I am delighted to be back in the Seanad. I watched the Order of Business outside and could not but be taken by the vim and vigour of those who contributed. I applaud them for their energy, given the work they have had to do in the past 24 hours.
The purpose of the Bill is to extend the remit of Science Foundation Ireland to enable it to fund applied research in addition to its existing remit to fund oriented basic research. The Bill also provides for other amendments to the functions of the foundation, including the refocusing of the research themes to be funded by it, covering both oriented basic research and applied research, towards areas that have the greatest potential to deliver a sustainable economic return through enterprise development, employment creation and quality of life.
The Bill provides for certain amendments to existing legislation relating to Forfás, Shannon Development and Enterprise Ireland. These are unrelated to the proposed changes to the remit of Science Foundation Ireland but are included as they are all within the framework of the Industrial Development Acts. The amendment relating to Shannon Development is a necessary one to the Industrial Development Acts to provide for new arrangements for the promotion of enterprise opportunities in the mid-west region.
Before I describe the provisions of the Bill in more detail, I propose to outline the background to Science Foundation Ireland, its role in the national research and innovation system and the broader role of research and innovation in the overall strategy for economic recovery and growth. I will also outline the rationale for the changes proposed in the Bill and their contribution to this strategy.
Science Foundation Ireland was established under the Industrial Development (Science Foundation Ireland) Act 2003. Under that Act, the main function of the foundation is to "promote, develop and assist the carrying out of oriented basic research in strategic areas of scientific endeavour that concerns the future development and competitiveness of industry and enterprise in the State". The Act specified information and communication technologies and biotechnology as "strategic areas of scientific endeavour". Sustainable energy and energy-efficient technologies were subsequently specified, by means of regulations, as comprising an additional strategic area of scientific endeavour. Science Foundation Ireland provides grants to researchers and research groups that are based in higher education institutions on the basis of competitive calls for proposals with selection on the basis of international peer review. The foundation's funding programmes support research teams led by principal investigators, the clustering of research teams with industry engagement and larger-scale groups of research teams to address a more limited number of strategic thematic areas in collaboration with industry partners.
The preparation of this legislation provides the opportunity to remind ourselves of and articulate the reasons the Government funds research and development. It is accepted internationally that the private sector does not fund research and development at the optimum level for economic and societal benefit. The reasons for this include the fact that research and development, particularly basic research, is inherently risky. The commercial returns are often insufficiently clear for the private investor. Another reason is that the societal returns from investment in research and development sometimes outweigh the direct returns to the private investor. If the private investor does not capture all of the returns generated from the investment, this may act as a disincentive for the private sector. These reasons apply in Ireland as they do elsewhere. It could be argued that Ireland, as a small, open economy, can take advantage of discoveries made elsewhere and avoid significant investment in research and development, particularly basic research. However, if we are to absorb and take advantage of externally generated new knowledge, we must have the capability to understand and use it. Therefore, the economy must conduct research and development itself. As the global economy and society are constantly changing and developing, there is an ongoing need to address societal, environmental and economic challenges. If Ireland is to maintain and enhance its position in the global economy, our economy needs to keep pace. Our past and current economic successes provide no guarantee of success in the future. Therefore, we must continue to invest appropriately in creation and innovation if we are to be able to compete in the global marketplace.
There has been significant public investment in science, technology and innovation in Ireland since the late 1990s. This was initiated from a low base. Before then, Ireland had not invested significantly in research and development and our international ranking for quality of scientific research was well below OECD standards, on a par with some Third World countries. The lack of high-quality research personnel performing industrially relevant research was deemed to be an impediment to attracting large-scale knowledge-intensive industrial projects to Ireland and to developing indigenous internationally competitive, high-growth firms. While the economy had grown substantially during the 1990s, with substantial employment growth and improvements in prosperity, there was a concern in the late 1990s that Ireland was no longer a low-wage economy. The movement of manufacturing to lower cost economies was evident. It was clear that Ireland had to make the transition to higher added value products and services that allowed us to sustain and increase incomes. A key part of this process involved recognising the importance of knowledge creation and innovation in sustaining and enhancing competitiveness. National policy was developed to focus on building new sources of competitive advantage with a view to sustaining growth and jobs in the longer term. This involved repositioning Irish enterprise higher in the value chain, thereby requiring more highly skilled and knowledge-based employment. The key to Ireland's continued success was to ensure the enterprise development agencies, Enterprise Ireland and IDA Ireland, successfully promoted the establishment and development of firms with a competitive advantage based on knowledge, technology, innovation and related skills rather than on maintaining traditional activities and approaches.
In 1998 the Irish Council for Science, Technology and Innovation undertook a technology foresight initiative which sought to identify emerging technologies that would be central to national economic development in future years. The report of the initiative recommended that the Government establish a fund to enable Ireland to become a centre for world-class research excellence in strategically important areas such as ICT and biotechnology and their underlying sciences. The Government accepted this recommendation and subsequently established Science Foundation Ireland to administer this fund. Science Foundation Ireland's investments in human capital in strategic areas of scientific endeavour are complemented by investments under the programme for research in third level institutions, which is administered by the Higher Education Authority. This investment is aimed at developing high-quality research capabilities in higher education institutions, including research buildings, facilities and equipment. This public investment has had a significant impact in the past decade or more. The human capital, infrastructure and systems that have been developed from this investment are feeding through to attract foreign direct investment and commercialisation. In 2012 more than 40% of IDA Ireland's job announcements related to companies with links to Science Foundation Ireland research teams. Such companies accounted for 4,575 of the new IDA Ireland client-win jobs that were announced last year. The researchers and research teams that are supported by Science Foundation Ireland are connected to more than 600 companies employing more than 90,000 people in this country.
Ireland is ranked 20th globally in terms of our research capability. This represents an improvement on our ranking of 36th in 2003. We are performing very well in specific fields. We are ranked third in the world for immunology research, which is a key area of relevance to the life sciences sector. We are ranked sixth in nanotechnology and eighth in materials science, both of which are key to Ireland's life sciences, ICT and energy sectors. These high standings result largely from the excellent research carried out by various teams that are funded by Science Foundation Ireland. Such global rankings are seen as a key element in the attraction of Ireland for these sectors as a location for foreign direct investment. The impact of our research investment can be seen in the figures for research and development expenditure by the business sector. Expenditure on research and development by the business sector trebled from €600 million to €1.8 billion between 1997 and 2010. In 2004, less than 10% of IDA Ireland's investment wins were in research, development and innovation projects. They were worth €120 million. We have seen an almost sixfold increase in this regard, to the point at which the comparable figure for 2011 was €700 million. This national investment is also paying off for indigenous firms. The exports, employment and sustainability figures of research and development performing firms consistently outperform those of firms that do not engage in research and development.
The areas around which public investment has been oriented to date were appropriate for building a broad base of capacity and expertise in strategic areas underpinning science and technology. Ireland is now looking to build on the strengths that have emerged from the investment to date in science, technology and innovation and to target future investment in areas that link directly to current and likely future economic and societal needs. It is appropriate for Ireland to define more precisely the areas where critical mass and concentration of effort will maximise returns.
As a small country which is very dependent on the global market, it makes strategic sense that we should, to a significant but not exclusive extent, focus on those areas of research with the greatest potential for development of applications to generate economic growth and address problems in our society. In addition, given the harsh realities of our current fiscal and economic crisis, there are competing and equally compelling demands for Exchequer investment and we need to ensure now, more than ever, that we achieve the optimum impact from our investment.
In 2010 a high-level Government-appointed steering group, chaired by Mr. Jim O'Hara, formerly of Intel, was established to identify priority areas of focus for Irish research for the future. This exercise was comprehensive, involving extensive research, analysis and stakeholder consultation. The report of the group was approved by Government in February 2012. The group identified 14 priority areas of opportunity for Ireland and six underpinning technologies and infrastructure to support these priority areas, on the basis of existing strengths of the enterprise base, opportunities in terms of the global marketplace and those which are most likely to deliver economic and societal impact, and, ultimately, jobs. The aim is to align the majority of public science, technology and innovation, STI, investment with the 14 areas of opportunity identified in the report, as well as the underpinning technologies and infrastructure. The report also acknowledged the important role of research for policy and research for knowledge and recommended that the remaining funding be channelled to support these two areas. A number of measures were also recommended to improve the efficiency and effectiveness of the STI system.
It is in this context that the Bill provides for the refocusing of the research themes to be funded by Science Foundation Ireland towards the priority areas of opportunity. In the context of considering how to accelerate the impact of public investment in research, the question arises as to whether we have the mechanisms in place to maximise the opportunities arising from the research funded by SFI and which is carried out in our higher education institutions. Currently, SFI's remit is to carry out "oriented basic research in strategic areas of scientific endeavour". The definition of oriented basic research in the 2003 Act which established SFI follows an internationally recognised categorisation as set out in an OECD publication known as the Frascati manual. It is defined as research that is "carried out with the expectation that it will produce a broad base of knowledge likely to form the basis of the solution to recognised or expected, current or future problems or possibilities". In other words, this research is expected to produce results that form the basis for future applications. Applied research means "work undertaken in order to gain scientific or technical knowledge and directed towards a specific practical application". Applied research is usually undertaken either to determine possible uses for the findings of basic research or to determine new methods or ways of creating practical applications.
Enterprise Ireland administers several programmes involving direct grants to companies to develop and support industry-led, market-focused applied research. However, these programmes still leave a gap in pursuing applied research opportunities arising from oriented basic research. The programmes operated by Enterprise Ireland start at a stage further from where many researchers find themselves as the possible uses for the basic research results have not yet been explored. Consequently, the proposed addition to the SFI remit is intended to fill this gap. The extension of SFI's remit to include applied research will take the outcome of oriented basic research funded by SFI closer to market, which in turn increases the potential of research to yield commercial opportunities and jobs, as well as other societal benefits.
The Bill also includes a new function to enable SFI to promote and support awareness and understanding of science, technology, engineering and mathematics. The Minister for Jobs, Enterprise and Innovation transferred responsibility for delivery of the Discover Science and Engineering programme from Forfás to SFI on an administrative basis with effect from 1 March 2012.
Since its establishment in 2003, the Discover Science and Engineering programme has been actively working with companies and higher education institutions, as well as representative bodies such as Engineers Ireland to heighten the awareness of science and engineering and to raise the level of student uptake of the physical sciences at second and third level. The objective of Discover Science and Engineering is to promote awareness and understanding of the importance of science, technology, engineering and mathematics, to increase the number of students studying the physical sciences and mathematics, to promote a positive attitude to careers in science, technology, engineering and mathematics, and to foster a greater public understanding of the physical sciences, engineering and mathematics and their value to Irish society.
There are many synergies and mutual complementarities between Discover Science and Engineering and SFI, particularly in light of the outreach programmes run through the SFI-funded research centres. This transfer enables synergies between the Discover Science and Engineering programme and SFI funding to be maximised and will increase the impact of this programme. The Bill provides power for SFI to provide funding for research groups based in Northern Ireland and also to enable participation by SFI in international funding programmes. SFI does not currently have the power to fund research groups outside the State.
In regard to Northern Ireland, the Bill enables SFI to provide funding for research groups in Northern Ireland under an existing scheme, known as the Charles Parsons energy research awards. The Bill also enables SFI to provide funding for research groups in Northern Ireland where they are in partnership with institutions or companies based in the State for the purposes of the research. Following the extension of SFI's remit to sustainable energy and energy-efficient technologies in 2008, the Minister for Enterprise, Trade and Employment and the Minister for Communications, Energy and Natural Resources agreed in 2008 that responsibility for the Charles Parsons energy research awards scheme would transfer to the then Department of Enterprise, Trade and Employment, with management of the awards undertaken by SFI. This transfer was completed in November 2009. Under the scheme, seven research groups were awarded grant aid by the Department of Communications, Energy and Natural Resources in December 2006. Two of the awards were made to groups based in Northern Ireland institutions, namely Queen's University, Belfast and the University of Ulster. While responsibility for the management of all of the awards has been transferred to SFI, for the time being, any payments to the Northern Ireland institutions are made by the Department of Jobs, Enterprise and Innovation. Subject to performance under the terms of the award, the final payments are due to be made to the awardees in 2013. This change will enable SFI to fund these awards directly, as is already the case regarding the awardees based in the State.
The more general power for SFI to fund research groups in Northern Ireland will enhance opportunities for collaboration between research groups both North and South. To leverage best value from Ireland's research investment it is proposed to enable SFI, subject to the consent of the Minister, to enter cost-share arrangements with international partners in areas linked with its mandated priority areas and where Irish researchers have real potential to achieve added value from such arrangements. It is important for Ireland, through SFI, to be ready to participate in international programmes in areas where Ireland has research strengths when the opportunities arise. It opens up access to external non-Exchequer funding opportunities and facilities for Irish researchers which would not be available otherwise.
It is generally accepted that international collaboration on research brings together resources and the pooling of knowledge, enhancing scientific excellence and thus achieving greater success in addressing research problems, as well as greater efficiencies. Participating in international research programmes facilitates inward and outward mobility of researchers, access to transnational collaborative networks, access to research facilities not available in Ireland and commercialising ideas and know-how. There is an increasing trend at European level towards research funding schemes which involve pooling of funding by member states, with or without additional European funding. SFI's participation in these schemes is restricted due to the limitations of the 2003 Act in respect of funding projects outside the State. While some forms of pooling of funding can be carried out under the existing legislation, other forms of pooling are outside its scope. The European Commission's proposals for research and innovation funding for the period 2014 to 2020, Horizon 2020, include the allocation of co-funding for member state collaborations, subject to "clear financial commitments of the participating countries, including prior commitments to pool national and/or regional investments for transnational research and innovation". In these circumstances, unless Ireland participates in such fund-pooling arrangements, Irish researchers will not be in a position to compete for the funds, including the matching funds being made available from the European Union. Therefore, as part of Ireland's efforts to maximise our drawdown from EU research funding, it will be necessary to be in a position to engage in "common pot" arrangements, where appropriate. It is also appropriate that Ireland leverage research being funded by other states and share the economic impact.
In addition, scientific and engineering equipment and facilities are becoming more and more expensive to build and maintain. Globally, particularly in Europe, the solution is to share development and operational costs. Researchers in participating states can use such infrastructure and machinery. If Ireland cannot contribute to such infrastructure, access to it by our researchers may be restricted to the detriment of research here and the intended enterprise consequences. In some of these programmes there may be no guaranteed "juste retour" in respect of an Irish contribution, but participation in such programmes would be evaluated on the basis of Irish research strengths in the specific area.
I will now turn to the other matters dealt with in the Bill. I will deal first with the reorganisation of enterprise development functions in the Shannon free zone. On 27 November last the Government agreed to implement the decision taken in principle last May to merge Shannon Development with Shannon Airport in order to create a new aviation-focused entity with a commercial mandate in public ownership. The Government agreed a number of actions which would be implemented to give effect to this decision. These include the separation of Shannon Airport from the Dublin Airport Authority and the decision to transfer Shannon Development's functions in respect of indigenous enterprise and foreign direct investment to Enterprise Ireland and IDA Ireland, respectively. The latter decision will act as a catalyst for economic development and job creation as it will ensure indigenous and multinational industry already in the Shannon region or considering locating there will have access to a comprehensive range of supports. By merging a strong independent Shannon Airport with the extensive property holdings, experience and expertise of Shannon Development, we will create a strong new State company which will work with IDA Ireland and Enterprise Ireland on developing an international aviation services centre in the region. The implementation of these decisions represents a new start for enterprise and job creation in the Shannon region.
In order to bring about the transfer of enterprise functions, it is necessary to remove the restrictions which prevent IDA Ireland and Enterprise Ireland from providing enterprise functions in the Shannon free zone. Section 8 of the Bill provides for the repeal of section 11(2) of the Industrial Development Act 1986 which prevents Enterprise Ireland and IDA Ireland from providing and administering grants and other financial facilities for industry in the Shannon free zone. The subsection also prevents the agencies from providing, developing, constructing, altering, adapting, maintaining and administering industrial estates and factory buildings, together with the associated facilities of such estates and buildings in the Shannon free zone. It can be seen, therefore, that this provision is required to give full effect to the Government's decision of last November. It is without prejudice to future legislative developments required to place the new organisational arrangement on a statutory basis. Enterprise Ireland, IDA Ireland and Shannon Development are in regular contact to ensure there will be a smooth transfer of enterprise functions, with no disruption to the level of services provided for client companies.
On the wider issue of establishing the new company, a high level steering group comprising the Secretaries General of a number of key Departments, a senior ICTU representative and the chair of the Shannon Airport Authority, is meeting regularly to oversee the transitional arrangements in both Shannon Development and Shannon Airport and full implementation of the Government's decision on the establishment of the new company.
The Bill provides for reform of the legislation governing the collection of research and development data by Forfás. The Science and Technology Act 1987 provides for the preparation by Forfás of a science budget on a periodic basis. It obliges bodies funded under the science budget to supply to Forfás such information in such form and at such time as it may require. The data, collated and published biennially by Forfás as the "science budget", measure overall expenditure on science and technology in the Government sector. The areas of expenditure measured are much broader than and do not align with current international practice in monitoring science, technology and innovation expenditure. It is, therefore, considered that the resulting survey is neither a useful policy tool nor an effective use of staff resources. The deletion of these provisions is, therefore, proposed as an administrative efficiency measure. The tone of my speech suggests one is a bridge to another, but it is another part of the Bill. It is not a continuation of the Shannon Development piece but a new part. However, Forfás will continue to compile on an annual basis a major component of the science budget, known as "Government budget appropriations or outlays on research and development", GBAORD, an internationally comparable metric carried out using harmonised concepts and definitions under OECD definitions. This is required under a Commission regulation relating to statistics for science and technology. The Bill requires an institution to supply information to Forfás from time to time for the purposes of the Commission regulation and in respect of research and development funded wholly or partly from moneys provided by the Oireachtas. This will give statutory backing for the collection of data by Forfás for the GBAORD survey and other purposes.
The opportunity is being taken in the Bill to align the legislation governing SFI and Enterprise Ireland with the Freedom of Information Acts. It is important to note that SFI and Enterprise Ireland are bodies to which the Freedom of Information Acts apply. However, section 16 of the Industrial Development Act 1998 in respect of Enterprise Ireland and section 17 of the 2003 Act in respect of SFI prohibit disclosure of confidential information by board members, staff and other specified persons.
It is proposed to make these sections subject to the Freedom of Information Acts and thereby allow for disclosure of confidential information in accordance with those Acts.
I will now summarise the sections of the Bill. Section 1 sets out the definitions of terms used in the Bill. Section 2 provides that expenses incurred by the Minister in the administration of the Bill will, subject to sanction from the Minister for Public Expenditure and Reform, be paid out of moneys provided by the Oireachtas. Section 3 provides for further definitions of terms used in the Bill, including the definition of "applied research". Section 4 sets out the revised functions of Science Foundation Ireland. Section 5 deals with the provision by the foundation of funding to institutions based in Northern Ireland and to international projects.
Section 6 provides for a consequential amendment to the original Act governing Science Foundation Ireland arising from the extension of its remit to applied research. The 2003 Act provides that the foundation should comment in its annual reports on the oriented basic research funded by it. This requirement is now extended to encompass all research funded by the foundation. Section 7 provides for the repeal of provision relating to compilation of the science budget by Forfás. Section 8 repeals the restrictions on Enterprise Ireland and IDA Ireland in respect of the Shannon region.
Section 9 provides for the new provisions for collection of research and development data by Forfás in place of the provisions repealed under section 7. Section 10 provides for the amendment of the confidentiality provisions applying to Enterprise Ireland and Science Foundation Ireland by making them subject to the freedom of information Acts. Section 11 provides for the Short Title to the Bill, the collective citation provisions and the commencement of the provisions relating to the legislation.
I commend the Bill to the House.
