Deputy Taylor-Quinn gave me notice of her intention to raise on the Adjournment the possible closure of the National Software Centre. The Deputy has 20 minutes to present her case and the Minister of State has ten minutes to reply.
Adjournment Debate. - National Software Centre Closure.
I thank you for affording me the opportunity of raising this very serious matter on the Adjournment and, with your permission, and with the permission of the House, I wish to divide my time with my colleague, Deputy John Bruton.
Is that agreed? Agreed.
In 1984 the then Minister for Industry and Commerce, Deputy John Bruton, following the publication of the White Paper on Industry gave his blessing to the establishment of the National Software Centre by the IDA. That was a very progressive and far-seeing move. He recognised that there was tremendous development potential in the software industry and that there was great opportunity for employment creation around the country given that we have a very well educated computer-literate young population.
Since then, the National Software Centre have been operating very successfully and effectively and have been giving entrepreneurs technical advice in setting up companies, directing overseas sales, assisting them in raising venture capital and in business planning. The National Software Centre also have been involved in market research and in the general overseas marketing of the national software industry and they have been doing a very good job. So successful have they been that in recent times that their development and expansion have been in excess of 70 per cent. That compares very favourably with the minimal expansion in other areas of industry. Evidently this is the one area where there is tremendous potential.
The question now arises, why did the Government give the IDA their blessing to close the National Software Centre. On 31 May 1988 in reply to a question by Deputy Bruton, the Minister, Deputy Reynolds, said it was based on a number of criteria including the view that the income of the centre would not be sufficient to sustain their operation. This is a very weak and unsustainable argument. The Minister did not give any other criteria for closing down the centre. In England when the National Computer Centre was set up, it took them 13 years to become self-sufficient. Our National Software Centre have been assisting industries employing fewer than 15 people.
I am sure you, a Cheann Comhairle, will appreciate that many of these companies would not be in a position to pay major commercial fees, whereas the centre in England was getting very high fees from Ford's and other large companies. Again I ask, why did the Government take this decision? On 31 May the Minister said he was ensuring that the IDA and CTT would be available to firms to fill any gaps that could arise as a result of the closure. The IDA are a development agency and have no technical expertise; CTT are not involved in overseas selling of software and do not have personnel who are specialised in that area, and they also handle the electronic sector.
Effectively, the National Software Centre were working a trading house. An interesting feature has developed, and this is a matter the House must treat very seriously. A private company was formed recently — TTH Limited — and was issued with a trading licence which has been published. The trading company intend to take over the work of National Software Centre were doing. What we are witnessing is this Government agreeing to an abolition of public company in favour of a private compeny. Why has this been done? I understand some of the personnel in this company have very close associations with senior members of the Fianna Fáil Government and Party, and have been very closely aligned to them for a considerable time. The general suspicion and concern among the personnel in the software industry throughout the country is that these people are getting a pay-off for contributions made to Fianna Fáil in the recent past. This is extremely unfortunate.
There is an onus on the Government and the Minister to take this matter back to Government and to direct the IDA to re-establish the National Software Centre immediately to ensure that the fears of people working in the software industry are allayed. This is a serious matter which this House must view with extreme concern. When one examines this matter one sees a close relationship to the marina incident in Dún Laoghaire.
The National Software Centre were internationally recognised. The Australian Government are at the moment establishing a software centre in Australia on the Irish model. Internationally this was viewed as an innovative development. The question is, why did the Government allow this centre to be closed? What is the real reason? I would go so far as to say that the Minister, Deputy Reynolds, misled this House when he gave one criterion — that it was because the income for the centre would not be sufficient to sustain operations. This House has been left in the dark. The real facts have not been put to the House and there is an onus on the Government to ensure that this position is corrected immediately.
Many questions could arise as a result of this closure. I hope the Minister takes this matter back to the Cabinet and that they will direct the IDA to re-establish the National Software Centre. I wonder how this decision tallies with various statements made by Fianna Fáil Ministers and the Taoiseach in the recent past? At the recent CII annual conference the Taoiseach said that enterprise means imaginative, innovative, courageous and well-directed action in pursuit of carefully defined objectives. He went on to say they tended to discuss enterprise mainly in the context of private sector activity and that it was also essential to promote it within the public sector. How does this closure of a public sector company tally with what the Taoiseach said?
One must ask why the Government are not prepared to be innovative and to take a chance and act as an entrepreneur in this area. The facts are there. There are people in this country and in other countries, who are constantly taking chances. But for these people there would not be any development at all. The fact that the Government have taken this decision means very serious damage has been done to this country internationally. While the IDA are trying to attract the software industry to Ireland, there is a feeling abroad that the Government are no longer committed to this industry. It will be far more difficult now to attract that type of industry here and I would go so far as to say that it will possibly cost the IDA twice as much to undo the damage that has been done. This is very unfortunate and should never have happened. The motivation behind this closure must give rise to serious questions. The Minister has an opportunity to outline the fine details to the House. I am not prepared to accept the answer given by the Minister, Deputy Reynolds, to Deputy Bruton because that answer cannot be substantiated.
The Government in their Programme for National Recovery claim that they intend to create 3,000 jobs over the next four to five years in the area of international services. The first one they mention is computer services. The IDA in their recently published document Your Partners in Development state that they provide a special package of incentives and support facilities for companies involved in internationally traded services. They go on to say that software development has been the main business supported and this sector has shown rapid growth in recent years.
Against that background, how can the Government justify closing the National Software Centre? The Minister makes the claim that it is because of lack of income but, as Deputy Taylor-Quinn has pointed out, a centre of this kind is not expected to be self-financing within the first two or three years of its establishment. It was established by the IDA as a centre of excellence in software so that it would gradually build up expertise, help create private companies and ultimately through its reputation after a reasonably long period, having helped independent commercial enterprises to grow, it would become self-financing. The private sector would have grown to a point where it would be using the services of the centre and providing it with sufficient income. The National Software Centre is described in paragraph 9.14 of the White Paper on Industrial Policy as being an addition to on-going promotional work for the software industry by existing organisations. It is part of the promotional activity of the IDA.
Why was it strangled in its infancy by the IDA? Why was a new board appointed to the centre only a few months before the centre was done to death? Surely if the IDA's intention was to keep the centre going they would not have appointed a new board and put it out of existence within a few months. It does not look as if this was an IDA decision when one measures it against that background.
I want the Minister to deny that any representations were made by the Government, by him, by any other Minister or by anybody acting on his behalf, or at his instigation, to the IDA to the effect that this centre was to be done away with. I want him to deny that representations were made to him by any private interests seeking the removal of the centre as potential competition for a private project. I want the Minister to deny those categorically if he can. If he cannot, one must ask serious questions about this matter.
The Government are continuing to fund infrastructural activity of this kind in the electronics sector. For instance, this year's Estimates provide £256,000 as a grant-in-aid for the National Micro-Electronics Research Centre. That same centre got £268,000 the previous year and about £400,000 the year before that, so the Government accept that it is reasonable to give a grant-in-aid to a research centre, a centre of excellence. The point is that the National Micro-Electronics Research Centre is concerned with research into micro chips and we have not a single micro chip manufacturer in this country. Two or three projects were found to be impossible because they could not operate in a country of this size and we could not put up the necessary money. They are not particularly suitable to this country, yet the Government are continuing to spend substantial sums of money subsidising a research centre into micro chip production. I do not criticise them for doing so because there are spin-off benefits.
I cannot understand, however, how they can justify continuing that grant-in-aid while, at the same time, closing on the grounds of economy a centre concerned with software, which is specifically suited to this country. We have a surplus of young, trained people with an interest in computer activity who have been trained in software. Software is a brain-based, not a capital-based industry. People make the software industry move; capital equipment makes the micro chip industry move. Yet we have a research centre into micro chips and the Government have closed down the only centre of excellence concerned with software, on the grounds that its income was not large enough. Why not ask the same question about the National Micro-Electronics Research Centre, which has been in existence for a number of years? If income was the criterion, why was it necessary to give £256,000 this year to the National Micro-Electronics Research Centre? Surely that centre, if this is the standard, should be able to pay for its own expenses in the same way as the Government say the National Software Centre should have been able to do?
It is important to know the true considerations behind this decision. The Minister has not so far given the full facts to the House. I am seeking clear denials from the Minister in regard to the questions I have put to him, in regard to representations by him or to him in this matter and whether a private sector project had any influence whatever in the matter. Secondly, will he indicate, given that he has licensed that same private sector project, whether it is doing or proposes to do any of the things that the National Software Centre was doing? If so, why did he not encourage the software centre to seek a trading house licence rather than encourage an alternative project? Why, for instance, did he not suggest that the software centre, if it had a deficiency of income from what it was able to sell here, should take part in the international development co-operation activities of the IDA? The IDA say they provide consultancy services to developing countries on a commercial, fee paying basis. If the National Software Centre in its early years was not able to get enough income within this country, why did not the IDA seek to sell those activities and services overseas? Why close it down? Surely the Minister should have looked for other ways to keep going that vital support to the software industry rather than strangle it in the way he seems to have done or allowed to be done. It is important that we have frank and full answers to these questions.
The decision to close the National Software Centre was made by the Industrial Development Authority. The Minister for Industry and Commerce was advised of the decision to close the centre but did not play a role in that decision. I am informed that the decision was based on a number of criteria, not just the one mentioned by Deputy Taylor-Quinn, including the view that the income of the centre would not be sufficient to sustain its operations.
To answer Deputy Bruton's questions about the new board, yes, it was that new board that advised the IDA when it decided to take shares in the centre, and more recently, when it decided to close, it was acting under it own authority, under statute, and the Minister has no responsibility in relation to these decisions. I reject totally the points raised about who influenced it. We did not force anybody's hand in this decision. I would also say to Deputy Taylor-Quinn that there is no place for chancers, as she describes them, in this Government. There may have been in other Governments but not in this one.
I did not use the word "chancers".
I wrote it down as the Deputy was saying it. In relation to the affairs of particular companies——
I talked about a pay off to Fianna Fáil Ministers.
——this is a matter for the day-to-day administration of the industrial development agencies and it is an area in which the Minister for Industry and Commerce has no function. This reflects the rationale behind the establishment of such bodies, that is, to give them a greater degree of flexibility and freedom than is normally available within the Civil Service, and to free Ministers from responsibility for the decision which the boards and staffs of these bodies take in the day-to-day administration of their responsibilities.
In this regard the Minister, Deputy Reynolds, in answer to a Dáil question last year, indicated that he is answerable for overall policy, including the legislation under which the bodies operate and also for the Exchequer allocations provided to them. Finally, it may be as well to emphasise here that the Minister for Industry and Commerce has no function in relation to the commercial affairs of individual companies in respect of his industrial policy role.
The National Software Centre was formally established in 1984 as a limited company, to help meet a number of perceived needs in the Irish software industry. The establishment of the centre was funded by way of IDA grants and equity. The principal objectives of the centre were: to increase the pace of development of the indigenous software industry; to increase Ireland's credibility in the eyes of overseas companies as a location for the development of sophisticated software; and to become self-funding within five years of being set up.
The principal activitities in which the centre engaged, in order to achieve these aims, were commission sales of software, technical consultancy, software research and marketing supports.
In the light of the decision to close the centre, the Minister has been keen to ensure that the provision of services and support by the State agencies leaves no gap in the range of aids and assistance needed for the development of the software services sector. In this connection, services from the IDA and CTT will be available to firms in order to fill such gaps.
They do not have the expertise.
The Department of Industry and Commerce, Eolas and the Industrial Development Authority are examining the form of support that will be required for the sector for the future, and have had, also, the benefit of some consultations with prominent people in the software industry.
The existing State supports for the sector include the full range of incentives available to exporting services companies under the IDA's International Services Programme. CTT's export marketing services are also available to the sector and indeed CTT have made organisational arrangments which are specific to the software area.
They do not have the personnel specialised in this area.
I could have interrupted the Deputy but I had more respect for my colleagues than to interrupt. In addition, the Government's trading house initiative is particularly relevant in the export of software by relatively small Irish firms. One of the first trading houses to receive a licence from the Department of Industry and Commerce would operate in the software sector thus providing increased export opportunities.
The answer to the second question asked by Deputy Bruton is yes. The Minister for Industry and Commerce fully appreciates the importance to Ireland of a strong software sector, and the employment potential which exists in the sector for our young computer literate workforce.
What is the Minister answering yes to? Is he saying that yes representations were made?
Deputies raised the question on the Adjournment. They must be good enough to listen to the reply without interruptions.
Does the Minister mean to say representations were made?
The Deputy posed the question and I answered it. We did not force anybody's hand in making the decision. That was the first question.
The question was did the Minister make representations? Did he receive representations? Is the Minister saying yes?
The interruptions must cease.
The Deputy thought I did not listen to the question but he is wrong. I listened attentively. If you go around and round and repeat yourself that is none of my business.
Would the Deputy address his remarks through the Chair?
I answered the first question already. We did not force anybody's hand in making the decision. The next question was about the licence for the private person to carry on in the sector. That was the question and I answered yes, so do not twist it about. The Deputy asked a straight question but he goes around in circles. We are used to hearing it.
The Minister for Industry and Commerce fully appreciates the importance to Ireland of a strong software sector, and the employment potential which exists in the sector for our young, computer literate workforce. The supports for the sector which I have outlined emphasise the Government's commitment in the software area.
The current appraisal of the supports to the software sector in the Department of Industry and Commerce, Eolas and the IDA which I mentioned will be used to further tailor these supports to the sector if and where appropriate. These measures should guarantee the continued success and future development of the sector.
Only yesterday, the Minister for Industry and Commerce announced the expansion of one Irish software company. This expansion will lead to the creation of 108 new jobs over the next three years, practically all of them of a high calibre. The range of supports already in place for the sector plays a vital role in encouraging expansions such as this. The fact that this growth is evident is a reflection of the success of our initiatives in the software area.
These initiatives will be maintained and, where considered appropriate, will be developed further. The Minister is confident that this course of action will maintain and accelerate the development of our software industry.
The Minister has not clarified the position.
The Dáil adjourned at 7.30 p.m. until 10.30 a.m. on Friday, 17 June 1988.