Select Committee on Business, Enterprise and Innovation debate -
Tuesday, 27 Mar 2018

Vote 32 - Business, Enterprise and Innovation (Revised)

Chairman

I remind members, officials and those in the Gallery to ensure their mobile phones are switched off for the duration of this meeting as they interfere with the broadcasting equipment, even when on silent mode. This meeting is for the consideration of Revised Estimates for Public Services 2018, Vote 32 - Business, Enterprise and Innovation. This was referred by the Dáil to the committee on 14 December 2017. It is an opportunity for the committee to consider the performance information regarding outputs and impacts of programme expenditure. I welcome the Minister, Deputy Humphreys; and the Ministers of State, Deputies Breen and Halligan. I also welcome their officials to the meeting and thank them for the briefing material provided, which has been circulated to members of the committee.

As members are aware, Vote 32 comprises three primary expenditure areas. These are programme A, which deals with jobs and enterprise development; programme B, which deals with innovation; and programme C, which deals with regulation. We will start with programme A and I invite the Minister, Deputy Humphreys, to make a brief statement.

Minister for Business, Enterprise and Innovation (Deputy Heather Humphreys)

I am pleased to have the opportunity this evening, together with my colleagues, the Ministers of State, Deputies Breen and Halligan, to say a few introductory words on my Department's 2018 Revised Estimates. My officials have already provided the committee with a detailed briefing on our 2018 Estimate, which I hope is of assistance to members. I propose to make some brief comments on our achievements in 2017 and the overall financial provision secured for our programmes in 2018 but I intend to focus my comments on programme A, which deals with jobs and enterprise development. The Minister of State, Deputy Halligan, will concentrate on programme B, dealing with innovation, and the Minister of State, Deputy Breen, will in the main deal with programme C, which pertains to regulation.

The total gross allocation for my Department, its offices and agencies in 2018 is €870.96 million. This represents an increase of more than €12 million, or 1.4%, over the 2017 allocation of €858.42 million, as per the 2017 Revised Estimates Volume, REV, published in December 2016. The 2018 allocation is made up of €555 million in capital funding and €315.96 million in current moneys. In terms of capital, the funding being provided in 2018 not only maintains the record capital allocation secured by my Department in the 2017 Revised Estimates Volume but increases it, albeit modestly, by €5 million. It must be borne in mind that the budget 2018 negotiations were conducted in a very constrained fiscal environment and improving our record 2017 allocation was, in itself, a notable achievement.

In comparing the Revised Estimates Volume 2017 allocations with the 2018 allocation, it may appear to the committee that they are on a par but the 2018 allocation is an increase of €5 million. This relates to the fact that in the Revised Estimates Volume of 2018, expenditure of €5 million under IDA Ireland's Winning Abroad programme was reclassified as current expenditure, whereas previously it had been classified as capital expenditure. While it is neutral in terms of the Department's overall allocation, this had the effect of reducing the capital ceiling by €5 million and increasing our current ceiling by €5 million. It will be seen, therefore, that the 2018 capital allocation of €555 million represents an increase of €5 million. The additional money, while modest, allows the Department to provide additional funding to its innovation programmes and, in particular, it will allow Science Foundation Ireland to increase the number of world-class research centres to 17.

The additional funding will also allow Ireland to take up membership of the European Southern Observatory in the course of 2018. The Minister of State, Deputy Halligan, will provide more details on these matters when we come to discuss programme B.

As regards current expenditure, the ceiling, as published in the Revised Estimates Volume, shows an apparent increase of €12.5 million over the allocation in the original 2017 REV. The 2018 ceiling of €315.96 million, however, includes the aforementioned reclassification of the Winning Abroad programme funding and additional pay and pension moneys arising from commitments under the Lansdowne Road agreement, as well as reflecting the funding reduction arising from the transfer of certain employment rights functions, including those relating to the Low Pay Commission, to the Department of Employment Affairs and Social Protection in the course of 2017. The net effect of the foregoing was that the Department secured an effective increase of €3 million in its current expenditure allocation for use in 2018. While modest, this increase will allow for the recruitment of an additional 40 to 50 staff across the Department and its agencies to meet the Brexit challenge. This brings the number of new Brexit-related staff posts to approximately 100 in the past two years, and demonstrates the determination of the Department to ensure that it, its offices and its agencies are sufficiently resourced to meet the Brexit challenge.

As for the financial matters, the committee will be aware that the Department was provided with a Supplementary Estimates package in 2017. The package, which was approved by the Oireachtas, enabled the Department to redistribute approximately €40 million in capital and current savings to other priority demands on the Vote. Specifically, the Supplementary Estimates package allowed the Department to contribute to the funding of the new Brexit loan scheme. The Department's contribution to this was €14 million. The remaining €26 million in saving allowed for €10.6 million to be provided to Science Foundation Ireland, SFI, to fund necessary research equipment associated with SFI research professorship awards. This brought SFI's capital investment in 2017 to over €173 million. Some €2.4 million was provided to the Tyndall National Institute to fund urgent infrastructure renewal requirements needed to ensure the institute can remain at the cutting edge of ICT research. Some €12 million was spent to accelerate the repayments on the State's commitments under the programme for research in third level institutions. Finally, €1 million was provided through the Supplementary Estimate to the European Space Agency to increase Ireland's contribution to the advanced research in telecommunications systems programme.

The additional €26 million provided to the Department's various innovation programmes through the Supplementary Estimate brings to almost €105 million the total additional capital secured for the innovation budget since December 2015. This is in recognition of how important innovation is in underpinning our future jobs capacity. It is a cornerstone of our overall economic development policy. The Minister of State, Deputy Halligan, will be happy to provide more details on this additional innovation funding.

Before turning to 2018, it may be helpful to the committee to look at what was achieved in 2017. In terms of jobs, 2.2 million are now employed. That figure represents the highest level in almost a decade, as per the fourth quarter data from the Central Statistics Office, CSO. The unemployment rate now stands at 6%, as per the CSO report of February 2018. Again, this is the lowest level for some time. The agencies of my Department continue to play a key role in job creation. In 2017 the enterprise agencies delivered more than 46,000 new jobs in gross terms, which resulted in a net increase of more than 24,700 new jobs. This is on a par with the number of net new jobs delivered in 2016. By the end of 2017 the total number of jobs being supported by the Department's agencies, including Enterprise Ireland, IDA and local enterprise offices, exceeded 455,000. Applying the multiplier effect, a similar number of jobs are indirectly supported in services. Effectively, approximately 900,000 jobs, or 40% of all jobs in the economy, are being supported directly or indirectly by my Department and its agencies. That is a fairly remarkable figure.

Notwithstanding this progress, it is important that the improvement in employment levels is felt across all regions in the country. The committee will be aware that one of the principle objectives of the regional action plan for jobs initiative is to have a further 10% to 15% at work in each region by 2020, with the aim of having the unemployment rate of each region within 1% of the national average. The success of the regional action plan for jobs has been crucial to the Government in meeting the ambition of creating an additional 200,000 jobs, 135,000 of which will be outside the Dublin region by 2020. Progress across the eight regions has been very positive since the launch of the initiative in early 2015, with implementation rates for actions in excess of 90% for each region. The eight current plans cover the 2015 to 2017 period, and each regional implementation committee is currently preparing its final or fourth progress report, which will conclude the current process. Collaboration between the private and public sector has been a core element in the development of each plan, and will be central to delivery. Based on the current data, all regions are on target to meet or exceed the job targets to be delivered by 2020.

The Department's enterprise agencies are making a significant contribution to the implementation of each of the regional action plans. Two thirds, or 64%, of new Enterprise Ireland jobs created in 2017 were outside of Dublin, while 45% of new jobs created by IDA firms in 2017 were outside of Dublin. Unemployment is decreasing in all the regions and given the strong progress that has been made, the potential to adopt a more strategic approach exists. It is proposed that the regional action plans be refreshed and refocused in order that they remain active for a further two-year period to 2020. An impact assessment of the regional action plans will be undertaken to inform and refresh the process.

Brexit clearly continues to be a primary focus for my Department, its offices and agencies in 2018. My Department's response to the Brexit challenge is based on four specific pillars, namely, helping firms to compete, enabling firms to innovate, supporting firms to trade and negotiating for the best possible outcome. My Department has initiated a suite of initiatives to progress each of these pillars, which I am happy to outline in more detail to the committee. Some of the headline initiatives spearheaded by my Department include a new €300 million Brexit loan scheme to assist businesses to meet the Brexit challenge; a further increase of 50 specific Brexit-related staff across the Department and its agencies, thereby doubling the number of additional Brexit-related staff to approximately 100 in the last two years; the roll-out of the €60 million Enterprise Ireland regional enterprise development fund and a second call for proposals and funding of €30 million in the first quarter of 2018; a tax package to support enterprise and investment to attract jobs to the regions; investment in PhD and research masters programmes to meet enterprise skills needs; an increase in SFI research centres from 12 to 17, with new capital funding; and enhanced programmes of Minister-led trade missions and bilateral visits to deepen existing trade and investment relationships and to forge new linkages across a range of markets.

As regards the enterprise agencies themselves, their 2017 record capital allocations have been maintained in 2018 and will be key in continuing the progress in achieving balanced regional development and responding to the challenges of Brexit. Specifically, the funding provided to the IDA will enable the authority to continue the roll-out of its regional property programme, to complete advanced buildings in Galway, Athlone, Dundalk and Limerick and to progress the design of similar buildings in Waterford and Carlow with a view to completion in 2019. The IDA will also continue to progress the delivery of its investment in job creation targets as it sets out its five-year strategy, "Winning: Foreign Direct Investment 2015-2019". The strategy targets the creation of 80,000 new jobs and a 30% to 40% increase in investment in each region by 2019. By the end of 2018 the level of employment in IDA-supported clients should grow well beyond 210,000 jobs. In 2018, the IDA will specifically target the creation of 7,000 new net jobs and the delivery of 185 new foreign direct investment, FDI, projects.

The focus of Enterprise Ireland in 2018 will be to continue to grow and maintain jobs in the face of Brexit. Specifically, it will extend its competitive start fund, CSF, programme, and intends to run a further nine CSF calls in 2018. Enterprise Ireland has targeted the creation of 15,000 gross new jobs in 2018. It intends to support 180 new and early stage companies and will support clients in concluding up to 1,400 new contracts overseas in 2018. In addition to its existing Brexit responses, such as the Brexit scorecard and the be prepared grant, Enterprise Ireland will roll out its Act On programme to assist companies to decide on specific actions over a short period to address some of the risks and opportunities from Brexit. Enterprise Ireland will also work with companies to support their export reach and deepen their presence in eurozone markets.

It has set ambitious targets to increase exports to the eurozone by €2 billion - 50% per annum - by 2020. This will involve Enterprise Ireland partnering with eurozone start and eurozone scale clients and working with them on the export journey, market opportunity awareness, research and capability assessment, product localisation, market entry and market growth.

The Minister of State, Deputy Breen, will provide more detailed information to the committee on local enterprise offices, LEOs, and their performance and plans for 2018. The LEOs are fully committed to continuing their remarkable progress of job creation right across the country. In 2017, they delivered an average of ten net new jobs each day. They will continue to be a key resource for regional job creation in 2018.

I will say a few words about the national development plan and my Department's responsibility in implementing the employment and innovation objectives relating to it. Project Ireland 2040 is the overarching policy and planning framework for the social, economic and cultural development of the country. Its foundation is the national planning framework and it includes a detailed investment plan for the period 2018 to 2027. Project Ireland 2040, in highlighting the employment challenge, has identified the likely need to create in excess of 660,000 additional jobs in the period up to 2040. One of the specific strategic outcomes identified in Project Ireland 2040 is a strong economy supported by enterprise, innovation and skills. My Department, together with its enterprise agencies, has a key role in delivering this strategic outcome. The national development plan, which sets out the configuration for public capital investment over the period 2018 to 2027, is the key vehicle for driving the implementation of Project Ireland 2040. The national development plan details the various investment priority projects and programmes which will be delivered or commenced by 2021 as well as those that will be prioritised between now and 2027. The national development plan has identified over 16 specific priority investments, the delivery of which will be the prime responsibility of my Department. These cover a variety of areas including regional investment initiatives, innovation initiatives, property investment initiatives, entrepreneur promotion initiatives and regional collaboration initiatives. The national development plan commits a total of almost €116 billion of capital funding over the lifetime of the plan to underpin the implementation of the strategic national objectives of the national planning framework. In so far as the capital funding for my Department is concerned, the plan commits a total of €3.16 billion for capital priority projects over the first five years of the plan out to 2022. Under the plan, our capital ceiling will increase from €555 million in 2018 to €715 million in 2022. That is an increase of over 28%. My firm focus is to ensure that we utilise this additional funding to deliver the aforementioned priority investment projects within the timescale envisaged in the plan. In this regard, progress has already commenced on a number of the projects or will be commenced shortly.

I will leave my comments there for the moment. I am happy to take any questions on programme A before we proceed to the other expenditure programmes under the Vote.

Chairman

There is quite a lot of information there. We will now open it up to the floor for any questions. If possible, I ask members to stay within programme A which deals with InterTradeIreland, IDA Ireland, Enterprise Ireland, agency legacy pensions, credit guarantee, INTERREG, etc. Who would like to kick off?

Deputy Niall Collins

To get it going, will the Minister outline the spread of staff? She mentioned twice that she has engaged over 100 additional staff to deal with the Brexit challenge across her Department and the various agencies. Will she give us an overview of the spread of those staff across her Department and agencies? Are they whole-time permanent or are they contracted? Will the Minister give us an overview of the type of contracts these people are on? Are they short-term or long-term? What lifespan are we looking at for these extra hires?

Deputy Heather Humphreys

They are full-time contracts. Enterprise Ireland has recruited 59 staff and IDA Ireland recruited somewhere in the region of ten staff in 2017. There was €750,000 in additional funding allocated to IDA Ireland to enable it to recruit additional staff. Science Foundation Ireland has approximately six staff and the Health and Safety Authority has ten staff. A number of different agencies have been able to recruit more staff.

Deputy Niall Collins

They are obviously permanent.

Deputy Heather Humphreys

Yes.

Deputy Niall Collins

Are they five-year contracts or three-year contracts?

Deputy Heather Humphreys

I understand they are full-time people who were taken on permanently.

Deputy Niall Collins

They are all full time. InterTradeIreland was mentioned on the news this morning. There was a Brexit event in Cavan last night and InterTradeIreland had an input into it. Is such an increase marginal in terms of the role it is fulfilling with the Brexit challenge on the horizon?

Deputy Heather Humphreys

I attended that event. It was organised in conjunction with Enterprise Ireland and it was about giving businesses a briefing and information on Brexit. There was a facilitator present. It was a very good event and a good number of companies - approximately 100 - were represented. InterTradeIreland is a cross-border body and the funding is provided on a 2:1 basis by my Department and its counterpart in Northern Ireland, the Department for the Economy. The funding arrangement is a complicating factor when it comes to increasing financial support for InterTradeIreland. We provided it with additional funding this year of €165,000 to undertake a range of initiatives for small and medium enterprises, SMEs, in the Republic. What Deputy Niall Collins mentioned was one of those events. Its goal was to help them adapt to the changed circumstances. It will involve the provision of factual advice, supports for capability building and the provision of other specialist expertise for companies. It is also doing a Brexit trade accelerator voucher, which is valued at €2,000. It will be provided to companies to engage suitably experienced sectoral advisers and to provide one-off advice on selected topics to SMEs as required. We have given them additional funding but because of the agreement on a cross-border basis, there is match funding. Whenever we increase our funding, there is match funding so normally funding is increased on both sides according to the ratio. We have given them some increased funding.

Deputy Niall Collins

How did that increase compare with what it asked for?

Deputy Heather Humphreys

It is an agreement. It is match funding on a 2:1 basis on both sides of the Border. I do not have the full figure. Whatever Northern Ireland agrees to give, we agree to give twice as much. We assisted with extra funding last year.

Deputy Maurice Quinlivan

Will the Minister clarify on the issue of the funding to InterTradeIreland on a 2:1 basis? I understand that if InterTradeIreland gets money that it spends in the Twenty-six Counties, it does not matter what we fund it.

Deputy Heather Humphreys

We can only give funding on the basis of the agreed ratio.

Deputy Maurice Quinlivan

I understand that but can we not give it additional funding if it spends the money down here?

Deputy Heather Humphreys

We normally stick to the arrangement, which is funding on a 2:1 basis, but we can give it extra money that it can use in the Republic. We gave it €165,000 and we can look at giving it additional resources. We do not want to change the balance that is there.

Deputy Maurice Quinlivan

I understand that but we are into difficult territory with Brexit and we might have to just plough on ourselves and support agencies.

Deputy Niall Collins

I will go back to the Brexit loan scheme and the €300 million fund.

The Minister said previously that this fund would be leveraged up by the pillar banks. Is that correct?

Deputy Heather Humphreys

Yes.

Deputy Niall Collins

What levels of expressions of interest has the Minister had to date in the potential take-up of that scheme?

Deputy Heather Humphreys

We are launching the loan scheme tomorrow. We are funding €14 million from my Department and €9 million is being funded from the Department of Agriculture, Food and the Marine, which makes a total of €23 million. That is to cover the risk. That will lever €300 million in funding, which will be provided by the pillar banks. It will be offered by the Strategic Banking Corporation of Ireland. It will be an overdraft facility of up to three years, with an a interest rate of 4% and 40% of it will be targeted towards the agrifood sector. Those who apply for it will just have to show that 15% of their business is impacted by Brexit. Considerable interest in seeking to have such a loan in place has been indicated to agencies such as Enterprise Ireland and Bord Bia. Application for it can be made across the economy and we expect there to be a big interest in it. It will not open not only to agency clients but to anybody who is impacted by Brexit.

Chairman

The Minister of State, Deputy Halligan, wants to make a comment.

Minister of State at the Department of Business, Enterprise and Innovation (Deputy John Halligan)

It is also worth noting a scheme operated by Enterprise Ireland. It is a consultation scheme involving small to medium-sized enterprises that can get €5,000 from Enterprise Ireland. A number of consultations with small and medium-sized enterprises have taken place throughout the country. They involve the provision of information on the scheme and the way to engage to draw down the money to help them in a consultation process regarding Brexit. That is another scheme that is operating. The take up of it has not been great but the offer of that scheme, involving a substantial amount of money for small to medium-sized enterprises, is in place.

Deputy Niall Collins

What is the level of the fund?

Deputy John Halligan

I do not exactly know what the fund is but any small to medium-sized enterprise interested in taking up the scheme will get €5,000. I have to be honest with the Deputy and point out that they need to match funding with it but that scheme is in place and a number of meetings have taken place and more will take place across the country.

Deputy Niall Collins

Okay.

Chairman

If I could interject with a supplementary question, is that scheme designed to Brexit-proof those companies?

Deputy John Halligan

Yes, it is to-----

Deputy Heather Humphreys

It is for them to be prepared for it.

Deputy John Halligan

-----help them to be prepared for Brexit.

Essentially, it is to use the scheme to have a consultation on the impact of Brexit. It offers a company the facility to get more information and consultation on the effects Brexit will have on it. It is also important to note that Enterprise Ireland has advisers available all the time for any small to medium- sized enterprise. It has advisers on stand-by for small to medium sized enterprises that need collaborative information on the way to deal with the impact of Brexit if it will have an effect on such companies.

Chairman

Is the reason the take-up of that scheme has not been great is due to people not being aware of it or that they find it difficult to match the funding?

Deputy John Halligan

There is a combination of factors involved. Some businesses and enterprises are prepared and will battle through Brexit and will be fine. The information has been slow to filter through. There may be a view that it will be followed up as we come closer to the event within six months or a year. Enterprise Ireland will re-engage in the next few months through its website and so on to let small and medium-sized enterprises know that such funding, information and advice are available.

Chairman

I thank the Minister of State for that response. I apologise for interrupting Deputy Collins.

Deputy Niall Collins

I have three other broad questions for the Minister. First, has she or her Department conducted any recent impact analysis given the change in trade policy that President Trump has been advocating in recent weeks and months? My second question is on an issue that is an old chestnut of this committee. Can the Minister give us an update on the Succeed in Ireland initiative and the breakdown that has happened between that programme and IDA Ireland? My third question is one I have raised previously and it is against the backdrop of Brexit. As the UK seems to be advancing the Brexit project, which will put it outside the EU, we will find ourselves more in direct competition with it. I have flagged the issue of our capital gains tax rate previously, particularly for start-up companies and entrepreneurs, with respect to people who start a business and then seek to sell it in terms of having a far more favourable capital gains tax regime. Has the Minister or her Department consulted the Department of Finance in advance of the budget that will be introduced later in the year to reconsider the rate of capital gains tax for entrepreneurs?

Deputy Heather Humphreys

The rate of capital gains tax was mentioned to me as recently as last night at a meeting I was attending. We can make a submission to the Minister for Finance on it but it will be his decision ultimately.

Regarding the Trump Administration and the tax regime in the US, there is no doubt that American investment is very important to Ireland's economic well-being. The US is the largest source of overseas investment here, accounting for more than 70% of our foreign direct investment. We are monitoring the evolving investment environment in the US very closely. Despite the legislative changes that have been introduced there, I remain confident that American companies will still require a global presence and that Ireland will remain well positioned to serve as a location from which those firms can internationalise their business. It is important to remember also that US companies invest in Europe and in Ireland for many reasons. The European market remains among the largest and the richest in the world. US companies will still want to invest here to capture markets and access skills and innovation. It became clear to me how highly US companies speak of the Irish workforce when I visited the United States two weeks ago. They talked about our most attractive features being our highly skilled workforce and pool of talent that they can access, that we are an English-speaking country and their access to a market of 500 million consumers in the EU. The fact that we allow EU nationals to come into this country and that they are welcome here is also a big plus in terms of their decision to invest in Ireland. We continue to monitor the changes in the tax regulation there but there is a journey yet to go on that. We continue to go abroad and market Ireland as a destination in which one can do business in a safe environment with good regulations and with a highly talented skills pool.

The Deputy will be aware that the issue involving the Succeed in Ireland initiative has been going on for some time. It remains our intention to undertake an independent review of the Succeed in Ireland programme. That review, once completed, will provide us with a better understanding of the initiative's results and the contribution it has made to employment generation in this State. We will then be able to make a determination on its long-term future. As I have said previously, and as my predecessor has also made clear, we cannot proceed with the review until it is possible to assess the projected costs of the programme. Such an assessment is an indispensable prerequisite if the review is to determine whether the programme provided value for money for the taxpayer. That cannot be made until ConnectIreland resolves, or otherwise concludes, its dispute with IDA Ireland on the operation of the initiative and the number of jobs it has created. It is essential that the dispute be resolved or concluded to allow the review to go ahead.

I have made that clear in the Dáil and in correspondence to ConnectIreland. Once this happens, we will proceed swiftly with the review, which will include publishing all the submissions made to the Department last year as part of the public consultation on the terms of the review.

Deputy John Halligan

It is worth knowing the indications from foreign direct investment companies are twofold. When Great Britain was indicating it was about to leave the European Union, foreign direct investment companies in Ireland were still taking on people, expanding and building. It is also interesting that if we go back six months, when the indications from the United States were it might change its tax rate, foreign direct investment companies were still doing this. As a matter of fact, in my constituency Bausch and Lomb, a US-Canada based company, is building extensions and taking on people. Speaking to companies around the world, as all of us have, they state quite bluntly there is a reasonable and favourable tax rate in Ireland and they mention how Ireland is geographically placed in Europe. The cost factor of exporting from the US across the Atlantic rather than exporting from Ireland to Europe is big factor. Companies tend to do what they think is right for their profit margins, irrespective of what they think might happen in their hinterland.

Deputy Maurice Quinlivan

I thank the Minister for her presentation and I welcome the job creation numbers that have been announced. I hope we can progress in this way. I have a number of questions. Will I ask one, after which the Minister will answer and then come back in?

Chairman

Whatever the Deputy likes. He can see how it is going.

Deputy Maurice Quinlivan

I have three questions on programme A. With regard to foreign direct investment jobs in the regions, my analysis of the 2017 foreign direct investment jobs indicates some areas are faring very poorly on this. For instance, the ratio of foreign direct investment jobs to the local population is best in Dublin, which is unsurprising. There is one IDA Ireland-backed job for every 15 citizens. In Laois it is 712:1 and in Monaghan it is 408:1. Other counties also perform poorly, with Meath having a ratio of 130:1 and Kilkenny with a ratio of 127:1. Laois currently hosts just 0.05% of all foreign direct investment jobs in Ireland, while the Minister's home county of Monaghan does not fare much better, being home to just 0.07% of all foreign direct investment jobs. We need new initiatives focused on getting more foreign direct investment companies to these counties. I agree with the Minister that we need more initiatives. Does she have any plans for this?

Deputy Heather Humphreys

I agree with the Deputy. The Border region is lagging behind and I want to see more of a focus there. In fairness, creating jobs in the regions is a priority for IDA Ireland and the Department as a whole. While progress has been made, more work needs to be done and I certainly will be focused on doing everything I can to deliver the fairest possible spread of investment throughout the country. Since 2015, IDA Ireland has been working towards targets set out in its winning foreign direct investment strategy, and this includes the creation of 80,000 new jobs and 900 new investments, which will bring total foreign direct investment employment in Ireland to 209,000 by 2019. The agency is also aiming to increase the level of investment by between 30% and 40% in each region, and the results for 2017 show 45% of all jobs created by IDA Ireland clients last year were based outside Dublin. Only companies that locate outside Dublin get incentives. Those locating in Dublin do not get any. Attracting foreign direct investment to regional areas is not without its challenges and this is largely because there is a global trend to base foreign direct investment in large urban areas where there is, for example, easy access to transport hubs and networks. As we know, some people like to live in cities, and sometimes it is unavoidable that some businesses are intent on investing in larger urban areas.

I was in Limerick for the announcement in Shannon by Edwards Lifesciences of 600 jobs in the region, and it is a wonderful addition to the area. Other areas could learn from what has happened in Limerick because the company could not speak highly enough of the relationship with the university and the local institute, as well as the standard and quality of people coming out of our universities. It said the one big attraction for coming to Limerick was that talent pool. It had a cluster of people in the area with the skill set. It could not speak highly enough of what has been happening in Limerick. This has not happened overnight and a lot of work has gone into working with the local authority, the agencies and the universities. It has yielded wonderful results in the region. The area is also fortunate to have the airport in Shannon and the connectivity it brings.

IDA Ireland is also delivering property solutions to attract jobs in the regions and it has plans for advanced facilities. Earlier, I mentioned Dundalk, Galway, Limerick, Carlow, Waterford and Athlone. It hopes to have some of these completed by the fourth quarter of 2018 and the remainder in 2019. There are a number of initiatives.

Apart from IDA Ireland, Enterprise Ireland does huge work in terms of creating jobs in the regions and supporting indigenous industries. For those of us who do not have as much of an IDA Ireland presence, we certainly have some very strong indigenous industries and they are also very important to the local economies.

Deputy Maurice Quinlivan

I have a question on Ardmore Studios. Will the Minister confirm or clarify reports in The Sunday Business Post that Enterprise Ireland wrote off €7 million with the recent sale of Ardmore Studios? My colleague, Deputy John Brady, expressed concern that no indication was given that the State was to sell its share in Ardmore Studios via Enterprise Ireland. Is the Minister satisfied that the jobs at Ardmore Studios are safe?

Deputy Heather Humphreys

In the case of Ardmore Studios, Enterprise Ireland had a 32% shareholding. The owners decided to sell and we were one of the shareholders. Enterprise Ireland got an independent valuation and was satisfied it was the right thing to do for the studios. I visited the studio in my former role and it certainly did need investment; there was no question about that. I understand there had not been a huge amount of investment over the years and it did need some investment at the time. Enterprise Ireland is satisfied. It got an independent valuation. It is also satisfied it got full market value in line with the other parties. It is a private commercial deal. Olcott is purchasing it. There are links between it and Troy Studios. I have been to visit Troy Studios and I can say that what is going on down there really is great stuff. Huge investment is taking place in Troy Studios and it will create up to 500 jobs. The same potential is there for Ardmore Studios. Certainly in terms of the film industry, there is huge opportunity in this country and it will be a game changer for Ardmore Studios now that it will have new investment very much focused on what is a growing industry in terms of the film sector. There is a lot of opportunity there and it is an area that has been traditionally linked with film production. It has made many good programmes and series and there is a bright future for Ardmore Studios.

The land is zoned specifically for a film studio and its zoning can only be changed by a decision of the members of Wicklow County Council. I do not expect them to change the zoning because the sale will be good for Ardmore Studios. We want to ensure continuity and the studios were sold as a going concern.

Deputy Maurice Quinlivan

Will the Minister comment on whether she is satisfied that the jobs will be safe? I recently visited Troy Studios, which is a fantastic facility that will do well. I hope it will be of great benefit to Limerick. A large production, "Nightflyers", is under way at the studios and we hope it will be successful. NBC Universal recently hosted a delegation, of which I was a member, at the facility. I would not like its success to come at the expense of jobs in Ardmore Studios. Is the Minister confident the jobs at Ardmore Studios are safe?

Deputy Heather Humphreys

I am confident they are safe because there is significant demand for studio space in this country. We have a good news story in Limerick. The local authority and institute of technology are training people to work in the film industry. As the Deputy is aware, not only are actors needed, we also need back-office staff, set designers, costume designers, producers, camera operators and others. Arrangements have been made to train people through the institute of technology. This is a great story and I understand the facility will deliver significant employment. I hope the first production goes well and opportunities arise for many more productions.

To address the Deputy's question on Ardmore Studios, Olcott Entertainment plans to retain the current experienced Ardmore management and staff and develop and expand the Ardmore Studios offering as well as other related entertainment projects. Deputy Donnelly is familiar with the project, which is a good new story.

Deputy Maurice Quinlivan

I have a question for the Minister arising from the debate in the Dáil on the Government's spin unit and its payment for advertisements to promote Fine Gael Party Deputies and candidates. Yesterday, an advertisement popped up on my Facebook page for an article sponsored by The Irish Times and featuring a photograph of the Minister. The article was headlined, Working to create "the best possible environment for business". When I clicked the sponsored article, I found it was paid for by IDA Ireland, an agency whose primary objective is to encourage investment in Ireland by foreign-owned companies. When I clicked on the Facebook option "Why am I seeing this?", I was informed that The Irish Times wanted to reach men aged 22 years or older who live in Ireland or who were recently in the country. Given that most men aged 22 years or older living in Ireland will not attract multinational investments to Ireland, I do not understand the reason IDA Ireland would pay for such an advertisement.

A photograph of the Minister featured prominently in the article, which commenced with the words, "As a native of Monaghan ..." In a year in which an election is probable, I found it strange that IDA Ireland would pay for such an advertisement. Will the Minister clarify how much was spent on the campaign in question and indicate whether other State agencies are paying for such advertisements?

Deputy Heather Humphreys

I did not see the advertisement.

Deputy Maurice Quinlivan

I have a copy if the Minister would like to see it now.

Deputy Heather Humphreys

I am aware that IDA Ireland did a supplement in The Irish Times outlining what it does, as it is entitled to do. It took out the advertisement and it has responsibility for anything featured in it. It is IDA Ireland's prerogative to do that.

Deputy Stephen S. Donnelly

I have raised previously with the Minister and her colleague, the Tánaiste and Minister for Foreign Affairs and Trade, Deputy Coveney, my ongoing concern about the mismatch between the resources being deployed by the Government to help small and medium enterprises prepare for Brexit and what these companies are seeing on the ground. I am sure the Minister is aware of a recent study undertaken by Allied Irish Banks which suggested that only 6% of small and medium enterprises had a Brexit plan. In the context of all the money being spent on this issue, does the Minister accept the 6% figure highlighted in the survey is correct? Does it reflect her understanding of the position? If she believes the findings of the AIB survey are correct, will she explain how the money is being spent such that it does not appear to be resulting in small and medium enterprises getting ready for Brexit?

Deputy Heather Humphreys

Almost 100 companies were represented at the most recent Brexit meeting I attended, which was held in Cootehill, County Cavan. The meeting was organised by Enterprise Ireland and InterTradeIreland and was well attended and received. Many of those to whom I spoke afterwards indicated they had learned a great deal from the meeting.

We have introduced a number of initiatives on Brexit. For example, I will shortly issue a leaflet which outlines the many supports available in preparation for Brexit. Every time I speak, I encourage businesses to engage with Enterprise Ireland and the LEOs. The first project developed was the Brexit online score card, which is open to anybody to use. The score card is a useful exercise but companies must want to engage in the process. We have outlined the different challenges Brexit will create and we want companies to engage with us. Enterprise Ireland has done substantial work in this area. In addition to the score card, a wide range of awareness sessions and advisory clinics are being convened by Enterprise Ireland, InterTradeIreland and LEOs to provide information and support to all companies on actions to address exposure to Brexit. As I stated, this week, we will launch the Brexit loan scheme for businesses that need external support. The Minister of State, Deputy Halligan, also pointed out that Enterprise Ireland is offering a Be Prepared grant of up to €5,000 to support clients to develop a Brexit action plan.

The Enterprise Ireland market discovery fund supports businesses to research viable and sustainable new market entry strategies along with a portfolio of other supports. The LEOs offer a range of Brexit supports in every county. These include the LEO Brexit mentor programme, which assists owners to identify key Brexit exposures and develop robust strategies to address issues and maximise potential opportunities. It also offers technical assistance for micro-exporters and provides financial assistance to support market diversification in qualifying businesses to develop new and export market opportunities. InterTradeIreland provides Brexit start-to-plan vouchers to enable companies to secure professional advice on Brexit, including likely tariffs, currency management and regulatory and customs issues. IDA Ireland is working with clients to advise on Brexit risks and opportunities. The Health and Safety Authority and National Standards Authority of Ireland are providing support and advice on sector specific Brexit related issues to firms throughout the country.

My Department will soon publish the Building Stronger Business – Getting Brexit ready pamphlet to which I referred. This easy-to-read brochure will provide a list of all the different supports available, including links to websites. We are encouraging businesses to get ready, remain competitive, invest in innovation and diversify their markets. The diversification of markets is working. The Copenhagen Economics report showed that while our exports to the United Kingdom remain buoyant and strong, our exports to other countries have increased as a percentage of our overall exports. Diversification is, therefore, working. A great deal of work is being done and we are working closely with businesses. A wide range of supports is available to encourage businesses to engage with the agencies and to use them.

Deputy Stephen S. Donnelly

I do not mean this disrespectfully but the answer the Minister just gave illustrates exactly the dialogue I have been having with the Government for the past year where I say the businesses are saying they are not getting ready. We had data from the Department last year and data from AIB and InterTradeIreland. Survey after survey indicates Irish businesses are not getting ready for Brexit. We are at about 6%. Approximately one business in 20 is getting ready for Brexit. I have raised this with the Minister's predecessor and the Tánaiste. I get back a very well-meaning and what sounds like a very comprehensive list of activities. What the Minister has just said sounds very impressive yet for some reason, Enterprise Ireland, which is a superb agency, is clearly not getting through to the businesses. I meet individual businesses all over the country, as, I am sure, does the Minister on Brexit. I meet their representative groups and ask them whether their people are being contacted proactively and whether they are getting the supports they need. The answer is "No". The Minister does not have to take my word or indeed her word for it. The sector-wide surveys, including from the Department, say that Ireland's SMEs are not getting ready for Brexit. Enterprise Ireland is a superb State agency with superb people working in it. I have no doubt that the Minister and her officials want Ireland's SMEs to be ready for Brexit but it is not working so that long list she read out is not getting through. We all want the same thing on Brexit. We want our companies to be ready for it. Could a review be carried out to investigate why only one in 20 businesses has a plan for Brexit when so much money has been spent and there has been so much activity from a top State agency?

Deputy Heather Humphreys

What I am seeing is that businesses are engaging. Enterprise Ireland is working closely with businesses. Some businesses may not be impacted by Brexit. I do not know who AIB surveyed. As the Deputy noted, Enterprise Ireland is a wonderful agency and is working very closely with businesses. Initially, people did not think this was going to happen. There was an idea among some businesses that maybe this is not going to happen. We have been putting the message out strongly that we will negotiate the best possible position for Ireland but in the meantime, businesses should prepare and do what any business would do, which is to identify risks and mitigate against them. We have identified the issues. To mitigate against them, we need businesses to look again at competitiveness, diversification and investment in innovation. We are helping businesses to do that. We have done a huge amount of work and are continuing to engage with companies to understand. We are carrying out surveys to understand the dynamics of Brexit on SMEs. This is informing our approach and has led to initiatives such as the Brexit loan fund. We are talking to these guys and are asking them what they want and how can we help them. I do not see what more we can do. As the saying goes, you can bring a horse to water but you cannot make it drink. At the end of the day, it is up to businesses to avail of all these supports. These are supports we have developed because we have been talking to businesses and this is what they are saying.

Chairman

Does the Minister of State, Deputy Halligan, wish to come in?

Deputy John Halligan

Deputy Donnelly's question is very interesting and relevant. As the Minister said, I have addressed two meetings with Enterprise Ireland involving 60 companies and 120 companies, respectively. Many companies are engaging. There are three issues here. Number one is there is no question that we should not underestimate companies that feel they are prepared for Brexit. Neither the Government nor Enterprise Ireland is in a position to tell them they are not prepared. We can offer all the assistance through finance and advice, which is done. Any time a meeting has been held, businesses have engaged with many of us. A total of 100 companies attended one meeting while 60 attended another. I think 120 attended another meeting. Admittedly, the take-up is not as good as we expected it to be but I do not think it is because of a lack of information from the Government. I do not think a month goes by without the Government and all agencies, including Enterprise Ireland, Science Foundation Ireland and IDA Ireland, being proactive in explaining the effect Brexit can have, particularly on SMEs. As I said earlier, the take up of the consultation fund of €5,000 was not significant but I was at a number of meetings and the necessity of taking up that fund was expertly explained. The take-up still is not what we would expect and we cannot really explain why this is the case. It is correct to state we should not underestimate some companies that are fine and will deal with and work through Brexit. The Minister is right - I would be blunt and say if she was not- in that I do not know what other information we can give to companies regarding Brexit. There are a number of funding schemes and websites directed towards Brexit. The Deputy is right about Enterprise Ireland. It is a fabulous organisation. I work with it right across Europe and the world. It is absolutely spot on. In respect of diversification, it is not all about the UK. Under Horizon 2020, our biggest collaborator is Germany at 12.5%. Our collaboration with Germany is fantastic. There is a recognition on the part of Germany about how good we are at downloading the funding, although I know that is a different area. I see the point the Deputy is making. All of us, including the Opposition, must come up with other ideas. As to whether we are being as informative as we should, I believe we are if one looks at what all the Ministers are saying and at the meetings that are well attended by businesses. It is not that one goes to a meeting and five or six businesses turn up. They do not. Over 100, 120, 60 or 80 businesses will turn up. It not a question of financial experts, experts on the economy, experts on Brexit and experts on collaboration with companies not being there because they are all there. It is a void as to why some companies are not taking up the funding but I do not know what else the Government could do. I am being honest about that.

Deputy Stephen S. Donnelly

I will move on. The point I am making is that for me, it is not some companies, it is 94%. It is not like 20% are not getting ready. A total of 94% are not getting ready. Clearly, that is not what any of us want.

In respect of Brexit funding, Colm Kelpie wrote that the Brexit unit had requested about €40 million but the figure reported was only €1.3 million. He wrote this last week. I appreciate that I probably should have sent this to the Minister beforehand so I apologise.

Deputy Heather Humphreys

What was it in the context of?

Deputy Stephen S. Donnelly

It concerned the head of the Brexit unit writing to the Minister before the last budget seeking €40 million for Brexit preparation.

Deputy Heather Humphreys

Is it Enterprise Ireland?

Deputy Stephen S. Donnelly

Yes, the Brexit unit in Enterprise Ireland. It was reported that Ms Julie Sinnamon had written seeking approximately €40 million but that the agency received an additional €1.3 million. Is this the case and if so, why? My apologies - now that I am asking the Minister, I appreciate that I should have sent her this question ahead of time.

Deputy Heather Humphreys

It is okay. Of course, at budget time, everybody puts in their pitch. A request was sent in. We examined it very carefully and are now in the position where we are providing this €300 million loan fund for working capital for businesses that are impacted by Brexit. That is certainly something that is very important.

We have agreement from Europe for a €10 million stabilisation fund, which is also very welcome because it means we will be able to provide that level of support to businesses that need it.

Those are just some of the initiatives that have been developed since to support businesses. Enterprise Ireland got an extra €1.3 million for pay in 2018. That accounts for 20 new staff in 2018 on top of the 39 extra staff it got in 2017. Enterprise Ireland is continuing to monitor closely the ongoing potential impact of Brexit on companies and their needs to respond to the challenges. The introduction of the €300 million loan guarantee scheme is certainly a welcome initiative and will help companies to access funding to mitigate against the potential impacts of Brexit.

Deputy Stephen S. Donnelly

The reason this specific issue was only written about last week, and this arises from the budget cycle last year, was because the information was obtained under freedom of information, FOI. Is the Minister confirming that the Brexit unit in Enterprise Ireland did request €40 million but only received €1.3 million?

Deputy Heather Humphreys

Enterprise Ireland got extra funding on top of what it got the previous year, but instead of a €40 million fund there will be access to a €10 million stabilisation fund, and also its clients will have access to this €300 million loan fund. This Brexit loan fund has a fair bit of flexibility. Businesses can get loans from €25,000 up to €1.5 million. They can also access greater amounts for support through the €10 million stabilisation fund. Enterprise Ireland had a record capital allocation in 2017 that was maintained in 2018 and it also got an extra €1.3 million.

Deputy Stephen S. Donnelly

I thank the Minister. Specific to the loan schemes, I have concerns in two areas, the first on the level of drawn down funds and the second on the interest rate. If we talk about the two active funds, the credit guarantee scheme and Microfinance Ireland, which are relevant to this Vote, the figures supplied to the committee suggest there has been a drawdown of €19 million from Microfinance Ireland and of €14 million from the credit guarantee scheme in the past five and a half years, giving a total of €33 million drawn down in the past five a half years, which on average is €6 million a year. There has not been a drawdown yet from the Brexit loan scheme. Is a drawdown of €6 million a year the target the Department is going for? In the context of Brexit, enterprise stabilisation and market diversification, this is an extraordinary low amount.

Deputy Heather Humphreys

I do not wish to confuse the Brexit loan scheme and these other two schemes, which are targeted at a different type of enterprise. The Microfinance Ireland scheme is a high-risk scheme that provides finance to businesses that cannot get it elsewhere. We will look at it and evaluate how it has performed in the past five years. The credit finance guarantee scheme was put in place at a particular time. I am not sure what we are planning but I will revert to the Deputy on it.

The Brexit loan scheme will be rolled out through the pillar banks. The last time a similar scheme was rolled out through the Department of Agriculture, Food and the Marine, the complete fund was drawn down very quickly. That is why we flagged this scheme when we signed a contract to allow businesses to have time to put together their proposals to make applications for this fund. I expect it will be drawn down fairly quickly.

In 2012, there were six loans of €582,000 under the credit guarantee scheme, which now has increased in 2017 to 129 loans for a total value of €19.7 million. The numbers availing of the scheme have been increasing. Since its introduction in 2012, the number of loans is now 530 to the value of €84.4 million. It has created 104 new jobs and 186 existing jobs have been sustained.

Deputy Stephen S. Donnelly

On a point of clarification, I understand from the briefing notes supplied to the committee that loans were approved to €84 million but that only €14 million were actually drawn down.

Deputy Heather Humphreys

Sanctioned. The Deputy is correct. Over the term, loans of €84.3 million were sanctioned, but I do not have the figure for drawn downs.

Deputy Stephen S. Donnelly

Only €14 million has been drawn down.

Deputy Heather Humphreys

Following a detailed review of the initial 2012 scheme, several changes have been made to make the credit guarantee scheme more accessible to SMEs and open to other finance providers and products. The revised scheme will encourage more lending to SMEs by providing for the State to take up a higher level of risk on finance provided. The State will take up to 80% of the risk as opposed to 75% and will allow new financial providers to take part so that others can take part in it, such as invoice discounters and lessors etc. The revised scheme allows for the provision of the finance to SMEs via products other than traditional bank loans, namely, credit facility agreements, asset credit facility agreements and invoice financing facility agreements. The conditions around it have changed somewhat. The Deputy is correct. We will provide the committee secretariat with the definite figures later on.

There has not been a significant take-up of it, but we have changed it somewhat and I think that is important. The Brexit loan scheme is completely different so I expect that there will be a significant take-up of loans under that scheme.

Deputy Stephen S. Donnelly

The Minister does not really need to answer this. Why is the interest rate set at 4%? While I understand 4% is lower than retail banks rates for SMEs, what I hope that Irish businesses will do with this money is to figure out how to open up new European markets and how to compete and gain market share in France and Germany and across the EU 26 states. However, the subsidised rate of 4% is higher than SME commercial lending rates in Germany which are less than 4%. In France they are less than 3%. At a time of serious economic risk, which is Brexit and when we are trying to encourage our SMEs to diversify into mainland Europe, the subsidised lending rate is still going to be higher than the rate available to the firms they will be competing with in places such as Germany and France. Is that sensible?

Deputy Heather Humphreys

In fairness, the rate of 4% for an overdraft facility is a very attractive rate of interest when one compares it with rates for overdraft facilities across Ireland. I do not know what the business rate is but I am sure it is in the region of 8% to 9%, but in my book 4% is a very competitive rate and I feel there will be a lot of interest in it. We are also considering developing a long-term or capital loan as well. Many businesses are looking at this, as seven years is generally the term of long-term loan so we are going to work closely with the European Investment Bank, EIB, which has supported us in this scheme and we will talk to it about providing a long-term capital loan to run concurrently with this overdraft facility. Again, I do not know what the rate is, but members will see it as a competitive rate in terms of the rates in Ireland. The provision of an overdraft facility at what I consider is a good rate, coupled with a long-term loan, mean we will be able to support businesses extremely well in terms of the facilities we can offer them to prepare them for Brexit.

Deputy Stephen S. Donnelly

The point, however, is that it depends on the rate in the jurisdiction with which ours is compared. I agree with the Minister that a rate of 4% is very attractive relative to Irish lending rates, but that is because Irish businesses are being screwed on lending rates. They are being charged twice what their competitors in Germany and France are being charged. I am not laying that charge at the door of the Minister. It is not a political charge. Irish companies are getting screwed. Irish mortgage holders are getting screwed. Borrowers in Ireland get screwed. We can pay twice what our colleagues in mainland Europe pay.

If the point of the loan was to help Irish businesses grow market share in Ireland, one would say that was a very competitive rate relative to the Irish market, but what we are asking the Minister to do with the money is to think about how to compete with German and French firms in Germany and France. The lending rate we are providing is still higher than the commercial rate in the countries in which we want the businesses to compete. This is highly leveraged money and the Irish State is putting in a tiny amount of the €300 million. We have the risk capital at the start. If we were to increase what is a very small amount from the Exchequer to leverage this fund to gain market share in mainland Europe, surely the least this State could do would be to ensure a borrowing cost no higher than that of competitors in places such as Germany and France.

Deputy Heather Humphreys

We are operating in Ireland and in the Irish market. It is not just about exporting to Germany and France. It is about expanding our exports globally. Some of the companies will be going to China and some will be going to the Middle East, Asia or the United States. Therefore, we have to deal with the facts of where we are.

The Deputy is correct that interest rates here are as they are for many reasons. We will not get into that argument. There are three banks in this country. Obviously, there are competition issues. As we all know, there have been many discussions on this. The old adage is that the higher the risk, the higher the price. That is the way lending rates work. I believe that 4% is a very good rate. A lower rate could be distorted by incentivising well-organised companies that are less in need to exhaust the fund. It could also give rise to state aid issues. This is a fund we have put together with the help of the European Investment Bank, the Strategic Banking Corporation of Ireland, the two Departments and the Minister for Finance. It will be snapped up very quickly at 4%.

Deputy Stephen S. Donnelly

I will not go through it again. It is relative to our market. On Ardmore, I acknowledge that the Minister has dedicated time to the issue before. She has met the Deputies more than once on this. There will be concerns raised by workers and local enterprises, and we have put these to the Minister before. Will her Department put together a detailed statement potentially addressing questions that the workers have? Will she, her officials, the other Ministers, or whoever the right people are, be willing to meet workers to address any of the concerns they have?

Deputy Heather Humphreys

I would be happy to arrange to give the Deputy a briefing on what has happened. I genuinely believe this is a good news story for Ardmore. The initiative is allowing it to expand to its potential. There is considerable potential in that space in Wicklow, where there are two studios very close to each other. What I have been talking about all the time here is clustering and a talent pool. It is very fortunate that the two studios are so close. There is now a connection with Limerick. All in all, it augurs well for the film industry in this country. We will be happy to give the Deputy a briefing on this. I do not believe meeting the staff would serve any purpose. It is an Enterprise Ireland decision, ultimately. I am happy, however, to provide the Deputy and the committee members with a full briefing on the matter.

Deputy Stephen S. Donnelly

I thank the Minister.

Chairman

The Minister spoke in her introductory remarks about her intention to carry out an impact assessment on the Action Plan for Jobs. It is very welcome. I have raised this on several occasions in respect of the south east. Much good work has been done but the unemployment rate in the region is still double the national average. It is not as bad as it was and I admit we came from a very low base. Will the Minister give us a little information on the impact assessment? Does she believe that where areas are underperforming, as opposed to overperforming, more resources should be allocated?

Deputy Heather Humphreys

I plan to have a meeting with the representatives of all the committees for the Action Plan for Jobs. We will have a consultation day and consider what has worked well in some areas and what has not worked so well in others. Bringing all seven Action Plan for Jobs committees, the regional action plan committees, together will be a good exercise to obtain information on what has worked well in some places and what has not worked as well in others. I want to examine what has been done. The committees have done a lot of good work.

Chairman

They have, absolutely.

Deputy Heather Humphreys

Some, however, have performed better than others so it is a case of determining the areas that have performed exceptionally well and those that could learn from them.

The South East Action Plan for Jobs was launched in September 2015. It aimed to increase employment in the region by 10% to 15% over the period to 2020, resulting in the delivery of 25,000 jobs. The implementation of the plan is overseen and monitored by the regional implementation committee. Some 16,000 more people were employed in the south east in quarter 2 of 2017 than in quarter 1 of 2015, the baseline year. That shows significant progress on meeting the target of 25,000 by 2020. In quarter 4 of 2017, the south east had an unemployment rate of 7.3%. That is above the national average. We are certainly going to be considering the areas where an improvement is required.

I will be launching the regional development fund shortly. Some €30 million was allocated last December. There is another €30 million this year. Some areas were particularly good at submitting excellent applications, which received support, and some were not so good. Again, we want to focus on those that are not doing as well and on how we can improve them.

Chairman

I now invite the Minister of State, Deputy Halligan, to make a brief statement on programme B. Deputy Lawless is chomping at the bit with questions for him.

Deputy John Halligan

That is no problem. I am looking forward to it. As Minister of State with responsibility for research, development and innovation issues, I am happy to outline to members what is being delivered through our activities in the programme B expenditure area. As we are all aware, the evidence clearly shows that research and innovation are key drivers of productivity and economic growth. In turn, innovation is central to Ireland's competitiveness and the ability of companies based in Ireland to compete internationally. It is vital, therefore, that Ireland has the capabilities needed to develop, grow and attract innovative enterprises. Our investment in research and development and a highly educated workforce is crucial to developing an ecosystem in which success can be achieved.

Over the past decade and a half, we have built up a strong science and innovation base which has yielded economic and social results. I was pleased to note last year that according to the most recently published European Innovation Scoreboard, Ireland is currently ranked number one for SME innovation and the employment impacts of innovation.

In addition, Ireland is placed 11th overall in global scientific ranking and ranked second in nanotechnology, immunology, and animal and dairy science disciplines. We are in the top ten for both maths and chemistry. This is phenomenal for a country with a relatively small population.

Investment in research and innovation from my Department is all about delivering tangible economic impacts. Investment and these successes are particularly important today, given the many global challenges we now face, including Brexit. In 2018, under programme B expenditure, approximately €328 million will be invested in research, development and innovation programmes by my Department through its enterprise agencies, primarily Science Foundation Ireland, SFI, and Enterprise Ireland. Further investments are being made through the Tyndall National Institute and the European Space Agency, as well as the programme for research in third level institutions, PRTLI. We have ambitious plans for the innovation programme throughout 2018.

SFI is the national foundation for investment in excellent scientific and engineering research. As the largest competitive funder of science in Ireland, SFI supports the Government's vision of Ireland as a global innovative leader, driving a strong, sustainable economy that is better in serving and informing society. In 2018, SFI will focus on establishing four new world-class research centres launched in September 2017, in addition to completing the review process for phase 2 funding for the first seven SFI research centres. The budgetary allocation to SFI in 2018 also includes €4.25 million to develop the SFI future milk research centre. The new centre will be led by Teagasc, in partnership with the Tyndall National Institute, as well as 11 universities and institutes of technology throughout the country. Up to 45 industry partners have committed €16 million to the new centre, which will be a world leader in research for precision pasture-based dairying and an agent of growth for the Irish dairy industry. This will bring to 17 the number of SFI-funded research centres of excellence in operation, supporting cutting-edge basic and applied research with strong industry engagement, economic and social impacts. SFI will also commence a postgraduate programme in 2018, funding both PhD and research masters. The 2018 budgetary allocation will provide for approximately 120 additional enrolments in areas of economic priority.

In 2018, Enterprise Ireland will continue to support research, development and innovation across our indigenous enterprise base. In doing so, it will drive innovation in Ireland's enterprise sector to reach the Enterprise Ireland strategy target of €1.25 billion in research and development expenditure per annum by 2020. Enterprise Ireland will also deliver more than 1,000 collaborative innovation projects between companies and the higher education sector to help companies increase their innovative capacities. Enterprise Ireland continues to support its client companies in securing Horizon 2020 funding. The agency plans to secure an additional €15 million in 2018 through the SME instrument. Promotion and communication of the new agile innovation fund offer, launched in November 2017 and which supports companies and sectors with rapid design cycles to maintain their technology position, will continue throughout 2018. Enterprise Ireland is responsible for the co-ordination of Ireland's engagement with the European Space Agency. It is on track to reach its target of €12 million in contracts secured by Irish industry from the European Space Agency for this year.

The Tyndall National Institute is the country's largest dedicated research centre, specialising in ICT hardware and systems, a sector of significant economic importance globally. It is highly recognised not just across Europe but across the world. The institute undertakes scientific research that translates research into technologies which will directly impact industry in Ireland. In 2018, investment of €4.5 million will enable the institute to grow its interactions with industry substantially, both at home and internationally, targeting additional industry income of up to €6 million. In addition, the institute plans to build its current impressive Horizon 2020 wins to date and secure an additional €7 million in EU moneys through funding of 20 new projects.

The increased capital budget for innovation 2018 will allow Ireland to join the European Southern Observatory, ESO. The benefits of ESO membership are significant, including creation of advanced enterprise relevant skills in areas such as data analytics, software and photonics. Membership will ensure Irish companies can compete for ESO contracts to develop innovative products and services.

To become a global innovation leader, Ireland must continually invest in research, development and innovation to ensure we have excellent research, a strong innovative enterprise base, growing employment, sales and exports, a renowned pool of talent in academia and industry, as well as internationally competitive research. Ireland's status in science is recognised across the world. Being in the top ten shows Ireland is doing exceptionally well.

Deputy James Lawless

I thank the Minister of State for his presentation and the enthusiasm he shows for his brief. We have worked together and his passion for it shows in his statements. However, the nature of this type of scrutiny means we will focus on the gaps rather than what is working. I hope he will indulge me in this regard.

I was at the Tyndall National Institute this morning. I was delighted to hear extra funding will be made available to it. One of the items mentioned to me there was the need for extra capital expenditure. I also visited the APC Microbiome Institute, another fantastic research centre with Professor Fergus Shanahan and his team. These are leading examples of what we are doing with some of the funds available.

The Minister of State claimed Ireland was in the top ten in maths and chemistry internationally. Trinity College's maths department did not qualify for SFI funding recently, however. There are issues in this regard and how these allocations are made. Trinity's maths department is a leader in all sorts of fields. Due to quirks in the prioritisation, the department did not qualify and several projects were affected.

In 2017, €26 million in PRTLI funding was carried over and in 2018, €14 million. Every university and research institute has the same challenge when it comes to bricks and mortar funding. There is a need for a fund dedicated towards buildings, labs, libraries and procuring equipment such as spectrometers, expensive pieces of kit which become obsolete quite quickly because of the nature of scientific advancement. A significant tranche of money has not been put into PRTLI since round five expired in 2016. In 2007, when PRTLI round four was announced, the funding stood at €230 million. In 2010, at a time when we were not booming economically, the then Taoiseach, Brian Cowen, announced a €359 million fund to run to 2016. Since 2016, however, only €26 million and €14 million have been allocated. The sums involved now are paltry compared with what used to be involved.

Since the start of 2016 and essentially since the new Administration, we have had a trickle. We had a river and now it has gone to a trickle. That is having an impact on the universities and research institutes. They cannot buy a new library or laboratory. They cannot buy a new spectrometer if the old one is ten years old and obsolete. Is there a plan to address that? Will there be a sixth round of the PRTLI? Will it be a bricks-and-mortar fund? Will it be of significant impact, because €40 million is better than zero but it is a hell of a long way from €359 million and the hundreds of millions in funds that were there for the previous 15 years. What is happening next with the PRTLI?

Deputy John Halligan

As for the amounts mentioned, part of the Supplementary Estimate is going to pay the continuous debt over the past number of years. In respect of the physical space for research to which the Deputy referred, the Department of Education and Skills has announced funding in the context of budget 2018 that will address the need for physical space for research in the higher education sector. This includes €200 million for public private partnerships with institutes of technology and €270 million for investment in the higher education sector generally, including research. Pending a decision on the further cycle of the PRTLI, the actions being taken by the Department of Education and Skills will address the most urgent requirements for increased investment in higher education.

Deputy James Lawless

My understanding is that the aforementioned €200 million fund is going to the institutes of technology. It is not going to the universities and other research centres. Am I correct in saying that?

Deputy John Halligan

I think it includes the higher education sector, as well as institutes of technology. The issue and the argument has always been the institutes of technology versus the universities. I do not see it that way-----

Deputy James Lawless

Neither do I but I understood that the fund was only going to institutes of technology and not to universities.

Deputy John Halligan

No, that is not correct. A portion of the PRTLI funding to the amount of €5.5 million will be used to commence a postgraduate programme, including both PhDs and research masters, in universities. It is important we do not differentiate between what universities and institutes of technology do. Some of our greatest research is coming from institutes of technology.

Deputy James Lawless

I totally agree.

Deputy John Halligan

It is interesting that when one talks about the PRTLI, Innovation 2020 includes an action to scope out and develop a successor to the PRTLI in support of new investment in research, which will encompass infrastructure, including buildings and equipment. It also contains actions to increase the enrolment of PhDs and research masters. It is important to note, however, that we are operating in a tight fiscal space. We are coming from a very poor fiscal space. If one considers the investment we have been making while coming from an exceptionally bad place, then I think we are doing exceptionally well. It will take a number of years.

We already have significant investments in both universities and institutes of technology. As the Deputy will be aware, many of our 17 dedicated research centres operate from universities and institutes of technology. It is a good question regarding buildings, equipment and infrastructure. I get that from representatives of institutes of technology and universities to whom I speak. However, there is a plan of action and there is significant money, amounting to €200 million, which is part of a public private partnership. I am confident that will bear fruit over the next number of years.

Deputy James Lawless

I have other questions but I wish to stay on that point for another minute. While I appreciate what the Minister of State is saying, the €5.5 million for PhDs and research masters is not bricks and mortar. It is not PRTLI and is not what PRTLI is about. It is a separate fund with a separate purpose. He mentioned an Innovation 2020 target. Again, that is great but we are looking at the Estimates and a cold hard figure of €14 million. I will come back to Innovation 2020 in another question but what is in Innovation 2020 does not matter. What matters is what is on this page, what is actually being spent and what is being voted. We are seeing a sum of €14 million, not €200 million, €250 million or €300 million. While it is great that Innovation 2020 has a target is great, it would be better were the target actually reality. Perhaps we missed that target, I do not know. On the institutes of technology and the universities, I totally agree. I would not for a minute make any distinction. It was my understanding from different statements made previously that the new fund was only for the institutes of technology. That was why I was querying it. Certainly, I think it should be all the one. I make those points and I will move on to the next item-----

Deputy John Halligan

It is interesting and important to note that in 2018 there is an allocation for approximately 120 PhD and research masters places in universities. That is significant.

Deputy James Lawless

It is great but it is not PRTLI. It is great and I am delighted that the money-----

Deputy John Halligan

It is Deputy-----

Deputy James Lawless

Go out to UCD and talk about the science buildings that need to be refurbished.

Deputy John Halligan

I think it is a successor to cycle 5 of the PRTLI.

Deputy James Lawless

I do not think it is. There is a need for a fund to fund bricks-and-mortar-type investment, be it for equipment, laboratories or libraries. That was what was always there in the PRTLI. Other funding streams are funding individuals, individual research teams and their projects, which is great, but it is a different type of funding and I believe we have a gap.

Deputy John Halligan

I see where you are coming from. The Deputy is correct. The PRTLI programme cycle 5 did include the expression or definition of bricks and mortar. Our critical investment was training people first. That is of critical importance based on where we are, where we are coming from and where we are facing with Brexit. I refer to us having our people ready to make sure we get all the funding we can get under Horizon 2020. The Deputy is correct in the sense that it is a twofold investment. It is in bricks and mortar but our objective also has been to train and invest in people. That is working quite successfully.

Deputy James Lawless

There is no doubt about that whatsoever. However, I think it is important. I have made the point and I will move on to the next one.

Deputy John Halligan

It is an interesting point.

Deputy James Lawless

It is important though that we do not allow PRTLI, if there is a sixth round, to become a different type of fund. There is a particular purpose to that fund and a very specific need for it. That is that subhead and there are other related subheads. I do not think it is like for like.

Looking at the table of figures, I note there is a set of metrics entitled "context and impact indicators". There is a little table there under programme B - Innovation for 2015, 2016 and 2017. I am talking about the table that has gross expenditure on research and development, GERD. That is the first one.

Chairman

What page is it?

Deputy James Lawless

It is page 32.

Chairman

Is it the Department's briefing?

Deputy James Lawless

Yes, it is. I am looking at the context and impact indicators. There are five of them there and the fifth one has a to e in respect of global rankings of performance.

Chairman

We are on page 32. Vote 32, sorry. Where exactly on the page? We start with "financial and human resource inputs" on the left?

Deputy James Lawless

I am looking at this table here of "context and impact indicators".

Deputy John Halligan

That is the context and impact indicators?

Deputy James Lawless

Yes. I think it is a useful table to have. I was concerned when I read it. I hope I am reading it incorrectly and the Minister of State can clarify if I am. However, if I am reading it right, there is cause for concern. If we take the five global rankings which are under section 5, from a to e, we have rankings in a number of areas from 2015, 2016 and 2017. If I am reading the table correctly, we have actually gone out in each of these areas and have actually disimproved. Of the five metrics, we start off with university-industry collaboration on research and development, then availability of scientists and engineers, capacity for innovation, quality of scientific research institutions, global competitiveness report and scientific citations per publications. If we take the five criteria, we appear to have gone backwards in three, where we have slipped in terms of global ratings. We have stayed static in one and only advanced in one of the five. I would be delighted to find out I am reading that table wrong. However, from studying it and talking to one or two colleagues to check, it appears that I had it right. In the first one, we were 13th in 2015, 13th in 2016 and 13th in 2017. We stayed static there.

Deputy John Halligan

The Deputy is on university-industry collaboration on research and development?

Deputy James Lawless

In the next one we have gone from ninth to 12th to 21st.

It is quite a drop. I will not labour the point but of the five key metrics that the Department has held out as being performance indicators, we have gone backwards in three, been static in one and moved forward with only one. That is a serious concern, to be frank.

We can look at the top level figure. The Minister of State mentioned a moment ago the Innovation 2020 targets. I will pick a target in Innovation 2020 indicating that the State will spend 2.5% of gross national product, GNP, on research and development. That is a target the Government agreed but the reality is that in the previous three years we are nowhere near it. Again, we have gone backwards from 1.74% in 2015 to 1.67% in 2016 and 1.44% of GNP in 2017. Rather than getting close to the Government-set target of 2.5% of GNP, we are getting further from it. At 1.44% of GNP, we are approximately halfway to the target. I asked the Taoiseach about this in the Chamber a few months ago and his response, to be honest, was disappointing. He said it amounted to much money and there were other competing goals for the same money. That would be reasonable except it was the Government that set the target. I am not saying this to be negative or awkward but it is a statement of fact. I hope the Government remains committed to Innovation 2020 and the 2.5% of GNP figure. We are not getting there and we are not even going the right direction. Will the Minister of State clarify the state of play on that?

Deputy John Halligan

Right now Ireland's research and development investment rate is at 1.43% of GNP, so the Deputy is correct. The rate is based on the latest Central Statistics Office gross national product, GNP, figure from July 2016. There are two issues. As the economic recovery continues, this is predicted to increase GDP and GNP, so the rate will continue to fall back until 2020 if there is no increase in public and private investment. I should point that there are few countries in Europe that have reached national targets. It is very important to make that clear. Whereas public research and development investment levels have fallen since 2013, there has been a gradual increase. In 2017, it reached €769 million. If we look at the Government's budget, it increased in 2016 by 6.95% over the previous year. In the most recent Supplementary Estimates from last December, €25 million of the €40 million available to the Department was targeted at research and development innovation programmes. All Departments with research funding will definitely need to prioritise it in the respective budget allocations. Additional funding will be required for my Department. As far as I know - I may be wrong but I do not believe I am - no country in Europe has reached the 2.5% target. It is not as if we are behind other countries.

I will refer briefly to the impact indicators. There are a couple of matters regarding international competitiveness ranking. In my initial contribution I said we were in the top ten for science projects and there are 17 research centres that are regarded as some of the best. We are competing with massive economies across Europe, such as Germany, and we do not have the investment we would like for research development innovation. We can consider how we must compete for funding in education in a tight fiscal space, along with housing and heath. It is somewhat restrictive. Looking at what we have achieved with the percentage of GNP spent and investment made by the Government in comparison with what can be made by bigger governments with larger populations, and which have been ahead of us for the past ten, 15 or 20 years in research and development, we are doing reasonably well. It will take some years but this Department and its Ministers are doing everything possible to invest in innovation and research development. We are looking to up our investments to the best of our ability.

Deputy James Lawless

I do not doubt for a minute the commitment of the team to meeting the targets.

Deputy John Halligan

I should have said that under the national development plan there is a priority for nine research and development investments, which is pretty significant.

Deputy James Lawless

I am sure the Minister of State wants to get there as well. It is frustrating and all figures are relative but we have declined in three of the five targets and stayed still in the others. The Minister of State has accepted we are not anywhere near the 2.5% of GNP target that the Government set as a target. Effectively, he is echoing what the Taoiseach said when I asked him about this late last year. He said there were other areas, including housing and health, competing for funding. That would be fine if it was not the Government that set the target. The Government set about putting in place Innovation 2020 as a plan for innovation; it was launched by the Government but it has not met the goals and is now saying there are other priorities. I am just getting mixed messages. Is the Innovation 2020 target of 2.5% of GNP still Government policy and what steps are in place to get there? When will we reach that?

Deputy John Halligan

It is a priority laid down by Europe under the Horizon 2020 programme in innovation, research and development that all countries should try to reach the 2.5% of GNP target. It has proven extremely difficult with most countries, as with ourselves. For example, the Deputy made the point about the availability of scientists and engineers. This is why substantial funding is being put into new PhD programmes to ensure there is no shortage. It would be a folly to say that based on the fiscal space we have, we would be able to compete wholeheartedly with some of the bigger economies. It is not possible currently and no Government, on the basis of our fiscal position over the next five or ten years, would be in a position to do that.

Looking at our investment in research and development and innovation, as well as our monitoring across Europe and the world and how we are ranked in most science programmes in the world, one can see we are doing exceptionally well. As the Minister of State dealing with research and development, it is important that I say that every effort will be made by 2020 to reach the target of 2.5% of GNP. It would be wrong of me to say we are not going to or cannot reach it. I can guarantee that every effort will be made to reach that target. The national development plan has mentioned that and it is one of the vehicles allowing us to try to hit the target. It is also very important to note that this does not relate solely to public funding and there are public-private partnerships, as the Deputy knows.

Deputy Stephen S. Donnelly

I do not accept the Government's position on this at all. The 2020 plan was for 2.5% of GNP and in 2012, we were at 2%. We are now at 1.4% of GNP. We are now going backwards fast. It does not matter that bigger European countries are investing more as the whole point of using a metric such a percentage of GNP is that we can look at our contribution relative to our size. I absolutely accept the Minister of State's personal bona fides on this and I imagine that if he was dictator-in-chief - not that his politics would subscribe to that - we might get to 2.5%. I am not having a go at the Minister of State but I am having a go at the Government on this. It is not like the Government is saying we were at 2% and now we are 2.2% so there is a way to get to 2.5%.

We were at 2% and now we are at 1.4%. We are getting hit with Brexit and by a massive reconfiguration of the United States' entire approach to global taxation. We are dealing with really heavy stuff and I think we are all agreed that we must be world leaders in the areas of technology, science and innovation. How is it credible to say to this committee, to the Dáil and the Oireachtas that we were at 2%, that we are now at 1.4% but that the Government is really committed to getting to 2.5%? Will the Minister of State walk us through why that is a credible argument? Will he indicate when we will see it happen and whether we have gone from 2% to 1.4% and now have to get a full 0.9% of GNP back up?

Deputy John Halligan

The key metric for the assessment of innovative activity in research and development is expenditure as a percentage of GNP. Ireland's research and development intensity rate is estimated at 1.43% for 2016. In July 2017, the CSO released the national income and expenditure annual results for 2016, including the new modified gross national income, GNI, indicator, which has been designed to exclude globalisation effects that we believe disproportionately impact on the measurement of the size of the Irish economy using GNI in the context of research and development intensity. While the percentage rates are higher, there is still a fallback for Ireland's gross national expenditure from 1.81% in 2015 to an estimated 1.72% in 2016. The 2016 gross expenditure on research and development amounted to an estimated €3.25 billion. It is important to note that €761 million was public investment and under €2.5 billion was research and development investment. The Deputy is asking if we are just imagining that we might reach 2.5%. I can tell him that I have been to countries all over Europe that are asking the same question of whether they can reach 2.5%. They are experiencing the same difficulties as us; there is no question about that. I respect what the Deputy is saying and I think he has a right to ask this because it is almost a European directive that we should reach 2.5% by 2020. If the Deputy and I are sitting here in 2020, which I hope he will be because he is younger than me-----

Deputy Stephen S. Donnelly

Likewise.

Deputy John Halligan

It is acknowledged by Europe that it is the success of the economy that is causing a fallback, as the Deputy would know. We are at 1.45% and I think we will probably reach approximately 1.78%. That is not bad. We will be on a par with most other countries Europe. It is not the case that when we return here in 2020, all countries in Europe will have reached 2.5%. I guarantee that they will not do so, particularly when one takes possible economic downturns and other issues into account.

Deputy Stephen S. Donnelly

Is that not exactly the point? We are more exposed to Brexit than anyone else in the EU. We are more exposed to the US tax changes than anyone else. We have to find competitive and comparative advantage. There are several but one about which I would say there is probably agreement across the committee and the House is that we have to be better than our friends in Europe at research, innovation, science and technology. AS a result, keeping at pace with them is not enough. For the same percentage, they can achieve more due to economies of scale. Technology does well with economies of scale.

Chairman

The Minister wants to come in here as well.

Deputy John Halligan

That is one of the reasons we have focused a lot of time, money and effort on collaborating with multinational, foreign direct investment industries. I will give an example of that. If one went back 15 or 20 years and looked at the collaboration of our universities, institutes of technology and research and development interests with big multinational companies, one would discover that there was very little. It is now acknowledged by many of the big multinational, foreign direct investment companies - which would be used to and committed to carrying out their research at base - that they recognise not Ireland's potential but that which we already have here in terms of our scientists, researchers and developers. There are also our buildings - our 17 dedicated research centres. I have visited many industries that collaborate with our universities and with our institutes of technology. They acknowledge that the investment in research and development in Ireland is a big factor in them investing here. Could we have been doing this 15 or 20 years ago? Absolutely. Deputies Donnelly and Lawless would know this. There is no question that we are way behind Germany and some of the bigger countries.

Deputy James Lawless

We were doing it 15 years ago. That was when Science Foundation Ireland, SFI, programme for research in third-level institutions, PRTLI, and Irish Research Council, IRC, were started and when we started to get it right for the first time. We started to build a base. We did it very successfully for about ten or 12 years and that is the base that is now being eroded. That is the risk, when have a PRTLI that is going from €350 million-----

Deputy John Halligan

I do not think it is being eroded.

Deputy James Lawless

It is at risk of being eroded.

Chairman

I will let the Minister in now.

Deputy Heather Humphreys

I agree with what the Minister of State said. Put simply, we have somewhat been victims of our own success because GNP in this country has grown hugely over the last years. The percentage has, therefore, gone down. Where the Department was able to get extra money, the vast majority went to innovation. There was an addition of €105 million in the innovation budget between 2015 and 2017. In monetary terms, we have continued to increase, but as a percentage of GNP, it has gone down somewhat. It is our plan to get it back on target. We have certain things happening in the economy. We are a centre for aircraft leasing for the whole world so that obviously brings up the figure. Members can rest assured that it is a priority here. Between my Department and the Department of Education and Skills, we spend €760 million per annum in this space. It is not the contribution from the Exchequer has gone down. It has certainly gone up but we have to get up to 2.5%. That is our target. Our aim is to increase it to 2.5% of GNP.

Deputy John Halligan

I know we are running over time but there is also a decision by the Government to increase masters and PhD enrolments by 500 per annum, delivering a 30% increase. That is part of the programme for Government, as is increasing the number of research personnel in enterprises from 25,000 to 40,000. Also, there is an intention to build further co-operation to maintain and enhance our scientific excellence, to deliver a target of €1.25 billion from Horizon 2020. We are doing very well in extracting money from Horizon 2020. There is recognition that there is much more to be done but if one looks at how we are investing across the Departments and how, if one goes to the universities, institutes of technologies and companies, there is that threefold group that is a proper barometer as to how we are investing in research and development. It is not everything we can do. We are a bit off and it would be folly for any of us here to say that everything is perfect and right. The Minister of State, Deputy Breen, the Minister and I meet regularly and we recognise, like members, that with the advancement of technology and how it will advance over the next ten, 15 or 20 years, and if we go back and look how it was in 20 or 30 years, we must invest in innovation and in research and development. The plan is to do that.

Chairman

Before I allow any more questions, to be fair, I will allow the Minister of State, Deputy Breen, to make his statement. He has waited patiently for over two hours. We can then take any subsequent questions on programmes B and C together.

Minister of State at the Department of Business, Enterprise and Innovation (Deputy Pat Breen)

I am available all evening, so do not worry about time. As Minister of State with responsibility for the Workplace Relations Commission, WRC, the National Standards Authority and the Health and Safety Authority, I am pleased to have an opportunity to make some introductory remarks on the Department's regulation programme C.

I also intend to reflect on the performance of the plans of the local enterprise offices, LEOs, which fall under my remit.

Subhead C3 provides just over €18 million euros to the Workplace Relations Commission, WRC. The reform of the WRC institutions is now bedding in well, and I believe the new structures are delivering results. The WRC achieved considerable success in 2017. From an operational perspective, the adjudication service received slightly more than 14,000 specific complaints, and where no requests for postponements were received and submissions were not delayed, more than 90% of decisions in respect of these complaints were issued within six months. That is a fair achievement for any organisation set up in such recent times, given the delays experienced in the past. There has also been significant improvement of timescales experienced by users of the pre-existing structures, and I am confident that the WRC will achieve its 2018 work programme objective of a six-month timeframe for all such decisions.

In June 2017, the Sligo regional service office of the WRC was launched, providing the full range of WRC services, including conciliation, mediation, adjudication and inspection. This was the first step in the extension of the full range of WRC services to all the regional offices to ensure that the same services provided in Dublin are available throughout the country. It is anticipated that Shannon will be next on the list, followed by Cork and Carlow offices in due course. The allocation to the WRC also provides for extensive information services to workers and employers, industrial relations advisory support and conciliation and mediation of disputes. In addition, it provides for inspection and enforcement of employment rights through the labour inspectorate. More than 4,747 inspections were completed in 2017, with a total of 2,032 employers found to have been in breach.

Subhead C5 provides €19.275 million for the expenditure of the Health and Safety Authority, HSA. Ireland continues to experience strong economic activity, with ongoing business and job growth. We can see that from the cranes on the Dublin skyline, a phenomenon which extends throughout the country. Against this background, it is vital that we prioritise the safety and health of all workers in a way that promotes and facilitates business growth and sustainability, aids competitiveness, and most importantly protects workers. Almost 10,000 workplace inspections and investigations were carried out across all sectors in 2017, and the HSA has a target for the completion of more than 11,000 inspections and investigations in 2018. There will continue to be a particular focus on high-risk areas such as agriculture and the construction sector. We are all aware of the high number of fatalities in agriculture in 2017. It should be noted that in 2016 and 2017, the HSA's Exchequer grant was increased by €340,000 and €400,000 respectively, to facilitate special safety incentives targeting the agriculture and the construction sector. Further additional funding has also been allocated to assist the HSA in dealing with the challenges posed by Brexit. Recruitment is under way for two of the three Brexit related posts, funding for which will be provided in 2017. These posts are being recruited for at the moment, and recruitment for a third post will be undertaken shortly.

The local enterprise offices play a vital role in fostering growth and employment throughout every region of the country, as the Minister has referred to. I have continued to engage actively with the LEOs, and in February I convened the annual LEO forum, at which I had an opportunity to discuss the excellent work which is being carried out and the challenges ahead for LEOs. In a challenging environment LEO clients have contributed substantially to the economic development throughout the country, especially outside the main urban centres. The fact that the LEOs added 3,760 net new jobs in 2017, an increase of almost 10% on 2016, is particularly praiseworthy in these difficult and challenging times. Indeed, the fact that LEO clients now directly support more than 37,000 jobs throughout the country is a testament to what can be achieved through local efforts and local organisations working together. This collaboration has been referred to by the previous witnesses in their own sectors as well, and it is extremely important. Initiatives such as the Ireland's Best Young Entrepreneur competition have also been a great success during the last four years. Ireland's Best Young Entrepreneur offers an attractive investment, mentoring and training package tailored to support entrepreneurs, particularly at the early stages of their enterprise cycles. The final will be held on 22 April at Google headquarters.

I understand that the committee has met the new chair delegate for the National Standards Authority of Ireland, NSAI, Mr. James Kennedy. He appeared before the committee to discuss his appointment. I want to take this opportunity to congratulate Mr. Kennedy on his success in the Public Appointments Service competition. I look forward to working with him in the future.

The Minister has spoken about the ongoing efforts of the Department to respond to the Brexit challenge. Small businesses are clearly one of the constituencies that will be significantly affected by the UK's departure from the European Union. Indigenous small enterprises are crucial to the economy, with Irish-owned enterprises accounting for more than 90% of businesses in Ireland. Ireland's active enterprise base is made up of 238,249 companies and businesses. SMEs account for 98.8% of the total enterprise population, and they also account for 69% of the total persons engaged or employed. Small businesses, that is, those employing up to 49 employees, account for 98.7% of all enterprises, 50% of private sector employment and approximately one third of the value of the Irish economy. Within this cohort of small businesses, there are 219,880 micro-enterprises with fewer than ten employees. They account for 92.3% of all the active enterprises in the State.

In addition to the specific measures and incentives which are being put in place to help small businesses to meet the Brexit challenge, which the Minister outlined, it is vital that appropriate structures are in place to ensure that the voice of small business is heard in policy making, particularly in these challenging times. It is my privilege to chair the advisory group on small businesses, AGSB. The AGSB provides a platform for structured engagement between small business owners, their representative bodies, and myself as Minister of State with special responsibility for trade, employment, business, the EU digital single market and data protection with a view to influencing policy. It held a very useful meeting today. The AGSB's functions include providing information and views on how issues are affecting small businesses to me as Minister of State, Government agencies and State bodies. It also provides feedback and input on certain consultations as well as the regional action plan for jobs, RAPJ, process. Moreover, the AGSB reviews Ireland's performance following the publication of the Small Business Act fact sheet by the European Commission each year, to suggest possible actions and assist in the promotion of relevant State-led initiatives.

Brexit is the principal issue which dominates the agenda of the AGSB. It is a very valuable resource to ensure that the unique voice of small business is heard, particularly in relation to issues such as Brexit. That voice is one I greatly value. I am willing to take questions from Members concerning my brief.

Chairman

I thank the Minister of State. I note that an extra €1 million has been allocated to the Health and Safety Authority, which is very important. The Minister of State said that additional checks and balances were to be introduced. Is this where he expects the money to go?

Deputy Pat Breen

The HSA plays a very valuable role in health and safety throughout the country. The three sectors with which they are mainly concerned are construction, agriculture and pharmaceuticals. We have spoken about the economy and how buoyant it is at the moment. We have seen a revival in the contraction sector in recent times. A lot is going to happen in the construction sector. The action plan for housing will see a lot of houses built. Industry is growing all the time, which means we will have to build more advanced units for companies. There is also a lot of reconstruction taking place in Dublin at the moment. Buildings are being demolished and new buildings are being put into place.

We feel that the construction sector is doing really well. There have been some deaths, but it has the resources, it is well legislated for, and health and safety officers are in place to ensure that the construction site is well equipped to deal with any potential accidents that take place over time. Of course, we cannot be complacent about that.

The big worry we have is in the agricultural sector. That affects all of us. There were 25 or 26 accidents this year, which we are very concerned about. Early last year I convened a meeting with the various Departments, including the Department of Agriculture, Food and the Marine. The Minister, Deputy Creed, and I were present, along with the Irish Farmers' Association and the Health and Safety Authority, among others, and we sought to develop proposals on how farm safety can be improved. It is a concern we all share. If one talks to a person who has been involved in an accident or the family of that person the devastation it can cause is plain to see. The same applies to the construction sector. A meeting of the task force on farm safety was also convened, with representatives of the various Departments, with a view to developing appropriate Government-led actions that can be put in place.

More inspectors are going to be recruited. So far this year we have been sanctioned to create eight new inspector posts, on top of the recent recruitment of 11 new inspectors. It is not possible to go onto every farm or construction site in the country, particularly in the farming sector because there are so many farms. We want to help farmers help themselves and to be conscious of the responsibility they have for their own safety. Farming is a solitary practice and farmers are in a hurry, winter and summer, to get their work done. It is important that farmers are educated and are aware of the dangers they face on the family farm. It is important to collaborate together and for peer groups to work together. The HSA has organised farm safety days where farmers are invited to various farms so that they can see for themselves the dangers that exist. Farmers falling through roofs or handling baling machinery are problems, as is the issue of children on farms. We are going to put a number of measures in place to ensure that farmers are aware of safety measures they can take, and there will be obligations on farmers to ensure that they change their behaviour.

Chairman

I have a question on C9, the Personal Injuries Assessment Board, PIAB. I am aware that the purpose of this subhead is to make provision for pension payments made by PIAB to retired staff, but I see that there has been a significant reduction in it. Will the Minister of State explain that? When I looked at it first I thought that perhaps the decrease happened because fewer people were going through PIAB, but it actually relates to pensions.

Deputy Pat Breen

The reason the figure was high last year was that there was a pensionable lump sum paid out. That was a once-off payment and it is not on this year's subhead. I am happy that PIAB has the resources to deal with that.

Deputy James Lawless

I have another, different type of question for the Minister of State, Deputy Halligan, on subhead B6, international organisations. I read through the briefing notes, and I am delighted that LOFAR is getting support to turn on the telescope. It is a great example of best in class Irish scientific research, and the team at LOFAR have been really successful. I appreciate the Government and the Minister of State's support for Ireland joining the European Southern Observatory, ESO.

Looking to the year ahead, the next issue that I will be raising relates to the European Centre for Nuclear Research, CERN. We have lost out by not being a member of CERN to date. Many of our best and brightest have been denied the opportunity to contribute and collaborate. Indeed, some of those who are doing related work cannot submit the results of their work to be analysed through the various CERN systems. I believe they may get there through colleagues internationally, but it is case of operating on a favours basis to access some of the computational systems there.

The Minister and I had a very productive visit to the European Space Agency approximately one year ago. In the same way, the ESA has a return on investment. I believe that €7 comes back for every €1 that is spent.

Deputy John Halligan

The return is between €5 and €8.

Deputy James Lawless

It is certainly money well spent. I understand that CERN results in similar yields. When a country joins CERN as a member or on an associate membership basis money is returned by way of contracts. Once it joins a country can bid for contracts and tenders, as well as benefiting from the educational and research developments outside of the return on investment. I wanted to mention that issue as it will arise in the year ahead.

I have been talking to CERN about visiting it in the near future. I will speak to the clerk about that. Perhaps other members of the committee would be interested in that as well, and indeed the Minister. It is a very worthwhile organisation, and I hope it is on the agenda for the year ahead.

Deputy John Halligan

The ESO and CERN are leading international research collaborations in astrophysics and particle physics respectively, and we know there would be absolute benefits from membership. It would drive research excellence through collaboration on physics, which is a fundamental discipline that underpins other areas of science and technology. It is our intention to do what we can. As the Deputy can understand it would be difficult to gain membership this year given the capital outlay required, but the Government announced in budget 2018 that Ireland would join the ESO in 2018. CERN is mentioned in the national development plan, and I, along with Minister for Business, Enterprise and Innovation, Deputy Humphreys, had an input into that. On the ESO, In January the negotiation teams met in Ireland, and I met both teams. A formal application to join the ESO will come before the council in October, I believe. I will keep the Deputy abreast of that.

Deputy Stephen S. Donnelly

I have two main questions on the technology and innovation issues, and then I might speak to the Minister of State, Deputy Breen, about the local enterprise offices, LEOs. I am aware they fall under subhead A, but I might ask the question anyway as they fall under his remit.

Chairman

We will conclude then.

Deputy Stephen S. Donnelly

The first question is slightly philosophical in terms of how we are spending our money. The stated goal of the innovation programme, programme B, worth €356 million, is to foster and embed a world-class innovation system that underpins enterprise development and drives commercialisation of research. Enterprise development and the driving of the commercialisation of research are stated aims. In the document supplied by the Department on Vote 32, the opening sentence on programme B says that research development and innovation investment is all about delivering tangible economic impacts from our investment in science and research. If we then look at the performance indicators against which this is measured, the metrics include the number of companies involved in technology centres, the number of high potential start-up companies supported, number of commercially valuable technologies transferred, the number of company collaborations, the number of commercial company collaborations with Science Foundation Ireland at third level, the cumulative funding leveraged from non-Exchequer sources, and licence agreements.

The stated goal, the introduction from the Department and the performance indicators are all about commercialisation. It says the State's investment in science and research is all about commercialisation. What about society? Society is an important element. Science and technology should be doing a great deal for society and community. This is not an abstract question. It goes right to the heart of how we are spending our money.

I was approached a while back by some very capable scientists, molecular biologists, who were saying that, since 2012, they have been pushed up the technology readiness levels from basic scientific research into commercialisation. Essentially what they are saying is that there is a great deal of important scientific work going on in Ireland that scientists are involved in, some of which translated into economic gain and some into societal gain, but that during the past seven years they have been pushed out of basic scientific research and they have found that money has only been available for collaborating with big pharma on clinical trials. If one looks at the money that is available in the universities for projects, one of the stipulations is that a company must be involved.

I put it to the Minister of State that there should be mention of society and the public good. We cannot just be talking about the economy. Obviously, the economy is important and we need a return on investment, but there can be a major social return on our investment. Let us say, for example that some of our scientists wanted to get involved in heritage work or other projects that benefit society. There is a great deal of interaction between societal good and science and technology, but if everything we say in how we spend hundreds of millions of public money is jobs and business, we will miss that. We are missing it because when one talks to our scientists and asks them about the basic research in scientific areas that are just for social good, the answer is no because they cannot get the funding for it because the scientists have to find companies and some way that they can make a profit out of the research. It is not right that this is the only way. When I ask our scientists whether we have a balanced distribution along the TLR levels, with one being basic research and nine being that it is popping off the end of a factory, the answer I am getting across Ireland is no, that the money is being funded upwards. I have spoken in the past two months to eminent scientists in Ireland and have asked whether the funnel of basic scientific research that was leaving our laboratories and was then being commercialised was being cut off. I asked them whether we would start to run out of inventions, patents and the other things coming out of the laboratory, and the answer was yes, we will run out.

Why is there no mention of a potential benefit to society and the public good from our investment in science and research? Is that dealt with by another Department? Is the Minister of State satisfied that there is a fair balance across the technology readiness levels such that we are getting a throughput or is there, as I have been told by scientists, a bottleneck of a lack of investment at the basic scientific level?

Deputy John Halligan

I thank Deputy Donnelly, but does he have an hour? The Deputy has posed very important questions. It is important to note that part of our research priority does include artificial intelligence, augmented virtual reality and health and well-being, smart and sustainable food production and processing. The Deputy asked a very complicated question about science and there is always the argument about basic research and applied research. As a matter of fact, I think both of them interlink. If one looks at the block grant in education, most of it goes to the humanities and social science. There is substantial money involved. There is a division between applied and basic science. It is important to note that 70% of all Science Foundation Ireland's budget goes to basic research. I will define it, if desired. Some €122 million of the funding of Enterprise Ireland goes to applied research. The reason for that is that we must ensure that all investments we make in science because we are a small economy can help our economy to grow. We do not have the facility, as we would like to have, to invest in all science. We must invest in areas in which we think we are good at. We have been investing in projects which has put us in the top ten in nanotechnology. Agri-science is significant to our exports in agriculture, and we apply our knowledge of agri-science. For example we have farmers using satellite imaging at present. Some of that technology was developed in Ireland, and that has the benefit of improving our economy. It is important that we can get a basic result when we spend our money in science. The basic result that we require is that it helps to develop and grow our economy. Deputy Donnelly is correct that if we could, we would. However, we invest in smart and sustainable food production and processing.

The Deputy makes a very good point in investing in health and well-being. Job creation is investing in our health and well-being and the most recent data available from the annual business survey, ABSEI, in 2016 show that nearly 99,000 people are employed in research and development activity agency client firms whereas almost 240,000 were estimated to be employed in research and development activity. If my calculations are correct, that is a difference of between 52% and 55%. The most recent annual report from Science Foundation Ireland estimates that, through its research, we support 31,000 jobs. In that sense, the investment in health and well-being, energy and climate action, sustainability advance and smart manufacturing shows that we are investing to a degree in the public good.

Again, we must be careful where we invest our money in science and where we invest it in basic research and applied research so that it can benefit our economy. All of us would like to have significant funding that we could do what we wanted. I have spoke to Deputy Lawless on this issue on a number of occasions where we would be able to invest in individual scientists in all sorts of technology and to deliver an outcome that is not of benefit to the economy. Some other countries can do that but we are not in that position so we have to take our budget in research and development and innovation and direct it to where it will be profitable for the economy. That is why we target basic research and applied research. That is why we do our best to collaborate with multinational companies, universities, institutes of technology and other Departments, such as the Department of Education and Skills.

The Deputy is correct. If all things were equal, in a budget where we could dip into and say that we can have what we like, I can tell the Deputy, I would be investing much more in applied science, which is what the Deputy referred to, the humanities, health and well-being and so on.

However, we are limited by our budget. We have to work with bodies such as Enterprise Ireland and Science Foundation Ireland - in a small economy that is coming from a bad position - to ensure that all the investments we make in science benefit job creation and growth in the economy.

I am not sure if that answers the Deputy's question. I agree that it is a generic answer but it gets to the root of where the Deputy is coming from regarding our investment in research and development.

Chairman

I thank the Minister of State.

Deputy James Lawless

I have a question.

Deputy Stephen S. Donnelly

I was not finished. Does the Chairman want me to stop?

Chairman

No, but some of us started at 4 p.m. for the first part of the meeting and we are certainly exceeding our time. There was a question about the LEOs as well. I will take one more question each.

Deputy James Lawless

It is on the same topic. I wholeheartedly agree with everything Deputy Donnelly said and I realise the Minister of State is sympathetic to the case. If we do not have basic research we will not have applied research-----

Deputy John Halligan

Yes, I agree.

Deputy James Lawless

-----because the pipeline will be cut off. It is also important to note the benefits of accidental discovery. I mentioned CERN earlier. The worldwide web was discovered at CERN. A group of particle physicists were clashing protons off each other underground and they discovered the web as a by-product. The benefits hardly need to be stated. I have a Bill before the Dáil at present which deals with the Science Foundation Ireland mandate. It provides for a review of the allocation between basic and applied research and the composition of the board in terms of basic and applied. It is probably a return to the pre-2013 position, when there was more funding for basic research and a better spread. Has the Minister had a chance to review that and would he be supportive of it in general?

Deputy John Halligan

Can the Deputy repeat his question?

Deputy James Lawless

Has the Minister had a chance to look at that Bill?

Deputy John Halligan

I have had a chance to look at it. I should point out that we have programmes for frontier research and the Laureate Awards. That is managed by the Irish Research Council, which has a budget of €20 million. This provides 30 Laureate Awards.

I do not support the Bill. I welcome the opportunity to discuss the important role of Science Foundation Ireland with the Deputy and I acknowledge his commitment to research and development, innovation and so forth. When Science Foundation Ireland was established 15 years ago, it had all-party support. That support was also evident when the foundation's role was extended in 2013. Having spoken to Deputy Micheál Martin and other Members of the Houses - and I know Deputy Lawless has good time for Science Foundation Ireland - I am aware that their support continues today. Incidentally, it should not be basic science versus applied science, and we do not necessarily have to undertake a review of the foundation's awards programme in respect of balancing research.

There has been commentary that Science Foundation Ireland funds too much applied research. In fact, the majority of its funding, 70%, is for basic research. If one digs deeply into Science Foundation Ireland, approximately 50% of its funding is committed to Science Foundation Ireland research centres, which perform applied and basic research, or ABC. These are facts and figures, so it is incorrect to say that. I am not saying the Deputy is saying it but there are indications-----

Deputy James Lawless

People in the sector are saying it.

Chairman

We must have specific questions, not statements.

Deputy James Lawless

That is fine.

Chairman

I call Deputy Donnelly.

Deputy Stephen S. Donnelly

I wish to respond quickly on the 70%. That figure was presented to this committee last year. I did not believe the figure so I examined it in detail. I met Science Foundation Ireland and I looked at how the money is being spent. The 70% is absolutely and categorically not being spent on basic research. The Minister has been given that figure but if he looks into how the money is actually spent he will find that nothing like 70% is being spent on basic research.

Deputy John Halligan

I am not questioning the Deputy - I know he is honourable and good - but these are the figures we have from Science Foundation Ireland.

Deputy Stephen S. Donnelly

I accept that. I have a final two questions. One is for the Minister of State, Deputy Breen, on the LEOs. I was disappointed to see there was no increase in funding for the LEOs in the context of Brexit. Some of the LEOs I have engaged with on Brexit are very impressive. They are offering good literature, conducting courses and are active in reaching out to the local business communities. I have been very impressed by them. However, some are doing very little. The LEOs are surely a great distribution network for Brexit training, responsiveness and information. Why was there no increase in the budget? I would have expected to see one in the context of Brexit. The second issue is the effectiveness of the spend. Why are we seeing such a wide variety of quality in terms of output from the LEOs? I would have expected to see more consistency.

My second question is for the Minister of State, Deputy Halligan. In terms of the effectiveness of innovation spend, whenever I meet the heads of our colleges and universities I always ask them if they have the degrees of freedom they need to get the best out of the money that the Government gives them. Not one of them has ever answered "Yes". They make the point that over the last seven years the universities and the colleges have lost autonomy. They have less control than they used to have. They also make the point that in the area of science they have moved - forgive me, but my figures will be slightly wrong - from approximately 50% or more of their funding coming from the Government to about one third. They have had to diversify due to Government cuts. However, at a time when they are getting less money than ever from the Government, they do not have the same control. Is there any review of whether our third level institutions, which are spending this money, have the management freedoms they need to do the best job?

Chairman

I will call the Minister of State, Deputy Breen, to respond on the LEOs. It is an excellent question on why the budget was stagnant. We all know they do a fantastic job.

Deputy Pat Breen

I am delighted Deputy Donnelly is a great supporter of the LEOs because I, too, am a supporter. I have visited almost half of the local enterprise offices throughout the country over the last two years. I am very impressed by the work they do. They penetrate into every region and county in the country, unlike foreign direct investment which normally sticks to urban areas. The LEOs play a very important role in every community. The micro job creation, with two, three or four jobs created, is important in small communities. In the Deputy's county, Sheelagh Daly is a good advocate for the LEOs. She plays an important role in the LEO network throughout the country as well.

With regard to the budget, Brexit happened in 2016 and the budget was €18.5 million. Obviously, we saw what was coming with Brexit. We realise that small companies are very vulnerable and microenterprises are very exposed to the potential effects of Brexit so we increased the budget by over €4.5 million at that stage.

Deputy Stephen S. Donnelly

Was that 2016 or 2017?

Deputy Pat Breen

It was 2017. That brought the budget to approximately €22.5 million. That was capital money only. The money has been used by many of the LEOs throughout the country to anticipate what could happen to small enterprises in the context of Brexit. As a company grows and if it wishes to export, its first point of call is its nearest neighbour. The UK is the nearest neighbour for many companies that wish to start exporting. We increased the budget in 2016 and 2017 for that. The Deputy asked earlier about the measures being put in place. I believe the wake-up call came for many small enterprises when sterling increased to 91 cent. They began to take measures to respond to the fluctuations of sterling.

We have put measures in place and those companies have also put measures in place. Enterprise Ireland provides assistance for those companies. That €4.5 million in the context of the budget has been used by most local enterprises. We are monitoring the position closely for the forthcoming year. As the Deputy will be aware, many of the problems those companies will face will be in the years ahead, not now. Many companies are doing okay at present. The uncertainty that currently prevails is causing many problems for companies. Many companies have decided not to invest further at present because of that uncertainty. We also monitor the measures we have put in place.

In the context of the budget for 2018-2019, we will monitor the position closely with respect to additional resources that may be required. Currently, the OECD - representatives of which were here last week - is carrying out a survey of our small to medium enterprises, particularly in terms of their productivity. Their productivity has fallen a little. Those in the OECD are professional people. We want to put in place measures to ensure that we increase productivity in the small and medium enterprise sector. We will be examining our preparations for budget 2018-2019 in the context of small businesses to ensure they remain the lifeline for businesses in rural Ireland and contribute greatly to rural economies.

Chairman

I call the Minister of State, Deputy Halligan, to conclude.

Deputy John Halligan

I want to comment briefly on one point. Regarding funding for research and development, the universities funds, the established international model of funding is based on a ratio of one third, one third and one third in terms of public, competitiveness, and industrial funding. The governance and monitoring of that are matters for the Higher Education Authority and the education sector, not our Department.

Deputy Stephen S. Donnelly

I appreciate that.

Deputy John Halligan

That is some information for the Deputy.

Deputy Stephen S. Donnelly

My point is that it is the Minister of State's money.

Deputy John Halligan

It is my money.

Deputy Stephen S. Donnelly

Therefore, it is interesting to have a view on whether those involved have the control they need.

Deputy John Halligan

It is important to note we work under the established international model, which has been pretty good and pretty forceful in recent years. It is called one third, one third and one third. It is important we evaluate that. We carry out an evaluation of how the money is spent on all the programmes every year. I can have a further discussion with the Deputy and give him whatever information he requires on that.

Deputy Pat Breen

If more resources are available in the context of the budget, the Deputy can rest assured we will seek more resources for the local enterprise offices. They created 3,700 jobs last year, which represents an increase of 9%. They could do much more, if they were properly resourced. They have sufficient human resources. Most of them have their full complement of employees. If additional resources are available, we will be pitching for more to be made available to ensure the local enterprise offices are well resourced.

Chairman

I thank the Minister, the Ministers of State and their officials for attending. I also thank the Deputies for their interaction. We have had a very good and constructive engagement.