I propose to take Questions Nos. 17 and 42 together.
The study to which the Deputies refer was undertaken within my Department as part of an ongoing evaluation of the industrial development process. The study examined the grant support paid to, and the job performance of, Irish-owned and foreign-owned industry over the period 1981 to 1990. The study was made available to the members of the Industrial Policy Review Group who drew on its findings and referred specifically to it in their own report — the Culliton report.
The analysis undertaken in the study shows that the net change in employment from end 1980 to end 1990 in firms which were grant-aided by IDA and SFADCo in the 1981-1990 period was about 7,000 jobs. The amount paid in industrial grants to these firms in the 1981-1990 period was £1.6 billion approximately in 1990 prices.
These figures clearly raise questions about the various programmes for industrial promotion which existed in the period. Some of those programmes, such as re-equipment grants for industry, even in cases where employment was being reduced, existed in the earlier part of the eighties but subsequently ceased.
In publishing my Department's Review of Industrial Performance over a year ago I said in the Preface to the Review:
it is clear that a poor correlation exists between State expenditure (direct and tax-related) on industry and net employment creation. State expenditure on industrial incentives is clearly not the determining factor. Net change in manufacturing employment depends on demand conditions and domestic and export markets, on the cost of capital and on the ability and willingness of Irish-based industrial firms to compete effectively on these markets. These factors are in turn partly dependent on the Government's fiscal stance, its taxation policies and on the consensus approach by the social partners to national recovery.
I pointed out that the employment performance of medium/large indigenous industry was particularly disappointing over the past 20 years. I said that:
In the three years of the Review period employment in the sector fell by more than 9,000 despite the input of tens of millions of pounds in State expenditure. The performance of the sector raises serious questions about effectiveness of the instruments used in pursuit of the development of the sector.
I also said that there is a "need to ensure a value for money assessment system, relating expenditure to objectives and performance, is in place for each promotional measure operated by the industrial development bodies".
The study to which the Deputies refer is part of the assessment system to which I then referred and which is being put in place by my Department. Its findings will be fully taken into account in the reform of industrial policy that will follow from the report and recommendations of the Culliton Group which, as I have indicated, had full access to the study report and its findings.
The figure of £4.58 billion, mentioned by Deputy Gilmore, is not contained in the study report. This amount, which was quoted in a recent press article, appears to include, in addition to the cost of grants, an estimate of the cost of tax reliefs for industry. That estimate of tax expenditure appears to relate not only to the manufacturing firms grant-aided in the 1981-1990 period and included in my Department's studies but to the wider industrial sector also.
Neither is the cost per job figure of £228,000, quoted by Deputy Gilmore, contained in the study report. It would be misleading and an oversimplification to derive cost-per-job figures by simply dividing the gross expenditure on grants over a period, such as the eighties, by the net job change over the same period by the firms which got those grants. Such an approach would not, for example, take account of the fact that in the eighties many jobs that had previously been carried out by the direct employees of grant-aided industrial firms were increasingly sub-contracted to external non-manufacturing firms in areas such as maintenance, transportation, distribution and so on. Many of these sub-contracting firms were established by former employees of the grant-aided industrial firms from which they received work. I would also ignore the fact that grant-assisted jobs were created in firms during the years 1981-1990 but not sustained until the end of 1990. Finally, such an approach would also fail to take account of the substantial indirect employment created more widely in the economy as a result of the direct and indirect expenditure by grant-aided industrial firms in purchasing goods and services.
