Wednesday, 8 March 1989
Dáil Éireann Debate
Mr. Cullen: One positive thing that has been highlighted by this debate is the lack of legislation from the Government side over a wide range of areas. Not enough emphasis has been put on this fact. Because of the creation of the single European market, the need for legislation over a huge range of Departments cannot be underestimated. It is not sufficient for us to be forced to implement this type of legislation when 1992 arrives. The need for legislation is great and it should be introduced now and over the next three years. That is the clear message coming from the debate on this Bill. If something is not done we know what the consequences will be. It is not enough for the Government to tell everybody else in this country to be aware of 1992 if they are not fulfilling their legislative role. The Government should lead with legislation and not come from behind to introduce legislation when things are already occurring due to the lack of legislation.
I am still confused with the Minister for Finance's response last night to the whole question of competition and the introduction of Articles 85 and 86 of the Treaty of Rome in this Bill. I simply cannot understand what other method the Government might be considering. The international sector of our economy is already operating under the rules of Articles 85 and 86 of the Treaty of Rome. I cannot see any benefit, particularly for a small open economy like ours in introducing some other form of anti-competitive legislation. The type of legislation operating in Europe at the moment is more than adequate for our immediate requirements. The main thrust of such legislation is correct——
Minister of State at the Department of Industry and Commerce (Mr. S. Brennan): The view of the Government is that the optimum arrangements for economic development and planning for the completion of the single European market would be as follows: first, to put our economy on a sound footing by restoring order to the public finances and by maintaining business confidence, second, to pursue a series of strategies in targeted economic sectors, based on improved competitiveness and on exploiting our natural advantages as outlined in the Programme for National Recovery, third, to use enhanced European Community Structural Funds to upgrade our infrastructure and, fourth, to help improve the competitiveness of the productive sectors to meet the challenges which will face us between now and 1992 and thereafter. We have put in train a fairly sound strategy to deal with the completion of the single market. The Minister for Finance spoke yesterday on the wider national measures involved. I will concentrate my remarks on the areas that touch on my own Department, indeed where appropriate, on the specific measures suggested in the Bill before us.
I am not very impressed with the somewhat fragmented set of measures set out in this Bill. I reject the contention in the explanatory memorandum that they constitute an integrated set of measures to prepare the economy for the single European market. The fundamental changes in economic performance that have taken place over the past two years will help Irish business to take advantage of the increased opportunities and to cope with the greater competition that the completion of the internal market will bring. I will give some examples of the results of that improved performance. In 1988 output growth in manufacturing was more than 10 per cent. This was the second year in a row in which industrial output exceeded 10 per cent. Contrast that with growth in low single figures during 1985 and 1986. Of even greater importance, the implications are that output growth is becoming somewhat more broadly based with many of the more traditional sectors dominated by  indigenous firms now showing a significant rise in output. It is in the indigenous sector that we need to concentrate our efforts. The picture is more dramatic in exports. In the Government's first year in office exports increased by £1.5 billion. In our second year in office there was a further increase of £1.6 billion, making an accumulative increase over two years of £3 billion. That is an increase of some 30 per cent in our exports in that period. Here again, indigenous companies have participated strongly with their exports growing at about twice the rate in 1988 compared with the previous year. We were very fortunate in that the growth from exports has not just come from international firms based here but has come to an increasing extent from indigenous firms. The trade surplus in 1988 was of the order of £2 billion. This compares with a surplus of £1.6 billion in 1987 and it is has nearly trebled the 1986 surplus.
So far as employment in industry and in internationally traded services is concerned, 19,500 new jobs were created during 1988. These figures are based on a detailed employment survey conducted by the State industrial promotion agencies. If the net increase in temporary employment is included the total number of new jobs created in 1988 well exceeded the average annual target of 20,000 set under the Programme for National Recovery. The end of the year surveys by the State agencies also point to a modest increase in the total net number employed in manufacturing and international services at the end of 1988. This confirms the results of recent labour force and CSO quarterly industrial employment surveys which showed a stabilisation in manufacturing employment and an increase in the services area. Projections from independent forecasters such as the ESRI, the Central Bank and the OECD suggested that there will be a further rise in manufacturing employment during 1989 which reverses the continuous downward trend which has been going on now since 1980. This increase is taking place notwithstanding the growing  practice with manufacturing companies of contracting out services such as catering, security, maintenance and the general downward European Community trend in manufacturing employment.
Industry spends about £9 billion a year, £4.5 billion of which goes on Irish raw materials, £2.5 billion on wages and salaries and about £2 billion on overheads. Over 200,000 people are directly employed in industry and probably as many again are employed in service activities directly related to industry. As the House will be aware, we have a very active programme in operation in the whole area of import substitution. The Irish Goods Council, who do a very good job, have informed me that there is approximately £1 billion of products being currently imported that could be manufactured almost immediately in this economy by existing industry and, perhaps, by fresh industry. We are working very hard to ensure that those particular companies come on stream.
There has been a significant improvement in Ireland's cost competitiveness vis-á-vis our main trading partners during 1988. Labour cost competitiveness has improved as a result of the moderate wage increases negotiated under the Programme for National Recovery. In the UK annual pay increases are currently of the order of some 9 per cent. Ireland's rate of inflation for 1988 is about 2 per cent, three times lower than the UK rate and lower than average OECD and EC rates. Interest rates for prime borrowers are currently 8 per cent in Ireland compared with 14 per cent in the UK. Further progress towards improving competitiveness was achieved through the enactment of the Courts Act, 1988, which should have a moderating influence on liability insurance for companies. The year 1988 has also seen a reduction in the cost of international telephone calls and electricity prices for business users fell by an effective 5 per cent.
I mention the above statistics to point to the marked improvement in our overall economic fortunes and international competitiveness. I know from my own extensive contacts with business people  in my present post that they have become more confident and more optimistic about investing in the country. Of equal importance they are looking increasingly towards mainland Europe for export and for joint venture possibilities. Once we looked consistently towards Britain and our economic fortunes, as the House will appreciate, were inextricably linked to the UK. While we still have strong economic ties with the UK — and it is still a major market for us — our recently sustained differentials in interest rates and inflation point to a growing economic independence within the context of the European Community as a whole.
This augurs well for the good performance within the single European market. I am not saying the UK market is any less important to us. Indeed, as 1992 bites we will increasingly find that the UK market, which is our major market, will come under increased competition from international firms from America, Japan and so on. In that context we need to be on our toes to hold our share of the UK market.
Industrial policy is an important element of our overall economic policy and has been under continuous review since the late seventies. A further review is required this year in accordance with the 1986 Industrial Development Act. It seems to me that there is little disagreement at present among the major parties in the House on the direction industrial policy should take. Differences where they do exist are confined to matters of emphasis or priority. The view is well exemplified by the amendments prepared to the Industrial Development Act, 1986, in the Bill at present before the House.
I should remind the House that the broad goals of industrial policy are: first, greater concentration on the development of internationally competitive indigenous industry — we have made some progress in this area in the last few years, second, promoting an overall environment conductive to business development — the House is well aware of our progress in that area regarding interest rates and inflation, correcting  finances and so on, that are bringing about the environment which is a central part of this policy; third, better value for money from State industrial incentives — the House will be aware of the moves that have taken place to rationalise agencies and so on; fourth, better targeting of incentives to address areas of perceived greatest business weakness, for example, marketing and management development — I will say more about that before I conclude; fifth, employing science and technology more effectively to develop new industrial products and processes; sixth, policy instruments to be more directly employment related — all of us in the House would wish to be able to draw a tighter line between policy instruments and the employment which results directly from those decisions; seventh, greater concentration on developing sectoral strategies and approaches to maximise industrial potential — the House will be aware of a number of sectoral strategies already announced; and eighth, clearer formulation and direction of policy by central Government.
I am glad to say that we are making substantial progress in achieving these policy goals. There are now clear statements of policy, our industrial legislation has been updated, our incentives and development programmes have been refined, the business environment has improved and agency rationalisation is in train. Sectoral strategies, for example, in food and electronics, have already been published and more are on the way. Greater resources are being devoted to science and technology initiatives in areas such as biotechnology, industrial materials and so on.
I do not see the amendments suggested in the Bill before the House as particularly valuable in strengthening industrial policy and, indeed, I would say that many of them are unnecessary. The first proposed amendment calls for the inclusion of material in the Triennial Review of Industrial Performance which would detail the shift in State support from fixed assets to marketing and research and development. This material was provided  in the 1986 review of industrial performance and it will be included in the 1989 review. I do not think we need to amend the legislation as the information will be provided in any event.
As regards the industry budget, the direct State expenditure associated with industrial development has fallen significantly since the mid-eighties. For example, the IDA's capital grants budget has been cut by one quarter and the building budget by three quarters. Moreover, the proportion of the reduced industry budget earmarked for marketing and product development has increased by one third and over half, respectively, mainly at the expense of reduced assistance for fixed assets. This shift is taking place. Tax concessions in the area of leasing and capital allowances have been curtailed and export sales relief will be replaced for all manufacturing companies by the 10 per cent rate next year.
Cuts in the budgets of the State industrial promotion agencies have already forced major changes in grants policy, differentiating between greenfield and expansion projects. For expansions the new policy involves a grant rate of 25 per cent, the abolition of training grants and a greater degree of repayability. Average fixed asset grant rates approved for industry have fallen by nine percentage points since 1985.
A further amendment proposed requires the Minister to report to both Houses of the Oireachtas on the establishment of independent regional development authorities to “prepare, implement and monitor development plans for each region in the context of the Structural Funds”. The arrangements for the preparation of plans for Ireland's receipts under the funds are already well in train and have been announced publicly by the Minister for Finance. The regional dimension to the planning process is catered for by the establishment of the seven subnational working groups and advisory committees whose work is already well advanced. Accordingly, I do not see much merit in the proposals in the Bill in this regard.
 Another amendment relates to industrial costs and requires the Minister to report to the Oireachtas every three months. As I have already outlined, substantial progress has been made in making industrial costs more competitive in European terms. Other than in the area of transport — which will be addressed under the Structural Funds Programme — I believe that industry is generally satisfied with the progress we have made in this area. The whole question of costs is continuously monitored, as the House will be aware, by the industrial costs monitoring group which operate under the aegis of the Department of Industry and Commerce.
In relation to the setting of statutory targets, as suggested in a further amendment, for industrial development performance by the year 2000, I am not convinced that this would be particularly useful. The overall target for industrial employment has been set under the Programme for National Recovery at 20,000 extra jobs per year on average over the ten year period 1988-98. The target in the programme has the backing of the employers, the trade unions and the Government. It is an ambitious target, nevertheless it is a realistic one.
A number of other amendments are proposed, the combined effect of which is to encourage an increase in funding of industry through equity rather than through grants. As a general principle, it is the policy of the State industrial promotion agencies to seek to increase the proportion of equity funding in all projects. As a general practice, all grants are matched with equity or equity equivalent. Project executives ensure that the best use is made of the business expansion scheme and other sources of third party finance towards this end. Moreover, the general cutback in grant rates has forced  companies to finance an even greater proportion of their needs from equity. Management developments grants are now being used to assist small companies to bring in management personnel from particular disciplines with specialised expertise, e.g. marketing and finance, appropriate to the needs of small companies. For these reasons I believe that the amendments proposed in this general area are not necessary.
Section 13 of the Bill seeks to amend the National Development Corporation Act, 1986, by giving the corporation a power to form or assist in the formation of regional investment funds for the purpose of making equity investments in projects or businesses. Under this provision it seems to be envisaged that it will be the funds rather than NADCORP which will take the individual investment decisions. If NADCORP's activities were to be extended to enable them to form or assist in forming regional investment funds — and this would probably imply a substantial NADCORP investment in such funds — such an important change in their activities would need to be catered for by an addition to section 10 (1) of the NADCORP legislation which sets out their objects rather than section 10 (3) which is concerned with ancillary operational powers. It is, however, very clear that such an object, which would involve investing money in a fund rather than directly in an enterprise, would be substantially at variance with the existing 12 objects of NADCORP as set out in section 10 (1) and would run counter to the whole tenor of the National Development Corporation Act.
Currently NADCORP hold over 50 investments in commercial enterprises with a number of other investments which have been approved awaiting completion. As is clear from their annual reports there has been a wide regional spread in NADCORP's activities. The criteria applied are those of commerciality and employment generation. It is clear that the amendment proposed  would serve to reduce the criteria currently applied by NADCORP and would weaken NADCORP commercially——
Section 14 of the Bill proposes to include Articles 85 and 86 of the Treaty of Rome in Irish domestic legislation. This is not an entirely new idea — the suggestion that our legislation be changed from the present “control of abuse” system to a “prohibition” system was considered by the then Restrictive Practices Commission, now the Fair Trade Commission, in their 1977 study of Irish competition policy. The matter was also raised by Deputy Bruton during the debate on the Restrictive Practices (Amendment) Bill in this House in 1987. Arising from this debate the then Minister asked the Restrictive Practices Commission to undertake a detailed study of the respective merits and disadvantages of the “prohibition” and “control of abuse” systems. A considerable amount of work has been done by the Fair Trade Commission on this study. However, legal advice is awaited from the Attorney General's Office in relation to certain aspects of the study.
The House is aware that last month there was a lengthy discussion here on the Enterprise (Competition and Consumer Protection) Bill which was sponsored by the Progressive Democrats. That Bill also proposed, among other things, that Articles 85 and 86 of the Treaty of Rome be included in domestic legislation. I do not wish to repeat what was said on that occasion. However, I will say that merely including Articles 85 and 86 in domestic legislation was not found to be the cure for some of these ills. In addition a prohibition system modelled on the provisions of Articles 85 and 86 of the Treaty of Rome is likely to be costly and bureaucratic if one takes into consideration the systems and procedures currently operated by the Commission of the European Communities in exercising its functions under these Articles.
 The administrative practice of the Commission provides for a procedure enabling parties to an agreement to seek a declaration from the Commission that their activities do not come within the scope of the competition rules. Notification of agreements, decisions and concerted practices is made to the Commission for the purpose of seeking a decision either than the conduct is not caught by Article 85 (1) at all, which is called the negative clearance procedure, or that while it is caught it may nevertheless benefit from exemption under Article 85 (3). No examption or negative clearance may be granted unless an agreement has been notified to the Commission. Depending on the complexity of the complaints of any given case it may take the Commission one year, two years or more to reach a final decision.
For the sake of expediency, many cases before the Commission are concluded by way of informal settlement, notably where the undertakings involved voluntarily eliminate any objectionable practices. In fact the Commission normally takes a dozen or so formal decisions each year whereas the number of informal settlements is usually several hundred. It is clear from this that the administration of Articles 85 and 86 is not without its problems.
It is accepted that current competition legislation may not be perfect. However, merely to import Articles 85 and 86 without a full and complete assessment of all that this would entail would not necessarily be the correct solution. If new legislation is to be put into place we must try to learn from the problems encountered by the EC in implementing Articles 85 and 86. The Fair Trade Commission have been asked to examine the merits and disadvantages of both systems. When this study has been completed the necessary information will be available to enable an informed decision to be made on the advisability of changing our legal system. I would expect that the report of the Fair Trade Commission would be available later in the year and we should perhaps  wait until then before deciding where to go.
Having dealt with the amendments proposed in the Bill, I should like to make a few other comments. As Deputies will be aware, exports of industrial products from Ireland fall under two broad headings — those from multinational companies operating here and those from indigenous Irish industry. My primary focus in the Office for Trade and Marketing is on the latter grouping.
Córas Tráchtála are at present working to a target of raising the contribution of exports from indigenous companies from £2.2 billion in 1987 to £3 billion in the three year timescale of the Programme for National Recovery. CTT estimate that in 1988 exports from indigenous exporters increased by around 15 per cent to over £2.5 billion. I recently held a meeting with the board of CTT and I agreed with them that they should adopt a target for indigenous export growth this year of a fresh figure, over and above last year's exports, of £400 million, keeping us well on target for the £3 billion figure in 1990. I should like to take this opportunity of thanking CTT for taking that target on board. It is a very ambitious target of an additional £400 million and I am confident they can deliver on it. In the longer term we are aiming at an increase in indigenous exports to £4.5 billion by the mid-nineties and a doubling of Ireland's share of the Community market. At present we hold 1.2 per cent of the total EC market. My target is to double that by the mid-nineties to a figure of 2.4 per cent of the entire EC market. That kind of achievement would substantially transform the Irish economy, particularly in terms of jobs which come from indigenous industry. I know that the House would support that target and encourage industry to go out there and make it happen.
The main point I should like to make is that while setting targets is necessary it must be accompanied by practical policy measures. We have put a number of these in place in recent months. On being appointed Minister I recognised that many of our smaller and medium sized  enterprises simply did not have the expertise to win markets on their own and for that reason I introduced the special trading house scheme. That scheme has been a resounding success. Eight trading houses have been licensed to date and they have targeted export sales of well over £100 million during their first three years of operation. I expect to issue further licences in the very near future. I should tell the House that a number of these are very exciting applications which will considerably add to our exports.
The special trading house scheme is designed to put in place a new corporate animal. Provided that corporate body purchase from small Irish manufacturers and sell the products abroad, they can then avail of two particular tax incentives. The first is the 10 per cent rebate which is currently available only to manufacturing and ancillary activities. The second is the business expansion scheme fund. I am confident that the special trading house scheme which is at present a success will come to be a major player in developing Irish exports.
I am also in the process of finalising a national marketing plan. I am doing this with the assistance of the National Marketing Group which were announced by the Taoiseach and myself some time last year. Among the measures on which I expect the plan to make recommendations shortly are the roles of marketing and language training in education. I note that these areas feature also in the Bill before the House this evening. These measures will, by their nature, bear fruit in the longer term because nobody has any doubt at this stage that if we are serious about winning a market share in the European Communities we must improve our language capability. I hope in this national marketing plan to make some specific proposals as to how we can make a quantum leap in that direction.
My colleague, the Minister for Education, has already made substantial progress improving the syllabus and switching away from the more academic side of language training to concentrate on the more practical elements. The  House, I know, will encourage her in that regard.
I spoke earlier about the import substitution drive and should like to remind the House that the levels of imports into this economy are still running above what is acceptable. Something like 70 per cent of everything sold here is imported. That is a figure no other European country would tolerate. The European average is less than half that. We do not have a majority share of our market-place and most European countries do. To an extent we are out of step.
Mr. S. Brennan: Surely the Deputy would join me in suggesting to Irish industry that the import level, which is currently very high and is well over half the market, should be gone after by Irish manufacturers——
Mr. S. Brennan: We should be careful that we do not send out any other message, or imply that imports cannot be substituted. There is much excellent business  right on our doorstep. One does not have to dash out and get into exporting immediately.
Mr. S. Brennan: I am pointing out to Irish industry that there are business opportunities on our doorstep. I would not like the Deputy and myself to send out the opposite message, that imports are all right, that we need not take them on. We must never stop that battle of taking on imports and trying to replace them by Irish manufactured goods. The day we do that, even in the name of the Community, is the day when small Irish industry will stop picking up opportunities and running with them. In that context, it is an important point that I stitch into the debate.
To meet competition in the single European market, we must do everything in our power to maximise these exports. Our buoyant export performance and our record trade balance are proof that Irish industry can meet and match the best in the world.
In my working day I spend much time talking to Irish industrialists and meeting with them. There is an air of confidence in Irish industry just now and I can assure the Deputy that from the services that are available and the products I have seen being manufactured and put out by Irish companies just now, there is no need for us to apologise to any country in regard to these products. There is plenty of business out there for the products which are as good as any I have seen anywhere in the world. There is absolutely no reason we cannot win even more of the market share.
It is a good time for manufacturers to try to crack the international market  places. I have spent much of the last two years encouraging them to do that and to win an additional share of our own domestic market, as well.
Mr. Lowry: I welcome the opportunity to speak on this Bill which, once again, underlines the exceptional initiative, foresight and ability of my colleague, the author of the document, Deputy John Bruton. Last evening in the House the Minister for Finance, Deputy Reynolds said that he rejected this Bill. However, he did not reject the individual proposals contained in it. In fact, he put forward no arguments against most of the individual proposals. He said the Government would tackle these issues in due course. I contend that the whole point of the Bill is to avoid delays inherent in dealing with the Bill in due course. The Minister of State, Deputy Brennan, is tonight adopting the same attitude in that he has not addressed the issues in the Bill. Effectively, he stated that he agreed with the principal contents of the Bill, but rather than accept it, the Government want to do it their own way and in their own time.
Last night, the Minister Deputy Reynolds' only substantial objection to the Bill was on the grounds of style, not content. He thought the Bill lacked coherence and was a hotch-potch of measures. This criticism is totally invalid. Even if his criticism were valid could I remind him that the real world is not arranged in neat lines and that the real economy is not coherent in the bureaucratic sense? The single European market will affect every aspect of our economy. Any legislation that inhibits efficiency must be changed if we are to maximise our benefits from that market.
If we wait to take action on any issue until, as the Minister would seem to suggest, all the measures have been organised in neat, coherent lines, we will never do anything. I predict that the Government eventually will have to implement all the proposals in the Bill and, unfortunately, they will take their time. If they implement them now they will be working to the benefit of the economy within two to three months. If, on the other  hand, the Government continue to reject this Bill, they will eventually implement the same measures but in a haphazard way and over a much longer period, probably for up to five years. This will result in valuable time being lost.
Let me indicate what will happen if this Bill is rejected. The reform of higher education will be delayed; the establishment of a roads development authority will be delayed; the reform of our competition law will be delayed; the development of language teaching and second chance education will be delayed; the effect of promotion of long-term leasing of land will be delayed; the giving of effective tax incentives to people to invest their savings in productive business will be delayed; the introduction of a new dynamic to State companies by selective sale of shares will be delayed; and the introduction of effective tax concessions for private investment in research and development will be delayed. If all these urgent issues are dealt with in this Bill, they will be carried through quickly. If the Bill is not passed, these matters will be left to various Government Departments in pending files and pending trays.
All the measures proposed by Fine Gael in this Bill rise from a coherent economic philosophy. That philosophy says that Ireland needs to put more emphasis on the development of human resources and brain-based activity. The proposals in the Bill on higher education, research and development, agricultural leasing, industrial policy, regional authorities, continental languages, second chance education and banking spring from the desire to shift resources towards brain-based activity and the development of human resources.
The Fine Gael economic philosophy is also one which emphasises freedom and competition as the best way to maximise economic growth. The propoals in the Bill on cutting business costs, on the possible sale of shares in State companies, on strengthening competition law and on shifting aid for industry away from grants and towards private equity are all ways of promoting greater competition and freedom within our economy.
 It is now clear that a dramatic new environment awaits consumers and producers after 1992. The removal of a whole range of non-tariff barriers such as frontier red tape, closed public procurement and a plethora of differing national product standards will lead to an immediate downward impact on costs but this is only a primary effect — there is much more. Above all there will be a new and pervasive competitive climate in which all the players, manufacturing and service companies — and indeed consumers — can exploit new opportunities to maximise the use of available resources.
The principal impacts will be reduction in costs and increased competitiveness, improved efficiency in companies, increased competition, innovation from increased research and development which a larger market can justify and increased economic activity resulting in anything from two to five million new jobs in the Community. While some of the gains from the internal market will occur almost automatically, the vast majority require changes in the behaviour of the economy's main players to achieve maximum impact. These challenges will only be taken up by companies if they have assurances that competitive behaviour is adequately policed.
A strong competition policy will be an essential part of the European home market of the nineties if the market is to function properly. Benefits for business will include economies of scale and the potential gains vary significantly in relation to industry. The manufacturing industry should have cost savings from economies of scale. The bulk of these savings will come from the restructuring which will follow the opening up of a market of 320 million consumers. Benefits for consumers will include price levels and profit margins for a given product. Competitive pressures tend to trigger downward pressure on prices and convergence of prices lowers profit margins so that they are artificially sustained above competitive levels.
The internal market, by liberating cross-frontier trade flows, will create the  necessary competition. Prices to consumers are estimated to drop by 6 per cent, even more in highly taxed countries like ours, and there will be a greater choice available to consumers.
For companies costs and prices are just two of the components of their competitive strategy for the nineties. Today, more than ever, the capacity of businesses to develop new forms of organisation, to penetrate new geographical markets, to invent new products and processes and to establish brand image are what create a competitive edge. Among these, innovation is crucial because it is the key to the revitalisation of traditional sectors which are able to transform certain traditional areas such as textiles and steel into high performance industries. It is the essential ingredient for lasting success in the rapidly expanding high technology sectors. Of course these benefits will not appear at the wave of a wand. To bring them about many changes are needed, not least the gearing up of business strategies to meet the greater challenges of the new markets.
If the single market is to succeed so must business. Most important, business must keep the pressure on Government to live up to their 1992 commitments. Companies will not launch themselves into major strategic choices without evidence of political commitment. Delays, muddled decision-making, obscure compromises and derogations—in short, failure to seize the political opportunity available today—will result in the missed market opportunity of tomorrow. Europe's greatest market opportunity is within our grasp but unless the Government assist business to prepare for the new environment, we will simply have prepared the ground, by removing the barriers to trade for outside multinationals, to take advantage of our weaknesses. We as a nation will not be in a position to take advantage of the massive new market being opened up.
To benefit we must be prepared. This Bill is progressive and decisive. It is necessary because the idea that all economies within the Community compete with each other on a level playing pitch is far removed from reality.
In support of section I of the Bill, it is obvious from survey results that, in looking for new opportunities, there is still evidently a strong tendency for Irishowned companies to confine their interest to the United Kingdom. A number who look beyond the United Kingdom seem to look at the United States market next, before thinking of mainland Europe. Of course, the great mental block we have about mainland Europe is mainly due to the language differences. Part of this is the arrogance of the English language: we assume we can go anywhere in the world and find someone who speaks English.
That is fine so far as it goes, but it puts definite limits on our ability to work and do business in the rest of Europe. The notion that all Germans speak English, for example, is simply untrue. This complacency of English-speaking people about languages is in direct contrast with the Dutch. Dutch people know that they can hardly travel more than 50 miles without having to speak another language. Dutch people are generally fluent in other languages because they have to be — they have turned necessity to their advantage.
Some of the consequences of our linguistic inability are quite tragic in human terms. This decade has witnessed the return of large-scale emigration of young people. Of course, it is a positive thing for people to move around the world but, if it proves to be more than temporary for the people concerned, we cannot be happy with what is happening. What is worse is that instead of emigrating to France or Germany, most, for language reasons, are emigrating to America and Australia. At least in Europe, Irish people who find jobs are legally entitled to be there, and they are only one or two hours' flying time from their family and friends in Ireland. There  is also the thought that at least some of the tax they pay to European Governments finds its way back to Ireland through European funds. As 1992 approaches, the opportunities for qualified Irish people to find work on the European mainland — whether as teachers or architects or in any other area — will be opened up completely. The only obstacle remaining will be the need to speak another European language.
In business terms, the US market is thought of by most Irish business people as our second export market for language reasons, despite the distance, extra trade barriers and currency fluctuations. As long as the language problem remains as disastrous as it is, we will be entering the internal market with one arm tied behind our back.
This Bill highlights the need for a better foreign language service in education and industry. Ireland is on the fringe of Europe. There is a great need for us to bring our talent to the Europeans, not vice versa.
In three years' time our markets will be fully open to European trade. If we are to avail of the full open market, our knowledge of European languages is vital in areas such as advertising, marketing, negotiations, law and contracts. Our European politicians must be able to communicate with their European counterparts, especially outside official governmental chambers, where the real decisions are made. We need more language teachers and resources in education, especially in the areas of German, Spanish and Italian. We must provide training courses for business students in modern languages; and we must make greater use of our language institutions and centres in providing courses for anyone wishing to get involved in European trading, and grant more scholarships for courses abroad for Irish people which allow for day-to-day contact with a language.
 The provisions contained in section 6 of the Bill would ensure that the Higher Education Authority would be required to make provision for second chance part-time education for those who may already have been employed. Second chance education is essential if we wish to ensure that those who have been unemployed for some time make a fresh start in the workplace.
The most urgent task facing us is the need to build up the country's resources in specialised skilled labour and technology in specific fields. Both of these point to the key role which needs to be played by the education system. If we are to take all of the talk about the new information economy seriously we will have to start thinking about our educational institutions playing a role in the economy, as crucial as that played by banks in a capital economy.
One of the major elements in the tremendous post-war economic growth in southern Germany was the development of a first-class higher education system. Our education system apparently is of very good quality by international standards in relation to the amount of resources spent on it. However the amount of resources devoted to research and development within the education system for example cannot compare with European levels. Strangely, the European Community avoided assisting the education systems of poorer member states until recently, with the exception of technical colleges. Spending on education has traditionally been considered as social spending with the education system not being seen as forming an integral part of an economy's infrastructure, but new horizons are now opening. However, as a result of a ruling in a test case brought before the European Court by the Commission funds from the Social Fund may now be used in funding education.
Another positive development is the introduction of the Comett programme to foster co-operation between industry and universities. Education is more important than training for our economic development. Training provides very  specific knowledge or skills which can easily become obsolete given the pace of change in today's world. Education on the other hand should equip people with the fundamental abilities to analyse and organise which can then be used in absorbing quickly new information and mastering changing circumstances. Irish education is quite weak in developing creative thinking, initiative and organisational abilities and these skills are just as important as the more technical skills.
In conclusion, this Bill contains a coherent package of provisions based on a coherent policy. It is not, of course, exclusive. Additional provisions may be included by way of amendments on Committee Stage. Fine Gael would welcome such amendments and we ask the House to support this Bill so that we can get on with the job of preparing for 1992 in an expeditious, planned and co-ordinated fashion.
Minister for the Environment (Mr. Flynn): I welcome this discussion on the Bill before us in so far as it draws attention to the need for preparation in all aspects of our national life for the opportunities and challenges of the single market. This is a matter of particular concern to me because of my responsibility for planning and co-ordination of the provision of physical infrastructure to prepare the economy for 1992. This involves ensuring that our approach in this area is comprehensive, that facilities are not duplicated and that requirements in particular areas of infrastructure are met.
It is my responsibility to see that changes take place as rapidly as is economically feasible and that developments in the different areas of infrastructure are consistent with one another. While development of adequate infrastructure is a key area of our preparation, we must of course, consider our preparedness right across the board. Anything which serves, so to speak, to raise consciousness in this area is to be welcomed.
That said, I would have to query, without in any way wishing to detract from  the proposer's good intentions, whether a piecemeal collection of legislative amendments of this kind would make any real contribution to our preparations for 1992. In the case of the main provisions of the Bill which affect my Department, sections 3 to 5 and section 8, I would have to go further and say that I consider them to be inappropriate or unworkable.
Before dealing with the Bill's specific proposals to amend the law on physical planning, I feel it necessary to engage Deputy Bruton on the nature and purpose of the planning system and planning control. In what was an original and interesting contribution to Second Stage debate on the Local Government (Planning and Development) (No. 2) Bill, 1988 last December, the Deputy posed a number of fundamental questions about planning. Unfortunately, time constraints did not allow me to respond to them on that occasion, but I do so now because I believe the issues involved are relevant to the approach to physical planning underlying the present Bill.
In the course of that contribution, at columns 2014 to 2028 of the Official Report of 15 December 1988, Deputy Bruton suggested that planning is intrusive and creates rigidities, and that we now have very unwieldy planning mechanisms. He suggested that the system involved the imposition of the views of the few on the many. Deputy Bruton argued that the primary objective of planning is to prevent developments which are intrusive or which cause nuisances to other people, and suggested that this might be achieved, in certain cases at least, by leaving regulation to be effected by means of restrictive private convenants between residents of an area and people operating commercial or other activities which could cause interference.
My principal reaction to this argument is that it involves an excessively negative view of the role of physical planning. Deputy Bruton emphasised the major purpose of planning as the prevention of development which is intrusive or which could cause nuisances. I, however, take a much more positive view of the purpose of physical planning. I believe that its job  is to achieve the orderly development of areas, in accordance with acceptable standards and the requirements of the common good. I would not accept, as the Deputy seemed to suggest, that development can be left to the operation of market forces. There is a valid role for the public sector in regulating and promoting development so that it occurs in a wellordered fashion.
The existence of different forms of development control in all European countries is a clear indication that we are part of a broad tradition in believing that development must be subjected to certain public restraints and controls. Indeed, the key EC Directive on Environmental Impact Assessment, the purpose of which is to ensure that development takes place in accordance with acceptable environmental standards, presupposes the existence of development control procedures in all member states.
The Deputy argued also that planning is intrusive and creates rigidities. I do not accept that this is the case. Our planning system is generally based on the principle that permission for development should be refused only where there are serious objections on important planning grounds, and I am satisfied that this is broadly how it operates in practice.
It is also difficult to accept the Deputy's suggestion that planning involves the imposition of the views of the few on the many. Our planning system is an open one which allows public involvement in the formulation of development plans and in the determination of planning applications and appeals.
Section 3 of the Bill proposes amendments to the Local Government (Planning and Development) Acts, which would reduce the time within which planning authorities must decide planning applications, and impose time limits also on the determination of appeals by An Bord Pleanála. The important balance involved here is between the right of a developer to a quick decision on his application or appeal, and the need to allow  sufficient time for the proper consideration of a case, having regard to the requirements of proper planning and development and the common good. While I appreciate the desire for speed in planning administration underlying section 3 of the Bill, I consider nevertheless that it errs too much in that direction and could consequently inhibit proper consideration of cases.
Section 3 (1) would require planning authorities to decide planning applications within six weeks, instead of the present two months. This, in my view, is not acceptable. I believe that two months is a reasonable time for deciding applications, many of which are in respect of major and complex development. I would be concerned that a reduction of the period for decisions to six weeks could inhibit proper examination of the wide range of issues and questions raised by proposals. It is unacceptable also in so far as it could lead to developments obtaining permission by default, in accordance with section 26 (4) (a) of the 1963 Planning Act, if planning authorities found they could not reach a decision within the allowed time. I might add that in the UK the movement has been in the opposite direction to that suggested by the Deputy; the time for determination of applications has been increased from eight to 16 weeks in cases involving environmental impact assessment.
To illustrate how the system is operating in practice, I would point out that planning authorities received almost 32,000 planning applications in 1987. In only 689, or 2 per cent of cases, was it found necessary to extend the time for consideration of the application with the consent of the applicant. The time for making a decision was extended in some 7,500 other cases, but only because planning authorities found it necessary to seek further information from applicants. Nevertheless, 73 per cent of all applications were decided within two months. I would not accept that reducing the statutory time limit to six weeks would bring about any improvement in practice in the speed, or the quality, of planning decisions.
 The remainder of section 3 is concerned with the imposition of time limits on the determination of planning appeals by An Bord Pleanála, — six weeks in a case not involving an oral hearing and 12 weeks in a case where a hearing is held. It is, of course, generally accepted that delays in determining appeals should be minimised. To this end, my Department liaise regularly with the board about their organisational performance in disposing of appeals, and I have emphasised the vital importance of dealing expeditiously with appeals on major developments, especially those with a significant employment potential.
The board are, however, the final arbiter in planning cases and are obliged to discharge their functions in accordance with the principles of natural and constitutional justice. This involves giving all parties to an appeal an adequate opportunity to make their case and to respond to the case of other parties. I have received legal advice that absolute time limits on the determination of appeals could prevent the board from respecting these principles and would to this extent be constitutionally unacceptable. I cannot, for this reason, agree to the limits which the Deputy has proposed.
I would point out that the board have in practice been making every effort to cut down delays in dealing with appeals. At the end of 1988 only 3.4 per cent of the appeals on hands had been on hands for more than six months, compared with 11 per cent and 7 per cent respectively in the two previous years.
Section 4 of the Bill would require all applicants for planning permission to erect a notice on the site of the proposed development giving details of the development. I might comment in passing that I do not see how this relates to speeding up the planning process, or to gearing up for 1992 for that matter. That aside, the Deputy's suggestion is not without merit. This whole area of public notice of applications has been contentious and warrants examination, and  the Deputy's proposal sets down one possible solution.
I could not, however, accept section 4. A procedural provision of this kind does not belong in primary legislation; its proper place is in regulations under the Planning Acts, along with related procedural rules and requirements. I am currently reviewing those regulations with a view to amending and consolidating them, and I will be considering the question of public notice requirements. I assure the Deputy that his suggestion will be carefully considered in that context.
While I cannot accept the specific proposals the Deputy has made in relation to the planning system, I would hasten to assure him that I share his concern that the planning system should operate effectively and should deal expeditiously with applications and appeals. I will be keeping the situation under review, to ensure that Ireland is not put at a competitive disadvantage because of undue delays in the planning process.
I now turn to section 5 of the Bill, which seeks to impose a six-week time limit for deciding applications for building by-law approval. These by-laws are adoptive and, at present, only seven major urban authorities operate them. Applications for by-law approval must normally be decided within two months.
I have already dealt with the question of time limits on applications for planning permission, and indicated that I considered six weeks to be too short to allow the proper determination of applications. I hold the same view in relation to applications for by-law approval.
There is another matter which is relevant to section 5. The Building Control Bill — at present on Dáil Committee Stage — will enable us to replace the current building by-laws system with a national system of building and building control regulations. Essentially, the options for the resulting control systems will fall into two categories. The first option, a so-called full approval system would involve the submission of plans and specifications to the local authority whose approval would have to be obained before work commences. There would,  of course, be an obligation on the authority to give a decision within a specific period of time. The alternative method of administering building regulations is by way of a “self-certification” system of control. Under such a system designers and builders of individual projects would, on their own responsibility, provide certificates of compliance with the requirements of building regulations. Reliance on this form of self-regulation by the industry would not involve the approval of plans by local authorities and the question of time limits would not, therefore, arise at all.
During the debate on the Building Control Bill I explained to the House that I have an open mind as to which of these systems should be adopted and that I will be asking the Building Regulations Advisory Body, to be established under the Bill, to advise me in this regard. I do not want to go beyond this at present but I expect that the advisory body will take full cognisance of the merits of the self-certification system of control including the facility for construction projects to get under way in the shortest possible period of time.
Before I conclude on section 5 I wish to repeat an assurance which I gave during the debate on the Building Control Bill. I intend to bring forward Report Stage amendments to ensure that local authorities are required to decide on applications for building regulations approval within a two month period.
What I am saying, therefore, is that even if an approval type system is put in place, applications will have to be dealt with within the same two-month period as applies to planning permission. As I have explained, however, the question of time limits will not arise if the concept of self-regulation by the industry is adopted instead.
Section 8 of the Bill proposes to confer on the Minister for the Environment the statutory power to establish, by regulations, a National Roads Authority. This would not be the appropriate way to establish a body with such wide-ranging powers as those envisaged for the NRA.
When I established the interim NRA  last July, I indicated that I intended to wait some months before commencing the detailed drafting of the Bill to set the authority up on a statutory basis. This was designed to give us all, including the interim board of the NRA, a better feel for the specific legislative measures which should be included in the Bill. I intend to have the general scheme of a Bill to establish the NRA on a statutory basis prepared by the end of May and a Bill brought before the House as soon as possible after that. The NRA have made recommendations with regard to the scope of this legislation.
The top priority in the roads division of my Department at present is the preparation of an operational programme for roads which I will be submitting to the EC, in the context of the revised Structural Funds, before the end of this month. This operational programme will be the channel through which work on our national roads can be accelerated. Following completion and submission of this programme, top priority will be accorded to the NRA Bill.
I have informed the interim NRA that, pending the enactment of the legislation, it has a significant role to play in the operation of the roads programme. In particular, they now supervise the development programme for national roads, within the context of my responsibility for policy and finance; they promote private investment in national roads and process all new toll road proposals for such roads. My Department will conclude negotiations on the possible tolling of the Dublin Ring Road and Newbridge/Kilcullen, in consultation with the Authority; they are developing proposals for loan-based investment; they will promote the case for EC aid for national roads, following submission of the operational programme; they will carry out annual reviews of the operational programme for national roads; they will prepare and submit to the Minister for approval future medium-term plans for the development of the network of national roads and they will recommend the annual State road grant allocations for the improvement and  maintenance of national roads, having regard to the blueprint and future approved road plans.
The NRA have already provided valuable comments on the draft Blueprint for Road Development which has been prepared by my Department. They are also being consulted on the operational programme. Fifteen administrative staff and 13 professional staff of my Department are now providing services to the Authority.
When the Authority have a statutory basis, they will, in addition to the functions I have already mentioned, also be empowered to: pay approved grants for national roads; arrange for the design of road improvement projects on national roads; place contracts or secure the placing of contracts for improvement works on national roads and charge tolls in respect of road projects attracting private investment.
This country badly needs an improved network of national roads. Transport costs for Irish exporters to mainland Europe are approximately twice those incurred by Community countries trading with one another on the mainland. Our problems will be exacerbated when all trade barriers are removed in 1992. The total cost of bringing our road network up to an acceptable standard has been estimated at £9 billion, £3.3 billion of which should be spent on national roads and access routes to ports and airports. The new partnership of the State, local authorities, the NRA, the EC and the private sector can deliver the required road network. I intend to publish the blueprint within a few months, taking into account the views of the EC on the operational programme. The blueprint will serve as the benchmark for the NRA.
The policy has been settled, the financial prospects are bright and the programme is gathering momentum. The total State road grant this year, at £194 million, is the highest annual amount ever provided, in real terms. This year is, in effect, the first year of a strategic programme to improve the road network. The National Roads Authority will have  as their main focus the development of the network of national roads and the access routes to the principal ports and airports. Their task will be to ensure that the job is done within the shortest possible time and in the most cost effective manner.
In conclusion, I must firmly reject any impression which might be given by this Bill that environmental controls are something to be abandoned or relaxed in the context of the completion of the single market. The Single European Act expressly lays down the objective of harmonising environmental standards, but on the basis of a high level of environmental protection. Far from espousing a policy of deregulation on planning and environmental matters in prospect of 1992, the EC is intensifying and strengthening environmental controls.
The reasons for this are simple. The Single European Act emphasises action at source to prevent pollution, rather than remedying of environmental damage after the event, as the best way of dealing with environmental problems. High environmental standards, guaranteed by planning and other controls, are critical to the achievement of the single market. More and more, consumer demand, within the EC and beyond, is for state of the art, environmentally friendly goods. To the extent that the Community as a whole, or we in Ireland, fall behind this demand, we will be harming ourselves economically and allowing our manufacturing base to slide into obsolescence.
For these reasons, I reject the thrust of this Bill's proposals, particularly as they relate to environmental requirements. Preparation for 1992 will have to proceed on a broader front and on more enlightened principles than are represented in this Bill.
Mr. Noonan: (Limerick East): I congratulate the Deputy Leader of Fine Gael, Deputy John Bruton, for bringing forward the proposals which gave rise to this Bill. I am not surprised that the proposals have been rejected by the Minister and his colleagues. Fianna Fáil have  traditionally rejected everything which was radical in nature. They rejected the Treaty, the foundation of the Garda Síochána, the foundation of the Army, the Free State Constitution, the declaration of the Republic in 1948 and, in more recent times, they rejected every initiative between 1973 and 1977. In the life of the last Government, after having rejected the foundation of the IDA and the VHI, organisations to which they now doff the cap, they rejected the need to control the national debt and, secondly, they rejected the Anglo-Irish Agreement. They also rejected the Single European Act. It is no surprise to me that Ministers tonight and last night, have rejected another radical proposal being put forward by this side of the House.
Mr. Noonan: (Limerick East): I am sorry if I have annoyed the Chair. The Chair is supposed to be neutral and not the leader. The Chair should not rise to political jibes. That is the function of Members on the other side of the House. I am not surprised that the proposals were rejected tonight. We expected that, but there is still hope because most of what was put forward by Fine Gael in the last four or five years, and rejected, has now become part of the Fianna Fáil gospel. Over the last two years, the principles of Fine Gael policy have been adopted by the Government and some progress has been made in achieving certain objectives.
The principal progress, through the work of the last Minister for Finance, Commissioner Ray MacSharry, was a major reduction in the national debt. That would not have been possible if the Minister had not received the co-operation of this side of the House. Recent history will illustrate that adversarial politics can sometimes end up in frustration but that consensus politics can  get things done. The key to Deputy Bruton's proposal is that we would have a further exercise in consensus on matters of principle. If we leave the political playacting aside, there is no difference in principle anyway. In my time in politics I have seen a number of major opportunities missed. We certainly missed one in 1973 when the initial input of funds from the EC under various headings was channelled into increases in standards of living. In one respect that was necessary but that move ensured that those funds did not go into the type of investment that was necessary to put the economy in the shape it should have been in the early seventies.
More recently, we have missed other opportunities. Had the corrective action which was taken in the last two years, following on the progress we made, been taken in 1979 when the Taoiseach took over, we would have a different country today and we would not be talking about an effective rate of unemployment of 28 per cent, if we add to the live register those who have emigrated in the last four years. It is not a sufficient response for Ministers to describe these as cod proposals, to say that they represent pie in the sky and that they will not get us anywhere. The history of recent years in the House has proved that a minority Government whose economic policies are supported, in so far as the general thrust of them go, by the main Opposition party can achieve objectives with which we all agree.
We are faced with another opportunity in 1992 when the market will be completed. The opportunities presented by the completion of the market are not that we are going to get a bonanza of Structural Funds from Europe, even though that is important, but that we will be able to participate in a market of 320 million people as equal partners. What we produce can be sold without let, hindrance, regulation — fair or otherwise — across the boundaries of Europe.
All argument about economic policy for this country could be reduced to one objective and it is one that I am sure all Members will share. It is all about Ireland  Incorporated producing more and selling it more effectively. Whether we sell it abroad or at home to substitute for imports, it ends up the same way. If we can organise an economy which can produce more and sell more effectively then it will require people to produce more and we will get a reduction in the massive unemployment figures we have.
The Minister of State and his colleagues would do well to look at the proposals contained in Deputy John Bruton's document, and they might look in particular at the lack of progress which we have made in comparison to other European countries. There have been massive improvements in the economies of countries all over Europe in the last 50 years, but Ireland seems to be stuck and going further and further down the league table. I should like to refer to the suggestion of consensus contained in these proposals. We believe there are certain objectives which are common to many parties in the House if they were openly stated. If there was a forum where the leaders of the parties, together with the social partners, could discuss those objectives and refine them, then those economic objectives would survive changes of Government and real progress could be made.
We have massive levels of unemployment, 240,000 on the live register, and huge levels of emigration, almost 30 per cent now. I do not think we will get out of those problems by the type of playacting that has passed for politics here over the last 20 or 25 years. We have suggested a forum where the social partners could discuss the issues of the day and the economic objectives of the leaders of all parties. We realise that the Executive must lead in the implementation of policies but we want clear objectives stated and action taken as a consequence of that.
There are areas which give us great concern. If we are thinking in terms of spending the money in the Structural Funds and evaluating whether it will be spent beneficially or not, we must ask ourselves, “what economic disadvantage  will be removed when all that money is spent in the Irish economy?” The test of whether Structural Funds are effectively spent is not how many roads are built, how many bridges cross rivers, how many sewerage schemes are completed or whether the length of one runway in a regional airport is longer than the runway in the next county. At the end of five years when we ask the question we must be able to answer it by saying that the following disadvantages have been removed.
If we look at the economic disadvantages at the moment, we will see that top of the list is the inadequacy of our road structure. As the country on the periphery of the Community in the North Atlantic we have a problem getting to the market of 320 million people. At present it costs 40 per cent more to move a metric tonne of produce here than it does in the United Kingdom and we have to get to the Continent after that. That is a result of the high level of excise duty on articulated trucks, the level of excise duty on fuels, particularly auto diesel, and the inadequacy of the road structure. If we could agree that it should be a priority of the House to reduce the cost of transport to the European average that alone would enable us to make significant progress in getting ourselves ready for the internal market. It would mean that a major economic disadvantage would be removed from our economy and ultimately, it would result in more of our people getting jobs at home and staying at home.
On the night of the budget I suggested to the Minister for Finance that he should use the revenue accruing to the Exchequer from the increase in the price of petrol to reduce the price of auto diesel. Had he done that, the price of auto diesel could have been brought down by between 25p and 30p per gallon and that would have been a significant cut in transport costs here.
I am glad that tonight the Minister for the Environment has finally come into the House and told us he is going to provide a statutory basis for the National Roads Authority. This was suggested,  announced and re-announced on several occasions, but there is no statutory basis for it. There is a statutory base for the road building activities of every county council in the country. The Minister is talking about tolling certain roads and about building other roads and about having a Bill before the House in mid-May. I hope he fulfils his promises because he has not done so up to now. Since this Government came to power, £35 million has been left in the coffers of Brussels — money that could have been used to improve the roads of Ireland — because the matching funds were not put forward by the Government.
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