Richard Bruton
Ceist:9 Mr. R. Bruton asked the Minister for Enterprise and Employment if his attention has been drawn to the decline in new business start-ups; and his views on whether after tax returns are providing sufficient incentive.
Ceisteanna — Questions. Oral Answers. - New Business Start-Ups.
Paul McGrath
Ceist:42 Mr. McGrath asked the Minister for Enterprise and Employment if his attention has been drawn to the sharp decline in small industrial business start-up; and if he will make a statement on the matter.
I propose to take Questions Nos. 9 and 42 together.
In so far as industrial start-ups are concerned, I am aware that there has been a decline in recent years in the number of such start-ups assisted by the two principal industrial development agencies, the IDA and SFADCo. However, as indicated in my reply to a question by Deputy Bruton on this matter on 27 October 1993, there are several other agencies and groups, apart from the IDA and SFADCo, involved in business start-up, including industrial start-ups. The most significant of these, in terms of spending power, are within the aegis of other Departments. Examples of the latter would be the Leader and rural development programmes for which my colleague, the Minister for Agriculture, Food and Forestry, has responsibility and the Programme for Economic and Social Progress area-based companies for which the Taoiseach's Department has responsibility. Statistics are not readily available on the number of industrial start-ups arising from the agencies and groups, other than IDA and SFADCo, involved in this area. However, it is probable that the decline in the IDA and SFADCo start-ups in recent years reflects the wider choice available in that period of alternative sources of finance for start-ups.
While I am not aware of any statistics which show that the number of business start-ups generally is in decline, I am acutely conscious of the need to increase substantially the current level of start-ups with a view to making inroads on our unacceptably high levels of unemployment.
In this connection, the primary focus of the county enterprise boards initiative, which is currently being put in place, will be on proposals for start-up in enterprise. The boards will have a multi-sectoral brief, although projects in industry and manufacturing and in the internationally-traded services sector which exceed a threshold of ten persons in terms of employment potential will be reserved to Forbairt. The new boards will complement the work of the existing State agencies and will not displace or duplicate local enterprise initiatives. The CEBs will be in a position to offer grant support to start-ups to a maximum of £50,000 involving investment costs of up to £100,000.
Clearly, the risk/reward ratio must be in balance if we are to succeed in encouraging start-up businesses in the future. In this regard I see the role of Government as twofold. First is the creation of a climate conducive to business start-ups and growth. This involves issues of broad Government economic policy — fiscal policy, pay restraint, taxation, interest rates etc. Second is the extent to which Government agencies and services can support individuals to get their projects up and running and to assist them in the early phase of development.
In terms of the environment for enterprise, inflation and interest rates are currently at historically low levels. As regards financial supports, the Government, apart from the CEBs, supplemented the current wide range of supports available to start-ups with the introduction of a new seed capital investment scheme and the extension of the business expansion scheme for a further three years in the 1993 Finance Act.
In addition, the small business task force, which I set up in June 1993 in conjunction with my colleague, the Minister of State responsible for commerce and technology, Deputy Séamus Brennan, has been examining and will make recommendations soon on all of the main issues affecting small firms, including start-ups. The task force, which is chaired by the Minister of State, consists of the owner managers of 14 small businesses. Therefore its members have first hand knowledge of the problems faced by small businesses. I can assure the Deputies that the recommendations of the task force, when they emerge, will be given full and prompt consideration.
May I draw the attention of Members to the fact that we have but 16 minutes available to us to deal with five questions nominated for priority? I am very anxious to facilitate for four Deputies involved. Perhaps they would bear that in mind.
A Leas-Cheann Comhairle, may I ask that you ensure that the time is divided equally?
I am appealing for co-operation to enable me to do that. I am sure I will have the full co-operation of Deputies.
The Minister had to read four ponderous pages of a reply.
I was anticipating the Deputies' supplementaries.
Does the Minister not believe that it is somewhat extraordinary that we have now reached a stage where there are so many bureaucracies operating he cannot even tell us the number of businesses start-ups in this State? Would he not agree that the figures supplied by his Department indicate a 50 per cent decline in five years? Would he not agree that only one-third of the target set in the last national plan for export growth from the small to medium enterprise sector was reached and that there was a dismal failure on the part of his Department to achieve the targets set for the small business sector? Finally, would he not agree that the appropriate response to the problems of small businesses is to render small business profitable, not to establish a proliferation of agencies and numerous, new grant-giving bodies which the Culliton report indicated was past its sell-by date as an approach to industrial development?
I do not accept the Deputy's assertion. This question was asked before and a reply given in October. As we heard already from the Taoiseach in reply to an earlier question today, there is a clear need, at local level, in that people who sought to create jobs on the lowest possible scale were simply not being listened to by the Industrial Development Authority because it was restricted to manufacturing and internationally-traded services and would not deal with firms below a certain scale of size. I might add that the county enterprise boards nationwide were designed specifically to deal with them. There is no duplication in that area. The Leader programme, with which the Deputy may be familiar, is designed to address the particular and acute problems of rural depopulation in the context of changes in the Common Agricultural Policy and agricultural activity generally. In addition, the Programme for Economic and Social Progress area programmes are designed specifically for 12 areas of concentrated, long term, acute unemployment where the nature of the problem is totally different. We have come forward with three totally different and specially designed responses to different kinds of problems because the nature of unemployment and business start-ups is different in different parts of the country.
The Minister is trying to create a smokescreen with all these agencies he has set up.
He should just face the facts.
Is it not the case that if the Industrial Development Authority had been failing to respond to the needs of small businesses, that was a policy issue and he, as the relevant Minister, was responsible and should have called the Industrial Development Authority before him and told them what was Government policy, rather than set up 75 agencies to distort policy?
I do not wish to take up the time of the House but I have just been asked a question to which I must respond. On 12 January 1993, when this Government came in to office, we had received the last of the Moriarty Task Force recommendations. Within less than a year we have done precisely what people had been seeking for years, which was to divide the Industrial Development Authority into two, one an internationally-focused organisation for inward investment and the other dealing with indigenous industry. These agencies will be legally operative from 1 January next, less than 12 months after we assumed office.