I would like to join the previous speakers in welcoming this Bill. I do not think the importance of our exports has been fully grasped by the people. There has been a huge growth in our exports since 1980 — around 20 per cent per annum. In 1981 it was 17 per cent; in 1982 it was 19 per cent and in 1983 it will be around 20 per cent. If we look at this in cash terms we see there has been an increase from £4.5 billion to £6.8 billion for 1983. That is a huge growth in money terms, and in real terms it is around 7 or 8 per cent per annum. This year our total exports are £6,850 million. How much is the State putting into CTT? A paltry £13 million. Successive Governments' attitudes to export promotion and to CTT like the TV spongers ad, they make Scrooge look like a playboy. The reality is that what we are spending is only a minimal proportion of what could be spent and of what is being demanded by CTT to show even better figures and greater growth.
In relation to the performance of CTT we must bear in mind the international market in which they are working. Since 1978 Ireland has lost 14 per cent in trade-weighted competitiveness. Our inflation rate has been out of line with the essential cost inputs to industrial production, and with the European average. If we look further we see that the states with which we are principally dealing — 40 per cent approximately with the United Kingdom, the other EEC states around 30 per cent and 8 per cent with the United States — have an imbalance in their trade situations. When we consider the general effect of the deflationary economic policies pursued by those Governments, plus the international recession, we see that this overall improvement and performance in exports results is incredible.
Not all the credit can go to CTT. If we look at the figures for 1981-82 we see that approximately 90 per cent of all our exports were either manufactured goods or in the food, drink and tobacco sections. The IDA have to take a certain amount of the credit for this improvement because these are the only areas in which the IDA are directly involved in grant-aiding new multinationals and so on. The devaluation within the EMS of 5 per cent earlier this year will have a once-off effect. I realise there will be an effect in the long term for those who import raw materials and re-export the finished product, but for 1983 the devaluation will have a once-off impetus.
A weak currency is very conducive to our export promotional policy. Many of the multinationals brought to this country have their own sales and marketing operations. They have their own international purchasing organisations through their own corporate bodies and structures and some of them, while they do not have a network throughout 19 countries as CTT have, in reality are not totally dependent on CTT.
Another important point I want to make is that, given this growth in exports, the overall state of the economy, the high level of unemployment and the general state of depression among the people. I want to put it on the record that the only salvation, the only economic policy which can work for this country, is a market-led approach. That has to be made quite clear. When we compare this State with any other in the EEC we see that we are a small open economy with 48 per cent of out total output dependent on exports. No other state in the EEC has that dependence on exports, with the exception of Belgium. Of the 24 OECD countries we are the second highest state dependent on exports. We must remember that in the international free trade environment nobody owes us a living. The only justifiable long term income we have in terms of standards of living for our people is what we can earn abroad and bring back through exports. This clearly shows that a market-led approach is the only way forward.
When we take into account our competitive situation and the difficulties under which we operate, which I have already outlined, we see an enormous potential for Ireland. This is a small country with a growing population. There are many reasons for it being depressed, but there is a major area we can tap. Let us examine the next important statistic. Of all EEC imports the Irish contribution is only one-half of 1 per cent. We are only scratching the surface of our potential. That is why I say time and time again that the only policy for this country is a market-led approach, even if it means deflation on the home market resulting in frictional unemployment and recessional unemployment.
I will quote one example. If we had, as they have in the Benelux countries, 58 per cent of our GDP as exports, as opposed to 48 per cent, overnight we would create 60,000 industrial manufacturing jobs and the direct one-to-one ratio in the spin-off service sector. We can see quite clearly how we as a small, open economy are dependent on free trade. Ours is only a fraction of the trade of the EEC. We see what the Benelux countries have done. We have enormous potential for growth and this is the only way forward.
I turn now to the schemes operated by CTT. Their best scheme involves the bringing of foreign buyers to this country. In 1982 they brought 1,400 purchasers here from abroad and this year the number will be about 1,200. These purchasers are brought here, wined and dined and brought to the factory floor. What more could they want? Their fares are paid and they see what we have to offer.
A second very important scheme is the employer support scheme whereby 90 people were taken on as marketing executives and based abroad. This scheme was funded on a 50:50 basis by CTT and the companies involved. It is estimated that these 90 jobs led to the creation of a further 900 jobs. This direct sales push is the second best policy operated by CTT and I hope it will go from strength to strength in view of the fact we have such a large proportion of unemployed graduates who would be suitable for this work.
There are other schemes which are very popular among businessmen such as incentive grant schemes towards travelling abroad and the production of brochures and literature. There are also grants towards product development and design and these are of great assistance to companies. If there are to be restrictions on the schemes operated by CTT, I would suggest that the emphasis of the finance available should be on direct company aid because the direct link with CTT represents the best value for money. Other schemes such as trade missions, store promotions, seminars and group marketing ventures have advantages but the direct company link is the best way forward at a time of scarce resources.
In County Wexford there are a number of concerns in the industrial engineering and food sectors that are substantial exporters. I have been alarmed at the continual complaints that since last May there have been no approvals and no extra payments. This can be reiterated by the Confederation of Irish Industry and the Irish Exporters' Association. No travel grants have been approved and the same applies in respect of product exhibitions and the employment support scheme as well as brochures. I know one manufacturer who is trying to break into the Greek market. He produced a brochure costing £20,000 and was told by CTT that no money would be forthcoming until January 1984. Perhaps that is the reason for this Bill. Exports have a huge potential for the economy and our policies are making Scrooge look like a playboy. We are not giving exporters the necessary support. The Minister when replying might indicate whether grant approvals have been made since May.
The embargo on recruitment throughout the public sector is a very blunt instrument. CTT have suffered a staff cutback from 358 to 320. This is crazy when they are trying to operate 25 overseas offices.
I call in the next budget for personal tax relief for marketing executives who spend in excess of 30 days abroad per year. This would involve between 700 and 800 people. Many of these top-class executives regard employment by an Irish company and tax rates here as similar to being sent to Siberia. Our taxation rates are so high that these brilliant marketing personnel are easily attracted away to work for different concerns abroad. Personal tax relief for such people would be an incentive to business people to move into the marketing sphere and this would have a beneficial effect on trade figures.
CTT have 25 offices operating in 19 countries in five continents. In countries where they are not operating there is a very strong argument for saying that people working in our embassies should be as helpful as possible in dealing with commercial matters in an effort to improve our export markets. The embassies could be used as post boxes, if nothing else. I recall a Deputy saying recently that the embassy in Peking cost £600,000 and the least we could expect is that they would do everything humanly possible to interact with CTT. When CTT do not have the resources to set up an office in any country but are trying to examine the market potential, the Department of Foreign Affairs should be lobbied to use their existing resources on a semi-commercial basis to see what can be done to assist them.
I should like to turn now to the very important area of quality control. We can be very proud of certain brand leaders such as Guinness, Waterford Glass, Bailey's Cream, and so on. They have been crucial in terms of selling Ireland as a front runner in high quality products. I understand from marketing contacts that the problem is not so much that we get complaints in our international CTT offices of inferior quality. I know Mr. John Murphy and his associates are given every assistance by CTT. Deliveries are becoming a problem. If people cannot be guaranteed the right product at the right price at the right time, as Deputy Flynn said, they will not come back to Ireland for more business.
The British Prime Minister, Mrs. Thatcher, chaired a conference on quality control. This will be the area of future development. The existing CTT scheme of product development and design aid should be given the necessary shot in the arm and boost it deserves. Under this scheme of design, product and development CTT are dealing with approximately 400 companies. They are stretched to their absolute limits in their endeavour to cope. If there is a need for extra personnel in this area, if there is a need for greater and more resources, they should be given top priority having regard to the attitudes and the policy changes of our competitors especially across the water.
A pet hobby horse of mine has been tried and has failed, but it has a potential for enormous development, that is, the need for an Irish international trading company which would operate on the basis of foreign offices abroad on a commission basis selling certain products for certain companies on an export basis. In other words, they would be the marketing agents. This has been tried already and there were problems. Certain banks and well-established industrial concerns became involved in the National Trading Corporation of Ireland. I understand the corporation ran into financial difficulties and had to be closed. The reason is that companies restricted to export trading alone find it very difficult to succeed. They need to be importing in some countries and exporting in others to have a balance of resources, trade and profits.
CTT should look out continually for a commercial profitable organisation which could act as a co-operative export marketing body and which would not advise but actually buy and sell directly on an agency basis. If we look at the Japanese experience we see that the Sumitomo and C. Itoh international corporations have been very successful. They zone in on a country. They have back-up links at home for the products which are being manufactured and they export on a commission and agency basis. This should be tried again. I urge CTT to do everything humanly possible.
I know CTT will say they already have the Irish Export Agency which, in so far as it goes, is a State company doing that very thing in the Middle East, and so on, and using State and private purchasing organisations over there and trying to make a profit on Irish products. This is only the tip of the iceberg. If this were organised and the best commercial brains in the country were running it, there would be real potential in following it up and ensuring that we could increase our exports.
I am not satisfied with CTT's regionalisation policy here. They have extensive offices in Dublin, Cork, Sligo and in Limerick servicing the Shannon region. I come from the south-east corner of Ireland. In Wexford we have the third largest and the fastest growing port. We have all the natural infrastructural advantages for commercial development in terms of location vis-ávis Britain and France. There is an immediate need for a CTT regional office in the south-east region. In all modesty I suggest there is no better place for it than Enniscorthy town, or Wexford. If you look at the regional offices of the Irish Exporters' Association you will see that the missing link in the jigsaw is a CTT office in the south-east region. That should be looked at.
With the forthcoming publication of the industrial White Paper, which we all hope will be a major initiative for development, employment creation and industrial policy in view of the Telesis Report, many arguments have been put forward by different people in the private and the public sector that the interaction between the IDA and CTT should be greater. One could expand it to include the IIRS and AnCO as well. I will stick to the simple argument as to whether CTT and the IDA should be amalgamated. I understand this would require amending legislation.
I would be opposed to that. Industrial development, export marketing services and promotional services are very specialised jobs. There should be far greater co-operation between the personnel involved. I understand that Pádraig White the Managing Director of the IDA is on the CTT board, and there are overlapping links both ways. On the ground the co-operation could be better. If you take all the Departments, all the State agencies, all the bodies, all the semi-State bodies, all the organisations the State provides as a backup or a direct incentive operation to commercial life, they amount to 27. I have always suggested there is a need for county development teams, not to amalgamate organisations and build huge quangos, but to have interaction between the personnel on the ground. If there was someone from the IIRS, the IDA, CTT and AnCO in every county — just four people — they would be able to provide a localised expert service which would result in greater industrial development and ultimately greater exports.
I wish to turn now to some technical matters which are vital to export promotion but are not the direct responsibility of Córas Tráchtála. I speak of export credit finance schemes and export credit insurance schemes. As I understand it, there are three schemes in operation at present. There is the export finance capital goods scheme operating over five years. Take the case of a company selling a ship or an aeroplane or a heavy piece of industrial plant to a French purchaser who wants three or four years credit to pay for it. The company go to their bank looking for 90 per cent credit over that period and the Government underwrite them to a certain extent. With regard to smaller products, for example clothing or toys, where six months' credit is required as against three or more years, 80 per cent of the contract is at the AAA bank lending rate. In those cases we must be extremely vigilant.
Because of the exchange risks and so forth, the price being quoted for export credit finance to Irish manufacturers is at present in the region of 11 per cent to 12 per cent, whereas the French and British can quote, on the same schemes, 8 per cent. I gather that the Government can do two things about this and one or other should be done. Through the loose arrangement within the EEC, there could be an equilibrium amongst member states on export credit finance facilities and this should be implemented in full, with everybody being treated similarly. Alternatively, the regional government should take appropriate steps and I realise that the Minister made a statement in detail on this during the summer. These steps should be implemented in such a way as to ensure that we are competitive. We are uncompetitive enough, as Deputy Flynn said, because of the cost of essential inputs such as stamps, telephone calls, diesel and everything else, so to compound the situation with a direct scheme which is supposed to help exports is not on. There should be lobbying at the EEC to get fair play and, if not successful, there should be subsidisation by our Government.
The third scheme is the export credit insurance scheme operated by the Insurance Corporation of Ireland. This ensures contracts against defaults of payments due to a changing political situation in Third World countries or to a company going bankrupt. The charges placed on companies here, which are then passed on to the purchaser to whom we are trying to export, are too high. It has been recognised by the Government that there is too much red tape and the scheme must be updated and modernised. I call for the earliest possible implementation of those proposals and welcome the Minister's decision to set up an advisory committee in that regard. I hope the committee will monitor the situation, especially regarding our competitors inside and outside the EEC.
The single largest reason for our phenomenal success with exports must be the export tax relief we give. This has been in operation since 1959. There is 100 per cent tax relief for the 100 per cent exporting company and if the company export only 80 per cent, they get only 20 per cent corporation tax relief. This scheme is to be phased out from 1 January 1985 due to EEC regulations, but the Government should immediately devise schemes to ensure that we are able to attract the type of overseas investment that we have attracted to date, which has resulted in our excellent export figures. If we do not have this 100 per cent tax concession for 100 per cent exporting companies, we can kiss goodbye to major multinational industrial development here. The phasing out of the present scheme poses the most serious threat to industrial development for many years.
I was interested in Deputy Flynn's comments about the number of companies which are 100 per cent exporting, and his question as to why they do not sell their goods here. One of the reasons is that the greater the Irish sales percentage of total sales, the more they work themselves into a tax problem. There could, however, be a review of the situation on the basis of low cost production and it might suit them to put on a third shift. The export tax relief, which is vitally important and must be maintained at all costs, is basically the raison d'etre of many American, Japanese and other foreign investors here.
In discussing exports, one must refer, albeit briefly, to agricultural exports, 25 per cent of all our exports being in the beef and dairy sectors. In 1981, dairy products alone amounted to 12.6 per cent of our exports, or £640 million. I would pinpoint areas of difficulty. Butter sales to Russia have diminished in the last 18 months. The problems created by the super-levy and the proposals to cut back on the Common Agricultural Policy highlight an urgent need to ensure that decisions which affect our commerce — because we produce so much butter and other dairy products — do not result in this or any Irish Government becoming the lapdogs of international politics. Our vital economic interest in this area must be supported. An Bord Bainne have done a very good job here. I know the people involved and have nothing but the highest respect and regard for their efforts, in view of the overall situation. One must give them credit for devising the Kerrygold brand name. They have been highly successful, especially in the United Kingdom obtaining prices commensurate with British prices and are to be commended. This is the type of development on which the CTT should be working. I know that there is interaction between An Bord Bainne and CTT, but it is not big enough. There is an enormous potential in using the example of Kerrygold for developing other areas.
With regard to beef, there is an ongoing argument within the CBF and the livestock trade generally concerning livestock on the hoof, carcases and boneless beef. The latter gives a far greater amount of employment and value-added content in terms of exports. Irrespective of the current financial difficulties of the EEC and the Commission's proposals on the super-levy, the Government should seek to increase the export refunds for boneless beef on the basis of reducing the rate of refund for live animals under 500 kg and also review the export refunds on heifers which are the essential backbone of the breeding stock in our national herds. I call for the greatest possible interaction between the CTT, An Bord Bainne and CBF.
Deliberate preference should be given to exporting companies with a track record. I have had many complaints from a previous board member of CTT and from business people who before CTT was around were successfully exporting clothing and so forth to the United States. These people have a track record and have put their own money, time and resources towards locating export markets and should be given a distinct preference by CTT for grant aid when the chips are down.
I outlined earlier that the most worthwhile recipients under the schemes, programmes, incentives and aids which CTT gave on a direct company basis were in financial difficulties. We must ask what the current situation is with regard to the preparation of the Estimates for 1984. I understand from CTT that with their present employment level of 320, they have a twofold approach to the 1984 allocation. Firstly, the out-turn for 1983 of CTT expenditure will be £16.26 million — that is the money which they will have spent this year. They maintain that to provide the same service next year, taking into account inflation and so forth, with more companies looking for the same service, they will need £20 million next year. This would involve even a refinement of their existing services.
Successive Governments have not grasped the full potential of a market lead approach and the whole potential of boosting CTT. When we look at CTT's individual business client relationships we see that three years ago they had 1,700 companies under their wing and this year they have 2,400. The growth and the demand are there and people want their services. I suggest that every pound left of the £20 million which they require to continue a refined service will mean that they are not fully able to utilise the resourceful potential of CTT as a body. That would be a damning indictment of any Government.
I am aware that CTT have a new policy which has enormous potential. It is called the market entry and marketing development finance scheme. This new scheme is the same as the French COFACE scheme and the market entry and guarantee scheme in the UK. This is a two-pronged approach. If you want to launch into a particular market you have to have a pre-launch expenditure to do the market research, to see if people will buy your product, to see what they are prepared to pay for the product. There is a certain amount of obligatory expenditure on a pre-launch basis. Phase two is that you have to launch the thing, you have to set up an agency for it, you have to set up a distribution network and you have to do all the advertising and the PR push.
I am reliably told that in relation to any new product today, such as a consumer food product, a sum of £5 million would not be an exorbitant amount to spend to launch that product into the UK market. I understand that the market entry and market development finance scheme involves State help in two ways. It helps a company on a risk basis. There is a risk involved in the launch of any new product. There is no guarantee because the product is new. Phase one of this scheme is that the State will under-write that risk. Phase two is that the company pay back only part of the original capital aid given to them because it is risk capital.
This scheme has not been publicised yet but it has been requested by CTT, and will cost £10 million over and above the £20 million ordinary allocation to allow CTT to continue what this year is costing £16.36 million. This is the crossroads for CTT, for the Government and this House. I implore the Minister to give a commitment that with this Bill he now has the opportunity to give a very open-ended amount of financial commitment to CTT. I hope he will give a commitment that for 1984 the market entry and market development finance scheme will be implemented. That is the only way that Irish small companies as well as large companies and multinational companies can crack new markets. It is too expensive and it is impossible to underwrite the extent of the risk on their own. This new scheme has been very successful in Britain and France and has been adapted fully to launch products in the Irish market. I hope the Minister will give the commitment that this new scheme will be adopted. If that is adopted I predict a very healthy future for our exports and the approximate 20 per cent growth we have had since 1979 can easily be maintained.
I commend this Bill to the House on the basis that it is belated and that it is a waste of time unless the initiatives and the drive, which Sean Condon and the boys in CTT have, are utilised to the full. If this does not happen we are wasting our time as far as the potential of our export drive is concerned. The expenditure of CTT was £16 million in 1983. That will earn £6,850 million. If that is not good economics, you give a little bit to get a vast amount, I do not know what is. I hope the Minister and the Government will use the Bill to ensure that the new schemes which CTT have on hand will get off the ground.
