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Seanad Éireann debate -
Wednesday, 6 May 1998

Vol. 155 No. 9

Year 2000 Computer Problem: Statements (Resumed).

I was speaking about the concept of triangulation and the difficulties it entails. I concentrate my remarks towards small and medium enterprises. I repeat that for the benefit of the Minister of State, Deputy Cullen, who has just entered the Chamber. I have no fear for the public sector and the large corporations as their access to resources will allow them deal with Y2K; but I have serious concerns about the SME sector, especially its lack of awareness and preparedness and the extra cost which will be imposed on it by that. While triangulation will be a more complex system than at present, it will not impact on exchange rates as they will not vary. I would like the Minister in his response to address the questions I asked about Y2K and the compounding difficulty of euro compatibility in the context of the Y2K problem as it is important.

I wish to refer to another point which the Minister never mentioned in his presentation. It is the compounding difficulty of the year 2000 being a leap year. I would like some indication in his response as to how that fares in the preparedness of the public and private sectors. The date of 29 February 2000 will cause major problems in relation to dates. We now have three dates which will cause problems: 9 September 1999, 1 January 2000 and 29 February 2000. What is being done as regards preparedness and what difficulties are foreseen if people do not address the problem? Are the various consultants and individuals working in this area giving sufficient priority to leap year compatibility as well as Y2K compatibility?

Difficulties have already arisen relating to the leap year issue. A multi-million pound scanner in a British hospital would not work on 29 February 1996 because it could not handle leap years. An aluminium smelter in New Zealand lost $500,000 because two plants shut down unexpectedly when the process control computers failed to allow for the extra day. These are examples of what can and did happen in 1996, the last leap year. Multiply that by all the problems we could expect if people are not ready for Y2K and if the leap year problem is heaped on them as well? Will the Minister indicate what work and preparedness is being done in relation to that problem?

There has been criticism that Europe is way behind Ireland in terms of Y2K difficulties. The US is stated to be a year ahead of us in preparedness, but Europe is at least six months behind Ireland. Has the European Commission been negligent in this area and in alerting member governments to the various needs in relation to the Y2K question? What is our Government's view on what I think is a negligent European Commission in this area? What are the insurance implications for major systems failure, dose miscalculations, failure to extend credit terms or the collapse of companies because of Y2K failures? How are legal actions likely to stand up if serious problems arise from Y2K? Perhaps the Government could comment on that and on the work it has done in that area.

I mentioned event horizons. We do not have until 31 December 1999; the event horizon issue is already with us. Best before dates extend beyond two years in many cases of non-perishable goods, including blood supply, as do expiry dates on credit cards and ATM cards. We could all pick a particular selection. Will the event horizons be met? Are areas which involve projections or event horizons up and running in terms of their readiness?

Will our banks follow the lead of British banks and ask for Y2K compliance guarantees from their customers as a condition for continued credit facilities and loan sanction? Small businesses need to know whether the banks will continue to extend credit and loans to them if they are not Y2K compliant. The banks need to state their policy and whether they will follow their British counterparts. Conversely, will building societies, credit unions and the banks assure their customers that their money is safe and accessible after 1 January 2000? We need to talk about this and hear more about it generally.

Will the Minister respond as to whether he is satisfied we have sufficient human resources to resolve the problems given the demands which will be put on these experts by the public and private sectors? The number of individuals who have expertise in relation to the old COBOL legacy systems are few and far between. I have a feeling the limiting factor in terms of preparedness and readiness may not only be a money resource but a human resource in terms of physically fixing and adjusting computer mainframes and various other systems. Perhaps the Government could comment on what is available in terms of the human resources needed. As awareness increases, the demand for these individuals increases and it is only then people will realise that having failed to plan, it will be extremely costly to get the resources necessary in terms of expertise and consultants to help them complete their readiness for Y2K generally.

There are many other questions and areas into which we could go, but the Minister has been generous and I appreciate his generosity in relation to the time. The concerns are numerous and include the small and medium sized enterprise sector, sections of the public service and their particular readiness, the financial institutions and how they will handle their customers in relation to Y2K compliance, hospitals and the health services.

A recent expert study in the US went through the different areas where there could be difficulty in relation to Y2K compliance and failure to comply. If we transpose the study done in relation to New York city and wonder how ready Dublin, as the large capital city of this State, will be, we could ask similar questions. Corporation 2000 studied New York and forecast that the millennium will throw the city into chaos with powers supplies, schools, hospitals, transport and the finance sector likely to suffer severe disruption. Remember, the US is one year ahead of us in relation to preparedness according to the experts.

Corporation 2000 reckoned that in New York, a major city, 50 per cent only of the electricity supply would be available from 1 to 10 January 2000, that hospitals would work on emergency systems only for four weeks, that schools could be closed for four weeks, that the stock market and banks could be closed for eight days such would be the chaos, that 50 per cent availability of telecoms only from 1 to 10 January would be the prospect, that there would be ten days disruption of the postal services and that there would be 30 days disruption of transport, including air traffic control, rail and bus services. Picture Dublin with failure in even this menu of areas without going into a range of other areas which we could all pick as examples.

This is a serious issue of awareness. While I welcome the awareness launch today for the business sector by the Minister of State, Deputy Treacy, I hope it is not too little too late. I have not seen the brochure. It is certainly late but perhaps better late than never in relation to this issue. I compliment the public service on the work being done in the past 12 months, particularly the past six months, in relation to readiness and Y2K preparedness generally. I need to hear more on how euro compatibility will be married to Y2K readiness. That is a very serious issue. We need reassurances that the European Commission and Europe is up and running. We are told it is six months behind Ireland in terms of preparedness. Outside Europe, I hear Scandinavia is even 12 months behind that again. What does that mean for interaction and infra-trade for a small open exporting country like Ireland?

The list of difficulties and problems is there and we could all choose queries and problems. To borrow the words of an expert commentator in this area, there is no doubt that failure to plan is to plan for failure. I look forward to the Minister's response and thank him for being with us this afternoon.

As Senator Avril Doyle has done, it is my intention to focus on the effect of the year 2000 on small businesses. We are talking about IT and technology and yet we do not have the use of aids such as overhead projectors and computers screens. In an effort to try to bring us into the modern world, I made two signs, one for the year 2000, Y2K, and a new one for the year 2000 compliant, Y2KC, to which I have added the letter "C" and which I will patent as something at which we will look in the future.

Without a doubt, the largest difficulty for the small and medium sized business sector, where the business is generally owner managed and where they make a significant contribution to the economy, is awareness and acceptance of the seriousness of this problem. I intend to address that issue, look at the action which needs to be taken and to comment, as Senator Avril Doyle has done, on the compounded difficulties of the implementation of the Year 2000 and the euro in and around the same time. I will also look at the inflexibility of the year 2000 deadline and the fact it cannot be moved. I would, however, also like to take a slightly different tack in terms of focusing on the year 2000 issue as an opportunity for Ireland as well as the threat it poses for our businesses.

Before we get carried away on a tide of fear that the world is falling around us, we might remember Chicken Licken and the acorn which fell on his head. He ran helter-skelter around worrying that the sky was falling until somebody with a little common sense told him it was only an acorn. I do not intend to take away from the seriousness of the problem but it is important people know the Year 2000 problem is fixable in case they fear they cannot solve it. We can plan for and address this problem. It is not rocket science. If people think about it and do a little study, it can be handled and they can take effective action in a planned and organised manner.

As Ireland is a small island on the periphery of Europe we sometimes suffer from an inferiority complex. We think we cannot do anything right and the problem is our fault. However, this is not an Irish problem. It is a global issue and many countries will have as much, if not more, difficulty than Ireland addressing it. It is the millennium time bomb and awareness is the most important aspect. In a recent study to which 40 companies responded, 17.5 per cent had taken no action whatsoever in relation to the Year 2000 difficulties while 57.5 per cent had begun to study the issue. A further 15 per cent had begun a formal impact assessment but only 7.5 per cent had begun to change codes and computer systems. If one examined the 7.5 per cent of the 40 companies, I suggest many of them would be large multinational operations with large budgets and resources. This is why I intend to focus my comments on small and medium sized enterprises.

In a worst case scenario on 1 January 2000, one gets into one's car which starts. One travels to the end of the road but the traffic lights are not working and one is caught in a traffic jam for 30 minutes. One arrives late for work and tries to use the lift but it is not working. One arrives in the office but one has missed an important meeting so one decides to fax the details one intended to discuss. However, the fax will not work because it has an imbedded chip with a date. One decides to use one's PC and e-mail the details. However, the PC or e-mail will not work. The company's communication systems internally and externally will not work. One then discovers that the bank did not process a payment so the money for which one is waiting did not arrive in one's account and money which was supposed to have been paid out was not transmitted in time. The just in time processes on which one's business depends did not work. This is a worst case scenario but it should not happen if people prepare and take action now.

The issue of funding gives an idea of the seriousness of the problem and how big businesses are considering the matter. The Bank of Ireland estimates it will cost it upwards of £40 million to address the issue properly, involving the spending of £20 million this year and £20 million next year. The cost to Ireland is estimated at approximately £7 billion. The ESB suggests it will spend £11 million. The international company, Unilever, estimates it will have spent £300 million before the issue is finally addressed. However, its big concern is how it will know it has finally solved all the problems when some of the difficulties have not yet arisen and have not been considered.

We should not only consider the big businesses which have large budgets but also consider small 0businesses. Many people say hardware has been replaced in recent years, but many companies are still operating 486 computers which have not been replaced because they are still doing the job for which they were intended. However, such computers now need to be replaced and each new PC will cost in the region of £1,200 to £2,000. If a company has an old fax which is not Year 2000 compliant, it may cost approximately £350 to £500 to replace. In terms of software upgrades, a company may have a system which operates a payroll for 15 to 20 employees. The system may include an accounts package which handles purchases, debtors and creditors and regularises stock. However, it is not Year 2000 compliant and it must be upgraded.

It may also be necessary to upgrade operating systems, project management and spreadsheet software and databases. Even WordPerfect version 6.1, which is the word processing package used by Senators, is not Year 2000 compliant. For a small company with five employees the approximate cost of those software upgrades is £5,000 to £10,000. For a slightly larger company with ten employees, the approximate cost will be £10,000 to £50,000. This must be funded from pre-profit income. Most organisations may be working on a 10 per cent margin. To pay for upgrades which may cost a minimum of £5,000 and a possible maximum of £50,000, the turnover must increase by somewhere in the region of £50,000 to £500,000. This is the scale of the problem facing us. A company may have to increase its turnover by up to £500,000 to pay for the right to survive in the economy. The difficulty facing small and medium sized enterprises in Ireland, Europe, America and elsewhere is that the cost appears to have no direct business benefit except continued existence.

Another aspect is competitive advantage and the concept of the chain. The Minister of State, Deputy Treacy, stated that we should not only worry about ourselves but also our suppliers and customers. Will companies miss deadlines because suppliers missed their deadlines? A huge number of manufacturing organisations deal with a large of number of suppliers which operate just in time delivery systems. Stock is not delivered to companies by subcontractors until it is required on the assembly line. A company may get away with missing a deadline once, but it will not get away with missing any further deadlines. What will happen if a company misses a deadline because its supplier missed its deadline?

Regarding the incorrect processing of payments, every small business is aware of the importance of cash flow and having money to pay its debts. It is dependent on money arriving from suppliers and customers. The banks have pushed automated transaction systems and a large number of companies are paid by electronic data transfer funds. The information no longer arrives in the form of a cheque which one can run to the bank and lodge to one's account. It now arrives overnight on the computer from one system to another. Any hiccup in that chain will affect cash flow, payments to the company and payments to its suppliers. There may be cancellation of orders and new stock may not arrive on time. Stock may be in situ because it cannot be issued in time. I mentioned intercompany communications. A huge number of companies now depend on e-mail systems to communicate internally and externally with their clients and suppliers. This area is likely to be affected if proper planning is not carried out and action is not taken.

Action can be taken and despite the comments of Senator Doyle, it is reasonably easy to take. The systems in an organisation need to be identified. It is not rocket science. Every piece of software which deals with a date needs to be examined and checked to find out if it accepts a four digit date. The difficulty is software which only accepts dates in a two digit format where, for example, "98" represents the year 1998. In the year 2000, the "00" may throw the computer software back to the year 1900. People can type in a date, for example, 29 February 2000 as 29-02-00 to take account of the leap year, and check if the software can handle it. It is also possible to check if the software can handle 1 January 2000 by keying in 01-01-00. If it cannot, we will know there is a problem.

Data for the next millennium can be inputted, various reports run and systems can be audited and tested with the results recorded. When an inventory has been carried out on the various software used we can then conduct an impact assessment on what changes are necessary and the effect of not implementing them in time. Many small and medium sized enterprises do not have bespoke software written specifically for them. They tend to buy off the shelf packages and are in a better position because they will be able to buy the solution from software suppliers and will not have to recruit a programmer to make the changes.

It is important that senior management takes responsibility for this matter. There is no time for reports and decisions; action must be taken now. We must realise the seriousness of the situation and what must be done. We must plan to get it done effectively and set achievable deadlines so that the work can be completed. The deadline of the year 2000 cannot be extended. Deadlines are most important and the work must be completed before the deadline in question. The Bank of Ireland said 125 man years is needed for the work to be done to get their systems ready and it is estimated it will cost £40 million.

Change will be more gradual in terms of EMU and the impact of its implementation in association with the year 2000. The deadlines are not as urgent and could be extended. The impact of EMU, the Year 2000 and the minimum wage issues will lead to a difficult time for small businesses. The Government is committed to implementing these measures as is evidenced by the programme of information and awareness it is putting in place and recognises the difficulties ahead. I commend the partnership approach evident in addressing this issue. Banks and building societies are sponsoring a television programme which will be broadcast at prime time later this week or early next week. They are putting together advice packages to offer their customers. Chambers of commerce, employers organisations and trade unions are coming together in partnership to try to address these problems. That will be the saving grace for the country.

Hardware and software companies will have to work together for the good of the country and will have to share their knowledge with us; they are large multinational organisations with huge resources available to them globally. They must be prepared to share information with the Government and other information organisations. The Year 2000 difficulty is an opportunity as well as a threat. When we talk about the need to purchase additional equipment we should look at the number of computer manufacturers located in Ireland, such as Dell, Gateway, Microsoft, Lotus and HP. These companies will need more people as they will have more sales and orders to meet. They have a direct impact on the economic growth of their locality as they provide work to suppliers, subcontractors and temporary workers. We must get the message out that there are positive aspects to this issue for suppliers, customers and natives. If the problem is seen as too daunting, the ostrich approach will be adopted which is to stick one's head in the sand and think it will go away. This problem will not go away and action must be taken now.

The role of the Government is not to come along and manage our businesses; it is to heighten awareness and to provide guidelines and support. The brochure that has been produced is colourful and clear and will have a significant impact on the tens of thousands of businesses which will receive it in the coming days. The regional conferences being organised are free and everybody can attend. The Government acknowledged the partnership approach and the seriousness of the problem. Its role is to advise and to heighten awareness and it will not try to run anybody's business. It agrees the problem is serious but is addressing it and doing its best. The question is whether companies are Year 2000 compliant; this is not rocket science. Companies must be assessed individually and plan the way in which they will address the problem. They must test and review and, if necessary, do so again. It is possible to make the grade. Ireland is a country of saints and scholars and the scholars are well able to handle technology. If we move from awareness to action and are not afraid to handle the problem, we can sort out the difficulty and not end up in the worst case scenario with no traffic lights, telephones, computers and software that work on 01-01-2000.

There are 605 days left and we are getting closer every day. Is it 605 days to a bright new millennium or severe chaos that could disrupt the economy, threaten lives and directly affect the lives of every citizen? I first raised the issue of the millennium bug in the House in March 1997 when I said we were running out of time. The situation now is considerably more serious because we are well beyond the eleventh hour. We are insiders who know about the problem, its cause and we have an inkling of the enormous importance of it and the vastness of the task of coping with it but the problem is that only insiders know.

Most big private institutions and organisations with IT departments are on top of the problem. Tackling this problem is a very costly issue for companies such as mine but we are aware of it and are coping with it. I returned yesterday from the United States and the concerns that were addressed there were interesting. Senator Avril Doyle referred to the effort made in New York. I attended a food marketing conference and heard of one company which is closing a store shortly. It has decided that the day after the store closes it will move everything in it forward to the year 2000 and carry out an experiment to check for unforeseen problems. Those of us who have walked around our businesses may think we have identified the problem areas but it is possible that we have not. Something is bound to crop up which we have not thought about.

In my own company, which I am sure is no different from many others, we have gone through every line of computer code which we use and adjusted it, where necessary. This involved hundreds of thousands of lines of codes and that is not all. The embedded microprocessors in the equipment could each, potentially, have the same problem. We have walked through our shops, listed every piece of equipment that might or might not have a microprocessor inside it and followed up each item with the manufacturer who supplied it to find out if it is Year 2000 compliant. If it is not, we hope that we and the manufacturer will take remedial action. This is a major project, even for a company like my own which has only 16 branches. I am not at all complacent or confident that we have done enough to overcome this problem.

The banks will also have a major problem but I believe they have it in hand. I am concerned about two parts of our economy — the public sector and small business firms. Both have been referred to and Senator Cox has concentrated on the small business sector.

The verdict on the public sector must be mixed although I acknowledge the steps the Minister has described and I congratulate those who have taken them. Some Departments are taking the matter very seriously and are working hard on it but others are taking a laid back approach which is possibly a throw back to the old days before the strategic management initiative when the customer did not really matter. It is a matter for concern that the public sector, in general, does not appear to be allocating the level of resources that experts suggest is needed to do the job properly and in time. I am sure that everyone who is working on it is working very hard indeed but are enough resources being put into solving the problem? It is difficult to tell from the outside and we are right to be sceptical about the bland assurances on this issue.

It is interesting that in Europe, overall, the public sector seems to be spending a great deal less on this problem than the private sector. That may turn out to be disastrous for the citizens of Europe, including ourselves. I would like to think that our public service is not taking a lead from their counterparts elsewhere but is instead being guided by the kind of action the big hitters in the private sector are taking. However, I am not holding my breath. I am worrying.

I am particularly concerned about what I call the devolved public sector — the health boards, local government bodies and places which are removed from the centre of the State. The problem in these areas has the potential to affect every citizen and even, in some cases, to threaten their lives. Senator Cox referred to traffic lights failing to work. We are also talking about lifts in hospitals taking on a mind of their own or — even more scaringly — all kinds of hi-tech medical equipment in hospitals behaving unexpectedly. Drip-feed machines at the end of hospital beds might contain parts which will not cope with the year 2000.

I am particularly concerned because it is very hard for central Government to exercise precise control over these devolved areas. Departments can send out circulars but they form part of the mountain of paperwork that pour into these bodies every day. Past history should suggest to us that central Government is not very good at getting things done at a distance except when it controls the purse strings and can make people do their bidding.

Before leaving the subject of the public sector I will touch on a problem of culture which may cost us dear in this case. I have often observed that the public service has a different attitude to time. It is best summed up in the notion of doing things retrospectively. Traditionally the emphasis in the public service has been on doing things right but not always in the right time. Time sensitivity has not, in general, been part of the public service tradition. It is always difficult, therefore, to create a sense of urgency in the public service. In relation to this problem time is of the essence because the millennium is not going to wait, not even for the public service. The millennium is not something that can be coped with retrospectively and it is vital that this message gets through to all levels of the public service, however distant they may be from the centre of power.

I know some people who plan not to fly in the days immediately following 1 January 2000. I can understand their fears. They are not merely worried about aeroplanes but also about air traffic control and many other areas of air travel. Others, of course, are planning to celebrate the millennium in the air.

Some of them may be in the air before they get off the ground.

The main concern in the private sector is about smaller firms. Big firms can look after themselves and, to the best of my knowledge, are doing this already. This does not appear to be the case with smaller firms and this is a major national problem. Most of our businesses — 95 per cent — are small. Nine out of ten are what are called micro businesses, employing fewer than ten people. There are more than 100,000 small businesses. They represent a significant part of our overall economy and they interact on a daily basis with millions of Irish people. These businesses need help to cope with the millennium bug and, as far as I can see, they are not getting it.

The Government needs to take a two headed approach to the problem. Where big firms are concerned the role of the Government should be to reassure itself that all the big players are Year 2000 compliant. The Government's attitude to big business should be, this is your problem; have you solved it yet?

A totally different approach must be taken to smaller companies. These companies need information but they also need help. At the moment they are getting some information from people with a vested interest in selling them a solution. They do not know how seriously to take this information and wonder if it is merely scaremongering. One cannot blame them for this because some of it probably is. Some small firms are not convinced that the millennium bug is a real problem for them. Some are likely to ignore the problem unless we encourage them not to do so. This debate is one further step in reminding everybody of the problem and I welcome it for that reason.

Small firms do not have much information from independent sources and that is where the Government should be playing a greater role than it has up to now. The Government should also be active in creating a high profile sense of the urgency of the matter among small firms. It is in the nature of running a small business to focus on the practical things in front of your nose. You deal with the here and now, not with the problems that stretch into the far distance.

Six hundred days seem an eternity to a small business person but the message must go out that this is a problem, that it is a problem that may wreck an entire business and one that must be coped with now if businesses are to be ready in time. There is a good possibility that products on shelves may be affected — some products have been rejected by up to date computers on the grounds that they were out of date since 1900. Most shops, small or large, do not have point of sale equipment which identifies the date of the product, but that technology is developing. That is only one technicality out of many in my business and many things may not have been considered in other businesses. It is much more likely to affect smaller businesses, which is why the urgency of the matter should be stressed.

In addition, the Government should give financial help to small companies to deal with the problem and we can justify this on the grounds that the continued viability of small business is a critical national issue. My hunch is that many small businesses will need financial help to get into action. It can be argued that it is in their interests to cope with the problem and they should therefore bear the full cost, but we must get them moving quickly and money may be part of the solution.

Everyone who has been in touch with this problem since it was first mooted has had his or her attitude challenged along the way. They have come to realise that the more one looks at it, the more serious it becomes. In the beginning we thought it affected only old computers, that personal computers would not be affected and that all recent software would be year 2000 compliant — none of that was so. No one thought about the imbedded microprocessors which are an integral part of every piece of equipment we use, such as traffic lights, video recorders and lift controls, as mentioned by Senator Cox. The daunting truth is that even yet, a long way past the eleventh hour, we may not appreciate the full seriousness of the problem. There may still be more of this iceberg under the water, which is all the more reason that we should deal fully and effectively with the problems we have identified.

I welcome the debate because it gives us an opportunity to spread the message. This is not intended to scare people but to be an alarm call which wakes us up to the fact that there are only 605 days left to go.

I wish to share my time with Senator Lanigan.

An Leas-Chathaoirleach

Is that agreed? Agreed.

I am not the computer wizard of the House but I think I understand what the problem means and I welcome the debate. As Senator Quinn said, small business people may not have a problem but large, highly organised businesses will. Some multinational companies are spending many hours to find a solution and let us hope one is found. The problem is like two cog wheels which mesh and run satisfactorily until someone puts in an extra cog which stops the system working. The solution may be to provide an extra chip or to change the chip already in the computers. This will cause a major problem for big multiples such as Senator Quinn's business. Every item going through their systems is coded and the information world will come to a standstill.

I have great confidence in an ordinary, simple solution, even if we have to stop the clock and start it again. The world will not end and business will not stop. People have called on the Government to do more but the problem is so big and affects so many countries that no single Government can provide the technology to solve it. We are entitled to be concerned and to keep our business people informed, whether they run small rural businesses or work in the IFSC. We are all in this together.

I welcome the opportunity to express my views, which are simple. I am confident that a solution will be found because too much is at stake. The people who invented the computer in the first instance, and the technology for control of information, are working overtime to provide a solution. We will never be allowed to reach rock bottom — technology will not stop and we will not have to return to counting on our fingers. No one, not even in remote parts of Ireland, is thinking in those negative terms. People are confident that a solution will be found by those working on the problem.

The Government is aware of the research being done and will have an input if it is necessary. Everyone is aware of this problem and it is the subject of debates on television and at conferences. Many people are expressing fears and there may also be some scaremongering. Nevertheless, common sense will prevail and hard headed business people, who have so much at stake, will find a solution which will be available to all businesses, from small rural credit unions to huge international banks. I am sure we will find a solution in time, before we reach D-day. There is a problem if we look at the downside but there is also a solution and I have total confidence in the ability of the IT world to find it.

It would be ridiculous to avoid this problem so we must confront it. No one has mentioned that technology has been the most profitable industry for a small number of people. Some Irish people have become multimillionaires in a short time through providing solutions to problems. If we look at the Bill Gateses and Dells of the world, one thing is guaranteed — they will become much richer as a result of the in-built problems which will arise as we approach 2000. The problems will be resolved, especially if those involved in the technological industry tackle the issue. A 14 year old could possibly provide a solution but would be prevented from doing so by the computer industry, which is too big and profitable and controls too much of the world's industry.

Senator Quinn said that small businesses will have to cope with the problems associated with the millennium bug. However, they will suffer as a result of the action or inaction of their suppliers and providers of services. If the latter find themselves in trouble they will pass on the costs and their customers will suffer more.

It has been suggested that banks calculating interest levels could find that their programmes could produce seriously incorrect interest amounts. They are doing that at present and unknown to their customers. It is also suggested that telecommunications operators may have problems with their charging systems and that companies relying on just-on-time manufacturing could face systems breakdown.

The banks have embraced information technology and have got rid of all of their employees over 50 years of age. However, their computers are unable to identify the potential businessman who, for example, can make money from a sandpit. In consequence, they are recalling their former plant management teams and are having to revert to their former ways of doing business.

If computer providers set their mind to this issue there would be no millennium bug. However, this would not pay the industry. As a result, Irish computer companies will go out of business because they will not be up to scratch. It could result in a wipe out of the computer industry in this country, especially if a 14 year old devises a solution to the problem and passes it on to Bill Gates. That is as big a problem as the one confronting the smaller or mainframe computers.

The developments in computers over the past 25 years have been a disgrace. When I first went into business in the late 1950s and early 1960s mainframe computers were being introduced. Some of them were as big as this Chamber. While they were increasingly developed and progressively reduced in size, the one certainty was that a person buying a computer could never get it repaired; he had to upgrade to stay in business. Computers were continually dumped and the millennium bug will accelerate this trend.

Comptometer operators — effectively an old computer — could work out percentages, for example, how many pounds of sausage would fit in a container or how many tons of produce could be stored in the hold of a ship. They could know the difference between something dated 2001 and 1901 and it is a nonsense that modern computers are unable to make this distinction. This problem was built in by the industry to once again rip off businesses and individuals who rely on computers.

All Members and staff in the Oireachtas have received new computers. It is suggested that they will be out of date before the end of this year, never mind 2001. Again, another computer company will win a contract from the Houses of the Oireachtas and all computer equipment, whether it entails telephones, printers or whatever, will be dumped again. In the process, another rake of money will be made by companies such as Dell and Microsoft.

Given the numbers who have been playing with computers from the age of two or three, there will be at least one 14 year old who could solve this problem. However, when people have a problem with their computers they will be told to replace them because they are not 2000 compatible. While surveys have been undertaken by companies such as IBM, they have not checked the position of smaller companies. They will suffer from the inaction of the bigger firms who will be ripped off again by the computer companies. However, they at least will be able to write off the cost of new machinery against their profits.

The real timebomb is not the millennium bug but the need to control computer manufacturers. The US Government has at least attempted to impose some order on them. For example, it has imposed a fine of $1 million per day on Bill Gates if he does not do something about the lack of competition world-wide in the computer industry. While a debate like this is useful, we must realise that the bigger computer firms are ripping everybody off and the millennium bug will be the biggest rip off ever perpetrated by them on individuals and business people.

I welcome the campaign launched today by the Minister of State This is a problem for all, both in the private and State sectors. Time is of the essence. The experts and those involved in consultancy services will not be readily available because of the pressures they will face.

Regrettably, inadequate planning is evident. The Minister of State rightly said that the Year 2000 problem is very much with us today. Many businesses have failed to take proper action to deal with the problem. If ignored, it could have very serious consequences for businesses and their ability to operate after 1 January 2000.

The Government is right to be concerned that small and medium sized businesses especially are not sufficiently prepared. I therefore welcome the brochure which it launched today and I hope it achieves a widespread distribution. It will be very important in bringing about the necessary awareness, which appears to be absent. I also welcome the announcement of regional conferences on the matter. Hopefully all of the efforts being made will ensure this complex issue will be at the top of everybody's agenda.

It is important that everyone in business ensures Year 2000 compliance for all their customers and suppliers. It is reassuring to know that all Government Departments and offices have produced Year 2000 plans and that they are acting on the replacement of all ageing computer systems and infrastructures. It is also reassuring to know that an interdepartmental Year 2000 monitoring committee with private sector participation is in place and working well.

Being aware is the first step in ensuring a proper response. In business this is a problem which requires top level management involvement. The potentially major impact on business requires the involvement of all relevant functions of any large organisation. As we know, this is a luxury which small businesses and sole traders do not enjoy; they have to take all the necessary steps themselves. These steps are well defined.

Testing will be the largest and most critical task. It is not limited to demonstrating that each system and component works properly with dates exceeding the year 2000, but must ensure interconnected systems inside and outside the organisation are able to co-operate correctly. Presumably there will be failures so a great deal of fine tuning will be necessary.

The shortage of programming and project management skills has become one of the most critical issues. Apart from the overall scale of the problem, the availability of professionals who are proficient in older programming languages and able to manage large and complex projects is limited. Organisations with a substantial internal IT staff will strive to retain it, whereas organisations relying on external staff will soon be confronted with the rapid exhaustion of the available capacity and the related price increases. Costs are huge. Organisations, small businesses in particular, using commercial software packages must urgently inquire about the plans of their suppliers to make such packages compliant.

Suppliers of computer hardware and software and of computer based products and services should provide their customers with timely and transparent information about the readiness of their existing and new products for the Year 2000 and adopt a proactive and responsible attitude to their customers. I hope we will not hear of the total rip offs to which Senator Lanigan referred. That is a danger. Senator Fergal Quinn put the issue into sharp focus when he said that we were only 605 days away from the year 2000.

I welcome this debate and wish the campaign launched on the issue every success.

Mr. Cregan

I listened with interest to the points made by many Senators about the problems facing small businesses. Multinationals can answer a problem of this nature but let us hope there will not be a problem. It is not realistic to say that because we are going from one century to another, the whole system must break down. I would be very confused if it was realistic, particularly with technology improving so much.

I am involved in a small business. It is unfair to the small business dependent on a turnover of £400,000 to have to upgrade constantly and attempt to hold onto staff. I know Minister Treacy is aware of the problem, but as a small country do we have any power at all over what is happening? The United States is prepared to fine companies involved in computerisation millions of dollars for every month they do not comply with regulations. What power do we have if there is a problem in the year 2000? Is there any way to secure an international agreement that, if systems break down after 1999, companies such as Apple and Microsoft should have a system for the year 2000 if a solution is not found before then? Can we agree to a stamp for computer systems indicating that they are year 2000 compliant? That is one answer.

Senator Lanigan commented on the upgrading of computers. No one buys an addition now, instead that person buys a new computer. People pay up to £3,000 for a computer to help their student children and it is out of date after four months. I find that most unfair and yet nobody is answerable. If that happened with anything else we would demand an upgrade and a guarantee. In this area everyone is at the mercy of the computer manufacturers. What rights do we have?

We are a small consumer of the equipment but can boast of being involved in the high-tech industries. We are doing well from them, we are delighted about that and do not wish to speak negatively of international companies which are creating work. Developments in Leixlip are a good example and we appreciate it, but we do not want to be in a situation where we are monopolised and given no guarantee.

Has this issue been discussed by the European Commission? Can Europe speak as one on this matter? We are talking about a population of over 300 million people. Is it possible to exert pressure via our MEPs? We should demand that they take action.

Mobile 'phones are being upgraded constantly and their use is becoming more widespread. I never thought I would use one but I cannot do without one. I can get more done in an hour with the 'phone than in a day sitting at the desk. The constant upgrading of technology begs the question of where it will end. When will we have a technology that will last? A family known to me bought a computer for their student son and was told on the day it was bought that it would be out of date after four months. Had I been the sales assistant I would have been ashamed to say that. If one spends £2,000 or more on a system one should expect it to last longer than three or four months.

A serious examination of the development of technology is required. We are but two years from the end of the century, yet we do not have a solution to the Year 2000 problem. Is it that there is no answer despite all the expertise? I suspect there may be an answer but the multinational companies are holding out to make more money. They should be compelled to provide solutions. The EU member states should act collectively to seek solutions. It is imperative that we do so. We must develop systems to which we can add in the future rather than having to eliminate them.

I am not an expert in this field but I am a realist. I do not like the idea of going to computer superstores where expensive technology which is obsolete after a few months is for sale. We have a responsibility to ensure that we are not left with a monopoly in this area.

I welcome the opportunity to speak on this important issue, which has been raised on many occasions on the Order of Business. We could not have dreamed of the transformation in technology which has taken place. We look forward to the year 2000 with excitement and enthusiasm for the opportunities it will present for further development and progress. On 22 May our generation will take a most important decision in the referendum which, hopefully, will be carried overwhelmingly with the aim of unifying the country and the nation.

The country has made amazing progress under partition, particularly in the last 20 years. I think back to a meeting in Castlepollard, County Westmeath, during the 1965 general election caused by the death of M. J. Kennedy. The late Paddy Lenihan, the father of the Minister, Deputy O'Rourke, and the former Tánaiste, Brian Lenihan, said at that meeting outside the local church that the greatest scarcity in Ireland was knowledge. How right he was. When Donogh O'Malley introduced the school transport system in 1966 it gave many children the opportunity to obtain second and third level education. That is where the progress started.

Our young people have been able to take advantage of technology. They have an attitude which is open to technology and it is amazing what young children can do with computers. I am a product of the education system of the 1940s and 1950s and I am pleased to be able to congratulate those who contributed to the development of the present education system.

I admire the Minister of State, Deputy Treacy. He has been one of the best Ministers of State in recent times. He made a range of points which must be taken into account in the decisions to be taken by industry and commerce. He pointed out the various problems which might arise. The brochure which he launched today highlights the problems resulting from the failure of software applications or data corruption:

— loss of contracts from inability to meet just-in-time deliveries

— the cancellation of orders of new stock

— inability to issue stock invoices or track debtors and creditors

— incorrect processing of payments

— disruption of supply chains due to Year 2000 problems suffered by key suppliers and customers

— computer controlled production systems could fail in a manner that causes physical damage

— automatic controls could fail to operate leading to overheating, fire and perhaps explosion

— rapid and uncontrolled shutdown of processes may lead to damage to process machinery and other possible consequences [it would be very serious for an industrial undertaking to have to face such problems.]

— safety guards on machines could malfunction increasing the risk of injury to employees

— failure could arise in fire alarms, sprinkler systems, air conditioning, heating, lifts, telephone exchanges, photocopiers, fax machines, VCRs, refrigeration units, ovens, etc.. the Year 2000 problem could have wide ranging effects from disruption and inconvenience at one extreme to catastrophic losses at the other.

The guidelines laid out by the Minister of State, Deputy Treacy, are most important. He and his Department officials will have to meet all the business agencies and groups which have played their part in this country's success. The difficulties that business will encounter must be explained in detail.

In common with most of the public, I did not realise until recently how serious this problem will be. I always thought that a "0" would come after a "9". This problem will be a bonanza for the computer business, and Ireland has been very fortunate in attracting so many of the world leaders in that area. The year 2000 is a leap year, in addition to the existing problems, but this should also be an opportunity for businesses to update their databases. Most businesses will avail of the opportunity to improve their computer infrastructure.

The previous speaker mentioned the transformation caused in business by the mobile phone, which meant one could do twice the work one was able to do before mobile phone use became widespread. We have all become far better businessmen because of the availability of mobile phones. There are also other methods of updating one's skills.

Ireland has achieved much in the past 20 years. If we have the same progress in the next ten years, who knows what technology we will be discussing here?

I welcome this timely debate on the millennium bug or Y2K. As Senator Cassidy said, the year 2000 is a leap year and we will no doubt have the prophets of doom and gloom telling us the end is nigh. However, the end will be nigh for some mainframe computers because of short cuts taken in computer technology in the 1970s and 1980s by removing the first two digits of the year. It would have cost a small amount of money to remedy at the time, and now we face huge expense in rectifying the matter.

Estimates of the cost for Irish business vary between £500 million and £2 billion. The Minister of State said the problem would cost the Civil Service £13 million; it is not clear if that sum refers to remedial work or the purchase of new technology, but there is no doubt that this will be an enormous problem for world business, given that the year 2000 is only 18 months away.

I understand that there have already been instances of computers programmed to operate into the new millennium malfunctioning. For example, computers have released prisoners from jail and told people of 100 years of age to come back to kindergarten. Marks and Spencers had to destroy thousands of cans of beef because they had exceeded their sell-by dates by over a century, according to the computer dealing with their labels.

The problem has already impacted considerably on some of the most modern computer systems, and we must take whatever steps are necessary. I was interested by the Minister of State's statement that 100,000 leaflets on this matter would be distributed and that there would be a number of regional conferences on the topic. The Minister of State stated that he would like everyone in business to read his brochure immediately and act thereafter. Unsolicited literature of various types goes to businesses on a daily basis, and it is unlikely that all businesses will act on the basis of a request by the Minister of State. We need a tighter framework for dealing with this matter. We have approximately 18 months to resolve this matter, but is there a monitoring process in place to check if businesses have moved to deal with the problem? Is there a help line in the Department to deal with queries from the business sector?

Issuing 100,000 leaflets will not solve the problem, nor will regional conferences. The vast majority of businesses are small to medium sized and may not have the finance or know-how to solve this problem. Some may throw the brochure in the bin. What steps will be taken to follow up this initial step? Are there any inspectors who will be responsible for seeing if our major industries are complying? I presume the multinationals will be to the fore in remedying this problem.

The Minister of State mentioned the Civil Service. What is being done in the very large and important semi-State sector and the health boards? Incorrectly programmed computer chips could cause problems in cardiac hospitals, lift failure and traffic gridlock. Health and education are very important areas. Has the Minister put in place inspection procedures to ensure essential public utilities are kept up-to-date? Is he certain they have put in place remedial mechanisms to ensure they do not break down in the year 2000 as a result of the millennium bug?

Are reports being made on this matter? Can we ask for a report on what has taken place to date in six months' time during the autumn session? Will the Minister provide statistics on the number of businesses which have updated their technology?

Ireland does business with other EU countries and Third World countries. Have any steps been taken to ensure a co-ordinated approach by the EU member states to the implementing of remedial work in this area? We have a great deal of trade with Third World countries, particularly in the agricultural sector. Is the Government taking a proactive stance in regard to that client base or is it leaving it to individual businesses to ensure they have taken remedial technological steps which would allow us to continue to trade without a breakdown in communication?

These are very serious matters. There will, undoubtedly, be flaws and breakdowns and some companies will not take the necessary steps. However, it behoves us to ensure we have done everything in our power in this regard. Litigation may rear its ugly head when clients are not serviced in the manner which they expect. The State might not have responsibility in that area in the private sector but it will have in the public sector. We should ensure we are above reproach in that regard.

I welcome this debate. The issue is quite simple in that a serious malfunction will occur in the year 2000 in all the major mainframes which predate 1996 if steps are not taken to deal with it now. It is our responsibility as elected public representatives to ensure a strong level of public awareness about this issue so that remedial action can be taken. Will the Minister return to the House with a report or statement within a reasonable space of time so that we can be satisfied the steps he envisages have been implemented?

This matter is of great importance to everyone it concerns. Much of what the Minister said in regard to the year 2000 is somewhat frightening when one realises we should have taken the necessary steps before now. It appears there may be fairly serious problems. One would wonder why we have not moved faster in this regard and why we did not foresee the problems we might face over the next few years.

We must examine the threats faced by business. We depend to a large extent on the software industry and any breakdowns in this area could cause serious problems. Unfortunately, we have not tackled the problems although we are moving closer to D-Day. Business people who thought they were modernising and moving with the times are now facing a serious financial burden. Businesses which were advised to follow a particular course of action now do not know what financial expenditure they will incur as a result of this problem. The Minister outlined the huge financial burden faced by Departments. If that is the situation in Departments which were probably modernising and preparing for this, what will be faced by businesses?

The Minister referred to conferences and the need to bring people up to speed, which is very important. However, should people not have been made aware of the likely problems they faced several years ago? People thought they were investing in facilities which would last for their business life but they now find a few years later that the facilities are in trouble. When people purchased equipment they were given the impression it was very modern and would last for many years but the same company soon produced a new brochure and people realised they had wasted their money.

The Minister outlined the serious problems we face. Educational conferences are one way to help industries in this regard but how are they to deal with the unexpected financial burden they face? How do they take on this burden which so many of them did not think they would have to face? They are aware that the problems are enormous.

A previous speaker stated that so many valuable leaflets posted are never read and the Minister of State was correct to highlight this problem. The document which is being launched today needs to be read carefully. Those in industry must study the document and make decisions. We are talking about modern technology which is quickly going out of date. People are spending substantial amounts of money updating equipment which is already out of date. Previous speakers have raised important points and I welcome the opportunity to speak on this debate.

I welcome the Minister of State to the House and I am glad to have an opportunity to contribute to this important debate. I could not help reflecting on how far we have come. We are on the brink of the millennium discussing technological matters. Our forefathers would have had extreme difficulty interpreting the terminology let alone the hardware. This is a product of our economic success allied to the rapid and astonishing development of information technology over the past two decades. Until the 1950s and 1960s it would have taken a room half the size of this Chamber to contain the hardware. The mind boggles when one considers that the memory available on such large computers did not compare to the laptop or personal computers operating on a microchip which one can fit on one's finger.

This technology has come upon us so fast and the question before the House, so excellently addressed by the Minister of State, is a product of this success. The year 2000 is rapidly approaching and many companies find that like many things in life, change has been put on the long finger. I am pleased that the Government has taken the initiative, not only within Departments, as outlined by the Minister of State, but also by setting up the interdepartmental committee which incorporates the private sector.

It is inevitable that some computers will not be capable of conversion in the year 2000. One must assume that such hardware will be obsolete. The Minister of State might confirm that this will be the case. If that is the case, what will happen to the computers which have slowly been introduced into the education system? This has taken place to a limited extent and we would all like to see more rapid advances in this regard where every child would have access to a PC at primary level. Sadly that is not yet the case but the Minister for Education and Science is moving in that direction.

The problem of the millennium bug does not apply to computers manufactured in recent years. The Minister of State might confirm the cut-off year. The problem lies before that year. Many of the computer systems operating in rural primary and secondary schools are quite old. Their memories have been upgraded but they were manufactured in the early 1990s. If these computers will be obsolete does the Minister of State have any plans for dealing with this issue? There could be a huge financial burden placed on the Department of Education and Science.

If these machines are obsolete there is the wider question of how the Government plans to deal with their disposal. It seems that there is a certain toxicity involved, if that is the correct word, because of the radioactive element in computers. It is similar to the debate some years ago on the problem of CFCs in old refrigerators. Plans were advanced at that stage to tackle this problem. There is no similar disposal mechanism in place for obsolete computers. Has the Government addressed this problem and has the Minister of State any views on this subject?

I bought an Amstrad computer which is now referred to as an antique. I subsequently purchased one of the discarded computers from the House. The word processing facility suits me. However, thank God Members were given state of the art PCs and laptops in recent weeks. I now have two computers which, effectively, are obsolete. I hope to pass them on to some voluntary organisation and perhaps Senator Cox might be able to brief me as to how I should dispose of them. If there is a problem with toxicity or radioactivity which will continue for a number of years, does this pose a health risk? What will happen to this mountain of computers? Where will they go? They cannot be upgraded. Their components are of little use so what will happen to them?

I welcome this debate. I have known the Minister of State for a long time. He has taken to his task with the enthusiasm, commitment and dedication which I have always associated with him personally and politically. He has highlighted an area of science and technology which might be boring in the hands of another Minister. One could never accuse the Minister of State of being that.

I thank Senators for their fine contributions to this important debate. It is an example of the relevance of this House to the modern problems of the country and the technological advancement of commerce. I commend the House for introducing this debate and allowing Members an opportunity to speak on this important day when we launch the national campaign.

Senator Avril Doyle referred to the need for various Departments, particularly the Departments of Health and Children and Social, Community and Family Affairs, to ensure that they and their agencies are Y2K compliant. Senator Quinn raised a similar point on the devolved public sector. I assure the House that the Cabinet has consulted on this issue on a number of occasions. Each Minister will ensure that this issue receives appropriate attention. The Cabinet has issued strict instructions to each Minister to take a personal management interest in this area, to liaise not alone within their own Departments but with all State agencies and Government services reporting to them, to ensure they are working towards making compliance commonplace across their area of responsibility.

Senator Doyle also referred to the introduction of EMU compounding the Year 2000 problem. This is a fact and there is no doubt about it. Although we had an input into the introduction of the euro, the date of its introduction is now set. Forfás, which operates under the aegis of our Department, has been running what I consider to be an effective campaign in educating small and medium enterprises on the euro issue. There has been a great deal of involvement with that and there has been a significant positive response to the work being done by Forfás. I congratulate Mr. Travers and his team for the great work done.

Senator Doyle also raised the added difficulty of leap years and quoted examples of what can happen, such as a medical scanner in the UK which could not operate on 29 February and a smelting plant which lost significant preparation. This is an added issue but all our discussions with software experts indicate that they are aware of this complication and that it is being considered along with the infinity date, 9 September 1999, and the Y2K date, 1 January 2000. All these are component parts of the same problem and are being addressed simultaneously. This means that whoever has to spend money within companies to redress the problem will resolve all three issues together.

Senator Doyle raised the issue of liability and the position of banks and insurance companies. Liability in any given case is ultimately a matter for the courts, but the banking and insurance companies have given their support to the Government's campaign and we have included statements from both sectors in the brochure which I launched earlier today on behalf of the Government.

Senator Doyle raised the issue of human resources because that level of activity will involve high demands on our software skills base. I believe we are in a better position than others, not least because of the investment by the Government in expanding the number of software graduates by an additional 1,000 per annum. This is creating a skills base which means other countries with much greater populations and greater problems in the technological field will not have the response opportunity our graduates will make available to us over the next 12 months.

As regards the European Commission, it is true to say that there has not been a high level of activity to date. This is changing and it has recently brought member states together to share their experiences collectively. We are participating in that and the Department is represented at the European Commission level. Senators can be assured that, while we will bring our strengths to the meeting, conversely we will take from it the experiences and strengths of others to assist us in our campaign.

Senator Cox, an eminent professional in this field, gave a graphic description of what the likely charges for SMEs would be. She estimated costs of between £5,000 and £10,000 for small and medium-sized companies. The cost may be difficult for the SMEs and levels will vary from company to company. It may be that small companies will not be penalised too greatly as in some cases it will merely mean bringing forward equipment replacement decisions. Some research carried out by Forbairt indicates that many small firms will not have insurmountable problems. Senator Cox also drew attention to the fact that many of these companies use off the shelf software which is easier to replace than bespoke software.

Senators Quinn, Doyle and Coghlan also focused on the SMEs. The main focus of the Government campaign is on this sector. Both through the brochure and the roadshows we want to engage small firms. In doing this we will also use other channels of communication, for example, financial institutions, banks, building societies, chambers of commerce, financial advisers, auditors, accountants, State industrial development agencies and county enterprise boards. We are not just relying on the brochure which, as Senator Costello noted, can only achieve so much.

Some Senators questioned whether a solution can be found to the problem. The fact is that solutions are available. We want to get companies to apply the solutions where they have a problem. Our campaign is directed at getting the companies to act now, to assess their systems, to consult with the professionals in the field, to take the necessary remedial action and to make the appropriate decisions to ensure their systems are compliant. This is so that we will be in unison and that we can continue with the commercial services and the economic growth which are vital as we move from this millennium to the next.

Senator Costello asked about monitoring of industry's reaction to the campaign. I established a monitoring committee to follow up on the campaign and to monitor its effect.

Senator Mooney raised a query regarding PCs becoming obsolete. They may or may not. The problem is less likely with recently produced and purchased computers but it cannot be overcome and remedied in many cases. I will have the question of toxicity examined as requested by the Senator.

I thank the House for its positive contributions. We are elected by the people to ensure we fashion laws which suit modern Ireland. We have a tremendously committed Legislature. Seanad Éireann is a gem when it comes to creating the necessary legislation, be it primary or secondary supporting legislation. The Seanad has today created an opportunity to have a focused debate on a major important component of economic and commercial development in the life of this country. I ask for the full co-operation of all elected Members of the Oireachtas so that we can collectively, through our communications systems, collaboration and interaction with small and medium-sized enterprises, put across the message that this is a serious and complex problem of international proportions which needs to be tackled immediately. To do this, each company needs to assess the systems it has, have them evaluated, consult with the professionals, take the necessary remedial action and make the commensurate investments necessary to ensure computer systems in all businesses comply with the year 2000. This must be done so that Ireland can continue to grow in a harmonious way and produce the economic growth vital for continued expansion and higher living standards as we move from this millennium to the next.

Ba mhaith liom mo fhíorbhuíochas a ghabháil leis na Seanadóirí uilig agus guím rath Dé ar bhur n-eachtraí uilig i gcónaí.

Sitting suspended at 5.40 p.m. and resumed at 6 p.m.
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