Public Business. - Industrial Grants (Amendment) Bill, 1966: Second Stage.

Question proposed: "That the Bill be now read a Second Time".

The main proposals of this Bill are, firstly, to provide for the establishment and administration by An Foras Tionscal of industrial estates, with factory premises for renting, in development centres and, secondly, to continue in operation for a further period the scheme of enlargement and adaptation grants to assist industrial undertakings in preparing for free trade conditions.

With regard to industrial estates, Senators will have seen the Report of the Committee on Development Centres and Industrial Estates and the statement of policy indicating the Government's attitude to the proposals in the Report. For the convenience of Senators I might recall that it is the intention on completion of the regional surveys being undertaken by the Minister for Local Government to identify development centres in each region. Meanwhile, it is proposed to proceed with the development of industrial estates at Waterford and Galway. The necessary powers to enable An Foras Tionscal to establish and administer industrial estates are contained in section 4 of the Bill and there is nothing in this provision to restrict the location of industrial estates to particular areas.

I should like to make it clear that the identification of development centres and the setting up of industrial estates is not intended to involve the discouragement of industrial development at other locations. The Government have already indicated in the policy statement to which I have referred that the dispersal of industrial activity throughout the country, where this is economically feasible, yields important social advantages, and that, in the administration of the industrial grants scheme, the location of industries in other centres will be encouraged. It is confidently expected, however, that the development of industrial estates will attract thereto industries which might not be located in Ireland at all but for the facilities offered at these estates.

It is also proposed in the Bill that An Foras Tionscal should be empowered to make available, at reduced rents, factory premises situated in industrial estates administered by An Foras Tionscal and also to make grants available towards the reduction of rents for factory premises situated in what may be termed private industrial estates. This power is inherent in the provisions of section 4 of the Bill in relation to estates administered by An Foras Tionscal and a specific provision is made in section 9 in relation to estates in the other category. Where factories are made available at reduced rents it is the intention that the reduction in rent would not be more advantageous to the industrialist than the equivalent grant which could be given under the existing legislation.

Senators will, I am sure, agree that the industrial grants scheme which has been in operation for a considerable time and under which assistance is provided in appropriate cases to industrialists who build their own factories, has been an important factor in the progress so far achieved in industrial development. I am satisfied that the provision of factories on industrial estates at attractive rents will represent a significant extension of the range of incentives available for industrial development and, therefore, should stimulate activity among industrialists contemplating industrial projects that are suitable for location in an industrial estate.

Under the existing legislation the aggregate maximum expenditure provided for in relation to grants which the Minister for Industry and Commerce may make to An Foras Tionscal is £30 million. It is not proposed to increase this amount, at least for the time being. Section 3 of the Bill proposes, however, to increase from £20 million to £30 million the aggregate amount of grants An Foras Tionscal may make for industrial development. The provision for grants made by An Foras Tionscal will thus be brought into line with the provision for grants made to An Foras Tionscal by the Minister for Industry and Commerce.

It is also proposed, in section 5 of the Bill, that An Foras Tionscal should be empowered to recruit staff for the administration of industrial estates. As the type of work involved will be more akin to commercial activities than normal Civil Service procedures it is desirable that An Foras Tionscal should have this power so as to ensure flexibility in staffing arrangements both in the administrative and technical spheres.

The legislation which enabled An Foras Tionscal to assist firms by way of special grants, not exceeding 25 per cent of cost, expired on the 31st March, 1966. The Government feel that if the impetus towards adaptation which has been generated is to be maintained and strengthened the continuation of the grants scheme is necessary and one of the purposes of this Bill is to extend the operation of the scheme to the 31st December, 1967, as provided for in section 2 of the Bill.

In March last I had the "Report of the Progress of Industrial Adaptation" prepared and presented to the House. Senators will have seen from this report the steps which have been taken to prepare industry to meet the challenge of freer trade. As the report also indicates the work of industrial adaptation is by no means complete. However the failure of some firms to make use of the assistance provided and the lack of progress in certain directions mentioned in the report may be due to the uncertainty that had obtained regarding our future trading relations. With the signing of the Free Trade Area Agreement this uncertainty has been largely dispelled and it is to be expected that more firms will urgently carry out the necessary measures of adaptation.

As is indicated in the report, up to 31st December, 1965, some 600 firms had formulated adaptation proposals representing a capital investment of over £55 million. Adaptation Councils for the various industries have been applying themselves to the solution of the problems highlighted in the reports of the Committee on Industrial Organisation. Some councils have achieved fairly satisfactory results. Others have not as yet made any real impact on some of the wider aspects of adaptation, such as joint marketing, exporting, training etc, which involve co-operative effort between individual firms in the same industry or in related industries. There is an urgent need for a great burst of activity in those aspects of adaptation—equally urgent, as I have said before in another place, with the need for further progress in physical adaptation by way of installation of new and modern equipment, expansion of buildings and improvement in techniques. I am confident that the desired progress will be made as I think industry is now far more aware of the need for adapatation measures than it was when the legislation was first introduced. This is, of course, only to be expected. The conclusion of the trade agreement with Britain brings us to the threshold of free trade and it is only the most ostrich-like mentality that could in the present circumstances ignore the need for radical changes in all aspects of industry. Evidence of the new and more realistic outlook is afforded by a sharp increase in the number of applications for special grants received in the quarter ended 31st March, 1966.

There is still a great deal of adaptation work to be done. Even though quite an amount has been achieved we must continue to build on this. Action cannot now be postponed. Now is the time for an all-out effort to ensure what still remains to be done will be tackled with energy and completed with speed. Section 2 of the Bill provides one of the means of continuing to assist those industries which are willing to prepare themselves to make proper provisions for the future.

I recommend the Bill for the approval of the Seanad.

Mr. Garret FitzGerald rose.

An Leas-Chathaoirleach

It is now close to the time to suspend business. Would the House agree with the suggestion that we continue the debate until 6 p.m.?

Senator FitzGerald will be finished in five minutes.

There is no cause for laughter.

That is a challenge.

An Leas-Chathaoirleach

What is the wish of the House in this respect? We could take up five minutes discussing what we are going to do.

Go ahead until 6 p.m.

I do not mind breaking off in the middle.

Half way through.

Ten per cent of the way. I have no hesitation in welcoming this Bill both because of the technical increase in the provision for grants, the extension of the period for adaptation grants, and this new development of industrial estates. When industrial grants were introduced originally they were introduced with a view to spreading industrial development more evenly, particularly to the west of the country. This was a reasonable idea at the time but whether because of the general stagnation of the economy at that time or because the grant provisions were inadequate, this early measure proved almost totally ineffective, and in five years the total of grant commitments amounted to less than £400,000 representing a total investment of less £1 million and giving at best 200 low-grade, low-paid jobs a year in small and not very stable industries in the west. During this period, as an examination of the statistics of industrial output by counties shows, the decline in the relative amount of industrial activity in the west as compared with the rest of the country continued unabated. It was at the end of this period that the legislation was extended to take in the whole country and the philosophy of industrial grants was changed from one of diversion to one of the creation of employment and the attraction of industry. Though the original provision made in the eastern part of the country was rather limited the subsequent increase in aids and in grants generally began to yield a good return in the late 50s and particularly in the 60s. I think there is no doubt but that these grants make a most effective contribution to the expansion of employment. It may be an inadequate contribution, and it is in fact, as I shall mention later on, quite inadequate to what we require, but it does involve the creation of new employment of a kind that would not otherwise be created, and the grants have proved effective in this way. Again, because of deficiencies which I shall mention later, we have not got adequate information to test the return we got on those grants but from the inadequate information there are strong indications that the effects on the creation of employment and continuing output are considerably greater than in other fields, and certainly greater than from investment in agriculture which has produced consistently such poor returns in increased growth of output over the years, and probably up to the level of what we get from investment in tourism and certainly greater than from investment in other activities.

In a developing country the attraction of outside industry by industrial grants and the encouragement of development of domestic industries are both essential if such a country is to solve the problems of economic development. In three ways these grants make a contribution. The first is that we do not have in this country, or have not had hitherto in any event, anything like sufficient volume of entrepreneurial ability and enterprise in the public and private sectors together to add up to the volume of enterprise required to create new activities that would provide employment at the level which we need.

Secondly, and this is greatly underestimated by many people, we do not have in our domestic firms and much less in our State enterprises the kind of market know-how and control of market access which is so vital. There is a very wide range of modern products whose development and sale is a highly expert business, often controlled by relatively few firms throughout the world. No small firm certainly, and not even many among the large firms, can readily break into that business. The only way in which Irish products of this kind can find their place in the markets of the world is if one of these large firms establishes itself in this country, and to gain that kind of market access we have to attract foreign firms to this country and accept and welcome them.

Thirdly, and this is a more recent development, we need capital. Up to a couple of years ago this was not a primary concern, we had adequate capital for the limited amount of enterprise available, but more recently for various reasons capital has not been available and from now on it will not be readily available, and therefore we require foreign capital to supplement our own financial resources. For this reason a grant which attracts foreign industry is of great importance.

It is a pity that some people tend to take a negative attitude to the whole idea of industrialisation, which tends to be subjected to unfair and unwise criticism, more particularly the idea of industrialisation with the aid of foreign enterprise. This type of xenophobia is not only out of date, it is dangerous. Foreign enterprise comes to countries which welcome it and in which the atmosphere is one favourable to foreign enterprise. Those who criticise the idea of foreign enterprise and who oppose measures to attract it, in a country where we are only providing a fraction of the new jobs required each year for our people, are not doing good work for our country.

Debate adjourned.
Business suspended at 6 p.m. and resumed at 7.15 p.m.