Dara Calleary
Question:1. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation his policy regarding the manufacturing industry and the way it can be developed; and if he will make a statement on the matter. [52080/12]
Priority Questions
Industrial Development
Manufacturing is a key priority of enterprise policy. Employment in the sector makes up 64% of Enterprise Ireland supported jobs and over 50% of IDA supported jobs. Manufacturing employment grew by 1.1% in 2011, an increase of almost 2,200 jobs. This reverses a trend of four continuous years of job losses, when almost 45,000 jobs were lost in manufacturing. The bulk of the growth was in foreign owned industry but indigenous manufacturing also increased slightly with 92,507 employed by Irish owned companies. Employment growth in Irish manufacturing companies has been particularly strong in the life sciences, food and ICT sectors, and we must continue to develop these sectors.
Both Enterprise Ireland and the IDA are continuously developing policy interventions to support the development of manufacturing companies and under the action plan for jobs, we are rolling out measures to improve productivity, extend innovation, enhance management skills, develop collaboration in new technologies and enhance access to finance.
The action plan for jobs also included a series of actions for developing manufacturing and specific sectoral opportunities within it. I have established a manufacturing development forum to set out a strategic vision for 2020 aimed at increasing employment in the sector. Its membership comprises key industry players. At its first meeting in June, I asked the forum to identify impediments to job creation in manufacturing areas and opportunities for immediate job creation.
The work of the forum is being supplemented by further research on a long-term vision and strategic plan for manufacturing in Ireland’s economy and an assessment of manufacturing skills needs of the manufacturing sector building on previous sub-sectoral work. To date, the forum has drawn up a comprehensive schedule of challenges and opportunities facing manufacturing and members of the forum have participated in workshops organised by Forfás to further develop particular issues relevant to the sector. I expect some interim findings from the forum before the end of the year. It is intended to publish a strategic plan for the sector in the new year and my Department and agencies will then progress the actions identified. I am confident these measures, combined with other Government initiatives to improve competitiveness, will ensure Ireland is well positioned to build and maintain a strong base of manufacturing activity.
I thank the Minister. I welcome the number of initiatives announced, particularly the manufacturing and development forum. Can the Minister outline the membership of it? While there was growth in employment in the sector last year, which is welcome, the QNHS survey showed a decline of 4,000 jobs between April and June this year in the manufacturing sector. Some 50% of IDA jobs are in manufacturing and I am concerned there is a concentration of those jobs in the pharma sector. We are moving into a period of challenge for the pharmaceutical sector, where products manufactured here are coming off patent. Is there a strategy in the Department to address that point and examine other opportunities in the pharmaceutical sector?
I also welcome developments in the indigenous sector, particularly in food. What element of co-operation exists between the Department and the Department of Agriculture, Food and the Marine in respect of Harvest 2020 and how to maximise job opportunities in the manufacturing space? The Minister referred to 64% of Enterprise Ireland jobs. Can the Minister indicate how many are in micro-enterprises? I am thinking of small indigenous manufacturing companies that are in a position to withstand any international downturn.
The most reliable figures are the agency figures because seasonal factors come into play in respect of the QNHS. Since we entered Government, we have had a focus on the sector. It is growing, in sharp contrast to the history of the sector. There were misgivings in the area in 2006 when the manufacturing sector was having problems. There was inactivity in the Department and no action was taken by the then Minister to address the problems. Manufacturing continued to decline relentlessly. We are taking this sector seriously because it was overlooked in the past.
There is a so-called patent cliff in the pharmaceutical sector. The IDA announcements and their pattern suggest we have successfully identified other sections of the pharmaceutical sector where we are growing, such as bio pharma in particular. The key to success is to have spread and to diversify within the pharma sector. Within the 195,000 jobs, pharma accounts for 25,000. Medical devices add more but the sector does not face the same challenges to which Deputy Calleary alluded. There is no doubt the patent cliff will have an impact on sales because of the drop in sales once the drugs come off patent but we are sustaining employment successfully in the sector. Last year, there was no change in employment in the sector. We have succeeded.
Food is a sector of enormous potential and we look forward to the removal of quota as an opportunity. The large diversification of sales into export markets is really encouraging. I do not have the full membership of the body or the data on micro-enterprises but I will furnish them to the Deputy.
Job Creation Issues
Peadar Tóibín
Question:2. Deputy Peadar Tóibín asked the Minister for Jobs, Enterprise and Innovation his views on whether the target of creating 100,000 additional jobs by 2016 as claimed in the action plan for jobs will be met [52081/12]
In the Action Plan for Jobs, the Government set an ambitious target of having 100,000 more people at work by 2016. Achieving this target requires a transformational change to our economy. This Government, when it came into office, was starting from a position where more than 300,000 jobs had been lost in the previous three years. Of those job losses, 150,000 were in the construction sector alone. The economy had been built on a fault line of sectors that were not sustainable in the long term.
The new economy, which we need to build, must be based on enterprise, innovation and exporting. The transformation we need to bring about will require progress on a number of fronts, including fixing our banks, reforming the public sector and embedding the jobs agenda across Government through the action plan for jobs. This is a huge task but we are making progress.
After three years of heavy job losses, we are now seeing a substantial increase in employment in export-oriented sectors. This has been backed by new policy initiatives and a strong programme of trade missions. Overall, the level of private sector employment is stabilising despite continued decline in sectors like construction and domestic banking.
There has been a strong performance by both Enterprise Ireland and IDA-backed companies. 2011 saw an increase of 6,000 jobs in IDA-supported companies, compared to net losses of 15,000 jobs between 2008 and 2010. So far this year, the IDA has announced investments with the potential to create more than 7,500 further jobs. In the case of Enterprise Ireland, we start to see a return to growth in Enterprise Ireland companies and approvals this year amount to 4,669 job commitments over the next three years. There has been double digit growth in exports from Enterprise Ireland companies and we reached a record of €15 billion in exports last year.
Sectors targeted in the action plan for jobs have made good progress, notably food, life sciences, ICT, digital games and international services. These developments demonstrate the transformation taking place to a more diversified, export-oriented and innovative economy. While we have seen a turnaround, I do not underestimate the scale of the challenge that still faces us. As a small open economy, we are influenced heavily by the challenging developments in international markets.
Additional information not given on the floor of the House
However, the merit of the action plan for jobs is that every year, each Department is required to focus on changes that can be brought about to make a practical contribution to the target of supporting the creation of 100,000 extra jobs in the economy by 2016.
We can normally ask supplementary questions. Will that be the case today?
Yes, within the time limit of four minutes.
Is that four minutes for me to speak?
The Deputy and the Minister, in total. The time for the exchange of questions and answers is four minutes.
So, the longer the Minister speaks, the less time I have to speak.
It is important to bring reality back to the situation. Under this Government, unemployment is measured at 14% to 15% on the live register and long-term unemployment is at 60%. Despite some of the recent announcements, job losses continue to outnumber job gains. The only stabilising effect on employment figures in the State is emigration.
Last year, 87,000 people emigrated. Nearly one third of a million people emigrated in the last four years. That level of emigration and people on the live register is an economic failure. Given that the state of the economy is a pre-eminent measure of the quality of a government, surely this is a measure of the Government's failure also. The Minister and the Taoiseach committed to the creation of 100,000 jobs by 2016. The Minister failed to produce targets in this regard and 33,000 jobs net have been lost over the past 12 months. The Department of Finance medium-term fiscal statement predicts unemployment of 13% in 2015. After four years of this Government, even the most optimistic figures predict a reduction in unemployment of no more than 1%.
Does the Minister accept that these figures indicate a failure in the Government's jobs policy? What level of emigration and unemployment do we have to achieve before alarm bells go off for the Government?
That was hardly a question at all. The Deputy is living in a dream world. We experienced an extraordinary economic shock of incredible proportions when 16% of our employment was wiped out. We are, however, stabilising that. While the Deputy refers to a 33,000 job loss, only 3,000 of those were in the private sector. The sectors we need to grow for the future are stabilising. Unfortunately, we must reduce the size of the public sector and that continues to be a pressure as we seek to stabilise and restore our public finances.
With regard to the future and the transformation necessary to create the 100,000 jobs, which is a clear target set by Government, this is going to take time. From the first day, I said it would take time and that I would not be setting annual targets because they would be unrealistic. The Deputy persists, however, in coming back with the same question.
We have a job of work to do to change an economy that has been devastated. The banks are broken and much of our costs base was smashed. Much of the base of our economy was damaged and we have to restore that. We are making progress. We see international confidence come back. The IDA had the best year in a decade last year. We are seeing indigenous companies winning new markets. That is the route to rebuilding our economy, on enterprise, innovation and exports. We are making credible progress in this area.
I make no apology for repeatedly asking this question. On both a human and economic level this is a disastrous situation for hundreds of thousands of people. While it is possible to select sub-groups or micro-elements in the economy where there has been some level of improvement, the general figures speak for themselves. The net job loss was 33,000.
Given that the Department of Finance said there would be a 13% level of unemployment in 2015, which was a review upward from the Government's initial objective, the Government must produce 76,800 jobs before 2015. Given that the trend is negative, how will that be achieved?
State Properties
Catherine Murphy
Question:3. Deputy Catherine Murphy asked the Minister for Jobs, Enterprise and Innovation the total cost to the State of the lease held by Forfás on a vacant property in Dublin 4 (details supplied) between 2012 and 2034 which is when the lease is due to expire; and if he will make a statement on the matter. [51773/12]
The property in question, Carrisbrook House, was acquired by AnCO in 1969 on a 65 year full-repairing lease, commencing on 1 August 1969 and expiring on 31 July 2034. There is no provision for lease breaks and the rent is due for review every seven years. The Industrial Development Authority, IDA, acquired assignment of the lease in 1976.
Since the relocation of the IDA to Wilton Park House in 1985, the Carrisbrook House offices were leased to a number of tenants on a cost-neutral basis to the Exchequer until early 2008, when a major tenant exercised a lease break and vacated the premises. Since then, six floors in Carrisbrook House have been vacant. Forfás acquired responsibility for the lease in 1994 when the enterprise development agencies were restructured. The Israeli Embassy is currently the only occupant of the premises, on a sub-lease which expires in 2025, with lease break provisions in 2015 and 2020.
Forfás has been actively seeking to market the vacant space in Carrisbrook House since it was vacated in 2008. Due to the downturn in the property market and a surfeit of vacant office accommodation in Dublin, these efforts have proven unsuccessful to date. Secretaries General of my Department have written to the Office of Public Works and the Department of Public Expenditure and Reform, advising them of the availability of the office space. The IDA has also been asked to bring the availability of the accommodation to the attention of prospective clients.
The total cost of the vacant space in Carrisbrook House in 2012 is estimated at €1.3 million, inclusive of rent, rates and service charges. It is not possible to speculate on the total potential cost of the vacant space out to 2034, as this will be influenced by issues such as future trends in the property market, the future intentions of the existing occupant, the outcome of the seven-year rent reviews and lease break options, and the possibility that a new tenant or tenants may emerge. In the meantime, Forfás will continue to market the availability of the offices and will continue its efforts to reduce the costs accruing to the State on the property.
A number of issues arise in this regard. First, we need to reduce waste. Are other sections of the public service in buildings where the lease can be broken or has almost expired and could they use the space in Carrisbrook House? Have all Departments been notified of the existence of this space? This is a considerable sum of money for a vacant property in a prime location.
What initiatives are being taken with regard to future leasing arrangements and are lessons to be learned about this kind of thing? For some time, I have been trying to compile a list of buildings across the public service that are subject to upward-only rent reviews. Some are extraordinarily expensive. I am trying to find out how many of them are vacant because I am sure viable uses could be found for some of them. For example, €800,000 is being paid for a social welfare office in Carrick-on-Shannon. That figure jumped out at me. Is there a cross-departmental initiative to see if a lease can be broken and the space in this building made use of, what lessons have been learnt and what lease arrangements will be made in the future, given the experience we have had?
I do not think in the time left I could deal with the lessons that have been learnt from the property problems we inherited. Numerous lessons have been learnt, as the Deputy knows.
The Office of Public Works, OPW, which manages all public office property, has been notified of this building on repeated occasions. The OPW has signalled that there is not a demand for the type of accommodation on offer and that it did not foresee a need for such accommodation in the foreseeable future. This reflects the decentralisation programme that took people out of Dublin and the downsizing of the public service that is reducing the pressure on property in the capital. There have been efforts to sell this building. It has been upgraded and work has been done to put it in a better position to market from this year.
I do not know how much property is vacant or whether or not we can get out of leases and vacate others that are coming up for review. Every effort is being made and we try to work closely with the Office of Public Works. Forfás has been repeatedly in touch with the OPW, even as recently as September of this year. It is a very close relationship.
I ask the Minister to ask other Departments if there are leases that are almost up so that this building could be used. It is a sizeable building. Could we not get out of a lease somewhere else? The Government promised a big cost-cutting agenda. We need to be imaginative about using this space if we cannot get out of the lease, which we do not seem to be able to do.
I will follow up on the Deputy's suggestion.
Job Protection
Dara Calleary
Question:4. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the way he proposes to help the retail sector; and if he will make a statement on the matter. [52079/12]
The retail and wholesale sector employs 258,000 people in Ireland, almost 15% of our total workforce. That sector has suffered heavy job losses in this recession, shedding over 55,000 jobs. The retail sector is very much dependent on domestic demand and this has suffered a substantial fall in the course of the crisis.
All of the Government programmes designed to restore economic confidence, economic sovereignty and international investment are part of the long-term restoration of the retail sector. Progress is being made on all of these fronts. We have already cut the lower rate of VAT, halved the lower rate of employers' PRSI and improved the employers PRSI exemption scheme and Revenue job assist for recruits from the live register. Recognising its importance to the economy, the action plan for jobs includes a number of specific measures aimed at supporting employment in the retail sector. These include improved access to finance through the microenterprise loan fund and the loan guarantee scheme, the enactment of legislation to reform the statutory wage setting mechanism, an audit of the licences required to start-up businesses, with a view to their simplification, and a renewed focus on prompt payments, the introduction of a statutory code of practice for grocery goods undertakings, the provision of support to retail firms seeking to internationalise, the provision of funding for the upskilling of workers in the sector and the promotion of the use of online tools to promote sales.
The retail sector must be innovative to overcome the difficulties posed by the current climate and our policies seek to support that innovation.
I thank the Minister of State but he should compare that answer to the answer given for the manufacturing sector, which had specific initiatives, task forces, reporting deadlines and job targets. This Government is doing nothing specific for the retail sector. The Minister of State listed the measures under the action plan for jobs, but nothing specific is being done by the Department to assist the retail sector, which is in huge distress at present. Fine Gael was elected promising to abolish upward only rent reviews, although it was aware that was not legally possible when it made that promise. The Minister of State talked about access to credit. When travelling the country to talk to retailers, the Minister of State hears directly from them that there is no access to credit in that sector.
We have four or five weeks ahead of us that will be make or break for many retailers for the next year. We accept that consumer demand is very weak but it is unacceptable that the Government has nothing specific in place to assist the retail sector apart from general responses from a document that essentially contains a lot of spin, accentuated by the specific focus and initiatives for manufacturing. Is there an assistant secretary in the Department who is in charge of retail and of the 258,000 working in that sector? As the Minister of State establishes the local enterprise offices, why has the retail sector been excluded from the process when it is the basis of local enterprise?
I totally disagree with Deputy Calleary on this issue. This Government has done a lot more than the last Administration.
What is it doing?
We have stated clearly what we are doing. We have brought in the loan guarantee and the microfinance schemes that the Fianna Fáil Party could not bring in. We have established the advisory group to Government and there are clear actions for job creation outlined in the action plan for jobs.
What measures are specifically for the retail sector?
The Deputy must recognise the role of banks in retailing; it is all about viability. The policy of the last Government left 13,000 unoccupied square feet per head of population. That was Fianna Fáil's ideology.
The Government has been in office for 18 months. What is it doing?
The last Government talked about the microfinance loan fund for two years and we have introduced it.
It took 18 months.
It is now in place with the partial loan guarantee. We cut the lower rate of VAT, halved the lower rate of employers' PRSI and increased the employers' PRSI exemption. We introduced numerous initiatives and I can go through the action plan for jobs outlining each measure.
One of the first things we did was reform the wage setting mechanism. We extended employers' PRSI, encouraged all accountancy, taxation and legal services to lower their costs, brought in support at regional and local level to identify opportunity and we are listening to retailers. I was in Malahide last night at the meeting of the Retail Federation of Ireland and recently attended meetings in Kilkenny and Waterford. We have €3.5 billion lined up in the two main pillar banks to support viable companies. Banks are not going to give money to companies that will not repay it and it is our job to build competence and increase credit.
We are trying to raise confidence in the domestic economy, a difficult task. The last Administration left a legacy of 55,000 job losses in the retail sales sector due to low consumer demand. That is the problem in the whole sector, be it services, restaurants or hotels. That is the situation we inherited, a sector on the floor because absolutely nothing was done by the last Government for retailers.
Again, there are no specific proposals for retail. I accept the Minister of State is meeting people but he mentioned the €3.5 billion. At the Joint Committee on Finance and Public Expenditure meeting three weeks ago, AIB admitted that of the €3.5 billion, it was making only €600 million in new finance available to businesses. We have discussed this before. I welcomed the loan guarantee scheme and said it would be interesting to see how it rolls out. The reality on high streets around the country is that retail is suffering, it is in distress and this Government is offering nothing but platitudes.
Small and Medium Enterprises Supports
Peadar Tóibín
Question:5. Deputy Peadar Tóibín asked the Minister for Jobs, Enterprise and Innovation the progress made in the establishment of local enterprise offices including the role of individual Irish small and medium enterprises and SME representative groups as part of the committee overseeing the development of the local enterprise offices. [52082/12]
The Deputy will be aware that as part of the action plan for jobs, the Government announced a plan for a major reform of the existing support structure for micro and small enterprises in February this year. The aim is to create a centre of excellence within Enterprise Ireland for small business support; to establish a first-stop shop at local level for the support of small and micro business; to integrate local authority business support services with local enterprise supports; and to create a network of local enterprise offices delivered from within the local authority working under a service level agreement with Enterprise Ireland.
There has been a series of consultations during the development of these proposals. They were discussed at the nationwide consultative meetings on the action plan for jobs. On foot of the Government decision in April to dissolve the county enterprise boards and transfer the functions, assets and liabilities to Enterprise Ireland, an implementation working group was formed, chaired by the Department. It has involved representatives of the key services that need to be integrated into this new model. It is developing the plans for the detailed implementation of the decision including the role of the Enterprise Ireland division as a centre of excellence; the range of services to be delivered; the service level agreement; and staffing and other issues. This implementation group is a management group to work out the details of the proposed reforms and does not include representative associations.
Our plans for the support of small and micro businesses have also been with the advisory group for small business, subsequent to which some of the members of the advisory group met the implementation group. The advisory group is also being consulted on the action plan for jobs 2013.
The Minister and I yesterday published a consultation paper which sets out the roadmap for the implementation of this reform process. I am keen to receive the opinions from the micro and small business sector across Ireland, particularly on how the changes to be brought about can best provide support to the right people, at the right time and at the right level.
I was looking at the action plan for jobs recently and action 1.38 outlined that there would be a new system of strategic dialogue that will align funding of higher education institutions to performance in the achievement of national objectives for a system development and priorities in relation to skills development commencing in 2012 and it will be fully rolled out in the coming years. People want reform on upward only rents but instead they get nebulous delivery of an action of that sort.
I welcome the fact the Minister of State and Minister have finally listened to Sinn Féin and the representatives of small businesses around the State and brought them into the process when replacing the LEOs. It is a year too late, because the process started a year ago. We know the whole system of county enterprise boards is suffering from inertia, as stated by the Irish Exporters Association, and it is necessary to resolve that problem. The new enterprise system should be built around entrepreneurs, who should have been part of the process from the beginning, not at its end. It is unbelievable they are only now being brought in.
Since those enterprise organisations have set their face against the centralising of the county enterprise boards in the local authorities, will the Minister of State confirm today that he will listen to the representatives of those enterprise organisations and that there is scope for a reversal of some of the more negative aspects of his legislation? Will these entrepreneurial representatives have an influence over this process or is the Minister of State going full steam ahead?
It is not possible to consult in a vacuum. We are consulting with people to best define the needs of small businesses. If the Deputy has read the consultation paper in depth, he has been very quick in stating that it is a climb down by the Government to engage in consultation. It is very difficult to go out and discuss an issue without a major document on which we have worked tirelessly in the past 12 months. We have a very clear plan for Enterprise Ireland and how jobs will be established in local enterprise offices. The Deputy has been very critical from the very start on every point. The fact that we are bringing businesspeople-----
It is not just me - it is the enterprise organisations.
It must be just the Deputy, because they are not saying it to me.
They are saying it to me.
Representatives of ISME and the SFA told the committee they were completely opposed to this.
I have met representatives of ISME several times and the Deputy should look at the statement it issued yesterday. The county enterprise boards have been very effective. Our job at the moment is the consultation process. We are bringing businesspeople into the heart of decision making locally involving representatives of business and local government. The Deputy will know from his county how effective local government can be. It is important that we are integrating the best knowledge within every county with a centre of excellence with a very strong service level agreement with Enterprise Ireland. We are taking submissions at the moment and are refining clear objectives as outlined in the consultation paper the Deputy received yesterday. The intention is to roll out that plan next year. We need to implement it in every local authority area and it will be delivered effectively.
Small businesses see the local authorities as cost centres, regarding planning applications, rates, enforcement etc. They do not regard local authorities as having a culture of enterprise. Representatives of the SFA and ISME have told the committee that it would be disastrous if this proceeds. The Minister of State has left it very late to consult these organisations, but given that he is consulting them, will he give scope for a new direction with regard to how enterprise support will develop?
Some 250 SMEs close every week yet Enterprise Ireland has had a €13 million underspend this year. How can that be the case given the difficulties being experienced by small businesses?
There is no inertia with enterprise boards. An additional €3.5 million was allocated to enterprise boards last week. They are working actively at the moment. We are not changing Government policy - we are listening in order to refine the policy. We are setting up centres of excellence and a one-stop shop for business in every county. Our job is to integrate the best of Enterprise Ireland, the county enterprise boards and local government. I am very confident the plan of action will be successful.