Services Sector Development: Motion.

I move:

That Seanad Éireann, in light of the fact that the bulk of new jobs in the future will be created in the services sector, recognises the need for a determined national effort to develop the services sector to its fullest potential.

The aim of this motion is not to score points off anyone on either side of the House. Its aim is to build consensus around a fundamental step, a fundamental shift in attitudes that this country urgently needs to take. It is the hope of the Independent Senators, Senator Henry and myself, in putting forward this motion to kick start a national debate that has barely begun but is long overdue. In that consensual mood I wish to acknowledge contributions to this issue that have already been made by both the Government and Opposition. I wish to praise the swift response of the Taoiseach in April when he established a committee to examine the potential for jobs in services following the landmark speech by the chairman of the Irish Management Institute in Killarney. I look forward to the findings of that committee. Perhaps we will hear more from the Minister on the progress of the committee in the course of the debate.

On the other side of the House I wish to commend the initiative of the Fine Gael Party in publishing their recent white paper on jobs through services prepared under the direction of Deputy Richard Bruton. I understand that Senator Doyle will be speaking on this paper. It is an excellent study which sets out clearly the strategic issues and the relevant facts and also goes on to make a series of concrete proposals which merit close consideration by this House.

I hope that the Government will take an open and generous approach to both these proposals and will not be tempted into the sterility of a "not invented here" policy. This issue is far too critical for the future of our country to be allowed to become a matter of political point scoring. As I mentioned at the outset, the aim should be to create consensus.

What is the issue that this motion seeks to highlight and why is it important? The issue is that we are witnessing the dramatic shift in where jobs are. Just as a century ago a great shift began when jobs in agriculture shrank and jobs in manufacturing took their place, we are now seeing an equally historic shift. This time it is away from manufacturing and towards services. In the future, which is quickly becoming the present, the overwhelming majority of jobs in every developed economy will be in services. According to the most recent forecast, made last week by two British economists, we are heading towards a future where fewer than one job in ten will be in manufacturing. This is in line with many other forecasts from a variety of sources and, more to the point, it is fully in line with what has already started to happen across the world and here in Ireland.

Since 1982, the number of jobs in manufacturing in this country has decreased by 21,000, while the number of jobs in services has increased by 78,000. During the same period manufacturing employment in the USA, the UK and in most European countries showed a sharp drop and is continuing to fall. Despite this historic shift, a shift that we can do nothing about, we still have a mind set in this country that leads us to believe that what we should be doing is stimulating growth in manufacture and growth in manufacturing jobs alone.

When the broad lines of our development strategy was first laid down 35 years ago under Seán Lemass and Kenneth Whitaker it was correct to focus on manufacturing as the main pillar of our growth. It is not correct to do so now in a world that has totally changed. It made sense 35 years ago to create a tax regime that was skewed quite deliberately in favour of manufacturing companies and to reserve to them and to them alone the expensive battery of State incentives that were being put together to stimulate growth. It is not correct to do so now in a world that has totally changed. It made sense 35 years ago to create a stable of State development agencies, such as the IDA, An Bord Trachtála, Eolas and so on that, in contrast to what other countries did, concentrated entirely on nurturing manufacturing companies. It is not correct to do so now in a world that has totally changed. That is the situation.

Even though some of the State agencies have now broadened their scope to include a narrow range of internationally traded service, these agencies, and the State as a whole, regard services as nothing more than a poor relation, a minor side-show that they do not know very much about and, worse still, whose importance they clearly do not understand. It is vital that we understand what is going on here. We are quite literally living in the past. We are providing a very expensive response to a world that no longer exists. That is why we must change. We must make a leap in our attitudes so that our response is to the world of today and the world of tomorrow and not to the world of yesterday.

We can make that change if we put our minds to it. I am optimistic because of the national consensus that now exists about the seriousness of our jobs problem and the national determination to tackle that problem effectively. If we are serious about jobs it cannot be long before we realise that we must concentrate our efforts on where those jobs are going to materialise. If we do not do that it only takes a further moments thought to realise that the jobs growth we want is going to come from services.

At present we are putting 80 per cent of our effort and resources into 20 per cent of the job opportunities. What we should be doing is putting 80 per cent of our resources into the sectors where there are 80 per cent of the job opportunities. I do not exaggerate, rather I believe that I understate how upside down we have managed to become in our priorities. We spend £600 million a year seeking to stimulate manufacturing growth where there is no prospect of significant job growth. In contrast we spend less than £50 million a year, that is one twelfth as much, on stimulating growth in services, the sector where virtually all of the new jobs are going to derive. In fact most of that £50 million goes on tourism which I have no problem with, but it means that State encouragement for all the rest of the services sector is much less than those other figures would suggest.

What we are doing is rather like as if we stood at the beginning of the twentieth century when agriculture was on the decline and industry was at the beginning of its massive growth and we decided to forget about industry and put all our resources into creating jobs in agriculture. If we had done that at the beginning of the century it would have been madness. From an historical perspective that is exactly how stupid our present situation looks. Unless we change our attitudes now, future generations will condemn our monumental short-sightedness. They will condemn our inability to adapt to a world that was changing in front of our eyes while we refused to acknowledge or to face up to that change.

This shift towards services is a challenge all countries are now facing. However it is a greater challenge for Ireland than for other countries. We alone of all the EC partners have chosen to skew our approach towards manufacturing, singling it out and giving it exclusive privileges. We alone have massively discriminated against our services sector, creating a battery of disincentives and barriers for those operating in the services.

Therefore we have more chickens coming home to roost. At a time when we need a healthy, vibrant services sector to take the brunt of our job creation, that sector is stunted by comparison with other countries. It is smaller and growing more slowly than in other countries, and that is not happening by chance. It is happening because of policy decisions in the past which we continue to follow.

Two negative points are often made to downgrade the contribution of the services sector. First is the notion that services do not bring extra wealth into the economy, while manufacturing does. The truth is the scope for service exports from Ireland is at least as great as that for manufacturing products. We have not fully caught up with the great trend of services becoming more international and more freely traded across borders. It is remarkable that we have not seized that opportunity.

The portable nature of services compared to products means we are not as disadvantaged by our geographical position. Putting more emphasis on services is the best strategy for coping with our much discussed peripheral position. Many services are now entirely driven by telecommunications and geographical location is almost irrelevant.

It is also remarkable that we have not put more emphasis on exporting services. We run a deficit to the rest of the world on services of the order of £800 million per year, if tourism is left out of the equation. I think it should be because it is a special case. Given that we import that many services, other countries obviously have no difficulty exporting them. If we apply the principle of import substitution to the services sector and look for opportunities there, we would create the potential for several thousand extra jobs.

The second negative comment often made is that an economy can only support a limited amount of services and that amount is directly related to how much manufacturing industry is in the economy. I am not opposed to manufacturing in any sense and it is clearly needed. We need to attract more foreign manufacturing firms to stimulate Irish firms. However the notion that we cannot have more services without more manufacturing is quite wrong.

There is slack in our economy which could be taken up by the service industry. One can prove this by looking at the level of services in other countries in comparison with ours, making the necessary adjustments for population, earning capacity, etc. One homely example is that people often complain they cannot find anyone to clean their windows. That market is not being fully exploited. It is limited because not enough people are offering that service, not because people do not want to buy it.

In the past decade in Ireland we have seen service businesses come into existence which were never dreamed of previously. Ten years ago few Irish people had eaten pizza. It is now a big business. We even export pizzas. One offshoot has been a new service of home delivery of pizzas. Similarly there has been a tremendous growth in fast food restaurants because of a lifestyle change which has seen people eat out more than ever before. The economy seems able to support this development, which creates massive numbers of jobs.

Just as new service businesses are springing up all the time, the potential future growth from existing concerns can be as great. Bray, County Wicklow, has one home pizza delivery service. Some may think that about right for a town with a population of 25,000. However a similar sized town in the USA would typically support no less than 19 pizza delivery companies. That gives an idea of the dynamics buried in services and the potential they offer for extra jobs. I am not suggesting anyone goes into the pizza delivery business in Bray because I know the person running the existing operation and she hopes no one enters that market. The point is our mind set does not encourage it.

I harp on about jobs because that is the core issue. Some 300,000 people are unemployed, yet we put almost all of our job creation effort into manufacturing industry. That sector contains only 200,000 jobs now and will be put to the pin of its collar to hold on to those. At the same time the service sector is ignored, although it already employs twice as many people and has the sole potential to make a real dent in our unemployment problem. We need a change of attitude and that is what this debate is about.

I am most concerned about the risk of paying only lip service to this challenge. People say this is being taken on board and services are now part of our strategy. Yet the underlying mind set remains the same. Services are thought of as one more sector instead of being seen as the critical area from where most of our extra jobs will come. Service companies are not thought as valuable as manufacturing companies, although the impact on the Irish economy of service companies is pound for pound much higher. That is because they spend more of their revenue on wages and salaries and source more of their inputs in Ireland.

Most dangerously, services are still thought to be parasitical on manufacturing growth. The idea is that growth in services can only come after growth in manufacturing and the downstream effect will flow automatically even if it is not stimulated or in fact actively discouraged. These attitudes may have been well founded at one time but they are now misconceptions.

These misconceptions seem to inform most of our recent job creation initiatives. How much mention is made of services in the Culliton or Moriarty reports? How much mention of them is there in the Government document Employment and Enterprise or in the National Plan debated here some weeks ago? In all cases the answer is virtually no mention. As long as that is the approach the need for a radical change in our attitudes will remain.

Services are where the jobs and job opportunities now exist and it is where we must concentrate. We must put the main thrust of our efforts and resources there. That is why Senator Henry and I have put down this motion. It is essential it be debated and attention be drawn to it. This House must be used to change the attitudes of the nation.

I welcome the Minister to the House. I should make clear that Senator Quinn and I did not put down this motion because both our day jobs are in the service sector. It was done entirely with the good of the country at heart.

As the Senator has explained, our perception is that the main area of growth here, as in other parts of the western world, will be in the services sector. We feel this idea has been largely neglected. The sector is perceived as offering low-paid, low status, part-time and often temporary jobs of limited value to the economy. This idea probably stems from poor employment practices in the past. Matters have improved enormously in recent years and more progress can be made by putting emphasis on the quality of the service in these jobs.

Many of the jobs are hard to categorise. It should not be a problem that many are part-time. For example, Denmark, a rich member of the EC, has a high number of part-time jobs. In the future it is likely many more jobs will be part-time, perhaps even seasonal, at Christmas or in the summer. We must be more flexible in our outlook.

Because we recognise that some jobs in the service sector are part-time and may be solely contract based, it is important to integrate the tax and social welfare systems. I welcome the card introduced by the Minister of State at the Department of Social Welfare, Deputy Burton. It will be much easier for people to get in and out of employment and back on to social welfare benefits. People are often hesitant to take a job for two weeks because while they will receive their social welfare payments it may take weeks to reacquire the fringe benefits. However, a job for two weeks can lead to one for a longer period, perhaps year round. Anything which makes the system more simple and efficient is urgently needed. That is why I welcome the introduction of the social security card.

We are highly suspicious; if people say they have been working for six weeks, we are inclined to think they have been working for three months. Having a more generous attitude towards people with regard to the tax and social welfare systems would be worthwhile.

I would like to deal with the public service — civil servants, nurses, gardaí, the medical profession, teachers etc. These jobs are created by the State, but since people in the public service use the services of others, the value of their being in employment must not be dismissed as though their money will not go into the private sector. However, it is the private sector on which I wish to concentrate.

It is amazing that the private services sector is there at all, never mind flourishing, because it has been given little encouragement. It is heartening to see that the county enterprise boards are now encouraging service industries. That much maligned organisation, FÁS, can be praised for promoting training courses which help people get into these industries. These schemes are important because if people do not have the necessary training, it is difficult for them to project a good image of the job and to produce good jobs. We have only recently become aware of the value of training. It must also be remembered that when we run training courses we are providing jobs for the teachers.

Many high quality jobs will produce higher quality services and existing services are greatly increased by in-service training schemes. Established industries here are slow to introduce these schemes. I will not refer to the retail sector in the presence of the master, who recently won the John Sainsbury Award for the best supermarket in the British Isles, but retraining in the retail area, which experiences constant changes in practice, is often essential and there are only some stores in this country — which I will not name — where this is carried out.

We are beginning to expect a higher quality of service. Last weekend, many newspapers ran a half-page advertisement on the Register of Electrical Contractors of Ireland — RECI — and the slogan, "You are in safe hands with RECI". This shows that quality of service is important and the acceptance of getting an electric shock is a thing of the past. Now whoever does our electrical work must be well qualified. This is good because it raises the status of service jobs.

We should also look at areas in which we have been successful and see what we can learn from them. Too often we have been afraid to set up services for the fear that they may close others down. For example, when courier businesses began, many said they would shut down An Post. There are many motorcycle couriers all over Dublin — there are eight pages of them in the Golden Pages — and An Post is still operating. The courier services have become a popular business and while I cannot see people staying employed as couriers into old age, the setting up of these services, as Senator Quinn said when he referred to pizza deliveries, made us think more about the opportunities that are out there. Indeed, what about the Golden Pages? It has been so successful that it has now sponsored the Dublin City Marathon for the past two years.

This brings me to the subject of advertising. If we have better quality goods, it is essential that we have better quality advertising to market them not only at home but abroad. Small businesses can find advertising extremely expensive and the promotion of advertising for them would be worthwhile. We are adept at distribution and organising services. For example, Aer Rianta set up duty-free shops in Moscow, St. Petersburg and other cities in the old Soviet Union. We lack the imagination, however, to go into other areas. Distribution is a problem for small firms exporting abroad. Do we make enough effort to help them? A lack in the areas of advertising and distribution can be important reasons for the failure of businesses.

We have done well in other areas abroad. Our music industry has produced successful acts — U2, Mary Black, Chris de Burgh, John O'Connor, etc.— and I was delighted to hear that there will be a concert of Irish performers and musicians in the National Concert Hall within the next few nights. We are the only country in Europe that has held the Eurovision Song Contest three times. This is not only important for the music industry but also for employment in the backup services. Our burgeoning film industry only recently received help.

Another recent export is the public house. Not only has it given employment but it has also enhanced our image abroad. The Irish pub is a good place to go to have a good evening when one is in Munich, Paris or Copenhagen and it has introduced our products to markets abroad. We are also doing well in art and design. Design has improved many of our small towns. Our shops have better designed small fronts and art is bought by those working here and by people visiting Ireland.

We have an international track record in language skills and have good summer language schools. There are some English language schools going on all year round but could they not be promoted to a greater degree? In-service training is necessary if we are to be more successful in selling on the international markets. The need for information is also important. It is difficult to get information here and no one knows more than Senators how important this can be. Public relations is also a vital area.

I know a great deal of money is being spent in the tourism area but so much of it seems to be going into golf courses. I wonder if people are going to arrive at Rosslare and travel all around the country to play golf. We should aim at improving the roads for cycling, and investigate the possibility of providing cookery and walking holidays, etc. Financial services do not consist only of tower blocks; they are made up of accountants working with secretaries.

We should also look more at recycling. The Rehabilitation Institute and travellers organisations have had to show us the way in this regard. A throw-away society is no longer acceptable. Older skills should be utilised. We should concentrate on the sectors in which we have expertise and raise the quality of those domestic skills that are under-emphasised. When I go to work, I see a laundrette in Lesson Street — The Press Gang — doing great business. There are similar laundrettes — the Iron Maid in Blackrock — with evocative names. More emphasis should be given to these basic skills and this in turn could create more jobs.

I move amendment No. 1:

After "potential" to add the following:

"and notes that the Task Force established by the Taoiseach to identify the measures which can best be implemented to develop this potential will be reporting shortly."

I welcome this non-contentious motion put down by Senator Quinn and Senator Henry, and the consensual approach Senator Quinn advocates on jobs in the services sector. It is good to see there is common ground across the House in the employment area because it is the most pressing economic, social and political problem we face.

The sectoral changes to which Senator Quinn referred on the composition of the labour force is borne out here, as it is elsewhere. For example, in the 20 years from 1971 to 1991, the numbers employed in agriculture dropped by nearly 44 per cent. In manufacturing, the figures were approximately the same, but there was a growth of over 41 per cent in the services sector in the same period. We are well in line with other countries in terms of the labour force composition. In fact, it is worth mentioning that over the last two decades, this same shift has occurred in all western economies and some statistics are enlightening in this regard.

There were 59 per cent of people working in the services sector in 1968; in 1991, that figure had jumped to 72 per cent. In the EC, 44 per cent were involved in services; in 1991 that figure increased to 62 per cent. In 1968 42 per cent of jobs in Ireland were in the services sector and that has now increased to 57 per cent. This trend proves that the future for new jobs is in the services sector. The figures in the United States are even more interesting. Over the past 20 years 34 million new services jobs were created of which 30 million were for women. The services industry has provided a major outlet for the increasing number of women seeking jobs in the labour force. Since 1988 there has been a net increase of 33,000 in the number of services jobs in this country, of which 30,000 are for women.

I wish to make a few general points about the job situation and the National Development Plan. The plan provides the greatest investment programme and opportunity in the history of the State and jobs are not created without investment. Over recent years we have had respectable economic growth compared to our European partners. However, it is still not good enough, given the 25,000 new entrants each year into the labour force. Our labour force is growing at almost three times the EC average. This means we must run fast to stand still.

We need a sharper focus. I hope the Programme for Economic and Social Progress negotiations will focus on job intensity and economic growth in the years ahead, because this has been disappointing in the past. We need a more active and innovative labour market intervention régime which is designed — I know this will be close to Senator Quinn's heart — to complement an enterprise culture as opposed to a dependency culture.

Services are vital for the future of the Irish economy, but our services sector is under-developed by international standards. On a positive note, I congratulate the Taoiseach for establishing the task force on services. Like everyone else, I await with interest the outcome of that study. Services will be the engine for future net gains in job creation. A recent study by FÁS and the ESRI for the period 1990-96 shows that services are expected to increase by 58,000 as opposed to a decrease of 29,000 in the agriculture sector.

It is against this background that I must agree with the thrust of what Senator Quinn said. We need to review our policy. I do not want to go overboard in relation to the manufacturing area but manufacturing jobs are important in terms of added value and so on. However, what we need is a better balance across sectors in terms of industrial and Government policy. For many years the main thrust of industrial policy has been predominantly towards the manufacturing and agriculture industries. We need a change in emphasis and balance and I think we will get that. In terms of the Taoiseach's task force I would like to think measures will emerge giving a better balance in relation to policy.

We are in the dark when it comes to the services sector because there is a shortage of data for a number of reasons. We need a national study which will give us the hard facts about the services sector. It is difficult to get hard data not least because there is such a variety of service industries that are difficult to classify. In addition, it is fair to say that a range of services provided in the services area are in the grey or black economy — and this may include the window cleaning to which Senator Quinn referred.

It is desirable to move from the grey or black economy into the white economy and I do not say this in a negative sense. The agenda for the development of the services sector should be like the manufacturing one, in other words, there should be a reward for enterprise, endeavour and risk taking. In this context, it is vital for start-up service industries, particularly the smaller types, to enjoy the same incentives as the manufacturing sector. In other words, a service which is sold should attract the same incentives as a product which is sold by a manufacturing industry.

I want to refer to some of the barriers which exist. The Minister of State, Deputy Brennan, is aware of these barriers, administrative and otherwise, and he has set up a task force to deal with them. Nonetheless, it is worth repeating that they are in the control of the administrative and political machine.

I want to refer to seed capital or venture capital. Last year, when I had the honour to Chair the Oireachtas Joint Committee on Employment, the first difficulty we identified for small enterprises and entrepreneurs was a shortage of venture capital, particularly for women entrepreneurs. It is important that a person starting a business should have to fill in as few forms as possible and these forms must be straightforward. Furthermore, there is the ongoing difficulty of having a sufficient capital base or support to get over the first few critical years and to make progress thereafter. Perhaps the Minister would consider financial support for entrepreneurs, including those in the services sector.

I agree with Senator Quinn that there must be support for policy initiatives in the services area, but not at the expense of manufacturing. However, priority must be given to services because there is potential for future jobs in this area. We must also support policy initiatives which are labour-intensive. I agree with the point already made that there is a lot of scope for greater activity in the services sector, especially in international trade services.

One must acknowledge that accountability is necessary in the operation of public service machinery. There is no doubt that the burden of bureaucracy is weighing down those who are trying to do business. Red tape is the traditional enemy of enterprise. In this context, it is worth noting that a recent study by the chambers of commerce identified 39 pieces of off-putting legislation which had to be complied with. In addition, each piece of legislation is subdivided into extra regulations. It is a network of rules and regulations. There are now 85 further regulations associated with the Factories Act, 1955, which must be complied with.

Accountability is necessary and one needs a set of rules and regulations to adhere to. However, the present system is crazy. It is excessive and forms a disincentive. It was against this background that the Minister of State, Deputy Brennan, set-up his small business task force which includes business people who are aware of the practical problems. I would like to hear how this task force is progressing and I hope it will report its findings in the near future. What appeals to me, and frustrates me, is the fact that our administrative systems are within our control. It is one thing to talk about the vagaries of international trade, recession and so on, but we have structures and systems within our control which are preventing job creation and frustrating entrepreneurs. It is in that context that I appeal for immediate action on our administrative systems to facilitate job creation which is the most urgent problem facing us.

In common with Senator Hillery I welcome the motion before the House. Senator Quinn kindly remarked that my party recently produced a White Paper on jobs through services. The creation of a jobs economy is Fine Gael's top priority. The policy paper "Towards a Jobs Economy" set out the broad quality approach to achieve this. If we are to tackle the job crisis we must adopt a radically different strategy at every level. We need to encourage enterprise, open up opportunity, strip away unnecessary regulation, build on our strength and competitive advantage, reward excellence, and experiment and tolerate the occasional failures that will occur.

At the outset it must be said that fine tuning existing economic policies will offer no hope of producing major advances on the jobs front. Irish unemployment is simply too large and the prospective entrants to the labour force are too numerous. During the last 20 years the services sector alone has achieved substantial growth in employment. In the period 1981 to 1992 there was a decline in industrial employment of 21,000 but the services sector achieved growth of 76,000.

As Senator Quinn said, despite this our employment strategy has relied almost exclusively on the industrial sector. Total support for the industrial sector runs at more than £600 million per year. In contrast the total public expenditure on support for the services sector, including tourism, comes to less than £50 million per year. The services sector in Ireland is still not achieving its potential. Employment growth in Irish services has been slower than in any other European country. It must be stated that the sector itself remains small compared to other European countries.

Services are far more labour intensive than manufacturing. The proportion of output devoted to wages and salaries is 35 per cent in the services industry and twice that in the manufacturing sector. The services sector alone sources a significantly higher proportion of its purchases of materials and services in Ireland than the manufacturing sector. In that sector, despite the IDA's best efforts, the job losses continue to outstrip employment creation by a big margin. The £13 million investment in AST research, an American owned company, will provide 350 jobs within six months and 600 jobs over a three year period. However, it would require 40 similar type manufacturing plants, providing 24,000 jobs every year, to make any lasting impact on the deteriorating unemployment problem.

The best estimate is that the IDA will barely match its 1992 performance when it secured 12,000 new jobs. That has not been helped by the decisions of Telecom Éireann and Irish Steel in recently revealed plans to reduce their workforces by 2,500. Other job casualties include 1,280 in Aer Lingus, 250 in Amdahl in Swords and yesterday's sad announcement that Neodata propose to relocate 450 jobs in the US. My colleague, Senator Neville, will comment on the effects that will have in County Limerick and County Kerry.

In the last three years, the IDA has created 38,000 jobs but there were over 48,000 redundancies, not counting those leaving agriculture. In contrast the services sector does not experience the same pattern of rapid change and redundancy. As I said earlier, structural changes are needed in key areas and thorough structural reform of the tax system is now urgently required. Taxes on work are too high while taxes on leisure are too low.

My party believes that the first priority is to make tax changes that ensure adequate reward for enterprise in the services area and to remove tax distortions that hamper development of those services. We have proposed that the corporation tax rate for services should be gradually reduced from the present 40 per cent to 27 per cent, the standard rate of income tax. We have also proposed that a personal tax allowance will be introduced on a phased basis for labour intensive home delivered services, such as child care, home nursing and home help. VAT rates should also be realigned in order to reduce VAT payable on labour intensive services. In order to relieve the compliance costs for many small and start-up businesses, the threshold exemption for registration for VAT should be raised by £10,000 to £25,000 and £42,000 in two respective categories.

We also propose, in line with the Culliton report, that business development services provided by the State will be made equally available to the services sector as to the manufacturing sector. The services sector should have equal access to assistance to assess the feasibility of projects, to support their marketing efforts, to improve design and innovation, to get the assistance of a business mentor and to technical advice and assistance. Small businesses should also be assisted with meeting the requirements of new legislation on the tax and welfare system to make it easier for them to understand these changes.

Tourism has a major role to play in job creation and could be important in reducing unemployment in our capital city. I am glad the Minister of State, Deputy S. Brennan, is here and I hope he will bear my remarks in mind. Between 1987 and 1992 employment increased in Dublin by 16,000 while unemployment increased by 54,000. There are now 345,000 people at work in Dublin and 95,000 people out of work. In certain areas of the city the unemployment rate is running at 70 per cent. It would require 10,000 new jobs a year until the end of the century to meet Dublin's requirements and the main source of growth can be through tourism and the services industry.

Tourism must be vigorously promoted and we must make use of Dublin's all year round attractions. Above all, we need a national convention centre that would hold 2,000 people. I spoke about this when we were debating the National Development Plan and I hope the Minister will give this requirement his special attention and pass on my remarks to the Government. It would have a galvanising effect on tourism development.

Birmingham has made such an investment. In common with other cities which fought their way back to economic growth through tourism, it is now finding that the convention centre is its core investment. It spawned 22 hotels and airport and retail development totalling £2.5 million new investment. Tourism related jobs in Birmingham have increased from 10,000 in 1975 to 100,000 last year. The conference centre itself has led to the creation of 15,000 additional new jobs. If Dublin was given this facility it would go a long way to help reduce unemployment there.

Given the necessary changes to our tax system and with support for the services industry, this sector can provide jobs for the future. For that reason I am pleased to support the motion before the House.

I also welcome the motion. This has been a very useful debate so far and I will support the motion and the amendment. Tonight of all nights one sector of the services industry will be extremely busy, and that is the pub industry. It is an appropriate night for us to debate the services sector.

As Senator Henry said, it is more difficult to categorise this sector than the agriculture or industrial sectors. Therefore, it was timely that a task force was set up recently to investigate the entire area. One of the reasons we have not concentrated on this sector is that it is so diverse. Sometimes it grows in spite of Government policy rather than because of it. Many aspects of this sector are market-led rather than controlled or organised in a particular way. That is a good reason we should debate the services sector and investigate how we can encourage further growth and jobs in that area.

Members on all sides of the House referred to statistics which show this has been a growth area over the past number of years. Senator Hillery referred to predictions from FÁS and the ESRI which suggest this sector will develop in the future. As Senator Quinn said, we must face the fact that the area of job creation is changing dramatically. Technology and agricultural methods have developed to such an extent that we can produce what we need in terms of agricultural products and manufactured goods with fewer people than we needed in the past. That is the problem in these sectors. We no longer need the same number of people to produce food and manufactured goods. Consequently those sectors are finding it difficult to maintain employment. This is especially obvious in the agricultural sector.

We are now focusing on an area where there is potential for growth, the services sector. In the past 30 years the total number at work has grown by only 60,000, yet the population has increased by almost one million. Over that period approximately 0.25 million people have emigrated and unemployment has increased fivefold. We must look at the potential for future growth in the services industry.

OECD figures suggest that while there has been growth in the services sector as opposed to other sectors, it has not been high in percentage terms in comparison with other OECD countries. According to my figures, the sector grew by 1.7 per cent annually between 1973 and 1990. We are fourteenth on a list of sixteen countries in this regard. Growth has been steady but slow in areas like distribution and finance. Although there has been growth in transport and communications, it has been in output and activity rather than jobs because it depended on the semi-State sector. Economic factors and a lack of money meant that jobs were not created in that particular area. As Senator Hillery said, many jobs in the services sector are on the edge of the white economy. Other jobs are in the black economy, particularly in the area of domestic services like window cleaning, house painting, child care and other services to householders.

Senator Quinn referred to pizzas and the food industry. There is room for growth in that area, but I am not sure what Government intervention can do in this regard as this relates to culture. Americans eat a lot of pizza, we are now eating more than we used to. The average French family eats out once a week while the average Irish does not. I do know how Government policy can influence cultural aspects like this. On the other hand, we go to public houses more frequently than other nationalities.

I agree with Senators' comments in relation to exports and tourism, which brings people to this country to spend money. We must study this area and provide funding and direct backing in the area of marketing. The marketing of goods and services has been referred to in this House on a number of occasions. We need to sell our goods and services. This Government has a strong policy on developing markets, networks and contacts in other countries. Given our small population, hopes for expansion must be in the area of exports because the home market is so small. Our only hope for growth is to sell to other countries by developing marketing and trading links.

Senator Doyle referred to Neodata and I accept his concerns in that regard. Jobs will not be lost before March 1994. There is still time for the company, which employs 5,000 people world-wide, to seek alternative employment for these people in the areas they deal in. The Department of Enterprise and Employment indicated the need to intervene and help the company to find alternatives as soon as possible if the current work is to be relocated to Boulder, Colorado.

We must concentrate on companies based and run by people in this country rather than be dependent as we have been in the past on companies run by people from outside. I agree with Senator Henry's comments that the county enterprise partnership boards should play a positive role in this area as they are closer to the coal face and the community. In the past people who came to me with job ideas believed there was no niche for them because they were providing a service rather than manufacturing a product. These people have now received a welcome from the county enterprise partnership boards and officers. I believe the boards have a role to play in the development of the services sector and I hope they are in a position to do so.

Senator Hillery gave statistics which highlighted the strong role of women in the services sector. The county enterprise partnership boards should provide an important link in this regard. A section encouraging women to set up enterprises has be established under the NOW programme in the Plassey centre in Limerick. I presume it is available to people throughout the country.

I support the motion and the task force which has been set up. I hope we return to this subject in the future. While a lot of research has been done and action has been taken in regard to the agriculture and manufacturing sectors, this sector is the Cinderella of policy making.

I want to make a brief contribution and will not be taking the time allocated. The services industry accounts for a very high percentage of employment in Ireland and consequently there is an urgent need to develop the sector to its full potential. That is what is being sought in this motion. Up to now, in any discussion on the question of industrial development involving the IDA, the question of grant aiding the services sector was ruled out immediately. It would not be entertained. I understand that the enterprise boards will now grant aid the services industry and, consequently, the position must be clarified as soon as possible.

The decline in the number of jobs in the manufacturing industry gives this issue an air of urgency. One was always complementary to the other but the main emphasis was on manufacturing and on some jobs in the services sector. At home and abroad, maintenance and catering were defined as manufacturing jobs but now that they are being contracted out, they are defined as service jobs.

The task force referred to in the Government amendment should address this matter. It should also do something to convince the Irish people that a 5 per cent swing towards purchasing our own manufactured goods would make a significant difference to the economy and the creation of jobs. If the £13 billion import bill could be reduced by a quarter, it would impact on the 300,000 who are unemployed. Clothing, accessories, textiles, fruit and vegetables, animal feeding stuffs and cereal preparations account for a high percentage of our imports. Recent figures indicate that over £54 million is being spent on imported biscuits and £23 million on imported toilet paper. Beer and alcohol imports amount to £45 million and £39 million is spent on imported lemonade. With 300,000 people unemployed, is it not outrageous to spend that kind of money on imports? That is why it is urgent to tackle this whole question. We must have a policy to cater for the services industry and the task force must identify sectors that can be targeted to give results as soon as possible.

The entire taxation structure must be looked at, as well as the VAT increase on clothing in the last budget. There is widespread evidence of job losses as a result of that increase because, with VAT at 21 per cent, it is cheaper to import. A personal tax rate of over 40 per cent and PRSI imposes a great handicap on the services sector. If the development of that sector, for the purpose of job creation, means investing and spending Structural Funds then it would be money well spent. I support the motion.

I support the motion and the addendum to it. I compliment the Independent Senators who moved this motion. It is relevant to highlight the potential of the services sector. For a long time I have felt that the potential of manufacturing industry, as opposed to other sectors in the economy, has been given far greater emphasis than it deserves. It is quite clear that there are several sectors within the services area which could produce significant economic growth and increased employment if those sectors received the kind of support and encouragement they deserve. I would like to mention a couple of areas where I feel such potential exists and where cognisance of this motion would be of great assistance.

First, there is the tourism and leisure area. If any major investment, foreign or Irish, is proposed, we do not have any agency to examine it. For instance, a few years ago Centre Parks, the largest leisure agency in Europe, proposed to invest £50 million in a tropical water facility in this country. We lost the facility for the simple reason that the IDA could not consider it because it was not a manufacturing industry. We did not have any agency with the ability to put a package together which would have brought Centre Parks here and created 200 jobs. We did not consider that those 200 jobs were worthwhile. The IDA still does not have the ability to put forward a package for a service company like Centre Parks that would be prepared to invest in this country. A significant amount of international, mobile investment is going to other countries and passing us by because we do not have a mechanism to put a package on the table for such companies. That is ridiculous.

Second, not too long ago a proposal was put to the IDA and the Government by a medical facility in the United States to set up a major hospital here for the treatment of patients from the US. I am satisfied the reason we did not get it was that we were not able to put a package together and did not think the jobs which would be created in that facility would be worthwhile. That new hospital is being built in Scotland with an investment of £150 million and 1,500 jobs. We let that project pass us by.

Third, another area where the service sector has much to offer is the field of communications, particularly tele and data communications. The IDA is certainly very much to the forefront in doing significant work in this area. The Government, however, is not providing sufficient support. Sufficient importance is not being attached to the need to set up, for instance, an international tele-centre. Such a centre could attract companies to establish their marketing headquarters here. They could avail of worldwide tele, data and network communications at a more competitive cost than in other European countries. Dell in Bray is an example of a company creating prestigious jobs. We must have the structures and facilities as well as being able to provide those companies with telecommunication links at the right price, if they are to locate here. Those are just three areas where we are not serious about wishing to develop the services sector.

I have no doubt our economic future lies in our ability to make Ireland the most prestigious destination in Europe for foreign visitors, yet we treat tourism as our Cinderella industry. In recent years we have made considerable strides in the development of Ireland as a major visitor centre. However, we would search the world for a company to develop a manufacturing plant which would provide 100 jobs, whereas if the expected establishment of a hotel or other service enterprise did not materialise, we would not consider it a significant loss.

The greatest example of how our Government ignores the potential of tourism is our treatment of car rental. Our car rental costs are the most expensive in Europe. We insist on charging the same high levels of import duties and taxation on cars for hire as we do on other cars. We insist on ensuring every foreign tourist is screwed — I use that word advisedly — when hiring a car. The Minister and Department of Finance should apply the law of diminishing returns and reduce the cost of car hire. This would make Ireland far more attractive as a tourist destination. I ask the Minister for Finance, through the Minister of State at the Department of Enterprise and Employment, to look seriously at aspects of our taxation policy which make it impossible to develop the services sector.

About two years ago a German travel operator asked the Department of Finance if he could pay reduced excise duties on camper vans he was bringing to this country. He started operating four years ago with around 50 vans. He increased this to 100. He wished to increase this further to 200 to attract Germans to Ireland from April to October. He paid £8,000 in excise duties when he brought in the additional camper vans. He was prepared to take them out of the country in October or to agree with the Department of Finance to pay £3,000 rather than £8,000 in excise duties. The Department's response was that he was to pay the larger amount even if he was to remove the vans from Ireland at the end of the summer. As a result of the Government's response to his efforts to attract tourists, his company, Ireland Tours Individual, did not go ahead with this plan to develop the camper van industry. The company still attracts several thousand tourists to Ireland each year. The Department's attitude is typical of that which exists towards the services sector.

I compliment Senator Quinn on this motion. I hope the Minister takes on board what he has heard during this debate and that it will be the commencement of a debate on the potential for job creation and economic growth throughout the services sector. This is the way to create the jobs we so desperately need.

I wish to share my time with Senator Honan.

Is that agreed? Agreed.

I warmly welcome the motion but warn against polarising manufacturing and services as if they were mutually exclusive. There is a great deal of overlap and blurring between them. It is not a question of one or the other. I appreciate the relative importance of manufacturing as an employer is declining throughout the industrial world. However, the proportion of our labour force in manufacturing is still extremely low by the standard of the industrial world. We have nowhere come close to the peaks from which others are declining. We need not follow precisely the same chronology of decline of other more industrialised countries.

Part of our problem in manufacturing is we have not identified the fundamental issue which dogs our efforts to sustain economic growth in that area, which is we put a great deal of emphasis on starting new firms and also on attracting multinationals. Our biggest problem has not been starting firms or the lack of the so called enterprise culture. International statistics are cited which suggest we do relatively poorly in that area but, on looking at them more closely, they seem to me to be based on false analogies. Our real problem is developing small firms into medium-sized ones and medium-sized firms into bigger ones. This is the biggest single challenge confronting us in terms of sustained job creation. In the manufacturing sector more emphasis should be placed on coping with that challenge. It is an extremely difficult one. I do not want to underrate its importance but we have not focused sufficiently on it. It is not necessarily a question of capital, grants, subsidies and so on. Having said that, and keeping in mind the potential that still remains in the manufacturing sector for more focused and sustained growth, I welcome the emphasis on the services sector. The most important contribution Senator Quinn's and Senator Henry's motion can make is to change our mindset about the potential of that sector.

It is very striking, when one looks at the Culliton report, that although international services are part of its terms of reference and it contains interesting comments on the services sector, its main thrust concerns the manufacturing sector. In particular, there is an emphasis on engineering, engineering education and engineers as virtually the sole source of wealth creation. I am a great admirer of the contribution of engineering education and recognise fully the importance attached to engineers in our economic development but it is very striking that the Culliton report largely dismisses the marketing and languages functions and business management education. These are held to be peripheral and marginal because the main thrust deals with the engineer, technology and manufacturing. Important though these are, it is the wrong strategic concept to bring to the future of Irish economic development.

This has implications for educating for the services sector. The Green Paper on education has a useful chapter, although I have criticisms of it, on enterprise and enterprise culture. It takes on board a large part of the Culliton rationale that the main thrust of job creation will be in the manufacturing sector. The type of education it seems to envisage is education for technicians, in many respects low level ones. There is a role for such education but if we are to further the development of the services sector as we ought, we must take on board the implications of that objective for our education system at all levels.

While the services sector, of course, employs high technology and is being revolutionised by technology in a number of areas, nevertheless it seems to depend to a greater extent than the manufacturing sector on human and personal qualities. Therefore, the type of graduate of the educational system — whether at second or third level — which one is disproportionately looking for is the type of person who is capable of coping with rapidly changing circumstances and effective personal presentation and has a good general education. It is on that basis that success in the service sector, in general, is based.

I deplore the type of mentality which tries to polarise specialist technical education versus general education. It is unnecessary to have that polarisation, but a good general education is a prerequisite for sustained growth of the service sector. I hope those who are thinking about education — and I know that Senator Quinn, wearing another hat, is deeply concerned about educational change at the higher levels of second level — will keep that in mind. When one talks about the relationship between education and economic development — and I believe there has to be such a relationship, education has to be for personal and also national development — one should have in mind a concept of where the economy is going.

I would like to thank Senator Lee for sharing his time with me. I welcome and support this motion. As a country, we are losing our attractiveness as a manufacturing base because we face stiff competition from eastern Europe and also South America. We have to look to the service industry to provide the jobs for which we heretofore looked to the manufacturing industry. We had a bias over the years towards manufacturing. Obviously, such a bias no longer makes any sense.

As a member of a county enterprise board, I welcome the fact that we are enabled to provide assistance to both manufacturing and service industries. Any enterprise which will create jobs in the county can be supported by the county enterprise board. This is a welcome development because the brief of the IDA to aid only manufacturing industry has hampered the development of the services sector over the years.

As a woman, I welcome the growth of the services sector because in countries such as the United States, where this has occurred it has been shown to be an area which is particularly attractive to women. If women can be involved from the beginning as an area begins to grow, they can then get to the top and prosper. Ireland has a low rate of participation by women in the workforce, although this is improving. The type of women who are now participating in the workforce may have resigned to rear their families and may have now decided that they have the experience and the desire to get involved in the workforce. The services sector provides an ideal opportunity for them. Therefore, I welcome the growth in this sector.

The National Plan listed the potential of the international services sector as a growth area for jobs. Employment in that sector now stands at over 11,000. This has shown an increase of over 50 per cent in the past five years. I welcome the commitment in the National Plan to the promotion of the international services sector.

The Government must have a commitment to the manufacturing, service and other sectors. All Government policies must be pro job creation. Under the National Plan the Government intends to spend £20 billion over the next four to five years which will create 200,000 jobs, but the loss of up to 130,000 is a great tragedy. Much of our effort must be concentrated on maintaining existing jobs. The difficulties and costs of creating new jobs are so great that all Government policies must be addressed to maintaining existing employment. I ask the Minister of State to remind his Cabinet colleagues that our policies in relation to taxation and the integration of social welfare and the taxation system are vital in encouraging people to create jobs, to think as employers rather than employees expecting the State to provide jobs for them. We can no longer look forward to that.

I also welcome the motion on the development of the service sector. That sector needs support. Senator Quinn stated that there is a significant shift away from manufacturing to services and that there is an increase in jobs in this area. Senator Fahey gave examples of enterprises which were lost because we did not have a proper Government agency to look after the services sector. This is a pity and the Government should place more emphasis on it. We in the Oireachtas could all consider that our jobs are in the service sector, in that we provide a service for constituents in our representations to Government and so on. Every profession — medicine, business and so on — could be considered to provide services.

I would like to see service companies protected, not exploited. I was told recently that when companies which supply supermarket chains, such as L&N, Superquinn, Quinnsworth and Dunnes Stores are renewing their contract, they are told that if they sold a certain amount of products to these supermarkets the previous year, a condition of the renewal of their contract is that they pay back a percentage of what they were paid last year. This is disturbing and I know of cases where it caused job losses. I was told that this is a condition of renewing contracts. I hope that this practice is not widespread and is confined to one supermarket.

Supermarkets give a great service for which we are thankful and while we often speak in terms of CAP reform, GATT reform and protecting food suppliers, we must also think of the consumer. I would like to see the consumer protected, especially in the services area. This sector covers a wide area and services will be needed even more in the future. I welcome this motion to ensure that companies in the services sector are better looked after.

I would like to mention job losses. We had good news in Limerick recently with the announcement of the creation of 600 extra jobs but we had news yesterday about Neodata which was not too good. It was mentioned by Senator Doyle and Senator O'Sullivan and I am sure it will be mentioned again.

I live ten miles from Newcastlewest and 14 miles from Kilmallock. Both areas will experience job losses. It is a pity to see people I know worried about their employment prospects following yesterday's announcement of the transfer of these jobs to the United States. Maybe with the co-operation of the Minister and Government agencies, other employment will be provided or the company may be persuaded to change its mind and remain in Ireland. I welcome the motion.

May I share my time with Senators Cregan and Burke and give them three minutes each?

An Leas-Chathaoirleach

Is that agreed? Agreed.

I welcome the motion. The services sector is very important for employment and is, as many speakers have said, under utilised. Like Senator Kiely, we are concerned that 400 jobs in the services sector are being terminated next March in the mid west region in Listowel, Newcastlewest, Kilmallock and in Limerick. This is of extreme concern to the area and I urge the Government that this company be replaced as quickly as possible with a similar industry.

The people involved in this industry have specific skills such as secretarial and typing skills which are readily available. There is an abundance of them throughout the country and many people find it difficult to obtain employment. It is devastating for these families. I know several of them, as does Senator Kiely. Most of the workers are women whose husbands are unemployed.

The company was considered very stable and had been there for a long time. It has provided excellent jobs and many people have made financial commitments on the basis of long-term employment with Neodata. I urge the Government to ensure a similar replacement industry. The announcement followed on that of redundancies in Alcan in west Limerick and also in De Beers. Many Limerick people are employed in De Beers.

The pessimism in the Limerick area is tangible at the moment and we hope this is the last of the losses, although we fear that it is not. We should not be surprised at this development following the change in Shannon's status. It was predicted by the Envision report compiled by Envision Marketing Consultants and University College Galway. When talking about the impact of a change in Shannon's status on industries other than manufacturing industries they said:

A survey of the largest employers in Galway/Shannon/Limerick region indicated that a reduction in the frequency of US flights at Shannon would result in inefficiencies and increased costs for these companies.

Data processing companies surveyed in the region (Cork, Kerry, Limerick, Clare and Galway) display a very high dependency on a daily flight service to the US. Seven such companies — employing 850 people — indicated that a change in the present US air service at Shannon would lead to inefficiencies, increased costs and a need to review their siting in Ireland. The potential to attract other such companies would be greatly diminished by a change in Shannon's status.

It was predicted by the Envision report that the change would have this effect. We should not be pessimistic but what else does the future hold as a result of this?

I urge the Government, if it can, to head off such closures. The impact is very serious for the people in the area. When one talks about the loss of 400 jobs in Neodata, one is talking about 200 more in firms which supply services to that company. It is accepted throughout industry that for every job in such a company, 0.6 of a job is created in the economy servicing it.

If we are to tackle the job crisis we must adopt radically different strategies towards employment. We must ensure that the services sector which has great employment potential is encouraged. We must ensure that this sector is viable in comparison to our international competitors.

Fine Gael has produced a White Paper on jobs in the service area which highlights the deficiencies and lack of efficiency in comparison to our neighbours in the area of taxation and so on. I would like to highlight some of the proposals which this party has proposed to improve the situation.

Fine Gael has proposed that the tax distortions that hamper the development of the services should be removed and adequate rewards to encourage enterprise be ensured. It wants to strengthen the capabilities of Irish service businesses, promote trading opportunity for existing service businesses and identify potential new areas of service where Ireland could develop a skill base. Fine Gael seeks the removal of the restrictive practices which limit entry to certain service areas and keep costs excessive.

The high compliance costs for small businesses in dealing with the growing number of State regulations should be reduced and a package of measures should be developed that could attract mobile international service operations to locate in Ireland. I will leave the remainder of my time to my colleagues.

I thank Senator Neville. I wish to continue the point he was making about the services sector. We have to ask where we are going in this area. The Minister is very conscious of what can be created in the small business sector. He has been speaking about it in the last few months and I have read it with interest. Whether or not it is enough is questionable.

There is a tendency in this country to eliminate rather than create employment. Jobs are being lost every day and we have not provided the answers. I have always believed that we must create an atmosphere of motivation and incentive to create.

Enterprising people with ideas who wish to make progress are unsure of the direction in which they should go. They are worried because of a general impression that the State asks too much of them from a legal and taxation point of view when they wish to employ somebody. This is why I say that we tend to eliminate rather than create jobs. It is very serious.

One example is what is happening in the west of Ireland. As a Cork man I am particularly aware of the situation in the Limerick and Shannon regions. If one drives from Gort to Ennis and from there to Limerick one sees that the area depends totally on the Shannon region. This is evident to anybody who takes an interest in the region. It is obvious that what happened in Limerick over the last few days is relevant to Shannon because of the transport structure.

I would go further and mention places of which I am particularly proud. The services sector in the Killarney region does very well but we are now downgrading an airport 50 miles from there and saying another airport should be built in the area. Are our priorities right?

It is obvious that Cork airport will suffer if there is an airport in the Kerry region and if the certain other airports in the region are downgraded. This will result in jobs being lost in areas which have opportunities other regions do not have. I say that with good will for Kerry because it is an area that attracts many people. However I wonder about the priorities of Governments. That issue must be looked at and we should get our priorities right.

I thank Senator Neville for sharing his time and I welcome the motion. There are some areas on which the Minister should concentrate. Senator Henry mentioned the music and fashion industries which may be more relevant to the manufacturing and export sectors. The Minister should look at those industries because at present we are discriminating against our fashion industry. When a shopkeeper buys from the manufacturer he must pay VAT on the spot whereas VAT at the point of entry has been eliminated. The Minister should look at that and give our manufacturers in the fashion industry a break, especially this year when John Rocha won the prestigious British Designer of the Year award.

I am involved in the services sector and I know there is a great burden placed on the small business person. Somebody once said that people from 14 different agencies call to a small business person, regardless of the sector in which he is involved. They include the rate collector, people concerned with refuse and water, food hygiene inspectors from the Department of Health, people from IRMO regarding music rights, the factory safety officer, VAT inspector, income tax inspector, PRSI inspector, insurance officer, fire officer, accountants and union representatives. This puts a great burden on the small business person. The Minister should look at that problem.

I thank the Senators for an interesting and useful debate. In particular I thank Senator Quinn and Senator Henry for initiating it. I wish to comment on some of the points made but first I will make some general points. I will not detain the House as I know the Members have heavy international commitments within the hour.

National service.

I estimate that there are over 100,000 small firms in Ireland employing fewer than ten people — the vast majority of whom are in the service industry. No other figure is necessary to demonstrate that we ignore the services sector at our peril.

There are many reasons for this increasing trend and it is important for policy makers to be aware of these underlying changes before we commit ourselves to policy changes. Some of the change in Ireland can be attributed to the decline in agricultural employment. In 1961 agricultural employment accounted for about 37 per cent of total employment; this had reduced to 13 per cent by 1992.

The trend in manufacturing must also be considered. Whereas manufacturing jobs as a percentage of total jobs grew from 24 per cent to 28 per cent from 1961 to 1992, these figures mask some significant developments during that time. We performed very strongly in terms of output during this period which traditional theory would say should have been translated into thousands of extra jobs. However, that has not been the case. We also considerably improved our technological capability and our productivity levels so that the jobs did not necessarily flow from increased output.

An equally important fact is that many of the traditional jobs that we counted as manufacturing in the 1960s and 1970s are now "outsourced" to the developing services sector. As manufacturing companies concentrate more and more on their core activities, many functions, such as cleaning and maintenance, security, payroll and other traditional in-house service activities, have been contracted out to the services sector. There is a reclassification of jobs between services and manufacturing so it is not fair to take the figures on face value.

In addition, we have many demographic and social changes within society, particularly in the developed economies, which are driving the development of the services sector. The increasingly ageing population in the western economies is driving demand for additional health care facilities and has seen a boom in private nursing homes. The increased spending power of consumers is considerably driving demand in the tourism sector, for example, for second holidays and for additional leisure activities and facilities. The trend for both partners to work outside the home is driving demand for more retail and home related services. In this area we have seen only the tip of the iceberg in the increased emphasis on convenience foods and other products. We have not yet even started to see the vastly under-developed potential for the software and telecom industry as the increased use of and access to data bases become the norm leading to more spinoff jobs.

The growth in services and the changing pattern of work is vividly demonstrated in the retail sector, a sector in which Senator Quinn is expert. Employment in the retail sector has grown by almost 5,000 in the four years from 1988 to 1991. There are two striking features in the statistics for 1988: employment is mainly female and about half of the jobs are full time. These reflect the trend towards two income families but they also indicate a change in work patterns and habits. The work patterns give rise to new services particularly in the retail area.

It is important to admit that the services sector has not been subject to the same analysis as the manufacturing or agricultural sectors. It is time we changed that. Whereas in manufacturing we have had a multitude of reports in the past two decades, including Telesis, NESC, Culliton and Moriarity, we have had no in depth analysis of the services sector. We must do more in that area.

The Taoiseach moved to fill this vacuum by setting up a task force on services last year. I understand that its report will shortly be completed and I hope it will form a useful foundation as to how we should exploit this job creating sector. The small business task force which I chair has also looked at this sector. The task force comprises 14 owner managers who are at the coalface of small business and who do not dodge the issues. I found the task force to be very useful. We should be in a position to report progress in that area within a few weeks. We believe that many of the problems associated with starting up or expanding a business, whether manufacturing or service, are common and we are addressing these problems.

The United States has always, from a policy viewpoint, worked from the notion that "a job is a job" whether it is in manufacturing or services. Their support for small business does not distinguish between various sectors. In fact, they do not support the business as such but regard themselves as supporting the entrepreneur. During my recent visit to the US on behalf of small business, I was impressed by this philosophy and their candour in admitting that the State cannot pick winners or what type of industry will succeed. They have decided — and I believe they are correct particularly in the small business sector — to support the entrepreneur rather than the sector in which the entrepreneur is involved.

The task force has been looking at four areas: regulations, finance, advice and markets. It has looked at the problem of filling forms, to which Senator Hillery referred, and will recommend a long list of forms for abolition in its report. It will also recommend a significant step forward in the use of computerised data to minimise paperwork and it will make specific proposals in the area of removing regulatory burdens. We are looking at the question of thresholds, to see whether below a certain number of employees or below a certain turnover or asset, we can eliminate a whole raft of State regulations and European regulations for small firms.

The key issue the task force identified was the question of access to low cost money. They are very clear about that. They are not saying they want venture capital, although that is important, they are not saying they want grants, what small businesses particularly in the services sector are saying to me and this task force is that they want low cost finance, fixed for a period. They tell me that if they know they can have £50,000 at 7 or 8 per cent for a definite three, four or five year period, they can get on with their work. I was surprised by that finding. I went into the task force thinking that these people wanted venture capital and grants. These owner-managers of small companies told me they do not really want either. They want access to low cost finance. We will have to take that on board. The Bank of Ireland — I thank them for this — responded to my request and that of the task force and introduced a £25 million scheme to make funds available for small companies in amounts of £20,000 to £100,000, and they will give considerable emphasis to small service companies. That will help considerably.

There are other matters which I will not go into at this stage because I know the proposers of the motion have to speak again. We are looking at the areas of public procurement and how to make sure that Irish service companies can get a bigger slice of State contracts and Brussels contracts. We are looking more at the question of linkage between large and small firms.

I was very taken by the statistic in Senator Quinn's introduction that we spend more than £800 million per year importing services from other countries and will look into it very carefully. The question of portability and of import substitution of services has not really been driven home. When Senator Quinn produced that figure it showed that the argument about the usefulness of services and how services live off manufacturing is not accurate. If we import £800 million worth of services, then we can provide those services here which prevents us having to import them. If those other countries can export them, we can do so also. It is time to put paid to that particular argument.

I thank Senator Lee for his comments about the need not to polarise, and I agree with him about the role of education, particularly to underpin the service industry. I have also found that start-ups are not as much of a problem as the need to develop existing firms.

I thank Senator Fahey for his point about there not being an agency to attract inward tourism investment. I attempted to address that problem when I was Minister of State at the Department of Tourism and Trade but I will now take it up with the IDA in particular. The Senator is right; there is a gap in the attraction market there and I will talk to the IDA about it.

I thank Senator Hillery also for the request he made to produce more hard data. Senator Doyle's call for a convention centre is taken up in the National Plan, and that is the intention. Intentions have to be made into reality and that is where the operational programmes come in. He should keep a close eye on them when they are published. I share the Senator's concern about the unemployment in Dublin. The Government has set up various programmes to address this.

My thanks to Senator O'Sullivan; the county enterprise boards will have to play a key role. What is exciting about those enterprise boards is that up to now the managers of small service company went to see the TD, Senator or councillor when they needed help. We did not know where to send people, so we sent them to the IDA, who did not want to talk to them. There is now a home for them. They can now talk to the county enterprise boards who have funds, expertise and a brief to help small service companies. I look forward to real progress in this area.

I do not want to detain Members any longer because of our international commitments. Thank you very much.

An Leas-Chathaoirleach

I call Senator Quinn to conclude.

I ask that Senator Henry take my place.

An Leas-Chathaoirleach

Is that agreed? Agreed.

In view of the fact that the national mind is set on Windsor Park, I will be brief.

We put down this motion to change the national mind so that we would be more versatile and that the establishment and policy makers of the nation would look at this area. From what the Minister has said tonight, we hope we have changed the attitude of the policy makers.

I deliberately did not mention women when I spoke. I was interested to hear Senator Hillery and Senator O'Sullivan say that the quality of the jobs of this large group within the services sector must be raised. We need in particular to look again at the areas of child care and care of the elderly. We talked earlier about administrative difficulties and Senator Hillery talked about services that would be the engine of the creation of jobs in the future.

How many jobs could be created in those areas if tax relief was given? While we have control over the administration of various regulations, only the Minister for Finance has control over that area and I hope he will look into it. Red tape has been described as the enemy of enterprise and has had a stultifying effect on the start-up and development of many service industries. Senator Hillery has a nice way of expressing things. He said we were in the dark about the number of people who could be described as in the service industry. Maybe we would get many people from the black economy if we were better organised. Senator O'Sullivan stressed how useful NOW has been for setting up small organisations which may have service industries behind them. I was struck by what Senator Fahey said. It is disastrous that there is no agency to deal with starting up businesses in the services sector.

I must point out that on the day we were making such a fuss about the four-chette and what had happened with the President of the European Commission, M. Delors, we were losing the European Drugs Advisory Agency, which would have employed an enormous number of people. I am not saying it is our fault. The British had to be given something for the loss of the European Bank, but, we were out front during the summer. I hope we had enough advice and information on how to make these international bids because that organisation would have created about 2,000 highly paid jobs here.

Senator Lee was right in stressing the situation regarding the Culliton report. I, too, found it very depressing. All the emphasis was on technology and research and development were relegated. Basic research is an international commodity; it can be sold anywhere. Obviously we will continue to rely on research which can be applied to manufacturing industry.

I thank the Minister for his comments.

Amendment agreed to.
Motion, as amended, agreed to.

An Leas-Chathaoirleach

When is it proposed to sit again?

At 10.30 a.m. on Thursday, 18 November 1993.