Priority Questions.
74 Deputy Leo Varadkar asked the Minister for Enterprise, Trade and Employment if he will implement the single recommendation of the business regulation forum that he established in 2005 to introduce a standard cost model as used in Denmark and the Netherlands to objectively assess the administrative cost for businesses to comply with new and current regulations; and if he will make a statement on the matter. [25672/07]
View answerIn response to the business regulation forum recommendation and to progress the agenda of reducing administrative burdens for business, I established the high-level group on business regulation under the chairmanship of the Secretary General of my Department. The high-level group comprises representatives of Departments and agencies, the business sector and a representative of ICTU.
The business regulation forum did not recommend the introduction of the standard cost model as applied in the Netherlands and Denmark. Instead, the forum recommended that "given the resource implications associated with undertaking a full baseline measurement exercise, a prioritised and selective approach is the most realistic way forward for Ireland." The high-level group is pursuing such a prioritised and selective approach.
The high-level group has decided to focus initially on ways to reduce, simplify and eliminate unnecessary administrative burdens and associated costs in the five priority areas identified in the business regulation forum's report and will capture the savings arising from the work on a case by case basis. The five priority areas identified by the forum are taxation, statistical reporting, environmental regulations, health and safety regulations and company and employment law. I expect the group to submit an initial report to me by July 2008.
In the recent past I have taken several initiatives to help reduce the administrative burden on business. These include audit exemption, as at the end of last year legislation was introduced to raise the audit exemption thresholds applying to small companies in respect of turnover and balance sheet to €7.3 million and €3.65 million, respectively. The previous thresholds were €1.5 million and €1.9 million. This will remove the compulsory annual audit costs from the very large number of companies qualifying from the enhanced exemption level.
In July 2007 the Government approved the general scheme of the companies consolidation and reform Bill as prepared by the company law review group and the Bill is currently being drafted. The proposals will bring the existing 13 Companies Acts into one and, in addition to a number of significant proposed reforms, will make it easier for firms and practitioners to understand and comply with the law relating to the incorporation and operation of companies in Ireland.
In June 2007, new regulations were introduced to include in one text virtually all of the specific health and safety laws which apply generally to all employment. This replaces and repeals a wide list of existing legislation. The new regulations are designed to be user-friendly and to assist those referring to health and safety regulations to find most of the general safety provisions in one text.
I take this opportunity to welcome Deputy Varadkar to this area of policy and I look forward to ongoing engagement with him.
I thank the Minister and look forward to our engagements.
Unfortunately, I do not have a copy of the report in front of me, but my understanding is that five recommendations were made and among those was the use of the standard cost model in assessing regulatory impact.
Will the Minister introduce this model and if not, why not? Will he follow the example of the Netherlands by setting a real target for reducing the cost of regulation? The Netherlands planned and succeeded in reducing the cost of regulation by 25% over five years and now plans to do the same over another five-year period. If the Minister sets a real target on reducing the cost of red tape on business, his efforts could be benchmarked.
We will not introduce the standard cost model as employed by the Netherlands, although we have engaged with Dutch authorities and they made representations to the business regulation forum on the application of the model there. One of the key issues is required resources in terms of a base measurement that a standard cost model would entail. We would need a significant cohort of civil servants in every Department, co-ordinated by the Department of Finance to oversee a standard cost model. Some of the methodology used by a standard cost model can be used, primarily to measure reductions achieved rather than identify burdens in other areas. In other words, we are identifying key areas brought to our attention by business, where we could make significant progress on reducing the regulatory burden.
The EU has set a 25% reduction target, which we will be signing up to. There is a significant implementation piece around that, but nonetheless we subscribe to the EU-wide policy of endeavouring to achieve a macro-reduction in regulation for business.
I understand what the Taoiseach has said to be somewhat different. He stated Ireland will play its part in reducing the cost of regulation. That is what one says when there is no plan to do anything. Has the Government formally signed up to a 25% reduction target and if not, when is it intended to do so?
I accept the Minister's statement on not implementing the standard cost model in the way it is done in the Netherlands. The implication is that it is intended to introduce it in some sort of Irish way. Perhaps the Minister will expand on that?
As a backdrop to this, it is worth pointing out that the World Bank's report, Doing Business 2008, ranked Ireland eighth out of 178 in terms of ease of starting and running a business. Only the UK and Denmark are ahead of us in the EU.
That said, we acknowledge a clear need to reduce regulation on business and I have already outlined some of the steps we have taken on this, such as the audit exemption threshold. In response to the business regulation forum, we have in essence established a high-level group chaired by the Secretary General of my Department, which will concentrate on several areas. These include taxation and statistical reporting, as companies are complaining that they have too many forms to complete to fulfil a range of requirements. There are also environmental and health and safety regulations, as well as company and employment law.
One of the most effective ways to do this is through modernising legislation, which we did with the health and safety area. Company law is the next big area. Modernising legislation would demand a significant collective exercise by this Oireachtas because it is so large, but in itself it will simplify very significantly the regulatory process for starting and incorporating a new business. We are taking that approach and I want quick hits on the issue. I wish to achieve and if anybody in the Opposition has any suggestions for quick hits in regulation, I will not be slow to adopt them and to work with people.
75 Deputy Willie Penrose asked the Minister for Enterprise, Trade and Employment when his attention was drawn to the fact that a project (details supplied) in County Cork would not proceed; the action he took as a result; if he regards the project as being cancelled; the steps he will take to ensure that alternative industrial projects are secured for the Cork area to compensate for the cancellation of this project and other job losses in Cork; and if he will make a statement on the matter. [25678/07]
View answerOn the morning of 3 October 2007, I was very disappointed to be informed by way of a conference call with the Irish general manager and the executive vice president of operations of Amgen Inc. that the project had been postponed indefinitely due to a downturn and difficulties within the American market for the company's products.
During the week commencing 8 October 2007 various discussions took place between IDA Ireland officials and both Irish and US-based corporate executives from Amgen at which the position regarding the indefinite postponement of the project was reiterated. On 15 October 2007 I met senior corporate executives from the company, including the executive vice president of operations, in California. The Secretary General of my Department and senior IDA Ireland personnel were also in attendance.
The decision was made as a result of a review of the company's operations and is based purely on developments related to the company's global business. The business difficulties being experienced by the company will result in the reduction of staff numbers by up to 2,600 people worldwide, the closing of two plants in the US, and a reduction of its planned capital expenditure. I have been assured by the company that the decision does not reflect on the business environment here. Amgen has praised the responsive, pro-business approach of the Government and its agencies and the level of co-operation of all the public authorities in Ireland.
Amgen made its original investment decision to locate in Ireland after a careful and calculated due diligence exercise, and this decision was won against intense international competition. The conditions which attracted the company to Ireland in the first instance have not changed.
The Cork gateway is still vibrant in what it can offer potential investors, particularly in sectors such as pharmaceuticals, medical technologies and internationally traded services. East Cork has been one of the country's strongest performers in recent times in attracting investment from these sectors. A total of nine foreign direct investment projects have been announced for Cork city and county since the start of this year, with an estimated 1,000 jobs to be created at full operation. In the past three years IDA Ireland has approved new projects for the Cork area with the potential to create over 3,100 jobs at full operation. There are currently 133 IDA Ireland-assisted companies in County Cork employing in excess of 20,000 people. The agency remains committed to securing additional new projects for east Cork and promotes the area to potential investors on an ongoing basis.
My question was carefully framed to elicit a detailed reply. The decision by Amgen not to proceed with the project in question was the equivalent of what happened at Intel. Everyone is sympathetic because 1,100 jobs were due to be created directly as a result of the project and a further 100 would have come about in ancillary and spin-off industries.
Does the Minister agree the signs in respect of this project were ominous? The early warning system in his Department relates to job losses but did no one associated with it happen to read a detailed article in the Los Angeles Times on 16 February this year which referred to the fact that Amgen’s top selling drug was under scrutiny, that negative results had been associated with it, that there was going to be a fall in the share price and that analysts were advising investors that the company’s shares would come under pressure? Were the Minister and his Department the only ones unaware of what was happening? Deputy Ned O’Keeffe was in a position to state the Government and its Ministers had painted a rosy picture until the general election had been negotiated.
I visited Amgen with my colleagues Councillor John Mulvihill and Deputy Sherlock, whose late father kept me informed in respect of this issue. Why did people not know what was going to happen in respect of the project in question? Is there any way the Minister could establish an early warning system in respect of promised employment that would be similar to the existing system relating to job losses? What has occurred is a significant blow. I accept the Minister's assurance that it was global rather than local or national considerations which led to the project not proceeding.
How much money was spent by Cork County Council with regard to putting in place infrastructure such as roads, sewerage systems, etc? Will that money be recouped from Amgen? What beneficial interest does IDA Ireland hold in the site and what efforts will be made to remarket it in the context of attracting alternative industry?
On the Deputy's latter queries, those matters will be dealt with in reply to a later question. In order to save time, I will deal with them when the said question is taken.
It is important not to play politics with this issue.
I am not playing politics with it.
There is an element of playing politics. The Government does not represent Amgen. I do not sit in on meetings at the corporate headquarters of global companies. Those who run such companies, not the Los Angeles Times or any other newspaper, make decisions. The executive vice-president of the company put it very well last week when he asked if I honestly thought that if the management previously knew what it knows now, the company would have proceeded with the decision it took in April to carry out the project on a staggered basis to 2012. He also inquired if I thought the company would have pumped more funding into the project, which it did. Up to the day on which the closure was announced, up to 80 people were employed on the project.
The project was the subject of two comprehensive planning applications. Given the scale and detail involved, these were expensive. One need only visit Wyeth's operations at Grange Castle to obtain some insight into the scale of the project. Such a project cannot be done under cover; it would not be a case of someone shouting "Hey presto" and a major biopharma operation suddenly appearing without anybody noticing. It has been suggested we should have announced the project differently. The planning application which was substantial in nature had to be made.
The company is extremely unhappy about the position in which it now finds itself. The decision not to proceed clearly has a great deal to do with the situation that obtains in respect of two of its major drugs, particularly in the context of reimbursement policies within the United States. However, companies in the pharmaceuticals and biopharma sector experience rough periods and then emerge from them. The terminology used by the company in respect of the project is "indefinitely postponed". It made clear to us last week that it wanted to retain the site. Our strategy, therefore, is to work with the company to see if it can overcome the difficulties it is experiencing. We will then see what emerges.
76 Deputy Leo Varadkar asked the Minister for Enterprise, Trade and Employment the action he will take to tackle the projected rise in unemployment in 2008; his views on the ESRI forecast in this regard; and if he will make a statement on the matter. [25673/07]
View answerThe total approved staffing complement for the Office of the Director of Corporate Enforcement, ODCE, has already been increased this year from 37 to 41 posts. A further increase of four posts is planned to take place by the end of the year. The recruitment process in this regard is under way. In addition, I understand the director is pursuing with the Garda Commissioner the possibility of additional Garda staff. The possibility of further increases in the staffing of the ODCE in 2008 and beyond will be examined in the context of Government policy in respect of public service numbers.
The pre-budget Estimates for 2008, published on 18 October by the Tánaiste and Minister for Finance, provide for an increase of 3% in the allocation to the ODCE. Any further increases in the office's financial allocations will be subject to review by my Department in consultation with the Department of Finance.
We are dealing with Question No. 76. The Minister's reply does not appear to relate to it.
I am prepared to deal with the questions out of sequence.
Have I jumped ahead?
Yes. Deputy Varadkar is forearmed with the answer to his next question.
That is certainly the case.
The Minister may give the reply to Question No. 76.
This is not surprising. Sometimes the answers we receive do not relate to the questions asked.
That is never the position in my case.
Another Minister had a similar problem last week. However, I understand Amgen is now making a tablet to help people overcome these difficulties.
Unemployment currently stands at 4.5%. The ESRI projects that it will rise to 5.6% in 2008. It also forecasts that employment will grow by 2.5% — 50,000 — this year and by 0.6% in 2008. The pre-budget outlook is more optimistic in this regard and states employment will grow by 3.5% this year and 1.25% — 26,000 — in 2008.
Employment has increased by 259,000 in the three-year period since 2004 and the number in employment is approximately 2.1 million. It was generally accepted that this rate of growth could not continue and the economy is now entering a period of adjustment. It should be emphasised that the forecasted growth rate, although lower than in previous years, is still impressive by international standards and ahead of the rates that obtain in other EU countries.
The range of services provided by FÁS will be available to anyone who becomes unemployed. This will include active engagement with persons on the live register with the objective of helping them to obtain jobs, either directly or through further training, education or work experience. This will include access to the various training and employment programmes provided by FÁS. FÁS is also placing particular emphasis on the training of low skilled workers in vulnerable industries. This is to ensure that in the event of becoming unemployed, they will have the skills necessary to make the transition to other employment.
The development agencies — IDA Ireland, Enterprise Ireland and the county enterprise boards — will continue to promote job creation through the delivery of programmes to assist the enterprise sector to develop and thereby create new jobs.
I was shocked by the statistics contained in the pre-budget outlook and the ESRI report. Unemployment has risen from 3.7% in 2001 when it bottomed out to 4.7% today. The Government seems to have thrown in the towel when it comes to employment and has clearly admitted that unemployment will rise to 5.5% next year. The latter will mean that there will be in the region of 200,000 on the live register which in the past was seen as a serious psychological barrier. By stating employment growth will fall to 1.25% in the coming years, the Government is effectively saying the number of jobs that will be created in 2008, 2009 and 2010 will, in total, be smaller than the number created this year. Essentially, its forecasts are suggesting a serious deterioration in employment figures. Does the Minister accept the projections put forward by the Department of Finance and the ESRI? Does he accept that the Government has thrown in the towel in respect of employment? Has he examined international comparisons and discovered what is obvious, namely, that our unemployment rate will overtake those of our major competitors next year?
The EU-27 average for unemployment is 6.9%. The projections made fall well below this figure, which is important. We must be careful as regards the language we use. We certainly have not thrown in the towel. The economy is robust and performing well in international terms. I have just come from the launch of Enterprise Ireland's new strategic vision for the next three years where it has set very ambitious targets for Irish-owned companies in terms of the following: new exports, the participation in research and development to develop new products and services, high-potential start-up companies and scaling up companies to grow significantly, internationalise and globalise. We are taking a very resilient, forward-looking approach to employment creation and protection, which must be achieved through innovation and investment in research and upskilling. If one looks at the national development plan, one will see within it the fundamental pillars that will underpin Irish competitiveness into the future and ensure that we can continue to compete internationally.
Deputy Varadkar correctly referred to the stunning achievements of the past number of years, although he did not use that language nor would I expect him to. Nonetheless, relative to any other country, the scale of employment growth has been very significant. In over a decade, we have gone from having 1 million people employed in the workforce to 2.1 million. Every economy evolves and goes through cyclical periods and we are going through one at the moment. However, the key issue for us is ensuring we have the right macro-economic policies to ensure we can become a centre where new products are produced and new services are conceived and delivered and that people internationally see us in that light.
The Minister's words are very nice and if I did not know better, I would be re-assured by them. However, like everything else, it is lip-service. The Minister suggests the economy is robust and the Minister for Finance suggests that it has not been stronger for ten years. In reality, we see that the Minister's own Government accepts that unemployment is going to increase, tax receipts are going down and the deficit is going to rise.
The Minister cites the EU average of 6.9%, which I accept. I accept that unemployment is higher in Romania, Poland and various other countries in eastern Europe. I will cite some other figures.
France and Spain.
I accept that France, which is a country with a long history of structural socialism, and we all know what that does, has a higher rate of unemployment. I will cite some other examples. Does the Minister accept that the UK has an unemployment rate of 5.4%, the US has an unemployment rate of 4.6%, Australia has an unemployment rate of 4.3%, South Korea has an unemployment rate of 3.7% and Norway has an unemployment rate of 2.7%? These countries are our real competitors in the global market, not France or Romania.
This will be the Minister's final reply.
Our unemployment rate is 4.5%.
Yes, but the Minister is accepting that we are going to overtake all those countries next year. That is a serious problem.
Deputy Varadkar is taking current figures for the other countries and comparing them with projected forecast figures for next year. I invite the Deputies to look at all previous forecasts for the past ten years. We could do an interesting assessment of how many of them were actually correct.
