: In the short time at my disposal I can deal with only a few limited aspects of the rather broad Department of which I am in charge.
The first matter I want to speak about is the promotion of Irish goods under the Irish Goods Council. Since the publication in January last of the Government's three-year programme for the promotion of Irish goods there has been a generally satisfactory response from all sectors. Manufacturers, particularly in those areas seriously affected by competing imports, have demonstrated an encouraging willingness to co-operate with the Irish Goods Council in marketing and in promotional ventures. The Sell Irish Campaign is being supported actively by the retail trade. Industrial purchasing management in both the private and public sectors have increased their efforts to identify import substitution opportunity. Community groups have undertaken a variety of consumer promotions throughout the country.
It would be inappropriate at this early stage to seek direct comparison between the impact of the programme and the month-by-month fluctuation in import statistics. However, the figures for the first five months of the year indicate that the rate of growth in competing imports of manufactured goods has declined in 1978 compared with the same period in 1977. While these trends are encouraging, the increased level of consumer demand coupled with the slightly healthier state of world trade generally suggests that competing imports could be on the rise again in the coming months. Already there are disturbing import trends in a number of sectors such as footwear and the furniture industry. The growth of imported food products will pose a continuing threat to whole industries in the foreseeable future. In short, the need to maintain and intensify the momentum of support for Irish-made products will become even more important as the year progresses.
When launching the programme early this year I described it as the people's job creation programme. I pointed out that it gave the ordinary citizens, as well as those in positions of responsibility, an opportunity to use the spending power at their disposal, no matter how limited that might be, for the benefit of the community. This message is being heeded but there is scope for it to be heeded to a greater degree.
Increasingly, priority is being given to ensuring that the manufacturing sector take full advantage of the improved selling environment that is being created. There are still pockets of complacency in Irish industry as well as a serious absence of essential marketing and selling experience. For many companies, particularly those in the small and medium categories, the effective answer is greater co-operation and a willingness to plan for growth. Those who do not do so will inevitably find their market share further eroded. We can help only companies who are prepared to help themselves. There are more than enough success stories already recorded to show that, given the right spirit of enterprise and market aggression, Irish manufacturers have the opportunity to fight back to regain a substantial share of the domestic market.
I want to say a few words on the question of State aids and incentives to industry about which there were rumours, speculation and a good deal of concern some six months ago. The House will be generally aware of discussions that have been taking place for some time now with the European Commission concerning our regional aids, including export sales relief. These discussions were part of the preparation of general arrangements to apply to all member states. I am glad to say that the new arrangements, which will be formally announced by the Commission very shortly, will represent a satisfactory outcome of the discussions from our point of view. The Republic of Ireland, together with Northern Ireland, the mezzogiormo, West Berlin and the French overseas territories will be allowed to maintain the highest level of regional aid in the Community.
Secondly, and more important from our point of view, export sales relief will be excluded from the aid ceilings which are being imposed in this present coordination. As I indicated last month, the Government intend to replace export sales relief by an alternative incentive scheme which will come into operation on 1 January 1981. Work on the preparation of the new scheme is in progress but it will not be completed for some time. However, the Commission have agreed that all commitments entered into under the present scheme of export sales relief before the change-over to the new scheme on 1 January 1981 may be honoured in full. This will apply right up to the statutory export date in our own legislation of 1990 and will apply to all firms who either physically establish plants here before 1 January 1981 or who sign grant agreements or similar agreements with the IDA before that date for the establishment of manufacturing industry here. The successful conclusion of these very prolonged discussions with the EEC Commission, which dispelled any adverse speculation in regard to export sales relief, enables the IDA, SFADCo and other industrial promotion agencies to press ahead unhindered with their investment promotion work.
In 1977 manufacturing employment increased on average by 5,400 or 2.8 per cent while manufactured output rose by 7.8 per cent. The employment out-turn would have been higher but for a decline in the final quarter which ran counter to a substantial increase in output in that quarter. However, employment growth in 1977 represents the best performance since 1973. The most recent indications are that manufacturing output is growing even faster in 1978 than in 1977 and this should add to manufacturing employment this year. Industrial exports during the first five months of 1978 are over 20 per cent higher in value terms than in the same period in 1977.
The IDA Industrial Plan 1977-1980 has set a target for the creation of a total of 49,500 new jobs over the four year period of the plan. It is envisaged that 47,000 of these jobs will arise in the manufacturing sector and the remaining 2,500 in the services sector. To achieve this level of job creation the IDA will have to approve projects over the period 1977-80 with a job potential of over 100,000. For 1978 the IDA has adopted an approvals target of 27,000 jobs; this figure is over 17 per cent greater than the 1977 target and about 60 per cent greater than the target set for 1976.
The general economic outlook for 1978 is favourable to the achievement of this target, high as it is. Rapid growth of gross national product and of manufacturing output and exports is expected to continue in 1978. Indeed, Ireland is expected to be the fastest growing economy in Western Europe in 1978. World trade is not, however, expected to increase significantly in 1978 and only a modest increase in market demand is expected in Europe, although the US market continues to be relatively buoyant. These factors, together with the continued high rates of unemployment in Europe, are combining to intensify competition, especially from the UK and Belgium, for internationally mobile investment. However, the IDA has intensified its promotional activities both at home and abroad and is confident of achieving its stated target of 27,000 job approvals in 1978. The maintenance of Irish industry's competitiveness, a favourable industrial relations situation and the continuation of the IDA's incentive package at a competitive level are, however, important conditions which must be satisfied in order that this target will be achieved.
I might mention at this stage that some weeks ago I was asked a parliamentary question in regard to the nature of some of the competition for industrial investment which we are now encountering from abroad and misleading statements that were made in regard to this country by one of the promoting authorities of another country. At the time I said that I believed these activities had come to an end. Since then it has come to my notice that there has been a repetition of a certain aspect of this activity, again in the United States of America, by and EEC country, the same country about which we had cause to complain in the first instance. The IDA are taking the appropriate steps and, through the Minister for Foreign Affairs, I shall be asking our Ambassador in the country concerned to take whatever steps are open to him also to try to put a stop to this unfortunate activity. It has been a feature of Ireland's promotion of its industrial development that we did it on our own merits and did not go around criticising other countries, and one would hope that other countries would adopt the same attitude towards us and have a positive rather than a negative form of promotion.
So far as progress to date is concerned, I understand from the authority that the preliminary results of the small industries programme and of the enterprise development programme are particularly encouraging. Over 130 small industry projects with a total fixed asset investment commitment of almost £8 million had been approved by the end of May. These projects have a job potential of 2,000, indicating that at this point the programme is 20 per cent ahead of target. I am particularly gratified by this achievement as I see small industries as being particularly suited to smaller towns and villages throughout Ireland, meeting the local employment needs of rural communities. In this connection I might make reference to the fact that, in addition to what the IDA are doing, SFADCo have responded in a most commendable and enthusiastic fashion to the task I set them earlier this year in regard to the promotion of small industry projects.
In the enterprise development programme, some 14 projects involving an investment in fixed assets of £4.2 million and with a job potential of 700 new jobs have been approved under the programme launched in January of this year. The IDA are providing substantial financial support towards this investment by way of fixed asset grants, training grants, loan guarantees, interest subsidies and equity participation. The prospects for further substantial job approvals under this programme during the remainder of the year are good. This is a new programme, its object being to help the establishment of projects by Irish people employed in industry but anxious and able, with the right kind of advice and assistance, to start up industrial undertakings of their own.
Since the beginning of the year the IDA have completed 570,500 sq. ft. of factory space at 16 locations. In addition, work has commenced on 34 other advance and special factories. Further advance and special factories are at the planning stage for 26 locations. This represents the largest ever industrial construction programme undertaken by the IDA, and is ample proof, if proof were needed, of the seriousness of the approach of the Government and the authority in the face of the job creation challenge.
I want to say a few words now about the inflation situation at the moment and as it was over the past number of years. About one week after the people had gone to the polls to vote in the last general election the consumer price index for the quarter ended mid-May 1977 was published and showed an annual rate of inflation of 13.9 per cent. The CPI figures for the quarter to mid-August 1977 showed a very slight reduction in the annual inflation rate to 13.5 per cent. However, it is no mere coincidence that the figures for the first full quarter for which this Government was in power showed a dramatic reduction in our inflation rate. The mid-November 1977 figures recorded an annual inflation rate of 10.8 per cent. The Government did not just accept this situation, gratifying as it was, and action was taken to ensure that this progress was not just maintained but was improved upon. The fruits of the Government's efforts were realised in the CPI figures for mid-February and mid-May 1978 when annual rates of inflation of 8.2 per cent and 6.2 per cent respectively were recorded. Thus, within one year of taking office, by a combination of factors, a combination of international movements, over which admittedly we had no control, and a lowering of some commodity prices, plus a temporary improvement of the currency situation from our point of view—by a combination of those factors, and because of the determination which the Government have shown to tackle this problem, the annual rate of inflation has been reduced by more than half within that year.
We are frequently accused, without much evidence to back it up, of not honouring manifesto undertakings. It can be truthfully said that we have not honoured this one in regard to the rate of inflation because what we undertook and said in May 1977 we believed was possible, was that we could achieve an inflation rate of 7 per cent by the end of 1978. At the time that flation rate by May 1978 was below the figure we said would be attainable by December 1978. At the time that projection was published as being capable of achievement it was scoffed at, laughed at, we were told it was totally impossible and that anybody who believed it could be brought about was naive, foolish, ignorant and so on. I will allow the figures to speak for themselves.
It is worth noting that the present annual inflation rate of 6.2 per cent is the lowest recorded since mid-February 1970—a period of eight-and-a-quarter years. It is also worth recalling that the annual rate to May 1978, 6.2 per cent, is less than the rate for the three months November 1974 to February 1975. Inflation then was 8 per cent, that is an annual rate of about 33 or 34 per cent. The annual rate up to mid-1975 was 24.6 per cent.
Those were the days when people did not bother complaining about inflation or price rises. There was a feeling that we had entered the banana republic league, that nobody would ever straighten things out, and that we were committed to these abnormally high rates of inflation almost indefinitely. There was a feeling of helplessness all round and at that stage the people might have been described as punch drunk. The most enormous increases used to take place at regular intervals with virtually no public comment. There was the feeling which stems from one of hopelessness that there was nothing one could do about it and therefore it was not even worth complaining about.
I am glad to hear that people are beginning to complain again about some of the recent price increases we have had in the last couple of months, which are running at an historically low level. It is right that people should complain, because they now feel there is hope. They have seen decreases in the price of major commodities and they have come awake to the fact that it is possible, up to an extent of 50 per cent as we preached for so long, to control inflation. We can control inflation if we have the will and the commitment to do it. The Government in regard to the 50 per cent under their control showed their commitment over the past 12 months and our commitment has paid off in a way that is extremely gratifying.
In relation to future movements in inflation, the Taoiseach, when he opened this debate, estimated that movements in commodity prices and currency fluctuations were likely to cause a slight increase over the annual rate of 6.2 per cent, which has been recorded to mid-May, and he estimated a rate for the 12 calendar months ending December 1978 of about 7½ per cent. It would seem to me on present indications that that figure is likely to be fairly accurate. A high proportion of that inflation rate, which is very slightly higher than the present rate but nonetheless is commendably low, is due to the increases in the price of food products, where prices are fixed not in this country or by the Government or by anybody under the control of the Government but by the Council of Ministers of the EEC.
I would remind people who are complaining about these price increases in agricultural produce, and accordingly in food products, that they cannot have it both ways. Are they against the common agricultural policy of the Community, as it appears some members of the Labour Party, such as Deputy O'Connell, are, or are they for it? If they are for it, they cannot complain about the consequences of it. It is as simple as that.
Another factor we will increasingly have to give some consideration to, although I am not suggesting that anything should be or will be done in the immediate future, is the question of the relationship of our currency with sterling. The British economy is now coming into a situation where it should be at its strongest for a long time to come, because within a year or two they will be self-sufficient in hydrocarbons. If at a time when Britain is about to become self-sufficient in oil and gas, her currency lags behind those of other industrial nations to the sorry extent that it has done over the last number of years, and still does today, what will be the position in five or ten years time when she is no longer self-sufficient in hydrocarbons and when she will not have the advantages she enjoys today and which can be foreseen for the years immediately ahead? This is a matter which we will have to ask ourselves about, not in the short-term because it would be unwise to do anything in the short-term and I am not advocating that it should be done, but in the longer term, because if we are going to tie ourselves permanently to a currency that has such apparently poor prospects, we might begin to think now about what it would be appropriate for us to do in 1985 or the later part of the next decade.
Finally I want to turn to the general question of minerals and hydrocarbons. As regards the development of mineral resources, the picture both onshore and offshore is one of considerable activity at the present time, despite the very unsatisfactory position of the base metals market. In 1976 new rules applicable to land prospecting licences were introduced with a view to inducing licensees to accelerate prospecting or to surrender licensed ground which could be made available for other competent applicants.
The evidence to date is that the introduction of the new rules is having the desired effect. There is, however, some concern that the continuing depressed state of the metals market might begin to affect prospecting budgets—although most reputable companies try to avoid this since the fruits of current prospecting work are long-term and are recognised as such. However, the present general situation is that there is no significant let-up in the volume of exploration being done in areas which have any substantial potential and there is satisfactory competition for most ground of any significant interest which becomes available for allocation and there is keen, competition for promising ground.
Consideration of legislation necessary to deal with the vexed question of minerals ownership is at an advanced stage and I expect to be in a position to introduce a Bill on this subject when the Dáil resumes after the summer recess.
Keen interest has been aroused recently in uranium exploration in Country Donegal following statements of interesting results from preliminary investigations. The search for uranium in Donegal and, indeed, in other parts of the country where indications of interest have occurred, has long-term implications which could be profound indeed. However, at this point, it is necessary to be realistic and to emphasise that, though developments to date are encouraging, and might lead one to express a sort of limited qualified optimism exploration work in the areas concerned is at much too early a stage and too little advanced work has been done to justify firm conclusions. It will, however, be my objective to ensure that the search for radioactive substances which are of great strategic and economic importance will be intensified.
The position of our existing mines is that in common with mining elsewhere in the world, they are suffering the effects of low prices, poor demand and high stocks overhanging the markets. The mining industry has had to live with the fact that they are in a business subject to cyclical price movements but the present poor trading conditions are particularly bad and most commentators are finding it difficult to be optimistic about the immediate future, although the somewhat longer outlook appears to be reasonably favourable.
The current market situation was the influencing factor in the decision by New Jersey Zinc to withdraw for the time being at least from participation in the zinc smelter project. As I have already announced, the IDA are continuing to study the possibilities in this regard and, so as to maintain our momentum, I have authorised the IDA to apply for outline planning permission for a smelter at a site near Bally-longford on the Shannon Estuary.
Offshore, there is a very satisfactory level of activity and this will be the most active year so far. A number of wells have been completed already and, while nothing of commercial interest has been discovered in these, there is still a lot of drilling to be done between now and when the season ends. Judgments on the year's operations, must, therefore, be deferred until all the results are in and are fully analysed.
Work is proceeding on the development of the Kinsale Head Gasfield. The onshore pipeline is, for practical purposes, ready and the drilling of production wells is proceeding offshore. Assuming no major problems arise we can look forward to first deliveries of gas commencing later this year.