Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the committee for taking my Department’s 2021 FRE this morning. I appreciate that it has a busy agenda. My officials provided the secretariat with a detailed briefing on the elements of the FRE, which I hope was of assistance to members. The 2021 Estimate, which I present this morning, provides my Department with a gross allocation of €1.142 billion. This is broken down between €796.647 million in capital funding and just over €345 million in current funding.

A prima faciecomparison indicates that the 2021 Estimate is €765 million less than €1.9 billion provided to my Department in the 2020 FRE approved by the Dáil last November. Members will recall that 2020 included significant once-off moneys to assist business dealing with Covid-19, in the form of restart grants, which have been superseded by the COVID-19 restrictions support scheme, CRSS, and employment wage subsidy scheme, EWSS, which accounted for through Revenue and the Department of Finance Vote. Comparison with last year is also complicated by the financial consequences of the various functions that were transferred to and from the Department in the course of 2020 and 2021. The most significant of these in monetary terms was the transfer of science and research functions, including responsibility for the Science Foundation Ireland to the new Department of Further and Higher Education, Research Innovation and Science in January of this year. Significant once-off Covid-19 and Brexit funding provided to our Vote again for this year further complicates year-on-year comparisons.

Nevertheless, the €1.142 billion being provided to our Vote represents an increase of almost €400 million on the Department’s pre-pandemic 2020 core allocation as per the original 2020 Revised Estimates Volume. The Estimate also provides for the carryover of €106 million in unspent capital appropriations for use by the Department this year. These unspent capital moneys arose due to a number of reasons, not least the almost doubling of our Vote in 2020, which for proper governance and due diligence reasons meant that it was not possible to expend the full amount of this additionality in the year.

Significant additional moneys beyond our core allocation continue to be provided to our vote to ensure the Department and our agencies can continue to assist businesses, consumers, and workers as we get through this pandemic. The committee will be aware of the various business and enterprise measures provided by my Department since Covid-19 took hold of our country. The briefing provided by my officials includes details of the uptake of these schemes and, therefore, I do not propose to go into them in any further detail at this stage.

I will say a few words about our intentions in relation to the additional beyond core funding being provided in the Estimate before the committee this morning. The majority of the additional funding is capital funding. The allocation of €162.6 million being provided to IDA Ireland will allow it to build an advanced manufacturing centre, which will be a national facility for multinationals and SMEs to trial, adopt, deploy, and scale digital technologies. An additional €10 million is being provided to the IDA Ireland's regional property programme, which is a critical element of the foreign direct investment, FDI, offering when it comes to regional enterprise development. The Covid-19 products scheme, which IDA Ireland administers jointly with Enterprise Ireland, EI, will receive further funding of €25 million to invest in projects in 2021. This will fund research and development of Covid-19-related products in Ireland with significant economic and societal benefits.

The FRE also provides additional beyond core moneys to fund particular Covid-19 activities by Enterprise Ireland in 2021. The €322.2 million in capital funding will allow the agency to provide €175 million to the sustaining enterprise fund, as well as the €48.5 million small business assistance scheme for Covid-19, SBASC. This is a financial support to help businesses with fixed costs associated with running a business, including rent, utilities, security, and storage. EI’s Brexit and related schemes will also receive additional funding. Some €15 million will be allocated to the ready for customs scheme; €5 million for a further call under the online retail scheme; €25 million for the regional enterprise development and transition schemes; and €7 million for a food transformation scheme. Food transformation will develop wider market opportunities for continued growth since Britain’s departure from the EU.

I know the committee appreciates the role that the local enterprise offices, LEOs, play in assisting and promoting local indigenous businesses, which is even more important now. The FRE provides the offices with a capital allocation of €40.8 million for 2021. This will ensure that programmes such as the trading online voucher, micro exporters assistance grant, preparing your business for customs workshops and targeted mentoring can continue to be accessed by small businesses throughout the country.

Ready access to finance has long been a live concern for many enterprises, particularly SMEs. It has become even more of an issue in the light of Covid-19 and Brexit. In response, my Department has implemented a range of targeted low-cost loans. Members will be familiar with these at this stage. Our 2021 Estimate will ensure that these schemes can continue to be available to the SME community. A new initiative for 2021 will be the Brexit impact loan scheme, which has been designed to provide easier access and a wider range of financing. Some €25 million will be provided for contingent liabilities under the €2 billion Covid-19 guarantee scheme, which was launched last year. Additional funding will also be provided for schemes such as the future growth loan.

The focus of my Department’s enterprise, innovation and commercialisation programme is to help enterprises commercialise innovations from investment in research and development. Initiatives such as the disruptive technologies innovation fund, DTIF, Enterprise Ireland’s research commercialisation programme and our membership of international research organisations, such as the European Space Agency, are key elements of this. The 2021 Estimates will provide further funding of €32 million to the DTIF programme, which will allow for a further call to be made under the fund as envisaged in the programme for Government. An additional €12 million will fund capital equipment under EI’s research commercialisation programme, helping innovative enterprises, particularly SMEs, to attain critical, cutting edge equipment and infrastructure.

Aside from our capital allocation, the current allocation of €345 million in the FRE represents an effective increase of 6.5% on the pre-pandemic Estimate of 2020. The additional funding will ensure our enterprise agencies, including EI, IDA and the LEOs, have the necessary resources to meet the increasing demand for their services and expertise. Additional funding is also being provided to beef up the staffing and resources of our regulatory agencies. The National Standards Authority of Ireland, the Health and Safety Authority and the Competition and Consumer Protection Commission will benefit from increases in the order of 20%. This will ensure that the agencies have the necessary staffing and related resources to continue their response to Covid-19 and Brexit.

The unprecedented challenges of Covid-19 underline the need for strategies and policies to ensure the recovery encompasses all elements of our society and economy. The Government’s national recovery plan charts the path for the reopening of the economy, which is predicated on rebuilding sustainable enterprises, supporting the domestic economy and leveraging the strength of the FDI sector. Funding for my Department in 2021 is targeted at implementing these priorities.

Any recovery must take account of the new realities, the longer-term changes to our economy and society in areas such as digitalisation, decarbonisation, remote working, and increased automation, which undoubtedly have been accelerated by the pandemic. The committee will be aware of the work going on across government to stop climate change. My Department is fully engaged in the intensive preparations for the Climate Action and Low Carbon Development (Amendment) Bill, which is a statutory catalyst for moving to a climate-resilient and climate-neutral economy by 2050.

We are also working closely with the Department of Environment, Climate and Communications on our contribution to the next iteration of the climate action plan. It is expected to be published later in the year. Together with our enterprise agencies, we are working on actions to promote and facilitate decarbonisation of the enterprise sector and also avail of the economic opportunities that arise from it.An example of this is EI's climate enterprise action fund, which will help companies to build the capabilities they need to develop sustainable products, services and business models.

Digitalisation also represents a totemic challenge for our enterprise base and my Department is working at national and EU level to drive digital transformation of Irish businesses.

The EU proposals for a digital services and digital markets Act are focused on optimising the conditions for the provision of digital services in the Internal Market, including in online safety, illegal content and fundamental rights, as well as setting rules for platforms that act as gatekeepers in the digital sector.

At the national level, the national recovery and resilience plan, for which funding is being sought from the EU recovery and resilience facility, includes proposals for a competitive fund led by my Department to drive digital transformation in Irish business over the next decade. Complementary digital transformation initiatives, which continue to be priorities for my Department and our enterprise agencies include the advanced manufacturing centre in Limerick, further calls under the disruptive technologies innovation fund, DTIF, and implementation of Ireland's Industry 4.0 Strategy 2020-2025.

The changes that have been wrought by the pandemic and the challenges ahead affect both businesses and their employees. It is important, therefore, the new work environment of the future equally respects the welfare of workers. My Department has a number of specific initiatives in the area of employment rights that we intend to progress over the course of this year. In the area of collective bargaining, a high-level working group under the auspices of the Labour Employer Economic Forum, LEEF, has been established to review collective bargaining and the industrial relations legislative landscape in Ireland. The group intends to produce an interim report by the end of July and complete its work as soon as possible thereafter.

As regards remote working, the national remote work strategy was published in January. It sets out the actions we need to take to ensure remote work is a permanent feature in the Irish workplace in a way that maximises economic, social and environmental benefits.

In terms of the right to request to work remotely, 175 submissions were received as part of the public consultation in April and May. My officials are currently reviewing those submissions and they will help us to frame the legislation, which I hope to bring to Government later this year. The right to disconnect is particularly important in helping employees to strike a better work-life balance and to switch off from work outside of their normal working hours.

The Workplace Relations Commission, WRC, published its code of practice on the right to disconnect on 1 April 2021. The code is designed to provide guidance for the resolution of workplace issues arising from the right to disconnect both informally and formally.The committee will be aware of the recent judgment of the Supreme Court in the Zalewski case. While the court found that the WRC’s adjudication service represents the administration of justice in accordance with Article 37 of the Constitution, it also found certain aspects of the WRC’s procedures were incompatible. The necessary legislation to change the WRC’s procedures on foot of the court’s decision is currently being drafted as a matter of priority under the leadership of the Minister of State, Deputy English.

On statutory sick pay, following consultation with the public, unions and employer groups, an interdepartmental group and an international review of best practice, a statutory sick pay scheme has been designed to cover almost all employees. Work is now progressing to draft legislation to introduce the scheme. I remains my intention to have it in place by the start of 2022.

The committee will also be aware of the commitment in the programme for Government to progress to a living wage over the lifetime of the Government. The Low Pay Commission, LPC, is currently commissioning research on this proposal and that is due to be completed before the end of the year. The research will examine international evidence on living wages, the different calculation methods and the policy implications of moving to a living wage in Ireland. The Low Pay Commission will outline a process by which Ireland will progress towards achieving this. Separately, the commission has also been requested to examine the issue of a universal basic income with a view to bringing forward recommendations on how a pilot in Ireland could be designed. It will take account of the annual recommendations on the national minimum wage, which is a separate matter.

The area of insurance reform is one which I know is of keen interest to the members of the committee. The action plan for insurance reform, which is overseen by a committee of the Cabinet, is on track with Ministers reporting progress on implementing reforms. That committee will meet later this afternoon. For my own Department and the reform of the Personal Injuries Assessment Board, following a public consultation which received more than 240 responses, work has commenced on the heads of a Bill with a view to bringing proposals to Government as soon as possible. That is being led by the Minister of State, Deputy Troy.

Finally, I want to mention work that is ongoing in the area of company law and, in particular, the restructuring processes for small companies. My Department has been working intensively to develop a simplified and effective statutory process to assist viable companies to restructure and remain in business. The drafting of the legislation is near completion and we expect to introduce it in the House soon and, hopefully, have it enacted before the summer recess.

Work on a Bill to establish a new corporate enforcement authority as an independent statutory agency is also near completion and it is intended to bring it through the Houses of the Oireachtas from the start of the autumn legislative session with a view to establishing the new agency in law on 1 January 2022.

I hope members of the committee have a flavour of what is being funded by my Estimate before them and of what the Department is doing with the money they vote to it. I am happy to hear members' views and take any questions they may have.