I understand there are many speakers who wish to contribute to the debate so I shall make my points as quickly as I can. At the end of the last debate Deputy Brady spoke about swimming against the tide and that is more or less the note on which I concluded my contribution the last day. I spoke about various Government Departments and agencies who enjoy a monopoly increasing charges for services without any regard for the hardship they cause to industry. They put up prices willy-nilly and expect private industry, which is the bread and butter of the nation, to pay. The truth is that we live by exports and yet we have the ridiculous situation where Government Departments and agencies put up prices and expect industry to pick up the tab.
The Minister spoke about the need for efficient management in the public sector and, together with the Minister of State, he had an opportunity to talk to some of them last Saturday. He saw efficient management and the need for competitiveness as a priority if we are to get our house in order. However, we need this in both the public and private sector. Trying to achieve it in one area without the other is crazy. I suggested the last day to the Minister that he would find himself swimming against the tide. He is devising a new industrial strategy which will be brought forward in a White Paper in July and at the same time the basic requirements for a developing economy such as ours are lacking.
I referred to the disincentives in the budget. That is a case of the right hand not knowing what the left hand is doing. The Minister will be compared at the end of the day to Canute trying to hold back the tide which will engulf him. We have seen the beginning of this tide in closure after closure because of lack of competitiveness on the export market and poor management. When I was Minister for Industry and Energy bad management was responsible for 50 per cent of the failures I came across. The closures we have had are a monument to bad management. We need efficient management in the public sector as well as in the private sector. Unless we put the two in order and unless the Government bring out a co-ordinated plan to bring all the strands together and make sure no Government Department takes decisions to increase costs on industrial production, the Minister will find himself swimming against the tide.
There are many omissions from the Minister's speech which were difficult to understand. There was no mention of inflation. Does inflation not count in industrial development? Is it not one of the biggest handicaps industry is trying to work under? Perhaps it is because the Coalition have such a bad record in relation to inflation that they have ignored it. During 1973-1977 it reached an all-time high of 24 per cent. In March 1982 when we came to office the inflation rate was 23 per cent. After prudent management and tough decisions we got it down to 12 per cent on leaving office and it would have been down to what our competitors enjoy in the international markets, 4 per cent or 5 per cent, had not the Coalition added 5 per cent by additional indirect taxation. They are only fooling themselves when they talk about industrial strategy and development when by their own actions they increase inflation, which makes us more uncompetitive on international markets. It is incredible to believe that the Minister when speaking about competitiveness never mentioned inflation.
There were many other omissions as well. There was no mention of major semi-State bodies in his own area of responsibility which would deserve mention. Possibly he took the view that because there was a major debate on Verolme he did not feel it necessary to say what the Government will do. However, the Minister for Foreign Affairs let it be known to the people in Cork and to the management and workers in Verolme that there was little consolation for them in the years ahead. We know from the Minister for Foreign Affairs that no more Government ships will be built for Departments or for semi-State bodies in Verolme and that the future is very gloomy.
There was no mention made of Irish Steel. Perhaps the Minister took the view that as we had a separate debate on it we were well up to date. We would have been better informed if the Minister was prepared to give us the information I asked for in that debate. We can only assume that the Government are undecided and that one party is pulling one way and the other the other way. I am sure before the end of the year we will hear more about it. NET are a body directly under the Minister's control which have borrowings in the region of £180 million and yet there was no mention made of them. I know there is a commitment at management level to turn around a very difficult situation. There was no word from the Minister as to how he sees their role in the future. Will they receive Government equity? What corporate plans has the Minister for them?
I asked the last day about Clondalkin Paper Mills and I hope the Minister of State will take the opportunity to tell us what is happening to that mill which was bought over six months ago with £1,760,000 of taxpayers' money. Is it to lie idle? What are the plans for it? Will it be sold? Will it be kept going? What will happen to Min Fhéir Teoranta where a liquidator was appointed last September? I hope the Minister of State will give us the up to date position. I know when I left office there were offers made for it which would have cleared their existing liabilities and would perhaps have enabled them to show a profit in the final analysis. What is the position? Is the tug-of-war still going on with Bord na Móna in regard to taking over that other company despite Bord na Móna having declined the opportunity of doing so earlier? They came into the reckoning later in the day when private enterprise were prepared to pay the price for the company. The offer from Bord na Móna was more than generous in terms of what they would be prepared to pay for bogland in any other part of the country.
What is the position regarding Ardmore Studios? Are they to be sold or are they to re-open? We heard enough from the people opposite when they were in Opposition about how they would use State money to put the studios back in operation. We should like information, too, concerning many other companies for which the Minister has direct responsibility. Has he any views, for instance, on the future of Ceimicí Teoranta? Surely this company are in grave need of development and of a new approach in terms of products for which there is a brighter future. The National Board for Science and Technology could contribute by way of devising the production of new products and bringing about a situation of renewed entrepreneurial spirit into Ceimicí Teoranta. Before leaving office I appointed two excellent directors to the board of that company.
Those are the kind of questions that have not been answered in the Minister's long statement. There is little mention, too, of the IDA. One wonders if some of the leaks of recent months are now coming to fruition. Has the Minister confidence in the IDA or what is his view in regard to the company? I recall headlines in various newspapers and journals to the effect that the Minister does not believe in the IDA, that he would be prepared to dismantle the Authority.
Having regard to the fact that the IDA command the greatest amount of money in terms of the total Estimate, one would have expected the Minister to have enlightened us a little more as to his plans for the job targets of the Authority. In this very difficult year is their job target 30,000 or will it be down by 5,000? What are the targets in the various areas in which they operate? I understand that the Minister of State is taking a special interest in the IDA. What is the position regarding the review that I set up on the Authority's building operations? The IDA have approximately two million square feet in terms of factory space. This is a sign of the times but perhaps there are ways of getting better value for the money spent. The review committee to which I have referred were to have reported by the end of December. I should like to hear from the Minister what the position is in that regard and also whether a new approach is to be taken by the Authority. At this time of a depressed building and construction industry, surely better value for money could have been had by way of wide-range open tendering instead of selective tendering which would make some sense in a buoyant construction industry but not in a depressed area in which there are many contractors who are either barely holding on or who have gone under.
The Minister talked of bringing within the ambit of his responsibility the National Board for Science and Technology. I agree with that. Another company that I mentioned earlier this year in this context are Fóir Teoranta. Surely the Minister who is responsible for industrial development should bring this rescue agency within his ambit instead of having the sort of duplication that has been taking place between the IDA and Fóir Teoranta in the area of rescue. I know that both agencies meet each week within the terms of the early warning system but the situation should be reviewed in depth with a view to eliminating any duplication there may be in terms of moneys or of executive time.
Having brought the National Board for Science and Technology under his wing the Minister has the opportunity of considering the operations both of the Irish Productivity Centre and the IIRS. There is divided responsibility across that area and there is an overlapping of executive time and energy. In the context of getting better value for money spent in the public sector the Minister should consider this whole area of co-ordination and possibly of doing with one or two fewer semi-State bodies.
A few ideas occurred to me while the Minister was discussing his approach to the White Paper. He asked for an indication of the views of the House on the education system and of how it is serving industrial development. I do not believe that our educational system encourages enterprise in any way. Instead, it misdirects personal ambition by way of turning out people who want to be something but who do not want to do anything. Our very fine vocational education system is the first step on the ladder towards acquiring the right skills and the right approach to industry. For far too long our education system has been orientated towards the academic, but it has taken a turn in recent years. However, we must start at the lower level. Irish parents have contributed to the situation in the sense that they wished their sons or daughters to be somebody without having to do anything. Our education system needs to be redirected towards the needs of the new work force. We should endeavour to have students think in terms of employers rather than employees because there will not be jobs for them in the areas in which they want jobs.
Recently while addressing a leaving certificate class of 85 in a vocational school I asked those who wished to join the civil service or to have office jobs elsewhere to raise their hands. 82 per cent of the class did so. I told them bluntly that 82 per cent of them would not find jobs in those areas. Those people did not have a hope of gaining the jobs for which they considered themselves suitable. I told them that students would have to think in future more in terms of employers than of employees. In this sense the Government have a role to play. For instance, when children come to Dublin on educational tours why must they always be taken to the National Library or to Leinster House? Is it not time that we had had a national exhibition hall where the Irish Goods Council could exhibit a list of the goods that are being imported to this country and also of the opportunities that are being missed by those goods not being produced at home. We must try to focus the minds of our young people on those areas. We must draw their attention to this matter, as well as the attention of their teachers. There should be a permanent exhibition hall with contributions from the Irish Productivity Centre, the IIRS, the NBST and the IDA. There should be videos about people who started business in a small way and became successful. That is the sort of thinking we must encourage in our young people in order to convince them that this is still the land of opportunity, urging them to think in terms of becoming employers rather than employees. Many of our industries had small beginnings and I have always believed in the philosophy that the small man of today can be the big man of tomorrow. There is a need for re-orientation.
In recent years the universities have been adopting a more outward-looking approach to the needs of industry. International companies setting up here have commented on this and in the Hyster negotiations a significant factor was the change in our educational structures. Four years earlier they had decided to go to Coleraine in Northern Ireland. The professors are beginning to realise that industry has a major part to play and that there is no need for so much academic education. We were spending scarce resources in educating people in professional areas whom the economy did not need and exporting them to other countries who benefited thereby from our investment. It is time to consider getting value for our money.
I recall writing a note on some suggestions for the White Paper on Industry. If the drawing up of such a document is confined to the IDA, the Minister's advisers and civil servants the opportunity is lost for industrialists to make an input. It is most important that their views be taken into account. I had in mind sessions once or twice a week where industrialists would give their ideas about the requirements for industrial development. These are the people we must rely on to deliver.
All this will be an absolute waste of time if we have not a national economic plan covering all areas. The best strategy in the world will be set at naught if the environment is not right. It is no wonder that successful Irish industrialists are asking why they should continue to invest here when we are taking away the incentive. They are looking to the United States and other places where they can get a better return and the recent Finance Act will hurry them along that road.
While I was Minister I had a particular interest in import substitution. We set up import substitution units in the Department of Industry and Energy and the Department of the Environment. Are those units working effectively or do the Government place any emphasis on import substitution? Have the Government introduced a system of monthly reporting whereby every State and semi-State purchasing section would have to make a monthly return of their purchases, giving the reasons for buying any goods outside the State? Sometimes when we query the purchasing of goods abroad we are told that those responsible were not aware that the goods were available here. There is no need for that excuse because both the IIRS and the Irish Goods Council have data banks on the products available here. The IDA also have a product identification unit. Is this information being used and taken into account by the State purchasing agencies? The Taoiseach has finally come round to the view that it is opportune to mention at the Stuttgart conference the move towards protectionism within the EEC. We all know what happens in France. There are many goods being purchased outside the State which could be manufactured here. Are the units I mentioned operating effectively? Is the monthly reporting system in operation and, if not, why not?
We talk about the need to improve management and competitiveness in the public and private sectors, as well as the need to establish venture capital companies. Despite the comments on this subject, the system of small business investment companies which has been developed quite successfully in the United States is not clearly understood here. A new layer of investment companies — not the banks, I would emphasise — is needed in Irish business. This involves another creative part of our strategy for industrial development. The type of investment companies known as SBICs in the United States have made a startling impact. The published venture capital index for SBICs went from 100 in 1973 to 760 in 1981. This contrasts with the ten best Fortune companies which showed returns of 29 per cent from 1971 to 1981. If we look at the UK we will see that there were only six such companies operating in 1979 and today there are 25. There is a great deal of advantage in this idea because of the motivation in small investment companies. They stand to lose if they back ventures that fail but they can make huge gains if they back winners. When you contrast this with the role and function of bankers and other finance institutions and estate agencies with paid executives, failure affects real prospects in that area of personal capital and it does not offer the high monetary rewards. The SBICs should be considered as a new layer of investment companies between the banks and other such institutions and on-the-ground operating firms. By investing in SBICs, banks and other such institutions can spread the risk. It should also be realised that 35 per cent of the SBICs in the US are high technology investors.
In the short time I have left I will not go into the details of that. The Minister is well aware from his advisers about what I am getting at. Clearly, before you can travel down that road, taxation incentives are necessary to promote such highly deserving commercial activity. Small investment business companies should be taxed at the capital gains rate with their losses set off against current income. Such a system would facilitate large-scale investment in the industrial rather than the speculative property market. If you want risk capital put into the economy you must be prepared to reward risks because risks that are not rewarded will not be taken.
We can look at the success rate of the IDA and SFADCo and we will see that job approval in small companies rocketed from 1,800 in 1975 to 10,000 last year. Anybody who begrudges such concessions to people who are prepared to take risks are not thinking in the interests of our economy. I appreciate this is only one approach but I suggest it is an approach that should be looked at. I regard it as a critical strategy in the field of employment creation. If you look at the ten top Fortune companies, they have not contributed one new job in ten years in the United States, whereas ten to 20 of the SBICs have contributed almost 35 per cent of new jobs in the US. I am giving an idea of the situation that would be created if the proper tax incentives were offered. That money would otherwise be going into speculative investment. We are all only too well aware that in the private investment area there is something like £350 million to £400 million available, not counting pension funds and others. None of that money is being invested in industrial development, for the very obvious reason that the risks being taken in industrial development are not being rewarded. Until we recognise that, we will have a very poor success rate in attracting the proper venture capital so badly needed in this area.
We heard a story at the weekend which was disturbing to every Member of the House and to those interested in the problems of industrial development. The story was about the involvement of the ICC in underwriting a shares issue by Atlantic Resources. Here is a Government development bank that was set up to help Irish industry and surely this is not the proper role for that company at this time. There was a rights issue of 14 million shares in May 1982. Thirty per cent, or £4.1 million of the shareholding of Atlantic Resources are in the hands of ICC at a cost of approximately 78p which cost the ICC £3.19 million. If one checks, as I did today, on the stock market one will find those shares are now worth about 47p. In other words, the ICC have lost £1.26 million in that short period.
It is time the Minister for Finance took a coffee morning with the semi-State bodies under his jurisdiction and asked them is that the role the ICC were set up for. Why should they be in the high risk sector? How many industries are crying out for working capital? How many industries have their backs bent from the high interest rates operating today? What would £1.2 million, the ICC loss, not counting investments, do to reduce interest rates on the heavily pressed industrialists in Ireland today? It is a scandalous operation for those people to get into and the House should question the role of the ICC who were set up to do a special job but who have wandered so far away that they are now in the highly speculative investment business.
Let us look at the make-up of Atlantic Resources and ask how were they able to convince the ICC to float shares. One can easily see what has been happening to oil shares in Ireland in the past several months. Who are the people who will benefit from this investment? Fitzwilton have 13.2 per cent of the shares and we all know who the chairman of Fitzwilton is. We know he is chairman of the fund raising business for Fine Gael. We all know another man who, apart from being a shareholder of Fitzwilton, is also a very big shareholder in Atlantic Resources. We know of his activities in raising finance. However, it begs the question of whether this is the worst political patronage in Ireland. I do not think anyone can convince me or the public that the money the ICC should have available for our industry is being put into this highly speculative area. Anybody who has been watching the Irish stock market in the past six months should know how Irish oil exploration shares have been going. It is time questions were asked and I put it to the Minister and the Government, particularly the Minister for Finance, to call in that corporation and ask them if that is the role we expect them to play.
Before I conclude I want to ask what is Government strategy in relation to the whole area of industrial development and job creation? Six months ago the National Development Corporation were a priority. Now we do not hear a word about them apart from the odd bit of loose talk here, that we have to wait for this little child to grow, the child that was stillborn in the Labour Party in the seventies. It was not alone in the Coalition's programme then but it was there in the seven months they were in Government, but we hear no more talk about the National Development Corporation. Will it be stillborn even at the end of this Government's term or will we see something done about it?
I do not think the Minister of State opposite me or the Minister have any appetite for this operation. Now I ask what has happened to the National Enterprise Agency which should be more in line with the philosophy of Fine Gael than the National Development Corporation. The Minister could put it into operation straight away with two shareholders, civil servants, but all we hear is that it will be developed in time. We also have heard about a task force of Ministers on unemployment. All we are getting are three or four more layers of bureaucracy but nothing being done for the 188,000 unemployed who are out there, 70,000 of them young people and 19,000 more young people who are not included. It is time for some action, fewer boards, fewer committees, less talk. We have plenty of agencies to do the job. All we need is action from the Government.
Deputy E. Collins rose.
