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JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 18 Jun 2003

Vol. 1 No. 14

Visit by Hungarian Delegation.

I have great pleasure in welcoming the delegation from the Employment and Labour Committee of the Parliament of the Republic of Hungary. We look forward to their contribution. The delegation chairman is Mr. Istvan Balsay and he is accompanied by Dr. Janos Bobok from the Hungarian Embassy.

In a moment I will invite the chairman to introduce his colleagues to the committee. I reiterate how pleased we are to receive the delegation from such a great and ancient country with which we feel a particular affinity. The ties between our countries will be closer next May when Hungary will be a full member of the European Union. That will take place during the Irish Presidency EU and follows the impressive 5:1 "Yes" vote in Hungary's recent accession referendum.

Hungary, like Ireland, has been a victim of geography and unfriendly neighbours. The secretariat, however, has confirmed what I already knew from my 20 years as a Member of the Upper House of the Oireachtas, Seanad Éireann, that Hungary's parliamentarians have found Ireland to be a particularly friendly country. In the run-up to the accession negotiations, Ireland was an early, if not the first, port of call when it came to collecting information and networking and Hungarian diplomats have become used to pushing an open door in our country.

I invite the delegation chairman to introduce his colleagues.

Dr. Istvan Balsay

(Translation) Mr. Chairman, ladies and gentlemen, on behalf of our delegation I would like to express our happiness on being here. We do not have any bad conscience over our attendance at this session because we also have parliamentary sessions in our parliament. We are also working here.

I am accompanied by Dr. Janos Both, a member of the committee, who is also a member of the Hungarian Socialist Party. He is also the mayor of a beautiful city called Vas in the vicinity of Budapest. Also in attendance is Dr. Csaba Sumeghy, a member of the FIDES, the Hungarian Civic Party, and an important member of our committee. This is his second term as a member of parliament. Dr. Valeria Molnar Farkasne is the committee expert and without her help we would not be able to be here. We owe her a great deal, both in terms of her work for the committee and in Ireland. I am sure that Dr. Gyorgy Bobok is not unfamiliar to some members of the joint committee. He works at the Hungarian Embassy in Dublin and is responsible for economic contacts and also the for the activities of Hungarian parliamentarians in Dublin. Our interpreter is Judit Tiszavolgyi.

The Chairman referred to the fact that this is an official visit from an accession state of the EU to a parliamentary session of one of the 15. We have less than ten and a half months before we become fully-fledged members on 1 May 2004. To be frank, it is a bit schizophrenic for me to be, not alone a member of the Hungarian Parliament and chairperson of our committee, but also one of the 24 observers to the European Parliament in Brussels. I see how much there is to do and what awaits Hungary in one year's time in Brussels. Together with my colleagues, I have had an opportunity to observe the work of the EPP. I represent the Hungarian Democratic Forum and there are many Irish parliamentarians also involved in the same parliamentary faction. On behalf of the delegation, I thank the committee for its kindness and for the attention it paid to our accession and our endeavours over the past ten years. I also thank it for helping us achieve our main objective in that period. Our efforts depended on the outcome of the Irish referendum on the Nice treaty. The reason the delegates of our commission chose to visit this committee, Parliament and Government is because we highly commend the success of the Irish employment policy. We would like in the future to be able to follow such a model and achieve Ireland's success.

Would the chairman of thedelegation like to ask our members questions?Our committee members will be delighted torespond.

Dr. Balsay

My first question relates specifically to some formalities. The Hungarian parliament has only one chamber but the Irish Parliament has two. Does this mean that the work of the Committee on Enterprise and Small Business is so important that it has a joint meeting, or are there any other explanations?

The Chairman of this committee is probably in the best position to answer that question, given that he has been a very distinguished Member of both Houses of the Irish parliament during his political career. Let us consider the structure of committees. One form of parliamentary committee, the joint committee, draws its members from both Houses. This committee is representative of both the Dáil, which is the Lower House, and the Seanad, the Upper House. A committee has been established to shadow each Government Department and Minister. All legislation that comes from an individual Minister is laid before the appropriate committee, as are the annual Estimates and expenditure profiles of each Minister's Department. Joint committees represent a joint overview, from both Houses, of every working ministry. The ministry we shadow in this committee is the Department of Enterprise, Trade and Employment. It is a big Department which looks after trade and employment, including issues such as trade union recognition, labour law and working conditions, as well as economic development and strategies for inward development. These matters, in essence, comprise the work of this committee.

Dr. Csaba Sumeghy

I am the oldest member of our delegation. In the former cycle I was the deputy chairperson of our committee and, for a short period in the present cycle, I have been the chairperson. On a personal note, I have been planning to come to Ireland for four years and those plans have now come to fruition. I am impressed by the beauty of the country but its economic achievements are also impressive. It is to the economic achievements that my questions relate.

On our committee I am responsible for issues related to enterprise, entrepreneurship and the representation of interests, such as those of trade unions or the civil sector. Perhaps this is related to the fact that I have a business background and am still active in this regard.

At the Department of Enterprise, Trade and Employment yesterday, we were given an outline of the highly successful model of social partnership and also the details on how social partnership was implemented here. My question concerns that: what do Members of Parliament think about the fact that it is basically the Government that reaches agreement with the employees and the private sector, an agreement which is not legally binding but morally and ethically so? Did they not think this agreement would somehow limit the rights and competencies of Parliament or does Parliament simply support such an agreement?

Back in 1987, when social partnership came about, our country was economically one of the weakest in the EU. Looking back over the past 15 or 16 years, social partnership has been the bedrock of our success as an economy. It was one individual decision, taken by trades unions, Government, employers and farming organisations, which eliminated strikes and allowed everyone to plan for the future. I know that the member who asked the question is heavily involved in business. The partnership agreement created an air of confidence in the economy where such had not existed for many years. I expect many members want to speak on social partnership which was the single most important factor in the creation of the Celtic tiger - the boom that has given us one of the most successful economies in the EU and indeed in the Western world at present.

The question was asked about how social partnership relates to parliamentary accountability and competence. There is a conflict between agreements reached among social partners and the competence of Parliament, in the sense that parliamentarians feel they are not involved if they are not members of Government - Cabinet Ministers. In debating the annual budgets for various Government Departments, Parliament is conscious of how it can fulfil its role, notwithstanding the agreements that have been reached outside Parliament between social partners. Over the years, despite this, it has been a very important development. Social partnership has brought about industrial peace and economic growth, but there have also been other factors, namely the low tax regime we have negotiated with our partners in Europe, particularly in terms of corporation tax, which for manufacturing is 10%. This has been important for the industrial development agencies in attracting inward investment.

We have had a very high level of EU transfers over the years but they have now stopped. That was a help and I wish the Hungarian people well in obtaining some of that largesse in the future. We also have a well-educated workforce - we had many graduates at the right time in our economic cycle. The education system in the area of technology and technological development which was developed in the 1960s and 1970s paid dividends when it came to the upward trend in the economic cycle in the 1980s and 1990s. I must apologise to the interpreter for speaking for so long, and I trust she understands my accent. Could I ask about bilateral trade with Ireland?

Each member will ask a question and then we will have questions and answers.

Dr. Janos Both

We will be happy to answer the members' questions.

Has everyone asked a question? Let us proceed.

Dr. Both

On the basis of my experiences here I appreciate the great efficiency of social partnership in Ireland, but I am also impressed by Ireland's excellent unemployment figures and the very low rate of long-term unemployment. How does the committee assess the future of social partnership which until now has been highly effective and efficient. Does the committee think that the system can prevail unchanged or will amendments be needed? I am aware that within social partnership the Government has the decisive role but the parties can obviously influence the Government's position. How does the committee assess the future of social partnership against that background?

I welcome the delegation. I say to Dr. Balsay that if he was in this jurisdiction he would have to surrender the mayorship of his city.

Does Senator Leyden wish to comment on the question that was asked?

No, I just wanted to welcome the delegation.

Senator Leyden may continue if he wishes.

I was in Hungary before the fall of communism and visited that country afterwards. I congratulate Hungary on the action taken because the country was going nowhere otherwise and I am delighted. We voted for the Nice treaty to bring Hungary into the European Union, and I am delighted the delegation have travelled to Ireland and wish them well.

Does Senator Leyden not wish to comment on the question?

No, just to make a general comment.

If I may answer the question put. We have had partnership over a period of years. It was born out of absolute necessity because economic conditions demanded radical action. It was relatively easy for people to buy into it. As other members have said it has been successful, but it is fair to say that right now there are significant stress points. One of the big issues within the trade union movement is the notion of agreed percentage pay increases - a one size fits all proposal.

There has always been a capacity for wage increases based on additional productivity but there are sectors of the economy in which it is very hard to measure productivity outputs, for example, in the public service. There is certainly now a very large pressure point within the trade union movement to return to free collective bargaining at the point of employment. That is something we will have to be able to address in a more flexible arrangement in the future.

I welcome the Hungarian delegation. I am delighted they are visiting Ireland. On social partnership, yes of course there will be pressures in future because at present we are paying high wage levels and have to be careful that this does not interfere with costs of production. We must be very careful of that because at present we are losing some industries to other countries where there is cheaper labour.

We have introduced benchmarking, which definitely helps, and we hope the social partners will accept this and more or less accept a lower level of wage increase in the future due to the fact that employees are benchmarked. Some speakers have mentioned our level of education, which is very advantageous, especially training in skills. We have invested a great amount of money in training in skills, which is very important for our future.

We have a vote in the Dáil. Do we pair each other automatically here or go to the Chamber? There are three Opposition and two Government representatives. I will offer a pair and we can have two on two. Deputy Murphy will go and we will continue the meeting with agreement. Is that agreed? Agreed. Do we have another question?

Dr. Balsay

I note that committee members are expected to vote, which means they have other responsibilities. There is one thing I would like to say to the committee on behalf of our delegation. We would like wholeheartedly to invite the committee to Budapest in the future. When committee members visit Budapest and we are members of the European Union, they can give us further advice on how to best access EU funds.

The EU funds will be of enormous assistance to Hungary, as they were to Ireland. I call on Deputy Lynch, who has not had an opportunity to address the delegation. I apologise to the Deputy for not calling on her earlier.

I welcome the delegation. I accept fully what the leader of the delegation said, that they are facing a fairly daunting task. It will appear at the outset, as it did to us when we first joined the EEC, that it is virtually impossible to come to terms with all of the different aspects of EU membership. Apart from specific areas like taxation and, probably, parts of their social agenda, membership will impinge on their lives dramatically. However, as one gets to learn this, one becomes familiar with the apparatus and quickly realises, as we in Ireland did, the elements of membership that will be beneficial to their country, both in industrial and agricultural development.

EU membership will change Hungary dramatically. Ireland's agricultural sector today bears no resemblance to what it was when we first joined and the same will happen in Hungary. In the main, however, there will be changes for the good in that country on a personal, societal and economic basis. Hungarians will find that sometimes these changes will be daunting and worrying, but nevertheless they will be for the good.

Membership of the EU has resulted in dramatic improvements in the lifestyle of women in Ireland. I am not certain of the position in Hungary, but most definitely we in Ireland would have been waiting another ten years to see the type of improvements that have taken place since EU membership. These, in the main, were forced on the Government through EU directives. I am referring to directives on equal pay, paternity leave, equality issues and social welfare for women. Joining the EU was good for women from that point of view.

Centralised bargaining should be highlighted because it clearly played a pivotal role in bringing the economy to its current position. However, it should be pointed out to a delegation of parliamentarians, in particular, that centralised bargaining greatly dilutes the power of parliament. It seems to most of us who are elected to Parliament that we no longer have control over the major issues of the day. Issues such as taxation, social policy, health and education are all now negotiated outside of parliament and have become part and parcel of the social partnership negotiations. That would usually be the job of parliament. That is one of the pressure points of which Deputy Howlin spoke. From our point of view, it is a big difficulty that parliament no longer has control over those areas. In addition, it dilutes the status of parliament in the minds of the people. It also brings us all to the centre, as the media is constantly telling us. This is because there is little opportunity to debate different positions, either of the left or right, on certain social changes. From that point of view, one really needs to be very careful.

Dr. Balsay

Do we have time for another question?

Yes, we do.

Dr. Balsay

My question diverges totally from the questions we have put. I forgot to mention at the beginning that at home I am not only Chairman of the Committee for Employment but also a member of the Constitution Committee, and I am also an observer of the related committee in Brussels. My question relates to that area. Yesterday the Parliament in Budapest started the debate on the legislation for the election of Members of the European Parliament. I know that in Ireland it is possible, in principle, to be both a member of the national Parliament and of the European Parliament, but we do not want to go that way. How does this Parliament control its 15 EU parliamentarians? How do you keep in touch with their work, or do you keep in touch with them?

As the most junior member present, I do not feel qualified to answer that question in full. I will ask one of my colleagues to respond.

Members of the European Parliament are entitled to appear before the European affairs committee. The general practice in Ireland is that if Members of one of the two Houses are elected to the European Parliament, they relinquish their seat of either the Dáil or Seanad Éireann at the next general election. That has been the practice of other political parties. There may be an overlap of two or three years but Members do not hold two positions after being elected to the European Parliament. One of our Ministers of State, Deputy Gallagher, had to relinquish his membership of the European Parliament immediately on becoming a Member of the Dáil.

I welcome the delegation. I would like to make an observation. Hungary is one of the few countries in the world which runs a very positive trade surplus with Ireland. We run very large surpluses with most other countries, with the exception of some of the OPEC countries. That augurs well for a country located in the centre of Europe, particularly with the direction Europe is taking. I see a great future for Hungary in the EU. There are many pluses it can take from other models in Europe, as Ireland has done. The model of social partnership here has worked very well, and the delegation has been given advice on that. If they can take the best from that, they will have done a great deal of good work here.

I will call finally on Deputy Howlin. The delegation is anxious to be in the Chamber for the Order of Business, and there may be a division also.

I welcome the delegation. I probably should not tell the parliamentarians but their Ambassador is a frequent visitor to my constituency in the south-east of Ireland where he enjoys deep-sea fishing. For that reason he has established a bilateral link between Hungary and Wexford, where I come from. I hope I have not got the Ambassador into bother. I will give a general observation to the delegation in relation to where Ireland is planning to go next. Rather than simply saying, "how did we get where we are?", the world has changed. The last phase of Ireland's economic development focused on two sectors, one of which was ICT, which is communications and technology. We managed to bring 60 of the largest IT manufacturers in the world, and their research units into Ireland. The other important sector is health care and pharmacology. Those sectors were the pillars upon which we developed the economy to this point.

The next phase we are looking at is biotechnology. That is probably an area where Hungary, with a very advanced technological background, is well placed to compete with us in the future. To give away our secrets, one of the anchors for the future is the establishment of Science Foundation Ireland, which is a State agency, to head-hunt the best and the brightest around the world in emerging technology and to bring them, and their research, to Ireland. We established Science Foundation Ireland with a very large budget of more than €600 million and the capacity to make individual grants of up to €50 million or €100 million to individual projects to bring the research to Ireland. That will be our next phase of economic sustainability.

We will conclude. Do the members of the delegation have any further questions? No.

I thank the delegation very much. This has been a useful meeting. I wish the delegation a successful conclusion to their visit and thank you for them for their kind invitation to the committee to visit Hungary. We would love to do so and look forward to making the trip during the lifetime of our Government which has four more years more to run. We hope we can make that visit in the coming year or so. I wish the delegation a safe return to Hungary and thank them very much for visiting Ireland and attending this meeting..

I would like to present the Chairman with a gift as a memento of the group's visit to our committee.

The Chairman and the delegation exchanged gifts.

I remind members that a meeting of the full committee will take place tomorrow at 1 p.m. at which we will launch our hearings into the reform of the Irish insurance market. I also remind members of the select committee that the committee is to meet tomorrow morning at 9.30 a.m. to consider the annual Estimates for the Department of Enterprise, Trade and Employment. It is hoped to conclude that meeting, with the approval of members, at about 11 a.m.

I wish to raise a technical point. Deputy Hogan indicated to me that he will not be available at 4 p.m. Is it possible to reschedule the working group meeting for 3 p.m. when he will be available?

Yes, he is the chairman of it.

Will the Chairman notify members?

Is that agreed? Agreed.

The joint committee adjourned at 12.15 p.m. until 1 p.m. on Friday, 18 July 2003.
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