Dublin Institute of Technology, Fingal County Council, Dublin City Council and north Dublin chamber. It is designed to be a centre of green innovation and enterprise which will link business to investors and develop trade partnerships with other major international green corridors. I will ensure that my agencies effectively support this initiative. DCU research clusters are also a major magnet for new business ideas and Science Foundation Ireland, SFI, has recently partnered with DCU to provide entrepreneurship training for post-doctoral researchers.
I believe there are significant opportunities for new sectors, for example, in digital gaming, which can build on the talent and enterprises operating on the northside. I recognise that very early stage companies can face difficulties in raising external financing, and we are determined to ensure that there is greater support for them to help them bridge this gap. In March, I announced ten successful companies that have been awarded funding under Enterprise Ireland's new Internet and games competitive start fund. Following the publication of the jobs initiative, I will continue to work with my colleagues in Government to take action that will stimulate the economy, facilitate enterprise and encourage job creation, including on thenorthside of Dublin.