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Seanad Éireann debate -
Thursday, 13 May 1993

Vol. 136 No. 4

Employment Through Enterprise: Motion (Resumed).

Debate resumed on the following motion:
That Seanad Éireann
—notes the publication ofEmployment Through Enterprise setting out the response of the Government to the Culliton report:
—approves the decisions to implement changes recommended by the Culliton report in accordance with the suggestions of the Moriarty Task Force; and
—asks the Minister for Enterprise and Employment to report on a six monthly basis on the progress made in achieving the implementation of changes that have now been mandated by the Government.
May I ask that we comply with the suggested time-frame? The Bill will be discussed in the Seanad within the next five weeks.
—(Senator Wright.)

I welcome the Minister to the House and thank him for discussing the decisions to implement the changes recommended in the Culliton report, which are also in accordance with the Moriarty Task Force report.

Economic and industrial policy in Ireland has been a victim of paralysis by analysis; many Governments have come and gone without taking much action in the important area of job creation. I welcome the fact that we have action now, and a promise, with timetables and targets, of further action in response to Culliton and Moriarty. The timetable and target dates in this response from Government are crucial to this discussion because they provide a yardstick with which to measure progress. The Government's response does not simply talk about what we may or may not do but specifically identifies when we will do them. The Minister's assurance today that he will report on progress at six monthly intervals indicates the Government's intention to carry through these targets and timetables and answers Senator Howard's concern that there should be a sense of urgency in this area.

I agree with Senator Hillery that support for employment and enterprise is the business not just of the Department represented by the Minister but of all Departments and particularly the Departments whose Ministers are members of the group set up to monitor progress — the Ministers for Enterprise and Employment, Agriculture, Food and Forestry, Finance and Tourism and Trade. It is important that these four Ministers continue to meet and monitor the progress of the implementation of the report. Culliton said that there were no quick fixes in this area and we have to recognise that progress cannot be immediate. The Culliton report contained 60 recommendations. The huge problem of unemployment, in many cases passing from one generation to another, has caused many families and communities to feel useless and hopeless and this cannot be allowed to continue.

I support the points made by Senator Howard about a climate for enterprise and the importance of allowing risk taking. It is important that risks taken are based firmly on a business and marketing plan and exact knowledge of the manner in which the business is to be made a success. It is not enough simply to take risks without having that strong foundation.

I am pleased that the report is based on a clear understanding of what firms need. The policy will have to be based on what firms need to be successful. Many speakers referred to the division of the IDA, between IDA Ireland, which deals with foreign investment, and Forbairt which is to strengthen the home based and home managed industries and the umbrella organisation Forfas, which is to co-ordinate both organisations. Marketing abroad will also be dealt with by An Bord Tráchtála.

Senator Quinn considers there is too much bureaucracy. I know he has wide experience in this area but it seems to me that the different areas of responsibility are fairly clearly mapped out. The Culliton report recommended that basic division between responsibility for foreign investment and responsibility for encouraging Irish enterprise. The particular weakness to date has been in relation to Irish owned firms as the Minister spelt out clearly in his opening speech with the statistics he gave us.

Direct State support for business in Ireland is high. For example, in 1988 we had the second highest level of support in the EC in terms of gross domestic product. Irish owned firms have had a bad record in terms of increasing their level of employment. In 1992, for example, employment in grant aided Irish owned industry fell by 1,600 while it rose by 800 in foreign owned companies. The Minister also gave us figures in that regard.

Another aspect to be taken into account is that the labour force increased by 60,000 since 1990, the same number as in the entire decade of the 1980s. Therefore, the increase has been dramatic since the beginning of the 1990s. It is crucial that we strengthen our Irish based industrial jobs policy, which is the purpose of Forbairt but the question facing us is how is it to be done?

The Culliton report referred to an unhealthy dependency mentality but the Government's response has not produced jobs. I had discussions with someone who advises small industries who told me that, when he discusses with small industries the problems that face them, usually it is not a cash injection that they need — although sometimes that is part of the problem — but advice on areas such as marketing, research, training, efficiency and management. Those areas are pinpointed in the Culliton report and in the Government's response to the report.

The decision to consider what is referred to as participative forms of finance rather than grants is crucial to the future proper use of Government money, which is limited. The right response is to use equity and seed capital as the means of financial support rather than throwing money at problems.

Approximately 80 to 90 per cent of Irish industry consists of enterprises of 50 people or fewer. It is important that these small and medium sized firms get the support they need. It is suggested that we have cluster industries, particularly in the food sector. This will be crucial from the point of view of selling abroad especially where Irish industry is seen to have a competitive edge and where our image as a green producer of food can be positively used to develop markets abroad. The Government has responded positively to the suggestion in the Culliton report that we cluster industries and respond to their group needs, for example, by helping provide training, management efficiency, research and marketing, rather than expecting each industry to cope with those areas on their own. One of the major problems in the past has been that industries have been too small to take on many of those areas on their own and, as Senator Hillery said, some of the incentives in the Finance Bill target that issue.

The Moriarty report says that emphasis should be put on areas of recognised weakness and it specifies marketing and innovation, to which the Minister referred in his speech.

I share Senator Quinn's view that marketing is crucial. We have a positive image and well trained young people who can sell our products abroad; we have a good reputation abroad as people who can be trusted. We need to get into the markets and the distribution mechanisms abroad and we need to set up structures that will facilitate small firms who could not possibly sell their products themselves on the various world markets. It is vital that they can channel into links that are already there. The only way we can improve our productivity is to extend our markets abroad because the home market is limited.

I will briefly refer to the education issues which have been covered by other speakers. I support the decision to integrate rather than separate a vocational stream in the education system. Mr. Culliton supported the Government decision to do this rather than the original suggestion of having a separate vocational stream. It is important that education produces for the jobs market people who have vocational and other elements of education. I also support the further emphasis on foreign languages. As regards training, the division between on-the-job training and other areas of training will clarify the role of FÁS.

I would particularly like to stress the importance of targeting black spot areas where unemployment is high — up to 80 and 90 per cent in some urban areas. I know they will be targeted in the national plan in the application for EC Structural Funds. It is important that we target incentives in those areas where, as I said earlier, successive generations are experiencing a culture of unemployment and we have to break that hold.

I would like to refer to the points made earlier regarding the increases in and the restructuring of phone charges. We all regret that there will be increases in certain areas. It was proposed in the Culliton report that in order to reduce overseas charges there would have to be increases in domestic charges. When that was an abstract proposal, it was strongly welcomed by commentators and by other political parties. Now that it is to become a concrete proposal, it is being criticised. I hope, when it comes to the taxation changes, people who now welcome the abstract idea of changes in taxation will be equally willing to welcome the downside of those changes. There will have to be a downside since money does not come like manna from Heaven.

I welcome the fact that we have clear policy identified in this area, that we have targets and timetables and that the Government has indicated its intention to fulfil those targets by coming back to us at regular intervals and by continuing the monitoring committee of the Ministers involved.

I thank the Leader of the House, Senator Wright, for bringing this motion before the House so promptly. I also thank the Minister for coming in for the debate.

The motion notes the publication of Employment Through Enterprise, which outlines the Government's response to the Moriarty Task Force on the implementation of the Culliton report. The report by the task force and the Government's response to it covers 16 chapters. I wish to deal with some of them this evening.

In the early 1950s the Whitaker report on economic recovery was produced. Many saw the Culliton report as a blueprint for industrial policy which would lead to the creation of jobs in the 1990s. Both reports were produced against a similar background. In the 1950s 40,000 people emigrated annually and I understand that since the Culliton report was published, unemployment has risen by 40,000.

The only valid objective of industrial policy is the creation of jobs. What creates jobs? Sustainable jobs can only be created by fostering enterprise and by encouraging people to take risks in business. We must encourage the entrepreneurial spirit. The Culliton report emphasised the creation of a culture in which enterprise could flourish. Three conditions were required to create that environment: first, tax reform; second, stiffer competition to make State enterprises more efficient in delivering low cost services to industry thus reducing industry's costs and enhancing competitiveness and third, the development of indigenous industries.

The Culliton report stated that the basic engine to promote employment was tax reform: "In no other single area does the Government have at its disposal the tools to make as far-reaching and effective a reform to support an enterprise economy as in taxation". The Government shows no sign of implementing the radical reform of the taxation system. Culliton called for a new property tax and cutbacks in mortgage tax relief to pay for a large reduction in tax on income.

The task force chaired by Mr. Paddy Moriarty appears to have taken a less radical view than Culliton. The industrial policy review group, chaired by Mr. Culliton, did not include civil servants. Its view represented the views of those at the coal face: industrialists, trade unionists and business people. In sharp contrast, a number of public servants were members of the task force chaired by Mr. Moriarty — including the Secretary of the Department of Finance — and they ensured that no extreme tax reform appeared in its report. The report merely offered a few bland paragraphs of support for broadening the tax base and reducing the burden of tax on low paid workers. There was no mention of property tax or the reduction of mortgage interest relief, so the Government had no problem supporting its recommendations. The Government would have been given the benefit of the doubt prior to the introduction of the 1993 budget. However, the levy of an additional 1 per cent tax on the income of all those earning over £9,000 per annum together with higher VAT on indigenous industry, notably clothing and tourism, substantially undermines the Government's commitment in this area.

The Government has accepted the Culliton recommendation that State enterprise should be reorganised as limited companies. Their access to capital from public or private sources would depend on their commercial merit and ability to provide a good return on investment. Changes in An Post, Telecom Éireann and Bord na Móna will improve competition and efficiency.

The task force considered the concern expressed by Culliton about telecommunication charges to be soundly based. It was pointed out that telephone charges to EC countries should be brought into line with cost based charges in Europe as the current telephone tariff discriminated against business users. This appears to be the first recommendation of the task force that has been implemented. It has met with strong opposition, and rightly so. There are many small businesses in Ireland that employ four and five people. Small businesses are crucial to economic growth. The telephone costs of these small companies are just as important, if not more important, to the future development of this country as the telephone costs of larger companies which deal with international companies.

The social aspect of telephone charges have not been considered; for example, the impact of the charges on elderly people. The charges will also affect helplines run by such organisations as the Samaritans, the AA and the Rape Crisis Centre who depend on telephones to deal with their clients. It appears the Minister has not given any concession on helplines and I would appreciate it if he would do so.

The task force recommended a three year programme to achieve efficiency, improved productivity and economic stability in Telecom Éireann. I accept this recommendation. There was a dereliction of duty by Telecom Éireann when it bought the Ballsbridge site — in the Minister's constituency — without planning permission, for £10 million. If semi-State bodies are to be competitive and profitable then ill judged decisions of that nature must be avoided.

I am pleased that the compulsory 35 per cent oil purchase from Whitegate will end, as recommended by the Culliton report, and that the subsidy paid by the ESB to Bord na Móna, through the use of milled peat, will be indemnified to the consumer.

I read with interest the task force's comments on port development as I was a member of the Dublin Port and Docks Board. The task force recommends that major commercial ports should be incorporated as limited companies registered under the Companies Act and that they should no longer have a status similar to that of local authorities. The task force states that the effectiveness, efficiency and economy of the management of each port will be critical to their reform. The Dublin Port and Docks Board, while I was a member, showed initiative in its attempt to sell some land for which it had no use, for a sum of £2 million. Unfortunately, it could not get sanction from the Department of the Marine to sell that land. I am glad to see that the ports will no longer have to answer to the Department of the Marine. As a result, they can make progress. I am pleased that the Government, in its recommendations, has noted the transformation in labour relations in Dublin port and that the new, more competitive operation will achieve operating efficiency.

There appears to be a tinge of bureaucratic madness in the reorganisation of State agencies. The Culliton group proposes that there should be one organisation through which State support should be provided to industry. This recommendation has been ignored. It is difficult to understand how Forbairt, the proposed new agency for indigenous industry, will carry out its task as, depending on the location of businesses, such support is also available from the enterprise boards, the Enterprise Trust Shannon Development and FÁS. The late John Kelly often said that the solution to problems of this nature offered by Irish politicians was to think of an Irish name for a company, put the nameplate on a wall and then the problem was solved. I fear that the proposed unintelligible reorganisation means that State support agencies will contribute less than their fair share to Irish industry in the coming years.

Finally, today's motion calls on the Minister for Enterprise and Employment to report every six months on the progress made in implementing the changes mandated by the Government. In fairness, the Government has chosen to respond in detail to the report and recommendations of the task force rather than attempting to bury them. The decision to publish the recommendations of the task force will provide a bench mark against which policy actions can be judged. It will be interesting to hear what progress the Minister will report in six months time.

The scale of the unemployment problem is so enormous that any opportunity to discuss it is very welcome. My remarks will be brief. I welcome the Minister and compliment him on the work he has already carried out in this difficult area.

I hope that the momentum for industrial development and promotion throughout the regions is not lost between now and the time when the legislation for restructuring is introduced and passed. We should try to avoid interrivalry between organisations and State agencies which, to some extent, has hampered development for some time. Although several changes have taken place in the organisational structure of industrial promotion agencies in the midwest region over the past number of years, the blame cannot be laid at the door of the agencies. The blame should be laid at the door of the politicians because there were successive changes of Government, of Ministers and of direction and policy. As a result, many of the agencies were not always sure from where the political mandate was coming.

The IDA was taken out of the midwest region by a Minister and the sole responsibility for industrial development was vested in the Shannon Free Airport Development Company. The regional tourism organisation, Shannonside Tourism, was disbanded and responsibility for tourism development given to SFADCo. The county development teams in the mid-west region were disbanded and their responsibilities were given to SFADCo.

I welcomed the change at the time because I felt it was important that the regional development organisation should be the central development organisation in the promotion of small and large regional industries and in the areas of county, regional and tourism developments. I believe it would be a retrograde step if we were to move from the regions and set up new structures which would create further confusion in the minds of industrialists, the public and the agencies. We will have an opportunity to discuss this matter fully when the Minister introduces legislation to establish these agencies.

Unfortunately, the reorganisation which has taken place in many of the agencies and Departments in the last couple of years has not continued. The policy documents were not put in place when the final legislation was passed and responsibility was not given, as was promised. This led to confusion, duplication and a waste of human and financial resources. Any impact on job creation was also lost. It is important for the Minister to clearly define where the ultimate responsibility lies when introducing this new legislation.

A sensible approach would be to set up regional development organisations, similar to the Shannon Free Airport Development Company in each of the six or seven regions which were accurately defined for Structural Fund allocations a few years ago. They would report to a small national agency which would report directly to the Minister for Enterprise and Employment. Bureaucracy and duplication of scarce human and financial resources in this area should be eliminated. This would indicate the success of the effort and would give greater momentum to enterprise development.

Last night we had a debate on rural development and I referred to the work of the Leader programme and the success it has in County Clare under Fr. Harry Bohan as can be seen from its record in job creation and the development of small enterprises in rural areas. It would be possible to reduce the unemployment figures in Dublin city if a Leader programme, similar to that in County Clare, could be put in place.

I would like to put on record our appreciation of the work done by the Shannon Free Airport Development Company in the development of the midwest region. They have been criticised about enterprises which we felt they did not fully support. However, in the 20 years I have dealt with the Shannon Free Airport Development Company it has not refused to put a project into operation because of lack of finance. It rejected projects because it was not satisfied with the product's market opportunities, the company was incapable of meeting the proposed targets or it did not have the proper quality control. I am talking mainly about small indigenous industry.

It is now time for change. It was almost impossible for the development agencies — the Industrial Development Authority, Shannon Free Airport Development Company or any other agency — to row against the tide of international recession which swept many industries out of existence over the past five or six years. There is no question that, in spite of the difficult recessionary times many people managed reasonably successfully to avoid closure and to set up a number of enterprises. The Minister has given figures which highlight the successes during the recession. The recession, especially in the United Kingdom, is turning around and now is an opportune time to revamp our industrial effort.

I urge the Minister to carefully consider his approach to the promotion agencies and to introduce appropriate legislation. We should avoid infighting and disruption of the industrial drive in the intervening period before the new arrangements are put in place. I have confidence in the Minister's ability to put proper structures in place which will meet the challenges of the next three years.

As I said now that the recession is turning around, there will be an opportunity to make steady progress over the next four or five years. In addition, with the availability of substantial funding and an integrated approach to development, we should be able to reduce the number of people unemployed and restore the people's confidence in this country's ability to organise our affairs efficently and well. We should avoid duplication of scarce human and financial resources and make the best use of the talented people in industry and in the industrial promotion agencies. We will then be able to reduce the unemployment figures and give hope to the many thousands of people who are anxiously waiting for jobs.

I welcome the Minister to the House and the Government's response to the Culliton report. The taxation changes recommended in the report have not been implemented. I will welcome them when they are implemented because at present the unfortunate lower paid are heavily taxed.

I welcome the measures introduced by the Minister for Health, Deputy Howlin. Medical card eligibility will now be decided on gross pay rather than on net pay. Sometimes getting people to take up employment has been difficult because a medical card is worth so much to people on a relatively low income that they are reluctant to lose it. This was a worthwhile change.

The main area I would like to address is education. I am glad the Government changed the emphasis from that in the Culliton report where there were two parallel streams, one stream including vocational and technological education. Although Senator Hillery said he thought there was more integration than separation, I felt the two parallel streams would rapidly become one superior and one inferior — the academic subjects would be considered superior and the vocational inferior. It is said that if a student is good with his hands he is not academically inclined. Very often, to be good with your hands, you must have a good head too. I find the two go together more often than not. The contrary is often true as well. People who are hopeless academically are often hopeless when it comes to working with their hands. Unfortunately, skills are not shared out evenly. Some people tend to be good in several directions while others have no obvious talents.

I would like to have seen more emphasis on good, basic education at primary level. Reading, writing and arithmetic are extremely important. I represent the Dublin Institute of Technology. We often discuss science and technology in this House. There are science, engineering and computer science faculties in Trinity College but without a good basic knowledge of maths it would be impossible to pursue these subjects. It is well known that, internationally, the standards in maths have been deteriorating. Our standards are not as low as those in other countries. However, I deal with people with third level education who while they know that ten is ten times one, they are not quite so clear that one is ten times 0.1. When I get results over the phone I sometimes say, that what I have been told is impossible. The impossibility of a situation to these people with a good education is often not evident. I am glad schoolchildren have left the Public Gallery because more stress should be placed on basic education, particularly in the mathematics area. It is impossible for people to progress in science and technology without a strong mathematical base. We should at least try to introduce the concept of science at primary level.

The teaching of foreign languages, if possible, should be introduced at primary level, and certainly at secondary level. As a nation we have a good attitude to foreign languages. We do not say, "speak English, or else." We are able to make the psychological jump to mainland Europe; we do not find it strange to learn German, Italian or French. Senator Hillery spoke about commerce students learning a foreign language, but many engineering graduates are doing that as well. I believe we should start stressing the use of foreign languages too in Irish speaking schools. Why do people like Senator O'Toole and Senator Fitzgerald, with their excellent command of the Irish language, not lead the way and learn a foreign language? I am sure that they would learn it more easily than the rest of us who are not fluent in Irish. We need to be careful not to dismiss the importance of an academic education, because, as Senator O'Sullivan said, it is extremely important. The Provost of Trinity College made a plea for the restoration of courses in the classics.

It is important to remember that many schools do not yet provide a choice of subjects. Many girls' schools do not teach honours maths, physics, or chemistry. The only science subject taught is biology. If we are going to stress the importance of science and technology, we should ensure that 50 per cent of those who could be scientists or technologists receive a basic scientific education. It is wrong to have home economics for one group only but not physics, chemistry, honours maths, applied maths or mechanical drawing. Technical subjects are not on offer in a large number of schools; this is not a sensible approach.

At third level not enough young people are getting into the science and engineering streams. This may be because they look at future employment prospects and see that they are more likely to rise in a firm if they have a marketing degree than an engineering degree. Not many company directors have a scientific, technical or engineering qualification. This is an important point because it means not many people in the higher echelons of those firms have any technical expertise.

Our standards of education are extraordinarily good when compared internationally. I never like to say that the best people leave the country, because we are still here. However, we have one serious problem: the good people in technology and engineering, the movers and shakers always look ahead to their career prospects. Are we encouraging them to take up employment in this country? I address this question to Irish employers.

The Minister also stressed in-service training but, as far as I can see, no money is invested in this area. People criticise FÁS. There are many people whose ambition seems to be to get on a FÁS course. This is not worthwhile if the course does not lead to a job. It is a terrible indictment if what the Employ ment Through Enterprise report says on page 41 is correct — that FÁS should be divided — one section providing prework and apprenticeships education and training and the other concentrating on training for those at work. All our apprenticeship schemes, on which we never put enough emphasis, should have certification to a high international standard and I welcome the remarks on that matter in the Government report. There is little emphasis on management training, and the teaching of foreign languages is vital in this area. If we are to sell our products abroad we must be able to speak to potential purchasers in their own languages.

Another area of the Culliton report which is not addressed in the Employment Through Enterprise report, and of which I am critical is research and development. During the debate in this House on Digital, I spoke of the importance of maintaining research and development in Galway in co-operation with the regional technical college and the university, because a good flexible research and development programme can often help other firms. It is essential to have links with the universities. The Culliton report seems to imply that research should be industry led. This is a narrow concept but it could become company led if we were not careful, because, in that case, our research and development would not be versatile. Culliton was critical of basic research and said that not enough application research for various industries was being undertaken. Programmes in advanced technology must not be geared to just one industry because advances in science and technology are rapid and we could be isolated if we remained in one specific area.

There is an even worse situation on page 56 of the Culliton report which states: "As a small nation, Ireland cannot expect to develop world class research in the development and application of many modern technologies." Why not? That is a very narrow approach. It is a deplorable comment. Who wants to be in the second or third stream? This matter has not been addressed in the Government report and I hope that defeatist attitude will not be taken on board.

Irish science and technology graduates are first class and we want to keep them here. I have just come back from America where I met people in excellent jobs. I have conducted research myself for the pharmaceutical industry in tandem with people in America. They constantly say that the experience of science personnel here enables high standard research to be conducted more cheaply. I strongly object to any lowering of our sights in research and development.

Debate adjourned.

When is it proposed to sit again?

At 2.30 p.m. on Wednesday, 19 May 1993.