I move:
That Seanad Éireann notes the Report of the Science, Technology and Innovation Advisory Council: "Making Knowledge Work for Us".
Report of the Science, Technology and Innovation Advisory Council: Motion.
I am indeed grateful to Senator Manning and to all the Members of this House for providing the opportunity for this timely debate.
One of the objectives of the Science, Technology and Innovation Advisory Council in completing its report was to encourage debate on the many fundamental issues contained in it. Science and technology are issues of long term economic development. It is not just a matter of implementing some, or all, of the many recommendations in the report; it is fundamentally about an acceptance of the role and importance of science and technology in all its facets in economic development. That is why this report must generate a debate, a debate which must continue, a debate between all the parties involved, principally the legislators, policymakers, industry and education sectors, a debate which must lead us to a lasting appreciation and consensus on the policies needed to bring about an Irish economy founded upon scientific knowledge and the application of that knowledge, research skills and innovative people, companies and products.
Shortly after the establishment of the council, the Seanad gave the opportunity for a debate on these issues and that debate served as an input to the deliberations of the council. I applaud the Seanad for again taking the initiative and I would suggest that Senators could, perhaps, organise an annual debate on science and technology to give the subject the level of attention it deserves.
To begin with, I would like to stay on this point of the appreciation and importance of the contribution of science and technology. The council devoted an entire chapter of its report to this issue, recognising that nothing would change unless the basic perception of science, technology and innovation is improved at all levels. The council points out that scientists, the media, industry at large, the financial community and our primary and second level education systems need to redouble their efforts to get across the positive image and value of science and technology in our world. However, the council also has words to say about the low level of appreciation within the Government system of the importance of science, technology and innovation. In recommending the new structures for dealing with Exchequer spending on science and technology, the council proposes that Government must display a more long term commitment to policies and funding rather than the somewhat more haphazard approach of the past.
I think we can admit among ourselves that long term policy approaches, where the returns are neither immediate nor obvious and where the developmental and political cycles are out of synch, are rarely the political imperatives of the day. This report now presents Government with the opportunity and the mechanisms to put in place structures for a more long term approach to science and technology. Unless we get the basic approach right, a lot of the other recommendations in the report will have a lesser impact than intended. The structures proposed in the report are designed not only to make the best use of available funds and find the best match between resources and competing demands but also, and more crucially, to ensure that we sign up for the long term commitment that Irish industry and society requires.
Against that background and focusing on the report in more detail, the council took the approach that it was important to demonstrate how investment in science, research, technology and innovation impacts on industrial and economic development.
It is important to recall here the very broad terms of reference which were given to the council, essentially to determine whether the current policies are the right ones for achieving economic development through research, technology and innovation; to determine what mechanisms should be employed to achieve the desired science and technology goals and to make recommendations to improve the effectiveness of science and technology in contributing to national and economic development. As I said earlier, in the first instance the council took the view that policy makers, and indeed the public, needed to be convinced about the benefits of investment in science and technology. In doing this it examined the international trends and statistics relating to investment in science and technology and economic development, the specific approaches in a number of other countries and the role of knowledge and its application in the competitiveness process.
The council concluded that innovation based on the application of science and technology is now the mainspring of international economic competitiveness. The most innovative countries are also the world's economic leaders, with strong export performance, based on high value added products and services. In countries where STI policy has encouraged development through innovation, investment in R and D has been maintained at a high level.
By way of example, business expenditure on R and D in Ireland is just over 1 per cent of GDP, the average in Europe is 2 per cent, it is over 2.5 per cent in the US and around 3 per cent in Japan. If that situation were to persist over the long term, the consequences for small firms, for our traditional and natural resource based sectors, where R and D has not been a priority, and the prospects for our continued export growth would, I suggest, be discouraging.
In more specific terms, the report points out that between 1970 and 1989 manufacturing employment in Japan increased by 4 per cent and in the US by 1.5 per cent, while within the EU it decreased by 20 per cent. This clearly indicates that those who successfully apply technology keep the benefits in jobs. Since 1970, employment in knowledge based industry increased by over 20 per cent in the OECD, contrary to the general trend in employment, indicating the job creation propensity in this sector.
The basic message is clear — investment in scientific research and technological development, and its successful application into innovative high quality products and services, is vital to sustained economic growth and increased high quality employment. Furthermore, there are no old industries — only old technologies.
The council also examined the situation on the ground in a number of comparable economies around the world, such as Denmark, Korea and New Zealand. It drew a number of general policy pointers from these countries. The essential element is to stimulate industry demand for R and D and for the higher skills to improve their innovation capability. Secondly, the State must ensure that there is an adequate support network to meet that demand — in terms of research programmes, centres of excellence, technical supports, access to international developments and so forth.
The most difficult aspect facing any small developing economy is to ensure that there is an effective supply-demand interaction. From the State's perspective it is critical to adopt a long term view of science and technology policy and to ensure sustained investment. It is also important to recognise that while a country must develop its internal science and technology capabilities, no country can be self-sufficient in meeting its needs. We must draw knowledge and technology from wherever we can source it and we must then use it.
There were interesting specific aspects from each of the countries. In the Danish case they successfully brought about R and D collaboration between numbers of small firms in particular clusters of technologies or industry sectors and with particular attention paid to the development of their natural resources. In New Zealand a root and branch restructuring of the national S and T system meant that State expenditure was concentrated on national determined priorities.
In Korea the strategic decision was taken to become a leading economic performer in world terms, through investment in science and technology. Staying with the Korean example, I quote from a recent edition of the British New Scientist magazine:
All that most people know about Korea is that it manufactures rather inexpensive electronics and cars but, when you come to think of it, doesn't that remind you of another far off land. The similarities between Korea and the Japan of 20 years ago don't stop there. Korea is determined to become a wealthy world power through vigorous exploitation of technology. It intends to boost spending on S & T to 5 % of GDP by the year 2,000, double that currently allocated by Britain.
On a recent visit to the UK, the Korean Minister said that Britain had great potential but had not translated that information into economic gain. He said Korea had many small and medium sized companies that could help. In concluding, the article said that Britain needs to swallow up the last vestiges of pride and learn quickly from Korea's success. "In ten years time, when Korea has become a Japan-style economy, it will be too late".
To finish on the international perspective, I quote from the recent OECD review of industrial policies in member countries in 1994. It states:
All OECD countries have given technology policy a higher profile through promotion of R & D, innovation and flexibility in industry. Greater efforts have also been made to link technological development to economic growth and employment, for example, by investments in long term strategic industry-related R & D, improving the industry-university interface and overhauling innovation support to enhance its effectiveness. But there is a continuing need to improve the integration of technology policy into other areas of industrial policy, particularly policies supporting intangible investments (training and skill information, software, market development).
The support for generic technologies, such as information technology, biotechnology in health-care, food supply and processing, advanced materials, environmental and energy technologies, as well as co-operative research and the technological development of small firms, is particularly marked.
From its examination of the international perspective the council concluded that Ireland is not well positioned at present in respect of the new technological and market dynamics. Many countries are engaged in sustained experimentation with policies and measures to stimulate their national innovation process. Such experimentation implies a willingness to take risks and presupposes a long term view. The council believes that we have little choice but to engage in the same process. In particular, according to the council, there is an undoubted need to increase Ireland's R and D investment, both public and business, if the substantial technology gap that exists in the indigenous sector is to be reduced.
The report states that the challenges facing all countries, not least Ireland, from the ever increasing speed of technological development are as follows: the national capability in new technologies must be expanded; there must be transfer mechanisms to integrate new technology into less advanced sectors; enterprises must invest to prepare for these changes; and innovation must be an integral part of industrial policy.
But what are the issues facing Ireland, if they are to successfully address these challenges? The report argues that, despite the strong macro-economic performance of the economy, there are still some fundamental weaknesses and, of course, unemployment remains unacceptably high. At the same time, societal needs and expectations for improvements in education, health-care and public services are no less than in other, more wealthy countries. In the enterprise sector, overseas companies, which account for three quarters of manufacturing exports, are only weakly linked to the domestic economy. Indigenous industry is highly fragmented and, in general, of small scale. In a number of measurements the foreign sector is strikingly superior to its indigenous counterpart. It is more advanced on the path to a globalised market; twice as skilled in terms of technical and administrative personnel; twice as committed to R and D; and twice as productive on average.
The unrelenting globalistation of markets, through the EU Single Market. bilateral deals between the super powers and the new GATT round of trade agreements, is an economic fact that all Irish companies, whether foreign owned or indigenous, must face up to. The report shows that the globalisation trend is being hastened by developments in information technologies. leading to the information super-highway. Countries with the appropriate technological infrastructure to participate in such developments will be able to benefit from the globalisation of education, research, commerce, trade, banking and other services. Ireland needs to be fully supported by the most comprehensive and advanced networking facilities available.
It is against that background that we must be concerned that some 80 per cent of our companies would be regarded as having a nil or minimum technology capability; that is, perhaps, no specialist technology personnel, perceiving no need for technological capability or requiring support in sourcing technology from external sources. This concern for the innovation capability and thus the long term survival and growth prospects of Irish firms has been reflected in every major report on industrial development since the 1960s, including the most recent Culliton report. The matter has also been treated in specific reports on science and technology policy in the 1960s, 1970s and 1980s, the latter two carried out by the OECD. Is there a connection between the reluctance to accept that science and technology are central to industrial policy, as reflected in the lack of implementation of these reports' findings, and the continuing fragile position of the bulk of our indigenous industrial base?
The report says that some countries and companies have been more successful than others in adapting to and capitalising on the many changes and opportunities arising internationally. The key to such success is the acceptance and effectiveness of the national system of innovation. This is defined as "the collection of all institutions and the mechanisms (public and private) that interact to stimulate and support innovations in products and systems within the national economy".
The S and T components of the Irish national system of innovation are the S and T capability within enterprises, the public sector S and T services and the S and T knowledge and skill base, principally in the third level sector. The interaction, inter-linkages, policies and incentives which enable these elements to operate coherently are vital. Equally important are the factors which influence the environment for innovation, that is, education and training, technical culture, public and political awareness, availability of finance and, particularly, international sources of science, research and technological innovation.
The council argues that the lack of an integrated national system of innovation and the fluctuations in Government commitment to science and technology over previous decades have been at the heart of the reason that there is not a better appreciation of science, technology and innovation and of the culture of technological innovation in Ireland. The Government must recognise and promote a long term investment strategy to build up the elements of the system of innovation.
Looking more closely at the main components of the system of innovation, the council argues that within the business sector there is a need to increase industrial involvement in R and D and innovation and to move business expenditure on R and D towards European average levels. There remains a negative attitude to entrepreneurship, risk-taking and innovation in many aspects of Irish economic life. There is a low concentration of scientists and engineers in industry. There is a relatively low level of new company start-ups and there is an overly strong EU influence, particularly on the funding side, on the direction of the national science and technology effort.
The State's direct role is to provide a balanced programme of applied research and development, strategic R and D in the important generic technologies, such as biotechnology, and to look to the future technology needs of the economy by providing a foresight exercise. The range of public research institutes in Ireland has always been limited by comparison with other countries where such capability is provided by the State. They must have a critical competence, be in areas of special national importance and give value for money.
The council describes the third level sector as the vital source of people and capability in the generation and transfer of research and innovation skills into society. Basic research provides the essential underpinning for applied research and technological development and, according to the council, we cannot achieve an innovative environment without access to the new knowledge and understanding provided by basic research. However, we must also ensure that we make maximum use of this knowledge. The council goes on to say that the role of such research has not been appreciated in Ireland and funding has been inadequate.
The council also points out that there is a need for better interaction between industry and third level colleges to exploit research for the benefit of the country. Industry must provide a stronger pull effect by making greater use of the expertise in the colleges. In turn, the third level sector must provide a science push effect and achieve greater application of its knowledge to address industrial and societal needs. The Government must act as a broker in creating this greater interaction.
In my speech so far I have concentrated on the problem side of the equation. I have done this deliberately because it is important that we all agree on what the problem is before we go on to recommend solutions, which the council has done in a most detailed way. I am looking forward to hearing Senators' views on issues such as international trends in the field of science and technology, how we compare with other countries at a similar stage of development, how much importance we place on science and technology in terms of our economic development, how we harness knowledge for national benefit and about the weaknesses in the various elements of our national system.
I do not intend to go into detail on the 160 recommendations in the report. Needless to say we want as many of these acted on as quickly as possible and in a pragmatic way. To that end, the Government has decided to set up a task force along the lines of the procedure used in providing the Government's response to the Culliton report, which will examine the recommendations and report to a Cabinet subcommittee on their implementation or otherwise. I hope that work will be completed in approximately six months. However, I do not want to give the impression that there is a quick fire solution to these problems. Ironically, and unlike the reports on science, technology and innovation which precedes it, I hope we are still dealing with these issues for years to come and that they remain at the fore of the national consciousness.
I want to say something about the new structures recommended by the council. The council is critical of the fact that despite an investment of £650 million in S and T related areas in 1993 "the fact that the composition of the figure only becomes known after it has been allocated, demonstrates a lack of predetermination as to how the money should be spent and limits the ability to set priorities". The situation "requires a decision to acknowledge the vital role of innovation by moving STI into a central position at Cabinet level in Government".
The council goes on to say that in Ireland there is an absence of a coherent approach to S and T across the spectrum of Government spending. This reflects a clear lack of awareness by Government of the considerable contribution S and T can make to the national economic effort. At the same time, the council says it is obvious that we cannot be involved in everything. Choices have to be made. This emphasises the need for prioritisation in State expenditure so that the Government has a coherent and integrated strategy for committing funds to different S and T activities.
In moving to better co-ordination of public spending and aiming to prioritise that spending in the areas of greatest need, the council recommends that there should be an annual national S and T plan prepared by an interdepartmental committee. S and T activities in individual Departments should be grouped together to create critical mass and raise the S and T profile in those Departments. The office of science and technology in my Department should be upgraded to a national office as part of this co-ordinating or prioritising process. An STI council should be established to provide independent expert advice and a Cabinet committee should approve the national plan, thus determining policies and priorities for S and T spending. This is designed to ensure that the national elements are operating in a complementary and synergistic fashion and that the best match is made between competing demands and available resources.
The reason I have singled this out is obvious. All the areas of expenditure on S and T, ranging from the portion of a physics lecturer's salary which goes on research training, through to Teagasc experiments on crop varieties, can be individually improved, developed, squeezed or expanded according to the demands and the pressures of the day but until all these programmes, activities and expenditures are shown in an open, transparent and critical juxtaposition, in a way that every Department and agency is aware of the activities and objectives of others, then we cannot really aspire to a national system where focus is concentrated on the national priorities and gives us value for money. Until such a system is put in place, the real value of the many individual recommendations will be diminished. It may well be that net additional resources will be required but it is also possible that we can achieve a lot by promoting S and T up the priority ladder and reallocating funds from less critical areas.
Before concluding, I would ask Senators to join me in congratulating and thanking the Science, Technology and Innovation Advisory Council for the enormous effort which went into the preparation of this report. I look forward to hearing the views of Senators and, if necessary or desirable, I will respond at the end of the debate.
The report of the Science, Technology and Innovation Advisory Council is important, timely and well presented. The members of the council were asked to undertake a review of science, technology and innovation policy and to provide a report in the form of a draft White Paper for the Minister and the Government to consider. They were asked to examine and assess current policies and to bring forward recommendations in relation to changes which would improve the effectiveness and efficiency of the national science and technology system in contributing to national economic development.
At the outset I will take up the Minister's invitation to compliment and commend the members of the council on the huge amount of work which obviously went into the production of this significant report. In his introduction to the report, the chairman, Mr. Dan Tierney, makes a number of important points. This is the first time in the history of the State that we have used our own expertise to review science, technology and innovation policy. He refers to this fact as an indication of our desire and ability to shape our own economic future. He also makes the point that if we are to implement the right policies, our economic future can be very bright indeed.
Mr. Tierney emphasises that the key to a prosperous economic future lies in our ability as a nation to stimulate growth through knowledge generation, innovation and the application of technology. He also emphasises that in the past we have been slow to appreciate the value of science and technology in terms of our country's advance. Studies which were undertaken in previous decades were not acted upon and, as a result, our indigenous industry is particularly vulnerable in the area of innovation. I would go further than Mr. Tierney and say that because we were so remiss in this regard in the past, we lost many industries which could and should have survived. I am thinking of the leather, tanning and woollen industries, and several others based on indigenous raw materials.
As far as the future is concerned, the chairman makes the point that no country, however small, can afford to rely solely on innovations elsewhere. We need our own sources of research and development to give us instant access to knowledge and the ability to apply it. Furthermore these sources of research and development need to be comparable to or, if possible, better than those available anywhere else.
Particularly relevant to Ireland is the need for innovative developments in the areas of natural resources, the environment, the food industry and tourism. These are key areas in which this country has to add value continuously if it is to maximise its considerable advantages and assets in these areas. This, however, will not happen unless there is a much increased emphasis on science, technology and innovation. Government commitment, support and investment will also be required on an ongoing, long term basis.
Over the years the percentage of Government spending on research and development has been one of the lowest in Europe, and this situation must change in future. The chairman says that this report must be seen as the beginning rather than the end of a process. The report makes it clear that much of the growth in output, exports and employment which we have had in recent years has taken place in the foreign owned sector of the economy. The same dynamism has not been evident in the indigenous sector. If this sector is to grow and become competitive in international markets a fundamental change is required in our attitude to science, technology and innovation.
The report, quite rightly, emphasises the point that innovation is not something new — a point that is worth repeating. In fact, innovation is as old as civilisation, but innovation based on the application of science and technology is now, as the Minister said, the mainspring of international economic competitiveness.
Countries which innovate are economic leaders with strong export performances based on high added value products and services. If Ireland's indigenous industry is to achieve and maintain competitiveness in international markets, it must bring new or improved products and services to the marketplace on a continuous basis. The report says that innovation, and the promotion of an innovative society in all areas, must become paramount objectives in Ireland's economic strategy and the key to sustained national competitiveness.
Of course, innovation does not always have to be based on the application of science and technology or have a research and development input. It may involve nothing more than new ways of organising work, design or packaging. Innovation must be ongoing because, as the report points out, the pace of change in the years ahead is far more likely to accelerate than to slow down.
The opportunities and challenges which lie ahead can only be met if enterprises and industries operate in an environment which favours innovation. The report makes clear that this can only be provided by long term State commitment in the form of a coherent science, technology and innovation policy.
International trends in science, technology and innovation are examined in the report. All over the world technological innovation continues to create new enterprises as well as transforming or displacing old ones. In countries where science, technology and innovation policy has encouraged development through innovation, public and private sector investment in research and development is maintained at a high level or is being increased. Innovation is recognised as being essential in such countries' strategies for survival and growth. In these countries too, there is a strong emphasis on the transfer and diffusion of technology resulting in the speedy commercial exploitation of new ideas and technologies.
Throughout Europe, according to the report, smaller companies are seen as holding the key to the future. This must also be the case in Ireland but as has been stated on many occasions, and particularly in the Culliton report, many of our smaller indigenous companies are not sufficiently competitive internationally. This makes the need for a coherent national science, technology and innovation policy all the more urgent. Such a policy must encourage small firms to become more pro-active and co-operative in the exchange and absorption of knowledge.
The capability of third level and State science and technology institutions to provide new technology must be harnessed to the greatest extent. The best possible mechanisms and procedures must be put in place to ensure the most efficient transfer of this technology to industry and other users.
The report quite rightly emphasises that one of the main aims of Irish science, technology and innovation policy should be to encourage the application of research and development in areas such as food, marine resources and timber. It welcomes the recent increase in funding for food research and development carried out by research institutions but points out that funding for research in other areas where Ireland has natural advantages is very inadequate. Among these advantages is the "green" image which the country has and the report emphasises the importance of ensuring that this status is provided through a national environmental management plan.
The report makes the point that while special sectors could be given priority in order to target limited financial resources, the general level of industrial research and development should be raised in all areas of industry through such measures as an integrated set of tax incentives, a programme to protect intellectual property rights and the fostering of stronger links between industry and the third level sector.
In addition, the capacity of many enterprises to absorb the benefits of research and development could be enhanced by the placing of science and technology graduates in such enterprises. The new Techstart programme, which has been initiated by Forbairt, is doing excellent work in this regard and its success is acknowledged in the report.
In the area of industrial innovation the targets set out in the report are the doubling by 1999 of the amount of research and development carried out by business and the maintenance of the Exchequer funding share at 13 per cent, thereby giving rise to a phased increase in the Government's cash contribution to research and development in industry. Tax incentives which will stimulate business research and development are advocated and certain tax changes are suggested as a way of encouraging multinational companies to establish their regional headquarters and strategic functions in Ireland.
It is suggested that new funds for food related research and development should focus on the development of new consumer products. A further recommendation is that FÁS should ensure that at least £50 million per year is used to support training for the employed and that all FÁS programmes should contain a strong emphasis on innovation.
The role which the third level sector and State research centres must play in providing a vibrant research base is dealt with in detail. The report identifies a number of serious problems which are impairing the ability of the research system in the third level sector to maximise its contribution to economic development. These include a shortage of research and development funding and equipment. There is also an unclear approach to contract research for external clients. The aim must be to strengthen the knowledge generation system in the colleges and to ensure that it reaches the areas where it will be most productive by putting in place the best possible mechanisms for its transfer to what the report describes as the "demand side", which is mainly the enterprise sector.
Since the majority of the smaller Irish companies have none or very few inhouse research resources they have to rely almost entirely on external resources, such as the third level sector, to provide them with technical know-how and advanced level help with innovation. In this regard the report points out that the increasing research and development activities of the regional technical colleges is important for smaller companies at local level. Most third level colleges have focused on certain disciplines, such as biotechnology or polymer technology, and this has proved to be an approach which suits industry. I commend Athlone regional technical college for the excellent work it is doing in polymer research and its links with industry.
As an important way of improving access to sources of know-how outside Ireland, the report suggests that the third level sector should actively participate in joint projects with partners in colleges and institutions abroad. This would have the effect of strengthening the role of the third level sector in interpreting worldwide technological developments. In relation to the role of the third level sector, the report recommends that basic research funding should be substantially increased and allocated on the basis of relevance and excellence. A five year programme should be put in place to address the research deficiencies across the public sector. PhD scholarships should be funded to a level of not less that £3,000 each per annum and should be open to all appropriately qualified candidates.
In the State sector, organisations such as Forbairt and Teagasc provide industry with a range of science and technology services, but the report suggests there is a need to revitalise these services. The implementation of a recruitment policy which will ensure there is a regular intake of new graduates into these services is worthwhile. If necessary, a voluntary early retirement scheme should operate to accommodate this "new blood" programme.
This is an excellent report. It admits that it does not have all the answers with regard to science, technology and innovation. However, its publication is a major step forward in developing a coherent and integrated national science, technology and innovation policy. The next step, hopefully, will be the publication of a White Paper. The recommendations and targets set down in this report are realistic, achievable and desirable and they all deserve to be incorporated in the White Paper. There is little reason why the implementation of many of the recommendations in the report cannot begin straight away, even in advance of the publication of the White Paper. The report calls for extensive collaboration and linkages between foreign and indigenous firms so that there will be the maximum use of modern technology through transfer, diffusion and application.
Third level colleges and academics are exhorted to take due account of national science, technology and innovation priorities and the development needs of small and medium sized enterprises in deciding on the allocation of funds and the selection of research topics. The point was strongly made that quality and relevance should be the guiding principles governing research, teaching and training. There is also an emphasis on the need for third level colleges and academics to join with industry in sharing the valuable and commercially exploitable results of research and development on an agreed and equitable basis.
For its part, the Government is called on to give a high profile to science and technology which will contribute to increased innovation and to put in place the structures and procedures which will ensure this will happen. Government should not wait until after the White Paper is published to begin this process.
I welcome the publication of this report and compliment all involved. I concur with the hope expressed by the council that the White Paper will be published with a minimum of delay. I thank the Leader of the House for providing time to discuss the contents and recommendations of the report so soon after its publication.
I welcome the Minister of State to the House and compliment the Leader of the House for giving us the opportunity to discuss this report. This is the first time in the State's history we have used our own expertise to review science, technology and innovation policy. In itself that is an indication of our desire and ability to shape our economic future.
We have been slow to appreciate the value of science and technology in terms of our country's advances over the years. Studies undertaken in the 1960s, 1970s and 1980s were not acted upon as they should have been. We must accelerate the rate of knowledge generation and absorption and its conversion into new products and processes for the expansion of companies, exports and jobs to compete in a world where the speed of change is such that there is a fusion of science and technology. No country, however small, can afford to rely on innovation elsewhere. We need our own source of research and development to give us instant access to knowledge and the ability to apply it.
It is stated in the report that Irish third level colleges and research establishments have constantly produced ground breaking work. Many of our researchers are to the forefront of knowledge creation. There is a rising tide of Irish entrepreneurs whose vision and determination catapulted their companies to a position of being major international players.
For many years we have had one of the lowest percentages in Europe of Government spending on R and D, reflecting our lack of conviction in this area. No country, least of all this one, can afford such lack of response to the critical needs of knowledge. The Minister outlined, and it is stated in the report, that 1 per cent of GDP has been spent here on R and D as against 3 per cent in Japan and elsewhere.
Unemployment remains extremely high, although upturns in the economic cycle are having a positive effect. Transfers from the EU inject over £2 billion annually into the economy, but changes in the Common Agricultural Policy and possible extensions of membership to eastern European countries could significantly affect this figure in the medium term, and we are all aware that this is on the cards.
The recent economic improvements will not be sustained without a fundamental change in our approach to the issues of science, technology and innovation. Such a change is essential to generate the dynamism necessary to create a highly competitive indigenous sector and to continue to attract and integrate foreign investment into the economy in order to make a significant and lasting impact on the problem of unemployment.
I support the proposal that there should be a target to double the amount of R and D carried out by businesses. In order to do so the Exchequer funding share should be maintained at around 13 per cent. If business expenditure does not increase at that rate the Government should consider other methods, such as a repayable R and D contribution from industry. An integrated set of tax measures is needed to stimulate business research and development, including dividend relief for owner managers, R and D tax credits, PRSI relief for R and D personnel. BES for R and D service companies and tax changes to encourage multinational companies to establish their regional headquarters and strategy functions in Ireland.
A portion of Government funds should be earmarked for new R and D performers in both multinational subsidiaries and indigenous companies. New funds for food related R and D should focus on the development of new consumer products, including marine based food. Research is also needed to increase value added in the timber sector. There is a need for an improved venture capital environment, particularly for high tech projects, as well as initiatives to improve business perception of entrepreneurs and innovation. FÁS should ensure that at least £50 million per year is used to support training for the employed and all programmes should contain a strong emphasis on innovation.
I visited Taiwan a few years ago and was taken aback by how far advanced its science and technology was. It had science and technology business parks. I would like to think that in the consultation which will take place in the committee the Minster has set up, we will consider going further than just upgrading the office of science and technology. We should have a national science and technology business park. We should be prepared to show to all countries in Europe and the world that we are in earnest about upgrading our position so that we can be as good as the rest in the world.
We are competing with people who are years in front of us because they realised that science and technology innovation was the way to go. When one considers the business parks in countries such as Taiwan, the number of people working in them and the presentations made on a continuous basis to visitors from other countries, it is mind boggling to think how far behind we are. If we are in earnest about developing this area in the way the report suggests, the only thing we can do is put our foot forward and say we will provide a science and technology business park at the earliest possible date and will compete on a one to one basis with our European partners and other countries around the world.
It is interesting to note that the report states that the council was critical of the fact that despite an investment of £650 million in science and technology related areas in 1993, the composition of the figure only became known after it had been allocated. It is unbelievable to think that the amount of money allocated only became known afterwards. This demonstrates the lack of planning of where we are going and what we want to achieve in the area of science and technology. Our third level institutions are training students to the highest possible level, perhaps higher than in many countries in the world. This type of lack lustre approach certainly predetermines what type of real input we wanted to see by Governments over the years in this area.
It is only six or seven years since we appointed the first Minster of State with responsibility for science and technology. We have come a long way in that short time. Even though we have come a long way, we started a long way behind everybody else; and even if we implement many of the recommendations in this report, we will still be behind those who have been so far in front of us. I expect and know that the Minister will ensure that we will move at the fastest possible pace to create advantages for the benefit of the large number of small industries which cannot afford the R and D required in their own industries and depend on the State to have people available to help industries who have to compete for business on the European and world markets.
If we do nothing else today, we should compliment those involved in drawing up this report and state that we will look for funds for the provision of a science and technology business park in conjunction with the Government and that we will ensure that we will be as good as the rest.
We are losing a substantial number of jobs because companies are not given the help they need at the time they need it to keep up with modern times. I have in mind one company in the food industry. It started as a very small company in producing prepared vegetables for supermarkets. It started with 12 employees; today it employees about 114 people. I know without a shadow of a doubt that if there was more up to date research and development available that number could be doubled because the company has the expertise to produce the product. To be able to compete with similar companies in Northern Ireland it is important that we should get this type of development up and running at a faster pace than heretofore.
There is a great deal of talk about being in the main league with regard to monetary union and a single currency. We are so far behind in that regard that we must get up and running — and I have no doubt that the Minister will put things in place and make relevant proposals to Government — so that we can at least get into the second league and put ourselves in position by the year 2000 to be in the first league. In view of what Korea intends to do — although we cannot compete in that league — we must be in a position to compete for the benefit of those for whom we are providing and framing policies and so that the young entrepreneurs who leave our educational institutions annually will have the best available technology in order to compete with those who are now years ahead of us.
I look forward to the publication of the committee's recommendations. Perhaps, as the Minister said, we will have the opportunity of looking at the recommendations and improving them later this year or early next year.
Beidh mé an-gearr. Cuirim fáilte roimh an Aire. Senator Quinn ought to make his contribution before me but I will be quick.
Obviously one warmly welcomes the report. Its impact on our thinking should be seminal. It is not begrudging anything in the report to concentrate on questions concerning it rather than on continuing to welcome it in a sustained way. Clearly we come close to the bottom of relevant international leagues, in so far as they can be relevant, in investment levels in science and technology. However, we must be careful about simple comparisons. It is one of the most difficult of all areas to analyse in terms of relating results to investment. I would not like to be thought that simply flinging money at science and technology in this country is a solution to current problems, and undoubtedly, there are problems.
The Minister related some comparisons between Europe, Japan and America in his worthwhile speech. There is clearly no one-to-one comparison between investment or business expenditure in R and D as a ratio of GDP and the ultimate employment figures. The Minister said that if a 2 per cent rise in expenditure in Europe is compatible with a 20 per cent decrease in manufacturing employment in Europe, what does 2 per cent mean in that context? Later he mentioned that the report urges that our business expenditure on R and D should rise towards average European levels. However, I am sure we do not want it to have the same consequences in terms of employment which he mentioned earlier. The point is that there is no one-to-one correlation.
It is important for us to ascertain the reasons for different rates of return on S and T investment in different economies. They vary considerably. It is a further stage in our thought process because it is not something this report was able to do. Perhaps nobody can do it in a definitive way. However, we should keep the question in mind. How do we evaluate rates of return? Can we refine further the comparisons we have here to make them more relevant to the decisions the Department must take in terms of possible rates of return on different areas of investment?
I welcome the concern in the report with constructive comparison and with learning as best we can from the experiences of other economies, particularly small economies. However, Korea with a population of 37 million is not small compared with Denmark, Finland or Norway. Nevertheless, we can learn from all of them. The jury is still out on New Zealand, by the way. New Zealand has recently been flavour of the month in a number of ways, but I would question that — not in an adversarial manner — and would not be jumping to follow New Zealand's example until one was much clearer on its results.
I welcome this approach. We must continue to refine it. We must not only improve our S and T capability but also our capability for thinking about S and T — we must learn how to learn. That is a major challenge in all areas and is particularly challenging in this area because it is relatively new in this country. This is the first Irish review of the problem, as the chairman says in the report. However, that refers mainly to the membership of the committee. As far as I can deduce from the names, a certain amount of the consultancy backup is still imported expertise. There is nothing wrong with that, but we need to reinforce our own expertise capacity in the evaluation area. That is a general proposition and is not meant as a reflection on the calibre of the report. It is simply an encouragement to continue further in that direction.
On the supply side, we obviously have low levels of expenditure. However, the gap between Ireland and the rest of the world is so wide and we are so relatively low on the league table that we can assume that some of the extra expenditure we will incur must have positive results even while we work at refining how those results can be most effective. We are probably even lower on the supply side than it appears.
The figure given for higher education, low though it is, is exaggerated. It refers to the imputed time spent on research. It is calculated in a mechanistic way. Perhaps that is the only way it can be calculated at present. However, in so far as I am in a position to observe — and I might not be the best observer — that time is being squeezed increasingly in higher education. As our institutions of higher education become institutions of mass education, although I strongly approve of that from the point of view of general social policy, the implication for the research staff of those institutions — given that all staff combine teaching and research and are trapped in internal administrative requirements which become worse as the pressure on resources becomes tighter — is that the amount of good quality time that becomes low quality time as a result of the misallocation of the time of researchers within institutions because of the battle for squeezed resources is really quite frightening.
If in a knowledge based economy we were to think of the quality time of researchers as a key variable, we would look with great concern at how that time has been eroded in recent years in higher education. It is difficult to talk except in an abstract way about this, but I am convinced that it is a serious and worsening problem. When, commendably, we are thinking about how to make higher education more accessible to sectors which have been deprived of it and when we are thinking of the social equity dimension, we should also try to keep in mind the intellectual dynamic of research. All these must be balanced in whatever way is compatible with the national interest in so far as that can be evaluated.
The report concludes that even the current figure for higher education research and development, which I believe is exaggerated, is, as a percentage of GDP, bottom of the league by far among 12 other European countries. Despite the initial scepticism I evinced about precise rankings and so forth, it appears that something must be seriously amiss. In that respect, there are major problems to be confronted by decisions makers about how to allocate any increase in S and T resources and the balance between basic and applied research. We can take quality and relevance into account. Who decides what relevance is? Who decides when relevance is? The Minister has rightly stressed that we are in a situation which requires long term thinking. How far can Governments afford to think long term? I am convinced the Minister is right for a number of reasons. I believe in balance in these matters most of the time. I would not like to see so-called applied research at the total expense of basic research. At the same time one cannot simply have basic research and hope that something ultimately will emerge from it. There must be a balance.
The report distinguishes between natural resource based investment and knowledge based investment in the economy in general. When it makes its recommendations there is a tendency, as there was in the Culliton report and despite this report's rhetoric about knowledge based investment, to go for resource based areas such as agriculture, fish and timber. I do not oppose that. We must extract what excellence and growth we can from those areas. However, when we must think of particular areas we are pulled in those directions rather than in the more vague and problematical but rapidly developing knowledge based areas — software, high definition television and so forth. Knowledge based areas require some capability in basic research within the country, even when most of what ultimately will be applied is, or can be, imported. We need a critical mass of basic research to be able to identify, domesticate and suggest ways forward.
I am not criticising this report for being so natural resource based. When one looks at Culliton, which was to be a businessman's report producing specific recommendations, which less businessmen type commissions were notably thin on, the specific recommendations for sectoral development — the famous clusters of the Michael Porter recommendations — are for agri-industry, which exactly reflect the membership of the committees, as some of the recommendations in this report naturally reflect the membership of this committee. As far as I can remember, the only other recommendation which they could come up with, having slagged the IDA for its failure to come up with a variety of alternatives, was aircraft maintenance. I support that, but if we were to rely on the record of aircraft maintenance since then, we would probably be questioning that recommendation.
In other words, it is very difficult to identify winning sectors. It says in the report that the State cannot pick winners; as far as I can see, nobody can pick winners. The market certainly cannot, except in a very rough and ready sort of way. Therefore, if it is difficult to pick winners in that sense, who picks winners in terms of centres of excellence and identifying sectors to concentrate on or ignore? An ignored sector may turn out seven or eight years later to have had potential growth which was unsuspected at the time. If we have no basic scientific capability here to respond to that type of development, we will be the losers.
There is a variety of very difficult balancing decisions to be taken. I do not think that there is any right way of doing that, but the complexity of the variables must be kept in mind. Simple decisions always have an attraction; but if they are wrong decisions, whole areas of potential development could be excluded by simply being a few years late in a particular area.
If we want to keep the best research students in this country and guide high quality minds into this area, £3,000 for Ph.D. students is not an adequate incentive for that type of mind. We will lose our best research students abroad, and there is a strong danger that many of them will remain there. Many of the best scientists and technologists in this country — and many of the best minds in every area — have returned here from extremely successful and promising careers abroad. They have not come back for research purposes but because they are Irish. The best of them, who are as good as any in the world, are sacrificing glittering careers and have in many cases left outstanding positions, particularly in America, to come back. If we are to hold them — and there have been some notable losses recently — we have to identify the highest quality people and find ways of providing incentives. Our normal third level incentive system is very weak in many respects; it is some sort of internal ethic which drives people, given our incentive system. We should identify the people whom this country does not want to lose in any circumstances. In that sense one is picking winners, but on the basis of proved performance and international competitiveness in their own field.
This report is saying that the demand side is disastrous and that Irish business, particularly indigenous business, is not capable of incorporating and domesticating science and technology at its most advanced levels in its activities. That is quite understandable as things stand — and Senator Quinn has spoken eloquently on this before — because not just the small size but the micro size of a great deal of Irish business makes it extremely difficult to expect business people to be able to appreciate the potential of S and T for their firms.
It is one of the striking lacunae in Irish business life that our industrial organisations, which in several Continental countries play a central role in alerting their members to the moving frontier of S and T, seem, if I understand the situation properly — and I hope that I am not being unfair — to play so muted a role here. If some of the energy which is spent on demanding changes in various policies — which may be right, for all I know — was devoted to trying to move the whole sector forward in terms of S and T rather than just simply looking for concessions, that would be a significant contribution towards raising the consciousness of our business community concerning the role of S and T.
In a sense, innovation dangles a little uneasily here. There are good paragraphs in the report and in the back up volumes on the need to integrate the totality of business thinking. However, because innovation involves changes in management structures and internal organisational structures as well as simply mechanical application or transfer of S and T, one of the directions in which we are going to have to develop our thinking is how one most effectively integrates in that area.
I was somewhat taken aback to see no cognisance taken in the report of the report of the small business task force in February 1994, which challenged the widespread assumption that we lacked enterprise because our number of start-ups of small companies was allegedly only half the international average. If the small business task force report is correct — and it is the only one to do that amount of digging — our number of start-ups is roughly average for the industrial world. Perhaps they would need to be more if we were to catch up, but on the basis of that evidence, which is the only evidence adduced apart from anecdotal evidence about the lack of enterprise in this country, we are not lacking in the enterprise needed to start firms.
However, where we fall down — and this may be because of inadequate thinking about S and T — is in sustaining those firms. The failure rate is exceptionally high for the first few years, but the founder rate is not exceptionally low. The main deficiency is not enterprise in the crude, risk taking sense, but management skill, if the report of the task force on small business is correct. That assumption and that specific reference recur a number of times throughout these volumes. If more homework is necessary on what the exact situation is, one needs to do it, because one's assumptions about that will underlie quite a number of policy conclusions about where the main thrust of policy ought to be oriented.
In case one thinks that this is an anti-business diatribe — God forbid, in the Minister of State's presence — I have enormous sympathy for the problems of small business people trying to cope in an economy of our size with international competition. In so far as they are highly market oriented, they have to think about exporting at a much earlier stage, in both the growth of the firm and product cycle, than is the case with firms in bigger economies. The objective challenge confronting them is much more serious as they have to export at a much earlier stage than is required from firms who are either in bigger economies or who have some genuinely big firms in their own economy to which they can act as sub suppliers. What is staggering about Ireland is not our shortage of small firms but our shortage of really big firms whose influence can pervade the rest of the economic system.
The Minister of State and the report are absolutely right that the linkages have to be created. It is a little sad to have to say, after all our historic obeisance to the market, that it cannot create those linkages. However, I am quite convinced that the report and the Minister of State are correct that the market cannot do that. However, I would like to see — and this is an ideological statement to some extent — the profile of science, technology and innovation raised, but not by advocating the development of these areas as an alternative to or at the expense of general culture. The Minister of State and the report used the phrase "technical culture". If such culture is to be properly appreciated it ought to become an integral part of general culture, so one does not think of culture as being on the arts side while technical culture is something different.
If we are to be a properly integrated people and to think consciously about the integration of all intellectual activities, we should integrate technical culture into general culture. We can feel equally proud of it and take equal satisfaction in its achievements. Literary culture and technical culture are not necessarily mutually anti-ethical or exclusive. In this small country, where the general cultural ethos is crucial to national achievement, we ought to strive to integrate our thinking in those areas, as well as integration in terms of linkages and overcoming the dreadful fragmentation which affects us all.
As the only slight concession to my local interests, I pay tribute to Dr. William Reville of UCC, who now writes a weekly column on science and technology in The Irish Times. He does this well. He attempts to place it precisely in a general cultural context, not as an extra or alien thought process which we must now painfully struggle to take on board. His column used to be in The Cork Examiner, which was the pioneer enterprise leader in this area. Despite the value of the Examiner, publication of the column in The Irish Times brings the issues to a wider public who would not necessarily have the time to peruse the Examiner in the necessary detail.
Raising the profile of science, technology and innovation, but as far as possible in a holistic intellectual context, ought to be an integral part of the way the Minister's Department approaches this issue. I use the word "holistic" although I do not like it, because there is confusion about what it means. I wish the Minister well.
Senator Lee's contribution was thought provoking and contained many ideas which will bear fruit if they are given consideration. I compliment him and I am sorry I am speaking straight after him.
I welcome the Minister and join with him and others in congratulating the council on this report. I hope it will not be put on the shelf for a Government Department to examine but that it will stimulate discussion throughout society, especially in those sectors to which it is relevant.
Everyone accepts the need for policy and action in this area. The question is: what policy and what action? How can we focus our attention on the way the intentions of the task force are carried through? The introduction to the report stresses it is not simply for its own sake that we look to science and technology; we do so to achieve economic development. We should stress this at all times.
In talking about economic development we are talking about tackling our fundamental problems of unemployment. As the Minister said, there is no "quick fix" solution. This is a long term strategy and that is why it has not always been at the centre of the political agenda. There is no immediate political kudos in research and development. However, that is all the more reason why we as legislators should focus on it and give it the priority it deserves.
The examples from other countries show there will be economic development and, in the long term, job creation, if we take this area seriously. The task force document cites examples from the Nordic countries. New Zealand and Korea which should be taken on board; there are more similarities between our problems and strengths and those of the Nordic countries than with the other countries.
I welcome the Minister's announcement of a task force on this area. He referred to the need for a national plan. A yearly one has been recommended in the document. I presume the intention is that we do not put this aside but continue to see what progress we are making. Whenever I make a speech on these issues I mention the need to monitor on a regular basis what progress we are making. That is essential in the research and development area.
This is a fiercely competitive market, particularly as regards technology. Technological items in kitchens, hospitals, offices, canteens and factory floors constantly change. Any company that is not able to keep up with the changes will go under. That has unfortunately been the experience of many companies; they have been unable to keep pace with technology and keep their place in the market. Other countries which have given more central priority to this area have been able to move forward and we should learn that lesson.
It is understandable that indigenous Irish industry has not been as good as it should have been in this area. We did not take part in the Industrial Revolution in the last century so we do not have an industrial background. We had a colonial history and an agriculturally based economy for a long time. We are therefore relatively new to this area.
Since the 1960s we have also been dependent on foreign companies, which we have not encouraged to focus on R and D. We simply encouraged them to come here, create jobs and pay the wages. We did not mind what happened after that. That is also changing now, which is welcome. This report suggests the IDA should encourage, if not require, foreign firms to have a research and development aspect to their activities in this country. I would be interested in the Minister's response to that point because that has not been the case in the past.
Under the Department of Enterprise and Employment there was a division of responsibilities between Forbairt and IDA. The development of indigenous industry has been concentrated in Forbairt, which has been important to this area. I hope that agency plays a central role in research and development.
Forbairt organised an exhibition in Limerick last year. There were stands for companies operating in the hightech area. People in third level education or who had recently qualified were invited to barter for jobs and see what was on offer in these areas. It is most important that there be a linkage between those in third level institutions, who provide the information, and industry. Senator Lee mentioned this in his contribution in speaking about the balance between pure and applied research.
There is an onus on third level bodies to have a closer link to the market, with industry and the places their graduates will go. The regional technical colleges, the Dublin Institute of Technology and the newer universities, University of Limerick and Dublin City University, have all developed strong links in this way. In my area there are strong connections between the University of Limerick and many local industries.
My Fine Gael colleague proposed a national technological centre; in Limerick the Plassey Technological Park fulfils that role. It encourages the interaction between industry and third level institutions. I am not suggesting that is not done by the other universities, but there is more emphasis on it in the regional technical colleges and the new universities. The links should be much closer. This report points out there is no point in third level institutions, the Government and industry doing things separately. There must be this kind of planned approach and this kind of link. By establishing a task force and through this document itself we are, therefore, for the first time, trying to make clear the kind of links which should be there and establish a policy. For that reason it is essential that there is this kind of focus and that there are clear policies and links between the people that are produced in the educational system and how they react with the industries which are in place.
In this context I refer to the educational section of the report, on pages 152 and 153, where suggestions are made regarding science education. We must go back, not just to third level, but to second and primary level also, because it is essential that this starts at an early age. There are programmes which are being developed, and the applied leaving certificate which has recently been introduced will have possibilities in this regard. In addition, transition years are now becoming more widely available than in the past and all schools can now have a transition year if they wish to have it available to students. This must be developed, together with the technology syllabi which have been introduced to schools. As far as I understand, the technology option in schools is still not as widely available as it should be. I know that in one school there was a queue of students who wanted to take this subject, but it was only offered on a pilot basis so it was not available to all of the students in the school. There was a very strong interest from the second level students in taking this option and the school had to turn away some students because it could not accommodate all of them.
There is, therefore, an interest in this area, together with an ability to think innovatively in this country, but it is not being channelled properly. It can be observed with regard to literature, music and so on, where we have the ability to use what we have and develop it. Again, in the University of Limerick, and formerly coming from University College Cork, we have Mícheal Ó Suilleabháin, who is adopting these techniques with regard to music. It was interesting that Toyota Ireland recently gave him £100,000——
It was £500,000.
——to enable his department develop innovation in music. There is no reason why this kind of thinking should not be applied and why firms like Toyota and others should not be putting money into using it in the areas in which they operate. Hopefully, it is an indication of things to come.
Regarding the famous issue of clustering, it is necessary in Ireland for firms to be brought together to operate, because we have so many small and medium sized firms, especially small firms. It is almost impossible for them to have the finance to develop their own technologies and to develop their own networking. This is a little bit off the subject we are considering today, but in the area of getting into the networks where people can sell their goods, of clustering together and of being able to share information — whether it be technology which is introduced from outside or the development of new technology in this country — it is essential that support of this kind be provided. Forbairt have a role here and the former Eolas, which is now part of Forbairt, had a strong role in this area, and it is necessary to strengthen it.
Community enterprise boards should also have some role, because the smaller people who set up small industries usually approach these boards first. They should have an additional role in at least channelling people to the available technology, information and support that is available, and, if necessary, bringing people together in clusters. One person came to me who had approached the city enterprise board and who had a very innovative idea in the area of recycling. However, it needed quite a bit of research and investigation to adapt the idea to Ireland and to what he wanted to do. It took him a great deal of effort to raise the finance and to get the kind of support he needed to develop this idea, but there was potential for a sizeable number of jobs, which I hope will be realised. There is, therefore, a need to assist people who have ideas but who do not always have the wherewithal in terms of finance or expertise to develop them. Again, the third level institutions have a strong role here in that they should be available, through contact either with Forbairt or with the enterprise boards — or, in our case, SFADCo — so that there can be a linking and that the maximum use can be made of the expertise which we have in this country.
We have a very good education system and a very intelligent population, but we need to channel it to ensure that it produces the kind of results we are seeking. That is why it is so important for this debate to be continued and that practical steps are taken to ensure that we are not just talking but that we are achieving results. In this context, I welcome the fact that in his speech on the Finance Bill on Tuesday last, the Minister for Finance indicated that there will be a number of measures to stimulate investment by companies in research and development. That is the extent of my knowledge on this matter, but perhaps the Minister will enlighten me further on it. In any event it appears to be moving in the right direction of encouraging — I am not aware if it is through tax incentives, PRSI or whatever — companies to invest in research and development. We probably need this kind of carrot approach, together with a follow up stick approach, but if we can have measures in our tax system which encourages companies to invest in research and development we could hope to reap rewards in that area.
In the section of the report dealing with learning from other countries, on pages 38 and 39, there is a reference to Denmark and Finland, and we should learn from these countries. Denmark has developed strong international competitiveness in areas such as agri-business, agri-industry, health care products and environmental technology. While I take the point made by Senator Lee that we cannot always anticipate which areas we may be able to best concentrate on in terms of sectors, there is a natural tendency towards these sectors in Ireland because of our history of agricultural dependency and our green environment. These are areas in which we could hope to develop, especially in health care, which is an area in which we have perhaps much potential.
There is also a big growth in natural products and a concentration on things such as the body shop, natural cosmetics and similar naturally based products such as health foods and so on. We should be able to link into this and develop products that would have worldwide competitiveness. In this respect the image of Ireland would help us to sell products in this area: and in the cosmetics industry especially, there is a constant battery of advertising and of new products. A lot of money is spent on these areas in the worldwide market and we need to consider these products to ascertain if we can link into them.
The food and agri-business sector is one which has received much attention and it should continue to do so. In my own area, the Limerick Food Centre in Raheen concentrates on developing products which have added value so that we can maximise the potential, in terms of jobs and wealth creation, of our large agricultural sector. We must continue to develop new products in this area. Programmes such as Techstart and Techman are doing good work, but they need to be expanded.
While I again welcome the fact that we are debating this issue, it is not enough just to debate it. I welcome the fact that there will be a task force and I hope that there will be ongoing monitoring of progress in this area, that it will be a wide debate and that it will be responded to in the third level institutions, in the country at large and in the industrial sector. Everybody must realise that they will have a responsibility and that, for example, the third level institutions will reward people who work in this area. Much of the time in third level institutions, people are rewarded by promotion if they undertake some kind of obtuse research which gets into a number of journals which the public often does not read and of which industry probably takes no notice.
Obscure, not obtuse.
There is also an onus on third level institutions in particular to reward by promotion people who do this kind of work. They have an eye to the outside world and not just to the people in their own sector. There is equally an onus on industry to put its money into long term development and there is an onus on the Government to respond with both the carrot and the stick. It should provide incentives but also the national support and focus that is needed in this area.
In accordance with the business ordered for today, the Minister will be called to conclude the debate at 12.45 p.m., which is a quarter of an hour away. I understand there are three Senator anxious to contribute. As there is no time limit, I ask Senators to keep this in mind.
As there are at least three other speakers offering, I will confine my remarks to three to five minutes. This is not because I do not regard the matter as more important or urgent than that but because I wish to give others an opportunity to speak. I wish the Minister of State well in his appointment. He has the drive and initiative to tackle the work needed in this area and I hope he will be able to use that in a positive way to make some dramatic changes during his period in office. I am glad to have the opportunity to welcome him and wish him every success in his job.
I spoke on this matter last May and I will not go over those points again. However, there are some areas which are as relevant now as they were then. Again, I wish to emphasise and support the report in calling on the Government to provide the additional finances needed to fill the gaps in this area as a matter of extreme urgency. The report highlighted that in a very stark way when it said that it was necessary for the Government to immediately allocate £25 million to face up to the present shortcomings in our programme. These need identification and a response. If this Minister secured that funding immediately in line with the committee's recommendation, he would have achieved a major step in the road towards meeting the shortcomings in research and development that have been obvious to many people for many years.
There was some comment about our lack of interest and awareness in or commitment to research and development and the lack of response over the years. There have probably been more reports written about research and development than anything else. The Telesis report in 1982 indicated clearly what needed to be done and there were many other reports. In one of its reports, Eolas specifically demanded that investment be trebled from £50 million to £150 million in 1994. In spite of all this, it will still be extremely difficult to reach any of the targets or achievements mentioned in this report unless the Government commits the necessary financial resources. I said this to the Minister's predecessor, Deputy Brennan, last year when I was on the other side of the House. If we are serious about it we have to make a financial allocation which matches our commitment. That is the main point I wish to make.
There is certainly a need for reorganisation to ensure we get the best possible value for money. This report identifies 41 agencies and institutions engaged in research and development activities, technological matters and innovation. This is daft and the sooner there is some reorganisation of agencies and institutions the better. I welcome the establishment of the Government committee the Minister announced today. The report indicated that the Taoiseach should chair it. I am not sure if he will, but the fact that there is now a Cabinet subcommittee dealing with the area is an advance. I hope we will get a report from the subcommittee to indicate what it is doing.
The report mentions that Ireland accounts for 0.05 per cent of European research and development. This indicates where we stand in the research and development league; we are at the very bottom. We need to do something urgently about it and the Minister would be well advised to seek some additional funding. Research and development and new innovation and technology will have a profound impact on almost every area of activity.
I want to highlight the present situation in Shannon. Up to 700 jobs are threatened in a highly sophisticated industry involving aviation maintenance and reconstruction development. There are 700 people whose jobs have been threatened for the past few months and who need a firm vote of confidence from the Government as to its support for that industry. It is an example of what can be achieved in the research and technological area for anybody who wishes to see it at work in practice. I am sure the Minister will have an opportunity to visit the aviation park in Shannon and see the work underway there and what can be achieved through investment in this area.
I draw the Minister's attention to the situation in Shannon Aerospace and ask him, as Minister of State with responsibility for science and technology, to take a personal interest in the business plan which has been put together to try to resolve the problems in Shannon Aerospace and secure the jobs of the 700 people there. He will be showing them and demonstrating in a very practical way that there is a real commitment to finding ways to increase economic activity and provide more jobs and, through science, technology and innovation, create an opportunity for many more people to be employed in this country in the future. I welcome this report and the Minister can be assured of our backing to get the necessary finances for its implementation.
I thank Senator Daly for giving me the opportunity and time to speak on this matter. I also warmly welcome this report, which is a necessary step along the important road the country has to travel. I have four brief points, the first of which relates to innovation. I welcome the connection the report makes between science and technology on one hand and innovation on the other. Innovation is the very reason why the State should strongly support science and technology in the first place. Innovation is the output and the end to which science and technology are the means.
Innovation has always been around, but there seems to be something new. Until recently innovation was just an option for companies. Some companies were able to survive and even thrive without thinking too much about innovation. There was a living for them following in the wake of what others were doing. Most Irish companies in the past did just that and they did not themselves innovate. They copied what somebody else was doing, usually at a leisurely pace. What is new is that this approach does not work anymore. We are rapidly reaching a stage where companies which do not innovate and are one step behind the leading edge, instead of keeping fully abreast of it, will not survive and have not been surviving. They become as out of date as some of the technical industries we have seen go to the wall in the last 25 years. Any company that is not driven by innovation is about to become as dead as a dodo. The future is as stark as that, and Senator Daly touched on it very clearly.
My second point is to underline the link between science and technology on one hand and innovation on the other. In the world in which we move innovation actually equals technology. One can no longer have worthwhile innovation without some technological dimension. This applies particularly to the development of new and improved products. Innovation in marketing is no longer enough to give one a competitive edge. From now on the heart of innovation will be firmly based on technology.
Senator O'Sullivan made the point that we are badly equipped to cope with the changes that have taken place. We do not have a tradition of science and technology in Ireland. I would not go so far as to say that we are technologically adverse, but it is true that our culture is mainly focused in other directions. Nowhere is this more evident than in the very corridors of power. If Members look around the administration and the world of politics, they will see very few people with a scientific or technological background. Overwhelmingly the qualifications are in the traditional humanities, not in subjects related to science or technology. This was touched upon by Senator O'Sullivan when she talked about the applied leaving certificate, which is a first step in that direction. This partly explains why we neglected science and technology so woefully in the past.
In the business world, the same bias is repeated. Most people lack a technological background and this is reflected in our very companies, the businesses they trade in and the degree to which they are driven by innovation. Far more companies, it seems to me, are driven by accountants than are run by engineers. Even when engineers set up their own companies, they are often handicapped by the fact that their training has not given them the basic business skills necessary for success. This is a fundamental difficulty of culture. We have become aware that we need to develop an enterprise culture. The Culliton report laid great emphasis on this. We need to sharpen that now, we need to develop an innovation culture because that is the very heart of the success of enterprise. We need to develop a technological culture because that is the way to innovation.
What can we do about these needs? I welcome the Minister's words today and the setting up of the task force. I am not sure that I welcome Senator O'Sullivan's reference to the need to have ongoing monitoring. I do not like task forces that monitor things. I was delighted to hear the Minister say that he is setting a deadline of six months for the completion of the task force's report. I then read that it was hoped that the report would be ready in six months. I would love to see a very definite deadline of six months to come to the cabinet committee.
The report today is full of good recommendations. I do not disagree with any of them. However, because of the costs involved, my guess is that only a small proportion of those will actually be implemented, although I know the Minister has said otherwise. If we take that route, we will fail miserably. I am not about to make a case for more public spending; we are in enough trouble in that area as we are. We should stop spending money on some things in order to spend more money on supporting science and technology in order to create an innovation culture.
We have too many State supports for companies. Too many programmes are available, supporting every worthwhile aim in the book. The result is that very often nothing gets done properly. That is certainly the case with science and technology. That whole area is starved of resources. There have been increases in recent times but they have only been a drop in the bucket, so I call for a more radical focusing of State support for companies. Let us just pick one project and get it right. That may shock many people, certainly many people in some of our State bodies, but it makes sense.
Acting Chairman
You have only two minutes left. Senator, and Senator Finneran is anxious to make a contribution.
I did not know Senator Finneran wanted to contribute. Let us take just one project and decide whether indigenous industries have a place in the marketplace in the next century. My apologies to Senator Finneran, I did not realise he wanted to contribute.
I have just had a word with the Minister and we could give three or four extra minutes to Senator Finneran if the House agrees.
Thank you very much indeed. Let me finish with a couple of sentences. Let us move away from the idea of the State development agency as a kind of universal nanny in the business of meeting every possible need of a developing company. Many of the services now provided by State agencies would be supplied as commercial undertakings by the private sector if the State got out of the way. Creating an innovation culture is something only the State is able to do. The question is whether it will or not. The need is there; the resources are there if we redirect what we are spending now and focus it on that one big task.
I thank Senator Quinn for cutting his contribution short. I welcome the Minister, Deputy Rabbitte, to the House and wish him well in his new Ministry. I will just make a few points because I know time is against us.
The report contains a well argued case for the importance of science and technology in a modern economy and why in general it is necessary for us, given our ambitions for national economic development, to increase the amount of funds we invest in this area. It highlights the neglect of this area up to now and also organises a lot of useful data in this area. It contains good recommendations for the development of our small indigenous industry. It also makes a very valid point that science and technology must be considered in terms of our wider industrial policy and not in isolation.
To look at it just from a taxpayer's point of view for a moment, a real problem with the report is the apparent approach, that of spending and continuing to spend money on the problem. There is no great justification for that. I would like to hear an explanation of the intention to set up a large office of science and technology. At the same time, the report says very little about how we can improve the quality of return we get from the large sums of money that are already spent on science and technology.
There is an over-emphasis in the report on natural resource based industries. More jobs could be created in the natural resource based industries, but these jobs need more investment rather than more research and development. In any case, I am not so sure that there is potential for so many jobs in the natural resource based industries. Jobs can be created in the high growth knowledge based industries. Although they are acknowledged in this report, there is very little emphasis on these growth industries and this, in my view, is a weakness in the report.
An important point made in the report is the very low level of innovation in our indigenous industries. This is correct and a continuous effort will have to be made to address this problem. However, there is little or no account taken of the fact that more and more multinational companies are carrying out R & D and product development in Ireland on a major scale. There is a structural problem here in that Eolas, the old science and technology agency, is now part of Forbairt, the industrial development agency dealing with indigenous industry. There is a real danger that Forbairt's emphasis will be on science and technology, which it feels is appropriate for indigenous industry. This would put us at a great disadvantage, I believe, and lose us opportunities in the area of helping multinationals find deeper roots here in Ireland. There is an opening there for us and we should home in on it.
Points in regard to education have been covered by a number of Senators, but I am not so sure that we should throw money into this area of education either. Universities and centres of excellence in education are already finding support in the marketplace if they are good enough, and I am not sure that everyone in our schools is good enough to merit grant aid. If they are good enough many of them are able to find the money themselves. I see a structural problem in regard to food research. Should it be carried out in Teagasc as opposed to the universities? Given the amount of money going to this area, guidance from the council is important. They are both represented on the council and it is surprising that it did not address this important issue. It should have addressed it.
I have one further point regarding pollution and the environment. There is a glaring deficiency in the Environmental Protection Agency. It has licensing and monitoring functions, but it cannot provide grant aid to an industry it finds offside and which could rectify the position if it were given £50,000. I ask the Minister to consider this matter when the White Paper is being considered.
I am a little disappointed that the report did not dwell on the potential of high growth, knowledge based industry. I emphasise the point that this area has high employment potential. The report is a major contribution — perhaps the best to date — to the debate on the vital role of science and technology in Ireland. It contains many good recommendations and presents the newly appointed task force with a serious opportunity to make further progress.
I thank the Leader of the House and all the Senators who contributed to this important debate. Senator Finneran concluded on the point on which Senator Mullooly began, regarding the preparation of a White Paper and what should be included in it. I have an open mind on whether a White Paper is necessary at all.
This is a very comprehensive report and a task force is examining it recommendation by recommendation at assistant secretary level, in keeping with the Culliton and Moriarty format. It is chaired by the chief executive of Forfás, Mr. Travers. This task force reports to a Cabinet committee, which, regarding Senator Daly's question, comprises the Ministers for Finance, Agriculture, Food and Forestry, Education, the Marine and myself. It is not chaired by the Taoiseach as the Cabinet felt it appropriate that I chair it.
The committee will consider on an ongoing basis the tranches of recommendations as they are dealt with by the task force. I have an open mind as to whether, following all of that, it will be necessary to publish a White Paper. It may be that when the Government publishes its response, as it will have to do, it will decide that the report and the response will be sufficient to guide it in this area of policy. A number of Senators remarked that it is unlikely the Government will be too short on policy and that other considerations will come into it.
I am not ruling out the question of a White Paper. However, I raise the question of whether it is necessary, having regard to the very specific nature of many of the recommendations and the fact that they will be subjected to scrutiny by a task force at assistant secretary level, which in turn will be examined by a Cabinet committee.
Senator Farrelly made a comparison in connection with his visit to Taiwan. He urged me to consider the establishment of a national science and technology park in Ireland. The STIAC report did not dwell on this aspect for the specific reason that another committee, comprising academics, members of chambers of commerce and others, is examining it. I assure Senator Farrelly that I note his points and that I am examining this matter. I am also examining the very interesting literature on how the notion has come a cropper so many times in the past. I am quite open to advice from anybody who can guide me on tiptoeing through the tulips in this area.
Senator Lee came closest to expressing the view attributed to the institutions and people engaged in research. To some extent, Senator Finneran expressed a very contrary view when he queried whether we should be throwing money at pure research. The answer lies somewhere in between. Senator O'Sullivan is probably correct when she said she would encourage greater links between universities and industry in this area. I do not think that doing this necessarily sacrifices the better elements of the traditional idea of a university and it is happening.
Senator Quinn is correct when he said he notices, when he looks around the corridors of power, that most people lack technological training. This is manifestly the case, but it is most emphatically not the case with our young people. This is the important thing I have learned in the short few months I have held this brief. The young people in industry and those being turned out by the institutions, if they lack anything, certainly do not lack a technological training disposition. They are not uncomfortable with it, rather they are eminently comfortable. The deficit which existed is being corrected and to some extent it has already been corrected. These people are also benefiting from skills learned abroad, before returning to Ireland for the reasons to which Senator Lee referred.
Senator Lee spotted an apparent statistical inconsistency. It is a fair point that one can prove anything with statistics. However, I am persuaded that our spend on research and development in this economy is less than it ought to be and considerably less than the successful economies. Perhaps using global EU figures hides factors such as the spend levels in Greece, Portugal, Ireland or the Cohesion countries generally as compared to the levels in France or Germany, which are considered successful EU economies. The underlying point is that the business spend is less and that too many businesses consider innovation in the same way as they consider training, as a cost rather than an investment.
Senator Lee doubts that we just need to improve our capability in this area. He suggests we also need to improve our capability for thinking about science and technology. I accept the point. Senator O'Sullivan is correct when she said there are no kudos in this element of my brief. People's eyes glaze over when one talks about science and technology. I cannot say that they reflect on little else in large tracts of my constituency. That is not the case, but we will persevere nonetheless.
The Minister has a sense of humour.
Senator Lee returned to the eternal problem of the difficulty with picking winners. This problem obviously exists. Senator Finneran made an interesting point when he said that the possibilities for job creation are in the high growth, knowledge based industries and that we harp on too much about the job creation potential of natural resource based industry. This runs against conventional wisdom, but there is probably some truth in it, especially when one considers how we have traditionally managed our natural resource based industry.
I recall Senator Quinn being the only member of a particular commission who stood out against the wisdom of An Bord Bia coming under the Department of farmers. He may not have used that term, but I do so advisedly. The Senator is correct. I represent the Department of Enterprise and Employment but I have never been able to understand why what ought to be our biggest source of jobs is not under the responsibility of the Department of Enterprise and Employment. It is not a good idea that it ought to be producer driven and under a farming department. This raises a whole new set of questions.
I have replied to the questions that were asked about the task force and the Cabinet committee and I will now refer to the question of finance. Many people are surprised that the total investment in science and technology related areas is in the order of £650 million. It may be as much a question of the planning and foresight that goes into it, how and where it is spent, what are the priorities and the fact that there are vigorously fought turf wars that make this area fraught will all kinds of difficulty.
Senator Quinn pleaded for more investment in this area, taking great care to cover himself from the public spending front. I also acknowledge that and that there may be a good deal of merit in what he says about redirecting some of the existing resources into an area like this that will create sustainable and new jobs in the future. However, he did not exactly tell me where we should start and that is the problem. When one makes an investment in any given area there are howls of opposition from others.
The small business area was mentioned a number of times. We have all heard complaints about foreigners who can get as much money as they want by way of grants, etc., when they come to this country but existing small businesses cannot. This is an extremely difficult situation. Everything in this country seems to be tax driven; every development seems to be tax driven and the Government has done well to extend inner city renewal to Ballybunion and Westport.
The answer to Senator O'Sullivan's question on the announcement by the Minister for Finance the day before yesterday is that my Department and the Department of Finance are, and have been, in consultation for some time about taking on board the recommendations of the STIAC report in respect of the taxation area. The Minister for Finance said he will be introducing a Committee Stage amendment that will encourage and seek to stimulate greater additional investment in research and development and some form of tax credits will be constructed to allow that to happen. Its purpose is to encourage companies to increase their investment in research and development.
I can tell Senator Daly — I thank him and Senator Finneran for their kind wishes — that I would be happy to visit Shannon. I understand what he is saying about Shannon Aerospace. I also understand that, after much agonising, the decision the Minister for Enterprise and Employment has made in respect of this situation is the only pragmatic solution that can be brought forward at the moment. It is an extremely difficult question for issues that I am afraid are bigger and wider than Shannon Aerospace in terms of whether and how that decision should be made. However, there is a young, well trained and flexible workforce working competitively at Shannon and it would have been difficult for a Government to explain any other decision than the one that was taken. However, as Senator Lee pointed out, it does raise questions about the soothsayers in this area who point, for example, to aircraft maintenance and similar kinds of development as the industries of the future. The disturbing fact about these prognostications is that they were made so recently. However, I sincerely hope that the Government decision will have secured the situation at Shannon.
I thank the Members for inviting me to speak. It has been a good opportunity to ventilate what is an important report and I hope it is only the beginning of our efforts to give, as somebody requested, a higher profile to what is a very important subject.
I was suffering from post-Lansdowne Road amnesia when I omitted to welcome the Minister to the House this morning, although it has not quite lifted yet.
A pre-emptive strike.
I thank the Minister for responding so readily to the invitation to come to the House. I thank all the Senators who contributed. It was an interesting, useful and positive debate and it is appropriate that it was initiated in this House. I hope the Minister will come back to us from time to time to keep us abreast of developments as a result of this report or of other developments in his Department.
Question put and agreed to.
Sitting suspended at 1.05 p.m and resumed at 2 p.m.