Dáil Éireann díospóireacht -
Thursday, 12 Dec 1996

Vol. 472 No. 8

Shaping Our Future — A Strategy for Enterprise in Ireland in the 21st Century: Statements (Resumed).

Mr. Boylan

I welcome the opportunity to make a brief statement on this important report and the consequences it will have in the Border region. I want to make a strong plea to the Minister to ensure that Structural Funds as currently applied will remain in place after 1999. There is a danger of such funds not remaining in place because of the great strides that have been made in the country as a whole, more especially in the east, south-east and greater Dublin area.

The residential property tax was referred to earlier but we do not have that problem in the Border region. That fact shows the disparity between the greater Dublin area and the rest of the country. It also reflects the growth that has taken place in Dublin and the south-east.

I compliment the Minister on the marvellous announcements he has made in recent weeks concerning job creation. These are positive jobs for the future of our young people and, while many of the jobs are to be located in Dublin, I have no objection to that. I understand the reasons companies locate in the Dublin area, including proximity to Dublin Airport and sea ports, because computer companies, in particular, must compete on world markets. While that area is quite a technical one, our young people are adept at working in such high technology industries. Thousands of skilled young people from all over the country, including Cavan, Monaghan, Sligo and Leitrim, are taking up places in these industries. In effect, this process moves young people from other areas to the east and south-east. The success these industries brings ensures that other industries will also establish enterprises here.

Looking to the future, however, the Border region must get a fair crack of the whip. Because of the substantial rise in incomes we will probably move out of objective 1 as we will have passed the income benchmark laid down by the European authorities relating to qualification. That will mean reduced funding from Structural Funds at a time when the whole country has not made the same advances as the east or south-east. There is a strong and genuine case to be made for regionalising the country between the Border region and the west. Deputies from the west will make their own case well, as Deputy Connor did earlier, but I am making a case for the Border region. If the whole country is to be designated as moving out of objective 1, the Minister should ensure the country is regionalised so that the Border region will remain in objective 1 for a further five to ten years. It can then rise to the same level of development that has taken place in the east and south-east.

The case can be based on the fact that for the last 25 years the six Border counties, Donegal, Sligo, Leitrim, Cavan, Monaghan and Louth, have suffered as a result of violence in the North. This often goes unnoticed because full attention is not drawn to the fact that economic development in that region has not matched development elsewhere. That is because industrialists were reluctant to locate in the Border region due to the spillover of violence. The tourism industry suffered badly because people were afraid to visit the Border region. The constituency I represent, Cavan-Monaghan, has much to offer in respect of tourism projects. However, tourism projects require the provision of Structural Funding during the next five to ten years to ensure maximum development. That is not an unrealistic or unfair case to make.

It has been noted that roads in my area are the worst in the country. However, we are taking action in that regard and facing up to the task that confronts us. In that context, I welcome the provision of Government assistance through the medium of Structural Funds but there is a long way to go. Cavan-Monaghan does not have access to the type of motorway recently opened in Dublin by the Minister for the Environment, Deputy Howlin. That motorway is a welcome development which helps the northern part of the country in so far as traffic travelling to Dublin city or Dublin Airport will reach its destination more rapidly.

Aghalane Bridge, situated on a national primary road in my constituency, is the only major Border crossing to remain unopened in the six counties bordering Northern Ireland. Many people in authority are not aware of this fact. We are working towards building a proper roadway to the bridge which was blown up by the British Army as a precaution against what it identified as a danger or threat to County Fermanagh and the towns of Enniskillen and Lisnaskea. This action has greatly affected the towns of Belturbet, Ballyconnell and Cavan in County Cavan.

I am satisfied the Northern Ireland authorities are engaged in rebuilding the bridge and, with its reconstruction, a proper road structure will be in place within the next two to three years. However, in the interim, we remain cut off as the end of the present Structural Funds agreement in 1999 approaches. A case for a further extension of funds can be made on that basis. This will only be achieved if those in power decide in fairness to the Border and western regions, to regionalise the country. Those regions, because of their problems and the low incomes which prevailed, helped to maintain the country's objective 1 status when the last review took place in 1993. It would be wrong and unjust were we to be removed from the maximum payment section of objective 1 status. The eastern and south eastern regions have moved far ahead and in the absence of regionalisation this will ensure the entire country loses objective 1 status, despite the fact that the Border region has not benefited from the developments that occurred. As already stated, I welcome developments which are beneficial to the country as a whole, and the Government is to be complimented on its excellent management of the economy.

Agriculture is the bedrock of the economy in the Border region but milk quotas there are the lowest per farm. Co-operatives and those involved in agriculture, North and South, make the case that, because of the troubles, farmers were prevented from developing their farms to the same extent as their counterparts elsewhere. Milk quotas in the Border region are less than the national average. They range between 10,000 to 15,000 gallons, which is not viable. An application is to be sent to Brussels to increase milk quotas in the Border region and the six counties of Northern Ireland to the realistic level of 30,000 gallons per farm. This will create a sustainable income for family farms. It will mean that an additional 30 million gallons will be divided between farmers in the six counties north of the Border and their six Southern counterparts. This application will take the form of a peace initiative in the region and will not cost European taxpayers anything.

Farmers in Northern Ireland, some of whom were close neighbours of mine, suffered greatly and tragically lost their lives caring for cattle at night. A number of them walked on booby traps and were blown to pieces. This created concern among other farmers and did not help the development of the region because people lived in fear of their lives for 20 to 25 years. Thankfully, things have improved during the past two years but we cannot just forget the troubles and state that that period of history is over. We owe it to those who died to do something and we have an opportunity to do so. A case has been made by farmers and farm co-operatives in Border areas for the division of 30 million gallons between farmers living in the six counties on either side of the Border. This proposal is currently before the Taoiseach, the Minister for Agriculture, Food and Forestry and others for consideration.

I am aware that the issue of milk quotas does not come under the remit of the Department of Enterprise and Employment but it would be in good hands were the Minister there to take responsibility for it. I am interested to hear his comments on regionalisation of the country to ensure that the Border region will continue to receive Structural Funds for the next five to ten years. This would enable it to reach the stage of development which has been achieved by other regions.

Minister for Enterprise and Employment (Mr. R. Bruton)

I will first deal with the points raised by Deputy Boylan who, as always, highlighted a very cogent policy issue. There is no doubt that the challenge of regional policy is very important to my Department. The Deputy is correct to recognise that IDA development changed in recent years and increasing emphasis is now placed on large instead of small projects and on projects concentrated in the electronics sector rather than spread across a range of manufacturing sectors. Those projects are increasingly attracted to centres with high population and well developed infrastructures. Educational infrastructures are a very important attraction for overseas investment.

There has been a shift in the regional division of job approvals. Deputy Boylan is correct in recognising that the Border region has not thrived as well, in that environment, as other regions. It will be difficult to reverse that trend because companies locating certain types of operation in Ireland will want to base their concerns in areas where their needs will be met. The Deputy recognised that fact.

The challenge, in respect of regional policy, is to consider how we can develop the regions more effectively. I see that development being built upon other activities in the industrial sector, particularly the construction of linkage initiatives. It is significant that the new national programme for developing links was launched successfully in the west. A good structure of sub-supply companies has developed in that region and these are capable of winning substantial business from larger FDI concerns that have established in Ireland. We must look more at analysing regional strengths rather than chasing the hope, which might be difficult to realise, that large electronic firms might be shifted throughout the regions. This will not be easy to achieve and we must look carefully at the strengths of each region and how they can be exploited. The regions have significant strengths in the areas of links and sub-supply and the development of the services industry with foreign and domestic investment. The services sector has become the most dynamic element of IDA and Forbairt investment in recent years. Almost half the jobs created by the IDA come from service oriented companies, which are more regionally mobile than manufacturing companies. It is now possible to develop effective tele-based activities in more remote areas as technology opens up more possibilities. It is significant that Killorglin, which is not regarded as a highly developed urban area, has a very successful business which supplies tele-based services worldwide.

In the development of enterprise strategy in the coming years, we must look more closely at the regional dimension to see how, for example, Border areas can establish strengths to attract industries. The remarkable feature of counties Cavan and Monaghan is the very large number of indigenous companies which have been steadily expanding their businesses over a long period. Even though they do not have the traditional inflow of foreign direct investment, the enterprise culture is particularly strong in counties Cavan and Monaghan. The Deputy rightly referred to the new thinking required in this area and I hope we will be able to devote our attention to this.

The Deputy also referred to EU Structural Funds and asked if certain regions in the west or along the Border should be given Objective One status. This is not necessarily a wise approach as Ireland is still very much in a developmental phase as regards the EU and the objective of European social and economic cohesion is to achieve a balance between the regions. Ireland's picture is distorted by a number of factors, one of which is the very unusual relationship between gross domestic product and gross national product which is caused by the very substantial overseas element of our business. The domestic product is bloated by profits which are transferred abroad and other overseas transfers. If one looks at gross national product, real disposable income, one will see that we still have a considerable way to go in this area. Equally, if one looks at infrastructural development one will see that roads and other infrastructure need further development. Ireland and Greece are the only countries in the EU which do not have a land link to other member states and this creates particular pressures in respect of economic and social cohesion. I do not wholeheartedly support the points made by the Deputy as this issue must be very carefully considered. Ireland is still very much in a developmental phase and the effective use of EU transfers should not suggest they can be quickly cut off. Rather we are in a process of development which must be sustained.

The Deputy referred to the case made for the west which is supposed to have done very badly. This issue deserves careful scrutiny as the employment performance in the west last year was second to none. The 22,000 extra jobs created in counties Mayo and Galway last year indicate that the sectors in the west are thriving and strong. The idea of breaking down the country into small sub-regions may not get us that far. We must develop the different strengths of the regions and not draw artificial lines which do not have a great economic basis. This is not to say I do not recognise clearly the particular needs of the Border region. At the suggestion of the Deputy and his colleagues, I have been very attentive to these needs in recent times.

I congratulate Forfás on bringing forward this report. It is the first time we have taken a 15 year view of the economy and tried to identify the forces which will break upon Ireland during this period and how we can prepare for them. These changes will be dramatic and forceful and will gather pace as the years go on. The trend towards globalisation is accelerating and companies like IBM, which have made a very significant investment in Ireland, are world players. They make their investments on the basis of how they will compete on the world market. This lesson underlines the need for a country like Ireland to be extremely competitive, flexible and adaptable and to put strong emphasis on the development of the strengths of our people. We have a superb educational system which we must continue to develop. We must also develop the concept of learning within business so that education and learning are not confined to the educational system but are at the very heart of business. The successful businesses of the future are those which learn from their environment and are in a position to respond effectively to the challenges facing them.

In the coming years the information society will be further opened up and will affect every business and walk of life. If we do not move quickly to seize the opportunities thrown up by this development we will miss a golden opportunity. There will also be a dramatic shift to services as a source of employment. Forfás predicts that within the next 15 years 85 per cent of employment growth will be in the services sector rather than in the manufacturing sector. We need to address the policy changes which have to be made if we are to respond to this.

The main point of the strategy put forward by Forfás and the many people who contributed to the report is that if we are to remain competitive into the 21st century we must look not only at the traditional tools of business — markets, finances and labour costs — but also at the educational system, the infrastructure in place and the development of transport and logistics. Industrial development will be a matter for every element of Government work and not one Department. The report states that an effective and efficient public service is as important to our long-term competitiveness as some of the traditional tools measured in world competitiveness reports. If we are to develop an effective economy we must have strategic management in every walk in life, including the public service. This is what makes the SMI process being undertaken within Government so important in the long-term; our public policy thinking and administration must be in tune with the challenges facing us.

The report is extremely valuable in that it takes a longer term perspective and sets out real challenges for us. We must take an early lead in the area of technology and look at our language strengths and how we can develop our skills and technology to secure overseas investment. We must look at the way our people are trained and educated, particularly in relation to business. We must start to reposition our businesses within indigenous industry so that we are not exposed to global competition from cheaper cost countries which would challenge Irish business. We must develop our traditional sectors in areas where they can command good margins, with better added value and positioning in the marketplace. That is a huge challenge. It will be an integrated framework which will challenge medium-term policy across a whole range of Government activities.

This is a useful report which challenges us to make policy changes over the coming decades. It also indicates what the rewards will be for meeting those challenges. It mentions the possibility of bringing unemployment down to 5 per cent of the labour force, reducing long-term unemployment to 50,000 and creating over 300,000 jobs in the next 15 years. I am gratified that the past two years have shown that the economy is capable of meeting and exceeding those challenges, provided we continue to manage our resources effectively. The past two years have been outstanding in terms of employment. We have achieved more in two years than has been achieved since independence. There has been a tremendous transformation in economic performance in recent years and we should build on this rather than become complacent about it.

I thank Deputies for their participation in the debate and I hope we will be able to act on the points raised in the coming years.