Select Committee on Jobs, Enterprise and Innovation debate -
Tuesday, 9 Dec 2014

Vote 32 - Jobs, Enterprise and Innovation (Supplementary)

Chairman

We now have a quorum and the committee is in public session. Apologies have been received from Deputies Áine Collins and Anthony Lawlor. All mobile phones should be switched off as they cause interference with recording equipment in committee rooms, even when on silent mode.

This meeting has been convened to consider the Supplementary Estimate for Vote 32 - Jobs, Enterprise and Innovation, which was referred by the Dáil to the committee on 3 December 2014 with an instruction to report back to the Dáil not later than 11 December 2014.

I welcome the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and his departmental officials to the meeting and thank them for the briefing material provided, which has been circulated to committee members.

Item No. 1 on the agenda is the Supplementary Estimate for Vote 32 - Jobs, Enterprise and Innovation, and I propose that the committee consider the Supplementary Estimate on a subhead-by-subhead basis. I further propose that the following arrangements apply to the debate: the Minister will make a brief address to the committee, after which each of the Opposition spokespersons will have the opportunity to make a brief response, should they wish. We can then consider the Supplementary Estimate. Is that agreed? Agreed.

I remind members that, in accordance with standing orders, the discussion should be confined to the items constituting the Supplementary Estimate, and I ask members to indicate to which subhead they are referring when contributing. I invite the Minister to begin.

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton)

I thank the Chairman for the opportunity to make a statement to introduce this Supplementary Estimate. These changes are largely technical. We do not seek new money, but the changes are necessary to reflect changes to organisational structures that we introduced. Members will know that many structural changes came to fruition in the course of this year. Local enterprise offices were established as bodies within local authorities under a service level agreement with Enterprise Ireland, and Forfás has been dissolved under legislation since August.

Shannon Development was dissolved on 5 September and in October we merged the Competition Authority with the National Consumer Agency. There has been a rationalisation of agencies, on which, as the committee knows, we are continuing to work. Legislation will be brought before the House, the Workplace Relations Bill, which is another major part of the reform agenda.

The Department has taken on two additional responsibilities. On 4 November the Government approved the establishment of the low pay commission on an interim basis, for which provision is being made in the Estimates. In October responsibility passed to the Department under the construction contracts legislation which was passed in 2013 by the Minister for Public Expenditure and Reform. The Minister of State, Deputy Gerald Nash, will take on responsibility for these two new areas. These proposals have been approved by the Department of Public Expenditure and Reform in line with the requirement to present the Estimates in a coherent way. I hope they are clear to members and I am happy to answer queries on them. I am armed with people who are experts in moving around Estimate lines. It is to be hoped we will be able to deal with any issue that arises.

Deputy Dara Calleary

I welcome the Minister and would like to give a flavour of what I will be looking for. We had a discussion and parliamentary questions on the dissolution of Forfás. In that context, I will be looking to see what budget is available within the Department for independent research and what moneys have been spent within the Department since the end of July on research.

Great improvements have been made in the past few years in the presentation of the Estimates. However, under the subhead for Enterprise Ireland in the future I would like the Minister to outline how much goes to LEOs, rather than lumping everything together in one sum. For us to make a comparison as to the effectiveness of the LEOs, we need to see the money for them highlighted.

I welcome the transfer of responsibilities for construction contracts. However, I would like to see an action or a work plan laid out as to when the Bill will be commenced. My last job as Minister of State was to bring it before the Seanad in March 2011 and it has still not been commenced. It is a very good fit for the Department, given the impact on job creation.

On the low pay commission, I would like to see a work plan established. What resources will it have within the Department in terms of staff? What access will it have to a budget to fund independent research outside the Department to allow it to do its work?

Deputy Peadar Tóibín

Recently, the Minister said there were insufficient resources within the Department to carry out important activities such as referring a report on tax evasion to the Garda. Given this, is there not a necessity to provide further resources for the Department?

Deputy Dara Calleary touched on other important issues. It is really important that the responsibilities for construction contracts are properly dealt with by the Department. I have said previously that the sector is in major chaos, having regard to the experiences of subcontractors. Staff working in the sector are being forced into subcontracting. This has been ongoing for a long period. The Bill enjoyed cross-party Oireachtas support and in the Government's An Action Plan for Jobs it was stated it would be finalised by this stage. A code of practice was to be agreed to. Is it yet to be finalised? The sector is very volatile and needs focus. Many cannot understand the hold up in completing the nomination of adjudicators.

In regard to the placing of the advertisements for staff of the low paid commission, for which €2,000 has been assigned in the Supplementary Estimate, why has this not happened to date? If the advertisement for these positions is not placed before the end of the year there is little chance they will be in place by the first quarter next year. Currently, Ireland has one of the worst records with regard to low pay and the number of people under-employed. These are two significant challenges to the economy and family lives. If we could garner that information today it would be very helpful.

Chairman

I remind members that in accordance with Standing Orders discussion should be confined to the items constituting the Supplementary Estimate. I also ask that members indicate the subhead to which their questions refer. I invite the Minister, Deputy Bruton, to address the questions relating to programme A.

Deputy Richard Bruton

On Forfás, we have worked out a protocol to ensure that it continues to have independent capacity to publish research. It continues to work to an independent National Competitiveness Council which, as members will be aware, I have reconstituted and has been working on delivery of the various NCC reports on competitive challenges which are in the public domain. It is also involved in work on the strategic policy and in bringing together the Action Plan for Jobs 2015, which is a key piece of work put together each year that seeks to identify key changes that need to be made not only in the Department of Jobs, Enterprise and Innovation but across the spectrum of Departments. A key part of this work is reports already assembled by the Departments, including the work of the high level group on skills to drive forward changes in areas where we need to make changes. Through integration within the Department of Jobs, Enterprise and Innovation we have strengthened its capacity to drive change through the new process of the action plan for jobs.

I agree with Deputy Calleary that independence is important but I am also very strongly of the view that we need a strong policy capability within the Department. It is the policy unit from which the agencies take policy direction. We need to have the resources and capacity commensurate with that. This is what Forfás is about.

The capital allocation to the local enterprise offices, LEOs, in respect of pay and non-pay matters is €18.5 million. This year we are rolling out a number of improvements in this area, including graduate recruitment, which will strengthen the base within the LEOs. As members will be aware, the business units of local authorities and LEO staff which have been merged have been very instrumental in particular areas, including the young entrepreneurs programme, which has been very successful and now includes more than 1,000 young people. Deputy Lawlor, who is not here today, and others long advocated for this initiative. It has been a huge success. Similarly, the flow of money through the microfinance scheme has doubled in the past year. Again, this has been pushed through the local enterprise offices. I am keen to see innovation through those offices.

On the low paid commission, an allocation for next year has been agreed and will be included in the Revised Estimates which will be published in due course. The sum of €500,000 is being made available to cover independent research as well as pay provisions. We are moving to place advertisements. There will be three staff initially. We will be moving to place advertisements through the Public Appointments Service for the membership of that commission. We are anxious to progress that as quickly as possible and will hopefully do so before the end of the year, as Deputy Tóibín is keen we would do.

Construction contracts only became our responsibility in late October. We are moving swiftly and the Minister of State, Deputy Gerald Nash, is keen to push ahead with codes of practice and recruitment of adjudicators, the full year costs for which will be around €0.5 million. It will require three staff which we will put in place. A statutory instrument will be required in early 2015 for the commencement of the legislation. We are moving to the appointment of arbitrators. There is no delay in moving to implement that swiftly.

The Deputy raised an issue about insufficient resources but the Chair has indicated an invitation to discuss that issue separately. I think we will take up the committee's request if the Deputy wishes to discuss that issue separately.

Chairman

I thank the Minister. I now invite him to move to programme A.

Deputy Richard Bruton

I made an opening statement in respect of all of the issues but I can go through them item by item if the committee wishes.

Chairman

Yes, please.

Deputy Richard Bruton

Subhead A1, the balance of the Forfás allocation at the end of July, is an adjustment of €2.4 million less €120,000 pay for four staff transferring to EI and €233,000 pay for staff to the HSA which is divided 50:50 between programme A and programme B. This is the allocation of the resources between the two headings, jobs and enterprise and innovation reflecting the specialisms within Forfás. The Forfás responsibility is now being transferred to the HSA. It gives rise to a transfer of costs but also gives rise to a revenue stream which is shown as a saving. Subhead A5 shows an additional pension cost in respect of IDA Ireland and Subhead A6 shows a spend until the end of August when it is being dissolved, resulting in a switch of resources.

Chairman

Are there any questions on programme A?

Deputy Dara Calleary

I have a couple of questions. On Subhead A5, in terms of the capital spend, is IDA Ireland on budget this year? Will the Minister comment specifically on the advance units being built at Waterford, Athlone and Letterkenny and indicate if they are on schedule? Is any planning under way for further advance units to be built in 2015 and, if so, is money being spent in that area? How much has IDA Ireland recouped in 2014 from companies that may not have reached their agreed targets and so on, or on property sales?

Deputy Richard Bruton

IDA Ireland is on budget in terms of its capital spend. Recoupments are covered in own-resource income. I can get the amount for the Deputy. Obviously, it waxes and wanes through the course of the year but I can get the figure for the Deputy. The advance units are well under way and will be an important dimension of regional strategy. As the Deputy is aware I am keen to develop a regional strategy and we are trying to roll that out.

Deputy Dara Calleary

We are very keen for the Minister to develop it.

Deputy Richard Bruton

Every region has seen employment growth since we started An Action Plan for Jobs process but certainly not at the same rate. I am keen to play to the strengths of regions. Like An Action Plan for Jobs it will require a reaching out to people outside of our own family of agencies. On 19 December we will have our first stakeholder engagements in the midlands which means engaging with the wider body of interests within the region. Our ambition is to have something like An Action Plan for Jobs at regional level to develop with other groups practical actions that can be taken. That is very much on our radar.

We will use a number of policy tools, of which advance units are one. We will also plan for additional similar facilities in 2015. The use of a specialist competitive start in the aviation sector worked very well in the mid-west because this approach has strength. It is our ambition to try to shape our instruments to better build the capabilities of regions.

Deputy Dara Calleary

Why was the additional allocation for pensions not anticipated? Is it connected to the transfer of Forfás responsibilities? Surely the Department should be aware of its pension requirements.

Deputy Richard Bruton

Forfás used to be the pension provider for all the agencies. However, it has now become a pension provider in its own right. The reduction arises because Forfás will no longer play a central role in the area of pensions.

Deputy Peadar Tóibín

There is nothing precluding members from discussing the issue of resources, given that they are the key element of Estimates. Does the Department have sufficient resources to meet its core responsibilities?

Is a policy shift required to rebalance investment away from IDA Ireland and towards Enterprise Ireland?

Regional resourcing is also a key issue. We have a two-tier economy, with Dublin developing at a different pace from the rest of the State. While resources are available for improving the regional spread - and it improved last year - is it not necessary to accelerate this improvement in light of the current imbalance in economic development?

Deputy Richard Bruton

There will always be issues around resources. That is true of every Department, and my Department manages resources as best it can.

On the balance between IDA Ireland and Enterprise Ireland, the latter receives a larger capital allocation as it is a much larger agency than the former. That we spend more on Enterprise Ireland than on IDA Ireland is as it should be. The former has capital programmes of its own and supports research spending in a number of areas. Unlike IDA Ireland, it has a large team spread across a range of areas. For example, it provides Lean programmes and management development programmes. IDA Ireland, which does not provide such programmes, has a responsibility for property across all of the agencies. For this reason, it receives allocations in respect of property activities that span both agencies. Favouritism is not shown towards any particular agency. It is recognised in the establishment of both IDA Ireland and Enterprise Ireland that the challenges facing Irish-owned enterprises are not the same as the challenges facing overseas enterprises.

Both IDA Ireland and Enterprise Ireland are growing apace, having both recorded very strong years in terms of employment performance. In 2013, Enterprise Ireland exceeded the export target it had set itself for 2015. I am satisfied that the programmes funded by each of the agencies are strong. I expect Enterprise Ireland to consider collaborative activities and new ways of funding activity to have a greater regional impact. As the Deputy is aware, I would also like IDA Ireland to focus more strongly on regional strategy in its strategy statement. Both agencies will shortly produce strategy statements that will reflect a much stronger regional focus. Such focus is also reflected in our initiative to have a regional enterprise strategy in each region.

We are trying to squeeze the best out of the resources available to us. The matter is not as simple as reducing the allocation to IDA Ireland or increasing the allocation to Enterprise Ireland. The Department will fund innovative programmes and companies with ambitions to grow, regardless of the sector in which they operate.

Deputy Peadar Tóibín

While I welcome the rebalancing, the Minister failed to answer the key question, namely, whether his Department has sufficient resources to meet its core responsibilities.

Deputy Richard Bruton

There is always scope for more resources. If I had more resources, I would do new things.

Deputy Peadar Tóibín

That is the environment.

Deputy Richard Bruton

That is the environment in which we live. My core responsibility is to create 100,000 jobs by 2016. We are well on our way to delivering that. There are always issues around additional resources, but every Department is in the same position. They would like to spend more resources on-----

Deputy Peadar Tóibín

Did your Department seek more resources?

Deputy Richard Bruton

We always seek more resources.

Chairman

Through the Chair, please, Deputy Tóibín.

Deputy Richard Bruton

Every Department has ambitions. The troika had slated €2 billion in actual reductions in spending programmes and increases in taxes. Instead, this year, because of our strong performance - not a small amount of it driven by my Department through employment programmes - we were actually able to put €1 billion back into the economy. We have been able to cut universal social charge, USC, rates, push out income levels at which USC cuts in, bring down the top rate of tax and push out the rate at which the top rate cuts in. We have been able to make changes which have been significant achievements. It shows that we are managing scarce resources in an innovative way and delivering the sort of change that everyone desires.

Chairman

I thank the Minister. Before we move on to programme B on innovation, I welcome the fact the midlands will be the location for the pilot project for the regional enterprise strategy, and I look forward to Friday, when the stakeholders will come together there. When does the Minister expect the Enterprise Ireland strategy to be prepared and ready?

Deputy Richard Bruton

It is very close to completion and I expect it to be published early in the new year, January probably. IDA Ireland may be a little bit behind that schedule but it is quite advanced in its work.

Programme B reflects the integration of Forfás staff into the Department and the transfer of staff from INAB, the Irish National Accreditation Board, to the Health and Safety Authority, HSA. The figure of €1.014 million in pay relates to the 54 Forfás staff transferring into the Department. Subhead B2, €324,000, is non-pay, which is moving into the administrative subhead.

There are several changes in programme C. Subhead C5, the HSA allocation, is reduced by the unresourced income of €680,000 that is coming in from INAB. Then there is €97,000 in INAB non-pay expenditure moving from subhead A3, and €233,000 in pay for staff transferring to the Department from Forfás. Previously, INAB was under Forfás.

The Supplementary Estimate also deals with the National Consumer Agency and Competition Authority allocations, with less expenditure at October. There is a nominal amount to open a new line for the low pay commission in subhead C18. These reflect the changes we have been making.

Deputy Dara Calleary

There was an issue last year when the HSA’s board expressed concerns about its ability to fulfil its mandate due to limited resources. This year has been horrific for farm deaths in particular, as well as workplace fatalities. Farm safety in particular seems to have taken a backward step this past year.

I cannot understand why, in the context of the discussion this committee had with the Department last year and what has happened this year, there would be a cut in the budget and it would not have the ability to spend that money.

The Competition and Consumer Protection Commission has not commenced its mandate with glory, given that one of its first missions was to write to the IFA in respect of the beef disputes and that it did not do anything in particular about those processing the beef and the prices they were paying the producers. I made this comment in the Dáil last year. When people stand up for producer rights the commission gets involved, and it seems to do nothing about the actual barons in the processing industry. That is just a comment. I am particularly concerned about the HSA.

Deputy Richard Bruton

Again, the HSA has not suffered a cut, although it is being presented as a cut. It is actually the new revenue coming in from the Irish National Accreditation Board, INAB, but that is the way it is presented in the accounts. It is receiving €1 million in own-resource income and extra staff. It is receiving a non-pay allocation for its new responsibilities, but the revenue shows in the way it is presented as if it were a reduction. This is the way Estimates are presented. There is no diminution in its mandate. There is a new board which is very confident that it will fulfil its mandate. There was no criticism from the board. There were some individual members who expressed concerns, as is their right, but the board has been a singularly effective body in managing its resources and introducing risk-based assessment and BeSMART methods to promote compliance in an effective way.

The HSA has placed a big emphasis on farm safety, and I do not think it could be criticised in that respect. It has been at the National Ploughing Championships. It has taken many opportunities and has stepped up its inspections in this area. There is increased activity in farming, and messages have repeatedly been put out warning farmers about safe practices, particularly where children are involved. I believe the HSA is managing its resources very effectively and getting that message out. I know that it is about building a network across the entire community in farming and getting the safety message out there. Some people are not as attuned to the message. One of the things the HSA has tried to do is to use non-traditional resources to access people and get its message across.

The Competition and Consumer Protection Commission has a statutory responsibility to uphold competition law. It cannot pick or choose those it will favour or not favour if there is a breach of the legislation, however popular or unpopular a group might be. It has to be fair in its application of the law. As the Deputy is aware, we will shortly publish the guidelines relating to the grocery trade and the commission will have a responsibility to ensure that the regulations are observed. They are statutory regulations and will be enforced with the full power of the commission, so the same strong armoury will be brought to bear on anyone who breaches those guidelines. There has been a general welcome for those in the committee. The Competition and Consumer Protection Commission is independent of any Minister of the day and that is how it should be. The commission does its job and that is the way we would want it.

Deputy Peadar Tóibín

There is a strong feeling, with regard to Irish society and enterprise, that competition problems are a significant element of the higher prices experienced in Ireland compared with other countries. This is seen throughout the pharmaceutical and the cement industries and also in the beef industry. Obviously this is a key competition challenge for the State, so any investment that is made in ensuring that there is proper competition and that market structures work properly has a massive effect on the competitiveness of the country. As has been said, the beef industry strikes me as an example of a market structure that is an oligopoly.

As such, it does not allow for strong competition between producers. It would be an ideal space for the Government to ensure there was a more competitive element to pricing and that the price experienced by suppliers was relevant to the output they - farmers themselves - were producing. It is also an issue for the cement industry in which typically we have more expensive cement than elsewhere. One reason we were told the Competition Authority could not focus on this issue in the past was resources. The authority has a very small resources element and I encourage the Minister to make a real blow to the competitive advantage of all these sectors by making sure the authority is properly resourced.

Deputy Richard Bruton

I agree with the Deputy, although it is only fair to point out that the European Commission has looked across countries and ranks us as one in which there is high competitiveness and the situation is improving. Ireland is in the top rank of countries and the Commission believes we are making good headway. This is reflected in a comparison of our price indices relative to those of other European countries whereby we are improving year on year. Our prices are still higher in significant areas but are improving across most of them, which is encouraging. However, I agree with the Deputy that we need to have a stronger competition code. We have put in place, with the assistance of the committee, stronger legislation and more effective legal mechanisms and slated additional resources for the investigative and prosecutory powers of the authority. This will provide the authority with the flexibility it needs to provide for more effective enforcement of the new legislation.

The merger of the Competition Authority and the National Consumer Agency is a positive step. They are both about effective markets and bring expertise from two sides. It is well worth looking at some of the agency's work on price comparisons in key areas where it has highlighted differences across professions, including doctors, dentists, lawyers and financial product people. The agency does great work that gives people a chance to take some of the power into their own hands. That is work it will continue to do. As always, if the Deputy has concerns about abuses of competition law in any sector, they will be investigated. If there is a sector in which there are issues anyone believes need to be investigated, this is an independent body which will look at the case being made without fear or favour. This is reflected in some of the earlier comments made. It will investigate, regardless of who is involved.

Deputy Seán Kyne

This goes back to what Deputy Dara Calleary said about the Health and Safety Authority. The Minister has said it is being presented as a decrease, but it is an increase. Will he clarify the position? It is down as being €18,730 in 2013 and I am not sure what the outcome in 2013 was. I estimate a figure of €17,738.

Deputy Richard Bruton

What is happening is that the authority is receiving a flow of income from the INAB. It is receiving some staff resources and an income flow which it never had before. The income flow was received within the INAB and part of Forfás but now it will appear in the HSA's accounts. From the authority's point of view, it will see an income flow, but it is not receiving it as additional resources; rather, its resources are being maintained. It is what we usually see with appropriations-in-aid, where the appropriations-in-aid are subtracted. If the authority has income flows, they subtracted from its expenditure. The net expenditure is shown in the accounts at the end of the day.

Chairman

Is there anything the Minister wishes to add before we conclude?

Deputy Richard Bruton

No. I thank the sub-committee for its time and attention.

Deputy Seán Kyne

I wanted to raise a matter but had to attend the House to make up a quorum. It is about IDA Ireland and Enterprise Ireland.

In regard to IDA Ireland and Enterprise Ireland, I know there has been a policy of incorporating IDA Ireland and EI with embassies and consulates abroad and that there was a plan to roll out a number of consulates one of which was to be in Austin, Texas. Is there funding in 2015 to allow the establishment of such new consulates?

Deputy Richard Bruton

Both the Department of Foreign Affairs and Trade and Enterprise Ireland are putting resources into Austin, Texas. Wherever possible, we have an Ireland House approach and I will find out for the Deputy whether both are sharing accommodation in Austin. Wherever we can, we do that as it is an effective approach. In any location where there is an ambassador, the ambassador is head of a team and co-ordinates the work across the agencies, not just our agencies but others like Bord Bia or tourism agencies. There is a united front and a sharing of information and they share a programme within each market. The export council which was established by the previous Government and is now chaired by the Minister for Foreign Affairs and Trade, Deputy Charlie Flanagan, is currently reviewing country plans to see whether we can enhance programmes through the sort of approach suggested by the Deputy.

Deputy Seán Kyne

There is huge growth in new jobs and enterprise in that region of the United States. I believe there is good potential there in regard to FDI for IDA Ireland and Enterprise Ireland.

Deputy Richard Bruton

Absolutely, we have had a couple of trade missions to the area already. The south by southwest, SXSW, IT conference is a huge gathering and last year we had a number of EI companies pitching for investment at that conference. We have opened up in the south east, in Florida and North Carolina and now Atlanta and Austin are two new areas outside of the traditional US markets where we increasingly see Irish enterprise going.

Deputy Peadar Tóibín

Deputy Kyne made an interesting point, because the sunshine states of America are growing at a faster rate than those on the east or west coast. It is estimated that one of the main drivers for this is the price of real estate. The cost of housing and of industrial property is far lower in these areas. This is a message for us in the context of prices in Dublin. I know this is not strictly the responsibility of the Minister's Department, but the price of real estate is a major factor to be considered in regard to Dublin being a competitive space and place in which to do business for foreign direct investors.

Deputy Dara Calleary

I encourage the Minister to use the Deputy's party's expertise in getting assets out -----

Chairman

I invite the Minister to continue his concluding remarks.

Deputy Richard Bruton

I thank the committee. To reflect the points made by Deputies Kyne and Tóibín, we seek to ensure we follow the opportunities and increasingly we see companies with the ambition and capacity to go into the new parts of the US market. This opens up new areas for us. Much of our growth is in areas such as software, where there are huge opportunities. Whatever the reasons, some companies would say it is not just this, but that these states have a developmental mandate generally, promote a good business environment and have been successful. We certainly follow the opportunities.

Chairman

I must ask the Minister to conclude, as we have a vote in the House.

Deputy Richard Bruton

I will conclude on that.

Chairman

We have completed our consideration of the Supplementary Estimate and a message to that effect will be sent to the Dáil. I thank the Minister and his officials for attending our meeting.