Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have received apologies from Deputies Anthony Lawlor and John Lyons. I remind members, visitors and people in the Gallery to ensure their mobile telephones are switched off for the duration of the meeting as they interfere with the broadcasting equipment even when in silent mode.

This meeting has been convened to consider the Supplementary Estimates for Vote 32 - Jobs, Enterprise and Innovation, which were referred to the select sub-committee by the Dáil on 19 November with an instruction to report back to the Dáil not later than 9 December 2015. I welcome the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and his officials and thank them for the briefing material that was provided. It has been circulated to the members of the committee. Based on this information, the secretariat has prepared a briefing document which has been circulated to members and to the Department. Is it agreed that the meeting should follow the structure in the briefing document? Agreed.

I propose that the following arrangements apply to the debate. The Minister will make a brief address to the committee, after which each of the opposition spokespersons will have an opportunity to make a brief response if they wish. We can then consider the Supplementary Estimates. Is that agreed? Agreed.

I remind members that in accordance with Standing Orders discussion should be confined to the items constituting the Supplementary Estimates, which are: subhead A.5 - IDA Ireland; subhead B.4 - science and technology programme; subhead B.5 - programme for research in third level institutions. I ask members to indicate the subhead to which they are referring when contributing.

I invite the Minister to make his address.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I will not have to make a lengthy address. I will just explain the three elements that are before the committee.

The first is additional provision of €21 million for IDA Ireland. The second is a total of €5.5 million for the science and technology programme - €5 million for Science Foundation Ireland and €500,000 for the Tyndall National Institute in Cork. All of that is to support strategically important research infrastructure in higher education institutions across the country to enable Ireland to maintain and further grow its innovative capacity and its collaborations with industry, and to provide our top class scientists with the required equipment. The third is the provision of €23.5 million for the programme for research in third level institutions, PRTLI. This is effectively paying out on matured liabilities under the PRTLI, which is infrastructural provision for the science and research area. It is more cost effective if the State pays out now and it creates some new business head-room capacity for capital expenditure in our Votes in the years ahead.

I am happy to state that since the previous occasion on which I appeared before the committee, IDA Ireland has had a strong flow of job announcements. A further 2,500 jobs among IDA Ireland clients have been announced since the beginning of October, with some very significant announcements among them. SAGE, Regeneron Pharmaceuticals and Apple were just some examples. This year has been another very strong year for investment wins by IDA Ireland and the agency is well on track to meet and surpass its jobs targets for the year. Halfway through the year it was 10% ahead on its jobs performance. Obviously, we will not have definitive year end figures until after the survey is completed. That will be available in the new year. It is a detailed survey of the actual number of people in place, as opposed to projects being announced, and the flow through that IDA Ireland has sight of through its daily work.

One element of the Supplementary Estimate relates to an additional €9 million in IDA Ireland grants drawdown, which is required under the Supplementary Estimate. This means that IDA Ireland clients are hitting their jobs targets earlier than envisaged, so there is an earlier drawdown.

We also have a stronger flow than previously, meaning that the run on IDA Ireland grants is stronger than anticipated. While it is an extra demand on the Exchequer, it is welcome that more people are in employment. It needs to be borne in mind for context that the IDA Ireland client cohort typically contributes €22 billion in spending to the economy each year. The State is growing significant tax revenues from the increased employment and the increased allocation that we are making.

The other €12 million is to focus on IDA Ireland's regional property programme, which has been a significant part of our new approach to regional development. IDA Ireland has set ambitious targets for winning additional projects, including a more ambitious property programme. Specifically, the €12 million will see the construction of three advance technology buildings in Sligo, Castlebar and Tralee. There will also be large site infrastructure upgrades in Dundalk and Sligo and some strategic site acquisitions in the mid-west and north west. This work will help to strengthen the magnets within the regions for attracting new investment and assist IDA Ireland in achieving its targets.

Regarding the programme for research in third level institutions, PRTLI, the additional €25 million will help to pay off the State's commitment under the PRTLI's cycle 5. It will also benefit the Exchequer in various ways, including by assisting quicker European Regional Development Fund, ERDF, claim submissions by Ireland, as the PRTLI is co-funded under the 2007-13 ERDF programme, which is still administratively live. This will create new business head room capacity for future capital provisions by our Department by effectively paying off the PRTLI mortgage sooner. It will also help the cashflow capacity of some colleges, enabling them to complete projects and move on to new ones. This is pertinent for the institutes of technology in Dublin and Cork.

Regarding performance indicators, which do not specifically relate to this Supplementary Estimate per se, I am aware that the committee is seeking to improve and smarten the quality of indicators. My Department is working with the committee's officials to try to secure better performance indicators that will provide more meaningful material for members.

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I welcome the Minister and his officials. We will start with subhead A5 on IDA Ireland and commend its people on their work, in particular the team in the field abroad. Those people are doing a fantastic job. I will drill down into some of the specifics on the regional property investment. Three locations are before us, but were other locations considered and not progressed? What were the specific advantages of these three locations over others?

The Minister fleshed out a certain phrase, namely, "securing strategic sites". Is this from a legal point of view, for example, title, or is it from the point of view of investing in site security? The third option is new sites. What will the breakdown in expenditure be between securing strategic sites and upgrading existing IDA Ireland business parks?

Of the grants to industry, how much has been repaid this year by client companies that did not reach their targets or fulfil their agreements?

The international media's response to the events of the past week regarding Pfizer and Allergan has been negative and uneducated. Have IDA Ireland's feelers detected any negative reaction?

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am sorry, but I did not catch all of that.

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am referring to the response, in particular in the US, to the Pfizer-Allergan merger. Much of the commentary has been negative and uneducated. Has IDA Ireland picked up on any impact in terms of investments?

I also have questions on subhead B4. May I ask them?

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Yes, if the Deputy wishes to do so.

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I have a general question. Earlier this year, a damning letter signed by the senior members of the research community in Science Foundation Ireland, SFI, was sent to the Department. I know the Minister of State, Deputy English, has put a great deal of effort since then into addressing the issues raised in that letter. Will the Minister give an update on the relationships with the Department at present? Have the concerns that were expressed in letter to which I refer been addressed in the Estimates?

Finally, if it is at all possible, I encourage the Minister to work with members to try to reach agreement on the performance indicators because that would be a very good legacy for this committee to leave behind.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

On the first issue, other locations were considered. Essentially, 12 locations in total were selected by IDA Ireland. There are one or two proposals for each of the regions. All of the regions outside Dublin have locations, which were selected on the basis of their effectiveness in the context of attracting IDA Ireland investors. This is the first venture in IDA Ireland's return to providing advance construction. The infrastructure is being located in areas with sectoral strengths, a labour pool that can be marketed as an effective magnet, access to education network and so on. IDA Ireland has a matrix against which it sought to select locations. While it has outlined a certain number of locations, it has not closed off the possibility of additional ones. As I recall it, approximately 30% of the total amount of money is being assigned to these other locations. The distinction between upgrading and securing sites is as the Deputy outlined, upgrading is strengthening the existing base of property to make it more accessible to market whereas the other could be looking at new assets for the continuing regional programme. This programme is part of the regional strategy. Overall success in this area will depend on a number of elements. We will be seeking to work with local authorities to create better support. We will also be seeking to work with the institutes of technology to have a regional skills strategies which will be part of the marketing tool that will be used by IDA Ireland to win investment. A good deal of the other material in the regional plans is designed to bolster the capacity of the regions to win business. This is not a stand-alone instrument with regard to pursuing the 30% to 40% increase. The repayment by clients typically runs to the order of €2 million per year. I do not think we have a specific figure for the year to date but we will see if such data are available.

The issue in regard to Pfizer-Allergan essentially relates to US tax law and instances where companies have decided to make certain decisions about their strategic location. Both companies have a substantial presence in Ireland. IDA Ireland does not encourage inversions in any form and it does not expect that this announcement will have an adverse impact on its capacity to win projects for Ireland. This has been a feature of the landscape for quite some time. Obviously, attention is heightened in the present electoral phase in the US. Clearly, there are issues in American tax law, which, as the Deputy knows, have caused concern. There has not been much change in US tax law in spite of the acknowledgement that there is a problem.

The Minister of State, Deputy Damien English, has done considerable work in dealing with the letter from the research community of SFI. To some degree it was based on some misunderstanding of what they were seeking to do. Today, an additional €5.5 million is being provided in the Supplementary Estimates, specifically to support the research community in building the required infrastructural capacity and to accomplish high quality STEM workers. The Government is developing an innovation strategy which will be published, which is being steered through by the Minister of State. The Supplementary Estimate is definitively a help in term of creating the new business friendly capacity into the future for the research funding. Discussions are ongoing with the Department of Public Expenditure and Reform on the new science strategy funding capacity out to 2020. Today's announcement is a significant help in that regard.

I am very interested in performance indicators. We publish wider indicators than can fit into the Revised Estimates Volume, REV. The REV is a fairly constrained document in which we only have little boxes to fill. We provide much more detailed information in Ireland Stat. Perhaps when we progress the dialogue we can use the wider indicators. We have sought to take on board the view of the committee in September in the ones we are submitting to the REV, which is currently under development. Obviously the Department of Public Expenditure and Reform has a key role in deciding what goes into the REV. We work within a framework which they have created more widely, but I am very happy to share with the committee the sort of dashboard of indicators that we publish and track.

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We obviously need to talk to the Department of Public Expenditure and Reform.

Seán Kyne (Galway West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome the Minister and his officials. I compliment IDA Ireland on its success in 2015 and indeed in the past number of years in job creation and also the plans for the regional facilities which are certainly very welcome.

I wish to raise a number of questions on the table in the briefing note on the percentage of investment projects to be outside Dublin and Cork. There were targets for 50% in 2013 and 2014, which were not quite reached, but there was no target set for 2015. Will the Minister explain the basis of that?

IDA Ireland has received requests for a large number of large grant payments from companies that have completed investment projects. Does the Minister consider this as evidence of expansion and job creation? Does he have any concerns in relation to the Estimates for 2016? Will this be replicated in 2016 as well?

I addressed a question to Enterprise Ireland on Údarás na Gaeltachta when it came before the committee. I know that Údarás is not under the Minister's remit, but does IDA Ireland have a supportive relationship with Údarás? I know that Enterprise Ireland said it had a relationship in respect of research. I wonder if IDA Ireland has a role as well? I am concerned about it. I fully support the increases in the budget for IDA Ireland and Enterprise Ireland, but Údarás na Gaeltachta is being left behind to a degree. I know it is not the Minister's brief, but it needs to be raised at Cabinet. There needs to be extra capital funding to ensure we secure jobs in the Gaeltacht area which is also important to the Irish language.

Is there any evidence the IDA is being hampered by planning laws compared to other European countries? Are we more liable to challenges and delays in planning compared to other European countries, and could it have an impact on job creation? Have the IDA or Enterprise Ireland raised it with the Minister regarding major projects?

On subhead B5, I welcome the projects listed, including two in NUI Galway, namely Advancing Medicine Through Discovery and a new research building for arts, humanities and social sciences, to cost over €2.4 million. How are the projects evaluated regarding jobs potential and their impact on job creation? Is there very stringent oversight of the programmes by the Minister’s Department? There are several programmes, totalling some €23.5 million, which I welcome. What is the Department’s role in evaluating them?

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The 50% target applied to the previous five year plan and it was very clear it had not been realised. To be fair to the IDA, there had been a progressive improvement in the proportion of projects that were won outside Dublin and Cork, as shown in the table. From 30% in 2013, it increased to 37% in 2014. I recall that it was lower than 30% in 2012. In the new approach, the IDA took a different view and said it would strengthen each individual region in terms of the regional management structure and the flow of information between the regions and their IDA offices overseas, which it has strengthened with additional staff and liaison, and that it would set a new target of a 30% to 40% increase in the projects won. It developed a different strategy with more tools in the locker. To complement this, we devised the regional enterprise strategy, to try to get more of the local players involved and make a more coherent offer in terms of winning additional FDI.

The target going through will be the projects won in the years ahead rather than the 50% target outside Cork. Each of the regions will be individually examined. This is a more stretched target in many ways and is also more relevant, in that each region can assess how it is doing. There is a monitoring committee within each region, with both private and public sector participation, which will seek to review how we are doing.

The earlier call-down is an indicator of the health of projects, the quicker ramp-up of project and, perhaps, the sectoral mix whereby we will get a different profile of projects that will have a quicker drawdown on cash. Overall, there is a higher percentage drawdown than anticipated. The provision we make in 2015 is a weighted average of approvals over a number of years with a certain assumed drawdown. The profile has scrunched up, and this is the cause. To some degree, bringing it forward may ease pressures later. With the healthy pipeline, we are considering an increase in the provision for 2016 and are continuing to talk to the Department of Public Expenditure and Reform about the possibilities of pressure arising there.

Regarding Údarás na Gaeltachta, we have very good relations among the family of agencies. One of my goals in the regional enterprise strategy is to break down the silos that exist between Departments and agencies, and get a catalyst going at regional level to see projects that are of value being progressed by joint effort. While we do not have a capital allocation goal for Údarás na Gaeltachta, we would support projects it is developing, where possible, and the IDA sometimes assists with specific project grants.

The IDA has not given any particular signal that planning laws, challenges or delays, as the Deputy said, are a problem. I think he knows there are concerns in his constituency about the provision of a particular road. IDA and local authority officials are working on that. Overall, one of the areas where Ireland has been weak in terms of competitiveness evaluations has been the speed of planning permits and construction permissions. It is an area that deserves attention as we move on. It is one of the areas that comes up each year when we examine where we stand against our competitors. It is certainly something I will seek to address through this closer alliance with local authorities to work towards shared objectives. It is to be hoped that will help to negotiate some of these planning delays more quickly. That is part of the purpose.

The PRTLI is essentially about capital equipment and beefing up the capital capacity of the institutes of education. The HEA administers that on our behalf. In terms of evaluation, it is difficult to turn investment in a particular piece of equipment into a job profile, but we work hard on that. Within Enterprise Ireland, we have a group called Knowledge Transfer Ireland which is working to establish how our assets, including our intellectual property and licences, can be more quickly transferred into business and on into employment. They are doing an evaluation of how well we do it. They will provide a framework within which we can look at the performance of different institutes of education and one hopes that will provide us with policy insight into how we can sweat the assets more effectively. As the committee knows, Science Foundation Ireland has become more discerning in its allocation of science money where it must not only have excellent science but come through a second gateway which is potential impact on areas where we have a competitive advantage and the ability to win joint funding from the private sector. We have more intermediate steps as to the effectiveness of these institutions rather than being able to say how much we put in and the job impact at the other end of the funnel.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is very welcome to see the required increases and where the funding is going. The funds for the IDA will no doubt help to realise the regional aspects of the Action Plan for Jobs. To see the additional funding going into Tyndall, Science Foundation Ireland and the third level institutions is also excellent. I thank the Minister and his officials for attending.