Seanad Éireann debate -
Wednesday, 22 Oct 1980

Vol. 95 No. 1

Shannon Free Airport Development Company Limited (Amendment) Bill, 1980 [Certified Money Bill]: Second and Subsequent Stages.

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

Minister for Industry, Commerce and Tourism (Mr. O'Malley)

The purpose of the Bill is to provide for the additional financing of the Shannon Free Airport Development Company Limited by the raising of the limits laid down in existing legislation. Specifically, the Bill provides for:

(a) an increase from £45 million to £80 million in the aggregate of the amounts which the Minister for Finance may subscribe in taking up shares of the company; and

(b) an increase from £22 million to £40 million in the aggregate amount of grant-in-aid voted annually which may be made to the company.

The company's share capital, which is subscribed by the Minister for Finance is used principally for expenditure of a capital nature, in both the Shannon Industrial Estate and the mid-west region.

Section 3 of the Bill provides for an increase in grant-in-aid moneys which are used by the company to meet day-to-day running expenses and also to provide financial assistance to industries on the Shannon Industrial Estate. The Minister for Transport provides an annual allocation in respect of the company's current expenditure relating to airport traffic development and this comes within the overall limit now being amended by section 3.

Expenditure by the company under the headings of share capital and grant-in-aid at 30 September 1980 stood as follows:

Share capital	—	£45 million
Grant-in-aid	—	£21.65 million.

The existing limit for share capital has now been reached and the limit for grant-in-aid will be reached shortly. It is, therefore, necessary that the statutory limits be now increased to enable the company to continue their operations. On the basis of estimates of expenditure available, the proposed new limits will be reached towards the end of 1982.

SFADCo discharge a wide range of functions of which the two most important are: air traffic development, and the intensive promotion of small indigenous industries in the mid west region.

Down through the years the task to secure the continued viability of the airport has been tackled in a most vigorous fashion by the company. At no stage did the company ease up on their efforts to increase traffic through the airport. The results of bad years had to be reversed and the road to growth resumed very quickly. Last year for example, the ground lost in 1978 had been regained.

To take the individual components of total traffic through the airport, the position is that in 1979 passenger traffic increased by 2 per cent; air freight traffic recorded a 6 per cent rise. Air freight continues to grow at a very heartening rate with a 36 per cent increase recorded in the first eight months of this year. This is largely due to the increased industrial activity in the region. However, passenger traffic so far this year shows a very serious decline on 1979 levels. The overall outcome to date this year does give rise to some disquiet. It is probably true to say that the challenge now facing SFADCo on the air traffic front is the most daunting for some years.

Three years ago the development of small Irish-owned and controlled industry on a national basis was not being pursued at the pace and vigour required to bring about a more balanced industrial structure. The policy of the sixties and seventies of attracting inward manufacturing investment could not be faulted. Yet the success of this policy, of which we are proud, did bring home to us the need to strengthen and diversify our indigenous industrial base. The most effective way of doing this was, and continues to be, the intensive promotion of small native industries. There was no doubt in my mind that the full potential of this sector was not being exploited. A fresh effort in this area was needed.

I gave SFADCo the task of proving that the small Irish industrialist had a major role to play in the drive for the rapid creation of good manufacturing jobs. The experiment was confined to the mid-west, which from the remote areas of County Clare to the inner city of Limerick had all the elements of a truly worthy challenge.

I gave SFADCo complete freedom in going about this job. The success of the venture would not be measured solely in terms of jobs but also by reference to the effectiveness of the new methods and ideas developed and tested by the company in stimulating this sector of industry.

Whilst job approvals are one of the best indicators of the future rate of job creation, I was also anxious that actual jobs would be created quickly and that these would be spread more evenly throughout the region.

There is within the mid west a large concentration of manufacturing employment within the Limerick city, Ennis and Shannon triangle. Automatically these centres were the prime locations for large mobile projects in the region. It was therefore necessary to give attention to those areas which could not have the necessary support services to accommodate projects of this size. Job targets must not only include what appears achievable with normal effort, but also those projects which can be brought to fruition with careful nursing and attention. In 1977, before the SFADCo experiment began, small industry job approvals in the mid west totalled only 230. The target which I gave SFADCo for 1978 was 500. This was exceeded by 20 per cent. Recognising the momentum being built up by the company and the spin-off benefits of large scale industry locating in the region, the target for 1979 was 1,000. It was therefore very satisfying to me when SFADCo turned in results which doubled this target.

Equally satisfying was the conversion into actual jobs and the geographic spread of the approvals of the 1978-79 period. By the end of 1979, 700 new jobs in small industries were on the factory floor. In addition, nearly 50 per cent of job approvals were in areas outside of the major manufacturing centres in the region.

One of the most effective elements of the company's intensified strategy was the appointment and work of four field officers who served Limerick city and Counties Limerick, Clare and North Tipperary. These officers searched out every source which potentially could lead to the creation of new small industry jobs. In doing this they were always available and were recognised in their areas of responsibility as being the people to get things moving.

There are other programmes in the SFADCo strategy such as the provision of a comprehensive advisory service tailored specifically to cater for the most pressing day-to-day problems of the small industrialist and the arrangement of management courses both in an atmosphere of informality and encouragement for the small entrepreneur.

The recently established Innovation and Microelectronics Applications Centres which are housed at the NIHE campus in Limerick are and will continue to be a powerful instrument in raising the technological standards of small industries. I would hope that the services offered by these centres will be fully untilised. Small industry in the mid-west region now has at its door-step a key facility to ensure future viability.

I would like at this stage to compliment SFADCo on the enthusiasm and expertise with which the staff, board of directors and particularly its chairman, Mr. McCabe, discharged the mandate for intensive development of small industries in the mid-west. Once again the company has demonstrated its ability to tackle effectively a job which, though difficult, was and is worth doing in the national interest.

I announced last July that I had decided to extend SFADCo's mandate for small indigenous industries in the area of south west and west Offaly. This area, which includes the towns of Banagher, Birr, Ferbane and Kilcormac, needs special attention and I am confident that it will benefit from intensive promotion by SFADCo.

I commend this Bill to the House.

Mr. Staunton

I welcome the Minister to the House for the introduction of this Bill, which allows the Minister to take up an increase in the share capital of SFADCo of from £45 million to £80 million. The grant-in-aid is increased, therefore, from £22 million to £40 million. We support the Bill in broad terms. The most significant aspect dealt with in the Minister's speech, has been the recent involvement by SFADCo, as a result of a decision by the Minister two years ago, in what is termed indigenous small industries in the mid-west region. The other areas are those we have been debating for a number of years — matters concerning air traffic, Shannon town, promotion of industry from other countries, and the industrial estate in Shannon.

Because the small industrial aspect is the most interesting sector dealt with by the Minister in his speech, I would like to make a few comments concerning this development. It is extremely welcome to see as high a proportion as possible of industrial development taking place within this country with equity help by Irish nationals, with board membership by Irish nationals and with management and a work force, in so far as it is possible, composed of people who are natives of this country.

There was a myth abroad which is dying at last, that grants to develop industries were available to Japanese, Germans, French, Americans and British nationals but were not available to the Irish public. I have had experience over 20 years of dealings with groups both outside this House as well as politically, such as the Industrial Development Authority. I know that viewpoint to be absolutely untrue. I know over the years that the Industrial Development Authority, and presumably SFADCo, have been absolutely fair-minded in dealing with schemes. Of course, one of the major reasons we did not have as much Irish involvement in industrial development was because the industrial revolution bypassed us; we were not basically an industrial country, we were an agricultural nation and we did not have these skills in industry to a fraction of the extent that the developed countries had. It was for this reason and not because of discrimination against Irish nationals that such a vast proportion of our industrial development came from foreign sources. We supported that policy, of course, because regardless of the source if it was providing jobs and diversifying the economy as successfully as it has over the last 30 years or so, obviously it was welcome. Of course, the intensive drive by SFADCo where native talents are concerned is welcome.

There are problems concerning organisation that relate not so much to the SFADCo region but in relation to what the Minister and his colleagues in the Cabinet will do when they look outside the SFADCo region and when they attempt to analyse what is termed success in the SFADCo region and when they look to the models that they feel should be developed in other parts of the country so that we can get equal development. We had been saying for many years before there was any question of specific responsibility for small industry — this is a question many of us raised over the years, especially those of us coming from other less developed parts of the country — that the SFADCo experience was on the record. It was anomalous in the sense that it was the single structure, outside national Government, which was entirely different from the organisation in any other part of the country. For the rest of the country we had this terrific level of centralisation as opposed to the autonomy within the region. We posed certain questions some years ago before the emergence of the small industries sector developed.

There is a consensus in this country that SFADCo have been a very significant success. If they have been a success I do not know if successive Governments can be excused for the fact that they have not looked at this model and developed models in other parts of the country, having learned the SFADCo region lesson. Unfortunately that has not happened. It is one of the major flaws in the present Government that they have not tackled this issue.

Many of us, looking at the SFADCo development over the three to four county unit, felt SFADCo is an organisation that has certain flaws in it and that this country should develop units with autonomy to varying degrees. During the tenure of the last Government some of us were involved in a policy document attempting to establish what was termed a western development board, which would have had responsibility for the five Connacht counties and the county of Donegal. We looked on that as the first unit which we thought the Government should have established because it was that part of the country which was least developed and from which further lessons would be learned which would lead to ultimate autonomy in five, six or seven different regions in the south or southeast. Unfortunately, that policy was scrapped completely. We were told subsequently by Deputy O'Donoghue, when he was in charge of Economic Planning and Development, that the whole concept of regional policy was not scrapped but that his Department were — this was 18 months ago — looking at the whole issue of sub-national planning and regional development so that the Government could make policy decisions based on these matters of which we are speaking. Deputy O'Donoghue, unfortunately, is no longer a member of the Cabinet. I do not know if the Minister, within his ambit in Industry and Commerce, can refer specifically to regional development, which presumably is a matter for another Minister but perhaps in a broad sense he might like to comment on this particular matter.

In so far as small industry is concerned, while the SFADCo figures are excellent and extremely welcome and the experiment initiated by the Minister has obviously been a success, it is also significant that throughout the rest of the country the level of industrial development in this sector has been, to a degree, on a par, that it has been a national success story and not simply a specific regional success story.

When we look at the figures here we find, taking other regions in the country, other IDA regions responsible to the IDA in Dublin or county development teams, that about 10,000 jobs in small industries were created there, which was about five times the level it had been, for example, three years ago. There is obviously a parallel here. I simply want to say that with the advent of modern public relations, with the trappings of semi-State organisations, the publication of glossy reports and with the annual meetings and annual delivery of such reports, the public hear a story which the promoters want to tell. For a number of years under the county development team system a terrific amount of work of this nature has been going on and continues to go on in what we call the 12 underdeveloped counties, such as Mayo, Sligo, Leitrim, Roscommon and Clare. The central development committee have been employing county development officers in each of these counties. They are responsible to the Department of Finance and co-ordinate their work with the local authority. I feel these people are being undermined by some of this type of development. A great deal of the activity which we are told of in the SFADCo area, such as courses, promotions within the towns and villages within the region to attempt to get Irish entrepreneurs involved in such development, and visits to Irish emigrants in major centres in Britain has been going on. All of the work, without the trappings, has in fact been going on in depth in these other regions.

One of the weaknesses has been that with the extension of the IDA structure into IDA regions, work which county development officers and their assistants had been very usefully doing within the county structure, was interfered with to a degree by the IDA regional development work. I want to put into balance the work that is going on in these other regions without any gloss. The Minister, with his colleagues in Government, should look at other parts of the country and seek to learn a lesson from SFADCo. He was right in his reply to the debate in the Dáil when he suggested that the IDA regions throughout the country are probably a little bit too large on which to base an intensive small development programme. If that is so, we should get back to what existed at local level through the county development system and the work done by county development officers before there was any emergence of IDA regional offices or before there was any involvement by SFADCo in small industries promotion. I agree with the Minister that he should be quite firm that the area within which SFADCo have responsibility should not, in any sense, be extended because the merits of the smaller unit will be lost if we dilute it.

The west Offaly or south Offaly involvement is mysterious. There may be a specific reason why help is needed in Offaly, but the weakness in breaking this rule creates a certain type of precedent which may be pointed to by other counties on the periphery if they are in difficulties at some time in the future. The Minister in his speech in the Dáil on 15 October stated that it was his intention to evaluate the position after 18 months to two years to determine if such an intensive drive should be extended to other areas. Presumably we can now review this and the Minister will be in a position to evaluate. I regret that in his speech to this House he has not indicated his views concerning such extension. Whilst obviously it is not within the exact province of the SFADCo Bill to discuss these matters perhaps the Minister might develop some of his views concerning an extension to other parts of this country. Because of the SFADCo success there has been this disquiet for a number of years and it is time the Government looked at these regional issues.

I noted in an Irish Times' supplement of 10 January, on the whole Shannon issue, that there was a comment concerning these regions which seems to bear out what the Minister has been saying about the size of the regions. The journalist on 10 January said that if the experiment is to be extended to other regions the same constraints will apply eventually and added to these constraints will be other considerations. He said:

The IDA is a central bureaucratic organisation, heavy at the centre, relatively small in staffing in the regions, both factors which will need to be overcome to deal with small enterprises in other regions as effectively as Shannon Development has tackled the problem in the mid-West.

It is for these kinds of reasons that I would like to cast the Minister's mind back to fundamentals and the fundamental structure of local government in this country, the county council, which in my view has been tampered with a little bit too much and to look to this as the unit of organisation, certainly where small industry is concerned and to look further afield in so far as autonomy in other regions is concerned so that we may have a more equitable policy. We welcome this Bill and support the Minister in his efforts.

Professor Hillery

It is heartening to note, especially at a time of international recession like the present, the success of the small indigenous pilot scheme undertaken by SFADCo. I join in congratulating Mr. Frank McCabe, the chairman, and his team on the initiative and flexibility they have shown in advancing the experiment. They have, of course, far surpassed the job approval target set for them. The Minister, too, is to be congratulated for encouraging SFADCo to concentrate on the development of small industry in the mid-west region.

While the creation of jobs is the primary task, I find it particularly encouraging, and an added bonus, that almost half the small industries approved by SFADCo are outside the three main population areas, namely Limerick city, Ennis and Shannon. I speak as one who was born and reared in west Clare and very much welcome this trend. This policy of establishing small industries is, of course, in accord with overall Fianna Fáil policy of bringing development and jobs to the people. Through this policy Irish men and women are afforded the opportunity to remain in their native areas which means that home life and community life are enhanced.

Small industry is increasingly interacting with larger industries. Small companies will continue to play a key role in supplying components, especially in the engineering sector, to the larger units. This development of small industry provides more opportunities for the creation of jobs as such, but importantly in addition it creates openings for those with the relevant skills and entreprenurial flair.

I share the Minister's concern that in the first eight months of this year transit and terminal passenger traffic at Shannon has declined compared with the comparable period for 1979. There are, of course, several factors contributing to this situation most of which are outside our control.

In this context I would like to raise one matter with the Minister. During the craftsmen's strike in Aer Lingus last summer it proved possible to turn around Aer Lingus trans-Atlantic flights at Shannon. They had the facilities and the manpower adequately to handle all Aer Lingus trans-Atlantic flights when Dublin Airport was closed for this purpose due to the strike. Since two out of three passengers who travel by Aer Lingus across the Atlantic either embark or disembark at Shannon, I would urge that as a means of helping Shannon, serious consideration should be given to turning around most Aer Lingus flights at Shannon in line with the passenger usage of the airport.

I support the Bill. This will be money well spent.

Mrs. Robinson

On behalf of the Labour group, I welcome the Bill and approve of the voting of further moneys for the SFADCo project. The Minister might give us some more information as to the use that will be made of the additional grant-in-aid which is being raised from a ceiling of £22 million to £40 million annually. Is that going to be taken up by SFADCo? What proportion will go to the support of the small indigenous industries and what proportion will go to aviation or tourism or the other activities of SFADCo? The Minister gave his targets and the performance of SFADCo during 1977, 1978 and 1979. It would be important for us to know what the target is for the coming year and if there are projections ahead of that for the further creation of jobs in these industries.

Another area that is very relevant to the actual creation of jobs is the amount of training and opportunity afforded to young people in the type of job being created. I would be grateful if the Minister could deal specifically with the training aspect. What proportion of these small industries are craft industries? What proportion have a high technology component or lead to the acquiring of skills? What emphasis has there been on the question of training and developing the people who would be involved?

The success of SFADCo and the Minister's understandable pleasure in that success is a great vindication of the intelligent involvement by the State sector and by State capitalism in the promotion of the kind of industrial development which we all welcome in Ireland. I would like to see us thinking more broadly about this.

Senator Staunton raised the question as to whether this pilot scheme or experiment could be developed in other parts of the country. It can be developed on a broader scale if one of the proposals of the Labour group were to be implemented by a national development corporation which would have a similar type role in creating, promoting and furthering, through intelligent capital injection, intelligent promotion and support, the building up of small industries, the creation of small increases in employment in rural Ireland and in small towns in a balanced way in order to complement the attraction of larger industries or the location of larger industry.

The Labour group welcome the Bill because we approve of the work done, particularly in this area of small industries, by SFADCo. The Minister could in his reply give us more useful detailed information on how this grant-in-aid will be taken up and in what proportions over the next few years, what the targets are for the next few years and specifically the Minister might give us some more information on the opportunities for training and the promotion of training for those who are in a position to take up jobs in the Shannon region.

Mr. Mulcahy

Ba mhaith liom fáilte a chur roimh an mBille seo. I recall to the House that when the Minister described this project to us some time back I made a contribution which outlined in what great esteem I held SFADCo and the work that they have done over the years. It is in the record of the House. This project has been a very successful one and is a model of its kind. It is with great pleasure that I have the opportunity now to make a few comments when the Bill is being presented to the House and to support it and the extra money that is being made available by it to SFADCo.

At the run up to the last general election we were looking at the small industry policy as it was operated by the Coalition Government and it was quite clear to us that not enough emphasis was being placed on the investment and the concentration of effort behind small industry. Of course everybody was in favour of it. The small industrial sector contributed a large proportion of the employment but when you looked at the percentage investment going to small industry and the percentage of projects which were in small industry, they were not in proportion to the figure which indicated the importance of small industry in the industrial sector as a whole. What the Minister and the IDA have been doing in the last three years has corrected that trend and has arranged for a concentration of effort in order to improve the development in this segment of industrial activity.

It is important to recognise some of the things SFADCo did to make this happen. It was not just a matter of selling projects: they set up a team of people who were experienced in production engineering, individuals who were quite at home milling metal, grinding it, cutting it and shaping it, and who did not feel out of place on a factory floor. This is one of the big contributions they have made. They have harnessed a team of people who can nurse the projects. I would like to see more of that. They also, in their training, put emphasis on entrepreneurial training and it is possible through appropriately designed educational experience to get people who normally might not be interested in setting up their own businesses, suddenly to have the motivation to do that. That has been the pattern of development and education in this country for years. Through the influence of parents, who were not properly informed of the opportunities for young people and who thought more of the secure jobs, such as teaching or the civil service, it is now possible to do this. SFADCo are making use of these methods and I am delighted to see it and would like to see it expanded.

Over the last few years the percentage of our GNP going into investment in productive interprise has come up to the levels required to employ young people of this country. The small industry side is the indigenous side mainly and is one that we have to develop even more. To that extent I put it to the Minister that perhaps if things are going well in Shannon and he has extended the experiment to Offaly, an expansion of the model might be needed. That might have implications in terms of investment of the structuring of existing activity but if it is good for Shannon possibly it will be good for Donegal and for other places.

The quantity of products which we import and which could be provided by industry here is colossal. Something like 3,000 million products are being brought into the country for further processing. Under the Minister's own agencies there is a target for the coming year of 30 million for the replacement and substitution of Irish products for products which need not be brought into the country. This is the outlet for small industry and I look forward to its growth. It gives me some satisfaction to see that the National Institute for Higher Education in Limerick is working with SFADCo in this centre for innovation. It was another O'Malley, the Minister's uncle, Donogh O'Malley, who founded the National Institute for Higher Education in Limerick and some of the cynics at the time said that all this talk about Limerick having its own MIT was a lot of nonsense. It is coming home to roost now as another O'Malley contribution to the development of this country.

Mr. Harte

The Bill must be welcomed by the Labour Party but it is necessary to make a few observations. Side by side with the affluence among some sections of the population and side by side with progress in some parts of the economy, there is also the very evident characteristics of chronic under-development. In welcoming the Bill we have to look favourably on situations such as those emerging in this type of progress which we see in the Shannon development area. We must also compliment SFADCo on the benefits that flow to the adjacent population and generally on the extension of the idea into Offaly. I note that the Minister has indicated that there is no danger of it getting out of hand to the extent that it would no longer be described as the Shannon development area.

Obviously this development is very good for the country. It is very good to see small indigenous industries being encouraged. It is very encouraging for people in places like Ferbane, Birr, Banagher and Kilcormack. I often heard people there complaining about the lack of effort to provide them with some sort of industry and there were complaints about places that had been built and nobody ever took up the option on setting up an industry there. I am pleased for those areas and I am pleased with the progress of the Shannon Development Authority.

We can see progress in this kind of an area, yet for some reason, there is a resistance on the part of the Government —Fine Gael would be equally resistant—to allow the State to participate in manufacturing industry. We see the evidence of that in the limited amount of participation throughout the country. You have it in places like NET, the Sugar Company, Bord na Móna —you could say about 5 per cent and that is a very, very low investment by the State in the manufacturing side of industry. In this short Bill is evidence that where the State participates, it is possible to create secure employment. It is also evident, if you look around the country, that the private enterprise sector cannot in its own right deliver on this question of full employment. It is a sad thing to have to say each time one talks about the economy, but the history is there and this has to be repeated as often as possible.

Here we have evidence of the State participating in an enterprising way and it is showing a very good result. The Minister is to be complimented on his initiative. At the same time, there is a reticence to extend the whole concept of State involvement in manufacturing industry as a whole. Probably we suffer in this respect because of what appears to be the bad performances of the service industries. In fact there are many good performances in the industrial side where the State is involved and we do not hear a lot about that. The amount of money that is involved is not very significant having regard to the progress that has been made.

We will have to keep on advancing the argument to the industrialists who continually want to take State grants that they are looking for rights without obligations. They do not want you to get into the areas where it is profitable, and they get encouragement from successive Governments in this respect. They argue that they are the people best able to deal with that situation. They are not very shy when it comes to the question of putting the hand out for a grant which is State aid anyway and State involvement. But it is State involvement without the returns, perhaps some sort of a tax return, but nothing about sharing in the profits. We have to give greater emphasis to this. We have to use places like the Shannon free development area as an example that the State can be a very productive partner in enterprises and can work side by side with private enterprise.

We have always advocated the idea of the development corporation. It has been the desire of the Irish Congress of Trade Unions that this would take shape as well. In this sense we were talking about the development corporation entering into the field of setting up industries, coming into partnership with people who are already in industry, forming some sort of co-operation move with other things. It is not just an ideological thing. It is not a question of the State taking hold of something, putting their stamp on it and saying, "I own you." There is a role for the State, particularly on the manufacturing side. The people in private enterprise should have it made known to them that, as far as we are concerned, the State is as much part of the game of setting up manufacturing industry as they are.

I agree with the Minister when he talks about the small industries being interactive with the larger industries. You cannot set up two different operations to deal with them. It is equally true to say that the whole question of development needs to be broadened. This is not so much in one particular region: there must be more State participation in the development of existing industries. There must be joint ventures in new industry. There must be direct State aid and development of the necessary infrastructure to meet these things. It is very nice to be able to say that one region is doing well, and again congratulations. I would love to see every region in the same situation. With a State development corporation we would be able to establish industries and develop areas judged to have potential growth.

An Cathaoirleach

I have allowed the Senator and other Senators to make reference to areas outside the SFADCo jurisdiction. I wonder if the Senator is going too far beyond the scope of the Bill.

Mr. Harte

I am very sorry. I did not realise I was going so far adrift. It is lovely to see small regions developing and to welcome the extension of that region. We are not going to get very far unless we start thinking of a very worthy development along the lines that I suggested. To back up SFADCo, we do in fact need the Department of Economic and Social Planning which we feel is a requisite not only to the Shannon Free Development Company but also to other similar projects that might be set up in other regions. We welcome the Bill.

We wish the people down there the best of luck. We hope that their example will be an inducement to other people to come in there and set up little industries.

Mr. W. Ryan

I, too, welcome the Bill. I would like to compliment the Minister on having introduced it. Both the Minister and the IDA are to be complimented for all the small industries that have been established, not alone in Shannon but in all the other regions as well. I am very pleased to see that part of County Offaly has now been included in the Shannon area. Some years ago, when the regions were being set up, I pressed very strongly for a part of Tipperary South, known as west Tipperary, which takes in Tipperary town, to be included in the Shannon area, and the then Minister said that was not possible. Now that a part of Offaly has been taken in I see no reason why the Tipperary area should not be included. We in the Tipperary area can make a far better case to be included than any other area outside the Shannon area because, as the Minister well knows, Tipperary town is only 24 miles from Limerick city and is completely surrounded by County Limerick. His own constituency, at Oola, comes within four miles of Tipperary town, again at Knocklong the west Limerick constituency takes in places like Galbally and a place called Ballywire. Some people in County Limerick who have to go to Limerick city on business have to travel through Tipperary town. For most people in Limerick, in Ballylanders and Galbally and those places, Tipperary town is their market town. To be fair to the south eastern region, we have got quite a lot of industry. Tipperary town itself is not too badly accommodated at the moment. We have the villages around it such as Emly on the Limerick border, Cappawhite and others, which are crying out for small industries. If they were in the Shannon development area they would have a much better chance of getting industry because, with so many big industries coming to the Limerick region, there are bound to be small industries needed to support them. For that reason. I again appeal to the Minister to reconsider the inclusion of west Tipperary in the Shannon area.

Mr. Markey

I think this Bill extends the area and scope of SFADCo. Up to now it was confined to the Shannon, but it has now been expanded into south Offaly. We are going to have a repeat of Senator Ryan's appeal in future for the inclusion of areas close to the Shannon region. We should consider whether it is time to think about having a number of bodies similar to SFADCo in different areas around the country. I maintain that the Industrial Development Authority, while it has done a tremendous job within the confines of its own restrictions and mainly in regard to finance personnel, has not really been able to get to grips with the problem of creating indigenous industries in a small sphere around the country. It is in this category that we will find the salvation of our employment problems in the future. There are many areas in this country which have had difficulties as Shannon originally had, with the airport there, and therefore it was necessary to create a body like SFADCo which could develop the region from an industrial point of view.

There are very many regions and areas with traditional industries which had problems caused by the recession and change in market trends or reorientation of industry in the general sense. These regions could well be catered for with bodies similar to SFADCo, by recruiting the local talent, the local education, the local skills that are in all these different areas and embodying them in an organisation similar to SFADCo, which could be financed by the State. There is a vast potential of local talent, calibre and personnel which could, if given sufficient incentives by the State, concentrate on the problem of creating small industries around the country. It is in the small industries sphere that we will solve our employment problems. It could well be an opportune moment for the Government to consider an expansion of this idea which has been so successful in Shannon and giving different areas of the country incentives to which the local skills and personnel could devote tremendous potential to creating small industrial employment.

The IDA have had very good success but have been inclined to concentrate on the large industry and the large technical and large capital intensive employment. I believe that every area of the country has within it small industrial potential and, if given sufficient encouragement by the State, I believe it could succeed. SFADCo has succeeded and there is no reason why, if the Minister is now extending it outside the immediate Shannon area, he should not set up some body who could consider the expansion of SFADCo to other areas. It can only succeed.

We should concentrate in future on creating small industries which can supply perhaps five, ten or 20 jobs. They are flexible and can stand up better to the economic strains during a recession than a very large capital intensive industry which the IDA, under their terms of reference, must choose in deciding where to invest, where to concentrate key personnel and where to spend the money which the Government put at their disposal. The IDA cannot get down to grassroots level to create these small industrial jobs.

An Leas-Chathaoirleach

Before I call Senator Whitaker, I should like to remind the House that we are dealing with SFADCo and references to the IDA would need to be very brief because the Bill is quite specific.

Dr. Whitaker

I should like to make a brief intervention in support of the Bill and in search of a little further information. The Shannon Free Airport Development Company has had the good fortune from the beginning of being very well led, well organised and directed, and of having a staff whose initiative, enthusiasm and efficiency have resulted in the creation of a diversity of new industries and jobs in the mid-west. I am particularly glad that the concentration of the company's efforts in recent years on the promotion of small native industries has enjoyed a high degree of success in spite of the difficulties of the times. It may not be generally appreciated, though of course the Minister knows it well, that the experience even in highly industrialised countries like the United States and Japan is that it is not the big industries but rather the smaller industries which create the majority of new jobs every year.

That being said, I should like to part company with some of my colleagues who, because of the success of SFADCo, are urging the creation of similar organisations elsewhere. An Leas-Chathaoirleach will allow me to say that the IDA already exist and are active in the small industries field as are also Údarás na Gaeltachta, who are charged with performing these promotional functions in the Gaeltacht areas. In this small country we should avoid any undue proliferation of bodies, considering that each body will attract its own overheads and the need for specialist services. I am not convinced that there is any need for such proliferation.

Might I also part company with Senator Harte who, as he so often does, expressed his regret at the failure to achieve full employment. Again, as usual, he tends to see the deficiencies mainly on the side of private enterprise and in the inadequate degree of State intervention—direct intervention in industrial enterprise. I suppose it is too much to expect him to recognise, as a difficulty in the way of reaching full employment, the actions of his own trade union colleagues in insisting so often on increases in wages and salaries which are greatly out of line with productivity.

The information which I should like the Minister to add in his reply concerns the share capital. The Minister has told us that the existing statutory limit of £45 million has already been reached. The Bill proposes to lift it to £80 million and the Minister says that share capital, as distinct from the grant-in-aid, is used principally for expenditure of a capital nature in both the Shannon Industrial Estate and the mid-west region. I wonder could he elaborate a little on that. Could he indicate what kinds of assets are held against the share capital, whether there is any direct return on those assets and whether it is sufficient now or likely to be sufficient in the future to pay any dividend on the share capital.

Mr. Kennedy

We can all give full support to this Bill especially as its main burden is to create much-needed employment. However, like Senator Robinson, I feel that the Minister could have provided us with some additional details in some respects. For instance, what has been the financial cost of providing one job in this region under a scheme such as this? I know the Leas-Chathaoirleach has ruled out references to the IDA but I think it is in order to compare that cost with the cost borne by the IDA of providing a single job. The Minister might also give us some information about the types of employment provided. It is very important to know will they be permanent jobs. I know that in the present state of the economy it is very difficult to determine that any particular job is of a permanent nature with so many things happening, so many redundancies and so many unexpected developments. Have we any assurance that the jobs will last even for a few years? This is very important. I am depending on memory but I think quite a number of the men and women on the unemployment register are in their early twenties and thirties. In the main they are people who have finished their education and are seeking employment of a permanent nature and with a potential. They are thinking in terms of getting married, raising families, and so on. It is very important that young people should have some assurance that, when they enter employment, it will last for some considerable time.

The third point on which the Minister might give us some additional information is this: does the Minister expect any financial return from this investment? I agree with everybody that these companies should be developed, but presumably they are established to provide employment and to make certain profits. If that is so, and they have been established and are being established as a result of the expenditure of State funds, does the State with its very large investment in this undertaking expect eventually to get some share of the profitability?

Minister for Industry, Commerce and Tourism (Mr. O'Malley)

I should like to thank the Senators who have spoken on this Bill for their general support of it. I will try to deal with as many of the points made as I can. If inadvertently I omit any of them, no doubt they can be raised later.

A number of Senators, from the Labour Party in particular, made the point that this is a case of a State enterprise being successful and they rejoiced for that reason. I do not want not to rejoice in the success, but the State's contribution was in providing grants and not in taking part in the enterprise. The relationship to individual private companies is exactly the same as the relationship of the IDA to them and the method of assisting them. SFADCo do not have any investments in manufacturing industry, nor do they propose to have any.

While I know some Members of the Seanad and the Dáil may feel compelled from time to time to say how much they would like to see greater State involvement in manufacturing industry, as the one who would have to make those decisions in the first instance, I would have to look at my experience in this office over the past three and a quarter years. All I can say to them—and all of them know it—is that my fingers are so burned by the State's unhappy involvement in manufacturing industry that I am almost down to the knuckles of both hands. There is at this very moment, in another room in this building, an inquiry going on into a situation which could most positively never have happened if private industry were involved or concerned. Everybody concerned would have been fired at a very early stage. The losses would have been cut and an end would have been put to what I term the nonsense.

Unhappily the State is in a very vulnerable position. I heard one Labour Deputy describe it as a bottomless pit that can be fished in by all those who want to seek more and more concessions for less and less work. This is the reality of the unhappy history of State enterprise in manufacturing. If it were otherwise, no doubt the State would look with much greater enthusiasm on these possibilities. As I said in the other House, the main engine or thrust of the economic development of this country over the past 20 years has been private enterprise. I see nothing in the experience of the past few years to suggest to me that it will change in the foreseeable future. The appalling experiences we have had in relation to State involvement in manufacturing render the possibilities of the State becoming involved to any greater extent there more remote. It is a pity to have to say that, but it is recognising the realities of what has been happening. There are some State enterprises which are run on a commercial profitable basis. Irish Shipping Limited comes to mind and other commercial enterprises are worthwhile and profitable. For every one on that side of the scales, unhappily it is heavily balanced in the other direction by perhaps ten on the opposite side of the scales. Senator Ryan made the case—and I was afraid someone would make it—that part of south-west Offaly had been added—not by this Bill which does not refer to it at all; it will have to be done statutorily in another Bill—to the area of jurisdiction of SFADCo for the purposes of the development of small indigenous industry only. He said that west Tipperary as he described it should also be added. No doubt if it were, central Tipperary would feel the need of being added. I made it clear in the Dáil that I had some hesitation in adding on any area. I did so only because of rather particular circumstances which affect the southern part of Offaly which is a narrow strip of land, only ten or 12 miles wide on average, if that, bounded on one side by north Tipperary in the mid-western region and on the other side by the Shannon river in County Galway in the western region, and finding itself at a disadvantage vis-à-vis both and not having done terribly well in recent years when the other half of County Offaly had done very satisfactorily. I see this extension of SFADCo's jurisdiction in this regard as a temporary one for this specific purpose. I would not envisage it being a permanent situation.

In no circumstances is it correct to say that this area has been added to the mid-western region. It has not. Part of one county has been given temporarily under the jurisdiction of SFADCo for the purpose of the promotion of small indigenous industries. There is no question of the region being changed. Of course, that would not be a matter for me. It would be a matter for the Minister for Finance or the Minister for the Environment. It was pointed out to me several times in the Dáil, quite rightly, and here too, that if one were to consider the possibility of further extensions of this kind, one would dilute the regional and local character of the body and much of its effectiveness might well be lost for that reason. Accordingly, I would repeat the assurance I gave the Dáil that I do not envisage any further such extensions.

Senator Markey made the case that the IDA did not display the same level of interest in the development of small industry. What he said might have been right three years ago. It is not right today. The IDA are ahead of their target of 30,000 job approvals for this year, 1980. It is worth remembering that they are ahead of it in spite of 1980 being a pretty dreadful year in economic terms at home and abroad. Of that target of 30,000 they are ahead of their target of providing 10,000 of them in small indigenous industries. Therefore, one-third of all the jobs the IDA will approve of this year are coming from small Irish industries. That is a dramatically different situation from what it was three years ago before I introduced this new system with regard to SFADCo. While SFADCo responded to it, and I am happy to say the IDA did too, three years ago I think the proportion was something like one-eighth. It is very heartening to see the direction in which these proportions have gone and the genuine and nationwide commitment of the IDA to the development of small industry throughout all parts of the country. The figures show the obvious success they have now begun to achieve. I feel confident that they will continue to achieve this success.

Senator Robinson inquired about the breakdown in proportionate terms of the jobs. I have the figures for 1978-79 and 45 per cent of the small industry jobs approved by SFADCo were in the metals and engineering sectors; 17 per cent were in furniture and textiles and clothing; 7 per cent were in crafts and the remainder were spread throughout various other industrial sectors. It was noteworthy that the sectoral spread in SFADCo was roughly the same as the sectoral spread in the IDA.

On the question of cost, I think it is correct to say, while I have not really got the precise comparable figures, that the cost per job in the mid-west region under the SFADCo programme was lower than in the country as a whole. That, of course, can largely be accounted for by the fact that small industry is much cheaper to promote. It is a bit invidious to try to make comparisons because, if you are comparing, for example, a capital intensive chemical plant where the investment required per job produced may well exceed £100,000, you cannot compare that with some light engineering plant where the investment may be £2,000 or £3,000 for each job and the grants are geared accordingly. It is not really very profitable to pursue the question of comparability in that way.

I fully agree with Senator Whitaker's dislike for a further proliferation of State bodies. We have enough and the application of SFADCo's experiment to the remainder of the country can be done through existing agencies. I would see perhaps a somewhat re-jigged regional IDA organisation as being a more suitable way to do it.

In the past year the IDA achieved very considerable success in terms of small industry on a regional basis even with their present structures. Their present structures have been improved in this respect. How the IDA could be improved would want to be discussed with the bodies in question in some detail before I made any public pronouncements on it. There are some fairly obvious improvements that can be made at local level to gear the regional organisation of the IDA to a greater extent towards the promotion of small industry.

Senator Whitaker inquired as to what the share capital was invested in. The share capital is used to finance capital works relating to industrial development, that is, factory construction and land acquisition, both on its own behalf and on behalf of the IDA, in the mid-western region, industrial development at the Shannon Industrial Estate and tourism capital works, for example, the castle restoration works and the provision of other tourist related amenities such as Craggaunowen, some other activities of that kind, and also SFADCo's investment in Rent an Irish Cottage Ltd., and other community related investment of that kind.

There is an income from the rented factories and the amount received in 1979 in terms of rent was £2 million. Generally, as the Senator will appreciate, the company would not go out of their way to try to rent the factories necessarily at a profit, because that is not really the purpose. It is to encourage people to go in there to manufacture, rather than trying to make money out of them. There has been considerable capital appreciation of many of the assets of the company. They are sold off from time to time at a satisfactory capital appreciation and that money is re-used as capital by the company.

On the question of training, SFADCo have the same grant giving powers as the IDA and the relationship with AnCO would be the same. On the question of air traffic which was dealt with by Senator Hillery, I am very concerned about the current position in Shannon. I envisage that perhaps SFADCo will have to take a more active role in trying to generate traffic and particularly tourist orientated and tourist related traffic.

It is disappointing to see that under the arrangements made in recent times, the running and promotion of the castles, which were a feature of that region, have not been as successful as they were in the earlier days. The whole question of tours and tourist promotion generally relating to the region will have to be looked at again. Perhaps we might have a reversion to the greater local enthusiasm which was noticeable in the days before centralisation from Dublin began to become so apparent in the Shannon Airport area. I think these are most of the points that were raised but if inadvertently I have omitted any I would be glad to reply to any further queries.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without recommendation, received for final consideration and ordered to be returned to the Dáil.