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Select Committee on Jobs, Enterprise and Innovation díospóireacht -
Tuesday, 11 Jun 2013

Vote 32 - Jobs, Enterprise and Innovation (Revised)

I welcome the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton and Minister of State with responsibility for research and innovation, Deputy Sean Sherlock to today's meeting. I understand the Minister of State, Deputy Perry, is unable to join us today as he is in Brussels. I also welcome all of the departmental officials and thank them for their briefings over the past couple of days and last weekend. A great deal of work has gone into ensuring we ask the awkward questions and hold the Minister and Ministers of State accountable.

Members will be aware that the Revised Estimates for 2013 were presented to the Dáil in the new programme based format. This means that the Estimate as presented contains the following information for each programme: how it is proposed to spend the money allocated to each programme and the previous year's outturn in each case; the number of staff assigned to work on the programme and how this compares with the previous year; performance related information; departmental outputs, including corresponding information on the previous year, including what are termed performance and impact indicators for the previous year; and administrative expenditure for the Vote as a whole summarised in more detail than previously. The Revised Estimate gives us an opportunity to review whether targets set and the distribution of moneys across the Vote are appropriate in all circumstances and demonstrate the best use of resources. It also gives us an opportunity to explore issues facing the Minister in terms of the 2014 allocation for his Department.

An agreed timetable was circulated prior to the meeting. It allows for a brief opening statement by the Minister followed by a discussion on the 2013 Revised Estimate, with questions on each programme listed in the Estimate. Is the timetable agreed? Agreed. I now invite the Minister, Deputy Bruton, to make his opening statement.

The Minister of State, Deputy Sherlock, would also like to make an opening statement on the innovation side. How brief should be the opening statements?

Ideally, five minutes. If the Minister and Minister of State could make their opening statements in less than five minutes that would be helpful.

I will be very brief.

The work of my Department is essentially work connected with the transition of the Irish economy from the model which got us into trouble, namely, construction, debt and property, to a new model based on enterprise, innovation and exports. This is the journey we are seeking to travel. We have introduced the concept of an action plan for jobs which essentially is a whole of Government instrument to try to engage every Department in so far as they impact on the work of this journey. There is good traction within the system in that we have quarterly reporting on specific actions. Each year we look afresh at what can be done the following year. For example, last year we looked at what could be done in 2013. We are receiving significant levels of submissions, including from this committee, which inform the work we take on.

In terms of how we are succeeding on our journey, while it is early days yet the IDA has had its best year in a decade in terms of it having secured 6,500 net jobs. Enterprise Ireland, which secured 3,500 net jobs, has also had a good year. This compares with a decline in this area during the past four years. Overall, according to the CSO, approximately 25,000 jobs have been created in the private sector. We have had a good export-led recovery and are now beginning to see some of that spill into other parts of the economy, although by no means all areas. There are continuing declines in construction and other areas.

Reflecting that exports have done well, a problematic issue, of which members of the committee are well aware and one which we must continue to address, is access to finance. Members will be aware that in this regard we have put in place a number of State designed instruments, including microfinance, seed finance, scaling finance and development capital, the cost of which when combined amounts to €2.5 billion. While these instruments are in their infancy, take-up in respect of some has been good. There is more work to be done in promoting them.

We have also looked at the range of enterprise support available and have sought to deepen it and make it more export oriented through the establishment of the first time exporters division. We have also introduced new instruments such as Connect Ireland which is tapping into a range of areas not tapped into by the IDA. We have sought to reform many areas from wage setting mechanisms to access to finance, including the innovation strategy on which the Minister of State, Deputy Sherlock, will comment. This year there will be what are termed disruptive reforms, which include actions in areas such as big data, encouraging people to recruit from the live register, buying into energy efficiency and so on. A number of these actions are outlined in the action plan. These are important in the context of continuing the momentum for change and drilling down to sectoral level. For example, the recently published manufacturing strategy.

In terms of reform, we have a pretty active work programme of consolidating and improving the manner in which the Department and its agencies work. This includes the work place commission on which the committee held hearings, which relates to a reduction from five to two in the number of agencies in the employment rights and industrial relations area. This work is continuing and is resulting in a better service. Also, legislation in this area is currently being drafted. The amalgamation of FÁS into the Department is ongoing, the rationale for this being that we need stronger policy making capability within the Department so that we can create a better framework. There are many other regulatory reforms taking place. Many of our agencies have committed to reduced regulatory burdens. The Department met its 25% target by 2012. This work is ongoing.

A big item on our agenda this year has been the EU Presidency. There were a number of important actions in play in this context, including Horizon 2020 about which the Minister of State, Deputy Sherlock, will speak later.

The Minister of State, Deputy Sherlock, will speak about our ambition to achieve a mandate for EU-US trade negotiations. Later this week we will host a key meeting of trade Ministers to deal with that. Progress has also been made on preparing financial instruments, such as the programme for the competitiveness of enterprises and SMEs, the accounting directive and the unified patent courts.

We are continuing the process of transforming our economy. While people recognise that some progress has been made, it has not reached everyone's door and levels of unemployment remain very high. I have confidence that we are travelling down the right road by building solid sectors with long-term sustainable futures in IT, medical devices, food and tourism. Although people will not yet see a huge transformation, we can see the shape of what is emerging.

The big ticket item at present is negotiating Horizon 2020, which is the next framework for research expenditure in the European Union. The Irish Presidency is chairing those negotiations, which will be subject to co-decision procedure with the Commission and the European Parliament. Horizon 2020 will offer a package of measures worth €70 billion or more, with a specific target of 20% for SME engagement compared to 15% in the current framework programme. We believe this will have a major stimulus effect in terms of SME engagement and job creation throughout the European Union and in Ireland in particular. Our overarching philosophy is to accelerate the economic and societal return from the public investment in research in order to deliver high quality jobs.

In addition to Horizon 2020, we are also implementing our own research prioritisation exercise which brings together the State funders of research. We have prioritised 14 key areas to maximise the economic and societal impact of our investment in research. A process is under way of developing the 14 action plans, involving all the State funders of research and the HEA to ensure maximum impact.

We are also pursuing smart investment in research centres at scale and with critical mass. In 2013, we announced seven new large scale SFI research centres supporting more than 800 scientists. These centres will enhance IDA's capacity to attract foreign direct investment. The recent €300 million announcement included €200 million from the State's funders of research and €100 million from industry. Many of the industrial players are in the FDI sector. Activities funded through the research centres include big data, advanced food research and marine energy research. Later this afternoon we will be discussing the extension of SFI's mandate to include applied research and to allow it to fund research proposals closer to the applied research arena in order to accelerate the exploitation of research for economic benefit. We are setting targets in a number of other areas, including high-potential start-up units, technology centres through the institutes of technology and the SFI funded strategic research clusters. I would be happy to speak further on these activities if members so wish.

Under our agreed timetable, we will consider that aspect as agreed. We will now commence our discussion on the general position on the saving measures introduced in 2012. Rather than go around the table for questions, I ask the Ministers to briefly summarise the savings measures achieved, followed by which we will take programme heads in turn.

The savings have been achieved by the non-filling of vacancies, the reduction of posts under the employment control framework and our ongoing streamlining of agencies, such as the workplace relations bodies, and the reform of the county enterprise boards. We have also sought to make use of ICT and other means of improving our capacity to reform in the context of declining numbers. The decline in numbers has been significant across the various agencies. Since 2007, the overall number has decreased by 16%. We have tried to spread the reductions to reflect priorities, such as by protecting the IDA from reductions in view of the work it is doing, but the consequence is a greater impact on other areas. Capital spending is predominantly demand led and our multi-annual programme reflects that. We meet our resource provision to the agencies based on demand and their commitments, which come to fruition over a series of years. It is not like a budget that can be spent in one year because this year's expenditure could reflect approvals made over a five year programme. We have been fortunate to protect our capital budgets at a time when other capital spending programmes have taken cuts of two thirds. We have retained our capital budgets in light of the Government's obvious priority of employment creation initiatives.

If members have specific questions I can answer them but, by and large, that has been our approach. The agencies have evolved and changed programmes in light of their reduced resources and manpower. An agency like Enterprise Ireland continuously considers the cost effectiveness of different elements of its work in order to remain within its budget while meeting its targets, whether in regulatory terms or in supporting enterprises. That is a bird's eye view of our operations and I can provide more details if members so wish.

The Minister has established the general position and we can address issues in detail under the respective programme headings. We will now consider performance and expenditure proposals on a programme by programme basis. We will take jobs and enterprise development starting with subhead A.3, Forfás. I ask members to identify the subheads to which their questions relate.

I acknowledge the amount of work underway in the Department, particularly in the context of the Presidency. The Minister does not get thousands of people protesting outside his meetings but that is not to say his Department is not taking the burden of the Presidency in many areas.

Under subhead A.5, IDA Ireland, considerable damage was done recently to our presence in the US market by the allegations made at the US Senate hearings. I acknowledge that our ambassador responded but given these were political allegations, should the Minister not have dealt with the allegations on a more hands-on basis? Politicians tend to respect politicians. Is he concerned that the 132 investment projects targeted for 2013 and 2014 will be affected?

Deputy Lyons and I recently visited China with the Ceann Comhairle. The IDA's presence in Asia is not what it could be. I recognise that the employment control framework has implications in this regard but we must investigate from where the next wave of industry will come. Does the Minister have any thoughts in this regard?

I will be asking the same question in respect of Enterprise Ireland and about our presence in China and Asia in general from where new industry is emanating.

IDA Ireland approved 144 projects in 2012, some 23% of which were located outside Dublin and Cork. The plan for 2013 is to approve 132 projects for the current year, with 50% of these located outside Dublin and Cork. The figure of 23% suggests we have moved away from the 50-50 split in the context of the Border, midlands and west, BMW, region. How is it proposed to increase the number of projects outside Dublin and Cork from 23% to 50%?

I ask members to try to confine their questions to the Estimates. At the beginning of his contribution, Deputy Calleary sneaked in a question not related to the Estimates under my radar.

The Minister indicated that the impact of the work of the Department of Jobs, Enterprise and Innovation has not yet been felt by everyone in the State. I suggest that it has not been felt by very many of those affected by long-term unemployment, emigration, under-employment, etc.

If possible, the Deputy should confine himself to questions relating to the various subheads. There will be plenty of time later for the making of concluding statements.

Okay. Does the Chairman wish me to deal with the overall position first or should I move straight to the subheads?

We are dealing with programme A, so the Deputy may pose any question he wishes in respect of that. This programme comprises subheads A3 to A16. I can come back to the Deputy on this matter if he so desires.

That would be fine.

I wish to pose a couple of specific questions. On subhead A1-----

We will deal with that subhead, which relates to administration, at the end. This is how we will be operating under the new format.

On subhead A5, capital expenditure for IDA Ireland for 2013 has been reduced on the basis of the outcome for 2012. Will the Minister indicate why less money is being invested? The position is similar with regard to Enterprise Ireland, the capital expenditure for which is down considerably on the figure for 2012. Will the Minister indicate why the proposed target of €70 million will not be hit? I presume this money will be paid out in capital grants. Why are we not delivering in this regard?

Subhead A8 deals with county enterprise development. Will the Minister provide an update on progress with regard to the amalgamation of local enterprise offices, LEOs? Will the funding available under this subhead be transferred to Enterprise Ireland next year?

On subhead A15, provision of €193,000 for legal costs and other services was made in 2012. Only €11,000 of this was spent but the amount provided for this year is €312,000. There is no logic to that. Is the Department expecting to be obliged to deal with a large number of legal cases? What is the reason for this increase in expenditure?

In the context of programme A, there appears to be a 6% reduction in the context of the outturn from 2012 and an 8% reduction in the Estimate. Will the Minister comment on this matter? How much money has been invested from the fund relating to the new capital development scheme? What is the spending profile for the coming year?

If possible, will the Deputy indicate the subheads to which he is referring?

I have not referenced any of the points I wish to make to the relevant subheads.

That is okay. We will allow everyone to take a little time to catch up with the Deputy. Is he referring to the departmental briefing in the context of the points he is making?

Yes. I was referring to the information on page 11 of the document provided. I am interested in the implementation of the new capital development scheme. How much money has been invested in this regard to date and what is the spending profile for the coming year? What are the leverage levels from the private sector?

The seed capital venture fund is dealt with on the same page. When will this fund become operational and what is the spending profile relating to it? Will the Minister indicate the target amount in respect of private leverage?

In the context of LEOs, the credit guarantee scheme is dealt with on page 12. Some €40 million has been allocated over five years in this regard. What is the drawdown for the current year in this regard and what is the budget profile for next year? Will the Minister also indicate what is the target for next year?

Attracting foreign direct investment is a topical issue. How many IDA Ireland-supported firms are operating Irish-registered non-resident companies? This matter is referred to throughout the document with which we have been presented. We are dealing here with the Government's subsidising of enterprise and foreign direct investment. This is extremely important and we all support what is being done. However, a major aspect of the stimulation of job creation relates to the tax breaks administered by the Department of Finance. While this does not specifically come under the select committee's remit, it could actually dwarf the levels of business subsidised by the Department of Jobs, Enterprise and Innovation. Will the Minister provide a ratio in respect of the tax breaks versus investment by the Department? Which of these are deemed to be more beneficial and useful - from the Department's perspective - in the context of job creation?

Page 14 contains a table about which I wish to raise a couple of points. Exports and surpluses have increased for the past five years and have returned to 2001 levels but unemployment has not fallen. We have, therefore, attained 2001 export levels but there has not been a corresponding increase in the level of employment. Given that we have attained the former, one would have assumed that the labour force capacity necessary to develop this level of exports would have been consumed.

Ireland is No.1 in Europe in the context of inward stock. The latter is defined as the value of the capital and reserves in the economy attributable to a parent enterprise residence in a different country. The first point that arises in this regard relates to exports and surpluses and the second to foreign direct investment, FDI, inward stock. Will the Minister outline his views on these matters?

On subhead A12, which relates to the temporary loan guarantee scheme, will the Minister provide an update on the number of projects that have been funded and the number of jobs created? Will he indicate whether the targets for this year will be reached?

I will try to deal with those points and questions as best I can. In some instances we may be obliged to provide additional information at a later date.

In the context of the microfinance loan fund, 72 applications - with a value of €1.15 million and supporting 181 jobs - have been approved. That is the up-to-date position. The fund is obviously in a roll-out phase. I understand representatives from Microfinance Ireland may have come before the joint committee to discuss its plans. The organisation has good plans in the context of rolling out the fund and improving the level of take-up in respect of it. The fund is being administered through the county enterprise boards and we are taking an initiative with the banks in order to improve people's awareness of it.

On the temporary loan guarantee scheme, some 41 facilities - worth €4.8 million and giving rise to 245 new jobs and maintaining 115 existing jobs - have been extended.

Anything from 200 to up to more than 500 jobs would not have been supported with credit without these facilities. Therefore, they are making a significant contribution. We have the ambition to expand them and certainly we have the headroom to expand them further. We will be reviewing the credit guarantee scheme imminently. We committed to doing that within one year and we will do it.

Deputy Calleary raised the issue of projects in Dublin and the percentage outside Dublin and Cork. There is no doubt that in recent years - it has been happening for several years now - it has not been possible to hit the targets for projects outside Dublin and Cork. Part of this is driven by the types of projects we are winning. There are far more expansions than new projects. These are largely in the information technology sector and are heavily concentrated in the information technology, pharmaceutical and medical devices areas. The projects tend to go to the places where those clusters are deep and established already and this has created real difficulties in hitting the targets.

However, there have been innovations such as Connect Ireland, a new addition to our foreign direct investment enterprise. It has a far better regional spread and it is winning projects. I imagine Deputy Tóibín will have seen the project in Kells last week. It is a good fit for Kells. It is the perfect new technology project but it is using skills that were there already. Connect Ireland is a new element in this area. I hope the focus on emerging companies will get a better spread. Ultimately, we do not or cannot tell companies where to go. They tend to come with rather sophisticated views and a matrix of what they are looking for and often they have already used ratings agencies to identify where in Ireland they will get what they want. It is an area that we need to work on and it requires a continued effort. We have focused in on the south east, an area that has been a blackspot, particularly in Waterford. We hope we can get some learning experiences from there and then apply them more widely.

Will the Minister get to the 50% mark this year? It is June now. Can the Minister call it?

No, I would not expect it, given the pattern. Obviously it is too early to say but not given the pattern of focus on the sectors where we are already strong. Increasingly, the wins are for people with higher skills and those in research and development areas. The Minister of State, Deputy Sherlock, will advert to the fact that almost 40% or 50% of the projects we are winning now have a research and development dimension. We should bear in mind two things. First, Enterprise Ireland has a much better regional spread. Second, there is a knock-on with all of this. For every job with a foreign company there is a job elsewhere in the economy and the same applies to Enterprise Ireland wins in export markets.

I wish to clarify a point. What is the multiplier for a county enterprise board job?

Does Deputy Tóibín mean the multiplier in terms of the knock-on?

What is the multiplier for the IDA and Enterprise Ireland? What is the multiplier for a county enterprise board?

By and large they are different. Each sector is different. If a company is in the exporting sector then traditionally it ought to have similar knock-on effects. By and large the multiplier is higher for an Enterprise Ireland company than for an IDA company because they tend to have higher purchases of materials and services in the domestic economy than an IDA company. However, one of the initiatives we are taking this year is to identify global supply chains as a source of opportunity for Irish business. We have targeted 500 million additional purchases for Irish companies from the supply chain of multinationals. From memory, I believe there is a multiplier of 0.78 for an IDA job and probably 1.5 or thereabouts for an Enterprise Ireland job, averaging approximately 1. That is the approximate figure. I am unsure of the figures specifically for county enterprise board jobs or whether such analysis is done, but I expect it would be closer to the Enterprise Ireland figure if the associated companies are exporting. If a company is in retailing it is a different matter because it could be buying only imported goods. Such companies would only be supported for mentoring by a county enterprise board and would not be supported for grant giving.

Since we are on the cusp of the new local enterprise office, LEO, initiative and given that the balance of CEBs is rather low compared with the other two organisations, it would be useful information for the committee.

The data on county enterprise board employment has not been collected on the rigorous statistical basis that has applied traditionally to the IDA and Enterprise Ireland. One thing we need to do is get a more accurate reflection of the jobs impact and that is something we hope to develop.

Deputy Calleary raised the issue of the case being made that Ireland is a tax haven. We absolutely reject that and there is strong evidence in this regard. Ireland has a statute-based tax code. It is based on a low rate but there are not many allowances against it. There is no issue of special deals being negotiated by any individual. Tax is primarily a responsibility for the Department of Finance but the Government, including the Taoiseach, the Tánaiste, the Minister for Finance and myself, and the IDA have taken a strong position in the media and in communicating directly with the authorities in the USA, where necessary, setting out our case. It is important to recognise that there is an issue around aggressive tax planning. No one denies that it is an issue. Deputy Tóibín raised the question of whether we know the number of Irish-registered non-resident companies. We do not have figures. By their nature they do not return tax in Ireland and therefore I do not know, but perhaps the Revenue Commissioners have better estimates.

Our rules for deciding whether a company is tax-based in Ireland are common. The British operate in the same way. If a company is managed and controlled in Ireland, then that is the basis for deciding whether it pays tax. It is the same in the United Kingdom. The difficulty arises when people who are aggressively tax-planning play one set of tax rules against another and look for arbitrage across the tax rules. I strongly maintain that it is not our tax system that is the problem, it is the arbitrage across difference tax systems. There will have to be international action to deal with that in order to be effective and that is the approach the Minister for Finance, Deputy Michael Noonan, and the Government has taken.

Deputy Lawlor raised the issue of the IDA. The IDA allocation last year included a special €10 million allocation relating to the write-off of a specific grant. There was an additional allocation and the authority made some specific property acquisitions that year. Generally, the capital allocation this year will be made up and is largely dictated by grant approvals over the past five years rather than grant approvals for this year. What is allocated will reflect decisions made over several years. Obviously, there has been a dip but we are now back to top-level IDA performance. We have had better IDA performance recently than for several years.

We should recognise that over time grant levels through the IDA will probably decline. Fewer companies will be attracting significant grant levels because of restrictions on state aid and because generally in the case of many of these companies the State will not be giving large grants for expansions. There is a change in the nature of it. We will be doing more in the way of promoting, going to countries and winning new investment, but it will be on a broader range of criteria rather than simply grant paying. That is a long-term change. There is also a carry over of €7 million in the €86 million in 2013. Given the multi-year budgets, we are allowed to carry over unspent money and that reflects the nature of it. This is a long-term pipeline, not a one-off payment.

Is the Minister saying that the figure relates to a five-year period, that is, the previous five years? We have been far more active in recent years. Does the Minister expect to see that increase in the coming years?

Different things are going on in those budgets. For example, let us consider Enterprise Ireland. Part of the reason for the under-spend in those figures was that the take-up in the innovation fund was less rapid.

The people were not as quick to come in with matching funds and therefore it did not get the take-up that had been budgeted for; that came later.

Essentially, the capital allocation is a reflection of activity under a number of headings. What we spend this year reflects decisions made over a number of years and also in terms of take-up. With the innovation fund, it is only as they pay out that we draw down capital as investments are made from an innovation fund. We make a commitment of, say, €250 million to an innovation fund. We do not pay it out until there are investments from that fund. We commit to match funding but it is only as the deal flow comes along that we pay out. That is the way the fund is made up. It is not as easy to read the activity levels just from the sums of money. IDA activity levels are rising even though its capital budget is nominally falling.

Regarding the county and city enterprise boards, CEBs, we are making very good progress in respect of the local enterprise offices, LEOs. Obviously, the reorganisation of 35 bodies takes time. We have published a service level agreement between Enterprise Ireland and the LEOs. We have an agreement with the local authorities in terms of the staff allocation that will go to each office. We are going through the process of identifying where these will operate, if they are different from their existing operation levels, and we are drafting the legislation that will shortly come to the House, which will only be the final phase of its introduction. This is a first-stop-shop for business. As part of the roll-out we have entered into what might be called memoranda of understanding with groups like the Revenue Commissioners so that if someone goes in to the LEO he or she will have, at the turn of a switch, so to speak, access to, say, the seed capital scheme where one gets tax relief. We are trying to make it an easy access point. Work is being done on memoranda of understanding to ensure that at the LEO front desk there will be access to those back office services from different agencies.

The legal cost is simply a contingency provision that I gather we make each year. It is to ensure there is a provision.

Deputy Tóibín's question is on the same issue. He is referring to the 6% decline under the jobs heading. It does reflect the capital budgets and the way they have moved. One needs to go below that to see the actual activity level but in terms of job approvals of projects, IDA Ireland approvals of projects are up. Enterprise Ireland approvals of projects are up and are on their target levels.

Regarding the new capital investment schemes and the likes of the development capital scheme, after we approve them there is then a fund-raising period during which our partners have to go out and raise matching funds. We are putting in seed capital. Our expectation is that it will be a 3:1 ratio, namely, private partners will raise €3 for every €1 we put in. We have put out €100 million to invitation and we expect that to be matched with €300 million on top of that while, obviously, giving fund managers the period to raise that money. We do not yet have a deal flow on those funds but the last seed capital fund, and we have only announced a new one, will be running 35 or 40 deals per year, in other words, significant seed investment of approximately that number of new companies each year. Overall, there are 95 high potential start-ups, 35 of which might be getting money from the seed and venture capital funding arrangements.

I gave the Deputy the credit guarantee figures.

What about our presence in Asia?

The Deputy will see that the flow of new investments from Asia on the foreign direct investment, FDI, front is probably less than the IDA would have hoped for but we believe it is a market with which we must persist. We will be seeking to maintain our presence in these markets even though, in the short term, one might say it is not turning around the same return, either in IDA investment or in Enterprise Ireland exports. They are in markets that will dominate growth in the future and we have to be there. In terms of Enterprise Ireland, we have to get companies that are Asia-ready. There is no point in bringing in a company that is not willing to commit feet on the ground and build a long-term relationship. From our point of view, it is a long-term project and we should commit to keeping the resource there even though one would be able to show that projects per head of placement are probably lower in Asia than in the United States or in-----

For the record, more resources should be allocated.

I know that is what the Deputy is saying. A balance is being run in all these areas. Our best market for Enterprise Ireland companies is probably Germany and France but we would be short-sighted to focus on those because we have to build new markets. It is a question of striking a balance.

On Deputy Tóibín's point about tax breaks, Ireland has an offering which is less and less about tax. Tax is a part of a much wider story. Mr. Barry O'Leary talks about the four "Ts" - track record, talent, tax and technology - and, increasingly, it is the human resource, the technology and the know-how that is attracting companies here. Many companies come here without any grant aid whatsoever. There would be a very significant number where grants are not being paid. They come here because of what they have already experienced.

The Deputy raised the point that export numbers have recovered more quickly than employment. There is no doubt there have been big productivity gains in many sectors during the recession. Our unit labour costs are down by 20% because there has been reorganisation. People have become more efficient but we have rebuilt our export market, and Enterprise Ireland added approximately 3,500 jobs last year. We are seeing expansion from that market, therefore, and there is the knock-on impact.

Regarding the figures on the FDI stock, I confess I do not know what exactly that inward stock measures but in terms of the suggestion that there has been a decline in the inward investment stock, it certainly is not reflected in the number of people employed in foreign-owned companies. It may refer to portfolios investment but I will have to-----

My understanding of it, and I might be wrong, is that it is the level of capital held by firms here that is not taxed here but where the enterprise is resident elsewhere.

No. That is the-----

The value of the capital reserves in the economy attributable to a parent enterprise resident in a different economy. It goes back to this-----

No. I understood that the amount of FDI invested in Ireland is the inward investment. The outward would be the number of Irish companies that have investments overseas.

While we are on that table, it states: "International competitiveness ranking of business impact of rules on FDI ...", and Ireland is No. 1 in that regard, which is a good news story, but what are those rules or what would be contained in them? What are the metrics under which that is measured?

Deputy Michael Conaghan wants to ask a question also.

There was a follow-up-----

There was but-----

They would be issues like intellectual property protection and investment protection. Those are the sorts of things that would be collected. It would be the general regulatory environment. We have been fairly high ranking in those for many years. They would also include the ease of tax payment, although not the rates. Tax administration would be an issue. We have been one of the top rankings in the world in terms of tax administration for quite some time. There would be a good deal around the regulatory impact.

I do not want to harp on about the tax incentive but in many ways it is the offshore elephant in the room. It is an incentive towards enterprise. We are here to discuss incentives towards enterprise, and the Minister mentioned that it is a reducing factor with regard to the four "Ts". It is probably not possible to identify the figure now but I ask that the figure for the tax incentive total for FDI in the State be supplied.

The tax incentive is the 12.5% rate, and we know it is raising 2.8%-----

What about companies which perhaps do not pay exactly 12.5%? Perhaps they have research and development incentives or another incentive which reduces their liability for the headline tax.

The effective rate of tax reported for Ireland by PricewaterhouseCoopers is approximately 11.9%, which reflects tax breaks under the code. Many people who speak about the tax paid seek to apply Irish tax to earnings a company made elsewhere. This is not a proper way to calculate it. A company with operations in Ireland pays tax on its operations in Ireland. This is how the effective tax rate is calculated. Other people seek to bring in flows which have come from other countries. Even though our tax code does not apply to them, they seek to somehow apply the tax paid in Ireland not to the operating profits in Ireland but to this bigger number they have added in.

I must-----

I have asked for the figure and I ask the Minister-----

We will get it in writing.

With regard to venture capital, seed capital, microfinance and credit guarantee, if the Minister is honest, he will be disappointed with the level of uptake and infusion of these structures in the past year. Private investment is a sorely lacking stimulus in the economy. What can the Minister do to help with this?

A number of general issues have been raised and I wish to raise several small matters. With regard to research, I know the linkage with product development-----

We are not discussing that programme just yet.

In fairness to those involved in microfinance, they are getting their act together in terms of PR, but the pricing of the credit guarantee and microfinancing schemes is totally out of sync with other loan products, and 8% is being charged at a time when ECB rates are low and there is talk of them going into negative rates. The timelines and the products do not fit much of the market. When will changes be made? Must we wait another three months for changes which most people agree ought to be made? This would mean people losing out on the opportunities provided by the schemes.

These are relatively new schemes and knowledge of them at front desks in banks and among small and medium enterprises is building. Recently, I met the banks to seek better arrangements whereby at the point of refusal, people would be alerted not only to their right to appeal but also access to the loan guarantee or other loan alternatives. I would be keen to see this because approximately 24,000 small and medium enterprises are refused credit each year and only a tiny percentage either appeal this decision or consider these new options. We need to increase this. We are determined to improve it. Microfinance Ireland is rolling out initiatives through the enterprise boards and other networks to try to improve understanding.

We will review the loan guarantee scheme and we will probably start this review before the annual turnout to see whether elements of the mix can be improved. These are new schemes which were never done before. There will be a need to evolve them with time and I accept this. They are adding to the environment and it may be that only 540 jobs have been created or protected by the presence of these schemes, but they are 540 valuable jobs and we will continue to push them on.

Will the Minister furnish the committee with the targets for 2014 which may answer some of the questions which have been asked?

We will move to programme B beginning with subhead B3.

Will the Minister of State, Deputy Sherlock, tell the committee exactly where we are at with Horizon 2020 which is crucial to many of these projections? Is it completely tied up with getting agreement on the budget at Parliament level? With regard to the capital programme, namely, the programme for research in third level institutions, PRTLI, the outturn for 2012 was €5 million higher than the Estimate and the Estimate for 2013 is €10 million lower than the 2012 outturn. We will probably discuss this again when discussing Science Foundation Ireland. What will this mean practically?

What is the current value of equity holdings by Enterprise Ireland companies? Why did Enterprise Ireland technology centres not match those in priority research? With regard to support through Science Foundation Ireland, the target was to consolidate 28 research centres and five new large-scale awards. Where were the large-scale awards made? With regard to Science Foundation Ireland leveraging the €100 million from funded researchers, how was it invested and who owns the outcome of their work? With regard to intellectual property, does the Minister agree rates or levels of patents submitted and the value of these patents are a suitable metric for reaching objectives? The figures on page 19 show gross expenditure on research and development as a percentage of GNP. I understood that in Horizon 2020 the metric was to show gross expenditure on research and development as a percentage of GDP which would change the measure significantly. The ears of the Minister of State, Deputy Sherlock, pricked up when I mentioned tax incentives for research and development. If he does not have the figures to hand, perhaps he will furnish the committee with an overall estimate of the level of tax breaks given to foreign direct investment and Enterprise Ireland businesses. How many Enterprise Ireland clients are in the State?

Research plays a vital role in the critical linkage between product identity, product development, employment and exporting. Some academics and people in the media have claimed this research has become very skewed and too utilitarian, that research should have a much broader vision and that Ireland's reputation may be damaged if this narrowing of the research mandate and focus continues. I do not know whether this is a concern. I am sure the Minister has read about it. What is his opinion on it? Does he agree with this criticism? Finding the balance between pure research and utilitarian research is difficult.

I assume the explanation for subhead B4 is similar to that given by the Minister with regard to the IDA and Enterprise Ireland. The Department must be expecting huge litigation. What is it concerned about?

A wide range of questions have been asked. Horizon 2020 involves a co-decision procedure and will require the agreement of the European Parliament, the Commission and the member states.

I am presiding over the negotiations with our team in Brussels, through the permanent representation. Ours is a partial general approach, whereby the Council of Ministers has agreed a negotiating position relative to the European Parliament. There are certain areas of inflection, or certain challenges regarding the full cost model. We are trying to move towards a simplified procedure under which calls can be issued. The simpler the mechanism, the greater the access for individual researchers and research entities. There are other differences between the Council and the Parliament, for example, on the rules of participation.

We have gone through six trilogues, under which the three entities have tried to move on to the next stage. We are on trilogue No. 7 and will move towards trilogue No. 8 in the latter half of this week, if I am not mistaken. We hope to reach a final conclusion by the end of the Irish Presidency because we want to ensure a smooth transition between the seventh framework programme, FP7, and Horizon 2020 so that there can be clarity regarding the latter throughout the EU's research infrastructure, particularly in Ireland, and it can start seamlessly on 1 January 2014. We are still in the midst of the political negotiations with the other two institutions.

An additional €5 million was provided to the Programme for Research in Third Level Institutions, PRTLI, to allow for payments that would otherwise have been made in 2013. This allowed for a lower allocation in the overall budget cut. Some 18 capital projects are still progressing, as are 15 current projects. Eighteen current projects were originally targeted, but the 15 are delivering approximately the same outputs, namely, 339 PhDs as opposed to the original target of 342 PhDs.

Seven new Science Foundation Ireland centres have been announced. Is Deputy Tóibín seeking clarity on these?

I read that there were five new large-scale awards. If the number is actually seven, that is fine.

We have surpassed the target.

Where were the large-scale awards made?

On big data, marine energy, drug delivery, food for health and perinatal research, which is based out of UCC and the Cork University Maternity Hospital. The overarching philosophy is to ramp up into world class research centres and to increase industry engagement but this does not preclude us from continuing our funding of regional technology centres, which are not necessarily mapped onto the 14 research prioritisation areas. Industry engages with the technology centres through the institutes of technology after identifying industry challenges. We should have distributed a note on the distribution of the centres as well as the activities ongoing in same. I can discuss this matter now, if the Deputy wishes.

On technology gateways, we have-----

Do we not have that note already?

Clerk to the Committee

No.

Technology gateways are housed within institutes of technology in Letterkenny, Athlone, Limerick, Cork, etc. They have various themes. For example, Waterford's theme is software solutions and mobile devices and the theme of CIT's Technologies for Embedding Computing, TEC, centre is embedded electronics for energy, water and location-based applications. Where specific thematic areas exist, industry has go-to points to optimise its opportunities.

I am trying to get through all of the committee's questions.

I will address the legal costs. The Secretary General is required to make a contingency provision, including for the protection of trademarks and emblems. We were involved in a court case in the labour area. Deputy Lawlor will know of the challenges to a number of registered employment agreements, REAs, and joint labour committees, JLCs. Court costs were incurred last year. Under Department of Finance procedures, we must set aside a contingency across the board. It is reflected in each head.

This allocation is very high, although barristers are also expensive.

We are not committing to pay it.

I know, and I hope the Department will not.

Deputy Lawlor will have sleepless nights over this legal money.

Why does the Department not tell the legal professionals that it has no money and ask them to do the work voluntarily?

That would be some deal.

The €100 million from industry to the SFI research centres is cash or in kind. The intellectual property protocol allows for arrangements to be agreed between industry and publicly funded research organisations as regards individual entities. The 2013 target for tech centres-----

There is no defined IP determination; it can be developed. How do determinations normally develop? I imagine that the IP is looked after by the private entity in most cases.

There is a set of guidelines as well as an agreed IP protocol, a document on which is published. Regarding the research centres, one must allow for a certain degree of flexibility if one wants a greater degree of industrial engagement in the funding of research. A designated technology transfer officer within each institution manages the relationship between principal investigators and industry. If one is too restrictive, one might curtail the level of economic activity or the opportunities arising from the engagement between publicly funded research and industry.

There are no figures to determine the breakdown of the IP historically.

I will revert to the Deputy on this matter, as I must on the other figures to which he referred, namely, the value of the equity holding in Enterprise Ireland.

We will establish tech centres for medical devices, connected health and pharma-manufacturing. These will map onto the 14 priority research areas. Dairy technology and analytics are two of those areas. I will revert if further questions must be answered.

Turning to Deputy Conaghan, the fundamental question is not of whether it is basic versus applied research. They are on the same continuum. However, we borrow approximately €300 million per week. In this light, it is pertinent that the State and its funders of research would outline a set of priorities to maximise the impact of that research in terms of creating new economic opportunities, namely, creating jobs and high-potential start-ups as well as resourcing the small and medium-sized enterprises, SMEs, that will sustain the economy.

We look at it from the perspective that perhaps 250,000 jobs were lost between 2008 and 2011. Through this prioritisation programme, and the technology sector centres and prioritisation areas I mentioned, we can begin to leverage more from industry to create those new opportunities. We have State funding and taxpayers' money coming together with industry cash or in-kind contributions to try to ensure we can retain the number of jobs we have within the foreign direct investment sector and also that we can grow new opportunities within the domestic or indigenous sector. There is a strong belief that by leveraging that intellectual property and creating more opportunities for scientists to move into the entrepreneurial sphere, the economy can be sustained over a longer period.

One does not come at the expense of the other, however. The research prioritisation exercise is part of the funding puzzle, if one wishes. As well as the HEA bloc grant there are other areas such as the Irish Research Council and other funding agencies that can still fund areas of blue-sky or basic research. There are reasonable amounts of money to sustain the relatively small pockets within the humanities and social sciences, areas, for example, that may feel they are outliers in any new process of prioritisation. The two are not mutually exclusive. Even within the humanities and social sciences, specifically the latter, there are potential opportunities within the prioritisation areas which can be mapped onto health or data analytics to provide new opportunities. It is about taking a more lateral view about how we fund into the research space.

I hope that answers the question adequately.

I refer to my question about the large scale awards. The Minister of State mentioned the sectors these were in and also mentioned the perinatal work in Cork. In regard to other geographical areas, was there, say, a figure of 50% identified for centres outside Dublin and Cork, or are they all to be found in those two city areas? My second question relates to the number of patents being granted annually, which is a metric related to success in research and development. What is the value of such patents?

There is the DARD Horizon 2020 figure which refers to 3% of GDP given to us as a percentage of GNP. What are the views of the Minister of State on that?

We are doing a metrics paper at present and will bring it to Cabinet. This will give the Deputy the context of metrics and how patents map onto it - or not, as the case may be. The question one must ask oneself is whether patents are an accurate measure of economic activity. What long-term effect do they have in terms of creating jobs, etc.? Of themselves, as intellectual property, patents are important in terms of protecting the good ideas and the new innovations people develop. What we have sought to do from the research perspective, and are doing, is to bring a paper to Cabinet. The Minister has a strong input in this regard. Its purpose is to ensure that wherever the State invests, through all the funders of research, for example, the HEA, Science Foundation Ireland, the Health Research Board and all the other State funders, it will map out or measure the impact of that research funding. That is measured in terms of publications and in the numbers of jobs created. One tries to measure the societal impact by looking at indicators such as the European Union innovation index, and so on. There are metrics around publications of papers, etc. The key point is that we are ensuring that where we are investing we have a set of criteria laid down such that the metrics have to be measured in terms of the impact and the number of jobs created. As that is done it informs our approach.

I refer to the SFI centres.

I ask the Minister of State to be brief.

This work cannot be measured geographically - the geographical spread is incidental. It is based on excellence, as it must be. If one were to skew it, based on geography----

There is excellence outside Dublin and Cork.

The criterion is excellent science. A criterion of excellence exists in terms of how one funds research; it is the fundamental pillar for any funding call or new opportunity. One cannot discriminate between various geographical areas. If, for example, one wanted to fund into south Kerry it has to be based on the pillar of excellence; it cannot be because the funding call is from south Kerry. If one examines the calls and looks at where the money has been disbursed, what has been forced is a major collaboration between institutions that might not, historically, have collaborated with each other. I refer to the CLARITY and INSIGHT centres, for example, where DCU, UCD and NUIG are coming together, which is a significant investment in the area of data analytics. One also maps the industry engagement, which involves industry from all across the country, geographically speaking. The geographical indicator takes second place to the pillar of excellence. One has to fund excellent research regardless of where it comes from, geographically. I hope that makes sense.

I mentioned the Horizon 2020 target for GDP.

There is a headline target under the Europe 2020 strategy to raise DARD to 2.5% of GNP.

It was originally GDP.

Yes, but in Ireland's case there was an amount relating to persons abroad. As a result, it is argued that GNP is a better measure of the value than GDP. The difference between GNP and GDP is that in the latter one factors out earnings that go back to the mothership. The GNP target is probably a better-----

Does the Minister of State not agree it makes the figure look better?

There is no massaging of figures. What we are talking about here is a true indicator, which is better.

We will move to programme C on which I will take questions. We are somewhat tight in time and ideally should be finished by 3.30 because there will be a second session. I call Deputy Dara Calleary.

Will the Minister of State give us an update on where we stand with C3, the tidying up of the institutions? When does he see that coming to fruition and finalisation? Can he give me an update on C9, the National Consumer Agency, and what the position is on the merger? In the context of the National Consumer Agency, would he like to comment on the story that broke yesterday which showed a substantial increase in grocery prices and basic food items, a figure ten times ahead of inflation? People are under enough pressure already without having to face that.

I refer to C13, and the Personal Injuries Assessment Board, PIAB. Will the Minister of State comment on the increase in insurance costs? Do we need to strengthen the PIAB again in terms of the work it does? I refer to C14, and the Health and Safety Authority. Will the Minister of State update us on any discussions he has had with the HSA in the context of the letter the chief executive of that body wrote to him in regard to budget cutbacks and their impact on the HSA's ability to perform its functions? I believe the CEO wrote to the Minister of State last February.

I refer to page 23, on workplace relations. When will this be presented before committee? Page 24 deals with the Companies Registration Office, CRO. This body will have a big job of work to do with regard to the Companies Bill and to allow for a smooth transition. I do not see anything assigned to the CRO to allow for that and ensure it does not suffer.

The Competition Authority targets seem to be legislative in nature and nothing more. The health and safety target is for 2,500 fewer inspections than the number carried out in 2012.

Given the figure under heading C3, does the Minister expect an overrun in the Labour Relations Commission allocation? Under heading C4, €944,000 has been allocated to the Irish Congress of Trade Unions, ICTU. Do we receive ICTU's accounts so that we might know where this money is spent? The fund has given rise to problems previously.

Good progress has been made on all of the mergers. The new legislation on the National Consumer Agency and competition Bill is on the A list. The legislation is not just concerned with the restructuring but also with the code of practice in the grocery sector and the new provisions on the transfer of media merger oversight to the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte. I hope the legislation is on track to meet its target.

Has the Minister told the Minister, Deputy Rabbitte?

He seems to be getting frustrated by the slow progress.

No. We proposed moving it to his remit. To reassure people, the existing legislation contains a strong public interest test. The review of mergers some years ago suggested a cleaning up of the criteria, which is being done under the new Bill. It will also address the transfer issue. There is a good code of public interest protection. We are pushing ahead in this regard.

The merger into the workplace relations commission, WRC, is progressing well. It is a major change, with five agencies being reduced to two, a body of first instance and an appellate body. We have streamlined all of the allocations and are moving to an online system. We have shortened dramatically the time for cases to be heard before a rights commissioner. From the moment a complaint is made, information is notified to an employer more quickly. We are avoiding having the same complaint sent to multiple agencies. We have introduced a pilot early resolution scheme to remove unnecessary delays by having cases resolved ahead of hearings. I am pleased with the progress in this regard.

Deputy Calleary has relevant experience, but any integration is time consuming and requires a great deal of work by officials to get all the ducks in a row. Rationalisations make good sense and we are enthusiastic about them, but making them work takes a great deal of work. In this regard, I acknowledge the work being done in my Department. The integration of Forfás into the Department is on track, as is the integration of Shannon Development into the IDA and Enterprise Ireland.

I have met the chairman of the Health and Safety Authority. Every agency could find important work to do were additional resources available. Reverting to the Chairman's first question, that we have needed to reduce our staffing numbers has had a knock-on effect. The authority has been effective in using modern tools such as ICT. It has pioneered BeSMART.ie as a way of facilitating companies in complying with their health and safety obligations without incurring elaborate costs. The authority has been at the forefront of trying to emphasise compliance as a part of a good culture and proper business. Many of our agencies are under pressure.

Insurance costs are always a concern. We are alert to them. The Personal Injuries Assessment Board, PIAB, which predates my term in office by a long time, has removed 70% of personal injury claims from the litigation system. It has reduced legal costs substantially. These costs amounted to 46% in 2002, but fell to 8.7% in 2012. The PIAB has had an impact. It monitors issues carefully and alerts the Government to matters of public policy.

The non-pay allocation provides for our preparations for the Companies Bill 2012, as did the 2012 allocation. The previous allocation anticipated work on the Bill. It is major legislation. Unfortunately, the committee will need to carry some of the load in getting through the legislation.

The ICTU grant for education, training and advisory services is performance-based funding with agreed reporting requirements, a memorandum of understanding and the submission of audited accounts. There is a good system for tracking the spending of the money.

I am unsure as to whether the Minister referred to the ability of the Companies Registration Office to deal with the transition under the Companies Bill's new strictures. While I understand there will be a reduction in funds to allow for inspections by the Health and Safety Authority, that there were 48 deaths in 2012 underlines how critical it is we enforce standards in industry. The number fell from the preceding year, but the decrease in construction work could have led to that reduction. The authority also did good work in helping to decrease the numbers.

The CRO has enough money. Its budget has been set in anticipation of its work under the Companies Bill and we are satisfied that provision has been made for this work.

The Deputy is right in that the Health and Safety Authority has been progressive in how it has done its work. If we rely on inspections, we will never get around to everyone. We must get people to embrace a culture of high standards and safety in the workplace. We seek to focus inspections on problem areas. For example, there has been considerable focus on agriculture. The authority is keen not just to use its own inspection force. We have held a round table meeting - I also participated - with agricultural interests, for example, the Irish Countrywomen's Association, ICA, to discuss how they can put the message out and support people, including older farmers who do not give the same attention to safety requirements. There is an effort to network the message more effectively among the groups involved. I have tried to get that message out. To be fair, the farming organisations have been supportive of it. We are trying to box smarter in the way we use our resources to get the message out, but the Deputy is right in that the death levels are reducing but are still too high. I have an agricultural background, and it is disappointing to see that the high number of deaths remains prevalent.

We have two further headings to discuss - appropriations-in-aid and administration. Do members have questions on the first heading? No. I will take questions on the administration heading.

Much of the savings in administration come from the Croke Park agreement, etc. One of the points my party has always laboured is the differential between the payments of those in the upper grades as opposed to those in the lower grades. In Ireland, typically, the rate is 7.7%, meaning the multiple above that the upper grade earns. In Nordic countries, for example, it is approximately 3.1%.

The figure is 3.1 times.

Forgive me, 3.1 times is what I meant. Would it be possible to get a breakdown of what those multiples are within the Department, to see the kind of cost base involved? I understand the Minister is probably not able to give that information now but I am sure it is accessible.

I have no doubt. The figures would be pretty much in line with whatever a Secretary General gets, which is the top of the tree, and what a service officer gets, at the bottom of the tree. It would be very easy to provide that information. I ask the Deputy to recognise that all the pay cuts realised in the Croke Park agreement and its predecessors have been graded in such a way that the higher the earner the greater the percentage cut made. The rates have been graded in a progressive way in all the pay cut rounds, including the one currently under consideration. There has been an effort to recognise that and no doubt that change will have brought down the ratio the Deputy remarked upon. It probably should be taken into account that the pension levy, which was also progressive, is probably included in gross pay rates. The Deputy is using gross pay but is not taking into account the progressive pension levy that is paid only by the public service, which may distort the figures. We will definitely provide him with the numbers and whatever notes might help him.

These are facts that may help us get a better understanding. Although much of the administration is from the Department each of the agencies also has its own administration so the administration of this Department may not be directly comparable with that of other Departments that may have fewer agencies delivering programmes. Would it be possible to get figures of administration costs per person, per grades or paypoints, to get an understanding of how the Department is structured in that regard?

The Department is structured into ten agencies and roughly another ten offices.

This administration is purely the departmental kind, rather than the agencies' administration.

Yes. It does not distinguish the office administration from its front-line activities. I do not have information readily available to me from the workplace relations committee on how much is administration and how much is front-line inspection, case hearing, and so on. I am sure we can seek it. Is the Deputy looking for the percentage of administration costs within the overall budget of different offices and agencies?

I am trying to get an understanding of the pay rates and scales in this Department and how they differ from those in other Departments.

Those figures are published. The pay rates of the chief executive officers of all our agencies are published, as is the administration budget of each agency. However, the Deputy is talking about the pay structure in each agency. We certainly know who is at the top.

Administration costs per person, for example, would give an average of the costs per person in the Department.

Does the Deputy mean the average pay rate per person?

Not necessarily, because the administration costs would be more than the pay.

The IDA would have people in the field. Is the Deputy calling them administrators, people who are out-----

I am asking the Minister to separate all the agencies from the Department. As we see the figures here, the Department's administration is completely separate from the budgets and activities of the agencies.

Does the Deputy want to put them together for presentation purposes the next time?

I believe the lady over there understands what I am trying to say.

We have administration costs set out in the document given to the Deputy, showing the pay element and the non-pay element. The estimate is €21 million for administration pay costs in 2012, with €5.6 million for non-pay. That would cover all our departments and offices, covering 788.65 people.

Okay. I can work it out from there. Those three figures will allow me to work it out.

That will give the average pay per person.

What about the 0.65 of a person?

All grades are there. There used to be the State directory which gave the pay rates of all grades. I am sure it is still around. The old State directory tells one the pay rate of every grade. Personnel would have it.

Are there any further questions on administration? This is the last chance. Does Deputy Lawlor have any questions?

On administration? We could be here all day.

We have a summary note here that might be useful. It does not give numbers, however.

If there are no further questions on the various heads, we will go to concluding comments. I call Deputy Calleary to begin.

Obviously, there is considerable work underway in the Department and the Minister is trying to re-engineer much of its work, which is welcome. He and I may disagree on the outcomes but we all want to get to the same destination. Although the growth in employment is encouraging, I would maintain it is a growth in temporary employment. We still have an issue of long-term unemployment, in particular youth unemployment. The youth guarantee is very important but I am concerned at the manner in which this Department does not appear to be driving it as much as it is being driven in the Department of Social Protection. The drive in enterprise and job creation needs to be part of the youth guarantee. That is very important.

I reiterate my concern, one I have often expressed and which I believe the Minister shares, about the fact we still seem to have a silo operation. I am still unconvinced that the jobs action plan has broken down the silos between different Departments in terms of job creation and the way every Department has a role to play in job creation, not only this one. I refer to expenditure on public projects. The committee has heard various groups that have attended, small contractors, even people selling school books and supplies. They are being priced out of the market by the policies of one Department while this Department is trying to encourage small business. The same goes for big Government contracts for building, where people are being priced out.

I am sceptical about the jobs action plan but one of the concentrations found in it concerned what needs to be done internally, within Government, to support business, in particular small businesses and job creation. I still believe there is a silo mentality which goes: "That's not our job; that's not our role, that's the other Department's role". We need to break down those silos in order to create employment and we need to make job creation the work of every Department, not just that of this Minister and his Department. Every Department needs to realise that every cent it spends should play some role in creating or maintaining employment. I believe that attitude is still not there in many Departments.

I accept the Minister and the Department are busy. The point I was trying to make in regard to the administration of the Department in its entirety was that there is a difference between being busy and outputs. Where I would have issues in regard to the Minister's work is in regard to outputs. He mentioned that the issue of job creation has not reached every door and I made the point that it actually has not reached many doors. The critical issues, the metrics by which he is judged, are the overall unemployment levels, long-term unemployment levels, underemployment, emigration - all those facts. In 2010, eight months before Fianna Fáil left Government, the unemployment rate had stabilised at approximately 14%. It is not really far off that level now, two and a half years into the Minister's administration. The problems that were there when he came to Government are still there. Demand is flat and there is a lack of both public and private stimulus in that credit is not available.

No matter how much tinkering is done around the edges, the core fact is that the banks are not working with private enterprise as required. The competitive advantage that the State needs to achieve enterprise development, for example, the cost base, including utility and legal costs, is suffering inertia. The Government gives heavy weighting to foreign direct investment over indigenous enterprise, wherein 78% of employment lies. Instead of tinkering around the edges, the Government needs to do more to affect the central areas of economic growth.

The microenterprise situation is disappointing. By dint of experience, many among the unemployed will set up small businesses. The county enterprise board-local enterprise office, CEB-LEO, crisis has been ongoing since 2008. The CEBs and LEOs do not know what is happening from one year to the next. The former enterprise Minister, Batt O'Keeffe, stated in 2008 that he would replace the CEOs, yet no legislation has been presented. The process has worked against the wishes of the representative bodies of small and medium-sized enterprises, SMEs.

We have banged on, so to speak, about these matters. Ireland has the fourth highest cost of electricity and diesel and our rental costs remain stubbornly high. Until these major influences on competitive advantage and demand creation are tackled, we will see only marginal changes.

As no other members wish to contribute, I call on the Minister and Minister of State to conclude.

I thank members for their interest in and commitment to this field. We may not agree on everything, but there is no question of the level of commitment on all sides.

Deputy Tóibín asked whether we were delivering outputs relative to our inputs. Our Department has seen a 16% cut in its inputs in the form of 500 fewer people employed. We do not claim that it is all down to us that 20,000 extra people are at work, but there has been a turnaround. We have pursued research prioritisation, introduced our intellectual property protocol and are putting in place a better system of supporting innovation. We did the same in respect of Enterprise Ireland, in that we initiated new schemes and set up a first-time exporters division. We have introduced new funding, for example, micro-financing, the temporary loan guarantee and seed capital. Our new measures are having an impact.

No one can pretend that our Department could deal with a collapse in house building from 90,000 per year to 5,000 per year. That collapse wiped out a swathe of employees, but I cannot talk the 5,000 back up to 90,000. I must make do with the new areas of the economy that we can grow. For this reason, the work on innovation and reform and the new activities in export markets constitute the only sustainable course for supporting our ambitions as a small open economy.

It is not true to say that there is a prejudice in favour of FDI. Only €100 million of our €760 million is directed towards FDI. Innovation alone comprises €150 million of our budget. Enterprise Ireland has a larger budget. We are doing a great deal in other areas. None of the €2.5 billion in new SME funding is targeted at FDI. However, FDI remains an important element of our strategy. One cannot build a strong cluster in ICT, medical devices or pharma without major multinational investors. The challenge we are trying to meet is to build the ecosystem beneath that level.

I take Deputy Calleary's point that there is an enterprise role to a youth guarantee. Regarding Deputy Lawlor's intervention, we are determining whether we should have a competitive start fund solely for young people and whether we can do more in terms of youth entrepreneurship. A part of the recently announced review of entrepreneurship will consider this matter specifically.

Regarding the criticism of the high level of part-time employment - not temporary employment - among the 20,000 extra people, the growth during the past two quarters was in full-time employment. The pattern seems to be that people start with part-time employment and grow into full-time employment. We are in a transition and I am not pretending that we are anywhere near arriving. Indeed, we are a long way from anything over which we can stand.

The point on silos was well made, but the Action Plan for Jobs is a genuine vehicle for breaking them down. We can point to a number of successes, for example, the ICTU skills area and the health innovation hub, where people have stepped up to the plate and done something different on the employment end.

Competition by SMEs for public procurement contracts continues to be a problem. We are examining this in two ways. We need to make public procurement savings. If procurement is expensive, we cannot fund other measures. However, we also need to support innovative small companies that can solve public service problems. Under the Action Plan for Jobs, we have been trying to have good, clear rules, to remove obstacles for small businesses and to cultivate innovation in procurement policies.

There is some validity in all of the members' points and we will try to take them on board, but some counterpoints are worth making.

On a practical note, we will distribute the information on the technology centres' status so that members can trace their lineage from the establishment of two in March 2010 to the proposed three centres in 2013. We can provide a further briefing note on Enterprise Ireland's research and development programmes. The committee has received a good note detailing the practical overview of the innovation vouchers, the research and development fund, technology centres and high-potential start-ups, HPSUs.

Were the committee to facilitate me, I would welcome an opportunity to return and delve deeper into the issue of research and innovation. Since the Estimates process is condensed, leading to a concertina effect, one would appreciate an opportunity to return, interrogate the landscape further and encourage members to visit some of the research centres in a co-ordinated fashion. Before I became a Minister of State, these matters could be nebulous and theoretical. If one gets one's fingers dirty by seeing what the researchers are doing in the centres and how they engage with industry, one has a chance to understand the situation fully. I am not saying that members do not understand it, but my experience of visiting the centres and seeing their work for myself helped me to capture what they were doing.

I wish to address the issue of silos. The Minister hit on it in terms of the health innovation hub. As the Minister of State with responsibility for innovation, my role is to try to break down those silos. The recent announcement represents the largest investment ever, with €300 million from the industry as well as State funding for research organisations, institutes of technology and universities. This will break down the traditional silos, elements of the industry will collaborate with one another along thematic lines, and the silos within academic circles will also be broken down. We are in a new disposition, in that people must collaborate if they are to flourish and survive. This is the underlying principle. I thank the Chairman and will leave matters there.

I thank the Minister of State. We will be glad to facilitate another meeting on that issue. I apologise for cutting the Minister of State short in some of his answers. It is not an ideal process for discussion. We will organise that meeting in the coming weeks, whenever it suits the Minister of State's schedule and, if possible, before the Dáil rises.

That concludes the select committee's consideration of the 2013 Revised Estimates for Vote 32 for the Department of Jobs, Enterprise and Innovation for the year ending 31 December 2013. I thank the Minister, Deputy Bruton, and the Minister of State, Deputy Sherlock, and all their officials for attending today's meeting.

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