Wednesday, 19 February 1986
Seanad Eireann Debate
Mr. McGonagle: I spoke at some  length on the last occasion the Bill was before the House. I do not intend to speak too long today. I said during my speech that I had great faith in the success and the contribution that would be made to the economic well-being of the Irish nation when this legislation was implemented. I trust that my confidence in the ability of the corporation is not misplaced. Job creation is vitally necessary — firstly, for the unemployed and, secondly, for the well-being of the Irish economy. Nevertheless, the difficulties are twofold. One, the operations of the corporation are to be carried out in those areas where venture capital is not risked; and, two, future dislocation and diminution of the labour force by technological change and the rationalisation consequent upon these changes.
The corporation must of necessity depend on research and development to assist in identifying projects which appear to be viable and profitable in the commercial sense. Profits, or indeed the projects themselves, may be sold off to provide the funding for other viable projects, or projects that appear to be viable. This, in fact, is the dynamic centre or the keystone to continuous job creation: the revolving fund to establish new projects and to establish new jobs. This feature of the Bill is most encouraging provided it works, since the true intent is a continuous provision of jobs.
For the benefit of those who have expressed doubts about the role of the State as set out in this progressive Bill, I would point to the experience in New England in the United States of America, a free marketeer country. Ten years ago this area was written off as a dying area in serious economic decline. It had double the national average rate of unemployment and had major industries closing. Today that area has the fourth highest per capita income in the United States of America and one of the lowest levels of unemployment in America. The explanation lies in the decision to establish public agencies:(1) the Community Development Finance Corporation, a  public sector venture capital fund provider for local companies; and (2) a technology development corporation beamed at high technology companies, state agencies operating successfully in the freest market economy and environment in the world.
The other example I would point to is the Roosevelt New Deal after the most serious recession in western civilisation in America after the thirties. There are other factors — I am not denying that — but it is clear that the public and private sectors' influences were welded together as major factors contributing to the provision of jobs. The creation of jobs, I want to emphasise, was an internal operation distinct from dependence on outside companies, American or multinational. It was a do-it-ourselves operation. I would almost call it a Sinn Féin operation. What they did was to concentrate on their local arena, and they did it within that arena. Our National Development Corporation, even under the scrutiny of the most prejudiced observer, must admit a striking similarity to the American experiment.
Attention is rightly paid in the Bill to efficiency, productivity and profitability. I would say that the role of the workers and their trade unions become of paramount importance in this context. The projects to be established by the corporation will require, and should get, the fullest co-operation of the trade unions and the workers involved. There is too much at stake to allow for failure. The failure rate — and I admit there is nearly bound to be some failures — must be kept to a minimum. That is the challenge, as I see it, to the corporation personnel, whoever is going to be appointed; to the management and workers in the established projects; to the research and development centres; to the retraining and educational centres — all combining to make a major contribution to the Irish people and the economy.
In regard to the broad picture of unemployment, may I, first of all, say that we live in a tough, competitive world? Nobody will buy our goods because they are Irish. They have to be produced and  sold at competitive prices. The place to ensure that is done is at the place of work — the factory floor, the farm and throughout our distributive outlets. Management, workers and their unions should seek the basis of a new partnership to replace areas of conflict and to establish real industrial democracy in which the workers are seen to participate intelligently and effectively. All this is to be aimed at reducing unemployment by the expansion of Irish industry to absorb the unemployed workers.
The National Development Corporation is a move in the right direction. I will conclude by saying that, if all concerned at every level of operation in the projects set up — from the top team to the factory floor — play their part, it will succeed.
Professor Hillery: May I take this opportunity to welcome Deputy Toddy O'Sullivan to the House and to congratulate him on his new office as Minister of State? Although we are politically opposed, I want to congratulate a fellow Munster man and wish him well in his new office.
Turning now to the National Development Corporation Bill, the Minister for Industry, Trade, Commerce and Tourism at the time, Deputy Bruton, has said in his opening address that the main duty of the corporation would be to assist, by means of investment in industry, in the creation of the maximum amount of viable employment in the State. The primary target of this Bill therefore is the creation of more jobs. Any legislative proposal that promises some improvement in the employment level and a return to the Irish taxpayer for the money invested must be considered seriously. This begs the question, however, as to whether the Government are going about these objectives in the right way with the establishment of the NDC. I will argue that it is a step in the wrong direction.
I agree with the Minister that most businesses are starved of investment funds in the form of share capital. Simultaneously, however, the financial sector is currently awash with funds available  for investment. Why then do people and institutions not choose to invest adequately in Irish industry? The problem, of course, is a shortage of viable commercial projects. These can only be generated if the climate for enterprise is right and if there is the opportunity to earn an adequate profit to compensate for commercial risks.
Investors must have the incentive to keep wealth within the country and invest it here. The crushing burden of direct and indirect taxes, the highest in the EC, which prevail in this country only serve to kill enterprise and incentive rather than to stimulate them.
At company level, it is estimated that there is a need to raise £300 million in equity investment each year. However, the average investment is only £80 million per annum by way of the equity finance which has been raised in the Dublin Stock Exchange in recent years.
I welcome, therefore, the reference in the Minister's speech to the potential development of an over-the-counter market to facilitate trading in the shares of smaller enterprises and to the initiative which the Stock Exchange proposes to take in meeting this need.
I must, however, again make the point that the burden of direct and indirect taxes constitute the biggest single obstacle to investment. Therefore, the reform of the taxation system is as urgent as ever.
As I said at the outset, I hold the view that the NDC is a step in the wrong direction. What we need is less State involvement and not more. There is, of course, a place for State sponsored commercial enterprise but, surely, the primary job of Government is to act as a catalyst in relation to industrial development and then to leave the main operational aspects to the private sector?
Members of the Coalition parties, expecially in the Labour Party, argue that the private sector has failed to provide the necessary level of jobs. I argue that  the creation of a climate for enterprise in investment, which is largely absent under present Government policies, will provide the main spur for private sector investment.
In any case, £2 out of every £3 spent in this country are already spent by the State. We still have nearly 250,000 people unemployed. Government at all levels now control about 70 per cent of gross domestic product. The highest previously on record in any western democracy at our level of real gross domestic product per capita was France in 1965 where the figure was as low as 37 per cent.
A further criticism that has been made about the National Development Corporation is that it is another layer of bureaucracy. The Government's White Paper on industrial development lists no fewer than 23 State enterprises which are involved in industrial development. Now it is proposed to add another. In 1983, according to the White Paper, the expenditure of these 23 bodies amounted to £433 million. Before the creation of another bureaucratic layer in the form of the NDC, an analysis should have been made of the performance of the 23 existing State agencies with a view to assessing how meaningful and relevant their objectives and operations are at this point in time and whether, indeed, they provide value for the taxpayer's money.
For example, looking at the range of State agencies which assist industrial development, it is clear that the IDA are of considerable assistance at the start-up stage. Fóir Teoranta, for example, are in turn of considerable assistance when companies are threatened with closure. The life cycle of companies which fail, however, shows that working capital can be a very acute problem and the primary reason why companies go broke. There is scope for providing grant aid and interest subsidies for companies for working capital to meet working needs and provide funds for expansion. Despite the plethora of 23 State bodies, there is not enough aid available for companies in their middle years. If I may draw an analogy with the human cycle, Government agencies provide grant aid at the “pram” stage and  they help when an undertaker is needed on the scene but, in between, there is a need for Government assistance to companies through the existing agencies.
I support the Minister in his view that funding is required to support the process of innovation in Ireland through research and development. New products to meet specialised niches in national and international markets require investment of those kind of funds that have to wait for a profit while the product is being developed and tested. There is a need for this type of investment in commercial enterprises which are based on the results of research and development activity. The question I want to raise is whether it is necessary to establish a new body in the form of NDC to fulfil this function of equity for the R&D type company.
The Minister also referred in his speech to the question of board membership for the National Development Corporation. This is something I feel strongly about and I raised it in the context of the Appropriations Bill a few weeks ago. Given the Government's majority in both Houses of the Oireachtas, this Bill will become law, and that is reality. The Government, therefore, will soon be appointing a board of directors for the NDC. The fact that the corporation will be starting from scratch provides the Government with the opportunity to carefully select people with proven expertise in the commercial arena for appointment to the board of the NDC. All political parties need to exercise more care in the selection of board members for State enterprises. I would urge that only the best qualified people, irrespective of political allegiance, be appointed to the board of the NDC. Indeed, the Minister, in his opening speech, has said that it is the Government's intention that members of  the board will not be appointed because of their political or ideological views. I welcome that. I look forward to and will carefully note the board appointments when they are made to ensure that the Government's intention is fulfilled. I wish, however, in the context of board membership, to make a further point. If the right people with proven records are willing to serve on this board, then they should be remunerated in a realistic way. The pittance which applies to board membership of State-sponsored bodies at the present time is grossly inadequate. If the directors of the NDC are to make a worthwhile contribution to the affairs of the corporation, this will necessitate time and commitment on their part and, therefore, realistic fees should be paid to them.
A further point I want to raise is this. I want to say that I agree with the Minister that the selection of a suitable person for the post of managing director of the NDC will be of particular importance. The Minister makes that point that the actual salary rates for this job and the terms and conditions of employment of the appointment of the managing director will be matters for determination between himself and the Minister for the Public Service. I would urge the Minister, that is, the Minister for Industry and Commerce, to discard the Devlin restrictions on pay in the case of the managing director for the NDC. I also think that the time is overdue for the abolition of the Devlin restrictions on all chief executive salaries in the commercial State-sponsored bodies sector. The remuneration package of the chief executive should be based on performance. At present chief executives of State-sponsored bodies are placed on set predictable scales, whether the organisations make or lose money. Chief executives should be paid competitive salaries and be appointed on contracts for a limited period, not for life, but for, say, five years, renewable if their performance justifies it. There should also be bonus and share option schemes designed to motivate them to achieve maximum performance and results. I would hope that the Minister would take this timely opportunity to ensure that the  chief executive of the NDC, together with chief executives of other State commercial enterprises, are realistically remunerated and that the Devlin guidelines should now be abolished.
In conclusion, it will be evident from what I have said that I do not regard the NDC a suitable vehicle for making a serious impact on our unemployment problem. The focus, as I have argued, should instead be placed on a genuine reform of the taxation system and on the creation of a climate for enterprise, where investors will have the disposable income and opportunity to earn an adequate profit to compensate for commercial risks. I am opposed to the Bill, but I have to say, now that it will become law with the Government's majority, I can only hope — and we can all only hope — that it will make a serious dent in the key economic and social problem facing the country at present, namely, unemployment.
Mr. Howard: Let me, first of all, extend my warm congratulations to Deputy O'Sullivan on his appointment as Minister of State and welcome him here this evening. I welcome the decision to establish the National Development Corporation. Let me also pick up a few points made by Senator Hillery which puts in very clear perspective the different attitudes towards this legislation.
Senator Hillery indicated that he was opposed to this but recognising at the same time that it would become a reality in the very near future. The alternative in his book would be a reform of the tax system so as to encourage risk taking by the private sector in job creation. I have always regarded myself to some degree as a representative of the private sector, at least somebody with close contact with them. Nevertheless, I have to say that experience has shown that in the position we find ourselves at the present time, as a nation with over 200,000 people unemployed, the private sector have not the capacity to deliver what Senator Hillery would expect them to deliver within the time scale required. I would find myself  in agreement with him when he spoke of the need to remunerate and to pay a salary scale to the chief executive and some others at top management level there which would be sufficient to attract the best and, having attracted the best, to retain them. I do not wish to further comment on my Clare-born colleague's contributions, but I will continue with the points I have to make here.
I welcome the decision to establish the National Development Corporation and I regard it as an essential element in the employment creation programme of the Government. I feel that it fills an important gap that very clearly exists in the industrial activity of our country. It is necessary and, indeed, I could point out that there are similar organisations and similar corporations in existence in many other European countries which are working successfully and are achieving results. I do not think it is necessary for me to detail where these are located but the reality is that they are there. We have the example and the experience from them.
The National Development Corporation, as we have been told, will provide crucial financial support and, more particularly, I would hope, through that financial support, the motivation that industrial development and job creation quite clearly requires. There are many promising enterprises that never reached their potential through lack of both capital and motivation. It is in these crucial areas that I can see the National Development Corporation being successful. There are many political industries that are inhibited from achieving their potential by a serious imbalance in the equity and the borrowings of these companies. Where that imbalance is very heavily towards borrowing, the constraints imposed on these companies in regard to expansion and development through the payment of interest and repayment constantly and regularly inhibit the capacity of these companies to expand and to develop. The problem has been recognised by the Minister and the Government. It is part of their policy, in attempting to resolve the unemployment  situation and to meet the need for additional jobs in this country, to ensure that there can be, through this vehicle, direct State participation in the equity of companies, those that I have referred to and, indeed, similar companies as well.
The National Development Corporation can and will invest in enterprises that would not otherwise develop. They can invest in suitable projects that have the capacity to achieve substantial and viable employment in enterprises that would not otherwise develop. The corporation, as I see it, provides an investment potential that does not exist at present.
My colleague referred to the fact that already we have a plethora of State agencies involved in industrial promotion and he mentioned a figure of 23. I believe that the National Development Corporation will complement the activities of these organisations and agencies that are involved in industrial promotion but it will be substantially different. It will complement their work. The Minister has indicated that there are crucial areas in which the National Development Corporation can involve itself. For example, agricultural produce and food procesing have been mentioned. I could never understand how the primary national resource of ours has never been properly harvested or harvested to its potential. Is it lack of capital? Is it lack of motivation? Is it lack of know-how? There has been an absence of real progress in that area of our primary national resource and it is a condemnation of all who have been associated with it that the achievements in realising the potential of food processing and the produce of agriculture have been so lamentably poor.
I sincerely hope that the availability of the National Development Corporation's involvement in this particular area will provide the inspiration which is needed to achieve satisfactory results there. I want to make it absolutely clear that I am not suggesting — and I doubt if anybody on this side of the House would suggest it — that the National Development Corporation  should get involved in lame duck operations. Very clearly that cannot be the case.
Another area is the provision of services to groups of small industries, services in the area of marketing and of research and development. There is a general acceptance that the capacity of small industries can often be severely inhibited by their inability to fully develop marketing and research because their scale of operations is not large enough to justify the expenditure involved and the resources that are available to them are not sufficient to permit the successful involvement of these smaller industries in market research and development. I believe that this will, in time, prove to be a worthwhile field in the work of the National Development Corporation.
Tourism is a very important industry that has been clearly starved of the capital it needs for expansion and development. I have no doubt that profitable and worthwhile investment by the National Development Corporation can take place in tourism and affiliated enterprises. I never want to see the National Development Corporation, and indeed that is not intended, becoming a rescue vehicle for ailing and hopeless operations. I want to see it as a source of capital injection, capital availability and — I will emphasise again — motivation. Where the commercial capacity of an industry can respond successfully and positively to that participation then it is obvious that we need an organisation such as the National Development Corporation.
I welcome the fact that an obligation on the NDC will be the creation of a revolving fund for employment. I support the concept of the roll-over on resources. I want to ask why should the NDC settle into a cosy position and sit comfortably on groups of successfully operating concerns? That is not its job. There must be a challenge and the challenge must continue to be a motivating force to promote successfully, to move out to promote again and to release their investments and to invest again. I believe that the concept is excellent. There are  successful examples from other countries which can give us encouragment in accepting that the Government are on the right road in this issue. I welcome the establishment of the NDC and I look forward with confidence to its success in the role that has been assigned to it.
Mrs. Honan: First, I would like to warmly welcome Minister O'Sullivan and to wish him well regardless of parties. He will find, after a while — I do not know how long he will be here — that we are a little bit more orderly here although by the time I have finished with the NDC he might have other ideas.
Listening to some of the speeches on the other side — I suppose I might be making them there myself in a short time — one realises how many different slants we can get on a piece of legislation. I ask what will the NDC achieve? What jobs will it create? Disregarding what happened last week and this week in the Government, it is well known that Minister Bruton did not want this piece of legislation. Eventually he just had to row in, but now he is gone and I cannot address my remarks on this matter to him. Everybody has spoken about more jobs. I cannot find in the Bill where all these jobs are going to come from. Like Senator Hillery, I would have preferred if the Minister took a closer look at all other agencies and tried to see if we could deal with employment that way.
It is quite clear that the good days are gone. It is now a matter of the survival of the fittest in industry in this nation. Good companies have come through the recession but they are not any more making profit — in many cases for good reasons. I repeat I do not immediately see this Bill providing a remedy. Perhaps other people on the Government side will make me think differently when more contributions have been made.
There is a danger that the NDC would support companies which will have an unfair trading advantage over others in the same sector. Where the State is known to be a significant shareholder the company is likely to secure better credit  terms from suppliers and stronger customer support to the detriment of independent competitors in the private sector. In addition, the State through the NDC should not back companies to compete with other businesses in the private sector. The Bill suggests that there will be a time limit fixed for each investment. In practice it is impossible to define the duration of a minority equity investment as the sale of the investment will depend, among other things, on the existence of a willing purchaser. It is proposed to ensure a turnover of investment, but how will the NDC sell a minority shareholding to a private company and who will buy it? There could be a danger that the NDC becomes a rescue agency for troubled State-sponsored commercial enterprises as it is specifically stated that it will assist, manage or act as a holding company for any State-sponsored enterprise established after the corporation itself. Will there be pressure to absorb the lame ducks or head up rescue operations? In a lot of legislation coming before us in recent times the Minister has to give this specific approval all the way along. If you set up an agency of the type and composition which I hope the Minister and the Government will do why does it always have to have this instant approval and the watchful eye?
In order to ensure that the NDC value companies on a competitive commercial basis for investment purposes they should be obliged, in most cases, to syndicate their investments with other venture capital companies or investing institutions. The NDC role should be to identify and to lead the way into new investment areas which, later on, will be taken up by the private sector, national resources and the capital for research projects or new high technology enterprises. Will the NDC try to attract experienced investment personnel to the staff — Senator Hillery also spoke about this but I think he was referring to the board — so that the right persons would be on the board and they would have the right staff to ensure that it will work. Some of my colleagues might say: “If you were there you would do the same thing” but I hope  that the members of this board will not have to have party cards in their pockets to get a place on the board. This has has been said also by other Senators. We are, I suppose all at fault in this respect. If this is to work it would be better that at least the top persons would not have to have party cards in their inside pockets. The board of the NDC should be made up of non-Government, non-civil servant personnel and should consist of professional industrialists.
Senator Howard confused me when he said that the private sector had failed. I have no block about whether it should be all private sector or all public sector. With the state of unemployment as it is in this nation, whether it is half-and-half or three-quarters of one and one-quarter of another, we should not be making these general statements that right across the board the private sector has not worked. That same accusation was made in the other House when ths Bill was going through. It is wrong to say that the private sector has not worked.
The Minister is saying that this legislation is not overlapping bodies such as the IDA, CII, the Irish Goods Council and others. I think we have overlapping here. I would have no trouble — no matter what the party Whips say to me — if, listening to the Minister or listening to any of my colleagues on the Government side I could be as convinced as they seem to be that the NDC will create all this employment. Remember it is the taxpayer who pays in the end, for whatever agencies we decide to add on to the already overcrowded list of agencies.
There is talk about £300 million for this agency. Perhaps I am not able to find it but I cannot see any money put aside for this agency in the budget which has just been passed. Perhaps I cannot switch on where finance is concerned because it is easy to shift the amount I have. I would love to know how much money——
Mrs. Honan: I can do without Senator Ferris's interruption. The Minister stated in his speech that the corporation are to invest only in enterprises which are both profitable and efficient and that furthermore, the corporation have a general duty under section 13 of the Bill to assist in the creation of the maximum amount of employment in the State and to earn a reasonable return for any investment made by it. It is clashing there again with the IDA.
We come again to the question of the approval of the Minister. It is awkward when you change Ministers during the Second Stage of a Bill. There is a new Minister now. Every time you look up there is a different Minister. I wonder why the Minister who has now gone to Finance decided to do away with the National Enterprise Agency while he spoke in his speech of the valuable contribution they had given over the past two years. Yet when he sets up this NDC the National Enterprise Agency is gone. Senator Michael O'Higgins says there is £900 million.
Mr. Ferris: On a point of information. I was not interrupting the Senator. I was quoting the correct figure and she interpreted it as an interruption. I was giving her the correct figure, with all due respects to her, £9.5 million.
Mrs. Honan: The Minister also said in his speech that, while the Minister of the day would be empowered to give directives to the corporation under  section 31 of the Bill, he would not be empowered to issue such directives in regard to any particular investment in which the NDC is, or is likely to become involved. I welcome that. At least he is not going to interfere at that level.
Further on he said that it is widely recognised in Ireland that there is a shortage of both private and public seed capital for projects. I have a terrible worry here and I think that Senator Hillery shares it also. I know that this legislation is going to go through and I would not be so dogmatic as to where my heart is if it gives jobs to people. But there is nothing in it — perhaps it will come on stream — to encourage people. Let us be honest about it. We are asking people to invest money to make the NDC workable. In today's environment, with money so scarce, people who invest funds will have to be sure that there will be some return. We will have to convince them from day one that this is going to work and that the money they invest will give a return. There are still people prepared to invest in this nation a certain amount of money and not look for a great return from it.
Ireland is still important to some people — perhaps not too many — but we are asking people to invest money in something and they have a horror of all the agencies. Perhaps people have arrived at this horribly cynical attitude towards all of us as legislators and see this as another agency and for that reason will not invest their money in it. It is like the 1 per cent levy and the 2 per cent levy — people did not see the job creation resulting from those levies. They saw us as legislators moving money from one Department to another and they are worried that perhaps this is not as sound an idea as it should be. After some time, when it has proved itself, they may have confidence in it; but it is in the early stages that money will have to be invested in the NDC to make it a success. I worry about the members of the board. This Government — because of the two partners in Government — have been even  worse than we were, and maybe we were bad enough——
Mrs. Honan: This Government decided that this appointment as a judge is to be Fine Gael and this appointment of somebody else is Labour. The NDC, I suppose, is the heart and soul of Labour Party thinking and the Labour Party's input into this Coalition Government; but I bet that the managing director and all the rest will be half and half. That would be tragic, because the people throughout the country who might be prepared to back a Labour project might not be prepared to back it if they see that sort of composition of a board, which this Government are quite capable of coming up with. That will be the end of the NDC. I hope that I have got my message across.
Mrs. Honan: We have a whole lot of agencies and now we have the NDC. I hope that it works, but it certainly is going to clash with some of the agencies already there. I do not know why the NDC had to push aside the National Enterprise Agency. There is also a worry with Aer Rianta and all the State bodies about who is going to be talking to whom on the telephone when this legislation goes through.
I am not at all convinced that this is going to create jobs. I wish I could feel as strongly as some of the Senators on the Government side that this NDC is a masterpiece of thinking. I wish that the Fine Gael people were as convinced as the Labour people that it is going to be a success. Senator Higgins might state the amount of money — he obviously knows, I do not — that will be there after this legislation comes on stream. Could he say exactly how much money was provided in the last budget for the NDC to be set up? If he is waiting for money to come in  from outside I would worry about it. I am opposed to the NDC because it is duplication of several agencies already there. Senator Howard seems to have decided that the private sector is finished and gone for scallops——
Mr. Howard: I did not say that. On a point of order, that is a misrepresentation of what I said. I said that the private sector had shown it had not the capacity on its own to fully solve the unemployment problem we face.
Mrs. Honan: I have no block about the public sector and the private sector. If we, either with the two together or with half and half, could create jobs for this nation that is what I am concerned with as a politician. But I can only see another big office and another bunch of managing directors and a board driving around in big cars. I cannot see how the NDC will create other jobs. In fact, in fairness to Minister Desmond, he is going to do away with something that we made a mistake in creating and that is the health boards.
Mrs. Honan: I have said what I wanted to say about the NDC. I am sorry that they did not decide to take on the other agencies and try to combine them rather than create another body, the National Development Corporation.
Mr. M. Higgins: I would like to begin by making a political point that I hope will be of some assistance to historians of the National Development Corporation. Speakers from the opposite side, and indeed speakers from the Opposition in the Dáil, have used the name of the Labour Party more often in connection with this Bill than they have used it in any legislation that I have read in recent years. That is perfectly correct and predictable. It is a Labour Party proposal for many years now that there be a National  Development Corporation. Having said that, it is also my personal wish, not only as an elected Senator but as a political scientist as well, that there would be far more open discussion of the debates that take place in Cabinet, because if there had been a Labour Party majority in this country and a Labour Government in office I have no doubt that the Bill presently before this House would be in an entirely different form from the Bill which is currently before us. Honesty behoves me to say that. It is interesting to tease out the reason for this. I say it in the fullest respect to the principled people who have become converted to the case for supporting the National Development Corporation in the other House as it passed through and the people who have spoken in favour of it in this House this afternoon.
In considering the Bill we are asked to place our faith in one of two directions. One of those directions could be roughly called the “school of climatology”, which has many adherents. It is rather like in the nineteenth century, when there were people who believed that the major cycles of economic recovery and collapse could be explained by moving sunspots. There are people in the country at present who use this phrase “creating a climate for investment”. The chain of logic which they seem to advocate is one that if you somehow or other change the climate reluctant capital — and remember we have just been told by Senator Professor Brian Hillery that this country was awash with capital and funds seeking investment — will then automatically find its investment slot. The assumption is that after these investment slots have been filled we will be witnessing another Industrial Revolution, creating the jobs that our young people want, creating the income which is necessary to be expended in order to create the service jobs, and so on.
This “school of climatology” has many adherents. They come mostly from the right. It was not accidental that in the other House one of the sources of information  quoted with more frequency than our own Economic and Social Research Institute was, in fact, the Trade Policy Research Institute in London. Its papers were quoted by several speakers. It is the one that has been producing this new orthodoxy. In a review — and I will come back to this in my speech — of a number of European economies the London Institute suggested “Let us go back to the supremacy of the market place and let us create competitiveness and in time the jobs will come”. I want to say that I find this thinking to be the most dangerous thinking in the social sciences since the great economic collapse of the 1930s. Certainly, it is the exact same thinking which has on several occasions underpinned the preparation for the resolution of economic difficulties through the mechanism of war.
The second perspective is that we would approach our economic difficulties and our human problems from the perspective of planning. We have, indeed— and I think speakers from both sides in both Houses are correct in identifying a problem in this regard — in this country a hostility to the planning process. I was not yet a student when the first document which came out of the discussions and the work of the late Mr. Seán Lemass and Dr. T.K. Whitaker, then a senior civil servant — and a young one — produced the First Programme for Economic Expansion. The word “programme” was used rather than the word “plan”. Indeed, lurking behind that choice of the word “programme” was an antipathy to the word “plan” which had gone across all aspects of Irish culture. We were after two decades during which, for example, when fighting the mother and child scheme in 1951 people had developed the strongest ideological right wing opposition in modern European history to the role of the State. We were restrained from this because of the enormity of emigration, the change which took place in the transition in Government in 1958, and the whole idea of opening up the economy with certain consequences — which I will come back to. The fact was  that we inherited an antipathy to the State. It was to some extent of our own choosing. We went ahead in our republic and set up, not a general health system but a private system that was not really private except in so far as it was consumed. With the additional money in your pocket you could live off the State, use tax-payer-provided hospitals, doctors and services. You could pay to be different like you could in the same way in the trains if you had the additional money. You could not invent a train or provide a train, but you could be in a different part of the train because you could use private money to establish a difference between yourself and others in transport. There was a comprehensive hostility to the State. As well as that, there was a social teaching of the major Church which stressed the principle of subsidiarity which makes it difficult even today, for example, for the battered child or the child who is being neglected to secure individual rights in relation to the State's protection, because you have to get past the two great buttressing points of this bourgeois statelet that had called itself a republic — the family and the market place.
All of these transitions and this ideology underpinned most of our thinking. In his distinguished history of the Department of Finance Dr. Fanning stressed the importance of the continuity of the orthodox thinking in fiscal and financial management between the British-administered State and the Irish State. I have looked at these different areas and I have been watching this where it has manifested itself. What was it made these peasants who had thrown off their empire, unique in Europe in not trusting the State? It is, of course, to be answered by historians. What made them amenable to authoritarianism? Why did they need to be told about everything, from a matter of their salvation, to their experence of spirituality, to why they should be grateful to go to a dispensary and consume health service? What was this distrust of the State? It is a good question to ask.
I want to lay the first point about this Bill  right where it belongs. This Bill raises a question of ideology, a very fundamental question of ideology, the pervasive ideology of the Right in this country. The people who are opposing this Bill are, I think, from a mixture of motives telling us correctly their worries about different ways in which there might be duplication, and so on. Why did this Bill come so late? Opponents of the Labour Party have asked that. Why did we insist on it? Why did we keep on about it? I remember very well when the first memo about the National Development Corporation was written. I remember the people who opposed it. I remember each vested point of interest that opposed the memo that was prepared in the first Coalition, 1973-77, seeking to bring the National Development Corporation into existence. The people who opposed it were opposed to the planning process. They themselves were inheritors of all of this voodoo about the State which has condemned us like voodoo does, to the sickness of an unmanaged economy, a country that had failed its people. They ran from the country in the boat, some driven, some choosing to go to become a burden on the hospitals, educational institutions and the other services that were being provided by the neighbouring island that we mocked and that was developing a welfare state. Many a mother followed her children to get her dental care in the island that we were supposed to be at war with — at least in our hearts — because they had developed the welfare state.
What is very interesting now is to see the Trade Policy Research Centre in London churning out the material that in Britain would roll back the welfare state and the health care system, and it has reproduced tuberculosis in Britain by abolishing separate wards for TB. It is that body which collects statistics that are misleading. I will come to the quotations used. They are misleading and dishonest. I must say, as a practising academic, that I would be ashamed to put my name to the documents quoted in the other House. For example, they ignore countries like Finland; they ignore the Austrian figures; they are totally selective  and the figures are distorted where they are presented.
To come back to our task here, let us listen to the two models we have. We must make a fundamental choice in this country. Senator Honan is right about the crisis that exists in relation to confidence in the political and in the economic system. People are questioning the ability of the political system to respond to the immense social problem that has been created, the ability to provide work, or the ability to provide income for those who now fill the country. Another colleague stated that emigration has returned — an indictment again. It is an indictment of a country that still goes on with this nonsense that the State must be opposed.
Why would they roll back the State? There are three rough models of the State that one can have. There is the residual model of the State about which we heard some comments this afternoon and about which we heard a great deal more in the other House, that is, its notion of the deserving poor. For example, there was the notion in the nineteenth century that conditions should always be a little worse inside the workhouse than they were outside so that there would not be a run on the workhouse and the poor law rate would go up. There is this kind of residual State with minimal interventions.
All around the place the lights are going on. People are saying that the State is wasteful and helping the sick too much. I was reared on this as a child. I remember such statements being made in the fifties when they were opposing people like Dr. Noel Browne and talking about women in Britain who were supposed to have four sets of false teeth and two pairs of spectacles. Later on, I read about the origin of the British welfare state and about the Labour socialist politics that took the children out of the mines. If I had a choice between a woman who had to go blind and toothless or could have two sets of teeth and three pairs of spectacles she could have them all. There is misery about this State that has now found new focal points in practically every sphere of life. It is about time it was taken on. I remember these discussions  very well. When we suggested the National Development Corporation, we had a role for it. We saw it as a vehicle of State investment in the context of a planned economy. In the first memo we presented on the document we spoke about different sub-planning commissions which would identify sectoral targets in different parts of the economy and achieve them. We stressed the importance of their not being in conflict with one another, so that, for example, what one would seek to achieve through the use of agencies in the food processing sector would not conflict with other agencies that were already in existence there.
The opponents of this Bill are right to an extent. It is rather like asking converts to become pietistic. The point is that the Irish public have not given a mandate to a Government to plan their economy in the interest of using resources so as to provide employment. It has produced a curious amalgam of populisms. It has now added to these a new foreign-type notion that we will get someone to say what everyone is really feeling in their heart, which is that because I am working and pay tax I should get a little more and retain more of my tax, while ignoring the plight of the unemployed. That feeling is in the country at present. This is what is called progress and democracy or progressive democracy. It is neither. It is regressive, selfish, mindless and backward-looking.
When we come to dealing with problems that are facing us at present, we have to make choices. There is a fundamental difficulty in that regard. If there is no philosophic commitment to the idea of the social and if, for example, we feel that it is not our responsibility to be concerned about the children of the unemployed father who lives next door to us, but that we are talking about the provision of my job, and if we are talking about the education of children next door or down the road, is it not a backwardness in ourselves that we have no concept of the social?
At present, all the speeches on this Bill have a message ringing loud and clear — the private, the private, the private. It is about the privatisation of experience and behind the phrase “Let the market dictate”, it is the rule of the strong. Behind phrases such as “The market place” and “When the climate has been restored and investment takes place” is the idea that, once again, we are in a preplanning phase. At the end of the nineteenth century everyone was supposed to be planners. We are leaving all of the destinies of the people and of the children to chance. Why do we do that? Because those who will be left to chance will not be the elite who will take this decision, because they have the time to sip their gins and ask the question “Perhaps the market place is best?” I know people in the Trade Policy Research Centre in London and I know many of these other agencies. They are not the people who come from the coal faces or from the poor, but very often they are people with limited intelligence who are the inheritors of privilege in Britain. It is the same kind of people who are coming out with this nonsense here.
When we proposed the National Development Corporation we did so because we believed that we should, even if we did not get political support for it, make the case for the planned economy. It has been shortened by recent events. Let us think of what is at stake around the world at present. This Bill has focussed a discussion on what we can do ourselves. There are external constraints on the Irish economy that are very real. There are external constraints in relation to aid, debt, trade and credit. For example, 65 per cent of the total export earnings of the Mexican economy will go to pay and service the international debt of Mexico. It is a source of wonder to parliamentarians, those of us who have visited Mexico, when, we look down from a window of a hotel at the slums that surround that city, the most urbanised centre in the world, and consider that 65 per cent of their export earnings go to service their debt, not to repay it. That is reality. It is not my function here this evening to argue. There is a version of economics at stake which argues for the centrality of the existing modes of relationship of aid,  debt, trade and credit in the world at present. Unless within the next ten years we have a major international conference on the whole question of debt and of restructuring trade, and on changing the nature of credit institutions, there is no prospect for world recovery. There will be even further debts. There will be a collapse in most of the development aid programmes. We could fall back on the classic conservative market-led response to international economic problems of war and famine. What are we doing in setting up bogey hostilities to the idea of the State taking an initiative in the economy is taking unto ourselves this illness from abroad. The newspapers write, for example, about another State agency. This is the hysteria that has been created. I repeat, to the point of tedium, that this constitutes an ideology which has stood in the way of progress in this country for so long.
There are a number of State agencies mentioned. What is on offer if you do not agree with the National Development Corporation? My distinguished friend and fellow Clareman, Senator Hillery, stated that the country is awash with funds. Yet people do not invest. I could assist him there by suggesting placing a tax on funds that are not invested in industry. Would he support it? There is the shortage of viable projects, but we have 23 agencies assisting the intelligence of Irish private industry. It is said that there must be opportunities for profit. We have been told that the climate for taxation must be put right. I agree that there must be changes in taxation. What will motivate the individualist to think in social terms? What will motivate people who need all this and much more — the dis-establishment of the State? When they have the corpses of the economy around the place they will then be moved to be patriotic and to build up a new Ireland. Some of them may have the brazen cheek to call it a New Republic, making a mockery of even more words than have been used before. If you believe in a sane, rational approach towards the economy, you would need a  stronger Bill than this.
I welcome the Bill such as it is. It needs to be very clearly structured from the very beginning to this question which is reasonably asked: “Where will it clash with existing agencies?” The National Development Corporation was always seen not as part of the State infrastructure but as an entity in its own right, with the right and capacity to innovate, to identify niches in the international traded sector, where, for a number of reasons, the private sector had shown neither historically nor now any indication of its capacity to become involved. The private sector is limited by its own tardiness and by the relationship that the financial institutions have with it. If you like, both have a time horizon that is short, a time horizon that will not take risks both equally in relation to the kind of security and collateral which they require for borrowing in credit. They have attitudes which are quite different to other countries in Europe and will not expand and move into these niches. Let us take some of these into account.
Let us turn the question of our youthful population around. Let us say that instead of it being a social problem, it could be turned into an asset. One should be investing in intelligence and taking from that intelligence specialisms that constitute new opportunities. It is not unreasonable to see the National Development Corporation — if it is properly envisaged — buying an entire piece of technological innovation. What Irish company could do that? Look at the Irish companies which have become regarded as the most successful. Part of my existential depression has been the admiration and adulation given to those dreadful Diarmuid MacMorroughs of the “Irish Business World” who have bought shell companies, wrecked good businesses, speculated on the shares, realised their assets and established themselves as some kind of litany of successes in the Irish business world. I should like to name some of them, for example, the Fitzwilton Group. Where are the jobs? I can tell you where the jobs were. Who had to pick up the bill when one job after  another went when the companies were realised? The State, of course. There was no question of rolling back the State then to pay the social welfare that these former working people had, who went to work one morning and were told: “Your life is now changed, not that it has changed but we are no longer trading. We are not manufacturing.”
What were they doing? They were speculating. The whole record of the Irish business sector in this regard has been that if it wanted to clean up its own stable there was a lot of manure it could have shifted in relation to selling itself as something interested in a viable Irish economy. All the incentives of the State were thrown at these people. The adulation of the media was given to them. They were interviewed on how they reared their children, what kind of wives they liked to marry and what kind of plane they liked to fly. There was grossness in personal behaviour and ignorance — all of this because it had been managed on a “trick of the loop” operation on the Irish stock market, leading, as I have so often quoted, Dr. T.K. Whitaker, a former distinguished member of the House, to express publicly his concern at what was happening to the Irish Stock Exchange in the seventies because of the operation of these people.
That is an aside and it took from my main argument. My argument is that the Irish private sector has not the resources, it has not the borrowing capacity and it has not the equity infrastructural support to become involved in the trading activities, one of which I have mentioned, in the technological sector. Neither has it the marketing expertise nor has it the time horizon which is most important — that is, the ability to be able to last out in a market place in which you want to establish a centre of excellence and a sufficient length of time to perform and to provide the jobs.
To turn away from that sector, there are endless opportunities to which the NDC, when it was originally envisaged, should turn itself. Some of these have  been mentioned. The scandal, for example, of exporting our agricultural produce in a raw state with very little value added. There are examples like this staring us in the face. That was not in the trade policy of Denmark which has a State company that now becomes a net importer of food, sending it out again in finished form, for example, sausage meats, cheese products, powdered products. These are all possibilities whereby the scale of the investment — the research and development and the marketing — can be provided by the State with a different time horizon and with a different relationship to equity investment than the private investor.
Mr. Ferris: It is proposed to suspend the sitting until 6.30 p.m. and at that time the House will take up the emergency resolution. The Second Stage debate on the National Development Corporation Bill will be taken after completion of the Valuation Bill tomorrow morning.
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