Seanad Éireann díospóireacht -
Thursday, 27 Mar 1980

Vol. 93 No. 14

Employment Guarantee Fund Bill, 1980: Committee and Final Stages.

Section 1 agreed to.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Mr. Cooney

It says, referring to the fund:

and which shall be under the control and management of the Minister.

The Minister said when replying to the debate, in dealing with this question of the substitute scheme for the employment incentive scheme, that this supplementary premium that was paid in some industries was found to be contrary to Community rules, that some other scheme to meet what that scheme was doing, but at the same time not in such open breach to Community rules, would be introduced using this fund. I understood from the Minister that the mechanism for avoiding conflict with the community is to take these payments from the employers' contributions. How realistic is that hope when the section sets out that the fund will be under the control and management of the Minister? It will be quite clear that the money paid in these schemes will be money paid by the Government and consequently the difficulties with the Community will continue. Will the Minister seriously argue that he will keep the funds segregated into two separate parts, a post office account for the employers' contribution and a post office account for the Government contribution? Will the Minister comment on those points, please?

Minister for Finance (Mr. O'Kennedy)

I take it that the Senator is not arguing against this provision. I acknowledge that this is an area where a certain amount of ingenuity is required and I hope the Senator does as well. The fund will, of course, be under the control of the Minister. I specifically said that this part of this provision, for this purpose, would be administered by a joint committee. That was the decision of the tripartite committee. They will administer it from that portion of the contribution which comes from the employers. There is only one fund. I would ask the Senator to read very closely what I said in opening the debate, to take account of what I am saying now and not ask me to state anything more emphatically than that publicly because it will not be in our total interest to make any further public statements in relation to it.

Mr. Cooney

I see that, but I find it somewhat distasteful that we are engaged in a legislative exercise which has the objective of concealing a breach of Community rules.

Mr. O'Kennedy

It is not a breach. The Senator should recognise that if it were a breach it would be distasteful.

Mr. Cooney

At least it amounts to ingenuity.

Mr. O'Kennedy

I hope the Senator does not object to ingenuity when vital national interests are concerned.

Mr. Cooney

It is commendable provided it is honest.

Mr. O'Kennedy

It is honest. It protects jobs and our economy, and it was the view of the tripartite committee that this would be a very appropriate way to do it.

Mr. Cooney

I hope it will be successful because we all want that. I wonder if the Minister, when this section specifically says that the funds shall be under his control and management, thereby will be sowing the seeds of failure. On section 2, could the Minister give us more precise details of how this fund is going to be controlled and managed? What precise mechanisms are going to be set up? He mentioned that a joint committee would be overseeing the payment of the employment subsidy. Could he specify beyond that how it will be composed and generally tell us about the mechanisms for the control and management of the fund?

Mr. O'Kennedy

I indicated in my opening statement that this will be collectively the employers' contribution to the surcharge of .35 per cent on the employers. It will, in fact, be administered or held in the fund in the Department of Finance. The Government contributed last year, in advance of the collection of this fund, £3 million which is now being made available for some of the projects that are under way. The balance will be contributed by the Government and will be invested in the normal course in stocks approved for Government investment. As the projects are sanctioned by the committee the funds will then be applied.

Mr. Cooney

Who is going to run this fund?

Mr. O'Kennedy

The Minister for Finance.

Mr. Cooney

With whose assistance? I want to know what the mechanism for this is?

Mr. O'Kennedy

With the assistance and with the acceptance of the tripartite committee.

Mr. Cooney

Is there a special sub-committee of this committee set up to manage this fund?

Mr. O'Kennedy

There are constant sub-committees in the various areas but there also is a sub-committee in that context.

Mr. Cooney

What is the composition of the sub-committee as between the three parties?

Mr. O'Kennedy

All three parties are represented on any sub-committee of the tripartite committee.

Question put and agreed to.

SECTION 3.

Question proposed: "That section 3 stand part of the Bill."

Mr. Markey

The Minister in his speech gave five examples of the sort of project which will benefit under this type of guaranteed employment fund. I agree with the wording of section 3 as regards the general application and motivation behind such a fund. Two of the five examples the Minister gave are construction of an airport at Waterford and the provisions of a dredger and pilot launch for Waterford harbour to be built by Ross Co. Ltd., New Ross. I am quite sure that each of these two projects is very commendable, but I am also quite certain that there are probably a few dozen other projects of similar consideration around the country.

Have the tripartite committee given any thought to drawing up criteria, in deciding what sort of projects should get funds, if there should be a labour or a capital intensive element in them? If a capital intensive element is given greater consideration rather than a labour intensive one, we would not be too long in exhausting a guarantee fund of £20 million. The construction of an airport appears to be something which should not come under the heading of a fund such as this. We are talking about a guarantee employment fund. The construction of an airport appears to me to be a completely new project which, perhaps, should be financed under some other heading rather than under a fund such as we are here drawing up. I would like the Minister's comments on those points.

Mr. O'Kennedy

Unless I went into detail on each case I would not be able effectively to re-assure the Senator. Can I just tell him, generally, that the breakdown would be between, in the first instance, 1,000 jobs in the public sector covering a range of activities? The cost of those is somewhere of the order of less than £5 million. Schemes to pay temporary supplementary premiums under the employment incentive scheme would be of the order of £2 million. Others, such as the one the Senator has touched on, are by way of contributions to programmes that are being undertaken. The contribution in the case he has referred to is of the order of £705,000.

The Senator will be aware that in terms of regional development and the potential of that area the desirability of having an airstrip there has been for a very long time represented by the industrial and business interests of the area as being very important. It provides in the course of construction considerable employment in addition to the contribution it will make towards generating further employment and enhancing the attractiveness of the region for investment. It was the committee and not the Minister who came to that conclusion.

There will be a balance between the moneys available from the fund and the moneys made available by capital investment from other interests involved. I should say in this context that there are proposals made by the employers, the Federated Union of Employers, which, in fact, in one instance also is quite in line with the particular proposal that the Senator has mentioned in respect of Waterford, but they make proposals in respect of certain industries and in respect of certain regions. On balance, the Senator can be assured that his concern has been adequately taken into account.

Mr. Markey

I accept what the Minister says. I would also accept that the tripartite committee in their good judgment decide what schemes the fund should be devoted to. My observation on the matter is that the question of an enterprise like an airport should be financed out of some other source than what is titled "an employment guarantee fund". An employment guarantee fund is really motivated to help industries in certain emergency situations, to undertake new projects—a new airport could not in any sense be considered a new project but projects which would be new to the Irish economic sphere—and get these off the ground. I would have thought that the guarantee fund would be for such projects. I still maintain that surely the financing of an airport should be provided out of some other source rather than this guarantee fund.

Mr. O'Kennedy

This is a contribution towards it.

Mr. Markey

It may well be but it still comes out of the fund.

Mr. Cooney

Is this fund a once off thing?

Mr. O'Kennedy

Yes, it is.

Mr. Cooney

If it creates 1,000 jobs in the public sector how will they be paid in the years ahead?

Mr. O'Kennedy

Many of them will not be permanent jobs; some will.

Mr. Cooney

How many will be temporary, for a year only?

Mr. O'Kennedy

I have to go down through the details of this for what the Senator wants. In relation to the public sector and the provision of tourist and recreational amenities, there are 110 man-years involved in that. There are 65 man-years involved in the provision of amenities, modifications, maintenance and development of the sugar company's buildings and plants.

Mr. Cooney

This is part of the 1,000 jobs?

Mr. O'Kennedy

It is.

Mr. Cooney

What does 65 man-years mean?

Mr. O'Kennedy

It means 65 jobs for one year. Projects in Bord na Móna, county development team projects, the provision of clusters for small workshops and non-grant aided industry in the west of Ireland, that is the kind of thing we are talking about. The total number involved there are roughly 1,000 jobs.

Mr. Cooney

Does that mean at the end of the year that this fund operates for those people and they will have to be funded from some other source or let go?

Mr. O'Kennedy

To the extent that the jobs are temporary—it is only a small number of them that are—the answer is that they would have to be funded from other sources. They are jobs over and above those that would have been created in the year in question.

Mr. Cooney

Yes, but how many of them will be temporary?

Mr. O'Kennedy

To give the Senator the answer to that question would require at this stage more than is available in view of the decisions. The tourist and recreation facilities would be temporary.

Mr. Cooney

How many would that be?

Mr. O'Kennedy

110.

Mr. Cooney

Will the people who get those jobs be told they are only being given this work for a year?

Mr. O'Kennedy

I do not know. This is a cross-examination procedure.

Mr. Cooney

I am anxious to find out how the fund will be distributed. It is desirable that people be told exactly what the position is.

Mr. O'Kennedy

It will be made clear to those who are getting temporary employment that it is temporary employment. I am sure the Senator recognises that it is desirable that those people be told what the position is.

Mr. Cooney

I agree but does the Minister hold out any hope to these people that their employment will be continued?

Mr. O'Kennedy

It is the Government's intention and mine in particular to ensure that the employment prospects in these and in other areas will be enhanced.

Mr. Cooney

What does that mean?

Mr. O'Kennedy

It means what it says, "enhanced". You cannot guarantee that a temporary job will suddenly become permanent at the end of the year. I am not going to suggest that I can guarantee that.

Mr. Butler

Does the Minister think with regard to temporary jobs that he will get the calibre of personnel for those jobs? I do not think he will get personnel of any calibre who will take a temporary job for 12 months and then be expected to look for a job elsewhere.

Mr. O'Kennedy

The fact is that from the inquiries made by the committee the labour pool was available and these are providing jobs for people who otherwise would be unemployed in certain areas.

Mr. Butler

The outlook is poor if the Minister is going to have 1,000 nonpermanent jobs available.

Mr. O'Kennedy

I had better make it quite clear that if one is to argue as it appears now to be argued by the Senators, that because temporary jobs have been made available the outlook is very poor or that it would be much better to have guaranteed permanent jobs, I do not think there is much merit in that approach. The purpose of the understanding was in a particular year to meet a shortfall if that shortfall occurred. That shortfall is being met. That is the whole purpose of the understanding and the committee's deliberations on that. One should not condemn it because it meets its own terms of reference and does not meet terms of reference that Senators are now suggesting it should have.

Mr. Cooney

How many jobs does the Minister expect the fund to produce this year?

Mr. O'Kennedy

At least 3,500 jobs.

Mr. Cooney

What will the total employment target for this year be?

Mr. O'Kennedy

That is a matter I will be promoting in consultation with the social partners when we get into the context of the next understanding. The Senator must know it is not simply thinking of a number and setting down one's target. I am not prepared to do that at this stage.

Mr. Cooney

That is precisely what the manifesto did. It set out that there was to be a reduction in unemployment to a certain figure for each of the succeeding years. The Minister now tells me that that is not a simple matter. Was the manifesto produced to cod us? What is the difference between projects and schemes?

Mr. O'Kennedy

I do not think in principle there is any difference to concern us here between projects and schemes. Would the Senator let me know precisely where this important question arises?

Mr. Cooney

It is in line 41 of page 2. It is in section 3 of the Bill which states: "The Minister shall apply the money standing to the credit of the Fund for the purpose of defraying expenditure on projects or schemes". Why are the two words used? Is there any significance in using the two words?

Mr. O'Kennedy

So that, whatever programme, projects or schemes were introduced the definition section would be comprehensive enough to ensure that they came within the scope of it.

Mr. Cooney

The Minister has no particular reason for using the two words?

Mr. O'Kennedy

For instance, you could properly call the project, the Waterford Airport Project. You could probably call a scheme the substitution for the employment maintenance scheme.

Mr. Cooney

It could be reversed.

Mr. O'Kennedy

If the Senator wants to argue that and he seems to be in the mood, I would not wish to deprive him of so doing.

Mr. Cooney

It is a question of the drafting of the section. On the schemes or projects that will be implemented from the fund the Minister in his speech set out the criteria for the allocation of moneys from the fund. One of the criteria is the creation of new jobs which would not be created in the usual course. Could the Minister give us an idea of what sort of jobs these would be?

Mr. O'Kennedy

Jobs that would not have been created. Whether it be jobs created for the provision of the airstrip at Waterford, the dredger in New Ross, the various amenity programmes that I have referred to, the county development team projects, each one of those in this instance creates jobs that would not otherwise be created this year.

Mr. Cooney

Could the Minister give us an indication of any in the pipeline?

Mr. O'Kennedy

I do not feel free to disclose these at this stage because they are under consideration by the committee.

Mr. Cooney

Would the committee look favourably at jobs that might be put by the Midland Regional Development Committee?

Mr. O'Kennedy

If the Midland Regional Committee have submitted any proposals—indeed every sub-committee were invited to do so—I am quite sure the committee will look at them favourably.

Mr. Cooney

In picking between them are there any criteria?

Mr. O'Kennedy

Yes. Obviously the first priority would be new jobs that would generate other jobs. That is No. 1 criterion. Again when one is dealing with a limited fund like this one tries to limit the amount of the cost per job. That is the second criterion. No. 3 relates to jobs that will enhance the investment climate of the area. These are among the criteria the committee consider and on the result of these they determine which ones will get money from the fund.

Mr. Cooney

The second criterion to be applied in the allocation of funds is the maintenance of existing jobs which would otherwise be discontinued. Does this apply to jobs in the public sector or in the environmental area such as the Minister has described already in tourism and things like that?

Mr. O'Kennedy

It could apply in respect of some of the examples I have given already. It is fair to say from the information available to the committee, that jobs would not have continued if it were not for the intervention of the committee in applying the resources of this fund. I have mentioned a number of examples but I am not prepared to specify here in the interests of confidentiality or the interests of the organisations concerned, which particular ones I have in mind.

Mr. Cooney

I would not ask for that information as that information would be confidential, but I am interested to know why the Minister says that this could apply to jobs in the commercial area. I would like him to deal with the position of a commercial undertaking which normally would go to Fóir Teoranta as a last resort. Of course, Fóir Teoranta's terms of reference permit them to lend only for projects which can be made viable. Would a commercial undertaking which had been refused by Fóir Teoranta then be considered under criterion No. 2?

Mr. O'Kennedy

There is nothing to exclude it from consideration because it had been either refused or accepted by Fóir Teoranta.

Mr. Cooney

Would the Minister as a matter of policy like to see funds allocated from this fund to a firm which Fóir Teoranta had rejected on the grounds of its non-viability?

Mr. O'Kennedy

The Senator must be talking about a particular case.

Mr. Cooney

I am asking this for my own information because public representatives from time to time are approached by firms in temporary financial difficulty. We may have to introduce them to Fóir Teoranta or some other State agency. Fóir Teoranta apply commercial criteria perhaps not as strict in the first instance. In a situation where some other public representative might come in contact with the commercial undertaking in difficulty unable to get assistance from Fóir Teoranta, I would be anxious to know would it be worth my while sending them to this fund for assistance? To enable me to decide that, I want to know from the Minister as a matter of policy, will this fund assist undertakings that have been refused by Fóir Teoranta, just as a general principle?

Mr. O'Kennedy

As a principle there is nothing to exclude them from assisting firms that have been refused by Fóir Teoranta. That is all I can say at this stage.

Mr. Cooney

That is all I want to know. With regard to criterion No. 3, could the Minister give us an indication of what is in mind there with the jobs that would not have commenced until later? Would these be jobs in the industrial commercial area or would they be jobs in the public sector, environmental things and so on?

Mr. O'Kennedy

It could be either place if they had particular projects in mind or in the semi-State sector for that matter. Jobs that certainly would not have commenced this year could be brought forward from next year to this year.

Mr. Cooney

Are there any such jobs in the pipeline?

Mr. O'Kennedy

There are.

Mr. Cooney

How many?

Mr. O'Kennedy

I cannot say at this stage. The allocation in principle has been decided but the actual amount expended at this stage is as yet relatively small.

Mr. Cooney

If the allocation in principle has been decided, presumably that has been decided on the basis of some projected number of jobs or particular scheme.

Mr. O'Kennedy

Yes, it has.

Mr. Cooney

If the Minister knows how much has been allocated, he should know how many jobs will be involved.

Mr. O'Kennedy

The examination is still continuing. I should tell the Senator here that there is a whole range of projects and schemes involved in this examination. I do not feel free to disclose information until such time as the committee, who have the responsibility, representative as they are of the partners concerned, come to their conclusions on it.

Mr. Cooney

I do not want confidential information on the precise nature of it.

Mr. O'Kennedy

I find it just a little bit tiresome as well as everything else to be subject to cross-examination by the Senator on the basis of which he must recognise I am not free to disclose at this stage. Perhaps, he is enjoying himself in his role. I will discharge mine, but I do not find that he is showing an awareness of what my function is in this area.

Mr. Cooney

I must protest at the Minister's attitude. The whole point of Committee Stage is to get information.

Mr. O'Kennedy

The Senator has.

Mr. Cooney

Fair enough, but I am entitled to protest. The point of Committee Stage is to try and tease out information. I am not asking for any confidential information, I am asking the Minister to amplify one of the criteria for the spending of money from this fund, the criteria that he referred to specifically in his speech, the bringing forward of permanent jobs which otherwise would not have commenced until later. I am only asking the Minister how many jobs there are under that heading at the moment? The Minister does not know and he is blustering as a result.

Mr. O'Kennedy

The section we are dealing with says specifically:

The Minister shall apply the moneys to the credit of the Fund for the purpose of defraying expenditure on projects or schemes which in his opinion will result in the creation of additional employment or the maintenance of existing employment.

It does not involve anything more than what is indicated here, what are the precise criteria in each particular case. Each case would have measured up on what the consequences of that would be.

Mr. Cooney

I am not asking the Minister to do that. The Minister brought forward the criteria that are to be applied in his speech. I am merely asking him for details of the criteria.

Mr. O'Kennedy

I can give examples. That is as far as I can go.

An Leas-Chathaoirleach

As far as the Chair is concerned, first of all, it would be preferable if the Chair was addressed now and again. From the Standing Orders point of view Senators may speak more than once on Committee Stage. I would prefer if the Chair was addressed. Is section 3 agreed?

Mr. Cooney

I am not likely to get any more information so I will have to agree to it.

Question put and agreed to.

SECTION 4.

Question proposed: "That section 4 stand part of the Bill".

Mr. Markey

Can we take it that this fund will be financed on a fifty-fifty basis between employers and the Government out of Exchequer funds? If so I must then move on to section 5 just to make my point. I have done some sums here and it would appear that the contribution of 0.35 per cent derives from calculating a shortfall of 5,000 jobs and the criteria laid down by the tripartite committee of a contribution of £4,000 per job will bring us to a total of £20 million. It is obviously estimated that that would warrant a rate of 0.35 per cent to give 50 per cent of that from the employers' side.

The Minister in an earlier comment stated that he would expect this fund in 1980 to cover about 3,500 jobs. That, working on the same criteria, would arrive at a total of £14 million. The 0.35 per cent, based on reckonable earnings in 1980, could possibly bring in a larger contribution than in 1979 on a 1979 reckonable earnings basis. To me the rate could be too high on the basis of only 3,500 jobs benefiting out of the fund this year. The rate on the employers of 0.35 per cent could, therefore, be too high or could mean that there would be a balance left in the fund at the end of the year going on that rate of 0.35 per cent. This brings me on to section 7 and the point I made earlier in my Second Stage remarks about the winding up of the fund, that where the balance of the funds goes is left to the discretion of the Minister. I would like this to be tightened up because I believe that if there are any moneys left in this fund they should be spent within the terms of the criteria of the fund. I have made some points there as regards whether the rate of 0.35 per cent is too high on the basis of the Minister's 3,500 jobs and it will still mean that the funds are going to be financed fifty-fifty.

Mr. O'Kennedy

That is the intention. First of all, the Senator will be aware that the original calculation was a rate of .4 per cent. It was precisely to ensure that the employers' contribution would not exceed £10 million, that on revision it was determined at 0.35 per cent. I can only tell the Senator that the indications are that, if anything, 0.35 per cent contribution from the employers will be less than £10 million. This is something which the employer organisations accept. The likelihood of an increase or an excess over £10 million from that contribution is not very real.

If there is a small shortfall, which is what is anticipated, from the employers' contribution, this will be made up from the investment from the contributions made by the Government. The possibility of there being a surplus from the employers' contributions is very unlikely in view of the revision downwards of the provision of the .4 per cent surcharge to .35 per cent. This is something which the employer organisations have accepted. I do not think there is likely to be a surplus at the end of this from the employers' contribution point of view.

Mr. Markey

I take it if there is a surplus——

Mr. O'Kennedy

A surplus would have been contributed from the Exchequer and to that extent would probably fall back into the Exchequer. It is not likely to be a major element either.

Mr. Cooney

Is the Government contribution of £10 million being paid entirely in the year 1980?

Mr. O'Kennedy

£3 million is provided by way of an additional Estimate in December 1979 and the balance has been included in this year's Estimates. The £3 million which was provided then was to ensure that funds would be immediately available before the employers' contributions became available for projects which have already started.

Mr. Cooney

Has this amount been paid into the fund yet?

Mr. O'Kennedy

No.

Mr. Cooney

How much has been paid out of the fund to date?

Mr. O'Kennedy

The figure is £400,000 to date.

Mr. Markey

Subsection (5) provides that an employer's employment surcharge shall be paid into the social insurance fund. I wonder if this is the appropriate fund to have such moneys put into. The social insurance fund, so far as I know, is the fund that covers all types of unemployment benefit. If it is, it would appear to me to be a somewhat inappropriate fund in which to put the surcharge from the employers. It also brings into consideration the point I made earlier, that if there is going to be contributions made from this fund towards capital projects rather than purely labour-saving or labour-employment projects, it would appear to me that the use of a social insurance fund to hold such moneys would be completely inappropriate.

Mr. O'Kennedy

It is not using the social insurance fund in that sense. It would be paid into the social insurance fund and would be transferred from that fund to the employment guarantee fund. It has been seen as the most suitable vehicle for the collection of the employers' contribution.

Question put and agreed to.

Sections 5 to 9, inclusive, agreed to.

Title agreed to.

Bill reported without amendment, received for final consideration and passed.

Mr. E. Ryan

As a result of discussions which have taken place, it is proposed that the House sit until 2 p.m. and break for lunch then until 3.30 p.m.

Mr. Cooney

Discussions between whom?

Mr. E. Ryan

Between the Whips—Senator FitzGerald in particular.