Dáil Éireann díospóireacht -
Wednesday, 24 Oct 1984

Vol. 353 No. 2

Supplementary Estimates, 1984. - Vote 40: Industry, Trade, Commerce and Tourism (Resumed).

Debate resumed on the following motion:

That a supplementary sum not exceeding £10 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1984, for the salaries and expenses of the Office of the Minister for Industry, Trade, Commerce and Tourism, including certain services administered by that Office and for payment of certain loans, subsidies, grants and grants-in-aid.

—(Minister for Industry, Trade, Commerce and Tourism.)

Mr. Allen

I hope that we shall be able to resume the debate this afternoon in a calmer atmosphere than when I was speaking this morning. I have said that there should be some balance to the influence which SFADCo have in the industrial scene here and I set out the influence that they have in siphoning away industry from other regions. I said what I felt should be done in that region as a follow up of Government support of the task force. I set out what I felt should be the structures of that authority, their role and objectives. I said that one of these roles was to stimulate action on derelict areas and other negative aspects of the environment of such areas. Some of the terms in the economic plan did just that and I mentioned those that would stimulate action on derelict areas. The authority would be used to influence management-worker relations in situations where employment was threatened. That complements totally what the Minister said today in the closing part of his speech, that the prevailing "them and us" attitude in industrial relations was seriously affecting certain areas of employment. This authority would have a direct influence on management-worker relations.

Finally, it would provide a definite link with the national development corporation or other appropriate bodies, at the same time having a definite local role. The authority would need to look, as a matter of priority, at the employment situation, naturally enough, in the Cork area. Even though the Government have designated certain areas in that region for special grants and have identified Ringaskiddy as a duty-free port area, much more must be done. Something must be done for underdeveloped areas like Cork. They should be treated similarly to the Belfast area. I advocate that the Cork area be treated as an integrated operation by the EEC in the same manner as Belfast and Naples in the past have been. This would follow from a study done by a UCC staff member in recent months. Aid could be based on that survey.

The Government have done much to generate employment in small industry in the Cork region in recent times by the setting up of a small industries division of the IDA. However, much more could be done by making funds available for promotional video films for abroad, outlining the positive aspects of Cork and its resources. I am glad that the Cork Harbour Commissioners have recently issued a very attractive publication which will be sent to all areas abroad outlining the attractiveness of the Cork region and setting out the special grants and incentives which will be available to industries in that region.

I take this opportunity of appealing for a reconsideration of the recent decision by the Minister for the Environment not to go ahead with the public inquiry for the low river crossing between Blackrock and Dunkettle. There is no point in pretending that that project will go ahead within the next two or three years. It is a programme earmarked for the late eighties or early nineties. It would have a 62 per cent labour content. At this stage, the preliminary work should be continued and the public inquiry should be held. I have been asking the Taoiseach and the Ministers privately to reverse that decision and go ahead with the inquiry.

The port and the airports in the region are important for the industrial wellbeing of the area. All possibilities must be looked at for the improvement and expansion of services from Cork Airport. Aer Lingus must be pressurised or persuaded not to allow their policy and influence to preclude the introduction of new international services using smaller and more economic aircraft. We met a deputation from Aer Lingus last week and I am always puzzled that they have to use large jets in and out of Cork going to the British mainland. I have always felt that it would be more economical to use smaller aircraft. There must be an improvement in the navigational aids in Cork Airport and early consideration must be given to the runway facilities there. If we have not an airport that can get industrialists and goods out of the area fast, the attractiveness of the area is diminished.

Finally, I welcome the Estimate and the implications it has for the Cork area. I ask the Minister to consider seriously the suggestions I have made in relation to the development authority for the Cork region. People say that setting up authorities for regions is counter-productive and that you are just attempting to pull industry from one region to another, but I have been worried for a long time at the influence that SFADCo has for regions like Cork. The results of that influence are there for us all to see.

Mr. E. O'Keeffe

I welcome this opportunity of speaking on industry. I was taken aback in the forenoon to hear Deputy Allen bring it to a local level debate and to such small issues as basketball courts. We have a very serious situation in the Cork area where we have lost industry after industry. Some of our proudest industries have suffered under this administration. We should be talking seriously about the creation of solid jobs that can bring our very high unemployment numbers to lower levels. The Deputy went around in many circles and into the areas of communications and unemployment, and he spoke about such things as a ferry development. We have been discussing the development of a ferry service for the Cork region for some time and we have not seen any concrete proposals or suggestions coming from the Government. I am convinced that with a very small subsidy there would be a very large pay back on that ferry service if it was reintroduced. We cannot allow the grass to grow under our feet at this time of the year when many of our hotels and people in the tourist industry are making preparations for the coming season. Since it has been dragged into this debate I urge that the Minister use his influence with the Government to see that this ferry is initiated immediately and developed so that people can prepare the necessary plans and documentation to bring the many tourists back to this island to do business in the Cork region. This matter has been raised in this House. The financial loss to the area over the past year has been very serious for many hotel people and small industries.

The Deputy spoke about the Cork area, SFADCo and industrial ghosts. We do not have to go to the Shannon area to find industrial ghosts. They are numerous in the Cork area. We have lost our textile industry at Youghal. This present administration lacked policy in the development of the oil refinery at Whitegate and they show lack of commitment to develop it further. The dockyard is still in existence but possibly the 500 jobs there are now threatened, and this is an area of glorious opportunity for further development. We have seen the development of a very fine fishery protection vessel, a P.21, and we could have sold easily a further fishery protection vessel to countries of the Middle East if this Coalition Government had had the will to go ahead and grant permission for the manufacture of that at that fine shipyard development which has excellent machinery and equipment unique in western Europe. Many of the people employed there and many people in industrial business in this country are worried about the future of that shipyard if it is not put into proper care and maintenance. It is still working, all is not lost, and I appeal at this late hour for some concrete developments as a result of very serious talks with the management and board of that company so that we can build another fishery protection vessel which can be marketed to some Middle East country. I understand that some research has been done in this area but the follow-up was not great.

Regarding the IDA, I read in last Sunday's The Sunday Tribune about the massive expenditure of £4.5 million and I thought that the whole industrial structure and the problems of 220,000 unemployed people are not being taken very seriously. We should have decentralisation of the IDA; the IDA should come down the country where the problems and the unemployed are. We should have much more regional thinking within the IDA. There is no point in having a large number of people locked away in big office blocks in Dublin very far removed from the real problems.

I am glad that my colleague, Deputy Myra Barry, has sought to raise on the Adjournment the closure of the high technology factory at Fermoy. This has come as a great shock and a great surprise to all of us because we believed, and the Taoiseach had said, that the development of industry in the Cork area depended upon high technology industry. We have a number of bodies dealing with industrial research and development such as the IIRS and the National Board for Science and Technology.

Mr. G. Mitchell

I am sorry I have to interrupt, but I understand that I must give notice before 4 o'clock that I wish to raise on the Adjournment the subject matter of Question No. 474 on today's Order Paper relating to world hunger, in view of the urgent situation in Ethiopia.

An Leas-Cheann Comhairle

The Chair will communicate with Deputy Mitchell.

Mr. E. O'Keeffe

Have we been getting the real, true high technology industry in this island? We have lost out. We have seen what is happening in the very modern development in the Cork area at Fermoy. Is the budget that we have in that area sufficient for development? I am thinking about the National Microelectronics Research Centre in Cork which has a mere seven of a staff and a budget of £0.6 million, and we take the budget for the whole industrial scene as something in the region of £433 million. It is time that we had more serious investment in this area of research because this is where many of the jobs we will be looking for in the years ahead will be created. If we have not a serious approach in that area we are only wasting our time with an investment of a mere £0.6 million. As someone who is fairly new to this House and to the political scene, I am surprised that we must transfer moneys that have not been spent in one section of the IDA to the other section. It looks like a three-card trick.

If you look further at the Cork-Kerry region you will see that we created a certain number of jobs last year. I talk about those created from our own natural resources. The number of jobs created in that area was 1,850 but less than one-third of those came from agriculture or handcrafts. We must take a serious look at that type of development.

There are too many agencies involved in the industrial area. I understand that 23 different agencies, which cost the State £433 million in 1983, are involved in the industrial sector. One agency is involved when industries are being set up, while Fóir Teoranta, the rescue agency, is not called in until a company gets into difficulties. Why is it necessary to have two organisations dealing with industries at those stages? Is it not true that there is a great waste of taxpayers' money in this area because of a lack of co-ordination? I do not think the staff from the IDA, Manpower or the county development teams would understand the problems faced by a family business employing about 20 people and it is unlikely that any representatives would call to see such concerns.

Most of our small industries are family concerns and the organisations I have mentioned should have the staff to give advice to them. The owners of such concerns have many problems to cope with. They must deal with the financial position of the company, the management structure and the production scene. Those people must be given assistance by advisers from State agencies. CTT have done a good job in promoting exports but the IIRS, the NBST and the National Microelectronics Research Centre should be amalgamated. The budget of the latter agency is not what it should be if we are serious about attracting such industries to the Cork area. AnCO is the training organisation for many industrialists. That excellent organisation has done great work down the years. It must be developed further if our young people are to get basic training in management and production skills.

The other bureaucracy, the Youth Employment Agency, is in competition with AnCO but has not done anything satisfactory in the area of job creation.

I was pleased to hear the Minister say that he was having discussions with the multiple trade on the question of food processing. Our food processing industry has been allowed to slide and we have an overdependence on selling goods into intervention. Our suppliers are held to ransom by the multiples who seek large concessions. The Minister has gone about dealing with this problem in the correct way and he deserves praise for his efforts. We are all aware that bulk imports are not satisfactory. Many small industries such as those involved in textiles and footwear have been put out of business because of bulk imports. That must be corrected but I accept that the Minister is dealing with this matter in the right way. This side of the House will assist the Minister in every way possible in dealing with this.

The cost of energy is hitting all industries. I understand that energy costs are between 30 per cent and 50 per cent of the total cost of industries. In my area three of the largest food processing industries which process approximately 40 per cent of the country's total milk supply have failed to get a satisfactory deal from An Bord Gáis. Many people are employed in those industries which are involved in downstream processing, something that must be encouraged. I urge the Government to give preferential treatment to native industries and co-operative societies.

Mr. E. Collins

Many Members are offering to speak on this matter and I have been given to understand that an agreement has been reached between the Whips, in order to allow as many Members as possible to make a contribution, that each speaker will be limited to 15 minutes.

An Leas-Cheann Comhairle

Is that agreed by the House?

Mr. E. O'Keeffe

I am not aware of that arrangement but I am willing to conclude my contribution.

Mr. O'Kennedy

The position is as outlined by the Minister of State but, obviously, Deputy O'Keeffe was not aware of the arrangement.

Mr. E. Collins

I want to make that point and I do not think we should include Deputy O'Keeffe in the arrangement.

An Leas-Cheann Comhairle

It is agreed, therefore, that Members after Deputy O'Keeffe will be limited to 15 minutes.

Mr. O'Keeffe

Any assistance given to the industries I have referred to in regard to energy costs would be a welcome shot in the arm for them. We must look at their employment record and what the future holds for them. We know the problems there are in agriculture but it is one area where jobs can be created. The cost of natural gas should be examined. I do not believe in giving it away but the charge should be realistic.

I am sad and worried about the Cork area. I understand other Deputies wish to contribute but I cannot let the opportunity pass without referring to the closure of the Dunlop plant. This was most unexpected. Was there enough consultation with the management and board of the company? Did the Minister and the IDA make efforts to continue the operation? We know that there were problems with the Ford motor company but we did not know there were problems with Dunlop. When this company closed it killed the life of Cork. A further explanation is needed. Was there sufficient consultation between the industry, the Government and Government agencies?

Mr. Carey

I support the Minister's application to the House for the Supplementary Estimate for the IDA. This organisation is primarily concerned with employment and manufacturing industry. They have had an injection of confidence since the Minister took office. He has succeeded in giving them a fillip which has been translated into action in many areas.

In my constituency when the chipboard factory in Scarriff failed financially for the third time the IDA put a package together and I am glad to say that next week a new company will start in full production. My only regret is that there will not be the same rate of employment. However work will begin again and the east Clare area will manufacture chipboard for the entire community. I congratulate all those who undertook this. It was not an easy task because the Departments involved pulled against each other. The Department of Fisheries and Forestry and other Departments were not conditioned to help the company. However the IDA, as they have been doing, put a package together which I hope will prove to be viable and profitable for us in Clare.

In their 1983 report the IDA said that five or six companies per week were coming to them for assistance. They said they had enough expertise to put 100 rescue packages together with the aid of Fóir Teoranta. We owe a great debt of gratitude to the IDA.

When Fianna Fáil were in office the IDA were asked to put a package together by Deputy O'Malley but they refused. The result was that the chipboard factory went under, which had been predicted by the IDA. We can rely on the IDA's expertise. The honesty with which they approach matters has to be commended.

There should be greater emphasis placed on attracting companies which would provide service industry jobs. I am thinking of industries such as those located at Shannon, for example, Guinness Peat or the Universal Insurance Company. These service industries could locate here very comfortably.

We have great facilities in Clare and in the mid-west region. We have third level education in Limerick, good schools and open fields. The high technology industry which the IDA have concentrated on in recent times is responding in the mid-west region to the promptings of the IDA. The Taoiseach recently opened a major unit for Wang which is acknowledged as being a major development. High technology is far more advanced in the US and in Japan. A recent study conducted for the EC revealed that out of 42 different types of high technology industry, Japan leads in 13, the USA in 34 and Europe in two. Any company locating here is at a disadvantage in that the greater part of research and development is done in the Far East or the US. In the EC and particularly in emerging countries such as ours there is a great need to update research and development. The IDA in conjunction with other EC agencies should examine any proposals in high technology or research and development programmes.

The workforce, particularly in the mid-west region, have proved themselves to be very efficient. Industrialists who have started new industries and research and development units have been agreeably surprised at the quality of their employees. I hope the IDA will continue to expand in the services and high technology areas. I hope they will bring about a reduction in the unemployment rate.

What is most disheartening about a debate on the IDA is that criticisms are made about them and about companies which have failed. We hear all about what should or should not be done but we hear very little about policy. We do not hear whether the IDA are promoting a policy or spending too much money buying land for the development of advance factories in certain areas. We do not hear if the land was bought properly or not or how policy is devised.

The IDA require the assistance of the locally and nationally elected representatives. They should assist the IDA to bring us out of the mire we are in rather than cringeing and whingeing the way they did this morning. I know that Cork has received reasonable aid. Some of the companies that closed there were national monuments. However, national monuments and big factories closed in my constituency and there was not a word about it. We got on with the job. The mid-west is the only area which has not shown a major loss of jobs.

Mr. O'Kennedy

As far as Clare is concerned.

Mr. Carey

I thank the IDA and SFADCo for their work. We are delighted to have them. I want to see them continue to work in the US. The role of the IDA in attracting industry from abroad has been criticised but nevertheless it has been satisfactory. They have brought in a range of various manufacturing industries some of which, especially on the chemical side, are heavy industries. There is an abundance of natural resources in the mid-west region. The Shannon Estuary offers great prospects and if there is a major development role for SFADCo the Minister should consider putting them in charge of that development. An appeal on those lines was made by Deputy O'Malley on the last occasion on which we were debating the IDA. I supported the Deputy then and I reiterate that call now. Such bodies as the Kerry, Clare and Tipperary county councils and the Limerick Harbour Commissioners should co-operate in the development of the estuary and thereby make possible the establishment of heavy industry there.

During the year we welcomed the opening of the Alumina plant at Aughinish. When Moneypoint comes into operation there will be full power on the north side of the Shannon. In the context of the Minister's linkage proposals he should consider using the services of SFADCo and the IDA to bring together all the various agencies so that in a unified way capital resources for the development of the Shannon Estuary can be provided.

Overall I am satisfied that the Minister is moving in the right direction but I agree with other speakers that there is a need for greater and immediate action in the area of import substitution. Perhaps SFADCo and the IDA could come together in this respect, too. There are moves in various areas of the mid-west region towards import substitution. I understand that, for instance, in north Tipperary the Junior Chamber of Commerce are sponsoring a competition which relates to food processing. I am not saying that there is major confidence in the mid-west area but there is a return of some element of confidence there. I am confident that the implementation of the national plan combined with the efforts of the IDA and of other State agencies will result in bringing us out of the recession we are experiencing.

Mr. O'Kennedy

Normally the Opposition are the ones who are accused of being negative and of undermining the morale of the people but in the past week there have been three significant statements from Ministers which are likely to have a detrimental effect on the morale of our people. I hope that in the short time available to me I will be able to make some contribution to raising morale and to pointing to a better way.

The first statement I refer to is the one made yesterday by the Minister for Industry, Trade, Commerce and Tourism when he said that in the past five years there has been a 135 per cent increase in unemployment. We all know that most of that has happened in the past two years. While the Minister was stating a fact, he was helping to undermine the morale of the people. The second statement to which I refer was made by the same Minister today when he said that, despite the growing levels of grant for the IDA, the level of employment in manufacturing industry is declining rapidly. Again, all that is fact but it is not helpful coming from a Government who should be promoting a climate suitable for investment. The third statement — and the one on which I shall base my contribution — was made within the past week by that harbinger of good news, the Minister for Finance. He acknowledged here, for the first time, that our levels of direct taxation are the highest in Europe and that our levels of indirect taxation are the second highest in Europe. The reality is that, taking both those factors together, we can boast of the highest levels of taxation in Europe.

While those three major admissions point to the problem, they also suggest the solution. Speaking today about foreign companies the Minister for Industry, Trade, Commerce and Tourism said that they have located in Ireland rather than elsewhere because we offer the most attractive package of incentives. Put simply, that means that the reason they invest here is that we are paying them more of the taxpayers' money than is the case elsewhere. It is fine to pay taxpayers' money at the level at which we are paying it if it results in extra employment. The only justification for a package of incentives or for the role of the IDA is the generation of employment for our people in their own place, but the reality is that it is all the other way. There was a promotion effort today in which there was a certain input from the Government and understandably so in terms of trying to attract foreign industry, particularly US based industry but we are told that while US firms account for 40 per cent of manufacturing exports, they account for only 18 per cent of manufacturing employment. That represents a big gap between the ratio of exports and the ratio of people employed in those companies. It is a matter that we must give our attention to. We are told that there was a significant growth in output and in industrial exports but the Minister has acknowledged that at the same time there is a serious and continuing decrease in manufacturing employment.

Why are we providing these incentives? Are they for the purpose of giving employment in our own country or simply to allow the Minister quote such statistics? Today, too, the Minister told us that 55 per cent of the profits of overseas companies are repatriated. We knew that 12 months ago following the black hole saga. We appreciate that if we are to attract these companies we cannot lock up their profits but the figure for the repatriation of profits does not tell the full story of what the taxpayer is contributing since those profits are tax free, the extra subsidy being provided by the Irish taxpayer who, properly, is interested only in the jobs that are generated at home.

On the question of finding a better way, I admit that there were some such indications in what the Minister said but not many. First there is the matter of tax levels. Is it any wonder, our being at the top of the tax league in Europe, in the past couple of years particularly, that the key personnel we require to reside here and to work in areas such as product development, especially in the technologies and in marketing, having regard to the need to promote our marketing expertise, do not want to know about us? Of course they have regard to what they would pay here in personal income tax compared with what they would pay in the US or in Britain. We have no hope of promoting the kind of added value required through product development, through marketing, and through the skills of top level executives by attracting them in, much less encouraging them at home, while we have penal levels of taxation which do not compare with anywhere else in the world. That must be corrected. I suppose we all tend to repeat ourselves and sometimes even to quote ourselves but I have been screaming about this for the last two or three years. Even now it does not seem to have sunk in that the hostile tax climate here is doing so much to frighten away all kinds of activity sought by the IDA, which uses so much taxpayers' money.

Mr. Carey

Has the Deputy any evidence of that?

Mr. O'Kennedy

I have lots of evidence but I have not time to make the Deputy aware of it now. It has been quoted in all the business magazines and is a reality. The Deputy will find evidence in the Minister's speech this morning referring to profits which have been repatriated. He said that in many cases profits in Ireland are absolutely necessary to offset the developmental costs incurred abroad. That is an interesting statement. Why should those developmental activities not be undertaken here? The reality is that the added value is in this new era of techniculture, developmental programmes, technologies, pharmaceuticals and so on. If we are to be satisfied simply with the assembly line we are in danger of becoming the lego centre of Europe with regard to technology. The work guarantee is elsewhere and we put the pieces together. It is not surprising that we hear of cases like Fermoy.

We must encourage marketing in all its forms through our taxation system by screaming for this. This is an appropriate word to use as it is the approach I adopted when we were discussing the Finance Bill earlier in the year in terms of marketing personnel. There is no incentive in our tax system for marketing personnel to penetrate the markets of Europe in the food or any other industry. They do not reach out and exploit markets. We can talk about CTT or any other body but until such time as those who are in the field will not be penalised as they are under our current tax system for their marketing promotion efforts, then we will fail. The opportunity, through a package of incentives for those engaged in marketing for a certain portion of the year, is so obvious as to be crying out for recognition from the Government.

Apart from the levels of tax, the tax allowances discriminate against employment. Every £100 under the current tax system invested in capital equipment will probably cost the promoter £50. For every £100 invested in employment and labour it will cost the promoter £150. We have a penalty ratio of three to one against employment in favour of capital and we prate about priorities for employment. Our tax system, loaded with PRSI, levies and so on, is penalising employment as against capital or equipment and we had better decide soon which direction we want to travel because the purpose of any industrial development programme should be to increase employment rather than penalise it.

Another factor which can and must be recognised is that local firms at present are only supplying 16 per cent of the value of goods, components and services of foreign based industry here. I have to admit that the Minister has focused on that and is proposing at least to offer incentives to improve the position. However, let us look at the state of indigenous industry. Unfortunately, the level of liquidations in indigenous industry are running at a rate even in excess of last year: in the first nine months up to 80 more than last year and, by the end of the year, we will top 750. A Leas-Cheann Comhairle, you and I know about this in our home town where the factory as it was always called, is gone. Perhaps we will resurrect it but nothing can ever replace it.

The ESRI and the CII have indicated recently in their surveys that their members feel that there will be a further fall in jobs in the manufacturing industry in the coming months. It is the indigenous industry that is more labour intensive. I am not saying we have to stay in the world of old Adam; we must move with the times and attract foreign investment but we must do it on a measured basis to make sure that we get added value here. We must promote the marketing personnel and we must guarantee that it cannot switch, as it has done, to wherever there may be a more attractive set of incentives from Puerto Rico to Singapore. If the highest bidder gets it we are building on quicksands.

Let us admit that there is a limit to what all these State agencies can achieve. They are growing like mushrooms and they are killing the very people they are meant to help. Could we please bury decently the National Development Corporation which has been talked about for the last three years because we were told today by the Minister that we are not going to use the £7 million which was provided for them this year? The total grants to the IDA amout to £280 million of taxpayers' money and we have factory bays lying idle all around the country. Is it any wonder that the Minister says he is switching from building grants? No one wants to come into the factory bays. It is no wonder that the IDA says to swtich from factory building. We have lots of factory bays but do not have any jobs. It is not surprising that there was a switch of £90 million from building programmes. We should save that money as there will be no more building programmes unless and until there is a change of Government policy. We must create a climate to encourage investment either abroad or at home. We must concentrate on the guarantee areas such as added value, marketing and the product developments. To achieve this we need a sense of identifiable, clear purpose which represents a complete reversal of all the existing confusing policies which penalise investment incentives and effort, especially at home.

Debate adjourned.