SELECT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Thursday, 13 May 1999

Vol. 2 No. 1

Estimates for Public Services, 1999.

Vote 34 - Department of Enterprise, Trade and Employment.

Acting Chairman (Mr. O’Flynn)

The Chairman has asked me to offer apologies to the Minister for his temporary absence. He will be present at about 12 o'clock. He has had to attend another important function.

I welcome the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, and the Ministers of State, Deputies Treacy and Tom Kitt. I also wish to welcome the departmental officials, including Mr. R. Molloy, Ms M. Brophy and Mr. M. Lynch.

The only item on the agenda is the consideration of the 1999 Estimates for the Department of Enterprise, Trade and Employment. It is not open to the committee to recommend increases or decreases or to approve or reject the Estimates.

I invite the Tánaiste and Minister for Enterprise, Trade and Employment to introduce the Estimates.

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney)

Thank you, Chairman. The other official accompanying me is Ms Sandra Hogan.

I am pleased to have the opportunity to appear before the Select Committee, in my capacity as Minister for Enterprise, Trade and Employment, to assist in its examination of my Department's Estimate for 1999.

The Estimate for my Department for 1999 is £863.845 million, which represents an increase of £97.091 million over the outturn for 1998. As members of the committee will be aware, a Supplementary Estimate for my Department, passed by the Dáil on 31 March 1999, provides a further £3.848 million approved by the Government specifically for the establishment of a North-South trade and business development body. The new body is a key element in giving full effect to the provisions of the Good Friday Agreement.

The 1999 Estimate for my Department will underpin initiatives and actions aimed at building on the unprecedented and sustained economic growth we have achieved in recent years. A major focus for 1999 will be the implementation of the National Employment Action Plan.

Since September last, all unemployed persons under the age of 25, as they cross six months of unemployment, are being referred by the Department of Social, Community and Family Affairs for FÁS supports. This preventive strategy has since been extended to other groups and the results of our efforts are bearing fruit. The live register is now below 200,000 for the first time in 15 years. The unemployment rate of 6.7 per cent is at its lowest in two decades and well below the European average.

I have also ordered a major concentration on targeting unemployed persons in two areas, Ballyfermot, Dublin, and Kilkenny. This will commence in June and I expect that this concentration will lead to further reductions in the live register.

Additional funding has been provided to FÁS, to increase its personnel resource as well as its operating systems. Likewise the local employment service is being expanded to a further seven areas this year which will bring to 25 the number of areas in which it is operational.

I have, however, been concerned that we are not getting the best value from the considerable resources - amounting to around £25 million in the current year - which we are investing in the employment services. We need to achieve better co-ordination and balance between the two strands of the service. In this connection, the Government recently approved proposals to put new operational arrangements in place for the management, development and operation of the employment services.

I intend to bring proposals to Government on a new dedicated social economy programme which is being initiated this year. The aim of this initiative is to support the development and reintegration of disadvantaged communities. The introduction of this programme has been greatly helped by the social partners on foot of an agreement in the context of Partnership 2000.

In 1998 total employment in Enterprise Ireland client companies was estimated at 144,000. A total of 12,500 new jobs were created during the year. Last year saw a 10 per cent increase in sales for EI client companies estimated at £18.9 billion. Exports were up 12 per cent over the previous year to an estimated £8.1 billion.

During 1998, 3,475 new jobs were approved by Shannon Development for new and expanding industrial projects throughout the region. The full impact of these approvals will be felt over the next three years. The company took equity investments amounting to £1.7 million in 12 companies during the year. During 1998, Shannon Development spent over £11 million throughout the region on developing the economic infrastructure. In relation to its property holdings, Shannon Development is focusing on consolidating its existing land bank in key locations to facilitate further investment.

In the period since their establishment in October 1993 to the end of 1998, enterprise boards have assisted the creation of over 15,500 jobs in the manufacturing, service or tourism sectors at a cost of about £60 million. This approximates to an average grant cost per job of less than £4,000.

The buoyancy in the creation of new jobs by IDA Ireland companies, which has been evident over the previous four years, has continued throughout 1998. A total of 15,996 new jobs were created during the year. This is the highest ever job creation outcome in one year and means that overseas companies have more than doubled their annual rate of job creation in the last ten years. Despite 7,186 job losses during 1998, the net employment impact was an increase of 8,810.

A total of 128 investment projects were agreed in 1998 with a job potential in excess of 27,000 over the next three to five years. Of these, 66 were new green field projects while the remaining 62 projects are expansions of existing overseas companies in Ireland. Nearly 70 per cent of all jobs approved were for locations outside County Dublin. In addition, 115 projects were secured for Dublin's International Financial Services Centre.

Preliminary indications are that there will be continuous employment growth in 1999. To the end of April 1999, 21 further new green field projects have been agreed by IDA Ireland. In the same period, 29 expansion projects have been secured from existing clients. There are a number of US projects, both green field and expansion, in the pipeline with a job potential in excess of 4,000.

To ensure that we build on the present economic growth, we must plan for our future by investing wisely and adequately in those technological niches which can best meet Ireland's socio-economic needs.

As the global economy becomes more knowledge based, the key to Ireland's continued success is to reposition Irish industry higher up the economic value chain. This is the new strategy of IDA Ireland and Enterprise Ireland. This approach is also endorsed by the ESRI and is in line with EU Commission thinking.

It was with this background in mind that my Department asked the Irish Council for Science, Technology and Innovation to undertake a technology foresight study. The council's report was launched on 30 April and among its key findings were that technology areas like biotechnology and information and communications technologies have significant potential to drive wealth and job creation. My Department, under my colleague, the Minister of State, Deputy Treacy, is examining the technology foresight recommendations and is preparing proposals for appropriate implementation.

The Minister of State at the Department of Enterprise, Trade and Employment with responsibility for labour, trade and consumer affairs, Deputy Tom Kitt, continues to pursue our national trade interests through the European Union, the World Trade Organisation and bilaterally.

Minister Kitt will represent Ireland at the launch of a new round of world trade negotiations in Seattle in November. Along with working towards reducing tariffs and barriers to trade, the new round will look at developing and improving agreements designed to protect intellectual property rights, services, government contracting and electronic commerce. We hope to have an ambitious and comprehensive new round of trade negotiations leading, within three years, to further significant reductions in trade barriers and increased growth and prosperity worldwide. Another major trade forum in which Ireland will be participating is the World Exposition, EXPO 2000, to be held in Hanover from June to October 2000.

The traditional indicators of the industrial relations climate are generally showing a significant improvement. For example, 35,000 work days were lost last year due to industrial action, the second lowest figure on record. Because we continue to need dispute settling machinery and to a degree because of the complexity of the cases coming to the Labour Relations Commission, I am maintaining the level of funding which I decided last year, a significant increase over1997.

During the 12 months ended December 1998, there has been considerable activity in relation to company law investigations. In summary, three inquiries were ongoing at the beginning of the year; three inquiries were concluded during 1998. Ten were commenced in 1998 and ten were in train at the year end. Among the latter were the appointment of section 8 inspectors to National Irish Bank Limited and National Irish Bank Financial Services Limited.

The section 19 inquiries have arisen largely as a result of the questionable corporate practices revealed in the report of the McCracken tribunal of inquiry. Careful consideration will be given to the findings of these investigations. I will be taking appropriate action to initiate prosecutions where warranted and to bring evidence of any wrongdoing to the attention of the appropriate authorities.

In March 1999, together with my colleague, the Minister of State at the Department of Enterprise, Trade and Employment with responsibility for science, technology and commerce, Deputy Treacy, I announced the Government's decision to implement the recommendations of the Working Group on Company Law Compliance and Enforcement. The working group produced a comprehensive report. The report illustrated the extent to which company law was not being complied with in Ireland and outlined the benefits which would come from the enforcement of and compliance with company law. In addition to making a number of detailed recommendations for change in company law, the working group made two substantive recommendations: the establishment of an office of the director of corporate enforcement, which would have primary responsibility for the enforcement of company law, and the establishment of a statutory company law review group with an ongoing programme of company law reform.

The Government has agreed to provide the necessary staffing resources for both the director and the ongoing reform of company law. The legislation to give effect to these initiatives will be drafted as a matter of priority. I expect the office of the director of corporate enforcement to be up and running early next year. The additional staffing for company law reform will be put in place in the near future with the company law review group established initially on a non-statutory basis.

Two important Bills have been published by the Government this year. The Companies (Amendment) (No. 2) Bill was published on Monday, 22 March 1999, and the Companies (Amendment) (No. 3) Bill was published on 30 April 1999. These two Bills include important new company law requirements in the area of examinership and in regard to Irish registered non-resident companies. There are also changes to provide for the exemption of certain small companies from the need to have their accounts audited each year.

I have also taken a more proactive approach in ensuring compliance with the companies Acts. This year I have successfully pursued prosecutions under section 131 of the 1963 Act for failure to comply with a ministerial direction to hold an annual general meeting. Currently prosecutions are in train in other areas.

The traditional compliance rate of Irish companies in filing statutory annual returns is extremely low. In fact, during 1998 approximately 13 per cent of companies filed their annual return in time and only 35 per cent approximately during the year in which it was due. This is unacceptable and the Companies Registration Office is putting in place a strict enforcement regime to ensure that either the returns are filed in a timely manner or non-compliant companies are brought to book.

Approximately 30,000 companies have been struck off the register since the new regime was introduced in September last. In the meantime all other companies which are behind in making their current returns are being reminded to do so and, if they do not file the returns, are being prosecuted. The first 300 such companies were successfully prosecuted in the Circuit Court on Tuesday, 27 April, and fines of between £50 and £150 were imposed on them for each offence. I expect that implementation of the recommendations of the Working Group on Company Law Compliance and Enforcement will greatly facilitate the Registrar of Companies in this regard.

I appreciate this opportunity to elaborate on the Estimate for my Department for this year. I and my colleagues, Deputy Treacy, Minister with responsibility for science, technology and commerce, and Deputy Kitt, Minister with responsibility for labour, trade and consumer affairs, will, of course, be happy to address any queries in regard to aspects of the Estimate which Members may wish to raise.

Acting Chairman

I thank the Tánaiste for her address which brought us up to date on all aspects of her Department. I have an apology from Deputy Rabbitte who is attending a meeting of the Committee of Public Accounts.

Mrs. Owen

I welcome the Tánaiste, both Ministers of State and their officials. I also welcome the positive elements of the Minister's statement. By and large, inward investment and job growth have been good news stories for her over the past year. Well done to her and it is good to see the continued creation of jobs. However, it will not surprise her that I intend to raise a number of issues which she did not address. They are not positive and, naturally, no Minister wishes to highlight things that are not working as well as they should.

I wish to refer to skills shortages. The Tánaiste outlined what her Department is doing vis-à-vis technology, including the commission of a technology foresight report by Mr. Brian Sweeney, former managing director of Siemens. I have not read all the reports but I am sure her officials will share their knowledge of them with us. I am concerned that she has not referred to the growing shortages in the medium and low skills sectors. We are seriously running the risk of losing investment if those skills are missing as well.

Many qualified scientists, computer analysts and others designing equipment and software are needed but support structures are also required for them to maintain growth in the economy. There is no reference to CERT's announcement that it could fill 5,000 more jobs in the catering industry. The Tánaiste did not refer to a number of low and semi-skilled areas where a number of employers will tell her that they cannot hire workers. They advertise and offer bonuses to their staff for introducing people to their companies.

It is a fact that, in one way, employers cannot recruit staff. What is the Department doing to correct that imbalance? Why has the Tánaiste not proceeded with legislation on work permits for non-EU citizens after agreeing with her colleague, the Minister for Justice, Equality and Law Reform, to look at the skills available among people who have lengthy waits for the granting of refugee status? These people want to work and it is costing the State to provide housing and social welfare for them. It is not beyond the realm of wisdom in both Departments to formulate a scheme that would not jeopardise in any way our responsibilities under the United Nations conventions for refugees so that people are allowed to work. Many of these people are currently working in the black economy and some are being exploited. Many employers would scream "more" if they were not able to use them. Employers and asylum seekers are forced into illegal activity. These people are bright and want to contribute.

I acknowledge that the allocation for FÁS apprenticeship schemes has been increased. I cannot understand why there is not more improvement in helping employers to recruit people who require in-service training. That imbalance has been corrected in the Estimate with an £8 million increase in the allocation for training schemes for people already in employment to upgrade their skills. I am disappointed that the wider area of skills shortages have not been tackled and not just the technology area.

The Tánaiste referred to the success of Enterprise Ireland. The Estimate does not address the staffing problem there and the fact that discussions are ongoing, although the threat of industrial action has receded. Has a decision been taken on the location of the national metrology laboratory and who will control it? Those issues have not been resolved yet.

The science and technology subheads have only been increased by £200,000 - subheads F1 and F2. Perhaps that budget is being spread further around. The innovation and technology centre's budget has been drastically reduced. There will not be significant growth unless companies are involved in research and development. Why has the allocation been reduced?

The budget for county enterprise boards has been reduced by £1 million. They do effective work at community level, whether through providing a service to the community or helping small companies to manufacture products required by bigger industries. Why has the allocation been reduced?

The budget for community enterprise schemes has been reduced by £3,500. I want a commitment from the Tánaiste that where a scheme is successful and there is still a need for it, FÁS managers will be given permission to re-employ people on that scheme. For example, people running community centres come to the end of their contract if they are over a certain age or the contract has expired but the replacement of these individuals is not allowed. The community centres will not close and, while the work is not full time, the CES is ideal. Tidy towns committees cannot recruit people to deal with the massive litter problem. If a CES is involved, people are also let go when their contract has expired.

Subhead K8 includes an allocation of £3 million for training networks which will give new approaches for the delivery of training needs of companies. Will the Minister elaborate on that? I welcome it if it is an effort by her to recognise the fact that companies have an obligation to, and must be assisted in, providing training not only to their current staff but also new recruits.

When the minimum wage is introduced in April 2000, many companies will be claiming the right to pay 75, 80 or 90 per cent of the minimum wage on the basis they are giving training. If there is no system in place which can guarantee that bona fide training is taking place, those companies will find themselves on the wrong side of the law by paying the lower rate of minimum wage. I presume that when this comes into law they will have to pay the full minimum wage by April 2000 as the commitment has already been given. I notice the allocation to the INOU is down and I would like an explanation.

The Minister of State, Deputy Tom Kitt's responsibility for trade was mentioned. What information can the Minister give us about recent disputes - the banana war and the hormones in beef controversy? It is clear the US has won the banana war and it is now looking at how many EU imports it will place more tariffs on or in which products it will cut trade. I understand some Irish products will be taken off the list of exports to the US. I would like more information on that. What is the Department's view on hormones in beef? The EU has decided we will not allow beef treated with hormones to be imported into the EU. It now looks like this row will come down on the side of the EU. What effect will this have on our trading?

I will conclude by reiterating a point I made last night on the Companies (Amendment) (No. 3) Bill which has passed through both Houses. I appeal to the Minister not to introduce any further legislation from her Department in the way that Bill was introduced. The Opposition had no time between Second and Committee Stages to reflect on what the Minister of State, Deputy Treacy, told us. It was complex legislation on which I have no expertise, apart from owning a small number of Allied Irish Banks shares. This is on the public record. I bought them about 15 or 20 years ago. They have increased in value and I must now declare them under the ethics in Government legislation. I know nothing about the Stock Exchange other than the fact that I like it when I get a letter to say my bundle of shares has increased in value. As I said, there was no gap between Second Stage and Committee Stage of the Companies (Amendment) (No. 3) Bill and Fine Gael will not agree to that happening in regard to any other legislation.

Acting Chairman

We had decided to go through the subheads individually.

Mrs. Owen

I am not going to do that; I have asked my questions.

Acting Chairman

I suggest that members should refer to subheads when asking questions.

Mr. C. Lenihan

I welcome the Minister. It seems that every time she comes before this committee I thank her for her forbearance. She has shown it in recent weeks and I think the last time she came before the committee was during the Ray Burke controversy. I thank the Minister for holding her nerve, sticking with the Government and keeping us all in a job.

Mrs. Owen

Where is that in the Estimates?

Mr. C. Lenihan

I do not know. I would be interested to hear the Minister's views on the social economy, particularly on the future of the local employment service. She said she is worried about the way the money is being spent on these employment schemes. The local employment service is working well and it is great to hear it is being expanded.

I have a query in relation to subhead H1 on the loan subsidy scheme. What is the potential for the expansion of that scheme from a small business point of view? I am not sure how the figure of £1.2 million is tabulated and why it is lower this year than last year. I am interested in how that scheme works and whether there are any policy objectives to expand that soft loan scheme for smaller businesses and enterprises.

In regard to the enterprise boards, the cost per job is £4,000, which the Minister of State, Deputy Treacy, calculated at a previous meeting of this committee. What is the composition of the cost per job? It seems like a spectacularly low price to pay for the creation of jobs and obviously it must be encouraged. What is the Minister's view on the creation and assistance of micro business? Has the Minister considered allowing credit unions become a vehicle for the funnelling of soft loans or micro and start-up businesses employing fewer than five people?

The Minister referred to the creation of another 4,000 jobs by the IDA, which is good news. I accept she must be discreet and confidential as regards the nature of the projects. What is the timeframe for the delivery of those jobs? Is it one year, 18 months or more? What is the geographic spread? Will they be in Dublin or outside? Broadly, in which sectors are they? I know negotiations are taking place.

I am concerned about the creation of the office of the director of corporate enforcement. This office has the potential to become another cost to business and I am interested in the Minister's view on that. The business community is concerned about adding an extra layer of compliance cost in relation to this director. This query may be academic at this stage now the office has been created. However, has the Minister given any consideration to allowing the Revenue Commissioners to police corporate compliance in terms of company law, etc.? This would seem to be a natural function for Revenue.

Mr. Ardagh

This is the first time I have attended this type of procedure so the Minister will forgive me if I say anything out of place - it is not intended. I am a director of the South Dublin County Enterprise Board and most of the projects it is involved in are not in the high technology area of industry. The enterprise board has been very useful and has provided a huge number of jobs. All moneys allocated to that board have been used in a very effective and efficient manner. The idea that a business must be involved in high technological industry is not in the interests of the continued development of small enterprise within the south Dublin area or the people whom the enterprise boards are there to serve.

I am delighted to see so many initiatives for training the unemployed. I am not familiar with the idea of a jobs club and I would like to know what it is. There are 4,800 new jobs club places for the long-term unemployed and 400 new jobs club places for lone parents. This involves significant expenditure and I would like more information on it.

As regards the grant for community employment, I notice there will be an average of 37,500 community employment places during 1999. How does this compare with 1998? Recently supervisors of community employment schemes in the Dublin west region met with all the local public representatives to express their concern at the reduction in numbers on community employment schemes. There are reasons for this in that the economy is improving and, as Deputy Owen said, there is a shortage of people to take up the jobs that are available. Supervisors made the point that a number of people on community employment schemes have personal development needs. They need to develop their interpersonal skills to be able to attend for interviews and they need to develop their ability to get on with people. The time it takes them to do that is greater than the one year allowed for CE schemes. These are issues which have been put to me by supervisors and I would like them addressed, if possible.

There is a significant increase in funding for the local employment service. I would like to have it confirmed that there will be such a service for the Dublin 12 area soon. Jobs clubs are a feature of this and I would like more information on them. I assume the support structures for employment and ADAPT community initiatives relate to people with disabilities. There is a significant increase for that in percentage terms. What additional support structures are being put in place for people with disabilities?

There is a small increase in trade union amalgamations. Although they have more than doubled, they are still a relatively small number. How many trade unions are there at present? How many small trade unions are there? What is the potential for further amalgamation within the trade union movement? There is a problem in that scaffolders have called an unofficial strike and many projects are held up. Some 35,000 days were lost last year and many more people are out of work this year because of the scaffolders' dispute. If there were stronger trade union affiliation, this would not occur.

Participation in the World Exposition in Hanover will be funded from the national lottery. Was it the intention when the national lottery was set up to use the resources to fund participation in the World Exposition in Hanover in the year 2000?

There has been an increase from £2,000 to £4.99 million for the European Space Agency. Who is being sent into space? I could name a few likely targets.

Mr. Perry

I welcome the Minister. County enterprise boards need more direction in using the funding allocated to them. Now that Enterprise Ireland has been formed, it is a pity the enterprise boards have been allocated less funding this time. I know of many companies, developing small enterprises with ten to 15 staff, for which the enterprise boards are the only vehicle of development at present. The enterprise boards have done great work but, with additional funding, they could create considerably more jobs, especially in services. The Sligo County Enterprise Board has a huge number of applications and its work is very evident but, unfortunately, it does not have the resources to create the maximum number of jobs. It costs £4,000 to create a job which is excellent value for money. County enterprise boards could create substantially more jobs in the counties in which they are working successfully. Given that they will now have a new role of working on development with local authorities, this is an area where an investment of an additional several million pounds could create more jobs. It should be focused upon more.

There is an increase in the EU support measures for small business to help improve access for small business to finance and credit, to facilitate access for small business to public markets and to improve the availability of information. Information for promotion of small business should be more widely available. Over £6 million is allocated to this, so how will it be used and how will it benefit small business? Perhaps small businesses with fewer than 50 employees could be targeted because that is a problem with Enterprise Ireland. In that context, perhaps some of the fund could be made available to the enterprise boards because it could create jobs. The enterprise boards focus on small business and some of the measures for small businesses are linked with the boards so part of the funding could be redirected to that. There could be a merger of ideas to create jobs in small business.

Much of INTERREG II, the Community initiative, has been focused on the Border counties, especially for funding tourism projects, and its budget has been increased considerably. Given the promotion of cross-Border development and trade, it is a pity so little is allocated to developing new and emerging markets for cross-Border trade between Northern and Southern companies. Companies on both sides of the Border seem to have little knowledge about developing cross-Border business. I do not suggest INTERREG funding should mainly be allocated to that but, as an example, £5.1 million has been allocated to projects in the South, yet there are many more projects which are very good ideas but no fund is available to promote and develop them. That is an area which should be examined.

Regarding training for the unemployed, Deputy Owen correctly stated that a significant number of people had successfully completed FÁS courses. However, I know many business people who, had they had the opportunity to employ those people on a trial basis, could have possibly created full-time jobs for them. FÁS does excellent work in the three year course, but if those who did the course were taken on by business people availing of a tax break or a grant, it would give them a great opportunity to be trained with the possibility of a full-time job. With FÁS, they are left without a job after a period of training whereas an employer could take them on and possibly create a full-time job. It is an area which should be examined.

Regarding the FÁS grant for community employment, Deputy Owen correctly stated that such schemes give valuable service to communities throughout the State. Now there is a break in such service because people who availed of one scheme cannot reapply for six or eight months for a new one and that is a big loss. Where schemes have been successfully developed by FÁS and people employed on them have done good work within communities, it is sometimes the case that, when their time on the scheme ends, they cannot get a job. They should be assessed to see if they can get a job and, if not, they should be reinstated on the scheme. If there is a possibility of their getting a job, every encouragement should be given to them to find an alternative employer. However, in the absence of a job, rather than putting them on welfare, the scheme should be maintained. Otherwise, it means a person going back on the dole and receiving the same money for doing nothing when they would be happier working.

The Department is responsible for managing several programmes which are part supported by the European Social Fund. I am disappointed a small allocation has been made to the Programme for Peace and Reconciliation, especially in the time that is in it. This should be increased to promote the integration of young people into the labour market, particularly those without basic qualifications and training, to improve the employment prospects of the disabled and to reduce unemployment among women as well as promoting equal opportunities for women in the labour market. This should apply particularly in cross-Border areas. Given political events and developments in the Border counties, I am disappointed that this fund is not larger. A lot more could be done as there are huge opportunities in this area. This is being administered from Monaghan and many jobs have been created. I appeal to the Minister to look at the Programme for Peace and Reconcilation. The British Government is pumping millions into Northern Ireland and this allocation is very small in comparison.

Mr. Daly

I congratulate the Departments involved in this very excellent performance. Lower levels of unemployment are an indication of the success of the policy being followed and the Departments are to be complimented on that.

I welcome the establishment of the North-South trade and business initiative. However, I would like an east-west link also as we still have fairly significant problems in the western region - places such as Kilrush and Ennistymon in west Clare have high unemployment. Such places have little prospect of attracting industry and it is necessary to see what initiatives can be taken to deal with falling population and emigration of youth due to lack of opportunities. This is devastating because old people are left behind to live alone and there are consequential social problems. Shannon Development has done excellent work to develop the tourism potential of these areas, which is welcome but there is an opportunity, for example with Kilrush, to identify a programme of investment in small units to attract industry into smaller towns. There is a very successful business development centre in Ennis and such facilities should be extended to smaller towns like Kilrush and Ennistymon.

I spoke to a very successful industrialist in Ennistymon who has won awards for innovation and for the success of his ventures in such a remote area. He made the point that when he employs people he gets the same level of grant aid, say £5,000, to take on a new employee, who may be costing him £50,000, as opposed to an ordinary GO who might be working for one-fifth of that amount. He favours increased subvention if a highly skilled person is taken on, especially in a high skills area. It is probably very difficult to do this but his point was that he had to employ graduates of the University of Limerick who were costing between £35,000 to £50,000 per annum. He got the same amount for taking them on as he did for taking on a person without those skills, though that person might not wish to have those skills and might be satisfied with another job in the company. He felt, however, that the highly skilled people were capable of creating far more employment opportunities and there should be some differential. Perhaps the Department could examine this.

Ms Harney

I thank Members for their remarks. The Minister of State, Deputy Tom Kitt, will deal with matters relating to consumer affairs and industrial relations. The Minister of State, Deputy Treacy, will deal with enterprise boards and science and technology.

It is clearly a good time to be in the Department of Enterprise, Trade and Employment due to the boom in the economy. Notwithstanding that boom, however, it is also a very challenging time. As Deputy Owen said, many companies cannot find workers and the bulk of jobs created in the new economy now require a much higher level of skill than was the case a decade ago. That poses huge challenges for people made redundant from the traditional sectors where there has been a very low level of value added activity, particularly in many manufacturing areas. Trying to upscale these workers to make them job-ready for emerging jobs is an enormous challenge and the older they are the more difficult it is. That is why it is important, in the context of what we are doing, that we maintain a focus on alternatives.

Deputy Owen is right in saying that there is a skills shortage at the same time that there is a surplus of labour. According to the latest live register figures, 6.7 per cent of the work force is unemployed and 37,500 are in community employment. There are 18,000 apprentices and several thousand people are in various training projects. When the Government took office we provided a fund of £250 million as an education and technology fund to produce people with higher skills. Recently we agreed to provide another £80 million in the same sector on the recommendations of the Horan group. Much of that is going into the education system.

At the lower level there is clearly a role for FÁS and £14.28 million has been provided to generate new programmes for the training of long-term unemployed people. The total amount of money will be £39.63 million. We have also decided to pay an extra £25 per week to long-term unemployed people who opt for training as an alternative to make it worthwhile and that is not taken into account when their social welfare entitlements are being calculated. That is important because everybody responds to the economics of their own situation.

The reality is that there are many sectors of the economy where, unfortunately, people do not work. That is always a feature of a growing economy and such economies around the world have always found it hard at the lower level to get people to work. I believe strongly that those seeking refugee status in Ireland should have the right to work, not just for economic reasons but for humanitarian reasons. We should not try to deny people the right to work and we should never say to any citizen or person seeking asylum in this jurisdiction that we will give them a cheque at the end of each week but we will not allow them to work. The issue of work permits has not been resolved politically but I hope it will in the next few days. Other difficulties have taken up much of the time of the Minister for Justice, Equality and Law Reform but I hope he can resolve the differences in approach on this issue between our two Departments over recent months.

Approximately 94 per cent of all applications for work permits are now being granted. Last year 5,766 work permits were granted as opposed to 4,491 in the previous year, an increase of 1,300. I take the view that employers, instead of having to prove they cannot get Irish or EU nationals, will not make an application unless they are having genuine difficulties, hence we are adopting a very open approach.

The work permit proposals before the Government include measures to put the work permit regime on a statutory basis rather than having them as an administrative or ministerial function. It probably takes up more time in my office than any other single issue in terms of representations. It is one of the biggest generators of representations from public representatives and employers. We want a statutory basis, fair procedures, fair appeals procedures and more staff, as I accept there have been long delays in processing applications due to the sheer volume.

In relation to Enterprise Ireland, we have rationalised the number of grades from 46 to eight. This took enormous effort. Clearly one cannot have an organisation with 1,200 people, which is approximately the work force in Enterprise Ireland, and 46 different grades with people effectively doing the same job but being paid very different rates. I am happy with the outcome of the negotiations but I am disappointed it took so long. I believe we are now in a position to ensure that Enterprise Ireland can become fully operational in every sense.

Enterprise Ireland is about a new approach to how we support indigenous industry. In the past companies got segregated help. On the trade side they were helped by one agency, on the training side by FÁS and in terms of company development they were helped by Forbairt. This is now being streamlined and companies will be helped according to the business development model which is specified in the mission statement under six different headings. Companies will be helped to assess business possibilities and to develop marketing and strategy plans. They will also be helped with human resource development, research and development and to develop new products and new markets.

This is how companies should be helped, because Irish companies traditionally have not been very successful in developing the skills capacity of the work force. They have not seen this as their function. A company is only as strong as the people who work in it. Regardless of the technology, companies need people. The more motivated, skilled, adaptable and flexible people are, the more successful and competitive the company will be in the context of globalisation and the competitive environment in which Irish companies must operate. Irish companies must export on average 80 per cent of what they produce. These products will only be successful internationally if they are competitive. The key to competitiveness is not just cost but quality, design and innovation. Companies that are not innovative will stagnate. In 1973 we grant-aided 113 different manufacturing companies and none of them exists today. We have been good at starting companies but not at sustaining them. The new approach is all about sustainability, helping Irish companies to achieve sustainable competitive advantage.

This brings me to training networks, a pilot project which will operate over a three year period. It will be run by IBEC. A programme co-ordinator was appointed in April and the project will be advertised publicly in June. This will look at the training needs of companies and imaginative ways for companies to come together to devise training strategies. I hope this will be very innovative. Certainly the level of interest is encouraging. As I said, it will be up and running from June of this year, when it will be publicly launched, now that the director has been appointed.

The grant for the INOU is down by £4,430. This is because they received £5,430 for a booklet on welfare in 1998. They did not seek money for a booklet on welfare in the current year.

Deputy Lenihan asked about the social economy. This will begin later in the year. A memorandum is almost completed and will go before the Cabinet. These proposals have been developed in the context of Partnership 2000. They have been developed by the voluntary pillar. It is proposed that initially at least 5,000 community employment places will move into what is called the social economy. This means they will move into an area which is not commercial and that has worthwhile community-based activity such as community centres and voluntary groups. This will almost exclusively be for the benefit of disadvantaged communities.

It is important to develop the social economy because, even with high growth and 1,000 jobs being created each week, many people are being left behind. We need new models and new strategies to address the needs of these people. Unfortunately, some people will probably never return to the world of real work but they can do very useful and worthwhile work in the community. Many people wish to do this. We must look at jobs in the wider sense and the social economy model is the way to do this. We provided £1 million in the budget to get the scheme up and running. Once the memorandum is approved by Government, I hope the scheme will begin in the summer or autumn of this year.

The reason for job clubs is to help the long-term unemployed to obtain the wherewithal to be able to go for interview. Much of the work will be about counselling, guidance, helping with the preparation of CVs and so on. It is an informal and relaxed way of getting people to enter into the system of help. Job clubs are run by the local employment service which will be co-ordinated fully with FÁS. It is important that we get the best value for money and make the best support systems available to the unemployed. This scheme will be organised properly and will involve the ADMs, the INOU and many other organisations under a sub-group of FÁS so that there is greater integration and co-ordination. I am determined to recognise the flexibility and open door approach of the local employment service. This involves the people of the community helping the community. It is important to continue with this gentle approach in order to encourage people to seek help.

On cross-Border initiatives, we did not get sufficient projects under the INTERREG and peace and reconciliation programmes. The peace and reconciliation fund of £84,000 is really matching funds to the EU. It is an EU programme and every Department has provided a sum of matching funds. We did not draw down money because there were no applications. I have a list of 30 different projects approved under the INTERREG programme. I will circulate this list so that Deputies will be aware of the projects which would warrant support.

I agree with what has been said about cross-Border endeavour. Deputy Owen and I recently attended the launch of the new Ryanair service to Derry which is a North-South endeavour. It is a result of the Irish and British Governments putting funds together to develop the facilities in Derry. The reason for this is that Derry airport provides an opening for many parts of Donegal. The natural economic hinterland of the Border counties is through the port at Larne or Belfast airport. The reason the Border counties have done so badly during the economic boom compared to the rest of the country is that they were cut off from their natural hinterland because of violence.

I believe the peace process will generate enormous opportunities for the Border counties. It is disappointing that some funds cannot be drawn down. Sometimes we are good at establishing projects at administrative and Government level but the outside world may not know they exist because of the information gap. I would encourage Deputies from all parties to look at possibilities for cross-Border economic endeavour. The new trade and business development body agreed in the context of the peace process will offer enormous opportunities. Much of this is about co-ordination, companies getting into partnership arrangements on research and generally trying to explore and exploit opportunities together.

I agree with Deputies, particularly Deputy Daly, who referred to infrastructural development throughout the country notwithstanding encouragement to get investment for areas outside of Dublin. The Dublin area is over-congested and this can be seen each day in the form of traffic. Many services in Dublin cannot meet the demand because of the sheer numbers of people who live in the area. However, in other parts of the country it is difficult to sustain public services because there are not enough people. The key to developing the rest of the country is not just in the grant aid we might give to inward investors or Irish companies to establish and expand, but in infrastructural development. Until there is a roads network of an international standard linking the main population centres in the country, we will not succeed. I believe that if opportunities are provided in the regions, people will follow. Coca Cola in Ballina recently advertised for 150 workers and 2,700 people expressed an interest. This has been repeated in other regions.

Of the 4,000 jobs that IDA Ireland have in the pipeline, some are for the Dublin region but the bulk are for the west and the midlands. They are either in the process of being approved by the board of the IDA or at the stage of final legal agreements being signed by the companies. As far as I am concerned, the deals are virtually done.

Deputy Lenihan mentioned loans to business. This is a question of demand and supply. Some £100 million was provided on foot of the task force on small business. Loans of between £40,000 and £500,000 were provided at a fixed interest rate of 6.75 per cent over ten years. Realistically, in the context of very low interests rates there is probably no need for that kind of scheme. The huge number of venture capital funds between Enterprise Ireland and the Irish financial institutions is filling the gap that existed a decade ago. That is probably the reason there is not the same interest in availing of something of that kind.

Nearly 11,000 new training places have been created. Approximately 3,500 long-term unemployed people will be trained along the tramlines project in Ballymun. This is a project setup by the partnership there with some of the multinational companies. It has been extremely successful in training long term unemployed people in the use of information technology. We have used that model to devise a programme for 3,500 more people. It will be co-funded by industry and was launched about two weeks ago by the Taoiseach. That is in addition to the nearly 11,000 places already provided. In that context, we cannot maintain community employment. We cannot operate everything at once.

One of the findings of the Deloitte & Touche report, and this is also my view, is that if we can have a higher level of training for unemployed people so that they can really access work, we should be moving that way. That is what we are trying to do. I recognise that some people will not move into the real world of work and that is why community employment will continue to be an important feature. We have to discriminate in favour of the disadvantaged communities and voluntary groups. Community employment will remain a feature of support for schools. Suggestions were made that it might be withdrawn, but it will not. If it were, the alternative would be much more expensive. The school environment is a group training experience for unemployed people and is very beneficial.

Minister of State, Deputy Kitt, will deal with any issues I have not covered and Minister of State, Deputy Treacy, will deal with his area of responsibility.

Chairman

I apologise for my delay in attending this meeting.

Minister of State at the Department of Enterprise, Trade and Employment (Mr. T. Kitt)

Two specific questions relate to my area of responsibility. I will make brief comments on some of the issues referred to by the Tánaiste.

An area which has been commented on to a great degree this year is the issue of health and safety. Members will see from the report that we increased the grant payment to £587,000 and we sanctioned 13 additional posts last September. As the economy continues to thrive, there is a need for us to be very vigilant about the welfare of workers. I am happy to support the Health and Safety Authority. We can never do enough in this area. I am involved in a great deal of promotion work in this area. My main concerns relate to two specific areas, one being small contractors. If one looks at the figures on health and safety you will find there has been a tremendous improvement on large building sites in the city areas but I have received many reports of fatalities where individuals were working on farms, or workers falling from ladders while carrying out repairs. The Health and Safety Authority is concentrating on areas such as those. A considerable number of tragic accidents relating to small children occur on farms. A lot of work is being done to promote safety through the schools, the IFA and farming agencies.

Deputy Ardagh referred to amalgamations and made a very valid point. On 31 December 1997 there were 51 licensed trade unions. In our view, that is a high number. The 1998 list is currently being compiled. Our Department is available to assist in the area of trade union amalgamation. The practice is to provide an amount to cover the cost of payments made on foot of amalgamations. Expenditure during 1998 in respect of two amalgamations was £49,000. A great deal of work is being done on education and advisory services. A sum of £731,000 was put aside in 1998 to cover an ongoing grant to ICTU, education, training and advisory services. This is something I will continue to promote.

The scaffolders' strike was mentioned. We should look at that dispute in the context of the Tánaiste's report which shows that 35,000 work days were lost last year due to industrial action, the second lowest figure on record. All these issues must be put in context. I echo the Tánaiste's words in commending the work of the Labour Relations Commission and the Labour Court. All Deputies would agree they are now dealing with very complex areas and we greatly value their work. The bottom line is that our system is based on a voluntarist approach.

The scaffolders' strike is an unofficial action which makes it a very difficult dispute. The Government looks on it very seriously. Contact between the parties involved is continuing. We urge that the official labour relations machinery be utilised on the basis of the very good record we have under social partnerships. We want to see the workers returning to work as soon as possible. Contact is being maintained and we hope to arrive at a situation where the JIC and LRC are fully utilised. Discussions are taking place and I am not in a position to say any more. I hope to see a resumption of normal industrial relations within that sector which is very important for the economy, for employers and for workers.

Deputy Owen raised the WTO case. As Minister with responsibility for trade and consumer affairs, I have a dual interest in this area. I am taking a very personal interest in the hormones treated US beef issue mentioned by the Deputy. I attended a meeting of EU Trade Ministers in Berlin at the weekend at which this issue was raised. The meeting was in preparation for the WTO in Seattle. The EU has until today to comply with the WTO ruling that its ban on hormones treated US beef is not scientifically based. The EU ban was introduced in 1989 on consumer health grounds and extended to live animals and meat to which any of six hormones had been administered. The EU is currently conducting further scientific studies to health risks attached to the use of these hormones. Those studies will not be completed today.

The US published a preliminary list of products which would be subject to 100 per cent tariffs if the EU did not comply with the deadline or in the absence of an interim solution being found. It is calculated that the US action, on the basis of this list, will affect an estimated US$900 million of EU exports annually. Our exports could be affected to the tune of £14.6 million per annum spread across a range of products including beef, pigmeat, poultry meat, cereals, cheese, tomatoes, chocolate, confectionery jams, mineral water and adhesives. We saw the list in the banana war.

Mrs. Owen

It included handbags.

Mr. T. Kitt

And chandeliers.

Mrs. Owen

I was not aware that we made handbags.

Mr. T. Kitt

The list was subsequently reduced. I tried to get an up-to-date position before I came to this meeting. Discussions are taking place within the EU and between the US and the Commission in an effort to resolve the issue. We are very active in these discussions and we view this situation very seriously. We hope that an agreement can be negotiated with the US on the beef hormones issue before sanctions are introduced. Such an agreement could entail the negotiation of temporary compensation measures as an alternative to the proposed US sanctions.

Many of these issues arise in the context of - and I am speaking as Minister with responsibility for trade and consumer affairs - the debate on genetically modified foods. The EU has taken a strong position on that issue. I have answered a number of questions on this in my capacity as Minister responsible for consumer affairs and I have said we must have adequate labelling. The report of the Food Safety Authority was issued yesterday and a number of other Departments are involved also. I know Members would support my position in seeking clear information for the consumer and that the consumer should have a choice. This whole issue spills over into the serious EU-US dispute on hormones in beef. If there are any developments I will make whatever public statements are necessary to keep both the committee and the general public informed.

Mrs. Owen

Is the Minister of State saying that it appears the US will win the argument, that we will have to allow hormone treated beef into Europe provided it is labelled?

Mr. T. Kitt

Obviously the WTO has made a ruling on this in favour of the US. We are starting on that basis. Now we have to depend on scientific evidence. Officials of the Department and I have been in close contact with the Minister for Agriculture and Food on this issue. We do not want a dispute to take place because that would not be in anybody's interest. I have mentioned that temporary compensation measures may be required. The question of labelling could become an issue also but, up to today, the studies have not been completed and so there is much more work to be done. As Minister responsible for trade I will be vigilant on behalf of our exporters in particular and, as Minister responsible for consumer affairs, with regard to the need to protect our consumers. There is much work to be done but we do not have an up-to-date report because the discussions are ongoing. I will keep the committee informed.

Mrs. Owen

Even though we have not met the deadline of today?

Mr. T. Kitt

We have not met the deadline but the EU has publicly made its position clear about that.

On consumer affairs in general, Deputy Owen and other Deputies were closely involved with many issues, including the Superquinn and Tesco problems. As members are aware, the Director of Consumer Affairs, Carmel Foley, was very proactive on these issues and I commend her for that. On the Superquinn issue of selling and advertising below cost, this was resolved because, in effect, Superquinn gave the required undertakings.

I will update the facts in relation to Tesco. The inspectors carried out a countrywide survey which comprised a total of 163 outlets, more outlets than Tesco checked with regard to over-pricing, and covered 16 different retail chains. A total of 8,518 items were checked and 113 - 1.32 per cent - were found to be over-priced, in other words, misleading price indications, while 45 - 0.53 per cent - were under-priced. Bar coding of special offers was the greatest problem that came to light. It is important to state that the problem was spread across all the retail chains; Tesco was no better or worse than others.

The question of Boru vodka was mentioned also. I note the director had samples of the Boru vodka tested - I am not sure if she did that personally - and that issue is ongoing.

Mrs. Owen

On a point of order, I put down questions about the Tesco and Superquinn inquiries and I was told that the Minister had no responsibility for them and the questions were disallowed, but the Minister of State is able to tell me now various aspects of the inquiries. Why were those questions disallowed - I am sure the Ceann Comhairle would have got that information from the Department? I asked about the outcome of the two inquiries and those questions were both disallowed. Is the Minister of State telling us his Department is satisfied with the final result of the director's investigation into the hello and support money? Some questions were raised about the commitment given but obviously no penalty was imposed other than the person was told to cease the practice, and the same applied to Tesco. Is the Minister of State happy with the outcome?

Mr. T. Kitt

With regard to the questions, more information comes into my possession as these issues are dealt with; I presume I have more information now than I would have had a week or two weeks ago.

Mrs. Owen

My question was disallowed and I was told the Minister had no responsibility.

A Deputy

That probably came from the Ceann Comhairle.

Mrs. Owen

He would get the lead from the Department. I know how the system works.

Mr. T. Kitt

Deputy Owen has been there and done that. In any event, I am happy to share the information I have with the Deputy. On the Superquinn issue, the future of the groceries order is one of the matters being examined by the competitions merger law groups. I am most unhappy with that whole saga and we have to examine the regime behind this. On the Tesco issue, we must be ever vigilant but it is important to make the point that there were problems across the board in different retail outlets. I am happy to share any updated information I have with the committee today. I appreciate there are specific rules within which the Ceann Comhairle must operate but we will do our best to share information with the committee as it becomes available.

Chairman

In relation to the industrial relations benefits that have accrued from the moneys available for the amalgamation of unions, which has been visible over recent years, there are 23 taxi companies in Dublin operating on 23 airways. To put it simply, if a person lives on a road in Clontarf which has 22 taxis on it and that person rings the 23rd taxi company, and that taxi is in Tallaght, the person will have to wait for that taxi to travel from Tallaght to Clontarf while the 22 idle taxis remain in Clontarf waiting for a call. We all acknowledge that there is a certain amount of pressure on taxis at peak times and that——

(Interruptions.)

Chairman

I hope they reappear in the next couple of weeks. I am putting this down as a marker and I believe the co-op and the federation representatives to whom I have spoken on this issue, including Dublin Corporation and the Director of Traffic, would be happy to put in place the amalgamation of those 23 companies, as enormous benefit would accrue from it. The Minister's office might be flexible in its approach. I am not sure whether he is strict in terms of whether it has to be a union. These are actual companies——

Ms Harney

Is this a merger of the taxi companies?

Chairman

It is a radio company but it could be accommodated by way of the taxi federation or the national union co-op. I am merely putting down a marker. Reference was made to the scaffolding strike. I raised a query arising out of the BATU difficulties including cases of unofficial strikes. Unfortunately - the Minister might be aware of this - a thriving company lost a co-director because the company closed as a result of a particular stipulation in BATU's regulations. I understand it is the only union of the 13 operating in the construction industry that had such a regulation in place. I am fearful it may spread to the other sectors and create a similar problem to the scaffolding one. We all acknowledge that the construction industry has a tremendous spin-off to the economy. Would the Minister of State like to comment now or return to the issue at a later stage?

Mr. T. Kitt

With regard to taxis, my Department and colleagues will be more than happy to help co-ordinate the trade unions. As the Chairman pointed out, it is trade union co-ordination rather than amalgamation that is required.

Chairman

Will the Department make money available to solve the problem?

Mr. T. Kitt

It is difficult to get a commitment on money.

Ms Harney

It could come from the Peace and Reconciliation Fund.

Mr. T. Kitt

We know the Chairman has an indepth knowledge of this issue. My Department would be glad to help him in any way.

With regard to the BATU issue and what has been happening in the construction industry, there has been unrest in that industry for some time. I am aware of the instances referred to by the Chairman. I hope the current dispute will result in better relations between employers and trade unions. I want a normal industrial relations climate to prevail in the sector.

I have mentioned that the Tánaiste stated in our report that only 35,000 work days were lost last year. The construction sector is under a lot of pressure with regard to industrial relations. We are aware of the problem and the Government is anxious to facilitate the establishment of better industrial relations. Trade unions and the CIF are also concerned about this issue. We must facilitate the development of better relations. Fundamental issues need to be addressed but there are people trying to do that. We will encourage the development of healthier industrial relations.

The number of cranes that can be seen along our skyline is a reflection of our thriving economy. Ireland's growth rates are not being matched elsewhere. Germany and other economies are experiencing a slow down. The construction industry is important to our economy and we must facilitate the development of good industrial relations.

Chairman

I thank the Minister of State for his positive comments, particularly his comment about taxis.

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

Deputies Lenihan, Ardagh and Perry talked about county and city enterprise boards. As the Tánaiste stated earlier, the boards have grant-aided more than 10,000 projects and created more than 16,000 jobs up date. They have been more than successful because their original target under the five year programme was 8,000 projects.

I endorse what Deputies Ardagh and Lenihan said about the South County Enterprise Board. Like most of the other boards it is a model of excellence and does great work.

Deputy Lenihan raised a question pertaining to the component on arriving at the cost per job. The cost per job is taken as the direct grant aid for the person employed, the money allowed for the capital cost of equipment and machinery and the capital costs given for construction of a building. When we subtract those three components from the total number of jobs grant-aided we are left with the average cost of a job amounting to £4,000, which is good value for money. In the old county development team system, dating from 1965-92, the average cost of a job was £3,000. Therefore, the Exchequer and taxpayer are getting good value for money if we take inflation, etc., into account.

Deputy Ardagh was worried that we were pushing the boards in a certain direction and that there may be some apprehension about that. We have a number of responsibilities. The boards receive 75 per cent of their funds from the local urban and rural development programme. The boards come under the remit of the local enterprise sub-programme of the operational programmes which operate through the community support framework. We have to fulfil our commitments to that.

As we enter a new national development plan we must show Europe that we can fulfil their desires and requirements pertaining to creating employment within the Union. As a result circulars are issued to the boards which recommend that they focus on high tech-jobs, internationally traded services, tourism, manufacturing and other services. We do not tell them they cannot continue their traditional role. However, they must be careful when grant-aiding the service industry that they do not put people out of business. They cannot duplicate services that already exist. They cannot create an uncompetitive environment for indigenous people who are giving a local service. For example, if someone set up a laundry five years ago and someone else wants to set up another one near it, it would be unfair that those who started off by their own efforts would have to compete with those who receive grant aid from the State. The original company may go out of business if the consumer demand no longer exists. Based on that situation we are committed to ensuring the boards are focused on the opportunities that exist.

Last year my Department and the local government services carried out a review of the enterprise boards. Neither my Department nor the boards was directly involved with the review. We were pleased that there was 100 per cent vindication for their performances since they were established. The report was presented to the Government. I pay tribute to the Tánaiste who analysed the report and made recommendations to the Government because it has now decided that post-1999 onwards local micro enterprise functions will be vested in the county and city enterprise boards. We have to create the national development programme for the next five years and we hope to persuade Europe to continue to part fund the boards' programmes.

Mrs. Owen

Why has the allocation been reduced by £1 million?

Mr. Treacy

The Deputy is looking at the net Estimate for 1999 against the gross outturn for 1998. We had a Supplementary Estimate last year which took account of extra jobs and demands. We gave them extra money and the sum of £1 million was mentioned. No barrier has been placed on the performance of the boards. If they need extra cash at the end of the year we will try to accommodate them.

Mrs. Owen

Will the Department be introducing a Supplementary Estimate?

Mr. Treacy

No.

Mrs. Owen

The boards cost £22.7 million to run but if the allocation is reduced by £1 million, someone will lose out.

Mr. Treacy

The 1999 net Estimate against the 1998 gross outturn is £1 million down. Last year's gross outturn included the net Estimate for 1998 plus a Supplementary Estimate. When we were preparing the Estimates the Minister for Finance gave strict instructions that we could only base our Estimates on the previous year's net Estimates, not on the gross outturn. Perhaps that is what shows £1 million down. It is not a negative statement.

Mrs. Owen

It is.

Mr. Treacy

That is the position. The net Estimate against the gross outturn is a different situation. It is an accountancy matter.

Mrs. Owen

It is no help if South Dublin Enterprise Board does not get the extra £40,000 it needs.

Mr. Treacy

The boards were a new structure and it took them some time to evolve and manage funds in a professional manner. Over the years we found that managing the funds through the use of Estimates and where allocations were made, the boards only drew down 70 per cent of the allocation at the end of the year. That drawdown has now reached 80 per cent. Based on that situation there is room for some flexibility and, therefore, there is no need to worry about this issue.

Mrs. Owen

It will all right on the night.

Mr. Treacy

It will always be fine once we are doing positive work on behalf of the economy.

Mrs. Owen

Deputy Treacy will be in the European Parliament and his successor will be worrying about it.

Mr. Treacy

I assure the Department that wherever I am I would never intend to leave anything negative behind me.

Mrs. Owen

A Kitt brother could be sitting there next year and answering us.

Mr. Treacy

There will always be a positive transfer of the baton, no matter what race we are running. East Galway produces good quality people, no matter which constituency they represent.

Mrs. Owen

Three of you are from Galway. We have no hope.

Mr. Treacy

There are even more elsewhere in the Houses. Migration has always been a problem for us.

We are very pleased that, as a result of the Government's decision, it is now clear that we are committed to ensuring that the enterprise initiative is focused within the Department of Enterprise, Trade and Employment, Enterprise Ireland, the county and city enterprise boards and IDA. As a result, we are in a better position to manage an enterprise culture and enterprise development. The enterprise boards have been asked to look at companies they have supported and created to see how those companies can be grown, taken to international markets and transferred to Enterprise Ireland. We are confident that this measure will help these indigenous companies to grow in the future.

Deputy Lenihan asked if we are committed to ensuring that credit unions can give soft loans. Of course we are committed to this but credit unions must operate within the legislation which has been passed for them. I have referred a number of initiatives to the credit unions over the past year and I would be delighted if credit unions could make use of opportunities for involvement in community development. Like the enterprise boards, credit unions are operating in a new environment. New legislation has been passed regarding credit unions and they continue to do a wonderful job. I am confident that in the immediate and medium term future they will be able to give much greater support to community development and job creation at a local level. They must, of course, operate within the terms of the legislation which governs them.

Deputy Ardagh referred to the European Space Agency. He asked why the Estimates were showing an outturn for 1998 of £2,000 and for 1999 of £4.99 million. The original Estimate for 1997 was £4.8 million. A Supplementary Estimate for £4.9 million was approved in 1997 to enable payment of the 1998 ESA contribution in advance. In the past, when we had financial difficulties we were not in a position to make our contributions to the ESA in the appropriate year. However, we always made a nominal contribution and made our contribution in the following year, thereby maintaining our membership of the ESA. We gave a commitment that when our economy improved, we would pay some of our contributions in advance to compensate for the earlier arrangement.

The ESA is very important to Ireland. We contribute approximately £5 million but that will be increased in the future because contributions are calculated at 0.2 per cent of GDP. Agreement on the level of contributions has been reached for the next three years but it will increase significantly after that. We estimate that the ESA is worth £27 million per annum to Ireland by way of contracts. We made a very detailed review before we made a decision regarding our membership for the next three years. A full day's information meeting was held, involving the Departments of Enterprise, Trade and Employment and Finance, Enterprise Ireland and many of the companies which have benefited from ESA operations. At the end of the day we were convinced that we should invest in ESA.

The Chairman has raised the question of communication. One of the companies of the Armstrong group had a great success with a communications contract for ESA. They may be able to assist in solving the Dublin taxi problem.

Mrs. Owen

They will be trying to drive space ships down O'Connell Street. Deputy Callely will be flying around the moon.

Mr. Treacy

We sent for the director of the ESA and had a very detailed discussion with him concerning our relationship with the agency because there were certain things with which we were not pleased. That meeting was very fruitful and today the director of our office of science and technology, Mr. McCabe, is attending a meeting of the council of the ESA. We are making steady progress in having an Irish person included in a future space mission. A number of fully trained and qualified people are on stand-by.

Mr. C. Lenihan

Can we send Deputy Owen?

Mr. Treacy

This may be amusing but Members must understand that involvement in the ESA gives a small nation such as Ireland a huge international profile and shows the excellence of our people. Professor Laura McKenna is doing wonderful work; I met her yesterday. We are committed to ensuring that Ireland's talents are recognised and we hope an Irish person will take part in a space programme in the near future.

Mrs. Owen

Is the Minister saying that this is money owed by Ireland to the ESA?

Mr. Treacy

Yes. We owed money.

Chairman

I have a particular interest in the hairdressing industry and I received a query from a constituent who is a hairdresser in Santry. As a service industry, can she avail of the support of the county enterprise board?

Mr. Treacy

I would have thought not. The hairdressing industry is one of the most lucrative in the country and gives between 100 per cent and 300 per cent profit on performance. It is a popular service with a huge consumer demand. It is a matter for each county enterprise board to decide which industries to support but I doubt if hairdressing would qualify.

Chairman

That concludes the discussion on the Estimates. I thank the Tánaiste and Minister for Enterprise, Trade and Employment and the Ministers of State for the forthright way in which they answered questions. I thank Mr. Roddy Molloy, assistant secretary, and the officials of the Department for providing the necessary documentation for Members and for their attendance. I thank the Members, particularly the Opposition spokesperson, Deputy Owen, for their positive contributions.