Dáil Éireann díospóireacht -
Tuesday, 2 Dec 1975

Vol. 286 No. 4

Private Members' Business. - Industrial Development (No. 2) Bill, 1975: Second Stage.

Minister for Industry and Commerce (Mr. Keating)

I move: "That the Bill now be read a Second Time."

The main purpose of the Bill are, first, increase from £200 million to £400 million the aggregate amount of Exchequer moneys which may be advanced to the Industrial Development Authority and expended by them by way of grants and certain other payments of a capital nature, other than payments against guarantees and, second, to make separate provision that the aggregate amount of moneys guaranteed by the IDA in respect of principal and still outstanding, and of payments made by the IDA on foot of guarantees shall not exceed £100 million.

There is a further provision that the IDA may not, without the prior approval of the Government, give a guarantee of repayment of principal exceeding £500,000 in respect of any undertaking.

Section 17 of the Industrial Development Act, 1969, set a limit of £100 million on the aggregate of Exchequer moneys which might be paid to and expended by the IDA on their various grant schemes and other capital expenditures. The limit was increased to its present level of £200 million by the Industrial Development Act, 1972, and issues to the authority of the relevant capital have now reached this limit.

It is necessary therefore that the limit be increased, as a matter of urgency, to enable the authority to continue to discharge their duties. The present Bill proposes a new limit of £400 million. It is the practice to fix such limits at levels which will facilitate review at reasonably regular intervals and thus afford the House an opportunity for periodic debates on the industrial development programme. I consider that the limit now proposed takes reasonable account of this practice. In the current year the capital allocation to the authority is £42.5 million and, as the need for intensifying the industrial development campaign is very great, it is likely that the level of capital payments associated with the industrialisation programme will render it necessary to review the limit again within a few years.

An indication of the degree of success achieved by the IDA is that between 1952 and 1970 68,000 new jobs were approved, while in the period 1970 to 1974, inclusive, 78,500 jobs were approved. In the period from April, 1970, to the end of 1974, the IDA entered into financial commitments of over £225 million, which are related to that figure of 78,500 new jobs at full production, and to a fixed asset investment exceeding £880 million.

What will be of special interest in this is that the fixed asset investment by domestic industry has been very substantial. For example, from April, 1972, to December, 1974—a period for which sectoral data are available—the planned domestic IDA aided investment was £268 million, as against £432 million for the new overseas investment. The domestic investment components is therefore more than 35 per cent of total planned investment in recent years.

Up to now the aggregate expenditure limits imposed under the legislation have included payments by the IDA on foot of guarantees which they are empowered to give in respect of loans raised for the fixed assets of an industrial undertaking. Recently reservations have been expressed about the value of the authority's guarantees in circumstances where they are approaching or have virtually exhausted their statutory capital expenditure limit. In such circumstances the authority would be unable without an amendment of the legislation to meet the liabilities they had undertaken under guarantee should it be necessary to do so. It is necessary therefore that a provision be made which will clearly substantiate the capacity of the authority to honour liabilities arising under guarantees. Towards this end the present Bill makes separate provision in regard to the aggregate of loan principal which may be guaranteed by the authority and of payments in respect of principal under such guarantees. The aggregate fixed for this purpose is £100 million.

The IDA have used their power of guarantee sparingly up to now and will continue to do so. Only cases of large investments have been involved, where the provision of a guarantee was the deciding factor in a firm's decision to establish here. These are mainly capital-intensive projects and in these cases the percentage grant given by the IDA is not large, as it takes account of the level of employment to be created. At present guarantees either given or approved in principle by the IDA amount to about £40 million. These guarantees will not be lightly given as will be seen from section 3 of the Bill, which prevents the IDA from giving a guarantee of principal in excess of £500,000 for a project without the prior approval of the Government.

On the occasion of the previous short Industrial Development Bill, which I brought before the House towards the end of the last session, I indicated that I proposed to introduce a further Bill dealing with more comprehensive legislation in connection with industrial development activities. Work has reached an advanced stage on this more comprehensive legislation, but it recently became clear however that certain measures it was proposed to include were going to delay the preparation of the Bill. Accordingly I had no choice but to prepare the present short Bill now before the House dealing only with urgent matters of a financial nature which are necessary at this time. I would therefore ask the House to facilitate the passage of the present Bill in the light of the knowledge that the further Bill, which I am endeavouring to have finalised as quickly as possible, will afford an opportunity for a further debate on the industrial development programme.

I accordingly recommend the present Bill for the approval of the House.

Mr. O'Malley

This is the second minor Bill of this kind we have had this year, simply increasing certain limits under sections of the 1969 Act, in particular, in this instance, the total amount of grants which can be made and the total amounts which can be guaranteed by the IDA. Even though the Bill is very short and not likely to give rise to any great controversy, on its provisions there are many comments one might make about what is not in it as much as what is in it. The Minister seeks to justify the shortness of the Bill and his failure to deal at all with the industrial and commercial problems that face the country by simply saying at the end of the third page of his three pages and a few lines script that there will be another Bill of a more comprehensive nature on which he would like to have a full debate at a later stage.

This Bill discloses that no effort is being made on the part of the Minister or the IDA to change policy in regard to job creation and to industrial and commercial problems generally. No change of policy is indicated in the Bill or in the previous Bill discussed here in July but 107,760 people were out of work last Friday week— probably 110,000 by now; we get the figures about ten days later. These are the people officially returned as out of work. In fact, there are 10,000 or 15,000 school leavers in particular, in addition to that who are not on the live register but who are equally, or, perhaps, even more painfully out of work.

In the present year the figures made available to us from various statistical sources show that industrial output is dropping. This tendency has continued through all of 1975. The economic statistics relating to trade which we received a couple of weeks ago relate to the first ten months of this year, January to October and they show a disturbing drop in nearly all forms of export other than food and live animals. There is a huge increase there, from £323 million to £534 million purely due to a very considerable increase in the past year in the price of cattle, and nothing else because cattle numbers are not increasing and will not increase in the future when we consider that so far this year 500,000 cows have been slaughtered. The industrial side of the economy particularly was never more static than it is today. Inflation is running at 20 per cent or more and our exports of manufactured goods, classified by material from January to October, 1975 are about £300,000 more than the same classification for January to October, 1974, an increase from £165,722,000 to £166,023,000, virtually a static figure in terms of cash, disclosing a 20 per cent drop in volume.

This matter is not sufficiently highlighted; it is extremely serious. Almost the entirety of the cash value increase of our exports in the ten months January to October this year is due to the increases in exports of live animals. There is a volume drop in virtually everything else. That is the most eloquent comment that I or anybody can make on the state of our industry today. If we go to output figures, leaving exports out and just taking output generally from manufacturing industries into account, looking at the most recent figures issued today in the Economic Series 1974-75, on page 4, under the heading "Number 18: Volume of Production Index; Industries Producing Transportable Goods" with a base in 1953 of 100, we see that in the first quarter of last year the index figure was 291.4. In the corresponding quarter this year it was 264.7; in the second quarter last year it was 313.6; this year in the corresponding quarter it is 292. The third quarter is not given and I cannot quote it but there is no reason to believe that the same trend is not continuing.

In simple language the effect of that is that there is a decrease of anything up to 5 per cent in the production of manufactured transportable goods as against last year. Last year was not great but this year is even worse. The Government are able to get away with this, and have consistently attempted to do so by referring to the value of exports and the value of output because the average man fails to take account of the fact that when making comparison between this year and last year you must deduct 20 per cent from this year's figures in order to arrive at a true comparison with last year's.

Naturally, the Government do not point out these matters to the public and many newspaper commentators fail to take up these points and we are left with a situation in which it can truthfully be said that the economy today is in a greater decline, particularly out industrial economy, than it ever was before. The Minister will not cure that decline by bringing in a small Bill with big figures in it such as £400 million instead of £200 million and £100 million instead of £50 million for guarantees. It is perfectly clear from what the Minister said that while there may be an attempt some time in the future on his part to have a reappraisal of our existing aids and incentives to industry, he is not prepared to undertake it now despite the 107,000 at the very minimum who are out of work and despite the fact that our output is dropping and that the value of our manufactured exports is also dropping very seriously. Apart from animals and animal products, almost all our other exports are becoming more and more uncompetitive with every day that passes. If one wanted a current and topical example of the reasons why they are uncompetitive one need only listen to the debate immediately preceding this one. That was a good example of why our industrialists are forced into the position of being uncompetitive against their counterparts in all parts of the world. Brutal increases of 30 per cent and 40 per cent in postal and telephone charges can only make already hard-pressed industrialists even less competitive than they have been up to now.

With the industrial and employment situation as bad as it is and even though the Minister had no words to say about it, nevertheless it behoves us, for the sake of the country, to examine the situation and see what can be done about it. I do not propose to examine further the situation as it is. I have given some facts and figures that paint the precise picture and it does not need a further half-hour to remind us of what a bad state our nation is in today as regards industry and commerce. What I do want to examine, even if only tentatively, is some of the things that might be done to ease the situation. I regret that the Minister failed to do this. It is his duty to do it in this kind of debate. It is not good enough to fob off the House with the statement that he is having a more comprehensive Bill drafted and that he will discuss it all then.

Could he not tell us the general lines on which such a Bill would proceed? Could he not tell us the kinds of things he hopes to do, the kinds of things which, if various difficulties are overcome, might be contained in such a Bill, the general lines of policy he might pursue in such a Bill? Surely statutory authority is not needed for everything he might wish to do to improve the wretched state of our economy and industry today? Surely a great deal can be done without statutory authority? Why is it not being done? Why did we not hear this evening what the Minister wants to do or intends to do? Is the position that he does not know and that that is why the House is not told what plans the Government have, on the basis that the House cannot be told if the Government have not any plans? Surely to goodness, with 107,000 people out of work, our exports and output dropping and even our imports of raw materials dropping, which is fairly shattering also, if the Minister had any plans he would disclose them to the House this evening, but he fails to do so.

The industrial development of this country falls broadly within two periods of time. The first one commenced with the election of the first Fianna Fáil Government in 1932 and continued roughly to the outbreak of World War II in 1939. At that time an industrial policy was pursued by the Fianna Fáil Government which was quite at variance with the rather half-hearted efforts at industrialisation which had gone on before that and, in effect, was a putting into practice of many aspects of the old Sinn Féin economic policy of Arthur Griffith, which had first been mooted by him in the early years of this century but which had never been put into practice by the Government in this country between 1922 and 1932. There was an extremely strong effort made by the Government of the day to establish native industries, run by Irishmen, financed, so far as was possible, out of Irish capital and heavily protected against foreign competition. That policy was successful. The policy of heavy protection against outside competition was one that was suitable for that time when Irish industry scarcely existed and when it had literally to be built up from the ground. There was no other way in which it could be done without heavy protection. It succeeded admirably in its time.

The second phase of Irish industrial expansion commenced with the passing in 1958 of the Industrial Development (Encouragement of External Investment) Act. That was a very different policy to the Fianna Fáil one of 1932. In fact, when analysed, in many respects it was almost the direct opposite of the 1932 policy. By 1958 the world was beginning to move towards freer trade. Europe, in particular, was seeing the establishment of a Common Market and of the European Free Trade Area. There were wider efforts made in the world as a whole at achieving reductions in tariffs, quotas and so on. It became clear that in a very small country with a population of only 3,000,000 the domestic market was so small there was no great hope for any intensive future expansion of industry unless we got out of protection and began to take our place in the world of freer trade. To enable us to do so it was necessary that external investment in industry in this country be encouraged. That Act gave legislative effect to the policy put forward at the time by the late Seán Lemass. We are well aware of how in the late 1950s, throughout the 1960s and into the early 1970s that policy worked extremely well. It created an enormous number of jobs that would not otherwise have been created. It started an industrial tradition here, in particular in many of the more remote parts where there would have been no hope of industry had that policy not been pursued.

I believe that, just as the old policy of the 1930s became outdated by changing circumstances, we have to ask ourselves now the question whether or not the policy so successfully pursued from 1958 to the beginning of 1973 is not itself in need of reappraisal and that some new thinking will have to be brought into play in endeavouring to work out what will be the best policy henceforth. This country has gone backwards industrially since 1973. It has done so at a much faster rate than any other country in Europe apart from Britain. Our unemployment has risen at an alarming rate in the last year. Our creation of new jobs is way below what it needs to be at present. Therefore we must ask ourselves—and it is the Minister who should be asking himself— this question: is the sort of policy that began in the late 1950s and succeeded so well into the 1970s now appropriate? Or will we have to make changes, as Lemass made the great change in the 1950s from the successful industrial policy of the 1930s? Will we not have to think again in the mid-1970s, see where the future lies and what will be most useful for out people and country over the next ten or 15 years?

Apart from the encouragement of external investment itself the most significant part of the general package of incentives to industrialists, and in particular to foreign industrialists, in the post-1958 policy of industrialisation was the tax concessions and grants. I would put them in that order because in the last resort the tax concessions were more important. We should look at what have been some of the side effects of those tax concessions. It is time to do so now. The main tax concession was freedom from income tax on export profits. One effect of that has been to encourage large international companies to import into this country partially-produced raw materials for finishing here. Their practice has been for their foreign subsidiary companies to charge out the raw material being exported to Ireland at the lowest possible figure, a figure which in itself would create a loss for their own foreign subsidiaries, and sell back the finished product from Ireland to their marketing countries, whether it be the country of origin or any other, at the highest possible figure in order to maximise the profit shown on paper in Ireland in the accounts and balance sheet of the Irish subsidiary.

One effect of this has been that it is important from the point of view of the foreign company to try to have the final process carried out in Ireland. This has often meant that the degree of skill needed was less than might have been so in the country where more extensive work and more actual value was added to the product. What has been important from the point of view of foreign companies under this policy has been to maximise the profit in Ireland, even though the degree of production may have been quite small. What would be important for us, if we are to continue to deal with that kind of industry, is to maximise the actual value added to the product here in Ireland.

It is suggested in a paper prepared recently for the National Science Council that we should now begin to think in terms of tying our export tax reliefs to the degree of value added here. By that I mean the degree of value actually added, and not the degree of value added on paper for the purpose of not paying income tax. An example of the converse of this particular instance will make it clear for many people. There are four celebrated companies trading here who operate the converse. They are the four major oil multinationals. They are not exporters from here and, therefore, there is no tax relief for them. Nonetheless, they have a turnover of £400 million to £500 million a year. One can safely assume they make a profit, considering that between them they have a monopoly, of, perhaps, £15 million or £20 million a year.

If you examine the accounts of each of those Irish subsidiaries of multinationals, you will find they either show a loss or a minute profit, something like £50,000 or £100,000 a year, and they pay very little in Irish income tax. The reason for this is that there is no relief on that tax. The multinationals abroad charge into Ireland the petrol or oil products at the maximum possible price, and the Irish subsidiaries simply act as distributing agents and, because of the high prices on paper they have had to pay for the product, are not in a position to make any profit, or any worthwhile profit. In my opinion, the Irish Exchequer, and indirectly therefore the Irish taxpayer, is done out of millions of pounds which should be paid by the multinational oil companies in income tax every year, but which is not paid because of the method of accountancy used.

We have the direct opposite to that in relation to foreign industries established here. I am afraid this is something we have not thought about. In those cases it suits them to maximise their profit here because it is free of tax. The very fact that it suits them to maximise their profit here means frequently that the part of the operation carried out is the one which is of least value from our point of view. I am talking here of multinational or international companies who are sending in goods to be further produced or further worked on here. That is something which most of the grant-aided industries which have been established here over the past 15 years have in common.

Very few of them are indigenous in the sense that they use native products, or that there is any local input of material into them. Nearly all of them are bringing in a partly processed article, doing some work on it, and sending it out again at a huge paper profit. In that way, they are suiting not alone their Irish operation, but their German, French, British or American operation as well, because they are minimising the otherwise taxable profits that would arise in the other countries.

This has had its side effects, some of which I indicated. The National Science Council is of the opinion that one of the effects is that Irish technologists do not get the full scope for their talents they might get, because the technology of the whole operation is done abroad: the Irish technologists get very little opportunity because frequently there is only a semi-skilled operation to be done at this end, the technology having already been designed.

Mr. Keating

Would the Deputy name the paper for me?

Mr. O'Malley

I have not got the full title, but I think it is "Technology and Science in Irish Industry". I can get it for the Minister.

Mr. Keating

I wonder could I have the author's name?

Mr. O'Malley

I had not got that. It is not on what I wrote out. It is a recent publication of the National Science Council. Another side effect of this policy has been to place tremendous emphasis on the capital side of Irish industry. Our grant policy has tended to attract capital intensive industry rather than labour intensive or skill intensive industry.

The Minister may be familiar with the fact that there is a very interesting article by Dr. Ciaran Kennedy in the Autumn, 1975, issue of the Central Bank Report. This article is on the Danish economy and why it has worked so well at the very time the Irish economy is working so badly. Dr. Kennedy went to Denmark to see why they were succeeding when clearly we are not succeeding at present.

Mr. Keating

I have read that article but I do not think it bears the gloss which the Deputy puts on it. It relates to the success of Denmark over decades and is not a comparison of our two economies at this moment. However, forgive me for interjecting.

Mr. O'Malley

One of the important things Dr. Kennedy found as a result of his short study of the Danish economy was, that the failure of the Danes to provide the sort of incentives we have provided, has not caused them to fail so far as their industry and employment are concerned. I think that is a fair summary on paraphrase of one of his major findings.

For that reason he comes to the conclusion that the incentives we have been giving are not necessarily the best, even though, like everyone else, he freely accepts that they were highly successful for about 15 years after they were brought in and only seemed to fail in the changing circumstances of the past two years. We can deduce from this that it is time for us to question whether the capital intensive nature of the industry we have been attracting over the past 15 years is the best type of industry to attract in the circumstances in which we now find ourselves with 107,000 people out of work.

In particular, it is noteworthy that in recent years the sort of industries that a high proportion of IDA grants have been spent on consist of industries such as chemicals and plastics, and other industries of that kind, in which there is a high import content. They are largely grant-aided but they have a very restricted impact on the Irish economy as a whole and the secondary investment which they create is, to say the least of it, very limited.

In recent years we have seen examples of some of these industries. I am not anxious to name individual industries. For example, there are chemical industries and allied industries of a highly capital-intensive nature in which millions of pounds have been invested which are employing only 60 or 70 people and are never likely to employ many more. Admittedly the 60 or 70 people have very good jobs, they are very well paid, their jobs are pleasant and, hopefully, reasonably secure. Nevertheless the dividend in terms of jobs which the IDA are getting from this kind of investment is very poor indeed.

It is well worth considering now whether we should continue to spend a lot of money on attracting that kind of industry or change our approach in order to encourage industry in which the need for capital is less but in which the amount of employment given is greater in relation to the capital employed. As well as the possibility of changing from capital-intensive to labour-intensive industry, we should consider what is described in Denmark as skill-intensive industry, where the amount of employment given and the value added can be very great, notwithstanding the fact that the amount of capital involved can be comparatively small. I think it is fair to say that one of the conclusions that Dr. Kennedy reaches in relation to Denmark is that the high degree of skill, in particular the high standard of design, had a great deal to do with the success of many Danish industries which, due to the economic strain, might otherwise have gone to the wall. The great bulk of Danish industry, as reported by Dr. Kennedy, was not the large type of foreign industry brought into Denmark by what would be the equivalent of the IDA, if they had one. Instead it was skilled Danish technicians and craftsmen who, in the course of their own employment in factories or workshops in Denmark, thought of a good idea, saw a way in which a particular process could be carried out more easily, profitably and efficiently than was being done in the factory in which they had been working hitherto, and set themselves up as a very small company to carry out that process.

It was from that that a tremendous base was given to Danish industry, a base which was able to withstand domestic and world problems of inflation and foreign demand in a way that the sort of industry we have encouraged in this country since 1958 in many cases would find difficult. This is not to say, happily, that the great majority of our industries are not thriving, as indeed I believe they are, but one of the reasons I think that comparatively few of them have gone to the wall, even though many of them are not expanding in a way that one would like, is that the IDA were extremely careful down the vears to whom they gave grants. They have required a proven track record from the particular industry someone proposed to establish, and it has been difficult for Irish citizens to get a grant from the IDA and to avail of the other incentives for industry and particularly exporting industries, for the reason that because they are Irish businessmen, because we have not the industrial tradition here that one would wish, they have no proven track record and cannot have.

If the IDA are to continue to insist on that sine aua non for giving grants and assistance then we are going to depend to a continuing high degree on foreign investments. I would suggest that the time has come to think twice about this. Do we wish to continue the foreign dominance of our industrial scene or would it not be preferable for us now, when we have seen a certain number of foreign companies depart this country very quickly in recent years, to have a reappraisal of the fundamental IDA approach to this sort of problem and get them to weigh the potential benefits and risks of helping, by way of capital and otherwise, small Irish businessmen who are prepared to take that chance?

It may well be that 50 per cent of such Irish industrialists or businessmen will fail, but at the moment it is very difficult, unless you have proved yourself in a particular industry, to get started in any industry at all here. Is it not worth taking a chance on giving grants to Irish businessmen who have not a proven track record in the particular industries they are trying to establish? Even if only 50 per cent of them succeed, is it not very much in the national interest to encourage them and enable them to succeed?

As I have said, the general characteristic of the sort of industries we have been encouraging into this country since 1958 has been industry of an international character in which frequently the full manufacturing process is not carried out in this country but is partially carried out in conjunction with partially processed raw material imported from a parent company abroad. One of the things we have lacked and have failed to attract to the extent that one would wish are industries that are prepared to use Irish products, local raw materials, and to carry out the entire manufacturing process in this country from almost the recovery of the raw material to the final placing of the finished article on the retailer's shelf.

The Minister may reply to that, that we have not that much raw material of various kinds that we can avail of. But even if we cannot avail of it as extensively as we would wish and if a great deal of raw material does have to be imported, at least let it be imported as raw as possible and as unprocessed as possible rather than in the comparatively highly processed form in which we have been importing it.

There are certain raw materials which, happily for us as a nation, are available to us today or are about to become available to us which were not available all down through the centuries and which, in particular, were not available ten, 20 or 30 years ago. I am talking, for example, about the product of the Tara mines at Navan, the lead and zinc concentrates which hopefully will become available in 12 months or thereabouts.

We have had no indication from the Government in recent times that there is any proposal to utilise the product of that mine or the other much smaller mines in the country right through to the finished product. In fact, all the indications are that the lead and zinc concentrates, when they leave the mine after the rough initial processing which they get at the mine or at the minehead, are going to be exported.

There is a big row going on about whether they should be exported through Mornington, near Drogheda, through Dublin, or through anywhere else. In my view, it matters very little, if they are to be exported, from where they are to be exported. The tragedy is that they will be exported and the Government have not told us otherwise.

Last February the Minister made an announcement that it was hoped to establish a smelter at a future time. We were given no details about it then and we have not got any since. The fact that the company concerned are making active preparations for the export of their concentrates indicates that there is no prospect in the short term of a smelter. If we fail to establish and operate a smelter here, we will lose a large proportion of the value of those minerals which this country was so fortunate to find near Navan. I do not think there is any country in the world, apart from the most undeveloped countries of Africa or Asia, who if they had the huge deposits of lead and zinc we are fortunate to have at Navan would not insist, as a condition of any licence for the extraction of those minerals, on the establishment of a smelter either by the mining interests concerned or some people in co-operation with them. Nevertheless, we have no smelter, or an announcement that we are likely to get one, and at the moment active efforts are being pursued to facilitate the export of lead and zinc concentrates.

I would like to remind the House that as long ago as 1970, on an appeal to the Minister for Local Government, planning permission was granted for a smelter, subject to many conditions, in respect of a site at Cork Harbour, which, as far as I recall, was on Little Island. At that time the principal objective of those who sought to establish the smelter was perhaps the smelting of concentrates or ore from abroad because we were not aware of the extensive nature of the deposits in Navan and the deposits in Tynagh; the Silvermines and Gortdrum are comparatively limited by world or Navan standards. That proposed smelter in Cork Harbour was not proceeded with. Nevertheless, the permission remains. Presumably some preliminary planning or design work has been done and the possibility is there.

I would suggest to the Minister that there is now a glorious opportunity for two of our great natural resources to be utilised very profitably for the maximum benefit of the Irish people by building a smelter somewhere on Cork Harbour and powering it by natural gas from the Kinsale Head gas field rather than have the bulk of the natural gas converted into electricity, as is proposed by the ESB for their new power station at Marina in Cork at a cost of £50 million.

I know this smelter was, like most smelters, originally designed to be powered by electricity. The quantity of power used by a smelter is so great that if one were to be established anywhere in this country it would be necessary to build a new oil fuelled power station beside it. We now have a glorious opportunity to utilise to the full two natural resources, lead and zinc and our natural gas, together for the benefit of the Irish people. As is well known, the conversion of natural gas into electricity leads to a loss in the thermal or calorific value of natural gas amounting to about 66 per cent.

That can be avoided by its direct use in the blast furnaces of a smelter. The smelter has of course to be redesigned, and it may mean slightly heavier expenditure as a result. But the saving that would come about by the more profitable use of the natural gas would be enormous. In the next year or two if we fail to start building a smelter we will have thrown away the great bulk of the value which we could have got from the discovery of lead and zinc at Navan. We will also have failed to utilise in an economic and profitable way the natural gas which will become available in a couple of years from Kinsale Head.

There are a few other points I should like to make, particularly about the development of industry in the Cork Harbour region. Over the next few years this is likely to be our most important site of new industry, due to the fortunate fact that natural gas has been found in close proximity to it. One of the very useful ways in which it is proposed to use some of this natural gas is in the building of a urea plant for Nítrigin Éireann Teoranta, which comes under the aegis of the Minister for Industry and Commerce. The only sad thing about that is that unfortunately Nítrigin Éireann Teoranta will be able to use only a small proportion of the natural gas which becomes available, and the bulk of it will go to the ESB and, comparatively speaking, will be wasted by conversion into electricity.

The planning of the NET plant for the manufacture of urea direct from natural gas is proceeding. Unfortunately, foreign consultants were appointed to supervise the operation generally, as happened in relation to other aspects of our natural gas, and in particular the pipeline, where the British Gas Corporation were appointed. In the case of the NET plant the consultants appointed were Messrs. Kelloggs, an American firm having a large office in Britain, from which they operate in this part of the world. An important part of the sub-contract for the building of this plant consisted of steel fabrication. The value of the steel fabrication sub-contract is in excess of £500,000. It was tendered for by an Irish firm who were looked over by Kelloggs before they were asked to tender and were found to be a firm capable of carrying out the necessary work at the necessary high standard within the time stipulated. They duly tendered. Long negotiations took place in the course of which they were informed by a director of NET that they had been successful and that their tender would be accepted.

A week or so after they were informed of that they found, to their horror, that their tender had been refused and that a British sub-contractor, Farmer & Sons, was awarded this valuable sub-contract instead. The view of Messrs Kelloggs was that Irish firms had not sufficient experience in this type of work and that there was no guarantee that they would carry it out within the time limit.

This is only one example in relation to the difficulties facing Irish contractors, sub-contractors and industrialists generally in relation to tendering for work arising out of big developments in Cork Harbour. There are numerous other examples; the bringing in of the British Gas Corporation being one of them. I know that Deputies Tunney and Gene Fitzgerald have more examples they wish to put to the House in respect of these matters. It is highly regrettable that Irish firms are constantly not obtaining these contracts. It comes back to the old IDA mentality: "Because you have never done exactly this before, therefore we cannot be 100 per cent certain you are capable of doing it." Nobody, it appears, is prepared to take even 1 per cent of a chance with an Irish businessman or an Irish industrialist. That is an appalling outlook and it will strangle our industrialists and our industrial development.

If contracts such as this, the fabricating of £600,000 worth of steel for NET, is being refused to a highly competent Irish firm in Dublin—the only Irish firm found worthy of being asked to tender and agreed by all and sundry who saw it as being absolutely competent in every way is turned down, not on the grounds of price but on grounds of inexperience, what hope have they of getting contracts worth millions, perhaps tens of millions, in the building of oil rigs which no Irish firm up to now has been able to do? How will firms gain experience in order that Ireland will obtain its full benefit of the entire spin-offs of the discovery of natural gas and, hopefully, oil? They will not be able to do it if all the time they are shot down on the grounds that they never did exactly this before.

The firm I am talking about has done work close to this, not quite as big or as complex but they were perfectly competent to do it and could bring in advisers from consultancies to ensure that they could do it to the highest standard and within the time specified in the contract. Yet, they were refused. I do not want to make any point of this, but I understand that an appeal was made to the Minister personally in respect of this and his attitude was that while he would like to see contracts such as this going to an Irish firm he had been given expert advice and he did not want to over-rule it.

Irish industry is not going to make any progress, so far as benefiting from gas and oil finds is concerned, unless the Minister is prepared to over-rule expert advice. Clearly our firms have not got the experience but they will never get the experience, even ones like this which have experience of 90 per cent of this type of work, unless somebody orders the firms concerned to award the sub-contracts to Irish firms. In the cases we have been talking about in relation to Cork Harbour it is not private firms that are making the decisions. One is NET which is a semi-State body and another is An Bord Gás, an entirely State-owned operation, that was allowed to bring in the British Gas Corporation. If State and semi-State bodies are going to do this, one can hardly expect private firms, particularly foreign privately-owned firms, to do anything else. The outlook for our industrialists and technologists in regard to benefits from the development of gas and oil must, accordingly, look very bleak.

As an alternative to the capital intensive nature of the grants which we have been giving up to now and of the side effects of the tax exemptions one can suggest fairly glibly and readily labour subsidies of some kind rather than the capital subsidies which, in effect, the present grants amount to. The type of labour subsidy I have in mind is something on the lines of the premium employment programme introduced as a result of the second official budget in June last. It is easy to say that was a failure and that we should, therefore, forget about schemes of that kind. Unfortunately, it was a failure because it seemed to be the only enlightened piece of thinking in relation to our economy and industrial and employment problems I have seen from the Government over the last two years. From the figures given by the Minister for Labour some weeks ago the number of people who obtained employment under the scheme, but not necessarily as a result of the scheme in all cases, was 2,467. One would have hoped that by now we might have 15,000 or 20,000 employed under the scheme, the great majority of whom would have been employed as a result of the scheme, but instead the figure is distressingly small.

The premium employment programme which is a form of labour subsidy does not work in its present form but that is not to say that it would not work if it were in a more attractive or useful form. The Government should look hard at the various restrictions on that scheme and try to remove as many of them as possible. In particular, they should remove the necessity that a person had to sign for four weeks and be in receipt of unemployment benefit or assistance for that period before they could come in under the scheme. At present a large number of school leavers are unemployed—it is variously estimated at between 10,000 and 20,000 and it might be greater—but none of these people can avail of the scheme. It is not really a scheme for job creation; It is a scheme for getting recipients of unemployment benefit or assistance out of that category. One of the other major drawbacks about it is that if a firm has declined in its employment figure since 20th June last, it has to get back up to its figure of that date before it can start to bring in people under the scheme. The scheme does not apply to the industry to which it could most profitably and usefully be employed, the construction industry. People could be brought in overnight in the construction industry, the most flexible of all our industries if this scheme applied to it.

It is worth the Minister's while to reflect on the fact that on 15th September, which is the last date for which we have figures for individuals, there were 21,950 unemployed in the building industry. A vast number could be put back to work almost overnight if some simple steps advocated in this House by this party were taken by the Government. Unfortunately, those steps have not been taken; but even if the Government were adamant in not increasing the loan level of £4,500 and the ridiculously low income limit for SDA loans, a lot more building could be got under way and many of the 21,950 could be got back to work if the premium employment programme were applied to them. It should be extended out of all proportion to the very limited way in which it was introduced in June last. It should be looked at as a positive programme for the creation of jobs, and all those provisos and conditions should no longer be expected to apply to it.

This form of labour subsidy applies in other countries and Dr. Ciaran Kennedy refers to it as applying in certain regions of Germany. There the method by which it operates is that a worker who is brought into employment finds that his employer is paid by the State an amount equal to the social welfare payment that would have been made to the worker if he had not been taken into that job. Therefore the employer is only called on to pay the difference between the social welfare benefit the worker would have got and the full wage.

That, of course, is a much higher incentive than the £12.50, or whatever the figure is, under the premium employment scheme here. What is important is not that it is only £12. What has damaged it is that it is available to such a very limited number of people and industries that it has unhappily, I regret to say, proved to be very much less successful than one would have hoped. It covered only 1,207 people between June and November at a time when unemployment continued at a fantastic rate.

Mention of the system that applies as a labour subsidy in some of the regions of Germany brings me to the point that clearly something of that kind is an incentive to work and we will seriously have to ask ourselves whether the social welfare system as it has operated here in the last year or two is not a serious disincentive to work in certain circumstances. I can quote examples constantly being given to me every day of the week where it would pay A, B, C or D not to work.

I do not want it to be taken from this that I am critical of a good general social welfare system and in particular I do not want to be taken as being critical of the dole system, which this party first introduced more than 40 years ago; but I am critical of the ways in which it has been abused in the last two years, not necessarily by recipients, though there have been and always will be individual abuses of it. I am critical of what I would regard as the abuse by the Government of that system generally, and I believe that in certain instances and circumstances this has created a serious disincentive to work, particularly in regard to those who are in the higher level of receipt of social welfare benefits of one kind or another.

If this were not so I do not think men would be talking today about what they call their right to redundancy. It is a right I would never have thought existed. I have had people approach me with the complaint that they had been seven years in a factory and that they had to continue to work at a time when men with only three years service were redundant, and I was asked did I not consider it to be fair that those with longer service should have the first right to become redundant. I had hoped that redundancy was the kind of thing the average worker would like to avoid, but I wonder from what one hears is that so: does the average worker want to avoid redundancy in all circumstances? I am not clear that all do.

I think there have been arguments in this House on Estimates and Bills for social welfare about whether in any circumstances the income of a particular worker would be higher if he were not at work rather than when he was, and I think the Parliamentary Secretary to the Minister for Social Welfare became fairly annoyed about this being suggested and he produced an elaborate table in which he showed that only in one minor instance at one particular point of the scale, did the income on paper of a person who was out of work exceed that of somebody who was in work, assuming that originally they both had the same wage.

That is true on paper but not in practice. This is what an increasing number of workers are beginning to find. It is in this that the difficulties for Irish industry in the future may well lie just as much as any failure of the IDA or the Minister to adapt policies or incentives. I have people coming to me and rather plaintively saying: "I am earning £35 a week. I am paying differential rent, income tax and social welfare contributions. I have £X net left when I have everything paid and I have a wife and two children to support. I see John Smith down the road who was in the same job earning the same wages and he is now getting social welfare benefit of £Y. He is paying no income tax or social welfare contributions and because of the differential rents system his rent has dropped from £5 to £2. When he has his various weekly payments made he has so much in his pocket."

I doubt if there is a Deputy in the House to whom the same examples have not been given, but all of us are afraid to talk about it. We are told that recent happenings in the western area arise directly out of these kinds of payments. Because the topic has not been discussed does not mean it is not one that may have a bearing on the size of our unemployment figures today. The wheel has turned a full circle from the marches of other years when people today talk of their right to redundancy, their right to be unemployed.

If we are seriously interested in our industrial development and in increasing productive employment we must fully consider what I have been saying in regard to the relationship between social welfare benefits and the net available income by comparison with the net available income of those who are employed. Every day of the week I hear in increasing volume from people working: "Here am I paying high income tax, high social welfare and so on. Am I not part of a diminishing group now supporting an ever-increasing group of those without work? How long can this go on?"

He is only partly right. Those who are working, paying social welfare and other contributions, are only partially supporting those who are not working. The remainder of the support for those out of work, the majority of whom are idle through no wish of their own, comes from foreign borrowing. We are rapidly nearing the situation when the desire of the Government to borrow abroad does not seem to be diminishing but perhaps the willingness of the lenders abroad will decline when they see the money lent spent on non-capital purposes, on current Government expenditure. Paradoxically the very thing that would save the country from what must be economic ruin if present policies continue to be pursued, would be the unwillingness of our lenders to lend because when they stop lending for current purposes and insist that borrowed money be used for capital investment then we might see a little reality in the economic management of the country. We might see unemployment figures begin to go down for the first time in three years; we might see industrial output beginning to go up; we might see the volume of exports begin to rise and we might even see what I should like to see, the volume of our imports of raw materials begin to rise again because that would be a sign that recovery was beginning to operate. Unfortunately that day has not yet come but for every hour it is put off the difficulties will increase.

I have tried as fairly and as objectively as I can to put before the House numerous points and aspects of industrial and economic policy that should at least be considered even if, on examination, all of them were found not to be fully warranted. At least I have endeavoured to make suggestions and outline roughly certain avenues that might be explored, certain policy reappraisals that are necessary in respect of policies that we have accepted as almost sacrosanct for the past 15 or 16 years. The Minister failed to make such a reappraisal at a time when it was never more necessary. I hope that in his reply to the debate he will expand reasonably the views of the Government on how an unemployment figure of over 107,000 can be countered; how our industrial grants and tax incentive policies can be altered in order to improve employment. I hope if he deals with these matters he will not confine himself to criticism of the shortcomings or alleged shortcomings of what I have said but that he will give the positive views of the Government on these matters and a positive and definite indication of what this new Bill, about which he spoke in his introductory statement, will contain and when we may expect to see it.

Many things are alleged in this House from time to time for political reasons to be urgent but if this country is to survive in anything like the way we have known it in the past and if it is to be able to hold its own in the EEC in the future and in the world generally no Bill is more urgent, more badly needed than a Bill which would bring about a reappraisal of our industrial policy and a drastic reduction in the shortest possible time in the incredibly high figure for unemployment that we have today.

Mr. Staunton

I am glad of the opportunity of speaking on this Bill. I listened with a certain amount of interest to the speech of Deputy O'Malley. To me it seemed there was not much grey area about it; it was largely black or white, that the solution of the problem of the Irish economy at present was merely that the Government of the country should be changed. This was simplistic and getting away from a fact that needs to be restated that we are living in extremely difficult times here and in Europe and in every part of the world. I read yesterday of one or two south American states with resources which have this year halved their inflation rate to 300 per cent. I know countries where there is mass terrorism, countries on a war footing, where 70 per cent of the budget goes into defence.

About six or seven weeks ago in Germany I called on a German manufacturing concern which about two or three years ago were interested in investing in Westport where I live and did not make any firm decision then. I called to see the principal of that company to find out the present position. In speaking of Germany we are speaking of a solid and strong country in financial terms, strong in investment, in personnel and technology. This industrialist's customers were, to a large extent, in the machine tooling industry in Western Germany. He was able to tell me that in his particular circumstance in his factory his sales were down. He had serious problems and the major reason for this was that most of his customers were on a two-day or three-day week. If we are attempting to isolate the position within this country and suggest that there are peculiar and unique circumstances here that do not exist elsewhere, that is an over-simplification. If, presumably, by extension, an alternative Government in this country could put the show on the road in Ireland, presumably, by definition, it is taking on the world and a mere change of Government will lead to brighter times in Britian, Western Europe, Japan and in the United States of America. There is no point in attempting to paint it in this sense.

In a debate like this, tracing the industrial development of a country is of certain value in putting matters into perspective. It seems to me that if the tracing of the history of such industrial development in again painted in a black and white sense, if, tracing the development of this country since the foundation of the State, no reference whatever is made to the contributions made by the first Government of the State, or other Government which contained representation of the parties which presently constitute the Government, it is a rather polarised type of development.

For example, no reference whatever is made to the establishment of the Shannon scheme; no reference whatever to the fact that the Industrial Development Authority was established by an inter-Party Government. It had not been my intention to dwell in this debate on such an historical background but it is necessary in the light of what has been said. Indeed, through the 1950s while there was substantial industrial development in the country, it was during an era of expansion in the world and in Europe and the incentives we were offering, and continue to offer, were infinitely more attractive than those that existed anywhere else at that time. It was an era of mass United States investment in manufacturing industry in Europe. Despite all that, the level of investment that accrued to this country from the United States, through much of that era, was a fraction of what it might have been had the policies been as expansionist as they might have been by the Government of that era. This is an attempt to put matters into a relative sense because, throughout much of that era of massive United States investment in manufacturing industry in Europe, there was a single office of the industrial agency of the then Government in New York and was inadequately staffed.

There was absolutely no presence by that industrial arm of the then Government elsewhere on that huge continent during that era of massive United States investment in Europe and I was personally a witness to that. There was involvement in the mid-east, mid-west later and on the west coast at an even later stage. But sadly, throughout much of that period, US companies had made decisions on European locations. Many of those American companies had established their European headquarters in Britain, which meant that attempting to go to these companies past this point and to suggest to them that Ireland should be the location for their base in Europe was extremely difficult. In many circumstances such companies did not take up options in this country they might have done had we been on the ball a little sooner. Therefore, if we want to speak of the industrial development of Ireland, we must speak in a relative sense.

Of course, we have problems at present. There is an extremely high level of unemployment which saddens us all. I am certain there is nobody in this country it saddens more deeply than the present Minister. The problems we have are partly for historical reasons due to the nature of this country, due to the policy of protection necessary throughout a certain stage of our development. It is due also to an amount of feather-bedding carried on for a number of years that led in some sectors of industry to an inherently weak Irish sector. If we look to the movement of free trade, which is supported by the Opposition, if we look to the start of this since the development of the Anglo-Irish Free Trade Area Agreement, which was negotiated by a Fianna Fáil Government, which was the start of the breaking-down of these tariffs—which we supported because it was necessary in a world of free trade—we can see the root of the problem we have at present.

In the context of the world economy at present the Industrial Development Authority are doing a very good job. I am particularly pleased that in the light of the gloom through which we are living, in the light of the economic disadvantage particularly in this country, if we talk about the broad political security of the country and if we speak of the terrorism to which we are a witness, it seems to be a remarkable compliment to the Government fundamentally that the type of stability exists here which encourages such investment, and to the Industrial Development Authority, through these extremely difficult times, to manage to attract the level of superior investment in industrial employment and in industry in general which they are doing.

Sadly, of course in the past year the net effect has not been good because there have been redundancies at a slightly higher level than new jobs have been created but we are beginning to get to the stage where we are over the worst of this. I said this previously, and it needs to be reiterated, that the present level of redundancies do not, to the degree that many people might imagine accrue from the present state of the world economic order or from the economic problems that exist here. To a certain extent they relate to that. But, I have said this previously and will say it again, if we were experiencing boom conditions in the world today, in Western Europe and in this country due to the opening up of free trade, due to the inherently weak sectors in some aspects of Irish industry with tariffs being reduced to a much greater level than had been previously, we were still going to run through a phase in which we were going to experience an extremely high level of redundancy. It is important that that be noted.

I think Deputy O'Malley referred to the fact that the average man fails to take into account inflation figures when he reads figures of increasing trade or investment levels. I do not think so. I think Deputy O'Malley underestimates the average man in the street. He is not that foolish. Indeed, I was interested, it had nothing whatever to do with industry but he introduced the topic at the West Mayo byelection, to hear him express an opinion reflecting that of others when he stated that the results apparently were because of excessive payments in the social welfare sector. It was an unfortunate statement——

Mr. Wilson

I do not think he said that.

Mr. Staunton

——which he then withdrew and it is on the record. He said: The results, a lot of people say, are because of excessive payments. He then withdrew the remark but went on to say the results were because of disproportionate benefits or something relating to income. I represent those people. It happens to be my constituency. If they are the type of people who now, apparently, can be bought in this type of manner, they are less than the people I hope I am representing. Indeed, the trend in that part of the country had started even before we were in Government to be in a position to even increase social welfare benefits.

The Deputy raised questions about the chemical industry and the capital intensive nature of much of the chemical industrial investment in this country. The suggestion that this type of investment should be discouraged is a point of view. But can we choose? Is there a limitless pool of industry in the world from which we can take our pick? Is it so limitless that we can say that we are going to have this sector, we are not going to have that sector, we want industry that is strong in labour; we do not want capital-intensive industry? Might I say that the hypocrisy of this attitude is typified by the very fact that the same speakers and the same party came into the House last week to suggest an infinitely greater level of State subsidy per job in the shipbuilding industry.

Mr. Wilson

It is a labour-intensive industry.

Mr. Staunton

Per job. Take the shipbuilding industry. Take the number of jobs you hope to create or maintain. Take the level at which you are going to subsidise these jobs. Take the rate at which it will work out per worker and yet the Opposition are pushing the Government into the position of adopting an attitude in the shipbuilding industry against a far more competitive situation.

Mr. Wilson

It is a labour-intensive industry. The Deputy missed the point.

(Interruptions.)

Mr. G. Fitzgerald

That gives me an opportunity. I will explain that.

An Ceann Comhairle

Order, the Chair is on his feet. The Deputy in possession must be allowed to make his contribution without interruption. The Chair will try to ensure that kind of courtesy to all Members.

Mr. Staunton

I want to take up Deputy Wilson on the point he mentioned. Of course, the shipbuilding industry is, to a degree, labour-intensive but only to a degree because it is an industry in which there is massive investment. I want to compare the level of subsidy that was suggested not on a labour-intensive or capital-intensive basis but to the extent to which it relates per capita, in other words, per worker. The Deputy came into this House and complained about the capital-intensive nature of the chemical industry and suggested it should be discouraged, and a week after that he comes in and seeks massive subsidies in a different area.

Mr. Wilson

I do not think the Deputy used the word "discouraged".

Mr. Staunton

It was approaching that. What is the alternative to saying simply that the Deputy does not want this?

Mr. Wilson

He wants labour-intensive ones as well.

Mr. Staunton

I think it is on the record that the Deputy said something approaching discouragement. I believe that is the word he used. We do not have these options in the world today. If we could have the luxury of suddenly emerging from a country of very recent industrial origin, a country which the industrial revolution by-passed, and transforming this country into a Switzerland where we had a very high level of sophisticated industries and full employment and labour-intensive industries, this would be excellent. But we do not have that luxury in our present state of development.

I welcome the fact that the Deputy in approaching industrial development suggested that we should take a fresh look at certain aspects of policy, but he did not develop these points to the degree he might have done. He suggested that grants tend to produce industry of a capital-intensive nature and there were complaints about foreign companies starting with partly-produced raw materials adding value in this country only to a small extent and maximising profits here for profit motives. I accept the point that Deputy O'Malley made that the tax is the main incentive. If we are in business and attracting industry from abroad to Ireland, if there are limits to our success and if we are not getting the level of investment that can create conditions of full employment here, while those of us who are concerned about Irish industry, an Irish arm of industry and lesser incentives for people coming from outside the country, one of the problems one has is of reconciling this viewpoint with the reality in the market place.

It seems to me that one of the problems in pursuing the lines suggested by Deputy O'Malley is that in the market place it will lessen the attractiveness of the country for foreign investment, because if we make it tougher for manufacturing industry from western Europe, the USA and Japan to come in here, where these companies have other options in the world, it will make it more difficult to attract that level of investment. We will, instead of the stabilisation which we are trying to produce, get disincentives which will substantially reduce the level of investment and the level of employment which Deputy O'Malley said he wanted to seek. There is a weakness in this.

I do not agree with the Deputy vis-à-vis the position of Irish people in so far as grants for industrial development are concerned. I have experience of this, both in public and private life. The Industrial Development Authority look favourably on proposals which are put to them by Irish people. There is an inherent problem because we are not a country of industrial skills or industrial background. This explains the reason why we have a lesser level of industrial development in the country than there is from foreign sources. However, there is a welcome increase in the domestic level in industrial activity. The Minister said this evening that the IDA domestic aided investment in industry from April, 1972 to December, 1974 was £26 million at a time when the level from overseas was £432 million. This, to date, is the highest proportion of domestic industrial development the country has achieved.

Mr. G. Fitzgerald

In cash terms, of course. What about jobs?

Mr. Staunton

I have not got the statistics for job terms but they should, on average, relate to the investment level. It has been my experience that Irish applications are judged on their merits. I do not accept that the approach of the IDA to get a higher level of Irish involvement is one in which they will have a situation where 50 per cent of the applications will fail. In other words, Deputy O'Malley would accept a risk level of Irish applications, in contrast to those from people outside the country, in which one might have an end result of 50 per cent failure on the basis that people are learning through experience. I suppose, to a certain degree, we have to pay a price but it is a lot of nonsense to suggest that people judging these applications will encourage risk to the level of an end result of a 50 per cent failure rate.

There are other ways we can tackle this problem. I believe it needs to be tackled because we need a stronger Irish involvement which we have not had to date. Sufficient study has not been given to the fact that in commerce we have a very astute business community. If you go through the country you will find that the vast proportion of experience in the commercial world is in commerce rather than in industry. We have great commercial skills, astuteness, merchandising skills, capital, tradition, and intellect but we lack, to a large extent, an appreciation of what industry is about.

Industry is very different to merchandising. It is a different world. We do not fully appreciate this. Something should be done to involve, to a greater extent, the Irish commercial population in the work being done by the IDA. Some of us had an idea some time ago that the country development teams, which are doing excellent work in the western counties and which largely consist of the senior executives of the particular counties, might be extended to include in their membership representatives of groups such as the chambers of commerce, the trade unions and the farming organisations. One of the problems at present is that these teams sit in judgment on grant applications. If the development I suggest took place they would not be on the teams for this purpose, judging grants at local level, but in a development sense in considering policy and the future. I see a great deal of merit in involvement of people such as that in these deliberations. The IDA could possibly do a bit more to involve Irish businessmen in a more integrated sense in industrial policy, in attempting to get them involved to a greater degree in the regions in their planning, and in their programming abroad and encouraging properly selected people who will work through the system and supplement what is being done at national level to get outside the country occasionally in order to learn more about promotion and what industry is about. That is the approach we should aim at rather than automatically accepting proposals from Irishmen and looking for a very high risk level.

The IDA are to be complimented for going after Irish businessmen during the past two years and encouraging, through seminars and meetings, the development of proposals from Irishmen to build industry in the country. I am delighted the Minister is here to listen to me because I would like him to take note of what I am about to say. Between the stage from which a thought is conceived regarding industrial development and the point at which that comes to fruition in the form of an industry is a fairly long span. We are talking about the Irish businessman especially. This is a much more important factor where the Irish businessman is concerned. It is more important than it is in so far as foreign operations, especially by multinationals, are concerned because they have vast resources in R and D, research and development.

What I am suggesting is bringing research and development to its simplest level which means that the single businessman or the two partners have got to find out something about this idea and that will necessitate travelling around this country, travelling to Britain, to the Federal German Republic and even further afield to investigate types of machinery that might possibly be necessary to produce a particular product, and to look at the operations of other industries in the particular field in which they are interested and take an overall look at the marketing situation in the sector in which they are interested. There could be a very worthwhile development under which the Industrial Development Authority working on their own or through the county development teams would encourage, not applications to establish industry from Irish sources but, rather, would encourage applications seeking a level of grant to conduct the very simple affairs of which I speak. In other words, if there is a summary of costs related to a particular project which might amount, for example, to £1,000 I would like to see instituted some type of programme under which a proportion of the cost of this type of fundamental research and development is funded by the national agents or by the county development system, thereby encouraging people to do the very basics and fundamentals and in this way——

Mr. Wilson

Surely that is available by the county development teams.

Mr. Staunton

Not as such. It is not spelled out. It is possible such applications might be accepted by county development teams but it is not defined.

Mr. Wilson

Surely the county development officer is entitled to go abroad.

Mr. Staunton

This is not the point I am making at all. I am talking about the Irish businessman, not county development officers.

Mr. Wilson

To go junketing around the world.

Mr. Staunton

If that is the Deputy's viewpoint, well and good. If the Deputy describes a sensible visit by a Skibbereen businessman to the North of England to look at some machinery as junketing, the Deputy has his choice.

Mr. Wilson

There are professional men——

An Ceann Comhairle

Order. Deputy Staunton should be allowed to make his own speech.

Mr. Staunton

If a man goes outside the country for business purposes, is this to be described as junketing? Are the activities of semi-State companies and Irish Government Departments who go outside the country in search of knowledge and experience to be described as junketing?

Mr. Wilson

The Deputy has a personal grouse affecting his own pocket.

Mr. Staunton

Will the Deputy answer the question?

An Ceann Comhairle

Order. Deputy Staunton will address his remarks to the Chair and interruptions will cease.

Mr. Staunton

I am glad to address my remarks to the Chair and that was my intention from the beginning. It is apparently in the national interest if people from the semi-State sector of Government go abroad, but it is junketing if an Irish businessman attempts to do it.

Mr. Wilson

At the State's expense.

An Ceann Comhairle

Deputy Wilson must desist from interruption.

Mr. Wilson

The Deputy is asking me a question.

Mr. T.J. Fitzpatrick

(Dublin Central): Córas Tráchtála gives a grant.

An Ceann Comhairle

Order.

Mr. Wilson

This is a personal thing.

An Ceann Comhairle

Order. Deputy Wilson must cease interrupting.

Mr. Staunton

I am aware that Córas Tráchtála give grants but this is largely in circumstances where industries already exist. I am seeking a more integrated and fundamental approach at the very simplest level of research and development.

There are restrictions on the employment premium. They are minor restrictions. The four weeks signing is a very minor restriction designed to avoid certain abuses of the system. Restrictions other than that are merely simple restrictions confining the employment premium to what is defined as industry within the country and expanding it beyond that point could make for many difficulties. I do not think the vast extension of a scheme such as that might bear the advantages which Deputy O'Malley suggested should accrue. For a start, I think he is going to tamper with the tax incentive or the grant incentive which he suggests should be looked at and, in turn, reducing the employment premium could lead to money being spent from State sources which might not altogether result in the competitive position. It is not as simple as all that. The British introduced it some years ago and they have since ceased to offer that particular incentive. There is very little experience throughout the world in that particular field.

With regard to Mayo, I am glad the Industrial Development Authority are going ahead with the advance factory in Westport. I am also pleased that they are looking at the possibility of another large-scale site in the area with a view to possibly establishing a heavier industry later. We welcome the Asahi development because of the level of investment and because of the jobs provided in its construction and because of the benefits which will accrue, but I want to put on record in particular the fact that the Asahi development so far as jobs are concerned will not affect the south-western end of the county.

Mr. G. Fitzgerald

They are not using our steel there.

Mr. Staunton

It would make it easier for me if I were allowed to speak without interruption. The Asahi development is a tremendous boon for North Mayo but it is 40 or 50 miles from the part of the constituency of West Mayo in which I live and that means it is beyond the acceptable commuting distance. It is very necessary, therefore, that there should be equal concentration by the Government on industrial development in the southwestern part of the county. There is an American company in Castlebar employing 600 or 700 people, mostly girls, and while this is welcome there is great need for substantial male employment there. I hope the success in north Mayo does not lead to a feeling in certain circles that the Mayo situation is a happy one. We want to see continuing progress in that area.

There is another particular area which to a degree pertains to the IDA. It relates to fish processing. A large proportion of the Donegal catch is caught off the north Mayo coast. Some is landed on the north Mayo coast. There are two fish processing factories but both these are now closed. One was processing crab and the other was processing other kinds of fish. Both these factories are privately owned. The Minister cannot afford the luxury of walking in over-night but it is a matter which should be examined to see if there is some possibility of sorting out the problems of these companies or having them taken over. There are vast fish resources off the coast of Mayo and both the Industrial Development Authority and BIM might be receptive to applications from others who might want to take up this option. The product is indigenous and this could be a viable proposition.

I do not think one can begin to compare industrial development here with the Danish situation merely because someone has written an article comparing Ireland with Denmark. The Danish experience is very different. Their traditions in industry are somewhat longer than ours. If we look at the present DE position in the world of 1975, Denmark is very vulnerable from what we hear. The Danes are very concerned about the problems which are worldwide today. It seems to me that holding up Denmark as the classic example of what the Irish should do is a little simplistic.

We certainly seek the Irish content in construction and in the giving of contracts, in so far as it is feasible, to Irish companies. We have to strive after this. There are problems when you talk about a competitive world where companies have options to do whatever they want to do in an era of free trade. When we come to sectors where we have, in a sense, a monoploy situation, where we are talking about basic resources which people want to develop, the Department should adopt as strict a line as possible, judging the situation by the degree to which we have control.

In sectors of industry or of basic resources such as oil or mineral resources, where we see ourselves being in a bargaining position, and in a sufficiently strong position to do so, in so far as it is possible we should make certain that Irish consulting companies and Irish construction companies get a fair crack of the whip. This is very necessary. Should we not do so, it will lead to very undesirable situations in the future.

We had from the spokesman for the Opposition a tirade about the dole and about unemployment benefit and unemployment assistance. The suggestion was in the same vein as the west Mayo thing, that the dole was abused. Deputy O'Malley hastened to add that it was not abused by the recipients. He went further and said the Government abused the dole without defining, in any sense, in what way the Government abused the dole. We would like to have this point developed if spokesmen on the opposite side wish to speak to it. In what sense is it suggested that the Government abused the dole? A Deputy who spoke before me wondered if an average or a fair proportion of the people want this redundancy payment today instead of work.

My experience is that the vast proportion of the people I meet and mix with, given an option in the morning, regardless of the levels of unemployment, or unemployment assistance, or redundancy payments, or pay-related benefit, want to work. To suggest, as the Deputy did, that an average number—and then it was amended to a fair proportion—of the people would prefer this redundancy payment to work is not an indictment of the Government. That is an indictment of that portion of the people of whom he spoke, not the Government.

I come now to the issue of foreign borrowing. Of course it is undesirable to borrow more than one needs. It is even more undesirable to borrow more abroad than one needs. This country ran into a hurricane due to the oil crisis. Fundamentally that is what happened. Overnight that raised colossally the imbalance in payments. This meant that if the Government were in an ultra conservative mould they could have pursued a certain policy. They could have said: "We will not borrow. We are damned if we are going to borrow. It is much safer to balance the books." The Government could have done that.

If you contrast the hurricane through which we went, and the problems concerned with this foreign borrowing which kept the show on the road and allowed a certain level of expansion and a certain human approach in the critical situation in which many unemployed people found themselves, with the results which would have accrued had the Government been less expansionist, and had they cut out this borrowing, and had they retrenched instead of going forward in this difficult era, I would hate to think of the results which might have accrued, and what the mood of the people might be at present. It is not a happy position but, in the circumstances, the Government did not have options.

We must take into account the resources we are led to believe we may have, especially the newly discovered resources, and the resources which are on the point of being discovered, we hope, offshore. Until they start digging it out, none of us really knows the extent to which the geologists are right or wrong. If we are to listen to the geologists and draw certain conclusions from what they are saying, and what has been happening in other countries on the western fringe of Europe, we only need to discover about one-fifth of the proportion of oil the Norwegians discovered for an equal input into our economy. Through the discoveries off their coast, the Norwegians have made themselves into one of the richest nations in the world.

When you go to borrow money you think of your collateral and your assets, and you balance one against the other. In a broad sense the expansionist policy was the right policy to adopt in the extraordinarily difficult circumstances in which we live. I wish the Minister well in the difficult times in which we are living. I hope we will ultimately come through with the increased levels of employment and investment which we want to see in the industrial sector.

Mr. Wilson

It is a bit discouraging that when somebody like the spokesman for the Opposition raises basic questions about social welfare, about industrial development, about choices between capital intensive and labour intensive projects, they are deliberately twisted in such a way that the spokesman is made to appear a kind of ogre who regards his fellow Irishmen as venal and corrupt, as one who is discouraging industries such as the chemical industry. It makes one chary——

Mr. Staunton

Look at the record.

Mr. Wilson

As soon as the Minister for Industry and Commerce has paid expenses for the Deputy's trips abroad in order to develop Westport, I will be sorry for having crossed him and irritated him which is his purpose in interrupting me.

Most of my contribution on this Industrial Development Bill is inspired by the same contribution to the Central Bank Quarterly from which Deputy O'Malley quoted. The head of the ESRI who wrote that article put in all the caveats that a scientific economist and writer on social affairs would put in. In other words, you cannot say what suits Denmark will suit Ireland. You cannot make direct comparisons. What he did say, and what I believe is true, is that you can get insights by examining the industrial or agricultural problems of a small country. You can get these insights when dealing with problems of a country of similar size and one which, broadly speaking, has a similarly constructed economy.

Dr. Kennedy said the Danes—and Deputy Staunton made a good point there in saying that they were in the industrial field before we were—developed their economy not by export subsidies or capital grants to industry, not through capital intensive industrial development, but through labour intensive and skill intensive industrial development. The important point is that it is not done by postponing social services. There is a very high level of social services in Denmark. Very important from our point of view, if only to make us think, or rethink, it was not done by foreign enterprise.

In this country we get a good deal of ignorant knocking of foreigners and loose talk by people of limited sophistication and the more limited their sophistication the more ready they are to offer solutions to all our industrial problems. You do get this kind of criticism: "He flew in from Germany and got this that and the other and a local man cannot get anything." I am not going to contribute to that kind of xenophobia. I am just saying that that country developed its economy not by attracting foreign enterprise and not by State sponsored bodies, which is also interesting as apparently there are very few of them in that country.

He points out there was protection in Denmark the same as we had protection in the thirties, when mainly through the exertions of the late Seán Lemass, the industrial wing of our economy was being established and developed. He said, in effect, that protection in that era was worldwide and in fact has been blamed by economists since for the horrible slump that took place in world trade at that time.

Dr. Kennedy talks in his article about the change that took place in Denmark and this country when there was more free trade perforce, when things had changed, and the effect this had on both Denmark and Ireland. He has one particularly interesting point when he says that at the end of the 1950s there seemed to be a kind of awakening of our industry to its true potential even before the free trade agreement was worked out, but at that time there was an awakening of our Irish-based industry before foreign capital was attracted which gave promise, although the promise did not flower, that this native-based industry would develop. I am going over this because there may be lessons in it for us. Nobody could say that conditions which are ideal in one country, with its distinct social structure, history and so on, may be ideal in another country, but there may be some insights which we can get from a study of the position.

Dr. Kennedy makes the point that only 10 per cent of the total work force is now engaged in agriculture but there is a very good agricultural base. I was brought up in an area where people always referred to the Danes as being models for the dairying industry and the development of farming. Our agriculture has a technologically sophisticated base and marketing is sophisticated. It is important for the country that it should be there, but at the moment we are dealing with industrial development. I think it could be said that we have a fairly solid agricultural base developing at the moment as a background for industrial development. What particularly interested me is the emphasis the paper laid on individual enterprise and initiative, that it was for the most part from private individuals—I think Deputy O'Malley made the point—not from the State that the initiative was coming, and that we should learn from this. The people concerned, as Deputy O'Malley pointed out, were not people who started with a lot of money. They started with the skill or with the refinement of a skill which they themselves had in the industry in which they were involved, and they worked up from that, a small skill to start with. One opinion often heard when we were going into the EEC was that the small-time venture was doomed. I remember at the time reading a very encouraging article by Nora Beloff which pointed out three or four small-scale industries which developed into rather large ones but which started, one in north Italy, in a back garage and another, again in a small back-of-the-house garage.

What I am particularly interested in is the kind of education that will spark off this kind of enterprise, this kind of spirit, innovation, creativity, and that is what the whole thing is about. It is about enlivening minds in such a way that they will probe, that they will invent, that they will branch out in new fields, that they will be in a sphere of ideas. Dr. Kennedy makes the point that many of the people in Danish industrial development movements had not a great deal of what we call formal education but they had a great knowledge of design and were prepared to experiment, take a chance and start in a small way. Many of them had very little capital when starting. Many of our industrialists felt that the managing director ought to have the swivel chair first and several colours of telephones, and that this was the important place to begin. Whereas most of the industries that developed into large ones started the way these Danish ones started that are described by Dr. Kennedy in his paper—the Henry Morris type of thing, fixing bicycles in Oxford.

I do not want to overemphasise this, but the point I want to make is that it is not necessary to have large amounts of capital if you have a spirit of enterprise, if you have innovative minds dealing with incipient industry. For the most part, there was very little money coming from the Government for people like that. We want to examine ourselves, particularly educationally, in this matter. I have my own views on this. I believe it does not really matter what the material taught is. I believe it is how it is taught and how it is made to affect the minds of the recipients. If we can bias people towards the creative rather than the system of the instillation of knowledge, this will be of considerable advantage in the industrial field. I shall come back to that in a moment.

From what I have said already it seems there can be a labour intensive bias, and the Industrial Development Authority could think along those lines at least. I did not see the script of Dr. Kennedy's article; I intended to contact him to get the script from him. I know Mr. Donal Nevin of the Irish Congress of Trade Unions challenged some of his criticisms of the way our industrial development has been handled or some of his views on it. However, it is important that we do a certain amount of rethinking on the whole matter.

Deputy O'Malley mentioned the subject of social welfare payments. Politics are crude at the best of times and when one raises a fundamental question one is liable to be misinterpreted, even without being culpably misinterpreted, but Deputy Staunton deliberately, and for a cheap political reason, misinterpreted what Deputy O'Malley said in this regard. I was thinking of the position of an industry in the west of Ireland which is so short of its raw material, potatoes, that they must import potatoes from Britain. Farmers in Britain grew less potatoes this year than last year—30,000 acres less or thereabouts—and I do not know where the raw material for this industry will come from. While in the west it struck me that recipients of small farm assistance could improve this situation. I am a great believer in that assistance, provided the money is used for the development of the small farm, the clothing of children and the improvement of houses, but I would not be averse to suggesting, depending on the valuation of the farm, that the recipient would have to grow a certain amount of potatoes before being entitled to the assistance.

In this way the raw material for this industry which gives good employment could be provided. There should be some kind of tie up to ensure that in a labour intensive industry like that the raw material would be available. The present system of capital intensive produces fairly comfortable circumstances for the worker but there are fewer of them and this is not suitable, particularly in the areas referred to by Deputy Staunton, those in which county development teams are working. High wages for a few is not as good as having a high number of jobs even if the wages are not quite as high. In this regard I am dealing with rural Ireland and the small provincial towns.

Industries which are bled by taxation are not in a position to reinvest money in the industry. I gather that in Denmark there is a system which encourages the retention of money for reinvestment. It is important that money should be reinvested. There is a tendency here to believe that the industrialist is a bloated capitalist that must be debloated by severe taxation. I am sure the Minister for Industry and Commerce does not agree with that; it is one of these simplicities one hears bandied around in the name of an ideology. This should be discouraged. The industrialist may often have two ulcers where the worker may only have an incipient ulcer. The worry is not all on the side of the worker.

The emphasis in the paper by Dr. Kennedy was on the importance of industrial design. I disagree with his major premise, and with the major premise of the Danes in this regard. The implication is that if the education is of a certain kind—he was talking of academics and second level education—the recipient of that type of education will not be very useful for the development of industry. I am aware that I am out on a limb in this regard but I do not believe it is true because the material taught is not as important as the way it is taught, as the kind of mind it produces, as its ability or inability to promote creativity in the recipient to promote a bold entrepreneurial spirit in the person. I admit that when the terminal of that stage has been reached that on top of that the skill in industrial design has to be imparted.

It is important that some element in what has gone before will lead to that but what has damned us is the belief that when the leaving certificate has been achieved the person has the qualifications necessary for something. That is the time when the particular skill must be super-imposed. I was glad to see that AnCO, in their report on the new apprenticeship which will come into effect in 1976, have made provision for apprenticeship for people who have already obtained the leaving certificate. That is in line with my thoughts on the importance of a basic education upon which certain skills can be built. I maintain that the skill will be better received and if it becomes obsolete the person with that background will be able to acquire another skill better than the person who has been trained only in one skill without such a background.

I read an interesting article by Doctor Hession in the Autumn Studies on this point. He pointed out that in Germany for a while the technological training was imparted and it was found that if the general education was not good enough before that if retraining had to take place the object of that retraining was not in a good position to absorb it. The emphasis on creativity, on entrepreneurial spirit, on the importance of the qualifications in things like industrial design were emphasised by Doctor Kennedy. He referred to the Scandinavian design team's report in which they emphasised that some of our products were badly designed and the most successful designs were those based on our traditions. I am sure the Minister for Industry and Commerce will have a special interest in this. It was debated at the NUI Convocation at the time when some people had their various hobby horses to ride but that came out prominently in the discussion.

The disincentive element in social welfare payments referred to by Deputy O'Malley and which was misinterpreted, deliberately or not, by Deputy Staunton, did not weigh very heavily with many of the Danish economists. A footnote to the article points out that one economist feared that there would be an element of disincentive where the actual payments were approaching the level of wages in a particular industry. In fact the reverse of the coin was referred to: if they were too low something he called the "culture of poverty, a breaking of spirit" might occur which would leave people unemployable altogether if they were dependent on social welfare payments for a long time.

Some of our young economists some time ago came out very firmly in favour of Ireland breaking the link with sterling and attaching itself to the snake. Denmark did this and it had some effect on the economy. This is not the time to debate this point but any consideration of the implications of any move like this can be creative in its own way and help to break some of the moulds and make us look afresh at the position in industrial development. There may be an argument that the United Kingdom have had too great an influence on our thinking in more ways than one, that we are trying to enter the industrial development building on the second floor in some instances without having gone up the stairway.

I should like now to refer to the position in my own area. Deputy Staunton beat the Westport drum for a while before he left. We have a particular problem in the Cavan-Monaghan area, which is in the north-eastern regional development grouping. Louth is heavily industrialised and unfortunately is very badly hit by unemployment. Monaghan and Cavan are in a special position in that it is difficult to attract industrialists, especially foreign industrialists, because even people in Dublin, for example, think it is dangerous to enter either of those counties. I would appeal to the Minister to pay special attention to those two counties when it comes to dispensing industrial grants.

If a local man has an idea, I am asking the IDA through the Minister, to take a risk with him because he is the best person to do the job. He knows the counties are peacable, the people are industrious and the chances of success are good.

In his statement the Minister referred on more than one occasion to the subject of jobs approved. Jobs approved and jobs actually created, realised and held, are not necessarily the same thing. There is, to use a cliché in American politics, a big credibility gap between jobs approved and jobs realised. When people speak about jobs approved they may say there will be 80 jobs but very often fewer jobs in new industries are delivered.

I would like the IDA to take a very close look at the legal hold it has on buildings which they have helped. I am not talking now about advance factories but about buildings for factories in which the IDA have reasonably heavy investment. If the industry goes wrong there is always the possibility that the IDA will find themselves in legal difficulties about their rights.

Deputy O'Malley referred to the problem of Irish firms in a particular line of manufacturing who have not done certain things because they had not the opportunity and are therefore refused a contract. That is very strange. It is similar to the young school leaver or graduate looking for a job—when there were jobs available—who was often frustrated by advertisements which read "experience essential". If they cannot get a job they cannot get experience and that can be very frustrating. If there was a certain amount of entrepreneurial spirit or a bias towards taking a risk, such firms could get the contracts and I am sure the Minister and the IDA would, if the occasional business went wrong, get the backing of the House when a bona fide risk was taken.

Sometimes firms that have been aided by the IDA move out. In my own constituency one firm simply moved out. They gave a splendid accolade to the workers, patted them on the head and told them how wonderful they were, but "Goodbye, Charlie, I am closing up" and offering the excuse that more sophisticated computerisation demanded that the firm concentrate elsewhere. Every time this happens it should be hammered, especially if public money is spent and an industry pulls out soon afterwards. They should be subjected to close scrutiny and severe criticism of this behaviour.

Deputy Staunton made the point that we had a great degree of sophistication in commerce but not such a great degree in industry. That is a good point. He was illogical when he suggested that the IDA should subsidise trips for people who had expertise in commerce in order to develop industry.

Mr. Keating

I do not think he said that. He is not here to defend himself.

Mr. Wilson

He said there was a great deal of sophistication in commerce in the country and less sophistication in industry.

Mr. Keating

Agreed.

Mr. Wilson

He spoke about the chambers of commerce getting a place on the county development teams. To my mind, a member of a chamber of commerce is someone who has expertise in commerce and it was that type of man he was advocating as a student of industrial development. My remarks have been offered not in any spirit of cavilling about what is going on. I believe in the type of economy which I know well, the economy of my own area. It is important that the IDA get the finances and the opportunity to develop new industry. It is as well also to remind ourselves that it seems manufacturing industry alone will not be enough to take up the number of people who will be looking for work. It would be foolish to believe that we must rely on manufacturing industry alone to cope with the young people coming on the labour market.

Deputy Staunton asked if we could choose between capital-intensive and labour-intensive industries. I suppose there is a limit to our choice but in certain instances we can choose, and we submit from this side that we should so choose. Obviously, some countries can and do choose and if we choose we will be helping to solve the very serious unemployment problem that exists.

Mr. E. Collins

I have listened with interest to Deputy Wilson's contribution which I found very instructive. It will commend itself to every Deputy when dealing with a Bill such as we now have before us. I should like to take him up on one point, a matter of ethnical difference. He referred to capital-intensive industry not being suitable to the west of Ireland and the general inference was that there is agreement that capital-intensive industry is not the best solution for the country.

I cannot agree. We are in a technological era and even in this country technical progress has become evident. We have our expectations of mineral and oil wealth not only here but in England and the North Sea generally. The trend has been towards capital-intensive industry and we must face up to this. Capital-intensive industries themselves generate employment in other industries as suppliers of industrial equipment and it is, perhaps, here that we miss out somewhat because although we can have capital-intensive industries, far too often the machinery and equipment has to be imported. It is at this level that we are lacking, especially in the matter of our mineral resources—our lack of a major steel industry. I do not know what it would take to establish in Ireland a heavy industry which would supply this type of equipment. It is a very complex problem which I am not qualified to discuss.

We must face up to the need to encourage capital-intensive industries. It will mean huge resources in the form of grants being committed to the establishment of these industries, but in the long run it may be our best chance to provide permanent employment which is, of course, the ultimate objective of the whole exercise. It may be a difficult thing to do because patterns change, industries change, but at least we should try to ensure that the industries we attract into the country will be ones that will prosper and be export orientated.

I say this because in Waterford we have lost some industries during the last few years, traditional industries which had been built up on the basis of protection. I mention the Messrs. Goodbody factory which was giving very good employment but was developed on a policy of protection. Denny's bacon factory was another traditional industry which did not continue to prosper in a competitive atmosphere. Neither did the footwear and the carpet industries.

We cannot continue to rely on a low level of investment in capital goods to see us through to a stage where we will have sufficient industries to give us the level of employment we are looking for. We have gone through a bad period in relation to employment, the level of unemployment reaching 103,000. Experience in other west European countries and in America has been similar and we all hope this stage will pass and that we will have learned something from our experience.

It is as well to point out here that Europe has resisted the attraction of protection. There were instances where fiscal action was taken but, by and large, Europe has resisted protection as a course to be taken to protect levels of employment.

The present recession was caused by two major factors. One was an unjustifiably high rate of inflation—unjustifiable in so far as, with the rate, of inflation appearing in the economy over the past two years especially, investment was not sustainable because the possibility of (a) operating profitably and (b) of getting a reasonable income for the investment did not seem to be there and there was a drastic cutback in investment which was a fairly obvious result of the high rate of inflation. The inflation itself was caused by the second component of the cause of our recession, the oil crisis. I believe that the four—or, as I suppose it is now—five-fold increase in the price of oil caused a major collapse of confidence throughout the west European economy, including Ireland. There was a fear among businessmen and even governments of the consequences for the economy of such a major disturbance caused by such a rapid increase in the cost of oil.

The result of the increase in oil prices has not even yet been fully felt because normally only the direct effect of the increased cost is felt in the transport industry and in transportable goods industries but the by-products of oil have risen to such a high price level that many industries have been affected in a number of ways. The plastic industry is an industry that was very hard hit by the oil crisis. The rapid increase in the price of oil and the very high rate of inflation were the two basic contributing factors to the recession. I think we are coming to grips with it but if we are to return to a high level of investment we must bring the rate of inflation down to an acceptable level of less than 10 per cent. This is vital to our economy because ours is a developing economy.

We have lost a certain amount of competitiveness vis-à-vis other foreign suppliers and this has damaged our economy and our potential competitiveness throughout Europe and in America for the coming years. By restraint, by fiscal and monetary measures we must reduce the rate of inflation to less than 10 per cent. If this means reducing the level of Government expenditure, we must face the long term desirability of doing so. We will not have a return to confidence on the part of investors and industry throughout Europe unless they can be assured their investment will be a real one in the technical sense of the word “real” and will not be eroded by the high level of inflation. They must be guaranteed that and if we want our industry to expand we must take steps to guarantee that their investment will give them a real return and will be protected against erosion by inflation.

The oil search has not yet been concluded in that we still do not know what will happen next year or the year after. The oil finds in the North Sea are real; the Norwegians are benefiting; Britain will benefit and we hope that with the passage of time we will also benefit from them but that cannot happen in the short-term future. I doubt very much if we will benefit from them for the next four or five years because it will take that time to carry out prospecting and, if successful, to harvest the crude oil. The potential is excellent; if we have oil off our coasts the potential for our economy is unlimited. The potential wealth and employment which it would generate are very badly needed in our developing nation. I hope we will be successful as we have been successful in harvesting our mineral wealth. It is proper to pay tribute to the Minister and the Government for the policy they have laid down in regard to the development of mineral and oil industries. It has been recognised abroad that a good job has been done from the point of view of the Government. I would condemn any Member or any political authority that would take a narrow view of this for a purely party political advantage. The development of our resources should not be the subject of party bickering. The experts have recognised that our policy is a sound, constructive one and will attract foreign investment at a level necessary for the development of our resources.

The question of competition interests me because we are a private enterprise economy for the most part. Our people have shown themselves to be very enterprising and shrewd in investment where they see a possibility of profit. I believe the challenges of the EEC will be regarded as promising for us with the passage of time. The potential of our country to benefit from the EEC is, perhaps, the most promising development, politically and industrially, we have seen since the establishment of the State. It is imperative that our goods, especially our agricultural goods, should have full and free access to EEC markets because only in that way can we really benefit from our membership of the EEC.

Debate adjourned.

The Dáil adjourned at 10.30 p.m. until 10.30 a.m. on Wednesday, 3rd December, 1975.