I join the Chairm an, and other Members in extending my sympathy to Deputy Callely on his bereavement.
I will begin by introducing my officials - Paul Haran, Secretary General of the Department, Roddie Molloy, Martin Lynch from the finance unit and Marian Brophy. Officials are not normally named but perhaps it will be better if we start doing so. Ministers of State, Deputies Kitt and Treacy, will attend shortly.
I am pleased to have the opportunity to appear before the Select Committee and to assist in its examination of my Department's Estimate for 1998. The Department of Enterprise, Trade and Employment has a vital economic mandate to promote employment, enterprise, economic growth, employee welfare and consumer rights. In keeping with the Government's plan An Action Programme for the Millennium, we have identified strategic goals to ensure this mandate is fulfilled.
Ireland has achieved unprecedented and sustained economic growth in recent years on which we are ideally placed to build. To do so there must be prudent management of the economy, improved competitiveness, promotion of enterprise, support for small business and improved training. To ensure that we increase economic growth we must make further significant progress in improving living standards and reducing unemployment. However, we must move forward in a planned and structured way if we are to realise our full economic potential. My Department's overall Vote for 1998 is £807,478,000 net. Members of the committee may have concerns or queries on aspects of the Vote with which I and my ministerial colleagues will deal.
Tackling the problem of unemployment continues to be the major focus of the Government's economic and social policy. All the indicators point to further substantial growth in employment. We are continuing to maintain our strong pattern of output growth. Allied to this, the downward trend in the monthly live register numbers and the Exchequer returns all point to significant further employment growth in the period ahead. The Government is determined to maximise this growth.
The committee will be aware that EU heads of state at the European Council meeting on employment in Luxembourg in November 1997, endorsed a set of EU guidelines on employment. These guidelines comprised policy prescriptions aimed at promoting the employment prospects of people, entrepreneurship, the adaptability of the workforce and equal opportunity.
Following the adoption of the 1998 EU guidelines, Ireland and other member states, submitted an action plan on employment to the European Commission in April 1998. This sets out the policy measures and steps being taken at national level. Within our plan, the Government has set an explicit target of reducing unemployment to 7 per cent of the labour force by the end of the year 2000. This key objective will be achieved by the pursuit, within a strategic framework, of a range of employment and labour market policies.
Key aspects of the EU guidelines call for the adoption of a preventative strategy whereby there will be early intervention with all young and adult unemployed, within six and 12 months respectively of their becoming unemployed, with a view to offering them a job or other employment support.
Systematic engagement at an early stage in the unemployment spell is a major innovation in our action plan. This preventative strategy has not been a feature of Irish policy heretofore. Our systems and interventions focus more on the reintegration of persons who are already long-term unemployed. The policy challenge for us is to reorient our systems in a balanced way such as will enable us to adopt the preventative approach proposed while at the same time ensuring that the reintegration needs of current substantial numbers of long-term unemployed people are met. We cannot ignore the large numbers of people who are already long-term unemployed who constitute 56 per cent of all our unemployment. This is a much higher level than most other European countries.
Our initial focus under the preventative strategy will be on young people under 25 years, where we will seek to intervene with them as they cross the six month unemployment threshold. Primary initial focus at this stage will be on securing job placement through appropriate guidance, counselling, development of job seeking techniques and through the use of instruments such as "self-help" job clubs. Access to personal development, training programmes and other labour market programmes will be offered where appropriate and needed. Referral to the Local Employment Service will be made where it is clear the intensive mediation, which is a key component of the service is needed. We are actively pursuing the implementation of the commitments entered into under our action plan.
We are creating the conditions necessary for greatly enhanced co-operation between agencies and Government Departments. New improved co-ordination and co-operation procedures are being worked out between the FÁS employment service and the Department of Social, Community and Family Affairs. Better integration between the FÁS employment service and the local employment service is also proposed. The Department of Education and Science also has an important role in terms of preventing, and providing alternative options for, early school leavers and in offering second chance educational opportunities. A closer link between ongoing entitlement to social welfare income and the obligation to participate in the supports offered will also be a feature of the programme.
The process of systematic engagement with under 25 year olds will be modelled generally on the Youth Progression Programme. The experience of this programme, introduced in October 1996, to enhance the awareness of and utilisation of employment and training services by unemployed 18 and 19 year olds, shows that an investment in a strategy of systematic engagement yields results. A first evaluation of that programme is that it increased the numbers of 18 and 19 year olds leaving the live register by some 20 percentage points - from 30 per cent to 50 per cent.
Under the plan we will pursue policies aimed at promoting a positive operating environment for small business; promoting activity in the social economy; and developing our fiscal policies to enhance the attractiveness of creating and taking up employment.
In addition, our plan encompasses actions aimed at achieving an even more flexible workforce and improving the employment situation of women. We also propose to make major structural adjustments to our arrangements for meeting the employment needs of people with a disability. Historically, responsibility for this area lay with the Department of Health which was responsible for focusing on meeting the medical needs of those with disabilities. The whole approach now is to mainstream their needs with the needs of the wider community. Policy responsibility for their training and employment needs is being transferred to my Department.
Plans for the new indigenous development agency, to be known as Enterprise Ireland are well on track. The enabling legislation is proceeding through the Houses of the Oireachtas this month with a view to having the agency established in July. The legislation will draw on the existing powers and functions contained in existing industrial development, including trade and marketing legislation. The committee will be aware that I have already appointed Mr. Pat Molloy and Mr. Dan Flinter as Chairman Designate and chief executive officer Designate respectively. In keeping with the partnership approach to the restructuring, my Department has been engaged in a consultative process through groups comprised of management, staff and trade unions. Regular meetings have been held with these groups since January last.
All ABT staff and the majority of staff in Forbairt will transfer to Enterprise Ireland. The structured development approach I am adopting and the focus on companies with the potential and willingness to grow will ensure a more efficient approach to the allocation of resources. For example, companies will not be able to "grant shop" between FÁS, Forbairt and ABT. At the same time, it must be recognised that there may be short-term costs incurred if the agency is to be in a position to realise long-term savings.
If, for example, the agency exits from non-developmental areas in the technology area, there will be a reduction in fee income. Upfront costs in relation to staffing could arise as and when the agency streamlines or exits from existing activities. I assure Members of the committee there will be no enforced redundancies.
My Department, under the guidance of the Minister of State, Deputy Tom Kitt, continues to actively pursue our national trade interests through the European Union, the World Trade Organisation and bilaterally. Our strategic interest is the further liberalisation of trade flows, both within the EU's Single Market and globally. A continuation of our success in the trade field depends on vigorous pursuit of a competitive economy which is another key focus of my Department's activities. A revamped trade advisory forum, representative of the social partners and the key players in exporting, advises the Minister of State Deputy Kitt on trade policy issues.
The relative competitiveness of the Irish economy in 1997 contributed greatly to our success in attracting inward investment. Job creation reached an all time high in 1997, with 14,930 new jobs created by IDA assisted companies. The net employment impact was an increase of 9,985 - a 36 per cent increase on the previous year's record performance. This brings the total direct employment in IDA backed companies to 107,826.
Future prospects also look good. The IDA has set a three year rolling jobs target for 1998 to 2000 for the creation of 42,000 new first time jobs. There are a number of US projects, both greenfield and expansion, in the immediate pipeline with a job potential of more than 6,000. In other markets, including the UK, Germany and Japan, activity remains busy with several potential projects in the pipeline. I pay tribute to the outgoing Chief Executive of the IDA, Mr. Kieran McGowan, who announced yesterday that he will not take up the post again when it becomes vacant in August. He is a great ambassador for Ireland and under his stewardship the IDA has done an outstanding job in attracting inward investment. All my predecessors who worked with him were full of praise and admiration for him for the manner in which he lead the IDA.
In 1997 we saw a 7 per cent increase in sales by indigenous Irish companies, amounting to £15.2 billion, thereby exceeding the target of £15 billion for the year 2000. Exports were just under £8 billion -an increase of 9 per cent on 1996. This is well on the way to achieving the target for the year 2000 of £9 billion by 1999. In 1997, Forbairt reported exceptional performance by lrish industry with a gross gain of 12,888 new jobs, its best performance in over 20 years. The net increase in employment was 5,061 - the highest net change in 11 years. Total employment in Forbairt client companies reached 130,641 at the end of 1997. This exceeded the target of 130,000 set in 1994, which was to be reached in the year 2000. A further objective of Forbairt is to bring research and development expenditure in Irish firms up to international standards as part of the general upgrading of competitive capability.
In 1997, Irish companies continued to increase their spend on research and development, investing more than £135 million - an increase of 47 per cent over 1996. There is a need to increase spend further in the coming years if companies are to ensure competitiveness. In 1998, there is every reason to believe that, with the current levels of investment and business confidence, the strong sales and jobs performance of recent years can be repeated. The focus of Enterprise Ireland will strongly enhance the potential of indigenous business to reach demanding employment, growth and export targets.
Shannon Development promotes indigenous industry in all of the mid-west region and has responsibility for the promotion of both indigenous and overseas industry in the Shannon Free Zone. The Shannon Free Zone currently accommodates 110 companies employing 6,300 people - up 6 per cent since the end of 1996 and accounting for almost £1.5 billion of manufactured and services exports per year. The approval rate for new projects in the zone has been very strong over the year and further employment in key sectors is being pursued by Shannon Development in conjunction with IDA Ireland.
The National Technological Park in Limerick has 90 companies employing close to 3,000 people in a balanced mix of inward investment companies, Irish technology companies, research and development entities and support services. Shannon Development aims to continue development of the park. Indigenous industrial employment in the mid west region increased by 13 per cent in the four years from 1994 to 1997 and is continuing to grow strongly.
The objective of Ireland's science, technology and innovation policy is to foster an environment where industrial competitiveness is founded on innovation which in turn is based on the successful application of science and technology. The State's role is to support the enhancement of the competitive advantage in Irish firms by providing a portfolio of infrastructural, financial and skills supports attuned to the expressed and anticipated needs of the economy. The Minister of State, Deputy Treacy, leads my Department's endeavours to boost the economy's science, technology and innovation potential.
This year sees the launch of a new £2.5 million fund that marks an important first step in the way the expenditure across all science and technology spending Departments may be planned and prioritised. The National Innovation Investment Fund is open on a competitive basis to priority science and technology that is recommended by any Government Department and endorsed by providing matching funding. The fund will also be able to assist emerging technologies which can benefit the country in the medium to longer term future. The technology foresight exercise launched recently by the Minister of State, Deputy Treacy, and being carried out by the Irish Council for Science, Technology and Innovation will facilitate the timely identification of such technologies.
A total of eight company law inquiries are under way currently. Members of the committee will see that a provisional sum of £45,000 was allocated in 1998 but indications are that this will be exceeded to a significant degree. The excess is due primarily to the costs incurred in the inquiry into Bula Resources (Holdings) plc and the other six company law investigations under way under section 19 of the Companies Act, 1990. The cost of the National Irish Bank inquiry is being borne initially by the Department of Justice, Equality and Law Reform.
With regard to the inquiry into Bula, the inspector, Mr. Lyndon MacCann has indicated to my Department that his report should be finalised and submitted to me in a matter of weeks. This inquiry is being conducted under section 14 of the Companies Act, 1990, and is investigating the beneficial ownership of certain blocks of shares in Bula. Subject to legal advice I may receive on the content of the report, I propose to publish the inspector's report and to make a statement on its content.
There are six company law investigations under way as a result of the McCracken tribunal. These relate to Garuda Limited, Celtic Helicopters Limited, Guinness & Mahon (Ireland) Limited, Hamilton Ross Co. Limited, Irish Intercontinental Bank Limited and Ansbacher (Cayman) Limited. All are being conducted by authorised officers of my Department under section 19 of the Companies Act, 1990.
The investigations of Garuda Limited and Celtic Helicopters were initiated last September and a great deal of work has been done since then by Mr. Peter Fisher and Mr. Gerard Ryan respectively. I am not in a position to give a precise indication of when the reports of these investigations will be finalised but I expect to receive Mr. Fisher's report first.
With regard to the remaining investigations which commenced in January, they are being undertaken by Mr. Gerard Ryan and good progress is being made. A significant amount of documentation has been received from Guinness & Mahon (Ireland) and Irish Intercontinental Bank, together with a smaller amount of material from Hamilton Ross Co. Ltd. Given that Mr. Ryan is seeking to uncover clandestine activity in the State spanning a period in some cases of more than 20 years it will be appreciated that his investigations will take time. At present I expect it will be a number of months before Mr. Ryan can complete substantially his inquiries.
Ansbacher (Cayman) Limited is not co-operating with Mr. Ryan' s investigation but the papers of Guinness & Mahon (Ireland) Ltd and Irish Intercontinental Bank contain correspondence and other information relating to the business of Ansbacher (Cayman) in Ireland. I am delighted the company's attempt in recent weeks to get a court order in the Cayman Islands prohibiting the release of its books and documents was dismissed. I have no information at this stage on whether Ansbacher will appeal this decision. I am absolutely determined that Mr. Ryan should complete his inquiries and I will assist him in doing so by seeking, through all available legal means, retrieval of the Ansbacher documents which should continue to be available to him here in Ireland for examination.
The investigation into the affairs of National Irish Bank is being conducted under section 8 of the Companies Act, 1990, by two High Court inspectors, Mr. John Blayney and Mr. Tom Grace. Section 13 of the Act provides for the payment of the costs of section 8 inquiries by the Department of Justice, Equality and Law Reform initially. The cost of the first month of the High Court investigation was close to £55,000. I am determined that the taxpayer should not pay for the costs of inquiry ultimately and that any costs incurred be recovered from National Irish Bank as is permitted under the Act.
In addition to the investigation into National Irish Bank, yesterday afternoon the High Court agreed to an early hearing of my petition to appoint Mr. John Blayney, and Mr. Tom Grace as inspectors to National Irish Bank Financial Services Limited. This petition will be heard definitively at 2 p.m. on Monday, 15 June 1998.
Positive co-operative industrial relations are vital to economic and social development. In particular, a stable industrial relations environment contributes to sustaining enterprise competitiveness and employment development.
Since the advent of national economic and social partnership industrial relations have improved considerably. For example, the number of work days lost through industrial action has declined significantly from 315,500 in 1986 to 74,508 in 1997. I have no doubt this substantial improvement has been assisted by the industrial relations agencies - the Labour Court and the Labour Relations Commission - funded by my Department.
At a time of increasing globalisation of world markets and the need for enterprise competitiveness it is, perhaps, not surprising that industrial relations have become more complex. Due to this and because of a planned extension to its remit, my Department's estimate for 1998 includes a significant increase in funding for the Labour Relations Commission. Partnership 2000 calls for the modernisation of industrial relations and I want to ensure that the Labour Court and the Labour Relations Commission are properly equipped to play their part in this modernisation process. The way forward is through increased co-operation between management, employees and their representatives. Confrontation is not the way forward. I am, therefore, disappointed with a number, albeit small, of high profile disputes where confrontation was evident.
