Seanad Éireann debate -
Wednesday, 28 Jan 2009

Vol. 193 No. 7

Industrial Development Bill 2008: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Tánaiste and Minister for Enterprise, Trade and Employment (Deputy Mary Coughlan)

Tá lúcháir orm bheith anseo inniu. Tá súil agam go mbeidh díospóireacht mhaith againn. I am pleased to bring before the House the Industrial Development Bill 2008 and to outline its main provisions. The purpose of this Bill is to provide for the transfer of shares held by Shannon Development Company Limited to Enterprise Ireland and to amend sections of the Industrial Development Acts of 1986 and 1993. These amendments are of a technical nature and relate primarily to the statutory limit on aggregate payments by the Minister for Enterprise, Trade and Employment to the enterprise development agencies and to certain thresholds above which agency grant payments to individual companies require Government approval. In addition, it is proposed to address an anomaly that has arisen regarding grants to small companies in parts of the Border, midlands and west region.

While the provisions of this Bill are of a technical nature, they are nevertheless important in that they facilitate implementation of the national development plan and the framework for sustainable economic renewal, Building Ireland's Smart Economy. It will allow the enterprise development agencies to respond to the needs of industry, thereby adding to the policies aimed at increasing employment and reducing unemployment.

The Irish economy is now one of the most globalised in the world. As a consequence, the global downturn created by the current international financial crisis has had a significant impact on our economy. We have seen significant job losses over the past 12 months as the ongoing turmoil in the financial markets leads to a significant contraction in global demand for goods and services. With the Irish economy expected to contract in 2009, it is inevitable that we will experience further job losses in the next 12 months. My Department and its agencies have a vital role to play in ensuring that the country is well positioned to progress when the global economy starts to pick up. While any job losses are deeply distressing for those concerned and very regrettable, we still have a historically high number of people — more than 2 million — at work today compared with a decade ago and we are continuing to create high value jobs across the economy.

Maintaining the competitiveness of the enterprise sector in Ireland is a priority for my Department and our development agencies. To sustain and grow the enterprise sector, Irish based enterprises will be encouraged and assisted to continue the progression to high value added sectors and activities and to continue to increase productivity through investments in human capital, technology and innovation. Our comparative advantage will increasingly lie in the production of knowledge intensive goods and services. With that in mind, a range of policies are being pursued to enhance competitiveness and improve the business environment for both manufacturing and services.

Creating the best framework conditions to enable innovation to flourish, which in turn leads to increased productivity and competitiveness, will continue to guide our overall policy approach to tackling the competitiveness challenges. Current Government policy contains a range of commitments focused on maintaining and enhancing our framework competitive conditions and promoting new areas of competitive advantage, including developing our research and development base, investing in critical physical and communication infrastructure and promoting tertiary education and lifelong learning. The national development plan projects a total investment of more than €25 billion, with €8.2 billion earmarked for delivery of the strategy for science, technology and innovation. To achieve our goal of becoming a leader in research and development and innovation, €3.3 billion is being invested specifically to support the development of the indigenous and FDI enterprise base and €13.7 billion is being spent on skills development. Although the economic environment is more challenging than we have seen for many years, we have the foundations in place for long-term economic growth and the implementation of these strategies will ensure Ireland remains a key location for cutting edge research and development and the quality jobs these can deliver. Achieving higher growth rates in productivity than our competitor countries will be important for international competitiveness and securing sustainable wage growth.

The report of the high level group on manufacturing, which was launched in March 2008, identified the focused actions needed by employers, employees and the Government to respond to challenges and take advantage of opportunities to further develop the sector in Ireland. The report contains 26 recommendations directed at key areas of innovation and productivity and leading to transformational change, re-skilling and management development for the innovative firm and increasing awareness and take up of existing supports. The social partners agreed, as part of the recently concluded review of Towards 2016, that a manufacturing forum should be established in line with the recommendations of the high level group. This matter is currently being progressed by my Department in consultation with the Department of the Taoiseach and the social partners.

In the future, a major impetus for growth will come from expansion of our services sectors. We continue to be one of the world's leading service exporting countries. Over the next ten years, services will be one of the key drivers of Ireland's economic success and job creation strategies. The report of the services strategy group, Catching the Wave: A Services Strategy for Ireland, sets out new policy proposals on how we can ensure continued development and growth in the sector. The report outlines ways to maximise the future returns to the country from services activities in all enterprises, both current and potential. This report will guide the development of our services policies and strategy into the future with a view to fully exploiting the opportunities this sector presents. In particular, the strategy will focus on maximizing the performance of companies that are already active on export markets, encouraging companies that are currently only trading locally to expand their markets abroad and fostering a new breed of start-up services companies with exporting potential. Implementation of the recommendations of the services strategy group, some of which are already being acted upon by the enterprise agencies, will enable Irish service companies to exploit new and exciting opportunities, such as e-learning, business and financial services, professional and consultancy services and others.

In summarising what I want to say, I think we would all agree that competitiveness is the most important issue we will have to address over the coming years. The work we are currently doing will provide an indication internationally of the Government's resolve in dealing with this issue. As we are living in challenging times, innovative solutions will have to be found.

Foreign direct investment is hugely important. We continue to maintain a strong pipeline for investment and this legislation will be more than helpful in that regard. I am equally determined to maintain our focus on developing indigenous industries. I take the view that they offer significant opportunities in terms of increasing exports through research and development, with the support of Enterprise Ireland and the innovation vouchers it can offer. We are also working with universities and institutes of technology to address the needs and concerns of industry.

I will summarise the Bill for clarity. Section 1 deals with the transfer of shares and sets out several definitions related to the specific terms used in the body of the Bill. Section 2 makes arrangements for the transfer to Enterprise Ireland of shares currently held in 28 companies by Shannon Free Airport Development Company Limited.

Up to 2007, Shannon Development, in addition to its responsibilities in the Shannon Free Zone, provided various supports, including taking shares to indigenous companies in the mid west. Following a change in the Shannon Development mandate in 2007, Enterprise Ireland took over Shannon Development's responsibilities regarding indigenous industry in the region. Shannon Development holds shares in 28 client companies and it is now necessary to transfer ownership of this equity to Enterprise Ireland.

As a result of the technicalities surrounding the transfer of shares by a shareholder to a third party, it was deemed necessary to enact legislation as the only practical means of effecting this transfer and of substituting Enterprise Ireland for Shannon Development in the various shareholder agreements and other documents relating to those shares. Shannon Development and Enterprise Ireland are in agreement with this approach.

Shannon Development, as a limited liability company, has the power under its memorandum of association to take shares in other companies. Under Section 7(1 )(h) of the Industrial Development (Enterprise Ireland) Act 1998, Enterprise Ireland has the power to make investments in and provide support to industrial undertakings.

The majority of the 28 companies subject to the draft legislation are designated by the agencies as high potential start-up companies, HPSUs. The flow of innovative HPSU companies into the economy is deemed critical, as we know, to the future growth of the economy. Taking shares in these companies is one of the methods used to provide financial support to them.

Section 3 amends the Industrial Development Act 1986 by increasing the thresholds on grants paid by the agencies to companies above which Government approval is required. It also addresses an anomaly that has arisen regarding grants to small companies in parts of the BMW region by extending the designated areas in the BMW region. Industrial incentives and grant aid has played a key role in the successful development of the economy and continues to be an important aspect of ongoing enterprise strategy.

State support specific to enterprise and job creation is channelled through the industrial development agencies. IDA Ireland has responsibility for promoting Ireland and its regions for inward investment and Enterprise Ireland is concentrating on developing the indigenous sector. Shannon Development is responsible for regional economic development in the mid west region, whereas the county enterprise boards offer assistance to micro-enterprises employing fewer than ten people.

The overall mix of incentives varies from fiscal policies such as the 12.5% corporation tax rate that all productive companies can avail of to targeted supports or incentives designed to stimulate specific types of business activity. These incentives include funding for capital investment, job creation, research and development, training, marketing, and management development.

The level of incentives or supports to eligible companies depends on a number of factors. Support is limited to activities that are in line with European and national development objectives for example, research and development, training, scaling or expansion of firms. All activities supported must be new or additional to what the company is currently doing. The size of the company is a factor, with some supports available only to small and medium sized enterprises. This is due to the particular market failures and barriers to development which face SMEs.

Examples of these supports include the business expansion scheme and supports for trade fair participation. The level of support is higher for companies in the BMW region than the southern and eastern region, and a return to the economy is required on public investment; all major projects supported by the agencies are subject to a detailed cost-benefit analysis. This analysis calculates the return to the State by calculating the impact of investments supported on employment taxes, corporation taxes and spend on goods and services in the economy. The grant instruments provided for in the 1986 Act, which are updated in section 3 and 4 of this Bill, are for use by IDA or Enterprise Ireland to support spending by individual industrial companies on building or extending factories, training workers, or carrying out research and development work.

Section 3 updates existing provisions relating to the powers of IDA, Enterprise Ireland and Shannon Development to give grants to companies in the manufacturing and internationally-traded services sectors. The Industrial Development Acts empower the agencies to make a range of grants and other incentives to client companies, subject to Government approval where specified thresholds are exceeded. This allows the Government to monitor the work of the agencies on a project by project basis, for each large project where the grant proposed exceeds the applicable threshold. These thresholds are kept under review and have been increased periodically in the past, most recently in 2003. Taking inflation into account, there has recently been a significant increase in the number of projects which require Government approval. A further increase in the thresholds is now warranted to ensure the Government deals with only the more important and strategic projects. An increase of 50% is being proposed in most cases.

An exception is the threshold for research and development grants, which is currently set at 50% of the thresholds applying to other grants such as capital, employment and training grants. This reflected the position in the past, when the types of research and development projects being assisted by the agencies were much smaller than they have become in recent years. Research and development grants provided by IDA or Enterprise Ireland to their clients are now a key component of the strategic objective of encouraging companies to move up the value chain. Such grants help to embed overseas companies in Ireland, thus helping to ensure their long term survival and growth here. They also serve to increase the strategic importance of the Irish operation within the parent group.

Previously, research and development grants of €2.5 million or more to any one company had to be approved by Government. The new threshold of €7.5 million reflects the growing importance of research and development activities to the Irish economy and would ensure that the right number of research and development grants are subject to Government approval, mirroring the thresholds for the other grant types.

The overall objective is to get more firms involved in doing research and development, increase the amount of research and development from existing performers and raise the quality and sophistication of the research and development being performed. This should facilitate a planned progression for companies carrying out research and development, thereby improving in-firm technological capacity and capability over time. These provisions aim both to encourage an increase in the amount of research and development by companies in Ireland and make Ireland an attractive destination for further inward investment.

The mix of supports and incentives offered is geared towards bringing about a qualitative and cultural change in enterprise in order to bring about the shift from an investment-driven economy to an innovation and knowledge-driven economy. Ireland has developed a reputation as being a top location for ground-breaking research. Company-to-company collaboration and partnership between our third level institutions and companies are at the core of this. Projects already under way include research on combating disease, improving communication technology and developing products of the future. This approach to producing high-quality research and development will ensure that Ireland remains a base for high-tech quality jobs in the years ahead.

Research and development grants above the threshold are now quite routine and it is considered appropriate to apply the same threshold as applies to other types of grant. The increases proposed are as follows. Employment grants to industry will move from €5 million to €7.5 million; training grants to industry will move from €5 million to €7.5 million; research and development grants to industry will move from €2.5 million to €7.5 million; and purchase of shares will move from €5 million to €7.5 million. The threshold for capital grants to industry is also being increased from €5 million to €7.5 million and, as this originates from the 1993 Act, it is included in section 4 of this Bill.

It is considered that these levels strike the right balance between, on the one hand, allowing the Government to see the larger grant proposals emerging from each agency, and in this way to monitor the spending involved and raise any policy issues it sees fit, and, on the other hand, keeping the number of such cases on the Government agenda to a number that is not too high. It may be suggested that if too many cases went to Government, the efficiency of the Government as well as the agency and company awaiting the decision would be impaired, although I do not agree with such an argument.We would be more than delighted to see as much as we can.

The 1986 Act also provided an aggregate threshold for all investment aid to one company, above which Government approval is required. This was set at €10 million in the 2003 Act and it is now proposed to increase it to €15 million. In the explanatory note accompanying this Bill, the amounts quoted in respect of the proposed increase in respect of the aggregate limit for investment aid are incorrectly stated as "from €5 million to €7.5 million", whereas the proposed increase is from the existing €10 million to €15 million.

Investment aid is aid to support the building of a new factory or the extension of an existing factory. It is paid either as a capital grant, an employment grant, equity participation in the form of ordinary shares or preference shares, or through a combination of these three instruments. For each of these instruments a Government threshold of €7.5 million is now proposed, and when they are used in combination an aggregate threshold of €15 million is proposed.

Section 3 also proposes to expand the designated areas in the BMW region. The 1986 Act provides that the maximum capital grant that can be given to a company outside the "designated areas" is 45% of the cost of the assets. The counties of Laois, Louth, Westmeath and Offaly, apart from the townland of Derrinlough, are not "designated areas", as defined in the 1986 Act.

Senator John Paul Phelan

What happened to Derrinlough?

Deputy Mary Coughlan

I do not know. However, the counties to which I refer are in the BMW region.

Under EU state aid law and the regional aid map for Ireland for the period 2007 to 2013, approved by the European Commission in 2006, the maximum grant rates for capital assets vary between 0% and 50%, depending on the size of a company and the region of a country in which its undertaking is situated. EU state aid rules permit capital grants for small companies in the BMW region of up to 50% of the cost of their assets. As a consequence, although EU rules would permit capital grants of up to 50% in these counties, national legislation limits the maximum grant to 45%. The proposed amendment is designed to deal with this anomaly and to ensure that small companies in these counties can obtain the same treatment as those in the remainder of the BMW region.

Achieving balanced regional development is central to my policy and that of the Government and is explicit in the core mission statements of Enterprise Ireland and IDA Ireland. It has been a guiding principle in the provision of agency supports to client companies and in the formulation of initiatives to improve business infrastructure in the regions. Obviously, an anomaly such as that which exists at present creates the undesirable situation where existing designated areas enjoy an advantage in the context of the level of grant assistance they can receive compared with other areas within the region. To remove this anomaly and provide equal treatment for all parts of the BMW region, it is proposed to extend the definition to include those counties in the region that are currently excluded.

Section 4 amends the Industrial Development Act 1993 by increasing the existing legislative limit on the aggregate amount of money that can be paid by the Minister for Enterprise, Trade and Employment to Forfás and its agencies for use in discharging their obligations and liabilities. This increase is necessary because expenditure to date is now nearing the existing statutory limit, which was set at €3.4 billion in 2003. It has been the practice that aggregate spending for these purposes is capped in legislation at a level which is raised from time to time in order to allow the agencies' operations to continue. The cap ensures that the Houses of the Oireachtas have an opportunity to review policy and spending on industrial promotion. There are, however, other legislative controls, such as the upper limits on individual grants to companies approved at agency level and these are addressed in section 3.

In addition, there are further Oireachtas controls, such as the annual Estimates process and the work of the Committee of Public Accounts. In the Estimates process, the Dáil takes decisions which determine the annual allocation of money to the agencies for the purposes covered by the longer term legislative aggregate limit set in this section. In setting this higher aggregate, there is no commitment that the money will actually be paid to the agencies. Legislative clearance for aggregate payments up to the level of €7 billion is proposed. However, the annual spending under these headings will still have to be agreed by the Government and voted by the Dáil. The aggregate grant limit currently in place is €3.4 billion and this will be reached in April. It is expected that the new ceiling would be reached in four to five years' time on the basis of the programmes contained in the NDP.

The 1993 Act also places a threshold on the amounts that can be paid by agencies in capital grants to companies. For payments above this threshold, Government approval is necessary. This limit was last increased in the 2003 Act to €5 million and it is proposed to increase this in line with the changes proposed in section 3 from the existing €7.5 million.

All of the changes proposed in the Bill are of a technical nature and are aimed at updating monetary limits in line with the policy already set for the period 2007 to 2013. They do not reflect a new policy direction. Principles and policy for the period are set out in the NDP and were discussed and approved at political level when the latter was being drawn up. They are also considered annually by the Joint Committee on Enterprise, Trade and Employment when it examines the annual estimate and by the Committee of Public Accounts in the context of the appropriation account. The agency programmes for the period are set out in the NDP and were thus adopted when it was approved. The amounts and thresholds proposed now will allow us to implement the principles and policy aims as set out in the NDP to the end of the 2007 to 2013 period.

While the provisions of the Bill are technical in nature, overall they will allow the development agencies to respond to the needs of industry and thereby support employment and, it is hoped, reduce unemployment. These provisions are extremely important in that they facilitate implementation of the national development plan and Building Ireland's Smart Economy — A Framework for Sustainable Economic Renewal.

I commend the Bill to the House.

Senator John Paul Phelan

I welcome the Minister. The final part of her contribution reflects Fine Gael's position on this Bill, which is largely technical in nature. On Second Stage, at least, we will not be opposing it.

Most of the changes to existing legislation that are put forward in the Bill are extremely technical. However, they provide Members with the opportunity to raise issues relating to regional development and unemployment. The House will be engaging in a specific debate on unemployment at 5 p.m.

The Minister outlined the provisions of the Bill and the Schedule provides a list of the companies the shares of which will be transferred to Enterprise Ireland from Shannon Development. I do not have a difficulty with that list. However, there are a number of matters I wish to raise.

The Minister referred to section 3 and the extension of the geographic region to include counties in the entire BMW region. I wish to reiterate the view I have put forward on previous occasions that I regard the BMW region as somewhat of an anomaly. It was created for purposes that I can understand in order to maximise grant aid from the European Union at the time. However, many of the poorest and most neglected areas of the country into which investment has not been forthcoming are not located within the BMW region.

As stated on previous occasions, the south-east region contains three of the five worst performing counties — in the context of average household incomes, employment rates and a number of other key indicators — in the country. Outside the Minister's home county of Donegal, Wexford, Kilkenny and Carlow have the highest rates of unemployment. As she pointed out, those rates are rising dramatically at present. These counties have the lowest levels of third level attendance and disposable income.

The legislation continues to reinforce the notion of the BMW region when, to all intents and purposes, this does not really exist in the minds of members of the public. The BMW region is statutorily established but it does not have much of an impact on people's daily lives and the concept behind it does not resonate with those who live in poor areas located outside this designated region. I accept that it was necessary to include contiguous counties in the region when it was originally drawn up. However, I must question whether it is necessary to reinforce the position in this legislation. Would it not be better to target our limited resources at those areas which have suffered most and which enjoyed the fewest number of benefits during the Celtic tiger era, rather than reinforcing the somewhat false boundaries of the BMW region? My view on this matter is personal in nature but I again take this opportunity to place it on record.

It is unfortunate that we are discussing the development of the mid-west region when it has just experienced a major haemorrhage of jobs in recent weeks. I refer, of course, to the announcement by Dell that 1,900 people are to be made redundant. The closure of the Dell factory will have major knock-on effects for many companies in the region.

I wish to thank the staff of the Oireachtas Library and Research Unit, who prepared for Members an extremely useful briefing document in respect of the Bill and Shannon Development. In 2005, the Minister's predecessor as Minister for Enterprise, Trade and Employment, Deputy Martin, referred to the new mandate he was putting in place for Shannon Development. A key part of that mandate was to be the establishment of a new independent authority for Shannon Airport. The Government made commitments in this regard on a number of occasions. To date, however, such commitments have not been delivered upon. Another key aspect of the former Minister's announcement in 2005 related to the role decentralisation would play in the development of the regions. I accept that a number of State agencies have been decentralised. However, it is clear the policy announced in the budget in December 2003 is pretty much in tatters and cannot be delivered as originally envisaged and as mentioned by him in those remarks.

The most interesting information I received from the research unit concerned a statement issued by Sean Dorgan as head of the IDA. He spoke of the importance of foreign direct investment in post-Celtic tiger Ireland. I looked at several of the headings under which he spoke and at a number of the issues he raised. He spoke about the importance of achieving an environment in which research, knowledge, high skills levels, expertise, high quality infrastructure and business services are combined in a flexible and creative way to promote job creation into the future. We would all agree with that. He also said, when he delivered these remarks in 2004 or 2005 that a further transformation to being innovation driven will not be instant but will need to progress quickly so that we are recognisably different yet again by 2010. I do not believe we have achieved that. I know it is an objective of Government and the Minister outlined that we have made progress in that regard but I do not believe we could say we are recognisably different.

Most telling was Sean Dorgan's description of what he saw spurred foreign direct investment growth in the economy throughout the 1990s in particular, and perhaps into the early years of this decade. He spoke about the long running boom in the US economy which we all know no longer exists. It is quite the opposite at this point. He spoke of the positive, stable and single-minded policy environment from Government. I know Members opposite might have a different view but we do not seem to have any policy environment from Government. I understand discussions are ongoing with the social partners and perhaps the Government wants to play its cards close to its chest. However, in the absence of any information, we do not seem to have a policy and leadership.

Another point Sean Dorgan made was equally important, although I will not get into a discussion on the Lisbon treaty. He spoke about the perception of Ireland as an integral and committed member of the European Union. Whether one is pro- or anti-Lisbon, our position as a committed member of the European Union has changed since he made these remarks.

He also spoke about the good supply of young, well-educated people. Our education system, which has some difficulties, is still supplying well-educated people to the workforce. Fortunately for other countries but unfortunately from the perspective of the economy, we are not unique within the European Union since its expansion in terms of the supply of young, well-educated people to the workforce.

Sean Dorgan also spoke of the export-led contribution to the economy in those years. We have seen a continuous fall in that export-led contribution over the past ten years. It is an area in which we will have to get our act together if we are serious about reversing some of the decline we have seen over the past 18 months.

He also spoke about the flexibility in the economy and about the relative competitiveness in terms of costs in the economy. This is the nub of the issue. Since he spoke in the early part of this decade, those relative costs have spiralled out of control. There is strong evidence to suggest that we have been haemorrhaging jobs because those costs have increased much too quickly. It has had a devastating effect in terms of employment in the State over the past 18 months, in particular.

Sean Dorgan made several comments about the importance of new technology, which the Minister mentioned. He also spoke about the level of taxation generated by the foreign direct investment companies in the country in terms of corporation tax and additional tax revenues. We have seen that the decline in the number of people employed in foreign direct investment firms has had a very detrimental impact in terms of the Exchequer figures in recent months.

The Minister spoke about the inevitability that we will experience further job losses over the next 12 months, with which we all agree. However, I am not convinced by what I heard from her and from Government that a policy agenda is being put in place which would ensure we can do something to arrest that decline in the coming years.

It is vital as we face into this period that there is a substantial review of how we spend money in terms of enterprise development and enterprise development agencies in the future. I think, in particular, of county and city enterprise boards, the IDA and Enterprise Ireland. I would welcome an opportunity to have a discussion on how we invest that money into the future at the earliest opportunity because it will be crucial if we are to reverse the decline in our competitiveness and the increase in unemployment we have seen over the past 18 months.

Senator Ivor Callely

I welcome the Minister and thank her for giving us her time. I understand the Industrial Development Bill is of a technical nature and does not introduce any new policy direction or otherwise, so I welcome it. The Bill provides for the transfer of shares by an existing shareholder to a third party and it was deemed necessary that the legislation be introduced.

As the Minister said, the Bill also increases grants paid by the agencies to the industrial companies. Industrial incentives and grant aid have played a key role in the successful development of the economy and they continue to be a fundamental aspect in terms of encouraging entrepreneurs and enterprise.

The Bill also updates existing provisions on the powers of the IDA, Enterprise Ireland and Shannon Development to give the grants mentioned. The overall objective is to get more firms involved in research and development, an area on which we are focusing to avail of employment opportunities which might present.

There is also an extension of the designated areas in the BMW region. The Bill allows the Minister to increase the amount of money that can be given to Forfás and its agencies, which is welcome. There is nothing of concern in the Bill. As Senator John Paul Phelan indicated, it has been welcomed by the Opposition.

I take the opportunity to congratulate the Minister on her endeavours to encourage enterprise. Some of the measures introduced by the Government, in particular in recent months, emanate from the Minister's office. I wish her well with the end result.

Our country is experiencing a storm such as we have not experienced heretofore. We did not experience that in the past. Some of my colleagues said we have been through this previously but we have never been through a financial storm such as the one we are experiencing. I recall the words of the former United States President, Richard Nixon, who spoke about——

Senator John Paul Phelan

Those famous words.

Senator Ivor Callely

He said when one is on the highest peak, one appreciates the lowest valley.

Senator John Paul Phelan

I think he said when one is in the lowest valley, one appreciates the highest peak.

Deputy Mary Coughlan

We are getting confused now.

Senator Ivor Callely

It was said when he was on the way out rather than on the way in.

Senator John Paul Phelan

Dicky.

Senator Ivor Callely

All of us in this House would agree that Ireland has enjoyed the dizzy heights of tremendous economic success in recent years. As a small island nation we enjoyed full employment, a tremendous revenue intake and activity at every level of industry and enterprise. Entrepreneurs were prepared to take huge risks and so on. We enjoyed also the moneys that were available for capital investment through the national development plan.

From that dizzy height the average two by four families, as it were, who had extra disposable income in their pockets are now experiencing enormous pressure. It has reversed somewhat but we have had pressure in terms of interest from the financial institutions, supplies, especially in the cost of a barrel of oil, and we now have pressure on sustainable employment. We are experiencing this global storm from a totally different perspective from that which we may have witnessed in the past. The international financial economic difficulties are also adding to the difficulties Ireland is experiencing.

I appreciate that the Minister, along with her Government colleagues, is doing everything in her power to prioritise expenditure, investment and policy which will give us the best economic return and help us turn around the current economic position. I support her words of encouragement to entrepreneurs. She has stated clearly on a number of occasions that she wants Ireland to be a business friendly environment, and her policies reflect that. She has some difficult choices to make. We all want her and her colleagues to correct the difficult financial position in which we find ourselves. My understanding is that we are short approximately €18 billion a year in our finances. To put that into figures people can understand, we need to borrow €50 million per day to keep the country operating, which is a serious position that must be corrected as quickly as possible.

I support the Minister, her colleagues and the Taoiseach in putting the timescale in place to try to have a framework document we can all work to as quickly as possible. I hope that will be by the end of this month. The resources are scarce but my understanding is that the Minister has put a number of incentives in place to try to help the economy and achieve some level of growth.

Regarding the credit crunch, my understanding from speaking to the Minister, some of her colleagues and some people in the financial institutions is that they are open for business.

An Cathaoirleach

The Senator has one minute remaining.

Senator Ivor Callely

I am not privy to the details of the discussion between the Department of Finance and the banking institutions but the people who have contacted me regarding the credit crunch have indicated that the banks have changed the rules in terms of the manner in which they are doing business.

All of us in this House understand the financial difficulties, the international credit crunch, and the collapse of certain markets but the financial institutions must come in and support the entrepreneurs who have taken the risks and helped fuel the economy in previous years. It is a serious issue for banks to say now to those people that they must reduce their loan to value ratios and the payment methods of their company or themselves as personal borrowers. That is serious because they are restricting entrepreneurs in their activities and, more importantly, they are impacting seriously on small and medium enterprises.

An Cathaoirleach

The Senator must conclude.

Senator Ivor Callely

I will conclude. I called to my local petrol station to get a tank full of petrol and the garage owner came out to tell me he is selling cars but the people are coming back within a few days to say they cannot proceed with the purchase because the banks will not give them the money. If that is happening at every level, and if the entrepreneurs and the small and medium size business owners are being stopped——

An Cathaoirleach

The Senator must conclude. I call Senator Quinn.

Senator Ivor Callely

I take this opportunity to say to the Minister that in the process of the recapitalisation of our financial institutions, we will need——

An Cathaoirleach

The Senator must stick to the time. I call Senator Quinn who has ten minutes.

Senator Ivor Callely

I am sorry. I welcome the Industrial Development Bill.

Senator Feargal Quinn

I welcome the Minister. I was talking to the Minister's opposite number in the George W. Bush Administration, namely, the Secretary for commerce or employment, and it was interesting to hear her use words not unlike those expressed by the Minister. She said that her duty was not to create jobs but to create the environment in which others can create the jobs. That is an important message we must get across and it is an important message I heard from the Minister earlier.

I recall being on a hospital board in the 1970s when it was job creation time. We were asked how many new jobs we could create in the hospital and if we could take on more porters and so on to solve the employment problem. That is what got us into trouble because we tried to create jobs as against creating enterprises that succeed, as Senator Callely spoke about. That is how we create jobs. I welcome the Bill.

The withdrawal of Dell from the Limerick area was a devastating blow and we must create jobs to fill that void. One of the main ways to do this is to help entrepreneurs start new businesses in that area. It was interesting to see what happened in Galway following the collapse of Digital. Many talented individuals got involved in new technology start-ups, especially in the area of software, hardware and medical devices. I refer to two companies, the hardware firm Multis and the medical tech firm, Embricon. They can trace their origins to their management being laid off from Digital.

I mention those because they are the entrepreneurs who create businesses based perhaps on technology developed in universities. I refer to two small companies, one started in the university in Cork and the other in Trinity. One of them is IdentiGEN. The Minister will be aware of this interesting company that is involved in DNA traceability. It is now selling that product in America. I believe it has made a contract with Wal-Mart. It has also set up in Britain to sell it there as well. This is technology that is way ahead of anything else in the rest of the world.

When the Minister referred to skills strategy and what people can do, it is this area she was talking about. I was stunned to discover that we do not have enough science graduates or students entering mathematics and science programmes. We must encourage that if we are to develop in that area.

I have a problem with the number of bodies involved in development in the Shannon region. They include the county enterprise boards, IDA Ireland, Shannon Development, Enterprise Ireland, Údarás na Gaeltachta, local development agencies and local partners. I fully agree with the Minister's proposal to try to amalgamate these bodies or bring them together in some form.

Some time ago, I spoke to a Minister who expressed concern that when a smaller quango, not one within the remit of the Tánaiste, wanted to make an appointment, a public relations agency made a telephone call to make the appointment on its behalf. The danger of having so many quangos is that they acquire many add-on roles. I accept the word "quango" is considered unacceptable.

Before I was elected to the Seanad, I was a member of a partnership whose aim was to create jobs. I recall attending my first meeting with a view to raising a number of ideas and concepts. I was jolted, however, when it became clear that most of the others in attendance wanted to send someone to Dublin to seek grants from the Government. This was the wrong approach. At the time, I encouraged others to take a different approach. One person started off on a small-scale producing jam, another started growing lettuce while another set up a window cleaning business. To the best of my knowledge, all these companies did well and were either sold off later or developed into larger businesses. We must attempt to create an environment in which entrepreneurship is encouraged as opposed to one in which assistance is sought from Government. The Minister's words in this regard are welcome.

One of my daughters worked for a year in the Third World. She was a management consultant in a large American consultancy who took a year off to work in Santiago in Chile where she worked for a Belgian organisation that encourages people around the world to start businesses. She described how a group of ten or 12 people with little money sought assistance from this organisation. One person wanted a few seeds, while another wanted a spade and another wanted a few hens to develop an egg business. Small businesses were started with little seed capital and members of the group gathered every week to talk among themselves and engage in self-help. This is precisely the type of activity required in this country to encourage development. We must develop the competitiveness to which the Minister referred.

Apart from my role as a Senator, my only other job is that of chairman of EuroCommerce, a Brussels based organisation which represents 6 million shops employing 31 million people in Europe. I raise this issue because the retail and wholesale sector is not given the credit it deserves for the number of jobs, wealth and success it creates. National governments and European institutions often state it is manufacturing companies which create real wealth. We must recognise, however, that it is the jobs created in wholesale, retail and international trade which make the world go around.

The Minister has criticised the uncompetitive prices of many retailers south of the Border compared with north of the Border. Many of these companies are going out of business because they cannot survive. The objective, therefore, must be to face up to the manufacturers and suppliers, whether multinational or Irish.

I understand the Minister will be involved in an event organised by the Irish Association of Supported Employment, IASE, later today. This organisation works with people who have a disability or different ability, as we describe it. It will launch its website later today and some of its members wish to have their photograph taken in the House with the Minister.

Deputy Mary Coughlan

I was suppose to attend the event but I had to show respect for the House. I mean no disrespect by failing to attend.

Senator Feargal Quinn

I took the Minister's place and took a photograph but the IASE still wants to have a photograph taken with her later. I raise this issue because those involved are among those who are sometimes left behind when jobs are created. We must find a way to address this issue.

Another area on which we must concentrate is foreign direct investment. I am pleased to note the Minister is not losing sight of this issue. I know the chairman and chief executive of Coca Cola which recently announced it plans to open a plant in County Wexford. While the company has a choice of locations in which to do business, its chairman informed me that it chooses Ireland because everything being done here makes this country a more attractive location. The continuation of this type of investment is not guaranteed because Ireland is in fierce competition for investment with other countries. I do not have the figures to hand but I noted that the Financial Times last week published a list of the most open and attractive countries in which to locate for businesses. I understand Ireland was ranked in fourth place on the list.

The Lord Mayor of Dublin stated today that she intends to ask newspapers to publish only good news from now on. There is a danger we will talk ourselves into depression. Great opportunities are available. Some people succeed in bad times while others fail in good times. With the support of the Minister we can make this country work, as we did in 1987 through a series of initiatives, one of which was to identify the sunrise industries of the future. From 1987 through to the mid-1990s, the sunrise industries were pharmaceuticals, software and information technology. While I am not certain what the sunrise industries of today are, entrepreneurs will find them if we open the door for them.

I welcome the steps being taken by the Minister and the amalgamation of the organisations covered by the Bill. Firm commitment is needed and the Minister's assistance is required to ensure Ireland is a competitive and attractive place in which to set up business.

Debate adjourned.