Select Committee on Enterprise and Economic Strategy debate -
Tuesday, 14 Jun 1994

Vote 34 — Enterprise and Employment (Revised Estimate).

Chairman

Today the committee will consider the Estimate for the Department of Enterprise and Employment. I welcome the Minister, Deputy Quinn, the Minister of State, Deputy Brennan and their officials. I propose that the Minister will have 15 minutes for his opening statement. Fine Gael, the Progressive Democrats and the Technical Group will also have 15 minutes for opening statements. I appreciate that there are counter attractions today and the other parties may or may not take up the time. Is that agreed? Agreed.

Minister for Enterprise and Employment (Mr. Quinn): I apreciate what day it is and I will strictly adhere to the timetable outlined and then leave the matter open for discussion. I am pleased to have this opportunity to elaborate on aspects of the Vote of my Department which may require more detailed explanation, particularly those on the objectives and procedures involved in achieving this Government’s economic policies.

As the committee is aware, Departments have entered into agreements with the Minister for Finance which place the onus on them to achieve a reduction in expenditure year on year. In my Department the second such agreement has been negotiated and there is a commitment to reduce overall expenditure over a three year period. Delegated authority ensures that officials are committed to exercising controls over expenditures and answerable for any failure to achieve target savings.

In a further step in the process of revamping operations under the Vote, I have arranged that the Director of Consumer Affairs and the Companies Registration Office will in future be funded by grants which will cover both pay and non-pay expenditure. The amount of such grants will be determined each year on the basis of the policy objectives and available funding. Each office will be in a position to determine its priorities on that basis and be free to pursue predetermined activities.

The most positive overall job creation performance in 1993 came from those sectors of industry dominated by overseas companies, namely, electronics, international services and healthcare pharmaceuticals, where nearly 6,000 first time jobs were created, leading to a net growth of nearly 2 per cent in total employment in those sectors. In total the IDA secured over 30 greenfield manufacturing projects and 17 new international services projects during 1993. The healthcare and electronics sectors continue to be strongest for major new investments while international services also produced excellent results.

The outlook for manufacturing industry in 1994 is more favourable than this time last year with improving economic conditions emerging in many key markets, particularly the UK and the EU. The pipeline of new investment projects is strong and IDA Ireland would expect manufacturing output growth of about 8 per cent and export growth of 8 per cent in 1994 — both in volume terms. Real GNP growth of 3.25 per cent is forecast for 1994, again remaining well above the EU average. IDA Ireland has a target to produce 6,000 first time jobs by the end of the year which includes a greenfield project target of 94 and an expansion project target of 56.

Since January this year 20 greenfield projects from the US with job potential of 3,500 have been approved by IDA Ireland. A further 20 greenfield US projects are in the pipeline. On the basis of current negotiations these should be approved by the end of the year. The total jobs potential for these 40 projects is about 6,000 to 6,500 jobs over the next three to five years. In addition, a number of significant expansion projects from US companies are already set up in Ireland which should lead to a further 3,000 jobs over the coming three to five years. The high level of activity from the US points to one of the best years ever for IDA Ireland in US investment. This is due to the current environment in the US for internationally mobile investment and the competitive position in Ireland in industrial costs and the economy generally.

As the committee is aware, Forbairt was established to bring together in a more integrated way the developmental and support services hitherto provided on a separate basis by Eolas and the indigenous section of the former IDA. The new agency is intended to provide a new impetus for and a more cohesive approach to the development of locally based industry.

Forbairt personnel have devoted much time and effort in recent months to the task of integrating two quite different agencies into one dynamic cohesive organisation with a clear vision of its future way forward. The committee will appreciate that this job has been tough. Complex staffing matters, for example, have had to be tackled and resolved. I am pleased to report that considerable progress has now been made in this regard and work is ongoing on further integration and rationalisation.

Forbairt's overall objective for the future is to assist in the creation of stronger, more innovative internationally competitive businesses in Ireland, leading ultimately to more jobs and wealth in the economy. Such assistance need not be solely financial. Forbairt also proposes to support enterprise by the investment of advice, guidance and encouragement. I understand that, based on performance to date, the agency should achieve its job creation target for the year. Further details of Forbairt's activities will be announced by the agency at a press conference tomorrow.

Shannon Development, as a critical part of its overall regional development mandate in the Shannon region, continued to promote the growth of the Shannon free zone, the National Technological Park, Plassey and indigenous industry throughout the Shannon region in 1993, helping firms to create 1,449 new jobs in the process. A new initiative by Shannon Development during 1993 was the establishment of the Women's Business Development Centre under the EU NOW programme to promote and assist in the development of new and existing businesses by women. The centre provides advice, consultancy, information, training and financial assistance to women in starting up their own enterprises.

The objective of the county enterprise initiative is to develop an entrepreneurial culture at local level with the intention of generating the maximum number of viable businesses and sustainable jobs. The total number of projects approved by the county enterprise boards to date is 1,300 with a grant commitment value of £11.1 million. These projects are expected to create 1,800 full-time and 600 part-time jobs over the next 12 months. I recently advised the boards of the importance I attach to the completion of their county enterprise action plans and have requested them to focus their efforts in this direction to ensure that the overall strategy upon which they can build for the future is agreed as soon as possible.

The Government is conscious of the need to continue to provide opportunities for the unemployed, particularly the long term unemployed, notwithstanding the encouraging downward trend in the numbers of unemployed so far this year, the fall in the number of proposed redundancies notified to my Department in the last five months which I will detail later and the recent predictions of the Economic and Social Research Institute for a significant increase in the numbers in employment between now and the year 2000.

As the committee is aware, I recently launched a new programme known as community employment, with a view to providing direct Government assistance for the unemployed and, particularly, for the long term unemployed. This programme, which has replaced the social employment scheme, the community employment development programme and Teamwork, builds on the strengths of these programmes and is also a response to the proposals for an expansion of work opportunities in the community through direct intervention.

It provides part-time work opportunities in a normal work environment as well as structured development and training opportunities for participants. In addition, the programme offers each participant a subsidy to help them undertake a training or education course in their own time. Participants retain those secondary social welfare and other benefits such as fuel allowance, butter vouchers and so on, to which they were entitled prior to participating. Special provision is made for assisting the older long term unemployed. As a target 25 per cent of places will be reserved for persons aged 45 years or more who have been unemployed for over three years.

Exchequer funding of £171.26 million will be available for community employment this year, a significant increase on last year's provision of £106.5 million for the three programmes which community employment replaces. It is planned that this level of funding will provide about 40,000 places on the programme by the end of the year. I am pleased that the basic allowances payable to participants on community employment will be increased by 3 per cent to take effect in respect of payments for the week ending Wednesday, 27 July 1994. A person without dependants will get £79.30 per week while the adult dependant allowance will be £34.70 per week and the child allowance will be £13.20 per child per week, which is the full rate. This means, for example, that a participant with one adult and three child dependants will be paid £153.60 per week.

An examination is currently underway into the feasibility of introducing a comprehensive employment and training programme, to be known as Youthstart, for school leavers. The objective of the programme is to integrate the provision of all initial training for new entrants to the labour market. A key feature of the new programme will be the traineeship model, which provides for a combination of on and off-the-job training. This traineeship model is well established in other European countries. Certification of the training received will also be an important feature of the new programme, which will help progression to further education and training. The cooperation of employers will be crucial to the success of any such scheme.

In line with the recommendations of the Culliton and Moriarity reports, a new FÁS industry division has been set up to concentrate on training for those at work. The industrial training committees established by FAS have produced a number of reports on the training needs of particular sectors of industry which are instrumental in identifying what needs to be done to increase the level of training in those sectors and also what specific training is required.

My Department, in conjunction with Forbairt, FÁS and representatives of industry, is currently examining further ways of developing training in industry. It is now accepted in all industrialised countries that science, technology and — most of all — innovation, are essential components in industrial development. We have just come through the first phase of Structural Fund support for science and technology and are now entering the second phase.

There have been many significant adaptations to the programme of science and technology activities, the most significant of which is the move from an initial position of supporting infrastructural development to direct support for research and development in industry. In 1993, expenditure in respect of the science and technology development programme amounted to £43.868 million, £20.452 million of which was made available through my Department. The remainder was non-voted expenditure in respect of the industry research and development scheme, known as Measure 6, which started in 1993. The scheme is separately funded by the European Regional Development Fund and effectively involves no net expenditure by the Exchequer. Consequently, it does not appear in the Estimate.

For 1994, a total amount of £34.665 million is being made available for the science and technology development programme. Some £18.665 million of this is included in the Estimate with the remaining £16 million being non-voted expenditure in respect of the industry research and developement scheme.

In February last, I announced the establishment of the Science, Technology and Innovation Advisory Council to undertake the most fundamental and far reaching review of Irish science, technology, innovation policy and structures ever attempted. As the task of the council covers such a broad area, I have made a provision of £150,000 in the subhead to cover consultancy costs which may arise in support of the council's deliberations.

One of the most significant developments affecting Irish industrial relations in the past decade or so has been extensive trade union rationalisation. Since 1980, the number of unions has declined from 86 to 58 — a drop of almost a third. My Department has sought to encourage and facilitate the rationalisation process by paying grants to help defray the costs unions incur in the merger process. Nearly £1.4 million has been paid to date. With a number of mergers under active discussion the indications are that this rationalisation trend will continue, in the medium term at least. A further reduction in the number of unions, which is desirable and achievable, would have positive benefits, not only for our industrial relations but for the members of smaller unions.

Increased responsibilities were placed on the Health and Safety Authority by the further expansion of the legislative base for occupational safety and health in the Safety, Health and Welfare at Work (General Application) Regulations, 1993, which came into effect last year. Also, additional demands on the Authority's resources arise because of the review of safety in the chemical industry being undertaken by the Authority.

It is, as a result, necessary to increase the staff of the Authority by 14 persons during 1994. The recruitment of these additional staff will enable the Authority to increase the level of workplace inspections undertaken annually and to develop further its role in raising Irish industry's awareness of the need for good occupational safety and health standards.

The administration of the redundancy payments scheme is another responsibility of my Department. Earlier this year, I introduced regulations which raised the ceiling used in calculating the statutory redundancy lump sum entitlement from £13,000 per annum, or £250 per week, to £15,600 per annum, or £300 per week. As a result of the new ceiling, workers earning more than £13,000 per annum who are notified of redundancy on or after 1 May 1994 will benefit from increased statutory redundancy lump sum payments to termination of their employment.

It is not possible at this early stage of the year to predict with any accuracy the likely figure for notified redundancies for 1994. However, the trend so far has been promising in that 7,321 redundancies have been notified to my Department in the first five months of the year. This represents a decrease of 1,055 redundancies, or 12.6 per cent, on the 8,376 notified redundancies for the corresponding period for 1993.

I am conscious of the time constraints. I have brought with me the first annual report which the Department of Enterprise and Employment will formally launch tomorrow. I thought it appropriate to make advance copies made available to Members, which they can take after the meeting. There is one for everybody in the audience.

Mr. R. Bruton

This Estimate is supposed to give us the opportunity to check, on behalf of the taxpayer, whether the proposed spending represents good value for money. The back-up information we have been given on this budget is poor. There is no information on unit costs of job creation programmes and no targets set against which we could judge their success. Innovations, such as job targets for Forbairt, have been dropped from any public debate. We seem to be going through a rubber stamping exercise. We are debating halfway through the year how money that has largely already been spent should be spent. I feel frustrated with this procedure and lament the abandonment of the pattern established by the Fine Gael-Labour coalition Government of the mid-1980s when substantial comprehensive programmes of public expenditure were published. These gave us the type of detail with which you could make a more reasoned assessment of what was happening in the Department. What we have here does not match those programmes. I warn the Minister about a complacency that appears to be slipping into his comments on the economy. He claimed great credit for the fact that the unemployment figures declined recently. These signs——

Mr. Quinn

I would be getting the blame if figures were increasing.

Mr. R. Bruton

The Minister is responsible for economic policy and change in it. However, there has been no change in that policy since he took office. Essentially, the Minister is adopting the policies pursued by the outgoing administration.

The facts are not encouraging as far as the potential success of that policy is concerned. The most recent employment figures show that to April 1993, there was an increase in employment of 7,000 people — fewer than 1 per cent — at a time when we know that 25,000 jobs need to be created merely to keep unemployment figures growing, unless one banks on emigration. Ireland is the worst of the EU countries at turning economic growth into jobs, which cannot be accidental. That is because of the policies pursued, especially the anti-employment tax policies. At a time when the Commission thinks we should cut taxes on employment by 1 to 2 per cent of GDP, it is lamentable that our Government is resisting such a move. The Taoiseach indicated he will not endorse that approach. The Commission has told us, on its analysis of economic trends, that such a move would cut up to 4 per cent off our unemployment rate. Yet we continue to refuse to do that. Tax reform is fundamental to the service sector, which has proved to be the engine for job growth. Job growth cannot be expected from a service sector which has to bear 21 per cent PRSI and 21 per cent VAT in addition to 40 per cent tax on profits.

The recent commission on small businesses advised that there was need for a threshold before the 40 per cent tax would affect small companies. However this advice was not acted upon. The same task force on the service sector indicated that a new tax regime was required for the sector, but nothing was done about it. The Minister introduced a special loan scheme to try to promote opportunities for growth as an alternative to the grant giving problems which supposedly existed, but he excluded not only the service sector, but small businesses, because he insisted that the scheme would apply to companies requiring a sum of £50,000 or more.

It is difficult to equate these measures with rhetoric suggesting that the economy is becoming friendly to those endeavouring to start new enterprises. In the past few months, the Minister axed the enterprise allowance scheme, one of the few available to people almost immediately upon becoming unemployed who wished to set up a small business. Such people were guaranteed that for the first nine months of their business, they would have a weekly wage. It was a valuable scheme, but the first to go. Although the Minister indicated that the scheme would be restored on the last occasion I raised the matter with him, no such decision has been made.

There are clear indications from the Estimate before the committee today of the short-sighted nature of the Government's priorities. For example, under science and technology there is a cut of 21 per cent in the activities undertaken in this area. This is a cut on a volume of spending only one third per head of population in comparison with the expenditure undertaken by other EU partners. The science and technology programmes are the seed potatoes of employment of the future and the cut this year is in addition to a massive cut last year.

The budget for science and technology is being whittled away, despite the fact that in a debate by the committee last year the Minister sympathised with the argument for greater investment in this area. Yet a further cut in the budget is to be imposed this year, which is difficult to square with the objectives set by the Government.

We must question the decision to cut spending on strategies to support industry by 11 per cent while at the same time to expand spending on all of the FÁS type activities by 25 per cent. This establishes a strange set of priorities. Many people, especially the unemployed, do not see FAS schemes as providing the long term response to their needs. It is interesting that the National Economic and Social Forum will shortly publish a report dealing with the problems of the long term unemployed and seek a reversal of policy to introduce a new community employment programme, or a souped up social employment scheme. The National Economic and Social Forum wants employment policy to relate to conventional employment, where people are given a foothold in the conventional employment and labour market, not on alternative type schemes. The Minister's priorities, however, are in the opposite direction. It may be argued that the Culliton report indicated there was a need to squeeze grant giving, but in this instance it is not only grant giving which is being squeezed, but the entire gamut of support granted to industry will fall substantially.

According to the Minister's budget, £240 million will be provided to FÁS and £150 will be provided to industry and industrial strategies. Is that the proper balance? More than twice as much is being spent on FÁS type activities as on the manufacturing and international services sector. I question whether this approach stands up to scrutiny. In addition, it is frustrating that there is no analytic back-up to show that this is a justified way to direct spending.

There are many unanswered questions on FÁS programmes some from the EU Commission, but others from Ireland, which illustrate the high level of cost per placement on these programmes and the low success rate in longer term placement following the experience of people a year after they have been on them. These questions must be addressed, and it is long past time when the Government should have produced a manpower policy.

Effectively, £340 million is being spent on manpower strategies which are strung together without any proper anlaysis placed before the Dáil which could satisfy it that it is value for money. The committee is advised that FÁS is happy with the results, based on internal analysis which has never been presented to the committee. This means that the Dáil is some kind of agency for rubber stamping what the officials know best.

On the service sector, the Minister does not appear to be aware of the trends of employment in Ireland in recent years. The service sector has provided ten times as much employment growth as the conventional manufacturing sector, yet it is the service sector upon which all the burden are placed. The sector consists of predominantly small scale operators who have to bear the high rate of tax. It is long past the time when policies should be implemented which make it easier for those operating in the sector.

The task force on the service sector indicated that the approach in industrial support policies should be that the service sector should be judged on the same criteria as any other industrial sector. This does not mean that grants should be provided to service industries that are displacing something down the road, as this is not even allowed in manufacturing. If there is an extra £1 available to spend on industrial support, the competition for it should be divided equally between the service and the industrial sectors. We have failed to take even a tiny step in the direction of that principle.

Not only is the service sector considerably more jobs intensive, 80 per cent of its purchases are sourced in Ireland in contrast with the manufacturing sector, especially the overseas manufacturing sector who still only sources 15 per cent of its purchasing here. This is a serious gap in policy. Every year there is talk to the effect that links are a key priority, but there is never a proper analysis of whether our link programmes are succeeding.

Organisations such as IDA Ireland publish what are essentially PR figures illustrating the amount of corporation tax or the total of purchases made. Are we successful in getting overseas industry to set down its roots firmly in Ireland and source its materials here? All recent surveys of industrial production indicate that this is not happening.

There should be more explicit indication of the new policies from Forbairt, which is a new body. As on so many occasions in the past, policy makers in Ireland mistake the establishment of a new body for the creation of new policies. Forbairt may be a vehicle for a new breakthrough in supporting indigenous industry but the committee has not been advised of any new policies which it will pursue and how the Minister will judge spending for it. The committee needs to know the targets set for Forbairt and the standards by which it may be judged.

The committee has become used to the job target and end of year statement from the former IDA to the effect that it created so many thousand jobs during the year, but this is not a fair test of the performance of Forbairt. However, the Minister said nothing about this in his opening statement. Indeed it seems as if the Minister is just slurring over this and by not even specifying a job target is implicitly admitting that he has no other idea of how to judge its success. Today we are voting upwards of £80 million to be spent on industrial support by Forbairt yet we do not have the basic information about how its success is to be judged. On the administration estimate, the Department states that its objective is to reduce costs by 2 per cent per annum over a three-year period and that this was agreed with the Department of Finance. Strangely, however, the Department did not tell us how it performed against that objective. The original published Estimates showed that wages and salaries in the Department were set to rise by 11 per cent in 1994 which was a clear indication that it was off line in achieving expected economies. The subsequent Estimates made the figures look better by droppoing the Companies Office and the Office of the Driector of Consumer Affairs from the Department's administrative load. The figures published look great but what exactly has happened to the administrative overhead on the basis of comparing like with like?

I notice that this year the Minister is expecting phenomenal savings is non-pay items, one of which is postage. It surprises me how one can achieve such dramatic savings on items such as postage. Is this a way of signalling something that will come back as a Supplementary Estimate later in the year?

The issue of administration in the new IDA/Eolas complex is disturbing. Most significant is the administration budget of IDA Ireland which is set to rise to £8 million, an increase of 7 per cent, at a time when the programmes it is administering are dropping by 34 per cent. That is quite a dramatic fall of in the value of programmes that IDA Ireland will administer and it is strange that its administrative overheads will rise. It is also worrying that such a large amount of the industrial budget is now absorbed in administration; almost £30 million from a budget of £150 million. It would be interesting to see how that has occurred.

On the county enterprise boards the Minister indicates a need for £11 million, I presume on the capital side. He is providing only half that figure in this Estimate. The small businesses task force was very critical of the approach of the Department in this area. It does not seem to have changed in the Estimate.

I have often asked for, and would again appeal to see, the value for money audit on FÁS programmes that now face a 25 per cent increase in allocation. The public deserves the proper publication of all available data on the performance of these programmes because £340 million spent on them is a massive amount of money.

In respect of dividend income, it is interesting to see that although Government policy appears to say that we will have more equity investment as an alternative to grants, what it expects to get from dividend income is halved and the allocation of equity has also declined.

I would like to have more information about the Minister's approach to foreign industry. Does the sharp decline of 40 per cent in the amount of grant-aid being made available to IDA Ireland represent a change in policy of the type Culliton advocated? Culliton's approach called for much more stringent tests of what type of foreign industry would receive grant aid, a type of budget ceiling on money available to IDA Ireland. On previous occasions the Minister indicated that that was unrealistic. However, it appears to be implemented in the Estimate. Is this some type of a pipeline allocation whereby if IDA Ireland increases the number of projects we will see an increase? What is the policy decision behind that? I would like to return at a later stage to some issues of detail in the Estimate.

Chairman

The Minister will have an opportunity to respond to the specific points made by Deputy Bruton when we are discussing the various subheads or in his closing statement. We move on now to subheads A.1 to A.8 under the heading of Administration.

Mr. R. Bruton

The Department has set itself a target to reduce running costs by 2 per cent per annum over three years. How has it performed in each of the three years to date and how is it expected to perform in 1994 against this target when one adds in the Office of the Director of Consumer Affairs and the Companies Registration Office?

Chairman

Does any other Deputy wish to raise a question under the Administration subheads, A.1 to A.8, before I call the Minister to respond?

Miss Quill

There is no breakdown of subhead A.8 covering advertising and publicity. Some months ago the Minister published a mission statement and I would like a breakdown of it. What was the purpose of that mission statement if any? Was any audit done as to whether the amount of money spent gave value for money? Is it the intention of the Minister to make this an annual event? It seems to be an unusual way of spending money in his Department. Can he give us the rationale for publishing it and how much does it cost? What is its objective and what return does the Minister expect to get for the outlay of money?

Mr. Quinn

The mission statement was published because the new Department was announced on 12 January but not legally established until the following week. It resulted in two Departments being brought together. The mission statement document was a definition of the aims and objectives of the new Department. It was also a directory of who was who within that Department. It was a telephone directory providing extension numbers at which people could be located within the Department. It was an aid to the citizenry of the Republic, the business community or anybody else who wanted access to the Department.

Mr. Dukes

In the framework of this report?

Mr. Quinn

Yes, indeed.

Chairman

May I remind Deputies that the report is not up for consideration. I would ask them to refrain from making any references to the report.

Mr. Quinn

Sorry, Chairman, I was responding to a specific question.

Chairman

The report the Deputy just quoted from is in his possession.

Mr. Dukes

I did not quote from it, Chairman, I was quoting from an aside of the Minister's some time ago. The Minister's statement is here too.

Mr. Quinn

That is correct.

Mr. Dukes

It is not as glossy as the last one.

Mr. Quinn

Tomorrow we are publishing the first report of the Department within which there are references to the mission statement which clearly states what the Department is about. It is designed to assist people to locate people who have different responsibilities within the Department and to ensure that they get direct and efficient access to those people who can be of assistance to them. The document was printed and published last September though I do not have the production costs to hand. I can, however, provide those later. The document is made available on a regular basis to people looking for information about the Department of Enterprise and Employment.

Mr. Dukes

It is kind of the Minister to give us a copy of this document which we may not mention.

Chairman

The official publication date is tomorrow.

Mr. Dukes

That should not worry us. If this committee, and the House are to have any meaningful purpose, they should discuss issues like this. It is kind of the Minister to give us advance copies of it. Does he intend to pursue this type of procedure from now on? The Minister in his speech spoke about Forbairt and various things it is doing and said that further details of the agency's activities will be announced at a press conference tomorrow. It is kind of the Minister to tell us this, but we are dealing with the Estimate for the Department which seeks the approval of the Oireachtas for the money to be spent by Forbairt this year. The Minister told us it will publish details of its activities the day after this committee discusses the allocation of money to it. This does not fit in with what the Minister claims is his idea of democratic accountability in the framework of this republic. He should note that reports of this type should be given to the committee, if it is to have any function, before rather than after it is asked to approve expenditure for the year. If it is not an impertinence on my part to do so I suggest that the Chairman a doughty defender of democracy in whatever circumstances, whose situation is sometimes difficult and I feel sorry for him, should make sure democracy is assured by having information given to us before the Minister goes out and bangs the drum in public after he has obtained our approval for spending the money. It would be useful to know these things before we approve the expenditure.

Chairman

In defence of democracy, I assure the Deputy that the publication of the report and the availability of the Minister to present the Estimate is coincidental.

Mr. Dukes

The Minister should be free.

Chairman

There was not any intention to withold information from Members of the committee and I have no doubt the Minister will give recognition to what the Deputy has said and will take it into consideration in future. If I still hold this post I will defend Members rights.

Mr. Quinn

I am not sure if I can give an adequate or comprehensive response to the question raised by Deputy Bruton but I will try on the basis of the information available to me. If he requires additional information I will come back to him with it. We have established two new cost centres for greater delegation of budget control. Figures for the Companies Office and the Office of the Director of Consumer Affairs were not included in the 1994 figures but were shown in the 1993 outturn. I can provide additional clarification on this for the Deputy if he wants it. I understand from my officials that we have negotiated a new three year arrangements with the Department of Finance on a rolling administrative budget. If the Deputy has any questions about how this functions, I will try to obtain the information for him.

On the question asked by Deputy Dukes, the decision by Forbairt to make a press announcement tomorrow is entirely a matter for it and is coincidental with the timetable of this afternoon's discussion of the Estimate. Forbairt's job target for this year is 6,000. It will be announcing progress to date on achieving a substantial part of that target. Given that Forbairt is a different agency in many respects from the IDA, it is not appropriate for it to emulate the way the IDA traditionally announced projects. Forbairt decided with my agreement that it would from time to time, perhaps two or three times a year, report on its progress but I took no part in this decision. Such reports will set out the agency's targets at the beginning of the year and report progress on their achievement on a comprehensive rather than on a project by project basis which has tended to be the manner in which IDA Ireland has functioned since its inception and in which the IDA functioned prior to that.

Mr. R. Bruton

May I speak about Forbairt or is the Chair ruling that we must first discuss the administration subhead?

Chairman

The Deputy will have ample opportunity later to discuss Forbairt.

Mr. R. Bruton

The one explicit objective set out in the backup documentation is to reduce the cost of running the Department by 2 per cent a year over three years. I suspect this target has been hopelessly missed having regard to the trends in wages and salaries published in the abridged Estimates. Will the Minister speak about this? My recollection is that last year this target was also hopelessly missed. What is the status of such agreements if they do not seem to have any real bearing on what happens?

Mr. Quinn

That is a fair question and I will come back to the Deputy.

Mr. Dukes

I asked earlier about Forbairt's activities. In the Estimate, Forfás——

Chairman

Forfás is dealt with under subhead E.1 and E.2 and Forbairt under subheads F.1, F.2 and F.3.

Mr. Dukes

My question is not about what they do but how we handle them.

Chairman

I will afford the Deputy an opportunity to raise the matter under the relevant headings.

Mr. Dukes

My question is a procedural one and I want to use one or two figures to illustrate the reason for my concern. We are being asked to approve a provision of around £21 million for Forfás and around £62 million for Forbairt without having seen the programmes of these agencies for the year. The Minister said their programmes are a matter for them and we cannot question these issues too much because we cannot trespass on the independence of these agencies. Will it be the procedure from now on, because we have this new concept of timing, that these agencies will announce their programmes before we have the chance to discuss them? If my colleagues and I were so upset about the way this Estimate is presented to us that we wanted to challenge it, we would not have a vote on it until next week under current procedures, yet Forbairt would tomorrow publicly announce what it is going to do with the money before we have voted to decide what is to be done with it. Would it not be tidier all round if the Minister could ensure that all allocations through the Estimate are decided before agencies announce what they will do?

Mr. R. Bruton

The Minister will recall that during the last Fine Gael-Labour Government the IDA appeared before a committee and accounted in great detail for the way its money was spent and the programmes in which it was involved. This right has been removed from us. We have only one control, which is the one we are seeking to exercise today. It looks as if this is not taken seriously by those who benefit from the decisions we make today.

Mr. Quinn

We are talking about the disbursement of taxpayers' money and I have no difficulty with Members of either the Dáil or the Seanad being given the maximum amount of information available. The three agencies were legally incorporated on 1 January 1994. I am not aware — this is subject to correction — that in the old days the IDA or Eolas published their programmes and the estimate of expenditure they received from the relevant Department at the beginning of each year or that there was a break down by the relevant agency of how it proposed to spend that money between capital sums, administration etc.

Mr. Dukes

Is that a comment on the Opposition of the day?

Mr. Quinn

No, I said that I am simply not aware. Unlike some other Deputies, I do not claim to know everything. I need much assistance most of the time. I am simply saying that I am open to suggestions by Deputies that at the end of each year when the Estimates process is completed there should be in place a programme for the agencies in terms of the amount of money they will have to expend on grants and running their affairs. If Deputies think it would be useful as part of the Estimates process to have that information available prior to the debate on the Estimates, I am open to that. Nothing is being hidden from Deputies. I will see if that can be done. If we are to have an Estimates debate in June. I do not see any reason why information on moneys which have been made available in the budget and the Estimates at the start of the calendar year in January cannot be made available.

Alternatively, if this committee wishes to meet representatives of those companies as a follow up to the semi-State agency, that would be a matter for the House to decide. Neither I or the Department object to entering into dialogue to discuss events in the Department.

Mr. R. Bruton

The Minister achieved a great reduction in the cost of his postage. How was that done?

Mr. S. Brennan

By word of mouth.

Mr. Quinn

It is because the Companies Registration Office and the Office of the Director of Consumer Affairs have been taken out.

Mr. Dukes

It has been reallocated.

Chairman

We will now move onto the next group -other services. I suggest that we take subheads B to G.2.

Mr. Dukes

On subhead B, I am curious to know what happened during the course of 1993 about the European Space Agency. I gather from the presentation before us, and for some discussions which took place last year that this country made no contribution to the agency last year and I see that there is a provision of £4 million for this year, which I support. What happened during the course of 1993 and has it had any bearing, for good or ill, on our status and how we are seen within that agency?

On subheads C.1 and C.2, it may be dragging the matter in a little by the scruff of the neck, but since the Minister has responsibility for the operations of the Shannon Free Airport Development Company, is there anything in the activities of the special promotion effort set up for Shannon Airport which would impact on the activities of the Shannon Free Airport Development Company? Does the Minister think those of us who have an interest in this, concluding SFADCo, are likely to have a report on that promotional activity at any stage in the near future?

On subhead G.2, I made the points I wish to make about Forbairt and Forfás. However, I note what the Minister said about these agencies. In his speech he said that Forbairt personnel devoted much time and effort in recent months on the task of integrating two quite different agencies into one dynamic, cohesive organisation with a clear vision of its future way forward. That is wonderful stuff, ringing prose. However, it was all a waste of effort and we did not need all of this complication. The Minister admits that complex staffing matters have had to be tackled and resolved. Meanwhile, the world went on and people got on with the business of trying to expand employment and generate extra economic activity. A great deal of this seems to have been obair in aisce in many ways.

Mr. R. Bruton

There is really no appropriate place to raise this matter, but in dealing with SFADCo and the European Space Agency, the issue which most people would want to know about is the Government's approach to TEAM Aer Lingus and the very serious problems it is facing. I realise the Minister will not have access to a report from the Labour Relations Commission until tomorrow but it would be remiss of us not to refer to the very serious concern among workers about their prospects. It seems that TEAM management is referring business elsewhere and has come back to the well for yet another round of cuts, having got other cuts agreed very recently.

The injection of equity into this company and the resolution of its problems appears to have been handed by the Government as an industrial relations issue. People feel aggrieved that what started out as a partnership approach to the difficulties in this company where the partners were the Government as shareholder, management and unions now seems to have evolved into an industrial relations matter between management and unions and the Government seems to be taking a back seat. People would like the Minister to give some indication on the broad strategy which the Government hopes to pursue because that would be quite helpful in resolving industrial relations problems as well. I do not know whether the Minister will choose to address this issue but if he does, all of us on this side of the House want to see the success of efforts and we acknowledge his efforts to date.

The Shannon Free Airport Development Company is a somewhat confused issue because of the purchase of shares in GPA last year —£9 million was spent on the purchase of shares. It appears as if SFADCo is getting a very dramatic cut in its allocation. Will the Minister comment on that investment of £9 million in shares? How is it performing at this stage and what can he say to the taxpayer about the return on that investment which was made last year? If this year's Estimate is compared to the original Estimate for last year, there is quite a significant drop in the SFADCo allocation from £12.5 million last year to £8 million this year. Why was there such a dramatic fall off in allocations in this area? Does it represent a policy change in industry in the Shannon free zone?

With regard to Forfás, there is a huge increase in the allocation to equipment on building operations. I presume that refers to advance factory building. Has a policy decision been taken to return to advance factory provision on a large scale? It was of concern some years ago that there was too much advance factory building and it was not the most appropriate area of investment for taxpayer's money. Will the Minister comment on that increase?

I have to express some frustration with the presentation of these figures. Under F.2 there is an allocation of £46.65 million to Forbairt but no corresponding figure is given for last year. One has to go through the figures to ascertain what happened. There appears to be an increase in the allocation to Forbairt and a dramatic reduction to the allocation to IDA Ireland. That is reflected in the reduction from £94.9 million to £62.3 million for support measures administered by IDA Ireland. Are there new policies in this area?

There is a reduction of over 50 per cent in the allocation for attracting new skills and technology. Does this dramatic cut indicate that IDA Ireland has decided to opt out of certain types of activities it promoted in the past? What exactly is happening there? We would like to know the answer before we make a decision on the allocation of funds.

Overall I welcome the higher promotion of the Government allocation now going to Forbairt rather than to foreign industry. There is clear evidence that the weakness has been in the indigenous sector which has stronger links. Successful policies in that area will produce a greater return. The Culliton report was right in this regard. The figures surprised me because the Minister has always resisted to commitment to recommendations in the Culliton report.

Dividends to Forbairt seem to be falling quite substantially and are now very small. Equity as against repayable grants is shrouded in mystery. What criteria do Forbairt and IDA Ireland apply when deciding between equity and grants? The Minister refuses to answer questions in the Dáil on the linking of companies coming into the country on the grounds that this is confidential information. He even refuses to answer questions when a number of foreign industries are taken together. This leaves us with little information on the criteria used in the expenditure of money on either domestic or foreign industry.

The Minister gets very frustrated when I point out that he is willing to spend 66 per cent more to create a job in a foreign company than in an Irish company. The Minister repeatedly says that this is justified by the great mystery about the manner in which foreign industry is attracted. The public do not understand why more money should be given to a foreigner to create a job than to an Irish person and neither do I and it is not for the want of trying. I have always sought information but I never got it. There is a growing discrepancy and the 66 per cent in the most recent figures is much greater than the figure of a few years ago. If we are to take up the Minister's offer and have meaningful debate on these issues, we need this type of information and to know why decisions are being taken and what criteria are applied before our money is spent. I understand why the Minister might not want to give us that information in the case of a specific industry but I cannot understand why he will not give us cumulative data on all foreign industry attracted since he went into Government as the identity of any one company would be concealed.

Will the Minister reflect on some of the changes in the pattern of support measures? We have not seen what Forfás, Forbairt or IDA Ireland have to say about their policies. Does the massive fall off in training grants reflect a decision that FÁS is the appropriate training body or does it indicate that training levels in industry are to be reduced contrary to what we thought would be a policy to build up training in industry? We need an explanation of what is happening here.

Chairman

I suggest that TEAM Aer Lingus should be dealt with under subhead Q which deals with the Labour Relations Commission. I appreciate that the Deputy wishes to raise the ongoing problems in TEAM Aer Lingus. There is no specific subhead but subhead Q would be the most appropriate one.

Mr. R. Bruton

I do not mind.

Mr. Quinn

I ask the Minister of State, Deputy Brennan, to respond to the question raised by Deputy Dukes on the European Space Agency.

Minister of State at the Department of Enterprise and Employment (Mr. S. Brennan)

The £4 million paid to the space agency in January 1994 was our membership fee for 1993.

Mr. Dukes

We are still in good standing?

Mr. S. Brennan

We are paid up and are in good standing. We are committed to that organisation. For practical reasons, the name is a bit unfortunate because it conjures up images of moon shots and so on being funded by Irish taxpayers. That is not the case. We have been a member since 1976 and since then Irish firms and Irish related firms have received, in contract terms, substantially more than we paid in.

Mr. Dukes

Without having to give a single passport?

Mr. Quinn

The background to the decision was, as Deputy Dukes will be aware, the difficult budgetary situation facing us in January 1993.

The Deputy raised a question on comments in my opening speech. There are substantial staff and related difficulties in bringing together the indigenous part of what was IDA and the two organisations which became Eolas, the IIRS and the NBST. I can elaborate on the nature of those difficulties if Deputy Dukes wishes. However, I am sure that being the well informed Deputy he is, he knows some of the difficulties.

Mr. Dukes

I can well imagine the difficulties. I do not think we needed to go through all that bother.

Mr. Quinn

I have on numerous occasions repeated my defence of the reorganisation of the agencies. It is working out better than most of us anticipated accepting that the establishment of Forbairt would always be the most difficult of the three because of the organisation's task and the difficulty in helping and supporting indigenous industry.

As the Chairman suggested, I will refer to the Labour Relations Commission in so far as it relates to the current difficulties in TEAM Aer Lingus under subhead Q.

Deputy Bruton made a point about the cost per job. By virtue of the capital costs associated with the development of the electronics, pharmaceutical and health care industries relative to the low numbers of jobs in them, the cost of creating jobs is greater than when we invest in indigenous industry the vast bulk of which is not as capital intensive. In terms of starting up, one would not get that type of investment because of the nature of the industry involved. If the Deputy feels he did not receive an adequate response to written parliamentary questions in respect of data that he sought he should come back to me.

The only times I have been shy about disclosing direct costs per job or amounts of money made available have been at the announcements of an expansion or arrival of a company, organised by the IDA in conjunction with the company. This has been done specifically at the request of the company or the IDA who do not wish to give precise information on that occasion for the justifiable fear that agencies, such as the Welsh Development Agency, the Scottish Development Agency or the Northern Ireland Development Board, would make direct comparisons. The information is available from the published records at the end of the year in terms of the amount of money that can be available.

However, I have no hesitation in making further information available to Members if they want it. I simply acquiesced to requests from the IDA and in many cases the company that the total amount of money made available should not be explicitly disclosed. This is what the Deputy seeks and there is no question of trying to conceal the total amount of moneys or money relative to particular projects. If the Deputy wants that information to evaluate policy and policy performance, it is available.

Deputy Dukes referred to SFADCo and its activities. I am not sure that I correctly understood his question. Was it about the promotional activities of SFADCo?

Mr. Dukes

No, it was about Gillian Bowler with regard to promoting Shannon Airport.

Mr. Quinn

I will have to get a note in respect of the task force. I am not sure if I have the information available at present. I am not sure if it comes under my Department.

Mr. Dukes

SFADCo comes under the Minister's Department and this is bound to have some effect on it.

Mr. Quinn

SFADCo only gets part of its money from my Department. As a former rigorous Minister for Finance the Deputy knows it does not receive all its money from us. No doubt, the Deputy will be in a position to get that information when the Minister for Tourism and Trade is before the committee.

Deputy Bruton asked about the GPA investment. This matter involved a share option that Aer Lingus was not in a position to take up because of its financial difficulties. It was a requirement that the existing shareholders put up approximately £200 million of the refinanced package that was essential for the survival and continuation of GPA in its present state. I understand from a meeting with the chairman, Mr. Dennis Stevenson, who succeeded Dr. Tony Ryan as the chairman of what is now known as GPL Plc, the company responsible for administering the financial obligations and liabilities of the previous GPA company, that they are ahead of target in their performance and hope to discharge their obligations sooner than anticipated.

The investment of £9 million by Shannon Development on our behalf taking up the Aer Lingus option is well secured and will be more than secured. I have no reason to expect that it is in any way exposed or in danger at present. Taxpayers money was used to avail of that opportunity because the aviation centre based in Shannon, including Shannon Aerospace and Shannon Technologies, would be consolidated by a viable GPA continuing to operate from Shannon. This continues to be the case.

Deputy Bruton referred to information on links between incoming companies investing in Ireland and indigenous companies. I got the impression from what he said that he has encountered difficulty in getting information about the level of links between such companies. We can give whatever information is available to the Deputy. In respect of Motorola, which was announced recently, a substantial amount of the components it will use in the manufacture of the product in Swords will be sourced from existing Irish sub-suppliers.

The IDA has gone out of its way to encourage sub-suppliers to get involved in the market for multinational corporations here. It has reached the point where some of the inward investing companies are coming here because much of their customer base is already located in Ireland. A specific example is Quantum in Dundalk, which recently announced a substantial expansion. It produces disc drives for computers and the bulk of its customers are other multinational corporations with plants in Ireland. This is a different type of link from the one to which the Deputy's question referred. We have some information, which would not normally be the subject of an Estimates document, and we can give it to the Deputy if he requires it.

Mr. R. Bruton

Why does the Department consider it wise to spend so much more on creating a job in a foreign company rather than in an Irish company? One issue which puts a question mark over that approach is the 9 per cent of foreign, non EC owned companies which source Irish materials as a proportion of their gross output while the level is 43 per cent for Irish owned companies. The pharmaceutical industry may involve higher capital spending to create a job and if that is a feature of the industry, so be it, but why should the Irish taxpayer be asked to give so much more to create this job in a foreign firm?

I could understand if the links were the other way around and these companies had huge knock on effects in the economy. However, it is clearly Irish companies which create jobs that have knock on effects in the economy. People want to know why this policy is continued. The Culliton report adverted to this gap and indicated that only 40 per cent of the jobs approved survived beyond seven years, which is not very long. It puts a major question mark over this approach. I am frustrated by the feeling that there is something of a three card trick involved in the figures; The important thing at all times is to put the best foot forward and make it look good rather than promote understanding.

The information has not been forthcoming. This is also the case in regard to equity. Are we in favour of equity investment? What do we mean by repayable grants? Are these so-called repayable options what they seem? Do we take our money back or is it just a different name for grants? What exactly are the criteria which apply in these decisions? We cannot get the answers now but, as members of the taxpaying public, the answers should be made available to us.

Mr. Quinn

If a company such as an American based company is coming to Ireland for the first time, is expanding its base or locating an extension of its productive capacity in Europe to service an existing market there the capital cost of such an investment in absolute terms is high and the ratio cost of jobs relative to the total cost of the operation, in comparison to the costs of an indigenous company, is extremely high. We are prepared to give more money to foreign companies not because they are foreign but because the cost of attracting such a company and the cost of the job it supplies is much more expensive. The positive side is that such companies pay substantial amounts of money in corporation profits tax. The Deputy will recall from his experience in Government that the IDA calculate the cost per job and the pay back period in terms of the net pay back and gross pay back periods and standard measures as to value for money are applied by the Department of Finance in addition to the IDA and my Department.

Making money available to indigenous companies is, according to a presentation made recently to the Department by the chief executive of Forbairt, increasingly taking the form of "investing in Irish business", a phrase carefully used to move from the grant mentality condemned by Culliton, Moriarty and others. The form that investment takes depends on the willingness of the owner of the business and the options available as a consequence. It can take the form of equity investment, preferential shares, a type of term loan, a grant or a combination of those forms. In many cases the inward investing companies will not be in a position, because they are publicly quoted companies, to offer equity participation. However, they will offer a form of preferential share. On the question of whether these shares are ever redeemed or have an income the answer is yes.

If a company left prematurely or has not complied with the terms and conditions of the package of grants the outstanding moneys must be repaid. They are debts in contract that can and have been pursued by the IDA. I can supply details of that to the Deputy. The IDA, with the full support of the Department, is rigorous in ensuring that the usual commercial terms and conditions apply to taxpayers' money going to inward investors, particularly foreign investors, and that such terms and conditions are upheld. That is why the recent unfortunate situation arose in Kilkenny. At the last moment the promoter of that project wanted us to change the terms and conditions to a level of security which was not acceptable to the IDA or to the Department and the Government.

The Government's preference in helping to finance Irish business is a form of investment that moves away from a grant and dependency culture to that of either equity investment or a form of investment designed to suit the needs of the industrialist or entrepreneur. In that respect we probably have more room to call the shots in the domestic market than in the international market where we are in competition with other agencies trying to attract inward investment. In addition to that constraint most if not all of the companies from north America seeking to invest in Europe are, in some way, publicly quoted companies and their ability to offer equity in return for financial assistance is severely limited.

Mr. R. Bruton

The Minister is justifying the extra grants to these companies. That it is more costly to create a job in these companies is not a matter of great concern to the taxpayer. That is a problem for the company.

The Minister appears to be saying that the extra money is justified because these are more profitable companies which will, therefore, yield a return in corporation profit taxes. The counter argument is that high profits which are a product of transfer pricing and other activities is not a fair test. The critical element is that only Irish companies have strong links. It is more important to look at the links of the companies rather than taking the Department of Finance view which is that the yields in corporation profit tax should be more than the grant money paid out.

The key question is the Department's policy on IDA Ireland. There is a 40 per cent cut in the grant to that body. Does that represent a decision by the Department to cap the budget of IDA Ireland, as was recommended by Culliton, so that IDA Ireland with its limited budget must decide how to use those moneys to secure the best projects with the best links for Ireland? Is it still the policy that IDA Ireland will get whatever moneys it needs to finance all projects? If that policy continues, Forbairt will progressively become the poor relation with IDA Ireland always being able to produce large numbers of jobs and Forbairt, which is taking on the more difficult although more rewarding task in the long term will be squeezed. What is the policy on budgeting IDA Ireland?

Mr. Quinn

There has been a reduction in the allocation for the IDA which has identified three sectors to which it is seeking to attract inward investment — health care, pharmaceuticals and electronics. Those sectors have been identified because the longevity of projects in the health care and pharmaceuticals sectors is very attractive. Electronics is seen as an industry which, in its hardware and software aspects is ideally suited to the Irish environment in the context of both the labour market and physical location.

Of course, we encourage companies to enhance their presence here and source as many component products as possible from Irish suppliers. The development in Sligo through its regional technical college of the toolmakers' expertise has led to an enormous expansion of indigenous sub-supply manufacturers supplying international multinational corporations to standards of world class manufacturing and just-in-time standards of delivery. This enables those companies, having cut their teeth with the customer base of Irish-based multinationals, to seek export markets.

The policy of the IDA, promoted by the Department, is to consolidate and build up two or three sectors of excellence best suited to the economy while constantly trying to widen the links of those companies with sister multinational companies in the same business — I cited the typical example of Quantum earlier. We are consolidating the electronic industry so that Ireland can be one of the foremost places in Europe with a substantial interconnected computer electronics industry ranging from the manufacture of disk drives to chips and other components.

Mr. R. Bruton

The Minister misunderstands my question. I realise the IDA will select sectors which provide good opportunities. My question is simpler. Has the Minister decided to cap the IDA budget at £62 million, a 40 per cent reduction on last year? Has the IDA to operate within that budget or is this a reflection of a weak period? Will the Minister submit a Supplementary Estimate for more money later or might the sum be increased next year by 40 per cent? Is there a policy decision on the allocation of money to these two support agencies and does it reflect the Culliton recommendation that we should squeeze IDA Ireland and put the emphasis on Forbairt, although that exact phrasing was not used?

On the substantial cuts in moneys for training, has the policy been changed and has it been decided that training in newly established or existing industry is not a good investment? The Culliton report and others led us to believe that one of the profound weaknesses in Irish industry was its lack of training. Training investment by Forbairt has now fallen to one third of its previous level and such investment by the IDA has been halved. Are these policy decisions or accidents of numbers?

Mr. Quinn

They are a mixture of both. I apologise to the Deputy if I did not answer his previous question; that was not deliberate. The IDA has been squeezed in the sense that the amount of money available under the Estimates is rigorously based on a cautious assessment of its ability to generate employment through net investment in any given year. We have not decided that will be the total the IDA will receive or that we will not give it more money if it develops a project that fits the requirements I outlined earlier.

However, there has been a policy change since the time the IDA had a substantial budget, perhaps far in excess of what it could feasibly spend to attract investment. That change has been as much driven by budgetary constraints as by——

Mr. R. Bruton

It might be easier if the Minister could say how the IDA's new criteria compare to its old criteria and how it produced this drop.

Mr. Quinn

I do not share the Deputy's mantra-like belief in the Culliton report because its advice on the attraction of internationally mobile investment was useless and did not have regard to reality. The report was especially relevant to indigenous industry and we are trying to change the grant culture among Irish entrepreneurs. However, changing attitudes to equity and persuading new companies to be open to sharing equity from their first day of trading will require a substantial cultural shift, of which there is little evidence at present.

Simply because the august people who wrote the Culliton report said the IDA's budget should be squeezed, does not mean it was a smart recommendation and I am not prepared to accept it. If one makes the distinction between international and domestic investment it makes sense. However, the cultural reaction of Irish owned companies to equity participation is negative, as was the reaction of some of those represented on the Culliton committee. They want no equity participation and are much happier having private companies because they are not subject to scrutiny.

Mr. R. Bruton

This brings me back to my original point; I would like to see what underpins the Minister's views. However, we never see the Minister's analysis of why matters are as they are. We have the Culliton analysis. The Minister may not like it but it shows that only 40 per cent of the jobs in question last for seven years. Again, is the decision to cut budgets for in-company training so dramatically is a policy decision?

Mr. Quinn

There has been a shift in the amount of money made available for training between the IDA and Forbairt. I share with existing industry the dissatisfaction with the quality of training by FÁS.

Mr. R. Bruton

These figures refer to Forbairt's support measures for training, which one would have thought were the alternatives to FÁS training.

Mr. Quinn

I am not exactly sure to what the Deputy's question relates.

Mr. R. Bruton

Under the heading of support measures by Forbairt, the amount provided for training in 1993 was £3 million; in 1994 it is £1 million.

Mr. Quinn

To which subhead does the Deputy refer?

Mr. R. Bruton

Subheads F.1, F.2 and F.3 show the allocation for training has fallen from £3 million to £1 million. In the subheads for the IDA, the training allocation has fallen from £9 million to £5 million. The allocation for in-company training has been halved. Why has it been decided to do that? It seems to fly in the face of everything recommended to us.

Mr. Quinn

I do not have the immediate answer to that question; I will obtain it for the Deputy.

Chairman

Is that acceptable, Deputy?

Mr. R. Bruton

Yes.

Chairman

We now move to the remaining subheads, H to X, under this heading.

Mr. R. Bruton

The main interest in this group of subheads is the science and technology programme. There is widespread frustration about Government policy on science and technology. We were promised a major review and a policy paper, which we have not yet seen. In the meantime there have been savage cuts. The Minister adverted to a cut in investment from £43.8 million to £34.6 million. The Exchequer funding within that figure is also being cut; last year from over £27.4 million to £18.7 million. There has now been a third cut in the Exchequer contribution and a decline in overall spending on science and technology.

As I said in my opening remarks, Ireland invests only about one third of the amount invested by other countries in this area. Possibly we cannot afford the luxury of original research and must be involved in derivative areas but this seems to be in conflict with what the Government is saying. When an EU scheme which did not involve Exchequer funding was established, the Government's response was to savage the budget. The Exchequer contribution dwindled to nothing when there was an alternative source.

When the EU introduced these schemes, it wanted countries to double their efforts in research and technology. Some 18 months ago the Commission President, Jacques Delors responded to the employment problems in the European economy and raised matters such as work sharing but one of his key ponts was that all countries should enhance investment in research and development in science and technology. We seem to be deliberately frustrating what is regarded at EU level as an important way for Europe to stay abreast of challenges.

Will the Minister of State say where his policy analysis of the new coherence in science and technology stands and how that gels with the sharp cuts in the area?

Chairman

Have you any further questions on this group of subheads, Deputy?

Mr. R. Bruton

Yes but they relate to completely different matters.

Chairman

I ask you to put the questions because we are dealing with the group of subheads. If we put each one individually we will be here all night. I asked for agreement on this earlier.

Mr. R. Bruton

You are asking me to put questions on science and technology, then on TEAM Aer Lingus, then on the county enterprise partnership boards——

Chairman

This is the fifth Estimate we have dealt with this year and we usually do it in this manner.

Mr. R. Bruton

I know, but I do not think it will be satisfactory.

Chairman

Two Ministers are present and they have a substantial support team.

Mr. R. Bruton

Under Subhead Q I will deal with TEAM Aer Lingus, which I mentioned earlier. Many jobs are in danger and the Government appears to be interpreting the company's problems as an industrial relations matter. When questions were asked in the Dáil the answers only related to industrial relations aspects. Workers feel that the Government, as shareholder and one of the parties in a tripartite arrangement, has opted out and said the issue must be worked out between management and unions. The workers also believe they have come a long way by reaching agreements about cutbacks and ways to improve productivity. All these have not been implemented and the management is now looking for further sacrifices. Opportunities are being lost because of the lack of equity and work is being diverted elsewhere, which will burn up goodwill in the long term.

We must recognise that the company has real problems. This is a competitive area and the projected opportunities are not as good as anticipated. However, the workers — and we — feel the Government made a commitment. Its approach to such issues was highlighted in its Programme for a Partnership Government. It was suggested that there would be opportunities for shareholders to hammer out with workers and unions how such serious problems could be overcome. However, that does not seem to be happening. The industrial relations problem would be easier to resolve if the Government adopted a more open approach. Perhaps the Minister could tell me what strategy he will use to support whatever industrial relations agreement is reached. I would also like to know what the Government will do to secure future employment in TEAM.

On the county enterprise development, the Minister indicated that 1,300 jobs, with a value of £11.1 million, and 1,800 full-time and 600 part-time jobs would be created over the next 12 months. However, the Estimate does not provide the money required. The Task Force on Small Business is extremely critical of what is happening in this area. It states that the £21 million originally earmarked for 1994 for the county enterprise partnership boards should not have been reduced to £6 million and urges that the original allocation be reinstated because it is important to maintain the initial positive response to this venture among local communities.

It was a serious slap in the face for the Government to decide to withdraw the enterprise allowance scheme. I have received conflicting views on this issue. At the last committee meeting, the Minister said he would restore this scheme, but the Minister of State said in the Dáil that it would not. Now people do not know where they stand. Recently, I spoke to a partnership company in my area and it is anxious to see the enterprise allowance scheme restored because many people, who are not 12 months out of work, come to it to set up new businesses. It is ludicrous and senseless to tell someone who is eager to set up a business he must stay on the dole for another nine months and that perhaps then the Government will help get him off the ground. The enterprise allowance scheme produced 1,300 new enterprises every year, which were as many as the county enterprise partnership boards produced, but without the hype or the super structure. However, it got the bullet without any ceremony. I would like to hear the Minister's response.

The Minister also promised on a number of occasions that he would introduce legislation to incorporate the county enterprise partnership boards and that this would be an opportunity for them to offer alternatives to grants. What progress is being made on this issue? Most people felt that while the county enterprise partnership boards were a great concept, it was a mistake to use them as a mechanism for giving grants. They believed it would be better to establish a dynamic board which would allow the public to become shareholders and which would have more creative options at its disposal than just giving grants. I would like to hear the Minister's views on how this will be developed. On subhead M, the Office of the Director of Consumer Affairs, I am surprised this allocation is so small. This year the Director of Consumer Affairs is expected to take on new responsibilities for consumer credit. While no comparative figure has been given in the Estimates, the allocation of £1 million for the Director of Consumer Affairs to supervise at least 100 different Bills, not to mention the new responsibilities, is meagre. Has the Director of Consumer Affairs been notified about this allocation and has he responded to the Department about its adequacy for the new responsibilities he is taking on.

Mr. Broughan

On subhead N, County Enterprise Development, I note the apparent discrepancy between the money made available so far and the Estimate figure of £9 million. Is the Department happy that the combined funding of the four county enterprise partnership boards in the Dublin region seems to be disproportionate to the funding other county enterprise partnership boards receive? Am I correct in saying that the Dublin City Enterprise Partnership Board would not get significantly more funding than the Leitrim County Enterprise Partnership Board or a board in any other county? The scheme is an interesting development in Dublin City and Fingal where people are availing of the support offered. What extra funding is being given to Dublin, given the high level of unemployment in the capital?

On subhead Q and TEAM, I congratulate the Minister for the vigorous action he, his Minister of State and the Department have taken in this serious and sensitive matter. North County Dublin will be devastated if the money runs out and TEAM collapses. May Deputies have information on cost structures in TEAM because contradictory information is coming from the management and the workforce? It is difficult for people who support TEAM to be clear about the way the situation should develop, given that we do not have the correct information.

Has the Minister information about a science park development in the Dublin region or in any other region? Was he taken aback by recent comments by IBEC on the development which he and his Department pursued over the last 15 or 16 months in indigenous employment? Some officers of IBEC seem unhappy that we are not using sufficient energy to attract foreign investment. However, we are doing the same as we have always done.

On subhead W, Health and Safety, is the Minister concerned that while his Department has successfully attempted to implement key EU directives and the public service and private enterprise are aware of the key requirements in health and safety legislation, many companies ignore legislation and directives for employment conditions, particularly for non-union employees?

Mr. S. Brennan

I agree with Deputy Bruton that an overall look at science and technology strategy and policy is long overdue. The Minister, Deputy Quinn, mentioned that the Government established a Science, Technology and Innovation Council under the chairmanship of Mr. Dan Tierney. The council has been given a broad brief to look at all aspects of science, technology and innovation, to make recommendations by the end of the year, to try to square the circle in regard to basic science versus the application of applied science and technology and to look at structures used to serve science and technology to see whether they are accurate. It has been asked to set this out in the form of a draft White Paper. When the Government agrees to or amends this draft White Paper it will publish a White Paper and introduce any necessary legislation or make structural changes which may be required. I am satisfied that we can arrive at an overall coherent approach, a stated Government policy, which will square a large number of circles in the science, technology and innovation areas.

I look forward to the publication of that report as a matter of urgency. This is important given that the State spends approximately £600 million per annum some for instance on university buildings under the broad heading of science and technology. One could argue that the amount spent on science and technology is substantial but I am concerned that too much money goes into bricks and mortar and not enough into programmes. That is one aspect which the Science, Technology and Innovation Council will look at.

To get a real picture of spending, one would have to look at the 1988 budget, for example, where the State spent £7.5 million in industry and commerce enterprise and employment programmes compared with last year's figure of £69 million. While there has been a reduction on the Exchequer side, in 1993 this was more than made up for by Measure 6 and Measures 2 to 7. There has been a significant increase in spending by this Department on science and technology. I acknowledge it has levelled off in recent years, but every effort has been made to balance that with support from the EU and other sources, including the Framework and the Eureka programmes. If you add them up, you will see the figure is being kept up.

An Eolas survey in 1991 showed that Irish business spent £176 million on research and development that year, an increase of 20 per cent on 1990. I asked the council to advise me on how we might get additional investment from the private sector in science and technology. I accept State funding has levelled off, but we are making every effort to make up for this with funding from the EU. Over a five or six year period the amount this Department spent has increased sevenfold. Although it is not enough, we can take note of it. As regards the science park, the Department is looking at ideas sent by the Dublin Chamber of Commerce and others to see how practical the development would be and what it would amount to.

Mr. Quinn

Under subhead Q, we are responsible for funding the Labour Relations Commission and industrial relations machinery generally. Ongoing negotiations betwen management representing the views and constraints of the shareholder and staff TEAM Aer Lingus broke down. That was manifest in the form of an industrial dispute about whether an agreement had been negotiated between management and unions. There was a difference of interpretation as to whether an agreement had been reached which the unions had put to their members and on which members had been balloted. As there was a stand off over the interpretation of that agreement, I requested the Labour Relations Commission to intervene.

On the Bank Holiday Monday when negotiations failed to make significant progress, I referred the matter for an inquiry and a report to the Labour Relations Commission under section 38 (2) of the Industrial Relations Act, 1990. I hope to get details of that report later this evening or tomorrow morning. The deadline was fixed on the recommendation of the Department of Transport, Energy and Communications which is responsible for Aer Lingus and TEAM Aer Lingus. Although I am not directly responsible for TEAM Aer Lingus our attitude to the survival and viability of the company is the same as that to Aer Lingus. As the shareholder, we will, within the constraints of the EU, make funding available to provide additional capital if management and staff demonstrate to our satisfaction and, perhaps, to EU satisfaction that they have a viable plan which will ensure that the company can trade profitably and will not have a recurrent need for a subsidy in breach of EU regulations.

As it appears that TEAM Aer Lingus has not been able to get to that point, it has not been, nor will it be, possible for the shareholder, the State, to provide extra taxpayers' money. We are committed to ensure that TEAM Aer Lingus survives, that survival is in the control of management and unions representing the workforce because they know the requirements to make the company viable in an increasingly competitive market for aircraft maintenance.

As far as I and the Department are concerned and within the resources of this Estimate which, under subhead Q, provide for the industrial relations machinery, I express my appreciation and that of the Department for the excellent work the Labour Relations Commission has done in this area. Indeed each time we praise the commission for the work it does, it looks for additional resources. This demonstrates that it can do marvellous work with decreasing or frozen resources. It is appropriate to recognise that the Labour Relations Commission does marvellous work.

On the reduction in enterprise allowances a budgetary allocation was made for the enterprise allowance scheme. To the best of my knowledge the number of applicants had, in effect, drawn down most of the money available for it. It is a question of whether we will make additional moneys available for the operation of the enterprise allowance scheme this year.

Mr. R. Bruton

The reason money ran out was because the Government savaged it.

Mr. Quinn

It was reduced because contrary to the Deputy's view in contrast to the view of the county enterprise partnership boards, the survey information shows that there is a 60 per cent displacement effect from the enterprise allowance scheme.

There is a new range of policy measures. The county enterprise partnership boards provide for a certain type of activity as does the back to work scheme in the Department of Social Welfare and the enterprise allowance scheme. There are also area partnership's in areas of substantial disadvantage.

Mr. R. Bruton

Is the Minister saying that from 1 January next year people can set up business again but must go into deep freeze now?

Mr. Quinn

We are looking at a number of these measures and the Deputy would be the first to recognise that it is necessary to evaluate and quantify the effectiveness of these measures on an ongoing basis.

Mr. R. Bruton

I would love to see the evaluations. What happened here was that it was just axed by stealth. There was no announcement, people just turned up on the day in FAS and were told that the shutters had come down.

Mr. Quinn

I regret that. The scheme had been either over-subscribed or underprovided for depending on what way one looks at it. The net effect was that the amount of money available for it was drawn down and that was it. People were not aware of that and there are lessons to be learned.

The enterprise allowance scheme was initially introduced in the mid-1980s as a stand alone proposal. It is no longer a stand alone mechanism of assistance. It is linked to a number of other measures and it has to be looked at in the light of its effectiveness relative to those other measures. It is not fair to suggest that there is no provision for assistance for unemployed people to get working again. A study shows that there is a 60 per cent displacement rate and if the Deputy wants information on that I will be happy to make that information available to him.

On the provision for the Director of Consumer Affairs, under this new arrangement the Director of Consumer Affairs' budget is being provided separately and, because extra work is being given to the Director of Consumer Affairs this year, an additional sum of £266,000 is being allocated to him in the new Vote to cover his additional responsibilities. Extra staff are also being made available. We should put on record our appreciation of the work the Director of Consumer Affairs has undertaken on our behalf.

On the County Enterprise Partnership Boards, Deputy Bruton raised the legal basis on which they stand. I sent out a draft Article of Association for them as companies limited by guarantee. We have a response from a number of the boards indicating their attitude to the draft legal structure which we proposed. It is my desire that those companies should be legally incorporated by end of June. That may be slightly optimistic but given the nature of the membership of those companies it will be difficult to assemble a full composite membership when we reach the holiday period of July and August. When legally established, they will be able to move to do more than simply process grants under the existing arrangements as was the case with the western development fund. They will be able to make loans available to companies and will have a revolving loan fund.

I intend to have them established on a statutory basis in due course and I hope to have that legisaltion produced as soon as possible. I am not in a position to give any firm commitment when that will be. Many of the problems in the operation of the county boards have been due to their lack of legal or legislative status, particularly since they give our taxpayers' money.

In reply to Deputy Broughan's question, in the four Dublin county enterprise partnership boards the following projects and sums have been approved: in Dublin city 25 projects have been approved and the capital sum grant aid approved is £233,600; in Dublin Fingal, 18 projects have been approved and the sum approved is £182,300; in Dublin South 24 projects have been approved and the grant approved is £468,000 and in Dún Laoghaire it is 12 projects at a figure of £115,000.

Like all approvals, whether for home loans or for the IDA, this grant money is not paid until all the requirements are fulfilled. That would partly explain the comments about the provision for the county enterprise partnership boards and the sum in the Estimates. The money drawn down is far less than the provision required and the amount indicated in the Estimates. We are not clear as to exact amounts because we depend on the county enterprise partnership boards processing the amounts as quickly as possible and they depend on the promoters of individual projects, having got the grant approval from the relevant board, to do the rest of their sums and put in place the balance of the money needed to get the project off the ground. It is only when they do so that they get the cash grant from the county enterprise partnership board. I think I have answered the queries put to me, but if I have not covered all the points I will be happy to do so.

Mr. R. Bruton

I never cease to admire the ability of the Minister of State to put a gloss on figures. He says spending is levelling off when there is a decline of 30 per cent. I know that the Government's vote declined by 25 per cent in Dublin and they have to put a gloss on things, but clearly the science and technology budget has been savaged in the last two years. When will we see this White Paper? We want an objective assessment of whether this serious cutback in spending is justified. My suspicion is that it is not. The £43 million reported here is a tiny fraction of GDP and compared to any of the other European countries is derisive.

On TEAM, the Minister presents the case that it is solely a matter for management and unions to secure the long term profitability of the company. It must be pointed out that if it was a private company he would not say the shareholder was not intimately involved in this, consider it as an industrial relations problem and say it is for the company to sort out, that the Government will sit back and see, and if it is a winner money will be invested but if not the Government will hide behind EC rules. That was not the impression given to TEAM workers in the heat of an election when people were talking to workers about their future. There is a degree of cynicism fuelled by experiences like this.

It is not a big sum of money but the way the enterprise allowance is being handled is disgraceful. The Minister reports 60 per cent displacement as the reason. He should have had the courage to say that he intends to get rid of this scheme. People would have asked why he decided to offer not just the enterprise allowance scheme but a subvention over two years to people who are over 12 months on the back to work allowance scheme and in some areas for three years where they are in the partnership areas.

Clearly displacement will be every bit as large in respect of the back to work type programme involving unemployed people setting up new jobs. I am sceptical about these displacement figures. On what basis does the Minister adduce these figures? There are clearly others who contest that this is one of the most cost effective schemes the Government operated. Recent figures show for example that the two most cost effective measures operated by FÁS were the enterprise allowance scheme and the employment incentive scheme. They were the cheapest cost per person sustained in employment 12 months after the programme, far cheaper than any other scheme. Yet those two schemes were axed.

I cannot accept the Minister's assertion that this is a good scheme in small measure but by April the money will run out and people will have to wait until January of next year for another allocation of money so that they can participate in it. Will the £2.3 million be allocated again in 1995 or will £1 million be allocated in 1995 which will then run out in February and we will again be faced with people's expectations being dashed? No scheme can be run in this way, the Minister should have the honesty to say that the scheme is being terminated and give reasons.

I would like to see the draft articles and what new powers the Minister intend to give the county enterprise boards. Many Members are on these boards or have a keen interest in them. A discussion at Oireachtas level on the direction of these powers would be useful.

The Minister did not say whether the Director of Consumer Affairs was satisfied with the allocation. There is no doubt that he has a mass of new responsibilities. On research, including manpower surveys, I know the Minister is researching the concept of work sharing. Will he give his views on the future of work sharing? Ireland has by far the lowest level of work sharing in any of the European countries. In the public service in the Netherlands there is 30 per cent work sharing whereas here about 1.5 per cent of full time positions are allocated to work sharing. Many of the concepts of work sharing, such as short time working for people approaching retirement would be more attractive if they were supported by Government subvention.

Chairman

I have given the Deputy much latitude. I thought he would ask supplementary questions, but entirely new elements are being introduced. I gave ample opportunity to put questions under the appropriate subheads. I appreciate that the Deputy is the only one to have shown sufficient interest to attend all day, but we must have some order to the debate, and he is expanding it. Will the Depute put specific questions?

Mr. R. Bruton

The specific question relates to subhead P — Research, including manpower surveys.

Chairman

When I asked the Deputy to contribute on this group of subheads from H to X, I gave him ample opportunity to ask as many questions as he saw fair and the Minister responded. The Deputy has now embarked on a second round of questions which was not the intention as to how the debate should be structured. I have been more than generous in the time I have given the Deputy to put his questions. The Minister has to be elsewhere at 5 p.m. However, if the Deputy wishes we could adjourn until another time.

Mr. R. Bruton

I did not realise the Minister had to be elsewhere. We are spending £500 million of taxpayers' money and the reason these committees were set up was to allow questions and answers without constraint. We were never told that we had to ask all the questions together.

Chairman

Nobody is trying to constrain the Deputy.

Mr. R. Bruton

I got the distinct impression that the Chair was trying to constrain me.

Chairman

I gave the Deputy ample opportunity. He led the questions on this group of subheads and only he and Deputy Broughan are here. He was at liberty to ask as many questions as he saw fit under these subheads and he is now coming back with more questions. That is most unfair.

Mr. R. Bruton

There has been no order of this committee which suggested that Members have to have all their questions at the beginning of their contributions. I have learned from this— and it will screw up these meetings — not to agree to taking groups of subheads together. We will have to go through them one by one and put questions.

Chairman

That is for the Chair to decide.

Mr. R. Bruton

It is not for the Chair. It is for the House to decide.

Chairman:

I do not want to get into an argument.

Mr. R. Bruton:

This is the second time the Chairman has done this.

Chairman

The Deputy is the only disorderly person here.

Mr. R. Bruton

I am the only Deputy who bothers to come to see what we are doing with all this money.

Chairman

That is not true. Will the Deputy please put his questions?

Mr. R. Bruton

We know the Government has sanctioned the spending of a substantial sum of money on researching work sharing and I have every right to ask questions about it.

Chairman

I gave the Deputy the opportunity to put those questions.

Mr. R. Bruton

There is no order of this committee which says that one has to ask all one's questions together. The Chairman should have told me that he would not permit any subsequent questions. I said that it would be difficult to cover all these subheads together but it is our right to ask questions. The Chairman should protect the right of the Opposition and other Deputies to scrutinise what is going on and not constrain them.

Chairman

The record will show that I have not constrained the Deputy in any way, but that he has monopolised the time.

Mr. R. Bruton

The record will show that the Chairman has, for the second occasion in consecutive meetings, intervened when I sought to raise questions, to tell me that he would not permit it.

Chairman

That is because the Deputy is disorderly.

Mr. R. Bruton

I am not.

Chairman:

Please put the questions.

Mr. R. Bruton:

That is what I was doing when I was interrupted.

Chairman

I have every right to interrupt.

Mr. R. Bruton

May I clarify if the Minister has to go at 5 p.m.?

Mr. Quinn

I have a Government meeting scheduled to start at 5 p.m.

Mr. R. Bruton

In that case we should not proceed.

Chairman

That is for me to decide. We are here until 5 p.m. so the Deputy should put his question.

Mr. R. Bruton

What is Government thinking on work sharing and the obvious opportunities to promote employment through worksharing initiatives of the type introduced in countries such as Italy and France where such initiatives have been seeded and supported by government?

Chairman

I cannot allow the Minister to respond. I will adjourn the meeting until another day.

The Select Committee adjourned at 5 p.m.