I thank Senator Henry, Senator O'Toole and other Senators who sponsored this motion. I thank them for the opportunity to say a few words on this subject. I express my gratitude to the Members who have spoken and I have carefully noted their concerns. I regard this evening's debate as a most helpful and constructive input into a process which I want to ensure is successful. I will pass a copy of the debate to the Science, Technology and Innovation Council for their consideration.
The word "review" can often be misinterpreted in Government circles. Sometimes it is misconstrued — or even construed — as a reason for defending current policy or for postponing action. I saw this happening in various Governments over the years. The question arises why we need a Science, Technology and Innovation Council. There are two main reasons in my opinion. When I launched the review on 18 February I indicated that the State was making an annual investment of £650 million in scientific research and technical activities. This is an astonishing figure. It covers virtually the entire range of Departments and agencies from, for example, the Central Statistics Office, the Meteorological Service and the bigger spending Departments such as Education, Agriculture, Food and Forestry and Enterprise and Employment. My first directive to the council was to examine that figure, to introduce more transparency and understanding of where the money goes and for what it is intended and, more importantly, to ensure that we are getting value for money and that there is a coherent strategy behind the annual investment.
On the day we launched the council, I had a discussion with the members and it was mentioned that some of this money should be invested in bricks and mortar — in buildings — as opposed to programmes and projects which might create results. This example shows the type of emotion which can become part of this debate. People have said to me that many of our great inventions and scientific breakthroughs did not take place in glamorous buildings, but in attics and other such places. Now it seems we cannot make any progress in science and technology unless a gleaming building is built, which is a couple of storeys high, with many rooms, a ministerial opening and a lavish annual report. This is an example of the type of dilemma which the council must consider.
The second reason we established the council concerned the debate and followup which is needed to ensure we give more prominence and attention to the subject matter. The council will lay the foundation for a clear strategy to drive Government spending in this area. In my view, there is no clear understanding or consensus among policy makers, the public and the providers and users of science and technology as to how science, research, technical development and innovation can best contribute to national development in its broadest sense. My expectation, therefore, is that the council will address this key issue and thus establish a platform for all future policies, mechanisms and schemes through which the Government will support science and technology development.
I have asked the council to try to establish what the Government strategy and policy should be in the area of science and technology in the short, medium and long term. This is desperately required because a coherent and focused national science and technology policy is at the centre of our economic development and we ignore it at our peril.
My first reaction when I accepted this post and looked at the science and technology area was that it needed to be pulled together. We need priorities and a sense of order. A small country like ours can only drive its economy if it has adequate investment in science and technology because that helps the industrial development we require. The reason the council was established was not to postpone anything, but to decide as a nation how to target an investment of £650 million.
Two developments have been responsible for bringing the debate from the realm of theory to the practical over the years, that is, the establishment of the Office of Science and Technology which was established in 1987, and the substantial increase in funding through the EC Structural Funds programme since 1989. The question is not if we should invest in science and technology, but are we investing in it to the maximum advantage and on what strategy are we investing it.
This year sees the beginning of the second tranche of Structural Funds, which will bring us from 1994 to 1999, including substantial expenditure in relation to science and technology. The policies and instruments which flow from the council report and from its implementation, together with this investment of funds over the next six years, will significantly influence the future shape of our economy.
I presume Senators have all seen and read the terms of reference for the council, which are essentially about achieving economic development through research, technology and innovation. I want to emphasise, as I did when I launched the council, that as a country we must seek to embrace all that is good and possible in science and technology and apply that to the best national advantage in the long term and the short term. We must aim to secure the highest possible standard of living, health, education and general well being for our people. That is the purpose of applying science and technology.
I have set the council a demanding task, given the breadth of the review and the target of concluding a report by the end of the year. The council will, of necessity, be concerned in the first instance with strategic issues, which serve us in the long term. That does not exclude any specific operational topic which the council might deem important or on which I might seek its advice in the course of the review. It is against that background that the Cabinet appointed 18 independent minded people to the council who, I trust, will bring a range of expertise and skills to the examination of this complex and important area. In passing, I would also mention that the members have been appointed in their personal capacity and are not there to represent any institution, issue or interest. It is important that the final report of the council reflects this principle and I pointed this out to them.
I would point out to the House that we are not alone in trying to establish a real contribution of science and technology or in reviewing whether we are giving it sufficient importance or in establishing priorities. To name but a few, the United States, the European Union, the United Kingdom, Portugal, New Zealand and Holland have carried out reviews of their science and technology systems and others are in the process of doing so. There are two obvious forces driving this general trend in reviewing how to maximise science, research, technology and innovation. On the one hand, with the ending of the Cold War, countries which previously invested heavily in defence research will obviously want to refocus some of this spending towards civil and commercial uses; in fact there seems to be a trend of diverting funding away from defence research to civil research. I welcome and support that trend.
At the same time we are witnessing a massive opening of national markets and the establishment of global markets. These are influenced by the dismantling of barriers to trade following the GATT and by the increase in international collaboration in science and technology. There is a clear link between technical development and growth in trade and we must, at a minimum, keep up with developments, particularly in areas where we have a competitive advantage, which we must hold on to.
The debate on science and technology over the past couple of years has led us to think about the need to focus on the targeting and application of research to improve our industrial competitiveness. The National Economic and Social Council report of 1993, A Strategy for Competitiveness, Growth and Employment, spoke at length about this and pointed out the importance of investment in science and technology and in management skills.
The Culliton report was emphatic in saying that technological competence was one of the main keys to competitive advantage and that it was not an optional extra in the search for industrial output and employment growth. As Minister with responsibility for commerce and technology, it is my intention to ensure that a focus on the development of science and technology is maintained by the agencies, that its contribution to industrial development and the competitiveness of industry continues to be highlighted and that activities are geared to meet current and future industry needs.
It is important to highlight that the current Programme for Competitiveness and Work abounds with references to the need for innovation and technology upgrading. The programme underlines the need to move in this direction as a key to competitiveness and employment growth. It is important that this direction and focus are accepted by all of the partners to the Programme for Competitiveness and Work.
However, the fact remains that business expenditure on research and development in this country is still too low. Latest available statistics for 1991 show that business expenditure on research and development in Ireland amounted to 0.65 per cent of GDP compared to the European average of 1.25 per cent. I believe that in addressing the many issues which the council has before it, this will become in time one of the key indicators of success or failure. I believe the recommendations which the council come up with should be primarily aimed at increasing business investment in research and development.
These figures do not reflect the impact of the major grant scheme for research and development which was introduced at the end of 1992 and has now become known as "Measure 6". In 1993 the Government made available a sum of £23 million towards this scheme and the same amount again was provided in matching funds by the successful applicant companies. Of far greater significance is the fact that the scheme generated applications to the value of £280 million, which demonstrates clearly the latent capacity of Irish industry to carry on research and development. Applications totalling £280 million were made for £23 million of funding, which was ultimately awarded. That indicates the interest of Irish companies in research and development.
The motion before the House specifically mentions taxation relief to encourage research and development in both indigenous and international companies in Ireland. I already asked the council to prepare a specific report on the impact of corporate taxation on the level of research and development carried out in Ireland and I expect to have a report from them within two months. Depending on my examination of their conclusions and recommendations, I hope to be able to make proposals to the Minister for Finance for incorporation in the next budget and Finance Bill.
One of the complications in this area is the fact that the 10 per cent rate of corporation profits tax, while strong in attracting foreign direct investment, has the indirect effect of retaining research and development activities in countries where they can be offset against the higher tax rate. This question of taxation leads indirectly to the question of how to encourage multinationals to carry on more research and development in Ireland. The key here is to find a way to encourage activities without creating impediments which would lessen Ireland's attractiveness as a location for mobile investment. That is one of the ironies of the taxation system and the method of attracting research and development expenditure.
International companies are not really interested in investing in research and development because they only get relief at 10 per cent. While the 10 per cent rate is a major attraction for them to establish here, ironically, it is more beneficial for them to write off their expenditure in areas with higher corporation taxes — some of our competitors have rates of 30 or 40 per cent. Our low corporation tax rate is a disincentive to investment by companies in research and development. I asked the council to advise me on that urgently because we cannot afford to be behind our competitors in that area.
Specific areas of industry which we need to address are small and medium sized industries — SMEs — which do not carry on any form of technology upgrading activities and the encouragement of greater numbers of technology based start up companies. Schemes like Tech-start have an invaluable role to play in this area and they have my full support.
From my participation in the Task Force on Small Business, I know research and development is not high up on the priorities of small companies which face many short term complications in their attempt to survive and prosper — usually how to get enough cash to pay the wage bill on a Friday or a meeting with the bank manager. It is not easy for them to focus on the importance of science and technology and research. I am convinced that in the medium term, innovation will be the key to continued growth of small business into the medium and large sized companies with expanding markets. I am doing everything possible to bring that message to small companies.
The motion urges that any project under the Leader schemes or the county enterprise partnership boards should have technological and scientific advice made available to it. I agree with this and given my previous comments I would like to see a certain priority given to projects coming before these schemes which are based on technological and scientific advances. I am assured by the operating authorities of these schemes that the necessary expertise and guidance is available through the relevant agencies which are represented. I will ensure that the requirement in the motion is brought to the attention of these agencies so that they are aware of Senators' concerns about this matter.
The motion urges me to ensure that environmental, educational, medical and agricultural aspects, as well as industrial, are considered by the council. I explained the broad terms of reference and the broad definition of economic development, including socio-economic aspects, which have been given to the council. I assure Senators that none of these important elements will be overlooked. I regard all of them as being inextricably linked with industrial development and thus contributing to economic growth.
I will deal with the educational aspects later. Otherwise, suffice to say that it is hard to think of industrial development without thinking of the relationship with agriculture and the food industry and equally, it is clear that companies marketing policies are increasingly influenced by environmental issues and consumer preferences. The medical, educational and environmental aspects of research and development all address society's needs in different ways and these cannot be left out.
I accept what the motion states and I will ensure that the council deals with environmental, educational, medical and agricultural aspects as part of its brief. This was, in any case, my intention because they are all inextricably linked. I thank Senators for reminding me to remind the council to do just that.
In regard to the education system, there is no question in my mind that the teaching of science subjects and the training of graduates in research disciplines is vital to the general economic development of this country, to encouraging and supporting research and development by industry and to fostering an innovative culture.
Members would think from reading some newspaper articles over the past 12 months that the only issue as regards third level education was the amount of funding for basic research, but the third level system is much wider than that. It is essentially about providing skilled manpower, about matching the supply of these skills and research activities to current and future needs and about improving the linkage between higher education and industry research activities.
First let me expand a little on the Government approach as regards basic research. I would like to make it clear, because this debate has been raging in research circles for some time, that I fully appreciate the importance of basic science as one of the essential ingredients in the interactive model of innovation. It is unfortunate that public debate on this issue quickly seems to become polarised into whether one is in favour of basic science or applied technology. It is not a matter of one or the other but of one as well as the other. The challenge is where to strike the right balance, how to order priorities and how to extract maximum benefit from the State's already considerable investment in this area.
I am anxious to see greater effort to convert scientific and technological achievements into products and competitiveness and more attention being paid to harnessing the results of basic research. At the same time I want to make it clear that I greatly understand and support the requirement for basic research, for research which does not always have a commercial or industrial or, indeed, any specific objective.
I have become increasingly aware over the months in this post that many of our great technological and scientific breakthroughs have come not so much from planned organised bureaucratic programmes but from the inquiring mind of the scientist, the probing of the professional technologist and I am very anxious, having responsibility for science and technology, to ensure that that element is maintained and nurtured. The disorganised side of science and technology is important and we have to acknowledge its existence, not interfere with it too much and support it financially.
As I say, it is a balance. We cannot invest all our funds in that side because we have a requirement to produce new products and technological breakthroughs for the economy. Ireland is known as a creative place, our people are known to be creative and it is very important to encourage that creativity and not put it into a straitjacket, as it were, trying to have State ordered science and technology programmes. That is not the way to proceed.
The motion proposed specifically that there should be a pilot scheme in introductory science at primary school level. Given my experience as Minister for Education and now as Minister for Commerce and Technology, I support this. I strongly believe that the education curriculum must begin at an early stage to encourage innovation, curiosity, technical skills, call it what you like.
I recall as Minister for Education being heavily criticised about my decision to put the phrase "enterprise culture" into the Green Paper on Education. I stand over that because my definition of enterprise is not just that you start a business. My definition of enterprise is of being creative, innovative, and enterprising. A philosophy teacher can be enterprising, those who provide services can be enterprising. Deputies and Senators can be enterprising. I have tried to explain, particularly to the teaching profession, that my reference to an enterprise culture in the Green Paper meant trying to convey to children the importance of being innovative and enterprising in whatever aspect of life they find themselves. Some quarters chose to interpret that as my trying to turn the schools of Ireland into some kind of industrial factories. I am glad of the opportunity to reject that again today.
Where do we go from here? As I said, we have just come through the first phase of Structural Funds support for science and technology and we are entering the second phase. There have been many significant adaptations to the programme, the most significant of which is the move from the initial position of supporting infrastructural development to a position of direct support for research and development in industry. I spoke about the buildings example earlier. At the same time we have entered a period of intense debate on the role and contribution of science and technology to economic development, with a clear eye on the appropriate strategies and support for science and technology to bring us into the next century.
While the comparative international figures tend to show us in the bottom half of the table when it comes to science and technology related expenditure, it is inadequate simply to aim for a more respectable place on the league table. Far more fundamental questions have to be addressed against a background where resources will always be inadequate to meet all demands in this exciting area. Do we have a proper system for prioritising areas for support? Do we have a system for targeting and measuring the impact of these supports?
The investment in science and technology and the success of that investment will determine what kind of economy we develop — high value market leader or low cost price taker. It is important to appreciate that success in this field is a long term objective and it is vital, therefore, that we prioritise and match the skills, the investment and the programmes with the needs. Most countries are now doing this and Ireland cannot be left behind. By definition science, research, technology and innovation are risk activity, long term in their nature but highly rewarding if successful. My thanks to the Senators who tabled this motion. It gives us an opportunity to stand back and see where we are going in this critical area and I welcome it.
