Vol. 430 No. 8
15 Mr. R. Bruton asked the Minister for Enterprise and Employment the cost per job created in indigenous industry and in foreign industry; and if he will give the basis on which the cost per job is calculated, including the way in which tax relief, training grants and other such reliefs and grants are treated.
I understand from the IDA that the cost per job created and sustained for IDA companies over the period 1986 to 1992 was £10,832 for indigenous firms and £17,986 for foreign firms, including overseas companies in the mid-west for which IDA has responsibility.
These cost per job figures reflect, in constant 1992 prices, the sum of all IDA grant payments over a seven year period, divided by the number of first time jobs created and still in existence at the end of that seven year period.
The IDA defines a first time job as the increase in employment in a company in excess of the peak employment level in the previous five years arising from a specific investment programme agreed with the IDA. For the purpose of the cost per job exercise, sustained first time jobs for 1986-92 are calculated against the peak employment level in companies in the period 1981-85. First time jobs created but lost prior to the end of the seven year period are excluded.
All grants paid by the IDA are included in the calculations including capital, leasing, training, employment, interest subsidies, rent reduction, research and development, technology acquisition, feasibility grants, loan guarantees and equity.
Tax reliefs which are allowed by the State are not incorporated in the calculations. Likewise, tax revenues from the companies are not included.
Does the Minister consider this cost per job represents good value for money or does he still support the Labour Party's manifesto prior to the general election which indicated that industrial policy had failed? Does he consider that a 66 per cent higher grant per job in the foreign industry section than the indigenous industry section is justified and worthwhile? Does he agree with the figures indicated by Culliton that only 40 per cent of the job announcements, which he and other Ministers are so keen to make, survive?
In response to the Deputy's first question, I am informed that on a comparative basis — there are sufficient agencies in Western Europe upon which a comparative basis can be made — the cost per job figure I have quoted is reasonably good value for money taking a reasonable time frame in which to analyse it. I agree with the Labour Party's manifesto that industrial policy has failed. With 300,000 people unemployed one does not need the Labour Party's manifesto to illustrate that fact, but how we respond to it is another matter.
We must examine ways in which investment can be stimulated here and get better value for money than is currently the case and we are examining ways in which that can be done. To that extent, the onward attraction of international investment capital and related job creation is something we will continue to pursue, but not exclusively and not to the detriment of the promotion of indigenous industries.
Why should we pay 66 per cent more for a job in a foreign industry than one in an Irish company?
I do not have the precise explanation as to why that is the case, but I will supply the Deputy with that information.
Will the Minister explain the discrepancy between the figures he has supplied and the detailed considered analysis presented by way of a paper to a conference in Kenmare in 1992 by a senior official in his Department which was referred to in the Sunday Tribune of 29 March 1992? That detailed analysis showed that during the ten year period 1981-90 the cost of grants was £1.6 billion or £228,000 per job and that when the cost of tax reliefs was taken into account the cost of a job could be in excess of £500,000. Those figures may seen astronomical but they are contained in that detailed paper which was presented to that conference by an official in the former Department of Industry and Commerce. Unlike his predecessor, would the Minister consider publishing that document which I understand was submitted to Culliton but was never made public?
I am not familiar with the report to which the Deputy referred but I would be interested in seeing it. I am anxious that every Member of this House is fully aware of the cost of job creation particularly the utilisation of taxpayers' money in regard to either indigenous or foreign based companies. Neither this Administration nor I have anything to hide in that regard. I would be concerned that we would get the best value for money in the attraction of sustainable employment and I am sure nobody would disagree with that. If the documentation to which the Deputy referred exists, perhaps he might contact me either directly or table a question in that regard.
I am quoting from the Sunday Tribune of 29 March 1992. The documents——
I call Deputy Finucane who has been offering.
Perhaps I will be allowed raise it later.
I had a question disallowed earlier on the basis that the Minister has no brief in relation to IDA and SFADCo, which surprised me. As I note the Minister is frowning, my question related to advance factories and their locations and I do not understand why it was disallowed.
Another faux pas.
We have nothing to do with the taking of questions.
The Minister made a promise here on a previous Question Time.
I wanted to ask the Minister to reveal where advance factories were available for industries but that question was disallowed. As a follow up to that, will the Minister ensure, in relation to the annual reports of both the IDA and SFADCo, that it is possible to reveal the actual jobs created by the companies? The usual information supplied relates to a company and the amount of grants paid to that company, but the most pertinent issue relates not alone to the company and the grants paid to such companies, but to the number of jobs they create. A vacuum exists regarding that important information. Will the Minister examine that issue?
I would be happy to examiane that matter. Subject to the agreement of the Whips we are scheduled to take the Estimates for my Department on Tuesday, 8 June, 1993, and we will reply to that question then.
The Minister gave a figure of £10,832 for indigenous industry and £17,986 for foreign industry, but what are the total figures for each sector and is there a major difference between the two sectors in regard to the total amount of money made available? Is he satisfied that there is a serious imbalance in that regard and what does he intend to do to achieve a better balance between the emphasis on indigenous industry and foreign industry?
I do not have the total figures, but I will supply the Deputy with the information at a later date. I have comparative figures for the years 1982-88 between indigenous and foreign industries which are as follows. For the years 1982 to 1988 the figure for indigenous industry was £15,488 as against £26,798 for foreign industry. For 1983 to 1989 the figure for indigenous industry was £13,037 and £22,994 for foreign industry. In the years 1984 to 1990 the figure for indigenous industry was £11,761 as against £20,184 for foreign industry. In the years 1985 to 1991 the figure for indigenous industry was £11,480 as against £19,182 for foreign industry and for 1986 to 1992 the figure was £10,832 for indigenous firms and £17,986 for foreign firms. There has been a pattern of relative reduction in the cost of foreign investment per job created relative to indigenous firms, but if the Deputy would like the total figures and puts down a question in that regard I will get the information for him.
Is the Minister aware that the proportion of the industrial budget allocated to foreign companies in recent years has jumped from 57 per cent to more than 63 per cent? Is he aware that we are increasing our emphasis on foreign industry within the industrial budget? Why should we pay 66 per cent more for a job in foreign industries located here than on Irish industry? Is the Minister aware that we are paying more than twice as much for a job in foreign industry located here compared to a job in small Irish industry? Would the Minister agree that if his brief is to radically transform industrial policy he should have some view on these figures when he comes into the House?
I have many views regarding many figures. I replied to the specific question the Deputy asked me which was a factual one. If the Deputy wishes me to reply to a wider range of questions he can put down such questions to me and I will respond to them in a measured way. I am aware that that situation existed in the past; we are in the process of changing it and the figures to which the Deputy broadly refers — the increase in the shift between indigenous and foreign investment — reflects patterns from the past two to three years.
I wanted to return to the point I raised about the cost.
I am sorry Deputy, I have been in the Chair for the past ten minutes and this question was in progress when I arrived.
It is a very important question.
I will allow a very brief question.
Thank you, Sir. I want to make it clear to the Minister that I was not suggesting that he or his administration was hiding anything. I gave him the only public reference I know for the paper in question and I am asking him if he can explain in any way the massive discrepancy in cost per job as produced in the internal departmental document concerning an open conference in Kenmare. I gave the Minister the reference and the figures he gave to the House today. It is such a huge gap between even the high figure of £17,000 and the figure in the paper of £228,000 per job that it is a matter of public interest to the taxpayer that it should be examined.
The last paragraph of my reply stated that tax reliefs, the subject referred to by the participant in Kenmare who took into consideration the cost of tax reliefs to job creation, which were allowed by the State are not incorporated in the calculations of the cost per job. Likewise — and this must be taken into account — tax revenues from the companies are not included. If the participant in Kenmare put on a balance sheet the tax reliefs as against the cost per job as set against the tax revenue generated by that job for the State, we might have a more balanced picture. However, I am not aware of the precise details to which the Deputy has referred.
Can I put down a separate question?
Please do.
