I thank the select committee for the opportunity to present my Department's 2007 Estimate which totals €1,509 million gross, made up of €1,039 million in current expenditure and €470 million in capital expenditure. Overall, the gross Estimate represents an increase of 8% on the 2006 Estimate and 11% on the 2006 outturn. In addition, a sum of €16.322 million is included in my Department's Vote by way of carryover of capital savings from 2006. The committee may also wish to note that the national training fund will contribute €395.666 million on top of the Exchequer allocation in my Department's Vote to upgrade the skills of the labour force.
As members will be aware, my Department's remit extends across a wide range of activity which is crucial to supporting the economy and the labour market. The brief which has already been circulated itemises the 2007 Estimate allocations by subhead and shows the corresponding Estimate and outturn figures for 2006. My Department's annual output statement for 2007 has also been submitted for consideration. As the committee will be aware, the annual output statement is a fundamental part of the Government's drive to reform the Estimates process and to set out more visibly the objectives, outputs and outcomes for the investment of public funds.
The annual output statement sets out 2007 budgets and targets for the key programme areas in my Department's Vote. There are some differences in layout between the annual output statement and the revised Estimates volume. Most notably, administrative expenditure, which is shown as a separate heading in the Revised Estimates volume, is apportioned to the appropriate programme areas in the annual output statement. My Department is hopeful that the Department of Finance will agree to align the structure of the Vote more closely to the annual output statement to assist the committee in its deliberations on the Estimate. The annual output statement provides details of own resource income, where applicable, for agencies under the aegis of my Department.
I will outline for the committee some of my key objectives in the 2007 Estimate as set out in the annual output statement. The enterprise development programme priority detailed in the annual output statement is the mechanism to fund activities carried out by Forfás, IDA Ireland, Enterprise Ireland, Shannon Development, InterTradeIreland, the National Standards Authority of Ireland and the city and county enterprise boards. A small amount is provided for the monitoring and evaluation of European Union co-financed programmes in the delivery of which some agencies are involved. The objectives of the programme are to improve competitiveness and growth by promoting entrepreneurship, increasing exports, attracting foreign investment in high value manufacturing and services, encouraging all-island enterprise collaboration and contributing to balanced regional development.
Exchequer funding for enterprise development in my Department's Estimate for 2007 amounts to €396.535 million. The figure includes funding which will be spent on staff and overheads in the Department, the formulation of policy and facilitation of the work of the enterprise development agencies. The Exchequer allocation in this programme area represents an increase of 11% on the 2006 return. A further €5.33 million is available for enterprise development activities from capital savings carried over from 2006. Almost €4.5 million of the carried over fund will be used to implement recommendations of the small business forum, especially those aimed at the promotion of entrepreneurship in the education system, the development of appropriate ICT strategies for small businesses and a scheme to promote innovation, research and development in the sector. These initiatives will be delivered through the county and city enterprise boards which aim to assist 1,000 enterprises this year. The boards have set a target of engaging 12,000 students in enterprise education.
The enterprise strategy group's 2004 report presented a vision for the development of the economy based on winning greater market share in fast growing sectors through innovative products and services. A key plank of my Department's response to the group's report has been Enterprise Ireland's three year strategy to help transform industry. The primary objectives of the strategy are: to develop quality, sustainable and scalable start-up companies; to assist companies in achieving international scale; to promote industry-led research and development and to grow exports strongly. Enterprise Ireland had some notable successes with its client companies in 2006. Significant first-time export sales contracts with a value of €125 million were won by client companies with Enterprise Ireland input. Overall, Enterprise Ireland companies achieved €1 billion in new export sales in 2006. The agency aims to continue to perform in the area in 2007 and help its client companies to achieve further new export sales of over €1 billion
In 2006, 76 companies with high export growth potential were established with support from Enterprise Ireland, bringing the total number of high potential start-ups established over the period 2005-06 to 151. The agency plans to assist a further 75 high potential start-up companies in 2007. This year it will further support 114 companies through the productivity improvement fund and 85 participants in the enterprise platform programme. In 2006 it approved grants of €7 million for 24 community enterprise centre projects nationally at a total building cost of approximately €26 million. The agency intends to expand the scheme this year. Last year it announced an injection of €175 million to support private venture capital funds. The scheme is expected to leverage €1 billion in private equity for investment in Irish start-ups and expanding small and medium enterprises. Employment in Enterprise Ireland supported companies grew by a net 1,261 in 2006, bringing total employment in supported companies to 141,000.
While Enterprise Ireland and the county and city enterprise boards will continue to work with enterprises to achieve growth in the indigenous sector, the parallel plank of my Department's enterprise development strategy is to maximise the number of foreign direct investment projects in Ireland and ensure appropriate property solutions are available to meet their requirements. Last year was another very successful one in this context for IDA Ireland which negotiated 71 business projects with new and existing clients to lead to a total investment in the economy of €2.6 billion in the coming years. The IDA supported 54 research and development investment projects involving a total investment of almost €470 million. Almost 60% of new greenfield projects and six of every seven research and development investments commenced outside Dublin, with a wide geographical spread. Over 50% of jobs in new IDA supported projects in 2006 carried wage and salary levels in excess of €40,000 per annum, a key indication that we are attracting higher quality jobs to Ireland. Employment in IDA-supported companies increased by 3,795 in 2006, bringing total employment in supported companies to 135,487.
During 2006 IDA-supported companies had annual sales of €77 billion, spent almost €15 billion in the economy and paid over €2.8 billion in corporation tax. For 2007 the IDA has set a target of approving 115 investment projects, with 50% of all jobs approved in greenfield projects to be created in the BMW region. The IDA will also continue its strategic sites initiative to ensure we will have the necessary facilities available to meet the requirements of major foreign clients. Shannon Development will also continue to work to attract foreign investment to the Shannon free zone. Five investment projects and three research and development projects have been targeted by Shannon Development for 2007.
The important and historic developments in Northern Ireland in recent weeks open up real opportunities for economic co-operation which will benefit both parts of the island. InterTradeIreland, funded under my Department's Vote, is one of the six North-South Implementation Bodies established under the Good Friday Agreement. Its role is to exchange information and co-ordinate work on trade, business development and related matters on the island. The body has developed a broad range of programmes and projects in this regard. Funding for it in my Department's Estimate for 2007 will increase by one third, or almost €3 million, to €11.89 million. The total value of trade and business development activity generated directly by InterTradelreland's all-island business networks and firms engaged in its network projects is expected to be €36 million this year. In addition to the Exchequer allocation for enterprise development programmes which I have outlined, the development agencies will spend €176 million of own resource income on this priority in 2007.
The competitiveness of enterprises and the economy as a whole will increasingly be driven by innovation and knowledge. Global competition is creating pressure for improvements in efficiency, quality and productivity and points to an ever growing need to innovate. Increased and continuing investments in science, technology and innovation activities will be crucial to maintaining future economic stability and improving Ireland's competitive position. The Government has made a significant commitment to investing in this area through the strategy for science, technology and innovation which was launched in June 2006. The strategy constitutes one of the principal pillars of the new national development plan and has at its core a vision of Ireland being internationally renowned for the excellence of its research and at the forefront of using new knowledge for economic and social progress. Over the lifetime of the plan the State will invest €6.1 billion in science, technology and innovation, of which the enterprise element amounts to €1.29 billion. Gross Exchequer funding for science, technology and innovation in my Department's Estimate for 2007, including the Department's own administrative and support costs, will amount to €298.3 million. This represents an increase of just under €42 million, or 16%, on the 2006 outturn and reflects the objective of making a quantum leap forward in the area of research and development. In addition, a sum of €8.992 million will be available for this programme area from the carryover of unspent capital allocations in 2006.
Funding in my Department's Estimate will primarily be used by Science Foundation Ireland and Enterprise Ireland to develop sustainable world class research systems, increase research and development in firms, and encourage stronger links between the higher education sector and industry. The costs of the Patents Office are also included in the funding allocated. Funding for the discover science and engineering programme will also be increased. The fruits of our investment in the science strategy are already beginning to be seen. A total of 54 research and development investment projects were supported by the IDA in 2006. Already this year we have seen the announcement of over 1,100 new jobs in high end industries and services. The IDA proposes to fund a further 50 research and development projects this year. During 2006 over 550 companies spent €100,000 or more on research and development projects. The objective for 2007, as set out in the annual output statement, is to increase the number of companies investing in this level of research and development to 617.
Over 40 companies spent in excess of €2 million on research and development activity in 2006. The aim is to maintain this level of engagement this year. A total of 115 projects were supported under Enterprise Ireland's commercialisation fund, the purpose of which is to support research projects to develop products with commercial potential to a point where companies can take them up. Science Foundation Ireland made a total of 468 awards across all of its main programmes in 2006 and supported 234 bio and ICT principal investigators, leading world-class research teams. This year the agency aims to process 500 new awards to higher education institutions and to maintain the number of principal investigators in the fields of bio and ICT research at around the same level. It will also continue to fund seven existing centres for science, engineering and technology and plans to make awards to two new centres. In addition, it will support four new strategic research clusters. A further objective for the current year is to promote awareness of the new EU seventh framework programme, with a view to optimising Ireland's involvement in the programme. To this end, a national director's office has been established. There will also be 35 contact points around the country to promote the framework programme. Overall, investment in science and technology for industry in the Department's Estimate will enhance innovation and competitiveness, increase output and promote employment.
Competitiveness and employment will be further underpinned by the Department's investment in the development of the labour force. The availability of a well educated and highly skilled labour force has been a major contributory factor in Ireland's economic success. We wish to contribute to continued economic success by supporting the ongoing training and upskilling of the labour force. Employment grew by 86,700 in 2006, taking the total number in work above 2 million.
Public expenditure for labour force development in 2007 will amount to more than €1.09 billion gross, including a contribution of €395 million from the national training fund, NTF. That represents an overall increase of 9%, or €92 million, on the 2006 outturn, with the NTF component rising by 12%. Funding under that programme area has provided for training and employment programmes operated by the Department, FÁS, Skillnets, Enterprise Ireland, IDA Ireland, Shannon Development, and several other agencies. The NTF also provides funding for the FÁS skills and labour market research unit, and the expert group on future skills needs, which last month presented proposals on a national skills strategy to the Minister for Education and Science, Deputy Hanafin, and me.
The skills strategy sets out clear, long-term objectives for education and training performance to develop Ireland as a knowledge-based, innovation-driven, participative and inclusive economy with a highly skilled workforce. In that context, the skills strategy is complementary to that for science, technology and innovation. The skills strategy places strong emphasis on the need to upskill the labour force, something on which we have focused in recent years; we will continue to do so in 2007.
Funding for the apprenticeship programme has been increased by €17 million in 2007, including a €2 million carry-over of capital savings from 2006. The additional funding will help alleviate existing pressures in the system and allow entry waiting times to be reduced. Total funding for apprenticeships in 2007 will amount to €128 million and will support 19,600 apprenticeship places at FÁS and in the institutes of technology.
In addition to upskilling those already in employment, FÁS will continue to provide support and skills for those seeking to enter the workforce. Measures to assist the long-term unemployed will continue to be well resourced in 2007, with more than €415 million allocated to FÁS employment programmes. Average participation levels in those programmes in 2007 are expected to be of the order of 24,000. In addition, it is projected that 55,000 seeking to enter the workforce will be referred to FÁS training programmes and employment services support.
The Department has placed special emphasis on facilitating access to the labour market for people with disabilities. Such people benefit from the full range of mainstream FÁS training services and programmes. In addition, FÁS provides an extensive range of schemes and grants specifically promoting the employment of people with disabilities in the private sector. A provision of €52 million has been made in the 2007 FÁS budget for the vocational training of people with disabilities by specialist providers in the disability sector. That represents an increase of €5.8 million on the 2006 budget. A provision of €19 million has been made for employment programmes for people with disabilities, including €10.5 million for the wage subsidy scheme and €8.5 million for the supported employment programme.
Achieving high employment rates is the ultimate objective of the Department's labour market programmes, and as the annual output statement indicates, the target is set to achieve an overall employment rate of 69% in 2007, with employment rates for women and older workers of 59% and 53%, respectively.
As the number of people in employment continues to grow, my Department has an important role in protecting workers' rights. Significant commitments were made under the social partnership agreement Towards 2016 to enhance employment rights and compliance, and funding to meet those commitments is provided for in the Department's Estimate for 2007. Exchequer funding for the employment rights and industrial relations programme area in 2007, as set out in the annual output statement, will amount to €34 million gross, representing an increase of more than €11.8 million, or 53%, on the 2006 outturn. That programme area funds the activities of the Labour Relations Commission, the Labour Court, the Employment Appeals Tribunal, the new national employment rights authority and some activities aimed directly at promoting social partnership
The establishment and resourcing of the national employment rights authority is a key priority for the Department in 2007. The authority will be established formally by the employment law compliance Bill, which is at an advanced stage of preparation. Pending the statutory establishment of the authority, the body is operating on an interim basis and is preparing for the expansion of services hitherto provided by the labour inspectorate and other sections of the Department.
A director has been appointed and a management team is now substantially in place. Recruitment and assignment of the remaining staff, including a progressive increase in the number of labour inspectors from the current level of 31 to 90 by the end of 2007, is happening in the context of the authority's decentralisation to Carlow. When fully staffed, the national employment rights authority will have 141 posts. In keeping with the commitment to establish the labour inspectorate on a regionalised basis, the national employment rights authority will have offices in Dublin, Cork, Shannon and Sligo in addition to its Carlow headquarters. The Office of Public Works has begun the process of securing appropriate accommodation in all of these locations. In parallel with an increase in inspection activity, the authority intends to run three public awareness campaigns this year to inform workers of their rights under employment law.
The National Employment Rights Authority, the Employment Appeals Tribunal, the Labour Court and the Labour Relations Commission services all form part of the employment rights and industrial relations mechanisms under my Department's remit. Commitments have also been made in Towards 2016 to strengthen the resources in these bodies. This is reflected in the allocation for the employment rights and industrial relations programme area outlined in the annual output statement.
The number of cases dealt with in any year by the employment redress and industrial relations bodies varies from year to year. Their role is to be available to provide services or interventions as required. However, the Labour Relations Commission's conciliation services expect to deal with 1,500 referrals this year. Its advisory services anticipate 150 referrals. The Rights Commissioners' services will handle 6,500 cases this year.
The promotion of partnership in the workplace can contribute in a positive way to reducing the number of cases which end up with the redress bodies. Last year a new subhead, O2, was established in my Department's Vote to support the promotion of partnership at enterprise level under the workplace innovation fund. The establishment of the fund was a recommendation of the national workplace strategy and is aimed at building a commitment to workplace innovation through partnership. The fund contains two strands, one of which is accessible by the social partners, while the second which commences operation this year will provide financial support for companies which seek to improve their competitiveness and productivity by introducing new organisational processes, practises and arrangements. The allocation for the fund this year is €950,000, a substantial increase on the 2006 outturn of €301,000 which reflects an increase in activity in 2007.
My Department's investment in areas such as enterprise and innovation is underpinned by ensuring markets operate in a fair and efficient manner. Effective competition policy encourages businesses to develop and prosper by eliminating unwarranted constraints. As the economy continues to thrive and people have greater levels of disposable income, it is also important to ensure consumers are protected from unscrupulous practices by rogue traders. The objective under the commerce, competition and consumers affairs priority heading in my Department's annual output statement is to uphold high standards of corporate governance, promote efficient and competitive markets and protect the interests of consumers. This programme area finances the activities of the Competition Authority, the Office of the Director of Consumer Affairs, the interim National Consumer Agency, the Office of the Director of Corporate Enforcement, the Companies Registration Office, the Registry of Friendly Societies and the Irish Auditing and Accounting Supervisory Authority. A small grant is also made to the Consumers Association of Ireland. Gross Exchequer funding for this priority will amount to €41.519 million this year.
Members will be aware that a key priority for me this year is the establishment of the National Consumer Agency on a statutory basis and the implementation of the legislative basis for new consumer policy. This committee considered the Consumer Protection Bill in detail on 13 March. It is worth recalling that the Bill represents a fundamental realignment of national consumer policy by establishing a new agency with much expanded and enhanced powers, in effect trading a forceful new advocate for the consumer. It also replaces nine existing pieces of primary legislation with a single statute. I established the National Consumer Agency on an interim basis in June 2005 and appointed a board and interim executive chairperson to begin putting in place the infrastructure of the new organisation. As a result, the new agency will be in a position to hit the ground running when the Bill is enacted following its passage through the Oireachtas. The agency has prepared a corporate plan which has been considered by my Department. One of the objectives set out in the annual output statement for this year is approval of a corporate plan for the statutory agency and to obtain approval from the Department of Finance for the resources required to run the statutory agency on a multi-annual budgets basis. In the meantime, my Department's expenditure on consumer affairs this year will increase by €2.5 million or 43% to just under €8.4 million. This allocation will continue to fund the work of the Office of the Director of Consumer Affairs pending the establishment of the national consumer agency on a statutory basis, as well as supporting the activities of the interim board.
The Competition Authority also has an important role to play in protecting consumers and businesses from unfair competition. The authority's main achievement in 2006 was the securing of the first criminal convictions in Europe following a jury trial for competition law offences. Between February and December 2006, the authority, through prosecutions brought by the Director of Public Prosecutions, secured 17 criminal convictions arising from its investigation into a price fixing cartel in the home heating oil sector in the west. Fines totalling €122,000 were imposed and one defendant received a six month term of imprisonment, suspended for one year. The authority also initiated proceedings against an individual relating to aiding and abetting the fixing of prices in the motor trade. The defendant entered a plea of guilty in respect of the charge and was subsequently sentenced in the Central Criminal Court to 12 months imprisonment suspended for five years and fined €30,000.
The Competition Authority intends to build on its successes in securing criminal convictions for cartel offences by focusing on other sectors of the economy. This approach will be facilitated by the allocation of extra resources for investigations into cartel activity which I made to the authority last year. The proactive work undertaken by the authority, the Office of the Director of Corporate Enforcement and the National Consumer Agency will help to demonstrate to consumers that real change is under way to protect their interests.
My Department funds a number of other bodies under the commerce, competition and consumer affairs priority heading. These include the Companies Registration Office, the Office of the Director of Corporate Enforcement and the Irish Auditing and Accounting Supervisory Authority. The Office of the Director of Corporate Enforcement will continue to build on its activities and successes in addressing its twin objectives of encouraging compliance with the obligations of company law and bringing to account those who breach these obligations. This year eight additional staff will be assigned to the director by my Department to strengthen the office's resources. As part of its activities, the office will continue to provide information on and raise awareness of the legal obligations of companies, directors, secretaries and auditors. A new guidance book on the governance of property management companies will be prepared and issued. The office will continue to pursue its detection and enforcement activities and expects to initiate 50 new criminal, civil and other proceedings, including seven further major cases, and achieve 100 criminal convictions, civil disqualifications or other outcomes by the end of the year. In a further 350 cases decisions will be made to avoid, correct or sanction potential non-compliance. The persistent misconduct of phoenix-type companies will also receive attention this year.
The Companies Registration Office will continue to ensure the enforcement of the requirement under the Companies Act for companies to file returns. In 2006 the office generated income of almost €33 million from fines for late filing of returns by companies. However, the compliance rate has been increasing and the office hopes to increase it from 88% of companies in 2006 to 89.5% this year with a consequent decrease in the level of fines imposed.
Occupational health and safety is a stand-alone priority in my Department's annual output statement for 2007. The programme area sets out funding for the activities of the Health and Safety Authority. Gross Exchequer funding for the authority this year will amount to €23.3 million which will be supplemented by a small amount from own resource income generated by the authority's activities. Health and safety at work is in the interests not only of employers and workers, but also of society in general, including the families of those at risk of injury or death in workplace accidents. Last year 50 workplace fatalities were reported. While this figure was down significantly from the 74 deaths reported in 2005, every workplace fatality is one too many for families and others.
The Health and Safety Authority's remit is to improve and enforce health and safety at work. It performs its tasks by promoting good standards, carrying out inspections to monitor compliance with legislation, investigating serious occupational accidents and publishing codes of practice, guidance and information. In 2006 it increased its inspection rate by 13% and ran focused campaigns in the high risk agriculture, construction, mines and quarries sectors. A total of 15,365 inspections were carried out in 2006, which number the authority plans to increase to 16,000 this year. It pursued 39 prosecutions in 2006, media coverage of which served as a caution to employers and employees on workplace safety, health and welfare issues.
A major development in health and safety in 2006 was the launch of the code of practice for preventing injury and occupational ill-health in agriculture. The code has been delivered to 160,000 farmers nationally and aims to provide practical guidance to help prevent and reduce the incidence of accidents, fatalities and ill-health on farms. Agriculture continues to have one of the highest workplace fatality rates of any sector in the economy. Of the 50 reported workplace fatalities in 2006, the highest number — 18 — was recorded in the agriculture sector. These 18 fatalities account for 36% of all workplace fatalities. The publication of the code of practice is, therefore, an important development in our efforts to improve safety on farms. The code was developed by the farm safety advisory committee of the Health and Safety Authority and the project was jointly funded by the authority and the Department of Agriculture and Food. A public awareness campaign on the code was launched in January and training is being provided for farmers by Teagasc and other approved trainers. It is planned to invite approximately 20,000 farmers to attend training this year
Other sectors which will be prioritised by the Health and Safety Authority for attention this year include construction, mines and quarries, the health service, local authorities and processing industries. Unfortunately, as employment and economic activity in these and other areas increase, accidents will occur. The target set in the annual output statement for 2007 is a decrease in the number incurring occupational injuries or becoming ill from the 2006 level of 60 workers per 1,000.
The remit of the Health and Safety Authority was expanded in 2006 as a result of the Government's decision to designate the authority as the competent body for the European Union's REACH chemicals regulation which will enter into force on 1 June. Pre-registration of chemicals with the new European Chemicals Agency in Helsinki will be required by the end of November 2008. Drafting will begin this year on new enforcement legislation for REACH which must be in place by November 2008. The authority's campaign to inform industry of its obligations under REACH is under way and additional staff have been recruited to carry out the authority's work under the new regulation. Other priorities for the Health and Safety Authority this year, as set out in the annual output statement, will be the publication of regulations on quarrying and the finalisation of a revised code of practice on the prevention of bullying in the workplace.
In addition to the key programme areas I have outlined, my Department's Estimate for 2007 under the heading of "Other Services" provides funding for a number of diverse activities, including the cost of research studies for the Department; subscriptions to international organisations; funding for commissions, committees and special inquiries; superannuation for members of the Labour Court and the Competition Authority; refund to the Exchequer of export credit insurance; and other miscellaneous payments. The total Exchequer allocation for this area this year is €20.243 million. My Department's priorities in this area are to ensure Ireland fulfils its obligations to contribute to international organisations such as the ILO, the European Space Agency and the World Intellectual Property Organisation; to provide funding to support the work of committees such as the company law review group, joint labour committees and the Business Regulation Forum; to provide funding for the pensions of former members of the Labour Court and the Competition Authority; and to ensure resources are available for other miscellaneous charges on the Department, including potential legal costs.
Following my comments last year, I wish to update the committee on the progress being made by my Department on decentralisation. Under the Government's decentralisation programme, 288 posts from my Department are due to move to Carlow. It has been agreed that approximately 100 staff from the National Employment Rights Authority and the Companies Office, with a number of support staff, will participate in an advance move to Carlow around the middle of this year. This advance move will take place on a voluntary basis to facilitate staff. Assignments are being made in accordance with the protocols agreed between the Department of Finance and unions. Levels of interest in the advance move are promising. As at 29 March, 83 staff had confirmed they would participate in the initial advance move. The remaining posts will be filled by competitive interview.
I thank the Chairman and committee members for giving me the opportunity to outline my Department's Estimate for 2007 and the key objectives for the use of the funding allocated. I will be happy to answer any questions about the Estimate.