I have suggestions regarding procedure for today's meeting. Its purpose is to consider the Supplementary Estimates for Vote 34, the Department of Enterprise and Employment. I suggest that the Minister takes ten minutes for his opening statement and that each of the spokespersons representing Fine Gael, the Progressive Democrats and the technical group have ten minutes. We would then have a question and answer session for 20 minutes. Will Members indicate if that is agreeable? If not, I have no problem with extending the period but I think it is sufficient time to discuss the Vote. We are dealing with subheads D.2 and T.2. Does anybody have suggestions as to whether we should take them together or separately?
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We will take them together.
I call the Minister to make his opening statement.
Vote 34 — Enterprise and Employment (Supplementary Estimate).
Two measures form the basis of today's Supplementary Estimate, the first is a celebration of the labour movement in Ireland and the second is a cause for celebration by the business community.
The first is the ICTU centenary grant. This year is the centenary of the founding of the Irish Congress of Trade Unions in 1894 — the first organisation of trade unions in Ireland. The past 100 years have seen enormous changes in virtually all areas of human endeavour. The technological advances are unparalleled in the history of mankind. This has brought about extensive change in the nature of work and in working relationships. The trade union movement has made an enormous contribution to the social and economic progress in the past century. Many of the rights and privileges enjoyed by workers today have come about through trade union activity. It is clear that the role of the trade union movement in the economic and social development of the country has been firmly established. Free trade unions are now seen as one of the essential institutions of a democratic society. For this reason, among others, May Day is a public holiday from this year. Henceforth, the first Monday in May will be a public holiday. This will bring Ireland into an international family of nations which celebrates 1 May as a workers' holiday.
The relationship between unions and employers has changed significantly in recent years. In the past, the relationship tended to be mainly confrontational. This, happily, is no longer the case. Conflict is in the course of being supplanted by co-operation in a partnership approach as both sides become more conscious of the need to compete in international markets. Workers and employers share common interests and objectives. We now speak of the "social partners". A key section in the Programme for Competitiveness and Work is on the subject of developing the partnership approach. It is a measure of how far down the road the trade union movement has travelled that its concept of solidarity has broadened to embrace society as a whole and that it is happy within the context of the Programme for Competitiveness and Work to participate, both at national and enterprise levels, in promoting higher productivity and competitiveness.
Trade union structures and functions have also changed. Unions no longer see their role as being solely concerned with pay and conditions but are broadening their approach to cover all the needs of their members. It is clear that unions take the view that the challenges ahead can best be met through larger and stronger unions. This has led to a considerable number of mergers in the past decade and, consequently, a significant reduction in the number of unions. This process of rationalisation is continuing and the indications are that it will lead to an even more streamlined trade union movement, one which is better equipped to meet the changing and growing needs of its members. We can all only benefit from this welcome development.
For the Government's part, it is delighted to witness the growing maturity of the wider trade union movement and it is fitting to recognise the importance of its contribution to the evolution of modern Ireland. Accordingly, the Government is happy to assist the ICTU by providing it with a financial contribution of £125,000 towards the celebration of its centenary. The scale of the nationwide programme of events that it is mounting is very impressive; it contains something to interest everybody, whether it is from an educational or entertainment point of view. It reflects wonderfully well on the ICTU and it is a tribute to the role it has taken for itself in the community. These points refer to subhead T2.
Regarding subhead D2, the second measure involved in this Supplementary Estimate is the enterprise fund, announced in the budget. One of the most significant factors identified by the small business task force was the need for small firms to have access to working capital. Of all the obstacles it identified, this was probably the most serious. In response, the Government decided to establish an enterprise fund of £100 million, which has been made available to small and medium sized businesses on terms and conditions that have never previously existed in this country. This measure will have a substantial effect on the creation of new long term jobs and the stabilisation of existing employment.
The operation of the fund is as follows. A sum of £100 million is being made available in long term loans to small businesses, of which £75 million has been allocated to the manufacturing and internationally traded sectors, with a ceiling of £25 million being allocated to the tourism sector. These loans are initially at a fixed rate of 6.75 per cent for a period of ten years. The loans are available for capital purchases and working capital requirements. The cost of the overall scheme will be approximately £18 million over the ten year period, with the Department of Enterprise and Employment's requirements being £13.6 million. The remainder, £4.4 million, will be borne by the Department of Tourism and Trade.
The objective of the fund is to provide a solid basis, both to consolidate existing businesses and to encourage growth by providing a stable lending environment. This will have the effect of maintaining existing jobs while providing an environment which will create new jobs. An indication of the interest generated by the overall scheme is that as of 8 April 1994, 1,018 applications and inquiries totalling £192.3 million had been made. The manufacturing and internationally traded sectors have accounted for 771 of these applications, totalling £133.8 million. Of this, 82 companies have already received loan approval for £15.7 million. This has, I understand, safeguarded the future of at least 162 jobs and is projected to create 519 new jobs over the next three years.
The emphasis of control on the loans rests solely with ICC Bank, which is administering the fund within the guidelines set down by my Department. The loans are being issued on normal commercial criteria. The ICC will report on a monthly basis, or more often if required, on the extent of loans issued, the number of jobs covered and any further details as might be required by the Department. All bad debt risk will be borne by the ICC.
The benefits of the fund are as follows: a movement from grants, in line with the Culliton report's recommendations; the maximum use of State investment funds — the investment is coming from the ICC which is funding the £100 million loan required; the encouragement of long term planning within small firms due to the commercial requirements of the bank; the matching of State support with the perceived need; ensuring investments in projects with a lower risk rate of return which would not be feasible under present normal commercial borrowing requirements; the minimisation of State risk — the risk, effectively, is to be borne by the private sector; the minimal use of the Department's administration resources in the project's applications and monitoring. Finally, it will act as an encouragement to the banking community to consider projects in terms of the quality of the project and the quality of the company's management as well as taking account of the company's security as opposed to the personal guarantees of the owner/managers.
I am happy to commend the Estimate to the committee.
I welcome the grant in respect of the centenary year of the ICTU. On behalf of the Fine Gael Party, I wish it a very successful year. Given the restrictions on time, I feel obliged to concentrate my contribution on the loan subsidy scheme. Anybody would welcome this move in principle. However, the Government has succeeded in binding a good idea with excessive restrictions which will seriously damage its impact in so far as small business is concerned.
It has imposed a minimum loan size of £50,000. This means that most small start-up businesses are effectively excluded because they do not have immediate working capital needs of £50,000. The fact that county enterprise partnership boards cannot provide any assistance for working capital under present rules underlines a clear gap. This aspect of the scheme is most unsatisfactory and has been roundly criticised by the two small business associations.
I feel very strongly about the exclusion of the service sector. It is confined solely to internationally traded services, manufacturing and tourism. It is quite clear, if one looks at the employment performance in recent years, that approximately four times as many jobs have been created in the service sector as elsewhere in the economy. The Government published the task force report on the service sector where quite clear policy recommendations were put up to it, that the service sector should compete on an equal basis for any grants or schemes available from the State. However, it thumbed its nose at the work of the task force and its first action, namely this loan scheme, excludes the service sector. It is a bad omen for the seriousness with which the Government will take this task force report. It is not by accident that none of the tax proposals advanced in the task force to help the development of the service sector has been integrated in the Finance Bill. It does not include, for example, the burden of PRSI on employment in the service sector or the fact that they pay four times the rate of profit tax to create a job in that sector.
It is a once off scheme, as far as we know from the Government. According to the Minister's statement, there is already a substantial take-up. It would appear that within a month or two all the money will be gone. What do we say then to people who have working capital needs? Is this to become an ongoing part of Government assistance? If it is, people should be told. It seems senseless to say that the Government is responding to a need and wants to assist long term planning when quite clearly the Government's planning is extraordinary short term and looks as if it will have run out of steam within two or three months.
The Government seem to have an uncanny knack of turning good ideas into unworkable nightmares. Probably the best example of that was last year's tax incentive for people starting up in business for the first time, under which they were to be able to get up to £75,000 tax relief from their previous PAYE contributions to invest in their new business. About 12 people qualified for that scheme. When announced, this was to be a great step forward and no doubt many Ministers got great mileage from that scheme. To buy the newspaper space they got for their announcements would have cost far more than the Government paid out in tax relief under this scheme. It succeeded in making it so difficult to qualify for that scheme that no one felt it worthwhile or bother pursuing it and those who pursued it were quickly disappointed.
This is symptomatic of a problem we seem to have. We set up Forbairt with a mandate to help indigenous industry, but we do not seem to have policies to match the mandate. We are great at setting up new agencies without having the policies to match them. One example is the Techstart programme, a very good programme whereby companies were able to get a grant to bring in graduates with particular technical skills. This meant they would not have to take on expensive consultants and also that new graduates were taking up employment for the first time in Ireland. The programme has run out of money and companies that want to avail of Techstart cannot do so. I know of a company which had a graduate lined up and were told the money was not there, to come back in three or four month's time. That is no way to treat companies struggling to get on their feet. We have to look at this more seriously. We cannot have the stop-go activity we have had in the past.
Anther example is the enterprise allowance scheme. I know some people criticised that scheme but there was no justification for abolishing it without giving notice to the participants or to those who were ready to take it up. It was put on suspension for two months and everyone knew it was unlikely it would ever see the light of day again. That valuable scheme helped people who had been perhaps only three or four weeks out of work to get started in a business. All other schemes expected them to remain on the dole for 12 months before they got anything. It should not have been axed.
On the Moriarty report which dealt extensively with finance for industry the Government seems not to have honoured its commitments. The loan scheme is the only evidence of new thinking on finance for industry. For example, according to the Moriarty report decisions and arrangements for increasing private equity participation in smaller firms, which the Department of Enterprise and Employment is to develop with the Department of Finance, the State agencies and the financial sector should be finalised in 1993. This very creative idea tried to involve the banking and financial institutions in a more strategic drive to support new enterprise. We did not hear anything about it in 1993 and so far in 1994 we have not heard anything about it either.
Before the end of January 1994 measures were to be introduced to encourage more investment of Irish savings in industrial enterprises. Consideration was to be given to the provision of partial guarantees to lenders and investors to encourage increased provision of long term credit and capital without distorting the prudential discretion. Instead the Minister made a virtue of the fact that no guarantees are to be offered. Either Government believes one thing or another. This is one of umpteen reports published since this Government came to power. To make such comments in a report and then do something completely different is frustrating. We need a clear statement of Government policy on how it will lift small indigenous industry and services off the ground.
On behalf of the Progressive Democrats I welcome the Estimate. My party fully supports the provision of the grant to the Irish Congress of Trade Unions. The Irish Congress of Trade Unions has much to celebrate in this, its centenary year. As a result of the activities and efforts in the trade union movement in the past 100 years, substantial and highly significant improvements have been made in the working conditions for workers. I am glad that we are playing a small part here in assisting to make that celebration a fitting one.
I also hope that this year could be used by the trade union movement to evaluate the role it will play in the next 100 years. While enormous progress has been made by large numbers of workers, there are still substantial numbers of workers for whom conditions are far from satisfactory. I speak about young workers and women in casual employment. There are areas where the trade union movement in co-operation with the Government and other agencies could look with a view to seeking improvements in their next 100 years. I wish them well in that, and I hope the next 100 years will be as fruitful for them as the last 100 years.
I also give a qualified welcome to the provision of capital for small businesses. I support the points made by Deputy Bruton. I am disappointed that no such provision is being made for the services sector. It is a proven fact here and elsewhere that the services sector is an area of job creation and growth. We must look at this area if we are serious about the provision of jobs on the scale that the present level of unemployment demands.
I am surprised and disappointed that the provision made here has not been extended to the service industry in the light of all the information we have from a number of expert reports on the economy here. We must look to this area if jobs are to be created in large numbers in future. The Minister should look at the possibility of appointing mentors to the service industry to see how it can be nurtured. That is another day's work, but I mention it here since I am talking about the service industry.
On the Supplementary Estimate, the provision of capital, welcome as it is, is not enough. A great deal more will have to be done if small businesses and small indigenous industries are to be helped. In tandem with this measure and this Supplementary Estimate, the Minister must look very carefully at the unacceptable level of bureaucracy and the adverse impact that has on businesses. My party has long since argued for the introduction of a single tax clearance certificate for all transactions in a single financial year. That one measure would make a difference.
We have also argued for a single point of contact for all dealings between small businesses and State agencies. Despite a strong key recommendation of the Culliton report that we would cut down on the number of agencies it is disappointing that we have done the opposite. There has been a huge growth in the number of agencies since this Government took office. That is a major step in the wrong direction and I am disappointed that the Minister has not taken on board the key recommendation that we should be reducing the number of agencies and not increasing it.
The Culliton report talked about two main agencies and we now have about 72, although it is hard to count them all because of classifications and definitions. We have far too many agencies eating up scarce money in their administration. I know from utterances the Minister made when in Opposition that he does not favour this development. He must address this as there are far too many self-serving agencies eating up scarce taxpayers' money and delivering nothing. Put simply, they will have to be cut down.
Assistance in cash is important but often assistance in kind is equally important, particularly for small businesses. I draw the Minister's attention to the need to assist small businesses with the provision of premises, which sometimes presents a great difficulty. They also need a great deal of help in getting better expertise in marketing and business planning, in acquiring language skills and in quality consulting. They need a range of assistance and it is as important as giving them access to cash.
More enterprise units must be developed, particularly in disadvantaged areas. More of the organisations who operate enterprise units should get the taxation benefits given to the Enterprise Trust and to First Step. Leases of industrial units should have five year opt out clauses. The duration of leases is often a huge obstacle to small businesses and needs to be looked at. In designated areas where developers have already got substantial incentives we will have to look at terms of leasing to assist small businesses, particularly in inner city areas.
Apprenticeship schemes should be widened to cover the training of production technicians and operators and such persons required by high tech manufacturing and the service industries. The job creation track record of the county enterprise boards will have to be carefully monitored. They will have to demonstrate that they have a useful role to play in job creation because I am sceptical about it.
This is a small item in the overall budget but is an important item nonetheless. Businesses are facing an uphill battle and there is an onus on us all, particularly on Government, to try to scale back the level of bureaucracy and pare down the penal system of taxation that confronts people who have good business ideas and the ability to create employment — sometimes only in small numbers — and prevents them from doing so.
It is appropriate that the Minister has chosen to make this contribution towards the centenary celebrations of the Irish Congress of Trade Unions. As has been said, the contribution of the trade union movement in Ireland over that period has been enormous. As the former leader of my union, Jim Larkin, put it, his aim was to lift the workers of Dublin off their knees. It is fair that we should reflect 100 years later on how that objective has been achieved and the contribution that Jim Larkin, the ITGWU, or SIPTU as it is now, and the trade unions generally have made to the cause of working people. I applaud the Minister's decision.
I am not sure that I agree entirely with all of the Minister's philosophy in his noting of the changes that have taken place in the labour movement in the last decade, for example. It is true that enormous changes have taken place but I would not go as far as the Minister in stating that the workers and employers share common interests and objectives. Obviously they share some common interests and objectives. We call the parties to national agreements "social partners" but that is not something that I would readily associate with. I have always described them as "social interests". They are different and there is a myriad of ways in which that manifests itself. When a multinational finds that its corporate interests are best served by pulling up stumps in Galway, for example, and reverting to its country of origin, one can soon see that the interests of the workers and the corporate interests of the company are not necessarily the same.
I take the Minister's point that the confrontational mood which was there until a decade or so ago has dramatically changed. I am not confident that there is a great deal of evidence among the leadership of the trade union movement that they have fully adjusted to that situation. It is a worrying factor for the trade union movement and the contribution it makes to Irish life and society that there are so many new unorganised firms and that it is a growing phenomenon. The trade union movement must attract and make a pitch for this kind of new worker. The expanding phenomenon of unorganised companies is worrying.
I agree with the Minister when he talks about the broader concerns of the trade union movement. Anybody committed to the concept of a social wage, as distinct from merely pay and conditions, recognises that it can only be achieved with the broader participation that has been envisaged in recent years in terms of centralised bargaining. I have some concerns about what it has done to the state of Irish society, especially in the context of the Labour Party participating in Government. The Labour Party has traditionally been affiliated to and associated with the trade unions. Now that the Labour Party finds itself in Government and the trade unions find themselves in this partnership arrangement, this leaves a deficit in society. The trade union leaders find——
What about Scandinavia?
There are serious problems at present in Scandinavia. The trade union leadership here in recent years has found itself muzzled somewhat by its participation. There have been a number of fairly major issues over the last five years or so where one might have expected the trade union leadership to pursue a more aggressive and assertive line — something their opposite numbers in the IFA have never been slow to do — and they have not done so. They have felt constrained by this situation. This was all very well while there was a substantial phalanx of Deputies in Leinster House arguing that broad labour movement position but this is not the case at present, it is an issue regarding the direction of society that is a matter for historians. I am not suggesting the Minister should not enjoy his time in office, but I am putting down a marker.
Is this a love-in on the left?
It is a sign of things to come.
The question of the fund for £100 million is one of the most reheated proposals in Irish politics. The Minister was, with me, a member of a committee in the last Dáil which proposed this idea.
It is very sad that it has taken from 26 August 1992, when this was announced by the then Government following a black week in Irish industrial policy where there were a number of closures and where the exponential rise of the unemployed it led to this emergency measure, until now to put it in place. This illustrates something about decision making.
On 27 August 1992, Deputy Spring denounced this decision as mere political cosmetics. It helps to have an archivist, Chairman, on these committees. If £100 million was political cosmetics then, can the same not be said about it today, because, as Deputy Bruton pointed out, the fund is already over subscribed? Every Deputy on this committee will testify that, notwithstanding this initiative, the constant complaint of small business is that they still cannot get access to working capital.
The Taoiseach announced this funding in August 1992, and he went on to get incredible mileage out of it as some of the press cuttings, which I have before me, illustrate. The private banks were to contribute first £50 million, then £100 million and, as it came close to the election, £150 million. That was the commitment, but the private banks never divvied up and the Minister must now resort to the ICC to enable him to underwrite the cost of subsidising it, and so on.
This action from the commercial banks is not acceptable. The Minister of State commented yesterday that the Bank of Ireland has produced a fund of £25 million at a rate, I understand, of 6.9 per cent. Doubtless the other institutions have produced matching amounts, but I am not aware of the total. However, the interesting aspect is that the commercial banks have done this as a result of the initiative with the ICC. If ever there was an argument which underlines the commitment in the Programme for a Partnership Government to the emergence of a third force in banking, this is it. Only a year and nine months later, when they see the Government proceed through the Government owned ICC, the commercial banks, to maintain market share, maintain good public relations and give the impression they are seeking to help small business, have finally produced a modest and feeble effort.
This is an argument for the emergence of a third force in banking and I am not aware what Deputy Kemmy, as the guarantor of my rights and my position in this Government, is going to bring this about.
It is emerging.
If the Government has not abandoned this idea, then it has put it on the back burner because there does not appear to be any enthusiasm for it. Merrion Street appears to have undermined it. The High Street banks appear to have convinced Merrion Street that it is not a good idea and the Minister for Finance appears to have convinced his Cabinet colleagues likewise.
There is an example at present of the merits of such competition in banking. The notion was that it would be a developmental bank which would facilitate the genuine requirements of small business in a fashion which the private banking institutions are not prepared to undertake. There is a desperate need here and the Minister has produced a welcome scheme. It is too late from the perspective of many small businesses, and is already over subscribed.
It also leaves a gap in the market because the minimum loan of £50,000 cuts out a segment of small business. The county enterprise partnership boards are still finding their feet and are restricted to a grant giving capacity or role. There may be an argument for providing the county enterprise partnership boards with a loan dimension in addition to a grant giving capacity which might cope with some of the existing overlap.
Small business, which has an entirely different meaning in this country from small business in the rest of Europe, is not the only sector affected. In this country, unless there is a blue chip possibility of raising money, it is virtually impossible to raise money on the venture capital side. The costs associated with it, apparent to me from a recent example with which I happened to have a peripheral involvement, was eye opening. By the time the professionals are discharged it is a heavy price for money. This applies even to the BES schemes, by the time the accountants and the lawyers are paid off. It is an extraordinary expression of the kind of society we are that one is still much better being a professional than seeking to produce and sell something in this economy.
I welcome the decision as far as it goes, I regret it took so long to penetrate bureaucracy and I specifically welcome the allocation to the ICTU.
I congratulate the Minister on both Supplementary Estimates which are timely. As the political wing of the workers' movement, the Labour Party is especially proud of the achievements of the trade union movement over the past 100 years and the basic rights achieved, often against enormous opposition.
The ideal situation would be a strong trade union movement and a Labour Party Governemnt. I remind Deputy Rabbitte that this is something on which we are still working. It has been successful in Scandinavia and many other countries.
We heard a lot about the service industry. I am concerned that in the private sector, just under 30 per cent of workers are unionised, in other words approximately 70 per cent are non-unionised. There is a connection here. Crocodile tears are shed by the Progressive Democrats, as usual, about the trade union movement when in reality the party is opposed to everything for which the movement stands. However, there is a connection between terrible conditions, terrible wages and abuse of very young workers and the fact that many industries, especially in the services sector, are non-unionised. Will the Minister state if anything can be done in this area? I also notice, as I live surrounded by a number of industrial estates, that increasing numbers of companies setting up in Ireland seem to be insisting on no trade union representation. In the context of the present partnership Government, we should not accept this position. Conditions are deteriorating for night workers, women and young workers. Could the Minister respond to this point?
I congratulate the Minister on the brilliant initiative his Department has taken to stimulate suppport for small businesses and companies. I totally support everything Deputy Rabbitte said. There is a direct connection between the provision of £100 million through the ICC and the fact that the Bank of Ireland and Allied Irish Banks have at long last begun to give some credence and respect to the small business sector. I have recently seen situations where small business persons and young entrepreneurs looked for sums in the region of £15,000 to £20,000 and were more or less told to get lost. This type of situation still exists.
Was the Minister interested in a Parliamentary Question I asked recently about the bank levy and the fact that it seems to have effectively disappeared? Would it be possible to link the performance of the Bank of Ireland, AIB and the two foreign banks, which make up the big four and provide poor support for small business, to the development of the ICC as the third force in banking? The ICC could be linked in some way to the Trustee Savings Banks. This would give us a decent choice.
I support the county enterprise partnership boards. This is a brilliant initiative by the Minister and I think it will bear fruit. In a few minutes I am going to a meeting of the support group for the Dublin board. The Minister should make sure that the four Dublin counties receive sufficient support, given their large populations.
I welcome these two Supplementary Estimates, which provide funding for the ICTU and the enterprise fund. I agree fully with what the Minister said regarding the trade union movement and the important role it has played over the last 100 years. Fianna Fáil has always had a good relationship with the trade unions and I think I am correct in saying that the majority of trade union members vote for Fianna Fáil. This certainly was the position up to recent years.
Maybe we should withdraw the grant.
The Labour Party does not have a monopoly of good relations with the trade union movement.
I am changing my mind on taxpayers' money, Chairman.
I fully endorse the role of the social partners in the consensus approach on economic policy. Even though this approach is under attack from time to time by some political parties and right wing commentators in the media, the results are there to demonstrate that it has served the country well. I congratulate the Minister and the Government for concluding the Programme for Competitiveness and Work. This programme will build on previous successes and will bring about further improvements in the creation of employment and the encouragement of economic activity.
A new bank holiday is to be introduced on the first Monday in May. The ICTU is planning a number of celebrations for that day. I fully support the view that May Day and all it represents should be celebrated, but can the country afford another bank holiday? There is a complete shut down for two weeks around Christmas, although there are only supposed to be bank holidays on Christmas Day, St. Stephen's Day and New Year's Day. Many businesses take considerably more time off during this period. There are bank holidays on St. Patrick's Day and at Easter. Good Friday appears to be an unofficial bank holiday. We now have the May Day bank holiday and a bank holiday in June. Bank holidays are worthwhile but can the country afford the new holiday on May Day? What production will be lost? Will we lose a competitive edge on our European partners? The Minister has probably done a great deal of research on this and we are probably in line with the other EU countries but given our tendency to take extra unofficial holidays can we afford this new bank holiday? I would appreciate the Minister's views on this.
I do not share any of the worries of Deputy Haughey about an extra bank holiday. I think we have the lowest number of bank holidays of all the developed countries, with only about half the number Japan has. Perhaps the message is that if we have more bank holidays we will be more productive and the economy will grow.
I welcome the two Supplementary Estimates and congratulate the Minister on introducing the May Day bank holiday, for which we have been waiting many decades. This is the traditional Labour Day. It is timely that at the same time we have signed the Programme for Competitiveness and Work signed, the ICTU centenary and the May Day Bank Holiday. This discussion is timely given the events that are about to take place and have taken place in the world of labour. We in the Labour Party have a particular affection for May Day and the trade union movement. We are anxious to celebrate the centenary of the ICTU. It was the trade union movement which founded the Labour Party through a motion submitted by James Connolly and James Larkin to the first Irish Trade Union Congress 82 years ago. There is almost an umbilical cord between the Labour Party and the trade unions. I do not share the reservations of Deputy Rabbitte that there may be something wrong with the Labour Party being in Government and having a close affiliation with the trade union movement. It is the most natural thing in the world. We are concerned about the development of the country and the social and economic partnership. This reflects the changing face of Irish society and is to be welcomed.
I am concerned about the lack of unionisation in certain areas of labour and the extent to which multinational companies coming into the country appear to have agreements with the IDA that there will be no recruitment by trade unions within their companies. This is a negative development. This is also true of the services industry, where unionisation is at a very low ebb. It has come to the fore in recent times that in the construction industry emergency tax certificates, known as C45s, are being used as a means of undermining that industry and the trade unions within it. I am concerned about this matter but at the same time I welcome the developments which are taking place in terms of the celebration of the centenary and so on.
The allocation of £100 million to the enterprise fund is welcome. This is a new initiative and any new initiative should be welcomed. I am very disappointed by the school of begrudgery from which Deputy Rabbitte seems to be coming when he said that this was discussed before. However, nothing was done by the previous Government and this Government is introducing it. Why should he have a bad word to say about it when it is actually being done? It is not a question of it being done badly or well but that it is being initiated.
The sum of £100 million is being put aside for working capital for small and medium sized indigenous businesses. This has to be welcomed rather than criticised. I am delighted to see that it is being directed towards the protection of existing jobs and the creation of new jobs with a long term fixed rate of interest, which is the way to do it. It was a commitment made by this Government when it took office which is now being delivered on.
When we have introduced the initiative we can build on it. I hope to see us expanding into using the semi-State bank, the ICC, in a commercial fashion. The private banks should also be encouraged to get involved. We should also see about extending it further with the ACC and eventually — which is also part of this programme for Government — combining the ICC, ACC and Trustee Savings Bank into a third banking force with a view to underpinning funding for small and medium sized businesses. That is very much needed and would show some real competition in the banking institutions.
This is a most welcome development which should be wholeheartedly received in the fashion which it has been introduced. I urge the Minister to look at it very closely and monitor how it is going over the coming 12 months — there has already been a tremendous uptake — and then see how we can usefully extend its use further in this and other areas.
I welcome the contribution towards the centenary celebrations. Any group which has been in operation for that number of years deserves recognition. There is no doubt that it has done a great deal of good work for many people. However, like some others, I hope that it will continue to improve conditions for many people in difficult situations, such as contract cleaners. Unfortunately some employees of firms have moved to the contract system. It means that many people have no guarantees or possibilities for borrowing, health status and so on. The trade union movement must, in this centenary year, re-examine its position on this to see how it can best represent the long term interests of its members.
It is of great importance that the loan scheme is introduced, although it is possibly too late for some firms. Many firms went through extraordinary trauma this time last year as a result of the currency déb�cle and the extraordinarily high interest rates. I hope this will help to minimise the losses incurred during that period and give them some sense of direction for the future. The amount is obviously too little, and I hope the Minister and the Government will reconsider that to make sure that funds will be available for all those who require them.
It is much better for people to be in employment rather than on social welfare, which the Government has to fund anyway. If a scheme such as this can produce the much needed incentive, it is valuable but I must criticise the £50,000 minimum figure, because many people who want to create jobs will not necessarily need to borrow that amount when starting off. It is significant that these are people who will not get support from the banking or other lending institutions.
It is also a problem that the service industry is not included because that is an area where a great deal of useful employment can be given. Deputy Rabbitte might not like this, but I came from an IFA background and can say that agriculture produces many jobs. In Cavan-Monaghan, pigs, poultry and mushrooms from which tax benefits were removed in the Finance Bill provide employment. That should be reconsidered. At the moment, the pig industry, especially, is going through a serious crisis and many jobs are being lost.
I hope the county enterprise boards are as successful as some people say that they are. I think Deputy Quill, suggested that there are 72 different agencies and Deputy Rabbitte is going to a meeting of a support group for an enterprise board. That means that there are even sub-committees of the 72 groups. I wonder where all these groups are going and how people will benefit.
I hope that this new scheme, the budget for which we are discussing today, is not tied up in so much bureaucracy and red tape that the ordinary people who could create jobs will not be able to afford the advice to get through the red tape as has often happened in the past.
A well known historian with whom I agree described the rise of the workers through the trade union movement as a magnificent journey. There is much about the rise of congress and trade unions in general which one can admire. It has been a long, hard and honourable struggle. However, I am not uncritical of trade unions or even of congress. Trade unions are often slow to evolve in our society. We live in a changing world and sometimes employers, and even political parties, can evolve and adjust to changing circumstances quicker than unions. Unions can also be conservative, although not so much the ICTU which has been enlightened, by and large, down through the decades.
Unions must continue to change and must ask themselves what role they are playing. We must all, including political parties, ask ourselves how relevant we are to the changing world. Some political parties have not done that in recent times and one wonders if some parties have become irrelevant to the changing world. We have far too many unions competing for too few members, in many cases and sometimes rivalry among unions is too intense and restrictive. I would like to see all trade unions affiliated to the Irish Congress of Trade Unions. That would be a good thing.
Recently, I have been listening on Sunday nights to the Thomas Davis lecture series on the history, role and relevance of the Irish Congress of Trade Unions. It is somewhat anti-social behaviour on my part because it means leaving the sitting room, going upstairs to the bedroom and turning on the radio. However, that is the way to listen to the radio in peace and quiet. I have been doing that for successive Sunday nights and I benefit a great deal from it.
Does the Deputy not have a Walkman?
No, the technology has not reached me in Limerick. I have learned a great deal about the relevance and role of trade unions today from that series of talks. I hope that it will be published by the Mercier Press, which usually publishes the Thomas Davis lecture series. We could then reflect on those talks in a more leisurely way.
I hope that this year is a successful one for congress. I approve of the support which the Minister has given to the ICTU. I hope the celebrations will not be confined to Dublin and that Cork, Waterford, Limerick, Galway and other urban centres will be included. Rural areas should also be included because the annals of the poor agricultural workers are, as Thomas Grey said of the annals of the poor, short, simple and often forgotten. All workers, including agricultural workers, should be part of this year's commemoration.
I support Deputy Costello's comments about abuses in industrial relations. It is time that workers in factories and industries stopped being passive and organised themselves in trade unions. The abuses in the building industry through the misuse of C2s and C45s to force workers into spurious forms of self-employment should end. I hope the Minister will meet representatives of Congress and take action to correct such injustices being forced on workers in the building industry.
I listened to Deputy Rabbitte's comments about the £100 million fund for small business. I was a freewheeling member of the Opposition for a long time and I often railed against Ministers for not doing certain things. When one is in Opposition one can spend billions of pounds with impunity on the floor of the House. One can propose many schemes and I was perhaps as bad as any other Member of the House. However, let us not curse the darkness, we should acknowledge that this £100 million is a step forward. Do not forget that other agencies help small business. In Limerick there are five such agencies. The IDA, Shannon Development Company, PAUL, — People Against Unemployment in Limerick — FÁS and the enterprise boards. I agree with Deputy Quill and other speakers that more coordination is necessary among such bodies.
However, let us not ignore the reality. Small business people also have an obligation to work and to show enthusiasm, verve and skill. They should not just look to the Government for handouts. Germany prospered after two world wars and did not have a FÁS agency or enterprise boards to help it. It is good that the £100 million is available, let us hope it will be used wisely and that there will be a dramatic improvement in employment. However, it takes two to tango and we must expect the business community to reciprocate and meet this opportunity in the right spirit.
I approve of the Minister's decision. This is a good day for the country although the proof of the pudding will be in the eating. I wish Congress the best this year, and I hope we will have the opportunity to join in the celebrations before the end of December. I hope to see some tangible improvement in employment before the end of the year. I also hope to see more competition in the banks. Competition is inevitable, not only in the European but in the Irish context. The banks, including a third banking force, and building societies will compete for business in this country which is as it should be. The banks cannot be aloof from change or competition. Today we are seeing a step forward and the Minister deserves at least two cheers.
The enterprise fund is welcome. There will never be enough money, irrespective of how much is made available and there will always be more applicants than money. The average for the 82 who have been approved appears to be about £191,000, about £173,000 on average has been approved for 771 applicants a sizeable amount of money. People are prepared to invest in their companies, albeit by borrowing.
The fund, with the county enterprise partnership boards, will have a major effect over a period. It gives small companies outside the main urban areas an opportunity to be examined and helped. It has been suggested in the county enterprise partnership board of which I am a member that in some instances it is preferable to pay loans rather than grants. There would certainly be more flexibility in paying loans than in paying grants. The Minister should consider the request of a number of county enterprise partnership boards, including the one of which I am a member. If loans were paid by the boards they could create a rollover effect to generate investment for other companies. That is the way forward, particularly when the board is limited to a maximum of £50,000. The opposite limit applies to the enterprise fund where £50,000 is the minimum.
Coming from a trade union background, I welcome the allocation for Congress. The ICTU had turbulent years in its history, there were many divisions and it is good to see the movement united in one group today. It has survived the years of turmoil. During that period, particularly in the last 25 years, major changes were won through the trade union movement and through good working relations with various Governments. However, there is no room for complacency. The job is not yet completed. Unfortunately, there appears to be a drift back to the bad practices which existed prior to Congress and the Government coming to grips with them. When legislation is introduced people try to find loopholes. In the last few years companies have found ways around legislation which has not been to the benefit of workers. A considerable number of workers are now in a system of casual employment which is similar to that which precipitated the great strike of 1913. That system has created insecurity of employment which, in turn, creates insecurity for families. The Minister and Congress must take this on board. They cannot let it continue to drift.
People have always found ways to avoid paying tax and will continue to do so. However, the present casualisation of work is a way around the PRSI system and other legislation which were hard won in previous years. While I congratulate the Minister for allocating £125,000 towards the ICTU celebrations, I ask Congress to look at itself and ensure that the hard won benefits are not eroded. That erosion is happening. Approximately 30 per cent of workers in certain industries are members of the trade union movement. Workers, regardless of whether they are trade union members, must be protected by legislation. There is an obligation on us as legislators to ensure that all workers are protected.
We support the grant for the celebration of the Irish Congress of Trade Unions centenary year. However, it is opportunistic of the Government to allocate the grant in a Supplementary Estimate. Everybody in Congress knew last year that it would celebrate its centenary this year. The Government, however, did not see fit to make provision for the grant in the Estimates and it has now introduced it in a Supplementary Estimate. That is a backhanded way of giving the grant. Nevertheless, I support the allocation.
Will the £125,000 grant include provision for a contribution to the Connolly memorial? There is a separate campaign to erect a memorial to James Connolly. Curiously there is not one such memorial in the city. Although I would never be regarded as an enthusiastic, committed or rabid socialist like the Minister, I agree that James Connolly deserves to be remembered for a great many deeds. Is there any provision for a contribution by Congress to that memorial? I am not sure if there is already a provision in Congress itself, but like other Members of this House, I would support such a move.
I was amused to hear Deputy Costello speak in such approving terms about the enterprise fund. I suppose because in his view it is commercial, he thinks it can somehow be respectable. I am delighted that at least one Deputy in the Labour Party is taking a hard-headed approach to these matters and feels that a project done on a commercial basis, has something to be said for it over a similar undertaking that would not be done on a commercial basis. Indeed, there may be signs of an awakening of common sense in the Labour Party and if that is the case it is welcome, but the Deputy should not go overboard. The Minister said that this fund will cost approximately £18 million over ten years. If one discounts that figure on a present value basis, one is referring to a real cost in present terms of approximately £12 million to £13 million, which is the cost of making funds available on slightly better terms than on a purely commercial basis. That may be an effective way for the State to spend in real terms, but I am a little worried about it.
The Minister told us for example, that 82 companies in the manufacturing and trading sectors have already received loan approval for £15.7 million. This is out of a total of 771 applications, which comes to approximately £134 million. Obviously, some people will be disappointed; that is inevitable with a scheme of this kind. I have been in communication with the Minister about one case — I have heard of others — where projects seem to conform to the criteria the Minister laid down in a lengthy and comprehensive statement in February. However, the reaction from the ICC to the applicants is that it will not deal with them under the terms of this scheme, but under its normal commercial lending criteria, in spite of the fact that, on the basis of the size of the company and the requirement for working capital, they seem to conform to the criteria.
I know there has to be some kind of rationing in a scheme of this kind. The Minister said that the total of 1,018 applications and inquiries come to £192 million, which is nearly twice as much as the amount available. I am not happy that the ICC will operate what seems to be rationing system simply by telling some of the applicants that it will not deal with them under this scheme, but under its normal commercial lending scheme. The Minister knows that I would be the last person who would want him to interfere any more than necessary in this case. However, has the Minister foreseen that eventuality? Is there anything in the scheme that would allow him to step in at any point in the process and redirect the aim? While clearly a number will be disappointed under such a limited scheme, they should only feel disappointed because there is not enough room in the scheme rather than feeling that an arbitrary decision had been made by the ICC.
I felt a little rueful — this has nothing to do with the Minister's statements — when I heard Deputy Costello refer to the third banking force, a project that was at one stage beloved of the Minister.
It still is.
The Minister's ardour has now cooled.
It has not.
Like the rest of us, the Minister must know that there is absolutely no way that he will get the Trustee Savings Bank involved in this proposal. God forbid that he ever should. The Trustee Savings Bank is not involved in the same kind of business as the ACC or the ICC. Even if the Minister managed to create this three headed monster which he seems to be contemplating, it would not be the third banking force in the Irish economy in any sense. Apart from the big two, some existing banking forces would be larger than this proposed unhappy monster, which I am sure the Minister will never put together.
What kind of progress has been made in any attempt to bring about a fusion — a marriage would be the wrong word — between the ICC and the ACC? Are we likely to see any real proposals in the near future? Is the Minister happy that the business in which the two groups are involved is complementary? I know they both have ambitions to become more deeply involved in retail or high street banking. By saying that, they are giving the impression they do not see the same kind of role there used to be for a sectoral banking institution. To be viable, they feel that any new or transmogrified institution, whether it has two or three heads, would have to be involved in a wider spectrum of activities then they have been up to now.
Perhaps the Minister would take this opportunity to reply to these questions. I am sure you would give the Minister the latitude to do this, Chairman, although it is strictly speaking outside the scope of the Supplementary Estimate, to update us on whether this unlikely alliance will ever come to fruition?
I welcome the Supplementary Estimate for the ICTU in its centenary year.
Great progress has been made and there have been many changes over the years. However, there are still many challenges ahead for us, future Governments and the trade union movement. Trade unions have become more rationalised and have reduced in numbers, but have increased their membership. That is progress in one sense, but if one goes back 20 years or so when there were smaller unions, there was a greater contact between members and officials. That may have been on the basis of the old system when members paid their union dues on either a weekly or fortnightly basis in the workplace. There is currently a fear — this is also true of political parties, but especially of trade unions — where it might be seen that the leadership are losing contact with their members. This point has often been mentioned to me. That aspect will have to be examined to ensure that these movements are at one with their membership.
The inclusion of the extra bank holiday on 1 May is welcome. It brings us in line with most of our European partners. The fact that May Day is being acknowledged is indicative of the progress and change in attitudes. When the Minister was a member of a previous Government, I recall that there was great pressure put on him——
His finest hour.
——for an additional bank holiday. While an extra day was granted, it was not for May Day. Many workers felt aggrieved about this and it is good to see that it has been provided for.
The low income mentality developing in this country must also be addressed. People have asked me what the Government and the Oireachtas are doing about this problem. There are many casual or part-time workers, including those who work a 20 hour week in Aer Lingus.
The development of the trade union movement is identified in this Estimate. The trade unions and the Government must look at this situation, otherwise it will be detrimental to society and families because we will not be able to provide for them.
Other Deputies referred to the crisis in the building industry in relation to the C45. This must also be addressed in a positive way. I look forward to co-operation between the trade unions, the Government and the Oireachtas. This has always been of benefit to the country and many other countries are moving in this direction. I would like to be associated with this Estimate and I compliment the Minister.
I will confine my remarks to the comments made by the Deputies. Deputy Bruton highlighted a number of concerns, which I also share, in relation to the operation of the £100 million fund. My Department is examining the services report and it will soon announce an internal reorganisation with specific responsibility for services and small businesses, as recommended under the small business fund. While drawing up the guidelines for the operation of the £100 million fund, a deliberate decision was taken to try to confine its application to certain sectors. As a result, the services area was minimised. However, that does not mean we do not recognise the value of services, but those who were looking for working capital came from existing small businesses in the international trade, services and manufacturing areas. The Deputy is mistaken if he believes this is a once-off effort and that nothing further will be developed from it. The indications so far, in terms of the volume of applications, suggest that the scheme will be oversubscribed and that similar and parallel measures will be needed.
Forbairt will be following the recommendations set out in the Moriarty and the Culliton reports in terms of the financial assistance it can provide for Irish industry. It may not take the equity route because there are indications that many people are reluctant to share equity, particularly in the early stages of a company. It is part and parcel of the process of growth. There is a need for access to working capital on acceptable terms and that can vary from one enterprise need to another. While welcoming the support from the committee for this Supplementary Estimate, I emphasise it is not a once-off measure because the success and experience we will derive from this will be put to good use.
The response from the two main banks, Bank of Ireland and Allied Irish Banks, to the success of this fund is an indication of what competition can do in this area. However, all is not as it would appear, particularly in relation to ICC's operation of this fund, which Deputy Dukes mentioned. There are many areas where ICC will exercise its own judgment because it is lending the money and taking a charge against whatever assets are put forward by the borrower. We must get the balance right, as Deputy Dukes testified. For approximately £12 million we are unlocking £100 million which would not otherwise be unlocked. We are trying to learn how to proceed in the area of trade-offs. However, from time to time that will not be as generous or as accommodating as we or some applicants would like. I hope we will build up experience in the future about using State funds in conjunction with private sector money and various lending institutions to try to provide access to what is a major barrier to the consolidation of existing industry and the growth and birth of other industries.
The necessity for introducing the Supplementary Estimate was because the main Estimate for this Department would not be introduced in time to release the money to ICC. The requirement to have the moneys for ICTU was necessary because the normal Estimate would not be put through until the autumn in the normal course of events and the expenditure would have been committed.
In relation to the enterprise fund and the criticism about the £50,000 threshold, ICC indicated that the difference between the administrative costs of a loan at that level, in comparison to the savings which would be made if someone took out a general loan, is small and that from its point of view there was no advantage in doing it. It set the threshold at £50,000.
There was a reference to the county enterprise boards. We are now finalising a new format for their operation which will, among other things, enable them to make loans or to use some of their money for loan facilities to existing companies, as well as giving grants in the manner which they do at present. Developments will take place in this area.
Under the existing Estimates, where we gave money to the trade unions for training purposes, it was considered necessary by the Department of Finance — and we do not dispute its observations in this regard —that a special subhead was required because of how this money would be used. Some general comments have been made about developments in recent times. Forfás has no instruction from me to say to companies that trade unions are not encouraged, it tells inward investing companies that they are free to choose whether to have trade unions. If they ask, they are given the pros and cons from their point of view as to the benefits of trade union membership. There are many benefits for management of having a single union organising the workforce and acting as a conduit for negotiation and discussion between management and the unions. The attitude of some inward investing companies to unions can vary. In response to what Deputy Costello said, it is misleading to say that Forfás has a policy of telling inward investing companies that they should not encourage union membership. That is not the case.
Some changes have been made in employment practices about which we must be concerned. Although we want to keep our competitive costs as tight as possible, that should not be done by employing many workers on a casual basis and the removal of the protections which they presume they still have. This applies particularly to the construction area.
That has not happened as a result of a change of Government policy, it is largely as a result of a change in the interpretation by the Revenue Commissioners of various tax certificates and tax entitlements. This was brought to my attention by Deputy Costello and others in the context of the construction industry in Dublin and countrywide and I have raised these matters with the Revenue Commissioners to see if such abuses can be avoided.
I thank the Members of the committee for their comments and support for both measures. I hope I have answered the queries. If any Member of the Committee requires additional information on either of these items or any other matter relating to the Estimate, I shall be happy to provide it.
I thank the Minister.
Chairman, you indicated there would be an opportunity to ask questions.
I assumed that you had asked questions in the time allocated to you. It was quite open for you to ask a question until the Minister responded but you did not avail of the opportunity.
You did not offer us the opportunity, Chairman. You took the speakers and you said at the outset that after the speakers were finished there would be an opportunity for questions. You did not provide us with that opportunity. On previous occasions the Minister replied and you permitted questions after that.
Do you wish to put a question to the Minister, Deputy?
I do.
Please do so. We did agree to a procedure before the meeting. You agreed to that procedure and you had ten minutes allocated to you, representing your party. I assumed you had said all you wanted to say. If you had indicated that you wished to ask a question I would have afforded you the same facility as your colleagues and Members from the other parties. Please put your question to the Minister.
I would like to put the record straight but I do not want to argue with the Chair. The record will show you said that at the end of the speeches there would be an opportunity for questions. You did not afford that to us. I am not seeking to impose on the Chair, I am acting on what you indicated would be the order of the meeting.
From Deputy Broughan onward, a series of questions was put to the Minister, to which he has now responded. Those questions were asked in the course of Members' contributions. If you have specific questions, please put them to the Minister without making a speech.
Thank you, Chairman. What security is being sought by the ICC? Has the Minister imposed any provisos such as banning security on the family home or other objectionable forms of security? Have the Moriarty proposals for arrangements between his Department and the financial sector been abandoned? They were to have been in place by 1993.
Have people seeking less than £50,000 in working capital from ICC been excluded from the scheme to cut administration costs for ICC? That was my interpretation of what he said. If that is the case, it is a laughable reason at a time when we are trying to remove bureaucracy from small businesses.
The Minister proposes to give loan powers to the county enterprise partnership boards. Will these include loans for working capital and will they be at the available preferential rates? To return to an item raised at the last meeting, does the Minister intend to restore the enterprise allowance scheme, which he said was under review? Finally, will this be the last Supplementary Estimate from his Department this year?
The criteria are normal commercial criteria for offering loans. However, the family home is specifically excluded and ICC is not allowed to have it attached as part of the security. If the Deputy has experience to the contrary I will note it although he has not indicated that he does. We have not abandoned the Moriarty proposals, we are in the process of developing them. I indicated policy intentions in that area.
The £50,000 threshold was also mentioned. At the outset we had to decide the best way to start the fund and the figure was set at £50,000. We had a number of queries about this, along the lines mentioned by the Deputy and I may not have given an adequate response earlier. ICC indicated to me that if one borrowed less than £50,000 under this scheme at 6.7 per cent interest fixed for ten years, the savings as against the normal terms it offers would be relatively small. It would not constitute as great a subsidy for a larger amount of money. That was the explanation given to me and I can give the Deputy more details at a later date.
We have now finalised our negotiations with the Department of Finance on the operation of the county enterprise partnership boards as limited liability companies; in effect they will be limited by guarantee. There are a number of technical problems on that subject because of the representative nature of boards of directors. They may be nominees of ICTU or the IFI but may have legal liabilities as directors. These matters must be clarified.
In the course of that we are examining how the county enterprise boards will be able to give loans and the terms and conditions under which such loans could be granted. No final decision has been made but this could be an extension of what we have discussed with ICC. Other banks may also be involved. The matter is under consideration at present.
The enterprise allowance scheme as operated by FÁS will be continued through this year. Finally, the main Estimate will be brought to the committee next month. We do not anticipate that an additional Supplementary Estimate will be required but from his experience the Deputy will know that cannot be ruled out.
Is there not a shortfall in the provision for the county enterprise partnership boards?
Not entirely.
I propose the following draft Report:
The Select Committee has considered the Supplementary Estimate for the Department of Enterprise and Employment. The Supplementary Estimate is hereby reported to the Dáil.
Report agreed to.
Ordered to report to the Dáil accordingly.
I thank Deputies, the Minister, his officials and the Clerk to the Select Committee. The Select Committee will meet next Wednesday at 2.30 p.m. to discuss the Supplementary Estimate for tourism projects.
The Select Committee adjourned at 4.20 p.m.