Vol. 848 No. 1
1. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation his plans to review the manner in which the State assists employees in companies in which management has expressed a desire to undertake a major restructuring of operations, including proposing substantial pay cuts and job losses; if his attention has been drawn to any other planned large-scale restructuring; and if he will make a statement on the matter. [30046/14]
I have tabled this question in the context of what happened at Bausch + Lomb and the manner in which a difficult and public choice was foisted on workers there. What strategies does the Minister's Department have in place to stop that process from happening in other companies? What assistance is available to workers from the Department?
A key element of the work of my Department and the development agencies is to work closely on an ongoing basis with client companies to ensure potential threats to employment in their operations are identified well in advance in order that they can be addressed before major difficulties emerge. There is a significant level of engagement with companies, quietly and behind the scenes, to address ongoing challenges and help them to develop new strategies, change their business models, where necessary, and further embed their operations in the economy. This work by the agencies includes pursuing relevant research and development opportunities, promoting training initiatives, the provision of targeted grant aid in specific circumstances, and developing capacity building and transformational management systems. A good example is a key disruptive reform set out in An Action Plan for Jobs 2014. It provides that the main development agencies will drive a national step change for the manufacturing sector which will drive the adoption of LEAN programmes and other initiatives to improve the competitiveness of these businesses.
In addition, an early warning system is in place to flag unexpected job threats which may emerge at short notice. In such instances, the agencies, my Department and I, as Minister, work with the company to develop alternatives or mitigate the worst impact on workers. We also explore all possible supports that might be available across government. This was the approach taken in the Bausch + Lomb case in Waterford.
The services of the State's industrial relations machinery are always made available to assist parties in a dispute. It is heartening that the work of the Labour Court and the Labour Relations Commission which come within the remit of my Department has managed to resolve many apparently intractable disputes and resulted in positive outcomes in cases involving restructuring. Where jobs are still lost, despite best efforts, my Department works with other Departments to ensure services are made available to workers to clarify their entitlements and develop other opportunities for those affected.
The overall process, involving many State stakeholders, works well. It is continuously learning and responding to the changing global environment. As of now, I am not aware of any such proposed large-scale restructuring which may arise in the near future.
Before calling Deputy Dara Calleary, I ask Members to turn off their mobile phones, as there is interference. We are advised by the technical staff that, if that happens, they cannot use the playback facility for use on radio or television. It is everybody's interests, therefore, to switch off all mobile phones.
I appreciate the range of responses from the Minister's Department and I am aware of the early warning system in place. The specific circumstances of the case at Bausch + Lomb were known in the Department and its agencies, but the workers seemed to be the last to know. They were then presented with a Hobson's choice and forced to take difficult reductions. I congratulate everybody involved in that process, including the Department, SIPTU and various employers, to try to achieve a resolution. However, the workers were presented with a choice of either accepting pay cuts or having the entire operation shifted. That is an unacceptable and very difficult choice to have to make and the workers were placed in a no-win situation. As I have said before, I do not think the outgoing CEO of IDA Ireland was helpful in that regard. It was his job to try to assist the company, but he told workers to take the deal on offer. This was particularly unhelpful and unfair and I do not want to see it happen again. Workers should not be placed in a difficult position in having to take decisions that will affect their personal lives. In taking such decisions they are put under the microscope and there is enormous publicity and pressure, knowing that their decision will affect 1,000 others. Is there a way by which the Department, working with various agencies, can ensure what happened will not recur?
Each case has to be treated on its merits. The company is the primary point of contact with workers. Clearly, IDA Ireland and other agencies have to respect the company's confidentiality. Such companies are often quoted on the Stock Exchange. If they indicate the direction of their thinking in confidence to IDA Ireland, giving it an opportunity to work with it to achieve the best possible outcome for Ireland, that confidence must be respected. It is not a situation where the best approach is to tell everyone what might happen in the hope one can develop a response. In the Bausch + Lomb case we had to work behind the scenes to develop proposals to achieve the best outcome, as well as putting investment proposals on the table, with other supports, to allow a successful deal to be reached. Obviously, it is for the company to deal with its workforce. As the Deputy knows, the issue emerged from a takeover or merger that had evolved, which had created a tight timeframe.
The Minister has teed it up for me. The company involved in the merger is sniffing around - for want of a better phrase - other Irish companies. I welcome the statement that there are no large-scale redundancies on the Minister's radar. Does IDA Ireland have a strategy in place, not just for the specific company mentioned but also for the pharmaceutical sector generally? Many companies involved in the sector are, effectively, asset-stripping, while floating around and looking for potentially good research and development opportunities that may result in a commercial return for their own investment companies. Is the Department aware of this and, if so, is it working on a strategy for the pharmaceutical sector to guide it through this phase?
Absolutely. Consolidation in the pharmaceutical sector is a fact of life. IDA Ireland's objective is to ensure that in any such consolidation Irish plants will be in a position to win in any restructuring. That is a continuous challenge that we are always addressing in working with companies to ensure plants in Ireland are the best they can be. We have a strategy, but, obviously, one must respond to individual decisions made by corporates.
2. Deputy Peadar Tóibín asked the Minister for Jobs, Enterprise and Innovation in view of the fact that just a small number of American firms account for two-thirds of Irish headline exports and that they directly employ about 72,000 persons here, his plans to re-balance employment distribution on a sustainable level. [30183/14]
Foreign direct investment is good and my party welcomes it. The Government must do all it can to ensure we will continue to win high levels of it. However, over-dependence on it is a major source of concern, especially when it is based on a small number of factors such as the bargain basement corporation tax rate used by the State. A number of years ago a senior adviser to US President Barack Obama stated we had an over-dependence on foreign direct investment. I am asking what the Government will do to bring to an end that over-dependence.
Is Sinn Féin now proposing that the corporation tax rate is too low? Is that the inference of the Deputy's question when he says we have a bargain basement corporation tax rate? I do not accept the Deputy's inference that US foreign investment in the economy is at an undesirable level. The activities of US owned companies represent an important source of exports and employment. They are spread across 500 companies in a wide range of sectors and have strong links with the economy. Exports from foreign owned enterprises are an important and sustainable element of the economy, as they are in other small globalised economies.
While IDA Ireland client companies play an important part in the economy, it should be remembered that employment in such companies represents less than 9% of total Irish employment. The majority of employment comes from the activities of Irish owned companies and enterprises and these are the key focus of much of our enterprise policy. Many of the proposals developed in An Action Plan for Jobs have been designed to assist the start-up, scaling and internationalisation of Irish owned enterprises. Measures include the roll-out of the local enterprise office, LEO, network, the establishment of the potential exporters divisions, the increase in staff assisting Irish companies to develop in overseas markets, the increase in the number of trade missions, the creation of new instruments to facilitate access to finance and the development of sectoral strategies in areas such as tourism, software and food.
There is solid progress being made. Exports by Enterprise Ireland companies are up by €3.5 billion in the past three years, while employment has grown by 14%, from 146,419 to 166,184 higher than the total employed in IDA Ireland client companies.
The effective corporation tax rate is too low. It is an international joke. It is a serious issue when, during the Taoiseach's travels to California, senior politicians joke that Ireland is considered to be an international corporation tax haven. Our reputation is low as a result. The Minister of State is correct in stating that, comparatively, there is a small number of employees working in the FDI sector, but this small number of firms account for two thirds of headline exports. We should know by this stage that when we localise the entire economy in a small sector, when we put all our eggs in one basket, as the previous Government did in the case of the property market, it causes problems. A healthy economy is a balanced one. It is one in which a large volume of exports come from the indigenous sector.
A question, please.
What will the Government do to rebalance the economy to ensure a far larger volume of exports will come from the indigenous sector?
If the Deputy thinks the effective corporation tax rate is too low, he should tell us what his party thinks it should be, rather than merely express it as a platitude.
It should be 12.5%.
Enterprise Ireland client companies have continued to generate increased jobs growth. They recorded the highest overall rise in employment levels in the past decade, with 5,442 net new jobs, some 3,620 of which were full time, at the end of 2013. Moreover, they provide employment for 175,750 persons, comprising 149,718 full-time and 26,032 part-time workers. We recorded export sales of €17.1 billion in 2013 and have set a target of €17.5 billion for Enterprise Ireland supported companies for 2014. There are 100,000 persons employed in 500 US companies here and we export goods and services worth €26 billion to the US market. Total trade between Ireland and the United States - the question relates to the US market - amounts to approximately €55 billion.
The effective corporation tax rate should be 12.5%, but it is not; it is far lower than this. The point is that a foreign direct investment economic model is normally seen as transitional for an economy. Normally, a country uses the FDI model to start to build its indigenous economy. While the Minister of State indicates some increase in net jobs through Enterprise Ireland companies, it is minuscule compared to what is necessary. It has been the policy of the Government to outline some successes, but these successes are small in comparison to what is needed. What is needed is far more energy in ensuring indigenous businesses are successful. The Government can do this by increasing demand in the economy and this can be helped with taxation and stimulus measures and also by a reduction of costs. Will it ensure the slide in funding, both for Enterprise Ireland which has been experienced in the past few years and the successors to the county enterprise boards, will stop and that we will see significant funding for these two organisations?
Enterprise Ireland's network of international offices now extends to 30. We opened two new offices during 2013, in Istanbul and Austin, Texas. Some 815 new overseas customers were secured for client companies, 38% of which were in high growth markets. In addition, 111 of Enterprise Ireland's high potential start-up companies secured their first new international reference company in 2013. There were 18 Minister-led overseas trade missions, in which more than 1,000 Enterprise Ireland client companies took part, and a further 67 international events in major target markets. We are making significant progress. There is a strong policy prerogative, since the creation of the LEOs, to support the SME sector at a local level and ensure those companies that have export potential through Enterprise Ireland will be supported. There is a broad range of supports available. I reiterate that there was €65 million in equity and venture capital, a figure of €92 million for technology and scientific infrastructure, €27 million for capability building and €19 million in capital for employment support and capacity expansion. This is taxpayers' money being invested effectively through Enterprise Ireland to support the indigenous sector.
3. Deputy Shane Ross asked the Minister for Jobs, Enterprise and Innovation the number of appointments he has made to State boards and State agencies since his appointment; the number who have gone through an interview process; the number who have been involved in an open competition for the positions; the number of appointments that have been publicly advertised; the gross cumulative value of the fees; and the average annual fee and ratio of males to females. [30332/14]
The purpose of this question is to establish, in the light of recent controversies about political appointments to State bodies, whether the Government is living up to its promise that it will advertise all State board positions, that it will ensure there is free competition for these positions, that the gender basis which it set for itself is being followed and that the public can be sure appointments are not being made on a political basis, that all appointments, particularly in this Department which deals with sensitive areas, are made on the basis of merit.
Since taking office, I have made 41 new appointments to the boards of agencies within my discretion. A further 67 were either reappointments or posts reserved under legislation for various representative groups. The Department advertised all board positions in the form of a group advertisement at the start of the year.
Of the new appointments made at my discretion, 28, or over two thirds, of those appointed were selected from those who had submitted an expression of interest in response to publicly advertised calls administered in conjunction with the Public Appointments Service. This process generated a strong response in terms of the number and quality of the expressions received. In all cases the expressions were evaluated having regard to the skills, expertise and experience being offered in the vacancy being filled. The gender breakdown was 50:50, with 14 men and 14 women being appointed.
As regards fees payable to chairpersons and board members, they are paid in line with the categories into which the agency falls under the Department of Public Expenditure and Reform's system. Of the agencies within my Department's remit, eight are deemed to be in category 2, for which the chairperson's fee is €20,250, while the fee for an ordinary member is €11,970.
The remaining four are deemed to be in category 3, for which the annual fees payable to the chairperson and ordinary board members are €11,970 and €7,695, respectively. The Deputy will wish to note that fees are not paid to all appointees. In some cases members may have opted to waive their fees, while some members will be subject to the one person one salary principle and others are departmental nominees who are not entitled to fees. The cumulative annual value of fees for the agencies based on their current composition is €200,070 payable to 11 chairpersons, an average of €18,188, and €847,305 payable to 84 board members, an average of €10,086.
The Minister successfully blinded me with science and I got lost when he began to speak about category this and that. I will read the printed version of his reply afterwards. I take it that while some of the positions have been advertised, others have not. I am particularly interested in the reappointments. What interview process or scrutiny did the reappointees undergo? Several of them were in IDA Ireland. Would it not have been more satisfactory if the Government had kept its promise that all appointments would be advertised and that prospective appointees come before Oireachtas committees to be subject to scrutiny by the Houses and the public? They would then be taken out of the political arena. The Minister knows what I am talking about; he has defended some of the more controversial appointments made recently in other Departments. Particularly where overseas investors and interests are concerned, I seek an assurance that all appointments in the future will be advertised and not be made on a political basis.
As I indicated, all posts are advertised. Two thirds of positions were filled by those who had responded to advertisements. However, as the Government's decision indicated, Ministers have to make decisions about suitability and, in some cases, an expression of interest does not yield the individuals required. In such cases, obviously, one needs to head hunt to fill these posts. That is appropriate.
In the case of reappointments, clearly some people have gained experience and are valuable additions to their boards. In regard to boards to which I have reappointed people such as the IDA Ireland board, the individuals concerned had lengthy and worthwhile experience and in no case would have served more than one term. I do not allow any person to serve more than two terms. My accountability to my colleagues and Oireachtas committees is open. The chairpersons whom I appoint all appear before committees for scrutiny. I consider it to be a transparent approach and I am happy to stand over the appointments I make.
What happened to the proposal which, I think, was accepted by the Government in respect of the large number of attendees at the global economic summit who volunteered, to great applause and approval, to work for nothing on State boards, thereby bringing an external influence to bear on State bodies and agencies? I presume this includes IDA Ireland and Enterprise Ireland. They would bring welcome expertise to these boards. Why have these appointments not materialised? They would take the matter out of the political arena and the individuals concerned could replace the reappointed members, which is a gap or loophole that is not subject to advertising. Perhaps we might make more appointments from people living overseas who have volunteered to bring their independence to the boards of semi-State bodies.
There are appointees from overseas on the boards and such appointments will continue to be made. Anyone who expresses an interest in a board will be considered, whether he or she volunteers at the global forum or by direct response to advertisements. There is an open trawl of persons who would be suitable. Clearly, only certain posts will become vacant every year and we have to consider the suitability of those who have applied on their respective merits. We consider all offers that come our way.
4. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation his views on the main impediments to the small and medium enterprise sector's ability of firms to increase employment; the actions he is taking to resolve these issues; and if he will make a statement on the matter. [30047/14]
I ask the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy John Perry, what he regards as the main blockages to SMEs' ability to grow employment and how we can support the SME sector, our most stable sector, in its efforts to grow employment and prepare for the upturn in the economy.
Since coming into office the Government has had a clear focus on assisting SMEs which make up over 99% of businesses in the enterprise economy in Ireland and account for almost 70% of people employed to establish, expand and export, with a view to driving economic recovery and creating jobs across the country. One of the priorities of the Government has been to identify and act on the impediments to the ability of small and medium enterprises to increase employment.
The advisory group on small business which I established in June 2011 reported on 23 November that year. The report identified a number of impediments ranging from weak demand, access to finance, labour costs and flexibility, the cost of doing business, competitive practices, access to public procurement, mentoring, management development, debt and insolvency to easy access to information. These impediments have been the subject of a range of actions within An Action Plan for Jobs. They include: a first stop shop through the local enterprise office, LEO, network; more accessible supports for recruitment such as JobsPlus and JobBridge; new instruments for access to finance; enhanced support in developing new markets overseas and through global sourcing; and access to information and support.
In addition, new legislation has provided for the streamlining of company law to make it easier for small and medium-sized businesses to form and operate. We have also reformed the wage setting mechanisms by removing the inflexibilities which prevailed. Legislation to strengthen competition and consumer law, including, in particular, the introduction of powers to regulate practices in the grocery sector is going through the Oireachtas.
A further major source of jobs growth in the SME sector is start-ups. The establishment rate of new businesses fell by 30% in the crash. A key challenge we are addressing is to create an environment in which more start-ups will occur, survive and grow to scale. The recent forum on entrepreneurship is a major contribution to this objective. As a follow-on to the forum, the Department shall shortly publish Ireland’s first policy statement on entrepreneurship.
On the 2011 report, I ask the Minister of State to outline the issues that remain to be addressed. We could beat each other over and back on access to credit which is not yet available for many businesses which want to expand. Banks are in the habit of lending to safe businesses, but businesses with good plans to increase employment which might be risky are not finding a home. The Joint Committee on Jobs, Enterprise and Innovation will be publishing a report on the issue next week and will make some suggestions in that regard.
The Minister of State also mentioned the issue of procurement, which remains a major source of frustration for small businesses, in particular. They are not given access to procurement. This is an area on which I ask the Minister of State to work in conjunction with the LEOs, now that they are linked with local authorities. The announcement made yesterday by the Minister of State at the Department of the Environment, Community and Local Government of funding to renovate local authority housing stock is an example of where small companies and trades people can make a difference and create employment. However, many of them will be restricted in tendering because of the current position on procurement. I ask the Minister of State to update us on the issue.
On procurement, last week we had a meeting with Mr. Vincent Campbell. We have also met Mr. Quinn.
We had a discussion about how best to deal with this through collaboration and ensure smaller companies can avail of major opportunities in the procurement sector. There is a demand to ensure small companies can be included in that very essential process. That is very much the Government's current task. I assure the Deputy we will provide an update and we look forward to reading the report next week. Procurement must involve smaller companies submitting joint bids, and such a process is now being examined. Procurement is about getting the best value for money, but it must equally bring quality. There is ongoing discussion with the Office of Government Procurement on the best way to proceed, and I will update the Deputy when that is concluded.
There is also the matter of bureaucracy and red tape. Work has been under way in the Department for some time to address the number and type of regulations. How effective has that been in the past three years since the issue was identified in November 2011? Is it now easier for companies to do business with regard to licences, etc.? Will the Minister of State provide an update on the work done on the one-stop shop for retail licensing?
That is going to EU tender at the moment. A review has been done of the 159 licences within the State and we expect that in the final quarter of this year the EU tender process, involving up to 40 different licences and 15 State authorities, will be complete. There will be a single portal for the issuing of licences. Within our Department there is a high-level group on business regulation and we have cut over €200 million from the cost of doing business. The establishment of local enterprise offices and easy access to setting up businesses through incoming company law will provide opportunities and ensure the laws of the State are proportionate to the size of the company. The high-level group has been very effective in many ways and we have a very effective committee that is representative of all sectors in the economy. We have taken many of the recommendations on board, particularly relating to the time taken to set up a company. The portal for licences will be on stream by the end of this year.
5. Deputy Peadar Tóibín asked the Minister for Jobs, Enterprise and Innovation the educational processes that have been put in place to ensure local authority staff are qualified to deal with clients of the new local enterprise offices, LEOs; and the training that has been put in place to ensure seamless delivery between the LEOs and Enterprise Ireland. [29882/14]
Bhí an-áthas orm fáilte a chur roimh an Aire Stáit, an Teachta Perry, go dtí An Uaimh Dé Máirt seo caite. I am sure the Minister of State is busy going around the country launching the local enterprise offices, LEOs, in each county and city. One of the major worries for us and enterprise organisations at the start of the process was that the LEOs would not sit well within the local authorities and the appropriate culture would not exist. This question pertains to the training provided to allow for proper integration with local authorities.
I was delighted to see the Deputy on Monday in Navan. Anybody who met the county chief executive, Ms Jackie Maguire, and Mr. Hugh Reilly, the LEO chief operating officer, would know they do not need much training. I was very impressed with the efficiency with which the launch was made and the team working in the LEO office. It is a fantastic facility in Navan, including an incubation unit with business supports. If Meath is an example of the service that will be seen around the country, I will be very happy. Coming from Meath and seeing what he did on Monday, the Deputy should have no concern about the operation or capability of the staff in Meath.
A comprehensive programme of training for all LEO staff has been put in place. This includes training in the area of entrepreneurship and enterprise, agency and local authority services at local level, revenue supports and change management. Ongoing training throughout 2014 is also planned across a range of service level issues. The new LEOs operating with local authorities are the first-stop shop through which all information on State supports for small and micro-businesses can initially be accessed, and this represents a significant and ambitious transformation of the support structure for enterprises across every county. The LEO staff cohort is composed of both former county enterprise board staff and local authority staff to ensure a totality in the service provided to LEO clients.
The service level agreement between Enterprise Ireland, whose representatives were in Navan on Monday, and the local authorities provides for Enterprise Ireland to support the developmental needs of LEO staff. In his first question the Deputy asked about us depending too much on foreign direct investment. We now have the tools to support indigenous small companies. Enterprise Ireland has a very clear mandate in promoting high-potential start-up companies and emerging and indigenous Irish companies.
Additional information not given on the floor of the House
In this regard, Enterprise Ireland has already begun, in collaboration with the local authorities, to deliver training to all LEO staff. A training and development plan for LEO staff was scoped in advance of the establishment of the LEOs, and all local authority staff designated to join the LEO were invited to attend a one-day information day, which was attended by staff and senior personnel from the new LEOs and other stakeholders. Topics included entrepreneurship, enterprise at local level and delivering excellence in customer service. In addition, presenters covered general areas such as the role of Enterprise Ireland and the centre of excellence, LEO brand management and communication protocols, enterprise support services and local authority business development services, as well as partnership with other agencies such as the Revenue Commissioners and Microfinance Ireland, where new protocols have recently been developed. As a follow-up, the Revenue Commissioners provided a one-day tailored programme for LEO staff.
The training programme is continuing, with two change management programmes about to commence for LEO staff of all levels to ensure they are equipped to meet new challenges. In addition, a customer engagement and services training day has been scheduled to commence in September. This will be an interactive one-day workshop for all staff. The aim of this programme is to develop both core customer service skills and behaviours within the LEO that are conducive to achieving the LEO mission and purpose.
I have no doubt the Minister of State is correct and that the two officials, Mr. Hugh Reilly and Ms Jackie Maguire, will do a tremendous job. My concern is with the whole of the State, which has seen a transition period. From what I hear, that has not been completely smooth, with LEOs not being able to communicate and engage with entrepreneurs and citizens for a number of weeks as they tried to access the service. My major concern is not necessarily about the staff of the LEOs but rather the staff of local authorities where the LEOs are located. The local authorities will now perform a pivotal role with regard to enterprise development. Everything from the planning process to financing to county plans will be taken in, so it is really important for the Government to do a job of work in training the staff of the local authorities in enterprise matters so they can better serve and work with LEOs in future.
Both I and the Minister, Deputy Bruton, as well as the Minister of State, Deputy Sherlock, have been all over the country visiting local authorities, and I have no doubt about what we have seen. They are totally committed to promoting entrepreneurship and self-help, and the LEOs are now a first-stop shop for those beginning a new business. The Deputy must remember that there has been a transformation in local authorities, with the executive officer taking over the role of county manager. They will deal with combined direct grants, mentoring and training, utilising local business expertise to evaluate projects, enhanced advice on signposting services, direct referral of clients to Enterprise Ireland, which is very important, and referral to supports from the Revenue Commissioners, the Department of Social Protection, Microfinance Ireland, the Credit Review Office, Skillnets and education and training boards. Direct advice and guidance on local authority rates, procurement and regulation effects on business are also relevant. There will continue to be three types of grant available from LEOs, including priming and business expansion grants. The criteria for receipt of those grants will remain the same as county board criteria.
I have seen commitment from the local authorities in how they can they can help establish businesses. I have no doubt this process will be a big success story. There is a level of participation by local authority staff, and the locations of offices will help. They are not upstairs or in a back room but at the front of house in order to deal with clients, as the Deputy saw in Navan.
I want the Minister of State to focus on the key question. What educational process will be put in place to ensure that the staff of a local authority are at one with the LEOs in an enterprise culture? This should be seen as a major opportunity to orient the entire local authority. For years, many would have been of the view that some local authorities around the country had a culture of going against enterprise. When businesses engaged with such authorities about rates, charges or planning, they would have experienced very negative feelings. The Irish Small and Medium Enterprises Association and the Small Firms Association, which are representative of small businesses, have indicated that they feel the culture of the LEO would be swamped by the culture of the local authority. Does the Minister of State see this as an opportunity to orient local authorities on an enterprise basis?
Yes; there will be reorientation of staff and a customer service charter. There will be training for all staff, with a focus on enterprise, job creation and recognition of an enterprise culture. One must remember that the job of the elected councillors - some of whom we saw the other day in Meath - concerns business in the county. In the motions at council meetings, there must be value to the county in how jobs are created in villages and towns in places such as Meath.
That is the focus of training. The new system will also incorporate an evaluation committee and community based enterprises.
This change gives autonomy to every chief executive officer to create an enterprise culture. The best example of this is in County Meath where the chief executive of Meath County Council, Ms Jackie Maguire, will work with the head of the local enterprise office, Mr. Hugh Reilly. This position is replicated elsewhere in the country. The local enterprise offices are an extraordinary vehicle involving training, an evaluation board and community and social enterprise. The 40 elected members of Meath County Council have a major responsibility in this regard as they now have a mandate to drive business in the county. The Government cannot create jobs. It is, therefore, a matter for every elected representative and official to promote enterprise in their respective counties. If they produce enterprise ideas, they will receive State support.
6. Deputy Peadar Tóibín asked the Minister for Jobs, Enterprise and Innovation the new direction he will give to the new chief executive officer of the Industrial Development Agency to improve the geographical distribution of foreign direct investment here. [29881/14]
A two-tier economy is developing, with people in the Border, midlands and west region much more likely to experience poverty and unemployment or have a family member emigrate. The most recent census found a general increase in the population of the State and a decrease in population in many rural areas. This trend can be ameliorated through good Government policy, especially on enterprise. The majority of new jobs announced by the Industrial Development Agency in the past five years have been located in Dublin and Cork, with a small minority located elsewhere. The question asks whether the position will change under the new regime in place in the IDA.
In 2013, for the first time in many years, every region experienced employment expansion. It is noteworthy that this included the south east and Border, midlands and west regions.
This year, 2014, is the fifth and final year in IDA Ireland's Horizon 2020 strategy, which has been in place since 2010. One of the high level targets of the strategy was that 50% of all investment would be located outside of Dublin and Cork. Although IDA Ireland did not achieve this target, there were nevertheless a number of substantial investments in regional locations during the period. Between 2010 and 2013, some 35% of all foreign direct investment, FDI, announcements related to locations outside of Dublin and Cork, while 40% of all IDA Ireland sponsored site visits by potential investors were to locations outside of Dublin and Cork. Overall, 72,500 people or roughly 44% of the total employment in IDA Ireland's base of companies, including those that were former clients of Shannon Development, are located outside of Dublin and Cork.
I am determined to optimise the potential contribution of foreign direct investment to regional economic development as part of a cohesive regional strategy. To this end, I was pleased to secure agreement on new European Union state aid rules, under which we have secured regional aid status for the south east, County Kerry and the Border, midlands and west region and the capacity to provide aid to large enterprises in these areas. In addition, Kells, Athy and Arklow have been designated under the new regional aid map.
Work is now nearing completion on a new foreign direct investment policy statement, as committed to in the Action Plan for Jobs 2014. This follows an in-depth analysis by Forfás of Ireland’s foreign direct investment strategy in light of a changing global environment to take account of factors such as key trends emerging in FDI best practice internationally, Ireland's strengths in attracting FDI and the new state aid rules, which came into effect on 1 July 2014.
In addition, the 2014 Action Plan for Jobs includes a commitment to develop a framework for a regional enterprise strategy to better integrate the plans of the enterprise development agencies and enlist the support of regional stakeholders in supporting the development of the competitive strengths and opportunities of the regions. My intention is that the framework will be rolled out on a progressive basis, starting with one or two regions and focusing, in particular, on co-ordinating the efforts of the agencies under the remit of my Department, namely, Enterprise Ireland, IDA Ireland and the new local enterprise offices. The overarching objective of the framework is to ensure the agencies work together on a common strategy to support their client companies and work with other key stakeholders to maximise the potential for job creation in the regions. My Department is developing this framework in collaboration with Enterprise Ireland, IDA Ireland and Forfás. This policy framework will guide the new chief executive of the IDA as the agency develops its new strategy from 2015 onwards.
I am glad there will be a new emphasis in IDA Ireland's strategy because, while its job creation efforts have been positive and successful in recent years, the regionalisation aspect of its strategy has been a disaster. The figures speak for themselves. In 2010, some 37% of inward investment was located outside Cork and the greater Dublin area. This figure fell to 27% in 2011 and declined further to 23% in 2012. I understand it increased to approximately 30% in 2013. This imbalance has a significant impact on rural communities. According to Irish Rural Link, for example, nine out of ten of the young people it deals with are considering emigration. It also has the effect of emptying rural areas, by which I do not mean the countryside but small and medium sized provincial towns where services such as post offices, schools and Garda stations are closing. This trend creates further pressures on cities. Will the Government ensure that the new emphasis becomes part of the IDA's strategy from 2015 onwards?
I am pleased to note the Deputy is changing his view of the role of foreign direct investment in the economy because he suggested, in an earlier question, that FDI was somehow undesirable and unsustainable. Foreign direct investment is an important element in the economy. There are, however, limits to what one can do in terms of regional location. IDA Ireland does not choose what areas of investment are mobile - certain sectors are clearly more mobile than others - nor does it decide where companies choose to locate. A range of measures is required to build up the competitive offering of different regions, to play to their strengths and to use these strengths as a magnet for attracting foreign direct investment.
While IDA Ireland plays an important role in regional development, as the Minister of State, Deputy Sean Sherlock, pointed out, 91% of all employment is in non-IDA areas of activity. We must work on these areas as well as on those where IDA Ireland attracts investment. It is for this reason I have located this focus in a broader regional enterprise strategy, rather than in one agency.
The Minister may have been concentrating on more important matters when I asked my earlier question on foreign direct investment. My first point was that foreign direct investment is positive and necessary and we must fight for more of it. I pointed out, however, that the imbalance in our exports on the FDI side is dangerous and implored the Minister to seek to rebalance the position.
For two years, the Government's Action Plan for Jobs included a target of having 50% of all investment located outside of Dublin and Cork. Having failed to achieve this target in the first two years, it dropped it in the third year of the action plan. My objective is to ensure the Government refocuses on achieving this target, which must be its paramount objective. The imbalance in investment is having serious effects on the west where and entire GAA generation is being lost. It is also causing significant problems on the east coast.
The Deputy is trying to have it both ways. Speaking out of one side of his mouth, he pretends that we have an excessive reliance on US companies and foreign direct investment and, speaking out of the other side of his mouth, he craves more foreign investment in particular regions.
I seek balance.
We need to win all the mobile foreign investment we can because emigration and unemployment are high. This investment strengthens certain sectors of the economy and builds clusters. We also need to develop a credible regional strategy within which IDA Ireland investment is only one part. We must have a credible and wide regional strategy that builds up the competitive advantage of regions, identifies the sectors in which they have an edge and builds on their strengths. Many of these will be in life sciences, tourism and food and not always in the sectors where there are flows of foreign direct investment from time to time.
We need to have a balanced debate on this issue and ensure all of our agencies, not only IDA Ireland, focus on maximising the regional spread of development. That is the approach I will take in respect of this matter.
7. Deputy Peadar Tóibín asked the Minister for Jobs, Enterprise and Innovation the annual trends regarding the level of investment in e-commerce by indigenous Irish business; and the numbers of persons employed in the sector. [29883/14]
Retail is one of the forgotten sectors of the economy, although it has probably suffered the most outside of construction in recent years. It has lost approximately 50,000 jobs recently and representative organisations state those in another 30,000 are clinging on by their fingertips. We are seeing a radical reorientation of people's spending patterns from the shop to online purchasing and my concern is that 75% of the business is going abroad. The Government must have a clear strategy to ensure Irish retailers start to use the service.
In the past decade the influence of the Internet on the economy has been growing steadily, about which there is no doubt. In 2013 Indecon Consultants estimated that digitalrelated activities contributed 4.4% of GDP to the economy. The consultants predicted that this contribution would increase by 16% year on year. Almost 95,000 jobs are already supported by digital-related activities in the economy.
Notwithstanding this trend, CSO data suggest only 23% of small companies in Ireland are engaged in sales through e-commerce. The proportion is considered to be even lower for companies with fewer than ten employees. These companies are potentially losing valuable sales opportunities in both the Irish market and in selling overseas. It is estimated that Irish consumers spend just under €6 billion online annually, of which 60% to 70% goes overseas.
Encouraging more indigenous companies to engage in e-commerce is, therefore, a key objective of the Government’s national digital strategy and An Action Plan for Jobs. The 2014 action plan includes a commitment to roll out a trading online voucher scheme to 2,000 micro and small businesses by the end of 2015. The scheme is intended as a catalyst to support businesses to start trading online or improve their current online trading offering, rather than simply having an online presence and there is a qualitative difference. It provides successful applicants with a voucher up to the value of €2,500 to help meet these objectives. The value of the voucher must be matched by the applicant company. The trading online voucher scheme falls within the remit of the Department of Communications, Energy and Natural Resources. However, the vouchers will be administered by the local enterprise offices.
Following a piloting of the scheme by the Dublin City Enterprise Office at the start of the year, the Minister for Communications, Energy and Natural Resources announced the national roll-out of the scheme last week. Applicant businesses will be selected on the basis of their project plan, including their expected growth in jobs and exports as a result of trading online.
The Minister will agree that the figures are startling. People are spending €8.5 million every day online; while 43% of the population had bought something online. Millions of Irish people now regularly orientate towards online shopping. The figure of €6 billion given in the Minister of State's reply is up from €2.9 billion in early 2012 and it is reckoned that it will grow to €21 billion by 2017, which means it will be an enormous chunk of the figure for the retail sector. That a figure of 75% in this fast-emerging sector is being lost to the country means that thousands of jobs are being lost. The Minister of State mentioned the roll-out of a trading online voucher scheme, but the numbers are not high enough. What is his objective regarding the amount of money he will spend on the project into the future and how many retailers does he expect to be affected annually?
There is strong recognition by the Government of the size of the spend and its impact on GDP. The advent of the online trading vouchers through the local enterprise offices, LEOs, is a concrete policy intervention in recognising this trend and providing funding towards supporting businesses.
On the eligibility criteria, the vouchers will be available to a maximum figure of €2,500. Approval must be obtained prior to incurring any expense and third party costs only will be considered. All third party supplier invoices must contain proper business details. This is a robust document that greatly encourages businesses that may have had an online presence but which were not trading online. It will be for the LEOs to advertise locally to ensure businesses will come into them.
We are talking about an annual spend of approximately €32 billion. We expect €21 billion of this to be accounted for by the spend online by 2017, with 75% of it going abroad. It is reckoned that every 1% of that spend we win back boosts the local economy by approximately €40 million. Every time we have this debate the Government rightly states it is doing something about it, but there is a mismatch between the level of the Government's response and the size of the problem. Exactly how much will the Minister of State spend in the coming years in focusing on this crisis within the retail sector? How many businesses does he expect to reach and how money jobs does he believe will be created?
The important point is that we have recognised the potential value and created a solution through the roll-out of the trading online voucher scheme. In terms of the early results under the pilot scheme, seven out of ten companies stated the voucher application process had already helped them to determine how online trading would fit into their businesses. Some 70% of the companies involved in the pilot scheme in Dublin had received more customer inquiries, while 55% had had more sales. There is a provision within the LEO infrastructure to allow those companies that wish to trade online do so and we are already seeing a positive impact. It is impossible to give the exact figure for how much the State will spend in supporting this activity, but there is a provision available and it has been rolled out across the State in the piloting of the scheme. The demand from small local businesses to participate has been extremely high. It will take us a little time to have data on the numbers of businesses that have come in and how this has had an impact on their businesses.
8. Deputy Seán Kyne asked the Minister for Jobs, Enterprise and Innovation if he will provide an update on the progress of the commitment in An Action Plan for Jobs to deliver an integrated licensing application service for the retail sector; when the service will be introduced; and if he will make a statement on the matter. [29922/14]
I ask the Minister, with regard to An Action Plan for Jobs, to speak about the ambition to deliver an integrated licensing applications service and portal for the retail sector.
The Forfás report, The Review and Audit of Licences, carries the findings of an audit of 159 licences in the State across key sectors of the economy and recommends the introduction of an integrated licensing system. The Government considers this project to be of significant importance and has positioned it as one of the disruptive reforms in An Action Plan for Jobs. Such an integrated licensing system which will streamline the licensing applications process is a reformative step in reducing the administrative burdens on business. A key goal of the proposed system is to support the licence applications process through the provision of a single portal or website through which businesses will be able to apply for and renew a multiplicity of licences. The new licensing system will be developed for the retail sector in the first instance and rolled out to other sectors of the economy thereafter.
The delivery of an integrated licensing applications system for business offers real potential to ease the process of starting up a business in Ireland and significantly reduce the work involved in the annual renewal of licences. It will also contribute to maintaining Ireland’s position at the forefront of delivering advanced e-government services and using information technology to reduce costs for business and improve the delivery of services to business.
The integrated licensing applications system should also provide productivity and efficiency gains in the public sector by streamlining the administration of licensing processes and the potential for more integrated inspection and compliance systems in the future and better application of risk-based enforcement.
A statutory instrument, SI No. 83/2014, was signed by the Minister for the Environment, Community and Local Government in February 2014 to designate my Department as a body to which the Local Government Management Agency, LGMA, can provide services. This will enable the LGMA to act as the contracting authority for the licensing application system. The drafting of the request for tender for outsourced provision of an integrated licensing application system involved extensive consultations with the Office of the Chief State Solicitor, in conjunction with the Office of the Attorney General.
A request for tender for a single supplier framework agreement for the provision of an integrated licensing application service was issued through eTenders and in the Official Journal of the European Union on 21 February 2014 with a closing date of April 2014. An evaluation panel, chaired by the LGMA, has been established and the evaluation phase is ongoing. Subject to the successful awarding of the services contract to an appointed provider, the system should be delivered in the autumn.
I thank the Minister of State for his comprehensive reply on an important initiative. The Minister of State, the senior Minister and the Department's representatives have attended a number of regional meetings. I attended one in Galway where a number of business owners commented on the time it takes to fulfil regulatory requirements and said that the time could be spent more efficiently. I welcome the fact that this was published on the eTenders site. Does the Minister of State anticipate that this can be rolled out to businesses in 2015? How long will the development of software for the integrated portal take?
Roll-out will be attempted by the end of this year. We met the State licensing authority bodies. The project is on the eTenders site and, subject to the successful awarding of the service contract to an appointed provider, the integrated licensing application system will be delivered in the autumn. By the start of 2015, this will be up and running.
With regard to the question about the simplification of licensing, this deals with 28 licenses and 15 State authorities. We looked at the cost of doing business across the economy of Ireland and it involves 159 licences across key sectors of the economy. We hope that, once this is successfully operational, we can roll it out to other sectors of the economy. The Minister identified that this is one of the key disruptive changes in the Government's plan. We are delighted it has moved to this level and we are confident this will be operational from January and will benefit restaurateurs, hoteliers and everyone in the retail sector. It should be of huge benefit.
I hope it can be developed by January of next year and that it can be rolled out to other sectors in the business community, because it is important. Were there any issues or problems with State agencies in developing this?
We brought together the licensing bodies and I thank them for their co-operation. I compliment them on their willingness to participate in the integrated licensing system, which is one of the first in Europe. It will be the first of its kind and we are happy with the co-operation, the statutory instruments, and the fact that it has done to tender. The Office of the Chief State Solicitor was helpful and the Attorney General ensured that difficulties were overcome. The support of everyone to ensure this happened and its inclusion as a measure in the Action Plan for Jobs is an indication of the commitment to the plan. As a measure incorporated into the plan, the Minister and the Taoiseach were determined it would be delivered in autumn. We are on schedule. The determination of everyone to deliver this was clear. I thank officials involved, including Forfás and the other teams, who worked to ensure we are at this point.
9. Deputy Noel Harrington asked the Minister for Jobs, Enterprise and Innovation the number of trade missions undertaken by his Department since 1 January 2013 including those organised by the Industrial Development Agency Ireland and Enterprise Ireland where there was an involvement by companies based in west Cork; and the benefits accruing to these companies and the west Cork region as a result of those trade missions. [29849/14]
I tabled this question because of the frustration many people feel. Cork is a large county and west Cork suffers from having the city in the same administrative area. When the IDA and Enterprise Ireland present figures, they present them for the whole county in the round. Cork city attracts a lot of investment and often west Cork does not attract the same attention from Enterprise Ireland and the IDA. Given the difficulty of attracting Enterprise Ireland and the IDA to Cork, can the Minister outline how Enterprise Ireland and the IDA can bring companies from west Cork to the market?
There have been 29 ministerial-led trade and investment missions since 1 January 2013. Normally, IDA investment missions would not involve Irish companies, so half of them are not relevant. Enterprise Ireland trade missions are open to all Enterprise Ireland companies. A full listing of events is published so that companies can participate. Since 1 January, 30 Cork-based companies participated in trade missions. I will obtain the breakdown for the Deputy in respect of how many came from west Cork. Trade missions help to win orders and achieve export sales. Commercial confidentiality governs individual deals, but notable deals have been secured by Cork companies, although some of them are not from west Cork. GTSS secured a contract at the National Maritime College in Cork and Digisoft secured an IT contract in South Africa. I shall obtain information for the Deputy.
Apart from trade missions, Enterprise Ireland works with approximately 700 client companies in County Cork and almost 20,000 people in sectors such as food and drink, consumer products and internationally traded services. Ministerial-led trade missions in the past 18 months have focused particularly on emerging markets. Such markets can be more challenging for companies that need scale, market presence and resilience to succeed. Ireland needs to develop these markets, where 90% of future trade growth is likely to be. It is important to recall that Enterprise Ireland has a network of 28 overseas offices that are available on a year-round basis to companies in west Cork and elsewhere. They provide a range of services to meet client needs in internationalising, including market knowledge, incubation and hot-desk facilities.
The reply identifies the problem. Each of the companies the Minister mentioned is based in Cork city. West Cork is the size of a mid-sized county. Using Cork-based figures does not give the same appreciation of the challenge we have in attracting Enterprise Ireland industrial and commercial activity to an area the size of an ordinary county. The figures mask the reality or make interpretation difficult. In the Minister's answer, west Cork is lumped in with Cork city, and this does not provide a true picture of what is happening in west Cork or north Cork. Perhaps we need a more nuanced approach.
Enterprise Ireland works with any company, no matter where it is based, and if companies need to see products developed through research or need to implement lean techniques, we will support them. This year we are introducing a step change for manufacturing, examining companies and auditing them to try to lift their capabilities. If companies in west Cork have ambitions that are not being fulfilled, we will be happy to support them. Counties are the usual boundaries under which we publish data but I can seek a breakdown of the data.
Our agencies respond to companies and provide start-up grants for anyone who wants to start a business. These grants are available to all companies, no matter where they come from or where they choose to locate. We do not have the ability to tell someone who wants to start in Cork City to start in west Cork. We will support any companies and if the Deputy feels some companies are being overlooked, I would be happy to deal with that.
10. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the actions that have been taken in response to the analysis of the action plan on jobs carried out by the OECD; and if he will make a statement on the matter. [29937/14]
This question seeks the reaction of the Minister in regard to the recent OECD report on the action plan on jobs.
The OECD published a preliminary review of the action plan for jobs on 22 April this year. The review examines some key elements of the action plan and found that the plan's focus on private sector-led, export-oriented job creation by getting framework conditions right and continually upgrading the business environment is a sound approach, particularly given fiscal and credit constraints. The review endorses the strategy of the action plan in getting the framework conditions right to support enterprise-led, export-oriented job creation. The focus on building and strengthening linkages between domestic SMEs and the FDI sector is also welcomed in the review.
The OECD review recognises that the action plan’s co-ordination mechanism, robust monitoring system and whole-of-government engagement is an important step in addressing the gaps that previously undermined successful policy implementation. However, the review also suggests a number of areas where we can make improvements, including ensuring that high unemployment does not become structural and persistent; stepping up efforts to improve access to finance for SMEs; ensuring that investment in basic research is translated into commercial products and services; and, introducing a performance assessment framework to measure progress towards achieving the action plan’s strategic objectives.
We have already taken on board some of the OECD’s suggestions in 2014 as part of the Action Plan for Jobs and Pathways to Work processes. For example, the Government has increased its focus on activating those most vulnerable to being distanced from the labour market through Pathways to Work and the Youth Guarantee. Further efforts are being made to increase new lending to SMEs, drawing on both bank, and non-bank, sources of funding, while the establishment of Knowledge Transfer Ireland last May will make it easier for companies to leverage the commercial potential of Irish research and innovation.
The development of a performance assessment framework to measure progress on the action plan’s strategic objectives is included in the work programme for the senior officials group on economic recovery and jobs for the second half of 2014.
One of the criticisms of the report was that the overall strategy was too centralised and needed to be adjusted and that bodies representing different industries and sectors in different regions of the country would be involved in it. This would support the ever and ongoing discussion on regional investment. Has the Minister any thoughts of a departmental review of regional policy?
I welcome the performance assessment framework, but what has the Minister in mind for that? Will it, for example, involve a role for the Joint Committee on Jobs, Enterprise and Innovation or will some element of this House contribute to that framework? How spin proof will it be?
Is the Deputy speaking from experience there?
The monitoring is centralised in the Department of the Taoiseach, which oversees every Department. The merit of this lies in the fact that it tries to span the whole area. Both I and the Ministers of State travel continually to the regions to hold meetings on the Action Plan for Jobs in order to get regional feedback. We are open each year to public contribution and ideas from anyone in any part of the country. As the Deputy knows, this year I am developing, for the first time, a regional enterprise strategy framework to try to bring the different pieces together, the EI piece, the IDA piece, the LEO piece and the wider stakeholders who can help to make this a success. As I indicated earlier, this framework will be rolled out this year, starting in just a couple of regions.
What we are trying to do in regard to performance indicators is to develop indicators that are SMART - specific, measurable, attainable, realistic and timely. We will look at the issue from the birth of businesses right through development. It will not be just about employment. We will look at a wider range to see how we are doing at start-up level, how we are doing at scaling companies and so on. That is the approach we seek to adopt. We are working on that and would welcome the committee's participation.
11. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the employment opportunities and challenges arising from the transatlantic trade and investment partnership talks; and if he will make a statement on the matter. [29941/14]
This question seeks to establish the position in regard to the transatlantic trade and investment partnership, TTIP. I notice the Taoiseach is getting very involved in that area this morning, in the context of one transatlantic project. This is an area that is hugely important for Ireland and the Minister puts a lot of store in it. What exactly does the partnership mean for us?
During the Irish Presidency in June 2013, the Minister, Deputy Bruton, secured the agreement of all trade ministers in the EU Council, to formally open negotiations with the US on a transatlantic trade and investment partnership, TTIP.
At a time of high unemployment we must grasp every opportunity that adds to the momentum of recovery that Government policies are achieving. In particular, huge potential is offered by TTIP to accelerate economic growth, and expand trade and export opportunities. These give us the potential to create more jobs so that the already falling unemployment rate can be more quickly reduced.
Ireland has particularly strong economic links with the US, with over 100,000 people employed in 500 US companies here and with Irish companies exporting over €1 billion in goods and services to the US every year. If we add in exports from foreign companies located here, over €26 billion in goods and services are sold to the high value US market. This gives a clear indicator of the opportunities we can leverage from fewer barriers to transatlantic trade.
The Department recently engaged Copenhagen Economics to examine the economic and other impacts of TTIP and related potential opportunities. Some tentative and preliminary findings suggest that the impact on our economy might be as large as an additional 1.1% increase in GDP. This is higher than the estimated 0.5% GDP gain from TTIP for the EU as a whole. In employment terms, this could lead to an additional 8,000 jobs for Ireland over the agreement’s implementation period. However, considerable further analysis needs to be done by the consultants to clarify what the impact of TTIP will be.
In terms of employment, benefits are likely to accrue, particularly to sectors such as life sciences, ICT, food and manufacturing. These include a large number of SMEs. I hope these would gain disproportionately because the type of barriers that TTIP aims to tackle, are more costly for small companies to deal with.
What are the downsides and what work is under way in the Department to look at the downsides?
We are looking at this from the point of view of the upsides and are not viewing it from the point of view of the downsides. We will do a proper analysis, but it is being undertaken with a view to an economic win.
