Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

I thank the Chair for the welcome afforded to me this evening. I very much look forward to working closely with her and her committee colleagues in the period ahead on various issues of direct relevance to the Department's remit, spanning the enterprise development, innovation and regulatory areas. I convey apologies on behalf of both my ministerial colleagues who I know had confirmed their attendance this evening and neither of whom can now attend. The Minister of State, Deputy Pat Breen, is taking the Social Welfare Bill in the House at this time. His original time slot was changed this evening so he sends his apologies. The Minister of State with responsibility for skills, training and innovation, and research and innovation, Deputy John Halligan, is unfortunately unable to attend this evening due to unforeseen circumstances. He was understandably keen to attend tonight to discuss the additional €26 million in innovation supports that are being proposed.

My officials have already provided the committee with a short briefing note, but I ask the Chair to permit me to mention a few key points for the record. The Supplementary Estimate totals €40 million and is being provided from within already voted moneys of €858 million to my Department this year. This is not about the provision of additional Exchequer moneys now. Essentially, what is being proposed is the permission to redistribute €40 million from underspends arising across the Department's Vote this year to support a number of enterprise and innovation initiatives. The proposed €40 million for redistribution relates to the following. The first is a new Brexit loan scheme, the Department's contribution to which is €14 million, through the creation of a new subhead A14 on the Department's Vote this year. In addition, the Department of Agriculture, Food and the Marine is contributing a further €9 million to the scheme to bring the Exchequer contribution to €23 million in total. This, in turn, through a combination of a Strategic Banking Corporation of Ireland guarantee supported by the State and partially counter-guaranteed by the European Commission and the European Investment Bank, is expected to leverage €300 million of lending to SMEs and small and mid-sized companies. A key point is that this scheme will be open to State agency clients and to businesses that do not have any relationship with State agencies.

Subhead B4 - Science Foundation Ireland is being provided with an additional €10.6 million to fund necessary research and equipment associated with the SFI research professorship awards. Funding of this key research equipment associated with research professorships will strongly underpin the work of the teams concerned and will increase the global visibility and impact of this important work. This will bring Science Foundation Ireland's capital investment in 2017 to more than €173 million. Also under this subhead, we are looking to provide the Tyndall National Institute with an additional €2.6 million. This additional funding will contribute towards a programme of research equipment renewal required by Tyndall to remain at the leading edge in ICT research and ensure its continued relevance to its key industry partners.

Through subhead B5, the programme for research in third level institutions, PRTLI, it is proposed to provide for an additional €12 million to accelerate payment on the State's commitments under the PRTLI programme. It is proposed that the following eight higher education institutes will receive this funding: Dublin City University, Dublin Institute of Technology, National University of Ireland Galway, Maynooth University, Trinity College Dublin, University College Cork, University College Dublin and the University of Limerick.

Finally, via subhead B6 an additional €1 million is to be provided to the European Space Agency to increase Ireland's contribution to the advanced research and telecommunications systems programme. Participation in this programme will allow for new contracts to be signed with Irish companies for market-oriented technology and product development. In turn, this can be expected to generate additional research and development activity, employment and exports that would not otherwise take place in Ireland. Membership of the European Space Agency provides Irish businesses and researchers with access to a €5 billion per year technology development organisation, with its main objective being to assist Irish companies to develop leading edge technologies through European Space Agency activities.

It is important to note that this additional €26 million for the various innovation investments brings to €105 million the total additional capital we have secured for the innovation budget since December 2015. This is recognition of the importance of innovation in underpinning our future jobs capacity. It is a cornerstone of our overall economic development policy. The investment by my Department in research and innovation has helped to place Ireland tenth in the global scientific ranking and we know that we cannot stand still. We need to ramp that up further to ensure that Ireland becomes a global innovation leader in the years ahead. Doing so will underpin the future development of indigenous firms and enable us to maintain and attract further foreign direct investment to Ireland and create the additional new jobs for the next decade.

Moving on to where this funding is being provided from, the Department acknowledges that the proposed redistribution of €40 million is a considerable amount. However, for context, it represents less than a 5% underspend - in fact, a 4.6% underspend - of the Department's total allocation of €858 million this year. The bulk of the underspend relates to €30 million in capital moneys in respect of subhead A7, Enterprise Ireland. Of this, €13 million is as a consequence of additional own-resource income being generated and retained for use by Enterprise Ireland. This is a positive development, as Enterprise Ireland is obliged to expend its own-resource income before drawing on Exchequer funding. Two other elements are contributing the remaining €17 million in unspent Enterprise Ireland capital, namely, its regional funding call, under which there is €12 million unspent, and other Enterprise Ireland grant funding, under which there is €5 million unspent. It is important to appreciate that the Enterprise Ireland funding model is demand led and grants provided to client companies are typically multi-annual in nature, usually over a three to four-year period. Funding provision is dependent on the client companies adhering to and delivering on certain terms and conditions associated with the grant award, for example, delivering on a certain number of additional jobs or achieving increased export sales, etc.

Good corporate governance of public finances means that grant payments can only be made on receipt of vouched expenditure claims submitted by client companies and properly vetted by Enterprise Ireland. Client companies will submit funding requests to Enterprise Ireland at a time that best suits their cash flow needs. In the context of multi-annual awards, that can give rise to funding commitments moving into another financial year.

The underspend on the regional fund can be attributed to timing issues and the very robust evaluations process which took longer to complete than initially envisaged. However, the first round funding call has been completed and we will shortly be announcing the results. Expenditure on successful projects will proceed in 2018. Some €6 million in current underspends derives from a combination of pay and non-pay-related subheads across the Department and its offices. It is anticipated that €3 million of the IDA Ireland capital allocation of €137 million this year will remain unspent. It relates to the agency's regional property programme. Given the nature of property supports and issues such as planning requirements, site issues, inclement weather, finalisation of contracts, etc., there will invariably be delays from time to time on property related projects which may impact on year-end expenditure. The remaining €1 million in savings is due to the delayed commencement of the INTERREG programme, which is partly due to the Brexit referendum result in 2016 and administrative delays in the EU managing authority.