Private Business. - Industrial Research and Standards (Amendment) Bill, 1979: Second Stage.

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

Is é cuspóir an Bhille cead a thabhairt don Institiúid Taighde Tionscail agus Caighdeán airgead a fháil ar iasacht chun dhá chríoch ar leith; an chéad chríoch, chun caiteachas reatha a íoc agus, an dara chríoch, chun trealamh capitiúil a cheannach.

The purpose of the Bill is to enable the Institute for Industrial Research and Standards to borrow temporarily such sums as they may require for current expenditure and to borrow on the security of their own lands and premises without any guarantee by me, such sums as they may require for the purpose of purchasing capital equipment, where the institute can show that they can fully service the borrowing through the earnings effected with the equipment.

I would like to put the Bill in context by saying something about the institute and their operations. Senators, I am sure, are aware that the overall objective of the institute is to promote the efficient operation of industry and to maintain and stimulate where possible, industrial growth. Their activities are distinguished from those of other State bodies such as CTT and the IDA, in that they are centred on industrial technology. The function of the IIRS is to ensure that industry has access to, and uses, the most up-to-date technology available for the creation of wealth, high quality employment and a higher standard of living for the Irish people.

The institute strive to achieve this objective in two ways. First, the provision of a technical advisory service to ensure the efficient operation of industry.

These services, for which fees are charged, are provided under the headings of specialist testing and analysis, problem solving for industry, and technical information and advice in general. Simply solving industry's problems, however, is not enough. The institute also engage in applied research and development which can lead to the development of new industrial units and the creation of new jobs by providing the necessary technological support for firms committed to grow and by providing viable investment opportunities for such firms. This research and development service now represents about 20 per cent of the institute's activities and the institute are hopeful of increasing this figure.

In addition the institute also act as technical adviser to the Government. Indeed, as Senators know, only recently the institute were given the lead role in the Government's energy saving campaign.

The institute receive the bulk of their funding from State sources. The total Exchequer grant-in-aid in 1979 amounts to over £5.1 million of which £1.4 million is for building and construction at the institute's headquarters at Ballymun Road, Glasnevin. On top of the £5.1 million, the institute expect to increase their earned income this year to over £2 million. Indeed, over the past ten years the institute's income from clients has increased dramatically from £83,000 in 1968 to its present level. In 1968 income as a percentage of the current expenditure of the institute came to only 15 per cent. It now represents over 33 per cent.

This increase in earned income has brought its attendant problems. Experience has shown that because of the delay in clients settling their accounts there is a substantial amount owing to the IIRS at the end of each accounting year, to be received in the early months of the following year. The outstanding amount has had to be financed by bank overdrafts to meet the cash flow problem at the end of each accounting year. The Industrial Research and Standards Act, 1961 makes no specific provision for borrowing powers by the institute. Section 2, subsection (1) of this Bill proposes to permit the institute, with my consent and the concurrence of the Minister for Finance to borrow temporarily by arrangements with bankers such sums as they may require for the purpose of providing for current expenditures.

It has been the practice since 1975 that the overdrafts are cleared very quickly in the new accounting year. This will continue to be the practice and Senators can be assured that these overdrafts will be purely year-end phenomena. The Bill currently before the House also proposes to extend the borrowing powers of the institute in section 2, subsection (2) to cover the acquisition of capital equipment which can pay for itself on a self-financing basis from fee income earned by the institute. With the increasing technological content of our exports in recent years, and the demand for certification of exports as meeting certain standards, it is becoming increasingly more obvious that there are certain areas of product-testing where the income generated from these tests would be capable of paying for the investment necessary to meet the demand. This Bill proposes, therefore, that in such cases the institute be allowed to borrow on the security of their own assets—their lands and buildings without State guarantee for the repayment of the sums borrowed. These borrowing powers will only be exercised with my consent and with the concurrence of the Minister for Finance.

I should like to assure Senators that it is not the intent of this Bill to place the institute at any disadvantage in borrowing compared with other State bodies. Quite the opposite, the aim of the Bill is to give the institute a flexibility in borrowing which they have not got at present. The reference in the Bill to "without State guarantee for the repayment of sums borrowed" is to make it clear that the institute's borrowings for capital equipment are to be on a self-financing basis and that the institute will have to satisfy themselves before considering such borrowing that they have the capacity to repay them from own resources and to ensure that the institute will be borrowing for clearly worthwhile capital investment.

Measaim go n-éascóidh an Bille na deacrachtai a bhi le sarú ag an institiúid agus molaim an Bille don Teach.

I am glad to support this Bill. I do so first of all because the institute have done excellent work in this age of technology, the importance of industry to this country and because of the type of growth we have to have in that sector there must be adequate funding of the IIRS in the work they are doing in the technological section so vital to our economy. Having said that, one could be a little bit critical. I want to re-echo somewhat Deputy John Kelly's remarks in the Dáil when this issue was discussed there because, in a sense, this is penny-pinching. Normal funding would be a grant-in-aid to the institute from Government but, in this instance, instead of giving them the money which they effectively need to do their work, we are, if you like, giving them the authority to borrow, which is a somewhat different way of doing things.

In this borrowing there is one specific problem they may encounter as a semi-State institute in that they are dealing with private industry in the commercial market place when people are trading and when people are buying or selling. Normally people pay reasonably promptly for goods or services supplied. It is possible that, in the case of the IIRS—because of the fact that they are a semi-State body with a supposedly bottomless pit of funds—some of their customers are not paying as promptly as they might do for their technology and advice. This was referred to in the Dáil. Certainly it would be proper for the financial controllers in the institute to look into their accounting methods, to see whether or not they are being paid as quickly as they should be by their customers. In this age of high interest rates—where the prevailing rate is anything between 15 and 22 per cent for different purposes—money is a very expensive commodity, but it is no more than a commodity. They should look into the possibility of adopting some type of system in so far as customers are concerned whom they might not sue as easily as people in private enterprise for overdue accounts. Something like additional invoices to charge up the prevailing rate of interest might help them in this regard. In so far as the cost of the money which they are going to borrow as a result of this addition to the Bill is concerned, they might get recompense to an extent by doing it in this manner.

Having paid compliments to the IIRS for the work they have been doing and for the services they have given to Irish industry, I should say that they have problems in the sense that such a huge proportion of industry here is of foreign origin, coming from America, Japan, West Germany, France and other countries which are technically more developed than ours. To a large extent the multi-national industrial companies coming in here rely on their own technology, or the technology of their home countries rather than on liaison with the IIRS. The IIRS have funding problems in this regard. Possibly they are not getting the support proportionately of what industry exists here as they might, for example, in a country in which industry has been indigenous and in which there is an industrial inheritance which we have not got.

The grant-in-aid in 1979 is over £5.1 million and the earned income is estimated to be over £2 million. There is a very healthy trend there for a semi-State body in the sense that they are earning an income for services provided. Back in 1968 earned income amounted to only £83,000. There is a parallel here with the extent of industrial development in this country since 1968, when they had then £83,000 in earned income. It is not merely a matter of inflation catering for the difference because, at that stage, it amounted to 15 per cent of their income, whereas today it represents 33 per cent, which is very healthy and on which I would like to compliment them. Independent of this House, in another capacity, I have had reason to be in touch with them and I have been very satisfied with the work they have been doing. But, having said that, to be objective one would need to refer to a very disturbing report in The Irish Times today on the financial page under the headline “US professor says the IIRS is not aiding Irish industry”. I will briefly quote from this, to put it into perspective. The Minister should be aware of the criticism, and if there are concrete reasons to rebut the criticism I think they should come in on the floor of this House. I would not normally pay too much attention to what professors of any discipline outside this country might say about this country, but the professor in question has a fairly eminent background, in that he works in the Sloan school of management at the Massachusetts Institute of Technology, otherwise known as MIT. It is probably singly the most advanced institute of technology in the world.

If you have somebody of that eminence, with that kind of background in that school of learning, expressing criticism, it is criticism which we have to take fairly seriously. Very briefly, he states that the IIRS has largely failed in its function to transfer technology to Irish industry. Indeed the IIRS appears in very poor light in his research, has failed in their role of transferring technology to industry. He states: "We have been unable to find a single instance of technology transfer." He makes the radical assertion that the IIRS strategy, which on the surface appears eminently reasonable, has not worked. He suggests the possibility, which was suggested to him by the general manager of a major Irish company, that IIRS have associated themselves too closely with British technology and that British technology is always either too backward or too sophisticated for Irish purposes. He adds that an explanation may be that the IIRS staff associate too much with contacts in the UK. All of their contacts are in Europe with little in the United States but that British technology is inappropriate to Irish needs.

There is in this article a rebuttal of his remarks by a spokesman for the IIRS who refuted Professor Allen's work as "biased, misinformed, disturbed, and unfinished", claiming that the work, which commenced in 1971, was to include 300 companies, but when it was finally updated in 1977 it included only 75.

Frankly, I find myself a little on the professor's side. If one is talking about detailed criticism from a source as prominent as I have quoted I do not know that it is altogether balanced or objective to dismiss it by the type of sweeping remarks which we read here: "biased, misinformed, disturbed, and unfinished". Whilst the work was based not on 300 companies but on 75 companies, 75 out of 300 is a reasonable sample. There is disturbing news in this. The Minister should be aware of it. I should like him to comment at this stage or later.

Having said that, my experience with the institute has been good. They have been doing excellent work. Today particularly they have singly an extremely important function in one specific area of industry. This relates to energy where we have been less diligent as a country in taking steps to reduce our dependence on fuel oil. We have been negligent. I know the Government have been talking to people and trying to get people interested in it. The public and industry in this country are very much less than receptive and are not sufficiently conscious of the real crisis there is in energy matters. Energy is the foundation of everything that industry stands for. There is an absolute crisis in energy at present. It is undiminished and is rapidly growing faster with the antics of the Ayatollah and for other reasons in the Middle East. We are not sufficiently conscious of it. We are not doing enough. In this regard the IIRS have been doing very good work in attempting to articulate our energy needs through public relations, in attempting to advise interests in this country, both public and private of what can be done.

Going very far wide of the mark of this Bill I might point out that there is a vast acreage of bog in this country. There are anthracite and coal resources; there are areas in which we could undertake research and development which would be in the interests of the country. I would like to compliment the IIRS on their work in that regard. However, I should like to balance that by saying that I am very disturbed by the report which I have read today which I accept as being authentic and on which I would ask the Minister to comment whenever it is convenient for her to do so.

I want to make one or two comments about this Bill. We all welcome it. It is good to see the IIRS being enabled to expand their work. I wonder if the capacity is not there for the institute to pay for new equipment out of their own resources, what then happens? Have they any option other than increasing their fees, or can they go to the Minister seeking a grant-in-aid? Perhaps the Minister would clarify that point.

My experience in regard to the Institute for Industrial Research and Standards is that they encounter considerable delay in being able to deal with complaints, particularly complaints under the Planning Acts whether they be in regard to effluent, noise, vibration or whatever. I have often wondered whether they have not alone adequate equipment but sufficient manpower with which to carry out the necessary tests in those cases. I had an experience once with them when they had to place in queue about a dozen applications for tests to be carried out under the Planning Act, 1963, when each complainant had to await his turn because there were available only two pieces of the type of equipment necessary to carry out the tests in the whole country. Of course complaints under the Planning Acts are becoming more frequent. Therefore, I can well see the need for the Institute to have more up-to-date equipment than heretofore.

The institute may well have to spend too much of their time and resources checking and testing existing products, and may not have the resources with which to undertake real pioneering work—as Senator Staunton said—on the energy problem. On television recently we saw that in Sweden a body equivalent to our Institute for Industrial Research and Standards had carried out tremendous research work into possible new energy resources, when it was thought that from their woodlands they could well have adequate energy resources within the next two decades. A body such as the IIRS should be entrusted by the Government to carry out pioneering work and very intensive research into matters such as the energy problem.

I believe there may be a problem on the administrative side of the IIRS in regard to collecting outstanding accounts. This is a problem all bodies have to face up to. The institute might well investigate bringing about an improvement of their mechanism in that regard.

I should like to thank the Senators who spoke and to thank them for their complimentary remarks about the IIRS. Each of us is aware in our own way of the tremendous response the IIRS have given to industry, the tremendous and valuable service they provide for industry, in particular—as Senator Staunton pointed out—to all the industry that we are getting from highly technological advanced countries. Of course, the IIRS are expected to be able to supply the type of service to which these people are accustomed.

I might refer to the last point made by Senator Markey. He talked about the institute perhaps not having the necessary manpower, about complaints that have been coming in about unnecessary delays that have occurred because of a rush on one service at a time. We will always have that type of situation arising because we can never budget in advance to decide what type of use will be made of a particular service. Then there are particular times of the year, particular times in the history of a country, or the history of a particular industry, when the services of the IIRS may be required at more frequent intervals. However, there is a consultancy study to be done of the IIRS. I should say immediately that that study would not be based on investigating what the IIRS are up to, in case they are up to any monkey business that we sort it out. Of course, the consultancy study is to ensure that the IIRS are geared to their role as an adviser, in their role as the institute which renders this service to Irish industry, ensuring they are able to carry out that type of service, and that they give the best service possible. The decision to have the consultancy study carried out was taken against the background of projections by the institute which gives this service to Irish industry to ensure that it is able to carry out that type of service and that it gives the best service that is possible.

The decision to have this consultancy study carried out was taken against the background of projections by the institute of an increase in staff numbers within the next ten years and a proposed major building programme to accommodate this extended function.

Preparations for the consultancy study are well under way. Representations have been received from three international groups with wide experience in science and technology, and in particular of the establishment operation and that type of research institute in developing countries.

As a result of this study, when the results of it are made known and the report is made to the Minister, it will be easier to make a correct decision to enable the institute to operate more efficiently, if that is necessary, and to aid it financially or otherwise in fulfilling its functions.

Senator Staunton referred to criticism of certain aspects of the institute's work by various people. Indeed, in the Dáil debate Deputies on the Opposition benches made certain comments. It is only natural, and indeed right, that there should always be ideas as to what the institute should do, what role it should fulfil and how best it should activate itself to meet the scientific and technical needs of Irish manufacturing industry. To the extent that all such inquiry of mind and comment are constructive, progressive and always aimed at achieving better results, then it is good and is welcomed.

I hold in high regard the motivation of the institute to serve Irish industry well. I hold in very high regard its efficiency and the level of expertise of its highly qualified administrative and technical staffs. It is evident that, as industrialisation progresses and changing needs emerge, new services will be demanded from the Institute of Industrial Research and Standards. New emphasis will be called for on the direction of its activity, and even criticism that it does not do enough in one way or that it is not going into the right areas. I reject this when it means that the institute is in any way unmindful of its obligations or lacks enterprise in pursuing them to the maximum degree that its resources allow it to go. I am always on the other hand, prepared to search, as I know the institute itself is, for changes which will optimise for Irish industry the activities which the institute is designed to carry on.

I feel that the consultancy study which I mentioned has that particular aim. As a result of the report which will be made by that consultancy study to the Minister, it will become obvious whether the institute could be helped in some way to give a better service to industry. This is on the basis that we are not being critical of the institute itself but that we are ensuring, as Senator Staunton pointed out, that the type of industry we are now attracting to the country is very highly sophisticated technological industry and we must ensure that the type of service this type of industry requires will be provided here in Ireland by the Institute for Industrial Research and Standards. The result of that consultancy study will ensure that any criticisms which have been made of the institute and of all such bodies, will be cleared up and that any help the Government can give to ensure that the service the institute give is the best and the quickest possible, will be forthcoming.

Question put and agreed to.
Agreed to take remaining Stages today.