Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

I thank the Chair. It is good to get the opportunity to sit before the committee for the first time in this brief. I look forward to working with everybody. I am pleased to have the opportunity to discuss my Department’s 2023 Estimate with the committee this evening. I am grateful to the committee for facilitating the change in the time for today's meeting. My officials have provided a briefing on our Estimate to the secretariat of the committee, which hopefully will be of assistance to members.

The environment in which our Estimate is being presented has undoubtedly changed. While previous Estimates were framed in the light of challenges such as Brexit and Covid, new challenges have emerged, not least in terms of increasing inflation, cost of living and significant increases in energy prices, impacted in no small measure by the war in Ukraine. The economic model that we have followed has served us well as is evident from the resilience of our economy to the elemental challenges posed by Brexit, Covid and now Ukraine. The fact that we have been able to grow the economy and maintain and increase employment is a testament to that resilience but also to the prudent management of our public finances and the value of the targeted supports and initiatives provided through recent budgets.

The value of our targeted policies can be seen particularly in the area of employment where, unemployment has fallen to 4.4% from the levels experienced in the height of the pandemic. While recent announcements of job losses in strategic sectors such as the tech sector are matters of concern, not least for the workers affected, the reality is that more than 2.55 million of our people are now at work. In this regard, the clients of the enterprise agencies of my Department employ more than 550,000 people, which is in excess of 21% of the total workforce. This is a remarkable figure and is a testament to the work of Enterprise Ireland, IDA Ireland and local enterprise offices, LEOs, and the value that they deliver for the funding they receive from the Exchequer.

The Estimate I have the pleasure to present to the committee provides my Department with a gross allocation of €1.621 billion for use this year, broken down as €1.035 billion in current funding and €585.6 million in capital funding. This represents an increase of 4% on our voted allocation of €1.558 billion as per the Supplementary Estimate approved by the Dáil last December. Both the 2022 Supplementary Estimate and the 2023 Revised Estimate included discrete allocations of €650 million to fund the cost of claims under the temporary business energy support scheme, TBESS. Stripping out the TBESS moneys, the Department’s core allocation for 2023 is €972.3 million, which represents an increase of 7.6% on our core allocation for 2022 of €903.8 million, as published in the original 2022 Revised Estimates. The increased funding being provided in the Estimate will allow the Department and our agencies to roll out a number of new initiatives under each of the three programmes in our Vote.

The Revised Estimate has increased the core funding to our jobs and enterprise development programme, excluding the once-off TBESS moneys, by 6%. Specifically, the Estimate has increased IDA Ireland's 2023 capital and current funding by almost €17.5 million, or 8%, to in excess of €208 million. IDA Ireland has also secured additional funding of €30.5 million in capital carryover. This will enable the authority to accelerate the roll-out of its regional property programme. The authority expects to spend €60 million on delivering property solutions in different areas across the country this year. Under its current property programme, IDA Ireland has delivered three advance facilities in Monaghan, Dundalk and Sligo. In addition, the authority has also completed the construction of its advance manufacturing centre in Limerick, which is a critical national facility for trialling, adopting and scaling digital technologies. In 2023, the authority expects to deliver a further four facilities in Carlow, Limerick, Waterford and Athlone by the first quarter of the year.

The increase in IDA Ireland’s funding will also allow it to further invest in the National Institute for Bioprocessing Research and Training, NIBRT. NIBRT is a globally-recognised centre of excellence for training and research in bioprocessing, has transformed Ireland’s capacity to train and educate a skilled workforce in support of major biopharmaceutical investment since it opened in 2011. IDA Ireland, through its capital grant programme, will also invest in a number of important projects of common European interest, IPCEI. The IPCEI initiative is an EU policy that encourages investments in large-scale, multi-country projects for global state-of-the-art innovation to address market or systemic failures in particular sectors. IDA Ireland's IPCEI investments will be in the area of microelectronics and communication and will focus on unlocking the potential of these technologies for the downstream industry and Europe's society.

The Revised Estimate increases the core allocation to Enterprise Ireland by €23.35 million, or 12%. Enterprise Ireland, EI, will also benefit from the use of an additional €24 million in capital carryover moneys.

This will allow Enterprise Ireland, EI, to increase funding to its capital support programmes, including its Evolve strategic planning grant and its capital investment scheme, which is a key support for the food industry as it adjusts to the reality of the post-Brexit trading environment.

The acceleration of the decarbonisation of the enterprise sector and the digital transformation of enterprises by way of targeted supports and incentives are specific priorities under the national recovery and resilience plan. Key initiatives in promoting these transitions are EI’s green and digital transition funds. Total funding of €140 million will be invested through these funds over the lifetime of the plan. The €35 million in funding support being provided in the Revised Estimate will enable EI to further progress the various strands of both funds this year.

The impact of the war in Ukraine will also continue to be a focus for EI in the coming year, especially given the challenges it poses for indigenous businesses. EI’s Ukraine enterprise crisis fund, which was rolled out late last year, provides liquidity supports to viable manufacturing and internationally-traded services companies experiencing trading difficulties, as well as targeted supports for eligible energy-intensive companies experiencing severe increases in energy costs. Funding for the scheme is being provided from the capital carryover moneys secured for EI in the Revised Estimate. I will also be engaging with my colleague, the Minister for Public Expenditure, National Development Plan Delivery and Reform, to secure additional funding for the scheme from the discrete Ukraine contingency identified in budget 2023.

The 7,780 new jobs created by clients of the local enterprise offices, LEOs, in 2022 demonstrate their key role in promoting job creation and enterprise development across our towns, villages and local communities. As the committee may be aware, the expansion of the mandate of the LEOs to support businesses with more than ten employees was a specific commitment under the programme for Government and not before time. An additional €2 million is being provided in the Revised Estimate to allow the LEOs to extend targeted supports, on a pilot basis, to particular enterprises employing more than ten, but less than 50, full-time employees. The outcomes of this pilot will help determine the way forward for providing additional grant supports over the coming years. The LEOs’ allocation also includes a further €2 million to support the introduction of a new green capital grant, the small firms investment in energy efficiency grant, which will provide a grant to companies to encourage investment in energy efficiency technologies or processes that reduce carbon emissions and overall energy costs.

With regard to access to finance, the Department will continue to support businesses that experience difficulty in accessing mainstream credit through discrete schemes such as Microfinance Ireland, the Ukraine credit guarantee scheme and the various Strategic Banking Corporation of Ireland, SBCI, loan schemes. One such scheme is the growth and sustainability loan scheme, the funding for which was secured in the Supplementary Estimate approved by the Dáil last December. The scheme, which will be launched in 2023, will make up to €500 million in loans available to small and medium-sized enterprises, SMEs, and mid-caps to expand, create new jobs, access new markets, develop their products and services and invest in energy efficiency and sustainability.

The other main programme being funded through our jobs and enterprise development programme is the temporary business energy support scheme, TBESS. As the committee will be aware, this scheme was introduced late last December to assist businesses with increases in their electricity or natural gas energy costs. The funding for the scheme is provided through my Department’s Vote, albeit the scheme is being administered by the Revenue Commissioners. Since its launch, a total of 22,840 businesses have registered with Revenue for the scheme and payments to the value of €26.11 million have been made to applicants as of 9 February.

Undoubtedly, take-up under the scheme has been somewhat lower than expected. My colleague, the Minister for Finance, recently published a report on the operation of the scheme which acknowledged the slow take-up, but also noted that the numbers of applicants has begun to increase and is expected to increase further in the weeks ahead. The €650 million provided in the Estimate will ensure that payments arising from these applications can be paid this year. My colleagues, the Ministers, Deputies Michael McGrath, Donohoe and Eamon Ryan, and I, will keep the scheme under review and consider any changes that may be necessary to improve uptake.

The Revised Estimate increases the funding to our enterprise, innovation and commercialisation programme by 9% to €258.7 million for 2023. The increased funding will be targeted at our science and technology development programme and strengthening our membership of the European Space Agency programme.

Our science and technology development programme is mainly delivered by EI, through focused research and development and commercialisation activities and supports. The 17% increase in funding being provided in the Estimate will allow EI to increase the number of innovative high-potential start-ups, as well as in-company research and development approvals over €100,000, and to deliver a great number of collaborative innovation projects between companies and the higher education sector. Other targets will be increasing the number of spin-out companies from the Irish research system and the number of companies involved in EI technology centres, as well as establishing a new technology gateways programme.

The science and technology programme also includes funding to allow EI to roll out a number of projects approved under the current round of European regional development funding. Funding of more than €15.5 million is being provided to support the launch of three specific innovation initiatives, namely, the technological universities collaboration, needs-led innovation and knowledge transfer boost schemes. These schemes, which involve multi-annual investment, will greatly assist in delivering on our strategy of maximising the potential commercialisation of research and development and driving innovation in our economy in the coming years.

Additional funding of €3 million is also being provided to the European digital innovation hubs programme. The European digital innovation hubs are part of a pan-European programme and are intended to provide access to technical expertise and experimentation in order that organisations can test before they invest, as well as providing innovation services, financing advice, and the training and skills development necessary for successful digital transformation.

In addition, funding of €500,000 will be provided to support the new construction centre, which was launched last year. This funding will allow the centre to prioritise research activity and innovation in residential construction, especially in areas such as standardisation and routes to certification, next generation rapid-build systems and autonomous construction. For obvious reasons, we need to put money into this space.

Our membership of the European Space Agency and our engagement in the space technologies programme are key elements of the national space strategy. The additional funding of €1.5 million allocated to the European Space Agency in the Estimate builds on increases in the past number of years. This reflects our continued commitment to investing in Irish space active companies, thereby assisting them to secure significant numbers of additional contracts related to the European Space Agency, growing their business and, in turn, increasing the number of people they employ.

The other significant initiative being funded through our enterprise innovation and commercialisation programme is the disruptive technologies innovation fund, DTIF. The DTIF, which is one of the four headline national development programme funds, supports collaborative projects in the development and deployment of disruptive innovative technologies on a commercial basis, targeted at tackling national and global challenges.

There have been five calls so far under the fund, with the latest call being in April last year. Under the first four calls, a total of 86 collaborative projects involving 321 project partners have been approved for funding of €288 million. The €61 million allocated in the Estimate will ensure that successful projects under the existing calls can continue to be funded and allow for a sixth call to proceed in the first quarter of this year, which will probably be next month.

The €116.49 million being provided to support the Department’s regulation programme in 2023 represents a 10% increase on last year's allocation. This additional funding reflects the fact the mandates of a number of our regulatory agencies have expanded and seeks to ensure that they have the requisite resources to carry out those mandates. Specifically, the funding being provided to the Department’s workplace relations programme, which mainly covers the operations of the Workplace Relations Commission, WRC, is being increased by 7% to €21.4 million. This additional funding will allow the commission to continue to increase its staffing resources, especially regarding its number of inspectors. In this regard, the commission expects to increase its current complement of 63 inspectors by a further seven as a result of a recent recruitment campaign and intends to increase this number in further targeted campaigns planned for later on this year.

The budget of the Health and Safety Authority, HSA, is also being increased by almost €900,000. The authority is also engaged in an active recruiting campaign and the additional funding secured for it for 2023 will ensure it can continue to increase its compliment of inspectors, in particular specialist inspectors, given its important role in areas such as farm safety, chemicals, etc.

The Corporate Enforcement Authority was established as an independent statutory agency in July last year. The budget of the authority has been increased significantly in recent years to ensure it has the necessary resources to act as a robust enforcer of company law, as committed to by the Government. The 25% increase in its funding to €9.7 million this year will help the authority to embed its governance structures, build operational capability, engage in effective advocacy and influence and develop proportionate, robust and dissuasive enforcement processes across the sector.

The Revised Estimate has increased the allocation to the Competition and Consumer Protection Commission, CCPC, by €2 million, or 11%. The commission’s mandate has significantly expanded as a result of recently enacted legislation, including the Competition (Amendment) Act, the Consumer Rights Act, the price indications directive, the Digital Markets Act and the Digital Services Act. The increased allocation of €20.3 million will help to ensure the commission has the resources to carry out its new responsibilities.

The Digital Services Act is intended to combat the proliferation of illegal content online. The Act applies to intermediary service providers, ISPs, such as social media sites, online marketplaces, video sharing platforms and search engines. The Act obliges member states to designate a competent authority, to be known as the digital services co-ordinator, DSC, to supervise, implement and enforce the Act. The Government decided in March 2022 to designate An Coimisiún na Meán to be the DSC in Ireland. The DSC will carry out a range of functions with respect to overseeing the due diligence online intermediary service providers are required to exercise regarding requirements for transparency and procedures for handling take-down orders, dealing with complaints and so on. The €2.7 million in funding being provided to the DSC in the Revised Estimate is to allow for its establishment in 2023 and the recruitment of an initial staffing cohort, including a commissioner for digital services, so it can be up and running by the beginning of the third quarter of the year, as required by the Digital Services Act.

Funding is again being provided under our regulation programme to support the Balance for Better Business initiative. The Balance for Better Business group has been to the forefront in progressing gender balance in senior leadership in Ireland. The group’s latest report demonstrates the progress that has been achieved. The report found 32% of board members of listed companies are female. This is up from 14% in 2018 and breaks the key threshold of 30% for the first time. For ISEQ 20 companies, this was 36%, which exceeds the 30% output target. For other listed companies, the figure was 26%, which exceeds the 22% target that had been set. My Department fully supports the work of the group and its ambition to significantly increase the number of female chairs of ISEQ 20 companies, as well the number of female CEOs of such companies, and its efforts to ensure all ISEQ 20 companies meet the 30% gender balance target for their boards.

On gender and pay, the committee will be aware of the Gender Pay Gap Information Act and the obligation to publish information relating to remuneration by gender. The Department's report on the gender pay gap was published last December. The report records the gender pay gap in the Department is 10.56%. This mainly reflects the greater proportion of women in junior grades and the high proportion of women availing of part-time work options. The Department has a gender parity in middle management and senior grades and this ensures a strong pipeline of top female talent. My Department is strongly committed to ensuring both men and women are represented highly at all levels and have equal inclusion in senior level roles. We are committed to reducing the pay gap further through focused policies such as our maternity leave and blended working policies.

The Department is also committed to the broader equality, diversity and inclusion agenda and expects to publish its equality, diversity and inclusion strategy during 2023.

In the area of administration, the Revised Estimate also provides increased funding to meet the administration costs of the Department. The need for this funding arises from the significant increase in demand for important services such as our employment rights service. The deployment of additional staffing resources has delivered significant improvements in the operation of this service and it is important this progress is maintained.

In addition, the increased administration funding provided in the Estimate will help to progress ongoing policy and legislative work in areas such as climate action, digitalisation, employment rights, trade, company law, competition, consumer protection, etc.

I hope this rather long introduction gives the committee an outline of the particulars of my Department’s Estimate and what we intend to deliver for the moneys being provided to the various programmes. I am just back from the west coast of the United States where we met 14 or 15 tech companies that have a combined footprint here of close to 24,000 jobs. We were trying to get a sense from the sector of where things are going this year. I am happy to take any questions on the Estimates or on anything else members may have questions about.