I thank the Chairman and members for the opportunity to present my Department's Estimates and annual output statement.
The last year has been a turbulent one for every economy. It is well documented that the financial crisis which hit the world from last September with the collapse of Lehman Brothers has been of a magnitude which has not been experienced for almost a century. Adapting to this crisis has been difficult, even for those economies which were traditionally regarded as among the strongest and most robust in the world. Japan, America and Germany have all had to cope with sudden and dramatic reductions in exports and consumer sentiment. Virtually no country has been immune from the fall-out of the economic downturn and Ireland as a small open economy has experienced the impact of international events.
In light of this, the Government has had to make some very tough decisions in this year's Estimates. Cutting public expenditure is never popular. However, in the current economic circumstances, it was necessary. There are no quick-fix solutions to the situation we find ourselves in, but recent expenditure returns published by the Department of Finance indicate that the Government's policies are beginning to result in a stabilisation of the public finances. This will provide a platform to restore confidence in our economy.
However, reducing public expenditure alone will not steer us out of the current economic difficulties. We also need to be proactive in pursuing policies which will keep the life blood of the economy flowing. We need to ensure that we do all we can to prevent the re-emergence of structural long-term unemployment which blighted this country in the 1980s. We need, above all, to ensure that we are in a position to benefit from the upturn in the global economy when it inevitably comes.
My Department has a central role to play in supporting companies and workers through the present difficulties, and in providing them with the mechanism and skills that will enable them to seize the opportunities that will emerge from the global recovery when it comes.
The brief which has been circulated to the committee itemises my Department's 2009 Estimate allocation by subhead and shows the corresponding Estimate and outturn figure for 2008. My Department's annual output statement for 2009 has also been submitted for consideration. The annual output statement breaks down my Department's Estimate over seven key programme areas and sets out targets for each of these areas for 2009. It also provides details of the progress made against the targets that were set for 2008. I am glad to report that my Department met or exceeded most of its targets in 2008, in spite of the poor economic environment in the second half of the year. The annual output statement provides explanations for the small number of areas where the outcomes were not as high as expected. The Estimate of net voted expenditure for my Department for 2009, as published in the Revised Estimates volume totals €1,469.387 million. This sum is made up of just over €981 million in current expenditure and €488.3 million in capital expenditure.
Appropriations-in-aid in my Department's Estimate will amount to €87.310 million in 2009, giving a gross allocation from the Exchequer of over €1.556 billion this year. This represents an increase of 3% on the provisional outturn for last year, although it is some €31 million lower than the amount originally provided for in the 2008 Estimate. In addition to the 2009 Estimate provision, which the committee is being asked to examine today, a sum of €18.326 million is available to my Department's Vote by way of carryover of capital savings from 2008.
The committee may also wish to note that the national training fund will contribute €381.483 million to my Department this year on top of the voted Exchequer allocation. The national training fund is used to upgrade the skills of the labour force through training and research into future skills needs. A particular emphasis is being placed this year on providing supports from the fund for those who have recently lost their jobs. The annual output statement also provides details of own resource income, which some of my Department's agencies expect to generate and use in the delivery of their programmes this year. This income, like the national training fund, is additional to the voted Estimate. When all sources of income are taken into account for my Department's programmes, the total gross expenditure for 2009 will amount to €2.058 billion.
I would now like to outline some of the key objectives for the use of these funds, as set out in the annual output statement, starting with the area of science, technology and innovation. The strategy is a whole-of-government approach to improving competitiveness and growth through targeted investment in research, development and innovation. Funding for the science, technology and innovation programme areas in my Department’s Vote for 2009 will amount to €317.3 million, including administrative costs. A further €6 million is available in capital savings carried over from 2008. My Department plays a key role in delivering the strategy for science, technology and innovation through its co-ordination function and through the activities of Science Foundation Ireland and Enterprise Ireland. Funding is also provided for the Discover Science and Engineering programme and some smaller projects as outlined in the annual output statement. IDA Ireland has a complementary role to play in promoting research and development through its activity and funding under the enterprise development programme area, which I will touch on later.
The role of my Department's agencies under the science strategy is to help enterprises become more competitive through investment in research, development and innovation and to realise the commercial potential of that research and innovation. The work being carried out by my Department and its agencies is having a real and positive impact on improving Ireland's competitiveness, not only in high-end innovative products, but across the enterprise spectrum. This work is also meeting the objective of improving Ireland's international reputation for generating and using new technology and knowledge.
The impact is being seen through the following: the increase in research and development activity in indigenous companies; the growth of spin-out and incubation companies; the generation of technology licences and technology transfers; the collaboration of enterprises in the centres for science, engineering and technology; research clusters and competence centres; and through the number of research projects being won by IDA Ireland arising from the groundwork carried out by Science Foundation Ireland, SFI, and Enterprise Ireland.
In 2008, 56 research, development and innovation projects were approved by the IDA. Also in 2008, 707 companies in Ireland spent in excess of €100,000 on research and development; a further 49 companies spent in excess of €2 million on research and development. This represents increases of 13% and 16%, respectively, over 2007. These improvements are a measure of how we are bringing about an important shift in the mindsets of companies and creating a realisation that research, development and innovation are key ingredients of success in today's global economy. Of course, successful companies create jobs and sustain local business and employment through spin-off services.
Science Foundation Ireland operates a range of programmes designed to deliver a world-class standard of research activity to Irish enterprises and institutions. There are now world-class research teams working with over 359 distinct companies in Ireland. SFI's remit was extended in 2008 to include research activities in areas of sustainable energy and energy efficient technologies. These areas offer potential for employment growth in the coming years.
My objectives for 2009, through the funding provided for the science, technology and innovation programme areas, are as follows: to promote research and development in companies; continue to support and develop the centres for science, engineering and technology, and the strategic research clusters; increase the commercialisation of publicly funded research; create six new competence centres, involving over 60 companies in collaborative research; and win further research, development and innovation investments through IDA Ireland. The target is to approve 53 such projects in 2009. SFI will also publish its energy strategy, in line with its remit in the areas of sustainable energy and energy-efficient technologies. Specific targets for 2009 are set out in the annual output statement.
Investment in science, technology and innovation in my Department's Vote is complementary to the wider range of activities supporting industry in the enterprise development and competitiveness programme area. The objective of this programme area is to optimise competitiveness and growth by promoting entrepreneurship, all-island enterprise collaboration, foreign investment in high value-added manufacturing and services activities, scaled increases of exports and balanced regional development. The programme area funds activities carried out by Forfás, IDA Ireland, Enterprise Ireland, Shannon Development, the county and city enterprise boards, the National Standards Authority of Ireland and InterTradelreland. Funding is also provided for enterprise development under the INTERREG programme, and for the monitoring and evaluation of related EU co-financed programmes. Total funding available for this programme area in 2009 amounts to €514.3 million, including own resource income, which the enterprise development agencies will generate. The Exchequer contribution is €403.3 million, including the cost of my Department's staff who oversee the work of the agencies. A further €9.8 million in Exchequer funding is available from capital savings carried over from 2008.
Enterprise development and export growth are the linchpins on which our economy will recover. It is only through enterprise, and the employment and income that it generates, that we can restore economic growth, protect our long-term competitiveness and fund services in other areas of government. The industrial development agencies are playing a vital role in supporting enterprise and in attracting new investment to Ireland.
In spite of the global economic downturn, Enterprise Ireland's targets were generally met or exceeded last year. In 2008, Enterprise Ireland supported 71 high-potential start-up companies across a range of knowledge-intensive sectors. These companies are expected to create close to 1,000 new jobs over the next three years. Enterprise Ireland clients also succeeded in reaching the target of achieving some €1.33 billion in new export sales in 2008. Some 608 companies assisted by Enterprise Ireland achieved annual global sales of €5 million for the first time in 2008. A further 226 companies achieved global sales of €20 million for the first time last year. The fact that all of this was achieved in the face of contracting international markets is a credit to the tenacity and resilience of those Irish enterprises that continue to compete for and win new business overseas. It is also a credit to the staff in Enterprise Ireland who have supported these companies and it demonstrates that the Government's enterprise strategy is paying off.
The enterprise stabilisation fund, which was announced in the supplementary budget in April, is further evidence of this Government's commitment to supporting business in the current challenging environment. This fund is targeted at vulnerable, but viable, internationally trading companies to help them survive the current downturn by supporting their drive to reduce costs and gain sales in overseas markets. Some €50 million has been allocated to Enterprise Ireland in 2009 for the stabilisation fund and a further €50 million will be provided in 2010.
Foreign direct investment, FDI, has been hugely important for the Irish economy and job creation over the past 30 years. Over 136,000 people are employed in IDA-supported companies and these companies contribute in the region of €16 billion per annum to the Irish economy. Apart from the employment generated directly by foreign companies established in Ireland, further jobs are created in local businesses that provide supplies and supports to the larger companies. In 2008, the IDA approved 130 new investment projects, with the potential to create 9,500 new jobs over the next three to five years. These investments will also help to sustain existing jobs and help the companies to develop higher value products and services. The number of new investments approved by the IDA in 2008 exceeded the agency's target of 122 investments. This strong performance is attributable to a concentration on the research and development agenda, building on work under the science strategy. Some 60% of the investment projects approved by the IDA in 2008 are for outside the greater Dublin area. The IDA's results show there is still potential to attract investment to Ireland, even in these challenging times. The IDA has set a target to approve 125 investment projects this year. A key component will be to ensure that the investments have sufficient scale and impact and make a significant contribution to the development of the regional and national economy.
Shannon Development also performed well in 2008 in a difficult global business environment. Ten new investment projects were approved last year and 576 new jobs were created, a net gain of 108 jobs. Shannon Development is committed to working with its existing client companies this year to sustain their operations in Shannon and win incremental activity. The agency hopes to approve a further ten investment projects this year.
The county and city enterprise boards, CCEBs, will also continue to play a key role in the Government's enterprise strategy by providing support for micro-enterprises, and by stimulating entrepreneurship at local level. The CCEBs also promote entrepreneurship through their collaboration with schools and through the national student enterprise awards scheme. A total of 959 projects were approved for financial assistance from the CCEBs in 2008 and more than 21,900 people participated on management and capability development training courses. There were some 33,811 net jobs in CCEB-assisted enterprises in 2008. The 2009 targets for the CCEBs, and for the other industrial development agencies, are set out in the annual output statement.
While we will work with the enterprise sector to maintain existing jobs and create new ones, one of my key priorities is to assist the large numbers who have recently lost their jobs as a consequence of the global economic downturn. To this end, the labour force development programme area in my Department's Vote will focus heavily this year on measures to assist the unemployed. Total funding of €1.1 billion is available to my Department in 2009 for labour force development activities. This includes a contribution of €381 million from the national training fund. The allocation will fund a range of programmes operated by FÁS, as well as training for those in employment operated by Skillnets, Enterprise Ireland, IDA Ireland, Shannon Development and a small number of other organisations. My objectives for 2009 in this programme area are to increase the capacity of FÁS to handle the extra demand for its employment services and to provide activation services to a greater number of unemployed people to help them get back into employment as soon as possible.
Since the end of last year, the Government has taken a variety of actions to help those who are unemployed to get back to work. For instance, in recent months we have doubled the capacity in job search support, training and work experience programmes. In particular, the capacity of the job search supports provided by FÁS employment services and the local employment services has been doubled to 150,000 places per year. In addition, the number of people who can be offered training places under the auspices of my Department has been doubled to 128,000 places. Moreover, I have launched initiatives such as the work placement programme, which aims to provide participants with six months work experience, and the short-time training programme, which trains people who are on short-time working. In both cases, participants are allowed to retain their social welfare allowances while participating on these programmes.
I also announced last month details of several new training programmes for those who have lost their jobs in the construction sector to convert or upgrade their skills to take advantage of new opportunities emerging in renewable technologies and energy efficiencies. A number of special measures have also been introduced to help redundant apprentices in the construction trades to progress their training towards qualification. I assure the committee that I will continue to work with my Government colleagues on developing schemes to address the current unemployment situation and providing workers with every possible support to find alternative employment.
Notwithstanding the increase in the numbers who have become unemployed recently, there are still close to 2 million people at work in the State. Safeguarding their rights and ensuring that they receive their appropriate entitlements, especially if they are made redundant, forms the core work of the programme areas dealing with employment rights, industrial relations and occupational health and safely. Total funding for this programme area in 2009 will amount to just over €51 million, as set out in the annual output statement.
The programme area funds the activities of the Labour Relations Commission, the Labour Court, the Employment Appeals Tribunal, the National Employment Rights Authority and other activities aimed directly at promoting social partnership. It also funds the activities of the Health and Safety Authority and the administration of the redundancy and insolvency payments schemes in my Department. My priorities for this programme area this year are as follows. We intend to deliver the Government's legislative commitments in the area of employment rights and industrial relations, including the employment law compliance Bill, the agencies regulation Bill and the industrial relations (amendment) Bill. We will continue to promote and support a stable industrial relations climate, including through the provision of effective dispute resolution mechanisms such as the Labour Relations Commission and the Labour Court. In the area of health and safety, we will continue to prioritise the high-risk sectors, like agriculture and construction, and will prepare and introduce secondary legislation that will provide the necessary enforcement regime for certain EU chemicals regulations.
My Department is also working to ensure that the significantly increased volume of claims for payments to workers who lose their jobs through redundancy or company insolvency are processed and paid within a reasonable timeframe. There has been a backlog in this area due to the unprecedented number of redundancies in recent months. However, measures have been taken within my Department to address the impact of the influx, including the reassignment of 19 additional staff from other areas of the Department to the redundancy payments area; the prioritisation of the Department's overtime budget to the redundancy payments section to tackle the backlog; the establishment of a special call handling facility to deal with the high volume of telephone calls from people and businesses who are inquiring about their payments — we are using the facilities and co-operation of NERA to help with this process; and the provision of better quality information on the Department's website relating to current processing times.
To put the size of the challenge facing the staff in the redundancy section into perspective, the number of redundancies in 2008 was 40,607, which represented an increase of almost 60% on the figure for 2007. The volume of new claims to end of May this year was almost 36,000, a level which was not reached until well into October last year. I am optimistic that the measures we have put in place to address this huge increase in redundancy claims will bear fruit. My Department will keep the situation under review and take whatever additional measures are necessary to ensure that the backlog is dealt with as swiftly as possible.
The investments in enterprise, research and innovation which I have outlined previously are underpinned by ensuring that markets work in an efficient manner, that fair competition is promoted and that consumers' interests are safeguarded. The commerce, consumers and competition programme area in my Department's Vote seeks to ensure that there is an environment in which trade and consumer transactions can take place on a fair and equitable basis. This programme area funds the activities of the Competition Authority, the 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. The allocation for these activities for 2009, as set out in the annual output statement, is €33.358 million. Related support is provided for the high level group on business regulation, the company law review group and the sales law review group under the other services programme area.
The need for a strong regulatory framework to ensure fair and equitable trading has been highlighted by recent national and international events. However, it is also important to strike a balance between regulation and the need to reduce unnecessary red tape to allow businesses to operate effectively. My priorities for this programme area for 2009 are as follows. It is intended to publish legislation to merge the National Consumer Agency and the Competition Authority in line with the Government decision of last October. This legislation will also amend competition law provisions following a review of its operation and implementation, and will give effect to Government commitments concerning collective agreements. I hope to achieve substantial progress on the review being undertaken by the sales law review group of the legislation governing the sale of goods and supply of services. My Department will provide continued support for the high level group on business regulation, which has a strong and expanding work programme of actions for 2009. The group's recommendations are already estimated to have saved Irish business some €20 million per annum in administrative costs through cutting out paperwork, revising the rules for small businesses and making much better use of secure online services. To ensure that competitiveness is enhanced, my Department will work, initially with the Competition Authority and then with other Departments, to identify and prioritise those recommendations of the authority whose implementation will have greatest impact on competitiveness.
Among my other priorities for this programme area, as set out in the annual output statement, is to ensure, as far as is practicable, the enactment of the Companies (Amendment) Bill 2009. This Bill was drafted to address a small number of perceived weaknesses in existing company law, relating in particular to the provisions of the Companies Act 1990 dealing with investigations by the Office of the Director of Corporate Enforcement, among others, and transactions involving loans to directors of companies.
Underpinning all of the programmes I have outlined, the annual output statement includes a programme on the delivery of strategic goals. My office and those of my Ministers of State and other staff of the Department receive high quality supports which ensure the delivery of the goals and outputs set out in the other programme areas. These central support services include human resources, information and communications technology, organisational support and financial administration. They are delivered through my Department's corporate services division. As well as providing services internally, the division delivers services to external customers, including the Houses of the Oireachtas, other Departments and agencies and the public. The total cost of these services this year will amount to €17.7 million, a reduction of €1.1 million, or 6%, on the 2008 outturn. The reduction reflects a number of administrative efficiencies made in the Department's core administration costs in line with the Government's objective of containing the running costs of public bodies.
My Department's Estimate for 2009 under the heading "Other Services" provides funding for several diverse activities, including subscriptions to international organisations, funding for commissions, committees and special inquiries, superannuation for retired members of the Labour Court, 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 €21.3 million, representing an increase of €3 million on the 2008 outturn. The increase is mainly attributable to increases in subscriptions to international organisations and to the provision of a contingency for legal costs related to several cases before the courts.
I thank the Chairman and the members of the committee for the opportunity to outline my Department's Estimate for 2009 and the key objectives for the funding. This year has been, and will continue to be, challenging for the economy. However, as I have outlined, we are achieving strong export growth, winning substantial inward investment and increasing our capacity to deliver new and innovative products and services. With the focus on the programmes I have outlined, I am confident we are pursuing the right policies to build the foundation for a swift economic recovery and that Ireland will be well placed to capitalise from the upturn in the global economy when it arrives. I would be pleased to answer any questions from the Chairman or the committee with regard to the Estimate.
