Thursday, 28 May 1987
Dáil Eireann Debate
That a sum not exceeding £221,632,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1987, for the salaries and expenses of the Office of the Minister for Industry and Commerce, including certain services administered by that Office, and for payment of certain loans, subsidies, grants and grants-in-aid.
The Estimate before us, provides, as indicated, for net expenditure of just under £222 million in 1987, as compared with an outturn of almost £240 million, in 1986, an overall decrease of £18 million.
This Estimate contains the major share of the public expenditure allocations for the development of industry. As Deputies will be aware this is by no means the full extent of State assistance to industry, a considerable part of which arises indirectly in the form of the various tax measures and incentives available.
The provision of monetary incentives, however generous, whether direct or indirect, will not, in itself, result in a satisfactory development of our industry. Indeed, as we have found, to our cost, the high level of Government borrowing which is required to fund this assistance leads, in itself, to the very stultifying of growth in the industry.
The role of Government in improving the industrial environment is crucial, but it is not the only factor governing the approach to development. In this country — and I am not suggesting that we are unique in this — we see too often an immediate resort to a confrontational approach. We have got to get away from this — to work together — to act as partners rather than adversaries. The Government can help in this, as we have  done, by ensuring that there is equity in the way people are treated.
In my own case, I am very conscious of the obligation to strike a reasonable balance between the needs of industry and the rights of consumers. Later in my speech I will touch on some areas where steps are being taken which will be of benefit to the consumer.
Many recent reports on science and technology including my Department's Review of Industrial Performance, 1986 conclude that much greater attention needs to be paid on a continuing basis to innovation, enhancing the technological capacity of firms, and to the raising of technical and quality standards. Urgent action in these areas is essential if this country is to face up to one of its major challenges — the building and sustaining of a strong indigenous industrial base. We need to pay far greater attention to the application of technology in industry in order to help our good firms survive and expand, and to encourage the growth of new high technology Irish companies on the international market.
We need to strengthen and make much better use of our R and D infrastructure to enable Irish firms and Irish products attain an increasing percentage of the keenly competitive world market in both goods and services.
Recent reports from the sectoral development committee, the OECD, and the Oireachtas Joint Committee on Small Businesses have commented on the low level of research and development in Irish industry, and the low use of State R and D facilities, which in turn reflects on the poor capacity of indigenous firms to innovate and expand. I intend to initiate a programme of action to increase the innovative capacity of Irish industry. I want to bring about a situation where our best graduates in science and engineering will use their skills and talents within Irish firms. It is there, within industry that they can apply their talents most directly to the question of developing new products and new markets for this country.
The importance which this Government attach to science and technology was outlined in the Fianna Fáil policy  document “A policy for Science and Technology”. Due to the present economic constraints, it is not possible in this financial year to initiate a full programme of activities. Nonetheless, it is important to make an initial commitment to this important development activity. I indicated recently in this House that I was establishing a programme for priority action in the area of science and technology. As I mentioned to the House only last Thursday, I am now finalising my consideration of this matter and expect to announce my decisions thereon very shortly. This will be done by a reallocation of funds within the Estimate of the Department of Industry and Commerce.
Referring to growth and job creation, in 1986, industrial output increased by 2.8 per cent and industrial exports rose by nearly 4 per cent in real terms. This level of output was achieved through the recovery in the chemicals sector and the expansion in the office machinery and data processing sector. The poor performance of the more traditional industrial sectors was due largely to increasing import penetration of our market combined with a fall-off in domestic demand. An analysis of the domestic market indicates that about one-third of the loss of output of domestic manufacturers in the period 1980-85 was due to a fall in domestic demand and about two-thirds due to increased import penetration.
Despite the increasingly competitive environment for mobile international investment, the IDA negotiated over £550 million in planned new investment in 1986 which reflects a substantial increase in investment from overseas. It is expected that 15,700 jobs will be created as a result of this investment; 12,400 of these jobs are in new projects or the expansion of the overseas industrial base already in Ireland. In addition 3,300 jobs  were negotiated through technology transfer agreements with Irish companies which include takeovers and joint ventures approved by SFADCo and Údarás na Gaeltachta.
On the home front considerable activity has also taken place. Small Irish firms committed investment of some £42 million in 1986, and 450 firms of the 800 approved for assistance are start ups which augurs well for the entrepreneurial spirit in the country.
There is also a renewed effort to encourage development among mature Irish firms. In 1986 the level of investment negotiated with such firms of £110 million was disappointing. I believe the potential for development of our major firms is enormous and I will be referring to this later in my speech.
As to performance in 1987, the latest economic commentary from the Economic and Social Research Institute predicts that the volume of manufactured exports and production will continue to grow during 1987 by 5 per cent. Investment in industry is expected to continue at a slightly higher level than in 1986 resulting in the creation of about 11,000 new jobs in IDA-backed firms and 1,200 jobs in SFADCo firms.
The IDA will intensify their industrial promotion strategy in the Far East where significant projects were approved from Taiwan and South Korea in 1986. The recent expansion of the IDA's Tokyo office and the establishment of an office in Seoul were part of the drive to promote Ireland as a suitable investment location for Far Eastern countries where there is considerable potential for industrial expansion.
On industrial policy, for some time now I have been concerned about the emphasis being placed on the interventionist approach to industrial policy in the form of State agencies, industrial grants and tax concessions. I have long held the view that the role of the State in supporting industrial growth required a balance to be struck between the level of direct support and the creation of a positive environment in which industrial activity would flourish and lead to  improved economic performance in all sectors.
The net contribution of the existing interventionist regime has not led to the degree of industrial growth we hoped for when we first embarked on this policy. Manufacturing employment in 1986 was only 20,000 higher than in 1963, when the country was in a pre-industrialised state. Of the 20 largest indigenous plants in Ireland in 1973, four have closed and the employment in the remainder at the end of 1985 was only half of its 1973 level. Output growth — which has slowed to below 3 per cent in each of the last two years — has been concentrated in the modern subsectors of electronics and chemicals which are dominated by overseas companies. Profitability in indigenous industry is extremely poor and investment is at very low levels.
While the budget involved reductions in the levels of direct State support for industry, these reductions have, I believe, been well understood by industry generally. This is because they realise only too well that the substantial Exchequer investment in industry — between £370 million and £400 million each year since 1984 and tax incentives and allowances of £250 million per year — cannot be preserved in a situation when general cuts in expenditure elsewhere are demanded by the economic circumstances which we face.
The Government's basic strategy towards industry is to boost investment and confidence through addressing the critical imbalance in the public finances which is at the root of such problems as unemployment, high interest rates and penal levels of taxation. These are the critical obstacles preventing growth and enterprise in our country. The budget strategy has already paid off with interbank interest rates having fallen by 2.5 per cent and with significant declines in the rates to business. There is still a long way to go in order to stimulate the growth in our economy that is so badly needed. I believe that a greater level of commitment in tackling the business environment is urgently required if we are to take advantage of the great opportunities  that will be afforded us in the wake of the completion of the internal market within the Community by 1992, and, indeed, opportunities which exist even now for Irish products further afield.
Industrialists realise only too well the benefits which can accrue from a more positive overall environment for investment. They know that interest rate reductions of the order which I have mentioned — and indeed with the prospect of more to come — are much more beneficial to them in terms of competitiveness, market share and profitability than a relatively small reduction in the aggregate level of direct Exchequer grants to industry which would at worst impact only marginally on the level of job approvals achieved.
Despite the major decline in the rate of inflation in recent years, the benefits which should have come our way were severely reduced by the lack of a similar level of decline in interest rates. This, together with the volatility in exchange rates and a lack of confidence in the economy presented a serious setback to growth in the economy. These are the reasons we must concentrate more on the importance of the environment for industry and why the need for cuts in public expenditure, including the levels of direct support for industry, become fully apparent.
However, I would not wish to convey the impression that the level of direct investment in industry is not providing a good return to the Exchequer, nor would I wish to suggest that the valuable contribution of the State agencies involved in this work is somehow redundant in favour of the approach I have outlined here. Rather I would prefer to think in terms of a simultaneous attack on the way we have pursued our industrial policy heretofore, where we recognise the importance of the contribution of both approaches and ensure that they are applied in a co-ordinated and logical way to the overall benefit of industrial growth and employment.
It is undeniably true that the structure of our industrial base is such that we need to offer direct support to industry seeking  to develop in competition with overseas firms for world markets and also to attract new overseas projects to Ireland in the face of very strong competition from other European countries with the advantages of better strategic location. This situation is not going to alter radically in the medium term but we must, nevertheless, examine how we can secure a greater proportion of inward investment at a better return to the Exchequer. We must also aim to develop the necessary skills and resources to develop a strong forward-looking, export oriented, indigenous industry skilfully exploiting the expertise that is needed today in areas such as marketing and technology. These were amongst the areas which were analysed in the Review of Industrial Performance 1986, published recently by my Department.
The review concluded in the case of overseas industry that the Irish incentive package is still attractive by international comparison and that a push for a better return for State assistance to such projects was fully justified. Already a certain amount has been achieved in that promoters are accepting performance related clauses and parent company guarantees in grant agreements without any undue concern about such projects locating elsewhere. I am in full agreement with the further decision in the review to reduce the level of State support for fixed asset investments in overseas projects to 45 per cent and 30 per cent in designated and non-designated areas respectively, leaving the excess to be made up by the use of State equity, loan guarantees or deferred grants or a combination of any or all of these. This decision will not only lead to a better Exchequer return on its investment, it will also encourage the location in Ireland of better quality projects where overseas promoters would include their key business functions in Ireland, such as marketing and R and D, thereby creating a more long term and fully integrated operation here. These are the overseas projects in which we need to concentrate our resources.
 However, foreign industry alone will not be sufficient to realise our ambitions for growth and employment. The key to a strong and developing industrial sector is indigenous Irish industry. However, it is also this sector which has been our Achilles heel when it comes to gearing up for international competition. The problem with many such firms is that they operate in traditional low cost product segments or they depend on the small domestic market and are increasingly being plagued by competing imports.
In current value terms, competing imports increased their share of domestic consumption from 34 per cent in 1980 to 41 per cent in 1985. The Programme for National Recovery indicated that, side by side with vigorous export development, we will strengthen manufacturers in the home market by import substitution within the public sector. There is considerable scope for improvement in this area consistent with our EC obligations.
The increasing level of import penetration in the consumer products market also is striking evidence of the failure on the part of indigenous industry to counter competition from abroad in key product areas such as food, textiles, clothing, footwear and furniture. It is difficult to see how the full potential for the development of indigenous industry can be secured unless there is a major concentration on assisting Irish firms to retain and regain domestic sales.
There are a number of initiatives in place to support Irish firms in this area including the marketing support services of the Irish Goods Council designed to assist smaller companies, the national linkage programme, which is aimed at developing a successful industrial sub-supply base and the initiatives aimed at encouraging major purchasers, both private and public, to adopt a more supportive attitude to indigenous manufacturers by providing easier access to their buyers, facilities for merchandising activities and arrangements for feedback of information on likely demands and products. In the public sector particularly there is considerable room for improvement in the level of  information provided in relation to purchasing intentions and a number of further initiatives in that regard will be introduced shortly.
Many of our medium and large indigenous firms suffer from management weaknesses and only one-third, approximately 200, are estimated to have significant growth potential in internationally traded markets. These are the companies that are appropriate to the company development programme. The programme was initiated with the intention of redressing the problems which have inhibited the development of indigenous companies, helping them in turn to identify and implement strategic initiatives and programmes. In 1986, 45 firms completed the company development exercise and a further 50 firms will be covered in 1987. While the review highlighted problems of co-ordination with the programme I am satisfied that these problems can be ironed out in the context of my Department's examination of the most appropriate means of operating the programme in the future.
My Department will also undertake a review of the small industry programme during the course of this year. The need for this review arises from the fact that while there are optimistic signs for this sector, in that it has achieved a net increase in employment, this increase can be attributed almost entirely to start-up activity leaving a vacuum in the area of expansion of new small firms. It seems to me that a partial redirection of State assistance is what is needed in order to provide help of a more directly operational nature. In this regard I have asked the agencies to adopt a more developmental approach to indigenous companies to help them focus on the strategic development aspects of their enterprises. However the long term initiatives to redress this imbalance can only be considered in the light of a full analysis which will identify the factors which impede small firms from growing into medium-sized firms. The small industry review will also identify the conditions under which a greater proportion of funding to small industry projects can be achieved  by recourse to equity participation instead of an over-reliance on State assistance in the form of grants.
There is one final area of my Department's review of industrial performance on which I would like to comment briefly. This is the conclusion that there is a need to rationalise the institutional arrangements associated with industrial policy as it is currently organised and delivered. The move towards rationalisation has been greeted generally, both inside this House and outside, with much interest and a general desire to know more about the approach to be adopted in effectively implementing such a rationalisation programme. The House will appreciate the enormity of the task ahead when I say that there are at present 3,400 staff involved in 20 separate institutions engaged in supporting industry in one way or another. This fragmentation of resources, despite co-ordination efforts, must inevitably lead to duplication of effort and a waste of valuable and costly resources. Indeed the survey of attitudes of senior executives in the review showed quite a concern amongst industrialists about the duplication of agencies with a substantial number of them, 86 per cent, believing that there are too many agencies involved in this area.
I do not intend to rush headlong into an exercise involving the engagement of outside consultants to produce a quick fix solution which might do more harm than good. I have commenced the first phase of the exercise along the lines of (a) a clear statement of objectives which would include a longer term vision of the objectives of industrial policy combined with a concern to work within the public expenditure profile which is likely in coming years; (b) the optimal organisational arrangements to deliver these objectives; and (c) an indication of the implementation process.
The White Paper on Industrial Policy, published by the previous Government in 1984, set a target for growth in net manufacturing employment of between 3,000 and 6,000 a year. Not only was this target not achieved but there has been an average reduction of 6,000 jobs each year  in manufacturing employment during 1983 to 1986. My principal objective as Minister for Industry and Commerce is to reverse that trend. I believe that the new Government have made a good start, that confidence is improving and developmental policies are being speedily introduced.
It is clear to everybody that the development of an Irish food industry will be the responsibility of the Minister for Agriculture and Food, the relevant sector of that Department having responsibility for the development of the food industry. I have already made arrangements in my Department to have officers who deal with the food sector there transferred to the Department of Agriculture within a matter of weeks.
The establishment of Bord Glas and the allocation of staff to that board is another clear indication of the Government's commitment and positive approach to tackling the scandal of the importation of vegetable and horticultural products.
In the other developmental area there was the announcement by the Government and their commitment to the establishment of an international financial services centre at the Custom House docks site. I expect that the development plans for the Custom House docks site will be announced within the next two weeks. I expect to be in the United States with the IDA in approximately two weeks' time to market this new financial services centre. I believe it has great potential in Dublin, with the right tax environment now put in place, and the supply of highly skilled graduates. Surely this must constitute the first step in stopping the brain drain from this country, to retain the people in whom we have invested our money at home in as large numbers as possible, ensuring their commitment to the development of our economy.
The National Development Corporation Ltd., commenced operations on 11 June 1986, the vesting date on which it took over from the National Enterprise Agency. The increased level of funding  allocated to NADCORP for 1987 by way of grant in aid for administrative expenses reflects the fact that this year is the corporation's first full year in operation.
The immediate priorities of the corporation in their earlier stages were the progression of proposals and the completion of investment commitments inherited from the NEA as well as the active management of a portfolio of NEA investments, including operational subsidiaries, which had been vested in the corporation on 11 June. At the same time the board had the task of putting in place the permanent staff structures and procedures to enable the corporation to fulfil their commercial and developmental role as set out in their legislation.
With the exception of the appointment of a managing director, these structures have now been established and NADCORP is fully operational and able to adopt a more active approach to identifying suitable investment opportunities. The provision in the Public Capital Programme for investment purposes by NADCORP in this year is £7 million.
To date NADCORP, of its own right, have approved investments totalling over £6 million as well as completing further investments in respect of commitments taken over from NEA. The corporation's report for the period 11 June 1986 to 31 December 1986 will be presented to me shortly and subsequently laid before the Houses of the Oireachtas.
It has long been recognised that a major problem facing many Irish-owned firms in the traded goods and services sector is their lack of an adequate equity capital base leading to an over-reliance on bank borrowings as well as a continued dependency on State aid. Up to recently, there has been a marked reluctance in our small to medium-sized companies to seek equity investment in their businesses from outside sources. With the general development in venture capital activity in recent years attitudes to outside equity investment are changing. Outside equity offers many advantages. It is free of interest and does not have to be repaid.
It gives a company that extra financial  leeway that can at times mean the difference between closure and success. Outside investors can, with their investment, bring new expertise, experience, disciplines and new growth ambitions to a company which are so essential in the current competitive business environment obtaining today.
The business expansion scheme, which has encouraged the investment of over £12 million by way of new equity in 125 smaller companies by outside investors to date, has helped to change the attitude of promoters to outside investment. However, it is disappointing that so little use has been made so far of the facilities available in the Stock Exchange, particularly its smaller companies market, for the raising of capital. If our smaller indigenous companies are to become strong, it is essential that they be prepared to go out to the market to seek the investment funds that are available there so that their development will not be restricted by the lack of adequate capital.
NADCORP have an important role to play in industrial and job creation strategy. As the States venture capital agency it can complement the grant, loan and advisory functions of the other State industrial development agencies and either on its own account or by leveraging in other investors can act as a catalyst in the initiation of new projects that might not otherwise get off the ground.
There are several benefits perceived in having NADCORP as an investor, as opposed to private venture capital companies. As the State venture capital agency, and within its commercial remit, NADCORP can invest in higher risk enterprises of a national strategic nature. It is also a more patient investor than most private venture capital companies, and is prepared to wait somewhat longer for a return on its investment. A further advantage is that NADCORP is prepared to invest in smaller firms. Private sector venture capital companies tend to invest amounts of not less than £100,000 and enterprises seeking amounts of less than this figure can experience difficulty in obtaining equity capital. NADCORP is helping to fill this gap in the market.
Of course, production can be of no benefit to industry unless it can be sold, and at a profit. For us today, with an export oriented industry, it is crucial that we secure, and maintain, access to our foreign markets. A critical factor in this is our membership of the General Agreement on Tariffs and Trade.
The “Most Favoured Nation Clause”, a fundamental principle of the GATT, enables Ireland to enter third country markets on the same footing as every other member including the more powerful trading countries. Because of our critical dependence on exports for employment and economic recovery we have a vital interest in maintaining and strengthening the GATT, which embodies the idea of a free international trading system.
Threats to the authority of the GATT and the ordered world trading system were posed by the increased protectionism, and threatened trade wars. Trends towards bilateralism, part of the armoury of US trade negotiations, are of particular concern of open economies such as Ireland, which are vulnerable because of our small size. Consequently Ireland was supportive of calls by the European Community and others for the launch of a new round of multilateral trade negotiations. This new round, destined to restore discipline to world trade and to contribute to its expansion, was launched last September in Uruguay. I am confident that an enhanced framework both for the trade in manufactured goods traditionally dealt with by GATT and the new and growing subject of services, which is something new in the negotiations, will emerge and provide a positive trading climate for the foreseeable future.
Welcome as the new round of multilateral trade negotiations may be it is clear that, given our crucial dependency on exports to the European market, the growth and further liberalisation of that market is equally vital. It takes more than 70 per cent of our total exports.
 Hidden protectionism in Europe in the form of physical and technical barriers to trade is probably the single most damaging obstacle to the further expansion of our exports and the attendant creation of much needed employment at home. Until these internal barriers are abolished, the full export potential of our membership of the EC — which is after all the largest single trading bloc in the world — will not be achieved and we will not be able to reap the full commercial benefits to which we aspire for our people. Neither will firms throughout other countries in the Community be able to achieve their full potential in competing efficiently and aggressively with US and Japanese companies both on the European and world markets. Given our dependency on exports to other more prosperous member states, we have a vital interest in maintaining their prosperity so that they may continue to increase their imports from us.
The creation of a true obstacle-free common market has been boosted by the acceptance of the Single European Act by the Irish people. Indeed, the fulsome debate we have just engaged in has clearly shown how the people realise that our commercial wellbeing in the future is dependent on our exports to the Community. With the hoped for improvement in decision making which will follow the Act's ratification and implementation, we can expect to see a distinct improvement in the environment for our exports and experience hand in hand further employment opportunities for our people.
The fact that growth in volume terms of 1 per cent to 2 per cent was recorded in 1986 represents a solid performance by exporters in the climate in which they have to operate. Merchandise exports, down from their record high of £9,744 million in 1985, were valued at £9,387 million in 1986. These figures, however, mask the upturn in economic activity in our main markets as a result of the decline in oil prices which became evident in the latter part of 1986. This improvement should gather momentum throughout  1987. The volume of world trade is expected to grow by about 4 per cent this year. In the OECD countries, which account for about 90 per cent of Irish trade, economic growth should be about 3 per cent and this should afford Irish exporters new opportunities for expansion in world markets.
In 1987 I expect that merchandise exports will approach the £10 billion mark for the first time ever. It is expected that the volume growth of Irish exports this year will be between 3 and 4 per cent and this will be combined with an increase in export prices of 1 to 2 per cent.
For the first four months of 1987 we have recorded a trade surplus of £162 million. It would be unwise to draw too many conclusions from these figures at this stage of the year but they do provide some grounds for optimism in that there was a discernable pick up in trade over the past six months. More recently, the CII's survey of business which records the level of a number of key business indicators, has shown that companies' order books are on the increase in the past six months and are now at their highest level since 1980. In addition production expectations are at their most buoyant since 1980 and companies' capacity utilisation is picking up. All these indicators bode well for the future. It is my intention and the intention of the Government to create the climate in which Irish exporters will be encouraged to go out and seize these opportunities.
Exports from Ireland currently represent 64 per cent of our gross domestic product compared with a figure of 15 per cent for Japan, 7 per cent for the USA and a European average of 32 per cent. Another indication of the importance of exports to the Irish economy is the fact that two out of every three jobs in manufacturing industry are export dependent.
In recognition of the critical role of exports in our economy the Government have allocated £24.272 million to CTT to enable them to carry out their activities in 1987. Of this figure, £23.022 million is being allocated to CTT's promotional and strategic marketing schemes and  £1.25 million is being allocated to the market entry and development scheme.
In 1986 CTT were originally allocated a total of £25.336 million, of which £24.536 million was given to promotional and strategic programmes and £0.8 million to market entry and development. These budgetary targets were not fully met in some of CTT's strategic marketing schemes mainly because of the reluctance of firms to meet the new criteria for a strategic marketing approach. The actual 1986 outturn figures for CTT were £23.758 million for promotional and strategic programmes, £0.582 million for market entry giving a total of £24.340 million. The amounts not spent were returned to the Exchequer.
I think the House will agree that given the current economic climate and the 1986 outturn, the 1987 allocation represents a strong commitment to CTT and its activities vis-a-vis the demands by the various other State agencies and the need for major savings across the board. The overall allocation reflects the Government's commitment to improving the marketing capability of Irish industry, and is a clear indication of the Government's appreciation of the vital importance of export growth to our national wellbeing.
Acting Chairman (Mr. M. Kitt): I have to ask the Minister to conclude. Perhaps the Minister may be able to elaborate on other points when concluding but unfortunately he must conclude now in accordance with an order made this morning.
Mr. Reynolds: We will not argue with the Chair. I will finish by saying that £5 million is being spent on schemes to address weaknesses in the area of product development and marketing skills and techniques and to address such matters as market entry and development, market research, group marketing for small exports and the building of marketing strengths in firms. I am satisfied with the very useful contribution these schemes are making towards creating a greater awareness of the importance of a properly  planned marketing effort on behalf of our export industry.
Mr. J. Bruton: I agree with the Minister in his interest in the development of financial services in Ireland. While Minister for Finance, I was involved in negotiating the European mercantile exchange project which, I hope, if it comes through, will involve approximately 1,000 jobs in Dublin in futures trading. I understand the Minister for Industry and Commerce is now responsible for this project and that an IDA feasibility study has been completed. I hope the Minister will give his personal attention to the project which was initiated during the period of office of the previous Government. It requires a different type of package to the one that is conventionally given to overseas industrial projects coming into Ireland. I hope he will be able to cut through the red tape, as I would have done, to ensure that this project, which could provide over 1,000 jobs, is brought into being. As the first major project in the financial services centre to which the Minister referred, it would be a suitable one.
I would like to ask for some information about the role of the Minister of State in the Department in regard to marketing. He has made a number of statements in recent times, for instance, calling for the amalgamation of CTT and CBF, he has been very critical of CTT and their traditional approach, as he described it, and he has called for trade attaches in foreign embassies. I would like to know who is in charge of marketing policy in the Department. Is it the Minister or the Minister of State? Is it Government policy that CTT and CBF should be amalgamated? Is it Government policy that we should appoint trade attaches to well-cushioned employment around the world at a time when we do not have enough money to keep nurses in hospitals? Is it Government policy that responsibility for marketing should be split between trade attaches in embassies and CTT? I may be a bit of a traditionalist but I believe CTT are doing a reasonably  good job and there is no need for trade attaches. I would like clarification of what is the policy here.
I urge the Minister to bring forward very quickly the restrictive practices legislation published by the previous Government. There is no doubt that importers in certain sectors are making substantial profits because there is not sufficient competition. We need even stronger legislation than that proposed by the previous Government to ensure that immediate action can be taken in the restrictive practices area to stamp out unfair practices. At present restrictive practices legislation says that if a particular practice has been identified by an inquiry it can be subsequently banned. I suggest that a different approach might be adopted. Certain practices in the trading area should be banned a priori, where anybody who undertakes them can be subsequently prosecuted and fined rather than having individual sectoral examinations before any action can be taken. Unfortunately at the moment, inquiries take so long that by the time they are complete and the legislation is introduced the problem has solved itself because the people who were suffering have gone out of business. I suggest a system of generalised bans of certain anti-competitive trading practices might be included in the restrictive practices legislation. That goes further than I proposed when I was Minister. This is something which needs to be talked about because although the legislation we proposed would have speeded up investigations it might not go far enough.
On a critical note, I would like to know how the IDA are going to do business under the present allocation. They have a net allocation of approximately £143 million this year, taking into account their own income and what they are given by the Department. Of that amount, up to one month ago £130 million was already committed to existing projects. That means they have only £13 million for any new projects submitted during the year. I do not know how they will operate on that amount of money because if one big  project comes along that will be their entire budget gone. That needs to be explained more fully than has been done so far by the Minister. Generalised statements like “their budget is adequate” will not satisfy. We need to get figures. If my figures are wrong perhaps the Minister will give the right figures.
I would like information on the progress of the NET-ICI talks in regard to the merger of the two companies. I would also like information on the initiative I took to have Irish Steel take in an outside foreign partner to develop their equity base. Irish Steel will not be able to get any equity from the Government and if they are to expand they must get equity somewhere else. I strongly suggest they do not borrow because they already have too high a borrowing requirement and they need an outside partner. Is the Minister taking an interest in this?
I agree with his critical remarks in regard to the interventionist approach in industrial policy. We need to have a hard look at that. I think the IDA are extremely good at bringing in foreign industry. However, the disciplines involved in bringing in foreign industry and in developing existing small firms in this country are entirely different. I do not believe the IDA have been as successful in the domestic sector. I am not sure the ethos of the IDA is necessarily the appropriate one for the domestic sector. It is very difficult to turn an organisation around but I think we need to look at this to see if there is a need to separate these two functions in the IDA so that there is a clearer management focus on domestic industry and its particular needs.
As far as domestic industry is concerned, there seems to be an assumption that if you undertake a certain type of activity — for example, if you put in a machine — then you must get a grant at the maximum level. Many of the improvements made by domestic industry would have been made whether they were grant aided by the IDA or not. Therefore, we must ask ourselves if it is reasonable to assume that domestic industries should always get a grant for carrying out these  improvements. This is where we need a different approach. We can say this about domestic industry but we cannot say it about foreign industry because if we do not give grants to foreign industry they will go somewhere else but domestic industries do not have the same option. Therefore, a different approach, and perhaps completely different codes of grants, might be appropriate if we can make that distinction without being in contravention of EC rules.
I would like the Minister to tell us why NADCORP have not succeeded in appointing a managing director. That is a scandal when one takes into account the time this corporation has been in existence. The Minister should spend a lot of time considering the internal market of the EC. I know that one of the reasons Travenol closed in Castlebar was that the company had another plant in France. They knew if they closed the French plant they would lose sales of their products in the French health care market because the French health care authorities discriminate, although they should not do so under the Treaty of Rome, in favour of firms with plants in France. That has to be stopped if a peripheral small country like Ireland is to have any chance of attracting industry. One of the places it can be stopped is in the internal market. The adoption of the Single European Act is very important for industrial development because it will enable us to do something about that type of discrimination.
Why have the CTT grants for marketing failed? The Minister said it was because of a reluctance of firms to meet the new criteria for a strategic marketing approach. I was responsible for those criteria so I am not criticising the Minister, but if the grants are not working one should ask why. One should not simply assume that the firms are stupid. Perhaps there is something wrong with the criteria I set, mea culpa. Perhaps we should change them or perhaps the criteria are such that they indicate to a firm they will only get a grant if they absolutely need it; in other words, if they are on the floor. If they say that, then the only firms to  whom we will be giving grants will be those which are so poor they will never do a damn thing. If we want to pick winners it means giving money to firms which are strong, but if we want to be selective with support we will give assistance to firms which are weak. This means we are in conflict with ourselves. I would like to know what is the legal status, if any, of the office of trade and marketing under the Minister of State, Deputy Brennan. Is it any different from the office occupied by my brother, Deputy Richard Bruton, other than in title?
Would the Minister care to speculate why firms have not used the smaller companies market? I was very keen on that but it has been a relative flop. The Stock Exchange should be asked why it is not working. They should be asked to change their rules or firms asked to change their behaviour in order to ensure that that market is a success. It was fine when it was set up and it looked good but it has not worked and we must ask questions about it.
We had to step in in two cases, when in Government, to rescue insurance companies, PMPA and ICI. There can be lots of arguments about whether we did the right thing but one thing is certain, we kept those companies on the road and prevented a banking crisis and, certainly, an insurance crisis in both cases. However, we introduced crisis measures to take the companies into a form of public ownership under the supervision of the court but crisis measures should not become permanent solutions. Running insurance companies through the agency of accountancy firms who are being paid very large fees for the privilege of running them is not the best way to manage such concerns. There is no reason why those two companies should remain in a form of State ownership for ever. I should like to ask the Minister to consider finding a way of selling those companies, or the State's interest in them, as quickly as possible. The recovery programme they have is good as far as it goes but it will probably go on forever if it is allowed. I suggest that the Minister should not allow it to  go on forever and that he tackles the issue as quickly as possible. That was not possible for the previous Government because the rescue had only taken place but the Minister may have a chance to do something about this in the next few months.
I should like to question the Minister in regard to his plans for the allocation of resources in industry. In the White Paper on Industrial Policy the previous Government published a graph which showed how we saw industrial funds being distributed between technology, acquisition, marketing, R and D, training, machinery and factory construction in 1988. That was the policy of the previous Government and I should like to know if it is the Minister's policy. If it is not his policy will he explain his policy to the House in regard to the allocation of funds?
What is the Minister's view about the level of electricity and telephone costs for industry? Are they too high? Is the Minister satisfied that he has enough clout to do something about those costs? Does he intend to continue with the cost-monitoring committee which I established? Does the Minister believe that that committee is strong enough and if not, does he believe it can be given further teeth to enable it to be effective in this area? Will the Minister explain the position in regard to the new role of the Minister for Agriculture and Food vis-a-vis the IDA? I understood that the IDA were responsible to the Minister for Industry and Commerce but it seems that the IDA will now have to report to two Ministers. They will have to report in regard to most of their work to the Minister, Deputy Reynolds, and will have to report in regard to the work of their food division to another Minister. Surely that will create a system of schizophrenia in the IDA. Will there be two separate budgets for the IDA, the IDA food budget under the Minister for Agriculture and Food and the IDA industry budget under the Minister for Industry and Commerce? If that will not be the case then the idea of transferring civil  servants from the Department of Industry and Commerce to the Department of Agriculture is a cod.
Mr. J. Bruton: The IDA should be under the control of one Minister. To have the IDA reporting to two Ministers is a recipe for a lot of trouble as far as proper control of expenditure is concerned. In my view AnCO should be under the Minister for Industry and Commerce and not under the Minister for Labour. The vask bulk of their work is concerned with industrial development and it is wrong that such a huge sum of money, some of which is being spent on projects that are being carried out by CTT, such as training and marketing, is being spent out of the Vote of the Department of Labour. That is not satisfactory.
I should like to make two suggestions to the Minister as far as the GATT round is concerned. My views on this topic are on record following the OECD meeting in Paris last year. Under the GATT rules there should be the ability for a citizen to pursue his or her own government if that government acts contrary to GATT principles. Consumers are ripped off whenever a government fail to apply GATT principles but consumers in member states have no means of hauling their own governments over the coals for doing so. There should be a possibility for third party complaints. If Japan and America sign a voluntary agreement in regard to semi-conductors there should be the possibility for Ireland, or Europe, to complain to GATT about that but as long as two countries agree at the moment nobody can complain. That is unsatisfactory. If Japanese semi-conductors are kept out of America they are diverted to Europe.
The Minister has accepted most of the decisions of the Review of Industrial Performance published by the last Government before they left office. I should like to raise one or two matters in regard to that. In regard to the data base being  established on value for money for industrial policy the Minister told me in the House recently that he does not have any intention of publishing that data base or allowing anybody, other than his own officials, have access to it. I realise that some of the material in the data base is confidential but I hope that an abbreviated or truncated form of the data base will be publicly available or available to Members of the House. We should know if we are getting good or bad value for industrial policy. It is a matter of public interest as well as being a matter of interest to the Minister and his officials. The Minister should consider allowing access to the non-confidential information.
When will the White Paper on science and technology be published? When will the consultants be appointed in regard to the rationalisation of agencies? I note that the Minister seemed to be pulling back from the idea that consultants should be appointed immediately and I am not so sure that he is wrong. It may be a waste of money. In my view the best consultant that can be obtained in regard to the agencies that should be rationalised is the Minister, possibly with a little help from one or two former Ministers for Industry and Commerce who should be readily available, if sought. We do not need people who will be paid huge sums, probably in dollars, to tell us what we already know. I suggest to the Minister that he take his courage in his hands and if he is going to amalgamate a few bodies he should do so rather than waiting around for consultants to tell him when he can do so. That is a suggestion and I hope the Minister accepts it in the spirit in which it is offered.
I am worried about the cutback in the allocation to the Irish Goods Council, an excellent organisation. The allocation made by the previous Government should not be cut. I understand that £94,000 is involved and I will not make a big deal about that. I wish to make an inquiry in regard to the grant to the Irish Productivity Centre. The previous Government gave that centre a grant to carry out studies on encouraging worker  shareholding in industry. The grant has been cut by the Government and I should like to know if that means that their study on worker shareholding in industry will be scrapped. If that is so the Government have made a wrong decision because a lot of money can be saved by good industrial relations and good harmony in industry. Work shareholding is one way of getting that.
Does the Minister agree that the IDA before giving a grant to a company — this was in the White Paper published by the previous Government — should ensure that the company have a proper quality control procedure within their own organisation? There is no point in giving grants for more expenditure to companies that are not properly controlling the quality of what they produce with existing equipment. I know the IDA do not want to have to do this because it amounts to their having to ask another question. The more questions they have to ask companies the more work IDA executives are involved in. However, given that they are dealing with a lot of money it seems foolish to be giving grants to companies that do not have a formalised quality control procedure. Quality control has developed to such an extent that there is a system right through from purchasing to sales with all the intermediate procedures. A grant should not be given to anybody who does not have a quality control procedure.
I should like to ask the Minister what co-ordination problems occurred in regard to the company development approach to which he referred in his speech. He said it did not seem to be working very well. What went wrong? I am sceptical about this because it involves the IDA becoming a sort of godfather who is involved very frequently with companies, pointing out their strategic interests. I do not hold the view that businessmen know everything; very often they do not necessarily know what is good for themselves, otherwise companies would not go bust. On the other hand, I do not hold the view that people in agencies necessarily know better. I would like — perhaps not in this abbreviated debate — to have a fuller report from the Minister on how the company development approach has worked. The IDA were extremely keen on the idea and they were going to do great things. Has it achieved much? From the figures the Minister quoted in regard to indigenous industries it has not been such a marvellous success. Perhaps it is early days but the Minister should give a report on the subject as soon as possible.
Mr. Keating: I also extend my good wishes to the Minister. I wish to make a few remarks on how my colleagues and I hope that the Minister will proceed. The areas that lie within his ambit of responsibility are germane to the economic wellbeing of the country and the Minister's success will lay the foundation for the next decade or two in relation to our economy and to the people who are lining up at the Passport Office.
A whole range of options and possibilities need consideration. Even though it does not fall immediately within the ambit of the Minister's responsibility, a priority in getting a national consensus for any form of action which the Minister and the Government wish to introduce will be the reform of this institution. It is not just a question of common sense, justice and correct procedure; it is also a way of ensuring that the people who look to this House — perhaps less and less — for leadership will believe we are serious in our intentions.
In regard to the development of industrial policy, I was pleased and interested to hear the Minister referring to the Review of Industrial Performance 1986 published by his Department. It is a very interesting document which, if I may say without disrespect to anyone, was unusually frank for a Government Department and, because of that, it received scant attention from other Government Departments or indeed from the Government. I am pleased the Minister seems to  be taking on board some of its contents. It is not possible to develop the theme of economic development unless one does so bearing in mind the need for social justice. The improvement of living standards and job opportunities will ultimately depend on the added value output of goods and traded services in home and overseas markets. That is a matter for enterprises in both private and public sectors, both of which can offer great opportunities if a number of conditions are laid down. One of those conditions is the concept of economic democracy: I am talking about participative shareholding and investment by workers in public sector employment.
There is a traditional attitude here to home ownership of which we have the highest rate in the industrial nations. There is also a traditional attitude in rural communities to the importance of owning land which should permeate the area of industrial development. Workers should be entitled to feel they could have a share in their enterprises, both public and private. If that is pursued logically and rationally it will not just bring about greater social justice, it will help to create an enormous momentum in terms of improving industrial development and success. At present, unfortunately, the conflict approach to which the Minister referred is implicit in the way we pursue industrial relations and the kind of major blocs which represent workers and employers. This is the antithesis of what we should be doing if we wish to build a consensus.
I argue very strongly that public sector employees who, because they are to some extent accountable to Government could give the lead, should be facilitated in having shares in their enterprises. In due course, my colleagues in the party and I will be spelling out in greater detail some broad suggestions in this respect. The concept of economic democracy is germane to a healthy society and good for us all from the point of view of creating a sense of belonging. It is also good for us economically because it means that people get some degree of reward in relation to effort and have a sense of  responsibility for the enterprises in which they work. The concept of economic democracy is essential.
It is past time that there was a dramatic and radical rationalisation and regionalisation of the wide ambit of State and semi-State bodies active in the area of industrial promotion. I am reluctant in a sense to go down this road because I am troubled by the fact that these bodies are, to some extent, easy targets and they are apparently expected to be passive and absorbent and not to answer back. At present State and semi-State bodies need a radical review of their function, purpose and role and their terms of reference.
Nobody in this House or in those bodies can deny there are significant areas where their remit has become very fuzzy. There is a degree of overlap and duplication. That aids and abets what I would call a buckshot approach to investment, the grant aiding and spending public moneys by the Government in the sense that a whole gamut of industrial endeavour is open for grant aiding instead of perhaps a much more narrowly focussed and selective approach by Government in consultation with the various interests deciding on the key areas of economic activity which we believe to be appropriate for job creation and, more importantly, to be areas in which we could achieve excellence. It seems nonsensical for us to enter into competition with Britain and West Germany and other countries in areas which we presently grant aid but in which we will never be able to fully compete. If you are going to focus the investment in key areas, for example, in food processing, you are going to have to take it from somewhere else and perhaps that is the hardest part of it but this buckshot approach, throwing money in every direction, is a waste of money and has resulted in a diffusion of State resources.
We should decide those areas which are essential to us as a nation, those areas in which we can achieve standards of excellence, those areas which serve key markets and which are not already being served, and those areas in which we have particular skills and educational  resources and go after them while by and large allowing the others to fade away. That will mean that we will have to review, rationalise and, where appropriate, regionalise the State and semi-State structures to cope with that targetting. That does not happen at present. There are a number of State and semi-State bodies which in some cases were set up decades ago and which have carried out excellent work in establishing a bridgehead or in meeting a temporary need and which are still in existence because, metaphorically, no one wants to put a gun to their heads. Nobody wants to say to them that their time has come and that they are no longer needed in the way they used be needed. A focus on industrial development does not exist at present. If one was asked to sum up the industrial development profile of this country they would have to say that it is very fuzzy. We are the fourth largest exporter of micro-technology in the world yet we are an agricultural country. We are supposed to be big in tourism but are we? Last year we spent £30 million in this area.
Where are we going to be when we grow up industrially? Until we answer that question it follows logically that the structures that are in place will be similarly confused by the lack of clarity of target and it follows that the resources we are applying in the various areas are either being mis-spent or misapplied or that the emphasis is not correct. We must know what we are going after and all other things may then follow.
Fundamental to our approach must be that we reduce drastically the over-regulation and the over-bureaucratic approach by Government to enterprise. I am not just talking about private enterprise, I am talking about semi-State enterprise. It is preposterous that there are semi-State bodies who in one week can receive between 70 and 80 pieces of correspondence from the Department of Industry and Commerce asking specific questions regarding their activities. That correspondence is unnecessary because the information will already have been supplied but it results in heads of staff  filling out ludicrous questionnaires to which subsequently people pay no attention. That is happening. Until such time as we reduce to a minimum this over-regulation and strangulation through this unnecessary paper work all we are doing is depressing people who will ask what is the point of their trying if every time they want to do something they are hindered and inhibited by a Department who, with no disrespect meant to them, may not necessarily have either the expertise, insight or the experience to know what the marketplace needs or demands. Again, from our point of view, there is a very strong need to reduce Government involvement in economic activity — State, semi-State and private.
I am convinced that there is room for a dramatic improvement in this respect and a vast overhaul of the duplication of work. I do not see any reason for several levels of auditing and several levels of accountability. For example, if there is an evaluation of the work of a semi-State body, another evaluation will take place by the Department. We could also pose questions on that matter and ask how well those evaluations are being done in view of certain disasters which have taken place in recent years but on this occasion I will not do so.
If we could row back on regulation and get the Government off the backs of as many people as possible, we would free up the sense of enterprise among people. The level of Government management of the economy in general terms is reflected at both national and local level. Government involvement in the economy is of the order of 70 per cent of national output. That is incredible. It is the highest single statistic of Government intervention in any democracy that I am aware of. It is continuing to happen. An incredible array of institutional structures are employed in running this country. It is incredible that a country of this size with a population that one could almost lose in, say, the city of London has more than 40 local authorities, eight health boards, God knows how many vocational education committees, 15 Government  Departments and a plethora of agencies and semi-State bodies, etc., spending a sum of money which is smaller in size than the budgets of many international companies which are run under one management. Unless that incredible house of cards is shaken down, we can imagine what will happen at the end of the day.
There has to be a strong emphasis on the development of all relevant areas of internationally traded services, such as financial services, tourism and a whole range of professional services. I have heard the Minister suggest this in the past. If necessary, the mandates of the various semi-State bodies must be looked at in order to give them that facility. Until recently those services were somehow considered to be inferior as regards their potential for job creation and economic activity and development. Of course there is no truth in that. Indeed, in many cases the argument perhaps is in the other direction. As a nation which invests heavily in education particularly we have the potential to give an outstanding quality of service. There appears to be a certain amount of indifference to the need to provide an improved climate for the development of internationally traded services using Ireland as a base. That indifference should cease and there should be a major commitment in that respect.
I would like to see a redeployment of public service personnel to the greatest possible extent in areas related to economic development and to the enforcement of public revenue collection, the elimination of abuses in the use of public expenditure programmes and the elimination of the black economy. This can only happen if and when there is some degree of reduction in tax levels. As the recent budget added 14 per cent in real terms or over £300 million to the level of taxation, this does not look like happening. The reason the black economy is a boom area is because high taxation levels are driving ordinary people into all kinds of gymnastics in order to avoid paying tax. That will continue to happen as long as the tax take is as big as it is.
 The extraordinarily high level of personal taxation has to be dealt with and the only way of dealing with it is to reduce public expenditure. There is no easy way around that but if we do not reduce taxation levels we are going to lose more and more money out of the legitimate economy. Estimates show that in 1985 the black economy was worth almost £2,000 million or 12 per cent of GDP. All the estimates will have to be hazy as no one knows precisely the size of the black economy but that is an estimate which comes from people who should know.
In the area of abuses in public expenditure programmes I want to draw attention again to the reports of the Comptroller and Auditor General which year in year out give incredible examples of systematic wasteful deficiencies in the way the Government spend taxpayers' money. In many cases it involves systematic fraud, deliberate falsification of documents by people in public employment. That is not my allegation; these are the allegations made by the Comptroller and Auditor General. I cannot understand why this is allowed to continue when we look every year at the same Departments, the same health boards, the same areas of Government misspending and abusing taxpayers' money and nobody held to be accountable.
I want to draw attention, in passing, to one very important paragraph in the most recent report which is 1985 — that is symptomatic in itself — of the Comptroller and Auditor General in which he says:
With the optimum utilisation of the resources now available, in my opinion it will not be possible to achieve an adequate level of audit examination in all areas of departmental expenditure and revenue on a continuing basis and the timely completion of the audits and accounts of some State-sponsored bodies and departmental funds. Bad as it was, it is now going to get worse.
I also suggest to the Minister that we should review all subsidies and grants with a view to targeting on need, whether that need be economic need in pursuit of the targets I mentioned already which  should be clearly defined or, indeed, targets in the areas of social justice. There is indiscriminate grant aiding, in some cases in direct contravention of our approach to employment, say, for example, agricultural re-equipment grants which automatically disemploy people. If we decide that is the road to go, fine, but it is indiscriminate and arbitrary. Nobody has thought about it. I want the lack of clarity in the mandate of public enterprises cleared up. None of them knows what it is at, none has clear targets to aim at and there is no absolute list of State-sponsored bodies available even from Government. That is because State-sponsored bodies, in my definition, are those who receive public funds, but that is not what the Department believe State-sponsored bodies to be. That is a different and more exclusive type of definition. We do not know where public money is being spent and, therefore, that money is not being used in pursuit of the targets for which this Government would claim to have a mandate. There is a lack of clarity in respect of the role, functions and financing of local authorities which are, or could be, enterprises. Perhaps they should be run as public utilities. At present they account for some 10 per cent of GDP, a very low rate of return on investment in indigenous Irish industry which obviously cannot go on because we will not get the investment.
I want to advocate strongly private sector participation in public infrastructural projects. I am talking here about investment not just by multinational corporations; I am talking about investment by ordinary citizens in pension funds — anybody who has a few bob to invest and there may not be that many of them left out there. That investment should be on a commercial basis. There should be no underwriting or guaranteeing by the State. It is an area of risk. If it is an investment opportunity with appropriate returns, there cannot be the safety net of the taxpayer once gain.
In broad terms, we have a major task to do if we are going to focus clearly on industrial policy, on the targets that at present are totally vague. I do not know  what we want to pursue industrially. We must create the structures to pursue those targets and that will mean major rationalisation of some of the existing State and semi-State bodies, putting the funds to pursue that into place and setting up structures which have clear accountability for those funds and actually monitor their effectiveness and efficiency.
I want to come back to the point on which I started. The very first thing this Government should do is to review this House, this institution, and cut out some of the nonsense and abuses that are going on here so that that will give a lead. In the next few weeks this party will be tabling a Bill to deal with one area of that abuse, that is the area of people who are still active in this House and at the same time drawing pensions as former Ministers. If we give that kind of lead, we can communicate our gravity of purpose and our genuineness of intent to the people out there, who may actually then begin to listen to us once again. Long ago they have turned off.
Minister of State at the Department of Industry and Commerce (Mr. S. Brennan): The Minister, Deputy Reynolds, has already addressed the major areas for which the Department of Industry and Commerce have overall responsibility. I will focus on the specific areas which fall within my formal area of responsibility, that is, trade and marketing on the one hand, and insurance on the other.
The new Office of Trade and Marketing is a key element in the economic planning of this Government. This is so because our starting point is that the economic growth we need must be export led. When we talk about going for growth we are talking mainly about exporting, selling more of our goods and services abroad. Marketing is crucial to getting that growth precisely because in the past marketing is where we have been weakest as a nation. We have been a production-led economy and to a very large extent we have neglected the side of wealth creation that marketing represents.
The House will be fully aware that this  weakness in our industrial approach has been pretty well documented. Over the past decade, we have had report after report singing the same tune, that marketing is our Achilles heel and that we must do something about it. We must turn our economy from one that is production-led into one that is market-driven.
The setting up of the Office of Trade and Marketing was a firm commitment by the Government that the time for talking about this problem has passed and that the time for action has arrived. Perhaps I could sketch out for the House the four main areas that I see the office concentrating on in its early days.
The areas are: firstly, to raise national awareness of the central importance of exporting; secondly, to restructure our export effort so that it produces the best return on the investment we make in it; thirdly, to reduce the cost penalty on Irish goods that undermines their competitiveness on international markets today and fourthly, to remove the obstacles to export growth.
The first area, the need to raise the profile of exporting, may strike some Deputies as surprising, but it is a very real need. To be frank, it amazes me how many people still do not realise we are now a fully-fledged trading nation and that we are three times, proportionally, more dependent on exports than Japan and nine times more dependent than the United States of America. Too many of us still tend to think that exports are a fringe activity, the icing on the cake, as it were, instead of seeing them as our lifeblood, which is exactly what they are.
We need business to be more export-conscious, so that more of our talent will be focused on exporting, to bring more companies into export trade and to persuade existing exporters to give it a higher priority. We need the public sector to be more aware of the real, practical needs of our export business. We need the semi-State sector to focus more on the possibilities of selling abroad. We need our educational system to gear itself to equipping more Irish people for exporting — most importantly, in the crucial area of languages. In all these areas my office have already begun initiatives to get more attention for exporting.
The second main task that faces the office is to restructure Ireland's export effort, so as to make sure that we get the best results from the very limited resources we have to invest. I would like to touch on three aspects of this restructuring this evening.
Córas Tráchtála, for which I have formal responsibility, which has been allocated over £24 million this year, is the spearhead of the State's effort in the promotion and development of exports. It is a State agency of which we can be proud and its track record is highly impressive. In seeking to maximise its contribution in the period that lies ahead of us, we need to ask some basic questions — questions that have not really been addressed since the agency was first set up in the fifties. What exactly do we want it to do? Where do we want it to focus its attention? Where is the greatest potential for State involvement in exporting, in the circumstances we are working in now?
These are the questions I propose to address through legislation for Córas Tráchtála, which is at present being finalised and which I hope very shortly will be brought before the House. The thrust of that legislation will be to focus the activities of CTT on the task of encouraging more Irish-owned companies to adopt a strategic approach to exporting. The emphasis will be on Irish-owned companies first of all, and on getting those companies to make a planned, long term attack on selected export targets.
Another agency provided for in these Estimates is the Irish Goods Council; the Government have provided £1 million for their activities this year. This body has for many years been working to raise the marketing competence of manufacturing industry that is geared towards the domestic market. I hardly need to remind the House of the importance of import substitution — it is, in effect, a hidden exporting market. Every pound of home  sales won against an imported product is a pound won for our balance of trade, just as much as if it had been won by exporting directly. An area of great potential development is in sub-contracting to major exporters, who at the moment source in Ireland a disappointingly low level of their needs, a level that is low when compared with international norms. This is a major concern of the Irish Goods Council and the office of Trade and Marketing.
I intend to discuss with the council the possibility of giving a fresh and added impetus to their very valuable work. It is a body that has evolved over the years in response to changing circumstances, and the time is now ripe to stand back and see if through restructuring the Irish Goods Council and redefining its role we can help it to do even better. I propose to set about that restructuring and redefining as a matter of urgency.
Another part of the restructuring task is to look for gaps in our export effort — and it is clear that we have already identified one. Deputies will recall that when I was speaking in the budget debate last month, I raised the idea of export trading houses, which I saw as a way of getting small new companies into the export business, and of providing services to bigger exporters in markets that were not top of their list presently.
I was very gratified by the highly positive response to this idea from the marketplace, and this response has encouraged the Government to press forward with the idea very quickly. Last week's Finance Bill provides that these trading houses will qualify for the 10 per cent rate of corporation tax, and indicated that investments in them will qualify for income tax relief under the business expansion scheme. These export trading houses will be private sector, free market entities, but they will be licensed by the State so that we can be sure they are effectively carrying out the role we see for them.
The third main area of concern to the Office of Trade and Marketing is the reduction of the cost penalty on Irish exports, the penalty which undermines  our international competitiveness. From an export viewpoint, our energy costs too much, our post and telephones cost too much, and certainly insurance costs are too high — just to give some examples. It must be a priority to search for ways of reducing this penalty, and my office are doing so. I will return to the specific problem of insurance in a few moments.
I am thinking of matters like the maze of documentation that has to be coped with, much of it unnecessary. Important progress is being made on this at the European level, and I am very concerned to make sure that here in Ireland our demands by way of documentation are no more than are fully necessary.
A major export obstacle that we have virtually ignored in the past, much to our cost, is the language barrier. If we are an exporting nation, we must speak to the marketplace in its own language — whatever that might be. Germany is, for instance, a vital market to us — yet the amount of attention we devote to learning German is pitiful. I am looking at what can be done to increase the importance of language teaching in marketing training. What we want to move towards is a situation where no-one will be considered to be qualified in marketing unless they are fully capable of doing business in at least one foreign language.
Those are the four headings under which the Office of Trade and Marketing is and will be working over the coming months, and I am hopeful that our efforts will begin to show concrete results very quickly. Let me turn briefly to the area of insurance, for which I also have responsibility.
The overriding function of Government in the insurance sector is, of course,  one of supervision — as a watchdog over an industry of vast economic importance and one that touches on the lives of every citizen. However, in the context of our national recovery, it is the issue of insurance costs that is most immediately relevant — and it is this matter I would like to touch on briefly.
As I mentioned a few moments ago, insurance is one of the elements in the cost penalty on Irish exports, one of the elements that undermine our competitiveness internationally. What we are talking about here is mainly insurance of employers' liability, which is reckoned to be the third largest overhead item in industrial costs.
I recently extended an invitation to the insurance industry to join with me in a partnership with the Government in an all-out concerted attack on insurance costs. Within the last week I met a delegation from the Irish Insurance Federation, and we agreed that both sides would sit down together and identify the key steps that must be taken to reduce claim costs and premiums levels in Ireland.
I am delighted with the highly positive response from the insurance industry to my invitation to work in partnership with them to get costs down. My aim is to put together a package of measures which will achieve significantly lower insurance costs — and with the help of the industry and the public I hope we can make some progress on that matter within months rather than years.
Mr. Durkan: Like previous speakers I wish the Minister and the Minister of State every good fortune in their offices be they for a long or short term and I assure them of constructive opposition from this side of the House.
In regard to my own area of responsibility, the food industry, I am particularly interested in food processing. The magnitude of this area was illustrated recently when the Minister for Food and Agriculture on Tuesday, 19 May, in reply to a parliamentary question, indicated that total processed food imports into  Ireland in 1986 amounted to £508.3 million. Price Waterhouse published a report entitled An Overview of the Irish Food Industry and Private Labour Marketing in April, 1986. Price Waterhouse seem to indicate that there is approximately a 30 per cent greater volume of imports in the processed food area. This indicates that the problem is somewhat larger than we expected or were given to expect.
At present we have a very highly sophisticated educational system both at second level and third level. We have a very skilled labour force readily available to us, a young population equally available and 250,000 people unemployed. It is a very stark indictment of our industrial policy and many other policies that we do not seem to be able to penetrate to the extent necessary to provide more jobs for our population.
We have progressed a great deal during the last 20 years. We have become a consumer society. Many of the products we were capable of producing at home years ago we no longer seem to regard very highly. Our option seems to be to go and purchase, and in many cases the goods we purchase are produced overseas and imported.
I experienced an example of this in the grounds of the House a few days ago. An old fashioned home made broom or sweeping brush made from heather and a handle bound into the head of it was being used to sweep the grounds of our national Parliament. Up to twenty years ago there was hardly a house in rural Ireland that did not have one of these brooms. Amazingly these items are still used but now they are imported from Portugal. That is surely an indication of our total inability to recognise areas where we can introduce import substitution. We do not seem to be able to home in on these areas and do something about them. This is my way of leading into the criticism many people have of the IDA and the way their system works. I know that the IDA have done great work and are continuing it and that they have a great number of successful enterprises to their credit but there is something wrong  when imports can come in such volume and in such variation for so long without an awareness and reaction from our people who might be interested in producing, manufacturing or processing. There is a gap somewhere in the communication system. There are many things which are easy to produce and for which we have a ready market and yet we do not seem to be able to identify them.
Various criticisms have been levelled at the IDA with regard to feasibility studies. Very often prospective manufacturers think that the bureaucracy to which they are subjected drags on too long and it ultimately breaks down their zest for the enterprise. Something should be done about that if that is contributing in some way to the fall out from the time initial inquiries are made with regard to new enterprises. In the food processing industry, for instance, there is a large number of inquiries but the number of enterprises that get off the ground is relatively few. One of the reasons for that is the slow procedure through which the various stages are processed and the time it takes for a response to come to the prospective processer. In our present climate we should lay special emphasis on that area. If a prospective manufacturer or food processor arrives with an idea it should be possible with the modern technology available to us to have a feasibility study carried out and to have the necessary grants paid towards worthwhile products. It should not be necessary to drag it on for a year or a year and a half by which time someone else in some other place may have found a system and may even be exporting to this country. This is an area which needs urgent attention.
I generally welcome the sentiments expressed by the Minister and the Minister of State. I would ask the Minister of State to clarify a speech attributed to him some time ago in which it is implied that CBF might be phased out or abolished or have its role in some way diminished. I note that that statement was contradicted by the Minister's colleague, the Minister of State at the Department of Food, but  I would like clarification of the proposals in that area. The role of the CBF is important and the role of the Department of Food is equally important. The development of the food industry is an area where the greatest strides can be made over the next few years simply because we have all the advantages in relation to the production of food and it is up to us to utilise them. It is also up to us to develop good quality products and to adopt an aggressive marketing stance like everybody else in the world. If we do not we cannot compete.
It is sad to note when one addresses a group of young people nowadays in any of our schools or colleges that what comes across is a defeatist attitude. There seems to be an acceptance among young people that they will have great difficulty in succeeding and that the State agencies will be slow to assist or advise. A general air of depression seems to permeate the young people. Such an attitude can become selffulfilling. If one says often enough that one cannot succeed one will eventually fail because of adopting that attitude.
Recently I addressed one such group of young people and I was startled at the magnitude of the depressed attitude which emanated from them. Maybe some members of the House say that we live in difficult times and that because of them we have no future. Such an attitude is damaging to society. We should adopt an industrial policy which would make it known to young people who will be coming on to the jobs market from the second level system that the opportunities will be there and that they are within their reach if they try. If an industrialist were to select a group of employees from two groups of young people, one with that depressed attitude, the people selected for employment would come from the group which consisted of positive thinkers who will ultimately be achievers. One of our current problems is that we have a dearth of positive thinkers.
Our industrial policy is a most important part of the foreseeable future. I would like to see, as Deputy John Bruton  said a few moments ago, greater co-operation between the Department of Industry and Commerce and AnCO so that the services of the industrial training authority can be brought to bear in such a way as to channel young people with their talents and the training and experience gleaned from AnCO into productive employment, to either set up in the industry themselves or to become involved in an industry. If we concentrated on that we could achieve a great deal more. There are countless opportunities in manufacturing of one kind or another in food processing and countless job opportunities are there. They must be right under our noses, yet our reluctance to participate and become involved is the cause of many of our problems at present.
I compliment the Irish Goods Council on the work they have put into existing small industries, nursing along small enterprises from the start and offering solid, constructive advice. The IGC are doing more to break the defeatist attitude I have just spoken about than any other agency. Like my colleague, Deputy John Bruton, I am sorry their budget has been cut this year. They give very good value for money, and I hope that in future those cuts can be reversed.
If it comes within the ambit of the Department, I ask the Minister for clarification on the abolition of juries and the Bill which was discussed at length in relation to which we all received considerable representations. Is it proposed to proceed with the implementation of the Bill? If so, when and what is the likely time schedule for it?
In relation to a more parochial matter, in my constituency of Kildare we have approximately 6,000 people unemployed at present the biggest proportion of whom are young because of the age structure within the constituency. Jobs are coming very slowly. We have a number of industrial estates which are well placed. One of them is on the main Dublin-Galway road and has been developed for the past couple of years. However, no industry is sited there yet and it does not seem to have the potential to attract one  in the very near future. Maybe it has that potential, I do not know, but I would like to see some action there. The area has suffered heavily from job losses in the past few years in that the meat processing plant at Leixlip which employed some 2,000 people some years ago has been closed for a long time. I ask the Minister to give special consideration to that area.
I was fortunate enough last year to travel to Germany with a group of colleagues. We found there an amazing lack of knowledge of our industrial promotion effort in certain parts of Germany. That was difficult to understand since Bord Fáilte are very well known in that area, Stuttgart, as are various other Irish promotional agencies, but parliamentarians had very little knowledge of our industrial promotion effort. The Germans were very anxious to find out more about our industrial policy and industrial opportunities here. Here I may sound parochial, but everyone likes to look after his or her own place and it would be an advantage if someone who has an opportunity to go abroad and meet politicians or industrialists of other countries could produce a booklet which would explain to the people they are visiting the opportunities that are available in his or her own place. It could be concise, not very expensive but produced in such a way as to get the message across. That is done in other countries. It has never been done here because it is not IDA policy to promote industry or industrial opportunities except on a regional or national basis. That is a mistake.
Mr. Kelly: I was struck by one of the general remarks made by the Minister for Industry and Commerce when he spoke about the duplication — perhaps I should call it the proliferation — of agencies and how he had plans to reverse this trend. I was astonished to learn from the figures he gave that 3,400 staff are involved in 20 separate institutions in supporting industry in one way or another. That figure seems incredible, but I presume the Minister knows what he is talking about. Agencies with small staffs may be roosting in rookeries of which I have no  conception, but for a country like this to maintain 20 separate apparatus in support of industry is ludicrous. I hope the Minister will be vigorous and successful in his efforts to condense that number.
I notice in the demeanour of the Government in the past few months something of the character of a bull in a china shop in the way they are approaching so far a rather limited range of problems. For example, their behaviour in regard to health cuts and to the protection of Border traders and so forth has been reminiscent of that of a bull in a china shop, but I must say of a bull with the right idea in its head. I am not being disingenuous when I wish them success in a general way in their efforts to cut expenditure and waste and in general address problems with more vigour than Governments formerly have felt able to do. If the Minister for Industry and Commerce brings the same bull in a china shop spirit to bear on trying to wind up redundant agencies he will have my warm support. I suggested here a couple of years ago that we should have a new agency, a board whose only function would be to wind up agencies. It would be an bord um threascairt bhord whose only criterion of success would be the number of agencies it succeeded in closing down.
The Minister spoke in general terms about this matter in a way I could only approve of and I am disappointed to find that a little later he spoke about the National Development Corporation in terms which suggest that they have his warmest approval. I hope I am not being unjust to him or to anyone in his Department or to anyone working under the umbrella of the NDC, but I suspect that we have here under our noses in the Minister's speech an example of the tenacious will to exist which is breathed into any State institution as soon as pen is put to paper to give it birth. I remember as a father going to nursing homes when my family were increasing in number and I was struck by a phrase that nurses used about how a baby had a stronger grip on life on that day than he had on the previous day and this at the age of two  and three days and so forth. They did not mean the baby had been ailing on the previous day; they just felt that the baby had got a sniff of the air of the world and was that much more determined 24 hours later to hold on to it. That is what happens with institutions and when I read the bland statements in the Minister's speech about the NDC I ask myself whether his will to cut down these agencies can be trusted and whether we can really make an act of faith in it.
Let me remind the House of the genesis of the NDC. They were spawned by the Labour Party. They were part of the deal made when they were in Coalition. The agency would spend £200 million or £250 million a year, or certainly that was the amount that would be put into the infant's pocket to see what it could make with it. Naturally, none of these geniuses had an idea of what this corporation would do. I begged, implored and harried them in this House and out of it to tell me of just one economic activity they had in mind. Naturally, gentlemen whose speciality is ideology must not be bothered with questions about concrete activities like whether they mean fishery, bog development or concentration on import substitution. Such questions were below the belt to an ideologist from that quarter. I asked that question over and over again in vain. Finally my party got hooked on this. It was part of the price we paid and ought not to have paid. I asked people in my party what they wanted from the NDC or in what respect that agency were going to provide a facility which our existing battery of institutions did not offer. If they were going to go into mariculture, did we not have An Bord Iascaigh Mhara which either has a function in that regard or could very easily be given a function without an entirely new institutional apparatus? If it was bog development or forestry development did we not have Bord na Móna and the forestry division? What were they going to do? That question was never answered. I used to get pitying looks from over there, from the like of one or other Deputy in the Labour Party,  as though I was really holding the place up by asking this simple question.
We now have the National Development Corporation. I see that their first full year's report has not yet been produced. Their activities seem to have been thin enough. I do not quite see what can be the delay in producing their report. The Minister has taken the corporation under his wing. He is like the hen on the old penny with all the chickens flocking around it. He has happily adopted this Labour Party chicken under his wing and is providing it with warmth, support and protection. Is there anything which the National Development Corporation is doing that Fóir Teoranta, the IDA, the Industrial Credit Company or one of the banks cannot do and, if so, what is it? If there is some interstice, some tiny space, between the meshes of the existing State agencies through which perhaps the odd firm falls, unable, for one small print reason to get money out of the IDA, or unable, for some other reason, to get it from Fóir Teoranta or from the Industrial Credit Company, would it not be an easier matter to extend the remit of one of the existing institutions in order to close that interstice between the meshes than to set up an entirely new organisation? I argued this point, I suppose, a dozen times in this House. Naturally it cuts no ice with my friend Deputy Desmond and his colleagues. I would have expected it to cut some ice with my own party. I was disappointed in that, as in other things. I would have expected it to cut some ice with Fianna Fáil, but no, the Minister for Industry and Commerce has quite happily enfolded this little day old chick into the warmth of his dusty wing. It will survive and thrive and tomorrow its hold on life will be stronger than it is today.
Regarding the National Development Corporation — NADCORP; it even has a little acronym now and I suppose even at this moment some natty little architect with a tweed tie is designing a stainless steel plate with a little logo with the word “NADCORP” neatly fitted beside it — the Minister said:
God be with the strategists. I remember the time when Deputy Gene Fitzgerald was always telling us about the Fianna Fáil Party strategy. It was all nostalgia for the world war which he could dimly remember his people talking about — everybody on those benches used to talk like that then — they could remember their parents talking about it at the time. They were like little Rommels — the word fell easily from their lips — they had a strategy for industrial development. The Minister continued:
I know roughly what a catalyst is and I know what a lever is but I am damned if I know where in the world of chemistry or in the world of metaphor outside chemistry one can use a lever to produce a catalyst. That confusion of metaphors is not really the point I am trying to make. Nonetheless it is important because, when one finds language like that, it is masking a confusion of thought. How does one leverage in other investors? An investor is somebody with spare money. He is somebody with money surplus to his day-to-day requirements which he wants to invest and make a profit on. If he sees something which will yield him a return he will put the money in without  any leverage from anyone. If he does not foresee a return he will not put the money in.
I do not know what return NADCORP envisages because I see, in the very next paragraph of the Minister's speech that he says it will be a more patient investor than most private venture capital companies, that it will be prepared to wait somewhat longer for a return on its investment. Of course nobody in NADCORP — as he takes down his hat and coat from the Office of Public Works hat rack in the evening, puts them on and goes off to the DART or to his car in the carpark to go home — will lie awake at night worrying about whether it is perhaps taking a bit too long for a return to show on its capital. It is not coming out of his pocket. I say that in no sense critically — and I hope it will not be understood in that way — of public servants and officials who loyally, faithfully, sincerely and honestly do a lifetime job — my own father was one of them.
I am not setting up as a critic of the Civil Service or public service mentality at all but I am saying that necessarily someone in public employment does not have the stimulus of risk on the one hand and profit on the other which an ordinary investor has. When I read that NADCORP, with one hand, will be leveraging in investors my reaction is that I am damned if I am going to be leveraged in by NADCORP if I am going to have to wait for a return until NADCORP's patience runs out. They will be doing that with one hand and with the other more or less twirling a daisy waiting for time to pass. Where is the sense of purpose in that? I do not expect the Minister of State, Deputy Brennan, to answer that off the top of his head. This is the first time I have spoken in the House in his presence. I should like to wish him success in his job but I would like to hear an answer from somebody. What is the point in talking about cutting down the plethora of institutional supports to industry while at the same time keeping alive this perfectly redundant socialist chick?
Deputy Durkan mentioned the food industry. I want to say a word or two  about that, not so much about the technique of the food industry as about a broader reflection which mention of the food industry brings to mind. The range of produce we export is so thin. I remember, and I have mentioned in here more than once, a deputation of Irish food exporters going to a food fair in, I think, Berlin a few years ago and coming back very deflated, saying that the level of variety, of quality, of attractiveness, of inventiveness in the food products they saw from the rest of the world in Berlin depressed them. They measured these products against the shapeless doorsteps of cheese which is our contribution to the European supermarket and said to themselves, “we have not yet arrived at the fair”. That is something which will take more than the appointment of a Minister of State to remedy.
I know we have a Minister of State with responsibility for food. Many Governments have been deluded into that idea, often helped along by the public who want a special Minister for this and that, but one will not solve a problem by throwing a Minister at it any more than one will by merely throwing money at it. It requires intelligent thought, sometimes from a long way back. It requires the turning over of the soil, perhaps deeper than one had thought of doing before. The reason Ireland has not arrived at the fair in the food industry is that Irish people have not sufficient acquaintance with the outside world. Their acquaintance with the outside world in too many cases, apart from a quick run to the sun in Spain or the Canary Islands, tends to be in the English-speaking States which are not distinguished in regard to food. In America a great proportion of the food is uneatable and certainly unenjoyable to the European palate. In Britain where I lived for years and where I still visit frequently the position is not much better. The standards of what one might call the food in the street, the ordinary common or garden restaurant, in both of those countries are lamentably low by the standards of continental Europe. Until Irish people  instinctively understand from personal acquaintance the standards which are taken as automatic, as natural and as self-understood in Holland, Germany, Belgium, France and Italy, we will not arrive at the fair about which these exporters spoke.
As I said, I visit Britain quite often. I sometimes work there under my academic hat and sometimes I shop there. When I visit English supermarkets the only Irish products I ever see, and I always buy them of course, are Kerrygold butter, of which I eat very little but I go through the motions of buying it anyway, and Irish cheddar cheese. There is no other Irish food of any kind, animal or vegetable, to be found in the average English supermarket. I also visit Germany a good deal for the same purpose and I shop there. In that country there are no Irish products of any kind to be found except a dusty bottle of Irish whiskey peeping shyly from behind a row of Scotch.
Mr. Kelly: We need not go into the brands. They are all made by the same people anyway. Deputy Joe Walsh, Minister for Food — I tend to lose track of the Ministers they are so numerous, but his name sticks in my mind only because of his public conflict with the Minister of State, Deputy Brennan, a couple of weeks ago — has a major job on his hands. It is not simply a question of ensuring hygiene with regard to the very limited range of products we have. It is a matter of making sure that a whole cohort, almost a whole garrison, of Irish people in the food production area have enough experience of living, which means eating and drinking, abroad in the countries into which we are trying to sell our products. They understand that what we take as being food will not interest the foreign palate. I have seen printed and I have heard foreigners say, although not in quite the same compact language, that if you want to eat well in Ireland you would have to eat three breakfasts a day. The level of food is very nutritious, it is  of the highest possible quality, bursting with proteins and carbohydrates and all sorts of good things but it is not very enjoyable.
The amount of innovation, inventiveness and variety shown with regard to Irish products is exceedingly narrow. That is the reason the home market is being taken over by foreign produce. It is not because we are not buying Irish. If you are spoiled enough as to want a certain variety of food and drink you will not be able to find enough Irish products as we have not got the range of products you would like to indulge in. I am not speaking as an epicure or as somebody who makes a god of his stomach. I do not do so and I am by no means expert on this, but I know from even the most casual expeditions into supermarkets here, in Britain, in Germany and also in Italy, that that is so. The average consumer abroad, even somebody who is not in a very high income bracket, has a far larger range of indigenous choice in food and drink in his own country than we have here. Until that is understood by Irish food producers there is no use whingeing and whining about us not supporting native industry and about import substitution being of high priority. I am sick hearing that; I have been listening to it for 20 years.
I want to say to the Government, with their “bull in a china shop” approach, which I salute them for because it is a bull with its heart in the right place, if they do not make inroads on quite limited problems in their first year they will not make inroads on them at all because events will catch up with them. I cannot foresee what events they may be but I remember from two stints as an office holder that events overtake office holders. Fatigue overtakes them. If jobs are left unfinished one week they will accumulate even more the next week. When colleagues are on holidays items on agendas have to be postponed and so on and suddenly the papers are talking about an election. The Government are over the halfway mark, coming up to the post and nothing done. They will realise  it is 8 o'clock and not a child in the house washed.
Mr. Kelly: May I say briefly in regard to industrial development that we ought to think not only of attracting foreign capital but also of attracting foreign artisans, foreign skilled tradesmen and in terms of personal tax incentives in that regard. When Louis XIV persecuted the Huguenots in the 17th century and drove them out of France it enriched the economies of every country in the surrounding areas, even as far away as Ireland. They brought skills with them which nobody else had. We should go out and look for people with skills which no-one in Ireland has even heard of or knows about. I do not care how much envy it causes but we should give them personal taxation incentives to settle here and make money and bring apprentices into their trade. That happened in the past — leave aside the Huguenots. Most of the clockmakers in Ireland are Germans — the Wadels the Schormanns and so forth. Every Irish country town has a German name over the clock shop. The pork butchers in Dublin came from Germany — the Eastmans, the Hafners, the Speidels and so on. Many German families came to Ireland to do such work. The English are behind a great number of our more successful country houses, hotels and restaurants. The fast food industry, although it was not so called in Italy, was largely brought here by Italians in the last century and the beginning of this century. I am not saying that we have to go out and look for people such as these but people can be induced to come and make a living in a place where they will do well. We should realise the importance of  spreading artisanal skills in this country which has a very low concentration of them, barely about the besoms that Deputy Durkan was fulminating about. Apparently, there is nobody in Ireland who can make a brush out of a handful of heather. We have to import them from Portugal.
We have a very low level of skill here. This is an area which country after country and report after report from the IDA have identified as a potential growth area for prosperity and for employment. The Minister ought to look at the possibility of setting up a scheme to induce the immigration of artisans and selected trades from other parts of the world, even from the Far East if necessary. I do not mind the dilution of the sacred Irish race; we have enough holy cows here without worrying about that one. We should consider taking that route not as a full answer to our problems but as part of the general battery of answers which any Minister sitting in the position of the two Deputies opposite will have to assemble.
Mr. Desmond: I am rather concerned about the framework of the Minister's speech. He indicated quite rightly and very understandably that about one-third of the loss of output of our domestic manufacturers in the past five years was due to a fall in domestic demand. I am concerned that the deflationary impact of this year's budget may well be greater than that which the Government either intended or was prepared to forecast. There has been a severe impact on the economy with the major reductions in the public capital programme over and above what was anticipated by the previous Government. One example is the loss of employment in the health services where the reduction in employment will be about 3,700 as against the figure anticipated by the Government of around 2,000, the take in taxation into the Exchequer being 38 per cent of total income as against an anticipated amount of 36 per cent, and the severe impact of policy changes in grants and construction. The deflationary impact on domestic  demand is proving to be a major strain on the economy. I am worried that there might be a further fall in domestic demand.
I appreciate that the last thing the Minister would favour would be a change in policy — he indicated very clearly at the annual lunch of the Confederation of Irish Industry that the Government had no intention of changing their policy — and I would be very worried that another £70 million or £80 million might be taken out of the economy in the next few months by virtue of the current review of public expenditure. That could have a further deflationary impact particularly on employment and domestic demand. For that reason I urge the Government to exercise caution. While I share the view that the current budget deficit should not exceed 7 per cent or 7.2 per cent of GNP, the jolt which the economy has suffered in the budget has been very severe and is percolating into the economy.
I wish the Minister well in his portfolio. I also wish the Minister of State, Deputy Brennan, well in his difficult but very exciting work. I have no doubt both Ministers are more than capable of meeting the intense demands which will be made on them in the months and years ahead.
I am pleased that the uncertainty of the last quarter has been removed in terms of Ireland's industrial involvement within the European Economic Community. I met a number of foreign entrepreneurs who were worried about the outcome of the referendum because they were, and are, dependent on exports. I am glad we decided so positively to remain in Europe and to directly participate in Europe because two out of every three jobs in manufacturing industries rely on exports and our agricultural industry also depends on exports. Our industrial environment has settled and there is now the prospect of stability and, we hope, growth. For that reason, the Minister can be assured of my support and the support of the parties in Opposition.
I want to commend those who were responsible for the Review of Industrial Performance, 1986, published recently by  the Department. It was an excellent review, a thoughtful document and well presented in terms of analyses. Those responsible for this publication were by and large public servants. This brings me to the point raised by Deputy Kelly. I must cavil with his comments on the National Development Corporation. He let the cat out of the bag when he said public servants should not be involved in this area because first they are not exposed to risk and second they are not profit oriented. He said they are not able to take risks, and therefore are entrepreneurial eunuchs. He cast them in that role. This shows his lack of knowledge about the work of public servants, the motivation of people in society and the involvement of public servants in industrial development.
I know men working in the IDA who are very profit conscious. I also know men who work for CTT who are very conscious of the risk factor in new marketing ventures. The fact that they might not own a brick in a factory or might draw a public service salary, is not a worthy reason to suggest that they must be cast aside as bureaucratic interferers or some kind of spawned ideological socialist mandarins who must be put down by Deputy Kelly. This is the kind of, what I would call ideological naivety which, with respect to my colleague in Opposition, he should have overcome after long years in this House, and more particularly having been a former Minister in that portfolio. He should at least understand the motivation of the people who do this work. I strongly reject his statement that public servants and people working in State-sponsored bodies are irrelevant in the drive for industrial expansion unless they have, to use his own words, the stimulus of risk and profit.
I welcome the Minister's report of the future work of NADCORP. The Minister has given a clear and balanced analysis of the prospects of this body. I remember the gestation pains which lasted about two years, but finally the Coalition Government gave birth to NADCORP. We set it up after a lot of discussion in this House and after a great  debate in Government. NADCORP is now in existence and we must ensure it has the resources needed to carry out its business, because I have no doubt it has a contribution to make.
I share the Minister's concern that there should be a rationalisation of the services involved in the industrial development drive. The Minister will have to be very tough in regard to this. I have always defended the work of the public service, whether in regard to the Department of Health or the Department of Industry and Commerce, but I appreciate that officials, like Deputies, fall prey to the occupational disease that once one is in a job and becomes a pillar of the organisation it is easy to coast and accept the conventional wisdom. The Minister, with his industrial background and his capacity to cut through bureaucratic concepts, should be emphatic about the amalgamation and rationalisation of a number of the agencies assisting industry.
For example, the National Board for Science and Technology might be offended at the suggestion that they should be amalgamated with the IIRS although it is a logical step and one which has been fought against for more than a decade. In 1981 when I was a junior Minister at the Department of Finance I suggested that amalgamation and all hell broke loose not least because of a fond affection in the Department of Finance for certain roles of the National Board for Science and Technology. I accept that both organisations have improved in recent years. The IIRS, under their excellent director, have sparkled in many ways but we must go forward. We have limited resources and skilled personnel.
One of the biggest problems I found in Government was how to place the limited pool of highly skilled motivated people who are prepared to contribute at executive level in regard to industrial development. We encountered that problem when trying to select people to sit on State boards. Very few have the time, the commitment or the personal resources to devote to such work in the national  interest. We must concentrate on amalgamations in our State-sponsored bodies. I wish the Minister well in his efforts in that regard. I have no doubt he will succeed in his efforts at rationalisation so as to develop our industrial expansion programme.
I welcome the Minister's comment about cowboy operators and their exploits. On Tuesday evening viewers of RTE 1 watched in amazement as they saw the saga of a stock fish deal unfold. On that programme, for which RTE should be complimented, we saw the capacity of cowboys to operate and milk the system. In the process a number of individuals gave our country a bad name because I have no doubt that programme will be broadcast throughout the world.
I should like to compliment the Minister on introducing the Companies (No. 2) Bill, 1987, in the Seanad. Between 1984 and 1986 many officials were involved in preparing that Bill. I urge the Minister to have the Bill processed speedily through both Houses because it will have a profound effect on business confidence here and on the drive to establish new industries. It will lessen the cynicism among the Irish labour force who are concerned that while their PRSI and income tax is deducted from their pay weekly others get away with gross abuse of limited liability and malpractice. The Bill is an ideal piece of legislation to be processed through Seanad Éireann. I hope it passes through both Houses this year.
My final comment relates to price control. I notice a considerable change of heart by Deputy Richard Bruton in regard to the pricing of petroleum products here and I was delighted to hear of that change. I raised the question of the alleged over-pricing of petroleum products in the House last week and I urged the Minister to have a look at this. I commend the Minister on his activities in regard to restrictive practices and I urge him to ensure that Irish motorists get the benefit of retail margins. There was no great need for the deregulating of price control in that sector. Abolition of price  control has meant that the retail margins have not been passed on to Irish people in a number of areas with the result that our inflation has not reduced as much as it should. The rate of inflation might be one half of 1 per cent lower than it is had we kept the reins on in a responsible way. We do not need massive bureaucratic inspections.
I commend the Minister on an excellent analysis of the work of his Department and I hope the various legislative measures which he mentioned and which are long overdue will be brought before us shortly. They are now five and six years overdue because of a succession of changes of Ministers in that portfolio and no Minister has had a real run at the problem in the past half decade, I hope the Minister will have the opportunity of introducing the many legislative measures which he has outlined to us in his address today.
Mr. Enright: I recognise the Minister's comprehensive speech to the House tonight deals with a very full brief and gives a very good outline of the workings of the Department. This is my first opportunity to speak since the Minister's appointment to the Department of Industry and Commerce and I wish him every success, happiness and health in his Department. The Minister has a most important Ministry. I think it is important in the interests of everybody in Ireland that Deputy Reynolds makes a success of it for whatever period of time he is Minister for Industry and Commerce. On behalf of this side of the House I wish to assure the Minister that we will be happy to co-operate with him to ensure success.
The first question asked by anybody who is considering setting up an industry, or the first question asked by a foreigner about to set up an industry in Ireland is, “What are the costs like in Ireland?” I believe if a person were to look at our costs it would be a major disincentive to starting a business. I would go further and state that our cost structure is downright deterrent. The Minister for Finance in his outline of budgetary strategy pointed  out that the reduction in the cost of borrowing money, the overdraft facilities and so on, is of major importance, and I certainly recognise that fact. I am certain that the Department of Industry and Commerce realise that the cost of borrowing money for any industry setting up in Ireland, whether it be a native industry, an American or European firm setting up in Ireland, will be a deterrent. Governments have only limited powers to change the situation in regard to overdraft costs because the whole monetary system is such that we have not the final say as the decisions are taken outside Ireland.
I will be brief as time is limited but I wish to raise the following points. Everybody in this House has to examine seriously the cost of staff. Many people in industry are moving in every way possible towards mechanisation and computerisation instead of employing more young men and women. The cost of PRSI is a major deterrent to anybody starting a firm here. The Minister knows all too well that every employer he meets must pay approximately 13.5 per cent and the employee must pay 7.5 per cent in PRSI contributions. To see 20 per cent of the cost of an employee's wages each week going to PRSI causes a considerable amount of antagonism to both the employer and employee. In the interests of Irish industry we must make a serious effort to grapple with this problem and to try to reduce the cost of PRSI as it is a direct disincentive to work here.
Secondly, we must deal with our rate of tax, which I know is not within the Minister's portfolio. People working in industry when they receive their pay see the rate of tax they pay, either 35 per cent, 48 per cent or the top level of 58 per cent. The rate of tax for an employee or an employer is a disincentive to work. If people are to put in real effort there must be encouragement but there is no encouragement at that level of taxation. I appeal to the Minister in the interests of all of us to reduce that level of taxation. VAT rates of 10 per cent and 25 per cent, which are far too high, affect a wide scale of items and will have to be reduced.  VAT is a cost on our industries and services. It is spread right across the board for everybody and it must be tackled. We are a small nation dependent on exports which are our life blood.
The PLV on industries, on small shops, supermarkets and offices is in excess of £21 in the pound valuation. It varies in different areas but £21 approximately in the pound would be the national figure. Anybody who has a fairly large industry, a supermarket, a small family shop or a decent size pub who is trying to make a living in a small country town and perhaps is employing one or two people has to meet the rate bill which is increasing each year. He has to pay this charge on a falling income. A large number of shops throughout Ireland are closed because the people who were employing workers are no longer able to do so. I ask the Minister to give serious attention to this problem. It is a nettle we must grasp. When we have succeeded in reducing our costs we will see growth.
I should like to refer to the part of the Minister's speech which deals with an order made earlier this week entitled the Restrictive Practices (Groceries) Order, 1987. I congratulate the Minister on making the order as it is essential. When in Opposition and in Government I referred to the desirability of such an order. This order has come about as a result of the review by the Restrictive Practices Commission. It bans “hello money” which is an abuse of the monopoly position of the supermarket chains in Ireland. I do not know the current statistic of the share of the grocery market held by the supermarkets. I believe it is approaching 55 per cent to 60 per cent but perhaps the Minister may have a more accurate figure. This is a serious matter in its own way. The introduction of this order is a step in the right direction. As the Minister has had the courage of his convictions to go some of the way, I ask him to go all the way by bringing in an order to restrict the size of any further supermarket development. I am advocating that no further supermarket development be allowed in excess of a given number of square feet, perhaps  18,000 or 20,000 square feet. We should try to curb the growth and development of these vast supermarket chains in this country.
I recognise that supermarket chains have been of benefit and that they provide an excellent choice of food for the housewife. It is a lovely environment in which a housewife can bring her children to shop and everything is nicely laid out with convenient trolleys to carry her shopping. However, the growth of these huge supermarkets have sounded the death knell for many of our small towns all of which have lost small grocery shops. The figures indicate that closures are at the rate of 3,000 per annum. Perhaps the Minister's efforts will help to retain family businesses.
Deputy Kelly and others spoke at length about the imports of food. We must recognise that the greatest proportion of foods purchased here are imported. This applies to biscuits, jellies, marmalade, jams, meat products, sausages and so on. They are brought here in big lorries with large trailers attached. The only work involved for Irish people in this regard is for the person who unloads the trucks, the young boy or girl who places the products on the shelves and the check-out girl who tots up the bill.
Many factories which manufactured this food here for the home market have closed and have not been replaced because of lack of demand. We had a “Buy Irish” campaign some years ago which did not meet with the approval of the EC because it was contrary to some regulation. I have travelled in England, Scotland and Wales and in many shop windows a slogan is displayed which says “Be British, think British, buy British.”“Buy Irish” was no different, apart from the fact that it was a much more simple slogan. Shoppers should be conscious of the fact that jobs will be provided only if they purchase foods manufactured in this country.
An excellent firm, Green Isle, was set up in Banagher in 1966. Unfortunately,  it is closing on 26 June. In the past they employed 150 people who were involved in processing vegetables such as peas, cauliflower, beans, sprouts and celery. They then moved into the meat line and produced burgers, steak and kidney pies, beef, vegetable and curry pies and sausage rolls. They have an excellent storage plant and meat processing area and the machinery is still intact. Batchelors owned it but they were taken over by Northern Foods. It was hoped at the time that Green Isle would be retained but that is not the case. I appeal to the Minister to investigate the closure of the firm because so much food is imported which had been manufactured and processed in Banagher. This town has considerable unemployment and the loss of these jobs will have a major impact. It employed only 50 people including management and staff. Perhaps the Minister will personally look into this matter to see if anything can be done to retain the firm and its factory. They had an excellent skilled workforce involved in food processing and for years past the farming community produced the highest quality vegetables for processing in the factory. Many of these farmers used the growing of vegetables as a cash crop and they will now lose this income. It is important to try to ensure that our food processing industries are retained.
I know that the National Development Corporation do not come under the Minister's aegis but I hope he will involve them in developing the food processing industry. Instead of importing so much food we should be exporting vast quantities of food. We must be able to process our own food which will provide employment.
When he visited Tullamore the Minister gave a most eloquent speech in regard to forestry, its development and the take-over by Bord na Móna. A new agency is to be set up which will have responsibility for forestry. I am disappointed that Bord na Móna were not given full responsibility for the development of our forestry resources. There is tremendous potential for job creation in the forestry industry and in its spin-off  industries such as the planting and felling of trees and in the use of timber in house building and furniture manufacture. I ask the Minister, who is young and energetic, to tackle this problem and to work in co-operation and in conjunction with his colleague who has responsibility for forestry. Forestry is an untapped source of wealth and offers one of the greatest sources of job creation. I regret that I do not have more time at my disposal but I am glad I have had the opportunity to make those few points.
Mr. Reynolds: First of all, I would like to thank all those who contributed to this debate. I thank them, too, for their very sincere good wishes to me. Having listened to three former Ministers on the far side, including Depty Desmond who was a Minister in the previous administration, I think there is a good appreciation of the difficulties and challenges which lie ahead in trying to get our industrial policy right and in achieving the rationalisation which inevitably must take place if we are going to invest in the right direction at the right time. It is important that there should not be the overlapping and wasting of resources which as the House generally appreciates does exist.
I hope to reply to the various questions raised but if I should miss any question, I would be only too delighted to give the reply later to the Deputy concerned. I will begin by answering the questions asked by Deputy John Bruton. I thank him for his constructive approach to this debate. He is a man of experience in this Ministry and he has had a lot to say. He referred to the PMPA and the ICI administrators and asked for my views in that regard. I have to say that both companies are going in the right direction. That will be welcome news for  everybody in this House. We will not go back and debate whether the previous Government made the right decision in relation to the ICI debacle but some people felt the banks got off the hook too easily. However, there were arguments for and against. Both companies are going in the right direction and I am giving an assurance to the House that the administrators will not be kept for one day longer than is necessary. The less State interference there is the better. Business should be allowed get on with an operation it carries on very well.
The philosophy of the National Development Corporation is repulsive to Deputy Kelly but I would ask him to refer once more to my speech in which I said quite clearly and explicitly that a total review of the moneys spent in the industrial area by all of the agencies involved will be undertaken. NADCORP is one of those agencies and its functions will be reviewed. I do not take the narrow view that just because a previous administration set up something it should be immediately dismantled by an incoming Government. I was a critic of many of the functions which were to be allocated to the National Development Corporation but as events have turned out it is a different animal to that which was born on the first day.
One of the major weaknesses in small indigenous industries is that they lack an adequate equity base. In this regard the National Development Corporation have a role to play. The question could legitimately be asked as to why some other agency did not carry out that role, why we had to have another agency to carry it out? That is a question which will be addressed in the examination that is to take place. I will repeat what I have already said. There was a role which was not being played by the Industrial Credit Corporation, the Industrial Development Authority or any other agency. One of the major weaknesses in small and medium-sized industries is the lack of an adequate equity base. One of the problems for an entrepreneur in establishing a business is where to get the initial capital investment because if he does not have  the equity the commercial banks will have no welcome for him. I do not exclude the National Development Corporation from the examination which will take place.
Mr. Reynolds: In a specific role but I would not give the National Development Corporation a role to play in many of the areas which were mentioned during the debate to set it up as clearly those roles can be carried out more effectively by existing agencies.
Deputy Bruton referred also to the European Mercantile Exchange. What we are really talking about is the establishment in Dublin, in the financial services area, of a futures market and he asked me to take a special interest in its development. I have done so and have met the principals involved and, if necessary, I will go abroad to meet some of the other people who are interested in setting one up. Many of the bureaucratic blockages are being taken out of the system and the tax incentive package which will apply to the international financial services centre in Dublin is the type of package such a market would be looking for and it is now in place. The project has been in the pipeline for between 18 months to two years. I do not think Deputy Bruton would disagree with me regarding my intention to make progress in that regard. He is a previous occupant of the Department which had control in regard to those bureaucratic matters. The examination which has taken place so far indicates that such a development has potential but we have quite a distance to travel before I will give an assurance that it will be developed here. It certainly would have a role to play and would be a marvellous addition to the financial services centre which is to be established on the Custom House dock site.
Deputy Bruton admitted and I have to agree with him that his efforts to establish small companies in the Stock Exchange  flopped. They did and he asked why. I know part of the answer, the rest I want to find out. In this connection I had a discussion with a former president of the Stock Exchange. I accept the views that he expressed but I think part of the answer lies with our psyche which was referred to in this debate. We like to own our own homes, our own land and our own factories, when we get something into our ownership we like to keep it. Perhaps history has made us a dependent race. It is an educational process on the one hand, it is part of our Irish psyche on the other. One thing is certain; in the fast moving world in which we live today we are better off loosing up on ownership and taking a national view. People will have to take a different view of ownership, otherwise we will lose our place in trying to trade internationally with the competition we have to meet. I have no doubt that many small industries here owned by families and by individuals hold that view very strongly.
However, one can look back at the successes, the real successes in Irish industry and business, for example, Ryanair. This was a man who worked for Aer Lingus, got out and got a small share of the company, was prepared to take a smaller and smaller share of a much larger and larger company. He could have stayed where he was, but he did not. He could have owned a lot more, proportionally, but how long would it last in the world in which he has to operate? The Smurfit organisation are another glorious example. Until we can educate those who do not see the world as small as those successful business people did, there will not be wholesale success. I have mentioned two out of many but, unfortunately, there are not enough of them. Until we come to realise that total ownership is not the be-all and end-all of development, we will have this reluctance to come to the small companies market.
I have spoken to the Stock Exchange past president and will be speaking to the new man coming in. There are a few companies under examination at the moment. By and large, what Deputy  Bruton said is true, the small businesses idea has not taken off, but I give him the assurance that anything I can do will be done.
The Deputy also mentioned Irish Steel which he said will have no more financial aid forthcoming from the Government. That has been a decision of the past Government and it is governed by the EC situation in steel. That situation has not improved to any great degree. Next Monday I shall be in Brussels for a meeting of the Council of Ministers on the whole steel quota situation. The problem has not been resolved to any great extent on the European scene and it will put Irish Steel to the pin of their collar to survive in the present stakes. I was with the management of Irish Steel three weeks ago. They are fully aware of the challenge which is before them. In fairness, they are meeting that challenge. The workers responded when the previous Government were making equity investment in relation to wage freezes and the breaking down of some of the demarcation lines. Some still exist and we cannot afford those demarcation lines in an industry which has to try to survive with the present over capacity.
Deputy Bruton also mentioned NET. The joint venture of NET and ICI is proceeding. It has taken a very long time and I have tried to put a date on the finalisation of the very complex financial negotiations going on between the commercial banks and the company. I hope within the next week or so to be announcing my appointees to the board of the joint NET-ICI company. That is another State industry and another company that certainly did well for a couple of years, but have come under pressure for the last 15 or 16 months due to oversupply on the fertiliser market. Third World countries, because of availability of cheap energy, are now beginning to manufacture even more fertiliser. There is a very difficult world situation and the sooner this joint venture gets running, the stronger will be the company. These two companies by merging and putting their company of Richardsons in Belfast into the joint venture with the Arklow plant would seem  to have chosen the strongest way to attract the market. I am looking at ways and means of improving productivity, in Marino Point in Cork especially, by more synergy between that and the existing Whitegate oil refinery.
I am already getting co-operation of other Ministers who control other State companies. Each and every one of these companies have operated in isolation in their own little independent republics. There is much synergy that can take place between many of the State companies. There is spin-off benefit for all. There has been this neglect of the capacity and the opportunities that have been there; there should be more interaction between them, rather than having them stand out on their own. The same criticism could be applied to many Government Departments. We cannot afford the luxury of the barriers that separate one Government Department from another, or one semi-State company from another. These barriers must be broken down and will be. That is the commitment of this Government.
The Deputy raised the question as to why the new Department of Agriculture and Food should have the IDA reporting to them in the development of the food industry. The IDA report to me. In relation to food development they will report to the Minister for Agriculture and Food. This works with single party Government, it will not work with Coalition Governments with two Ministers from two different parties. Already, the Minister of State with responsibility for the development of the food industry and the Minister for Agriculture have been to my office and vice versa. Within seven days of coming into Government the civil servants dealing with that area were transferred to the Department of Agriculture and Food. That is the sort of co-operation that is needed if this country is to share economic recovery.
Mr. Reynolds: There does not have to  be. The Deputy is trying to put even more blockages in the way. There needs to be a breaking down. There is no need for more and more segregation. We are all members of the one Cabinet sitting at the one table. We are adult people and the job can be done. If Deputy Durkan wants to wait for another month or two, he will see the fruits of this work. The approach to development in the food area will be sector by sector, not an overall generalisation — that would not succeed. One must home in on the various sectors.
A point was made by Deputy Kelly in relation to his visits to Germany and other countries. I do not know where he travelled to in Germany because it is not so long since I was in that country, albeit that my German interpretation might not be great from time to time. Irish products are on sale in supermarkets in Germany and good strong Irish companies, although not half enough of them, have made the break-through. However, we must build on the strength of those companies to penetrate that market. With regard to the beef trade the Goodman organisation have negotiated direct sale from Ireland to the supermarket shelves in Germany. That shows the way for the future development of that industry. I do not know where Deputy Kelly shopped in the UK and cannot understand how Bailey's Irish Cream was missed out — in the UK, Germany or elsewhere. I accept what Deputy Kelly says, that there are not enough of these products, but they are on sale there.
Mr. Reynolds: If we had ten more Bailey's firms around the world, we would be far better off. In relation to food processing, I take on board many of the criticisms and the job is there for development. We must think of the quality of the food and its presentation. Who will do the product development? I said before and people laughed at me that there is no point in trying to develop an Irish food industry if we do not recognise first that we need the product developed and need to respond to the tastes of the consumer in the marketplace. I cannot understand Deputy Kelly's point that we need three breakfasts when we are visiting hotels. Perhaps that is what is wrong with us, that we are overfed. One breakfast will do me at any time. Sometimes I would not even eat a half of one breakfast served up in Irish hotels.
Mr. Reynolds: ——because I believe they are bad value for money. I do not  believe that one has to eat in a dear restaurant to get the status one deserves. There are restaurants which are very good value for money.
Mr. Reynolds: There are not enough of these restaurants. Who is going to do the product development? We have plenty of young people who have served their time as chefs. They were sent to Switzerland and France. They are working in hotel kitchens every day of the week. If one is asking somebody to give them the taste housewives buy off the shelf, their chefs are the ones to do it. They have been trained in the food business. Unfortunately we go for production managers who have not been trained in the food business.
On the production side we have students with third level degrees in science and chemistry. The whole team must be put together. The Institute for Industrial Research and Standards have excellent people working for them. There should be more interaction between the institute and industry. This is another one of our failings. I think it was Deputy Desmond who said that when one goes to work in an institution or a semi-State body one is there for life. These people should not be there for life; they should be moved in and out so that the people in the institution or the semi-State body know what is happening in industry and the market place. These people should not be locked behind closed doors with their talent going to waste.
Mr. Durkan: What about the lack of knowledge among German politicians with regard to an Irish industrial promotion? Some of the Minister's colleagues were on the delegation who went to Germany. There was an amazing lack of knowledge by the German politicians in Stuttgart of the existence of an industrial promotion when the delegation were there.
Mr. Reynolds: There was not an amazing lack of knowledge in relation to an industrial promotion. The first message I picked up in Germany was the bad name the Irish economy had got from international press before, during and after the general election. This is what happened and the papers are there to prove it.
Mr. Reynolds: Fine Gael set a climate of defeat, of doom and gloom and that there were no answers to the problems of this country. They did the country a disservice. They have tried to do it again by saying that Irish people do not have skills. I challenge Deputy Kelly or anybody else in this House to deny that Irish skills in the computer-based industry are the best and highest in the world. Our third level educational infrastructure is producing the best——
Mr. Reynolds: If I wanted to introduce politics into the debate I would have started off by holding up Building on Reality. I know what I said on those benches in relation to Building on Reality. The greatest conflict imposed upon this country was the projection by Fine Gael of 3,000 to 6,000 jobs a year.
Mr. Reynolds: I heard compliments paid to my Department for the frank document they produced which gave the facts and the reality. I do not believe those projections were ever produced by public servants because they do not do things like that. Not alone did Fine Gael not achieve 3,000 to 6,000 jobs a year but they lost 6,000 jobs a year for the three years they were in Government. Despite their short term Government policy, that sort of deceit does not bear comment on.
Mr. Reynolds: I was asked to comment on that strategy. I want to return to the question of skills. Manufacturers in Germany are employing Irish science and engineering graduates. As Deputy Kelly has said many times in this House, our students lack training in foreign languages. We are only now introducing German into our schools. Anybody who looks at the German population structure will see what exactly is happening there.
It is quite clear that the Germans are looking towards Ireland as an investment base, firstly, because the Deutsche Mark is getting so strong and, secondly, it leaves their home market open to penetration for the first time and their exports are coming under pressure. This is why the Germans are going to have  to diversify their production bases into other currencies. They are looking towards Ireland not because of the grant structure but because of the availability of skilled labour — and if workers could speak German they would be even more sought after — and our political stability.
Many people might think that because we have had so many elections we do not have political stability. Irrespective of what Government were in power industrial policy was kept intact and not chopped and changed with each change of Government.
We have a low productivity rate. German industrialists do not blame, as some people in this House do, the lazy Irish workers for this. They believe that this is as a result of bad management. It is management motivation that gets the maximum out of Irish workers. German management in Ireland have shown that Irish workers, if properly led and motivated, can produce as good a productivity level as Germans. There are German companies in Ireland to prove this. We should stop knocking ourselves and start looking at our strengths and build on them. We should stop decrying everything that goes on.
I listened to Deputy Enright's contribution and I compliment him for some of the suggestions he made. I will certianly follow some of them up. He referred to the PRSI and the social contributions paid by workers. He should examine what is the average paid by wokers around Europe and he will see how well we come out. The confusion starts when one looks at the overall amount that is taken out of wage packets. In effect the overall level of what is taken out is the very high level of personal taxation. This is a big disincentive to workers to produce extra effort because they do not believe they are remunerated for it. We do not have high rates of PRSI and social contributions but we do have high levels of personal taxation.
Everybody knows that we are out of line with the rest of Europe in relation to electricity and telecommunication charges but at least I can say to this House that there will be no increases in electricity,  postal and telecommunication charges this year. This is a start towards driving down these costs that have got so badly out of line. It cannot be fixed in a year; it is going to take time.
With regard to the cost of interest to investors, industrialists and anybody else in business, our first priority was to try to get interest rates down. Nobody could stay in business if they continued to pay the real rate of interest that had to be paid. The real rate of interest may be 11 per cent but 11 per cent over the rate of inflation makes it impossible to run a business. The first priority of this Government was to tackle interest rates and the cost of money and to do that we had to take hard decisions to reduce public expenditure and the public sector borrowing requirement. That has already shown some benefits in the reduction in the inter-bank rate by 2½ per cent. We have a long way to go and hard decisions will have to be taken. I reaffirm, at the request of Deputy Desmond, that this is the reality of our economic problems.
We have to reduce public expenditure. I played my part in the first budget of this Government in reducing the allocations for industrial development by £18 million in the overall Estimate for my Department. That can bring more benefit to industrialists who are not necessarily successful because they have received a big grant. If one examines indigenous Irish industry, looks at the grants they get in a particular year and at the profits they have generated, one is startled by the fact that the industrial investment incentive package that has gone to indigenous industry at least equals if not slightly exceeds the profit margins those companies generated. Are we sending money round in circles in transfers that are defeating the purpose? We are spending a lot of money paying the people to administer these systems of sending money around in circles. What is needed is perhaps to bring down the cost structure of industry by lessening those grants. That is the reality which I set out clearly in my speech this afternoon.
If the State interventionist policy in industry in the way we have pursued it in  the last 25 years had been successful then we would be the most successful industrial economy around, but that is not the case. We have only 20,000 more people working today than we had in 1963 which was pre-industrialisation here. Surely it is time that somebody grappled with the problem? It does not matter which Government or which Minister are in office. We must face up to the reality of the price we have paid since 1963 to date, that we have only 20,000 more people working. We should not ignore the reality of what happened when we entered the Common Market. There had to be a shake out of traditional industries that did not move with the times and which did not modernise or diversify. We have to get our policies right and I will pursue that task for whatever length of time I remain Minister. I was only here for nine months on the last occasion. There is consensus that there is a job to be done and I look forward to more than nine months on the job this time.
In relation to the food industry, there are many reasons for our lack of development here. First, we never had the structures in place. We had four Government Departments and nine semi-State agencies involved in the food industry. That was nonsense because what is everybody's business is nobody's business. If responsibility is spread everybody does a little but nobody does the job.
The situation is worse in relation to developing the fishing industry. The first decision the Government took was to force the whole lot in together under one statutory head. This Department will get the full backing of the Government. The sectors in the food industry must be taken individually. The bacon sector should have been rationalised 15 years ago. It has started now on that road. With aid to the tune of 50 per cent from the FEOGA grants structure in Europe and 25 per cent maximum in Ireland, there is a huge incentive for somebody to do the job properly. The job must be done properly or we will not survive in the marketplace. Sector by sector is the approach to the development of the food industry. Deputy Kelly said that if one goes into a  supermarket one sees many foreign convenience foods. That is the case in many supermarkets but some very interesting developments have taken place over the past few years. In order to stop imports the whole area of convenience foods is being tackled. It is nice to see young people who were buyers in supermarkets going into production, knowing what the market wants in the line of convenience foods. There are a few very good examples of how successful that can be.
The problem in relation to the development of the food industry from the small industry point of view is that we have been production-orientated rather than market led. That is a basic weakness in small industry. We are great at producing things but we do not seem to stop to think about what the customer wants. We want to reverse that trend. Another major weakness in the small industry area relates to marketing. The initiative taken by this Government to address that major weakness was to set up export trading houses enjoying a tax incentive at 10 per cent which can bring into play, in their establishment, the business expansion scheme. Both CTT and the IDA have been trying to nurse small industry along. We cannot afford to wait. Export trading companies can do the marketing for all the companies who can produce good products but who can never break into the international marketplace because of their lack of financial strength and the expertise to do it. This is a concept which has worked successfully in Japan, Taiwan and Korea and we should try it here. It can make a good contribution towards eliminating a major weakness in marketing.
Mr. Reynolds: CBF are in charge of meat marketing and will continue to be in charge of it. The role of the Minister of State, Deputy Brennan, and the Minister of State, Deputy Walsh, was queried by Deputy Bruton. Minister of State,  Deputy Walsh, is in charge of the food industry with responsibility for CBF and neither Deputy Brennan nor I have involvement in the marketing of beef in CBF or otherwise.
I was asked by Deputy Bruton to clarify the situation in relation to policy formulation and new policy decisions in the Department of Industry and Commerce. Since Deputy Bruton was a former Minister for Industry and Commerce, I do not see his reason for asking that question and perhaps he was being a bit facetious. Even as he asked the question the Deputy would have known full well that the Minister for Industry and Commerce has the sole responsibility for policy development and decisions and even if he chose he could not delegate that responsibility. I have dealt with the food area reasonably well. It is a long haul, a very difficult job. Attitudes must change.
I agree with Deputy Kelly to a certain extent. We are lacking in tool making skills on the engineering side. Maybe we have not people of the calibre necessary such as are found in the German and other successful economies. I have mentioned this to the Minister for Labour, Deputy Ahern. Tool making is basic to engineering. I do not know whether that weakness exists but I fear that it does and if so it should be rectified by whatever means we have for that purpose. However, in many other areas we have no shortage of skills. A few years ago when I was in Government the Prime Minister of New Zealand was here and he had carried out an industrial review. I asked him what it showed. He said that it showed there were many areas that New Zealand should not be in. I asked what areas they should be in and he said that he came to the conclusion after the industrial review was carried out that if it grows New Zealand should be in it. He was saying in simple terms that their basic strength was in agriculture, food and so on and that was the area they should be in. When I asked him what he was doing with the sectors of industry that could not compete with low price bargains in the  Far East he said that he created the environment for closure. He did not survive the following general election, but that does not mean that he had not the right ideas about how to do the business. That is political reality.
We have an excellent opportunity in the aftermath of Chernobyl. All central Europe is beginning to ask where the source of the food is, whether it is frozen, convenience or whatever, and that question is going to raise its head more and more in the years ahead. Much of the Chernobyl fallout has destroyed or put serious question marks over the environment in which much of central Europe's food was produced. We have a golden opportunity if we keep our environment clean. The best marketing tool we can have is the green pasture image going into consumer markets like Germany and France. We have it and we must protect our environment to ensure that it continues. I do not see it as an insurmountable challenge. Sufficient young people are coming out of various educational establishments who can be trained in the food industry and their future is there.
I have looked at market research from a very large operation in the UK — I was going to say as a customer but I must say a former customer considering the job I have now. This company spend a great deal of money on market research which they say shows that in the next ten years there will be a return to fresh food and Ireland could not be better placed for that. An idea grew up in this country in the last 20 years that economy in scale production of food was going to succeed. That may have been true then. It is not true today because the market is there for quality food delivered on time, well packaged and well presented and priced. A recent survey of the grocery market in England shows that price slots in at No. 3. Quality is No. 1, reliability and consistency No. 2, price No. 3, and presentation comes up in joint third place. That is the challenge facing us. We will not succeed overnight. There is a job to be done and we have taken the right steps to face that challenge. I hope that my  colleagues in that Department will be successful.
Deputy Keating raised the philosophy of the semi-State sector. He said, rightly, that 25 years ago many semi-State bodies were set up with an objective in mind. The late Sean Lemass set them up to do a specific job and fulfil certain objectives which are not necessarily relevant 25 or 30 years later. This matter should be examined. I have spoken about co-operation between them. The semi-State bodies can produce a great deal more but somebody must push their heads together in order to help them achieve that. Cross-fertilisation of boards of directors is only a step. Making it happen is what it is all about. I have certain ideas in that regard that I am pursuing at Government level. I hope to see them through and that will be able to show exactly what can be done by better co-operation and somebody forging the heads of management of some of our semi-State bodies together.
Regarding the establishment in our embassies of trade attachés, CTT do the international marketing. This is not the time to create new positions and new posts. Embassies could take a more active role in the promotion of trade abroad and so far as we can assess how their roles can be made more effective in the marketplace that will be examined. This is not the time for the establishment of more and more jobs. We need redeployment of the skills and the people.
Deputy Durkan asked when the Courts Bill will be introduced. I expect my colleague, the Minister for Justice, to make an announcement in this regard in a week or so. The Bill will have an impact on employer liability.
Two Deputies contributing to this debate mentioned the price of petrol, diesel oil and fuel. Petrol, oil and diesel prices went out of line in this country in the latter part of 1986. I am not jumping in for a quick solution to that or getting into an argument about the abolition of price control. It is easy to say with hindsight that the wrong time was chosen because we are entering an era of falling world oil prices. We must be vigilant in  that regard. I am not looking for a temporary solution but for a long term solution as to how we can get the benefit of a collapse in world oil prices which we have not been enjoying. Perhaps prices are inching up somewhat but they are not expected to exceed $18 or $20 a barrel. I am carrying out an evaluation of that and when that is completed the House can be assured that whatever action I can take to redress it will be taken.
Let me give an example of the spin-offs of higher petrol and oil prices. The Irish economy is being charged $244 million more for its products than the French economy is at the moment, exclusive of all taxes. Various factors are involved in that. We have more distribution margins than France has. There is a difference of distribution in the marketplace because we have a small market. I could make a similar comparison with the Greek economy. However, there is one difference that is not explained and that is the one I am homing in on. The matter calls for bigger decisions and actions than just a quick call across the House on price control or some such matter. It is more fundamental than that and I am looking at the fundamental aspects.
Regarding regulation and deregulation, anybody who knows me knows that I abhor red tape and bureaucracy. Export documentation costs £200 million plus to this economy. This nonsensical running around having to produce an export licence where some agencies will not accept a carbon copy or a photocopy of it means that you have to bring the export licence from A to B to C. If you are exporting from three different ports somebody must drive to one port with that export licence and then drive with it to the next port and the one after that. The whole range of export documentation retards any entrepreneur who is trying to get into the international marketplace. If the Single European Act means anything it means that we are on the road to rationalisation of trade, but we have a long way to go in that regard. At the moment I have a task force examining export documentation not alone for  the cost which can be redistributed in the economy but for the management time and the nuisance of having to run around in circles. We live by exports, our whole future is bound up in them.
The world does not owe us a living, we have to go and earn it. It is the duty of Government and any Minister to remove all those obstacles. Export documentation is a glaring example of something that has never been tackled in this country. Does anybody realise the benefits that can be brought to bear on this economy by so doing? That is the philosophy of this Government's approach to economic recovery and management. We are going to break down the barriers existing between various Government Departments and semi-State agencies. There will be total co-operation between 15 sitting around the Cabinet table because, in management terms, that is what it is all about. We all play on a team. We do not play an individual role. There is no place for anybody who plays an individual role with the challenges, the obstacles and the real problems confronting this economy at present.
Mr. Durkan: Perhaps the Minister could clarify a matter he raised himself in winding up. He said that many people thought the banks got off lightly in relation to the Insurance Corporation of Ireland collapse. Could the Minister clarify exactly who carried the burden or financial responsibility in that insurance collapse?
Mr. Reynolds: The Deputy knows as well as I do why the ICI collapsed. The position is as straightforward as this:  there are two administrators in there but, as I have said, they will not be there one day longer than necessary. The company are back on the road to recovery, on the road to showing a profit, small though that may be in relation to ICI. My approach is that there is a place for them in the marketplace, that the State should not be in the marketplace except where it cannot be avoided or where it has to fill a vacuum.
Mr. Reynolds: The Deputy will have to ask the Minister for Finance. I have to close now. I am not running away from the question. The Deputy knows as well as I do that I would not know the cost to the taxpayer off the top of my head.
Mr. Reynolds: Question Time is available to the Deputy if he wants to raise it there. I raised the matter because I was asked to answer questions. I have answered them in so far as I could. If I have left out anybody along the way I will be only too glad to give them the information sought. I am here to be as constructive as possible and the debate was constructive. That is the way we want it to continue. In the final analysis I should say I will do the job and I will give it my best shot.
|Last Updated: 13/09/2010 22:43:53||Page of 70|