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

I thank the Chair. I am pleased to have an opportunity to present my Department’s Supplementary Estimate. I understand that the committee secretariat has been provided with a briefing on the details of the Supplementary Estimate by my officials, which I hope has been of assistance. With the Chair's permission, I would like to outline to the committee the elements of the Supplementary Estimate that I am proposing.

The Supplementary Estimate is not designed to seek any additional Exchequer funding over and above the €1.621 billion gross provision allocated in the Revised Estimates for 2023 and approved by the Dáil. Rather, it is of a technical nature. It seeks to redistribute just over €43 million in savings to fund a number of capital and current expenditure priorities across the various programmes in the Department’s Vote this year.

With regard to jobs and enterprise development, it is proposed to provide increased funding of €32.73 million in the following areas. Additional current funding of €4 million is being provided to IDA Ireland to support marketing and advertising activity in key markets in 2023. Promotional activity, advertising and marketing are crucial tools for IDA Ireland to compete in an increasingly competitive environment for foreign direct investment, FDI.

Earlier this year, IDA Ireland participated in a seminal inaugural Bloomberg New Economy Gateway Europe event in partnership with Bloomberg. The event was very successful and impactful for the agency, with significant media and social media coverage. The event provided prominent branding and content opportunities, allowing IDA Ireland to showcase Ireland as a modern, open economy to a curated audience of global decision makers in the context of ever-increasing competition for globally mobile FDI. IDA Ireland’s efforts, including through its promotion and advertising activities, continue to deliver significant results. In this regard, as of mid-year, IDA Ireland had secured 139 investments which have the potential to create more than 12,000 jobs. Almost half, 68 of the 139 investments, were secured for locations outside Dublin. Some 52 were new investments in the first half of the year from companies investing in Ireland for the first time.

Additional net funding of €2.33 million is being provided to the local enterprise offices to ensure that they can meet the increasing demand for their services. The committee will be aware that the mandate of the local enterprise offices, LEOs, has expanded to cover businesses who have grown to more than ten employees. In fact, LEOs can now support companies that have up to 50 employees as long as they are exporting. The additional funding will be allocated to financial supports such as trading online vouchers, energy efficiency grants, and Green for Business grants as well as training, mentoring and management development programmes such as the Start Your Own Business programme, which guides clients through the various aspects of business and business planning. By the way, anticipating significant demand for funding next year we did agree in the budget just past an extra €9 million for the local enterprise offices so that is consistent with looking for an increased Estimate this year in terms of their increased levels of activity.

We are allocating €6 million to the temporary credit guarantee programme. The funding for this programme supports the cost of meeting claims in respect of defaulted loans under the various credit guarantee schemes including the original SME scheme, the Covid-19 credit guarantee scheme, CGS, and the most recent Ukraine scheme. The subhead also funds the cost of the administration of these schemes by the Strategic Banking Corporation of Ireland, SBCI. The additional funding is required as the claims against the guarantee incurred in 2023 to date and due by year-end are at a significantly higher level than claims incurred in 2022. By way of comparison, some €7.23 million has already been expended on the schemes up to the start of November as compared with a total expenditure of €4.69 million in 2022.

The importance of the CGSs in allowing indigenous businesses, particularly SMEs, to access finance is demonstrated by the experience of the Covid-19 scheme. Total lending under that scheme was more than €700 million. It is not a small amount of money that is going out to SMEs across the economy. Under that scheme, which was available from September 2020 until June 2022, the participating nine bank and non-bank lenders and 19 credit unions provided a total of 9,857 loans for a value of €708.8 million which supported companies and represents more than 81,000 jobs.

The INTERREG programme, which is one of 60 cross-border programmes operating across the EU, supports cross-border initiatives in a number of areas including strengthening and enhancing cross-border collaboration in research and innovation. My Department, together with our counterparts in Northern Ireland, the Department for the Economy, is responsible for funding projects under the research and innovation strand of the current INTERREG programme. Our commitment to the research and innovation, R and I, strand is €21 million over the duration of the programme of which some 85% will eventually be reimbursed by the EU. Expenditure under the programme can vary from year to year depending on the development stages of funded projects, which can make it difficult to accurately provide for the programme in the annual Estimates process. The additional €1.4 million being sought in the Supplementary Estimate arises as a result of an increased funding requirement for this year.

In the area of legal costs, €1.5 million is being provided in the Supplementary Estimate to meet the costs of a legal challenge taken on the constitutionality of certain provisions of the EU-Canada Comprehensive Economic and Trade Agreement, CETA. In late 2022, the Supreme Court ruled, by a majority, that the Constitution of Ireland precluded the Government and Dáil Éireann from ratifying CETA as Irish law currently stands. The Supreme Court did, however, rule that CETA could be ratified by the Oireachtas if certain changes were made to domestic legislation. My Department is engaging with the Office of the Attorney General to determine the next steps so that ratification of CETA can proceed as quickly as possible. The €1.5 million being allocated in the Supplementary Estimate reflects the outcome of the negotiations on costs managed on the Department’s behalf by the State Claims Agency with the representatives of the legal team of the opposing party.

Funding of €12 million is being provided to support loan schemes administered on behalf of the Department by the SBCI and, in particular, the growth and stability loan scheme. The committee will recall that funding of €55 million was provided under the 2022 Supplementary Estimate to meet part of the Department's contribution to the scheme. The €12 million now being provided will meet the outstanding commitment to the scheme. The growth and stability loan scheme is particularly important given the dearth of mainstream long-term finance facilities particularly for SMEs. Loans of between €25,000 and €3 million, with terms of up to ten years and attractive terms and conditions, are available under the scheme to eligible SMEs through participating finance providers, with loans of up to €500,000 available unsecured. The growth and stability loan scheme, GSLS, was launched to the market in September 2023 and already has a number of participating lenders. Further on, lenders and financial institutions are expected to offer loans under the scheme in the coming weeks and we need to make provision for that.

The committee will be aware of recent serious flooding events across various areas of the country and the damage they caused to homes and businesses. My Department has been at the forefront in assisting businesses impacted by these events through the humanitarian relief schemes which we put in place in the immediate aftermath of each event. Because of the severity of these events and the extent of the damage caused, in addition to the financial supports under the standard scheme we also introduced an enhanced scheme for those businesses most severely impacted. The standard scheme provides for an immediate payment of up to €5,000 to eligible businesses with possible further support capped to an overall payment of up to €20,000 on the back of an assessment. Under the enhanced scheme, an initial payment on application of up to €10,000 is available and that can be further added to on the back of an assessment. Businesses can get supports of up to €100,000 in the enhanced scheme. The further payments under the standard scheme and the enhanced scheme are subject to a detailed assessment of the loss incurred. The Irish Red Cross is delivering both the standard and enhanced schemes on our behalf.

Given the emergency nature of the schemes and the importance of assisting impacted businesses in as timely a fashion as possible, the application process only requires the completion of one single application form. The Irish Red Cross is currently processing applications under both schemes and as of Friday, 17 November 2023, which is some time ago now, it had 44 applicants at that stage. That figure is now just under 200 applicants and the Irish Red Cross has already paid out, from memory, just over €1 million. The scheme is very much delivering to businesses on the ground and I want to put on the record my thanks to the Irish Red Cross. It has done a really good job here.

In a relatively short number of weeks, it got a lot of money out and supported many businesses that need it in the build-up to Christmas. I thank the Red Cross. I am happy with the relationship between the Red Cross and my Department in the context of the pressures and timelines around this scheme. Some €5.5 million has been allocated in the Supplementary Estimate to meet the costs of claims under the standard and enhanced humanitarian relief scheme. There is still some time for businesses that have been impacted to apply, should they need to.

On the innovation programme, the Supplementary Estimate is providing an additional €8 million to support our membership of the European Space Agency, which is a core element of the national space strategy. The additional €8 million will ensure that Irish companies can secure new European Space Agency contracts to a commensurate level. The funding will also help to meet the contract targets in the national space strategy, as well as assist the funding of immediately identifiable activities that Irish-based companies could not compete for otherwise. In other words, we are putting money in, but we are also getting a lot of money out of ESA.

The number of Irish-based companies engaged with the European Space Agency has grown from 70 in 2019 to 97 in 2022 and is expected to exceed 100 this year. This represents an increase of 39% in less than three years since the publication of the national space strategy, which takes quite a lot of people by surprise. I do not think people see Ireland as an economy that is very much linked to the space sector, but actually increasingly we are, predominantly through technology and digital platforms.

Aside from increasing the number of contracts, the purpose of our investment in ESA programmes is to nurture and build a base of technologically sophisticated enterprises that develop and trial technology solutions via space applications, and then go on to develop new markets in a wide range of application areas based on the expertise they have built up. A concrete example of this is EIRSAT-1, which is effectively Ireland’s first satellite. That will be launched within days, potentially. It is an exciting project predominantly led by UCD. This is a ground-breaking moment for Irish industry and academia and the culmination of many years of work by a dedicated team of students and researchers. It has only been made possible by Ireland’s membership of ESA and represents a great leap forward in our national ambitions in the space sector.

The Supplementary Estimate increases funding to the Health and Safety Authority by €1.55 million. The additional funding is mainly required to meet the extraordinary costs incurred by the authority in the statutory investigation into a particularly tragic workplace safety incident in Creeslough, Donegal, and its aftermath. The Health and Safety Authority obviously needed a lot of resources to do it properly. The investigation, which began in late 2022 concluded in June of this year, was very detailed and complex, involving the forensic demolition of the scene of the incident in order to effect the retrieval, securing and storage of evidence, which required specialist expertise and equipment.

The HSA is continuing to deliver its 2023 programme of work through a combination of promotion, information and education, as well as intervention, inspection and enforcement. Inspection activities target specific risks and hazards within the construction, agriculture, transportation and storage, chemical and health and social care sectors. Regarding activities, the figures available for the first two quarters of the year show that the number of proactive inspections across all sectors of the economy was over 5,500, with more than 200 reactive inspections carried out. This is in addition to more than 600 market surveillance assessments. The authority has also continued to increase its staff resources and currently has 250 whole-time equivalent staff in situ, up from 190 in December 2020, with a further 17 additional staff expected to start before the end of the year.

The Supplementary Estimate provides the Competition and Consumer Protection Commission, CCPC, with an additional €700,000 in current funding to assist it in meeting the demands of its increased mandate. In this regard, the introduction of the Consumer Rights Act extended the CCPC’s powers to investigate anti-consumer behaviour. In addition, the commission is due to assume responsibility for the functions of the European Consumer Centre. The preparations for these expansions in the CCPC’s mandate have resulted in additional previously unforeseen costs. The €700,000 in funding proposed in the Supplementary Estimate is required to allow the commission to meet these costs. The CCPC's remit continues to expand. It will also be quite involved in the Digital Services Act. That legislation will be coming through the House in the next few weeks. I appeal to Opposition parties to help us move that legislation through the Houses quickly because we must have it in place and in law by 17 February under EU regulations on digital services. The CCPC, along with Coimisiún na Meán, will have significantly increased roles and powers in respect of enforcing the rules of a digital-based marketplace.

The final additional allocation proposed under the Supplementary Estimate increases the legal costs provision for regulation programmes by €425,000. The requirement for this additional funding relates to the costs of a constitutional challenge regarding the adjudicative process established under the Workplace Relations Act 2015. The case was subject to hearings in both the High Court and Supreme Court and essentially revolved around the administration of justice applied in cases held before the Workplace Relations Commission. The Supreme Court, in its judgement, confirmed the constitutionality of the WRC. It did, however, highlight certain procedural practices, including the importance of public hearings; taking evidence on oath and the possibility of prosecution for false evidence; cross-examination; and the independence of decision-makers. The court accepted that the case raised issues of public interest and awarded the plaintiff his full legal costs in respect of the Supreme Court action and 75% of his costs in respect of the High Court action. Following negotiations conducted on the Department’s behalf by the State Claims Agency with the legal representatives of the opposing party, legal costs totalling €996,000 were agreed. The additional €425,000 being sought in the Supplementary Estimate is required to meet some of those costs and the remaining €571,000 is being met from savings within subhead C15.

As advised, this Supplementary Estimate is technical in its nature as it involves the redistribution of just over €43 million in savings from within my Department’s 2023 voted gross allocation of €1.621 billion. It represents a reallocation, I think, of 1.67% of the total budget.

Some €35.84 million of the Estimates package provides increased funding to particular capital programmes. The cost of these increases will be funded from savings on Enterprise Ireland’s capital allocation under subhead A7. The nature of a number of Enterprise Ireland’s enterprise development capital supports-schemes can involve a time lag between the approval of applications and the projects underlying such applications being completed and submitted for payments.

It can be also the case that clients themselves, for their own reasons relating to matters such as cash flow and so on, may delay submitting their claims for payment. These delays have resulted in payments under some EI schemes not being drawn down as had been expected, thus giving rise to savings in the subhead.

It is important to say that Enterprise Ireland also generates own resource income from capital investment programmes such as its seed and venture capital programme. It is required to spend its own money before drawing down capital from the Department. Surfeit income generated through such investments can reduce EI’s requirements for Exchequer funding, which can also result in savings on its voted capital funding allocation, which has happened in this case.

The remaining €7.565 million of the Estimate package provides increased funding to particular current programmes. The cost of these increases will be funded from savings across a number of subheads on our Vote. Some €4.94 million of these savings will come from my Department’s administration pay budget and the allocation to the Corporate Enforcement Authority. This is in the main due to difficulties being experienced in recruiting staff in a tight labour market. Some €700,000 will come from savings in the Companies Registration Office, primarily as a result of delays in completing a number of IT projects there. The remaining €1.925 million will come from savings on the temporary business energy support scheme, which is subhead A18. The savings under the TBESS arise for a number of reasons, including the fact that wholesale energy prices reduced significantly in the months following the announcement of the scheme and a whole range of other factors which I know we have discussed in this committee in the past. In the end, TBESS spent just over €145 million. Obviously, much more was potentially allocated for that. In essence, my Department was a vehicle to allow Revenue to take applications and to make payments for TBESS. I think that, in the end, 50,000 and 60,000 applications were funded.

I hope that provides the committee with some useful detail about the Supplementary Estimate. I apologise for having gone into so much detail and having taken so much time. I wanted to go through the rationale for the decisions, where the money is coming from, and where the money is going to. It is a less than 2% reallocation in the Department but I think it is important to give members a good explanation about where it is going. I am happy to take any questions that people might have.