JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 14 May 2003

Vol. 1 No. 10

Visit of Polish Parliamentary Delegation.

Chairman

On behalf of the committee members, I have great pleasure in welcoming the Polish parliamentary delegation here today, under the chairmanship of Mr. Adam Stanislaw Szejnfeld, to talk about economic matters in the Republic of Poland. I say to you a hundred thousand welcomes, or céad míle fáilte in our native tongue.

Some of us have already had the pleasure of meeting the delegation over lunch. The delegation is accompanied by His Excellency the Polish Ambassador, and in a moment I will invite everyone to introduce themselves to the members of the committee. First, I emphasise how happy we are to receive the delegation, and the members of the committee from your great and ancient country, with which we in Ireland feel a particular affinity. In less than a year's time, we know there will be closer ties and that Poland will join the European Union next May, during the Irish Presidency.

I have referred to the Republic of Poland, which came into existence after the end of the first World War, but we have knowledge of the visitors' glorious and often sad history. Poland, like Ireland, has been a victim of unfriendly geographical neighbours.

In more recent times, the achievement of the visitors' countrywoman, a dual Nobel prize-winner, who is better known in Ireland under her married name of Marie Curie, has been an inspiration for many women and men the world over. The honour of naming the elements after one's country is unlikely to be repeated on this planet and will forever remind the listeners of Poland's contribution to scientific discovery, continuing a distinguished tradition.

Other listeners, and those of us who have been involved for most of our lives in the entertainment industry, but particularly in music, will remember one of the greatest ambassadors of all for Poland, Chopin, its famous musician.

Committee members and the Polish delegation will agree, and it has come as no surprise to the visitors to know, that the Pole whom we revere the most today is his Holiness, Pope John Paul the Second. His enduring legacy will extend far beyond the boundaries of the Catholic Church, and he is arguably the most influential person of the last quarter of the 20th century.

The delegates come here as representatives of a great and ancient nation. I invite them to introduce themselves.

Mr. Adam Stanislaw Szejnfeld

(speaking through interpreter): Mr. Chairman, and committee members, I thank you for your kind words about Poland and the Polish people who have risen to positions of authority. We too have great respect for Ireland and its people. We are also very interested in their experiences over the past years, and that is the reason for our visit to Ireland.

Before we move on to the bilateral discussion, I will present our delegation. As I would not like to make any faux pas, I would like all members of our delegation to present themselves.

This is a mixed delegation of members of the Polish parliament and the Government. The largest group in our delegation is from the parliamentary economic committee, and I am the head of that committee. From the Polish Government side we have the deputy minister and secretary, Ms Okonska-Zaremba. There are also representatives of the state agency for enterprise development, and the president of this agency is also present. They will all present themselves. We are accompanied by His Excellency, the Polish Ambassador to Ireland, Mr. Sobkow, without whose help we would probably not have been able to come here.

I am the head of the committee and the representative of the civic platform which is the opposition party, and by profession I am a lawyer.

Ms Margarzata Okonska-Zaremba

I am the under-secretary of state in the Ministry for Economy, Labour and Social Policy. I am responsible for small and medium-sized enterprises, for internal trade and for tourism. I have the great pleasure of co-operating with parliamentary committees among others, mainly economic committees, and I represent the Socialist Left Alliance. Like the chairman, Mr. Szjenfeld, I am also a lawyer.

Chairman

A very good profession for politics in Poland.

Mr. Marek Sawicki

This is my third term and tenth year as a member of parliament. I am a deputy-chairman of the parliamentary economic committee. I am also a member of the executive board of the Polish People's Party. I have a master's degree in agriculture.

Mr. Zbigniew Kaniewski

I, too, am a deputy chairman of the economic committee. I am a representative of the Socialist Left Alliance. I am also on the select committee dealing with the legal affairs of Government projects concerning enterprise and entrepreneurship, development and labour. This is my fourth term. I am a graduate in geography.

Mr. Zenon Tyma

I am also a deputy chairman on the economic committee and I represent the Self Defense opposition party. I have a secondary education.

Chairman

The chairman and the vice-chairman are from the opposition party.

Ms Katherin Gadecka

I am secretary of the committee.

Mr. Arter Zawisza

I am a member of the Law and Justice party, and also chairman of the Irish-Polish inter-parliamentary group. I am a graduate in philosophy.

Mr. Michal Figlus

I am a member of the economic committee. I am a qualified technician in the automotive industry and I represent the Socialist Democratic Party.

Mr. Marek

I am the president of the Polish Agency for Enterprise Development, which is a governmental implementing agency subordinate to the Minister for the Economy. Its role is to run the programmes that are financed mainly with European funding, programmes concerning development of small and medium-sized enterprises, as well as human resources development and some infrastructure.

Chairman

You are officially representing the group as president?

Mr. Marek

Yes.

Chairman

You are most welcome.

Ms Anata Olech

I work for the promotion and information department of the Agency for Enterprise Development. I am a journalist.

Mr. Szejnfeld

Those are all the members of our delegation. I understand I do not need to present His Excellency the Ambassador. As far as I understand, your committee chairman is the head of the committee equivalent to our committee in Poland, the parliamentary committee which I represent. If I were to say what I would like to know, and what is interesting for us, it would be difficult for us, because I would have to say that we are interested in everything. As the topics are so broad, I would like to tell you what was most interesting for us, and what were the reasons for coming here. You might then choose the most interesting topics and inform us about them.

There are several topics in which we are interested. There were several meetings of our delegation on these subjects in Dublin and outside it. First, we are most interested in the system of public finance and the tax system. This is mainly because we are now trying to change the system of public finance and taxation. The next topic is export promotion and the way to attract foreign investment. It is also very important for us as we are trying to establish a new system of export promotion and attracting foreign investment in Poland. The next topic is the use of EU structural funds after the accession for the promotion and development of enterprises. The fourth topic is the reform of agriculture and rural areas. Ireland's experience may be a very good example for us in future. The last topic relates to how to combat unemployment.

Even though I have narrowed my field of interest to five points, they are very broad and complex. I do not expect we will discuss everything in detail. I would prefer to give the floor to the chairman so that he can choose the most important and interesting topics.

Chairman

We have heard what the requirements of the delegation are in regard to the five points. In 1987 our economy was at an all-time low. In order to make progress and attract foreign investment, the Government, of which Senator Daly was a Member, put together a national understanding. This included the farming organisations, trades unions, employers and the Government agencies. They put together a package which almost completely eliminated strikes. That was the first target at the time.

I will explain our problem at the time. We have a two-tier rate of income tax. At that time the lower rate was 35%, the higher rate was 65% and unemployment was running at 20%. From then until now, we have gone from being a very weak economy, one of the worst in Europe, to currently being one of the top two economies.

Deputy Lynch

I am consumer affairs spokesperson for the Labour Party - that is the Opposition. I would like to point out that the chairman and I may have different views as to what the economy was like and how it progressed. I welcome the delegation to Ireland. As someone who fought hard for Poland to join the EU, I am pleased it has done so.

In regard to foreign investment, which is one of the key issues in addressing unemployment, during the boom, we received at least five delegations a week from foreign countries coming to Ireland to find out how we managed to increase employment levels to such a rate. I do not think any of them ever got a definite answer. I am not certain we have the answer ourselves. I read that your rate of corporation tax is 19%, or has it decreased to 19%?

Mr. Szejnfeld

Yes.

Deputy Lynch

Our rate of corporation tax is 12%. Encouraging foreign investment was a major factor. We also gave extensive tax breaks, lasting for a ten year period, to foreign countries during the period about which the Chairman spoke. Now that the world economy has changed, one of the other major factors in regard to encouraging foreign investors and bringing down the unemployment rate is education.

Mr. Szejnfeld

We are going to decrease.

Deputy Lynch

As the Chairman has said, we still have the same system of taxation, including corporate taxation. We actually had a three-tier system and that still exists. We had high rates of taxation, 32% and 65%, and additional levies such as health and employment levies. There were times during the 1970s and 1980s when workers paid up to 70% of their income in taxation.

However, there is another group of people who pay virtually no tax at all. They are those who own the majority of the wealth. I suggest that if Poland is going to introduce a system of taxation it should not adopt ours. It should make sure that everyone pays tax, not only those who can be caught in a particular net because that causes resentment.

It is good that the economic committee is visiting us now while Poland is in the transition period. The Polish economy has a high agricultural base, as Ireland did when we first joined the European Union. People must find it difficult to understand that there are people here who have a huge resentment towards the EU. I imagine that is difficult to understand when we have benefited so much. One must keep in mind that there are certain sectors here which have benefited far more from the EU than others. That causes resentment. My final word of advice is to build up your country's infrastructure. I do not think we did that well.

Chairman

That was Deputy Lynch, a member of the Labour Party which is in opposition. We will now have a member of the Government party who has been a Minister with eight portfolios. He is one of the most experienced people from both Houses of the Oireachtas, Senator Daly.

Senator Daly

I welcome the delegation and hope it has a successful visit. We are glad to see them here. I have been a colleague of the present Polish Minister for Foreign Affairs in the Council of Europe for the past four or five years. We have had a lot of co-operation between the Polish members of the Council and the Irish representatives.

I am very pleased to see His Excellency, Ambassador Sobkow, here. He has been a good friend of ours and has been involved in the Irish-Polish business committee which has been working successively. We have had a successful Polish-Irish business organisation in Dublin for a number of years which has kept aware of developments here and in Poland.

I attended a conference in Gdansk some time ago which was organised by the Council of Europe and was impressed with the huge number of students in the polytechnic there. The key to the success of the Polish economy, like ours, is in the educational area, particularly the high-tech area which is going through a difficult period at present. That in my view is short-term. The real secret of our success has been education, especially in the higher technology area. What I saw in Gdansk indicates to me that the Polish people are looking in the same direction.

I come from the west of Ireland which has certain concerns, especially among the farming community, about the Fischler proposals. We would certainly look forward to some support from our colleagues in Poland when they join the EU, as they have similar problems to ours in relation to small farms. One of the issues we wish to discuss is how we can forge links between Ireland and Poland, especially in relation to developments with regard to the Fischler proposals over the next year or so.

The delegation is very welcome. In so far as we can be of assistance, on the basis of our experience since joining the Community in 1973, we will be available to do so.

Chairman

In light of the experience in Ireland in 1987, when Senator Daly was in Government, in relation to the tax incentives needed to give the private sector the encouragement and incentive to create jobs, perhaps the Senator will outline briefly, for the benefit of the Polish delegation, how that was achieved, having regard to the present 18% unemployment rate in Poland.

Senator Daly

The success was based on very tight management of the public finances, cutting back on expenditure, managing the economy efficiently and eliminating wasteful overlapping and duplication of functions as between public bodies. That involved some fairly drastic cuts in expenditure, some of which would not be welcomed by my colleagues in this committee but were very necessary at the time. The first requirement, in any country, is to place the economy on a sound footing. It is very difficult to deal with the situation in Poland, having regard to the fact that, as well as the unemployment problem in Poland, there is also a serious unemployment problem in its neighbouring country, Germany. In some respects, an upturn in economic activity in Poland will be governed by developments in Germany.

Chairman

Urban development schemes created substantial employment in the building sector.

Senator Daly

The problem is how to curtail Government expenditure on the one hand while at the same time investing in education, industry and infrastructural development. I appreciate that some of that infrastructural development has taken place in Poland and I was greatly impressed by what I saw there. The question as to how this can be expanded further is really a matter for the Polish authorities to decide rather than on the basis of example from Ireland.

Chairman

I refer one final question to Senator Daly, at the request of the chairman of the Polish delegation during our discussion over lunch. In relation to EU Cohesion and Structural Funds, Ireland was probably one of the most successful countries in availing of such funds. Will the Senator elaborate on how that was achieved?

Senator Daly

To the best of my knowledge, as part of the Polish accession agreement, there has been an allocation of funds in that regard. I believe Poland has also been drawing down some Union funding prior to accession and that will be followed by further substantial funding for investment in regional development and other infrastructural development. However, I am not familiar with the details of the Polish terms and cannot comment further on that.

Ireland successfully drew down Structural Funds at a time when our economy was greatly in need of such assistance. That has since been curtailed to some extent in light of developments over the past five or six years. In relation to such issues, we would welcome close collaboration with our Polish colleagues when they join the EU to ensure that funding is allocated to the most productive areas.

Deputy Lynch

In relation to funding it would be useful for the Polish Parliament to set up a special European affairs committee, as was done in the Irish Parliament.

Mr. Szejnfeld

I have a proposal to make our conversation run more smoothly. If you agree, Chairman, I suggest that the members of our delegation ask direct questions of the members of your committee so that the discussion is directed to the areas and specific topics of interest to us.

Chairman

Is that agreed? Agreed.

Deputy Hogan

Before we proceed to deal with questions, I wish to make a brief observation. I am a Fine Gael member of the committee and I am interested in obtaining information on the issues emerging in the context of the referendum proposal to be put to the people of Poland in June. Over many years, the factors contributing to economic prosperity in Ireland included a young, well trained workforce, the partnership agreements between the social partners, whether business, agriculture or trade unions, and the funds which were available to provide the inflow of capital from Europe through the European regional development fund and the European social fund to develop the infrastructure of the country, and the Common Agricultural Policy which sustained agriculture.

I will conclude by welcoming the delegation from Poland to Ireland and hope they have a pleasant visit. I look forward to meeting as partners in the European Union.

Mrs. Okonsa-Zaremba

My first question concerns not only success but good conditions for enterprises to run economic activity. What are the key factors? I am mainly interested in tax rates but also in conditions for foreign investors and whether they are the same as those for Irish investors. I would like to return to the 1970s regarding the social agreement. What were the key elements of the agreement and the main instruments which made it successful?

Senator Daly

The main success of the partnership arrangement was the bringing together of the Government, employers, unions and farmers, and the social partners who have now been included although that was not the case until recently. Another factor is that we have had very successful agencies at regional and national level and I am glad the agency development president is present at today's meeting.

At regional level, there are bodies such as the development company for the Shannon region, which is part of the under-developed west. Such agencies give special grants and incentives to local industry and a small enterprise board has also been set up in that particular region. Apart from overall national agencies, there are also smaller agencies dealing with small businesses.

The main industrial success in Ireland has been that of small industry. We have had a policy of attracting foreign investment, especially American multinational companies in regard to which we have a fixed tax rate of about 12%. We have diligently fought within the European Union - we look forward to Poland adopting the same methods when it joins the Union - so that Ireland is in a position to decide its own tax rates to suit our conditions, enterprises, plans and programmes rather than having that dictated by the Union at large. We have diligently fought that and made the issue one of our principal stands.

Mr. Kaniewski

When I listen to representatives of different agencies, bodies and parliamentary parties with regard to the reasons for your success, I cannot see the differences. All Members give, more or less, the same reasons.

Chairman

When in government, yes.

Mr. Kaniewski

I am interested in your opinions concerning the changing growth rate of development in recent years. While there was a certain position before, it is different now. I am interested in what you think could be the key to success. I presume you discuss that matter across party lines. I would like to know only the main conclusions you draw from the recent situation and whether your attitude or approach has changed in any way.

Deputy T. Dempsey

I welcome the delegation. I can only say a few brief words as I must leave for another meeting. Regarding economic growth, I believe, independently of politics, that education has played a key role. However, what is important is the type of education on which you must concentrate. It must be responsive to two aspects of economic growth, the first being the economy's national needs and the second its international needs.

Perhaps I might give examples. In Ireland there has been a huge growth in numbers studying trades, particularly the building trades. Not only have those youngsters built the country, but they are building part of England and I am certain that they will build part of Poland very soon. Agricultural education is important, as is tourism. We have a very successful system of training in hotel management, and tourism has grown in the same proportion as our ability to attract foreign people to our country through hotel training.

Regarding the national economy, it is important that students leave school believing that they can work for themselves and start their own businesses. Foreign investment is only part of our success story. A carpenter or a blocklayer can start his own business much more easily than an accountant. The international economy demands that one knows about computers as foreign investors will come here because of a computer-literate public that understands foreign languages. We are the biggest exporters of computer parts in the world, despite our small population.

Chairman

In the past five years we had a growth rate of 8%. This year we envisage 3.5%, which is the second highest in the world after China. As has been said, in the IT business and the computer industry, particularly the production of software, we are number one in the world. There is much kudos attached to that, but we also passed one of the largest Bills ever to go through the two Houses of the Oireachtas here - the Copyright and Related Rights Act 2000. That deals with intellectual property, something of enormous importance to manufacturers and those in the computer industry as well as entertainment and music. We therefore have enormous credibility in that industry.

As Senator Daly has said, the great success of the computer industry stems from working hand in hand with the United States of America. The former President, Bill Clinton, can take credit for our success in that area. There was enormous goodwill during his presidency and he was a major help to us regarding establishing markets and enhancing those we already had.

Before I call on the deputy chairman, Deputy Conor Lenihan, I will say this. As you know, Your Excellency, we have Enterprise Ireland and the Industrial Development Agency, with all our trade missions throughout the world. We are interested in, and very anxious to establish partnerships, particularly in EU states where the workforce is readily available and where we could assist and train as a country. Partnerships are the order of the day and they allow us to increase our markets. We have our established markets and, having been in South Africa last week with Enterprise Ireland, are trying to achieve things there. Poland seems one of the most logical next steps.

I had a brief discussion with Your Excellency over lunch regarding the very successful business conference that you had earlier this week. There is enormous interest on the part of the Irish business person and the Irish nation, and there is enormous goodwill towards your country. Of the ten countries about to join the EU, the Irish can identify perhaps most easily with the Polish people, particularly in terms of business. Attitude is very important and when one is in business, the most important word is "trust". There is enormous trust between the Irish and Polish peoples.

As we will conclude the meeting at 4 p.m., I thank Senators Daly and Hanafin for attending and being of assistance. Mr. Szejnfeld, do you wish to ask any further questions before I bring in the vice-chairman?

Mr. Szejnfeld

Is it possible to have two more questions from our side? They can be answered together.

Chairman

Is that agreed? Agreed.

Mr. Sawicki

My first question is to Deputy Lynch and concerns consumer protection. In my last term, I was a member of the consumer protection committee. We passed many legal regulations to bring our consumer protection regime into line with EU legislation. While everything has been done from the legal perspective, as far as I can see, all the agencies are not working properly and people do not know where to get financial support. The system is still not working well. What is the position in Ireland's case?

I planned to address my second question to Senator Daly, who has left the meeting. He stated that he comes from the west of Ireland where there are small farms.

Chairman

Yes, he is from a rural background.

Mr. Zawisza

He said something had to be done to deal with the problems facing rural areas and that the Common Agricultural Policy needed to be reformed. What, in his view, should be the Polish position? Should we support the Common Agricultural Policy as it is now or support radical changes to it? Does he want radical changes or for it to be preserved as it is?

I would like to return to corporate taxation levels. Does Ireland have data on the proportion of its revenue derived from corporation tax before and after it was reduced?

Chairman

Deputy Conor Lenihan could answer the final question.

Deputy C. Lenihan

The quick answer to the question on corporation tax is that the yield from corporation tax doubled when we reduced capital and corporation taxes here. However, this was an exceptional case as the halving of corporation tax occurred when Ireland was on an 8% to 10% growth trajectory. Therefore, one could argue about the figures. Nevertheless, the evidence is that the lowering of these taxes has increased yield.

Chairman

If one had shares outside Ireland, stock or property of any kind and one sold them off, one paid tax at the 20% rate here. In addition, a husband and wife with a grown up family, aged, say, 65 years, and living in a big house with four or five bedrooms, who wants to give some of their wealth to their children, are able to do so because no taxes are levied on the sale of family homes. We have introduced measures which encourage people who are getting on in life to distribute wealth to children who are resident here. Years ago, 50,000 people emigrated every year, but that figure has fallen to 1,000 or 2,000.

Deputy Lynch

I am sure that is not the type of tax regime one wishes to have so that people invest outside the country when there is a crisis.

Chairman

It was inherited.

Deputy Lynch

They should try not to let that happen. They should get people to invest in their own country rather than elsewhere, where it is probably more profitable.

We joined the EU almost ten years before consumer affairs legislation came into effect. Our inflation rates are double the European average at 4.3%, which is down from the recent figure of 4.9%, and costs to the consumer are a high priority. We should make people conscious of the legislation and their rights in relation to their purchases, whether of a house, a car, food or clothing. We have a consumer protection agency, which is small, but the director is high profile and gets a lot of publicity on various issues. Most people do not realise that there is a connection but we also have a Competition Authority, funded by the Government but independently run, as is the Consumer Protection Agency. Anyone who suspects there is a cartel such as among companies that produce dairy products, charging exactly the same price for milk or cheese, can bring it to the attention of the Competition Authority and if it finds there is deliberate co-operation between them to keep prices up, they can be prosecuted.

This is about education and ensuring, through publicity, usually through television or leaflets from various agencies, we teach consumer protection to our children in school.

Chairman

We will take the agricultural part of that question. I will ask our Government convenor, Deputy Callanan, what the farmers would like to do in relation to the question that was posed?

Deputy Callanan

As a new Deputy, some of my comments on agriculture might be personal. I am a farmer in the west of Ireland. When we first joined the EEC, we generally exported to Great Britain, which was our main buyer. We provided cheap food for Britain. After we joined the EEC, we got premiums and grants for the first ten or 15 years which improved the industry greatly. If we were not in the EEC, we would be back in the black old days when we were dependent on Britain to give us what they liked for their food, as was the system at the time. We still export much of our produce to Britain but we are receiving subsidies from the EU too.

We had an Irish Commissioner, Ray MacSharry, in the 1990s who tried to adjust the 80:20 divide, which exists in many countries - 80% of grants go to 20% of farmers. In the west of Ireland, we have small farms and grants were issued in the form of headage payments.

Chairman

A small farmer is one with 70 or 80 acres. Is that the case?

Deputy Callanan

Yes, 50, 60 or 70 acres. Farmers in some parts of the EU had 1,000 or 2,000 acres and the difficulty was that one man might receive €5,000 in premium, another €50,000 and another €100,000. Ray MacSharry tried to put limits to this at the time, which for us in the west, seemed to be the thing to do. However, Mr. MacSharry failed to achieve this because he did not get enough support from other countries as they were looking after their larger farmers.

Coming back to the Fischler proposals, the only difference with them is that farmers are being paid per acre, but still at the same ratio. The man with the large acreage gets a bigger amount of money than the man with the small acreage. In the west, we are finding it extremely hard to stay in business. We are receiving the same money per acre for our produce from the EU, so the outlook is poor. We would like to see a certain amount paid for the first 100 acres or number of animals under the Fischler proposals or the CAP. That is the only difference I see, one would get X amount for that. One would get less as one goes up the line and world trade is taken into account in terms of higher amounts. That is the point at which we will be turning to countries such as Poland. If it is their intention to keep small farmers alive——

Chairman

On the land.

Deputy Callanan

——something like this will have to be done because small farmers will not be able to sustain themselves on the land without change. There is enough money there but it is not distributed correctly. As someone from the west of Ireland I will be looking for support from the countries coming into the EU - some of them have many small farms - in persuading the bigger players that the money should be distributed more favourably.

The main difference between the CAP and Fischler proposals is that here in Ireland we are producing food for a market we do not have. Perhaps it is better to consider the amount per acre, but whether calculations are done per acre or per head, unless there is a division between smaller and bigger farmers, the west of Ireland, particularly small farmers, will experience difficulties in the future. They will lose out completely.

Deputy C. Lenihan

I wanted to answer one of the questions posed by the deputy chairman. He said that he had heard a lot about what had happened to Ireland but wanted to know what will happen into the future and what challenges we face. We face serious challenges here due to the enormous growth rates we have achieved. There are pressures on our public infrastructure, our health system, and on our public services generally, particularly education. There is a very high cost base in terms of the problems we are not coping with because of high growth, high wages and the high cost of producing things here, and a public sector system of delivery of services, infrastructure and so on, that really is not up to speed with the new-found wealth in the country. One sees many signs of what I call infrastructure overload in public services. That is a huge challenge for the people who are currently in charge.

A benign issue for Ireland in the future is the demographic picture. We have a very low dependency ratio, whereas in the 1970s and 80s, when we were going through a bad period, we had a high ratio - in other words, there is a large number of children in school and a large number of elderly people. From now until 2020, we will have a very benign situation. Most of our population is concentrated in the "able-bodied" category, ready to enter the workforce. This is a very positive backdrop to what is happening here.

At another level, we face a serious competitive challenge because of the high wages and inflation in the current system. However, we also face a second wave of de-industrialisation. We experienced this when we joined the EU in 1973 when we saw the footwear industry disappear. Certain industries characterised by high unit costs of labour disappeared in 1973. We are going through a second phase of this now for two reasons: one is the entry into the EU of countries such as Poland and the other is our membership of the euro currency zone. Many low-wage or low skill-based businesses will migrate from here. There are already signs here that investors are moving those kinds of jobs to places like Poland.

We now have to try to increase our skills. One of the big shortages here, for example, is in people with a masters degree in engineering. In other words, we have all the high-spec companies - technology, pharmaceuticals, electronics - but we do not physically have the ready supply of masters-level engineers and graduates in that area to keep supplying these people with the skills they need.

Deputy Wilkinson

I agree with the comments of both my colleagues, but I want to add a little about agriculture. Ireland benefited immensely from joining the EEC. At the moment, we export 90% of our produce. The numbers engaged in farming are dropping quickly due to a number of factors - one of the main ones is education. Many of our young people from farming families are going on to third level education and moving away from the farming way of life. Over the past ten years we have had an economic boom known as the Celtic tiger. Jobs and work, and perhaps shorter hours and better conditions appealed very much to the younger people. They saw a way out of the seven-day week.

Today, many well financed and well managed farms are without successors. A very high percentage of farmers - more than 60,000 - have no successor in farming, although they have children. There have also been immense improvements and emigration has stopped. We now have inward migration, with up to 40,000 people coming into the country last year. There are many small farmers in Poland and our experience is that people are moving away from farming. Our population has increased for the first time since the Famine - it is now around four million, a major trend. We have a very good education system and a young, educated workforce who are not afraid to travel, and that impacts on farming.

The Fischler proposals were strongly opposed by our farming organisations but there has since been a slight change in attitude from our major farming organisation, the IFA. The Minister is opposed to the proposals but we are being told that many of our farmers now support them so there is much talking to be done.

Senator Hanafin

It would be remiss of us not to mention the historical role played by Poland. Twice in the last millennium, Poland contributed to the saving of European civilisation - when the Ottoman empire reached the gates of Vienna and in 1980 when, in Gdansk, Solidarity, Lech Walesa and his holiness Pope John Paul II, Karl Wojtyla, stood with the people of Poland and contributed to the bringing down of the Iron Curtain. For that, Europe owes Poland a great debt of gratitude.

Mr. Sawicki

As far as Vienna is concerned, we saved a part of Europe, but those whom we helped invaded us a few years later. Hopefully it will not be like this now.

Senator Hanafin

It is important to pass on our experience because we were in a similar situation to Poland. It can expect numbers on the land to decrease substantially and the price of land to increase substantially, giving an incentive for people to leave it. There will be many more people working in service industries.

In this State in the 1980s, we could not come up with the 10% to pay for the Structural Funds and we had to refuse the 90% funding. Whatever Poland gets now, it should apply for the Structural Funds and come up with the money because it will get one shot at it and should use it in full for its benefit.

The challenges facing Poland and Ireland now are caused by the high value of the dollar and sterling. It has gone from minus 15% to 15%, a differential of 30%. We must trade more with each other because many companies will not compete in this market and it could mean that both Poland and Ireland will request in future an exchange rate mechanism between the dollar and the euro.

Chairman

I thank the delegation for coming to our meeting. It has been a very useful meeting and we wish them a successful conclusion to their visit and safe journey back to Poland.

Mr Szejnfeld

I thank the committee for arranging the meeting. The information and opinions about how Ireland became so successful will be very useful for us. During even the best meetings we cannot get all necessary information but as we meet other agencies, we will put all of it together and will be able to build a complete picture. I thank the Chairman and our ambassador, who organised the meeting. I repeat my invitation for the whole committee to visit Poland so that we can continue our exchange of views in Warsaw.

Chairman

We gladly accept that invitation.

The joint committee adjourned at 4.30 p.m. sine die.