Thank you very much, Chairman. I will briefly introduce my colleagues: Dr. Patricia O'Hara, policy manager, and Mr. Ian Brannigan, development manager. I thank the Chairman and other members of the joint committee for the opportunity to make this presentation on the work of the Western Development Commission, as well as the challenges and opportunities facing our region. In the presentation I will provide the background as to why the commission was established, the continuing challenges facing our region, our approach to its development, and a future vision for the west.
The Western Development Commission was established following intense public concern and pressure about the continuing social and economic decline of the region, which had become significantly more marked in the 1980s and early 1990s. The gap between east and west was widening and there was a concern that without special focus and special intervention the prosperity that was beginning to emerge in the country would not spread to the west.
There has been substantial progress in the past decade since the WDC was established. Over the past 15 years, we have had a population increase of 80,000 in the west — the first time since the Famine, which is quite significant. We have also had a significant increase in the numbers at work, up 46%, which is a phenomenal achievement. There has been diversification of the rural economy and improved standards of living for all.
However, despite this progress we still continue to face a significant number of challenges. The east-west gap clearly remains and there is a concern in the current economic climate that it might even widen further. One of the fundamental issues facing our region is the poor physical access to broadband connectivity, in addition to road, air and energy links, which are fundamental criteria. We need international best standards of access and connectivity in order for our region to attract jobs and people, which is critical to achieve balanced regional development.
For a number of years, the commission has been highlighting our concerns about the sustainability of the current employment profile in the region. For example, 38% of men in the region are employed either in agriculture or construction. That concern has been borne out in the last 12 months during which there has been a substantial increase in people signing on to the live register. Overall in the region, the figure is 59% but among men it is 72%, which is a staggering increase in such a short period of time. Neither of those sectors will improve in the short term, so we are facing some serious challenges.
One of the areas in which the west has done well in the past is foreign direct investment. We have a significant cluster of such employers, which is important to our region's well-being in providing high quality jobs. However, we have felt downward pressure in the last few years in this area. Between 2002 and 2007 there has been a net job loss of 1,255 jobs in that particular sector.
A scourge facing the west has been the brain drain — an exodus of highly educated young people from our region. It is a dilemma because parents in the west have always put a large store in educating their children to the highest possible standards. The most recent statistics show that that continues to be the case at present. All seven of our counties are achieving third level education standards above the national average, but we are almost educating our children to export them to other regions or countries. Less than half of our graduates get their first job in their own region.
All these issues and challenges point to the fact that without high value-added economic activity there will be further divergence in regional economic growth patterns and increased dependence on more developed areas of the country. We need to work together collectively with agencies and organisations — be they public, private or in the voluntary sector — to find ways to develop the indigenous knowledge economy in our region. One of the ways in which the Western Development Commission has addressed that is through our investment fund, which provides seed and venture capital to high growth knowledge enterprises setting up in the region.
Our work context is framed by our legislative remit, which is to foster and promote the social and economic development of the western region, covering Clare to Donegal. In addition, the national Government objective of achieving balanced regional development as set out in the NSS and the NDP, whereby all regions must build on their strength and address deficits in order to realise their full potential. That has been the core of our thinking and the approach to all our work.
We have done this across four main work themes. We are conscious that the commission is a focal point in promoting and supporting the development of the region. The commission fosters co-ordination and is a catalyst for change. We are not a delivery agency; we try to get others to focus on our region's needs and its special requirements, while leveraging out their expertise and resources in order to achieve synergies. This successful model has been done on a collaborative and partnership basis.
Research and analysis is one of the four areas we work on. We help to inform national policy makers to take account of the west's needs. We do this by providing a strong rationale for public investment and by undertaking robust analysis of evidence-based cases. We understand that there are limited resources and that one needs to be able to make the best possible case to attract such investment.
We have always focused on improving the region's infrastructure. The commission was one of the first organisations to urge a four-lane Atlantic road corridor, which is now in the programme for Government. It is starting to be rolled out and has already made significant improvements. Something as basic as the Ennis bypass has transformed the journey between Galway and Limerick.
International air access is a critical area for our region, which is remote. Tourism and industry rely on such access, so Government investment in regional airports is significant. The western rail corridor has hopefully begun to roll out, although no pun is intended. It is hoped to have the first services up to Athenry commencing by spring 2009. We look forward to rolling it out further to Tuam by 2011, Claremorris by 2014 and onwards to Collooney.
Energy is a major issue for all industry and for the public also. The Western Development Commission was instrumental in changing the connection policy for access to towns in Mayo and Galway to the natural gas pipeline. Some 12 towns and villages in both counties will be connected as a result of amendments we proposed.
Telecommunications, including broadband connectivity, is a fundamental requirement. It is nearly as important as the air we breathe. None of us could envisage going back to the days of meeting at 3 p.m. under the clock in Cannock's. Everybody has a mobile phone and that is how we operate. E-government and access to services are vital. That is one of the most fundamental issues facing rural areas in particular.
It is important to highlight that ours is a predominantly rural region. Two thirds of the population live outside gateways and hubs. That has been a major focus of our work. Another aspect of what we do involves helping to deliver balanced regional development, for the west and the country in general. If we operate on all cylinders, we will have a more prosperous, vibrant and fair economy and society.
Promoting the region is fundamental to our work. We have taken an innovative and novel approach to this matter in recent years in our LookWest campaign, which highlights the benefits of living, working and doing business in the region. For too long there has been a negative portrayal of the region. We were somewhat guilty in this regard ourselves but we came to the realisation that ours is a great region with much to offer. We wanted to sell to people the positive message that there is a high quality of life and a lower cost of living in the west. That message has been put across by means of our LookWest campaign.
Surveys and independent research indicate that there is an understanding among people of the high quality of life on offer in the west. A survey carried out this time last year showed that 41% of those under 35 in the Dublin-Leinster area would be interested in moving to the west. That number is staggering. We discovered that perceptions regarding the availability and quality of jobs was a barrier to people making the move. We set out this year in our campaign — in partnership with the local authorities — to promote the enterprise message. We used seven extremely successful indigenous companies to sell that message for us and to be champions for western development and enterprise development and in the context of delivering jobs to the region. One of the key intangibles of the campaign has been the instilling of confidence and pride of place among the citizens of the region and the underpinning of investor confidence in the region.
Our rural development function is extremely important to our work. We have been very proactive in trying to help diversify the rural economy. We considered our comparative advantages and strengths and that which is embedded in our region which can be exploited for sustainable job creation. In that context, we have focused on areas such as rural tourism, organic agrifood and the creative sector. These areas are not being addressed by others or in an holistic manner.
Wood heat and energy is a project on which we have been working in the past couple of years. We developed a strategy and an action plan and brought together eight or ten different organisations from the supply and demand sides. Our organisation is the hub around which the project revolves. On one side there are foresters who have a product they want to sell, while on the other there are users such as nursing homes, hospitals and hotels. These interests are not necessarily able to discuss matters with each other at present because the sector is so underdeveloped. We have worked on that and we hope that when the programme is fully rolled out during the next decade, it will result in a tripling of the use of wood heat in the region. This could lead to the creation of up to 900 jobs in rural areas and would result in a gross value added, GVA, of €15 million, some €1.7 million of which would be paid directly to farmers on an annual basis. From an environmental point of view, it would reduce emissions by more than 600,000 tonnes. This equates to removing 92,000 cars off the roads every year. The project to which I refer represents our model of development, namely, working in partnership and allowing the agencies that operate as delivery mechanisms to do their jobs better.
The fourth aspect of our work relates to the western investment fund. This is a seed and venture capital fund which provides risk capital. The concept of risk capital is somewhat self-explanatory. In return for a percentage shareholding, we invest in businesses. We, therefore, share the risks but we also share the rewards. We invest at what is called the seed and early stage, which is the point of highest risk for any business. Members will be aware that establishing any business is a risky proposition. However, setting up a knowledge enterprise involves even more risk, particularly in the west. Some of the companies we support have already enjoyed success and we hope they will become global players from their west of Ireland base. We literally invest in entrepreneurs and their ideas, vision and business plans. We work extremely hard to ensure that their vision is achieved and that jobs are created, particularly in the knowledge economy, in our area.
To date, we have invested almost €31 million in 78 enterprises across the region. These companies and projects employ more than 1,200 people and almost 60% of the money we provide has been invested in rural areas outside the hubs and gateways. We follow quite a rigorous evaluation process. Our organisation is a member of both the Irish Venture Capital Association, IVCA, and the European Venture Capital Association, EVCA, and we employ the best practice guidelines they set down in our evaluation process. Ours is a commercial fund and we have already started revolving our investment. To date, €4 million has come back into the fund and has been reinvested in the area. The model we are trying to achieve involves it not being a handout but rather a hand up. We hope the money we provide will return and be re-invested in the region.
This programme is specifically ring-fenced for the west. In that regard, it is one of the few such programmes of which I am aware. It is unique and also complementary. No other State agency provides risk capital and invests it on the model of providing loans that we employ. Some of that has come about on foot of domestic legislation. More important, however, we obtained EU approval, under state aid and risk capital guidelines, to operate as we do. Ours is the only State agency in the country that has received such approval, which is significant and which means the region has an additional resource.
I referred earlier to the challenges we face and the fact that we started from a much lower base than other parts of the country. Extra incentives and support are required. The western investment fund is one of the mechanisms that can provide these. We hope that in time it will prove to be a major catalyst in the context of encouraging entrepreneurship and job creation in the region. In light of the turbulent economic climate that obtains at present, the fund is needed now more than ever. Our companies have always found it difficult to compete for a variety of reasons. One of the basic reasons relates to the distance from Dublin, where 17 of the 18 private sector members of the IVCA are based. Less than 10% of the moneys these firms invest come into our region. There is a gap and it will remain in place. We carried out a survey among our companies in recent months and over 80% stated they expected it to be more difficult to raise funds going forward. The companies to which I refer already experienced difficulties in this regard in the past.
I wish to outline the future vision for our region. Among OECD countries, it is recognised that regions are the drivers of economic development and comparative advantage. In a global context, it is necessary to exploit what is unique and distinctive about an area in order to drive regional and national economies. A good example in this regard relates to the area of energy. The west has some of the best ocean and wind energy in Europe. This is a major resource and there is an opportunity that it might be exploited in the context of creating jobs in the area of technology, reducing our dependency on foreign fossil fuels, developing security of supply and reducing carbon emissions, which would have a positive impact in respect of climate change.
Electricity costs in Ireland are the highest in Europe and this places major pressure on our enterprises. In that context, perhaps we could consider engaging in a paradigm shift by developing an international energy centre in the west. The model for the latter could be similar to that which obtained with regard to the development of the International Financial Services Centre in Dublin.
Another part of our vision for the future is the development of a world-class infrastructure in order to underpin our quality of life, our cost-competitiveness and our enterprises. At the same time, however, we must retain our sense of community and our heritage and environment, which are unique and innate to our region. As already stated, people recognise the quality of life that is on offer in the west and we really want to retain this because it also makes the region unique.
We wish to develop and support the creative and entrepreneurial spirit among people. We are particularly interested in the creative aspect. When people think of the west it is usually in the context of culture, music, language and creativity. There is a major opportunity to exploit the latter and create sustainable employment. Such employment is extremely suitable to rural areas. Our organisation has worked hard during the past decade. Our vision is not only to catch up with our more prosperous east coast neighbours but also to become one of the leading regions in the world.
I hope I have shown members the WDC has been successful in delivering on its remit of fostering and promoting the social and economic development of the western region; we have been instrumental in transforming the perception of the region instilling confidence and pride of place among our citizens and investors; we have helped develop highly innovative rural economy initiatives that are generating wealth and jobs in rural areas; we have played an important role in supporting the development of knowledge-based enterprises and jobs through our western investment fund; and we have articulated and supported the case for investment in enabling infrastructure and balanced regional development. Despite the progress of recent years, our region faces serious challenges in the future and needs the support of a dedicated agency such as ourselves now more than ever. I look forward to the Government's continued commitment to western development and the work of the WDC and the committee's support in helping us deliver our remit.
