First Report of the Committee on Small Businesses: Motion.

Mr. Yates

I move:

That Dáil Éireann takes note of the First Report of the Committee on Small Businesses: Manufacturing Industry.

The committee were established about a year ago. Their establishment was a recognition of the fact that 90 per cent of all businesses are small. Nearly all small firms are indigenous, meaning that they have no potential to repatriate their profits abroad. Therefore the net benefit to the economy and to the Exchequer is far greater than from other forms of mobile international investment. In the past year the committee have been a focal point for the representatives of small businesses. I hope we will discharge our responsibility as a parliamentary policy committee on an all time basis.

In our initial programme of work we decided to produce four sectoral reports, the first on manufacturing industry, now before the House, the second on retail distribution, the third on tourism and the catering industry and finally, construction. The report we are discussing today was published in May, the second in October and we hope to publish the third in January or February. At the outset I thank the clerk of the committee, Mr. Shane McAuley, for his valuable help and work. I also thank all those who made submissions and the members of the committee for their non-partisan approach and all others who assisted us with advice and guidance. The committee have no consultancy resources. Therefore, everything they produce is at minimal cost, all our own work.

I should like to make two other points before going into the report in detail. As with other Oireachtas committees, there is a problem about staff and I hope that when the Minister contributes to the debate he will make some point in relation to follow-up facilities. I suggest we would have one meeting with the appropriate Minister or Ministers so that this matter can be clarified. I realise we do not have an executive function. I hope the Minister for Industry, Trade, Commerce and Tourism will tell us that all the recommendations can be dealt with by the different Departments concerned.

The report has more than 80 recommendations. Already there has been a debate on it in the Seanad. I have read the reply of the Minister of State, Deputy Collins, in detail. A White Paper was published a matter of weeks after our publication and we are in broad agreement with it — I will stress the areas of disagreement. The second report we hope to publish will be widely at variance with the White Paper.

Since the establishment of the committee the Government have taken initiatives in a number of areas, such as the White Paper, linkage programmes, the regionalisation of the IDA and many others which I will deal with later.

I will now turn to our specific recommendations and the degree of general difference between them and the White Paper. I will make some criticisms of the White Paper. It seems to suggest that there is a limitation on the cash resources available to aid small industry. That does not take account, of the enormous dynamic potential of the rate of return on any such investment. The White Paper does not make any clear deliniation between the problems of small firms and industrial policy and strategy in general. I am not talking about small firms which employ 41 people or 53 people but of companies that have a very tight management structure in which the owner, the manager, the managing director, the personnel manager and the financial controller is the one person. That is the practice in many small firms and it is their problem.

The principal recommendation in the report is in the vital area of finance and this, of course, concerns the IDA principally. I do not believe there is sufficient flexibility in the existing IDA grant package for small firms. At the moment it is 45 per cent of fixed assets and 50 per cent for feasibility, etc. Our principal recommendation in this regard was made because we came across many firms that had full order books or great proposals for improvements but never got going or went out of business because of day to day cash flow or lack of finance. We recommended an extension of the enterprise development programme so that the grant aid could be reduced from 45 per cent to 30 per cent to be substituted by an 80 per cent guarantee of the loan fund. We went into specific detail and suggested that £15 million would be made available in a three year period. Part of that £15 million would be premium to offset insurance in case anybody defaulted on the guarantee. This is very important and could be done by reducing the grant aid from 45 per cent to 30 per cent.

The second recommendation in relation to the IDA package was the question of secondhand machinery. A receiver or liquidator cannot get rid of the plant and equipment of a company because secondhand machinery is not grant aided. This is a shame. Many small businesses can get perfectly good and viable equipment at half the cost if they buy secondhand. The State's money would go further and it would help small businesses to a great extent if this was done.

For labour-intensive industries we recommended that there should be an option between grants for employees and grants for fixed assets. There are many labour-intensive companies in the textile and clothing areas. In relation to the area of long term financing of small businesses there should be an option between getting capital grant aid on day one and getting the equivalent interest subsidy on a fixed interest rate long term loan over 15 or 20 years. This would spread the IDA's risk.

I do not have time to detail all the recommendations we made in relation to the banks, ICC, the European Investment Bank and the Stock Exchange. I hope the Minister, in discussions with these institutions, will take up the various matters raised.

We found that given the same tax problems and financial problems some companies were very successful and some were struggling. The difference between success and failure was always good management. I have often said that an improvement in management efficiency and capacity would do more for the economy than a major oil discovery. The Government should place greater emphasis on management performance and capacity. There should be a White Paper on this subject. I know there is to be one on manpower policy and I hope it will be included in that. We made 13 recommendations in the management area but the most specific one was that there should be a co-ordinated management policy initiative to include the IMI, IPC and AnCO whereby they would do a three year in-company management training programme. There would be the classroom environment activities of the IMI, AnCO teaching people to work machines and the IPC doing a management consultancy job. The three should be combined. A company could then be taken and a development plan drawn up for it. Targets could be set and monitored. A proper management structure could be set up within the company to ensure that it achieved the highest levels of efficiency in order to get the ultimate in, what they call in the trade, the hands on approach.

As regards State agencies, it has been long recognised that there is a multiplicity of services being provided by the various Departments, State bodies and institutions giving assistance to small industries. There are 27 of them in all. We looked at studies from AnCO and the small firms association which stated the clear dissatisfaction of the people who were the recipients of these services. They felt that they were not localised but were in centrally heated south side Dublin offices. It was felt that they were too remote from the problems. It was also felt that there was not the maximum interaction between the various State agencies. What we are seeking is a totally integrated business approach to the various problems of small businesses. This should be done on a localised consultancy basis. It would involve the key functions of finance, management, marketing, quality control, research and development. To date, we have county development teams, the hot line and the IDA regional development programme. This is insufficient. In one satellite town in Dublin or one county there should be a small business centre redeploying the personnel from existing agencies. We were thinking of something equivalent to the ACOT localised consultancy service. Small businesses would be able to get IDA approval for grant aid there.

Mr. J. Bruton

How many would there be?

Mr. Yates

I would pilot it in one county to see what the demand was for it. In the Telesis report it was stated that a development effort aimed at new indigenous industry must be reorganised to emphasise the building of structurally strong Irish companies rather than strong agencies to build weak companies. That is the fundamental point. I understand from the grapevine that the IDA are opposed to it. I strongly resist the general thrust of the IDA control over policy in the industrial development area while I have the highest respect for their personnel.

Marketing was considered very important. The difference between marketing and sales is that sales is selling what you have and marketing is selling what people want to buy. For a successful business approach one must take a market led approach. We split this into three: import substitution in the domestic market, the export market and potential and State purchasing within the indigenous market. In the Minister of State's reply to the Seanad I note that the general revamping of the Irish Goods Council was rejected. I accept that Mr. Murray and others in the Irish Goods Council have done a good job but there cannot be complacency when in 1983 total imports were £7.4 billion. Of that consumer products were £2 billion. One in four of everything we buy is imported. The Irish Goods Council's resources are limited and they cannot provide the service that is required.

There must be an improvement in the area of developing an Irish standard in terms of quality control. The Irish Goods Council should play an effective role in the area of linkages. There should be indigenous marketing plans for companies. There should be the kind of consultancy service in terms of advice on products and research that there is in other countries, especially so now that the "Buy Irish" campaign is being conducted by the Confederation of Irish Industry.

On the State purchasing side, total non-salary expenditure in the State area was £3½ billion last year. Despite our best efforts by way of parliamentary question and otherwise, we could not get any figures about what proportion of this was Irish purchases. Either the information was not available or was not given to us. This is totally inadequate. We recommend, as is in line with the EC Directive, that 30 per cent of all purchases should be confined to small firms and where they are sole Irish manufacturers, they should be given field trials for trial purchases. We also recommend that the Government contract committee be revamped and that there be a data bank to provide information to small businesses on the opportunities in the State purchasing area. I know the Minister held a conference in relation to State purchasing. I should like to see far more extensive activity in this area.

As regards export promotion, I am pleased to see that in the White Paper the proposals made by CTT have been taken up in full in relation to the market entry and development scheme. The Minister of State in the Seanad pointed out that our recommendation in relation to the provision of a sales agency service in our foreign markets, the provision of extensive warehousing in our foreign markets and grants for trading companies which are trying to locate these markets would be a duplication of the activities of CTT. Economically we either live or die by our exports. We are only scratching the surface of the iceberg as regards our potential in this area.

Exports per capita to the UK in 1983 were £46 per head. Exports to the Netherlands were £29 per head and £11 per head in West Germany but every extra £1 per head of population which we sell to West Germany is worth £62 million. If we sell as much to the West Germans as we do to the Dutch we would solve our balance of payments deficit by creating £11,016 million in extra exports. I do not accept that there is duplication. Anyone who tries to get more business for Irish manufacturers is worth supporting and I hope that CTT's open attitude will prevail in this area and that the Department will encourage people to act as middlemen in markets and provide warehousing facilities for small businesses. I hope our recommendations in that area will receive further consideration.

The area of taxation is vital because it also concerns investment and there is a direct ratio between taxation penalties and the incentive risk/return for the investor. The jobs tax credit scheme is innovative and imaginative. Whatever case there is for tax reductions for small businesses, there is an indisputable argument for employment-related tax relief. We suggested that this should be based on company tax relief amounting to £400 in the first year and £250 in the second year for things like net VAT payments, employers' PRSI and corporation tax and that they should get recognition for taking on new staff. The employers' share of PRSI is crippling labour-intensive companies. There should be an option between the standard rate of manufacturing corporation tax and low PRSI or, alternatively, they should not pay PRSI but pay the higher rate of corporation tax which applies to non-manufacturing industries. This would give non-profit-making companies an option of reducing their overheads under levels of employment.

There are six rates of VAT and this is very cumbersome for small businesses. The rates should be rationalised to at least three bands. There should be a £500 credit which applied when turnover tax was in operation compensating for the unpaid paper and administrative work which is forced on small businesses in relation to VAT. In our second report we went further and adopted the Belgian position in relation to an equalisation tax whereby you raised the levels of tax which basically meant that VAT became wholesale tax and that the retailers' margin would not be liable to VAT. The margin would be increased so that there would not be less revenue to the Exchequer.

VAT at the point of entry is a problem and we recognise that its abolition would cost about £190 million. We suggest that the element of guarantee should be taken out, that companies would only have to meet the two monthly repayments instead of having a continuous drain on their overdraft accommodation.

I was at a conference on Tuesday morning in relation to the electronics industry and I learned of the huge brain drain from the country. There are highly educated engineers who are moving to the United States because every £1 they earn here over £12,686 is taxed at the rate of 73½ pence in the pound. People with these qualifications will seize their opportunities in other countries and we are the losers. We should follow Sweden's example where only 70 per cent of income is taxable. Marketing personnel who spend more than 30 days out of the country should get tax rebates for that period.

In the area of legal and administrative environment — this does not concern the Minister's Department — we recommended a simple change in line with the practice in Northern Ireland regarding the area of debt collection. Many small businesses fail because of the detrimental effect on cash flow and they cannot collect the money owed to trade creditors. There is a small claims court system in Northern Ireland set up under the Arbitration Act, 1937, whereby in regard to sums under £1,000 companies can go to the county court with no legal expenses, no delays and can collect their money through arbitration. The system operating here is that if you have 20 trade creditors, you pick out the biggest and hope to make an example of them. There are huge legal expenses involved, long delays and the system is totally unsatisfactory. It also brings an immoral aspect into Irish business.

In relation to planning law, there are costly delays and there should be a three months limit to An Bord Pleanála decisions on any appeal. There should be partial refunds for refusals of planning applications because, as it is based on square footage, it can be very expensive. I understand that the Government are bringing in a new Bill to revise the 1963 Companies Act. Small firms are being butchered at present by the domino effect of liquidations and receiverships by virtue of the fact that they are all secured creditors. The law is not on their side; they are the last on the list and invariably they get nothing. Banks circumvent their position by getting personal guarantees. The Revenue Commissioners circumvent their position by being preferential creditors. Others look after their own interests. People who are legitimately owed money are those who produce goods or a service and are left with nothing under present law. There must be a change in relation to that aspect of trade creditors and limited liability.

We also recognise the problem of delinquent directors. We recommended that the Government should talk to the financial institutions and advise them that in the area of personal guarantees, where the investor is significantly involved already, personal guarantees should not be required up to £20,000. When small businesses are owed substantial amounts of money as trade creditors, they should have the right to appoint an administrator so that he would have power to collect the money. There should be a crack down on deliquent directors and where it can be proved that they deliberately manipulated assets they should be debarred from managing companies for ten years. I am not talking about legitimate people who try but fail through no fault of their own. I am talking about people who are well known in Irish business and who have a track record of manipulating the limited liability loopholes.

There is vast potential in the whole area of small business development and it is worth backing. It has been proved that these small businesses and enterprises are durable and can weather the recession better than their international counterparts. They cannot pull out of Ireland even if they wanted to. Our report clearly states the need for a national policy on small businesses. Not only have we set out the need for such a policy but we have also set out the basis for that policy which is centred on a package of incentives that are selective and geared to improving management performance. You can selectively give incentives in a sophisticated package provided they are linked to improved performance based on a clear delineation between the problems of small firms and industrial policy generally.

I make three requests to the Minister. He should make himself available, as should the IDA, for a follow up meeting on our report and full discussion. We do not have an executive function or an overall monitoring role but we want a once off meeting so that we can thrash out all the points fully.

Secondly, I ask that the Minister would place this report before the management committee which he chairs. This is a management committee combining the State agencies and he should ask for a report from them on the matter. Thirdly, the White Paper specifies that there would be a three year review of industrial policy. In any such review the essential ingredients of our national policy for small business development should be taken on board in view of the special needs of small businesses with their unique management structure and narrow base.

I hope we have assisted many small businesses who feel frustrated in lobbying Government and I hope we have responded to their needs. We have made more than 80 recommendations and I do not think we can be accused of neglect. We scrutinised exhaustively all elements of their problems and we have come up with recommendations that are not academic or macro-economic but that are practical and decisive. The ball is now firmly in the Government's court.

Mr. Leyden

I wish to recommend this report on manufacturing industry to the Dáil, to the Minister and to the Minister of State. The report has gained status in being placed before the Dáil and the fact that the Minister, Deputy Bruton, and the Minister of State, Deputy Collins, are present to listen to the deliberations of Deputies is an indication of the importance they place on the report.

Many Deputies and Senators have been involved in compiling the report. As the chairman of the committee, Deputy Yates, has stated, it is basically the practical deliberations of people who have had some involvement in small businesses during the years and the committee worked without the assistance of any support group or advisers. I should like to pay a special tribute to the chairman, Deputy Yates, for his dogged determination in preparing the report in the time it took and also to the former vice-chairman, the late Deputy Cowen. He played a very important part in compiling the report. We much regret his early passing. I should also like to compliment Shane McAuley, the secretary of the committee. He is a very determined man and he ensured that as many Deputies and Senators as was possible attended the committee regularly. It is a major difficulty for Oireachtas Members to get the necessary time from their constituency work and other commitments to attend meetings. However, the overall attendance and participation in the committee's work has been high.

This is an agreed, non-contentious report so far as the recommendations are concerned. We went into the committee in a fair and open way in the best interests of small businesses. We have achieved our objective by the presentation of the report and also the report on the retail distribution trade which has already been approved. I recommend this report to the Department, to the Ministers concerned and also to all State agencies who have an involvement in this area. I hope every State agency will be supplied with a copy of the report and that it will be debated and analysed within the organisations concerned. Where possible the recommendations should be accepted and adopted. I do not wish to see the report gathering dust on the shelves of the civil servants. It should be acted upon because it is relevant for today. However, it may not be relevant in three or four years' time. The committee should meet with the Minister and the Minister of State in the very near future to discuss the recommendations, to see where the Government and the IDA can go along with them or where they will reject them.

We were disappointed that quite a number of the recommendations were not included in the document Building on Reality. After our deliberations and involvement we felt recognition should have been given to the fact that the report existed.

I will deal only generally with the report because I think it a pointless exercise for Deputies who have participated in compiling the report to go through it in detail. However, there are a few items which relate to my constituency and which are relevant. The Minister will be pleased at the economical way we prepared and compiled the report. The first press conference was hosted by the chairman of the committee, Deputy Yates, and the second press conference was paid for by the members. The Minister will see that we adopted very stringent measures in the way we operated, to such an extent that the Deputies and Senators paid towards the presentation of the press conference. This is an indication of how we went about our business.

In my constituency of Roscommon-East Galway in the past few years we have had serious difficulties. There have been closures of firms in Roscommon, Castlerea and Boyle. A small firm who manufactured aluminium ladders and trolleys in Roscommon closed down because the management decided to move to Dún Laoghaire. I do not intend to name the individual but, as a reward for his endeavours on behalf of small businesses in my constituency, the same gentleman was made chairman of the small businesses section of the CII. It makes me wonder when I see such people pronouncing on industry because when it was the case of a viable industry in their own neck of the woods the result was closure of the firm concerned. When that business closed down within a few weeks the workforce were laid off with the minimum statutory redundancy payment, no more and no less. The building is falling into disrepair and is becoming a target for vandals and itinerants are camping beside it. It is regrettable to see a viable small business closing without any regard for the workforce of the area. The best efforts of the IDA and the local development team were in vain as far as that project was concerned.

There is great need for small businesses because of the massive increase in unemployment in the past few years. In my county more than 2,090 people are unemployed and 571 of them are under 25 years. There are 290 people in short-term employment, in AnCO and in youth employment schemes. There is great need for the creation of long term jobs and small businesses have the best potential because of the security of small firms. In addition, there is not the same traumatic effect on an area when a small business has to close as is the case with the closure of large firms. Of course there is always a need for larger firms because in some cases they assist the small industries to survive. Surrounding large businesses there are the support industries, whether it be the machine shop or the shop preparing commodities for the larger firms. I take this opportunity to ask the Minister to visit my constituency to see the devastating effect of unemployment and the number of firms that have gone out of business in the recent past.

I give another example of a constituent who endeavoured to set up a small business and at every step of the way his efforts have been frustrated. It is a typical case history of lack of support from the State agencies for a young person who is prepared to set up his own firm. He is under 30 years of age and he is seeking to set up a firm to rewind motors. This may not be a manufacturing business in the strict sense but I believe it is an import substitution business. Furthermore, the fact that a person of that age would commit himself to buying a site near the town of Roscommon and in the process of the development of that site received no co-operation whatever from the local authorities as regards either planning permission or development is deplorable. It was an effort for the young man to obtain planning permission, and the initial cost of the planning fee was a major disincentive. The person has bought a site and has now commenced the development but the organisations of State seem unable or unwilling to help.

I have endeavoured over the last few weeks to obtain information regarding the product. I have advised my constituent where possible to liaise with the manufacturing business in this type of motor trade. I thought the IDA had a computerised list of items imported into this country detailing the country, cost and specification of the item involved. When I was Minister of State I worked in an active capacity with the IDA on European promotion in Antwerp, Brussels and Amsterdam. I thought that the IDA would have in their possession a full breakdown list of all manufactured items imported into this country and that a full specification should be made available from the IDA of any item of manufacture.

Mr. J. Bruton

That is so.

Mr. Leyden

I thought so, but I rang the IDA and they told me that the only place where I could get that information was in Customs and Excise. I was looking for an armature for a motor, a simple manufacturing item which I felt this constituent could prepare.

Mr. J. Bruton

I will look into that. The IDA have data banks both in Dublin and in the rest of their offices.

Mr. Leyden

I felt confident in saying to my constituent that I would be in touch with the IDA during the week. I rang their office, not their head office but one of their subsidiaries in Dublin, and I was informed clearly that they had not got a data bank, that they were not computerised and they could not give me information as to whether an item like a motor armature, a very expensive item which is used for reconditioning engines of tractors, cars etc. and which is a relatively simple, straightforward manufactured item could be made by small industry. I hope the Minister will take this up and have it clarified because in my investigations I have been informed by officials within the IDA that they have not got this kind of information available. I have the details of the date on which I rang. If they have not got that information the Minister should set about——

Mr. J. Bruton

They might not have it in the detail that the Deputy's constituent wanted. It might be very rough information.

Mr. Leyden

They were not even aware that this item existed or of the number of items imported. The only information they could give me was that I should contact Customs and Excise. I do not know whether Customs and Excise have a role in relation to job creation or job promotion. We have now reached the computer age and I would have thought that every branch and sub-branch of the IDA, if a young manufacturing spirited person arrives there, would be able to give him the information he wants as to whether an item is imported and the quantities and costs involved. That would be a logical approach in relation to our import substitution programme. If the case is as I am stating, that the IDA have not got the information, they should set about having that information. If we want to provide jobs for young people it is essential that we substitute the majority of imported items as far as is practicable, particularly parts of machinery that could be ground and prepared here.

The number of people unemployed is so high and also the amount of imports is so large that we must try to cut down our imports and substitute the items here. We have the capacity and the ability to do that. My constituent is still looking for this information in relation to the armature for these motors and also he is trying to obtain a grant from the local development team on a start-off basis to give him some help or assistance to set up his own business and provide jobs for himself and perhaps three or four others. It is an interesting case history of lack of general encouragement. He said to me that if he had known the lack of support and assistance he would not have proceeded with the purchase of the site.

In relation to industry in general the IDA have a good track record. I recognise their role. I know of the efforts they have made and the difficulties under which they operate. Nevertheless, I feel that certain regions are not being given the treatment they deserve at present by the IDA. I take this opportunity, because I do not get too many opportunities in the Dáil, to promote my constituency. I appeal to the Minister where possible to give special attention to an area which has been practically decimated as far as employment is concerned. The State also have a role in relation to the promotion of jobs. I am disappointed that the Government are not proceeding with the import substitution programme initiated under our last Government. In my capacity as Minister of State at the Department of Transport and at the Department of Posts and Telegraphs, I initiated import substitution seminars which took place in Cavan, Roscommon, Dún Laoghaire and elsewhere. They were of great assistance because the number of items at present being imported by Bord Telecom Éireann, An Post, CIE, the ESB and other State agencies is quite amazing. I recall one item alone, the steps for the P & T poles, galvanised and simply manufactured, which were being imported at that time. I understand that now they are being manufactured here and that is how it should be. Quite a number of other items are now being manufactured here as a result of the import substitution programme initiated by us at that time.

I appeal to the Minister to use all the power he has as Minister in that Department to regenerate interest in this regard. Discussions and seminars should be held in all major towns on a national programme on import substitution. Young enterprising industrialists exist but they must be encouraged and shown the potential in the different areas. Instead of embarking on the expensive system of transporting heavy display units, our import substitution programme should be based on films, slides, and lectures. Officials of the IDA, the local development teams, CTT, and other State agencies, should be encouraged to get involved. Those who become interested in a project should be given all information available. The report deals with the one-stop-shop for information but we should embark on a major industrial promotion at local level with the assistance of all State agencies. Our people should be informed of the many items at present being imported that could be manufactured here. I have no doubt that such a promotion would result in a number of small and sound industries being set up. I accept that the IDA are doing tremendous work in Europe, America and elsewhere to encourage industrialists to Ireland but with our own resources we can establish many small industries to manufacture import substitutes. There is unlimited potential as far as the creation of jobs is concerned in that area.

The Government cannot rely totally on the private sector to provide the necessary jobs. For example, many jobs could be provided if the Government gave the go ahead for the Ballyforan briquette factory. I have no doubt that up to 100 permanent jobs could be created there. I appeal to the Minister, Deputy Bruton, who was responsible for postponing the decision, and to the Minister for Energy, not to close the Derryfada project but to turn the area into an oasis for job creation. The bogs are available and the infrastructure exists to provide a lot of employment in that region. While that matter is not dealt with in the report I am pleased to be able to avail of the opportunity to appeal to the Minister to press at Cabinet level for a go ahead of this project. A deadline of May 1985 has been set for a final decision. The redundancies announced there were unnecessary, particularly when a final decision has not been reached. The Minister has the power to reverse a bad decision taken to postpone the project. It is a national scandal that more than £12 million has been invested in the infrastructural works there. Some of the plant for the factory is located in the country but I am not sure where it is hidden. I am aware that a boiler which cost £1 million is hanging around somewhere. It appears that it is lost although its location may be known to Bord na Móna officials. It is a national scandal to spend £1 million on some plant that may never be used as a result of Government inactivity. The postponement of that project is the responsibility of the Government.

Local development teams have a major role to play in establishing small businesses. I support the concept of local development teams but I suggest, on a non-party political basis, that Deputies and Senators resident in a county should be given the opportunity of participating on a regular basis at meetings of county development teams. I am not suggesting that they should be entitled to attend all meetings or those where a special project is under discussion but there should be more liaison between the development teams and elected representatives. Our role is not simply one of constituency representation. We have also a role to play in regard to job creation, a task I have been aware of since first elected. I have made every effort to assist enterprising people to create jobs.

County development teams, with the county manager as chairman, are well constituted. All agencies in the counties are represented on them but there should be a greater openness between the teams and Oireachtas Members. I must add that I have found the teams to be very co-operative. The development officer in my constituency, Mr. Lynch, and his assistant, Mr. Kelly, are very co-operative and responsive to representations. However, in a semi-formal manner there should be more discussions between Oireachtas Members and members of the county development teams. A former chairman of our county development team set about establishing a small industry in Elphin, County Roscommon. He provided funds by way of the proceeds of the sale of lands and other legitimate dealings but, unfortunately, to date, although the infrastructure exists, we do not have an industry there.

I take this opportunity of appealing to the Minister and his Minister of State to assist in helping the provision of a small industry at that location. The development team at the time felt that the advance factory programme initiated by the IDA, which was extremely successful, which brought about tremendous potential and created quite a number of jobs, could not cope with every area. The local authority themselves took that responsibility. That is something the Minister should encourage and assist where possible.

In addition, the IDA's Small Industries Division set up a very successful project in Strokestown, County Roscommon, involving a totally new concept in craft industry, which constitutes one of the most interesting and successful developments in the constituency. The work of the Slieve Bawn Industries and others in that area have established a new concept in development, creating much needed employment. I might mention that the well known toy or puppet "Bosco" is produced in that area, which was done with the assistance of RTE and small local industry, constituting an interesting connection with the broadcasting media, because of a programme on television which made that toy very popular and which toy is now being manufactured in the county creating jobs throughout the year.

There are other interesting developments taking place in the constituency. There is, of course, the Hanley bacon factory in Roosky, an example of one of the finest bacon factories in the world. On account of the quality of their personnel, and with assistance from the State over the years, they now represent a fine example of the full utilisation of available raw materials. We should recognise successful projects and not always highlight those less successful.

In recommending this report to the House I am confident that quite an amount of the recommendations will be accepted. It should be remembered that much work went into its production. It is encouraging to note that it crossed party divides. We did not engage in the work of that committee to score any points or to adopt any party political approach in relation to the production of this report. Rather we endeavoured to prepare a report which would be of assistance to small industry, and I feel we have succeeded. It may not be a perfect report — there is no such thing — but it is a fair and honest one. We even traversed ideological bounds through the participation of all the parties represented in this House. We may have had differences at various junctures but we had resolved to produce what might be described as an agreed report which should be more acceptable to the Government and the IDA.

I would recommend that this report be circulated to all local development teams and also to all the State agencies. If the funds are not available to the committee to provide for such distribution I would recommend that the Minister ensure that this report arrive on the desks of all our semi-State organisations and that we now obtain their views thereon.

We would welcome a meeting with the Minister or his Minister of State to discuss the progress being made regarding its recommendations from the date of its production. As a team we should work in an endeavour to create a better climate for small industry, resulting in much needed employment.

Minister for Industry, Trade, Commerce and Tourism (Mr. J. Bruton)

I should like to compliment the committee on their production of a very thorough report within a very short time. Indeed the fact that they have produced yet another report since this one clearly indicates that the work rate of this committee is very high indeed. I should like to compliment everybody involved.

The chairman of the committee put three requests to me. The first was that I should have a meeting with the committee to discuss in detail my reaction and that of the Government to the report, and I do intend to have such a meeting. meetings with the various agencies, which was his second request. I am responsible to this House for all of those agencies and it is better that communications be channelled through the relevant Minister. However, I will, of course, arrange to have a full range of officials, with the necessary expertise, present with me at this meeting to ensure that any questions raised by the committee are capable of being answered there and then.

Also, as was requested by the chairman of the committee, I will put the report before the Management Committee on Industrial Policy, ensuring that his third request, namely, that the recommendations of the report be included in the review of industrial policy which will take place in approximately two years' time will also be done.

Mr. F. Fahey

Did the Minister say in two years' time?

Mr. J. Bruton

It is a three year cycle of reports. We are already into the first year. There is provision in the relevant White Paper for a review every three years.

Perhaps I may make a few comments about the report. The committee chairman said that his view was — and I presume this reflects the committee's view as well — that there had been too much in our industrial policy in the past of strong agencies assisting weak companies, that agencies' influence was all pervasive, thereby creating a situation in which companies perhaps did not accept sufficient responsibility for their own destinies.

Some of the proposals of the report fall precisely into the trap that the chairman of the committee himself said we should endeavour to avoid. For example, I have in mind in particular the recommendation about specialists input to the management training programme, which will more or less get involved in practically everything a company is doing, their present performance, current management deficiencies, preparation and However, I do not intend to arrange for implementation of in-company action plans, installation of proper company management systems, monthly monitoring of management development progress, the utilisation of technical and other specialist assistance available at either regional or national level. This was to be done by AnCO, the IMI and the Irish Productivity Centre. If this was to be done on any kind of a wide scale for a large number of companies the personnel costs would be very substantial indeed and we do not have those types of resources available.

I think also it is not at all healthy that there should be that degree of involvement by Government agencies, paid for by the taxpayer, in the internal management of companies. There has to be some area in which companies themselves are responsible for their own future. The role of the State is to make available a level of general business environment, first of all, which is conducive to enterprise and then to provide individual incentives. But the trouble is that the more one becomes involved in the provision of incentives and services the more one's taxation rises and the worse becomes the business environment. The danger is that if we endeavour to do too much, to spend too much on services for industry, the level of taxation and the costs, within the general environmental framework for industry, will become adverse. In my view that approach goes too far. I know that it has some parallels with the company development approach in which the IDA are engaging, although that would not be as ambitious as is this recommendation of the committee.

In the White Paper I sought especially to put clear limits on what the IDA may do in terms of becoming involved in individual company development. It is not the responsibility of State agencies to manage companies. Those companies are owned by private individuals. They should manage their companies, carrying the costs, risks and responsibility relevant to their ownership.

When I meet the committee I would like to discuss the cost of all these recommendations, because some of them will cost quite a considerable amount. Many recommendations would involve very little cost, such as the one-stop-shop idea, the regionalisation of the industrial services of the IDA, and the introduction of a quality control programme in firms which get State aid. These are some of the recommendations I have adopted, but where I did not adopt the committee's recommendations it was generally because I felt they would cost more than was available.

I agree with Deputy Yates when he says it is not right that there should be a limit on the amount of funds available for industrial development. That would be a very desirable condition in which to live, but it is not the condition in which this country finds itself at present. It is clear from the Government's plan that there will be cash limits in respect of all the Government's activities over the next three years. I believe that is in the long term interests of industry because, hopefully, it will lead to conditions being created in which the overall tax burden can be reduced. It would not be wise to exempt any area of activity from these cash limits because that would establish a precedent which could undermine the system of having cash limits. What business needs most is an improvement in the tax environment and that will only be achieved by stringent control over public expenditure. That point was made quite eloquently by Deputy Yates in respect of his recent meeting with the Federation of Electronics Industries. The example cited indicates that our tax system is a problem and we have to be careful when spending money if we want to reduce the tax burden.

Deputy Leyden referred to import substitution. The Government have continued the import substitution programme. The Minister of State, Deputy E. Collins, met all the State companies under the Department of Industry and Energy, as it was then, to encourage them assist Irish companies when meeting the purchasing needs of their own companies. What was needed was to give them small amounts of work to build up their confidence so that they could become full suppliers after a while. Those discussions were very successful.

I have undertaken a series of meetings with the major supermarket groups to get them to buy more Irish goods. Those meetings have already yielded substantial results. The Irish Goods Council are working with the major retailers at present to develop long term relationships with Irish suppliers where previously imports were meeting their needs.

Deputy Leyden referred to a problem experienced by one of his constituents — he could not get information about import statistics for a particular product. I understand the IDA have a data bank but there are only details in regard to electronics. They have more general information in regard to other categories of imports and these are broken down by category in the Central Statistics Office publications, which are not always exactly what the businessman wants to know. The IDA offer feasibility grants to people to work out prospects for a particular industry, an important part of which would be the market and the extent of imports. Assistance is available to help people to research a project from the point of view of imports. I do not think there is a great problem there but I will ask my officials to contact Deputy Leyden to get more information about this particular case.

The Deputy also referred to his efforts in the area of telecommunications. He went around the country seeking Irish suppliers. He is probably aware that telecommunications is exceptional because it is not controlled by EC rules so far as nationalistic preference is concerned. One can do things in the telecommunications area that one cannot do elsewhere. In my view it is not the good thing that there should be discriminatory nationalistic purchasing in the telecommunications area. It does not suit Ireland because we have reached the point where our telecommunications investment programme has peaked and it is now on the way down. On the other hand, we have a number of suppliers and if they are to survive they have to get into the export market. If British Telecom, the French ITT or the German company are to buy only their own products, the Irish suppliers will not have a chance to penetrate the market.

I am glad to say that one of the achievements of my presidency of the Industry Ministers Council has been to get agreement that we will open up the European telecommunications market to suppliers from other countries. This will suit Ireland because we have to export to survive, and it will also suit Europe. Instead of having one or two huge American companies able to supply a market of 200 million people, and therefore get tremendous economies, Europe is broken into ten separate markets and no company can get big enough to compete on a world stage. We should be moving away from discriminatory purchasing practices and towards throwing the European markets open. As I said, I am glad we have made a major step forward in that area during our Irish presidency.

Deputy Yates spoke about the lack of a clear delineation of the problem of small industry in Government activity. The IDA have a separate small industries programme and the regionalisation of the offices is specifically designed to enable small industry decisions to be taken in the region, not in every county because that would cost too much. That could not be done with the existing staff. It would be impossible to provide a comprehensive staff in every county and suburb because we do not have the staff.

The enterprise development programme is designed specifically to help people involved in high technology to set up their own businesses. However, there is a problem in defining small industries which would make me reluctant to go along with the committee's suggestions that there should be higher grants for small proposals. The problem is this: what is a small industry? Is this decided simply by the number of employees? If there is a sufficiently segmented market, a very small company with approximately 25 employees could be the dominant supplier for Britain and Ireland of some new product, because there was so little of the product, because it was such a specialised product, they controlled the market with a small number of employees. In a real sense they are as dominant as another segment of industry, a multinational.

Given that they are dominant, to give them all sorts of discriminatory help which you would be justified in giving to a company with the same number of employees, but in a very large competitive market, is not the same thing. In defining what a small industry is, what is crucial is whether, to use the economic jargon, this company is in a state of perfect competition or is in an oligopolistic market. If it is in an oligopolistic or a monopolistic market where it has the possibility of making an economic arrangement in addition to its basic profits because of its control, no matter what size it is, it is not a small industry. If on the other hand, it is in perfect competition where it has not control over the price it receives for its goods, there is a case perhaps for giving it some extra help. If we were going to do anything along the lines suggested by the committee, we would need to redefine the definition of what a small industry is.

A number of suggestions were made in the report about company law. As the House is aware, we are promoting legislation in this area to stamp out abuse and to provide for the publication of the accounts of private companies so that people lending them money will have some chance of knowing whether they are in a healthy state and are a good credit risk. There is always the danger that, if we make the legislation too stringent, people will close down viable companies because they are afraid that, if they did not close them down, they would end up in jail, or have all their assets taken from them. There is the real risk that, if you go too far in penalising the delinquents, people will play safe and liquidate the company before it needs to be liquidated. I have been looking at the legislation and trying to balance the inherently conflicting but desirable objectives.

There is a lack in our law of something equivalent to the Chapter 11 procedures they have in the United States. A company can be put into a form of receivership which is designed to reconstruct it and float it off again, not necessarily with the same ownership. They can keep it going rather than break it up and sell it off to suit the creditors. I would like to run in parallel with legislation penalising delinquent directors which could possibly lead to somewhat earlier closure of some companies because of the fears of the directors that they would be on the wrong side of the law if they carried on in a dodgy credit situation, something which would reform the law in regard to receiverships and give receivers a slightly more constructive perspective so that businesses which are inherently viable but are carrying an unsustainable load of debt could be started off again, without the debt, but with their inherent viability intact. That is being examined at the moment in the Department.

I do not want to go into the recommendations in detail at this stage. I am meeting the committee and it will probably be better to treat recommendations individually in that forum. I want to repeat what I said at the outset. I greatly welcome this report. Members did a great deal of good work. While I have had some critical things to say about some aspects of the report, they were not meant in any sense as a reflection on the work of the people concerned. It is important to hear the other side of the case. As I said, I do not mean any reflection on the work of the committee.

I have to apologise to the House. I cannot stay here for the rest of the debate. I have to go to a Government meeting. I hope Deputies will understand that I do not mean any disrespect to Deputy Fahey or Deputy Doyle in not being here to hear their contributions.

Mr. F. Fahey

I hope the Minister will wait to hear some of my contribution. We put a great deal of work into this committee. I compliment the Minister on setting up the committee. We feel we have done a very good job. I compliment the chairman, the secretary and members of the committee on the work they put into it. Having received 87 very practicable and implementable proposals from us, it is important that the Minister should put those proposals into effect as quickly as possible. I do not agree that many of the proposals will cost massive amounts of money. I am quite satisfied that many of the proposals will be self-financing and that there will be a high return on the investment made. I am disappointed that a number of those proposals were not included in the national economic plan. We want the Minister to tell us where, when and how many of those proposals will be implemented. Will it be in the next budget, next year, or never?

Small business is crying out for the creation of a climate conducive to proper and adequate rewards for efforts made. If these proposals are not implemented the small businesses we have left will find it difficult to survive, and people hoping to get into business will be discouraged from doing so. Recently a businessman said to me that the only way to make money at the moment is to get out of this country. We must all advert to that. The climate in small business at the moment is conducive to making people get out of the place or get into the black market. That is probably the most serious problem facing small business at the moment.

I am deeply disappointed that the Minister cannot stay in the House for this debate. I feel like walking out myself. We put six months work into this, and we are having a three hour debate. If the Minister cannot partake in the debate for those three hours——

Mr. J. Bruton

A number of important industrial projects are being considered at the Cabinet meeting which is now taking place which, if they are approved, will lead to substantial job creation. It is important that I should be at the Cabinet meeting. I apologised for the fact that I have to leave the House. I do not think what the Deputy is saying is worthy of him.

Mr. F. Fahey

If that is the case this debate should not have been arranged for the same time as such an important Cabinet meeting. The Minister set up this committee to make the Dáil more relevant and so that politicians could do something positive.

Mr. J. Bruton

As I have said, I am meeting the committee to discuss all the recommendations in detail. There is no question of my not wishing to discuss the report with the committee.

Mr. F. Fahey

What is the point in having this debate if there is no one to listen to what we are saying and respond to us? We talk about Dáil reform. Is this not totally irrelevant as far as small businesses are concerned? But for the fact that I do not want to be discourteous I would feel like walking out after the Minister.

Mr. J. Bruton

There is an important Cabinet meeting taking place.

Mr. F. Fahey

This debate should not have been arranged for the same time as the Cabinet meeting.

Mr. J. Bruton

That is not my responsibility.

Mr. F. Fahey

If the Minister is serious about Dáil reform he should be sitting opposite me for the three hours of this debate and be able to respond to me and other speakers at the end of the debate. He may go to his meeting but I am deeply disappointed.

Mr. J. Bruton

The Deputy is playing politics.

Mr. F. Fahey

I am not playing politics. I complimented the Minister on setting up this committee. He knows my commitment to Dáil reform and my anxiety to make this House relevant. This is a bad example.

I wish to deal with those three sections of the report which concern finance, management and marketing. On the question of finance, there are a number of proposals regarding taxation which would not involve hugh amounts of money to the Exchequer. They would involve mainly a redeployment of the means by which we collect taxation from small businesses. The Minister is well aware that ours is a fiddler's economy. Most people in business must compete with people who are operating on the black market. This is putting many people out of business. The whole black market situation is due to the very high levels of taxation on every front. A businessman said to me recently that if he did not dabble in the black market he would not be able to continue in business. Unfortunately, our friends in industry must engage in black market practices if they are to survive. That is something that the House should recognise as a first step to solving the problem. We must reduce the level of taxation both in personal terms and as it applies to industry. I am not saying that it is merely a question of collecting less tax. It would be foolish to say that. While reducing the levels of taxation we should collect the enormous amounts of tax that are not being collected now because of the high levels of taxation and because of the magnitude of the black market.

There are two very good proposals from the committee in respect of finance. The first is for the setting up of a scheme whereby personal savings could be channelled into small business loans with the payment of tax free interest to investors. The committee proposed that such loans could be made available at lower rates of interest and that the scheme could be administered by the associated banks with the agreement of the Department of Finance. This is a novel proposal. It represents a method by which countless millions of pounds could be channelled into small industry. In this way we might succeed in having huge amounts of money taken from under beds or brought back from the Isle of Man. A similar scheme has been tried in France and has proved tremendously successful. It is not something that would cost the Exchequer money so I trust the Minister will respond positively to it. There is also the question of equity finance. Because of the serious need in this area, the committee's proposal should be implemented immediately.

On the question of management I should like to deal first with the Minister's point regarding our proposal outlining the necessity to set up a specialist in-company management training programme. The Minister is incorrect in his conclusion as to the effect of this approach because the present system of in-company training is far from satisfactory. Taking the present rate of progress of AnCO in this regard, 20 years will elapse before the last company is reached. The vast majority of small firms are in need of specialist in-company managment training. I disagree totally with the Minister when he says that such a programme will cost huge amounts of money. Our proposal is to organise the system on a regional basis so that the agencies can come together and become more effective by using the resources in the regions for the proper implementation of the programme. The main resource is education and in that sense the main bodies are the regional technical colleges and the universities. A programme of the type we envisage would provide a very good return on the investment involved. Initially, a certain amount of money would be required but those small companies are prepared to pay for the service. What is more important is that the benefit that would accrue to them would more than adequately compensate them for their outlay. It is impossible for a couple of people running a small company to be experts in accountancy, research, marketing, management and so on. That is why these companies must be given assistance.

We will be pressing very hard for the introduction of this scheme even on a pilot basis. Another reason why it should not prove expensive is that there is a good deal of talent in the regions. For instance, there are many retired executives who would be only too glad to work on a consultancy and part time basis. There are many determined and highly motivated young graduates who are not employed and who, too, would be willing to work for small remuneration. There is a lot of potential in the involvement of the third level institutions. The present system whereby the managers of small companies are expected to come up to the IMI in Dublin for a number of days is not satisfactory. The levels of assistance and training are totally inadequate for industry. The benefit that accrues under the present system of training to small firms is negligible. It must be changed and significant change is required if we are to provide for small industry the basic service they deserve.

The question of management generally has been neglected. I submit that the attitude adopted by the committee in this regard should be adopted by the Government, that is, that good management must be regarded by Government as a good investment and that a significant increase should be brought about in both expenditure and effort on management training. We say that Government should restate the fundamental need for more management skills in small industry and make a clear policy statement on the responsibility of the various State agencies involved. The reason we say that is that in the past couple of years — and I am not being in any way political in this — finance for the area of management has been reducing in real terms. The Government must make up their minds that investment in good management brings about a good return and that the extra money spent will result in an increase in revenue to the Exchequer. For that reason the reduction in the amounts being allocated to such bodies as the IMI must be arrested. There must be a new approach.

I turn now to the area of marketing. This area, together with the areas of finance and management are the ones I consider to be the most important for small businesses because they are the areas in which small businesses are falling down. We have totally neglected the whole concept of marketing. We have endeavoured to produce good quality articles, we have put money into the setting up of industry and have been successful, but we have failed miserably to create markets. At home we are being beaten all over the place by imports and we are failing to make an impact on foreign markets despite the fine efforts of CTT.

In the matter of buying Irish, I compliment the Minister and the Minister of State on the two efforts they have made in regard to supermarkets and State agencies. However, this is only scratching the surface. The Minister's insistence on a policy of opening up markets is shortsighted because though European countries may express similar ideals they do not put them into practice. That is clear from the position in Britain, Germany and France, in particular. Britain has a very strong campaign to encourage the purchase of British food. In France we have seen evidence of what amounts to blackmail on firms who do not support French products. In Germany we have examples of very strong pressure on industry and on the people to support home industry. The Minister told us that he cannot put on such pressure here because he is prevented from doing so by a decision of the European Court.

I accept that prevents him from taking direct action, but unless it comes from this House and unless we as politicians provide the proper climate for our people to support Irish industry we will continue our economic lunacy of buying foreign products. I have spoken about this in the House on a number of occasions, because it is clear to me that we as politicians have failed Irish industry through our inability to put clearly to the people the lunacy of continuing to support foreign products at the expense of the Irish equivalent. I am sure we can make a massive change in people's attitudes if we go the right way about it.

We have dealt with this in a small way in this report, but we have dealt with it more widely in our more recent report on retail distribution. I will refer to two proposals in that report which are relevant to this debate. One recommends a nationwide campaign, a consumer campaign, for people committed to the purchase of Irish products who would be proud to say so and would be proud to use such slogans as "I am for Ireland" or "I support Irish". They would display those slogans and in so doing would indicate immediately to shop assistants that they want Irish products. I suggest we should have a young Ireland movement to put forward this campaign so that we would get it across to all our people that by supporting Irish products they would be supporting Irish industry and, in the last analysis, themselves.

I am not saying for a moment that we should ask anybody to buy an Irish product inferior in quality or price. I am suggesting that we ask the people simply to look for Irish products and give them a chance. If they do not match up we can leave them where they are. Many industries have much work to do to ensure that they will be capable of competing with imported products. Many of them cannot do so at the moment. If they cannot match up at home how can we expect them to compete in outside markets?

The report has a number of recommendations on marketing, and I should like to refer to two or three of them. The chairman of the committee referred to recommendation No. 4, the establishment of a sales agency service in our main export markets, involving the deployment of first class marketing executives, mainly in Europe, in Britain and the US, backed up by a proper network of warehouse facilities across Europe and America. Small businesses cannot afford to get into the export business because of the whole range of difficulties involved. With the establishment of the marketing system we have recommended, to be operated by CTT, there is massive potential for export growth for small firms. Indeed a number of such firms who got into business in the US in the recent past have shown the results that can be achieved through a proper marketing system.

The opposite has occurred because of the limitations of CTT in regard to putting marketing executives into the field. They have been limited in resources to provide warehousing facilities in foreign parts. I urge the Minister to adopt the two proposals I referred to, as a matter of urgency. I am satisfied that the extra money spent would more than pay for itself in extra returns for Irish industries.

I will refer to proposal No. 5 in which we suggest that grant assisted new marketing or trading companies be set up, the grants would cover office accommodation, equipment, transport and working capital. Such companies would take over marketing arrangements for small manufacturing firms. They would do market research, sales promotion, distribution and give advice on new product development. This proposal would give assistance to many small firms who do not have either the capability to carry out their own marketing or the financial ability to involve themselves in sales promotion. The small amount of money that would have to be invested to grant assist young marketing graduates to set up such marketing or trading companies abroad would bring a good return on the investment. Many small firms are manufacturing first class products but they do not have a proper marketing structure.

We have a recommendation in regard to the involvement of third level education institutions. We have been making the disastrous mistake of trying to keep education separate from the world of work. This has been a grave disadvantage to education and to industry. In recent years we have seen the folly of it and we have consequently begun to open up our third level institutions. There is vast potential in third level education to give assistance to industry on all fronts.

University College, Galway in my constitutuency has provided a great example. Due to the efforts of the president, the university has decided to become involved in the world of work. An industrial liaison has been established and industry has benefited greatly. The wealth, talent and expertise of those institutions should be made available to every industrial discipline and they should be financed in order to do so.

I am not talking about a huge amount of finance. I am satisfied that two of the proposals which we have made would involve very small amounts of money, but they would have a great reward for both the colleges and the industry. The first is the provision of awards in science and technology to support post-graduate students in co-operative research projects between third level institutions and companies or organisations either in the public or private sector. For that we are looking for £40,000 to fund 10 awards. The second proposal, the sixth on our list, is that funds should be made available to bring student ideas to a stage where they could be considered under the feasibility grant scheme. We are looking for £5,000 per university college on a pilot basis so that students could be encouraged to seriously consider the possibility of setting up their own business as an alternative to seeking employment in the traditional fashion. I am convinced that putting money into those areas will have an undoubted benefit both for the students and industry.

In the commerce faculty of University College, Galway, one of the most important aspects of getting a commerce degree is the project which students must do in putting together proposals for their own small business or industry. That is a welcome departure from the type of education which existed in third level institutions in my time. It should be encouraged and supported. When I see the work of a young marketing professor in Galway, Jim Ward, and the great assistance he is giving to small industry in the west without any resources I wonder what his potential would be if he was given a small amount of financial assistance.

There are a number of recommendations in this area which do not involve very large amounts of money and which could only benefit small industries. For the Minister to ignore or fail to implement them would be the best example of him turning his back on small industry. Up to now, this House did little to assist small industry. When this committee was set up I believed it was the most important of all the Oireachtas committees. I am now satisfied since it produced this report that it is the most important one. We were assisted in our work by small industry.

I look forward to the meeting with the Minister and to him indicating how many of the proposals he will implement. If he cannot give good reasons for not implementing the proposals I do not see much point in the committee studying other areas. I appeal to the Minister to implement as many of the proposals as possible in this first report on manufacturing industry.

Mrs. A. Doyle

I have no doubt that the general overriding principle of government must be to gear the country to a position in which economic activity will have a natural momentum. I have no doubt that the encouragement of a climate in which a strong indigenous small business sector will flourish will go a long way to solve our great problem of unemployment. There must be incentive to work, just reward for the risk taker and profit no longer a dirty word. Success must be applauded and rewarded. Approximately 90 per cent of small manufacturing firms are Irish owned. Small firms, under the terms of reference of the committee, are those which employ up to 100 people. I take the Minister's point but I do not think we need to worry about it unduly. Most of the firms which employ from zero to 100 people look to the Government and to the committee for help, advice and aid generally. In 5,000 of these small companies the owner and manager are usually one and the same person. He or she must also cope with the marketing end of things, production, industrial relations and administration. One person usually deals with all the issues.

There are deficiencies in our history, culture and education when it comes to the business field. The complexity of an industrial civilisation requires an early grounding in finance, administration, political and computer skills. Computer literacy is essential for all school-leavers. When one considers this fine report in conjunction with the White Paper on Industrial Policy and the Minister for Education's "Programme for Action in Education" we should be assured that the issues have been diagnosed correctly, that the solution has been prescribed and that we must now wait, hopefully not for too long, for evidence of a remarkable recovery.

I referred to our deficiencies in education and to the Minister's plan. It is heartening to see the co-operation between the different Departments that appears to exist in this field, particularly as it pertains to small businesses. As regards the primary school area and curriculum, the Minister for Education is endeavouring to establish pilot projects for the teaching of science and the use of computers in a selected number of national schools. It was stated in that document that it was intended to supply micro-computer facilities to post primary schools which had not yet benefited under the scheme. She stated that as far as possible all students should have the opportunity of becoming familiar with the role of computers in modern society. In reference to third level education — an area which is of prime interest to manufacturing industry — the Minister stated that priority in financial support from the Department of Education would be given to those academic developments which are geared to developments in modern society and which would ensure that our graduates are kept abreast of rapidly changing technology and can compete with graduates from other countries. She also mentioned that a review was to be carried out regarding the extent to which regional technical colleges have succeeded in achieving the goals originally set for them in the report of the steering committee on technical education.

The Minister stated that the links between higher education and industry would be intensified, and referred to the input of the NBST. She stated that it had a major role to play in this area, and recently announced an expanded higher education industry link scheme to operate in conjunction with the Department of Industry, Trade, Commerce and Tourism, this to meet the specialist needs of industry and give the support necessary to post-graduate studies in the industrial area.

Continuing the theme of how important the role of education is in industry and how it impinges on the work of our committee, I refer to the Minister's speech on the Estimate for education this year. The Minister said that, as is the case with second level education, there is a need for closer links between the third level institutions and the world of work. She said that a good deal had already been accomplished in this area and that links have been forged between the industrial and the commercial world with a number of our third level institutions. This link is mutually beneficial. She gives a good example of the co-operation between higher education institutions and industry, especially industry which is sponsored by the NBST which has been very successfully developed by, for example, the dairy science faculty in UCC and County Cork co-operative in the processing of cheese for export.

Another project quoted involved the NIHE in Limerick and the development there with funding from the NBST of an automatic power supply test system. The success of this venture led to the formation of a new company to produce and market the product. The company are now selling automatic power supply test systems here, the UK and in the US. Perhaps there is not a general awareness of how our education system is linked to industry. This is a very important and growing feature of the higher education system. The National Micro-Electronics Centre attached to UCC is a good example. It has twin objectives of educating engineers to work in the micro-electronics industry and serving as a centralised research and development laboratory where co-operative university and industry projects can be carried out. This centre has been a determining factor in attracting major electronic firms to Ireland. I give these examples to indicate the need for ongoing co-operation between the Department of Education at all levels of education, primary, secondary and tertiary and those of us who are interested in small industries.

We must also refer to the role of career guidance in secondary schools. I have got the impression for some time and I am still of the opinion that some career guidance teachers feel that there is something less than respectable in encouraging young people into the business arena when they leave school. There is still an emphasis on the safe, secure, pensionable job in the bank, the professions or the public service. Far too little emphasis is laid on encouraging an entreprenurial spirit among our young people and identifying to them the possibilities of a safe and secure future in the business arena.

In mentioning the entrepreneur and technocrat there is a very sad aspect at present, that there is not sufficient reward for these people because of the tax climate in this country and we are exporting the best brains in this field. It is a tragedy in the long term as well as in the short term because we were hoping to look to these people for recovery in this area to a large extent. I hope this can be redressed and that the situation will be rectified so that it will be worth these people's while to stay at home and invest their talent here.

Turning briefly to some aspects of the report under the recommendations of finance, there is a major problem in regard to the debt equity ratio in most small companies in the country. Many firms were under capitalised when they were set up. Increasing venture capital loan availability is very welcome, and I refer to the business expansion scheme announced in the budget, but it is not the answer in itself. Additional equity will not necessarily increase capitalisation. Apparently in this country we would rather be 100 per cent owners of unsuccessful companies rather than 40 per cent owners of successful companies.

Interest rates are crippling our competitiveness. When we take inflation into account, real interest rates are very serious in regard to our ability to sell what we manufacture at a competitive price. Our competitors in the market have lower interest rates, lower rates of inflation and lower energy costs to industry generally. Much has been said in recent days about the price of energy to industry generally. This morning we are concerned with the price of energy to the small manufacturing business sector. Our track record in this area is lamentable to say the least. In comparison to our competitors abroad our rates are very high. A lot has been said about this, and I am not aware of how we are going to act. I know there is a report on the Minister's desk and I await with interest the outcome of how we can resolve the problem of the crippling rates of electricity to industry generally. It must be resolved without increasing the burden on the consumer. It is a very difficult equation, but I await with interest the outcome of the Minister's deliberations, and the whole business world also awaits the outcome.

The chapter on management generally has received a poor response from those that the committee had hoped would relate to us. The Minister said some things about management this morning. He indicated very forcefully that it was not the State's business to manage companies and interpreted some of our recommendations as pointing in this direction. I can state categorically that this is not so. I have already mentioned the importance of an educational system geared towards the business environment, which could relieve the State agencies of an awful lot of investment and aid to the manager when he is involved in a company. If that investment was made through the Department of Education, through the educational system, there would be need only for a very small top up by the State agencies when it comes to the business arena. We must remember when we talk of State aid and investment that we are not just referring to State agencies. The Department of Education is a State agency of a kind in that it educates our children for the future, and an awful lot of money is channelled through that Department to our children. It is up to all of us to ensure that they are getting the education that fits them best for this country in which I hope they will all be able to earn their living some day.

The State agencies must accept some responsibility in developing management programmes and skills and in co-ordinating their policies. Marketing in general has been a Cinderella area of business for far too long. We have a small, open and highly competitive economy, and it is sobering to realise that much of our 1983 imports bill of £7,400 million comprised raw materials and other goods that could not be manufactured in this country. We have ample evidence for the scope of import substitution in this fact and figure alone, and evidence for the necessity of product identification in this field, particularly in the area of consumer goods.

The whole area of State procurement should be closely scrutinised. We must demand that the public sector is loyal to small manufacturing industry. We also recognise that we demand of the public sector that they balance their books. Here we come back to the whole area of competitiveness in the manufacturing field in Ireland. It is a tragedy that we cannot produce goods that our public sector needs more cheaply than our competitors abroad, notwithstanding the fact that transport and import costs have to be added to the product. They are still more expensive to produce in this country. A sum of £3,500 million of the non-salary expenditure of the public service was spent in purchasing items from the manufacturing sector. We had a good example recently of the tragedy that the lack of competitiveness of this country means to employment. Springs Limited in Wexford were the only company in Ireland who produced a certain type of spring needed by CIE for their buses. They also produced items which were needed by Bord na Móna, the Sugar Company and many other semi-State bodies. They employed 40 people for several generations in Wexford town. Those products can now be bought more cheaply abroad by the public sector because of the difference in price. That is an example of the overriding tragedy for the small industries sector here. Even our public sector cannot be serviced by our industries because of the huge difference in the price and because we are not competitive. Our inflation rates are too high, our interest rates have been consistently too high, our energy prices have been too high and because of the tax climate here we are on a hiding to nothing. I commend the recommendations in this area and I hope the Minister will take them on board, together with some of the fine proposals in his own White Paper on Industrial Policy. No amount of State aid or State crutches will take away from the reality that until the tax climate here is right we will not be able to generate the economic activity that will have a natural momentum and allow successful development of industry and companies generally.

We must also assist small firms in overcoming technical barriers. This matter has been mentioned by other speakers. We must not shy away from technical barriers if they result in demanding the same standards from others as we expect from ourselves. Here I can give an example of the only company in Ireland producing solid fuel cookers. Recently the IIRS recommended to the Minister certain regulations with regard to the interests of the consumers as regards solid fuel cookers. Yet, the IIRS told the Minister that the regulations should not be made mandatory. I ask why. Have we not a duty to the consumer to expect the same from importers as we demand from our own manufacturers? There is only one company in Ireland producing solid fuel cookers. They have approximately 40 per cent of the market here and they produce a high quality item that is in great demand here but yet we cannot look to technical trade barriers of the most positive kind to demand that imported products are up to the quality of those produced here. We must ask the IIRS why they did not recommend that the recommendations be mandatory. Perhaps there was too strong a lobby from vested interests outside this country? Perhaps the lobby in respect of Irish interests was not strong enough? What does it take to get positive protection, to get the technical barriers that operate in every other country, barriers that only demand quality?

The impact of technology generally on product development cannot be over-stressed. We look to the third level institutions to obtain and disseminate information in this area. Their expertise and facilities must be made fully available for the benefit of industry. Quality control is another essential ingredient for success. Without that we will not be in a position to demand premium prices for our goods. I have a feeling we will never be very successful as a country in the mass production of items. It is in the quality product we can shine and where we should lead the way in many areas.

Other speakers have referred to State agencies and I have touched on that matter very briefly. Generally they are perceived to need co-ordination and rationalisation in respect of State support to industry. The Minister mentioned, and our report recommends, one-stop-shops for aid and advice to industry. In the White Paper on Industrial Policy the Minister suggests one per region but we suggested one per county. I stand over our recommendations on this matter. I urge the Minister to look at the matter again and to accept our recommendations. The south east region would be one of the first areas where the one-stop-shops will be set up. I understand it will open in Waterford in January 1985. These shops will be glorified advice centres. Perhaps it is not practical to expect every State agency to be represented by a person in these one-stop-shops. I understand there will be qualified people there who will give advice on what is available from all the agencies in the various fields of industry. I ask the Minister and the House to look at the matter and compare what is suggested now with the work the county development teams have been doing during the years in each county and not at regional level. I think the advice, direction and support of county development teams and their officers have gone unrecognised for far too long. What we are now doing could be adding an extra tier of advice and direction, advice and direction that are already available on a more accountable basis in each county for those who are interested in having their questions answered.

The one-stop-shop per region will not add a lot to what is available on a county basis. I should prefer to see extra support given to the concept of county development teams, where all help and advice is easily accessible to an individual. I wonder if people will travel from the more remote parts of Wexford to Waterford for advice regarding the feasibility of products they have in mind to manufacture? Will they find it any easier to speak to a person in an office in Waterford than they would to a county development officer in Wexford with whom they are probably on first name terms? I do not think we will achieve any more than has already been achieved by the county development teams. If money is to be invested in this area, if services are to be increased and if advice and aid is to be available on a more accountable basis, let us have it on a county basis.

The national linkage programme between the IDA and the IIRS as announced in November 1983 is to be commended and we look to it for great results in the near future. When talking about State agencies I caution against over-dependence on the State generally when it comes to industry. Let us look at what has happened in New Ross in recent times. The people there, faced with a huge unemployment problem, have set up a self-help programme. They have set up their own industrial development team and recently they appointed their own industrial development officer, financed by local industry. This is a tremendous example of the people doing something for themselves rather than depending too much on the State. I commend this approach to many other areas.

The IIRS have given a tremendous service in various areas of research and development in product testing. There is one issue with which I have been concerned for some months and I was delighted the committee took it up. The IIRS run a dye-house service for small textile companies. There are more than 2,000 people employed in 60 small textile companies. These people were finding it impossible to get small lots of yarn dyed and tested and the IIRS were providing this service in name at least. They were under tremendous pressure when the only other people in the field, Smith Hayward, closed down in the past 12 months. Our committee used their role and their interest in small businesses to ensure that this service will be continued by the IIRS, at least until someone in the commercial field takes up the service and relieves the supplier of the responsibility. Without this ongoing service by State agencies 2,000 jobs will be at stake and the future of 60 small textile companies will be in serious question.

There is a major problem in the area of taxation in small industries generally. The major call is for a general improvement in the tax climate so that the natural momentum of economic activity can be generated. Business people in general and industrialists complain about being unpaid tax collectors. They have to deal with reams of paperwork when it comes to PRSI, PAYE and VAT returns. The bookwork involved is tremendous. I hope that the Minister for Finance will be able to take on board our recommendation of £500 credit against a VAT bill for those companies who are not in a position to employ an accountant. This we have suggested for some time, and it would be a tremendous incentive for those companies who are doing what they consider to be Government business, in effect collecting taxes.

Much has been said about our multitier system of VAT rates. Ideally one VAT rate is what we should aim at for the future but it is not practicable at the moment and would not get political acceptability. However, we could reduce the six rates of VAT down to two or three with perhaps not much difficulty and certainly no loss of revenue. I opposed VAT at point of entry strenuously at the time it was proposed. Now I realise that it is not possible to dismantle this without a tremendous effect on the balance of payments in any one year. However, I urge that the VAT guarantee system at the point of entry should drop as soon as possible because it is causing a serious cash flow crisis amongst our small industries in particular. Those with a good record of repayments in this area could surely be allowed to drop this guarantee scheme. It is very easy to implement it if there are defaulters. I urge that our recommendation in this be taken on.

In regard to our legal recommendations, I would like to mention the protection of Employment Act, 1977. Like many other members of the committee, I am coming increasingly to the conclusion that this is acting as a disincentive to full time employment. It has little effect on part time employment. While there may be a case to be made for increasing even statutory redundancy payments, some system must evolve whereby the company themselves do not feel that they will be blackmailed in a redundancy situation. The result of all this is that many companies who have sections which are not viable now cannot afford to streamline or cut out those sections because of their worry about redundancy commitments over and above the statutory redundancy situation. In many cases the entire industry is in danger of being pulled under by action not being taken when necessary. We can all give examples of this happening throughout Ireland. Because of loyalty to employees or fear of what the redundancy situation might be, companies go on from hand to mouth month in and month out and eventually the whole thing goes under because the problems were not faced and tackled in time. The net loser in all of this is the employee because jobs are being lost as a result. As we look to the small manufacturing industry generally to create employment which is badly needed we must recognise that an adequate reward for the risk taker is paramount. No amount of State support will ever substitute for adequate reward for the risk taker.

This is an agreed report. I urge the Minister to take on board all our recommendations. I thank our chairman, my colleague Deputy Ivan Yates, and Shane McAuley, clerk of the committee, for their tremendous work and personal commitment to the outcome of our committee. The only recipe for economic activity is to generate a natural momentum and have a tax climate suitable for business to flourish in. I appeal to the Minister not to let the dust gather on this report.

Acting Chairman (Mr. McGinley)

Deputy Daly, and I remind him that he must conclude at 1.20 p.m.

Mr. Daly

I will be very brief. I compliment the members of the committee on the excellent report which they have submitted. Most of us will agree with most of the recommendations in that report. There are one or two things with which I disagree. I mention the views of the committee in relation to legislation on maternity leave which they consider may have been counter-productive. I do not agree with their views in that regard. That is one of the minor differences that I would have with the committee.

You cannot at this time divorce the problems of small industry from the problems of industry generally, and this has been mentioned on more than one occasion. High energy costs, transportation costs, isolation of industry in various regions, difficulty with communications and so on all present problems. One aspect we tend to forget in relation to small industry is the impact of closures of bigger industries on small associated industries. Very often far more consideration would be given to the major industries and far more attention would be paid to them if those in authority understood fully the total impact that a closure could have on a whole range of small associated businesses which are running alongside the major industry and which are totally devastated and upset at the closure of a large firm. I speak today in particular about the impact that the closure of the Burlington industry in Clonlara, County Clare, a £30 million industry in the textile business, will have. The losses will be severe. The 250 people employed in that industry will lose their jobs, but the associated small industries running alongside that providing services and bits and pieces for that industry to enable it to operate successfully will be devastated by the closure of an operation such as the Burlington plant. Here we see an industry which has been undergoing difficulties in production ranges for the last year or two. It should have been apparent to Government agencies that problems would arise unless massive investment, restructuring and re-equipment and other development took place there. It will be essential for the development agencies and for the Government to ensure that action is taken at this stage before the plant closes to alleviate the difficulties for the 200 to 300 people directly involved there but above all to ensure that there is some prospect of salvaging some of the jobs and providing some hope for the small industries attached to, dependent on and surviving alongside Burlington.

Out of all the development agencies we have at present I do not believe that there is in the whole structure a person with either the responsibility or authority to walk into any industry in any region and say to the management there — not to take over his management but to motivate that management —"I am from a development agency of the State. My function here is to see how I can assist you to double your workforce here, increase your range of products, help you in your marketing structure whatever it is. I have money available to me to help you to do that". This is a basic weakness in the whole development agency structure that we have established and developed here over the years since the foundation of the State. I support the view of the one-stop-shop, provided you turn it the other way round and that the one-stop-shop man is given the responsibility and function to go into small industry in particular and motivate it in a way that will allow us to say to him, "I can assist you. I have so much funds available and I can arrange whatever other funding is necessary for you. You can double your output and your workforce. I am here to help you and this is how we propose to do it". In recent times in particular there has been a move away from attention at regional and local levels to more centralisation of the activities of the development agencies. The IDA in particular seem to be developing within their organisation an attitude that from here on all decision making and all activities relating to particular industries in regions should be dealt with in a centralised way, going over the heads of local and regional management, going over the heads of the field workers in an area. We need to strengthen regional decision making. One of the basic weaknesses at present relates to the new trend that is developing in the IDA to centralise all activities in Dublin and, if possible, take away from the regional offices the decision making. That is a retrograde step and must be rectified soon. I believe in regionalisation and in strengthening the role of regional offices. They must be given the authority to make decisions in regard to local industries. Local officials are better acquainted with the area than those centralised in Dublin.

I should like to mention some of the small industries success stories in my region. One relates to the small industrial estate of Smithstown at Shannon. There we have a unique example of how local industries can work alongside a major industrial estate. Through the aegis of SFADCo it has been possible to identify a whole range of products which can be produced for major industries in the area. Those products are produced by small industries in the Smithstown estate. Component parts which in the past have had to be imported are manufactured there. That estate has been a remarkable success. The GAC bus plant employs almost 350 people in the Shannon Industrial Estate while in the Smithstown Industrial Estate a small industry employs in the region of 200 people producing parts for those buses. That is a first class example of import substitution. That should be developed in other areas.

I support most of the views expressed by the committee. If industrialists can identify a good product, get the price structure right and deliver it on time they will succeed. However, there is a need for more investment in education and we should concentrate on directing young people into the industrial area. That can be done if there is closer co-operation between the schools and industries. That should be done at second level. I can recall as Minister of State at the Department of Labour launching a school-industry linked scheme in Drogheda. That example has been followed in other areas. We are aware that the transition from school to work is one of the biggest problems our young people face. More attention should be paid to that area. While the report is useful there must be more Government action to deal with the problems being faced by all industrialists.

Mr. Lyons rose.

Acting Chairman (Mr. McGinley)

Deputy Sheehan is offering.

Mr. Lyons

The last speaker and I divided the time and the Chair was made aware of that. The Chair is now trying to give Deputy Sheehan a few minutes even though speakers on his side exceeded their time limit.

Acting Chairman

The practice is to alternate between one side of the House and the other. I had no objection to Deputy Lyons dividing the time with Deputy Daly provided there was no Member offering from the Government side.

Mr. F. Fahey

The Chair did not indicate that to me when I asked for a division of the time.

Mr. Lyons

I had intended to speak longer but I cannot do so because the time was consumed by the Government side. We have listened to a tirade from the Government side.

Acting Chairman

I do not think there was any allocation of time given to any Member. There was an agreement on the Order of Business that the chairman of the committee would be called upon to conclude from 1.20 p.m. to 1.30 p.m. I understand that Deputy Sheehan is offering and the practice is to alternate between one side and the other in order to maintain balance. I am calling on Deputy Sheehan.

Mr. Lyons

On a point of order, we agreed to divide the time available between 1.10 p.m. and 1.20 p.m. and the Acting Chairman has said that he does not have any knowledge of such an allocation.

Acting Chairman

There was no definite allocation of time for any speaker.

Mr. Lyons

Is the Chair saying that the Opposition spokesman on manufacturing industry is not to be given a few minutes to discuss this report when a member of the committee on the Government side spoke for 35 minutes consuming most of the time?

Acting Chairman

There was no agreement at the outset except that the chairman of the committee would be called at 1.20 p.m.

Mr. Yates

I am prepared to cut my time from ten minutes to six minutes providing the remaining time is allocated equally between Deputies Sheehan and Lyons.

Acting Chairman

We are wasting time on this but if that proposal is acceptable to Deputies Sheehan and Lyons I will agree to it.

Mr. Sheehan

We have wasted five minutes already.

Acting Chairman

In accordance with the agreement Deputy Sheehan has three minutes.

Mr. Sheehan

I should like to congratulate the Taoiseach, and the Minister, on establishing the Committee on Small Businesses which consists of 16 Members of the three main parties in the House. The Members have a thorough knowledge of the problems that confront manufacturing industry. It is important that we have sound manufacturing industries run by people who have pride in their products and are competitive on the home and export markets. It is vital for manufacturing industries that all avenues are explored to capture home and export markets. Our industries should be in a position to compete with the best of opposition.

The need for small industries is greater now than at any time in the past. We should aim to promote the establishment of small businesses in all towns and villages. I dislike the policies that operated down the years with huge sums of money being allocated to foreigners who did not have any stake in the country. They came to reap the harvest of IDA grants but, having received the maximum amount, took the first plane back to Europe and forgot about the Irish people. It is well known that many enterprising Irish people who approached the IDA for State aid were refused and those with an address at Dusseldorf, Paris or Amsterdam were facilitated in every way. We must change that attitude and give our Irish entrepreneurs all the backing needed to get started.

We should concentrate on industries that derive raw materials from within the State. Why is it that we import £40 million worth of chipped potatoes when we have the finest climate in the world to grow potatoes? All our supermarkets sell frozen chips imported from Holland, Belgium and Canada. Our fishing industry could employ ten times more workers if properly operated. We are only skimming the surface as far as that industry is concerned. We must do something about smoking, marinating and canning. We are falling down in our commitment to the fishing industry. The Dutch and Norwegians are cashing in on that valuable industry while we stand idly by.

Acting Chairman

I must now call on Deputy Lyons.

Mr. Sheehan

I recommend the adoption of this report. It is a very good one. I congratulate our chairman, Deputy Yates, on its presentation and on having done an excellent job within a short time.

Acting Chairman

Deputy Lyons has three minutes.

Mr. Lyons

It will be as well for me to get into top gear as quickly as I can bearing in mind the time available to me.

I suppose it is very bad to commence any debate with an element of criticism. My criticism is this, that the time allocated to such an important item as this report, as ordered by the Government, is to me, in one word, "deplorable". The whole country at this time is turning its attention to the setting up of small industries as a means of redressing the massive unemployment obtaining. I compliment the people who sat for many hours in an endeavour to present this report.

I had a number of matters in the report underlined on which I had wanted to comment but time will not allow me. Under the heading of industrial costs the report had this to say:

Although State policy towards small industry is one of support there are contradictions including, on the one hand, a variety of support services through various agencies and, on the other, excessively high charges for such State provided commercial services as electricity.

Here I want to emphasise the costs of electricity in view of the debate we had earlier this week as yet unfinished. One of the most severe cost factors vis-à-vis our lack of competitiveness in small industries, indeed in large industries, has been highlighted in the report of this committee. I hope that when we resume the debate on the proposed costs of electricity to small industries the people who came into the House this morning, who waxed so eloquently, some of them for 35 minutes, will show, by marching up those steps, where they will go vis-à-vis small industries — rather than coming into this House taking up the time of Members who did not serve on that committee and who would have liked to contribute to this debate, pontificating, telling us what she or others could tell the relevant Minister of State. I condemn that attitude. I hope that the cost factor of electricity to small firms will be decided at the top of those steps by the people who are so concerned and who pontificated here this morning to us. I recommend, as does this report, that there should be a third tier of electricity charges for small industries. Import substitution is not being developed to the fullest possible extent.

I could continue for much longer. I must say that the legal aspect of small businesses constitutes a very serious problem for all firms but particularly for small ones which are labour-intensive and who may be unable to avail of the advantages of new technology.

I see I am running out of time already.

Acting Chairman

The Deputy's time is expiring.

Mr. Lyons

If there were some means available to me by which I could have this debate resumed I would avail of it. This arrangement is unacceptable to me, to members of the committee, to the electorate, that this debate should be knifed at this time, it being so important. Could I have the direction of the Chair?

Acting Chairman

There was an order made this morning to conclude this debate at 1.30 p.m., an order of the day.

Mr. Lyons

How much have I remaining, a minute?

Acting Chairman

The Deputy is running out of time just now.

Mr. Lyons

We were told this morning about the White Paper. This is such a disappointment I would need much more time to talk about it but I shall revert to it on another occasion.

I shall conclude by saying that my message to the Government for small industries, indeed for all industry, is to create an incentive, to encourage development, to ease taxation, providing the kind of funds which will stimulate our stifled economy, giving back our people the incentive to work and to create work.

Acting Chairman

Deputy Yates, to conclude.

Mr. Yates

I regret also, like other Deputies, that there was not sufficient time to debate this report. As the time available to me is brief also, I should like to thank all members of the committee and of the House who spoke. We shall study the Official Report and take up any of the points they have made.

I should like to deal principally with the Minister's response to this report because I suppose in all respects, in relation to the implementation of this report, that is the most crucial.

The Minister made three or four points. First, he wanted to know what was a small firm, where is the line drawn? He said also that it was not altogether desirable that the Government should interfere in the management of private firms and said there would have to be strict cash limits, in terms of the implementation of industrial policy vis-à-vis State agencies, because we needed to create the right tax environment. The reason I did not go into any of this — which is basically a justification for our over 80 recommendations — is that I should have thought such a fundamental point would already have been taken on board by the Minister. Obviously his advisers are not at that level of understanding. Therefore, I should like now to justify it. The criterion for assessing what is a small firm is both quantitative and qualitative. There are assessments used both in Europe and in the United States with established criteria for so doing. For example, in the United States and EC it is 1-500; in AnCO it is 1-80; in the IDA 1-50, in the Small Firms Association it is 1-100 and so on. In relation to the qualitative criterion — which represents the level of output, of fixed assets and the level of employment — if there is any difficulty encountered in endeavouring to get statistics to justify a case for small firms, it is simply that the CSO are so out of date with regard to figures. But, just on the figures they do have and those I have from the IDA annual employment returns, one can prove, first of all, that 93 per cent of all small firms are indigenous and do not have the potential to repatriate profits. Therefore, any economic development there is purely for the good of this country. Second, between the years 1973 and 1980 employment doubled in small firms. The latest figures available to me say that, in 1982 — which figure subsequently increased — there were in excess of 99,750 people employed in small firms and small firms also represent 90 per cent of manufacturing firms. It needs to be pointed out also that 66 per cent of all exports belong to small firms.

Therefore, if one views the picture in terms of employment, wealth creation and balance of trade, there is no doubt that if one is not prepared to zone in and assist small firms, then it must be said that one's industrial policy is unsoundly based. Most people in the IDA will tell one that the level of mobility of industrial investment — take the high technology area of electronics — is extremely vulnerable, so that one must remember that as quickly as they came in they can pull out. There is the genuine fear felt — if one looks at the 500 per cent growth over the last ten years, the growth in the electronics — that the Scottish Development Agency, the Welsh Development Agency and the EC generally are now giving the types of incentives, in terms of grants, research and development and of corporation tax levels that Ireland was giving. This means that the incentives we have are now being copied. But we will not be able to keep pace with, say, Taiwan or Hong Kong vis-à-vis wages. Therefore, the future appears very vulnerable indeed. It must be remembered that, unless one builds up one's base of small firm development, if one depends on multinationals who may be operating in 22 countries simultaneously, then one could find that, within a period of months, there would be a rapid loss of investment to the detrimental effect of our economy.

The Minister spoke about interference in private companies.

Acting Chairman

I would remind the Deputy that he has two minutes remaining.

Mr. Yates

I should say that what we were getting at there, first of all, was a pilot scheme to assess whether the IPC, the IMI or AnCO could do a better job purely on the basis of redeployment, as was said by Deputy F. Fahey and others. The point we are making here is that very few people scrutinise our existing State agencies. For example I did not hear the Minister this morning say that three years ago of the IDA personnel, 60 per cent were engaged in field work and 40 per cent in administration. Now the position is that those figures have been turned around, with 60 per cent in the centrally-heated offices.

Deputies

Hear, hear.

Mr. Yates

That is the type of accountability about which I am speaking, and which we must have. Surely it is the primary role of politicians, in terms of policy, to monitor the State agencies that are advising the Minister and dictating the pace of policy. Of course, they are on the inter-face of industrial development and, of course, their opinion must be taken into account. Therefore, somebody must scrutinise them. If we say that the interaction of small firms vis-à-vis State agencies is not adequate, is not localised, does not constitute the best type of consultancy service, that is a sufficient criterion for a change of direction.

In those few words I have endeavoured to justify the need for a national policy for development of small firms in this sector. Of course, I take the Minister's point about the tax environment. The whole of our report on retail distribution says that that sector is being seen as a revenue earner, therefore, we say, get the State off their backs. This sector is different. There is here great potential for development, this is not a service sector, there is growth and employment potential here.

I thank the Minister for having acceded to our three requests in relation to the management committee, the three-yearly review and an early meeting with him. All of our input by way of aiding industrial policy is there and available and I am glad that he has acceded to that point. However, I should like the Minister to re-examine his position fundamentally in the context of the importance of small firms. I hope that this debate will prove to be the first step in the implementation of our 80 plus recommendations.

Question put and agreed to.

Dáil Éireann díospóireacht - Thursday, 15 Nov 1984