Seanad Éireann díospóireacht -
Wednesday, 1 Jun 1994

Vol. 140 No. 13

Trade and Marketing Promotion (Amendment) Bill, 1994 [Certified Money Bill]: Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Tourism and Trade (Mr. McCreevy)

The purpose of this Bill is to increase the statutory limit on the amount of grants that may be made to An Bord Tráchtála to enable that body to continue the work of promoting and developing the sale of Irish goods and services.

The Trade and Marketing Promotion Act, 1991, under which ABT was established, fixed the total amount of grants which may be provided by the Oireachtas to the board at £400 million. The Bill proposes to raise this amount to £650 million in order to cover expenditure by ABT over the next four to five years, including that incorporated in the National Development Plan, 1994-1999. It does not imply any long term commitment to provide funding at a particular level and does not bind either the Government or the Oireachtas to any financial commitments. It should be seen, therefore, as essentially a technical measure.

This ceiling has been raised every few years since the establishment of Córas Tráchtála, An Bord Tráchtála's predecessor, in 1959. The idea of setting such limits is to give the Oireachtas a periodic opportunity to review the agency's operation. However, I should point out that such opportunities also exist through the annual Estimates exercise and the various Oireachtas committees.

The current aggregate or cumulative sum paid from the Exchequer to ABT and its predecessor CTT since 1959 is now in excess of £380 million and will reach the statutory limit of £400 million before the end of this year.

The focus of ABT's work is to enable Irish companies to overcome the disadvantages of peripherality by means of strengthening their marketing capability, identifying new markets, consolidating existing ones and by actively promoting Irish goods and services.

Senators will be aware of the key role of ABT in the promotion of Irish goods and services abroad and will appreciate its major contribution to the growth of Irish exports in the last number of years. Indeed, we must congratulate Irish exporters on their outstanding performance to date and especially in 1993 when most of our major markets were in recession and when the effects of the currency crisis made their task an extremely difficult one — for indigenous companies, in particular. It was a demonstration of exceptional resilience and determination.

Figures indicate that in 1993 world trade grew by only 2.6 per cent, less than half the growth of the previous year. This meant that Irish companies had to significantly increase their market share at the expense of their international competitors. In 1993 our total exports rose by almost 9 per cent to an estimated £18.1 billion; this represents a cumulative increase of 23 per cent over the past five years. Exports from the indigenous sector, where ABT concentrates its efforts, grew to an estimated £3.9 billion — an increase of 8 per cent in 1993 and a cumulative increase of 30 per cent over the past five years. These excellent results are reflected in the remarkable trade surplus of 1993 estimated at £3.8 billion or 12.3 per cent of GDP.

According to the latest information available from the Central Bank, the outlook for world output and trade has improved. Indeed, the evidence from the early part of this year suggests that the US economy is experiencing significant growth and that the UK recovery, although more muted, is also well established. Economic activity in Germany and Japan has also shown signs of improvement. Overall, it is expected that stronger international demand will assist export growth both from the foreign owned and indigenous sectors in 1994.

Meanwhile, the ESRI medium term review for the period 1994-2000 forecasts average annual inflation to remain under 2.5 per cent. This factor, combined with growing competitiveness within the Irish economy, should keep Irish firms well positioned to avail themselves of the ever increasing opportunities which will arise as a result of the completion of the Single Market and the conclusion of the GATT Uruguay Round.

The achievements of Irish exporters in 1993 show that we have the capability to win more business in highly competitive markets and despite adverse conditions. With a brighter trade picture before us and opportunities multiplying, I am confident that ABT's 1994 forecast of further growth in total exports to £19.8 billion will be achieved and, more importantly still, their forecast that indigenous exports will grow to £4.3 billion, an increase of 10 per cent, will be achieved.

The Government recognises that Irish companies must be suitably equipped to succeed in the highly competitive trade arena. It is clear, for example, that the opening up of the public procurement market in Europe will provide tremendous opportunities for Irish companies. Put simply, public procurement means all purchasing done by public bodies and agencies of all sorts, from the largest commercial State company to the smallest local authority.

In an Irish context alone, it amounts to a very large amount of business, over £4 billion a year. However, it is when we translate it into EU terms that its magnitude becomes apparent. It is estimated that throughout the EU spending by Central Government, State bodies, local authorities and other public sector purchasers amounts to the equivalent of over £400 billion a year. Previously, only a small percentage of this business was placed with suppliers from outside the procuring State, although it must be said that the Irish market was open to the tune of about 50 per cent when the comparable figure for some other countries was as low as 2 per cent. The liberalisation of public procurement policy creates a huge area of potential new business for Irish companies. The time has now come for Irish companies to begin to take advantage of these new legislative developments.

It is for this reason that we incorporated in the Programme for Competitiveness and Work a new ABT programme to assist Irish companies to compete for a greater level of sales to the public sector in Ireland, which will ultimately strengthen their ability to compete in the larger overseas public sector markets. The immediate objective of this initiative is to increase Irish suppliers' sales to the local market by £100 million per annum.

The Government has set ABT a target of increasing the exports of indigenous industry to £5.5 billion by 1996. One crucial element in achieving this target is the commitment in the Programme for a Partnership Government to ensure that more Irish salespeople are located in overseas markets. The EUROPLACE scheme, which I launched last year, aims to double the number of Irish salespeople in overseas markets by 1996. I am glad to say we are on target to achieve this figure.

Other valuable ABT programmes include the business leads campaign which generated sales leads worth over £200 million, while the targeted marketing consultancy scheme, which assists companies to undertake significant marketing investments, plays an important role in the success of indigenous industry. These successful measures will be further enhanced by a drive to diversify Irish exports and target new markets with high growth potential.

Senators will be aware of the importance the Government places on the development of indigenous industry. This is the overriding objective of the new market development programme. This programme will be administered by ABT over the next six years and is assisted by EU Structural Funds. It will promote and develop trade from the indigenous manufacturing and traded services sectors. Identifying and maximising outlets for these sectors is a key component in the Government's strategy for creating employment.

The market development programme will use specific measures to address and correct the structural disadvantages experienced by indigenous exporters visà-vis their competitors in the rest of the EU. Its target will be to achieve an annual increase of 9 per cent in our indigenous exports and to increase Ireland's share of other EU markets by 25 per cent over the period of the plan.

This Bill will ensure that the statutory framework to support and develop the Irish export sector into the 21st century is in place. This will enable us to provide ABT with whatever level of finance is appropriate.

I commend this Bill to the House for approval.

Mr. Howard

I welcome the Minister to the House and I support the Bill. As the Minister has indicated it proposes to increase the level of non-repayable grants to An Bord Tráchtála from £400 million to £650 million. The role of ABT in helping Irish industry in the generation of profitable exports is supported by everyone. This role is essential to the economic development in the country and the prospects of job creation.

The reports of ABT state that it supplies services to 2,500 companies in the State and point out the opportunities for increased exports. On the basis of our industrial, manufacturing and exporting performance over the past two years, we are poised to avail of improvements and growth in overseas markets. The work of ABT is vital, and I join with the Minister's praise of the body. I have been unhappy with one or two decisions by ABT in recent times and I will refer to them in due course.

I also join with the Minister in praising the excellent performance of Irish manufacturers, exporters and industry as a whole in the face of competition in overseas markets. We must recognise our duty as Oireachtas Members to encourage expansion and progress.

The Minister mentioned that the figure for exports in 1993 was over £18.1 billion. At the beginning of that year the ABT forecast for exports in 1993 was £1 billion less than that figure. This indicates how successful our industry has been. The ABT forecast for the present year is just over £19 billion. If last year's performance is repeated we will break the £20 billion barrier. We can be proud of this. The Oireachtas must always be willing to assist in such cases. I commend the Minister for his interest in this area; he has left his mark on many aspects of his Ministry.

We must recognise that while progress is being made, the Government seems to be leaving in place certain handicaps which militate against better performance. If these handicaps were removed, it would enhance a good performance. The handicap to which I am referring is the overwhelming burden of bureaucracy which many companies, particularly in the export field, are confronted with and which is a disincentive to many aspiring companies, especially the smaller ones. I find a certain consistency there. While the Minister, Deputy McCreevy, is doing an excellent job—and I give him credit for that— obstacles are still in place, many of which come under the general heading of bureaucracy. This causes unnecessary cost but equally disturbing is the unnecessary frustration for people who are attempting to break into export markets.

Another obstacle is tax on working performance which confronts both individuals and companies and creates a disadvantage for manufacturers and exporters. We must continue to mention this factor until effective measures are taken to deal with it, although it becomes tiresome after a while. This tax burden militates against performance, especially when viewed against similar costs of competing companies in other countries.

I recognise the progress which has been made in the indigenous industry sector. This is an important development. The Minister mentioned a target of £5.5 billion by 1996. Given our output and performance record in indigenous industry over the past couple of years, we should be able to meet this target.

We cannot conclude this debate without referring to the situation which may develop, and is likely to develop, from the recently concluded GATT agreement. No doubt there will be opportunities for some sectors of Irish industry and these will be grasped but, we must also recognise the disadvantages — and there will be acute disadvantages in some cases—for some important export industries which have a good track record in winning markets overseas, often against stiff competition. I am referring to the disadvantages for those involved in agriculture, food, textiles and clothing. We should not allow this opportunity to pass without saying that difficulties will arise for those areas. Perhaps the Minister could tell me what examinations and preparations the Government has undertaken to deal with these situations as they arise.

The Minister said the Government recognises that Irish companies must be suitably equipped to succeed in the highly competitive trade arena. Perhaps I am taking that sentence out of context because I am not following on from it, but I want to consider it on its own. How does that stand with a decision taken by An Bord Tráchtála in the past year to dispense with a worthwhile scheme — the provision of management consultancy services to companies? Companies could get a grant of £9,000 and avail of the services of a management consultant for up to 32 days per annum. Many companies found that to be a useful scheme. In two cases, I was told it was the factor between success and failure. I would like to know why it was considered desirable or necessary to remove what would appear to have been a good scheme. Another reason it was a good scheme was that, unlike others, it was put in place to help industry, it had a built-in mechanism to measure its success or otherwise. Because of this built-in mechanism I believe the decision to dispense with this scheme was hasty. However, reasons for this decision may be advanced later.

I welcome the fact that An Bord Tráchtála has decided to leave in place another scheme, which was under examination, and that is the graduate placement scheme where the services of a full-time graduate are made available over a one year period. It is a good scheme and I am glad it was not dispensed with because that would have been a mistake.

My party and everyone in the House supports the work of An Bord Tráchtála, which was set up less than three years ago to take over the joint role of Córas Tráchtála and the Irish Goods Council. It has built up a reputation of excellence over the past three years. I wish it well and I hope that trend continues.

In regard to the Minister's comment that Irish companies must be suitably equipped to succeed, I was surprised to find that grant-in-aid to An Bord Tráchtála has been reduced by 8 per cent in the latest Estimates. Perhaps if it had been the Minister's decision that would not have happened. If, as the Minister said, the Government recognises that assistance should be provided—a theory I support — why has this happened? Perhaps £3 million is not a significant figure but it represents a reduction of 8 per cent in grant-in-aid to An Bord Tráchtála at a time of growing opportunities for Irish exporters in foreign markets. If there are growing opportunities, we should not curtail services. We must avail of these opportunities and exploit them to the full.

The stifling burden of bureaucracy and red tape, especially where indigenous industry and small operators are concerned, must be removed. We must look at the burden of tax on work, production and incentive. It has a double edged disadvantage in that it is oppressive where those in employment are concerned, but it also puts many companies operating in Ireland competing in international markets at a disadvantage in their cost structure in relation to other companies producing similar products in other countries. The Government needs to face up to big issues in this area, including the problems and the opportunities GATT will create.

I have found another matter to be worrying. In an article in The Irish Times dated 20 August 1993, Mr. Alan McCarthy of An Bord Tráchtála stated that following a survey carried out by An Bord Tráchtála, two out of every three Irish exporters were not properly prepared for the consequences of a floating pound. We have been getting near this question of the pound at parity, and to me this rings alarm bells. I do not know to what extent the situation may have changed since that statement was made last August, but if An Bord Tráchtála found that two out of every three exporters were not properly prepared for the consequences, then we have a serious problem, but perhaps this has been addressed in the meantime.

I do not know whether the Minister is free to comment, but it is important to preserve the good standing of State boards. There was an article in the newspapers just over a year ago about a sum of £128,000, building societies, non-existent companies and so on. I do not know whether that matter has been fully resolved. I am sure the Minister knows to what I am referring. I do not know if he is free to comment on it, but for the sake of upholding the good name and standing of State companies and semi-State bodies, the matter should be disposed of in a satisfactory manner.

I wanted to comment on the spread of markets, the growth we have witnessed and the changing pattern of the markets, but since I cannot do that in half a minute, I will not mention it further. I welcome the Bill.

Mr. Daly

I welcome the Minister and congratulate him on his achievements to date in the Department of Tourism and Trade. He has brought a new dynamic to that area. It is very important that we have an energetic dynamic exports drive. I want to avail of this opportunity not only to congratulate the Minister and to wish him success but to express to the board and staff of An Bord Tráchtála our support and congratulations for the efforts they are making.

I have had dealings with them once or twice. I stood in for the Minister's predecessor at a promotion drive in Brussels when we were endeavouring to open up markets in the Belgium/Luxembourg area. I was fascinated to note even at that time, which was about two years ago, that exports to Belgium were in excess of £800 million. It is a very important market. I was impressed with the expertise of the professionals in An Bord Tráchtála who had made important economic contacts between the chambers of commerce and people involved in trade, industry and business there. You will find the same kind of professionalism in An Bord Tráchtála in every country where they have offices. They have offices in five or six locations worldwide as well as several offices in the UK and Europe.

The reorganised board has combined the old Irish Goods Council and An Coras Tráchtála. The figures highlighted here by the Minister speak for themselves. Senator Howard mentioned them when he spoke about the expansion in total trade in 1992 to £16.5 billion, an increase of over £1 billion from the previous year, and a further increase to £18 billion in 1993. These are substantial increases in total export value and underpin job prospects here. It is important that we provide the necessary finance to enable An Bord Tráchtála to carry out its important work. It is a modest amount bearing in mind the impact this work has on employment generation. As Senator Howard said, about 2,500 companies are serviced by An Bord Tráchtála.

This will be especially important in the future with the completion of the GATT negotiations and development of trade in other areas, for example, the expansion of the EFTA countries into the European economic area, the development of the North American Free Trade Area and the development of the east African economic grouping which is developing rapidly, where the opportunities will be great, the stakes are high and we must ensure that we have the best possible team operating. The combination of these elements — the GATT negotiations, the regrouping of trade in North America and Asia, and in Europe with the coming together of the EU and EFTA — will bring a situation which will be exciting and encouraging over the next five to ten years.

It is important that we would have highly skilled professionals in the marketing and sales areas; and this goes beyond just marketing; it includes design, product quality, the time that services are delivered, etc. All these elements combine to make up a total package. I am encouraged by some of the work I see in many of the professional schools and colleges which are producing graduates of the highest calibre in marketing and design and in the promotion of business generally. This is to be commended and welcomed.

I would like to record appreciation for the work done by the professionals in this area, in paying more attention to the design of products, sales and marketing. It is essential that we continue to produce quality goods which can command premium prices on markets all over the world and it will be increasingly essential that the necessary funding is provided to An Bord Tráchtála and other agencies.

There is a wide range of sectoral activities in which An Bord Tráchtála is involved and each provides new and exciting opportunities. In the food and drink sector the focus on fish is important, the production of quality fish from fish farms and the development of a trade mark for Ireland, as has been done in Norway. All these matters must be attended to if we want to make an impact on these important markets.

In the international services sector the opportunities are great in aviation services, medical services, construction personnel, etc. I notice from An Bord Tráchtála's report that quite an amount of work was done in Germany. Although the German economy was sluggish, companies were still prepared to get involved in some of the contracts there, and this provided opportunities in the engineering, electronics and chemical sectors.

I would draw the Minister's attention to the fundamental necessity for the provision of well qualified graduates, especially to assist small and medium sized industries. When we discussed the reorganisation of EOLAS I mentioned that a number of graduates had succeeded in getting jobs in small companies under a scheme which EOLAS operated. About 80 per cent of participants were placed in permanent positions, having worked on a temporary basis on the funded EOLAS scheme. The demand for those places far exceeded the opportunities available. An Bord Tráchtála should consider setting up a grant scheme. Perhaps it already has a scheme of this nature, but if it has, it is a minor one. There is an opportunity for an extensive scheme of recruitment or the payment of grant aid through the board to companies hiring young professionals, especially in marketing, who would be involved with these companies, possibly on a shared basis but exploiting new opportunities. They could avail of the expertise of many of our young professionals who are either unemployed or who are working overseas and would be glad to come home. In nearly every country I have visited, I have found such people working in businesses overseas. They would be more than willing to come home and play a part in the revitalisation of our industry, provided they had stability of employment. One could not expect them to come back otherwise.

The Minister should examine these areas and see whether it is now possible, with the availability of funding — possibly also European funding — to devise a scheme which would enhance the prospects of employment for many of our young graduates who are either unemployed or have to emigrate. Such a scheme could also help our small and medium sized industries to exploit the world market.

It has been shown that there are opportunities for our companies worldwide. The American and British markets are not being fully exploited and developed. I welcome the work done by the board in bringing to Ireland those involved in the promotions sector in the UK in an endeavour to sell more of our goods on the UK market.

I want to ask the Minister about International Development (Ireland); a combination of An Bord Tráchtála, Shannon Development, the IDA and others involved in the promotion of international services. Is that company still in operation? Is it successful? Many companies, such as the international divisions of the ESB and Aer Rianta, have exploited opportunities in the professional management consultancy area. I presume this has been dealt with by a subsidiary company of the board. Is it still in operation and, if so, can it be expanded?

I wish to draw the Minister's attention to the fact that the Channel Tunnel has been completed; trade will soon be moving rapidly through it. What effort is the board making to direct some of our traffic, especially to continental markets, towards the tunnel? The Channel Tunnel will have a major impact on trade between the UK and the European continent and we need to become involved in that.

I fully support this legislation. Could the Minister tell the House how the marketing of our tourism is progressing? Will it be a feature of the efforts of the Trade Board or has the Minister any plans to reorganise it? Any money spent marketing Ireland abroad is money well spent. There have been serious criticisms about the level of funding provided by Governments on the marketing of our tourism overseas. This might not be relevant to the functions of An Bord Tráchtála but it has a lot to do with business, jobs and economic development. There is a necessity at this stage to look at the marketing of Irish tourism and see whether now is the time to look at its organisation, especially when one considers that individual organisations are making their own marketing arrangements. In Shannon, for example, Aer Rianta, Shannon Development, Bord Fáilte and Aer Lingus have separate overseas marketing arrangements. It is important to bring these together and provide a central focus and direction, although perhaps it should not be done under the auspices of the An Bord Tráchtála.

I welcome the legislation and congratulate the staff of An Bord Tráchtála and those involved in this important work. I also compliment the Minister for introducing the legislation and assure him of the support of this House in his endeavours.

Dr. Henry

I welcome the Minister to the House. Nobody grudges the money being provided for An Bord Tráchtála, but hopefully the board will be self-critical about how the money is spent.

There was a trade fair in Chicago in 1993, which I understand the Minister attended. It is important for An Bord Tráchtála to get non-Irish associated shops to attend fairs of this kind and in this instance heavy inducements were given to firms to attend, for example, a voucher valued at $200, or a contribution towards air fares was provided for those firms who pre-registered. In view of the fact that there were approximately 600 pre-registrations at that fair, inducements of this kind would have amounted to £120,000, which is a lot of the tax-payer's money. I hope all the people who were chosen were carefully vetted before being provided with such vouchers or free air tickets.

I was told — I assure you it is only anecdotal, but I had to take notice of it seeing it came from a constituent — that one person who came to her stall owned a pet shop. I know we are selling horse rugs, etc., but I do not have details of the volume of export of these products to North America. I would be pleased if the volume of exports was increasing, but we should be careful in the way we select people to whom we are giving these promotion slips.

In the past, Coras Tráchtála, now An Bord Tráchtála, appeared to advertise heavily at these shows. I have noted that several pages in glossy magazines have been taken; this is very expensive. For example, there was heavy advertising in the brochure accompanying the Birmingham Premier Collection recently. Does An Bord Tráchtála make any effort to ascertain how many people read such advertisements and how much business is generated from them? Does the board ascertain how much benefit is derived, in terms of bringing further business to Irish firms, from its free promotions, such as distributing vouchers, air fares and so on? What kind of surveys has the board undertaken to ascertain feed back from firms which receive follow up business from their advertising?

An Bord Tráchtála does not have agents abroad. I am not aware if the board is able to spend money in this way, but I ask the Minister to ensure that consideration is given to this. While it is important to have Irish people selling abroad, the board should be allowed to recruit agents abroad. This is important on the continent because people can sometimes be reticent if they deal with people who are not at home in their own language or their currency.

Perhaps An Bord Tráchtála could group five or six complementary small firms, find an agent for them in some of the bigger cities on the continent and have these agencies deal with local problems of currency, freight, etc. Such problems may not be as serious as they used to, but this is an area where insufficient effort is being made, even excluding the language problem. In my experience many North Americans find it impossible to deal abroad if they do not have access to a local facility. It would be worthwhile if An Bord Tráchtála could put some effort into acquiring good, competent agents, be it on the continent or North America. Perhaps the board could report to the House, through the Minister, in a few years' time on the cost effectiveness of undertaking this service for Irish exporters, rather than running expensive trips for buyers to shows or engaging in expensive, glossy advertising which perhaps many people do not require.

Ms O'Sullivan

I welcome the Minister and the Bill. My contribution will follow on from what many other speakers have said. It is a tough world and our population is small. We are, therefore, highly dependent on our exports for jobs and economic prosperity. It is important that we have a strong trade board and a well organised system of selling our products in the outside world.

We have considerable strengths and must use them. These are evident in the figures given by the Minister. We are in a healthy situation with regard to our exports, which have increased in recent years. We are peripheral to Europe but we are also central to world markets beyond Europe. To expand we need to look further than the EU to markets such as Australia, South America, Africa and parts of Asia, where we do not have a high level of exports at this stage. We need to look further than the EU. Our largest markets at the moment are in the EU. Britain is our biggest market, Germany is our second biggest and the Beneleux countries are the next largest. The challenge in the future will be to go outside the EU and extend our markets to other parts of the world. In a world context we are central rather than peripheral and need to build on this strength.

We also need to build on the strength of our reputation, particularly as a green island which produces good quality food. Our reputation in fashion is growing strongly and An Bord Tráchtála looks to our own marketing strategy, which is mainly based on selling within Ireland but sales of Irish fashion are also increasing in other parts of the world. Our natural fabrics and the high standard of our designers, who have won international awards, give us hope that we can extend this market.

Senator Daly referred to the strengths of our young marketing graduates. Language skills are improving greatly and this ties in with what Senator Henry said about the importance of being able to link in to problems in specific countries. Being able to speak the language of a country is one of the most important assets one could have. Our young graduates are trained in foreign languages as well as in the skills of marketing; this is important. We have a large number of young, well educated, talented people who already have the gregarious skills of the Irish personality and being able to speak foreign languages is an important asset. I welcome the stronger emphasis now on young people learning to speak and use foreign languages and learning the technical language needed to use marketing skills.

When we spoke about the problems of small firms, I mentioned the importance of support and this includes marketing support. I support Senator Henry's point about clustering, where a number of small firms, which would not be large enough or have sufficient money to sell on the European or broader markets, are brought together and aided by agencies like An Bord Tráchtála. Clustering arrangements are much more cost effective. The vast majority of Irish firms are small or medium in size and support is all the more needed for them.

I have spoken on other occasions about the importance of becoming involved in networks such as transportation, which would get our products on to the shelves of shops in other countries. It is difficult for a small entrepreneurial firm to know about these systems of which it is necessary to be a part if one wishes to sell outside of one's own country. An Bord Tráchtála is crucial in this area.

To ensure we come up to international standards, we have the ISO 9000 mark. It is important that Irish firms are aware of the necessity to achieve the necessary technical standards. If they do not, they will not win tenders. The Minister spoke about public procurement and the importance of Irish firms being able to tender competitively within and outside Ireland. According to EU regulations, if public companies advertise something above a certain cost, they must advertise in European journals. Irish firms must compete with outside companies. They have difficulty in doing so and it is helpful if they can tender for big projects in Ireland. Unfortunately, they sometimes cannot match the cost or the technical standards needed. Whatever aid they can be given is welcome and I am glad the Minister emphasised this. Until our companies can compete effectively in this country they will not be able to do so abroad.

I refer to my experience in relation to An Bord Tráchtála at regional level. I was recently involved in a promotion by the board's mid-west region, which matched Irish firms in this region with their buyers in the Beneleux countries. These buyers were brought to the mid-west, a meal was organised for them and they were matched with individual small firms. Large contracts are agreed and business is promoted through such contacts. This ties in with what Senator Henry said about the importance of direct contact with people who buy from our small producers. It is difficult for such producers to make these kinds of contacts themselves.

I welcome the new market development programme about which the Minister spoke. We are successful at the moment in terms of exports but we need to continue to develop markets. The establishment of this programme should put us in a good position to expand our markets. Because of our small population and small home market, we are dependent on increasing our exports from year to year if we are to increase the number of jobs and significantly reduce unemployment. It is crucial that An Bord Tráchtála is well funded, monitored and run and this Bill is an important move in the right direction.

Mr. Quinn

I regret that the Bill, however necessary it is to keep the wheels turning at An Bord Tráchtála, will strengthen further the impression that the State's main function is to stimulate marketing by giving grants to companies. The board has, over the years, become a conduit for the disbursement of large amounts of Structural Funds. As a result there is a perception that An Bord Tráchtála is in the grant giving business. This is unfortunate because the central core activity of the organisation should be the disbursement of expertise and knowhow, not cash. There is a need for the disbursement of the former, particularly among smaller and medium sized businesses and firms, which are the special focus of the board's work.

Members are familiar with the phrase "the grant mentality", which is the mindset that there should be a grant for everything and that the primary purpose of any Government agency is to hand out grants. We need to lay this mentality to rest forever for two reasons. First, while it exists State agencies are just seen as grant bestowing organisations. A great deal of the energy of companies will be focused on the wrong activity. A large number of companies spend their time trying to avoid tax, and now a large number will spend their time trying to get grants. The target becomes getting grants rather than helping the business to grow.

Second, the grant mentality takes attention away from the real role of State agencies, such as An Bord Tráchtála which is to help businesses to grow through supplying certain essential ingredients which they lack — not money for the most part but know how and expertise. The real value of An Bord Tráchtála is that it can lengthen the reach of those medium sized and small companies which are in the global marketplace. It has resources for researching and identifying market opportunities which no smaller company could afford.

It is an essential way of addressing the problems of Irish companies which have to learn to compete in export markets far earlier than their counterparts. Our home market is so small that we have to move much earlier. In Ireland, even quite small companies have to export. The gap is in knowledge and expertise rather than money. If money is needed it will not necessarily be supplied by the State. Where it is supplied by the State, we would be much happier if all grants came from a single source. We should designate one agency — perhaps Forbairt — as the fountain of any grants which are to be had and make it very clear that all the other agencies are in the business of dispensing a different kind of help.

The grant mentality is sapping at our potential growth. The existence of a plethora of grant giving bodies strengthens the notion that grant giving is the central platform of State support for industry. We want to get away from that grant mentality forever.

Professor Lee

I will speak for two minutes only but they are probably the wrong two minutes. Is it possible to give compassionate leave to the Minister and others here whose hearts are in a great cultural event taking place next door?

An Leas-Chathaoirleach

It is up to the Senator but I suggest that he finishes his contribution first.

Professor Lee

I agree with what Senator Quinn said, although I did not take the Minister's speech as an indication that grant giving was to be directed to companies in precisely that way.

I deplore the invocation of peripherality at the outset of the Minister's speech — that the focus is to enable Irish companies to overcome the disadvantage of peripherality. It is not; it is to overcome the disadvantages of our small home market. Even if we were in the centre of Europe we would still have the same problems. Of course, peripherality affects products in some areas but it is not the main problem confronting us. Issues such as strengthening marketing capability, identifying new markets and so on, have nothing to do with peripherality as such. I hope that will have a lower profile in future.

What the Minister said about the public procurement market is very important. One of our main problems, as we have said here before, is that our small companies do not have larger companies to sell to within Ireland itself, in other words, we do not have a major domestic market of large companies. The procurement market in Ireland is the main substitute for it and the procurement market throughout Europe is an even better substitute. I am concerned by the phrase that "the Irish market was open to the tune of about 50 per cent when the comparable figure for some other countries was as low as 2 per cent". We have not been effective at selling ourselves to our own State procurers. That is a matter of ongoing concern which we must address.

Thirdly, I was glad to hear the positive references to the education system, and third level in particular, by Senator Daly and Senator O'Sullivan, which I think are well deserved. There is scope for further improvement of co-ordination between the marketing sector and third level education. I hope that the perceived slightly adversarial attitude to third level in some sectors does not exist in the marketing sector. If it does, I hope it can be overcome by co-operation between both sides.

An Leas-Chathaoirleach

If no other Senators wish to contribute I suggest that the Minister reply at 4 p.m. Is that agreed? Agreed.

Sitting suspended at 3.45 p.m. and resumed at 4 p.m.

Minister for Tourism and Trade (Mr. McCreevy)

I thank Senators for their contributions which were well researched and worthwhile. The standard of debate in this House has always been very high. I also thank Senators for their timely adjournment. Senator Lee is a fellow past pupil of Gormanston College and I thank him for raising the question of an adjournment with the Leas-Chathaoirleach.

The first occasion on which I had to answer questions in the Dáil as Minister for Social Welfare was in March 1992. It was Gold Cup day and as I was answering questions in the Dáil at 3.30 p.m. the Gold Cup was being run. This House is more civilised than the Lower House.

I thank Senators for their good wishes for An Bord Tráchtála and the constructive manner in which each Member dealt with the Bill. Senator Howard made a good point about bureaucracy with which I concur. The small business task force examined this problem which is a continuing one for small and medium enterprises.

My Department and An Bord Tráchtála try to keep paper work to a minimum. An Bord Tráchtála recently changed its financial scheme and it is now processed on foot of just one form. They are trying to reduce bureaucracy. If Members have worthwhile suggestions for a further reduction, I will take them on board. However we must remember that a certain level of accountability requires a degree of bureaucracy.

Some Senators referred to the conclusion of the GATT Uruguay Round. Senator Howard asked what the Government and my Department propose to do for industries that may be in trouble. During the GATT negotiations I made it clear on a number of occasions that one cannot view the various issues in isolation. You do not have to be Einstein to figure out that, for a trading nation such as Ireland, the more liberal world trade is, the better Ireland will do.

Various estimates have been made about the total growth in world trade as a result of the conclusion of the Uruguay Round; it will be substantial. A marketing country such as Ireland depends totally on selling abroad because our market demand, with a population of 3.5 million people, is too low. I have always said that certain sectors will lose out. The independent report commissioned by my Department also made this point but concluded that the overall benefit to Ireland will be worthwhile.

The Senator raised a question about the cut in grant-in-aid in 1994. The 1993 grant-in-aid was exceptional because when the 1993 Estimates were being prepared in September or October of 1992 we were at the start of a currency crisis which did not end until 1993. The 1993 grant-in-aid was exceptionally large. In the last five years the grant-in-aid to An Bord Tráchtála has increased considerably. In 1994 there was a small cut but no one has complained about it. The board is happy with the level of grant-in-aid and there have not been any complaints from exporters and people in the marketplace.

The Senator also raised some interesting questions about the currency exchange rate. I answered this question in the Dáil recently; the matter of currency exchange rates is one for the Minister for Finance. However, as Minister for Tourism and Trade I would also be alarmed if the punt went to an unsustainable level.

The growth in exports in the past number of years is not the result of the weakness or strength of the Irish punt but because Irish exporters got a competitive advantage in markets which they did not have previously. It is interesting to note that until 1992 when the world was in recession, Irish exporters increased their market shares in various European markets by being competitive. The market was not growing but they acquired an increased market share.

Low interest rates, low inflation and good competitive practices resulting from national agreements mean that Irish businesses will be able to compete. If a business is totally dependent on a favourable exchange rate for its survival, it would be my view as a business person that those businesses will not survive for long. I do not think the current currency level represents a danger for Irish exporters but it is something we will monitor closely.

We are victims of our own economic success. The strength of the Irish punt results from events in the past five to seven years. Our currency also depends on the performance of the pound sterling. Its weakness is causing the increasing strength of the punt. It is impossible to predict the future in this area but we will bear it in mind.

The fraud in An Bord Tráchtála which came to light last year was also mentioned. It involved the marketing development fund the Government put in place during the currency difficulties; the sum involved was £128,000. The net loss to the Exchequer will be small as most of that money has been recovered. Legal action is in train and Senators will appreciate that I cannot comment further on it.

Senator Daly raised an interesting point and had some suggestions about the potential for development in certain sectors. There is a grant scheme for graduates and An Bord Tráchtála runs schemes which take on graduates. This was also mentioned by other Senators. The intention is to strengthen Irish firms and enable them to do business themselves.

Senator Quinn spoke about the grant giving mentality and the importance of providing expertise. An Bord Tráchtála wants to develop to the stage where it will be able to place graduates with companies. Various schemes are in place which enable companies to take on graduates.

Large Irish companies are very small in international terms. When launching a scheme last year I was surprised to find that the number of Irish companies with sales people abroad was ridiculously small for an exporting country. The target is to increase that number substantially over the coming years and we put a scheme in place last year to accomplish that.

Most Irish companies tend to use agents abroad. One can be very successful with agents abroad but one can also be singularly unsuccessful with them. It is not the agent's business just to look after one particular product. He looks after a wide range of items. However, it is very expensive for Irish companies to set up their own marketing operation in countries abroad. An Bord Tráchtála is trying to do that for larger companies and is also trying to bring some companies together for that purpose.

I will not deal with the question of Irish tourism Senator Daly raised. An Bord Tráchtála and Bord Fáilte co-operate abroad and when one can do something with the other, it is done.

Senator Henry mentioned the Chicago fair which I attended last year. The operation was jointly funded by the Irish Government and the Northern Ireland Development Board. I am not aware of the operational details of the inducements offered to individual companies but I am sure some were offered to get people there. It was a most successful operation. Its format was most unusual in that it took over an entire hotel. When one stepped out of one's room, one looked down and saw the foyer. All the hotel floors were taken over for the week and it worked very well; thousands of operators attended. Chicago was chosen because the concentration of Irish companies has always been on the east coast and Chicago was more central in the effort to branch out. Senator Henry also raised the question of agents.

Senator O'Sullivan made an interesting contribution regarding how standards could be raised and markets broadened. It is in companies' own interests to try to do this. However, as I said earlier, the difficulty is that large Irish companies are small by international standards. It is very expensive to market one's operation. However, we must try to do this. We must broaden, attack the markets and sell more goods. We are competitive, and we must remain so. We must broaden our vision in terms of how we do things, as suggested by Senator O'Sullivan.

Senator Quinn made an interesting suggestion about a single body providing grants. He also mentioned the grant mentality. I do not know if what he suggests is feasible. The idea of one agency dealing with grants of all types has not been considered by any Government; I presume the Senator means grants from every Department. The administration of such a move would give rise to great difficulties. However, the Senator's idea is novel and could be explored at a future date.

I agree with the Senator regarding the tendency towards a grant mentality. This is stronger in certain parts of the country, in some Departments and among some civil servants. I am on the same wavelength as Senator Quinn in that I am not of the grant mentality. If a business idea works and can stand on its own, it will succeed and prosper. The new operational programme for tourism and marketing will reflect my idea that grants should be used to prime an operation, to tip the balance when an entrepreneur is deciding whether to go ahead, rather than, as Senator Quinn outlined, people going ahead with ideas because a grant is available. That tendency has existed since the foundation of the State. Many people proceeded with ideas because grants were available, regardless of whether the ideas were good, bad or indifferent. This is not the way.

Senator Lee mentioned peripherality but said our problem is one of size. He is correct but our problems are both peripherality and size. We are a small market and that is why we must develop. I thank the Senators for their contributions to this most worthwhile debate.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without recommendation, received for final consideration and ordered to be returned to the Dáil.