Dáil Éireann - Volume 492 - 18 June, 1998

Industrial Development (Enterprise Ireland) Bill, 1998 [ Seanad ] : Second Stage.

Minister for Enterprise, Trade and Employment (Miss Harney): I move: “That the Bill be now read a Second Time.”

Mrs. Owen: Is the Bill being amended after yesterday's announcement?

Miss Harney: No. The Deputy was encouraged about the proposals when we debated the Estimates last Thursday. At least Deputy Broughan did not have a problem. However, we can discuss that on another occasion.

The Bill provides for the creation of a new support structure for enterprise development. First and foremost, that structure entails the creation of a new agency, Enterprise Ireland, through the amalgamation and restructuring of Forbairt, An Bord Tráchtála and relevant elements of the services to business function of FÁS. The Bill is much more than a technical change in agency configuration — it is also about a fundamental reappraisal of industrial policy.

Industrial policy needs to be founded on clear principles. The following aspects are critical. First, it is the people, not Governments, that create successful businesses. The primary role of Government is to help create the environment in which people want to start new businesses, to grow those businesses and explore new directions when entrepreneurial ideas fail, as some inevitably do. First, it is the people, not the Government, who create successful businesses. The primary role of Government is to help create the environment in which people want to start new businesses, grow those businesses and explore new directions when entrepreneurial ideas fail, as some inevitably must. Second, Government must respond to the dynamic inherent in business. For too long industrial policy has been dominated by a protectionist tendency, propping up and protecting businesses which have no inherent competitive advantage or long-term prospects of survival. Ireland's economy is constantly changing and our industrial base must undergo a similar process of transformation and upgrading.

Finally, we need to recognise that not all companies want, or have the potential, to grow. Many firms are lifestyle businesses which will not grow beyond a certain point. Such businesses are a normal, healthy part of a market economy. Their existence, however, serves to underscore the point that State assistance, if provided, must necessarily be limited. The risks of deadweight [1263] and displacement are ever present, threatening to dissipate Government's development efforts and waste taxpayers' money.

On coming into office I directed my Department to undertake a root and branch review of industrial policy. That review of policy started from a zero base, nothing was ruled in and nothing was ruled out. The first option considered was the abolition of all direct State supports to industry and the consequent dissolution of the agencies providing those supports. This option was considered on the basis of the following potential benefits. First, the Exchequer resources freed up by this approach could be used to approve the enterprise environment through, for example, investment in infrastructure or tax reductions. Second, the elimination of direct supports would effectively end the grant mentality and leave companies free to focus on their competitive strategy instead of trying to exploit complex and unwieldy agency structures. Third, market forces would promote the survival of companies fit to compete in the global free market. I decided not to pursue this option because of the clear evidence that Irish industry has still not reached the stage where it is fully self-sufficient.

Various market failures and other barriers to development still exist. Some examples are in the areas of finance where the key market failure is in the provision of affordable equity and working capital to developing firms, especially those competing in international services and technologically intensive sectors. Lack of scale is also a major issue. Some 84 per cent of Irish-owned manufacturing firms are SMEs employing fewer than 250 people and 53 per cent employed between 11 and 100 employees. Related to the lack of scale are issues of accumulated experience and depth of infrastructure. Virtually all advanced economies display strong groupings of firms in specific sectors or in related and supporting industries. Such groupings create a positive mix of competition and co-operation which strengthens the industry as a whole. Because of Ireland's late industrialisation we have yet to develop such mutually reinforcing groupings of firms and the associated depth of infrastructure — for example, in areas such as technology and logistics — to support them.

These deficiencies in scale and experience give rise to information deficits at firm level. Many small or developing firms are not in a position to undertake strategic analysis and to identify their strengths and weaknesses or to take the necessary steps to address them. Key information deficits at firm level involve research, development and design, knowledge of and access to markets and training and human resource development generally.

I am convinced, therefore, that a role exists for the continued provision of some direct State supports to industry. However, I am far from satisfied that the existing structures, programmes and [1264] approaches are delivering optimum results and, therefore, I propose to put in place a new strategy. That strategy will be built around the key elements of sustainable competitive advantage and the business development model, BDM. Sustainable competitive advantage is the ability to consistently and profitably deliver products and services which customers are willing to choose in preference to those of competitors. The definition may be simple, but for the individual firm or entrepreneur, developing and sustaining a competitive advantage is by no means a trivial issue.

Success or failure at firm level is determined by a complex interaction of forces that run across the firm's value chain from its suppliers to its final customers. Out of these forces come the inescapable facts that with the advent of global free trade input prices are considerably more volatile than in a sheltered domestic market. Customer needs and tastes are constantly changing. New technologies emerge which give rise to new products and processes and render existing products obsolete. New markets are opening up while others are declining as a result of globalisation.

To prosper and grow firms need to constantly evolve to meet the needs of this changing environment. Failure to do so is evidenced by the fact that to take just one random example, every one of the 113 manufacturing firms which started in 1974 are now closed — the last two closed last year. It is no surprise there is a general perception that we are strong in terms of creating businesses but weak in sustaining them. Why is this the case? We can certainly gain some insights from an assessment of the performance of indigenous industry which identifies significant strategic weaknesses. For example, there is an excessive dependence on traditional sectors. Many firms are located in traditional industrial sectors where growth prospects are poor and competition from low cost producers is intense. Such competition will intensify further with increasing globalisation and free trade. While average profitability, defined as return on sales, has increased in recent years, according to Forfás surveys, it remains low in absolute terms at 4.3 per cent for the food sector and 9.2 per cent for general manufacturing. This restricts the funds available for investment and growth.

There is a low propensity to conduct research and development. In 1996, 55 per cent of indigenous companies did not undertake research and development. Of those companies that did, only 19 per cent spent more than £100,000. There is insufficient investment in human resources and evidence that overall Irish business does not invest sufficiently to upgrade the skills of workers and management. This is particularly the case for smaller firms. Continuing reliance on home and UK markets is a cause for concern. Only 44 per cent of Irish SMEs export compared to an EU average of 54 per cent, and 65 per cent of indigenous manufacturing output is sold on the home market. Of the balance that is exported, 43 per cent is sold in the UK alone. These problems [1265] have persisted despite an interventionist industrial policy which has featured widespread availability of grants. In this decade alone almost 70 per cent of the firms recorded on my Department's industrial data base received a grant from the State.

These deficiencies paint a bleak picture. They should, however, be taken in context. On the positive side the enterprise sector as a whole is thriving. Employment in the foreign direct investment sector has grown by 32 per cent and 32,000 jobs since 1992, while employment in indigenous manufacturing companies has grown by 13.5 per cent and 16,000 jobs in the same period. Even more striking has been the growth in the services sector where employment has grown by 142,000 since 1992. This growth and Ireland's rapid economic progress in the 1990s generally has been underpinned by a commitment to get the climate right. Prudent management of public finances, coupled with the contribution of successive partnership agreements, has created a virtuous circle of rapidly growing productivity and real wage increases.

The European Union has played a major part through the contribution of the Structural Funds and in the liberalisation of markets in the run-up to EMU. We are, therefore, faced with a conundrum. Overall enterprise is booming. In particular we have a thriving domestic services sector which is capable of further significant growth as living standards continue to rise. In addition, we have arrived at the stage where it is no longer necessary to grant-aid firms to offset the effects of a dysfunctional cost and taxation environment.

In the midst of all these positive aspects, the indigenous traded sector displays significant performance weaknesses which the traditional industrial policy model fails to address. The policy review which I initiated identified specific weaknesses in that model which I will outline to the House. The traditional approach can be characterised as supply driven. Under this approach development agencies channel their cash into a wide range of schemes which they have established and the onus is largely on the firm to match its needs to those schemes. The effect of the supply driven approach is that there are too many schemes and too little focus on the real needs of the client firm. At best, this gives rise to a scattergun approach in the hope that if enough clients get support across enough categories, at least some of it will hit the mark. This approach is wasteful, inefficient and less than optimally effective. Moving away from it requires a much greater focus on identifying the real needs of client firms and addressing those needs in a streamlined, flexible way. Such a move will result in better value for money, better targeting of supports and better performance from the assisted companies.

The key to fulfilling client needs is to first establish what those needs are. Historically, industrial development agencies have tended to concentrate on grants administration based on [1266] paper plans rather than on taking a hands-on approach and spending time with the client to develop an in-depth knowledge of their business and the strategic issues facing it. This approach works well in the foreign direct investment sector where the majority of firms are well established successful firms who essentially negotiate the level of cash subsidy which will be paid to secure the location of their project in Ireland. By definition, the majority of these firms should already have the necessary internal competencies in research and development, marketing and strategy. Indigenous firms, however, tend to be less well developed and their needs are more complex, ranging across the entire spectrum of business functions. At present firms are faced with the prospect of having to deal with three independent agencies which administer in excess of 45 different schemes. There are some firms which profit from the current system. Those firms which have a clear idea of their needs and the resources to exploit the system will be more successful than other less well developed firms and may thus capture a greater proportion of agency resources. In addition, the existence of three separate agencies, FÁS, Forbairt and An Bord Tráchtála, offers firms the opportunity of using a positive decision on funding by one agency to leverage funding from the other agency.

The ability of firms to grant shop among the agencies reinforces the grant mentality which has been strongly criticised for its negative impact on entrepreneurship and risk taking in enterprise. It also diverts scarce resources from the areas of most need. The Culliton report summarised the problem as follows:

Industrial firms are integrated business entities. The different functional areas operate together in a cohesive way. State support for the functional activities of firms, whether in marketing, training or finance, should be provided in an integrated package.

The Culliton group's key insight was to recognise that State supports relate directly to the key strategic business functions performed by firms.

My Department has built upon the Culliton view by developing a business development model which provides the basis for assessing existing agency schemes and programmes and for streamlining them into a format which is clear, simple and directly related to developmental needs of firms in the areas of strategy assessment and formulation, research development and design, production and operations, marketing, human resources and finance.

The goals are simple support structures meeting real business needs and efficient client-friendly delivery. Having three separate agencies operating in excess of 45 different schemes is not the way to achieve this. If we want to continue with a policy which is unfocused and which fails to target the State's resources at the real developmental needs of firms, we should leave the existing agency structures as they are. If, on the other [1267] hand, we intend to take an integrated, holistic approach to the development of enterprise and to make a real impact on industrial performance, we need to have an integrated agency, hence the creation of Enterprise Ireland.

Enterprise Ireland will bring together the business development functions of Forbairt, An Bord Tráchtála and the relevant human resources expertise from FÁS. Enterprise Ireland will have a new mission and a new approach to service delivery based on the strategy outlined in my address to the House today. In bringing together the key elements of Forbairt, An Bord Tráchtála and FÁS, the new agency will have access to expertise across the range of business functions required by firms and outlined in the business development model.

The following essential elements will underpin Enterprise Ireland. There will be clarity of mission, clarity of focus in terms of its client base, a close working relationship with client firms to establish their developmental needs, streamlined services which meet those needs and selective deployment of resources to achieve maximum impact on the performance of client firms. I will now outline those elements in greater detail.

The mission of Enterprise Ireland is to help client companies develop a sustainable competitive advantage leading to increasing profitable sales, exports and employment. This mission statement reflects the fact that we want to see the new agency devote its resources to helping firms achieve real growth in sales, exports and employment. If firms cannot think strategically and profitably deliver the products and services which customers want, they have no long-term future. The key metrics of sales, exports and employment underpin the need for Enterprise Ireland to focus strongly on companies with the willingness and potential to trade internationally. Given the limited size of the domestic market and its increasing openness in a globalised competitive environment, significant growth in sales and employment can only be achieved through exporting.

The client base of Enterprise Ireland will comprise manufacturing and internationally traded companies which are genuinely Irish based and whose growth and development can be enhanced through working with Enterprise Ireland. Enterprise Ireland client companies will essentially fall into two categories. The first category will involve companies which are Irish owned at start-up and where any foreign involvement is of a purely financial nature. My primary intention is that Irish start-up companies which are bought out by overseas investors, often at a relatively early stage of development, should remain as clients of Enterprise Ireland.

The second category will comprise companies which are foreign owned but whose Irish management has autonomous decision-making power in relation to a majority of key strategic business functions, that is, strategy formulation, research and development and marketing. Such companies [1268] are effectively indigenous in terms of functions and, as such, appropriately belong in the Enterprise Ireland Apestroph's clients. Companies whose long-term strategic development is determined in Ireland will fall within the Enterprise Ireland client base, while companies whose strategic development is determined by their parent corporation will fall within the client base of IDA Ireland.

I will now turn to the issue of the delivery of supports. In the context of the client base segmentation which I have just described, there will be one clear source of financial assistance for companies; Enterprise Ireland and IDA Ireland will be responsible for financial assistance to their respective client groups. As regards the issue of non-financial soft supports, which are largely of an information or advisory nature, these will be directed primarily, but not exclusively, at Enterprise Ireland's clients since these companies face greater developmental challenges than IDA Ireland's clients. However, the objective of embedding foreign direct investment companies in the economy through sub-supply linkages and the location of strategic business functions, such as research and development and marketing, must also be taken into account. In that regard, the overall policy goal is that the maximum number of foreign direct investment companies should become fully rooted in the economy.

Significant diseconomies of scale would arise from splitting the provision of soft supports between Enterprise Ireland and IDA Ireland. In the new agency structures, therefore, soft supports in relation to linkage, marketing, research and development and human resources will be provided centrally by Enterprise Ireland. The main focus of these supports will be on Enterprise Ireland's client companies. However, Enterprise Ireland will also provide these supports to IDA Ireland and other agency clients which have specific developmental needs and where Enterprise Ireland supports can add value.

As I have already stated, the business development model will be central to Enterprise Ireland's functions. The key strategic concept is that flexible, customised supports should be delivered to Enterprise Ireland's clients. This will be done through a structured development process involving an analysis of client needs, delivery of the supports themselves and subsequent monitoring of client performance.

Enterprise Ireland will have the necessary expertise to add value to its client base in the analysis and quantification of client needs across the six functional elements of the business development model. Enterprise Ireland will also draw on its internal resources to provide added value services which meet identified client needs. However, the agency will also facilitate third party provision of developmental services where this is the best way of meeting client needs. In order to effectively implement the business development model and the structured development approach, the following activities and [1269] associated resources will transfer to Enterprise Ireland: all of An Bord Tráchtála's functions, Forbairt's business development, investment policy and commercial assessment functions, the relevant elements of Forbairt's research and technology functions and the relevant elements of the services to business function of FÁS.

I would like to return to the issue of focus and to underscore its importance. I aim to ensure that Enterprise Ireland is a genuinely new and focused organisation, not simply an amalgamation of the component parts and activities of the agencies involved. The business development model will provide the overall strategic direction for the refocusing and streamlining of the various schemes operated by the agency and the mechanisms through which they are delivered. My Department will work in conjunction with Enterprise Ireland to ensure that the model is effectively operationalised and that the necessary streamlining of schemes takes place. I am particularly anxious to ensure that a clear strategic direction is set for Enterprise Ireland's technology operations and to remove some of the confusion which has persisted since the incorporation of the former Eolas into Forbairt. As part of Enterprise Ireland's overall company developmental mandate, its technology function will provide needs analysis and developmental, value adding supports to client firms. To achieve this, Enterprise Ireland's technology activities will encompass technology auditing, advice and problem solving, contract research and development where identified market failures exist, assistance and advice with licensing and technology transfer and co-financing of in-company research and development.

It must be clear that Enterprise Ireland is an industrial development organisation, not a stand alone technical institute and its technological activities must fit that brief. The corollary is that Enterprise Ireland should not be involved in public good or regulatory activities or non-developmental testing services and services where, relative to private sector providers, a competitive advantage is gained through cross-subsidisation from other parts of the organisation, either in cash or in kind.

In light of the foregoing the Government has decided that some functions currently exercised by Forbairt will not transfer to Enterprise Ireland. In this context it is intended that the existing Forbairt functions in the metrology area will transfer to the National Standards Authority of Ireland. It is also intended that the Irish Energy Centre should be constituted as a statutory agency of the Department of Public Enterprise and separate legislation will be brought forward by the Minister for Public Enterprise to achieve this.

As regards those elements of the existing Forbairt technology activities involving the third level sector, such as the programme in advanced technology and the measure 4 scheme, these will be incorporated within Enterprise Ireland on the [1270] clear understanding that they must contribute to the development of enterprise in the long, medium and short-term. I conclude on this aspect of Enterprise Ireland's functions by reiterating that, where necessary, specific technology activities transferring to the agency from Forbairt will be reoriented and reconfigured to meet the agency's overall developmental mission. Where necessary, such reconfiguration will involve the discontinuation of non-developmental activities.

I want now to outline the human resources dimension of the new agency. I am committed to ensuring, as with the other elements of the business development model, that Enterprise Ireland has the capacity to address human resources development within its client firms. That capacity will be provided through the transfer of relevant elements of the FÁS services to business function. Significant elements of STB activities interface directly with the overall mission and strategic approach of Enterprise Ireland, in particular assisting companies in assessing training needs; assisting them in the development of company training plans; and the delivery of training grant schemes. The relevant staff and resources required to exercise these functions within Enterprise Ireland will transfer from FÁS to the new agency. Other elements of the function will remain within FÁS.

I want to turn to the specific provisions of the Bill and to outline its key features to the House. As I indicated at the start of my address, the main purpose of the Bill is to provide for the establishment of the new industrial development agency, Enterprise Ireland, through the amalgamation and restructuring of Forbairt, An Bord Tráchtála and certain elements of the services to business function of FÁS. The Bill also provides for the transfer of the metrology functions currently exercised by Forbairt to the National Standards Authority of Ireland.

The Bill also provides for amendments to the Industrial Development Acts, 1986 to 1995, and the Metrology Act, 1996, arising out of the restructuring, as well as certain other minor amendments to those Acts, the Shannon Free Airport Development Company Limited Acts, 1959 to 1995, and the National Standards Authority of Ireland Acts, 1996 to 1998, which are mainly concerned with the updating of certain financial limits. I intend that the new agency will be established during the month of July and section 3 provides for the making of the necessary order to achieve this.

Section 6 provides for the establishment of Enterprise Ireland — known in the Bill as “the Agency” — as a corporate body and as an agency of Forfás. In that regard, Enterprise Ireland will come within the policy and co-ordination remit of Forfás and its powers have been expanded to allow for this in section 45.

Section 7 sets out the functions of the agency.

This section provides the broad powers to allow Enterprise Ireland to implement the business development model. In addition to these broad [1271] functions, the agency will also draw on the specific provisions of the Industrial Development Acts, 1986 to 1995, to provide its client firms with a comprehensive range of advice and developmental supports.

Staffing provisions for Enterprise Ireland, and related provisions for IDA Ireland, are dealt with in a number of sections, while the provisions of the Industrial Development Act, 1993, are also relevant. Under the terms of the 1993 Act which continue to apply, Forfás is the overall employer of both its own staff and those of Forbairt and IDA Ireland. Initially, it is proposed to retain this approach in the Enterprise Ireland context; that is to say that staff will be employed by Forfás and seconded to Enterprise Ireland. This is provided for in section 39 for ABT staff and in section 40 for FÁS staff. Under the terms of the 1993 Act, the staff of Forbairt are currently staff of Forfás and, as such, the power already exists to second these staff to Enterprise Ireland.

In regard to the staff of FÁS, as I have already indicated, only certain elements of the FÁS services to business function will transfer to Enterprise Ireland. Section 40 therefore provides the powers to transfer the relevant staff. In order to allow sufficient consultation for this, the section will come into force by ministerial order.

Provision is also being made in the Bill to allow Enterprise Ireland and IDA Ireland to assume the role of employer should this prove necessary. In the case of Enterprise Ireland, this is provided for in sections 18 and 19. A similar consequential provision is being made for IDA Ireland in sections 36 and 37.

The successful pursuit and implementation of Enterprise Ireland's new mission and strategy will require a very different approach from that currently pursued by its component agencies. As such, the success of Enterprise Ireland will therefore be critically dependent on its staff.

Over the last six months, there has been extensive consultation between my Department the staff of agencies and their trades union representatives. Meetings have taken place on average every three weeks and there has been a full sharing of information and experience between all those involved in the process. I believe this approach has created a positive climate of consultation and partnership which I want to see continued after the establishment of Enterprise Ireland. l want to ensure that Enterprise Ireland has the full scope to implement a human resources policy which underpins its distinctive mission and business needs, and which fosters a corporate spirit among its staff and a strong sense of identity with its new mission and strategy. Should this require a change in the staffing structures established under the 1993 Act, then such change will be made and the necessary order making provisions are included in the Bill to achieve this.

Section 33 provides for an amendment to the Industrial Development Act, 1993, to allow for an [1272] increase — from £750 million to £2 billion — in the aggregate amount of grants to Forfás, Enterprise Ireland and IDA Ireland. The increase is necessary because the bodies in question are now nearing the existing statutory limit in respect of the total amount of moneys which may be granted to the bodies for the exercise of their functions. Similar provisions are made in respect of Shannon Development in section 35. It should be noted that this is the gross amount of money to be granted to the agencies and has no impact on the percentage grant aid to individual companies.

Section 34 provides for an amendment to the Industrial Development Act, 1993, to allow for an increase in the aggregate threshold — from £2.5 million to £4 million — for grants to an individual undertaking above which Government approval is required. The existing threshold dates back to 1981 and, taking inflation into account, its continued application has resulted in a significant increase in the number of projects which require Government approval.

This section also provides for a pro rata increase in a range of individual grant thresholds set out in the Industrial Development Act, 1986, above which Government approval is required, thus bringing these thresholds into line with the increased aggregate grants threshold.

Sections 49 to 51 provide for the transfer of the metrology function to the National Standards Authority of Ireland. In the first instance, the staff of the metrology function will be seconded by Forfás to NSAI. However, consistent with the provisions being adopted for Enterprise Ireland and IDA Ireland, provision is being made to allow the subsequent transfer of staff to NSAI.

I conclude by reiterating my earlier assertion that the creation of Enterprise Ireland is not simply a case of moving the deckchairs. This Bill, the structures it provides for and the strategic thinking underlying it, which I have outlined to the House today, are part of a fundamental reappraisal of industrial policy. It is based on a firm commitment to putting the business environment first and to critically reassessing the role of State interventions within that overall context. In that regard, it emphatically will not simply provide easier access to funds for firms who have no willingness and potential to grow. However, for those firms which want to grow and which are committed to developing a sustainable competitive advantage, it will put the customer first and deliver streamline supports which address their real business needs.

The structural changes for which this Bill provides are not an end in themselves. These changes are an integral part of a comprehensive strategy of focus and selectivity which is designed to deliver better value for the significant amounts of taxpayers' money devoted to industrial development, and to build the kind of industrial base which will provide the impetus for Ireland's economy in the new millennium.

[1273] Mrs. Owen: I thank the officials of the Department of Enterprise, Trade and Employment who briefed Opposition spokespersons on the Bill last week. The provision of such a service is a welcome development.

By and large, Fine Gael supports the establishment of Enterprise Ireland. However, the Minister could be compared to Christopher Columbus setting sail across the Atlantic to discover what he thought would be India. He did not know where he was going, he did not know the name of the destination at which he arrived and he financed his trip with borrowed money. The Minister is also setting off on a journey and she is using money borrowed from taxpayers to create Enterprise Ireland. However, I am not sure if she knows whether this new agency will work. The reason I say this is because Forbairt was only established in 1993. At that stage, everyone believed it represented the way forward in industrial policy but the position has again changed.

The Minister stated that the creation of Enterprise Ireland is more than an exercise in moving the deck chairs around but that remains to be proven. We must not ask what Enterprise Ireland will achieve but what policy it is designed to implement. The legislation is strong on enabling measures but weak in terms of incorporating the mission statement and the document published by the committee set up to establish Enterprise Ireland. On Committee Stage, I hope the Minister will be able to satisfy Members' concern that the objectives set out in the mission statement will be achievable in terms of the legislation.

In the explanatory memorandum it is stated that section 7 sets out the functions of the agency, indicates that the central purpose of establishing Enterprise Ireland is to allow an integrated approach and that the functions provided for in the section will allow it to assist and develop industry across the range of key strategic business functions including strategy, research and development, marketing and skills base development. The mission statement goes further by referring to client base, the business development model and other issues relating to the agency's functions. However, these are not spelt out in the legislation. Will the Minister indicate whether the industrial policy behind the Enterprise Ireland concept is geared towards developing a strong industrial base which combines Irish and foreign industries, whether that industrial base should produce high value products with high capital and low labour intensity or whether we seek to develop high level intensity industry or a combination of both? Will she make a statement on the wisdom of following these routes?

In the absence of a clear statement, it strikes me that various programmes and investments will be justified by those responsible for putting them forward or that the people involved in Enterprise Ireland will sell their services to particular industries. I am concerned that Enterprise Ireland may not be as focused as the Minister implied and it [1274] may merely be a case of taking whatever is on offer.

We have the benefit of modern equipment, technology and reliable maps and charts. The future is in our hands and we must plan carefully. We will not be able to return in three to four years to create Enterprise Ireland mark ll because Forbairt, IDA Ireland, FÁS and the Trade Board will disappear with the establishment of Enterprise Ireland. Over the years speakers on all sides of the House have praised the work carried out by those bodies but they are now being amalgamated into one large agency. I will return later to the issue of whether big or small is beautiful.

The Minister may have encountered difficulties in setting out a statement of industrial policy in clear terms. To digress from the main subject of the debate, the Minister showed recently that she makes Government policy on the hoof. This was graphically illustrated when she announced the Government's policy on the minimum wage during a radio interview on RTE. No one on this side of the House received a copy of the minimum wage report and we were obliged to listen to the Minister's radio announcement in respect of it. She wholeheartedly endorsed the report and, when asked about the level at which the minimum wage would be set, stated that she accepted the report's recommendation in that regard. Gradually, as wiser counsel prevailed, she began to draw back from this strong statement.

Miss Harney: That is untrue.

Mrs. Owen: Yesterday, in answer to a question from the floor at a meeting of the Small Firms' Association, the Minister made a definitive statement about the withdrawal of unemployment benefit and assistance from people who refused to take up job training places and job opportunities. She stated there would be no ifs or buts, if people did not take up such opportunities they would lose their payments.

Miss Harney: That is what happens at present.

Mrs. Owen: I am glad the Minister, perhaps because Fianna Fáil Members were concerned about her solo run——

Miss Harney: On a point of order——

Mrs. Owen: There is no point of order.

An Ceann Comhairle: Does the Deputy wish to give way to the Minister?

Mrs. Owen: No.

Miss Harney: The Deputy must give way and let me correct the record.

Mrs. Owen: I am not obliged to give way.

[1275] Miss Harney: The Government approved the minimum wage. With regard to the meeting to which the Deputy referred, I was not asked a question from the floor. The Government agreed to the policy of conditionality in April.

Mrs. Owen: That is not a point of order.

An Ceann Comhairle: No, it is not.

Mrs. Owen: I trawled the text of the Minister's address to the Small Firms' Association and she did not refer to the issue of withdrawing social welfare payments.

Mr. Broughan: She stated there would be no fifth option.

Miss Harney: Yes, that is correct. Does Deputy Owen know what that statement means?

Mrs. Owen: I have also trawled the text of the employment report the Minister published in April, which was sent to the EU Commission. I fully support the concept of intervening with people under 25 years of age who have been on the live register for six months and targeting and focusing on their needs to ensure that they receive proper and appropriate training and real job offers. However, to defend herself, the Minister stated yesterday——

An Ceann Comhairle: This is not relevant to the debate on the Bill.

Mrs. Owen: It is.

An Ceann Comhairle: No, it is not. The Chair is charged with making decisions on relevancy and I have allowed the Deputy a certain latitude on the matter. She should not abuse that because her comments are not directly relevant to the subject matter of the Bill.

Mrs. Owen: I accept the Chair's ruling but only in so far as the legislation is entitled the Industrial Development (Enterprise Ireland) Bill. Let us be honest, if Enterprise Ireland is to work we must focus our attention on jobs, people's employability and their availability for work. It is perfectly appropriate to talk about the Minister's policy on making people more employable and ensuring fewer people are on the live register.

Miss Harney: The Deputy agreed with me last Thursday.

Mrs. Owen: I agreed that people under 25 should be targeted. We all know conditionality exists.

Miss Harney: What is conditionality?

Mrs. Owen: We all know that people must be available for work.

Miss Harney: What if they are not?

[1276] Mrs. Owen: We also know the job or training offer must be appropriate to young people. The Minister made an off-the-cuff remark yesterday. I am glad that when she went on radio later, and again this morning, she took up the Fine Gael demand to know the precise proposals she has in place to ensure young people are not merely thrown off the live register.

Miss Harney: The Deputy is wrong.

Mrs. Owen: I am glad she changed her mind and rolled back on what she said yesterday. I have no doubt she did this because people in Fianna Fáil were extremely angry. She did the same during the election campaign when she stated that unmarried mothers should live at home and not get help to find accommodation. She also stated on radio that the minimum wage rate would be the same as that stated in the report on wage rates, but subsequently in reply to a question from me she said the rate should be fixed based on the negotiation of Partnership 2000.

Miss Harney: It will be.

Mrs. Owen: That is a change from what she said on radio.

Miss Harney: It is not.

Mrs. Owen: I advise the Minister to think a little more before she makes statements off-the-cuff. I realise she is hurting because of the difficulties between the two partners in Government and her party is the small one.

Miss Harney: They are all Government policies.

Mrs. Owen: If she is using the report submitted to the EU as support for what she is saying, she should re-examine the report because it contains no reference to the arbitrary removal of people from social welfare. She refers to offering people a job or other support and states that the key focus will be to encourage young people into employment and away from reliance on welfare support through appropriate guidance, counselling and job search techniques. The Minister should ensure she brings together all her policies.

Miss Harney: The Deputy should refer to page 21 of the document.

Mrs. Owen: Page 21 does not refer to people being removed from social welfare. The Tánaiste is paraphrasing what is in the document.

The recent document published by the Minister and Minister of State, entitled Statement of National Trade Policy, describes Ireland as a trading nation and outlines the key success factors in terms of trade policy. It also outlines the challenges and opportunities that lie ahead, but it does not state what the policy is. I am [1277] pleased An Bord Tráchtála appears to think it is appropriate for it to be amalgamated with the other agencies under Enterprise Ireland. When the amalgamation was first announced, the board was extremely concerned that the expertise and support structure it had built up would be subsumed into Enterprise Ireland. I am pleased its objectives are being built into the new company.

It is not surprising that the Minister has subsumed the trade promotion board, which has done such great work, into the new company because her trade policy document did not adequately develop our role as a trading nation. We need greater access for exporters. In her mission statement, the Minister stated that in an increasingly open and globalised competitive environment, significant growth in sales and employment can be achieved only through exporting. She will be aware that the Irish Exporters Association has expressed concern at her failure to refer to exporting and overseas trading in the legislation. On Committee State I hope she will be willing to develop the functions provided for in section 7. With a population of 3.5 million it is obvious that we cannot grow our industries because we do not have enough consumers to buy the products or services produced. We must expand our export base.

Exporters want knowledge about the markets abroad and the risks and dangers attached to trading in certain areas. They need assistance to develop the quality of their products, but they do not necessarily need a good exporting company or too much State intervention. There is a danger that industries and exporters may have to go through more red tape when Enterprise Ireland is established. I hope that will not be the case. The legislation is weak on recognising the need to develop our export markets.

When the new agency is established, approximately 1,200 people will be employed with a budget of about £200 million. The Minster has fudged the issue of staffing in the new agency. Sections 18, 19 and 39 state that certain safeguards will be built in for trade unions and staff associations to hold discussions. I am concerned that in the first six months or even one year the main emphasis will on sorting out staff positions and the new names they will have to take on. The three agencies being amalgamated have a plethora of job titles such as technology officers, technicians, POs, HEOs and EOs. I am concerned that the focus in the first year will be on the human resources element of the change. The Minister stated that there have been three weekly meetings with the staff, but from my knowledge there is no agreement on the new structures. Also, there has been no public discussion about whether it will be necessary to introduce a voluntary redundancy scheme. It is wrong that those issues are not out in the open. In six months' time Opposition spokespersons will probably inquire as to what is happening in Enterprise Ireland because the trade unions and staff associations [1278] will have come to a standstill in their discussions with the Department.

I am disappointed more progress has not been made. It has been argued that it would be easier for the staff to deal with one head in terms of a single agency, but the legislation will have already set certain parameters and it will be more difficult for staff to hold open discussions about their jobs. I am also concerned that the staff of Enterprise Ireland will essentially be answerable to Forfás. Will the Minister outline the exact role of that body? The document Shaping our Future — Strategy for Enterprise for the 21st Century outlines its objectives as advising the Minister on matters relating to the development of industry in the State, advising on the development and co-ordination of policy for Forbairt, IDA Ireland and An Bord Tráchtála — which will become IDA Ireland and Enterprise Ireland under this legislation — promoting science and technology for economic and social development, encouraging the establishment and development in the State of industrial undertakings from outside the State and advising and co-ordinating Forbairt and IDA Ireland in regard to their functions. Some of those titles will be changed.

If Enterprise Ireland is doing all this what will be the role of Forfás? There will be a loss of the flexibility which has enabled staff with different kinds of expertise to transfer or seek transfers between IDA Ireland, Forbairt and An Bord Tráchtála because these will now be included under Forfás. I am concerned that the amalgamation of these agencies will mean this expertise becoming stagnant in one area. I hope the Minister will assure the House this will not happen in the development of Enterprise Ireland.

The mission statement makes clear that, based on the continuation of existing policies, Enterprise Ireland will not as a rule assist companies of under ten employees. These will be dealt with under the county enterprise structures. Given this is not set down in the legislation, I am concerned there will not be the flexibility implied in the mission statement. I do not believe the Minister can prescribe that companies of under ten employees should not be covered by the services provided by Enterprise Ireland. How will such start-up or expanding companies know whether to go to Enterprise Ireland head office or to their local county enterprise board for assistance?

Will the Minister clarify how she decided on the figure of under ten employees? A number of companies, especially management consultant, computer services and software, get many valuable contracts abroad while other small companies trade in services internationally. They must have direct access to Enterprise Ireland expertise, both at home and abroad. A company with three or four expert employees trading in the Middle East or the Far East must be able to approach the Enterprise Ireland structure in that region for help. They cannot be expected to approach a county enterprise board in County Limerick or [1279] County Cork saying they are unable to get help from the relevant Enterprise Ireland office abroad. I hope the Minister will revise this provision to ensure it is based more on the scale of the business. It would be inappropriate for a small company doing £5 million of business to approach the county enterprise board, which, by and large, deals with companies with turnovers of tens and hundreds of thousands rather than millions of pounds.

It is not clear from the legislation where SFADCo fits in. It appears it will continue to operate and take on the role of Enterprise Ireland in the areas it currently handles. This appears to be contrary to the Minister's policy of seeking to bring all the support structures for indigenous Irish or foreign industries that are almost exclusively run by Irish management under the one umbrella to focus the supports they are given. Given that SFADCo appears to be left on the outside while delivering the services of Enterprise Ireland, I am concerned it will not be able to provide supports and services to companies west of the River Shannon. What will happen to Udarás na Gaeltachta? Will it be covered by Enterprise Ireland or SFDACo?

Does the Minister propose to include staff representatives on the board of Enterprise Ireland as provided for on the board of the National Standards Authority of Ireland? Staff are concerned about this and I hope the Minister will consider the inclusion of staff representative in the appointment of the 12 members of the board. I also hope she will be diligent in appointing people with direct exporting experience.

The chief executive officers of each of the agencies under Forfás will sit on the board of Forfás while the chief executive officer of Forfás will not sit on the board of the new agency. The quorum for a board meeting of 12 members is only three members. I suggest the Minister should reconsider this figure. Section 11 allows the board to make decisions. It seems extraordinary that a board meeting with a quorum as few as three would be able to make major decisions on behalf of the board. I hope the Minister will raise the quorum to five, or even a higher number if she considers it appropriate, as it is on the board of the National Standards Authority of Ireland. A quorum of three is not enough.

The Bill provides for the complete transfer of staff from the existing agencies to Enterprise Ireland, which may ultimately become their legal employers. While the legislation gives the Minister the power to transfer, it does not specify this will happen. Has the Minister any long-term proposals to make Forfás an upper echelon advisory group while making Enterprise Ireland the main employer?

I welcome the concept of Enterprise Ireland. However, I am concerned that the legislation is strong on enabling powers and weak on details. There is still a huge mismatch between the jobs available and those on the unemployment lists.

[1280] One of the functions to be transferred from FÁS to Enterprise Ireland will be to assist employers identify the training they need to find the matching employees for their firms. I cannot overstress the importance of this. Those unemployed with skills and training have got jobs. We are now getting to the hardcore who are not readily employable. We must consider the employability of those who are on the unemployment register.

I am glad that companies who are under the guardianship of Enterprise Ireland and its client development managers will be assisted in identifying their needs exactly. For example, if a company need a warehouse manager it should identify the training needed for the post. If a company feels the training agencies cannot provide the training needed the company should be assisted to provide the training.

There is a mismatch in the allocation of £15 million to companies to provide in-service training and more than £400 million to provide training for the unemployed. I urge the Minister to re-examine this imbalance in the funds available to ensure that when Enterprise Ireland is set up it will create jobs, increase exports and further the viability of indigenous companies.

Mr. Broughan: I also had the pleasure of attending the Small Firms Association meeting, although I missed the Minister's address. It was interesting to meet small business people from north Dublin who have developed viable businesses. They had interesting questions about the new agency and the role it might have for their businesses. Given that many of them employ fewer than ten people they may not come within the remit of the new body. On the basis of the ideas put forward in the Bill does the Minister intend to provide resources for those small businesses?

The Minister announced a “workfare” scheme yesterday and indicated that there would not be a “fifth option”. The Labour Party put forward a detailed critique of the employment action plan the Minister released a couple of months ago. Some of our criticisms of that plan were echoed by the European Parliament and the Employment and Social Affairs Council. The plan did not have a commitment to full employment in the short-term and did not provide for new resources to advance the ideas in the plan. With regard to people under 25 years the Labour Party feels that the quality of training, mentoring and the availability of job placements are the key aspects on which the State agencies should focus.

The Minister did not recognise the great performance of the local employment service and the Department provides a derisory sum to support it. It was clear from the employment plan that it had been cobbled together on the basis of describing the EU's ambitions in terms of the Amsterdam Treaty and the Luxembourg Summit but without providing further resources to help people into the job market.

The Government is in disarray on this issue. [1281] At a recent meeting of the Enterprise and Small Business Committee it appeared that the Minister for Social, Community and Family Affairs, Deputy Dermot Ahern, had unilaterally introduced a type of “workfare”. I gave examples of cases involving people over 25 years who had been sent to building sites and security firms by employment exchanges to find that there were no jobs for them. Despite the attempts of the Taoiseach to recover the ground lost, the current arrangements are reminiscent of the Jobsearch fiasco of some years ago when people were trained in telephone skills using bananas because of the lack of resources.

The worst feature of the Minister's announcement yesterday is that it cuts across the work of the agencies we are discussing and that of the local partnership companies and the local employment service. In north Dublin there are many significant interventions to try to keep people in school for as long as possible, to train them with an intensive mentoring system and then to try to find a placement for them in a decent job. The Minister has cut across that unilaterally. She has indicated that she will not proceed with a detailed and responsive training and advisory service for those under 25 years.

It seems the Government is backing down from the commitment given on a national minimum wage. The Minister appeared to indicate to the small business people that further detailed legislation would be needed before a minimum wage could be put in place.

In various American states “workfare” has not worked because only a small percentage of people got jobs having gone through the brutal system of taking a low paid job in bad conditions or not receiving social welfare. The Labour Party advocated a job guarantee system and that is the way forward. I call on the Minister and the Taoiseach to clarify the position on the right of unemployed people to training and job placement.

Many people under 25 years in my constituency have young families. Is the Minister saying to them that they will have no welfare benefits? Is she telling them to starve?

Miss Harney: Of course not.

Mr. Broughan: There are many aspects of the Bill which we will tease out on Committee Stage. The Bill is deficient in many respects. We give a qualified welcome to it and I join Deputy Owen in thanking the Minister and her Department for providing a detailed brief on the legislation. It was helpful in allowing us to put in context the Department's plans.

The Bill has had a long gestation. At the time Fianna Fáil and the Labour Party were in Government the difficulty appeared to have been that one Department and Minister was only justified by responsibility for An Bord Tráchtála. When we embark on major changes in the delivery of services, whether for business or some [1282] other sector, we must be careful to ensure that if agencies are working well and delivering we do not change them too much. Most people accept that the IDA, Forbairt, FÁS and the other agencies have delivered fairly well over the past decade. If the system is not broken, why fix it?

The current operations of An Bord Tráchtála and Forbairt have served a valuable role in our industrial trade and overall economic development. The changes we propose must be only implemented with extreme care. Unless we are careful, the plan to take the in-work training element out of FÁS may weaken the type of services it provided. The Minister said yesterday that she was introducing Enterprise Ireland to help Irish companies become more market driven and address their key development weaknesses. She said she thought this would have to be done in a very focused and targeted way. That is the key to the success of this Bill.

Having regard to the lengthy submission I received from various interest groups and worker representatives in the agencies, it seems there is a detailed commentary in the Bill and the briefing documents to it on what the Department is trying to achieve. However, there seems to be a distinct lack of focus in many elements of the Bill. It does not set out any fundamental targets in respect of what the new agency is to achieve. Section VII deals with the functions of the agency, but it is a very brief and incomplete summary of what most of us feel the vision of industrial policy should be as we move into the 21st century. In many of the briefings to this Bill we have had detailed strategic plans and policy statements, but they are not carried through in the Bill. That is one of the main criticisms that could be made of it. Even the vision outlined by the Minister is not fully reflected in the small part of the Bill which sets out a vision for industrial policy. The bulk of it is devoted to the structure and establishment of the agency.

The Minister will appoint a chief executive and chairperson to Enterprise Ireland who will literally spend their first months in office sorting out major redundancy packages given what the Minister said at a committee last week and in response to questions in this House and the existing serious industrial relations problems. If we are serious about consolidating State support services for business, it would have been best if these transitional procedures had been sorted out over the past year, long before Enterprise Ireland will be established. That is why the metaphor used by Deputy Owen has a certain relevance. To some extent we are setting out on the unknown and we may be in the middle of dealing with serious industrial relation problems on whatever day in July the Minister decides will be establishment day because we did not use the opportunity over the past year to consult or liaise with the staff. As I said previously during Question Time, during my visits to Forbairt and the other agencies I heard of complaints that there was limited consultation [1283] and negotiation with staff in the various elements that will become Enterprise Ireland.

Last month the Minister said that she was not in a position to confirm whether there would be redundancies as a result of the merger, but she added that if there was a duplication of services in the new agency it may be necessary to introduce a voluntary redundancy package. Before the agency is established the Minister should be able to determine if a crossover of services will occur and sort out any redundancies that may be required before the merger takes place. I and, I am sure most Members, do not want to see any redundancies and that is another ground for giving the Bill a qualified welcome.

I understand staff in certain sections of Forbairt received a memo during May indicating that the services they provide will be discontinued under Enterprise Ireland. When I visited Forbairt I learnt that three units of the Glasnevin campus were aware of that. The staff in those units are in the dark about their future employment in the new agency. As it is only a matter of weeks before it will be established, it is disgraceful the Minister has not come clean about their positions in the new agency.

Another area of key concern is the services to business section of FÁS. We must question the reasoning behind the Minister's decision to treat FÁS in this way by creating this super agency. Most people would say the most successful element of FÁS is its in-work training element. By taking that element out of the agency employers may be left with a weaker service. It is notable that FÁS is the second most underused national employment service in Europe after Greece. Instead of ignoring that statistic the Minister should put her efforts into improving FÁS and ensuring it can deliver to all its clients, including employers, workers and the unemployed. While the Minister insisted Enterprise Ireland will increase supports to small and medium size businesses, it seems the main problem cited by such enterprises, as we heard from their representatives yesterday, relates to recruitment difficulties and skill shortages. The development of the services to business section of FÁS does not go anywhere near sorting out the difficulties that will be encountered by such businesses.

There is a rationale behind the developments to bring forward Enterprise Ireland. A fair criticism of assistance to business in the past was that often it was supply driven and not driven sufficiently by the needs of industry. I accept what the Minister said, that in the past there was a scattergun approach to giving resources to businesses. She said several times that with separate agencies and 45 schemes we could only end up with an inefficient allocation of resources and a lack of performance measurement. Nonetheless, as Deputy Owen said, we have a plethora of bodies looking after firms with fewer than ten staff. Also, the mid-west region has its own development agency and is not incorporated under this new [1284] rationale. If the rationale put forward cogently in some background papers given to us on this development is so clear, a single enterprise development agency would have been the obvious way to go.

The ideal of creating companies with a sustainable competitive advantage is a reasonable and key vision for Ireland. However, section 7 did not develop that vision sufficiently strongly. For example, section 7(b) states “To promote, assist and develop the marketing of goods”. Little thought has been given to the increasing pressures on Ireland from its EU partners not to cross subsidise key assistance to Irish companies. There is a failure in the promotion, assistance and development of the marketing of service industries to refer to the huge numbers of service companies which have small workforces — under ten workers. Nothing has been developed in this area.

Section 7(e) refers to the technological base and the capacity of Enterprise Ireland to innovate and undertake research, development and design. It is an area which has not been teased out. The Minister referred to the various technological departments in Forbairt and the fact they will have to be directly relevant to industrial development, but in the broad picture painted in the Bill there is no coherent vision of what we are about to do as, indeed, there is not in section 7(f) and 7(i) in terms of the skills base and schemes, grants and other financial facilities requiring the disbursement of EU and such other funds. Little recognition is given to the changed circumstances in the EU in terms of competition policy and the overall changed circumstances of Ireland in terms of Objective I status and the assistance that can be given to business in different areas.

The Minister's contribution and the background documents provide an essential vision of industrial development in terms of sustainable competitive advantage and the business development model. However, it would have been better if the approach had been outlined in more detail. I look forward, when Enterprise Ireland is established, to the realisation of the ambitions outlined by the Minister, such as the single stop shop for companies from their early development to success in foreign markets. Everyone endorses what the Minister and Deputy Owen said regarding our survival and development economically over the past 30 or 40 years and the fact we are among the top traders in the world with 130 per cent of GNP involved in trade.

I agree with Deputy Owen that the future role of Forfás, the IDA and An Bord Tráchtála, does not seem to have been sketched out. Forfás has carried out extremely valuable research in the past and provides Deputies with up to date information on many aspects of our industrial and export performance. Given the development of Enterprise Ireland and the already clear, coherent role of the IDA, Forfás may become redundant to some extent.

The Minister outlined what she hopes will be the client base of the new agency in terms of [1285] autonomous Irish companies with foreign connections. She has provided a coherent vision, although she is looking forward in terms of soft supports to a situation where Enterprise Ireland will interact with companies which are fundamentally in the IDA part of the stable and transnational companies. The fundamental flaw is not some of the detail in the Bill, but the way in which the Minister handled the industrial relations of the merger. There are considerable worries about sections 18 and 19 and the direct transfer into Enterprise Ireland. Despite the assurances given, many employees feel the mere transfer from their basic role in Forfás to the new agency would be a diminution of their conditions of employment and introduce significant insecurity.

I have similar criticisms of the structures of the new board and management in Part II. The Minister conceded to my colleague, Senator Costello, in the Seanad, that she would address criticisms of board membership, but there is a fundamental feeling that there should be staff representatives as is common throughout much of the public sector. That she did not lay down any basic qualification in terms of gender is disappointing. One of the achievements of the partnership Governments over the past five years was that they attempted to bring about a reasonable gender balance in the administration of the State in terms of boards and it is disappointing the Minister has not carried that forward.

I always get annoyed at the way local politicians are ruled out of membership of important bodies as is the case in sections 10 and 12. We seem to be included with people who are bankrupt and have financial difficulties, etc. My annoyance is understandable with regard to national politicians and MEPs. There are many among the 1,000 councillors involved in local government who have enormous ability and they should be considered. I have similar criticisms of the quorum and the position of Forfás.

There could have been more consultation and liaison regarding An Bord Tráchtála, particularly with exporters. Exporters were not on the steering group. There are still genuine fears that the agency will be totally submerged and, given its successful track record, this could be detrimental ultimately to business. Some of my colleagues will undoubtedly refer to the changes in the NSAI and the science and technology sectors. It is interesting how the Minister decided what would go, such as the metrology service in the NSAI and the energy centre in the Department of Public Enterprise. However, it seems to many employees that a rather cavalier approach was taken to some of the other agencies in the Forbairt family.

I pay tribute of the outgoing chief executive of the IDA, Kieran McGowan, and his achievements as a fine public servant in recent years. However, in the whole vision sketched out I do not see any reference to the failures of our industrial strategy. There have been a number of high [1286] profile failures for instance Applied Magnetics in my constituency and in the northside generally in recent years. That should be addressed in this new structure.

I give the Bill a qualified welcome. I will table amendments on Committee Stage to deal with some of the matters I raised.

Mr. B. Smith: I wish to share my time with Deputy Ardagh.

Acting Chairman (Mr. Briscoe): Is that agreed?


Mr. B. Smith: I am pleased to have an opportunity to speak in support of the Industrial Development Bill, 1998, and the establishment of Enterprise Ireland. I commend the Tánaiste and the Government on bringing forward this important legislation.

The decision to establish Enterprise Ireland is a very positive response to the challenges facing this country as we enter the next millennium. Times change and we are in a changing world. The pace of technological development, undreamed of even a decade ago, means that these changes are more capable of being felt much more quickly than ever before. Consequently, we must continually adapt our responses to them.

Our industrial development policy has too often been dominated by good intentions. Day to day industrial development policy is handled by three agencies, administering no less than 45 different schemes. It is only fair to pay tribute to the work done by these agencies in the past and the immense experience and expertise they have given, both directly and indirectly, to Irish workers and entrepreneurs.

We must realise that valuable jobs were created while structural weaknesses remained and went unsolved. We live in an increasingly global market, where Irish products and services must compete with those emanating from around the world. The protectionist policies so beloved, quite rightly, by many of our founding fathers, and which served us well in the past, are as out of place in today's economic environment as steam engines and sailing ships. We have only one realistic option, which is to compete. Far too many indigenous industries have shied away from the global marketplace, preferring the safer, but ever shrinking domestic market — which should never be derided or looked down upon but viewed as a stepping stone.

Many have believed that to make a product is all that is required to succeed and not enough thought has been given to research and development, not to mention the vital aspect of continual staff retraining. As a consequence, our job creation experience has not been matched by a consequent story of successful job retention, and so the importance of jobs provided by indigenous firms has tended to be deprioritised and considered less important in the long-term than [1287] direct investment by foreign firms. These weaknesses must, and I have every confidence they will, be overcome in the years ahead. Enterprise Ireland is a vital first step along this road offering context based and focused help and assistance.

The residents of the Border region are all too painfully aware of the impact of economic hardships. We have been buffeted by the harsh winds of economic recession, although an even more withering gale has swept us over and prevented us from enjoying the full fruits of prosperity. I refer to the tragedy of the conflict in the North of Ireland which has had devastating, although often indirect, effects on the Border regions. Industrialists and business people, whether from the area or outside, have been reluctant to invest their financial resources in businesses in the region.

Financial returns were often meagre, having to be offset against higher overhead costs, such as transport and insurance. Border regions have long suffered from a deterioration in the provision of infrastructure. Cavan, Monaghan and Donegal have no railway network, thereby consigning transport of goods and materials to roads, many built over terrain which cannot handle such a heavy volume of traffic without constant and costly maintenance. Border regions are frequently distant from seaports and airports, adding costs to both exports and imported raw materials.

Indigenous firms, as well as outside investors, have not been attracted to invest in areas where the infrastructure for getting products from the factory to the marketplace is deficient. I hope Enterprise Ireland, with its new, more realistic and context based approach, will be able to help these areas where business ideas and skills are not in short supply.

The structural problems I have outlined, combined with the troubles in Northern Ireland, led to economic and social deprivation in the Border areas, which have a higher rate of unemployment than the national average. Much talent has been lost to those areas over the years through emigration. Although the scourge of emigration has ended elsewhere, the youth of many Border areas are still painfully aware they cannot take for granted a future in their native place. Our current tiger economy is having an impact on Border areas, but unfortunately it is a very slow impact and on a far smaller scale than elsewhere.

However, in the midst of all this doom one glimmer of hope has arisen, which is brighter in the hope it embodies than any other flame — an end to the bitterness of conflict. The chains tying people to their pasts have been broken and replaced by a new sense of optimism, a thirst after that which is possible and achievable. Fear has given way to hope. The fear of generations who have seen conflicts burst forth in even the most peaceful localities has been replaced by a new security, not the type which must be constantly imposed and guarded by soldiers and policemen but the security which grows from trusting one's neighbour.

[1288] The people of the Border areas have been yearning for this time for generations. Many young people have never known a time when news broadcasts did not detail a litany of attacks and senseless violence. Apart from everything else, they expect that peace will also have an economic impact. They have skills and energy which they have used day in and day out, even at the height of the troubles. Now is certainly the time to beat swords into ploughshares and spears into pruning hooks, but it is not too cynical of me to say we must ensure the ploughs are state of the art hi-tech machines capable of ploughing deep furrows of prosperity and not rusty antiques.

The Irish economy is booming, enjoying prosperity unparalleled in our history. This, combined with the advent of peace in the North, should make for unmitigated joy, especially in Border areas. We are joyful and optimistic, but we are also conscious that specific programmes of development must be put in place to harness the potential of the region and create the gainful employment which is so badly needed.

Our new and long awaited prosperity as a nation is likely to bring its own problems, not least of which is that Ireland's status as a recipient of Structural Funds from the European Commission is being modified from that of Objective I status to Objective 2 status. It is true, however, that this will not happen overnight and Ireland will be granted a seven year transition period.

The idea of Structural Funds was a fundamental tenet of the European Community, whereby more developed members of the Community would help out those less fortunate and less developed. In Ireland's case, the contribution of these funds in reshaping our economy, society and the fabric of our nation has been immense. It is only just that a country such as Ireland, which has benefited and skilfully used the funds given to it to become relatively rich, should, in turn, forego Structural Funds, especially when so many poorer states are seeking membership of the EU. However it is equally true that the benefits of the new prosperity have passed some parts of Ireland by, including the Border region, and these areas still need development. In these areas the structural problems impeding growth are acute and are crying out for remedies. Roads, water services, telecommunications and other parts of our infrastructure need upgrading and substantial investment. A curtailment of Structural Funds to Border areas could be dangerous. No opportunity should be lost to underpin the peace that has been established and to end conflict and hatred. The promotion of business, especially small indigenous companies, is one of the best ways to bring this into effect. People may not see eye to eye on everything but if they are prepared to trade with one another and to value one thing belonging to the other person, even if it only his currency, it is a start.

The European Commission appears anxious to avoid the regionalisation of Structural Funds and insists on member states being viewed as an [1289] undifferentiated unit. The position of the Border region will also be unprecedented for another reason — Britain has decided to stay out of EMU and is unlikely to reverse this decision in the short-term. As a result the region will also experience a financial border and its economy could be subject to events beyond our control. The retention of Structural Funds for Border areas at Objective I level will not in itself ensure prosperity or the continuation of peace, yet the assistance this would provide, combined with other job creation initiatives, is vital. It is particularly important that the Government and the EU do everything to ensure that the peace dividend so long dreamed of and talked about becomes a reality and not a mere figment of rhetoric.

Mr. Ardagh: I welcome the ethos and direction of this Bill, which consolidates various functions under one body, Enterprise Ireland. It is a salutary thought that all 113 indigenous manufacturing firms set up in 1974 have failed. Part of the reason was that the boards of these companies spent so much time working out how to access the grants available for employment, feasibility studies, capital, social welfare, etc. there was not enough time to concentrate on their core work. Some of the blame must lie with the Government for making the grants available in that way. However, not all the blame can be laid on grants, because in general Irish businesses are under-capitalised. The 10 per rate of manufacturing tax has allowed for more retention of capital within business and the broadening differential between corporation tax and income tax will further help this process.

I am worried about the size of Enterprise Ireland and the number of “suits” who will be in Wilton Terrace, as this may make it difficult for the organisation to address the needs of individual businesses. I am particularly concerned with access and delivery of services. Wilton Terrace is too far away for people in Dublin 12 and Dublin 24, so how much further away is it from people in Sligo, Mayo or Cavan? We need a more localised service knitted into the infrastructure. A good example is the Minister's constituency, Dublin South-West, and the Tallaght/South Dublin area, where there is excellent cohesion and integration between bodies like FÁS, the South Dublin County Enterprise Board, the Institute of Technology, Tallaght, the South Dublin Chamber of Commerce and the South Dublin County Council. Since 1984 I have been involved in the development of the Chamber of Commerce and as a director of the county enterprise board. The missing link in the provision of services in the area is a definitive and sizeable presence on the part of Forbairt or the IDA. As far as people in Tallaght are concerned, one might as well go to Mayo as to Wilton Terrace to look for the services — Tallaght only has a small office with a PR presence. It is imperative that Enterprise Ireland dovetails into that milieu of business activity so [1290] that it is not necessary for businesspersons in the area to go into Dublin.

In the South Dublin area, FÁS is based in the Cookstown Industrial Estate and is involved on the county enterprise board and the local chamber of commerce, and in innovative training alliances with local businesses. Recently a business course was run for junior managers on an exchange basis with Germany. This was brought about through innovations in the FÁS organisation which could not have happened if the body was not situated in Tallaght. The county enterprise board is an intimate part of micro-business in Tallaght. It ties in with New Opportunities for Women, or NOW, the Tallaght Partnership and the Get Tallaght Working organisation. Like Castrol oil, the county enterprise board penetrates and lubricates the engine of business and it is most successful. The Institute of Technology, Tallaght, under the innovative directorship of Dr. Columb Collins and his staff, has forged alliances with business which have been good for both sides. Enterprise Ireland must insinuate itself in a dynamic way into the creative business force represented by the combination of the bodies I mentioned.

The mission statement of Enterprise Ireland refers to sustainability of profitable sales, exports and employment. Sustainability is equivalent to “stickability” and without a pro-active presence where the businesses are, the body will not be able to achieve that. It must be at the coalface. The difference between having the organisation at Wilton Terrace and being at the coalface is comparable to the difference between the Open University and a campus university. If Enterprise Ireland is in situ, it will get to know the needs and strengths of local businesses and will be better able to apply the money and methods businesses need to prosper and grow. The IDA has been successful in attracting firms to Ireland but it went to where the action was — it has a greater presence in the United States than agencies of other countries, which is why is has been so successful. Enterprise Ireland must do the same on a local basis here.

The current agencies — the IDA, Forbairt and Forfás — have identified 22 areas where broad band communication services could be applied. Eight of those areas are in Dublin so perhaps one or two of those could combine. Enterprise Ireland should become an integral part of the business community in those areas with a concentration of companies at the forefront of business, both outside and within Dublin, and should play its part in ensuring the success of the areas.

I welcome the provisions of the Bill which consolidate the services which assist and help businesses to prosper and flourish. I look forward to Enterprise Ireland helping businesses in a dynamic, localised way so that the country, the businesses and their employees prosper.

Mr. Rabbitte: I welcome the Bill, not so much because of anything substantive in it as that, in a [1291] short two weeks, this is the second Bill from the Department of Enterprise, Trade and Employment — we had a four-section copyright Bill two weeks ago. Those who said that the legislation section in the Department had been shut down are clearly wrong. I am delighted to see this burst into legislation.

I welcome the thrust of the Bill which has its origins in the dispute that took place on the formation of the 1992 Government when, if the pieces had fallen differently, An Bord Tráchtála would have been incorporated into a more rational relationship both in agency terms and in terms of its relationship with the Department of Enterprise, Trade and Employment. I will come back to that point in a moment.

I join my colleagues in extending congratulations to the staff in all the agencies for the part they played in the economic turnaround we have experienced over the past four or five years in particular. I have already recorded in the House my appreciation of the work of the resigning chief executive of the IDA, Mr. Kieran McGowan, who has made a major patriotic contribution in that position over the years. The contribution of the IDA has been immense. When economists, politicians and public servants are attempting to explain the phenomenon of the transformation in Ireland over recent years, there is an entirely disproportionate contribution made by the IDA. It was exactly a decade ago that former Senator Joe Lee put his book to bed. His attempt then was to explain why we were an economic failure. Running through the book is the attempt to explain our inability, since independence, to make economic and social progress. Ten years later the task of economists is to try to explain the transformation. The IDA's success in targeting lead players in the high-tech high value added area of industry is a very disproportionate part of that success. I extend my best wishes to the new chief executive of Enterprise Ireland, Mr. Dan Flinter. He has been managing the agency, which is the poor relation in the sense that it deals with many sections of the less glamorous manifestation of indigenous industry, but it is critical that we strengthen that focus. I hope that will be the outcome of what we are doing today.

It is difficult from outside, and not entirely easy from inside, to assess the performance of the agencies because one is subject, in whatever capacity, to constant anecdotal evidence and representations, the merit of which are always difficult to determine inasmuch as they very frequently come from persons with a vested interest in the arguments they are advocating. Therefore, when allegations of ignorance of certain market sectors or unwillingness to see the merits of a particular project are being advanced, one has to weigh them up very carefully because of the vested interest dimension. Sometimes there are people who believe in the intrinsic merits of their own project to such an extent that they cannot understand why it was not readily grant-aided [1292] and, as a result, they have a lifelong crib with the agencies. That is not intended to give blanket approval to the agencies but merely to say that the business of assessing performance is quite difficult.

The precedent which I established in terms of the board of the NSAI, which is referred to here in passing in that it relates to incorporating the functions of legal metrology where staff representatives were nominated to the board as of right, is something I would like to see continued in the new board of Enterprise Ireland.

Let me make a brief comment about the Tánáiste's solo run yesterday on long-term unemployment. I take it more as a speech for the occasion. If one reads the text of the address itself, it does not say a great deal to which I would fundamentally object, but when the Tánáiste got off the leash and gave some interviews she put the ball well and truly up in the air that she was introducing workfare and cutting the benefits of social welfare recipients who would not take a job or a training option. I rather take the view that that was for the benefit of ISME and the type of constituency that the Tánáiste might consider to be dear to her heart. It is important, however, when its cosmetics are got out of the way, that whatever does come out of the Department on this is carefully considered, because the Tánáiste's remarks, although moderated since, are out of line with the plan the Department prepared and submitted as a result of the Luxembourg Summit. The policy plan for youth is in contradiction with what the Tánáiste said. It is true that a culture of dependency has grown up in the large-scale unemployment black spots and that long-term unemployment is clustered around certain geographic areas. It is true also that existing policies, programmes and labour market initiatives have only partially ameliorated that situation. What those young people in particular require is further investment in education and training. Nobody can gainsay that because there is no place for people with no skills or low skills in the modern labour market. What the Tánáiste seems to be ignoring is that cutting off the unemployable from the dole will only create deeper and worsening poverty because, regardless of whether it is popular to say it, the unfortunate fact is that young people who drop out of school early, especially in those massive concentrations of urban black spots, are unemployable in the structure of modern industry. That is a regrettable fact. If anybody planning this, or any politician leading it, thinks that cutting them off the dole will make them suddenly go to work, that is either extremely naive or playing to a very serious misguided prejudice in society. I do not know what proportion of those children is saveable, but investment in training and resourcing the local employment service is what is needed. I am not saying it should be all carrot and no stick. I am saying it has to be carefully balanced or we will aggravate the situation in these huge tracts of unemployment.

[1293] The Bill should be taken in the context of the departmental document entitled Enterprise Ireland — Mission, Strategy, Clients and Functions. Hopefully on Committee Stage we will have more time to go through the substance of that document. Broadly, the Bill proposes to give statutory effect to a restructuring of a number of agencies, Forbairt, FÁS and the trade board. In essence, An Bord Tráchtála is being merged into Forbairt and certain industrial training functions of FÁS are also being transferred to the agency. The enlarged Forbairt is being renamed Enterprise Ireland and, as a tidying up operation, the metrology service currently within Forbairt is to be transferred to the NSAI.

Fundamentally, all this appears to amount to the consolidation and maintenance of a large industrial policy support service for indigenous business. This appearance was also conveyed in the contribution of the Minister. Implicit in raising the cumulative grant limit is the likelihood that the consolidated agency will continue to disburse significant sums of public money to indigenous businesses. In fact, Enterprise Ireland is not envisaged as an exclusive indigenously focused development agency. The exact opposite is intended.

It is furthermore recognised that there will be some churn in the client bases of the two agencies, Enterprise Ireland and the IDA, as a result of this change. It is accepted also that there will be turf wars, to a degree, and it is envisaged that Forfás will act as referee in these disputes where they arise.

The final paragraph of the document to which I referred states: “In consequence, it is proposed that the client base of Enterprise Ireland (and consequently that of IDA Ireland) should not be defined using the simplistic measure of ownership”. It is clear from that paragraph that this churn is envisaged and planned for.

Section 2.1 of the document sets out to define the Forbairt and, by definition, the IDA client base. Essentially, where a company was Irish owned at start-up and-or foreign involvement today is purely financial and-or key management functions are located in Ireland — autonomy for the Irish subsidiary, for example — then the company is a Forbairt company. In relation specifically to the food industry, the IDA can be involved in the sector through attracting foreign food firms to Ireland. Where also a food firm is engaged in value added as opposed to being dependent on the CAP, it will be an IDA company. Where it is Irish and-or dependent on the CAP and subject to “restricted raw material supplies and the impact of EU policies on prices and production levels”, it will be a Forbairt-Enterprise Ireland company. The redistribution of existing clients of both agencies will be subject to the wishes of the clients and where there is any dispute between the two agencies over ownership of companies, Forfás will act as arbitrator.

It is possible to be critical of this complex structure as a way of organising the affairs of the agencies. [1294] However, it gives Enterprise Ireland significant leverage in attempting to get itself into the sexy sectors and overseas firms as opposed to dealing simply with the sometimes less glamorous sections of indigenous industry. The whole agency structure was put in place at a time when the Irish economy was characterised by low development — it was even in a state of collapse; business generally was underdeveloped, unsophisticated and functioning in depressed economic circumstances; and taxation rates were high — not long ago corporation taxes were at 50 per cent. Nobody in Government has talked to us recently about corporation profits taxes and how that issue is progressing in Europe. I am puzzled about this because if matters were going well, I suspect we would have been told about it. Perhaps we will be briefed on what is happening the national interest in this regard.

Matters have changed radically. We have a strong, growing economy, a positive business environment and an enormous FDI sector which acts as a source of business and a model, demonstrator and disseminator of best international corporate practice. Corporate taxes are falling, in terms of headline rates, and effective corporate tax rates are very low. In addition, the banking sector has grown in sophistication in terms of services to business — corporate finance, investment finance and so on. With globalisation of capital markets there is now also access to exchanges such as NASDAQ and ESDAQ. Domestically there is also a growing venture capital sector and tax incentives like the BES.

The question that arises is whether we need to continue to have the same level of hand-holding of the private corporate sector. Obviously we need to continue to market Ireland as a location internationally and, therefore, we need the IDA, but do we need to continue the current level of supports? There is little discussion of that either in the explanatory papers, as I read them, or in the Bill itself. The Tánaiste argues in favour on the basis of an excessive dependence on traditional sectors; low levels of profitability; low propensity to conduct research and development; human resource deficiencies and continuing high reliance on home and UK markets.

The typology of traditional-modern is not particularly helpful. Food, newspapers, clothing, etc., are traditional but we will always have them. The issue is how well the business is managed. Seagate, for example, was modern and hi-tech but we all know what happened to it. What unique and special insights can be brought to instilling competency and competitiveness in these companies?

Average figures on the rate of profit are highly suspect, even meaningless. Profit is what a company and its auditor decide between them from the point of view of taxation. It is a discretionary variable, as Mr. Justice McCracken showed to us. I agree with the Tánaiste in regard to research and development but the real issue is the question of a culture of innovation. That brings us to the [1295] White Paper on Science and Technology and its discussion of the issue as an aspect of a culture of innovation. A low propensity to export is not necessarily always a sign of weakness. For example, if I supply components, packaging or whatever to American electronics firms located in Ireland, I am engaged indirectly in export.

In sections 33 to 35, inclusive, the Houses of the Oireachtas are being asked to enact provisions that allow for an increase, from £750 million to £2,000 million, in the aggregate amount of grants of public moneys to Forfás, Enterprise Ireland and IDA Ireland; an increase in the total amount of public moneys that may be granted to SFADCo, from £150 million to £200 million in respect of voted capital and from £200 million to £250 million in respect of non-voted capital; and an increase in the aggregate threshold for grants to an individual undertaking above which Government approval is required, from £2.5 million to £4 million, with pro rata adjustments to reference limits of specific grant or incentive programmes or schemes operated by the agencies.

The rationale offered for these requests is that the cumulative amounts of the aggregate grants of public funds to the agencies to date are near to their existing statutory limits, while the present reference points for Government approvals in respect of individual applications date back to the 1980s and have not been adjusted since then.

The main issue I raise in relation to these measures is that the Oireachtas is being asked to forego what is effectively parliamentary control of public spending decisions and Government approval of spending being undertaken, or guarantees being provided on its behalf, the resources or limits having been voted by the Oireachtas. Clearly, if parliamentary control is to amount to anything, the agencies cannot operate entirely at their own discretion. In other words, they cannot function in a context in which their subjection to parliamentary scrutiny is no more than nominal and theoretical and does not subject their demands to the Exchequer — ultimately the taxpayer — to parliamentary-democratic limit or effective scrutiny.

As a practical matter, however, there is a tradition of giving some limited freedom of manoeuvre to the agencies by means of prior enactment, which is to say according to law and up to defined limits, to act without reference to parliament or Government other than as subject to the annual Estimates-budgetary cycle and within the normal rules of public finance procedures, which is an important caveat.

One aspect to this limited discretion is a degree of latitude in respect of the cumulative amount of capital provided by the Oireachtas without further reference to Parliament. The Bill proposes to raise by a considerable amount the cumulative grant limits available to the agencies. The relevant provisions are those in section 33.

A second aspect to agency freedom from or [1296] subjection to scrutiny is the reference limit for Government approval in section 34. The issue here is the amount of discretion granted by the Oireachtas to the agencies to act without Government approval. The discretion is extended by means of provision of a series of thresholds which, if exceeded, require the agencies to seek Government approval and, if not breached, give the agencies discretion to act without such approval being obtained.

I want to deal with a number of individual programme incentives which will have to await Committee Stage.

Mr. N. Ahern: I wish to share my time with Deputy Callely.

An Leas-Cheann Comhairle: Is that agreed?


Mr. N. Ahern: Rather than deal with the general policy issues, I will deal with this matter from a parochial point of view, as a Deputy from Dublin North-West where many Forbairt employees work. For many years that organisation was known as the IIRS, then it became Eolas and now it is Forbairt. There has been much good news from Forbairt in recent years. I congratulate the staff in succeeding to attract multinational companies here. Unfortunately, those companies are not always evenly spread throughout the country. Many of them set up in the same constituency, in Dublin South-West or Dublin West, or in certain other parts of the country. Perhaps some constituencies are fully built up and do not have space in industrial estates for such companies. Whatever the reason, there have been no announcements of multinationals setting up in my area.

Forbairt employees in Glasnevin consider the proposed amalgamation as a disadvantage in that it will result in job losses. Many of those people have worked in Forbairt for 20 or 30 years and may not be interested in the overall grand plan, but there has been a lack of communication. If there was an attempt to sell the amalgamation to the staff, it has not succeeded. Some of the staff may be happy, but the ones whom I meet are fearful that it will result in unemployment.

Many employees believe reorganisation of the company is premature, that matters have not settled down since the last reorganisation a few years ago and there is much internal wrangling in Forbairt. Many people have been transferred from Wilton Terrace to Glasnevin and a power struggle has been going on for the past four years. In the case of any reorganisation, people's toes are stood on, but hundreds of workers in Forbairt who did great work for many years believe they are now being pushed aside and there is no place for them in the new organisation.

One point made by the employees is that after the reorganisation Ireland will be one of the few, if not the only, EU state that will not have a national agency dealing specifically with science and technology. In recent years, particularly with [1297] the availability of EU funds, a number of bodies have dealt with the administration of funds. Perhaps this grand plan is an attempt at co-ordination in that area. The employees in Glasnevin believe that since Forbairt was set up they have been the poor relations and there is no time for them in the new organisation. That was brought home to them in documents issued in recent months in which the impression is given that they do not fit into the new organisation, which is business orientated, and that if they are lucky they will be there for another five or eight years.

Perhaps that is the wrong impression, but there certainly has been lack of communication. Those employees should be told that their talents are needed and appreciated and that there is a role for them in the new organisation. I understand the rationale behind reorganising State agencies, but Forbairt employees feel the reorganised company will concentrate more on the business than the science aspect.

In recent months I met constituents who referred to metrology, of which there are three aspects. I do not claim to be an expert on metrology, other than being aware of the new building erected in the Eolas complex, a visible landmark on Griffith Avenue. Of the three prongs of metrology, two are being brought under the aegis of Forfás while the accreditation body is left out in the cold. That will not lead to co-ordination. Perhaps the Minister will comment on that matter when replying.

In reorganising a company the danger is that by allocating minor expert functions, senior officials may consider it as a power play and may not grasp the detail of what is being done. I worked in a State body for many years and while some departments are good at promoting their profiles, others, while competent, just get on with the job and are not very good at PR and getting the media on their side. There is concern that, even with metrology, all aspects will not be co-ordinated and that a more appropriate structure might include the consolidation of the NML, the LMS and the NAB in one body under the aegis of Forfás.

I hope what is happening in terms of Forbairt is not repeated with An Bord Tráchtála, which is expanding. I hope it will not be swamped by the larger body in two or three years' time. There are always personnel problems when two or three State agencies or hospitals merge. It takes a long time for the culture to change and for people to forget from where they came before they started working for the new organisation. We are all human and there are many examples of where things did not work out.

People must take on board the concerns of and good work done by the smaller component parts and not swamp them in the new organisation. Otherwise, we could look back in a few years' time and realise that the marketing function of An Bord Tráchtála has been put in the ha'penny place or treated as second class. I am sure consideration has been given to merging other marketing [1298] bodies, such as An Bord Tráchtála, An Bord Bia or Bord Fáilte. There should be greater communication at local level and employees who have given good and loyal service should be reassured that they are an integral part of the new organisation and not just a refit, as they have been told.

Mr. Callely: I congratulate the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, on introducing this Bill. I pay tribute to the officials working in the State agencies referred to in the Bill, Forbairt, An Bord Tráchtála and FÁS.

I agree with some of the comments made by Deputy Noel Ahern about staff fears. He has first hand knowledge of what is happening because Eolas is located in Glasnevin. It is important that such fears are addressed immediately and that the necessary assurances are given to the staff.

Deputy Noel Ahern also made a valid point about science and technology developments. The Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy, has responsibility for science and technology. There have been some recent developments in the private sector, such as Citywest, and I understand that two more science and technology parks are coming on stream in the Dublin area. This shows the potential for development in the areas of science, technology and research. It is regrettable that we lost the EU's science and technology centre which was supposed to be based here, but its veterinary and medical centre was set up instead.

Yesterday, at the Small Firms Association's conference, the Minister made an announcement about people's entitlement to unemployment assistance and other such benefits. Members of the Small Firms Association said it was a courageous and correct step. Many of us in this House have been told by the business community about how difficult it is to get employees to fill various vacancies. We are not just talking about skilled workers but about employees right across the board. I welcome the Minister's announcement, but we must be cautious in our approach and ensure there is adequate feedback so that nobody suffers hardship. We must encourage people who are inclined to sit on the pig's back to enter the workplace. Many Members have first hand knowledge of people who were not involved in the workforce but who, with a little encouragement, participated in it and found a new world for themselves.

The Minister said that Enterprise Ireland will be set up on a number of clear principles and that the “primary role of Government is to help create the environment in which people want to start new businesses, to grow those businesses, and to explore new directions”. She also said the Government must respond to the needs of the business community and our changing economy. She referred to the mission statement of Enterprise Ireland which is to help client companies [1299] develop a sustainable competitive advantage leading to increasing profitable sales, exports and employment.

It is important that Enterprise Ireland brings together a number of the current business development functions of Forbairt, An Bord Tráchtála and FÁS. We have often referred people who sought assistance to one board or State agency where they were asked to prepare a submission document. However, they were then advised to contact another agency. There are so many agencies and such an array of services available that it is difficult to chose between them. Enterprise Ireland should be user friendly so that people can avail of its services and information.

The functions of the agency are outlined in section 7(1)(a) to (k) and subsections (2), (3), (4) and (5). While this section deals with promotion, development, assessment and marketing, should it not also include a safety net for people who are experiencing business difficulties? Should they be able to go to Enterprise Ireland with their difficulties? Should one of the functions of the agency be to address such difficulties? While there are many proactive measures which are merited and warranted, surely there should be a safety net?

This weekend I will have the opportunity of meeting an entrepreneur who has been actively involved in the Irish scene. Because of difficulties he is experiencing in Ireland, he is in the early stages of winding down his Irish operation to move elsewhere, and that is regrettable. That is one of the reasons I ask that we look at the feasibility of developing some safety valve in that area.

We should look at the feasibility of involving the relevant local authorities with the other groups working in this area, such as the partnerships. I pay tribute to the Northside Partnership in Dublin under the direction of Mr. Pádraig White, who is doing a tremendous job along with many others, including Ms Marion Vickers. They brought to my attention the need for advanced factories to encourage enterprises to locate in the Northside Partnership area and we should look at that.

Multinational pharmaceutical manufacturing companies operating in Ireland are of tremendous benefit to the economy in that they create wealth and employment opportunities, including research and development. It is an area at which we should look closely, particularly when on the one hand we encourage multinational companies to locate here while on the other the local health boards recommend that GPs participating in the national medical scheme prescribe generic products. That will not balance out.

Mr. Perry: I wish to share my time with Deputy Deenihan.

An Leas-Cheann Comhairle: Is that agreed?


[1300] Mr. Perry: The Bill has the desirable aim of improving the delivery of support services to indigenous manufacturing firms and of reducing the inefficiency which can result from having three agencies delivering up to 45 different schemes. Anything which makes life simpler for the owners and managers of native industrial companies is to be welcomed.

I hope the new industrial development agency, Enterprise Ireland, will give a more user-friendly supply of financial and other assistance to small and medium-sized firms to improve profitability and employment. Only time will tell if this latest integration of the industrial agencies will prove more effective than previous attempts. It is certainly necessary to bring to a conclusion the business of subdividing and reintegrating the agencies concerned. More certainty and continuity in working arrangements, and a more integrated and direct approach to the delivery of the services is owed to the staff of Forbairt, FÁS and An Bord Tráchtála and their potential clients.

This initiative needs to be introduced with sensitivity and a high regard for the morale and concerns of all the employees in the agencies who will be affected by the new arrangements. There is plenty of experience of how difficult it is to get agencies working together effectively to the benefit of the client. The genuine worries of the employees about their careers and working prospects in any new format must be addressed, and effort must be put into creating a unified and dynamic organisation. The success of the new agency in contributing to improved performance and profitability in indigenous industry will depend largely on the quality and commitment of its staff.

I am pleased to note from the Minister's speech in the Seanad that the Bill is only part of a fundamental reappraisal of industrial policy. There are still many matters of concern and a number of issues to be reappraised if Ireland's industrial development is to achieve its full potential. The question of regional imbalance must be addressed. It is the stated aim of all parties to promote a better regional spread of investment and jobs. In practice, however, there has been a retreat from regional policies favouring disadvantaged areas. One of the most significant regional development issues in terms of employment and redressing imbalances was the industrial development policy of the then IDA in the 1970s. The benefit of regional industrial plans between 1973-7 and 1978-82, which set manufacturing job targets for hundreds of locations throughout the regions, is still to be seen in towns and villages all along the western seaboard and in other remote areas. In many cases, there had not been any industrial employment there previously and now successful firms continue to provide valuable job opportunities. The question of regional industrial policy needs to be revisited in the light of today's needs and the opportunity which modern telecommunications has provided for hi-tech industry [1301] to be dispersed more widely than was possible in the past.

In the implementation of the Bill, there is a need to remember not only the large export oriented firms but the smaller indigenous firms which may serve only a local and national market but which provide valuable employment in towns and villages. It is important that these latter companies do not fall through the net of supports which will be provided by the new integrated agencies. It is not unusual to hear of well established small companies, which are exporting successfully and which have the potential to provide further jobs and make significant capital investment, which seem unable to obtain any assistance from the present schemes. I hope the new agency will have the staff and structures to give such firms the support and financial help they need to benefit from industrial development, which is imperative.

What is the future role of Forfás in the £500 million equity fund which has been invested by that agency in a large number of companies throughout the State to date? What are the Minister's views on the potential sale of the State's investment in these companies? Forfás has as much as a 10 per cent shareholding in a large number of companies. Last week's newspapers indicated that Forfás's total investment would be valued at £500 million. Has the Government any intentions for or views on that investment?

Many FÁS schemes have been amalgamated in Enterprise Ireland. What focus will be placed on the remaining ones? FÁS has made a considerable contribution in the past. With regard to the redeployment of FÁS staff, will a new FÁS be formed? Will it be focused on a different aim?

The Minister stated that Enterprise Ireland will only focus on companies with more than ten staff. The allocation of £21 million to the enterprise boards is insufficient because it would appear from the Minister's speech that they will deal exclusively with job creation and with companies. We must realise that the real growth in jobs today is in the small company sector. We must not take our eyes off the massive potential of small companies. The provision of £21 million for all the enterprise boards throughout the country is insignificant considering the Department of Enterprise, Trade and Employment has a budget of £2 billion. I appeal to the Minister to focus more funds on the enterprise boards, particularly since Enterprise Ireland's supports for the creation of jobs will be focused on companies with more than ten staff.

That Enterprise Ireland has no remit to create jobs within the trade and services sectors is a major mistake also. In America, the greatest job creators are in the service industries. There are few supports in not only the retail trade, but in other sectors such as tourism. This is about job creation, the number of jobs available and the difficulty in getting people to take up employment. The Minister stated yesterday — she backtracked this morning — that, while supports would continue [1302] to be offered, people under 25 years of age who do not accept training opportunities will no longer be entitled to social welfare payments.

I hope the Minister will take a new approach to training. To date, FÁS has been the recognised training authority. However, the Government should seriously consider appointing trainers in other business sectors, such as the hotel industry. Employers should be given funding to train people over a 12 month period. Such training, when assessed, might eventually lead to a job opportunity. I appeal to the Minister to give serious consideration to this matter when FÁS schemes are refocused.

I understand that the business development module will provide the overall strategic direction of the refocusing and streamlining of the various schemes. Will the Government be putting in place a benchmark system to assess the success of Enterprise Ireland in a year's time? I accept that integrated schemes were put in place in the past. However, Enterprise Ireland represents our last attempt to resolve problems in this area. It is unfair to staff that Forfás, FÁS, IDA Ireland, etc., are being amalgamated into one agency. This might lead to uncertainty. We must get it right this time because there will be no room for further amalgamations in the future. It is important that a benchmark system to assess the development of Enterprise Ireland's role is put in place.

I appeal to the Minister to give serious consideration to the development of FÁS and the role of the enterprise boards. Consideration should also be given to the role of trade services, an area which could play a major role in reducing unemployment. Job vacancies are advertised daily but people are not willing to take them up. However, if we refocus training initiatives and nominate employers, not State agencies, as trainers, jobs could be created immediately.

The explanatory memorandum states that section 40 provides that the Minister may designate such and so many members of the staff of FÁS as he or she may decide to be transferred to Forfás and that staff so designated shall be transferred to and become members of the staff of Forfás. We must be careful in determining the future of FÁS because it provides valuable training. Extraordinary work is done by the staff of FÁS training centres. However, there is a need to adopt a new approach to the operation of FÁS schemes because people who take up a place on schemes with a duration of six months sometimes take a two month break before returning to complete their training.

The long-term unemployed have no opportunity of entering the workforce. Staff represent the biggest single investment made by employers. People must be carefully selected and, once they enter employment, an employer's obligation to them is considerable. That is the greatest problem employers face. Consideration should be given to providing State supports to remove the risks involved which would give people an opportunity [1303] to prove themselves. Unless we take a different perspective in terms of creating jobs for these people, we will face an uphill struggle.

I welcome the establishment of Enterprise Ireland. However, I still have some concerns about it. In the debate on the later Stages of the Bill, I intent to raise a number of issues because, for example, the role of companies with ten employees or less has not been considered. That is a major mistake. The larger proportion of Irish companies are small concerns and they cannot be compared to their counterparts in the United States or the UK whose economies are four times larger than Ireland's. The creation of ten jobs in a village by a small company is equivalent to the creation of 100 jobs in a city. I appeal to the Minister to give consideration to that fact.

Mr. Deenihan: I thank Deputy Perry for sharing time. The Minister stated that on coming into office she directed her Department to “undertake a root and branch review of industrial policy”. Industrial development policy has been a total failure in terms of the west and constituencies such as North and South Kerry. Towns such as Listowel, Tralee, Castleisland, etc., are being devastated because of the policy being pursued by IDA Ireland and the Department and a lack of industrial development.

In the past, and at my own expense, I visited companies in Silicon Valley in the US on three or four occasions in an attempt to lure industry to my constituency. Their representatives visited Listowel but they located their operations elsewhere, principally because of current industrial policy. Under this policy, there is no difference in the incentives being given to people who are investing in different parts of the country. In my opinion, the west, particularly remote areas which lack adequate roads and other conveniences and services, will continue to suffer until a system of preferential grants is introduced.

There is an outflow of skilled people from parishes and communities in the west. We do not have the capacity to maintain population levels because these people have already left. However, they would remain at home if they were provided with the opportunity to do so. The Minister, who has been very active during her first year in office and who has an impressive record, must give serious consideration to this matter.

IDA Ireland claims that it does not direct people but I do not believe that. I was delighted to see Coca Cola locate its operations in Ballina but it was directed and given the incentives to go there. I am also delighted for the people of Clonmel because of efforts to find a replacement industry for the town following the Seagate debacle. Companies are being directed and given incentives to locate their operations in the town. Why can similar incentives not be given to companies to locate, for example, in Tralee, Listowel or Castleisland? Deputy Finucane would say the same about locating industries in Newcastle West.

[1304] I recall the occasion on which he raised the issue of unemployment in that town and I know that a factory was located there as a result of his efforts.

In her reply to Second Stage, I hope the Minister will refer to the regional disparities in respect of industrial location. Will she inform us what she intends to do to address that problem? If no action is taken, there will be total devastation, loss of population and no hope of future regeneration. One of the problems currently faced in my locality is the attraction of labour. Families have left the land in the past 20 years as a result of Government policy. Even if industry or investment are attracted to my area in the next ten to 15 years, they may not have access to an adequate labour force.

It has been suggested that Enterprise Ireland merely represents another layer of bureaucracy and it remains to be seen whether it will be successful. Nevertheless, there are good aspects to the new agency which will provide a more co-ordinated approach in terms of exports. Like Deputy Perry, I am concerned that provision has not been made for companies employing ten people or less. I am familiar with a number of small computer firms and food companies that export goods to Great Britain and Europe. What will happen to them if increasing focus in placed on exports? How will the county enterprise boards cope with this new situation? The county enterprise board in Kerry, which employs two officials, and its evaluation committee, the membership of which comprises a number of extremely busy people, meet once a month. How will all those enterprise boards help companies with fewer than ten employees market their products abroad? The Bill is flawed in that regard. I hope our spokesperson will table an amendment to address that matter on Committee Stage.

Will the Minister clarify the position in regard to Shannon Development? I note the medium term plan is to transfer the functions of the new agency to Shannon Development for application in the mid west region. What is the long-term plan? Will all those functions be taken away from Shannon Development? Would that render it less effective as the local development agency?

Given that we joined EMU without the UK, there will be major pressure on Irish exports to the UK. What contingency plans, if any, has the Minister put in place to address that problem? We face the possibility of a strong English pound against a weak Irish currency. Our exporters will face major obstacles in future. We will also have to compete with the UK in European markets. Will the Minister address the concerns of Irish exporters, particularly as 26 per cent of our exports go the UK?

Does the Minister agree that function (b) could be construed as anti-competitive or contrary to EU internal market regulations? Other than the stated functions arising from the activities of the existing industrial development agencies which will transfer to Enterprise Ireland, Forbairt, in particular, delivers a number of technological services [1305] which could be characterised as public good activities. It is not clear from the Bill whether those services will transfer to Enterprise Ireland. If not, is the Minister satisfied they would be available in the private sector? Is she concerned that, as a result of this legislation, Ireland will be virtually the only EU member state without a State sponsored industrial technology agency?

Mr. McGuinness: I support the Bill. The merger of An Bord Tráchtála, Forbairt and the services to business function of FÁS is a welcome step forward. The move and the new agency will create a new dynamic for the promotion and development of indigenous industry and business. The sector will welcome this development and I hope this is the first of many steps to reform the State's approach to it. All those agencies need a kick-start as we approach the new millennium and an ever changing market place.

I hope Enterprise Ireland will not be a prisoner to the past and will find new energy, ideas and enthusiasm from new personnel and a new structure. All of us have a “sell by” date, prior to which we perform at our best. The world is going through rapid change and, therefore, I urge the Minister to build in a management roll-over mechanism in this structure to ensure the life of Enterprise Ireland is always conducted at the cutting edge of this indigenous sector and its development.

While I am please all staff from the old agencies will be accommodated, the day must come when the staff will be directly employed by the agency it represents. I urge the Minister to ensure this happens sooner rather than later. This matter is dealt with in section 37 of the Bill. If the management and staff are committed to the mission statement of Enterprise Ireland — I have no doubt they are — the new agency and our indigenous business has much to look forward to. The mission statement refers to profitable sales, exports and employment.

Coming from a county where 85 per cent of the population are employed by indigenous firms, I am well aware of their importance. However, I also know their frustration and annoyance at the myriad Government agencies and grant schemes, the weight imposed on companies by these agencies through bureaucracy and red tape, the constant requests to complete forms, and their failure to understand the urgent need for the company to move on and make a decision. I hope Enterprise Ireland will bring all that bureaucracy and slow-coach approach to an end.

The concept of a client executive assigned to each client to assist and support is welcome. I hope those key personnel are fully trained and briefed so the maximum help and direction can be afforded to the client. I also hope the six measures under which Enterprise Ireland will function and deliver will reduce the myriad schemes now available under the old structures. A total of 45 grant schemes is neither acceptable nor workable. The six measures under which [1306] Enterprise Ireland will function include strategy assessment and formulation, which is essential to indigenous industry; research and development, which has been put on the back burner for far too long; production and operations; marketing, distribution and sales; human resources and finance. I am pleased the agency will have a special focus on marketing our indigenous industry and business.

A key function of Enterprise Ireland will be to conduct an audit in each county to determine performance under the old model and to assess infrastructural requirements. I urge the Minister to take an overview in each county of the performance of State agencies, what they have delivered in the past and, above all, what is happening locally. Many positive initiatives are being taken by local chambers of commerce and special limited companies that benefit the community. All those activities must be acknowledged within the indigenous sector and by Enterprise Ireland, if it is to prove successful.

As I already stated, 85 per cent of the workforce in Kilkenny is employed in indigenous firms. Our self-help ethos has been rewarded, but to further achieve I urge the Minister to consider a number of investments which would have a multiplier effect on the economy of Kilkenny city and county and the region. This would also enhance our opportunities within the indigenous sector and under Enterprise Ireland. For example, our ring road remains incomplete.

Mr. Crawford: It is not the only one.

Mr. McGuinness: That may sound parochial, but it serves the port of Belview. It is essential that the large volume of traffic travelling to and from that port has a proper access route through Carlow and Kilkenny and this could be achieved by completing that ring road. To say we waited 20 years is a reflection on all Governments in that period. It also reflects on our understanding and commitment to the indigenous sector.

The port of Bellview offers the south-east a second chance to become a new Ringaskiddy. A considerable amount of money has been invested in the port and private investors are waiting to invest as the project begins to roll out. The port is at the cutting edge of the development of this country. However, its development is gravely hampered by the roads infrastructure in County Kilkenny. For example, the road from Kilkenny to Waterford has remained untouched for the past 20 years. It is nonsense that modern juggernauts are warned by signs to keep to the middle of the road because of an approaching low bridge or cautioned by signs advising that traffic ahead is on the centre of the road for the same reason.

Access to a port such as Bellview requires a proper infrastructure. If the port is to be properly developed a serious commitment by this and future Governments is required to ensure that the road network, including the ring road and the road to Waterford, is complete. Travelling from [1307] the midlands it is peculiar to see the main plant of the Avonmore-Waterford Group food company to be almost in a wilderness because the road leading to and from it is almost non-existent. Appeals to Governments in the past have fallen on deaf ears. If this company is to function as the fourth largest food company in the world, which involves it creating extra employment, extra traffic and the use of extra juggernauts, it needs an investment commitment in the form of a proper road infrastructure from the midlands through Ballyragget into Kilkenny and on to the port of Bellview. Will the Minister comment on this and indicate that the Government will give serious consideration to these three areas?

I have said previously that the constituency of Carlow-Kilkenny is almost like the Brigadoon of Irish politics. I am taking a stand on these issues and raised them a number of times previously under various headings. In the context of our national and regional development they can no longer be ignored.

I acknowledge the role of our county enterprise board structures. If Enterprise Ireland is to look after the job creation and export market of companies with over ten employees the enterprise boards structures becomes ever more important. As a member of Kilkenny Enterprise Board I realise the value of the board. It is worth considering the board by the six measures under which Enterprise Ireland will function and deliver.

The first measure, enterprise awareness, warrants expenditure of £15,000. Surely our commitment to the enterprise boards warrants a greater expenditure? If we are serious about creating enterprise awareness in young people a greater financial commitment will be required. The second measure, short-term training, warrants expenditure of £78,000. This is a pittance when one considers the huge gap between those who have and those who have not. Short-term training would do a great deal to take in people from the marginalised and ensure their place in future employment and in indigenous companies with up to ten employees.

The third measure, the grant budget, warrants expenditure of £365,000. With the other measures, this has created 400 jobs in four years. Given that 85 per cent of employees in Kilkenny are employed by indigenous firms, this is a major commitment by a young board.

The fourth measure, the long-term management development programme, warrants expenditure of £62,000. There is a serious lack of funding in this area. In considering Enterprise Ireland we should reconsider the position of the enterprise boards. We should strengthen their structures and give greater financial support to the boards to ensure they develop, encourage local people to work within and strengthen their communities and to provide the indigenous jobs we are so strong in creating.

The enterprise boards, in conjunction with the [1308] various enterprise schemes throughout the counties, form a local investment, especially in county towns where communities are breaking down. We do not fully realise their value. I ask the Minister to give further consideration to their proper funding when considering Enterprise Ireland. The boards were founded on a free spirit ethos to remove red tape to make it possible for young firms and those involved in them to get grants and move on. However, this process has become clogged with Government and EU bureaucracy. If it is to continue to be successful this will have to be reduced. When this happens the boards will become even more attractive to emerging new companies.

IDA Ireland has created 400 jobs for Kilkenny. It is not a proud record, given that 85 per cent of employers are indigenous companies. However, I am glad that through local effort, IDA Ireland in partnership with Kilkenny Development Company, has developed a 60 acre site in Kilkenny. The company has applied for planning permission to construct a 20,000 square foot unit with a promise from IDA Ireland that it will construct a second unit of comparable size. This is a clear indication that, in partnership with all the bodies, local communities can develop. If anything, the Kilkenny experience of company partnership, indigenous industry, local community effort, the IDA, other State agencies and the local county enterprise board is a role model for the rest of the country. I ask IDA Ireland to acknowledge that in a tangible way by ensuring that the advance factory is filled when it is completed and that the second phase development proceeds with the construction of a 20,000 square foot office block.

The success of these boards is also linked to marketing the various counties. If Enterprise Ireland is to move forward rapidly it will need the support of the remaining State agencies. In addition, they will need a marketing arrangement which shows these bodies can be brought together and which perhaps markets each county in its own unique way. Every county has its strengths and weaknesses, the proper use of marketing will highlight the positive aspects of each and will, perhaps, indicate the investment required in terms of infrastructure.

However, there is no point in IDA Ireland excluding itself from participation, or at least liaison, with the county enterprise structure and Enterprise Ireland. A marketing policy should be developed with Enterprise Ireland in conjunction with local groups to ensure that each county gets its fair share. I support the Bill.

Mr. Finucane: I wish to share my time with Deputies Crawford and Belton.

Acting Chairman (Ms McManus): Is that agreed? Agreed.

Mr. Finucane: I welcome the opportunity to speak on this Bill. Part of the philosophy of the [1309] Progressive Democrats has been the necessity to reduce the number of State agencies. However, given the provisions of the Bill how far has the party gone in this regard?

The Bill contains provisions on the role of IDA Ireland and SFADCo. The IDA has been very successful. There was an attempt in recent times to try to attract industries to rural locations by enhancing the grants for those locations. There are added difficulties in doing so. What chance does a rural location with a green field site have to attract foreign industrialists? Would such industries come to Newcastlewest which is 25 miles from Limerick city? In the past many towns had the benefit of advance factories but such factories are no longer built because of a change in building policy. Such towns depend on local entrepreneurs to build factories. However, they take a gamble on the IDA promoting the location.

On the Adjournment of the House last night I raised the issue of the closure of Neodata Services Limited at Newcastlewest and Kilmallock over two years ago. I raised the matter at the time its factories closed and I was told the IDA would redouble its efforts to find replacement industries for those locations. The only evidence of action in Newcastlewest was a flurry of activity from different bodies to form a local task force. However, a replacement industry has not materialised. At local level I saw no evidence of the IDA including the area in its itinerary. The itineraries remain secret. In many cases, if the local business people do not get the chance to meet industrialists the talents and positive aspects of a location are not presented. Many rural locations find it difficult to attract industry because there is a natural tendency for industrialists to locate in large cities. The IDA views rural towns as dormitory developments for those large cities. The Neodata unit in Kilmallock was bought by local interests with the objective of providing a replacement industry. I am optimistic that there may be positive developments in that regard.

It is stated policy not to build advance factories but without them many rural areas will find it difficult to attract potential industries. There is a difference between the attractiveness of a green field site in Limerick city and one in Newcastlewest. There is a dedicated 200 acre site on the N69 outside Askeaton which is testament to the lack of industrial activity in the area because not a single industry has established there. To what degree has that site been marketed?

Is there a vacuum in the IDA with regard to this area? The IDA does not have an office in the mid west region. It is the responsibility of Shannon Development to manage the attraction of industries to the area. While I appreciate that some functions will be devolved to Shannon Development the role of that organisation in the mid west should be reassessed and redefined. When Deputy O'Malley was Minister for Industry and Commerce he devolved responsibility for small industry in the region to Shannon Development. [1310] That role has been supplanted by the county enterprise boards to the point that executives of Shannon Development will refer requests for grant assistance to the county enterprise boards. The county enterprise boards are funded by the Exchequer on a quarterly, drip-feed basis and their funds are restricted as a consequence. I am a director of a county enterprise board and I am aware of what the boards do. However, if more responsibility was to be devolved to them more funding would be required. They do a good job and help with the development of small industries.

The role of Shannon Development should be redefined. At present its role is almost exclusively Shannon oriented, although the IDA would argue that it has a responsibility for the mid west region. I do not intend criticism of Shannon Development because it does much good work. However, its remit should be more properly defined.

I worked in FÁS and I am aware of the work of the section dealing with training support for industry which is being devolved to Forfás. How many people will be transferred and what degree and span of responsibilities will they have? Given the level of personnel, is it feasible or practical to devolve the responsibility to help out the industries in question?

The Minister indicated yesterday that a more draconian regime for those on the dole may be introduced. Have FÁS and the Department of Social, Community and Family Affairs done enough for the unemployed? Is a data bank of the potential skills of the unemployed available? An analysis of many of the unemployed may highlight difficulties such as literacy problems? In such cases is it right that they should be penalised by being taken off the register when they may be unable to undertake training? Consideration should be given to providing training to address literacy problems. To what degree has there been a proper analysis of the strengths and skills of the unemployed?

The unemployed should be assessed as people and not as social welfare statistics. In our obsession to reduce the numbers on the live register we may forget that we are dealing with human beings. I understand that about £54 million has been spent on the area partnership and back to work allowances. They seem to be effective in taking people off the live register. It might be a popular approach to get people off the dole and into work but it is important to remember that we are dealing with human beings. Decisions on their training needs can only be made in the light of a proper analysis of their strengths and skills. There is scope for great improvement in that area.

Mr. Crawford: I welcome the title Enterprise Ireland for the new agency proposed because it will be more readily understandable in the North and internationally. I am not against the Irish language but the new name is simple and easily understood. Enterprise Ireland will take over [1311] from Forbairt and An Bord Tráchtála and will assume some of FÁS's responsibilities. The overseas insertion of ABT will give Forbairt access to overseas markets which it has not at present. The merging of three organisations will lead inevitably to job losses. Will the Minister indicate how that will be dealt with? Will the IDA and the new body encounter problems with separate offices abroad? How will they decide which body supports which enterprise? From the Minister's speech there seems to be some haziness about that area. That will not benefit the consumer of these services who wishes to create jobs.

I have some knowledge of this area. Some of my constituents who wish to get on with the job of creating employment find it difficult to know which scheme to participate in and which of the large number of bodies to approach. Those include the IDA, Forbairt, Forfás, IFI, Leader, INTERREG, enterprise boards, partnership boards and the peace and reconciliation initiative. Some efforts have been made to liaise between the various bodies, but there are still difficulties. I spent a number of years trying to get agreement between the IFI, INTERREG, Forbairt and the local bodies. Because so many of those bodies are answerable to committees it takes a good deal of time and a good deal of hard slog to reach an agreement with which everyone is satisfied.

Despite all the bodies in place, the Border area has not benefited greatly from outside investment. In recent years the IDA has had a great record in creating jobs. Enterprise Ireland must be seen to represent all Ireland, not only Dublin, Galway, Cork and Limerick, and the Border region should be given its fair share.

Cavan and Monaghan have a proud record in providing indigenous industry. The food and furniture industries in those counties have been set up by local people often out of their own funds. There is a need for a hi-tech industry to give graduates the opportunity to remain at home and to strike the right balance between sufficiently high incomes and other relevant issues, which has not been achieved in the past.

The British-Irish Agreement is welcome. However, unless it is followed up with a financial commitment and a commitment by the IDA and Enterprise Ireland to attract foreign industry to the Border region, the position reflected in the recent statistics, which show that region has fallen behind, will continue to prevail. I understand there will be advance factories in Sligo, Dundalk and other towns. There is an advance factory in Monaghan for the past 15 years, but no client has been found for it. We have as good a workforce as any other region, but we do not have the ring road my colleague from Kilkenny spoke about some time ago. That was promised, but it fell through and, as a Deputy representing Cavan-Monaghan, I am not proud about that. We need to ensure the necessary infrastructure is in place. There is no railway or airport to service the people of Cavan-Monaghan. A CIE report [1312] reveals that a rail line stretches from Kingscourt to Dundalk and across to Sligo. Donegal, Cavan and Monaghan are the only counties on this island not serviced by a rail network.

A recent US delegation was brought to Sligo which is not a Border county, although a former Minister for Finance, Ray MacSharry, succeeded in having it designated as a Border region when he was Commissioner. The Border region, particularly Cavan and Monaghan, should be given its fair share.

Regarding the matter of telling the unemployed that they must take up jobs, it is important that taxpayers are absolutely certain that people in receipt of social welfare get it for the right reasons. However, a problem arising from the last budget is that, at the request of the Progressive Democrats, benefits from taxation reform were geared towards the well off. The country and the unions want taxation reform to be geared towards encouraging those who want to work to take it up. The food and furniture industries in Cavan and Monaghan are not high payers, but people have shown they want to work in those industries. However, it could be shown that the people who work in those industries and earn a salary of approximately £250 per week which is taxed to the hilt would be much better off claiming social welfare and all the benefits associated with it, including a medical card. We want the tax bands increased and the allowances increased to ensure that as many people as possible are taken out of the tax net. That would encourage people to work, rather than force them to do so. We want to adopt a carrot rather than a stick approach.

Mr. Belton: I thank my colleagues for sharing their time with me. I endorse what has been said about enterprise boards. I am a member of the Longford Enterprise Board and I am aware of the good work it has done, but staff in all the enterprise boards are concerned about their long-term future. Officials from the Minister's Department visited my constituency recently and there seems to be some discussion in the Department on the future of enterprise boards.

Enterprise boards are vital to the structure of development. The Longford Enterprise Board has been vital in creating jobs. All one needs to do is read the editorials in the local papers which have been scathing in their attacks on the State agencies because that county has been bypassed in every sense of the word. The Celtic tiger never roars in Longford. At a time when the Minister might announce 1,000 jobs in one area on a Sunday night and a further 500 in another area on the following Sunday night, it is bad that none of jobs can be created in my area.

The Minister visited Longford recently and was upbeat about the prospect of locating a client for the advance factory in Longford, which has been vacant for two and a half years. We were optimistic when it was built that a client would be found. We do not want to put all our eggs in the one basket, but it is embarrassing that no client can [1313] be found for that factory when our economy is booming. I hope this new departure will be successful and I pay tribute to the IDA for all the work it has done in the past. It has competed in the world market to encourage clients to invest here, but all that costs money and this new arrangement should be underpinned by a regional policy.

Minister of State at the Department of Public Enterprise (Mr. Jacob): Before responding to the concerns and views expressed by Deputies, I will make some general points. There have been claims that this Bill merely represents another tinkering with agency structures in response to changes to ministerial portfolios. The Minister addressed this point, but the changes proposed have been on the industrial policy agenda for most of this decade. This Bill, although largely technical in nature, is about putting in place the necessary structures to meet the Culliton injunction that State support for the functional activities, whether in marketing, training or finance, should be provided in an integrated package. The Minister stated that the key insight of Culliton was to recognise that State supports relate directly to the key strategic business functions performed by firms. In this context the Bill cannot and must not be viewed in isolation. On its own, it merely creates an agency framework, but that is only one aspect of the response to the Minister's overall review of industrial policy. It must be seen in conjunction with twin elements to be introduced in determining the mandate of Enterprise Ireland, namely sustainable and competitive advantage and the business development model. They are, however, the basis on which the aspirations and projects of clients will be addressed and the vehicle whereby integrated Enterprise Ireland assistance will be delivered to those clients.

I refer to the Culliton prescription of delivering integrated assistance to a firm in respect of its overall strategic needs rather than in regard to its specific functional activities as in the past. Concern has been expressed, not just in the debates on this Bill, but by various sectional interests in the run-up to these debates that the new agency will mean a loss of focus on this area. Thus, the senior officials in the Department of Enterprise, Trade and Employment heard in the extensive consultations in which they engaged with management and unions in the three organisations involved that there would be a loss of focus on marketing, human resource management would be neglected and science and technology downgraded. The fact that all three areas expressed concerns speaks for itself. It also points up the fact that sectional interests speak for themselves, sometimes not taking cognisance of the bigger picture.

The Minister is well aware of these concerns and is convinced they are unfounded. Enterprise Ireland could not hope to fulfil its mandate, which is helping firms to grow sales, exports and [1314] employment while paying adequate attention to marketing. However, the crucial difference is that Enterprise Ireland will look at the wider picture. The best marketing in the world is irrelevant without the right products, which require an adequate emphasis in the firm on research and development and product design. Marketing of products will not guarantee success if the human resources creating and selling them are not deployed in an efficient way.

Enterprise Ireland does not represent a loss of focus in particular areas in embodying the skills and resources of the three agencies previously responsible. It represents the potential for delivering an integrated service to the client company that would be greater than the sum of the component parts. However, the benefits arise, not just for the client where the single point of contact in regard to a rationalised range of programmes of assistance will be considerable. The Exchequer and taxpayer stand to gain from a situation where companies with the appropriate management resources can exploit the current systems to draw down finance from a variety of insufficiently co-ordinated sources. The current systems provide an artificial incentive for the client company and the individual agency executive to create specific applications for assistance which are tailored to the existence of the agency rather than the needs of the company. A major benefit of the creation of Enterprise Ireland is that it brings that undesirable situation to an end.

A number of colleagues raised specific points and I will endeavour to address those in the remaining time. Deputy Owen raised the work involved in translating the mission statement described in the Minister's contribution into legislation. The explanatory memorandum which has already issued set out the broad parameters of the industrial policy which forms the background to the mandate for Enterprise Ireland. Specific points about value added will be addressed by the Minister on Committee Stage. The issue of exporters who want a knowledge of overseas markets was raised. There is no question that Enterprise Ireland will ignore this vital need of growing Irish firms.

Deputy Broughan suggested the Minister dodged the issue of excess staff in the new agency and that, perhaps, this will distract it in its first year. She acknowledges there will be need for rationalised structures and grading, but it would be folly to assume the Department could do better than a new arrangement could given it will implement the mandate and that the agency will not start until well into 1999. Deputy Deenihan referred to Enterprise Ireland not assisting companies with fewer than ten employees. It will be able to assist companies with the potential to grow above ten employees and if they train abroad, the overseas office of Enterprise Ireland will be able to provide marketing and technological services. On behalf of the Minister, I thank all colleagues who participated in the debate and I [1315] am sure she looks forward to interaction on Committee Stage and beyond.

Question put and agreed to.