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JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 11 Dec 2002

Vol. 1 No. 1

Department of Enterprise, Trade and Employment: Presentation.

I welcome the Secretary General, Paul Haran, and Seán Gorman, John Corcoran, Ned Costello, Ciaran Grace and Lorraine Benson from the Department of Enterprise, Trade and Employment. Will the Secretary General give us an overview of the role and responsibilities of the Department and the bodies under its aegis? Members may ask questions afterwards.

Mr. Paul Haran

It is a privilege to be here. We would have liked to bring our strategy statement to the committee, but because of the changes in the Oireachtas we are preparing a new one reflecting An Agreed Programme for Government and the priorities of the Tánaiste and her Ministers of State. It is at an advanced stage and we hope to send it to the committee early in the new year.

I will use the format of the new strategy statement to outline what the Department is doing. I thought an interactive session of questions and answers would be useful. I do not pretend to have all the answers and I have brought with me an able team of people who will try cover all the issues that arise at today's meeting.

In preparing our strategy statement we looked at the economic and industrial backdrop to our society. We talk a lot about the challenges ahead, economic downturns and so on, but we come to this committee in a very positive mode. We sense that it is still a great time for Ireland and we sense a very strong labour force performance. Unemployment levels are low compared to what they used to be. Unemployment was a horrendous problem only a couple of years ago. There are many strong multinational companies still interested in this country which want to come here to share in its success. We are preparing our statement in an environment in which exciting new companies are emerging. These are characterised by youngsters with great skill and ambition who feel they can be the best in the world. This is still a highly exciting period.

"Ireland Inc." has managed to catch up with the best in Europe and the world. Our aggregate production is very high. We have come from a position of being behind. We see the challenge as one of getting Ireland way ahead. It is one thing to catch up with the norms such as when Sonia O'Sullivan arrives with the leading pack, but it is another when she goes out ahead on her own. Perhaps the challenge for us is to help the industrial base move ahead on its own. This requires us to look at new initiatives and new ways of doing business. We must build on foundations that were laid yesterday, consolidate the success of today, and prepare for the future. That is all very flowery, but it must be remembered that most excellent business does not stem from our Department, but from outside. All we can do is try to provide the best possible support, reinforcement and public administration.

Our Department covers quite a broad footprint of activity. We have a group of agencies that do most of the hard work in the field. IDA Ireland focuses on attracting mobile international investment into the country. Enterprise Ireland focuses on helping create indigenous companies and encouraging them to grow, which really means supporting people who want to create companies. It does not create its own companies. It is looking at international markets and helping Irish companies break into them and using a range of measures to help them do so. Forfás acts as an adviser to the Department and the Government and also acts as a co-ordinator of activities.

The agencies to which I refer are the main ones in the enterprise area. There are also the 35 county enterprise boards which look after the micro-enterprises in each local authority area. Shannon Development looks after the mid-western region. It uses a different model and tries to mobilise the strengths of the region, crossing from enterprise into tourism. Those bodies are backed up by the Department. We have a range of policy-makers and supporters in the Department who look at the programmes and the measures that are taken. They look at expenditure and try to manage it in a fashion that best reflects the political dynamic and the priorities of the Government. The National Competitiveness Council reports, through Forfás, to the Government. We also have colleagues who look at competitiveness in a horizontal fashion. They look at small business and the particular challenges that face different types of groupings in terms of enterprise.

The Department has expended much energy. The new Government programme stresses the political importance of science, technology and innovation and our new strategy statement will do likewise. We have a division that looks at science, technology and innovation and tries to promote a range of measures to encourage them. We have created a new agency, Science Foundation Ireland, regarding which a Bill will be coming before the committee.

Science Foundation Ireland is the cornerstone of the next wave of industrial development. It seeks to increase, in a dramatic way, the level and quality of innovation and basic research. It is not a radically new idea in terms of theory or design, but its emphasis, impetus and focus are radically new. It emerged from a foresight project that was carried out under the auspices of the Irish Council of Science, Technology and Innovation, ICSTI, and identified biotechnology and ICSTI interests as two really powerful areas in which "Ireland Inc." should invest.

We are trying to improve the quality of the labour market in these areas. We want Ireland to have the best researchers in the world and we want them to draw into the country mobile investment in these areas. We want to use them to prove Ireland has researchers of a very high quality. In such an environment, we want to see more indigenous companies emerge. We want to see people doing high quality research, identifying market opportunities, emerging out of universities and creating their own companies.

If one considers the extraordinary success of Silicon Valley and how it has underpinned so much wealth creation in the US, it seems that we could use it as a model. From Science Foundation Ireland, universities, institutes of technology and the high quality research teams, we hope to produce high quality companies.

Within the areas of opportunity to which I referred, the industrial policy of helping companies grow merges with the industrial policy of trying to attract mobile investment. This in turn influences the industrial policy of upgrading the performance of multinationals already in Ireland, but which may be operating in a lower productivity area.

As I am not reading from a prepared script, I hope members of the committee will forgive me if I miss covering one or two areas.

We have two or three key goals in our labour market. We are trying to ensure that everyone who wants a job can get a decent one. We are examining the number and quality of jobs created. The quality of a job involves more whether a job is a nice one to have; it involves the quality of the regulation and protection of the employment and ensuring there is no exploitation in it.

We are trying to find pathways for people to move from social exclusion to social inclusion through the labour force. There are many players as well as our Department involved in this. Through community employment schemes we have sought to provide a migration path for people excluded from productive work so that they have an opportunity to participate and then to be provided with a migration plan from that position to one that is unsheltered in the open economy. The emphasis of this programme has changed over the years. From the Department's point of view this programme provided a migration path for people to return to employment, which is our prime goal and function. While we have programmes for people in the drugs task force areas, lone parents and people with disabilities, our prime focus, the labour market focus, has changed to also include a community focus in recent years. This has resulted in communities receiving public employment benefits from the services these people deliver and while this has created a tension, it is being worked through.

In that context and through FÁS, we have also created a social economy programme under which we have tried to make a certain number of community employment jobs that were labour market focused more focused on the community service being delivered, which ultimately to be viable, might not require such significant Exchequer support.

FÁS employs 2,000 people who are slowly changing the range of programmes the agency offers. The agency significantly upgraded the level of enterprise support in the late 1990s. It has designed new training programmes and the national training fund supports much of this work. We see FÁS moving from having supported more than 40,000 jobs in CE schemes to spending more of its energies on employment placement, employment action plans and training with a view to supporting employment.

Our labour market also requires significant support from people in employment to help protect them from exploitation and to ensure that their rights are respected. We have an investigation branch in which there is a range of labour inspectors. We have a call centre in the office to help respond to queries. We used to have such a service on a sectional basis. However, we now provide public telephones and have call waiting signs displayed on the walls to ensure that we provide a good response to queries. We have put a good deal of money into improving the quality of our web based service to ensure that the public can access information on their rights.

In the associated work permits area, we have prepared multilingual information leaflets for workers coming into Ireland to ensure they gain access to the knowledge base that is their right. We were concerned that people coming from certain countries where standards are lower might not realise their entitlements or how to gain access to them. We wanted to reach out to ensure such people had access to this information base.

Our service level in the work permits area dipped significantly in the early part of the year due to the deluge of applications received. During that time our response target of three weeks extended to nearly two months. We put a good deal of energy into processing them and our staff constantly worked overtime to the extent that we were worried about their welfare. We tried to improve our systems and we have now reduced our response target to a three week turnaround time, which we consider reasonable. We constantly monitor and try to improve our service performance as it is one among many challenges facing the Department. Deputies and Senators have observed problems in the service, which they have brought to my attention, that of my colleagues and the Tánaiste and we have tried to improve it.

We also manage the industrial relations arm of the State. We look after the EAT, the Labour Court, the Labour Relations Commission and the Rights Inspectorate. Largely, Ireland has been extraordinarily successful in this area, having had a low level of industrial strife in recent years. Last year was a particularly good year with low number of days lost. Who knows when the summer will end in this regard? We do not know what lies ahead. We try to ensure that our structures and responses can adapt to the future. To date we have had responsible social partnership where both sides of the partnership have worked hard to resolve the problems. Both sides have worked in partnership rather than in an industrial relations mode in seeking to solve the problems.

We also have responsibility for a number of related market issues in that we try to improve the quality and functioning of our markets. We have put a good deal of work into trying to ensure that we are good at regulation. That does not mean more or less regulation, it means trying to find the correct balance to ensure that Ireland is well serviced. This will be one of the areas where countries will differentiate themselves. We want business to be done honestly in Ireland. The Minister for Enterprise, Trade and Employment has put a great deal energy into growing the quality of the regulatory backdrop.

The committee will examine the auditing standards Bill next year, which proposes a radical reform of the governance of the auditing profession. The Bill will also focus on how those in the auditing profession carry out their jobs and the rights and responsibilities of directors. The review body on this area was led by Senator O'Toole. Our Department is at an advanced stage in the preparation of this legislation, which will published soon. We consider it to be an essential part of the regulatory backdrop for this country. Our policy and initiatives preceded the Enron and Worldcom scandals. This legislation is essential for the welfare of this nation going forward.

We have a new regulatory reform process for company law. Members will be pleased to know that a company law Bill with 1,000 heads is due to come before this committee some time towards the end of next year.

I thank Mr. Haran for that.

Mr. Haran

It is gripping business. Such legislation is essential for this country. If we get such mechanisms right, we will make a material impact on the welfare of this country.

Is that Bill as large as the last company law Bill?

Mr. Haran

It is larger and consolidates matters. Existing legislation is designed around the plc being the basic model company. However, approximately 97% of companies are small private companies. There is a shift towards placing the emphasis on the private company in legislation and providing additional requirements for the plc. That is a simple explanation of the legislation.

We have done much work on competition policy, an area on which people have strong views. We have significantly enhanced the power of the Competition Authority. We have grown and professionalised the resource base and the authority can call on the services of two detective sergeants.

We also look after the Directorate of Corporate Enforcement, the establishment of which represents a significant change. It polices the corporate world and looks behind the veil of secrecy or corporate protection to make sure that activities in this area are not abused. This results from a lot of the work we did in respect of the Ansbacher and Cayman investigations and those areas of business that we have been investigating for a number of years. The director is a depoliticised, statutorily independent officer who has gardaí, accountants and lawyers policing the corporate world. It is not that we feel there is a huge problem within Ireland, but if something is not policed, problems will be generated. We feel this is a critical item of regulation.

The Director of Consumer Affairs is responsible for considering consumer welfare. This is another complex and difficult area of policy. We are concerned about the level of inflation in our society and the fact that some sectors are charging more than others. We also know that the consumer is the most important deterrent to abuse in the marketplace. We look at ways in which we can empower consumers. There is a delicate balance between telling a consumer what he or she should do and encouraging him or her to do something.

I drove back from Tralee two weeks ago and was startled by the difference in the price of petrol along the route. It went from 82.9c up to 93c or 94c. We cannot tell consumers they must only spend 82.7c, but that is more than a 10% differential on a €50 fill.

It is more than a coincidence that petrol stations in every town are identical as one passes through.

Mr. Haran

In most towns there are similarities, but sometimes I am surprised at how close some of the differences are to each other. I suppose that when towns change, it shows they are responding to the competition. Display orders make a difference and if prices are displayed, drivers can see them and will hopefully shop in a cheaper place. It is difficult to prevent somebody charging more. Perhaps they provide a different type of service or perhaps they are in a more remote area and find they need to charge a bit more to cover delivery charges. I do not know the dynamics of the marketplace.

It depends on who owns the filling stations.

Mr. Haran

It depends on who owns them, but I still notice that there is a big difference and——

Yes, huge.

Mr. Haran

——this is one of our challenges in the area of consumer policy.

We do a lot of work in the area of trade. Ireland's role in multilateral trade is basically one of influencing Europe. We have people working in the trade area in Brussels and Geneva. In Geneva, in the World Trade Organisation, Europe takes the lead and is the prime negotiator. However, we are also negotiating with the European negotiators about what position to take on the Doha round.

Ireland has an extraordinarily open economy. If our imports are added to our exports and divided by our gross national product, the result is 160%. In most European countries and the United States, this would be down to 20% or 30%. Therefore, those countries have different responses to global trade and a different way of growing wealth within their economies. As we are such an open society and because trade is so important, Ireland has a critical interest in the outcome of global trade. We have thrived on open systems of trade and are very interested in seeing Doha succeed. We play a significant role in Europe in trying to encourage open trade.

We do an awful lot of bilateral trade work. Ministers lead trade missions around the globe. We support Enterprise Ireland and other entities and we enter into agreements with different countries where we feel it will help our futures. We have a number of agreements with China because we see it as an interesting, difficult but very important marketplace. We have similar interests in other parts of the globe that we are trying to grow.

I am trying to give Members a rough a guide to the general issues within the Department. We do a lot of internal work and I would be glad to describe how we manage internally. I am giving the committee information about the outward facing element of the Department.

The Secretary General did not mention the spatial strategy.

Mr. Haran

The delivery of the policies of the spatial strategy will be mainly through our agencies. In attracting inward investment, IDA Ireland is responding to the spatial strategy. Due to the fact that the spatial strategy has only been launched, it will take time for a response from our agencies in respect of it. However, they have preceded the strategy in a number of areas. First, the Tánaiste has directed IDA Ireland and given it a strong remit to try to increase the penetration of inward investment, particularly into the Border, midlands and western area. It has been asked to achieve a 50% target of new greenfield announcements and deliveries into the BMW area. Prior to 1999 approximately 25% of announcements were in the BMW area. In the past two years it was 46% and 42% as far as I recall. This shows that IDA Ireland is making a big effort to try to attract jobs into areas other than the greater Dublin area.

We feel that the spatial strategy is critically important to support IDA Ireland's jobs because the organisation cannot tell anybody where to locate, it can only attract them. Attracting high value companies - which are the companies we are seeking - into areas requires a number of circumstances to be right and certain concentrations of scale. Some types of employment require a lot of skilled workers and certain companies do not want to be the only player in a particular labour pool. We hope that the gateway towns will attract a lot more investment. I am not an expert on the distribution and on the decision basis for a spatial consideration, but we believe it is very important.

IDA Ireland has also moved certain divisions physically out of Dublin. Athlone has health care and property, Waterford has information technology and Sligo also has a sector. They are the three areas IDA Ireland has picked for growth and to have its own people working there. It is one thing to plan regional development in Dublin and another to be in the region planning it and being aware of the different emphasis of interest and approach.

Enterprise Ireland has put a lot of work into a number of programmes that will support the goals of the spatial strategy. One of these is a webworks programme, which tries to put in place high-wired buildings - items of real estate - in a number of towns throughout the country. The idea is that many new and interesting jobs will be created in spaces of this type, which are different to the normal type of space on offer and which are extremely high-tech in nature and offer good supports.

Another problem in the regions has been a lack of venture capital, which is critically important to the emergence of companies - particularly small start-up companies involving young people with good ideas. We noticed that companies felt they had to come to Dublin to gain access to venture capital. Enterprise Ireland has supported the emergence of a number of funds which are either exclusive to areas outside Dublin or funds which have a proportion or a focus that is regionally-based.

IDA Ireland has also supported the development of a number of flagship business parks. Again, this is a real estate issue. Real estate is a strange egg because it is easy to erect a building but difficult to ensure it is occupied. However, there are certain responses or programmes that we feel are worthwhile doing because they will complement a coherent governmental approach to developing gateways and hubs. County enterprise boards are regionally-based and FÁS has a strong set of regional offices.

Through these types of measures we hope that we have anticipated and are responding to the spatial strategy. Clearly all the measures have not yet been revealed because the spatial strategy has particularised regional development. Our agencies will have to respond to this new type of development, where places are chosen and decisions are made about what to do within them. We will have a regional remit in Shannon.

I do not know if I have covered all the points, Chairman.

We have heard an eloquent address by the Secretary General of the Department. Does anyone wish to ask questions? We will take two or three.

I echo the Chairman's vote of thanks in respect of the formidable team the Department has brought here.

I am new to this area. I feel I have received parole after four years as a member of the Joint Committee on Justice, Equality, Defence and Women's Rights. I am glad to be present. The Department's remit is broad and I do not want to ask questions that would trespass on political decisions. I want to understand what the Department does. I have eight questions I could pose, but I will not ask them. I want to confine myself to certain areas so that I understand the direction the Department is taking in respect of them.

The first area is labour force mechanisms. One of the major issues that has been debated in the House in recent weeks is social employment. I would like a flavour of the Department's view on the concept of social employment because it is tackled in different ways in different countries. Even in the most conservative countries such as Japan, there is an understanding of a requirement for a concept of social employment. The community employment scheme has been an extremely important model for us since the mid-1980s. I will be interested to hear how the Department will address the issue of a coterie of people who will not fit into normal employment and the social needs of a society which will not be in a position to employ people in the regular way.

On labour force democracy and trade union law, the new EU directive on workplace democracy due to come into force here in 2005 seems to be one of the most radical legislative proposals about which I have heard little. When will the enabling legislation be introduced? What sequencing is envisaged? Will it be part of this 1,000 section companies Bill spoken about? Although it will take a great deal of time for people to comprehend the magnitude or impact of that EU directive, there has been little talk about it.

I do not wish to trespass too much on the Chair but I will ask a question on regional imbalance. I wish to broaden the horizon on the question put by the Chairman who has a particular interest in the BMW region. There is a subset of that which will cause difficulties for some of us, and Deputy Tony Dempsey will be aware of that.

The two regions - the BMW and the east and south regions - were set up under a set of criteria, one of which was that a region had to be contiguous. There are patches within the prosperous region which are excluded from designation by virtue of the fact that they are not contiguous with the poorer region. Areas within regions have been denied the focus which the formal designation gives to the BMW region. That goes for issues such as the roll-out of broadband, an area for which this Department does not have direct responsibility but in which it surely has an interest.

I am interested in the impact on some of the plans - you mentioned business parks - of an 84% cut in the building estimate, as published in the Estimates a fortnight ago. With that level of cut, one will not build too many business parks and will only look forward to changing the light bulbs in the ones already established. What is the position for next year in regard to buildings?

I raise the issue of work permits because I was on the justice committee for the past four years and involved in much of the immigration legislation, including what I used to categorise as the "chucking out" legislation which came fast and furious from the Department I previously shadowed. What are the criteria used to determine work permits? Is there a ceiling of numbers? Is it based on skills or how is it determined? The Tánaiste and Minister for Enterprise, Trade and Employment has said in reply to questions that tens of thousands of work permits have been issued in recent years. Is each application evaluated on its merits or are a certain number of permits issued in the catering area, for example? Is there an analysis of the skills requirement of the country as a whole and is it then determined how many permits will be issued in each area?

Deputy Howlin has considerable experience, including ministerial experience. I will ask the Secretary General to respond to those questions and I will then come back to the vice-Chairman.

Mr. Haran

I will answer briefly and will ask my colleagues to speak as it is only fair to give them the chance to make a few comments. Deputy Howlin referred to the broad remit of the Department. It is a very coherent remit. We internalise much of what would otherwise be externalised.

Holding on to the empire is always an important job for the Secretary General.

Mr. Haran

The Department initiated the removal of the insurance regulatory function from the Department in the belief that it would be better done in a different environment as in the case of the banks. I say that as a defence against a possible accusation of empire building.

On social employment, the social programme and community employment, this is a complex and live area of policy at the moment. The community employment scheme was significantly ratcheted up from the old social employment scheme against a backdrop of nearly 12% long-term unemployment. These people had been totally excluded from an opportunity to work and the view was that they would never work again. We produced a number of CE posts, still less than the number of long-term unemployed. Today, there are more CE posts than there are long-term unemployed people, so its emphasis has changed dramatically and the need for it has changed.

I am always wary of designating people - I do not mean that in a smart way and I ask members to excuse me if it seems that way - as being unable to work in the open labour market. As the economy grew dramatically, I was amazed too see people in my community who one would have thought were wasters and incapable of work suddenly going to work. It is dangerous to categorise people as not being able to work. There are communities which cannot support certain types of employment and there are people in the margins who, at some point in their lives, may be unable to gain access to open employment.

In the area of disablement, we have employment support programmes in the open economy. We boost the wage, either through the employer or to the persons themselves, while they are in employment in order to compensate for the fact that they might not be as productive as other people.

We have a social economy programme which we will review and which involves significant funding. We are looking at the balance between the employment need and the community need, which are different. Ultimately, if all we do is provide public services which could be provided in a different way, we must question whether our Department should do that or whether it is for another area of Government. In the schools area, the provision of assistants is important but is that a job for a labour support programme or for education support? I will ask my colleague to elaborate on that in a moment.

On the regional imbalance, the Deputy is correct that if one is not lucky enough - pardon the expression - to be in a BMW area, one could be excused for thinking that one has been left out of an important access. The national spatial strategy, however, is not designed around BMW and non-BMW regions. It tries to pick a number of important areas to develop within society. On the east coast, there are some extraordinarily black spots from an industrial development and unemployment point of view while in the BMW region, there are areas which are thriving and doing extraordinarily well. Nobody begrudges the thriving areas but we need measures to help areas which have been excluded. It is not just an IDA or Enterprise Ireland responsibility. An agency will not suddenly sort out a community's problems without mobilising the resources of the community. It is about the spatial strategy determining the broadband, the utilities, the electricity and the educational support. We find educational presence is a huge predictor of industrial success. In a knowledge based economy, new jobs will go where there are bright and well trained people. We cannot be the full solution and it is dangerous to think the IDA or Enterprise Ireland has the solution to the problems in the regions.

Do you have a strategy?

Mr. Haran

We do. We are reforming it under the NSS to ensure the specifics are stated. That is what the agencies have been asked to do.

People in County Longford put in broadband. They did not wait for the Government.

Does that include roll-out?

There is broadband in Longford town and it was put in long before it was put in in any other county in the midlands. A company took it upon itself to do it.

Broadband is coming into the country in two locations in Wexford.

Mr. Haran

With regard to social democracy, the information and consultation directive is related to the companies' statute. The two are linked. There is a directive on information and consultation in the workplace which is linked to the European companies' statute, which will be introduced in 2004-05. There is a lot of consultation in these areas. I will gladly ask my colleagues to meet you and discuss them. Perhaps Mr. Seán Gorman, labour market development division, will outline some of the social economy and social and community employment based challenges.

Mr. Gorman

The community employment schemes have brought into focus the debate on social employment and what we should or should not be doing in that area, as distinct from a purely labour market agenda. From the perspective of the Department, the community employment scheme has been primarily an instrument of the labour market, created at a time of high unemployment and successfully used to help people make the progression from unemployment to employment. There are high numbers of places available on community employment schemes.

As the long-term unemployment rate reduced through the successes of the Celtic tiger, the Government decided to reduce significantly the number of places on community employment schemes. That brought into focus a tension between the labour market agenda, which is concerned with preparing people for the world of work, and the wider community services, where a big dependency has built up during the years through the availability of large numbers of places on community employment schemes for a whole range of community services, ranging from meals on wheels to caretakers in community centres to those working in ICTU job centres.

When the Government considered the direction of community employment, especially in the context of the recent Estimates exercise, where some tough decisions had to be taken, the issue of community services and the social employment agenda came sharply into focus. Through the Cabinet committee on social inclusion, the Government has established a high level group of civil servants working across a number of Departments, including ourselves, the Departments of Finance, the Taoiseach, Social and Family Affairs, Community, Rural and Gaeltacht Affairs and the Environment and Local Government, to look at the issue of where we are going with the broader problem of community services. We will look across the spectrum of what supports are available from a range of Departments across a range of schemes and examine these issues in the context of where we are going in labour market terms and, very importantly, where we might want to go in terms of social employment and the provision of community services. It is a substantial exercise which will take us well into the middle of next year to complete because it will involve a root and branch review of everything at present available, including how it is funded, for what it is funded and how it might contribute with whatever modifications the Government might decide.

Chairman, I suggest you ask the Clerk to write to the Society of the Irish Motor Industry regarding the variations in petrol prices. It produced valuable data to the committee some time ago which indicated the prices available in every constituency. It would be of interest to Deputies.

With regard to the report of the three advisers to the Minister for Finance on the overlap of agencies, how many agencies has the Department closed down or rendered no longer of use under the Estimates process? Many agencies are wasteful of public funds. Is there a time date for the interdepartmental review of community employment? I have heard the Department's views on the social employment mechanism for approximately two to three years, yet nothing has been formulated. Does the Secretary General agree that in an ideal world the community employment scheme should be the responsibility of the Department of Community, Rural and Gaeltacht Affairs? It is not an active labour market mechanism because it is becoming more involved in community services rather than the labour market.

I pay tribute to the IDA, now Enterprise Ireland, for what it has done for the country in improving living standards and achieving export rates and surpluses that are more than comparable with those in Japan and Germany. The benefit of such a high standard of living is widely felt. The research engaged in by foreign direct investment and the move towards the new biotechnology and genetic industries are also encouraging. However, parts of the country have been left behind because of the way the system operates.

I come from north Tipperary in which there are three major towns each of which has a Government task force because of the loss of major industries. We are in the unfortunate position of being located in the mid-west when our true location should be in the BMW region. As we are positioned with counties Limerick and Clare, which are wealthier, we lose out. We are weighted with them and, therefore, part of the mid-west. Our region has also lost out because we will not be part of the gateways or hubs in the national spatial plan. In the past we could rely on agriculture as an old reliable, but that is changing. In the next few years approximately 3,500 people are expected to move out of milk production. Under the heading "social inclusion" areas have lost out substantially. I ask you to address the situation in north Tipperary which is unfortunately positioned in a wealthy region. We need support.

Does the Department have a policy to address the comparative disadvantage facing areas that fulfilled the criteria for inclusion in the BMW region but were non-contiguous? Mr. Haran spoke about people leaving universities and starting their own businesses. I come from a vocational school background and in one class alone youngsters are leaving to start hairdressing salons and restaurants or to become cabinet makers or carpenters. We need to enhance the encouragement given at second level so that youngsters who do not attend university, which is the majority, see a future for themselves as businessmen, because if one does the statistics, one will find they are the major employers, not the university people.

Could Mr. Haran describe in one sentence the difference between a hub and a gateway?

I understand the Order of Business is not in the Dáil until 11.36 a.m., so Deputies need not be concerned.

I will be brief. I apologise for being late but unfortunately I am not as accustomed to Dublin traffic as others.

In light of the "Prime Time" programme last night, what mechanisms are in place in the consumer affairs area? There is competition law, yet the programme last night showed that it was exceptionally easy to find out what was happening. I looked at it as an ordinary viewer, but Eddie Hobbs had examined the file and he would have a deeper knowledge than most of us.

What type of safeguards exist and what is the nature of the inspectorate? Why was the Department not aware of this when every housewife was aware that if one bought from CMP, Dawn Dairies or Premier, one paid exactly the same price? Surely that should have set the red lights flashing, and someone should have examined it. What safeguards exists, what inspection process is in place and what does the Department intend to do about it? If it is that obvious that these people are in breach of competition law, will the Department pursue them and impose penalties? Will it conduct its own investigation?

There are other areas where this practice is obvious, such as in the price of foodstuffs. It is widespread and not just confined to the dairy industry. What does the Department intend to do about this?

I compliment Mr. Haran on his presentation. What interest do firms, businesses, enterprises and companies in Dublin have in moving out of the city to the regions?

I compliment the Department on the great work it has done in bringing the country to where it is at this stage in terms of employment.

Hear, hear.

That statement must be made. Matters may be slipping a little at this stage, but we must compliment the Department on the work done.

I live in the BMW area and, even within the area, there are problems. I am from Ballinasloe, which is a blackspot. Every industry brought to the area wants to locate in Galway city because of the attractions there. That is a problem. I am involved in farming and there is a flight from the land. We could see ourselves keeping the farm going for our youngsters if we could obtain employment nearby. We cannot drive 40 miles and keep the farm going as well. It is impossible. People are trying to do it every day. Is there any hope that industry can be moved to the area? I know it is a problem. I am aware of the thinking of people who want to locate in a nice city where there is a university and so on. An effort should be made to locate a certain amount of industry away from the major gateways.

The FÁS apprenticeship scheme, where a young fellow learns a trade, has problems in finding employers to take on the apprentices. AnCO once trained apprentices for the jobs market and there were problems with that as well. If a young fellow wants to train to be a carpenter and no employer will take him on, he is in limbo and does not know where to go. I would like to hear Mr. Haran's comments on that.

Mr. Haran

On the wise men's report, we do not have any particular plans to close any of our agencies. We are getting out of the regulation of insurance and the Department is closing down that particular area. That involves the Department proper, the Director of Consumer Affairs, who is involved in the regulation of the price of products in the financial services area, and the Office of the Registrar of Friendly Societies, which oversees credit unions. We are getting out of those areas. Within our agencies——

Are they being transferred to the Department of Finance?

Mr. Haran

They are being transferred to the new financial services regulatory authority which will be under a separate board and whose new interim chief executive has been announced. Brian Patterson is the chairman of the interim board.

What Department will it be under? Will it be the Department of Finance?

Mr. Haran

That will ultimately be under the Department of Finance, but there will be a Department of Enterprise, Trade and Employment impact on the board structure. It will be a statutorily independent agency.

Will it be under the umbrella of the Department of Finance?

Mr. Haran

Yes. We are also cutting our administration budgets throughout our organisation by 2% as part of the measures to control expenditure.

We merged Forbairt with the Trade Board to create a single agency. We do not believe that there is bad geometry in the agencies. We do not believe that Ireland Inc. will be served well by closing one down and merging others. We created the IDA and Enterprise Ireland from a unified agency. We feel that the benefit has been demonstrable throughout the 1990s where the IDA, unburdened from developing indigenous industry, could search the highways and byways of the world and win mobile investment. It is the best marketing agency in the world at attracting mobile investment. Enterprise Ireland has a different and unique focus of trying to grow indigenous investment. We think that is a good idea. We do not see in our portfolio of agencies particular reasons to start closing down and merging. This can create its own loss of productivity and is upsetting in a functional way for organisations.

Regarding the north Tipperary challenge, it is not fair to mention counties as being bad and I will avoid doing so, but clearly there are counties that are underperforming. The problem is not only about whether an organisation is in the BMW region, because that affects the maximum amount of grant aid we can give. We do not see the grant aid being the constraint in attracting companies. Clearly this is an agency function. Our Department is not involved in giving out the grants. We do not see the differential in the maximum that can be given as deterring industry locating in a certain area. Solutions are much more multi-factorial and multi-functional. I hate using that language. It is about many elements coming together to try to achieve things. When Clonmel lost Seagate, it was dreadful, but it won Guidant. It was not that the IDA won Guidant for it; Clonmel played a big part in winning the project.

As our cities grow tight, as travelling to work issues come to the fore - I cycle to work in the morning because I would hate to drive in Dublin city - as companies find it increasingly difficult to satisfy their workforce and as the knowledge economy improves, people will start seeing, as in the case of MBNA going to Leitrim, that there are hidden and highly qualified workforces worth tapping into which are outside the main development places.

There is severe deprivation in urban areas as well as in pockets of counties. There is social exclusion rather than inclusion. We have to work on that collectively and try to find the answers. In Thurles, they are working on an innovation park with an incubation centre associated with the institute of technology. I accept it is not only the third level. What I was trying to emphasise about the third level is trying to turn on the higher end of new companies as Stanford did for Silicon Valley. We would hope institutions like Trinity, UCD, UCC and Limerick would help to turn on the high end of business. Clearly entrepreneurship is a much more pervasive thing and my colleague, Ms Benson, might speak about what we are trying to do through the attempts to grow entrepreneurship at second level and first level. I will come back to other questions after Ms Benson addresses that piece.

Ms Lorraine Benson

I have responsibility for small business and competitiveness in the Department. I would like to say a word about entrepreneurship which has become a new focus of our activities in the small business area and in trying to encourage new business growth here. With our agencies we have become involved in setting up business infrastructures throughout the country. I can respond to the questions from Deputy Dempsey and Senator Hanafin about regional and social inclusion and what we are doing in regions outside Dublin.

We have a range of incubator centres on three different levels connected with the regional institutes of technology. There is a range of community enterprise centres and my colleagues can list these later if committee members are interested. Through Enterprise Ireland, we are setting up "web-works" which will be highly wired modern places for business creation in the regions around the country. These are three different areas where we are expending significant resources through our agencies in setting up web-works together with the third level institutions to leverage out and provide incubator space for people with creative new business ideas.

I would also like to talk about entrepreneurship, the culture of entrepreneurship and entrepreneurship education. Historically we have not focused on this area which is quite a new area of study and research. Very recently the National Competitiveness Council produced a study, Entrepreneurship in Ireland, which is available on the Forfás website and I can let members have a copy of that very interesting document. One of the interesting areas it considers is the culture of entrepreneurship and entrepreneurship in schools. When I grew up we were trained for a job and certainly were not trained to be innovative, self-directed and to think about creating a business for ourselves. Across all three levels of education, we have a very interesting range of educational initiatives directed at encouraging this self-directed learning, innovation and thinking for oneself. This is operating at primary, secondary and third levels. There is a richness of examples that I would like to outline, but I know we are not here to talk about entrepreneurship and education.

It is very important.

Ms Benson

It is extremely important. With your permission, Chairman, I would like to circulate a recent list of initiatives that we have documented and are trying to pursue and encourage.

Feel free to do so.

Ms Benson

The list focuses on Ireland as a source of its own entrepreneurship and growth for business in the future.

Mr. Haran

There was a question on milk. I hope it is the house husbands as well as the housewives who notice the difference in the price. Although I did not see the programme last night, I am aware of the issues. The Competition Authority has been dramatically expanded in its powers, following the passing of a Bill last year and its staff has been increased. There are now two detective sergeants in the Competition Authority.

The decision to prosecute lies outside the Department. It is up to the Competition Authority to prosecute a civil action and for the DPP, effectively, to prosecute a criminal action. It would be wrong for me to talk about the case because I do not want to prejudice anything that might happen. I understand the Competition Authority is still actively involved from a civil perspective in the issues involved. It is important that we have an agency like the Competition Authority properly resourced with the right type of legislative backup and a good relationship with the DPP and the Garda to ensure that collusive behaviour to the detriment of the consumer on the part of companies is addressed in both a criminal and civil way.

Without talking about any particular example, wherever it occurs, this is a very serious issue that needs to be addressed. The Tánaiste has put much energy into ensuring there is the appropriate resource base in terms of the involvement of civil servants, lawyers and accountants along with the authority and the Garda. The Oireachtas has given them the right legislative base to stamp out collusion to the detriment of the consumer and ultimately to society.

It is up to the relevant Minister to introduce the legislation.

Mr. Haran

She has done that.

I know Mr. Haran did not see last night's programme and cannot comment on that, but the Director of Public Prosecutions felt there was not sufficient proof to bring a case. There is clearly a flaw or a weakness in the legislation. The evidence included memos, letters, agreements and meetings, so the legislation must not be sufficiently strong. I do not expect Mr. Haran to comment on that aspect of it, but if——

We cannot discuss here anything which is before a court.

I do not expect Mr. Haran to comment. However, if the legislation needs to be strengthened, will the Department do that in the near future?

Mr. Haran

I cannot talk about burdens of proof, etc. From the outside, it is impossible to determine why statutory officers make decisions. It would be wrong for me to comment on that. I understand the case was quite old and might have preceded some of the legislative changes that have occurred. If the Tánaiste or another Minister discovered there was a lacuna of a serious nature, it would be up to the Minister, not the Department, to introduce whatever changes might be required. However, I do not know of any changes that are required.

I was asked about the difference between a hub and a gateway. I understand it is like a city and a town: it is a function of size and regional impact. Enterprise Ireland is actively trying to encourage companies to expand their activities out of Dublin into the regions. We have had one or two successes where we have encouraged companies to grow certain parts of business outside the major hubs. It is not just Dublin now because there are other hubs, gateways or concentrations of economic activity that are doing very well.

There can be problems with FÁS apprenticeships where there is no receiving employer, because the whole system works through employers. We have traineeships and other systems of support for training, but it would not be a good idea for us to divorce apprenticeship from the masters - effectively the companies. It would not be good to train youngsters to go to a job without future employment possibilities, especially where the apprenticeship involves a particular skill. The past few years have been glorious for people in many of the building trades. It is wonderful to see that income levels have risen in a significant fashion responding to the scarcity that has existed. However, the supply has dramatically increased and there are now record numbers of people going through the systems of apprenticeships. I may have missed some questions, but I am not evading anything.

What about work permits?

As some of the members are worried about the Order of Business, perhaps Mr. Gorman might like to speak now.

Mr. Gorman

I will comment on a few of the issues raised. On this cost cutting exercise involving a number of Departments on the future role and direction of CE, we have said to the Cabinet committee that we expect it to take about six months for us to complete our work. I know the Cabinet committee is anxious to get that and make decisions as quickly as possible. I cannot forecast what decisions will be taken and when they will be taken. On the locus of responsibilities——

Is it a truly departmental review?

Mr. Gorman

It is a cross-departmental review.

There is no input from the social partners or service providers on the ground.

Mr. Gorman

The social partners are feeding into the review in two ways. First, a standing committee on the labour market, established under the Programme for Prosperity and Fairness and representative of the social partners, is doing a number of parallel exercises which will feed into the review.

What does that mean?

Mr. Gorman

It is conducting a review of a number of active labour market programmes. The cross-departmental group will take on board the outcome of its studies. Last week, with officials from the Department of the Taoiseach, I met representatives of the community and voluntary pillar as an adjunct to the talks taking place on a successor to the PPF. We made a commitment to consult them at regular and appropriate stages of the talks and take their advice on how the process should proceed.

The question of the locus of responsibility will be examined. Ultimately, however, it will be a matter for the Government. There are different views on where it should reside. There is no doubt community employment continues to have a valuable, active dimension. FÁS will continue to need an instrument, such as the community employment scheme, to work with the long-term unemployed. It is not simply a matter of deciding to move the locus of responsibility. Community employment is valuable from a labour market perspective and FÁS will continue to require an instrument to interact with the people concerned. This issue will form part of the review.

We have had a very flexible approach to the criteria for work permits in recent years. Initially, this came about in response to skills and labour shortages which almost reached crisis proportions in 2000 and 2001. We are not enthusiastic about quotas as they are difficult to deliver and would require introducing significant, new layers of bureaucracy, which we do not want.

With economic growth beginning to slow at the beginning of this year, we introduced a new arrangement by which FÁS was brought into the process. This meant we ceased accepting work permit applications directly from employers and required them to interact with FÁS first when trying to source labour or skills which FÁS then seeks domestically and, where necessary, on the wider European market. The figures for the numbers of work permits issued this year show the initiative has been successful in changing the pattern of permits. To date, we have issued about 38,500. The important point is that some 46% of these were either renewals or permits issued to those changing jobs. While we are issuing large numbers of work permits, a substantial proportion of recipients are now renewing. I attribute some of this change to the recent initiative involving FÁS and employers, which is encouraging.

For how long are work permits valid?

Mr. Gorman

They can be valid for periods of three months, six months, nine months up to a maximum of one year.

In the main, they are valid for one year.

Mr. Gorman

Most employers seek permits for one year.

May we have an historical breakdown of the proportion of renewals versus fresh applications?

Mr. Gorman

I can provide that in the form of a table showing how the figures have changed in recent years.

How do people change jobs? I understood one was virtually owned by the employer under the current system.

Mr. Gorman

Although the work permit is issued to the employer, we operate a flexible approach when people run into problems, for example, where they lose their jobs or the company closes. In such cases, we have been prepared to issue work permits. We have facilitated individuals by issuing several thousand permits to people changing jobs.

Mr. Haran

We also have a work visa system for certain high skilled sectors, such as the medical-nursing sector, in which we believe the country lacks skills. Medical or nursing staff arriving here are given a work visa, not a work permit, which allows them to move between employers as they see fit. The visa is not directly linked to an employer and is similar to a green card.

The Department has achieved enormous successes on behalf of the country during the years. The committee is delighted the delegation attended this morning and appreciates its informed update on the current position. As we are live on television, I will put some questions on what the future holds. Will we become a Silicon Valley as Mr. Haran stated? Will we become more high-tech? Where will we train our young people? These are the questions we are asked by the public and employers, of which I am one. Many are concerned we are becoming too expensive. The committee would like to play a part, through Government, in giving direction about where we envisage Ireland plc will be in five years.

Mr. Haran

Fundamentally, I am supremely optimistic and positive about our future opportunities. This goes back to the questions asked earlier. Enterprise and labour markets are two sides of the same coin. Our future lies in continuing to grow the quality of our people. Business will migrate to where one will find very good people and excellent systems of Government and public administration.

A plant for a new arthritis drug is being developed in Grange Castle by the American Home Products Corporation which is investing €1.5 billion in this 1 million square feet bio-pharma project which will grow cures for illness. This and another major investment, Fab 24, represent a magnificent endorsement of our society and people. These are the big multinationals. Similarly, however, we have wonderful new companies emerging on the bio-tech and ICT side as well as in other areas. People are creating their own companies, sometimes out of an institute of technology. One company in Knock, County Mayo, at the forefront of the optical disks industry, won a competition two days ago in the innovation area.

Our future lies in having excellent people who are well trained and systems that can help and support them in breaking into marketplaces. This is a very small, nimble country and an English-speaking, intimate society. If we can get the Oireachtas to change legislation as quickly as is required, keep our agencies focused on supporting the country, have the collective confidence to protect our competitiveness by growing our productivity, in other words, to pay ourselves more only when we make more, and maintain the confidence we had in ourselves throughout the 1990s, this country can pass out its European colleagues and other countries across the globe. Our future lies in being small, nimble and highly productive. There is a global shortage of excellence. If we have the right people and can continue to show our excellence, we will have nothing to fear in the future.

On behalf of the joint committee, I thank the Secretary General and his team for joining us today. They provided an excellent and informed presentation which we all found very uplifting. Some of us are newly elected to the Houses and are determined this committee plays its full part in assisting in any way it can.

The joint committee went into private session at 11 a.m. and adjourned at 11.20 a.m.

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