Vol. 458 No. 5
21 Miss Harney asked the Minister for Enterprise and Employment if the amount of grant-aid recently offered to the Chungwha company to locate a manufacturing plant in Ireland was in fact greater than the amount of direct State aid offered by the authorities in Scotland, where the company eventually decided to locate; and if he will make a statement on the matter. [17402/95]
23 Mr. T. Kitt asked the Minister for Enterprise and Employment the reason the Government failed to attract a Taiwanese electronic company (details supplied) to Ireland which would have resulted in 3,500 new jobs. [17385/95]
37 Mr. M. McDowell asked the Minister for Enterprise and Employment if the amount of grant-aid recently offered to the Siemens Company to locate a manufacturing plant in Ireland was in fact greater than the amount of direct State aid offered by the authorities in Britain, where the company eventually decided to locate; and if he will make a statement on the matter. [17247/95]
56 Miss Harney asked the Minister for Enterprise and Employment if the amount of grant-aid offered to the Chungwha Company to locate a manufacturing plant in Ireland was in fact greater than the amount of direct State aid offered by the authorities in Scotland, where the company eventually decided to locate; and if he will make a statement on the matter. [17248/95]
I propose to take Questions Nos. 21, 23, 37 and 56 together.
The matters raised by the Deputies relate to the day to day responsibilities of IDA Ireland and are not ones in which I have a direct function. In any event, contacts between IDA Ireland and the promoters of potential projects are conducted on a confidential basis and, as such, it would be inappropriate for me to comment on the details of the incentive package proposed in the case of the companies mentioned.
The Deputies will appreciate that there is intense competition from other industrial development agencies for overseas mobile investment projects. Notwithstanding this, IDA Ireland has been extremely successful in attracting new projects, particularly in the electronics sector. In deciding on an incentive package to attract projects, IDA has regard to the incentives on offer from competing countries. It must also, of course, have regard to the balance between the cost of securing the project and the benefits that will accrue from it to the country.
In the final analysis, decisions as to where to locate overseas manufacturing operations rest ultimately with the owners of companies themselves and are beyond the control of the IDA.
I take it from reading between the lines of what the Minister said that newspaper reports suggesting that we offered higher grants are probably correct. That being the case, will the Minister accept that if these companies go to jurisdictions offering lower grants there is something else which is not attracting them to Ireland? Will the Minister accept that it is the high taxes on labour? Does the Minister agree with me and, indeed, the Culliton report that the 10 per cent manufacturing tax has been the greatest attraction to foreign industry locating here rather than individual grant-aid packages?
Foreign companies are attracted to Ireland by various factors — very often the attraction is the quality of the labour force, particularly in the electronics area, rather than tax on labour cost issues. Access to markets is another factor taken into account, as is location of sub-suppliers. Because of our small market size, Ireland may be at a disadvantage in terms of companies that wish to locate close to markets or suppliers. A range of factors is taken into account in deciding location; no single factor can be attributed as the primary reason for locating in a particular country. I agree with the Deputy that one of the problems we need to address is the wide tax wedge.
Given our resources, we will never be able to compete with the British and French in terms of grant-aid pay packages — those countries have almost limitless resources. Will the Minister agree that at EU level we should strive to have large scale grants to industries of this kind reduced or abolished? Will the Minister consider initiating discussion within the EU on that matter?
I fully accept that some of the richer central countries have an advantage in the amounts they can pay. While certain restrictions are operated by the EU in terms of maxima that may be paid by way of State aid, those restrictions are not effective. When I recently had occasion to meet Commissioner van Miert I raised this question with him. He has reported to the Council of Ministers on this issue, which was discussed at a recent Industrial Council. It is an issue that has been under consideration for some time and one which I hope to pursue. National interests vary dramatically in this regard and it will be difficult, but nonetheless important, to make progress on it.
Will the Minister confirm that during his recent visit to Taiwan in early October he did not avail of the opportunity to meet or lobby the Taiwanese Economic Minister or any other Minister about this project? If he did not do so, will he confirm the reason was not related to the fact that the Chinese Vice Premier and Foreign Minister were visiting Ireland around that time? As we are aware, there are strange diplomatic relations between those two countries. Was the Minister afraid that by holding such meetings he would offend the Chinese? Has the Department of Foreign Affairs expressed a view on this matter? Obviously, political considerations come into play here. Since the British made intense political approaches to the Taiwanese on this issue, I am concerned that not enough action was taken by our Government.
I do not accept that. I visited Taiwan and met all the senior executives concerned with this project. I was there to demonstrate the Irish Government's clear interest in the project going ahead. Detailed negotiations are a matter for the IDA, but it was essential to demonstrate clearly the great importance the Irish Government attributes to investment by this company in Ireland. The Government did everything appropriate to deal with the case. At the end of the day the company made its decision on the basis of factors such as proximity to marketplace, and it is not easily amenable to change.
I am sure the Minister will accept that this is the largest investment by a Taiwanese company in Europe and, therefore, the strongest possible representations should have been made at political level. The British clearly had done their homework. Did the Department of Foreign Affairs express the view that the Minister should not press too strongly on the matter at ministerial level? In view of the fact that the British made strong political representations in this case, will the Minister accept that we should have done likewise? Two-track approaches are adopted by many countries to Taiwanese investment, which in terms of this country is significant. Will the Minister accept that mistakes were made in this case in that strong political representations were not made at the highest level?
I do not accept that. Having met the company and assessed the issue, I believe the decision was made on economic grounds. I did not seek to meet Ministers. I met the company, and I believe that was the correct approach. With the IDA we clearly demonstrated the advantages of locating in Ireland, but the company, as is its right, made its decision based on other factors relating to marketplace and supply issues. We have had extraordinary success this year in attracting projects in the electronics sector. We are competitive in many cases but not on every project — we do not win them all.
I cannot understand why the Minister did not seek a ministerial meeting for such a vital project involving 3,500 jobs.
The question of where a company locates is not a ministerial decision as it is not a political issue. If I were approached about a decision of a large Irish company to invest in another country, I would not be in a position, nor would I try to influence that company in deciding its location. We must put our package and compete as best we can, and that is what we did in this instance.
The courtship was very timid.
The decision by Chungwha confirms that we should not put so many eggs into the grant-aid basket because that does not work. I urge the Minister to be more aggressive at European level is seeking to outlaw grants to foreign industry because Ireland cannot compete in the grant-aid stakes. Will the Minister agree it is wasteful from an island point of view to have two promotional agencies — the IDA and the IDB — dealing with foreign investment? Does the Minister see merit in pursuing an initiative to adopt an island approach to this issue?
Problems do not arise in that regard at present. The IDA has been exceptionally successful and its success has spill-over benefits for sub-supply companies in Northern Ireland. Equally, the IDB has recently established a success rate. It adopts a different approach and has a different package to offer. The two agencies are complementary. At times there is an element of competitiveness on projects, but that is welcome. There is a competitive market for foreign investment. Both agencies operate sensible, co-operative principles which prevent one from bidding against the other. They have a satisfactory relationship.
