Dáil Éireann díospóireacht -
Wednesday, 15 Nov 2006

Vol. 627 No. 4

Priority Questions.

Industrial Development.

Phil Hogan

Ceist:

74 Mr. Hogan asked the Minister for Enterprise, Trade and Employment if his attention has been drawn to the fact that according to Forfás’s Statement on the Costs of Doing Business in Ireland, key business input costs that weaken Ireland’s overall cost competitiveness include property costs, utility costs, particularly electricity, mobile calls, waste disposal and key non-discretionary services, including information technology services; and if he will make a statement on the matter. [38044/06]

Minister for Enterprise, Trade and Employment (Mr. Martin)

The National Competitiveness Council, NCC, recently published its Statement on the Costs of Doing Business in Ireland. The publication outlines the key findings of research looking at the cost of doing business at four locations in Ireland — Dublin, Cork, Galway and Limerick — and comparing these to international centres such as Bangalore, Boston and Copenhagen. The data is for one period only, January 2006, but will be updated in two subsequent reports in 2007 and 2008.

The chairman of the NCC recognises that Ireland's competitive position remains favourable. The NCC's recent annual report noted that economic growth in 2005 was one and a half times the average EU 15 GDP growth between 2000-2004 and Ireland is ranked first in the EU 15 for entrepreneurial activity. Ireland ranks highly in the UN's human development index. For 2005, we are eighth in the OECD group and third in the NCC's benchmarking group. This reflects several improvements, including the elimination of employment, improvements in life expectancy and raised life satisfaction. In addition, a recent Price Waterhouse Coopers survey ranks Ireland second in the world in terms of ease of paying taxes, while the World Bank continues to regard our regulatory environment as benign, ranking us tenth out of 175 countries. Ireland has made significant progress both over time and relative to other countries in terms of increasing secondary school participation rates. At 86.1% we now exceed the Lisbon target of 85%.

The NCC Statement on the Costs of Doing Business in Ireland states that it is notable that most successful countries in terms of wealth are generally expensive. In this respect, the report shows that labour costs at 59% dominate firms' business costs. These were followed by property costs at 11%, utility costs at 9% and transport costs at 4%. All other costs accounted for 17% of total costs.

The NCC's cost profiles demonstrate the importance of labour costs for firms across all sectors. However, the analysis by the NCC shows that labour costs, taxes and transport costs are competitive when compared to benchmarked locations in the EU 15 economies or in the United States. Labour costs in manufacturing are marginally more competitive than in the services sectors, compared to other EU 15 and US cities.

The NCC acknowledges that our cost competitiveness is also supported by relatively low taxes on labour. The research highlights the fact that Irish cities show the greatest cost competitiveness compared to others that were looked at in medical technologies, engineering and food processing. These are important sectors for economic development.

Additional information not given on the floor of the House.

The report underlines the competitive position of a large part of our economy.

Looking at the cost of business across all business sectors reviewed, Irish cities are on average 15% more cost competitive than the average of other high income cities. It is inevitable that we will have a higher cost base than low cost cities examined such as Bangalore, but I am confident that our broadest competitive position will remain robust and particularly in those sectors of the economy which will drive economic growth and employment.

Mr. Hogan

Based on the Minister's reply, I am not sure if he has seen this report. This is what it looks like. One would have expected him to acknowledge that there is a problem with our competitiveness. A number of issues go back to 2001 when the NCC briefed the Taoiseach and Tánaiste on Ireland's deteriorating competitive circumstances under a number of headings. I draw the Minister's attention to the conclusions and policy implications of the NCC, which is chaired by the eminent Dr. Don Thornhill. It suggests:

Ireland ranks among the most expensive of the locations surveyed for electricity,water . . . waste disposal, and key non-discretionary services, especially IT services, accountancy and legal fees. In terms of policy implications, this paper suggests that addressing the infrastructure needs of the Irish economy and tackling the high cost of services must be a key priority for the Government. In addition, property costs, both of construction and of rental, appear out of line with our competitors.

It states that "together with a risk of the decline in the value of the dollar against the euro, these challenges present a potential threat to jobs and growth in internationally trading sectors of the Irish economy, upon which we all depend", particularly manufacturing. That is an indictment of the cost of doing business in Ireland. I therefore ask the Minister to have another go at answering the question he was asked and to suggest the measures he will take to bring us more into line with the competition we face.

Mr. Martin

I answered the question by giving a balanced perspective on the issue. Deputy Hogan is overly concentrating on the negative.

Mr. Hogan

Forfás is a Government body.

Mr. Martin

We are aware of the energy issue. That is why the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, produced a Green Paper on energy and has brought in a number of initiatives in that area. Our main energy problem is our high dependence on fossil fuels. I am on a Cabinet sub-committee on the issue.

We are concerned on an ongoing basis about energy prices and its effect on our competitiveness. That is not news. It is interesting that regional areas such as Cork, Limerick and Galway are quite competitive on labour costs in relation to the EU 15 and the US cities. Ireland is not in the same cost frame as Bangalore, for example, nor should we expect to be. However, the report states that compared to other cities in the EU 15 and the United States, Irish wage costs are almost 20% lower. We have cost competitive advantages in some areas. Deputy Hogan has identified areas in which we have cost competitive pressures and challenges, particularly in utilities, and I am not arguing against that point.

Overall, the report suggests that labour is the dominant cost while utilities comprise approximately 9%. Nonetheless, the cost of utilities is a key agenda item for Government. Our construction industry and property market have had unprecedented scale and pace of growth. Every economic analyst has made different predictions about this for years, but they have not happened. It reflects, as one economist recently said, a robust employment situation. People have bought houses because we have unprecedented employment levels. Utility costs are an ongoing issue, particularly waste disposal, energy and mobile communication charges, and we will continue to work on making those more competitive.

Ireland is significantly more cost competitive on transport than the most expensive locations throughout the world. It is a balance. We are doing very well in some areas and not so well in others. Based on any international benchmark, however, the overall picture suggests Ireland is doing very well in competitiveness terms, but that is not a reason to be complacent.

Mr. Hogan

I acknowledge that, economically, Ireland is on a strong growth curve and we have a low level of unemployment. However, every report published in the past year in particular signals the pressure this jurisdiction will come under in terms of competitiveness from eastern European and Far Eastern locations and that the level of investment in this country will come under greater scrutiny — it is being scrutinised already from the viewpoint of relocation because of the high cost of doing business here. I am disappointed the Minister has no plan.

The Government had an opportunity last week when the Opposition tabled an amendment to have regular reviews of utility costs imposed on the energy regulator, rather than the annual review, but the Minister chose not to take that on board. Will he suggest any policy for the future as regards the regulation of public utilities, for example, whereby the policy remit of the regime could be changed to reduce costs for small businesses in particular, as well as consumers, to bring them into line with what we ought to expect? An increase of 90% in electricity prices over the past four years, for example, is not something that can easily be explained to people with more costly bills this week.

Mr. Martin

It can be explained when one considers our dependence on fossil fuels. That is where the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, and the Minister for Finance, Deputy Cowen, moved in last year's budget in terms of incentivising indigenous renewables and alternatives to our fossil fuel dependency. That is ultimately the way forward, as well as the national energy efficiency savings programme which has been launched by the Minister, Deputy Noel Dempsey. We are working with him on these issues. We advance the competitiveness agenda, advocating on its behalf in tandem with enterprise. He is very well aware of that and has produced a Green Paper, which represents vision in dealing with the energy issue. However, there are global issues to be considered as well and it is not something that is entirely within our command. Elements of it certainly are and we are working on those.

I reiterate that we are taking nothing for granted. Our view is that to sustain economic competitiveness and underpin the job creation we have witnessed in recent times, we need to invest significantly in research and investment, third level education and the workplace skills base of the economy. These are areas where we score well, competitively, and we need to continue to reinvest in them and enhance the levels and quality of such investment into the future.

Job Protection.

Ruairí Quinn

Ceist:

75 Mr. Quinn asked the Minister for Enterprise, Trade and Employment if his attention has been drawn to the fact that certain agricultural producers, in particular in the mushroom-picking industry, are forcing employees to present themselves as independent contractors or to work for piece-rates in order that the payment of the minimum wage and other labour entitlements can be avoided; if he will undertake to have an inspection carried out in an enterprise (details supplied) in County Tipperary to ensure that the standards of employment are compliant with the legislation for which he has responsibility; and if he will make a statement on the matter. [38041/06]

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Killeen)

I am aware through a variety of sources that there is particular concern with regard to the alleged practices of some employments in the mushroom industry. The labour inspectorate of the Department is aware that the application of piece-rates is a feature of the remuneration structure of many mushroom enterprises. The payment of such rates is not in itself a contravention of employment rights legislation subject to workers receiving a total remuneration package which is not below the statutory minimum rates of pay for that industry as set out in the appropriate employment regulation order, ERO.

The Deputy will be aware that Irish employment rights law makes a distinction between a contract of service, which applies to an employer-employee relationship, and a contract for service, which applies in the case of an independent sub-contractor. In effect, employment rights legislation does not apply to independent sub-contractors with the exception of the Safety, Health and Welfare at Work Act 1989 and the Equality Act 1998.

In most cases it will be clear whether an individual is employed or self-employed. Where there is doubt as regards the employment status of an individual the relevant Departments and agencies will have regard to the code of practice for determining employment or self-employment status of individuals. This code was drawn up and agreed in 2001 by the Revenue Commissioners, the Department of Social and Family Affairs, the Department of Enterprise, Trade and Employment, the Irish Congress of Trade Unions and the Irish Business and Employers Confederation.

A number of criteria are set out in that code for determining whether an individual is an employee or self-employed. These include whether the person is under the control or direction of another, owns his or her own business, supplies labour only, receives a fixed wage, is exposed to financial risk, assumes responsibility for investment and management, supplies materials for the job, can sub-contract the work or works set hours or a given number of hours per week, month etc.

The labour inspectorate has encountered a claim by an employer in the mushroom industry that workers were engaged on a sub-contract basis and were not, therefore, subject to employment rights legislation. In this case the scope section of the Department of Social and Family Affairs, following consideration of all the relevant facts, decided that the workers involved were employees. This decision facilitated a recent Employment Appeals Tribunal award in favour of a number of former workers in that enterprise.

A major package of measures has been agreed by the parties to Towards 2016, the new social partnership agreement, to provide for enhanced public confidence in the system of compliance. New legislation will be published next year to provide for enhanced employment rights measures, including the establishment of the Office of the Director for Employment Rights Compliance. Providing for greater clarity in the application of employment rights legislation to employees and the self-employed will be considered in the context of drawing up that legislation.

The proposed legislation will also empower the labour inspectorate to join with the Department of Social and Family Affairs and the Revenue Commissioners to work together in joint investigation units. Such units will have a particular focus on the employment status of workers.

In so far as the mushroom concern, details of which have been supplied by the Deputy, is concerned, I can confirm that two inspections of that enterprise have been conducted during 2006, the most recent of which was on 1 November. Breaches of employment rights legislation were detected on both occasions. These breaches have been rectified and all arrears due will be paid to the relevant employees. A file is being prepared for the Office of the Chief State Solicitor.

Mr. Quinn

I thank the Minister of State with responsibility for labour affairs for his frank and honest response to my question, unlike his predecessor. We have a problem here. For people coming to this country in the hope of a better life, as so many Irish people did when they went abroad in the past, the Celtic tiger has become the Celtic predator. It is now beyond any reasonable doubt that the entire mushroom industry needs to be seriously investigated. That is not to say that every mushroom producer is breaking the law, but there is now enough public information to suggest that this is a crisis sector that requires a crisis response.

What action does the Minister of State propose to take, for example, as regards the cases I cited to him, where there were two registered breaches of unemployment law? One can presume, on the basis, for example, of a case in Carrickaboy, as reported in The Anglo-Celt, where 13 foreign national mushroom pickers were employed, that they were unfairly dismissed because they were, in effect, employees and not contractors.

What action does the Minister of State propose to take because this is a sector that needs to be dealt with collectively, in tandem with the Department of Agriculture and Food, where this is relevant? That would send a signal to other rogue employers and sectors which are difficult to inspect and monitor, given the limited force of the Department's current inspectorate.

Mr. Killeen

There certainly is a problem on the basis of some of the information we have received. The labour inspectorate has targeted this industry in recent times, with 40 investigations, 28 of which are ongoing, in contrast to 12 last year and only seven the previous year. The inspectorate has been following up in this area. I have met SIPTU on a number of occasions and a group that represents some of the employers. There is a suspicion that this group represents the best employers, but in any event, it represents some of them. SIPTU and that group have been trying to agree the basis for a new ERO, which may well be required for this subsection of the agriculture sector. When I met the SIPTU representative last week, he indicated the union was unhappy with the rate of progress and I shall convey that to representatives of the mushroom industry when I meet them in the next week or two, with a view to ensuring that progress is made on that.

Mr. Quinn

I welcome what the Minister of State has said. I suggest he tell all the mushroom industry representatives he meets that under no circumstances will work permits be granted to them for workers coming from outside the EEA. There is a suggestion that applications are being made for Chinese and Thai workers to come into mushroom enterprises because eastern European workers, who are now full citizens of the European Union, are no longer staying in those plants. I expect the Minister of State is as familiar as I am with all the evidence which SIPTU, particularly Mr. Mike Jennings and others, have gathered.

On the basis that we are sharing the same information, will the Minister of State say that he is considering an ERO or a joint labour committee-type floor hourly rate, irrespective of the nature of the contract, because we had something similar as regards contract cleaning in the 1980s? Such a regulation should be imposed by the Department. Will he say that given the EU workforce as it currently stands, certainly with the accession of Bulgaria and Romania, under whatever working arrangements are provided for by the Department, no applications for work permits will be entertained from persons outside that area, and that there will be a vigorous programme of inspection, regulation and invigilation of this sector? The mushroom sector is a good story in our agrifood business. Those who comply with the law, make a fair profit and pay decent wages will not be undercut by unscrupulous employers.

Mr. Killeen

I would like to see a new JLC or ERO in this sector, ideally in co-operation with employers and unions. That would benefit the industry and workers tremendously. There are some deficiencies in respect of records, as Deputies are aware. This will be addressed in promised legislation under Towards 2016. The legislation on work permits introduced by the Minister will address all the issues outlined by Deputy Quinn. This will help to ensure standards are much better in the mushroom industry and others.

Mr. Quinn

The Minister of State could give a signal that he will not entertain work permits for the sector.

Mr. Killeen

It will take place in January. The signal given in the legislation is strong. There is no doubt where we stand on the rights of workers.

Equal Opportunities Employment.

Paudge Connolly

Ceist:

76 Mr. Connolly asked the Minister for Enterprise, Trade and Employment his views on taking an initiative to increase the employment threshold in the private sector for persons with disabilities to 5% and to mandate employers to comply with this threshold; and if he will make a statement on the matter. [38043/06]

Mr. Killeen

The Disability Act provides that each Minister may specify targets for the employment of people with disabilities in the public bodies under his or her aegis. The Minister for Finance may specify targets for the Civil Service generally. It is not intended to legislate to impose a similar approach in the private sector which could be counter productive.

The latest available figures published in the 2004 quarterly national household survey found that there were 110,800 people with a disability or health problem in employment, which was 6% of total employment of 1,835,000. The Department is fully committed to promoting the employment of people with disabilities. In 2006, the total budget provision for FÁS vocational training and employment services amounts to almost €68 million, including a budget of over €47 million for specialist training providers.

The sectoral plan of the Department of Enterprise, Trade and Employment under the Disability Act outlines the Department's key initiatives in promoting equal opportunities for disabled people in the market, which includes the development of a comprehensive employment strategy for disabled people. The key pillars of this strategy are enhancing the effectiveness of employment and vocational training programmes for disabled people, developing financial and other supports to potential employers and disabled employees, and developing measures to promote the continued employment of workers who acquire a disability while in employment.

Mr. Connolly

The answer is very scant. To state that no legislation is intended is most disappointing and to state that legislation would be counter productive is a cop-out. Strategies have been referred to by the health boards but those that are not enforceable are not worth speaking about. Is employment not a major issue for people with disabilities, particularly those with intellectual disabilities? Does the Minister of State agree that unemployment levels of people with disabilities are disproportionately high? They are far more likely to be out of work as opposed to able-bodied people, for whom there is full employment. There is something very wrong in this regard.

I am aware that the Department of Enterprise, Trade and Employment is not responsible for the public service, which is paying lip service to the 3% quota, sometimes abusing or ignoring it. This is bitterly disappointing. There is some dignity attached to people being employed, particularly those with disabilities. They could have a sense of pride, feel part of society and lead a more fulfilling life. We do not intend fixing this problem. It is already broken. There is no point in these quotas if they are not legally enforceable, with a binding obligation on employers.

Private companies in Europe with more than 50 employees must employ a certain quota of disabled people. In France, it is 6%, in Germany, 6%, and in Italy, 15%. Our European colleagues view this differently. In European countries where there are such quotas, the government imposes a levy if the employers do not meet the quota. This provides an extra incentive. We cannot let the situation in Ireland continue.

Some public service companies get around the quota by reclassifying people. If a grant is available, one or two people can be reclassified to avail of it. Some positive grants and incentives are available to the private sector but there is no obligation on private sector employers to employ a certain percentage of disabled people.

I have met parents of those with intellectual disabilities who are tearing their hair out. They feel their children have an ability that is not used in the proper sense because they are being offered meaningless work. These people wish to work in mainstream employment. I am disappointed by the Minister of State's short, disrespectful response.

Mr. Killeen

I regret that Deputy Connolly finds the answer disrespectful. I could have given more information but I wished to leave time to respond to further questions. The Deputy refuses to acknowledge a number of facts, such as the voluntary nature of our tradition and the appropriate provision of incentives to encourage employers to hire people with disabilities.

I had the honour of speaking at a conference in the National College of Ireland run by the Association of Higher Education Access and Disability, AHEAD, for students in, or graduates of, third level colleges. Considerable progress was acknowledged, particularly in the public sector. They believe the challenge is to inform employers of the incentives available. There is a substantial supported employment programme, endorsed by IBEC and the Irish Congress of Trade Unions. It was difficult to spread the programme to the regions. The wage subsidy scheme introduced by FÁS would have had a greater impact but it was difficult to disseminate information to the employers, particularly additional information addressing employers' concerns. If Deputy Connolly is serious and not just scoring points, he could assist in disseminating information to employers.

I wish to declare a personal interest. I have a family member who suffered a brain injury and might benefit from some of the programmes set up by the Department.

Mr. Connolly

I resent the Minister of State's reference to scoring points. I acknowledge that much has been done but why do we not have full employment for disabled people as we do for able-bodied people? We should keep this under review and examine how we can achieve full employment. We should do all in our power, which we are not doing at present. Other schemes in other countries are more effective and we should examine them.

Economic Competitiveness.

Phil Hogan

Ceist:

77 Mr. Hogan asked the Minister for Enterprise, Trade and Employment if his attention has been drawn to the report from the OECD entitled Trends and Recent Developments in Foreign Direct Investment, which shows that foreign investment inflows declined in 2003 and 2004 and turned strongly negative in 2005; and if he will make a statement on the matter. [38045/06]

Mr. Martin

The data in the OECD report refers to foreign direct investment, FDI, inflows and outflows that cover a wide variety of transactions. The flows of FDI associated with companies for which IDA Ireland has responsibility would only form a component of the OECD data. It would be incorrect to take the OECD data in isolation and infer from it that Ireland has become uncompetitive, or is losing ground, in terms of foreign direct investment in the areas in which Ireland competes, namely, manufacturing and internationally traded services.

In addition, as is the case with previous OECD reports on trends and recent developments in foreign direct investment, the data on inflows and outflows exhibit much volatility from one year to the next. This is because the data include, and appear to be dominated by, purely financial flows that move up and down in response to a wide variety of factors such as interest rate changes, repayments of inter-corporate loans, the strength of the dollar, changes in regulations and so on. The data do not, in large measure, reflect trends in financial flows associated with investment in actual facilities to produce products and services, which are the focus of IDA Ireland activities.

As noted by the report, one factor that appears to have caused a substantial shift in the flows of US investment in 2005 is the American Jobs Creation Act 2004. While this factor had a real and substantial effect on outward flows from the United States in 2005, in terms of the dynamic of trends from year to year in future, its impact can be expected to wash out of the data quickly.

As for the types of FDI that actually contribute to the development and prosperity of the Irish economy, 2005 was a remarkably good year in many respects, particularly in terms of the quality and regional spread of investments secured. For example, the projects approved included a €42 million expansion of the Bausch & Lomb plant in Waterford, a new 300 person customer service centre to be developed by Toucan in Sligo and the location by Zeus Industrial Products of its new European operations centre in Letterkenny. This success has continued in 2006 with, for example, projects such as Amgen in Cork, Northern Trust in Limerick and Servier in Waterford. This is not to forget today's announcement of the creation by Google Incorporated of 500 jobs.

The Government believes the best way to measure net investment by foreign firms in Ireland is through an assessment of overall economic activity and wealth creation. After a very strong performance up to 2000, job losses from foreign-owned firms outnumbered job gains from 2001 to 2004 as the global economic downturn following the 11 September attacks took hold and the effect of the marked slow down in the information and communications technology sector was felt. However, net job creation in foreign-owned firms was positive in 2005, which indicates that Ireland continues to be a very attractive environment for international investors. A total of 150,689 people were in permanent full-time employment with foreign-owned firms in 2005. This constitutes an increase from 149,079 in 2004.

The level of foreign direct investment in Ireland relative to the size of the economy is one of the highest in the world. Currently, more than 1,000 overseas companies have substantial international operations in Ireland. These include many of the leading companies in information technology and communications, life sciences, international services, engineering and financial services.

The challenge for IDA Ireland is to sustain, embed and grow this investment. The Government's recently-announced research and development strategy copperfastens such a focus on enhancing Ireland's competitiveness to attract foreign direct investment in future.

Additional information not given on the floor of the House.

In responding to this challenge, IDA Ireland is focusing on the development of its employment base into high technology, high value added and high skill functions, including both high-end manufacturing and areas such as high-end services and research and development. I am satisfied the strategies and interlinked programmes in place in IDA Ireland are the most appropriate ones to underpin our continued success in this area.

Mr. Hogan

I acknowledge this morning's announcement regarding the creation in Ireland of 500 jobs by Google Incorporated. This constitutes a major boost to the Dublin region's economy, as well as a welcome boost to the IDA in its efforts to attract foreign direct investment. However, it coincides with some concerns articulated by the OECD report. The Minister does not appear to believe the OECD and asserts it is selective in its interpretation of the figures pertaining to Ireland.

Has the Minister ever heard of a document called the European Investment Monitor report for 2006, which was produced by Ernst & Young? It is a leading company with a database that monitors investment and its origins throughout Europe. Its report states that although foreign direct investment into Europe increased by 5% in 2004, Ireland lost foreign direct investment that year, as it did last year.

As the proportion of investment to Europe increases, the position of Ireland declines. It reported a reduction of 11.8% in foreign direct investment to Ireland last year at a time when foreign direct investment into Europe generally increased.

I wish to ask the Minister some questions. What figures, and from whom, does the Minister believe? From what reporting mechanism does he derive his figures? On what basis does he believe figures? Has he ever heard of the European Investment Monitor report and was it ever brought to his attention? Does he have concerns regarding its comments in respect of manufacturing employment or future foreign direct investment, particularly from the United States?

Mr. Martin

Like everything else in life, the projects built and the jobs created are the ultimate benchmarks or inputs to any database. I referred to the impact of the American Jobs Creation Act 2004. If the Deputy listened carefully to my reply, he will note it stated that a range of inflows and outflows are assessed. However, the bottom line is that 2005 was the best year since 2000 in respect of the range and quality of new investment.

Mr. Hogan

Did the IDA say so?

Mr. Martin

Yes. A total of 70 greenfield and expansion projects were sanctioned in 2004, and a further 71 in 2005. This year looks even better. The quality of this year's investments says a great deal about Ireland and its world class manufacturing capability in the field of pharmaceuticals and of bio-pharmaceuticals in particular. For example, the largest biotechnology company in the world, namely, Amgen, will locate a major bio-pharmceutical plant in Ireland. This follows other companies such as Wyeth, Cordis Corporation in Cashel and Servier, the French pharmaceutical company to be located in Belview on the Kilkenny-Waterford border. Two weeks ago, Merck Sharpe & Dohme announced a major expansion in Ballydine, County Tipperary.

Mr. Hogan

They decided on Carrick-on-Suir in spite of the IDA.

Mr. Martin

The financial services company Northern Trust will locate in Limerick. Today, Google, the Internet company that is the brand name in terms of Internet activity, decided to locate in Ireland. From my perspective, such high quality investments in what I would describe as the industries of tomorrow are reassuring. Such organisations have made hard decisions. When I visit such companies in the United States and elsewhere, they still speak highly of the quality of the workforce in Ireland, the quality of the business environment in Ireland, the agility and responsiveness of the Government, its agencies and local authorities in respect of the issue of business investment in Ireland. When such factors are considered with our corporation tax rate of 12.5% and our good pro-employment tax polices for both personal and business taxation, we still have a good package.

This is not to deny that we face competitive challenges as we do. We must be extremely vigilant regarding issues pertaining to costs and must ensure productivity is maintained and enhanced. I refer in particular to the substantial productivity gains made during the past decade. While the rate of productivity growth has slowed from the dizzy heights of the late 1990s, nevertheless we must maintain a focus on issues such as productivity and so on. Ireland is winning because it continues to focus on high value activity and this year has been very good. Moreover, 2005 was also a particularly good year.

Mr. Hogan

I acknowledge that in relative terms, our unemployment levels are low and that much investment comes into Ireland. However, when reputable organisations such as the OECD or Ernst & Young which monitor such matters suggest we must consider the challenges ahead very carefully, I certainly will not make any apologies for bringing them to the Minister's attention. Equally however, I expect him to have a plan as to how such challenges will be dealt with and he does not have one. He believes everything is fine and that one can assess variations from any report in a positive or negative light, which I also understand.

In respect of tax, the only time when there was an overall tax reduction for workers and labour costs was when Deputy Quinn, my friend and colleague, held office as Minister for Finance between 1994 and 1997. This was the only time when Ireland experienced a tax reduction for people as a percentage of GNP. While the Minister might suggest otherwise, when one considers the figures for the past 15 to 20 years, this is a fact .

Mr. J. O’Keeffe

The Minister believes his own rhetoric.

Mr. Hogan

That was the only time when this happened. Opposition Members are conscious of costs in respect of labour and taxation matters. They are also familiar with the corporation tax rate of 12.5% because they introduced it.

Mr. Martin

The Opposition parties did not introduce it.

Mr. Quinn

They did.

Mr. Martin

They opposed it. Deputy Rabbitte opposed it.

Mr. Hogan

When the Minister talks about Governments, he seeks to airbrush from history the Government of 1994 to 1997. Opposition Members have no difficulty in discussing what happened in the mid-1990s.

I understand the Minister has established his manufacturing group. When will it report to the Oireachtas on the work on which it is engaged? The only reason to set up such a group is because of the worries in the manufacturing sector about the cold competition coming from other countries.

Mr. Martin

I welcome any constructive suggestions from Deputy Hogan regarding ongoing issues pertaining to foreign direct investment.

Mr. Hogan

He does not heed them.

Mr. Martin

We are planning very effectively and comprehensively for the future. The research and development strategy is a plan for future industry, jobs and competitiveness. This is why we put so much effort into it. A total of eight Departments were involved in the process, which was chaired by my Department. I chaired a Cabinet sub-committee on science and technology. We see it as critical for winning more jobs for the future and underpinning the kind of quality jobs we have in pharmaceuticals, biopharmaceuticals, medical devices, financial services, digital media and other sectors.

In terms of skilling, the One Step Up initiative and the national skills strategy which is currently nearing completion, we estimate that 80% of the current workforce will be part of the workforce in 20 years time. We have clear plans and have taken investment decisions to enhance the skills of existing employees to ensure we remain competitive and underpin jobs for the future.

In one rhetorical flourish, Deputy Hogan eliminated the former Minister for Finance, Charlie McCreevy, from the tax reduction story of modern Ireland, which is some achievement.

Mr. Hogan

He reduced the rates but we are talking about the overall tax burden.

Mr. Martin

Charlie McCreevy personified the tax cutting agenda in this country, which produced increased revenue flows in respect of corporation tax and capital gains tax.

Mr. Hogan

Who produced the figures?

Mr. Martin

I always remember how Deputy Rabbitte attacked Mr. McCreevy's policies on positive tax reform on that occasion and tried to score some political points off them.

Mr. Hogan

The Minister is forgetting about who opposed Deputy Quinn when he introduced policies as Minister for Finance.

Mr. Martin

It is important to always remember that the Deputies opposite opposed Mr. McCreevy's policies at that time. It is a very positive development that they now attempt to seek credit for them.

Mr. Hogan

What did the Government do with Mr. McCreevy? It got rid of him and sent him to Brussels.

Mr. Martin

On the contrary, it is important that Mr. McCreevy——

Mr. Quinn

The Minister should ask Mr. McCreevy himself. If the Minister does not know the story, Mr. McCreevy will tell him.

Mr. Martin

With the greatest respect, Mr. McCreevy is making a great contribution to the global enterprise that is the European Union and his impact is already being felt in that jurisdiction.

Mr. J. O’Keeffe

Mediocrity prevails again.

Mr. Martin

The Deputy may speak for himself.

Mr. J. O’Keeffe

I am talking about the present Government.

State Property.

Eamon Ryan

Ceist:

78 Mr. Eamon Ryan asked the Minister for Enterprise, Trade and Employment the amount of money invested over the past five years by Enterprise Ireland in the redevelopment of the current headquarters in Glasnevin, including the amount spent on the materials building Technology House, and the land acquired at Claremont Avenue; the cost of the annual lease for the new headquarters at Eastpoint; when the decision was made to relocate the headquarters; and the reason for the decision. [38198/06]

Mr. Martin

The details of Enterprise Ireland's expenditure over the past five years on its current headquarters in Glasnevin in order to meet both its business needs and health and safety obligations is an operational matter for Enterprise Ireland and not one in which I have a function.

However, I understand from Enterprise Ireland that, in the period 2001-06, it spent €6.6 million on redevelopments on its Glasnevin site. This expenditure was committed well in advance of the Government decision to decentralise and was necessitated by the organisation's business needs. These included the need to accommodate the move from certain laboratory based activities to increasingly office based activities, the need to upgrade older buildings in order to meet health and safety considerations and the need to realign staff between buildings to meet the organisation's demanding strategic plan targets. This expenditure is split between expenditure on Technology House, which amounts to €4.5 million, and expenditure on the Materials Building, which amounts to €1.6 million. Enterprise Ireland also spent a further €640,000 on site consolidation and is now in possession of a very valuable asset which can be sold following the move to Eastpoint Business Park. The bulk of this expenditure took place in the period 2001 to 2003. Enterprise Ireland signed the lease in September 2006 for a single site Dublin office in Eastpoint Business Park in order to relocate its Dublin-based staff from its current four Dublin locations. The cost of this lease amounts to €2.9 million per annum.

The decision to relocate to Eastpoint was made in order to meet the business needs of the agency. Currently, Enterprise Ireland occupies four office locations in Dublin, primarily as a result of the amalgamation of various State agencies over a number of years into a single organisation to support indigenous enterprise. The lease on two of these buildings will expire in the fourth quarter of 2008, necessitating the move to a single site.

From an operational perspective, occupying four separate locations in Dublin was suboptimal, especially for an agency mandated to provide a range of services and expertise across several critical business functions in a holistic fashion. Crucially, having all Dublin based-agency staff in one location will enable Enterprise Ireland to further deliver on one of its most important new initiatives, namely, the creation of integrated teams of staff with complementary expertise to service client companies. Locating Dublin- based staff in a single location will significantly increase the level of collaboration within the organisation which will enable Enterprise Ireland to deliver a more effective service to client companies.

The move to Eastpoint will enable the agency to sell the majority of its valuable site in Glasnevin, while also enabling the National Standards Authority of Ireland to temporarily relocate from existing substandard accommodation which is causing health and safety problems to one of the buildings on the site which has already been refurbished by Enterprise Ireland, namely, the Materials Building. This move does not in any way impact on the National Standards Authority of Ireland's decentralisation process.

Mr. Eamon Ryan

It seems remarkable that we have just spent €6 million doing up two buildings, Technology House and the Materials Building, which are specific to the purpose of Enterprise Ireland but will spend a further €6 million in the next two years, given that the lease costs nearly €3 million per annum, on a building which is officially part of the decentralisation programme but which is located in the centre of Dublin, a location to which I never realised we were decentralising people. This operation was based in the centre of Dublin and one could argue it was situated in a location in which people will have bought houses in order to get easy access to their workplace. However, the Minister has now moved everything to a new location.

Can the Minister give me details regarding the length of the lease arrangement and its terms in respect of upgrade of rent on the new premises, given that it is currently €2.9 million per annum? How many years have we committed ourselves to? What is the expected value the Government will get from the sale of the building? Would it not have been possible to use the existing building given that other agencies such as Sustainable Energy Ireland are vacating that premises as part of the real decentralisation programme? I understand that Sustainable Energy Ireland is due to decentralise to County Louth. Who was behind the decision in respect of Enterprise Ireland? Was it the Minister or Enterprise Ireland itself? When was the decision made?

Mr. Martin

I have already answered the Deputy's last question about when the decision was made. The decision was made by Enterprise Ireland. The agency has been undergoing significant change over the past two years. It has launched a very impactful strategic vision for the future and is very clear in its focus following the report of the enterprise strategy group on what it must do to develop and grow indigenous enterprises in this country. The feedback from many small to medium sized enterprises across the country is very positive in terms of the impact Enterprise Ireland is having on the growth of indigenous enterprise, particularly exports, and the need to help companies internationalise and globalise more quickly than we possibly did heretofore.

A considerable number of recommendations emerged from the enterprise strategy group's report relating to how Enterprise Ireland should reorganise itself in terms of its core functions, particularly in areas like research and development, technology supports, sales and marketing, internationalisation and the connection between both. Therefore, the need for integration was important. The idea of the agency being scattered in four offices around Dublin does not make sense. The different locations came about because Enterprise Ireland emerged from the amalgamation of a number of State agencies, all of which had their own buildings. In terms of the future of Enterprise Ireland, it makes sense to locate the agency in one office in Dublin for its Dublin-based staff. It has an asset which it can now sell and realise significant returns on as a result of this particular decision.

The lease was signed on 13 September for a single site in Eastpoint Business Park. As I previously stated, the cost amounts to €2.9 million per annum, which is €20,077 per square foot plus service charges. Enterprise Ireland has taken a normal commercial 25-year lease on two office units in Eastpoint. The lease has break clauses to enable Enterprise Ireland to effectively manage changes in accommodation levels and factors in the flexibility needed for it to comply with the Government's decentralisation programme. The decision makes sense in terms of what Enterprise Ireland is doing. The agency will realise a significant asset in selling it as a result of this decision. Critically, in terms of its own objectives and remit, the decision will facilitate a far greater degree of integration of functions for the future.

Mr. Eamon Ryan

The Government is scattering civil servants all over the country, which will do immense damage to the long-term joined-up thinking we need in the Civil Service. This does not appear to be a consideration in terms of splitting up the Civil Service elsewhere.

Can the Minister indicate the estimated revenue that will be realised from the sale of the site? How can an agency like Enterprise Ireland, which by definition must be engaged in strategic long-term thinking, spend €6 million in taxpayers' money and then make a decision which goes in the opposite direction, namely, a decision to move to a new premises at a cost of €3 million per year when the State owned the original premises and there was no substantial cost? The key question is what revenue the Government expects to receive from the sale of this premises and how it can justify spending €6 million of public money which was effectively thrown out the window over the past six years.

Mr. Martin

Such money was not effectively thrown out the window. If the Deputy was to go through the reply in detail, he would note it illustrates that is not the case. I will not estimate the value of any sale.

Mr. Eamon Ryan

How can the Minister make a decision if he does not have a figure?

Mr. Martin

The market will determine that. The Deputy knows as well as anyone that the sales of any asset or building in Dublin are buoyant.

Mr. Quinn

Did the Minister get a confidential estimate?

Mr. Eamon Ryan

Did he get an estimate?

Mr. Martin

Any person on the street would know that. It is common sense from that point of view.

Mr. Eamon Ryan

The Minister for Justice, Equality and Law Reform would know that.

Mr. Martin

The Deputy has asked questions and sought replies. As I said, Enterprise Ireland is going through a period of structural change not only in its objectives but in how the organisation is structured. A fundamental document was prepared in the context of the enterprise strategy group which recommended certain courses of action. I have full confidence in the executive management of Enterprise Ireland and it has clear focus on the future. It is determined and enthusiastic about driving forward the indigenous enterprise sector. I have worked hard with it, as has the Minister of State, Deputy Michael Ahern, on a range of trade missions. We are keen to get it right for the future, as is Enterprise Ireland, because the indigenous sector must play a stronger role in the future in job creation and industrial policy.