(Limerick East): I wish to share my time with Deputies Finucane and Connaughton.
Private Members' Business. - Re-Establishment of Fóir Teoranta: Motion.
Is that satisfactory? Agreed.
(Limerick East): I move:
That Dáil Éireann calls on the Minister for Finance to re-establish Fóir Teoranta and, conscious of the difficulties being experienced by examiners appointed under the terms of the Companies Act, 1990, further calls on the Minister to extend the powers of Fóir Teoranta on its re-establishment to mandate it to provide examiners with the working capital they need to carry out their functions so as to avoid unnecessary liquidations and consequent loss of jobs.
As unemployment moves inexorably towards a level of 300,000 and the Government fail to put forward any real initiatives to provide jobs it becomes imperative that everything possible be done to preserve existing jobs. Every day we hear on radio and television and read in the newspapers about firms folding up with massive job losses. Bad news in regard to jobs is now so frequent that the fact is merely reported and comment has almost dried up. The closure of factories is now treated by the media like shootings in Northern Ireland — inevitable and unfortunate but beyond comment. The victims are treated with a similar fatalistic shrug — what cannot be cured must be endured.
The Government have stood idly by and watched the spiralling unemployment figures. They have rejected all proposals made by the Opposition parties and, in particular, by Fine Gael, to solve the problem. They ignore the best advice given in reports commissioned and paid for by them, as they have done in the case of the recent Culliton report.
I wish to confine my remarks tonight to the preservation of existing jobs rather than the creation of new jobs. One essential weapon in the armour of the State in the preservation of jobs is a State rescue bank. This is why I am calling for the re-establishment of Fóir Teoranta.
Fóir Teoranta were established in 1972 and until their abolition did sterling work in rescuing thousands of companies and maintaining jobs. As their mandate only allowed them to invest in companies which were in trouble they were involved in the riskiest of risk capital businesses, yet their record in this area was good. Up to the date of their abolition, £85 million of their investments had to be written off. However, they had rescued hundreds of companies and saved tens of thousands of jobs. Many household names in Irish industry today owe their strength to the intervention of Fóir Teoranta in their hour of need. The Taoiseach's family business, C & D Petfoods, was the beneficiary of a Fóir Teoranta rescue in the eighties.
Naturally Fóir Teoranta had their losses. The very nature of their business ensured that they would have losses, but taking all things into account, their contribution to Irish industry and the preservation of jobs has been positive. On a value for money basis, I believe the country has got as much value from the investments by Fóir Teoranta in failing companies as it has got from the investments, by way of grant aid, by the IDA, SFADCo. and Údarás na Gaeltachta.
It is worth looking at the figures in the last annual report produced by the company which reviewed their activities for the last five years they were in business. In 1984, 93 firms were approved for Fóir Teoranta investment and the number of workers in the firms approved was 7,800; in 1985, 86 firms were approved and the number of workers was 6,600; in 1986, 58 firms were approved and the number of workers was 5,600; in 1987, 51 firms were approved and the number of workers was 2,130 and in 1988, 46 firms were approved and the number of workers was 2,500. In all, just under 25,000 jobs were involved over that five year period. In present circumstances with the unemployment level spiralling towards 300,000 the interventions of Fóir Teoranta in rescuing companies and saving jobs are missed.
The sectoral analysis table in the annual report dated 31 December 1988 shows the spread of investment through the different sectors of the economy. They are also worth looking at. Of the total invested by Fóir Teoranta, £6.6 million or over 21 per cent was invested in the food processing industry; £6 million or 19.6 per cent was invested in pharmaceuticals, plastics, rubbers and chemcials; more than £5 million or 17 per cent was invested in engineering; £4.2 million or 13.7 per cent was invested in clothing and textiles; £2.4 million or 7.9 per cent was invested in glass, pottery and domestic ware; £2.4 million or 7.8 per cent was invested in print and packaging; £2 million or 6.6 per cent was invested in building materials; £500,000 or 1.5 per cent was invested in footwear and leather and £1.2 million or 3.9 per cent was invested in other industries. The total invested was £30.5 million. This investment was spread right across all the sectors of the economy and made a contribution. That was a reasonable record.
When the then Minister for Finance, the present Taoiseach, introduced the Bill to abolish Fóir Teoranta he gave a number of reasons for his actions. He said first that the economy had picked up and there was very little demand for Fóir Teoranta's interventions. It is self-evident that that is no longer true, if it ever was true, as the economy is in crisis, job losses are mounting on job losses and the Government do not have a single shot in their locker to deal with the unemployment problem. The recent UMP example is merely the most high profile example of the haemorrhage which has been bleeding jobs out of the country for the past 18 months.
Some progress was made when Fianna Fáil came to power in 1987. A certain number of extra jobs were created at the time of the Tallaght strategy. However, since mid-1989 progress in job creation has been very weak and our unemployment level is absolutely catastrophic. To use the argument that we no longer need a State rescue bank because Government policy has stimulated the economy out of its difficulties to the degree that a State rescue agency is no longer needed is certainly not true in present circumstances.
The second reason given by the then Minister for Finance for abolishing Fóir Teoranta was that venture capital was freely available for viable firms. That was not the case at that time and it is not the case at present. By and large the banks are not in the business of giving venture capital; they are not interested in providing venture capital. They want all their lending to be backed by fixed assets. If a company do not have fixed assets they look for personal guarantees on the personal assets of the business person, including the family home, before they will provide money. There is no venture capital industry in the country. The amalgamation of NADCORP and the IDA meant that the State agency which provided some venture capital was done away with. Fóir Teoranta, the State agency which provided risk capital for companies in difficulty, has also been done away with.
There is no money in the commercial sector to invest in companies in trouble. Indeed, there is very little money in the commercial sector to invest in companies where the investment is not backed by fixed assets. This is particularly true in the knowledge-based industries. Many bright young graduates who want to set up, for example, software operations, are not being backed to any great extent by the banks because they do not have the fixed assets to back the loan; the banks are not prepared to back ability, skill, brainpower and entrepreneurship. They are simply not interested in doing this. We do not have a venture capital industry here. To say that there is sufficient venture capital available from other sources to make State agencies such as Fóir Teoranta or NADCORP redundant is to miss what is happening in the economy and the point of bank policy in recent years.
The third reason given by the then Minister for Finance for the abolition of Fóir Teoranta was associated with this point. He said that the business expansion scheme would provide an alternative source of finance. The Taoiseach knocked the stuffing out of the business expansion scheme in the last budget he introduced as Minister for Finance. Whatever potential there is still in the scheme for the provision of small amounts of venture capital to viable companies or companies with stong potential the business expansion scheme will not provide a single pound for ailing companies in risk of liquidation.
That is what Fóir Teoranta did and to suggest that the business expansion scheme is a substitute for the activities of Fóir Teoranta is a total misunderstanding of the system. There was some merit in the argument when the business expansion scheme applied to the tourist industry and certainly BES money was used to improve the balance sheets of many hotels in trouble. However, it no longer applies to the tourist industry and BES money is not going into ailing companies in the appropriate amounts. Anyway, the amounts now appropriate for an individual BES scheme have been capped by the actions of the Taoiseach when he was Minister for Finance and the amounts available for a company in difficulty are so small as to make the argument which he put forward at the time he abolished Fóir Teoranta irrelevant at present.
The fourth reason advanced by the Taoiseach when he abolished Fóir Teoranta was that the Examiner provisions of the Companies Act — which were not even enacted at the time — would provide an alternative mechanism to ensure that ailing companies could be treated out of difficulty. The courts would protect the company from their creditors and the Examiner, after a preliminary examination, would have the protection of the courts while he drew up a scheme of arrangement for creditors and commenced to trade the company out of difficulty. Very briefly, that was the intention of the Examiner sections. This was fine in theory but, after the initial success of the Examiner provisions in coping with the Goodman debacle, serious doubts have recently emerged about the efficacy of the Examiner provisions as a rescue mechanism.
The difficulties in the provisions were pointed out when the Bill was going through the Dáil by the Leader of Fine Gael, Deputy John Bruton and by Deputy Seán Barrett. There are a number of problems but the key problem in the context of what I am saying is that if an Examiner fails to trade a company out of difficulty and the company are subsequently liquidated, expenses incurred by the Examiner have first call on the company's assets. Consequently, banks who provide credit to an Examiner are moving themselves to a lower preference category in respect of any debts due to them prior to the introduction of the Examiner. This brings me to the second part of my proposal, Examiners appointed by the courts must have access to independent funds. A re-established Fóir Teortanta is the best vehicle for the provision of such funds; there would be no risk to Fóir Teoranta or the State as, under the Companies Act, expenses incurred by the Examiner would have first preference on the company's assets. It would also ensure that Fóir Teortanta would, as in the case of consultants, be asked to give a second opinion on the viability of the company in question which could strengthen the Examiner provisions and at least a bank could decide whether the Examiner's report was worthy of investment and if a business could be traded out of difficulty.
Many commentators believe that the Companies Act needs to be amended to meet the growing discontent, especially from creditors who operate under the Examiner's provisions. This is probably for another day and another debate but I should like to draw the Minister's attention to an article in theSunday Business Post of 29 March 1992 where Mr. Michael Ford examined the Examiner sections of the Companies Act and referred to the difficulties involved. He said:
One of the difficulties is the ease of appointing an examiner. Once there is some prospect of saving the company, albeit a slim one, the courts tends to appoint an examiner. A case could be made for a higher burden of proof to be overcome. However, if it was required that there should be a stronger likelihood of a successful outcome, it is questionable whether the usual court procedures are the appropriate way to deal with that question.
He went on to talk about the veto on re-possession and said that security cannot be enforced on re-possessed goods or forms of execution put into effect without the Examiner's consent. He also mentioned the problems of a debtor in possession, the automatic progress to a second stage and that, after 21 days, when the Examiner comes back to court it seems that he inevitably progresses to trading the company out of difficulty even though it might not be justified. He also talked about the Revenue's preferential debt and the problems of secured creditors, with which I have dealt already. He mentioned the Examiner's expenses, the way they are treated and funding the expenses. The article is well worth reading to appreciate the latest thinking in regard to the various gaps in the law in relation to companies. Certainly there is merit in the recommendation that the Minister for Industry and Commerce should look again at the recently passed Companies Act; in particular, he should look at the provisions which were introduced as a separate Bill in August, 1990 in response to the Goodman crisis.
The Companies Act has a very long history; as a matter of fact it was the last Bill I published when I was Minister for Industry and Commerce. The Dáil had gone into recess and it was introduced in the Seanad. The late Frank Cluskey and Deputy John Bruton were involved in putting it together; it was very complex legislation. It was on my desk for one year and was published just before we went out of Government. It was four years later before it became law having been thoroughly scrutinised by a special committee of this House.
Curiously, the Examiner provisions which were lifted out of the main Companies Bill and introduced here as a separate Bill in response to the Goodman crisis did not receive much scrutiny, which is obvious from the debates at the time. While people on our side of the House pointed out certain difficulties there are major gaps in that law which are now emerging in practice. We all know of the difficulties the Examiner faced in relation to UMP. There were also difficulties in relation to a north Dublin company. Was it called Portacabin?
It was called Atlantic Magnetics.
(Limerick East): At any rate, the Examiner proved inadequate, taking all the circumstances into account, because the appointment did not lead to a rescue. Curiously, in the Goodman case, the Examiner succeeded in bringing about a situation where the Goodman group of companies are still trading and seem to be doing so out of difficulty. It is now very questionable whether the hopes which the then Minister for Finance, Deputy Albert Reynolds, pinned on the Examiner provisions in the Companies Act as a substitute mechanism for rescuing companies, which made Fóir Teoranta redundant and subject to abolition, were realised.
I call for the re-introduction of Fóir Teoranta because there is a gap in the armoury of weapons which the State has in rescuing companies and in protecting jobs. When they are re-established, they should be given the additional mandate of providing working capital for Examiners appointed by the courts under the terms of the Companies Act.
The escalating crisis on the jobs front and the closure of businesses has focused our minds on the necessity of re-establishing Fóir Teoranta. This motion is timely and opportune and recent events within United Meat Packers, which have focused all our attention on the economic devastation on communities in Sligo, Ballyhaunis, Ballaghaderreen and — near my own constituency — Charleville, has shown the limitations of the protection afforded by the appointment of the Examiner.
It was orginally envisaged that when the Examiner approved cheques they would be honoured. We are all aware that the farming organisations are, rightly, extremely agitated because of farmers not being paid. This also applies to the hauliers who purchased expensive trucks and who have been left high and dry with hire purchase commitments. I hope after the High Court sitting that sanity will prevail, that priority status will be authorised for the farmers and hauliers and that they will be paid for liabilities incurred for the duration of the Examiner. It is imperative also that the Government honour their commitments to the workers and that the plants are opened as soon as possible. Although tenders for the plants have to be submitted before 10 April 1992, it is obvious to everyone that bidders will not submit their bids while the company have outstanding debts to farmers. Therefore, it is important that this matter be resolved and it is now recognised that the legislation to appoint the Examiner is flawed.
When the Minister for Agriculture and Food was asked by Deputy Deasy, the Fine Gael spokesperson for Agriculture and Food, if the farmers would be paid, I recall that he assured him that they would. When pressed further about treating them as preferential creditors, he would not give such a commitment. It is now time for the Government spokespersons to stop talking, that the debts be paid and the jobs be restored.
It is hard to accept that Goodman Ltd. are seriously considering bidding for these plants. It should be firmly pointed out to Mr. Goodman, even at this stage, that under the monopolies legislation this would not be tolerated. We already know of the financial failure of this enterprise and the large rescue package put together by the banks. Already, the Goodman organisation are having difficulty meeting their commitments under the financial package as their profits are not what they were in the past. One does not need to be an economic wizard to know the reasons for that. It would be dangerous for the industry and would not be beneficial for the farmers if Goodman were successful.
It is indeed ironic that when Fóir Teoranta were being dissolved in May 1990 the present Taoiseach, who was the then Minister for Finance, piloted their dissolution. Fóir Teoranta were set up in 1972 with the purpose of helping existing potentially viable industries when the financial institutions would not support them when they encountered financial difficulties. Many companies trading today, including the Taoiseach's company, C & D Petfoods Ltd. are still trading because of Fóir Teoranta's assistance. The then Minister for Finance, Deputy Albert Reynolds, announced in February 1989 that Fóir Teoranta were being wound up because the Companies Bill provided for the appointment of an Examiner by the courts in order to protect a potentially viable company from going into immediate liquidation. I have already elaborated on the fact that this has not worked out, as the recent UMP saga proves.
When the Bill to abolish Fóir Teoranta was going through the Dáil, the Fine Gael spokesperson on Finance, Deputy Noonan, stated that the Minister should not proceed as it was "ill-conceived and untimely". There is a need for Fóir Teoranta now more than ever because of the jobs crisis which bedevils our country. Many companies in the high tech area may get into financial difficulties in their early years. Their best asset is the brain power of their staff. Fóir Teoranta provided experienced personnel who could be most helpful during a growth phase. There is a need for a rescue agency to assist empires that run into difficulties and emergencies when their viability is threatened. It is essential that we try to preserve jobs when we run into extreme difficulties. As we are aware, the banks and financial institutions are ultra cautious when giving loans to industry and are not in favour of providing risk capital.
As we are aware from past experience, banks are not prepared to facilitate companies that may be experiencing short term difficulties. There is a need for a body such as Fóir Teoranta and never was it more warranted than in the present jobs crisis. There is an urgent necessity to create jobs. Indeed, there are many existing worthwhile jobs which would not now exist except for the intervention of Fóir Teoranta.
Since the dissolution of Fóir Teoranta no financial institutions have been involved in helping companies. For that reason it is essential to re-establish Fóir Teoranta. This would help to provide an injection of funds to companies to help them get over short term difficulties. These difficulties can often arise due to an increase in interest rates, increased raw material costs and other emergencies that may crop up from time to time.
Our interest rates remain stubbornly high and this places a tremendous burden on industry. I call on the Minister to support this motion and restore Fóir Teoranta.
In my view, the Companies (Amendment) Act, 1990 is flawed. I would not sell any of my cattle to a meat factory when an Examiner is in control and I certainly will never advise any other farmers to do so again after what has happened at UMP.
The measures which were passed in Dáil Éireann as part of the Companies (Amendment) Act do not translate into the type of protection which was envisaged at the time. I have to admit that I believed that if the issued cheques had the protection of the Examiner, all would be well. The collapse of UMP illustrates all that is wrong with the examinership. Several hundred farmers, many of them small farmers depending entirely on the sale of their few cattle, believed what they were told: that the cheques were safe when issued by the Examiner. However, long after the demise of the Examiner and the installation of the Receiver and the High Court case today, the farmers still have not received one single penny for their cattle. I understand that Mr. Justice Murphy said that the law did not enable him to give priority to people who supplied livestock. They are the very words I heard from the court today.
Who is supposed to fund the Examiner? That is the big question. Were the funds to come from moneys available at UMP, from the receipts for cattle sold abroad or from intervention? None of these scenarios is a cast-iron guarantee of payment, for a variety of reasons. I wonder if the money was supposed to come from a deal done with the banks on working capital, as I think this was the most likely source of funding. One of the major factors involved in UMP being in trouble was that the major French bank involved expressed the view that the Irish banks had too little exposure to the debt and that they were vulnerable. After the Examiner had made the deal and gave the guarantees — I was in Ballyhaunis the night he announced that all livestock would be paid for — the banks for their own reasons sought to appoint a receiver. The Examiner now has egg on his face and the farmers have rubber in their pockets.
I believe there must be some type of State guaranteed funding to back up all the cheques issued by the Examiner. Commentators will point out that the Examiner was successful in the case of Goodman International. However, that was an entirely different story. Up to 25 banks worldwide were involved with the Goodman group and, let us be honest, Mr. Larry Goodman may as well have been a member of your Cabinet, Deputy Ahern, such was his influence.
He could command the junior Minister to give him a letter destined for the Iraqi authorities before the Department had time to check the spellings or the grammar.
The Deputy is entering into an area which may well besub judice.
I do not wish to get into that area.
I thought the debate would range around one particular company.
While I bow to your ruling, A Cheann Comhairle, I must confess that as I thought this Bill was brought before us specifically to help Goodman International I should refer to them.
Let us not forget thesub judice aspect of the matter.
I will bow to your ruling, Sir, but suffice it to say that Sher-Rafique of UMP had no such influence and in my view he has paid the penalty as a result. Nobody in the west wants the Goodman organisation to have anything to do with the UMP factories in the west. Farmers and small creditors must be paid by Friday of this week irrespective of who takes over the factories. We are led to believe a number of people are involved.
I assure the House that farmers will not deliver one animal no matter what the guarantees, or by whom they are given, until everybody involved in the supply of stock to those factories has been paid. That is reasonable and no self respecting receiver, examiner or Government could expect farmers to lose twice. Tonight it appears that something of the order of £7 million has been made available but for some strange reason the receiver could not give a categoric assurance as to when farmers and small creditors will be paid. I speak for thousands of people affected in the west when I say that I do not want to hear in the morning that the banks got their few million pounds first. I assume that is not possible but, bearing in mind the way our region has been left on its own, anything is possible.
People are appalled at the shenanigans of the Government, the banks, the examiner and the receiver on the UMP issue. Everybody seemed to have an answer when a television camera was switched on them; everything seemed to be rosy. Up to today, many weeks after cattle and sheep were delivered to the factories, not a single penny has been paid.
Due to the demise of Fóir Teoranta the Government had no direct responsibility to try to help a firm like UMP. That is the major problem. It appeared to me they had great sympathy and compassion but they were not in a position to rescue UMP, irrespective of the evaluation of the future of that firm. That is why I see a huge problem with the Examiner. I have no doubt UMP could have been saved had there been an early warning system which would have identified the problem areas earlier; 650 jobs could have been saved; valuable export markets protected; competition for cattle and sheep maintained and a valuable indigenous industry left intact.
The UMP debacle reminds me that what is everybody's business is nobody's business; that is the only way one can explain the hands off attitude we have had for the past two months. An Examiner without guaranteed funding and under the influence of the banks — which undoubtedly he had to be because that is the only place he could get his working capital — could never deliver the goods.
The Fine Gael motion is sensible and, in my view, addresses the problems that have arisen. My colleague, Deputy Noonan, the Fine Gael spokesman on Finance, on several occasions complained about the abolition of Fóir Teoranta. He, in fact, published the Companies Bill, a very complex document. I understand the reason it took a long time to complete but I am not sure it should have taken all those years. Suddenly, the section dealing with the Examiner was lifted. That section never got the attention it should have. The reason was an urgent matter in August 1990. At that time many people said it might work; I am not sure it worked for the company concerned. As Deputy Noonan said, that company continuing to trade as such have done something which the UMP enterprise have not been able to do.
Some people see the involvement of the Statevis-à-vis Fóir Teoranta, in any guise, as promoting the idea of being the keeper of lame ducks. I can point to a number of firms, during my time in politics, that progressed following the involvement of Fóir Teoranta; I know some that did not succeed.
For a company such as UMP we had guaranteed raw materials, thousands of cattle and sheep, the best in the country; the expertise in the factories in Ballyhaunis, Ballaghaderreen and other factories and no shortage of export orders. That firm trebled their direct sales to the supermarkets of Europe in the past three or four years. Like other companies, they had to depend, to a certain degree, on intervention but they were trying to trade away from intervention. That is what the Minister for Agriculture and Food, the Taoiseach and everybody is talking about. They encountered a financial problem and talked about a sum of £50 million. Should we try to equate the UMP turnover of £50 million with the £550 million turnover of Goodman? I am not sure if the debt ratio was the same.
I heard in financial circles that on the day UMP collapsed they were much further away from bankruptcy than were the Goodman Group in their day. If all that is correct I would have thought that, even if one or two bank groups got nervous — perhaps with good reason — a project evaluation would show that in two to five years time this company could have been saved. They operated for 17 years, and nobody could raise a finger to them but suddenly the firm disintegrated.
Had the Examiner the necessary legislative power the day he sat down to make a deal — he had to bring in a number of banking groups, commercial entities who protect themselves — and had there been a State rescue agency, modelled on Fóir Teoranta, combined with the work of the Industrial Development Authority, there would have been a different outcome. For a very small financial input by the State combined with State control which the Minister would have had because of the investment of taxpayers' money, there would have been a different conclusion to the case of the UMP group. That is why the Fine Gael Party believe this particular legislation is incomplete. A type of Fóir Teoranta must work with the receiver; in other words the emperor would not be without clothes.
I would be grateful if the Deputy would now conclude his remarks.
I sincerely hope the Minister will take this matter seriously as I can assure him that the next time an examiner gives a guarantee in relation to funding, particularly to the agricultural community, he will be laughed at and rightly so.
I move amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:—
"endorses the Government's overall economic policies as the best means of ensuring the creation and retention of long term sustainable jobs in the economy."
At the outset I should say to the Fine Gael spokesperson on Finance, Deputy Noonan, and to Deputies Finucane and Connaughton that I have listened carefully to the points they have made and will cover a number of aspects of the motion which deals with An Fóir Teoranta and unemployment, while some of my colleagues will deal with the companies Act, 1990. Indeed, most of the points made by the Deputies opposite relate to that Act, with particular reference to what happened in the House in August 1990 and the ongoing difficulties of UMP. Having been involved in the various discussions on the financial aspects of that company I understand the Deputies' arguments fully and can assure them that I will deal with the points which concern the Department of Finance and will bring the points which concern the Department of Industry and Commerce to the attention of my colleagues.
I would like, first, to devote a few thoughts on the performance of the economy over the recent past. Despite the economic downturn at home and abroad last year, Ireland's economic performance had many positive features. GDP growth at about 2 per cent was only slightly less than envisaged in the 1991 budget. Growth was of course much lower than in 1989 and 1990 but it was nonetheless creditable in the context of the recessionary conditions in some of our trading partners. Our performance compares very favourably, for example, with the UK where the volume of GDP fell by 2½ per cent in 1991. Our industrial exports rose by over 6½ per cent, even though our export markets expanded by only 2 per cent.
At home, we saw a further general improvement in real incomes, but weaker confidence internationally and continuing high real interest rates saw much of this reflected in savings rather than spending. Thus, there was only a modest rise in consumer spending and investment fell in real terms following the very strong growth of the previous two years.
The corrective action taken in July last year kept Exchequer borrowing within reasonable bounds, and another important step towards reaching our medium-term fiscal targets was thereby taken. Most significant of all, despite all the difficulties, non-agricultural employment continued to grow. Average employment in larger industrial establishments was up by 1,100 in the first three quarters of 1991 on the corresponding period in 1990. Average employment in banking, insurance and building societies was up by 900 in the same period. Tax returns and employment levy receipts also suggest that employment was still holding up at the end of the year. Thus, the steep rise in unemployment last year reflected the return of many former emigrants and the cessation of emigration. It was not caused by falling employment at home.
Looking to the future, the international economic outlook for 1992 remains uncertain. Last December, both the OECD and the EC Commission forecast a slow and modest international recovery with growth picking up to 2 per cent or more compared with about 1 per cent last year. While these predictions may now be a little optimistic, I think we can still expect some improvement in our export markets. The UK Treasury now forecast a 4 per cent rise in the volume of UK imports this year compared with a decline of 3 per cent last year. Our agricultural exports should also benefit from better market conditions in the Middle East.
At home, nominal after-tax incomes should rise by about 6 per cent this year. Assuming broadly unchanged savings behaviour, consumer spending and investment should show a modest improvement in real terms.
Although economic growth this year may not be much faster than last year, its composition should be more balanced as between domestic demand and exports and should be more employment-intensive. However, with unemployment in the UK likely to go on rising for the foreseeable future, and with only modest growth on the Continent and in the US, job opportunities abroad will be scarce. Given the projected rise in our labour force, average unemployment here is, unfortunately, likely to rise significantly again this year.
The Government have taken a number of steps to combat rising unemployment. For example, the EC Commission has agreed to provide substantial funds for a new employment subsidy scheme and for in-company training. I warmly welcome the fact that these schemes are receiving the full support of the Federation of Irish Employers and other employer organisations as well as the Irish Congress of Trade Unions. I strongly urge all employers to participate as fully as possible in these schemes.
The area partnerships envisaged in theProgramme for Economic and Social Progress to combat long term unemployment through training, education and enterprise development are now in place in 12 pilot areas. The public agencies concerned have made the necessary arrangements.
The recent report of the Industrial Policy Review Group focuses on the need for a wider strategy in addressing industrial policy, e.g., by ensuring that various Government areas of responsibility such as education, training, taxation, transport, energy, infrastructural services etc., which have a contribution to make to industrial policy, are brought together in a more integrated and coherent way in the context of industrial policy, than in the past. The report states that it is axiomatic that there should be no overall increase in expenditure/State borrowing as a result of its recommendations.
The report represents a significant input to our approach to industrial policy and to how that policy can contribute to increasing employment and living standards in this country. It contains a large number of recommendations over a wide range of policy areas which are under active consideration by the Ministers and Departments responsible. A task force under the chairmanship of Dr. Patrick Moriarty has been established by the Government to follow up on the implementation of the recommendations in the report. The task force will be vigorously pursuing any proposals likely to have a positive impact on employment.
The task force will report to a committee of Ministers, headed by the Taoiseach and including the other Ministers concerned. That committee will also consider recommendations of the task force on employment. The direct link with Government will ensure the highest priority for the activities of both task forces.
While Government sets the policy environment, they cannot play the primary role in employment creation. The lead here must be played by the private sector. The private sector has shown in the past that, given the right conditions, it can create a significant number of new jobs. For example, between April 1987 and April 1991, net non-agricultural employment in the private sector rose by over 70,000. Deputy Noonan acknowledged that when the policies pursued by the Government led to economic growth there was a sustained increase in employment.
The labour force increase we will have in the next few years means that even this creditable performance is not enough. It must be bettered if the rise in unemployment is to be halted. The key to greater employment creation in the private sector is stronger investment and expansion. In today's conditions, maintaining competitiveness is not enough. It must be improved. The recent adjustment in cost increases achieved in the UK shows we have no cause for complacency. The days of easy competitiveness gains in the UK market are over.
The message is clear. Even in international recession, better competitiveness allowed us make worthwhile progress — increasing our share even of stagnant overseas markets. Sound fundamentals stood up well in hard times. Equally, they can be the springboard for more rapid growth as conditions improve, but a daunting employment task lies before us — to earn the extra jobs we need through our own efforts: soundly based jobs which flow from selling goods and services at home and abroad, not from borrowed money. This task will be with us for several years to come but is one worthy of the finest talents which this nation can command.
We cannot achieve sound results by going back to the days when the State actively intervened in the economy. It is for all these reasons that I tabled an amendment to the motion asking this House to endorse the Government's overall economic policies as the best means of ensuring the creation and retention of long term sustainable jobs in the economy. I will now remind the House of the background to the decision to wind up the activities of Fóir Teoranta and the reasons for its abolition. This is part of the Fine Gael motion before the House tonight, the other part being primarily linked to the Companies Act and related issues, such as the involvement of the Department and the working of that legislation since its passage through this House in 1990.
Deputies will recall that the Government announced the wind-up of the activities of Fóir Teoranta in February 1989, from which date it closed for new business, and the company was dissolved under the Fóir Teoranta (Dissolution) Act, 1990, on 2 April 1991.
Fóir Teoranta had been established in March 1972 under the Companies Act, 1963, as provided for in section 2 of the Fóir Teoranta Act, 1972. They were designed to fill a gap which was perceived in the range of State services available to manufacturing industry at the time. Their purpose was to provide an orderly procedure for restructuring ailing, but potentially viable, industrial concerns which encountered financial difficulties and which were unable to obtain their financial requirements from commercial sources.
Fóir Teoranta were established in a period of structural change in Irish industry prior to EC membership in 1973 and the removal of many trade barriers. The progression to the open economy which we now have was taking place rapidly, and the Government at the time took the view that transitional measures aimed at helping Irish industry to adapt to the new, more competitive conditions would be reasonable. Fóir Teoranta's busiest period of activity was during the recessionary period of the early 1980s, when they provided very substantial assistance to Irish industry, mainly in the traditional sectors such as textiles and clothing, footwear and leather, furniture, etc. Unfortunately, despite Fóir Teoranta's efforts, many of their client firms in these sectors did not survive. It would be difficult to assert that Fóir Teoranta had anything but a marginal effect on the overall performance of these sectors one way or the other over the period of their operations. On the positive side it must be said that some firms, in various sectors, which were assisted by Fóir Teoranta are trading successfully today.
Ireland joined the European Community in 1973, shortly after Fóir Teoranta were established. Since then, there have been wide fluctuations in the performance of the economy. In part, fast growth periods were stimulated by increased Government expenditure and borrowing. These borrowing eventually became unsustainable. TheProgramme for National Recovery had as one of its central aims the improvement of the environment for industry so that industry would be in a position to stand on its own feet and compete in the world marketplace. The aim was to reduce excessive Government expenditure, thereby reducing Government borrowing and lessening the upward pressures on interest rates and inflation. As Deputies, know, very considerable progress was achieved under that programme.
The level of activity in Fóir Teoranta had tapered off considerably in the years prior to their closure, reflecting the improved outlook for industry at the time, from a peak of about £23 million in disbursements in 1983 to about £7 million in 1988. The number of applications received, cases approved, and the average size of cases approved had also substantially reduced.
In line with the fall-off in demand for their services and the virtual disappearance of large cases, together with buoyant, own resources, Fóir Teoranta's requirement for Exchequer funding also declined. From 1987 until their dissolution, they financed their operations from ongoing income from their investments by way of repayments from clients, including a considerable element of prepayments, and share realisations. However, it was not until near their closure, when no new business was being transacted, that Fóir Teoranta were in a position to repay some of the Exchequer moneys advanced to them. Fóir Teoranta were never really in a position to act on a commercial basis by remunerating any part of the Exchequer moneys advanced to them.
Since Fóir Teoranta were a lender of last resort, it is perhaps not all that surprising that a high degree of failure took place among their client firms. However, the failure rate experienced by Fóir Teoranta involved very considerable cost to the Exchequer. The failure rate may be measured by the fact that some £75 million of the Exchequer advances of £87.5 million outstanding at the time of their wind-up had, in effect, already been written-off by the company as irrecoverable. These advances have since been written off by the Exchequer.
The level of write-off in Fóir Teoranta reflects the fact that many firms assisted failed, despite the assistance given by Fóir Teoranta. Many of those firms left it far too late to go to Fóir Teoranta for assistance in the first instance. Nevertheless, where assistance was given, in many cases the damage had already been done and the firms eventually went to the wall anyway. While there may have been some economic benefit in keeping jobs in existence longer rather than being lost at the outset, the prospect for long term sustainable employment is better if firms are transferred to new owners quickly in the receivership or liquidation process. Keeping firms in existence, with Fóir Teoranta assistance, but with existing high levels of indebtedness and generally poor management, as well as other weaknesses, was likely to result in a more artificial intervention unlikely to generate long term benefits. Frequently, it transpired that Fóir Teoranta's money eventually ended up in meeting bank liabilities, and the banks were often not all that accommodating in agreeing to financial restructuring packages.
It might be said that the primary purpose of Fóir Teoranta was to secure the continuance of manufacturing firms which would in turn secure long term sustainable employment in those firms. Indeed, it was a condition of obtaining Fóir Teoranta's assistance that there had to be reasonable prospects for long term commercial viability of the firms concerned. Yet, it is a feature of Ireland's employment record in the manufacturing sector that between 1973, soon after Fóir Teoranta were established, and the end of 1988, close to the time of the announcement of their wind-up, manufacturing employment was in almost continuous decline, from 216,700 in 1973 to 182,900 in 1988.
The years following 1988 saw continuous growth in manufacturing employment, back up to an estimated 194,000 in 1991. While a body such as Fóir Teoranta could hardly have been expected to have a substantial impact on the downward trend in manufacturing employment during the years of their existence, it would nevertheless be difficult to argue that Fóir Teoranta had a positive impact on overall manufacturing employment over that period, though of course the position in some individual firms was ameliorated.
Average manufacturing industrial employment declined by an annual 1.8 per cent over the period 1981-88. In the period 1988 to 1991, that employment trend was reversed, and employment in manufacturing industry increased by an annual average of 1.7 per cent. The employment growth of recent years is the result of the prudent fiscal and monetary policies pursued since 1987, policies which gave low inflation and led to a reduction in the differential between our key three month interest rate and that of Germany from 9 percentage points in March 1987 to about one percentage point now. These policies were, of course, complemented by the moderate wage agreement in theProgramme for National Recovery which helped to improve our competitiveness while at the same time reductions in income taxes gave employees increases in real take home pay.
It is pursuing policies such as these that have turned overall employment around. Fóir Teoranta, operating at the level of the individual firm, could never aspire to achieve such results. Indeed, they could even act as a hindrance in that non-viable firms could be kept in artificial existence upsetting natural competitive forces which might otherwise throw up a new genuinely viable firm to replace the non-viable one. I can see no prospect if Fóir Teoranta were re-established, as Deputy Noonan's motion proposes, that they would make a significant contribution to solving our employment problem.
Employment is at the centre of this Government's agenda. We are intent on developing proper long term sustainable measures which will keep employment on the growth path it has been on over recent years. The recent report of the Industrial Policy Review Group set out an agenda in this regard which is being followed up vigorously by the Government. I want to reject any suggestions that it is not. It is being followed up at a number of levels with involvement at the highest levels of officials from the State area, outside expertise and outside specialists who were involved when reports were necessary. Deputies will note, however, that nowhere in the report is there any suggestion of State interventions of the type operated by Fóir Teoranta. Indeed, the whole thrust of the report is towards broader macro-policies to be followed by Government, and not just in the economic area. Tinkering with the economy at the firm level is not the type of policy favoured by that group, whose report has been widely welcomed across employers' organisations, trade unions and political parties.
The Government's decision that Fóir Teoranta should be wound up was based mainly on the following factors: (i) the low level of demand for Fóir Teoranta's services over the years previous to the decision being taken; (ii) the very much changed industrial environment as compared with when Fóir Teoranta were established; (iii) the provisions that subsequently became the Companies (Amendment) Act, 1990, for the appointment by the Courts of an Examiner in order to help a potentially viable company to avoid going into immediate liquidation; and (iv) the need to prepare Irish industry to be ready to meet the challenges of the more competitive regime which will apply when the Internal Market is fully in place after 1992.
The decline in demand for Fóir Teoranta's services was due to a number of factors; the new climate of confidence in the economy and the favourable environment for industry were obviously major influencing factors. Another important consideration was the fact that finance for industry had become available on a much wider scale than ever before from private sector individual and institutional sources. Given also the improvement in the economy generally, it was inevitable that demand for Fóir Teoranta services would be considerably lessened and the need for such an organisation diminished. The industrial environment had changed as well, with industry itself, through the CII, stating that it would prefer a better overall economic environment, rather than grants at the firm level. The pressures on State aids from Europe was another aspect, and indeed, it may well be that the European Commission would not permit a body such as Fóir Teoranta to exist in the post-1992 environment. The Examinership provisions of the Companies (Amendment) Act, 1990, were seen as removing the need for State assistance to individual viable manufacturing companies in temporary financial difficulty. Such assistance could in future be provided by the market.
Management assistance was provided by Fóir Teoranta in some cases, but the IDA can, in relation to medium and large Irish industry, provide management with guidance and support in a number of ways: through the company development process, deficiencies can be identified which can allow restructuring to take place at an early stage; through their extensive network of contacts, both nationally and internationally, the IDA can assist companies to bring in new investors or partner investors; and where the company management team is perceived to be too narrowly based, it may be bolstered through use of the existing range of incentives for management development.
In relation to small businesses, a number of courses of action are available to the IDA with companies where difficulties may be anticipated: through the Mentor Programme, the IDA can assist companies by introduction to an experienced business person who would assist the company in identifying the problem areas in the business and advise on appropriate remedial action; and the involvement of the Mentor can be complemented by use of management development grants to address the specific problems identified.
The IDA may become involved in restructuring where a company have closed down or goes into receivership and the assets have been taken over by a new investor with the objective of re-establishing the business on a commercially viable basis. In this situation, the IDA may have a role to assist the new investor to put together a commercially viable operation using the assets, skills and expertise already in existence.
To sum up, as regards Fóir Teoranta, the Government took their decision in relation to Fóir Teoranta in the light of prevailing circumstances. The Government's view was and still is that with the other sources of finance available for investment in industry, and with the economy in better condition, there would be little if any adverse impact on employment as a result of the closure of Fóir Teoranta. That is still the Government's view, as borne out by subsequent employment statistics. As regards the view that a need has now arisen for the State to be actively involved once more in industrial rescue, it has to be made clear that the days of feather-bedding Irish industry are over. That is the whole thrust and emphasis contained in the Culliton report on Industrial Policy. The days are gone of an interventionist approach at taxpayers' expense to bail out the failures of individual private sector companies. The IDA are still there to help with viable manufacturing jobs, through other means. Such failures cannot be rectified by using Exchequer moneys, thereby perhaps giving some firms where such failures occur, an unfair competitive advantage over others in the same market.
Irish industry must be able to compete in the marketplace and, in an intensive effort to ensure that that will be the case in the post-1992 situation, the Government are devoting greater resources to industry in the context of the EC Structural Funds in order to assist employment and companies to expand into international markets. Expenditure supported by the Structural Funds will be over £1 billion over the five-year period to 1993. There is therefore no lessening in the level of resources being devoted to industry. It is the purpose for which those resources are used which is important, and we will be ensuring that the funds involved are put to best effect in order to secure good solid progress in attaining the employment targets set out in theProgramme for Economic and Social Progress, regardless of the hostile international climate.
I might add that the unavailability of Fóir Teoranta's services over the past few years has not caused major dislocations in Irish industry. No industry association or trade union has made any representations to me that a need exists for the re-establishment of Fóir Teoranta. Further, as already mentioned, the IDA have a role, subject to certain criteria, in relation to giving financial assistance in the case of companies undergoing restructuring. I cannot therefore, see, the need for the re-establishment of Fóir Teoranta in respect of their former role as provider of State finance in company rescue cases, or as a provider of working capital to examiners. As I have outlined, the IDA can do that with the £1 billion Structural Funds.
I will now go on to speak about the particular context in which Deputy Noonan's motion appears to be set. That motion speaks of the difficulties being experienced by examiners appointed under the terms of the Companies Act, 1990. It calls also for the extension of the powers of a re-established Fóir Teoranta to provide examiners with the working capital they need to carry out their functions so as to avoid unnecessary liquidation and consequent loss of jobs. However, I am not aware of major difficulties being experienced by examiners in obtaining working capital during the examinership period. Nor am I convinced that any company has gone into unnecessary liquidation as a result solely of the examiner being unable to obtain working capital. Despite examinership procedure in cases where firms have subsequently gone into liquidation the reasons have been far more deep-rooted than a lack of working capital.
I cannot say that the examiner provisions of the Companies (Amendment) Act, 1990 require the intervention of a State body such as Fóir Teoranta. Since the expenses of the examiner are a first charge on the assets of the company concerned, I do not see the need for any such State intervention. Nor am I aware of a problem arising in this regard, except perhaps in the recent United Meat Packers Group case with which we are dealing. Attempts are being made to make some progress in overcoming the difficulties in this case. The Minister for Agriculture and Food is constrained by legislation, but he is doing everything he can in this case.
Therefore, I do not believe that Fóir Teoranta's re-establishment to provide working capital for examiners is necessary, as they would be curtailed in the same way. Indeed, the danger is that Fóir Teoranta's role as envisaged under Deputy Noonan's motion could quickly become that of an alternative banker enabling the banks and other creditors to avoid taking on further exposure during the examinership period or longer. It is not difficult to imagine that if Fóir Teoranta were in existence, they would be regarded as an easy source of financing in examinership cases and commercial criteria could be lost sight of. There is no need for the State to engage in any such non-commercial interventions, particularly when there is already in existence an adequate legal frame work to deal with the problem. Should problems be identified in the legislation, then I am sure that my colleague, Deputy Des O'Malley, Minister for Industry and Commerce, would be happy to look at the examinership provisions of the companies legislation.
With regard to the situation which arose with the United Meat Packers Group, that group were confronted with a very grave financial crisis when their bankers were unwilling to advance further funds. The problem here was not really one of lack of working capital but a lack of confidence in the group by their bankers. In these circumstances, the only realistic option available was that these plants should be sold to reputable buyers without delay and the business, which is fundamentally sound, disposed of. The sale of the plants is under way at present by the receiver who has reported a high degree of interest in the various factories. He believes that all plants can be disposed of, and the Industrial Development Authority are assisting as far as possible with both the receiver and with potential buyers.
There is no problem about the banks providing finance on a commercial basis to enable these plants to get up and running as quickly as possible. In fact the banks have consistently said that they are ready to assist in providing necessary finance for potential purchasers.
The Government are aware of the difficulties experienced by small creditors of the Examiner in the UMP case. However, the problem is one of timing, not a question of non-payment. I understand that this issue was before the courts today, and I hope there will be a satisfactory outcome very shortly.
This Government are committed to sound economic policies which offer the best prospect of creating and sustaining long term viable jobs in the economy. As the Industrial Policy Review Group report states, there are no quick fixes when it comes to tackling unemployment. Government can, however, make a substantial contribution in this task through fostering the right economic conditions and by adopting the type of broader strategy towards industrial policy recommended by the report in areas such as education, training, infrastructure, transport and energy. This Government have curtailed the growth in Government spending, reduced overall State borrowing as a percentage of GNP, got interest rates down almost to German levels, tackled inflation, contributed towards improved wage competitiveness and are seeking to reduce the overall burden of taxation through reductions in personal income taxes and the removal of many of the plethora of allowances and tax shelters. We are serious in our determination to bring about major improvements in our economic fundamentals with a view to bringing about increased long term sustainable employment. The resurrection of a body like Fóir Teoranta, for which there is no demand from industry, forms no part of that strategy. Such a move — turning back the clock — would not be in the best interests of the taxpayers of this country.
Given the full circumstances I have outlined, I strongly commend the amended motion to this House.
I may share the balance of my time tomorrow evening with one of my colleagues. This is a timely motion in many ways. However, it is ironic that the motion comes from the Fine Gael side of the House. For many years the Fine Gael Party supported the ideology which is opposed to the involvement of the State in any way in building, planning, creating wealth or rescuing failed enterprises. The philosophy of Fine Gael in relation to these areas can be summed up in the phrases "the operation of free market forces" or "the survival of the fittest". These phrases are used frequently by this coalition Government of Fianna Fáil and the Progressive Democrats. This philosophy led those parties, and Fine Gael in particular, to fight a rearguard action against the development of the National Development Corporation, which we insisted was a necessary instrument and tool which could be established. They continually sought to weaken and undermine it.
The Minister has said that Fóir Teoranta had various periods of success from its foundation in 1973. It was actively involved in rescuing what turned out afterwards to be viable operations. I was personally involved in bringing industrialists to the then Minister for Finance to ask him to use the Fóir Teoranta structure to assist various companies which were temporarily in difficulty. The Act allowed for the appointment of Fóir Teoranta directors to the boards of companies as a safeguard for the State involvement. Fóir Teoranta's services were used almost exclusively to assist the high risk mining area and the tanning industry, which has now collapsed, although I hope it may succeed again in the Carrick-on-Suir area. Since the Minister admits that there was a drop in the demand for Exchequer funding and that towards the end of their day Fóir Teoranta were in a position to repay the Exchequer, why was it necessary to abolish them? One can only assume that they were abolished in 1987 by the minority Fianna Fáil Government in order to save money and because Fianna Fáil had become infected with the philosophy of free market economies. They admitted only recently that the free market economy has not always worked. The Minister for Finance has on numerous occasions repeated the view that if the proper environment for industrial development is created jobs will follow. Unfortunately our experience is that the private sector is very slow to create manufacturing jobs, even when market conditions and economic environment are right and the tax regime is to their benefit. It is because of this reluctance on the part of the private sector that the free market philosophy has been proved to be ineffective. The private sector is primarily interested in profits, not in people.
People are important to the creation of wealth and profits. It is imperative that our people have gainful employment and that the State be used as an engine to create that employment within its own resources, with a payback to the State and a saving in the Exchequer funding of social welfare. We must end the trauma of emigration and all the other scourges which follow the loss of jobs in industry. This Government must come to grips with the reality that the free market philosophy has not been successful. The level of unemployment must be embarrassing for this Government as it is for Members of this House. It is so unacceptable that we voted with the Government today to ensure the setting up of an employment committee in the hope that our combined efforts can produce some ideas and some understanding of how jobs can be created. The State should have a role to play in that process.
Following the 1989 election and the formation of this new coalition Government they took the next logical step in fiscal rectitude, in terms of their own philosophy, by abolishing the National Development Corporation. The Fine Gael Party shed some crocodile tears but both decisions fitted in neatly with the prevailing philosophy of Fianna Fáil, Fine Gael and the Progressive Democrats. The net effect of both these changes was that two very valuable mechanisms were removed from the economy. The first, Fóir Teoranta, enabled the State where necessary to step in with an injection of capital and very often with an injection of new management when enterprises got into difficulties. Fóir Teoranta prolonged the life of a great many enterprises and enabled others to put themselves on a permanently sound footing. The other mechanism, the National Development Corporation, enabled the State to inject venture capital into enterprises that were getting off the ground. In the correlation of the private and public sectors in this mixed economy NADCORP was the catalyst. That body during their relatively short life, even with the constraints under which they operated, were directly responsible for the creation of several thousand jobs. Both these bodies were seen by us as useful tools of industrial policy.
It is a matter of regret that Fine Gael have not chosen in this motion to call for the restoration of both Fóir Teoranta and NADCORP. However, to do that would be to admit their mistakes as well as to criticise the Government's mistakes. The reality is that we need venture capital in our economy. We need a source of funding which is clearly based on the notion of risk.
The strength of NADCORP, and indeed of Fóir Teoranta, in their day was that they made investments with the prospect of a realistic return in the medium term rather than in the short term, a policy favoured by most capitalists. In an economy where greed for the quick buck is too often a feature, it is essential that there be agencies that are prepared to take reasonable risks in the interests of job creation, and are prepared to wait for a slower return on their investment. However, very few capitalists want to do this. The State has a responsibility in the overall economic development of the country, particularly in terms of job creation and the benefit that accrues to the economy from that, to, with reasonable risk, wait for a slower return on their investment. That was the whole philosophy behind Fóir Teoranta and the National Development Corporation.
We all know, for example, that there are vast areas of Irish industry which are totally under-developed as a result of a lack of slight risk capital. The food industry is an outstanding example. That industry, particularly the beef industry, is going through a crisis. Forestry is another example of an area of slow return, but it is of major benefit in the long term to the economy and to the country as a whole. It is impossible to develop areas like these if the emphasis is only on a quick return for capital invested. Similarly, it is impossible to develop areas like these if there is not a medium term co-ordinated planned approach, which the Labour Party advocate in their industrial policy.
It would be very interesting to tot up the number of jobs lost since Fóir Teoranta were abolished. The Minister talked about the achievements of this body in the past but he did not quantify what has happened since their abolition. Things have changed drastically for the worse since Fóir Teoranta were abolished two or three years ago. It would be interesting to know the amount of social welfare that has been paid out since the agency were abolished. If people are working they are not dependent on State agencies for social welfare and other subsistence allowances. It would also be interesting to count the number of people who have emigrated since the abolition of Fóir Teoranta. Of course, no one can argue that all those jobs, all that social welfare expenditure and all that emigration could have been prevented if Fóir Teoranta had been saved and allowed to function, even in the restricted way in which they did function but nobody can deny that they would have been able to play a significant role in some of the closures that have taken place in the intervening years.
With so much economic catastrophe at present, with businesses closing down throughout the country, non-one can deny that there is a role for a State agency, properly structured and financed. United Meat Packers, referred to by the Minister, were cited by us in the debate on that debacle as a very good example of a company that could have been saved by Fóir Teoranta. That is the kind of industry where detailed examination could have taken place as a precursor to rescue rather than a precursor to asset stripping, which is possibly going on in these factories throughout the country. I hope that the efforts of the Minister for Agriculture and Food, together with those of the farming organisations, will ensure that the limited powers available to the Minister under present legislation are used for the benefit of suppliers to these factories. If that is done confidence will be restored in the factories and in the success of the beef industry which is a very important part of the food sector. During the crisis in UMP there was no State agency to tide them over, though they had available to them the markets, expert employees and the natural product. That company could have been a success if the State was in a position, through legislation, to assist them by way of an injection of capital.
With every day the bank strike continues the possibility increases that a large number of businesses, particularly small businesses, will need to be rescued when the strike is over, particularly if it is prolonged and if greater efforts are not made to bring the two sides together. The only mechanism that exists under law appears to be the mechanism of examinership. There have been many examples in the recent past of how limited and, at times, questionable that approach has been. It is worth pointing out that in the debate that took place in this House when Fóir Teoranta were being wound up the Labour Party pointed out, as can be checked from the records, that the examinership procedure would be almost the only alternative. At that time NADCORP were still in place. In that debate we said:
Examinerships will not meet the needs of the kind of companies that Fóir Teoranta catered for. What Fóir Teoranta were doing was different. It was much more practical and produced much more immediate results; most notably, it preserved people's jobs and kept the factory wheels turning. We can set up all the court examiner procedures we like, and it may hold up the creditors from suing, but one thing it will not do is provide an injection of one penny of funds.
How true was that prediction. The abolition of Fóir Teoranta, especially when coupled with the later abolition of NADCORP, meant in effect that there was no organisation, company, bank, examiner or any other body in existence to meet the need that arises when a company goes into crisis. With the right kind of handling, advice and subsistence from the State many companies could survive and prosper again. For such companies now there is only the receiver or the liquidator and for the employees of these companies there is nothing but redundancy, unemployment, emigration and eviction, as can be seen on a daily basis in our constituencies.
In an era when we have the highest unemployment in Europe it is a scandal that the machinery which should be available to the State has been deliberately allowed to erode. No responsible businessman would think it sensible to remove the safety mechanisms from the machines on his factory floor, but the Government's abolition of these two agencies is precisely that — the removal of two useful and valuable pieces of equipment from the wealth-creating sector of our economy. That is a tragedy and for that reason the Labour Party will support the motion tabled by Fine Gael.