I move:
That Seanad Éireann takes note of the Sixth Report of the Joint Committee on Small Businesses — The Development and Management of Small Business Co-operatives.
Sixth Report of the Joint Committee on Small Business — The Development and Management of Small Business Co-operatives: Motion.
Sitting suspended at 3.35 p.m. and resumed at 3.50 p.m.
I would like to congratulate the committee on their work on small businesses in general and in particular on this their sixth report on the development and management of small business co-operatives. The committee identified five types of co-operative which currently operate and concentrated their deliberations on worker co-operatives and community co-operatives.
While the co-operative movement is long established in this country, the concept of small business co-operatives is still relatively recent. The past few years have seen an increase in the number of these co-operatives being established and the trend would appear to indicate that small business co-operatives are going to significantly increase their impact, both on the social and economic fronts.
In 1981, there were some 30 trading co-operatives, mainly in the Gaeltacht areas. There are now about 60 trading co-operatives employing almost 600 people, with the main growth occurring outside of the Gaeltacht areas. Some 300 groups throughout the country are currently involved in some form of community enterprise, the majority of which are organised along co-operative lines.
The emergence of these co-ops is due to a variety of factors such as: high levels of unemployment contributing to a desire on the part of the unemployed to find alternative means of creating sustainable employment in their localities; a growing sense of the need for self help among workers in businesses and communities which have experienced or are threatened with unemployment; a European and world wide growth in "local employment initiatives".
Co-operatives have been the subject of two other reports as well as the one which we are now discussing — one from the Society for Co-operative Studies in Ireland on "The Wider Application of the Co-operative System in Ireland", the other being the Irish Congress of Trade Unions' "Report on Worker Co-operatives". The three reports have been subjected to intensive scrutiny by a number of State agencies, including IDA, AnCO and YEA.
The State agencies have already undertaken significant initiatives in relation to small business co-operatives. As the report points out, under the community enterprise programme, a community enterprise programme approvals committee was established by agreement between the Department of Labour, community voluntary groups and the relevant State agencies. The Youth Employment Agency co-ordinates the role of the other State agencies — IDA, SFADCo, Údarás na Gaeltachta, AnCO and the National Manpower Service. The purpose of the committee is to provide the maximum assistance to business co-operatives while ensuring no overlap in functions. The agencies see the co-operatives' need for assistance occurring in two primary areas — the planning and development stage and in start-up and after care. They provide a full range of services for small business co-operatives at any stage of their development.
The role of the Manpower agencies in relation to co-operatives has been copperfastened through specific provisions in the Labour Services Act, 1987, which will establish the umbrella body, FÁS, under the aegis of the Minister for Labour. The establishment of FÁS will also reduce the number of State bodies involved in supporting worker co-operatives and help remove any confusion attributed to the multiplicity of State agencies in this area about which the committee expressed concern, and I believe rightly so. The involvement of another body such as the IPC as recommended in the report would be counter to this process of rationalisation.
In the Programme for National Recovery the Government recognise the case for promoting the establishment of worker co-operatives in suitable circumstances. They are, therefore, to request FÁS to consider urgently proposals for the establishment of a co-operative development council. The Minister for Labour is, at present, considering plans for a pilot operation which would help emerging co-operative business with specialised advice in advance of the establishment of FÁS. This operation would be part funded out of current manpower agency funds with contributions coming from the IDA and non-State funds. It is envisaged that the new body could draw on the collective experience of State agencies, trade unions, co-operative bodies and the Northern Ireland Co-operative Development Agency in developing its services.
In addition, since publication of the committee's report the IDA have completed an internal review on how they, as a development agency, can best assist further growth in the co-operative movement and in particular, manufacturing co-operatives. The IDA have decided to appoint an officer with overall responsibility for the development and promotion of co-operatives. The officer will work in close contact with the proposed co-operative development council. He will be responsible for the regular review of IDA co-operative policy, promotion of co-operatives at both national and regional level and liaison with Government, State agencies and groups involved in co-operatives. In the interests of developing strong co-operatives, the IDA will also, as a condition of grant-aid, require that certain criteria be fulfilled. These will include such matters as positive evidence of external funding, professional and experienced management, incompany training and the appointment of experienced external local directors to co-operatives management committees.
The report makes several other recommendations and I would like to address myself to some of these. A major recommendation, and one which was also made in the other two reports to which I referred earlier, is for a new co-operative Act which would define a co-operative and set out the legal framework for the structure and operation of co-operatives.
As the House will be aware co-operatives are at present registered under the Industrial and Provident Societies Act, 1893. This Act has been criticised for not defining a co-operative and for allowing for the registration of businesses which are not co-operative in character. It has also been criticised for imposing a number of restrictions on registered societies and for not reflecting modern standards of protection for members and all who deal with the societies.
There is substance in all of these criticisms but it is necessary to make some other points in relation to the statutory position in order to get a balanced perspective on the role of legislation in this area.
The committee in their report points out that the lack of a new co-operative Act in itself is not a fundamental reason for the failure of industrial and service co-operatives to take root in Ireland on any widespread basis. It has also to be said that legislation no matter how positive in its intent can, at times, be restrictive in its effect. This could be the case especially with any legislation which would seek to define a co-operative and limit or restrict the registration of new co-operatives which did not meet a new statutory definition.
The question of a new Act specifically for co-operatives has been considered a number of times over the years but it has never been possible to produce a satisfactory statutory definition of co-operative which would cover every type of co-operative activity and at the same time be sufficiently water-tight to exclude from registration organisations which are not bona fide co-operatives.
The general principles underlying co-operatives are well understood internationally. However, the principles do not have the precision which is necessary in a statutory definition. A restrictive definition could be counter-productive in that it would limit the registration of some bodies which could be of long term value but do not meet the strict definition in law. The net point which I make is that the flexibility which is offered by the current Industrial and Provident Society Acts may be preferable to a more restricted regime under a new co-operative Act. I have to say that this could be particularly the case in relation to the recommendation by the committee that new legislation should acknowledge the different forms of co-operative including producer, consumer, credit, industrial and service, and community. Co-operatives will not in every case fall neatly into categories such as these and attempts to force them to do so are not likely to be beneficial.
It is as well to consider the two sides of the coin also when one comes to look at legislative provisions in relation to the conduct of business by co-operatives and standards of protection for their members and others who deal with them. The legislative provisions governing companies have increased over the years and, indeed, there is a substantial Companies Bill before the Seanad at present. A strong case can be made for the extension of similar provisions to industrial and provident societies but it must be realised that all such requirements impose administrative and compliance costs on the bodies to which they apply.
It is my intention that my Department should continue to examine the legislative aspects of this issue, together with all the other aspects, with a view to ensureing that no unnecessary hurdle is put in the way of the establishment and development of co-operatives.
The report also seeks to have the employment rights of worker members of co-operatives dealt with under the relevant employment legislation and not under co-operative legislation. Employment legislation generally applies to employees who meet the various requirements in relation to hours worked and continuity of employment. As worker members of co-operatives are not excluded for the purposes of the legislation, I feel that the existing legislation is adequate in this regard.
The questions of education and training are vital to the success of a co-operative. It is essential that well trained managers be available to manage co-operatives as many of these entities fail because of the lack of expertise at this level. Members of worker co-operatives can have difficulty at times in appreciating that they are both workers and shareholders, and that they are not in an "us and them" situation. This can be particularly so in the case of "phoenix" situations where a workers' co-operative takes over from a failed business concern. This type of difficulty calls for continuing educational programmes for all involved.
Considerable State resources are allocated to developing management expertise within co-operatives. The committee have recommended that co-operative management grants be introduced. In that regard, the YEA provide management grants to co-operatives of up to £14,000 for one year, with provision for a further £10,000 grant for a second year. Furthermore, the IDA's management grants are, of course, also available to manufacturing co-operatives.
Another recommendation is that AnCO fund a scheme of management secondment to co-operatives in European countries, with a commitment from the personnel involved to work in an Irish co-operative for not less than two years thereafter. While I agree that overseas experience would be of great benefit to managers, it is doubtful if AnCO could commit funds for this purpose. It is also very doubtful if a commitment to work in a co-operative for two years on return could be enforced. There could be some difficulty with that.
There is also a recommendation to remove the condition that 75 per cent of the workers in a co-operative must be under 25 to qualify for the full range of incentives available under the community enterprise programme. The Labour Services Act, 1987, to which I referred earlier, provides for the abolition of the upper age limit for assistance from employment levy funds.
The committee, conscious of the importance of long term funding mechanisms for the successful development of any business, consider that trade unions, credit unions and existing large agricultural co-operatives would be in a position to establish co-operative venture funds which would invest in small business co-operatives. As an incentive to individual investors, the committee recommend tax relief at the marginal rate in respect of involvement in the shares of such funds, subject to an upper investment limit of £10,000. While tax relief for investments in venture funds is not a feasible proposition given our current budgetary situation, the business expansion scheme, through which more than £17 million has been invested in 170 companies to date, enables individual investors to obtain substantial tax relief on investments made directly in a qualifying co-operative.
The committee have recommended the institution of a revolving fund to provide loan finance for co-operative start ups. A number of initiatives to provide funds for start ups have already been taken on a local basis, but the feasibility of establishing a revolving fund on a national level, to be supported on a goodwill basis by major companies and institutions, might best be left for consideration by the proposed co-operative development council.
In passing I should recommend the district expansion scheme to all concerned, including the co-operative movement. As Senators know, it is a scheme whereby you can invest up to £25,000 of your own funds in a business and subsequently write that £25,000 off against your personal income tax. There is no need to pay income tax. By investing the money in a suitable business proposition that qualifies, you would be doing both yourself and the business you invest in a great favour.
The committee recommend various changes in the enterprise allowance scheme. Among these is a proposal that the weekly allowances be increased by 20 per cent and that the scheme be extended to a second year on a reduced basis. However, in the context of scarce Exchequer resources, it is most unlikely that significant changes of this nature in the scheme could be implemented at the present time.
A weekly payment of £100 to participants in co-operatives is also recommended in the report. I feel that discretionary rates of payment between categories of participant would be very difficult to justify simply on the grounds of the legal form which the business takes.
The committee also recommend that people who have been made redundant and who can produce a P45 should not have to fulfil the 13 week unemployment criterion as required under the scheme. The reason this condition applies to the scheme is that it is felt that a proportion of persons becoming redundant can secure alternative employment quickly by virtue of their skills and experience and the demand for these skills in the marketplace. To react too soon to unemployment would be tantamount to diverting scarce Exchequer resources unnecessarily to an area not requiring them. Employment schemes have a common objective of catering for the institutionally unemployed and this is currently perceived as commencing after 13 weeks of unemployment.
I should point out that since the report was published, qualification for the scheme has been switched from marital status to social welfare dependency. For instance, a man who previously qualified for the higher allowance under the scheme on the basis that he was married would now be assessed on whether he was receiving a social welfare payment in respect of an adult or child dependant.
The report's recommendation on the establishment of a representative body for small business co-operatives will, no doubt, be addressed both by co-operatives themselves and by the proposed co-operative development council, as will the committee's proposals for a series of five year plans with targetted employment levels.
In their report the joint committee states that while co-operatives are seen as a third force, in addition to State and private enterprises, not even their most enthusiastic advocates regard them as the ultimate solution to unemployment. The relatively small number of co-operatives developed to date, their size and the sectors they are located in, indicates that it will take many years to successfully develop a viable and expanding worker co-operative sector.
It is in all our interests that the co-operative movement should develop as a genuine third force in employment maintenance and creation. The fulfilment of this objective demands the promotion and establishment of strong, viable co-operatives which will not need successive injections of State aid. Such companies will have a strong product base and strong management and will widen their horizons beyond the purely local level. The development of a strategic approach to import substitution and exports is the linchpin upon which co-operative members, and the community at large, will prosper. I thank Senators for their attention.
Sitting suspended at 4.15 p.m. and resumed at 4.30 p.m.
In his opening remarks the Minister congratulated the Joint Committee on Small Businesses on the work they have been doing for the past number of years. As a former member of that committee I welcome the Minister's comments, but I am disappointed that the Government did not see fit to reestablish the committee. In my opinion it was one of the hardest working committees, producing seven reports which dealt with the manufacturing industry, the retail and distribution industry, tourism, catering and leisure, the construction industry which has now been devastated by this Government. A number of the recommendations which emanated from the committee were implemented by the previous Government but have now been scrapped by the present Government. The committee also dealt at length with the chronic problem in the insurance area for small businesses, which is a growing problem for small industries. I am aware of the Minister's work and the positive speeches he has made on this issue.
The Joint Committee on Small Businesses were very active under the chairmanship of Deputy Ivan Yates and the vice-chairmanship of Senator Michael Lynch. They both worked very hard for the success achieved by the committee. In view of the very serious economic climate and the huge unemployment figures I ask the Minister to have this committee reestablished or a committee with more widespread powers set up. This would have a definite input into solving some of our problems.
The sixth report of the Joint Committee on Small Businesses deals with the development and management of small business co-operatives. In most European countries, including Ireland, Government agencies, community groups and trade unions have been promoting various employment initiatives within the general framework of co-operative business entities. In this context the committee decided to examine the potential for small business co-ops in Ireland and the obstacles to achieving that potential. Although there has been a revival of interest in the co-op idea in Europe as a result of the growing levels of widespread and chronic unemployment, not even their most enthustiastic advocates regard co-ops as the ultimate solution to unemployment. However, co-ops are increasingly seen as a third force, in addition to State and private enterprise. On the basis of evidence from some European countries, properly funded and well managed small co-ops can be an important extra dimension to both job and wealth creation.
I will deal at a later stage in my speech with the success enjoyed by a number of co-ops set up in the town of Mondragon in Spain where it has been clearly shown that co-ops have had a major function to play in solving the unemployment problem and in the creation of wealth. In Ireland, we will need to create between 15,000 and 20,000 new jobs each year into the next century simply to prevent unemployment rising further. Like Spain, we should be able to set up co-op structures which would enable us to enjoy similar success. However, up to now our record in the co-operative movement has been very poor except in the dairy area, where the co-op structure has been a major employer. This was not dealt with in this report.
As a former creamery manager I have seen at first hand the importance of dairy co-ops for employment and wealth creation in rural Ireland. One need only look at what the formation of the Kerry Co-op and the North Kerry Milk Products did for County Kerry, creating thousands of jobs for both young and old. Now because of their expansion into the US and other markets opportunities are given for highly trained staff with secure jobs to travel and gain valuable experience which can be utilised here.
It is very important that personnel involved in the agricultural co-operatives should be willing to share some of their experience with small businesses co-operatives being established. The international Labour Office defined a co-operative as:
An association of persons who have voluntarily joined together to achieve a common end through the formation of a democratically controlled organisation; making equitable contributions to the capital required and accepting a full share of the risks and benefits of the organisation in which the members actively participate.
The Congress of the International Co-operatives Alliance met in Vienna in 1966 and set down six generally accepted principles with regard to co-operatives:—
(i) Membership should be voluntary and available to all persons who can make use of the services of a co-operative and are willing to accept the principles of membership.
(ii) Co-operative societies are democratic organisations. Members should have equal voting rights and participation in decisions affecting their co-operatives. Co-operatives should be administered by persons elected or appointed by the members.
(iii) Share capital should receive a strictly limited rate of interest.
(iv) The surplus or savings arising out of the operations of a society belong to the members and should be distributed in such a way as to ensure that no one member gains at the expense of others.
(v) All co-operative societies should make provision for the education of their members, officers and employees, and of the public in the economic and democratic aspects of co-operatives.
(vi) All co-operatives should actively co-operate with other co-operatives.
The legal difference between a co-op business and a private firm is that in the case of the co-op ownership and control are vested in the members on the basis of equality rather than in proportion to financial interest, whereas in the case of a limited company control is determined by the size of individual shareholdings.
There are five basic forms of co-operatives: (1) producer co-ops, the majority of which are the dairy co-ops in this country; (2) the consumer co-ops, in Ireland the main examples are housing co-ops; (3) community co-ops which deal with group water schemes, tourism, farmhouse holidays, local development etc.; (4) credit co-ops which basically are credit unions as we know them and which have made a major impact on employment in this country; (5) worker co-ops which may be in either the manufacturing or services sectors and are owned and controlled by the people working in them.
Worker co-ops arise out of two situations: (1) where unemployed people come together to start their own business and provide their own jobs; (2) conversion of phoenix co-ops which arise out of closures in manufacturing industries when the workers purchase the assets and resume trading as a co-operative. Worker co-ops operate almost exclusively in the industrial and services sector. Although many European countries have worker co-operative movements going back to the last century, this movement is still in its infancy in Ireland. However, worker co-ops have developed here in recent years and there is a growing interest in this form of enterprise.
Worker co-ops are also increasing in Europe's production sector, especially in Italy and Spain. From 1970 to 1980 the number of co-ops in Italy increased from 48,000 to nearly 80,000 with 500 new co-ops being created annually, providing 15,000 jobs. In France the number of worker co-ops doubled since 1978. There are now 1,300 co-ops providing 36,000 jobs. With our level of unemployment and our expanding labour force, we would want to give much more impetus to the possibility of a co-op structure on the lines I mentioned in Spain, France and Italy.
The ESRI and the NESC have shown that the labour force is expanding at the rate of about 20,000 a year into the early nineties. There are, therefore, three possible scenarios: we will generate more jobs and-or we will have more emigration and-or we will have more people unemployed. The number of people employed has been falling since 1980. In 1980 there were 1,163,000 people in jobs in Ireland. The latest official count was the labour force survey of 1985 which showed that there were 1,070,000 people with jobs. This represents a drop of 93,000 over those five years. The ESRI have estimated that overall employment will have fallen to 1,030,000 by early 1988. This would mean a further drop of 40,000 since 1985.
The committee in their findings fully support the development of small business co-ops as a new force which can play a significant role in job creation. It is to be expected that, given the lack of co-operative tradition in the industrial and services sector, initial progress will be slow. It is recommended that a series of five year plans agreed between State and co-operative interests for the development of a movement of small business co-ops be initiated. The first five year plan should be modest in its objectives and aim for a target of 250 small business co-ops employing approximately 2,500 by 1992. The achievement of this target would provide a firm foundation for further major development of approximately 1,000 jobs annually in small co-ops. To achieve this there is now an absolute need for Government, State agencies, other public authorities and co-operative representatives to provide an effective framework of support for small co-ops.
I have already mentioned the Mondragon development in Spain as a prime example of what can be achieved by the formation of a co-op movement. After the 1936-39 Spanish Civil War there was economic and social devastation and as a result a co-operative technical college was established in 1940. In 1956 the first manufacturing co-op was set up with 24 employees. Some others followed and by 1960 there were 400 employed in eight different co-ops. The growth in employment was rapid rising from 3,395 in 1965 to 18,058 by 1980. There are now 90 industrial co-ops producing a wide range of goods with a total turnover of $1,000,000,000 including exports of $250,000,000. We should certainly be able to take a leaf out of their book.
I urge the Minister to take a serious look at the recommendations issued by the committee on the proper framework for setting up of successful co-ops. These include the following: (1) a new co-operative Act — this point was dealt with by the Minister in his opening speech and I welcome the fact that while there may be problems in relation to a new Act he has promised that he and his Department will have a further look at that area; (2) finance for co-ops — Ireland does not have a co-op bank like other European countries; (3) a new focus for management development; (4) a single representative body — and again the Minister referred to this in his speech when he mentioned that both the IDA and FÁS will be involved in the co-op movement; (5) improved State agency and local authority services.
It is important that all of the above should be implemented if we are to take a revival of the industrial co-op movement in this country seriously. I am aware that already a number of State aids are available to small business co-operatives. These include feasibility study grants, fixed assets grants, training grants, R and D grants, employment grants etc. I believe new investment and a new approach to the co-op movement in this country would pay dividends and would help us along the path to economic recovery.
I welcome this report and I congratulate the Minister on bringing it before us. Unfortunately it is many years late. I worked actively with Father McDyer many years ago when he was promoting the introduction of worker co-operatives. We worked hard to promote the development of vegetable growing. Unfortunately, we were entering an age when the emphasis was on amalgamation, rationalisation and what I would call conglomeration, because small units had to be got rid of. There was no room for anything small. "Big" was the in word. Today as a result of that type of thinking, we are importing millions of pounds worth of vegetables, potatoes and other crops we could produce here. I welcome Bord Glas who are now working in that direction. For many years chips have been coming in from Holland and other countries. We have reached the ridiculous situation where we were importing boiled potatoes from the Continent and putting them into a microwave to heat them. As long as history has been recorded we have known how to boil potatoes, but we just got out of the habit of doing it. Jobs were lost because we did not put the emphasis on being more self-sufficient and producing crops that we were capable of producing.
When Father McDyer and many of us were working to promote co-operatives we were coming into the age of expansion. We had to get rid of the village pump, the parish boundaries. We were in Europe and had to forget about local ideas. We are coming back to that way of thinking, to a sense of community. Those were the days when we were holding meetings and marches. It was Thomas Davis who said many years ago: "Meetings and marches are not sufficient; we must work our land and correct our failings". Today we are reaching the stage where we will work our land. I do not agree with the pessimists in our society who say there is no future for this country. The country is as good as the people who live in it. It is as good as the effort we make. A home is as good as the people who live in it make it. The windows may be broken with the breeze blowing in, or it may be clean, tidy and repaired and be a comfortable home. Ireland is our home, and it behoves all of us as a family to use our talents and abilities to create work and to make it a better place to live in.
I have experience of trying to get a small factory for my own little village of Grange, County Sligo, but nobody would listen. I was so convinced there was a future for this thing that I built a shed at my own expense. Today there are eight industries working in my village, all propagated from that old shed. Last week one of those industries got a very lucrative contract to supply equipment to the American market which we will manufacture in the village of Grange. What we can do in Grange can be done elsewhere. Unfortunately those of us who were plodding along that road were hitting our heads against a stone wall. It was very hard to get support.
A group not mentioned in this report for whom I have great admiration — they did a great deal for small industries, with all due respect to IDA and everybody else — are the county development teams. Admittedly they could only give £200 or £300 but they came in at that vital point and gave help and assistance to small industries. Their role should be broadened because they have a wealth of experience and information and they should be included in any talks on development. No one has done more than the county development teams. They did fantastic work. County development officers worked late at night and early in the morning trying to promote industry particularly in rural Ireland. I would like to see a role for them in this report. Perhaps at some future date we could think of including them in it.
The Minister referred to the 13 week unemployment criterion. I do not agree with that. I ask him to rethink it. I have seen a number of private businesses in Sligo which were going to the wall. Those employed would have gladly tried to pick up the threads and keep the business going, but because they would get no assistance until a period of 13 weeks unemployment had elapsed the shutters went up. It is very hard to reopen a business because the customers go when the place is closed.
When a business folds up and the employees are prepared to try to keep it going, they should not be forced to go on the dole for 13 weeks, but should be given assistance. I have at least four cases in mind where people who were trying to get a business started should have been allowed to continue. We should not have allowed those places to close as they would have created more employment. I ask the Minister to re-examine that point very carefully.
The Minister talked about amending the law. The old law has worked very well. There has been a great deal of chopping and changing of laws of one kind and another in an effort to modernise them. Have we improved the law that much? We should look very carefully at the old Act. It has worked very well since 1893. Many successful co-operatives have operated under it and I believe that it could continue to work with perhaps some amendments. If we start amending the Act, we may end up worse than we were before we started. I believe in what has been tried and tested. It would be better to work with it rather than to throw it out. However, if that is the case we will have an opportunity to give our views at a later date.
The report discusses the advantages and disadvantages of co-operatives. Waiting for the committee to make a decision was the only disadvantage I found with co-operatives. You can miss the bus when a decision has to be made fairly fast. With that exception, I do not see any disadvantages. Co-operatives are a great advantage particularly at present when we have labour problems, industrial unrest and people seeking to participate in decision making in their firms. Some two or three years ago I sent a resolution from Sligo County Council asking the Minister to encourage the promotion of worker co-operatives. Perhaps that resolution prompted this motion. It is good that Sligo County Council were thinking in that vein some time ago.
I believe we have many good workers in this country. If people were working for themselves and had a share in the business they could partake in profit sharing that would result in better workmanship. Better workers would play their part in reducing unemployment. Are we doing enough fact finding among the unemployed? I think many unemployed people have good ideas but their main problem is to get the money. Finding money is a big problem when starting any venture.
In Sligo a number of people came together and set up a fund through the Chamber of Commerce to help young entrepreneurs starting a business. It has worked very well. The fund lends them £2,000 or £3,000 at a very cheap rate of interest — 3 per cent or 4 per cent. We should encourage more such action. The commercial banks have done a good enough job. When I approached them on behalf of young people starting out in business I found them helpful and co-operative. Unfortunately, the day of the friendly bank manager is very fast coming to a close.
Has the Senator noticed?
I have. We have had some good managers. I will not allow anything to be said against good bank managers. I had many dealings with them over the years and but for them I would have had nothing. That day is gone because we are dealing now with computers. We are dealing with the modern idea of projections, cash flow, finance management and this type of thing.
Some time ago a bank manager knew the account holders and knew they had started small. He saw how they were managing and how they intended to go a bit further. When they went into talk to the bank manager, he had their track record and he would give the go ahead and lend them more money. We have to do something to replace the friendly bank manager who is no longer there. Banking is computerised. I do not think computerisation is as good for the country as we were led to believe it would be because it has done away with individuality. Individualism has to be retained. The good thing about co-operative business is that it helps to keep the community together. It also keeps individualism.
A good co-operative is a focal point and a talking point. It is a centre where people congregate and where work is done. I would like to see some more flexible way in which we could replace the bank man. I am not so sure that funding at present is as easy as it was 15 or 20 years ago. It certainly is not. There is too much book work. Very often a good worker, a man with good ideas, is not a good book-keeper. If he was, he would not be a good craftsman. He may decide to set up a business or to set up a co-operative with two or three of his colleagues. The fact that they had to get accounts and figures discourages them. They are knocked out at the first hurdle.
The county development teams would be very good men to help people starting because they would start them off small and they would know their capabilities. The county development officer could play a large and important role in trying to help worker co-operatives get their business off the ground. The whole idea is to provide many services which we need in our society. He could also play a very important role in stopping imports. If we can stop imports we can create jobs at home. If any society wishes to obtain private loans or raise more than £10,000 in share capital in any period of six months it must obtain the prior approval of the Registrar of Friendly Societies. That is not the biggest problem. It was, but of late it is not. Where do you go to get this £10,000 plus, other than a commercial bank? I want to emphasise that we must do something to replace what we had when we could go and talk to a bank manager. That is no longer possible or feasible. Cashflow projections get too complicated for the ordinary person who is a good worker, a good craftsman, who is able to do a good job.
I am delighted to see that we are going to have an enterprise worker grant. There will be a maximum grant of £17,500 available to community groups to employ a resource person for 12 months to advise and assist in the development of business ideas into job opportunities for young people. That is certainly to be welcomed. It goes some way towards alleviating what I have been talking about. How soon can you get this man? You can only get him after you have started. The problem is you need this man before starting because you can spent quite a bit of money in the early stages. Auditors and accountants, while they are very good, cost money. It has become very expensive to produce all this documentation.
I have seen young fellows parting with their money and their documentation being sent away. The documents come back but the bank does not think they are a good risk and the few bob they had is down the Swanee. This is very important. I have seen people losing the few pounds they had. All they had left was a nice bound volume of documents. The pages in it are no good to pay the bills or to give to the bank manager. We also get £10,000 towards the manager's salary and £2,000 towards marketing and development costs. There is also a figure of £2,000 towards financial and administrative costs. This is all available when the business is going.
The vital point is that the friendly bank man who would help the lads in my village of Grange who have been very successful over the past ten years or so is no longer there. There were definitely two of them in Sligo and they were real gentlemen. They would look at the enterprise and say: "Right, we will fix you up". Unfortunately, that day is gone. Too much money is being spent on paper work before a start is made. I would like to see some way in which finance could be made available. It might be only £5,000 or £6,000 that was needed. If there was some grant or assistance for the feasibility study before they start, whatever money the young men have would not be spent.
Although co-operative banks are a feature of some European countries, co-operatives in Ireland are generally dependent on the commercial banks for their loan finances. For many years we in the rural community have been advocating setting up farmers' banks, but that is a long story. We never succeeded in getting special banks to facilitate farmers. It is a great pity that we did not. However, I do not see us getting co-operative banks as fast as that either. We have to work with commercial banks.
I keep coming back to the county development teams because I have wide experience of the great help and advice I got from them in setting up my little industrial estate in Grange. Their budget is very limited indeed. The young lad who has got his contract for the American market will get IDA assistance. Everything will be laid on. He is over the hill. When you get that far, our IDA services are super. There is no question about it. I am talking about the position from the starting line until you get to where you have a bit of a track record. The county development teams are the only body at present to assist you. Their budget is far too small.
I ask the Minister to consider giving a bigger budget to the county development teams and the county development officers. They have created many jobs. They were the forerunners in the scheme and showed people how to get IDA grants. The IDA claim the credit for all the factories they have set up. We always hear of the ones that fall by the wayside. There are thousands of good factories which the IDA set up. We must be fair about it. In many cases it was our county development officer, with a shoestring budget, who set up people and enabled them to get a track record in order to qualify for IDA grants.
In the interests of small business, I would like to see some latitude and some way, as I have said so many times, in which we could replace the friendly bank manager. I am very pleased that there are grants available to employ management and to provide book-keeping expertise. I would not like to be starting a business today. I am not running much of mine now. I have given it over to my son. When I was running a business you had only to worry about the bank man. When you employed men you only stamped their cards. I find today that to start to give employment involves a lot of administration. Something should be done. I have said this on many occasions.
Perhaps we could replace PAYE and PRSI with some simpler system of stamping the card, even if the card cost £20 or £25 per week. At least when you took on a man years ago you knew about your rights. Now, if you want to employ a man, even for a short term, you just cannot do it. Many people will not do it. They leave a job undone or, unfortunately, go to the black economy because to employ a man is such a big job. Just as an employer, I must get a registration number, PRSI and PAYE numbers. Then you have to fill up all those forms. The man who is getting the job says it is too much like work to get back on the system again.
We should find some way of getting back to the old system. It would be easier for people, for the first four or five years if there was some way in which they could pay a certain amount for every man. It could be paid by stamp or some other system. Indeed, such a system would be more reliable. In the days when you stamped a card for a man, he could not get his unemployment assistance unless his card was stamped up to date. The employer had to stamp the card and hand it to him, duly stamped, before he left his employment. Today, an employee does not know whether his PAYE is paid or not paid. He does not know whether his PRSI is paid or not paid. Nothing may be paid. If the stamped card system was still in existence, even if it cost as much as PAYE and PRSI does together it would be better. The employee, when he finished, knew whether his card was up to date or not. The Government would get more revenue out of this system. It would be much simpler than the present one.
We should have a good look at that end of the business for small industry and, indeed, big industries. It would go a long way to help to create employment. Our present system is very restrictive. It is very difficult for people to set up an enterprise, with all the necessary book-keeping and administration costs. I welcome the whole thrust of this.
I would like the Minister to say that they are going to amalgamate many of the agencies. We have far too many bodies in this country which are duplicating one another. I have often said so. I am delighted the Minister is deciding to do something in that regard. I was indeed critical the other day at a county council meeting of our social employment scheme, which is an excellent scheme. We all said so from the day it was first initiated. It is bedevilled by the fact that we have Manpower — with all due respect to them — operating it. It is ridiculous that if you want a couple of men to do a bit of environmental work for the county council or something like that which is second nature to them, they have to dress up and take the bus into the local town, sit in a queue and be interviewed for that job. It does not make sense.
In the old days when the county councils had a job they said to the local ganger: "Get five or six men for this job." Such social employment schemes should be operated directly by the local authorities. There would be more people involved in getting work. The present system is not sensible at all where we have working men approaching Manpower in order to get a job cutting hedges, clipping grass, setting flowers or some of those ordinary run of the mill jobs. The county council are wasting time writing to Manpower about them. Manpower then write to the Labour Exchange. The Labour Exchange write out and get a list of names and pass that back to Manpower. Manpower then write out to those who have to come in for an interview. The men come in for interview. Manpower then write back to the county council and say: "A, B, C and D are suitable." Look at the administration costs involved in order to get a few men to cut weeds, cut hedges along the road, clean up a graveyard or some ancient monument.
The amount of administration work is beyond me. I can never understand why that scheme cannot come directly to the local authorities and let the county engineers say to a local ganger: "Right, we are going to do that little project at whatever little village it is; see if you can get five or six men, because we have six months' work for them". I am sure the local ganger would have five or six men on that job the following Monday morning. There would not be as much money in it for An Post. Are we in the business of keeping An Post in jobs, or are we trying to run the system in the best way, give as much employment as we can get the best returns we can? I would like to see something along that line.
I have already welcomed the manager's salary and the grant towards marketing development costs. That is a very good thing, but £2,000 towards market development is a rather small amount. Marketing development is a fairly big job and £2,000 goes a very small way. If £7,000 was given towards the manager's salary and £5,000 towards marketing development it might be a better division. I ask the Minister to have a look at that because marketing development is very important. I welcome the grant towards administration costs. As I have already said, administration costs are high. What is the cost of the paperwork in this country compared to 20 years ago? The amount of paperwork we all get, never read or could not possibly read is enormous. We are gone mad on literature and administration. We will all have to take a hard look and see where can we cut down on administration costs. While we have it, we have to put up with it, and deal with it. I am delighted that there is a recommendation here to give £2,000 towards that. It is definitely very welcome.
I certainly welcome the report. I look forward to its implementation. I would like to see the county development officers involved in this. I have great admiration and respect for them. I know their work because I worked with them for ten or 15 years. I know the amount of work they have done and the knowledge they have. They should be involved in the creation of jobs and in the formation of small industries for workers.
I would like to appeal to the Minister regarding what Senator Kelleher said at the outset about reforming this committee. We welcome the Senator's comments and congratulations on the work of this committee of which I happen to have the honour and privilege to be a member. This Government, when forming the new committees, omitted the committee dealing with small businesses. I asked the Leader of the House, Senator Lanigan, what was going to happen about the small businesses committee. Why was it left out? He assured me that day that they were forming six committees, and others would follow. Subsequently, I again asked Senator Lanigan, and I reminded him of the day he promised that this committee would be set up. He said he gave no such promise. He was only taking note of it. I appeal now to the Minister to use his influence with the Government to try to get this committee going again because it was a very important one.
Senator Farrell referred to the question of finance and spoke about friendly bank managers. There must be something in the air in County Sligo — and the Minister is not too far away from there — that created a certain species that we do not have in my part of the country. As regards the friendly bank manager he seemed to suggest that all you have to do is go in and talk nicely to him and you will come home with what you asked for. That is an Utopia, which in my lifetime in my small business, I never succeeded in finding. What I got was by way of blood, sweat and tears. Senator Farrell now admits that the Utopian bank manager has become a diminishing species. He said that such men are not there any more. He appealed to the Minister to find some way of financing these industries.
I should like to suggest to the Minister — in helping Senator Farrell's cause, which is a good one — that there is a simple solution to the problem. The solution is to get the credit unions into the business of financing businesses. At the outset the Minister spoke about investing capital in businesses which would be free of tax. This is a good thing provided the business is going to succeed. Can a company invest in another company? I expect it is only a private person who could invest his money in it.
We had industries which, when the late Seán Lemass set them up, were successful. You heard nothing about an industry that was successful but there was a hue and cry when one of them failed. Everyone knows that in this life you win some and you lose some. The good ones would counter the ones that were unlucky and failed.
New capital finance, as required to foster co-ops, as Senator Farrell mentioned, should be provided by the credit unions with the necessary tax incentives. Overall, this whole area is in the embryonic stages. Senator Farrell referred to the fact that there are too many agencies and bodies. I agree with this. I would like to see a new Bill redefining the co-ops which are currently in limbo. The Minister is aware that the present Act dates back to 1893. It is time it was renewed.
I should like to see small, single, grant-giving bodies with consultancy services within the Irish Productivity Centre, instead of the Youth Employment Agency. I should also like to see grants given for the recruitment of managers, that is, professional managers. Bad management has been a big weakness in the co-ops and, indeed, in other companies. Bad management has caused the collapse of a good many companies, as well as of co-ops. In other countries such as Spain — and this was referred to by Senator Kelleher — there was a movement which was successful in creating jobs. We should take a leaf out of their book.
Senator Farrell also spoke about the amount of paper work today and said that nothing like that was seen 20 years ago. He said that a lot of people had not got time to read all this literature and that they were not interested in reading it. The anti-litter Bill was brought in recently. More notice should be taken of this in Departments. A lot of literature goes into the wastepaper baskets. I have seen this happen with my colleagues. I am no different from them. I do the same thing. Letters come in. You open the envelope; you know what it is; and you throw it into the wastepaper basket. The cost of postage is enormous. An Post are making fortune out of this.
I live in Dublin 2 and my post is sent out. I get an Order Paper for the Dáil and Dáil Questions down for Wednesday which arrive on Thursday. I get an Order Paper for the Seanad the day after. I do not know what the Post Office do or whether they are storing up post. I agree with Senator Farrell that there is too much post and some of it is quite useless. We are trying to create savings in the economy. I suggest that we start this at home. Charity begins at home. The number of documents issued should be monitored. There is a simple way of going about this. Instead of every Member of both Houses of the Oireachtas receiving a load of literature in the mornings — I know there are some Senators who would be interested in the Order Paper and in the Questions in the Dáil and that there are others who would have no interest in them — it could be left in the general inquiry office, or in the Dáil office. Once each Member knew it was there — or any one was interested in particular literature — he or she could go in and get it. This would save a lot of paper, postage and effort.
This is what Senator Farrell was talking about. The surprising thing about this is that in the age of the computer and the microchip there should be no need for half the paper work. You can store information on microfilm. You can store today in a small drawer that would have taken a whole room to store in years gone by. There is a good computer company in the Minister's home county. It is called "Digital".
Debate adjourned.
Sitting suspended at 5.30 p.m. and resumed at 6.30 p.m.