I welcome the Minister, Deputy O'Rourke, to the House to deal with item No. 1 — Motion on Report of the Industrial Policy Review Group — a Time for Change — Industrial Policy for the 1990s. I call the Leader to move the motion.
Industrial Policy Review Group Report: Motion.
I move:
That Seanad Éireann notes the Report of the Industrial Policy Review Group — A Time for Change — Industrial Policy for the 1990s.'
I am glad to be here today to speak on this very important report. It marks the importance which the Seanad gives to all the issues of the day particularly this one. The House has devoted this afternoon to debate this motion and, if I heard the Leader correctly, depending on the numbers of speakers remaining, time may be provided for further debate. I warmly applaud the Seanad for the openness with which they seek to address the issue.
Two weeks ago we had a very significant debate in the Dáil. There were 17 speakers from various political parties. In fact, there was as near consensus as I have ever seen, and I was there for most of it. While there were, of course, various concerns about different points, the main thrust of Culliton was very quickly agreed. It was debated, if I may say so, with great attention to detail. I have no doubt, knowing the tenor of this House, that the debate will be intensified and given even more attention.
I look forward today to hearing the contributions by the various speakers here. Following on from what was an excellent debate on the Culliton report in the Dáil two weeks ago, the level of political interest in its implementation is obviously very high. We may differ somewhat in our views as to how this or that aspect of the report should be followed up, however, I detect a clear sense of unanimity across party lines on the crucial importance of ensuring that all the policies and measures which can enhance industrial development are in place and operating in a complementary, coherent and cost effective way.
This overall objective will be of particular importance to the small firms which constitute such a significant element of our manufacturing industry. For instance: in 1991, small industry accounts for some 87 per cent of manufacturing establishments employing fewer than 50 people. They provided 35 per cent of manufacturing employment and are almost totally Irish-owned — 91 per cent.
Because of their singular place in the life of so many towns around this country, I would like, therefore, to concentrate my remarks today on the recommendations as they affect small firms. I know that each speaker will address his or her own area of interest in the Culliton report. That, of course, is what intelligent debate is all about. The expertise which Members bring to this House, and in the Dáil debate, is usually slanted in a particular direction. Education, training, manufacturing taxation and incentives will be discussed.
When I spoke in the Dáil last week I talked about the education issues. Today I intend to talk about small industry. I will listen with great interest to what everybody has to say. We all agree that small firms must be encouraged and given their proper place. The Culliton report was very strong on the big companies coming into towns, lasting so many years and sometimes being great success stories, but there was sometimes an unhappy ending because in Colorado or somewhere equally remote from Ireland, the company had run into difficulties and tears were shed in a small Irish town. As we all know, industrial breakdown can lead to hardship. Small industry is usually locally based and locally secured. Local people have a stake in the community. In my view, these small industries are a great force for the future and this is why I want to concentrate on them.
The recognition in the Culliton report of the need for better integration of the support services provided at present by numerous agencies is one, I am sure, which many small firms would echo. By ensuring that a more coherent unified service is available to firms than is now the case, we can assist small firms to a far greater extent than is possible with the present multiplicity of schemes and programmes delivered by the many State agencies with the objective of developing industry here. The utter complexity of these support and incentive regimes amounts to a real maze for a small business. Indeed, before ever the small business person gets the business going, he must be worn out with frustration because of so many agencies, programmes, projects, grants, avenues and what he has to do before the desired objective is ever gained.
For the owners and managers in many such firms — often one and the same person incidentally — time is of the essence. If we are to be serious at all about helping these people, we must recognise that it is simply not on to require them to have to go in turn possibly to several different agencies if they are to avail fully of the range of support measures which are there for their benefit. This is particularly true at regional level where access can be more difficult, bringing a corresponding need for an even more streamlined service in the regions. As far as possible, State support for the functional activities of firms must reflect the fact that these firms are themselves integrated entities.
Indeed, in an era of talking about regional development and devolution — all the proper terms which Europe recognises and which are more and more within our political and educational structures — there is a strong case to be made for the regionalisation, in a coherent way, of the various State agencies assisting small firms.
The 1990 Review of Industrial Performance had recognised that "it is difficult to see a coherent pattern in the distribution and implementation of these activities between agencies. The full range of promotional and advisory activities must be subjected to a continuing system of objective evaluation which relates expenditure undertaken to defined objectives and measures of performance." Culliton took up that same view point very strongly.
However, it is still the case that for industrial development purposes, marketing assistance, scientific or technological advice and assistance, training support schemes, special tax relief schemes or other advice, one has to go to the IDA SFADCo, Údarás na Gaeltachta, An Bord Trachtála, EOLAS, FÁS, the local tax office, the Business Innovation Centre or the county development team.
A business person might have a bright idea. We have many people coming out of our regional colleges, universities and schools bursting with ideas, and knowledge, and wanting to put to use. They start off with high hopes. I am sure many of us in our constituency duties and while meeting people have come across young people like that who are utterly frustrated. They cannot find out how to get help from these State agencies. Perhaps they can be helped following the Culliton report. Perhaps a solution will be suggested in this debate and the Culliton report.
This is only to begin to identify the complexity of the situation for the individual seeking to avail of the supports of different kinds on offer, because each of these State offices administers in turn numerous different schemes, including those introduced under the Operational Programme for Industry, which is covered by the Structural Funds. Under that programme alone, there are 45 different measures, and this is in addition to those already on offer from the various national sources.
Inevitably no matter how well meaning each of them is, there must be a signficant element of duplication involved and this is something which has to be addressed. Indeed, when I consider the extent of the support and services now available to all firms in Ireland, large and small, I become more and more convinced that what is needed urgently is their greater integration and rationalisation rather than the introduction of any new measures. There has been a poor correlation between expenditure and improved performance in the past and one way of redressing this situation is by the rationalisation I want to see brought about quickly.
The need for closer liaison and working arrangements in developing an integrated approach covering incentives, advisory support and human resource development has already been recognised under the Programme for Industrial Development which is supported by the Structural Funds. Co-operative arrangements are in place between the Department of Industry and Commerce which has responsibilty for industrial policy generally, Roinn an Gaeltachta which has responsibility for development in the Gaeltacht areas and the Department of Labour which has responsibility for human resource development policies. These co-operative arrangements extend to the executive agencies which operate under the aegis of these Departments. The small firms sector has been identified under ths programme as being particularly in need of the benefit of the support mechanisms it provides.
A special sub-programme has accordingly been devised for the development of Irish owned small businesses. This recognises that "while the potential for small industry for wealth and employment creation is good, there are many obstacles to overcome. Barriers to growth include the small size of the domestic market in Ireland, the country's island location on the periphery of Europe which adds considerably to transport and distribution costs and the underdeveloped capital market which makes it difficult for small firms to raise initial start-up finance and to fund growth".
Among the range of measures under this programme, the establishment of business innovation centres which I have already mentioned — in Dublin, Cork, Limerick and Galway — is a welcome development. The aim of the BICs is to stimulate entrepreneurship and to encourage the introduction of innovative processes into local industry and services by providing practical support and advice; access to sources of seed capital and access to appropriate resources of State agencies. Particular importance is attached to the efforts made by the business innovation centres ensure that their activities do not duplicate those already being undertaken by the existing State support network.
I want to talk briefly about access to finance. That is the stumbling block which many business people have to overcome. They have the idea, and have finally located the appropriate agency but then, there is need for capital, equity, and finance.
Another issue of great concern to small businesses is access to finance. In its submission to the Industrial Policy Review Group, the CII Small Firms Association maintained that borrowing facilities took precedence over industrial policy where small firms were concerned. The association says that "the financial products available from the lending institutions are excessively restrictive with regard to the cost of money, collateral requirements and length of loan. There is currently little or no incentive to shop around between the banks as the product range is restrictive and similar. When I am talking about banks, I am aware that at the moment that is a delicate subject, so I am talking in the general rather than in the particular. This point was taken up in the Report of the Review Group which said:
In order to remain competitive for business customers, the banks will need to address a widespread customer perception that branch managers lack an understanding of business needs and provide lending decisions only with an unacceptable delay allied to what seem unreasonable demands for personal guarantees and collateral. This gulf between bankers and their business customers needs to be bridged, perhaps by the expansion and deepening of specialised development business-oriented units. The adoption by the banks of a code of practice for their dealings with small business customers, along the lines recently introduced in the UK, would also help.
Each of us deals with constituents all around the country. We have heard stories of heartbreak caused by delay and what seem to be unnecessary bureaucratic restrictions. We all know that the banks are minding money for the investors and that money cannot be provided for every idea put forward. All of us have come across young people with feasibility studies and well thought-out research. Everything is in place, but still they are finding it very difficult to see the human face behind the lending agency.
The report also praised the initiative of the Small Firms Association in negotiating with the banks on these issues.
I note that the Culliton Group thought it essential to retain the business expansion scheme as an important source of risk capital, particularly seed capital. I think they have made an interesting case for this, nor do I disagree with the assertion that its functioning needs to be continuously reviewed to ensure that it is not diverted away from its intended channels.
The continuing shift from providing grants to equity and repayable forms of capital by the IDA will also be to the benefit of all concerned, not least to taxpayers. The recipient firms will not alone have available to them the life blood of capital supply, but will also have on tap the expertise that direct involvement in the company by the agency will bring. On the other hand, the State will benefit as the money invested in the company can be recouped when the company has progressed to the point of being able to go it alone.
We would be the first to admit that there were abuses of the business expansion scheme and some schemes were never set up. Many major successes have been achieved through the business expansion scheme. There is a clear case for the scheme to be reviewed and restructured to suit small firms with a limit on the equity and with its terms, conditions and framework geared towards the small business person with the good idea, who is willing to invest and to raise money, as well as being willing to put in a stake locally.
Finally, of course another matter that concerns small firms is the tax regime. The objective in regard to taxation to which we all aspire is to achieve the most equitable and efficient distribution of the burden.
The conclusions in the Culliton report is that this can be achieved by addressing a range of current tax measures which are regarded as inequitable or inefficient. To give just two examples, it suggests that both the 10 per cent corporation tax rate and the section 84 lending provision have been far more valuable to foreign based than Irish owned industry. It recommends an end to section 84 loans, and that would be for debate.
It says that the whole area of tax measures affecting savings should be overhauled, following the principle that the system should be neutral as between different forms of saving so that it does not affect the relative return on each. Establishment of such neutrality, the report claims, would help to achieve greater investment in indigenous industry.
The Government fully recognise the need for the reform of the tax system which has been recommended by many experts. They have already committed themselves under the Programme for Economic and Social Progress to improving the equity of the system and began that process in the budget last January. The scale of the reform needed is such that it cannot be achieved overnight but the Government will not be deflected from their clear intention to make progress on this task.
The Culliton report recognises that much of the analysis it included and many of its recommendations had already been identified by others. They do not claim — I would like to make that clear — to have suddenly come upon a fount of knowledge which gave only them the right to speak. They readily acknowledge that the various reports over the years had come to many of the conclusions they reached.
The value of Culliton is that it is precise, coherent and clear. It is easily understood, touching a chord in people who read it, despite some misgivings here and there, the task force is proceeding with a time frame for implementation. Its unique usefulness, however, has been in the way it has highlighted the extensive range of the policies which can affect industrial performance. This has ensured that there is a clear recognition now of the need to have effective co-ordination of all these policies. The establishment of a task force, at present preparing for submission to the Government its proposals for giving effect to the report's recommendations, is a reflection of the Government's intention to bring about that overall coherence of approach so essential if we are to achieve real improvements in this country's industrial performance. There is, as I said already, cross-party agreement on many of the issues.
When we debated this in the Dáil there were some misgivings that it would become another talking shop but that is not the case. There will be a report issued to the Taoiseach-led review group by the end of April beginning of May, with a time frame for implementation, and I presume there will be a debate on it when it comes out. The Culliton report means business. Paddy Moriarty means business too, as he usually does; he is chairing that expert group. They will wish, and we all wish, to see the policies which will give an underpinning to our industrial life proceeding quickly.
There is no need for me to come in here and lecture anybody. Each of us, in our way, within our local environment, recognises the urgency of the unemployment problem, the need to address an issue which confronts us daily. The history books, contemporary writers and everybody concerned, will not give us any praise if we do not attempt to tackle this problem in a structured way. While we all go for the immediate measures which might alleviate the problem, the only way we can forge a proper future for industrial performance and all the measures, some of which I touched on, in the report, is to get at each aspect in an interlinking and coherent fashion.
Education is very important and I look forward to some of the contributions from the Senators elected from the Education Panel. I had misgivings until I met some of the people involved in the writing and preparing of drafts for the Culliton report. Tansey Roche wrongly used the words "parallel streams of education". "Parallel" means two tracks which never converge, and nobody wants to go back to the time when there was seen to be a lesser education system as distinct from any other type.
Most young people can be good at either academic or technical subjects. They may be good at one technical subject, good at a language or good at something else. There is no need for a dichotomy between the education systems and to go back to where a stream of schooling was seen as lesser would be completely inequitable and not fitting the Irish culture of education. There is a strong historical wish for education in this country.
When I was finishing my Green Paper the strongest point in it was the multiplicity of second level schools — community schools, community colleges, comprehensive schools, secondary schools and vocational schools — in a country of this size. In the future each second level school should, be able to provide under one roof for young boys and girls, young women and young men, a multiplicity of subjects of a technical/academic nature. There are many young people in the Visitors Gallery today; they are younger than the age group to which I am referring but my comments may strike a chord with them. They are very welcome. Young people should be able to sample the subject that best suits them. Young people should not feel they have to go to another school which is deemed to be in a lesser education system. They should have the academic and the technical subjects under one roof where they can go from woodwork class to German class, to mathematics class and then to building construction or home economics, etc. That is the type of education which is needed. Having talked to some of those involved in the Paddy Moriarty force, I am satisfied that they did not mean divergent paths. They set out to mean divergent paths but they quickly came to realise that our cultural history of education will not allow that, and there is a strong wish for an integrated system under one school roof. I said that very strongly in the Dáil and I say it again here today. I never believed that there should be a dichotomy between the aims of education to inform and to awaken a spirit of inquiry while simultaneously equipping a young person with a practical awareness of the world of work and useful applicable knowledge and skills to participate in it, but, please, no parallel tracks but tracks running side by side under one roof.
The Cathaoirleach has been generous to me in allowing me time to diverge down another pathway. I look forward to the contributions and will be here for as much of the debate as possible.
May I welcome the Minister here this morning. I welcome her approach to this debate. She has indicated what is a very necessary approach in the sense that she wants an open, positive discussion and I intend to play my part. I also will, to some degree, be following her example in focusing on a few aspects of the report rather than attempting to go into it in depth because within the time available to me, that would not be possible.
I wish to refer to some points made by the Minister. She has dealt — and I am in full agreement with her — with the support that is available to the start up industries and the problems and frustrations that beginners in particular can encounter in their search for finance and other facilities in getting a venture off the ground. I fully support her observations on the difficulties relating to access to finance and I fully agree with her comments on the unfortunate attitude that can so often prevail between banks and financial institutions on the one hand and their customers on the other.
I welcome the fact that the Minister has indicated very strongly that this is not just another report to be set aside, but that there is a commitment to take action on it; I accept that setting up the task force under Mr. Moriarty is an indication of commitment to what is involved in the report. I also welcome the indication that a report is expected from that task force by the end of April or early May.
The message on the cover of the Culliton report is a very fair summary of both the objectives of the report and what as a community we require. I will read it into the record. It says:
We need a spirit of self-reliance — a determination to take charge of our future — to build an economy of real strength and permanence which will give jobs and wealth sufficient to our needs.
I believe that is an objective to which everyone concerned with the future of the country and the future of our people must subscribe 100 per cent.
This is a very comprehensive document. It deals in a very straightforward manner with industrial promotion, job creation and so forth. I would describe it as a worthwhile blueprint by which this country can move forward in the fields of industrial promotion and job creation. A person does not have to agree with everything that is in the report or with every aspect of it. I have some reservations, but not many. I believe the overall value of the report is such that it may be possible to deal with my reservations in relation to certain aspects of it but even if that is not so, I still say it does not take from the overall value of the document before us.
I want to turn to page 9 of the report — The Executive Summary. There is a very significant first paragraph there. I quote:
Irish industrial and economic performance over the past quarter century has broadly matched and in some respects exceeded, performance in the EC economies generally.
The extraordinary thing is that we have kept pace in certain aspects of our performance with our fellow members of the EC and with similar economies. Unfortunately we have never been able to relate that to corresponding progress in job creation. The report sets out a number of the factors that prevented similar progress in relation to job creation being achieved. Time and time again it returns to the crippling tax system which it more or less describes as a rampant destroyer of any rewards for initiative, enterprise or risk-taking. The only criticism I would have of the Minister's speech is that she seemed to gloss over the damage the tax system is doing to industrial achievement and job creation.
We are at a significant crossroads. I believe there is a public mood for action and it is important that we build on it. I also accept that if matters referred to in the report are not dealt with quickly, nothing will be achieved. The public may well lose their desire to see things happen and we could get an unfortunate atmosphere of fatalism preventing, shrouding and overcoming initiative that is so urgently needed.
The proposals that need to be addressed are outlined in the report and they relate to a number of issues. There is the tax system to which I referred and to which I will come back; the Minister has dealt very well with education, a chosen field of hers, and she displayed the competence I would expect from her. There is infrastructure, semi-State agencies, support for industries, the food sectors and other matters that inhibit employment and job creation.
Culliton said, at an early stage in the report, that they were influenced by two factors — first, the size of the national debt and, second, the fact that at that time there were 270,000 on the unemployed register. What I find most refreshing about Culliton is that they have little respect for sacred cows — if I may use the term. They has said plainly that there is an anti-enterprise culture in this country and that we now face a choice between enterprise and emigration. I accept that. If we are serious about making progress many more of us will have to have as little respect for some of the sacred cows. In fact, I propose to make some observation that will not be very acceptable in some quarters.
I believe there is an anti-enterprise culture here which is the biggest obstacle to making progress in the areas we are dealing with. It is widespread and is located in very influential sectors of society. Last evening Senator Upton, speaking on the jobs forum, referred to vested interests that would have the capacity to obstruct progress. My sentiments are the same. We might not have exactly the same vested interests in mind and our approaches might not be the same, but I think there would be a overlap there.
If Culliton or any other worthwhile proposals of a similar kind are to succeed, that anti-enterprise culture must be challenged, it must be changed and it must be replaced. We must put in its place a pro-enterprise culture that supports and rewards enterprise and risk-taking. As far as I am concerned, there is no other way. The only alternative would be State enterprise on a vast scale and experience elsewhere in the past couple of years has shown that that is a non-runner.
I am going to examine, at the risk of annoying certain quarters, where I feel this anti-enterprise culture is rampant and where it is most entrenched. It is in the public service, particularly in the Department of Finance and Revenue, it is certainly in semi-State bodies and in trade unions and other areas of influence and importance. That opposition is registered for a variety of reasons, not all of them malicious.
I will outline a few of the less malicious reasons I think are responsible. There might be the question of the status, reputation or position in society of a certain person or body which might be diminished were certain steps to be taken; there is always an inbuilt resistance to change; a long standing commitment to present methods — we know them, we are familiar with them, they have worked, do not take the risk of changing them, they are all right as they are. I am all right in this situation and we will continue. That is one of the factors that has contributed to a growth of an anti-enterprise culture in the country. There is also the fear of trying something new. That is a regrettable trait in our race and it is something we do not share with other peoples. Therefore, the capacity of these interests to stunt worthwhile plans is very substantial and one I would say to the Minister and to the Government that cannot be over-estimated.
Some of the Culliton proposals require a response of significance from indigenous industry, small Irish companies and the type of people the Minister spoke about this morning, such as small scale local concerns, and Culliton put a lot of emphasis on the fact that there is potential in that sector. It says, of course, that more than grants, finance and advice are necessary. If we are to have a pro-enterprise culture, risk-taking must be encouraged and the rewards in enterprise, where they arise, should not be met with an attitude of envy that, unfortunately, is true in many aspects of our society. That envy of small business people and the self-employed and indeed workers is not alone expressed by ordinary people but is manifest by certain actions in the State bureaucracy in its dealings with private enterprise, self-employed and small industries. The envy of that machine, I believe, manifested itself very much in the recent budget where every incentive and every reward by which companies and firms would recognise the performance of their workforce was hammered. Benefit in kind, profit sharing, share ownership, productivity bonuses and so on were all knocked.
In recent years the theory has been advanced, and I agree with it, that worker participation in their firms is worthwhile and to be aimed at. That participation involves the availability of company shares and this system is recognised as a progressive way forward. There are many examples which time does not allow me time to quote, where profit sharing and share ownership have brought a ready response from the workforce, leading to increased productivity, reduced absenteeism and controlled costs. These are examples of workers responding with pride to the well being of their own company. I have spoke about narrow mindness and envy on the part of the State machine. The budget indicated that rewards for dedicated performance were to be penalised and I think that is a regrettable step.
Difficulties and barriers of a similar kind daily confront the small business person and the self-employed. There is a widespread obsession among authority here that the self-employed and the small business people are engaged in a 24-hour daily conspiracy to defraud and cheat the State, and that they must be closely policed by inspector after inspector. They must be knotted in red tape and any surplus cash must be siphoned off in a tax of one kind or another, eliminating the capacity to expand the business and to create job opportunities.
Over the years, we as politicians have played our part in contributing to the building of that anti-enterprise culture I talk about. We have now reached the stage where the outstanding performance of a workforce cannot be rewarded by benefit in kind, by share ownership or by profit sharing; where the small business person and the self-employed are overpowered by impediments of all kinds. As long as this atmosphere prevails, it is reasonasble to ask why should a small business person get involved in job creation or take risks? Why should they put themselves to the trouble? As long as that anti-enterprise culture exists, I am afraid the worthwhile objectives in the Culliton report will be frustrated. How can any business person or any self-employed person rationalise the harassment that he or she is continually subjected to by the authorities and witness, at the same time, the ease with which some of the largest operators in the country — Goodman, Telecom, the Sugar Company etc. — can rip off the system under the noses of the authorities that are hounding the small operator?
I support the broad thrust of the report, I wish it success in it objectives but until that anti-enterprise culture is eradicated and that mentality of envy is replaced, I believe it is almost an exercise in futility to talk about the contents of that very fine document. Some of us as politicians have played our part, regrettably, in creating that anti-enterprise culture. It is a culture that is anti-enterprise, anti-progress, anti risk-taking and anti-reward for effort and performance and I believe that, having played our part in creating it, there is an obligation on us to take responsibility for dismantling it.
Culliton has rightly questioned the scale of the grant aid we have been giving to industry, particularly during the eighties. In the eighties we provided something like £1.6 billion in grants for a net gain of a total of 7,000 jobs. Between 1980 and 1990 existing foreign industry received £530 million, yet, within that sector we had a net loss of 15,000 jobs. Between 1980 and 1990 existing Irish industry received £460 million in grants with a total net loss of 30,000 jobs. One comment which Culliton makes, and with which none of us would disagree, is that this is not a good return on an investment of scarce national resources.
I want to dwell on another aspect of our performance as a country where employment is concerned. For the past 20 years we have followed an active policy of subsidising the replacement of the worker with the machine; we grant aided the replacement of a worker with a machine — a tax friendly type of machine, there was the annual write-off of the capital cost, there was no problem with overtime, PRSI, etc. We actively encouraged that replacement. Today, 20 years down the road, we wonder why we have massive unemployment. The reality is that for 20 years we actively pursued and supported that policy and we are now reaping the benefits.
Some economic commentators in recent days have put forward the idea of job subsidisation. It is ironic that having spent a generation eliminating every conceivable job with grant aided tax friendly machinery, we now seem to have come full circle and to be contemplating grants and subsidies for the employment of the individual worker. I have no commitment to the idea, but it is being advanced in very influential quarters. All I will say in its favour is that it is one approach which has not yet been tried. We are definitely in a crisis, and it seems there is not much left to try if we want to reduce the numbers on the dole queues. Approximately £1 billion will be paid this year in unemployment assistance and benefit. What is being suggested is that part of that £1 billion should be used to subsidise extra jobs in existing businesses for the long term unemployed, that the opportunities of acquiring new skills would be provided or, at the very least, the opportunity of re-entering the workforce. Perhaps there should be certain safeguards to ensure that it is not used to replace existing jobs and that it is a voluntary option at least. This has merit in that it has not been tried before.
I want to turn now to the aspect of the report on which I have a few reservations, while again emphasising the fact that I accept the broad thrust of the report. The report is anti-regionalisation — if I may use that term it is pro-centralism. I will explain what I mean by that. The thrust of EC thinking and EC funding is towards the regions, but in two key areas Culliton goes against EC thinking. The policy of giving higher grants to attract industries into areas remote from the bigger centres of the population would change, and should change, according to Culliton. I do not accept that because I believe that if you go down the road that Culliton is advocating in the report, then you will finish up with half a dozen large centres of population and you drain the population from the countryside. It is imperative that we continue to provide employment in remote areas. When I talk about remote areas, I am talking about areas other than the half a dozen big cities; rural provincial areas would probably be a better term than remote areas. It is necessary to discriminate in grants and support in favour of locating industries and providing jobs in these provincial areas. I would question the approach of Culliton on that.
The other aspect of the Culliton report I am not happy with is the proposals that deal with such bodies as SFADCo and Údarás. According to the recommendations in the Culliton report, SFADCo and Údarás would become subsumed into the IDA and would become no more than arms of that body. Coming from the mid-west where SFADCo have responsibility for industry and tourism promotion, our experience is that we are better off with a regional body than we are with national bodies. That experience of national bodies is that they tend to focus the greater part of their activities on Dublin and the Dublin region as against the provinces. The best examples in the mid-west are the attitudes of Bord Fáilte and Aer Lingus. Both are anti-regions. We have no doubt whatsoever in the mid-west that that is the case. Leading figures in both bodies, including their chief executives, have in recent times used the public media to attack Government regional policy, particularly in relation to the status of Shannon Airport. The policy of both national bodies has been to take from the regions and bring whatever prosperity that is to there is to the Dublin region. As I said, the chief executives of both Bord Fáilte and Aer Lingus have publicly used the media to contradict Government regional policy in relation to this matter. In any other democracy, that would be a firing offence and rightly so.
I suggest that the Minister and the Government should examine carefully these proposals towards centralism because they conflict with the approach and policy of the EC which is towards the regions. There is a proposal in the Culliton report that there would be regional sub-committees which would be responsible for distribution of grants and so on. That is only a gesture and it is not worth a lot. Strangely enough, I favour regional bodies in which there is a local response: in fact, I would favour regional elected bodies even if they were comprised of Fianna Fáil people, because I have more confidence in the capacity of an elected person who has responsibility to a region and to the people, to deliver on a particular project that I have in the bureaucrats.
I ask the Government to examine that: to what extent is there a commitment by national bodies to the regions? There is commitment by the Government but there is no commitment by national bodies, and I think this is a serious issue. As I have already pointed out, the Government should question closely the proposal to provide attractive incentives to industries in provincial areas.
I spoke earlier about the anti-enterprise culture and so on. The group who prepared the Culliton report believe that if their recommendations are implemented they will begin to transform the economy and will lead to an improvement in jobs and in spin-off services. Industry alone will not solve the unemployment problem. That is a significant and important admission; the Culliton report says that industry alone will not solve the unemployment problem. They say that emigration will be a fact of life until the end of the decade. The ESRI, in a report issued in the last week or so, expressed the view that the completion of the Internal Market, the more efficient use of Community funds and the assumed gains of monetary union will be to increase employment by about 55,000 to the end of the decade; but, they said, that when other factors were taken into account, the net gain in jobs would be only 30,000, that is, one-tenth of the numbers at present unemployed.
The Culliton report recommends that the role of the IDA should change, that it should be split into two parts, one dealing with overseas industry which should attract every worthwhile project on a selective basis, and the domestic part should take over the entire grant giving powers of Córas Tráchtála. It recommends that the IDA at home should be rationalised to include SFADCo and Údarás and should have a series of genuine non-politicised local boards with grant giving powers. The group recommends that such regional boards should provide more venture capital, a move away from grant support to equity. I have already explained that I do not agree with the concept of subsuming SFADCo and Údarás within the IDA nor do I agree with the concept of non-politicised local boards with grant giving powers. I would be happier with politicians any day, no matter who they are. Once they are elected they are responsible to the people who put them there. I am not happy with the absence of local accountability. This should be closely examined by the Minister. It is no more than a gesture to regional development. I am concerned that the commitment to regional development is not as strong as I would like it to be.
The Minister has referred to training which is an area that requires urgent attention. The report says that education is weighted heavily in favour of the academic rather than the vocational and technical sectors. It says a whole new attitude is required to accommodate those pupils who fail or who do not sit for the leaving certificate examination, to give them training which is strongly linked to enterprise and development of skills. It makes a very important point, it says that in Germany 70 per cent of the youth from the ages of 15 to 19 go on apprenticeship courses to companies. By the age of 19, 95 per cent of all the youth involved have a degree or an acquired skill or a highly regarded certificate. A greater proportion of the money allocated to FÁS should be spent on industry relevant training directed towards those at work or preparing for work; as it is, it says 90 per cent of the FÁS budget is spent on unemployment.
The Culliton report says very clearly that there is an anti-enterprise bias in the community in Ireland. These attitudes must change and people must be told the choice is between enterprise and emigration. I support that, and I hope the Minister does too. As the Culliton report says, the choice is enterprise or emigration, and it is a clear choice. If everything in the Culliton report was acted on, we still would not solve the unemployment problem. There is another value which is also important in relation to the Culliton report, it provides a focus at a time when it is dawning in a general way that we have a crisis of horrendous proportions. The cost and consequences of 300,000 unemployed could sink the economy. The resources that are available may have to be applied in other and more effective ways. We now have a better understanding of how serious the situation is and, a willingness to accept measures that would be unacceptable at other times.
I welcome the opportunity to contribute to this debate. I may have been scathing about certain interests, but the situation is so serious, the need for action so great and the elimination of barriers so necessary that we should go light on the diplomacy in sheltering those interests that have contributed in no small way to the mess we are in.
Mr. Farrell
Cuirim fáilte roimh an tAire go dtí an Teach seo. I welcome the report. Many Senators will say that they said a great deal of what is in this report ten or 15 years ago, but I did it ten or 15 years ago, and anyone who comes to Grange today can see it. We have seven factories in a village with a population of 50 and 200 people employed. We are a begrudging society. The previous speaker referred to the negative attitude to enterprise. There is a story told — which is true — of an Irishman in New York who sees his neighbour driving down Fifth Avenue with a Merc 200. He looks after him, he spits on his hands and he says with God's help I will have a Merc 300 before this time next year. The same fellow passing up Kildare Street or O'Connell Street in Sligo or anywhere else, sees a neighbour driving his Merc 200, looks after him and says, only he got it handy he would not have it. That is the attitude we have to deal with, and that is the nub of our problem.
When I started 15 years ago the IDA started building advance factories — and I give them credit for giving me the idea. I put in several notices of motion to Sligo County Council asking for an advance factory for my village but, at that time, small was ugly. They were the days of amalgamation, rationalisation and conglomoration etc. I was so convinced that my theory was right that I put my money where my mouth was and built an advance factory that today has spawned seven factories employing 200 people, with employment for at least another 200 or 300 people in spin-off industries. Some of those factories are exporting to the Continent and to the United States from the little village of Grange.
I was travelling to Donegal recently listening to Gay Byrne's very interesting radio programme. He had brought together a Leitrim family of seven who were living all over the world. It appears there has been a lot of desolation in Leitrim and they had to emigrate. By a strange coincidence I gave a girl a lift — I give students seats when I see them on the road — and said I would not talk to her because I was very interested in that programme. When it was over I asked her what she thought of it and she said she was one of seven and all were working in Ireland. I thought I would pen a letter to Gay and tell him there were families of seven fully employed in this country because I wanted to counteract the dismal picture he painted. I also said he should send Joe Duffy to Grange in North Sligo to see what a small community can do and to see the other side of the picture, but I never got an acknowledgement.
If one of those factories went to the wall, if something happened there, I guarantee we would have space for the television cameras. As a nation, we seem to love bad news. I am disappointed with the way the country is going as far as tribunals and investigations are concerned. They are not going to prove any dishonesty worth talking about. We are damning the people who took risks and destroying them. Who will want to do try anything again? Is it not better to leave the country? If those men went to America or any other country and achieved something, we would tip our hats to them. The media will have to adopt a more positive approach because they are demoralising society from 8 o'clock in the morning; as regards television programmes, one more demoralising than the other all trying to make an isolated tale of woe the norm. There are thousands of happy people working.
I was pleased the Minister spoke about the special sub-programme devised to develop Irish owned small industries. I remember going to a meeting in the Park Hotel in Sligo, and indeed the same thing occurred to me when I went to a Save the West campaign recently, not one person on that stage was able to create a job for themselves, they were all State employees. It is time we put on stage people who have a proven record in creating jobs, and have done something positive about creating jobs; we should not have State employees telling us what to do because, with respect to them, they are in the white collar class and do not have the experience of creating jobs, work and industry. I am delighted to see that something is being done in this area.
We can say a lot about banks, but I must be positive. The only thing that has gone wrong with the banks lately is that we have seen the demise of the bank manager. I regret that. Now, he is only a public relations officer. When I was dealing with the banks and ploughing a hard furrow 25 years ago, you could go to your bank manager and you got money on your record. He could make the decision and tell you to go ahead. I went in to the manager the day before an auction to borrow £1,000. He said I had not given him very much notice but that £1,000 would not be adequate. He opened a drawer and took out a cheque and said it was good for £1,500 and that if I got what I wanted for that amount I should buy it because it was good value, even at that price. No bank manager could say that today.
The Senator met a good manager.
Mr. Farrell
I did, and he has now retired to Galway. I was speaking to him recently; and I have great respect for John Hannon, I hope he lives long and has a real happy life.
I am talking about facts. In those days you could go in and talk to a manager if he thought your idea was good, but now we are governed by the computer. Everything is done by computer and remote control. I believe the banks will have problems until they get back to reality and keep in touch with people. They are no longer talking to people, and that is a great mistake. As I know from experience in my little industrial estate, the human touch is all important. Incidentally, I do not own any of the factories, they have all branched out from the advance factory I built.
Another issue that has been dealt with lightly in the report is the county development team. I believe the county development team should be promoted. I would like to see them having more funds; they are only allowed to give £2,000. That £2,000 was a fine sum when they were set up 12 or 14 years ago, but £2,000 today is ridiculous. From small acorns great oaks grow — that is not the correct wording but it gives the message. As the county development team are the first people to meet the young entrepreneur, they should have more funds available.
The IDA are very good, excellent, and I will not knock them, but unfortunately they are hamstrung, and of late they are more hamstrung than ever before because, like the bank manager, the local man in Sligo, or any other county has damn all say because it is all dictated from Baile Átha Cliath. That practice must be discontinued. I promised myself I would no longer adopt a negative approach; God knows, we hear enough negative things, but I would like to see the IDA having full responsibility for certain matters; in theory they have — and that is something I will deal with at a later stage — but not in practice.
In one of my factories in Grange, the only stranger to the area was a Longford man who is employing approximately 30 people but he could not get grant assistance of any kind. While it is an indigenous operation, he is using raw material from the area and he is producing a good product, because it is a meat factory but he is not in the export business, he does not qualify for any grant. Now he is told he has only a couple of years to bring his factory up to the standard of the export factories. All the export factories are getting big grants, but this man cannot do it on his own.
I appeal to the Minister to look at that situation because if this factory is closed, 20 people directly employed in the factory will lose their jobs, if this and the people selling cattle will also be affected. This man is providing a great service, a great market for local producers. He is a great advantage to our village and it is unfair to say his factory must reach the same standards as those involved in the export trade. I am not against raising standards and neither is he, but things would be different if he was sending a few pounds of beef into intervention around the country. He saw an opening for this type of business when abattoirs owned by individual butchers did not reach the standards set down in the regulations and they had to close down. At that time the supermarkets, were coming on stream and they sold meat. The supermarket is a big market for him.
We should give some assistance to people who creat jobs. Harry Blaney said to me recently — I thought it was very good — we hear a lot of talk about jobs but no one wants to hear about work. People who create work and jobs should get recognition, and they are not. Another factory would have closed through no fault of the operator but through the rate of retirement, if it had not been taken over, but, again, it did not qualify for any grants. Sligo Crystal is producing a good product, a lot of it being exported, quite a lot to the American market, but there is no grant aid because of a decision taken mBaile Atha Cliath.
They get grant aid to start but when they are up and running they do not need grant aid.
Mr. Farrell
They should get grant aid to start off, not when they are up and running. If, as in the case of the meat factory, they have to upgrade to a certain standard, they should be grant aided. I think it is unfair to say a factory must be upgraded when the person sending beef into intervention can get a grant. I would shed no tears if many of the grants were cut out and the money given in loans. Many years ago I was at a meeting in the Chamber of Commerce in Sligo and they set up a venture capital scheme to help industries in the town. Venture capital is very important and if we could borrow at 5 or 6 per cent interest and give subsidised or cheap loans depending on the number employed, this would be a step in the right direction.
Taxation is something we have rightly talked about. On the radio one morning a fellow said that losing his job was the best thing that ever happened to him because now that he and his two brothers were unemployed they bring home £300 a week each; when he was working he brought home less than £200. He made no secret of it. He got £300 a week, medical card and all that goes with it. Our tax system in some way encourages that attitude. Many people believe they would be better off on the dole. Young people have it rough because they have no dependents and are put on high tax from the word go. We should give young people in their first job two years tax free so that they can get themselves a car and organise themselves financially.
When I was a young worker I received only 50 shillings a week but there were no deductions. Whatever I earned I got; wages were small in those days. Somebody earning £170 or £180 a week now may receive no more than £100; if they work overtime and discover that most of the overtime worked was for the taxman, they may rightly feel disillusioned. When I look at my own Seanad cheque I thank God I am not a young person when I see a third of my own cheque go in tax. I think if I were young trying to start out I would become disillusioned and cynical.
Our hope is our youth; it was young people I encouraged when I was an employer. One can train a young person to one's own way whereas someone with more experience may have bad habits. The young person from school is willing to work; you can talk to them. We must invest in or young people, which is why I said so much here about motor insurance for young people. They are crippled financially on every front. Only people who get jobs are financially crippled because people without jobs do not usually have a car and do not have to pay motor insurance. Similarly, unemployed people do not have to pay tax. Progressive people get themselves a job and are prepared to take any job, even washing dishes in a cafe, regardless of their qualifications. They believe that one job leads to another which is true. Anyone who waits for the job they want may end up like the woman in the proverb who spent the first 20 years of her life wondering who she would take and the next 20 years wondering who would take her. This is what happens in employment as well.
She may not need anyone.
Mr. Farrell
I am quoting seanfhocal. If people stay too long out of work nobody wants them because employers think there must be something wrong with people who have not yet got a job. We penalise the most industrious in our society. Our tax system needs reform. The last budget and the budget before that contained measures to reduce taxation, and I compliment Deputy Ahern and Deputy Reynolds for their work. They cannot simply cut tax all at once because we need the revenue. I hope they continue to work on this.
In the area of planning organised vociferous group of objectors oppose every factory no matter where it is being built. I am sad to see this because I thought when we agreed to commission environmental impact studies that the findings of those studies would be accepted. I had a terrible experience recently when I sold a man ten acres of land to set up a sawmill industry in Dromohair; he also bought the old railway station there. We had all heard about all the timber that was leaving Leitrim for Northern Ireland with no one to create jobs out of it. The man applied for planning permission. There was a sawmill in every Irish town and village 20 years ago. He did not get permission before he produced an EIS study which cost a lot of money.
Eventually he got permission which was appealed to An Bord Pleanála, but the buyer has thrown in the towel. That would have meant 40 or 50 jobs for an area in Leitrim with the required raw material all around them but it was lost because of objections. Many people who object to proposed factories are in safe State jobs. I can see why they object if they have built a house in a scenic area; they are afraid their property will be devalued by an industrial development in their area. People now buy a site and expect the rights of a landlord which makes it difficult for factories to get started and for jobs to be created. I do not know what the answer is, but it is a national problem; we are told that certain areas are listed as blackspots which industrialists will not go near.
Now that the Iron Curtain has gone, some European countries have an increased workforce with the possibility of cheap labour. Foreign industrialists will go where there is cheap labour. We need to change our attitude and to be more realistic.
It has been said that a journalist never lets the truth get in the way of a good headline. That is an old saying even among journalists themselves, I did not make it up. If there are objections to a proposal the first people to be interviewed are the objectors; the planning official or the Minister is on the defence from the word go. Instead of getting an opportunity to give the positive aspects from his point of view, the ten or 15 minutes allotted to the official or Minister on radio or television are spent trying to contradict the outlandish statements made by objectors. This proves that there is no respect for authority; whoever blows the whistle loudest and creates a good headline gets the high ground. We cannot be restrictive to that degree.
I want to see the environment protected but the situation has got out of proportion. When an environmental study is carried out it should be final; the professionals involved would not make the report if they were not sure it was accurate. That is one of our biggest job creation problems; it is impossible to set up factories or build extensions to factories.
My own town which has a substantial number of workers experienced teething trouble at the start because of fierce objections, although three elections had been fought on when a particular factory would come to Sligo. As soon as they started up we had objections to smell. People are not prepared to give industry a chance although the industrialists said that a teething problem existed which they were coming to grips with. There were reports that the smell was a health hazard — the great phrases — although medical people proved that it was not health hazard, but merely an objectionable smell. There was a saying in my county that one should look out for the fireside law and the hob lawyers, and the hob lawyers are stronger today than ever. When it was called a health hazard, the headline read "Smell health hazard". We have to marry industry, the environment and the community; we have to be more realistic and stop petty objections.
When SNIA came to Sligo 25 years ago I was on the council and objections were made. Objections were not as insuperable then as they are now. The council went ahead and gave permission; 500 people worked there for over 20 years. It was a great boon to Sligo. We had a hullabaloo in Ballyhaunis when factories closed but only one paper carried a small headline which said that three or six months before it closed people signed petitions to have it closed because of the objectionable smell. The same people who collected money to finance a High Court injunction to have it closed were crying when it finally closed. These double standards must be ended; we cannot have it both ways. We will have to come to grips with that but I do not know how any Government or group will succeed there.
I agree with the next part of the report which deals with education, enterprise and technology, which says we neglect vocational training. I am a product of a technical school and proud of it. There is still a need for two types of education in this country, the academic and the vocational. People who are good with their hands — technical might be a more appropriate word — should go to the technical school from where they would emerge as good citizens. Goldsmith said; "...and still the wonder grew, that one small head could carry all he knew". I do not think the average youth going to school today can study technical subjects, practical subjects and academic subjects together satisfactorily. We expect people to be able to work with their hands and with their heads. That is not humanly possible and I preferred the old system where the school master would advise that a child should go to college or to the technical school. That approach has been proven successful.
We have had comprehensive schools for 25 years now, and the last report from the Save the West, group is that the great majority of unemployed people today are leaving certificate students. When we began secondary schools what did we do? We had practical subjects in the technical schools such as woodwork, mechanical work, metalwork, cookery, needlework etc., but as soon as we got students into the secondary schools and all on one level, we abolished all the practical subjects.
Why not have them all in the one school?
Mr. Farrell
I quoted Goldsmith; one small head is not able to carry all that.
He was from my constituency.
Does he still vote for you?
Mr. Farrell
If we were that brilliant we would have no failures; I will come to that in a few minutes.
I imagine he would support the Minister.
Mr. Farrell
When we had two types of education we had a better system. Students from technical schools became some of our best technicians with the ESB. They received mechanical and technological training and were able to do things with their hands. Now what have we done? We have woodwork theory, metal theory and a student could now write 40 foolscap pages about the shape of a new penny and never say it was round. That is what we have got from theory; if theorists could run this country we would have no unemployment. We want to get back to the practical things.
A great mistake was made with FÁS. It is doing a good job in its own way, but FÁS and the vocational schools should have been married and the money being spent on training in FÁS should be in the vocational education committee pool to provide training in schools. In my technical school in Grange many years ago they introduced work experience in the fourth year; they placed boys in firms to work for a few days a week and they got work experience. We are coming around to that idea again through AnCO and FÁS but they should be abolished and technical schools revived. The Culliton report says very accurately that we have plenty of people who can tell us how to do everything but we do not have the volume of people needed to do it.
Another issue I take with our education system — I do not blame teachers; we introduced the system — is the points system which is based on failure. I used to be involved in pony shows, and I think education over the last few years is comparable to pony jumping at horse shows; we have only so many prizes so we raise the jumps until we eliminate competitors through failure. We have to put students down through failure. A standard should be set and everybody who reached that standard should qualify for third level education. We do not have enough third level places so we should allocate them on a lottery basis. The student who did not get it would be able to say "I qualified but I was unlucky." The student today who does not qualify is regarded by everyone as a failure. That is a negative attitude which must change. Until we have enough third level places we must adopt a standard.
Some of our best people have only a leaving certificate. They went on and studied to become teachers, nurses, priests, nuns and other professionals. People made excellent nurses although they did not come through a points system; they got their qualification because they reached a standard. There is far too much negative thinking in our society that has to be abolished.
Previous speakers referred to the fact that machinery has been introduced which cuts labour requirements. We have to live with technology whether we like it or not. Machinery was introduced for various reasons. In our last report four to five years ago, five million days were reported lost in absenteeism. If Our Lord were still alive he would not be a million days old yet. When we look at it in that light and realise we have lost five million days in absenteeism in one year, is it any wonder firms introduced technology?
We imported the lump system from Britain, unfortunately: "lump it up, it will do". That day is gone. We must strive for perfection. My technical school teacher who is till alive had a saying: "Small things make perfection but perfection is no small thing". The day of lump mentality is gone. We have seen a great deal of shoddy workmanship.
We have to adapt to modern technology. In a factory in Sligo modern technology was introduced with a loss of jobs but now the factory is back in full production and is employing more people than before. One employee told me they were manufacturing a high quality product with a 6 per cent throw away rate when it was done manually, but with the introduction of modern technology that rate dropped to 2 per cent — a 4 per cent waste difference between the human and the mechanical is too much. No firm can afford to carry a 4 per cent throw away rate that could be eliminated.
We are inclined to object to technology in this country as in Britain. When we introduce technology we often have to pay off people. People must realise that if we are going to be progressive we must employ modern technology. If the technological process is properly managed it may cut jobs at the start but eventually it will create more jobs and a better product, which is what we should be doing.
I am not as pessimistic as many people; I am talking about what I have done not what I said. There can be full employment in this country. There is a large market in Europe and a very small percentage of that market would keep us in full employment, but we must go after it.
We are now educating people in marketing. I made my living selling and I have always maintained that it is no good stocking a product if it does not sell. We must have sales people. We should spend more money on marketing and small industries. In my own village we have a small industry the director of which was a student of Grange vocational school. One of the biggest importers of toys in this country — he now manufactures them — was also a student of Grange vocational school. Those men have to go to the Continent and to the United States to get what they want and to make their markets. We expect people to be manufacturers, sales people and so on, which is impossible. We must create and guarantee a good market for our products. There is a huge market out there; we have personnel, know-how, technology and ability.
When a new laboratory was opened in Sligo recently that exports solely to the American market, I was pleased to see many graduates of our regional colleges working there. It was like a breath of fresh air to me. We have the students with ability but we have to get our act together to create a market. No fairy godmother is going to say to us they will give our sons or daughters a job. We can do it ourselves but we must first get rid of this anti-enterprise attitude. For far too long we referred to people who created jobs as speculators and "speculator" became a dirty word. The attitude towards anyone trying to advance themselves was they are ripping off society; they are ripping off the workers.
When a firm closes down we have a rule that if the employees wish to take it over, they have to be six months unemployed before they get State aid to restart. By that time the market is lost; all is gone. If a firm collapses there should be state aid immediately for the workers who should be encouraged to take it over because the workers played the leading role in keeping that business going. If something goes wrong we should encourage workers to keep a firm going or to set up a workers' co-operative. We never put much effort into that aspect which might create employment. We should cut out that unhelpful regulation immediately. If someone can take over where a firm left off, good luck to him.
I hope this report will create a new atmosphere so that we will start to look at things in a different light and cut out negative attitudes, especially now that we have practically all party agreement on the committee for job creation——
Practically.
Mr. Farrell
We have all those who count, the important ones. We need a more practical approach and I look forward to a brighter future for our young people.
I welcome the publication of the Culliton report because it pulls few punches in relation to many Irish sacred cows. It is good that these aspects of Irish life should be addressed and that the report confirms that there is no simple way in which progress can be made. It is clear from the report that progress in relation to job creation will be slow. The report emphasises the enormity of the challenges which face this country in regard to job creation. I welcome the fact that it produces a series of proposals which, at least, represent a framework for change from which we can set about moving away from the status quo. As I said yesterday, the status quo in relation to industrial policy and unemployment is no longer an option, but change will be very difficult. Following the change, important and key people will be less important. I have no doubt that those people will resist change. I am also under no illusion whatsoever about the capacities of those people, some of whom are exceptionally powerful and capable. It will be difficult to bring about change as they will resist it. I do not underestimate their abilities and capacities and anyone who underestimates their power has only to recall the scenes we witnessed in the past few weeks to realise their capacity to make politicians flex their muscles. That power has been lying dormant in some areas but when it comes to life it is a fairly terrifying phenomenon for many politicians. Fortunately, neither I nor my party are worried about the present round of manoeuvres because we have been through that business before and, to some extent, we have learned to cope with it.
We must realise that progress will be difficult and slow and if it is to be successful it will have to be based on a methodical approach. We must realise that in the longer term we simply cannot fool the consumer. There seems to be a mentality that the consumer will not understand if he or she is being sold short or ripped off. There is far too much of that mentality and sharp practices, particularly in the tourist industry. There is the practice of prices being increased simply because a festival is on, a hurling or football match, or, indeed, because a holiday weekend brings large crowds to a tourist resort. These short term, half clever gimmicks are of no long term value. The industries which have endured, the people who have endured in business, in particular in the tourist industry, did so because they gave value for money and a good service. They were in the business for the long term. At the risk of digressing somewhat, there was a party in this country in the forties called Ailtirí na hAiséirghe.
Do not disgress too far, Senator.
I will not. One aspect of the policy of Ailtirí an hAiséirghe was that if the people played their cards cleverly they could dictate and determine the shape of the universe for the next 2,000 years. There is a touch of that mentality still around as far as I can see, the idea that somehow we can pull a stroke, work a gimmick, take a short cut, soft talk our way to a handy solution; indeed that we can plamás or bluff our way out of any set of circumstances. That is not an option, certainly not in relation to the type of people with whom we are dealing in Europe. Although in many ways they are very generous, they are hardheaded and certainly will not be fooled by gimmicks.
The recommendations and comments in the report on the food industry are very welcome, with perhaps one or two exceptions. The report identified three main problems in relation to the food industry. It has first of all identified the impact of the Common Agricultural Policy. I think it is fair to say that the Common Agricultural Policy has been more of a hindrance than a help to the food industry. It has blocked, inhibited and damaged its development. The second aspect of the Irish food industry which has been identified in the report is the significance and importance of seasonality. Seasonality and seasonal aspects of production are very understandable from a farmer's point of view; however, there are very serious limitations as far as the food industry is concerned. I now believe it is important to address these imbalances in the seasonal nature of production on Irish farms and, indeed, to begin to adjust price structures to make life easier for the food industry. The food industry should be able to plan and to be assured that products will be available for processing at a constant level throughout the year rather than having enormous demands on processing capacity at the peak of production, while for the remainder of the year plants are working to, perhaps, a fraction of their capacity.
The attitudes of the public are important in the food industry, particularly those of the farming community, and indeed the attitudes of some people in the food industry itself. Ugly and negative attitudes are seen in the manner in which angel dust is abused. In the past few weeks an enormous haul of something like a half tonne of angel dust was discovered. From the point of view of the welfare of the food industry that type of thing is simply terrifying and exceptionally destructive.
The proceedings of the beef tribunal are ample testimony to the way we have done our business and, indeed, to the foolishness of the way we have behaved over the past number of years. The low levels of technology in the industry must be a continuing cause of concern, and that is especially true in the meat industry. The technological capacity of the meat industry is very low by international standards and compares very unfavourably with the levels of technological capacity in the dairy industry. It is a clear testimony to the failure to invest in educational infrastructure, particularly in relation to the meat industry.
The other side of the coin is the value of the technological strength of the dairy industry. That is mainly due to the work which was carried out in University College, Cork, in the dairy and food science department over the years. They slowly and systematically built up a technological capacity to enable the Irish dairy industry to meet international competition.
Above all, there is our abysmal failure to develop branded products and to be able to market them. The report mentions that the only successful industry is Baileys Irish Cream. It casts a cold eye over the image and the success of Kerrygold. As far as the European consumer is concerned Irish meat simply does not exist. What exists is Sainsbury's meat or supermarket branded names which use Irish meat. Irish meat is not available as Irish meat on the shelves of European supermarkets. That is regrettable.
We have failed to exploit the green, healthy and wholesome image of Irish food. The report mentions that and how essential it is for this country to set itself the highest possible standards. I have long believed that we should be setting the pace in relation to standards regarding food quality and hygiene on a European level. The Irish standards should be higher than anywhere else, whereas we are trailing behind in this area. We have in the past been looking for derogations. We certainly are not investing to anything like the extent we should in education in regard to quality of food and hygiene both for the general public and specifically for people who work in the food industry.
It is essential that anybody who works in the food industry, right down to the people who sell sandwiches in small foodstores, should understand the basics of food hygiene. I am not suggesting they should have domestic science degrees or anything of that nature, but it should be possible for those people to learn the basics of food quality and hygiene in short courses which could be run during time off in the evenings, this would make a big difference.
I am somewhat disappointed that the report states the way forward for the Irish food industry is through interaction with the multinationals. I would prefer, if it were possible, for the Irish food industry to go it alone, to develop solely on the basis of the Irish industry, to be able to develop Irish products, market them and put them on the shelves of European supermarkets. It appears from the report that the committee consider this is not an option. Perhaps it is not and if so then it is just as well we are realistic about it because there is no purpose in any further tilting at windmills in relation to our food industry. We have done a great deal of that over the years. There are a whole series of reports, all making wonderful recommendations but which, for various reasons, we have been unable to implement. That is ultimately related to the fact that the recommendations, if implemented, would mean that important people would be less important, and those people certainly have the capacity to exert themselves.
I am concerned about the decline in the technological support which is available to the food industry from Teagasc. There have been serious cutbacks in Teagasc over the past number of years resulting in a winding down of the technological capacity. It is easy to criticise Teagasc but we must remember that they provided the core of technological support. They enabled people to learn how technology works and many of those who began their lives in Teagasc moved on and are successful in the industrial world as managers of meat and dairy plants, etc. They learned their trade in Teagasc, which is very important. For that reason, I regret that Teagasc are being wound down. Various scientists learned the whole scientific process there in Teagasc and then moved out into industry where they played a valuable role, both at technological level and subsequently when they developed and moved on, at management level.
I also want to express concern in relation to the amount of money which is available for research in the universities. We are now moving to an excessive degree towards dependence on industrial funding. I should declare my own interest in this regard as I worked in the university sector. There is an excessive dependence on research funds coming from industry. It is important that a certain amount of money is available in the universities for basic and applied research. Even if it has little direct and immediate value there is a long term spin-off in developing a technological capacity. In many ways we do not know — and are unable to predict — what technological capacities will be useful in the next ten years. The difficulty in relation to these matters is that if you do not have a certain basic capacity it is difficult to acquire it; it is difficult for people to adapt and change.
I welcome the suggestion in the report that all aspects of agriculture and food should be centred in one Department. The Department of Agriculture, for many reasons, should be re-termed the Department of farming or the Farmers' Department. The Department of Industry and Commerce seem to be the Department with responsibility for the food sector. The days when it was possible to stop worrying about farm produce at the farm gate are long gone. The effect of what takes place within the farm certainly makes its way back to farmers if the material being sold is of a low standard. Indeed, some of the problems which farmers are now experiencing arise because the food industry is unable to process and market the materials properly. The primary difficulties are in relation to marketing.
In relation to the institutions, the suggestions and proposals in relation to the IDA are welcome. Figures which have been kicked around over the past few weeks — that it costs in the order of £0.5 million to create one job — are a terrible indictment on the IDA. I know the IDA have contradicted this figure and taken issue with it. Regardless of the accuracy of the figure, there is no doubt that there have been considerable failures as far as the IDA are concerned. This is evidenced clearly in the dole queues. For a long time the IDA were the key determinant of industrial policy. The IDA had the capacity, in effect, to brush aside the Telesis report and block the logical consequences by way of certain types of action which should have been followed arising from the contents of that report. The IDA have had the capacity to stymie that.
Over the years there has been continuing wrangling about the number of jobs created, the number lost and, indeed the cost of creating jobs. At one stage the IDA pervaded pretty well every area of industrial policy and activity. In my experience they were well able to throw their weight around and, indeed, "to come the heavy" when it suited them. On many industrial boards and, indeed, on many State boards the IDA person emphasised the IDA line and was treated with a great deal of respect. That was certainly my experience. If you were even vaguely critical of the IDA you were called aside by one of those wise and feathery birds of the State board world who said that a youngster like yourself should perhaps not emphasise things to the extent that you did and that when you get older and wiser you would understand the significance of the policy line that those very wise, cautious and carefully spoken gentlemen made. In those days they were all males.
In relation to direct support for industry, I welcome the fact that the report acknowledged the difficulties that arise from an over-dependence on the multinational sector. It is good that the report has cast a cold eye on the multinational sector. I am not suggesting that multinational companies should not be let into this country. They have a role here but we have become carried away by their significance and value to the country. One thing that bothers me about industry here is that we either skid from one extreme to the other. We get this terrible, gushing enthusiasm at one level and then later we are full of criticism. In many ways the reality is somewhere in between but certainly the enthusiasm for the multinationals was ill advised. It is important that Culliton has identified the need to provide capital to develop the commercial State sector, something to which the Government should pay much more attention.
The recommendations in the Culliton report in regard to education have been controversial. If change is to come in relation to industrial policy and industrial achievement then we will have to change our outlook in relation to education. At present, the primary drive and purpose of education seems to be directed towards the achievement of points to enable young people get into college which will ultimately facilitate them in securing safe, comfortable jobs in the professions. Unfortunately, those safe, comfortable jobs in the professions do very little to develop our industry and relatively little to create jobs.
I wonder if the present emphasis on education is good. I believe it is not and it does not encourage enterprise. It promotes caution and encourages people to strive for a comfortable, easy life in a steady job. Once upon a time the aim was to get a job in the Civil Service but those days are gone. Now the aim is to get a steady comfortable job in one of the safe, old professions which is not good for Irish industry. In many ways the mentality behind that is understandable but it is fairly close to being the antithesis of enterprise.
I am concerned when I hear of people rushing to defend the academic bias of the Irish education system, the attitudes of many of those people are incredible. Their attitudes, to some degree, smack of the old suggestion that the rich never fail to moralise to the poor. What are people who are unemployed to be told? Should we continue an education system which does not place any emphasis on the need for enterprise or to develop jobs? Should we persist with a system the primary drive of which is towards the attainment of points? Anybody who has the slightest doubt about that has only, for the next week or so, to watch the huge number of young people who will make their way to grind schools. I am not being critical of grind schools, but it emphasises the drive and purpose of the education system.
It would be a good idea if young people were encouraged to go to enterprise schools where they could learn how to create jobs, but that is not the purpose of those colleges. Their purpose is to assist students to get the points they will need to get jobs in medicine, law, the veterinary profession, in which I am involved, and various other safe professions. While those professions in many ways fill an essential role — I am not disputing that it is important to have the highest standards in those professions — they are not at the coalface of generating industry and creating jobs; they are basically service professions.
It is important that we develop a transport policy which would make transportation of material around the country easier and less expensive. The Culliton report places a good deal of emphasis on the need to develop our roads structure. I am a little hesitant about the notion that the primary way of transporting industrial products, certainly heavy industrial products should be by road. I would prefer to see more of those products being transported by rail. I acknowledge that I am not an expert on those matters and one must take account of costs, etc., but it is essential that we seriously consider a transport policy which would facilitate industrial development. We must also consider the communications infrastructure, how it can be improved and, the role of the ports.
In relation to environmental concerns, the attitude which Europeans and the wider world have to the Irish environment is an important plus as far as we are concerned. For that reason, we should be setting the pace in Europe in relation to environmental matters. We should aim to achieve high standards in that regard.
To some degree I share the concern expressed primarily by people on the other side of the House, regarding vexatious claims in relation to planning and so on. I agree with most of the claims and concerns expressed about planning. However, one has to accept that in planning matters a trade off situation exists and, the short term interests have to be balanced against long term interests. This is not easy and people would be well advised to consider what the impact of their proposals would be to the development of industry. That is not to say that I would have any time for people who want to develop dirty, ugly industries here, I would not, but we must take a balanced approach.
I am also concerned about the impact of changes in Eastern Europe on the European Community and how it, in turn, will affect the opportunities for industrial development here. Those developments will have enormous implications for us too and I am concerned that, perhaps, we are not giving them sufficient consideration. Competition from eastern Europe will have profound implications for us in that those countries will have to be given priority in regard to EC resources, which are already in scarce supply. I am not saying that those countries do not have rights, they do. I believe they should be assisted in their development because if their economies become further depressed and drift further into chaos, the implications in terms of stability in Europe would be enormous. Nobody can cast those concerns aside lightly.
First, I welcome the Minister to the House. If she applies a percentage of the energy, enthusiasm and initiative she has shown in Education and previous Ministries, we should be glad that, at such a crucial moment, following the publication of the Culliton report, we have an effective and dynamic Minister associated with it. There are numerous reports — good and bad — gathering dust in the Library but I doubt if any of them is as crucial or relevant as this to the development of this country, not only in the nineties, as the report suggests, but also in the coming century. It is important that this report be taken seriously and that the Ministers concerned ensure that its recommendations are taken on board.
That is not to say that I do not have any criticism in regard to the report. It is an excellent report and Mr. Culliton and, indeed, his colleagues are to be congratulated on the thoroughness and imaginativeness of their work and on its actual production. However, although it reviews the situation extremely well and makes many excellent points, nonetheless, that in itself is not enough. One must have objectives and targets at which to aim. Perhaps we might take the Culliton report as the framework, but there are a number of targets and objectives which we must aim at both as a Government and as a Parliament.
One of the interesting aspects of this report has been the considerable agreement it met across this House. For example, I would find it difficult to disagree with many of the points that my colleague, Senator Upton, made. As a nominee of the Confederation of Irish Industry, I suggest we pay particular attention to and emphasise the key objectives which the confederation have proposed in relation to the Culliton report. They have suggested two targets which I believe are fully achievable. First, they suggest a growth target for industrial output of 10 per cent per annum on average during the coming decade through maintaining, as they rightly emphasise, a competitive environment. This is a reasonable and important target.
Sitting suspended at 1 p.m. and resumed at 2 p.m.
Before we adjourned I was suggesting the importance of objectives and targets and had referred to the Confederation of Irish Industry's proposed target of growth in industrial output of 10 per cent per annum on average over the coming decade. I was going to go on from there to refer to job creation and a suggested target of 20,000 jobs on average per year in the industrial sector. The suggested target for investment in manufacturing 10 per cent of GNP per annum over the coming decade. These are all quite difficult targets, but they are all achievable.
Following on what Senator Farrell said, I think we can become a little too despondent or pessimistic regarding employment and the possibilities of job creation. We have a very good record of job creation. The number of unemployed is far too high in percentage terms, but nonetheless it is a very small number in terms of the European Community of today, and is not all that great when you deduct from it the 60,000 or 70,000 who for one reason or another will always tend to be out of employment as jobs change, as companies expand or contract, or through matters which are not necessarily specifically matters of employment, even though the people concerned have come on the register. If we could get the investment in manufacturing industry here which is suggested, we could quite quickly find it difficult to recruit appropriate people for employment, especially if we are investing in that type of manufacturing industry aiming at high quality, top niche targets.
There have been great achievements under this Government in recent years in dealing with the financial aspects and we must move on from that absolutely essential base to investing more money in industrial development. Such development must be profitable. If it is not profitable, sooner or later it is going to collapse. It may be relatively soon or we may have a situation like that in Eastern Europe which we cannot keep holding up for decades. At some stage or other unless an industry is competitive, unless somebody requires the product and unless it is done properly, sooner or later a day of reckoning will come. The finances have to be right, the product has to be right, the market has to be right. If you can get all those things together — and there is no ideal way of doing it — you have some hope of creating a prosperous and profitable economy in which people have worthwhile, satisfying, well paid jobs.
The CII suggest a number of necessary conditions for achieving these targets. The first condition is continued emphasis on improving the competitive environment for enterprise. We just have to compete. We had marvellous achievements 60 years ago within a closed economy with protected industries. We managed to begin the change from an agricultural economy to a more industrial one, but it was within very protective walls. In the sixties we began to compete outside and in recent years we have been very effective at competing. Not many people realise, for example, that we export more to Germany than we import from there, resulting a favourable balance for us. It is very much to the credit of those companies which have succeeded in the competitive export market. We must always be able to compete outside. Our own domestic market is just too small for it to be anything other than a helpful base.
In that respect, may I diverge for one moment and pay tribute to the Confederation of Irish Industry and the Irish directors for the contacts which have been made between the North and South, between here and the corresponding bodies in the North. There is a considerable opportunity for increase of trade to the mutual benefit of both parts of this island. I am glad to say that already quite significant increases in trade have occurred and there is very considerable further opportunity there.
A second condition is reform of the taxation system. This is not necessarily reducing taxes per se— I am sure we would all like to have taxes reduced — but reforming it so that it is more effective in a number of respects. One I would mention is that it is more effective in the sense of people knowing what their tax is, the system being clearcut, both for individuals and corporations, so that people pay their taxes rather than, as has been happening, having people and companies wasting a great deal of time trying to so arrange their affairs that they are able to reduce the tax demands.
A third condition suggested is the provision of an incentive package competitive with our main trading partners. We forget at times that there are on the mainland of Europe and elsewhere certain effectively protected areas which get very considerable incentives and support and yet have the advantages of being on the mainland of Europe in close proximity both to markets and to suppliers. We have to look at that aspect further in our European Community relations.
With regard to the development of the infrastructural supports, transport and roads, the reality is that we are an island on the periphery of Europe. This will become even more marked with the development of the Channel Tunnel. That will physically link the UK economy directly with the mainland European economy and it leaves us, whether we like it or not, with extra transport costs. That has a knock-on effect in all sorts of ways, but it certainly puts an emphasis on those types of manufacture where there is a high added value — low value, large bulk production. One of the reasons it is not suitable for this country would be the extreme expense in bringing such products to market.
But we must do what we can to reduce the costs of transport between this country and the other countries of Europe and also to ensure that it is as available and efficient as possible. One is rather horrified at the sort of air fares we have to pay for travel between this country and the United Kingdom. Additional competition and reduced fares should prove quite significant for business. We also need to have a better road system from the point of view of industrial development. It is a farcical situation that manufacturing companies are transporting their goods by truck up to Larne in Northern Ireland and then back across to Stranraer and down through the UK instead of exporting through ports in this State which geographically are closer to Europe. The reference, "Encouraging growth in research and development through the provision of effective science and technology infrastructure," relates, I suppose, to a number of aspects. One of the great disadvantages of having the major foreign multinationals come into this country, even though they may create jobs and so on, is that any multinational company, or indeed any national company, always keep the greater part of their key research and development laboratories and installations and personnel, close to headquarters. Consequently, we find that very little research and development is done by those companies which have invested in this country.
Secondly, research and development, even though it may be very much of an applied type — as has been exemplified most of all by the Japanese, paticularly perhaps in the previous decade — is very relevant to us and we must engage in it if we are to continue to develop products and to be competitive. This is associated also with our education structure. As the Minister present would realise, we have an excellent education system in this country, one of the best in the world, but in some ways it has aspects which are not really suited to the modern world.
Our third level education system is basically related to the nineteenth century third level education system of England, which was designed primarily to provide administrators for the colonial territories. It did that job extremely well and indeed there were many Irishmen who took part in that process of education and administration and did their job very well. However, that system became totally outdated in the UK. It was a significant factor in the failure of the United Kingdom to compete, because to go into business in the UK was rather looked down upon. It was all right if you went to a job in the City, in finance, but to actually dirty your hands with manufacture was something which you did not quite do. There was a fair amount of that attitude in this country, too. People, for example, would say that you could not have a university if it was only a single faculty one, that you had to have arts faculties. Perhaps one of the best universities in the world in recent years has been the technological university in Hanover, which is a single faculty university and a very effective and competitive one which turns out some first class graduates. I am not saying that the arts part is not important; indeed it is and is a part of that wide education which we would like to see. But there again you have had people contradicting themselves, saying you either do a language or you do a science subject. How could you have more nonsense than that? We need to look at these aspects.
Regarding the reference to a more focused support for human resource development, the answer is yes, we want the latest technology. But for the latest technology to be effectively used, somebody at the end of the day is writing programmes for the relevant computer or whatever. In this country we have already shown a very high degree of ability in that and in many other aspects of human resource development. But no matter what machines we have, what money we have, or what else we have, it eventually comes back to a man or woman doing some particular job and doing it well or doing it badly.
I think we would all agree on the need to reinforce support for export marketing. There is reference to "Developing the base of manufacturing industry in Ireland with emphasis on the development of key business functions rather than focusing on the ownership issue". We have tended, I think, to sway backwards and forwards here. At times we seem to welcome foreign ownership, with the local person almost feeling excluded or a second class citizen. At other times we have perhaps overemphasised the indigenous, the local person. It is a difficult balance. I certainly would agree with the idea that we want to support the successful business, the successful enterprise. If it is foreigners who are coming in here doing it, good luck to them and let us give them all the support we can. Equally, if it is local people who are doing it, let us give them all the support we can.
I fully agree with Senator Farrell's comments about begrudgery. It is so sad in some ways and yet so stimulating in other ways, a Chathaoirligh, to go out to the States and find that the most upwardly mobile, effective ethnic group in United States industry are the Irish-American group. Over and over again, often from the most difficult of beginnings, they rise to the top and are admired by their fellow Americans for that while here sometimes you feel people are almost against you succeeding in business; yet it is vital for the prosperity of this country that we encourage people. When we see someone achieving something, instead of a sense of begrudgery about it, we should say "Well, if he or she can do it, I can do it for better," and go out and do it and good luck to those who succeed.
On "developing the base of the internationally traded services sector", again, this is going ahead with the general institutional strengthening we have discussed. May I put that aside for a moment in terms of objectives? I think this report will be wasted unless the Government set targets, set objectives and encourage industry in every way to meet these targets and objectives.
We have, a Chathaoirligh, a statement here. It is not on the face of this report; it is actually under chapter 2, under the heading "The Objectives of Industrial Policy" and it says: "Until more people are prepared to undertake the risks associated with business we will continue to experience only modest progress." We have to accept that if you make a choice, if you are trying to be competitive, competing up market for a manufactured product, for a pharmaceutical or a food industry product, you cannot go out there and say you are sure to succeed with it. You have to make an informed judgment as best you can and say "Yes, this is a market I have researched and I think I have the product here which will fill that market. I think I can produce it competitively and that I can go out there and sell it." If you succeed you are due reward for it, and never stand still because there will be another target, another development. Nonetheless, you have succeeded. However, you may not succeed; you may fail. When you go out to sell a product, to manufacture something, to provide a service, you take the risk that it may not be a successful product; it may not be a service that is wanted; there may be a more competitive or better product. We have just got to accept that there are risks. To succeed you have got to take risks. You will not be right every time, or someone may have done it better or earlier. I do not think in this country we have yet accepted that attitude or the idea that there is risk as well as reward. That is one of the factors which really does hold us back quite a lot.
The heading of the third chapter is something which I referred to a little earlier on — a search for an adequate response to the unemployment crisis is the most urgent national economic priority. I would accept that in one sense: yes, it is the most urgent national economic priority if you take it in isolation. But it is not the whole story. We could have temporarily solved unemployment by having national service, putting people into the Army, having uncompetitive industries of one sort or another, but the economy would have collapsed and we would have been far worse off a few years later or even a few months later.
If there is a social system which does not really measure up to the employment situation, it can happen, as Senator Farrell and others pointed out, that someone is worse off if they take a job. That is absolutely ridiculous. If somebody takes a job and finds they now have to pay for their medical card and for transport while the person two doors down who is staying in bed is actually ending up with more cash in their hand, there is something intrinsically wrong with that. It is not easy to deal with it because there is always that sort of overlap at some stage or other. It is a very basic failure in our social and employment policy.
Occasionally it is said that Irish manufacturing industry has failed, that the foreign firms have done far better than the Irish firms. Many foreign firms here have done very well indeed. We welcome them and compliment them on their achievements and on the major role they have played in relation to our economy. But if you take the period from 1973 right up to last year, and look at the graph on page 30 of the Culliton report, in terms of thousands employed by indigenous and foreign firms, you actually see a small but steady increase in the numbers employed by the indigenous Irish firms, despite all the enormous support and encouragement that we have rightly given towards foreign firms coming into this country. In fact, in terms of overall employment, the total in respect of foreign firms has declined, whereas the Irish employment figure has increased.
I think it was Senator Upton who referred to environmental protection, for which we have in this country rightly got a reputation. We have a green flag and a green country, and it should remain so. It is a marvellous country to live in and the envy of other people. However, keeping it that way does not mean, as sometimes seems to be considered, keeping it as some sort of Celtic reservation for wealthy individuals to come here to their holiday homes for two or three weeks a year and to give us lectures on what we should be doing or should not be doing for the rest of the year, and for small, self-appointed, interfering busybodies to get in the way of worthwhile employment and the development of this country.
That employment and development can certainly be achieved while maintaining the highest environmental standards, but we really have to reach a situation in which industries will go ahead in this country. As a Senator pointed out, there are certain counties where international companies are beginning to think twice about locating. Is it not that they are not companies of the highest repute, or that they would not fulfil the highest environmental regulations, but that our attitude towards development and planning is such that they see no certainty. If they put forward a project it could take many years, a great deal of hassle and no degree of certainty — no matter how well they planned it or how good their environmental impact study was — that at the end of the day they could proceed. If you are in industry or in business you have to make forecasts. You are going to invest your money. If it is so uncertain, that becomes a very negative feature and unnecessarily so. Let us keep our standards high, but let us do it with a little bit more efficiency and effectiveness.
I finally close on the food industry. Yes, we have gone from being an agricultural country to an industrial country, but the foundation of our economy is food and its magnificent potential quality. We must look upon it also as a product, and product in which we could lead the world but which we have scarcely begun to even touch as yet.
When our Minister came here this morning my education hat appeared again——
Unconsciously.
Yes. In my introduction I will briefly refer to what the Minister said in her emphasis on small industries, but I know that at some stage of the debate I will wander deliberately down the education road and I am very much at one with the Minister in what she said in her opening remarks. First, I would like to refer to the positive things in relation to the support of small industry. I suppose I will be provincial or regional in my remarks here because I will refer to SFADCo and the efforts at having the one stop shop. The Minister underlined the plethora of various agencies that the small business entrepreneur has to go through to get started. That one stop shop, which worked very well in the Granary in Limerick, where all the agencies and all information one needed as there under the one roof, was very successful. I hope the Minister will follow that through and perhaps do a little survey on the outcome of that in the Limerick area.
I now put on another hat and I think the Minister, as a local representative would appreciate this. Many times at our council meetings in Limerick we have called for that integration that is referred to, where there are the lists of interested people, you have to be brought together — the IDA, SFADCo, Údarás na Gaeltachta, An Bord Tráchtála, Eolas, FÁS, the local tax office, the business and innovation centre and the county development team. In the context of local government reform he would like the local authorities to play their role in the planning area, because they are the planning authorities; and it disappoints me that we are brought into that integrated process only when, through a motion put down at our monthly council meeting we call for the representatives of SFADCo to come to talk about industrial development in the area.
Over the last couple of years this has changed and I am glad to say that we have regular meetings now with Shannon Development, which at least is helping us as public representatives to be aware of the needs of the people we meet, and at least we have that entrée, particularly to the area of small businesses. Representatives of SFADCo go to each area and look at jobs on the ground. What comes across mostly in relation to agencies are the glossy brochure, facts, figures, end-of-year statements and all the rest; but what really is needed is, starting from the bottom, the identification of projects, the identification of people's entrepreneurial skills and, as public representatives, helping them, as the Minister mentioned, to weave their way through that plethora of agencies. Really, you would need a little code book and a mental map to go down this road of agencies and to try to come to grips with where you should start.
I am interested in the direction the Minister has taken here today. There are thousands of lines in this report which one could take and develop, but I am delighted that an area that has been to a large degree ignored has been highlighted by the Minister and that she succumbed to the temptation to go on her educational track. I will further develop that point.
It brings us back to the whole area of regionalisation. It has been stressed again and again that if we had regionalisation with reference to the impact of European funds to the regions, all the things we are talking about here — such as the plethora of agencies and the bureaucracy — would still be needed but it would be regionalised. It would be local; we would know the personnel; we would know the people. Culliton pleads for regionalisation, but it is not developed to any great extent. He talks about a greater need to monitor and to ensure that with the Structural Funds we are getting value for money. However, that is a debate for another day.
I will refer now to education. Reading the preface, I suppose, as an English teacher, that certain words leap from the page. The point that I noticed in the report by the chairman, Jim Culliton, was the number of times he used "time". It found its way in "a time for change". That is significant because he makes it very clear that he is taking a long term view. That is something we are not very good at. We want instant, pragmatic results and solutions. He said there are no quick fixes. We must do something immediately in relation to job creation. We must take the long term view. He talks about recommendations which, when implemented, will lay secure foundations for the future. There are no short term solutions. The reason I selected the word "time" to structure my points is that solutions — and I think it is very important — lie in our own hands.
I listened to Professor Joe Lee speaking in Limerick a few weeks ago as part of Limerick UCC group — I should call it the Limerick Graduate Association at University College, Cork. He made a very interesting comment about us: he said that most of the big reports, such as Telesis, had an impact on the Irish economic future. Plans have been commissioned from outside. Always through those reports there has been a line or sentence which says we should look within ourselves for solutions. He posed that question.
I am glad the Culliton group are Irish people, which is one reason we are able to identify so strongly with this report. We are with our own. He also made the point that generally we take economic theories from outside this country and they may not suit us at all. Why should we go after economic theories that have an American base? Of course, we should see how the Germans, the Italians and the Australians operate. We should read everything we like, but we should not say they will suit us. We should glean from them, but come up with our own ideas. That is very important. We tend to copy the United States or the UK.
We never look at other European countries. For instance, the French got their act together by not just thinking exclusively French but by taking responsibility in their own country. They had the problem of decentralisation — all roads led to Paris and that was that — but they solved it. The exercise started many decades ago.
The same happened in Germany. They have taken a German approach, not ignoring the outside world. Why can we not take the Irish approach? We say that the Irish psyche is complicated, and may be we go on about it and maybe it is difficult to understand us, but do we understand ourselves? Leaving that aside, would this not suggest that we should take responsibility for ourselves, as Jim Culliton says, and look to ourselves for solutions?
Words like "enterprise", "initiative" and "finding our own solutions" are not new. They have been said many times. I reiterate we have 93 reports on employment. With reference to the numbers on the live register, Jim Culliton states that all he can hope for is an average increase of 10,000 jobs in the private sector per year. With regard to the other startling figure — the 25,000 new entrants each year to the labour force — he is not going overboard by saying we can solve everything if we implement his report. What he is saying is that there will not be even a reduction in the number of people on the live register. All the report is stating in regard to the creation of jobs is that we can hope for an increase of 10,000 but we still have 20,000 to 25,000 new entrants on the labour force each year.
The Culliton report is timely. It is practical and down to earth. It is easily read — that is one of the reasons everybody has read it at this stage and it has been published in pocket book form.
Let us look at our strengths and weaknesses. One of our strengths and weaknesses is that we are great talkers. That is a paradox. Everybody now says the talking is over and we need action. The hardest part is to stop the discussion and see what we can do.
The IDA figures show us what the situation was in 1991; the stark figures show that companies supported by the IDA created 12,439 new jobs, 561 less than their target figure of 13,000; this means there was a drop of 4 per cent where the job losses outweighed the gains. I do not want to appear negative, but we must look at the facts. Overall employment fell by 0.16 per cent — 308 fewer jobs at the end of the year. The 1992 target is 13,000 jobs. Where were the jobs created? Were they in electronics, pharmaceutical, health care or food manufacturing services? It is good to have facts.
Irish companies created 53 per cent of the jobs — 6,653; companies in the food sector created 1,400 jobs. I am glad of that. Senator Conroy referred to the food sector. In many discussions people do not differentiate between the agricultural sector and the food sector. Once you leave the farm gate you can forget agriculture; you are into food production. When we talk about food, the discussion always seems to come back to the problems of Common Agricultural Policy and GATT. We have to be very clear. Coming from Limerick and knowing what is happening in the food centre there, I know job creation is a very slow process.
I went to ENUGA trade fair in Germany. If one walks through the fair one sees the multiplicity of products. We find interesting products from Ireland. The Irish stand is always good; you will always find entertainment there. If we could market the Irish personality we would be doing well, although I suppose the tourist industry does that. The Irish stand at the ENUGA Trade Fair is worth visiting. We should not just say there is great scope in the food sector; it should be worked on positively. It is not difficult. We have the raw materials. We should not send them out in their raw state as if we were a Third World country — and I do not say that in a disparaging way. We need value-added products.
I am glad the Minister referred to small businesses because there was an increase of 3,100 jobs in that area. In Irish owned manufacturing concerns there were 2,000 extra jobs. This area should get support.
Five thousand seven hundred and eighty-six of the 12,439 new jobs created were in the international companies, an increase of 44 per cent on the previous year. In 1992 in green field investment areas there were 42 extra manufacturing jobs and 50 jobs in the financial services. Let us look at the solutions from the statistics.
One of our major weaknesses is lack of products. I would make a very strong case for the word "production" which seems to be a buzz word in the Irish manufacturing vocabulary. Products and production are not the same. We should look at patents and the lack of research and development. We are making use of our raw materials, but we must link our products with our local raw materials. If we look at the United States — and this statistic people are not aware of — 80 per cent of their industry is small. Yet, in the context of the United States we think big; it must be big; it must be multinational, but it is a staggering statistic that 80 per cent of the United States industries are small and no more than 20 per cent of them are exporting. That is fascinating, because there is a possibility there for us to acquire those products through licensing or joint venture. Let them come into Europe through us, but let us be aware that only 20 per cent of firms are exporting and many of their products will never see the light of day outside the United States. Why do we not home in on that area? We obviously have to evaluate them, assess them and look at the whole area of licensing. We should look at industruies that will match our skills and our raw materials. Will they bring benefit to the larger market area of Europe?
I suppose marketing over the past ten years has been a hackneyed word. People ask: "What are you doing in college?" The answer is: "I am doing Business Studies, but I am concentrating on marketing". You hear this over and over again. Everybody in business must do the MBA and so on, but the reality in regard to our marketing graduates is that 90 per cent of them leave the country. We must have effective and efficient marketing.
I want to recap on what I said on raw materials. They are going out in bulk form. We should break them down into ingredients, components and finished products with more value added.
Another interesting statistic relates to the whole area of patents. I got figures recently of 200,000 patents in Japan, 170,000 in the United States and 4,600 in Ireland, and of the 4,600 only 400 were actually Irish. The others were patents that came in through foreign companies. I am not saying we do not have creativity and that we could not go into the area of patents but there is very little of it here. If we do not have patents, where are we in regard to innovation and job creation? The foreign companies have done their bit. We are glad they have created employment but they are here basically for tax incentives. They are in the business of making money, not out of love for us. Basically they are here to survive and they will survive only if they make profits.
The lead-in time for R and D is too long, particularly in high technology. Culliton admits we should not chase high tech exclusively. We should be buying in research and development. Time flies and the high tech is out of fashion by the time we get to work on what we would consider research and development. The chip has moved on again seconds afterwards. We will never make it in that area because it is extremely expensive. We should have the multinationals doing their research and development when they set up here. I am not being negative as regards our research and development. The country is very small. We are outside the area where innovation is taking place, whether it is Japan or the United States. We should buy in.
I wish to make one point about ourselves and joint venture and partnership. We are a nation of individuals and it seems — I have no survey results on this — that we are not great in the area of partnership and joint venture. That is something that should be looked at. What makes joint venture work? The Irish psyche, the Irish personality, apparently does not lend itself very well to partnership and joint venture. If we are going to go into that we must look at where joint ventures have succeeded, why they succeeded and how they succeeded. Maybe there are cultural differences. We may have to change, because other countries have joint ventures all over the place. The Japanese are everywhere in joint venture deals. They were into eastern Europe while we were wondering whether there would or would not be a united Germany. They were ready because they were on the ground. Was there any problem about language difference? That was the least of their worries. Maybe it is something to do with the difficulty of language. Maybe we want to be our own bosses and will not yield to different ideas. We should examine whether our personalities relate well to joint venture deals and, if not, why is this so.
This country is not suited to large-scale industry, basically. The whole emphasis should be on small and indigenous industry. The Japanese are lauded for their Mitsubishi cars. There are far more small industries in Japan. Go down any street there and you will find every component necessary. There are pins, needles and timbles and toothpicks from their wood, chopsticks, and so on. They are not sophisticated small industries. They are little shacks, but the whole place is just a hub of activity. They are able to balance the large and the small but they are never neglectful. "Small is beautiful" as far as the Japanese are concerned. I home in on the Japanese for many reasons. I have been in that country quite a bit and I see the potential and though they change, they change slowly. They are not innovators. Their cars are the best and there is nothing wrong with that. They copy, I suppose we do too, but they still manage to survive.
I mentioned the food industry and the whole area of human resources in relation to education and location. Look at Shannon and its GPA aircraft maintenance. Look at the Team maintenance unit at Dublin Airport. I am not going to be tempted to talk about the retention of the status of Shannon which, again, would be a matter for another day. We shall be marching on Saturday in Limerick at 12 noon to ensure that we will keep our airport and our jobs. That is a positive step.
We risk many things in this country. We risk being caught by the breathalyser test. We risk being caught for many things but we certainly are not great at risk taking, unlike the Americans. After failing three times they say that person has been tried and tested and knows the pitfalls. We have got to the stage where our backs are to the wall and we must take calculated risks. I am not saying that we should take huge risks, but we have to take a quantum leap and work on this enterprise culture.
In relation to education, coming from the launch today of Gender Equality in Education, it is interesting that the whole Culliton aspect again came up for discussion in relation to the educators who came through at first, second and third level colleges. I have to agree with Minister O'Rourke that the reaction to the Culliton report is such that the fact that there was no educator on the Tansey/Roche report has now caused such furore. I agree totally with her that the word is integration. I remember some years ago having to teach integrated studies. It took a long time for me to get away from history and geography to integrated studies, which, in that case, was social and environmental studies. The process is slow. One has to say: “it is not geography, it is not history” and work on integration. That is something we have worked on in the education system in the past number of years. I do not want to go back to the two parallel lines between vocational education on the one hand and academic education on the other. That is the rock we have perished on in the past, and I do not want to see us going down that road.
The whole points system affected vocational education. Parents, to a degree, thought in terms of the professions. When it came to the CAO form, or even when it came to school selection or to the curriculum within the vocational school, the academic subjects tended then to get far more prominence than metalwork, woodwork, home economics and technical drawing which were seen as the poor relations. I am very saddened about that. An integrated approach of some academic and some technical subjects is the way I want to go. We have to make several distinctions. We have to make the distinction between education and schooling, between education and training and between educating for life and educating for work. There is not a teacher in the country who would not say that his or her prime objective is the development of the individual. I am not saying that a highly skilled worker who did not get an opportunity to appreciate the geographical or physical landscape or an historical perspective is any less a person but I want the combination of the two.
Many graduates from the technological and electronic streams have come to me and said "we should have taken honours history or honours geography; when we view the landscape or listen to programmes about it on radio or television do not fully appreciate it, we would have liked integration." One hears such comments from the highly skilled who have Ph. Ds in engineering or whatever. Sadly they have had to wait until middle life before realising the importance of pure, cultural education. They are winding down. They are wondering what are they going to do after their retirement. That trend began in the Sixties when education was more closely linked with the economy and it one of the reasons for the high cost of education, which is £1.6 billion. We looked for value for money in education instead of value for the individual.
Schools are slow to change. I do not mind if they react. Teachers and teacher unions understand that education has to have relevance to life. That does not mean sectioning people off into this or that career at an early age. The Japanese do not do that. They do not train young people for work until they finish their education. I do not agree entirely with their system but they do not say to students: "you are good at maths and you have to go in the direction." Nobody is told what they are good at. There is no streaming. I am not in favour of streaming. Without streaming teachers get the opportunity of seeing the practical child, the co-operative child and the bright child. That is society.
I hope this report will be debated in the Dáil and Seanad. We have not seen a Minister for Education in the Seanad since Minister O'Rourke left that portfolio. I am extremely disappointed. When Deputy O'Rourke appears in the Seanad I think of her in terms of Education.
Will the Senator give the title of the Report?
The title is, Gender Equality in Education. It is the Second Report of the Third Joint Committee on Women's Rights a follow on of the 1984 report.
Acting Chairman
I presume the Senator will be calling for a debate on it.
Certainly. I know the Cathaoirleach will give it priority after Easter. It is widely acclaimed by all Members of this House. We have a cross section of third level colleges and the Culliton report refers to the need for integration.
I would like to return to the question of infrastructure and our roads. As a member of the sub-regional review committee on Structural Funds, I am not happy with what is happening with our Structural Funds. Most of the money is going to the eastern region. Roads are an essential part of our economic development. We should be able to travel the country from west to east, from north to south, from Larne to Rosslare on a proper road structure. We are forgetting the basic requirements of any country which has potential for growth. This is a criticism made by investors and companies. They do not necessarily emphasise that we are on the periphery of Europe but complain about the time it takes to move products from one side of the country to the other. As somebody who uses the roads, I understand why. We have turned our backs on the railways. Many commodities could be transported by rail. This would free up our roads, and reduce our maintenance problem.
I am glad the report is getting such an airing. I am sure there will be a debate on it in this House. I am sure all Senators will contribute to it. It is important that the recommendations in it are implemented. I am calling for an immediate move by the task force to ensure that the various reports are acted on immediately. We must have regard for the long term view. I agree totally with the Culliton outlook for the future. We must set achieveable objectives and look at what is working. We must look at the small industry sector, the food industry, the pharmaceutical industry, health care and, above all education and training. In the services sector we seem to think that a person who has to deal with people does not need any training. When I talk about services I am not talking about financial services, our whole commercial world of selling — shops, hairdressers, or whatever. We should have apprenticeships for the services sector. We should consider people like the Japanese girls who operate lifts in hotels and in stores. They go about their work as if their job was the most important job in the world. This is something we have got to get to grips with. No matter what we do we should do it well. No job is menial. We all contribute to the national cake.
I would like to welcome the debate on industrial policy and also the publication of the Culliton report if for no other reason than it provokes a debate on matters I would have had direct contact with over the years. One of the first things mentioned in the Culliton report is reform of the taxation system. I do not think one can look at reform of taxation in regard to industrial policy without balancing our taxation mechanisms with the incentives we give. According to a calculation I did once if Údarás na Gaeltachta were abolished one could at the same time abolish PAYE and PRSI in the Gaeltacht. In other words, there is a direct relationship between money paid by the State and how much industry, in return, pays back.
I am sure that if an analysis was done between the IDA expenditure on direct industrial projects and the pay back, one would find something similar. Therefore, we need to look at the taxation structures. We must get away from looking at things in grand isolation.
As an industrialist I used, in my cynical moments, say that managers in industry nowadays tended to spend the morning making out applications to get money from the State and the afternoons filling up forms to pay all that money back again. To me that was an ineffective way of using money.
If we think of the £1 paid by tax, PRSI or any levy on an employer and then look at how that circulates through the system to come back out as an IDA grant or an Údarás grant to the industrialist, one finds that the "line losses," as I used to term them, in electrical terms or otherwise — the loss in transmission of the money— actually accounts for a great proportion of the money one would pay into the system. For example, if we look at £1 tax paid through PAYE or PRSI by an industrial worker we will see that money is first transmitted to the Collector General's Office. It will be then transmitted to the Department of Finance and the Department of Industry and Commerce, and back again to the IDA. It will probably come back again to the original company.
If you took a 10 per cent service charge as you went along you would find that a large amount of the money had disappeared by the end. I calculated that in certain circumstances, in agencies that we would be dealing with, you could be talking about between 30 and 50 per cent of the money disappearing in administrative charges along the way. This is something we cannot avoid and it is something that people have at last begun to face and, therefore, in any review of taxation policy in connection with industry, I think we also have to look at why people should always be paying in and getting out at the same time. I will have some specific proposals to make with regard to this when I come to the grant aids that should be available to industry.
As an industrialist, of sorts, I always felt that our tax system was wrong. We insisted on having terrible low taxes on profits and, at the same time, collecting most of our revenue in labour turnover taxes, and let nobody be mistaken that PRSI and PAYE are effectively a tax on labour turnover. In other words, the more labour you have, the more tax you will pay and, as well as that, you pay that tax whether you make a profit or not. I always favoured the system that you would keep those taxes down and that if you made a profit and since we allow for depreciation etc., there was no big problem in paying tax on the profit. If that policy had been followed and if the rules had been changed, many industries that have failed because of our persistence with taxing on the total amount of labour, transport and so on, would be viable. That is an inescapable fact which seems to hav eluded the planners over the years.
The second consideration is that taxes must be regionally fair. If we persist in taxing diesel and labour there is no question but that the further you are from the centre the greater the disadvantage and the greater the percentage of your turnover that goes in tax. As I have pointed out before, if you compare a manufacturer in the west with a manufacturer operating out of Dublin, both exporting to either Britain or the continent, if you run 250 lorry loads of goods to Dublin per year, the difference in the tax on diesel alone for the two operators is £10,000. There is no compensation system even though the State is getting a much better return from the operator on the west coast because of our tax system. In the old days on the west coast we were given extra capital grants but that has all gone by the board. I have also always argued that there is an illogicality in insisting on capital grants as being the method of promoting industry, because capital grants, with a tax system that inhibits people on the periphery, gives you a once-off advantage and long term disadvantage.
In summary on taxation, there are recommendations in this report that I think were obvious and it should not have taken a report to come up with them. However it is written now and that is good. The report proposes that the tax base be broadened. I would go further and say that taxes should be on profit, not on turnover or on the amount of transport needed. We should recognise the great disincentive to employment in taxing labour highly, particularly lower income people. We must also ensure that there are no regional imbalances that put certain sections of the community at a disadvantage as compared with other sections.
The next part of the report deals with infrastructure, and the necessity for roads is mentioned. Anybody who has tried to do business in Ireland, particularly in any industry that is transport-dependent, as the food industry and fishing tend to be, and as forestry particularly tends to be, can testify to the reality of the deficiencies in our roads structure. Anybody who thinks it is as simple as building a few national primary roads is totally mistaken.
There is an illogicality here again, because we are talking all the time about developing indigenous resources. As regards agriculture, fishing and forestry, the one thing these indigenous resources have in common is that the raw material for them comes from the more rural parts of the country and transport of the goods is dependent on the country road network. Where is the fishing industry located? Rossaveal in Connemara, Beara in west Cork, Killybegs in Donegal. All we have to do is look at the road structure in and out of these places to see that the greatest problem of moving the goods is not on the national primaries but actually in getting them as far as the national primaries.
Take the milk industry: every gallon of milk has to be brought to the processor and most farmers live in country roads, and we should never underestimate the cost of transporting to these centres. I know from the forestry industry what the disadvantages are. Most of our plantations are in areas of marginal land which nearly always, by definition, are areas with a bad road infrastructure. It might shock people to learn that in the mill with which I was associated transport cost were 20 per cent of the sales cost of our product. That is something very few people understand. To put it in simple English — if we sold £1 million worth of goods, £200,000 of that went in transport. One of the big causes of the high cost of transport was the lack of a roads infrastructure and, of course, the other one was the tax structure on that £200,000, which probably meant that 50 or 60 per cent went in one form or another back to the Exchequer. The second disadvantage we have to face up to is the fact that we are an island. If we are an island we have to have cheap and efficient access and egress to this island and it is time we got out act together here and ensured that people can get their goods on the market at minimum cost.
Telecommunications is an old bugbear of mine. If we want to compete with industrialists in Bonn, Brussels or Paris, our costs must be competitive. Therefore, what will be a low cost call for them tends to be a very expensive international call for us. To add insult to injury on this one, we then insist within our own little island on exorbitant telephone charges. I am reasonably proud of the improvement in the charging systems for the regional and peripheral areas that we managed to bring Telecom round to this year.
I am proud that in the area in which I live we are able to achieve 40 per cent savings on our telephone bills due to the fact that Galway is now a local call. There is no cost reason from a Telecom point of view, why the whole of this State would not become a local call area. They know, and I know, that the cost of making a telephone call bears no relationship nowadays is the distance involved. The only difference in costs is the provision of the original infrastructure and since that is in place there is no running cost difference between phoning from Dublin to Galway and from Dublin To Dublin.
If we want to level up the playing pitch industrially, we will have to face up to these facts and we will have to ensure there is not an impossible burden put on industries operating in more regional areas. I have often said that I would have swopped any grants I could get for low telephone costs, low energy costs, low transport costs because the beauty of low costs is that you do not have to apply for the benefit, you do not have to go on delegations, you just get a smaller bill at the end of each month. Therefore, it is the most efficient way we have of ensuring aid to business and industries particularly in rural areas.
I said once before that I can see justification in the State foregoing, for example, £30 million in their dividend from telephone revenues and then clawing back £30 million from the IDA budget in return for further reduction in Telecom charges. If you do it that way the £30 million actually gets to the consumer, whereas if you do it the other way when you go to spend the £30 million a good proportion of it is lost in handling costs.
Similarly when it comes to energy costs the same reasoning applies. A step was taken some years ago to effectively put rates on the ESB, or to put a charge on them in lieu of rates. Again, I would see merit in a swop, in reducing, on the one hand, that burden on the ESB, and, on the other hand, doing that on a tough condition to the ESB that the total advantage of such a move would be given to manufacturing industry.
I say to the ESB that I am a bit shocked at the moment that where I live there seems to be some delay in providing us with the necessary power to run the local industries. Because of the hard efforts of the people, the electrical supply into Cornamona is not sufficient to meet the needs. We need urgently a 20,000 volt supply but there is only a 10,000 volts supply in the area. All our computers, our equipment and the domestic homes are getting voltage fluctuations and anybody who is conversant with these things knows the damage this can cause. We are told we could have to wait up to one year for them to provide new lines. I understand the money is there but they just cannot seem to get down to work on this. Industries cannot be run without proper energy sources. I would have thought that in an era of high unemployment they would be breaking their gut to support rapidly expanding industry in an area of next to no unemployment. What do we get? Foot dragging on the part of the energy suppling agency. I would also say that for equality purposes the gas grid should be extended to the main centres of population along the west coast.
The report contains a number of proposals on education. I am not one for high-flown words or for fine theories. Experience has taught me that when I am looking for an employee, I am looking first for native intelligence. There is no substitute for a person's ability to do the job. The second thing I want to know is whether I got the niche for the particular skills a certain person has because putting round pegs into square holes, no matter the training, will not work. The situation on training, as far as I am concerned, is that we have the wrong approach. People think that if you organise enough courses in some way you are going to solve industrial problems. My experience is the opposite. The best training any worker can be given in industry is on the shop floor. All the courses in the world will not substitute for the experience of work on the job. After a lot of pre-employment courses you have to retrain them, to get them to realise the realities of production on the ground, the necessity for volume, for quality and for time keeping, etc. That should not be so but that is the hard reality of what we term training.
Regarding education in general, I believe we should teach technical subjects in school but that it is not necessary to incorporate industrial training or industrial indoctrination into our schools. That is not what we need. The quality I would look for from our education system is an inquiring mind. I would hope that we would teach all our people to take nothing for granted, to work out problems for themselves.
The second quality I have found in most people who are successful is a belief that no mountain is too high to climb. This is of vital importance. I have seen people with agriculture degrees, with no degrees, with primary school certificates, with Celtic Studies degrees, make a success of industry in the most difficult of conditions. I ask myself what had they got in common? Most of them had, either by education or background, an absolute determination to be a success and an attitude that the greater the problem the more they were determined to overcome it. That is something you inculcate in a general way in the mind, that is something that is done by broad education rather than by narrow training. Experience has taught me that it is not the number of years spent at school but the way a person adapts to their education that tends to determine their effectiveness.
I have been very critical over the years of the levy grant scheme. This is a scheme whereby we are supposed to pay 1.25 per cent of our wages over to FÁS to provide courses they define as being important to us. There is the old saying that you can bring a horse to water but you cannot make him drink. As far as I am concerned, that scheme is just an effort to bring the horse to water and to make the horse drink. That will not work. I would favour much more that training would be something an employer and an employee would work out to their own requirements. I know from my own experiences that if I wanted to train a person, money would not have stood in the way but I found that most of the schemes offered on the levy grant scheme were not relevant to the type of industry I was running. Furthermore, the training I mainly wanted to carry out was there on the ground, on site and not in courses away from home.
There is one type of training on which I would put great emphasis, that is, a much more comprehensive apprenticeship system, intensive courses in certain technical matters, particularly electrical and mechanical. We need fully qualified skilled people. I am afraid that the numbers of people qualified is far short of the demand for them.
I want to come to the question of direct support for industry and say a word about the semi-State enterprises. I have believed there has been unfairness in the way we treat the semi-State enterprises because we have counted the cost of giving them equity as being too great and, at the same time, we have money for grants for private industry. That is putting an unfair competition against semi-State enterprises. If there are to be grants for private industry, as far as I am concerned there should be a mechanism that would give the equivalent amount whether in equity or in grant to the semi-State industry for doing the same thing.
I will now look at the grant-aiding structures in general. Our system of grant aiding has been geared towards high-tech industry. It has been geared towards the low transport costs, low employment, high-tech exporting industry. Our package suited that type of industry because taxes on transport and on labour were not too bad and taxes on profits were negligible. Therefore, our package suited that type of high-tech industry coming from abroad. We insisted on running a totally uniform system of aids for industry. What that meant was that our indigenous resource-based industries were being taxed out of the market and the advantage of grants was not as attractive to them. Our resource industries are created around our agricultural production, fishing and forestry. High grants put a disincentive on employment. I could never understand that. Here we were trying to create employment and there is an immediate disincentive. That made me wonder what we were at. This also stifled enterprise. When you grantaid fixed assets you are saying: "You must keep that for a fixed period of time notwithstanding changes in technology". As far as I was concerned technology and equipment are mobile assets, and they could be traded and should be traded as technological developments took place. I felt the grant-aiding of fixed assets was inefficient, and stifling and stymied development.
Any industrialist I spoke to would have swopped low taxes, low overheads, minimum bureaucracy, for all the help from the institutions but institutions seem to take on a life of their own and be ever-growing empires. I do not see that this is properly addressed in this report. I do not like the directing of industrial policy because I found it stymied development and enterprise. We must have at this stage one of the most controlled economies in Europe where the State indirectly decides what goes ahead and what does not. They decide, for example, that you have enough capacity but what happens is that you get a lack of enterprise because no new person can start up and push out an existing person because he will not get the grant to do so and since they have got the grant he is immediately at a disadvantage. This has stopped competition. We are always talking about competition and free enterprise and then quietly we kill it dead in a crazy policy that has stopped proper competition and development and the search for better markets, etc. Perhaps some day we will get another chance to complete the debate on the Culliton report.
I agree with almost everything Senator Ó Cuív had to say particularly in relation to taxation, grant aiding, the centrally managed economy and other issues. We have to deal here with the Culliton report. One of the most important issues facing this country is the creation and maintenance of employment. We have a serious problem. Nowhere is this more evident than among our young people who, regrettably, are now finding themselves in the situation where they feel they have no future. Some of them are taking it so seriously that there is now a high incidence of suicide among young people.
In my own college in May of last year we had four suicides in one month. Last Saturday night as I watched the "Kenny Live" show I listened to a distraught mother talking about a suicide in the family. I made some inquiries about that town and I was told there were six suicides in a relatively short period of time. I am not sure what all the reasons are for the high incidence of suicide but I am satisfied that one of them is the bleak future many of them see, with no prospects and the pressures of examinations and the pressure to succeed.
I noted one thing in the Culliton report which I have grave reservations about — although I agree with much of what is in Culliton — where it said that Irish industrial performance over the past 25 years has not been bad. Let me take you back further. When we got our freedom in the 1920s on a per capita basis we were the 13th wealthiest country in the world. Today, 70 years later, we are the 28th wealthiest in the world and declining rapidly. How can the Culliton report claim that Irish industrial performance has not been bad? Of course, measured by some yardsticks it has not been bad but I suggest that some of that is due to mechanisms known as transfer pricing. What that means is that foreign companies with subsidiaries here try to avoid excessive tax burdens at home, whether it be in Japan or the US, and they avail of the tax break they are getting here by the following means: they sell their components or whatever is produced here to their subsidiaries at a very low price thereby minimising the profits in the home country. That, in turn, means they are maximising their profits here where we have a low tax regime but it also inflates our export performance and our general economic performance. Perhaps that could go part of the way in explaining why, despite the so-called success, we are not creating jobs.
This is a fine report in many respects and I do not want to be too critical of it. It is difficult to criticise much of what is in it but it is far easier to criticise what was omitted from it. In the infrastructure section, no mention is made of public transport, at least none of the railway system. I am not sure if I may interpret that to mean that the railway system is all right when I see it disintegrating before my eyes or whether the author sees no future for a railroad system in this country.
It is also very surprising in a report drawn up primarily to deal with unemployment that no mention is made of a very labour intensive industry, namely, the tourist industry. It is equally surprising that no mention is made of our thriving black economy and what might be done to overcome that problem.
Our unemployment problem is not due to lack of work. Even the most cursory glance at the condition of our roads, railroads, parks, graveyards, canals, buildings, etc, will provide ample evidence of work to be done. The problem is a lack of jobs that can give a net take home pay equivalent to or better than the sum of dole plus allowances, plus chances on the black economy.
The black economy could be eliminated and a contribution made to the economy by requiring those in receipt of the dole to give a number of days work per week on community selected projects or to attend selected training courses on a prescribed number of days. For the remainder of the week, they should be free to earn whatever money they can for their labour. It is morally wrong and economic madness to oblige almost 300,000 able-bodied people under the law of the land to remain idle when there is so much to be done. Such a policy is a dreadful and demoralising waste of our most valuable resource — human skills.
To get all round agreement for such a dramatic change would not be easy. Neither would it be easy to work out all the finer details, but desperate ills need desperate remedies and it is in this context that the jobs forum proposed by Deputy Bruton with all parties involved, including the unemployed, could be useful for stimulating imaginative new ideas.
It is interesting that this report was drawn up by home grown experts for a change; it is also interesting that they commissioned 16 consultant reports to draw on and I am delighted that the report was drawn up in the light of the size of our national debt and the size of our unemployment problem. I am also pleased to note that the group at the outset decided that no recommendations would be made that would increase the national debt.
Some disturbing information comes out of this report. For instance, fewer than 20 indigenous companies employ 500 or more people and there are only 1,590 companies with a turnover of more than £5 million per year. This is small industry by any standard. The report also points out that between now and the year 2000 the average number of school leavers entering the workforce will be between 20,000 and 25,000 per year. That means that unless we can produce 20,000 to 25,000 jobs per year, the total number of unemployed will continue to grow and will exceed 300,000 by the end of the century.
The report also notes that 90 per cent of the FÁS budget of £210,000 per year is spent on employment supports instead of training and points out that between 1980 and 1990 existing foreign owned companies received £530 million in grants with a net loss of 15,000 jobs. During the same decade existing Irish owned plants received £460 million in grants with a net loss of 30,000 jobs. The understatement of the report is that this is not a good return on investment.
What do other people think of the report? An outsider, Professor Enright of Harvard University was asked about it. He said multinational companies provide jobs at a price. They do not provide headquarter functions, nor do they provide research and development functions in newly established branches. Why should they? They get a grant aiding fixed assets; they do not get grants to go into research or marketing; they get a grant for equipment, buildings and so on. There is a disincentive against their bringing research here.
The taxation system discourages them from establishing administration here; neither does it encourage them to develop their marketing. I agree with Senator Ó Cuív when he criticises the grant aiding of fixed assets which, in fact, is a disincentive to job provision. We should be encouraging labour intensive rather than capital intensive industries.
Professor Enright points out that analysis shows that multinationals buy only 4 per cent of their requirements in Ireland, a startlingly low figure. The 10 per cent tax rate for manufacturing has a perverse effect on multinationals because they cannot afford to bring administration or research and development functions into Ireland since they would be offset against a 10 per cent rate as against 40 per cent elsewhere.
The group recommended that the 10 per cent tax rate should not be extended beyond the present 2010 deadline. Whatever the group recommended, I believe it will go anyway in the context of the Single Market. I do not believe we will then be allowed to continue this kind of discrimination in corporate taxation. It was also felt that the 10 per cent rate for manufacturing industry when compared to the 40 per cent tax rate for service industry unfairly discriminates against the service sector in which many more people could be employed. I agree thoroughly and in this day of electronic communications I see no reason certain types of service industry could not be carried out as effectively, or more effectively, here than in home bases such as New York, Boston or Brussels.
Let me give a few examples. In the towns of Castleisland, Fermoy and Kilkenny, US insurance companies have sub-offices where they process claims. The incentive to do this is as follows. Skilled people are available and more cheaply here than in the US; real estate costs for office space are also cheaper than in New York. Furthermore their mainframe computers can service these offices overnight while they would normally be idle in New York because of the time difference.
If the American companies find it profitable to do that, may I respectfully suggest that people in Brussels might find it eqully convenient to do so and much of the secretarial work being done in the Berlaymont or in Luxembourg or in Strasbourg where office space is extremely scarce, could be done here. Office space is extremely scarce in Brussels——
Or falling asunder.
——or as the Minister said, threatening to fall asunder. Could I respectfully suggest to our civil servant masters that, if they are sincere about helping peripheral areas like Ireland, Portugal and Greece, administration work might equally well be done in Cork as in Brussels with modern electronic communications. That is the kind of labour intensive service industry we should be promoting.
The report says and Professor Enright agrees that the 10 per cent corporation tax for manufacturing industry and the 40 per cent for service industry discriminates unfairly against service industries.
Professor Enright also recommends that Ireland should not chase high-tech industries and that we should fix an absolute limit on grants for inward investment; whatever we can afford, he says. Our efforts should be concentrated on doubling the indigenous industry base. Professor Enright also recommends that various State agencies be redirected to maximise the number of start-up indigenous industries not only in manufacturing but in services, tourism, etc.
It is hard to disagree with that; I certainly do not, except perhaps in one area; I believe we need a certain amount of high-tech industries. Our high-tech industries have served us well. There are 80,000 people now employed in foreign owned, mainly high-tech, subsidiaries particularly in the pharmaceutical and electronics area. The real success story of foreign industry in this country, however, is not electronics or information technology but the pharmaceutical and fine chemical industries which get nothing but bad publicity. That is where jobs are never lost and numbers increase every year with a major capital investment.
There is a small example of such an industry near Kinsale which I visited some years ago. It is by any standards a small plant when you look at it physically, but it makes a capital investment of at least £6 million every year. In big companies like Pfizers and others in Cork harbour the capital investment every year is greater still but we never hear about it. The only thing ever heard about pharmaceutical industries is the risk they pose to the environment. Of course there is risk; there is risk attached to crossing the street but we need to get things in perspective. Unless we view things more rationally unemployment we will continue.
Three weeks ago in this House I had lunch with a stockbroker who said that what Irish industry should concentrate on is food rather than chemicals. I suppose he knew I was involved in food science teaching but I pointed out to him that the only country in Europe, not only in the EC, which has more than one industry in the ten largest food industries in the world is Switzerland. The Community as a whole has only one food industry within the first ten in the world in size. I then pointed out to my stockbroker colleague that Swizterland is also noted for its chemical industries and that there are more people employed in the chemical industry in Basle than in the entire 32 Counties here, yet nobody would accuse Switzerland of lacking concern for the environment. He sat back in amazement and said "he never thought of that before". Of course he had not because the entire media has got it distorted as a result of some fanatics with blinkered vision.
Some of the report's main recommendations deal with education, taxation training, enterprise and infrastructure. I have spent almost my entire working career in the university sector. While I cannot agree with some things said about education in this report, for my entire career I have made the argument that there is too much prominence given or importance attached at second level to getting into university. Not every student is born to be academically brilliant but we now have a situation at second level where the only hallmark of success for the school is the number of students who get the required points to admit them to the high points faculties. That is nonsensical. It is important that good students get into the university but it is just as important that students not blessed with superior academic ability be given a chance to succeed in life and not branded as failures. Successful countries find it equally important to have people who have physical skills; without that we will not have a manufacturing economy. Our attitude towards people who are not academically bright should change; they should not be regarded as failures. Each person is born with his or her own gifts and it is for the system to identify these gifts and enable that person to bring these gifts to their fullest fruition to allow them to assist the economy and to fulfil themselves in their own lives.
Earlier, before the Minister came in, I said that many young people are so disillusioned and consider themselves failures with no prospects in life that they are taking their own lives. In Cork University in May last year four young people took their lives. One need only contact health boards around the country to find that suicide is becoming all too common.
In education more emphasis must be placed on training for physical skills, for management and for marketing. In relation to physical skills, we have been over-influenced by what happens in Britain where people acquire only one skill, whether carpentry, plumbing or electricity mechanicals. In successful countries like Germany and Japan crafts people are not confined to one skill; they are taught more than one which helps to eliminate restrictive practices where one only person can fit a bulb or fix a plug. In Germany a person can fulfil three or four functions and nobody complains. We need to get rid of the baggage we inherited from those who ruled us for so long.
I will finish on taxation and training. Taxation has already been dealt with adequately by Senator Ó Cuív and I agree with him that we have a muddle of a taxation system that is a disincentive to enterprise, to work and to job creation. I note with interest that the role of the IDA is dealt with at length.
One of the most interesting comments in the report is that the IDA should be given new policies to implement and these should be split into two parts, one dealing with overseas industry with a definite budget which should attract every worthwhile project on a selective basis and the domestic part of the IDA should take over the entire grant-giving powers of Córas Tráchtála. I see no reason why we should not implement this recommendation. It also recommends that the IDA at home should be regionalised to include SFADCo and Udarás regions and have a series of genuine non-politicised local boards with grant-giving powers. I say "hear, hear", but I wonder how we can get away from having political hacks appointed to regional boards. It is naïve of the group to think we could but more power to them for mentioning it.
Senator Raftery disagrees with his colleague who emphasised the importance of having political representation of whatever party——
I did not say there should not be some political representation but an overload of political people is not good.
Transport costs were mentioned by Senator Ó Cuív and while it is a factor we all too often use our geographical location and transport costs as an excuse for our lack of success. The most successful economy is the Japanese economy and to get to our markets in the European Community they have to cross two oceans and one continent. We have to cross a few hundred miles of water or land and we make it almost the sole reason why we cannot succeed industrially. We place too much emphasis on that. It is a factor; we cannot change it and must overcome it by developing hitech low volume high value products where transport as a cost factor is relatively small.
The food industry got special treatment in this report and I cannot disagree with much of what it states. We had a problem which was not referred to and which did serious damage to our food industry in the seventies, the manipulation of currencies, particularly vis-á-vis Britain where we were put at an advantage because the British refused to use the green pound system which meant their industry had raw material available to it at a very much lower price than we had.
I cannot pass on without saying something about finance and venture capital. I note with satisfaction that the group recommended continuation of the BES although it would need to be more closely monitored. There have been abuses of the BES. I was so confident about the BES that I put money I did not have but borrowed, into a project under it.
Will the Senator get his return?
I believe I will. I said in the House that under the BES I was getting relief on the interest I had to pay on the borrowings as well as income tax relief on what I put in. The Minister for Finance, shortly after I mentioned it — I am not saying it was because I mentioned it — plugged that gap. I was getting double relief and everybody else who borrowed money was getting the same benefit. There were opportunities for abuse: I am not saying I was abusing the scheme as it was perfectly legal then but it seemed crazy. If I were given the opportunity of saying how grants should be given to companies we want to attract here I would be inclined to give much of the grant for marketing. If companies come and invest in capital here there is no risk involved there; so why should they get grants? The building and equipment will always be there. The real risk is in research and marketing. Too many people confuse selling with marketing. Selling means selling something one has; marketing is the wider concept of establishing what the consumer wants, of monitoring whether the consumer is satisfied or not and or providing the product in a reliable form competitively priced on an all year round basis. That is the message we must get home to our people and it is most important in the food industry.
I am glad of the opportunity to contribute to this very important debate. At the outset I should like to compliment the industrial policy review group on producing this very comprehensive report. Over the years tons of paper has been used in various reports and policy documents the value of which to the country or whoever they were aimed at was questionable. I notice that this report poses many questions and examines many aspects of industrial development and makes recommendations for industry almost sector by sector. It is interesting that the group who compiled the report seem to be getting away from the idea of grant aid. I read in a Sunday newspaper about two weeks ago a heading to the effect that IDA job creation over the past number of years has cost £750,000 per head. The figures are correct but I assume the writer of that article included the entire cost of the IDA service not only at home but in the offices abroad. Perhaps it is a little unfair to attribute such a high cost to each job; after all I am sure there are thousands of people involved who enjoy comfortable lifestyles out of it. We should not be too critical of that figure from that point of view.
This is an opportune time to ask if such a considerable amount of money attracted additional jobs. What we must bear in mind in this exercise is that we are not alone in trying to attract multinationals and foreign capital into this country. Every other country in Europe have incentive offering agencies to attract firms to use their territory as a base. The most successful one I came across in the seventies was the Uregia area of Holland of which Mr. Mansholt, the former Agricultural Commissioner was president or chairman. It got away to a tremendous start with much imagination and I have no doubt that that experiment proved its worth.
I agree with the suggestion about regionalisation. There is an element of duplication between the Industrial Development Authority and Shannon Development and, perhaps, Údarás at present. We could do without that.
Debate adjourned.