Oireachtas Joint and Select Committees
Wednesday, 25 June 2025
Joint Oireachtas Committee on Enterprise, Tourism and Employment
General Scheme of the Industrial Development (Miscellaneous Provisions) Bill 2025: Discussion
2:00 am
James O'Connor (Cork East, Fianna Fail)
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Apologies have been received from Deputies Brian Brennan and Tony McCormack. We pass on our sympathies to Deputy Brennan on the passing of his mother. I will explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. Witnesses are protected by absolute privilege in respect of the presentation they make to the committee. This means they have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty as Chair to ensure that this privilege is not abused. Therefore, if witnesses' statements are potentially defamatory regarding an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
Members are advised of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate when he or she is not adhering to this constitutional requirement. Therefore, a member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask members participating via MS Teams to confirm that they are on the grounds of the Leinster House campus prior to making their contribution.
Members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory regarding an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
I propose that we publish the opening statements and submissions provided by the witnesses on the committee's website. Is that agreed? Agreed. We invite our witnesses to speak for up to ten minutes. We will allow members to ask questions and make comments for up to seven minutes. Members may speak more than once if they wish to do so. Is that agreed? Agreed.
The subject of today's meeting is pre-legislative scrutiny of the general scheme of the industrial development (miscellaneous provisions) Bill 2025. On 4 June 2025, the Minister for Enterprise, Tourism and Employment referred the general scheme of the Bill to the committee to determine whether the committee wishes to carry out pre-legislative scrutiny of the general scheme. In general, the proposed Bill may not be initiated, pursuant to Standing Order 180, until eight weeks have elapsed, not including the summer recess, from the date the heads and scheme were given to the committee.
From the Department of Enterprise, Tourism and Employment, I welcome Mr. John Hughes, Mr. John Lee, Ms Amy Gargan and Ms Fiona Kilcullen. From IDA Ireland, I welcome Ms Breda O'Sullivan, Ms Sarah O'Connell and Ms Síle Murray. From Enterprise Ireland, I welcome Mr. Donal Leahy. I invite Mr. Hughes to make his opening statement.
Mr. John Hughes:
I welcome the opportunity to present to the committee today on the general scheme of the industrial development (miscellaneous provisions) Bill 2025. I am the principal officer heading up the inward investment unit of the Department of Enterprise, Tourism and Employment.
In alignment with the latest programme for Government, the proposed Bill is aimed at enhancing Ireland’s competitiveness, driving sustainable growth and further enabling our transition to the green economy through amendments to the Industrial Development Acts designed to enhance the capacity of the enterprise development agencies - IDA Ireland and Enterprise Ireland - to offer grant assistance to their respective client companies. It is proposed to do this by updating and expanding the tool kit of the enterprise agencies, providing for new forms of grants that incentivise actions to reduce carbon emissions and map out digitalisation projects that are critical to expanding employment opportunities in the years ahead.
The Bill will also enhance IDA Ireland’s capacity to deliver property solutions to support both IDA and Enterprise Ireland investments into the regions . Therefore, it is proposed to allow IDA Ireland to establish designated activity companies, DACs, with third parties for the specific purpose of acquiring or developing industrial and commercial property and infrastructure across Ireland. Furthermore, the Bill also provides a vehicle for other legislation from the Department of Enterprise, Tourism and Employment, specifically amendments in respect of Enterprise Ireland regarding freedom of information, the Health and Safety Authority related to the length of appointments to the board and technical enabling amendments to the Dangerous Substances Act 1972 and the Chemicals Act 2008.
I will first address the IDA and Enterprise Ireland grant elements of the Bill. The first amendment provides for a new environmental protection aid grant.
IDA Ireland and Enterprise Ireland have grant-making powers under Part III of the Industrial Development Act 1986, but this does not specifically provide for an environmental protection aid grant to incentivise carbon abatement actions. The creation of a new category of grant will allow the agencies to assess such grant applications solely on suitable environmental criteria, rather than relying on research and development, fixed assets or other categories of grant under the existing legislation. These include conditions related to economic output and employment targets which are not the primary objective of projects aimed at carbon abatement or other environmental protection measures.
Additionally, updates to the EU’s state aid general block exemption regulation, GBER, provide for a number of new types of investments which support decarbonisation and sustainability projects by enterprises. The revised rules increase aid ceilings to support large-scale industrial decarbonisation, deep retrofits and industrial upgrades, as well as specifically providing for investments in circular economy methods. This has allowed EU member states to expand the provision of operating aid for the promotion of electricity from renewable sources, such as offshore wind, which is significant in the State’s strategy to develop this important sector. However, the existing 1986 Act needs to be updated to allow the agencies to maximise the potential to expand opportunities, which are available to other EU member states. The proposed amendment would also future-proof the legislation to provide for forms of environmental aid permissible under future iterations of GBER or, more broadly, any supports compatible with state aid rules, without having to further amend the Industrial Development Acts, the primary legislation.
The second amendment regarding grants provides for the enterprise agencies to offer financial support for clients to hire external consultants, in particular on the green and digital transitions. The 1986 Act does not specifically provide for grants to incentivise enterprise agency clients to hire external consultants to provide advice and recommendations on the green and digital transitions, thereby kick-starting this transition process. A grant for these services would currently need to meet the employment, output and value-added conditions for approval, as outlined in section 21 of the 1986 Act, or, much more commonly, come from a time-limited scheme approved by the relevant Ministers. This makes the use of the 1986 Act to aid access to expert consultancy advice challenging as it requires a client to satisfy the enterprise agencies as to outcomes in relation to employment, output and value-added before any advice from consultants is received. However, such conditions or criteria would continue to apply if follow-on grants, such as those for fixed assets, technology acquisition, etc., were to ensue.
More frequently - in fact, in nearly all cases - work-around solutions to this issue of consultancy grants where individual time-limited schemes are referred to Government for approval are used by the Department and the IDA. These are time-consuming to develop and create an unnecessary administrative burden for the Department and agencies. It also limits the flexibility of the agencies to respond to client company needs in as timely a manner as we would wish. It is proposed, therefore, to include amendments to specifically provide for the agencies to support their clients in obtaining external support in the form of consultancy to provide professional advice and guidance on the green and digital transitions, so they can develop their businesses on a footing which is sustainable and competitive in the long run. This should be of particular benefit to SMEs which are not typically directly employing experts in digitalisation or decarbonisation.
The last amendment on the industrial development side relates to grants. It provides for an increase in the threshold at which technology acquisition grants must be approved by the Government to modernise the 1986 Act and align it with previous amendments to other categories of grants. Currently, section 30 of the 1986 Act, which deals with technology acquisition grants, requires grants greater than £400,000 or exceeding an aggregate of £800,000 to be approved by the Government. The reference to punts tells us how old that legislation is. It is proposed to change the thresholds to €7.5 million and €15 million, respectively. These aggregate amounts, which can be granted to an undertaking without Government approval under fixed assets, for example, currently stand at €15 million. We are aligning the technology acquisition grant threshold with the fixed asset threshold that is already provided for in the legislation.
In relation to enterprise land and property development, an amendment is proposed to allow the IDA to co-invest with third parties, such as State agencies like the Ireland Strategic Investment Fund, ISIF, to develop property solutions and infrastructure through designated activity companies, DACs. This amendment would allow the IDA to leverage its property budget, expanding its ability to provide property solutions in regional locations. In tandem with the development and review of an ISIF pilot project, the IDA is currently engaged with a number of other stakeholders in relation to joint strategic objectives for developments in the regions. Currently, the IDA can only invest by itself, although it collaborates with others, including local authorities. Once the new legislation is enacted, the IDA will be able to partner with others to deliver enterprise property solutions once the terms of the DAC arrangements have been approved by the Minister for Enterprise, Tourism and Employment and the Minister for public expenditure.
In summary, these amendments, if approved by the Oireachtas, would allow the agencies to streamline their processes, fast-track incentives aimed at actions to drive the green and digital transition and stimulate further economic activity, particularly in regional locations, in line with the objectives of the programme for Government.
It is proposed to have a small number of other miscellaneous amendments included in the general scheme of the Bill. The first concerns amendments to the Dangerous Substances Act 1972. This relates to the definition of flammable liquids to ensure that Ireland’s dangerous substances legislation and licensing regime are fit for purpose to ensure a safe working and retail environment. It is also proposed to amend and bring the Safety, Health and Welfare at Work Act 2005 up to date with the code of practice for the governance of State bodies. This recommends that board appointments be for a period of five years. Currently under the governing 2005 Act, appointments to the board of the Health and Safety Authority, HSA, are for a period of three years.
The Chemicals Act 2008 is being amended to enable the Minister for Enterprise, Tourism and Employment to create offences with an increased maximum penalty for breaches of the EU’s so-called detergents regulation. It is proposed to amend the Freedom of Information Act 2014 to ensure that Enterprise Ireland’s disclosure obligations under the Act are not overridden by statutory confidentiality obligations that apply to the agency. This amendment will remove any uncertainty as to whether the FOI Act applies to Enterprise Ireland staff and will ensure there is clarity around Enterprise Ireland’s obligation to disclose information in line with the FOI Act.
I thank the committee again for the invitation to engage with it about these legislative changes. My colleagues and I will be happy to take any questions of detail.
James O'Connor (Cork East, Fianna Fail)
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I appreciate that, Mr. Hughes. I will now allow members to comment. Senator Comnor Murphy of Sinn Féin is first.
Conor Murphy (Sinn Fein)
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I thank Mr. Hughes for his presentation. It is welcome that the agencies are now being given the necessary tools to support what is a necessary development, namely, the requirement to meet climate change targets. It will also create opportunities for Ireland, an island on the western seaboard of the Atlantic, in the area of renewable energy. It will ensure that our companies on the island transition more readily and will have more support in meeting the carbon emission targets that will be set for everyone.
I will make a couple of points. There are a lot of technical aspects to the amendments being brought forward. How does the Bill align with the aim of the energy strategy to get more people involved in renewable energy as a business? Many of the grants seem to be focused on making sure our indigenous businesses and SMEs move into the space of reducing carbon emissions and assisting in meeting the necessary targets.
I know from conversations with the previous Minister for energy there is an ambition to not only be self sufficient in terms of renewable energy but also perhaps at some stage in the future to become an exporter of renewable energy off the island. How does it align with that?
I also ask our guests to expand a little more on the designated activity companies. What types of companies are they envisaging in that regard and what are the incentives for those who fall into that category? What is the expectation in terms of assisting with property solutions for future businesses? I ask them to expand a little more on what that actually means.
Mr. John Hughes:
On the first point, principally the amendment that we are proposing to the legislation is to assist in the decarbonisation of the existing client base of both IDA and Enterprise Ireland companies. In the process that will, of course, have spill-outs and spin-offs, as is often the case but it is fully aligned with the desire to increase the number of both domestic, Irish-owned and FDI companies in the green wind and green energy production space. That can be facilitated currently under the range of grants that the agencies have such as fixed assets grants, research, development and innovation, RDI, grants, training grants and so forth. It is fully aligned in relation to the existing cohort of companies and we do not see any additional legislative requirement to be enabled to support the development of sustainable green energy in Ireland. In fact, in the new IDA strategy one of the four objectives, in addition to semi-conductors, AI and digital, and health, is sustainability, which is significant. That should be reflected in year-on-year grants and Estimates to the IDA, which will obviously be debated here in committee.
In relation to the designated activity companies, the initial proposal was to partner with the Ireland Strategic Investment Fund, ISIF, on an initiative for premises in Limerick. That was a specific case in point where bringing a second partner on board would create a more impactful outcome and better value for money in terms of the IDA budget. What we are doing with this amendment is enabling other joint ventures to come to the fore. At the moment, the IDA can only invest itself, 100%, so this will allow it to have other partners. They could be local authorities or other State agencies, where that is relevant, particularly where the development might require significant utility investment, for example. In theory, there could be a private sector partner as well, under the legislation. The safeguard for the Exchequer is that each designated activity company's terms of reference, effectively its memorandum and articles of association, will have to be approved by the Minister for enterprise and the Minister for public expenditure. That will ensure that there continues to be oversight from the relevant Ministers on the terms of each individual designated activity company, as and when they might come to the fore. There may some more specifics that colleagues from the agency can provide, if necessary, but that would be the overarching framework under the legislation.
Conor Murphy (Sinn Fein)
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Do the local authorities have the legislative authority to become involved in that type of private enterprise, to become a third party alongside the IDA?
Conor Murphy (Sinn Fein)
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As part of preparing and discussing the necessity of these particular amendments to the legislation, has there been outreach and dialogue with the local authorities and with private enterprises and funds to see if there is an appetite for joining with the IDA in terms of supporting this type of project?
Ms Sarah O'Connell:
Yes, as part of this pilot we initially engaged with the ISIF. We would always engage with all of the local authorities nationally to see what opportunities lie within each region to try to strengthen that potential for investment. We have had early stage conversations but this legislative change is necessary to enable us to go further.
Linda Nelson Murray (Fine Gael)
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I thank the witnesses for coming in today. I am always bringing up my family in these committee meetings and in the Seanad because I always seem to be able to relate stuff to them. My dad, who passed away last year, always spoke very fondly about the IDA helping him in Navan in the 1960s when it came to setting up his furniture business there. There is a little bit of a soft spot there in terms of bringing back nice memories.
Anything that allows us to be competitive and sustainable and that drives growth is going to be welcome. From what I have read, this seems to be welcome news, for sure. Do the witnesses have any idea how many clients within the IDA or Enterprise Ireland they will be able to help or give grants to under the environmental protection aid? How many do they think would avail of the consultancy advice grants? They seem to be very good.. We were speaking about sustainability last week in the context of European legislation. People want to do the right thing but it is a question of supporting them to do it. Do the witnesses have any idea how many clients they think they can help with this in the next year or so, or whenever we see it through?
Ms Breda O'Sullivan:
I thank the Senator for the question and am sorry for her loss. In relation to the number of clients, over the last strategy we looked at getting 60 sustainability investments overall and we are looking for an uplift on that in this strategy. We are looking, in total, for 1,000 investments from client companies. How many of them, specifically, will fall into the energy efficiency or consultancy categories we cannot say at the moment but what we can say is that there is a good appetite for those kinds of projects. They usually tie in with other areas. When we are talking to companies, we probably talk about their entire transformation journey. We look at how we can make them as productive and competitive as they can be in Ireland and it is one of the key ways in which we try to keep companies in Ireland for the long term. They might look at things like doing research and development, training, energy efficiency, digitalisation and so on and different companies will be on different parts of that journey. I could not give the Senator specifics on the numbers right now because things might shift from other projects that companies are doing. I do not have an exact number for the Senator.
Linda Nelson Murray (Fine Gael)
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That is understandable but Ms O'Sullivan has spoken about 60 investments in the past and a target of 1,000, which is great.
James O'Connor (Cork East, Fianna Fail)
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I am next on the speaking rota. I welcome the witnesses and thank them for the work they are doing. I am interested in the scope of incentivising and accelerating decarbonisation and the digital transition, which is a fundamental part of this legislation. The IDA in particular is dealing with large multinationals. Is there a strong request coming from them for grant aid to support work they do on sustainability and so on? Why would the taxpayer be supplementing extraordinarily successful and profitable businesses, by and large, or is it the case that there is a more mixed picture in that regard? That is my first question, which is for the IDA.
Ms Breda O'Sullivan:
In response to the question on whether companies are asking us for aid for energy efficiency, the issue is that we are always trying to make them as competitive and productive in Ireland as they possibly can be. What we are talking about doing with these kinds of supports is making their Irish sites the most attractive. The focus on transformation is a huge part of the current strategy because the reality is that multinationals have choices as to where they locate. They also have choices as to where they do energy efficiency projects so we are always trying to make sure that Ireland is as attractive as possible in that context. When we look at things like energy efficiency it can take costs out of the Irish operations and can underpin that employment, especially in regional locations. It can help to improve margins and solidify what they are doing here in Ireland.
There have been examples of that over the years, where the transformational investments we put in, while they might not have driven additional output and employment at the exact time that the project was going on, underpinned the investment in the long term, and they are constantly improving the investment in Ireland. That is the issue for us. They have choices, they can do this in many places and we want to make sure that they are doing it in Ireland.
James O'Connor (Cork East, Fianna Fail)
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I appreciate that. On the same question of consultancy grant aid, the premise of what I am saying is that you are dealing with some of the largest employers in the State. We have an example of a State agency that is providing consultancy grant aid for that. Without referring to a particular company, will Ms O'Sullivan give us an insight into or an example of the type of money involved in providing consultancy grant aid for environmental works in these firms? Are we in the millions or is it hundreds of thousands if the IDA is dealing with an average client?
Ms Breda O'Sullivan:
It is hard to say right now because we do not have the power, but I would say we would at the maximum probably be looking at coming down from the hundreds of thousands. Maybe the tens of thousands is where we are right now. That does not mean that there could not be a unique case where we might be looking for more, but there are lots of safeguards in place in this regard where we would have to go through our own management investment committee, our board and indeed to Government if we are getting into very big amounts in terms of the grant aid.
I will give a hypothetical situation with something like a consultancy on digitalisation. We could have plants and factories here that are quite old and have been here for a long time. To be able to bring in something like a digitalisation project, which could underpin the factory for the next ten years, very specific expert advice is needed to do so effectively, to map out existing processes and to look at what is needed to bring the factory forward. In those types of cases, this grant aid is really helpful. For the multinationals, the choice could be between doing this in Ireland or somewhere else.
James O'Connor (Cork East, Fianna Fail)
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I appreciate that. Thanks for your very helpful information. On a broader point, of the 27 EU member states, Ireland now has the most expensive commercial electricity. How often has this been raised with the IDA? For me as a policymaker, it seems alarming. What is IDA Ireland's view on this and what is its strategic outlook?
Ms Breda O'Sullivan:
The level of electricity costs in the country is a concern for client companies. It is more of a challenge for certain companies which are very high energy users. The question is always what the long-term plan is, how we are looking at this and how we are going to tackle it in the medium term. There is a lot of work coming forward from the Government in this area. With the level of uncertainty and the ups and downs in the world at the moment, people can accept that there can be spikes and troughs in things like energy prices, but it is about what the plan is in the medium term.
James O'Connor (Cork East, Fianna Fail)
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Thank you, Ms O'Sullivan. Mr. Hughes, would you like to comment?
Mr. John Hughes:
The Department is working across government at the moment on a large energy users action plan. This should come to the fore. No doubt in due course the committee will wish to consider this. The plan is reflective of the fact that energy is one of the biggest issues that individual companies raise with the Department and Ministers at the moment, in addition to housing, water, wastewater and so on. It is an area that the Department has particularly seized on. Equally, it is hoped that some of the amendments we are making here will enable individual companies to be able to take ownership of the solutions themselves in addition to what is being done by the centre. I am referring to issues about private wire and private connections. There are a number of companies that I cannot name that already have secured and invested in the production of on-site green energy themselves as they move ahead to obtain a larger supply of secure green energy for themselves.
James O'Connor (Cork East, Fianna Fail)
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The point about private wire is very pertinent. It comes up quite frequently when I visit multinationals or large-scale employers in Cork that ESB Networks seems to have a very obtuse approach, even down to the length of time it allows for applications originally. I am glad to hear that this is a priority for the Department, because, unfortunately, it is a big issue. That is it for my time so we now proceed to Deputy Eoin Hayes.
Eoin Hayes (Dublin Bay South, Social Democrats)
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I thank everyone for their contributions and for preparing for this meeting. I appreciate the witnesses taking the time to come before the committee. I should probably declare some past interest in that I used to be a consultant to EI client companies and have worked for IDA client companies. I have some familiarity with the area, although there is no financial interest since I entered politics.
Many of the provisions here are very welcome, in particular the idea of the green grants. Separately, I know it is kind of an addendum to the Bill, but from an environmental perspective the detergent regulation is very welcome. In the interests of doing the pre-legislative scrutiny, I will take the approach of scrutinising closely and perhaps I will ask questions that are more hard-hitting or more incisive. This is just so that I can understand all the different bits and pieces. It is not that I decry the legislation or anything like that. I think it is a very positive step.
I have some minor questions and two major ones. Maybe with my first speaking slot I will stick to the minor questions. Overarching this, I want to focus on transparency, accountability and unintended consequences of the legislation. On the threshold amounts, was any international comparison done? How were they arrived at and are the amounts enough?
Mr. John Hughes:
The thresholds we are proposing are simply aligning with what is in the existing legislation. This would be for fixed assets, for research, development and innovation, for training and so on. The technology acquisition grant was clearly out of date, so we have aligned it with the others. The general threshold under which grants have to be approved by Government, in some categories €7.5 million and in others they aggregate €15 million, continues. This will continue to obtain, including under the new headings. There will continue to be oversight. Each grant that goes to Government for the larger sums or is managed by the IDA itself under the legislation will always have, on a case-by-case basis, performance criteria and various elements built in to the individual contracts between the IDA and the parent company globally, at which repayment would arise if the agreed targets were not achieved. Equally on decarbonisation, sustainability and digitalisation, there will be agreed targets at which the IDA is giving some financial assistance - it is never 100% - against which performance would be assessed, including timelines for achieving those targets.
Eoin Hayes (Dublin Bay South, Social Democrats)
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To be clear, regarding going over the threshold, there is still an ability to give grants above the threshold but it would require explicit Government approval through the Cabinet. Is that right?
Eoin Hayes (Dublin Bay South, Social Democrats)
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On consultant quality, and I realise this may be a loaded question because I was a consultant myself, it is a competitive environment and Mr. Hughes cannot go into the specifics of individuals and private areas, but there is a question regarding oversight of the quality of the consultants who are engaged with client companies. How is it proposed to make sure it is the case that these people are being held to the best international standards, especially if we are talking about large quantities of money, in the millions or tens of millions?
Eoin Hayes (Dublin Bay South, Social Democrats)
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I can take the answer in writing, if the witnesses prefer. It does not necessarily have to be today.
Eoin Hayes (Dublin Bay South, Social Democrats)
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Yes, that is fine. On the detergent level, I have just noticed that in many enforcement mechanisms, more generally, instead of having an absolute number of, say, up to €3 million as a penalty, certainly in data protection and other realms, percentage of revenue seems to be a particularly coercive measure that gets the right kinds of behaviours.
Is there any reason this particular number was picked and this mechanism used instead of percentages of revenue?
Eoin Hayes (Dublin Bay South, Social Democrats)
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Okay. Specifically on the idea of an offence, and I am not a lawyer, so I am not sure if this is something most lawyers understand, but when something is named as an offence in legislation like this, what does this mean in terms of the enforcement mechanism that can then be applied?
Eoin Hayes (Dublin Bay South, Social Democrats)
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Would that go specifically to the company in terms of how it is acting? Would it go to specific individuals in terms of what they signed off on? I am just not sure where the term "offence" leads us.
Eoin Hayes (Dublin Bay South, Social Democrats)
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Perfect. I thank Ms Kilcullen. On the state aid rules and the general block exemption regulation, GBER, will the witnesses talk me through the nature of the GBER and its impact on the change to state aid rules as it might apply? What would the state aid rules look like in a world where there is no GBER and then in a world with the GBER? I am quite interested in the area of state aid rules and how they have an impact on the Department's ability to do more work in this area.
Mr. John Lee:
The general block exemption regulations are essentially what states are allowed to do without having to notify. There are several different articles under the environmental protection element. These set out what states are allowed to do and the thresholds, ceilings and kind of aid they can give to companies. The IDA or any of the agencies, for example, once they stay within those thresholds, can provide aid. Once the domestic legislative basis is there, they can provide those aids without having to go through a whole notification process through the EU. The ceilings and thresholds were expanded in relation to environmental aid concerning carbon abatement. The ceilings around research and development are also quite high because this is seen as a public good. Generally speaking, however, unless it is set out in the GBER, it cannot be done. This would be the overarching structure around it.
Eoin Hayes (Dublin Bay South, Social Democrats)
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That is very helpful. I thank Mr. Lee.
James O'Connor (Cork East, Fianna Fail)
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I thank Deputy Hayes. We now go to Deputy Rose Conway-Walsh.
Rose Conway-Walsh (Mayo, Sinn Fein)
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I think the legislation is necessary, but I have several questions about it. The ESRI research indicated that climate and energy efficiency-related investments fell in 2023 in terms of the amount of expenditure and the number of firms. There was also a fall in the proportion of SMEs indicating that climate change adaptation is important for their businesses. This fell across all sectors and in SMEs of all sizes too. Will this legislation fix that? Will these changes address what has come out of the ESRI report?
Mr. John Hughes:
That is certainly the intention. The legislation is intended to allow both enterprise development agencies to be able to give direct assistance to their respective client bases, be that foreign direct investment companies or Irish-owned companies, to specifically invest in sustainability and decarbonisation, whether this involves heat pumps, solar panels or whatever particular initiatives they wish to engage in. We think allowing the enterprise development agencies that have a lot of day-to-day interactions with individual enterprises across the State to have grant assistance capabilities will drive up the level of engagement in the FDI and Irish-owned sectors to accelerate their decarbonisation. We have significant funding agreed for the environmental aid programme. It is €300 million across the two agencies for the period ahead. We want to give the enterprise development agencies the toolkit to be able to give that assistance to companies, bearing in mind these agencies are engaging with those companies on a week-to-week basis on all other aspects of their development in terms of competitiveness and productivity challenges. We think that giving the agencies this extra tool will enable them to proactively engage with those companies to try to accelerate their engagement on this agenda.
Rose Conway-Walsh (Mayo, Sinn Fein)
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What will be the key indicators in measuring whether this is successful in terms of the legislation?
Mr. John Hughes:
The legislation itself is not prescriptive in terms of the outcomes. What it does acknowledge and make clear is that the IDA, in the case of foreign direct investment companies, will agree what the baseline is and what the targets are in terms of percentage reductions. As the Deputy will be aware, the enterprise sector overall has to achieve a 35% reduction. We are behind on achieving this target, so we think this initiative, with sufficient funding through the Estimates process, will help us to accelerate and get back on target. The individual client company targets will be agreed, negotiated and monitored and payments will only be made on the achievement of targets. This is how the IDA ordinarily operates under the various grant authority powers it currently enjoys.
Rose Conway-Walsh (Mayo, Sinn Fein)
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Are there any countries the IDA does not do business with?
Rose Conway-Walsh (Mayo, Sinn Fein)
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I am referring to engaging with investors. Are there any countries the IDA does not do business with?
Mr. John Hughes:
Currently, the IDA, as we know, is engaged globally in searching for and attracting foreign direct investment. We are looking to diversify the various markets we engage in. A due diligence process is undertaken for individual markets and individual companies. The IDA does this through its executive approval process, overseen by its board. Ultimately, then, the grants over €7.5 million or €15 million that come to Government will all have a due diligence process attached to them. The IDA is very mindful of Government policy and of international policy in terms of the jurisdictions and individual companies it engages with and targets.
Rose Conway-Walsh (Mayo, Sinn Fein)
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Okay. So, if legal actions were taken against a company in another member state, the due diligence process would pick that up and such a company would not then be allowed to operate here or operate under the IDA.
Mr. John Hughes:
The IDA would be heavily involved in being aware of the operations of its client companies in this jurisdiction and, insofar as it can, in overseas jurisdictions, within the European Union and wider afield. It would have a kind of intelligence engagement, if you will, and that would inform the ongoing dialogue with companies in terms of the ESG agenda and other issues.
Rose Conway-Walsh (Mayo, Sinn Fein)
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Okay. It is just that at different times I come across companies operating here, most recently in a "Prime Time Investigates" report in respect of a company, that have legal cases stacked against them in other member states and they just seem to be allowed to operate here. This particular company I referred to is not an IDA company, but it has happened. I think it is very important that full due diligence is carried out for businesses and companies we allow to operate here.
I think the consulting question is very important. Many State agencies use up an awful lot of their budgets on consultancy fees. How are we going to ensure when it comes to the consultants who are used in this space, and accepting that obviously there is absolute need for specialism within this, that we do not have general consultation? How will this be taken care of within the IDA? Who will oversee this? What I am getting at is that we are going to facilitate the increase of grant aid. We need to make sure this grant aid does what we want it to do, that it does not go into areas it should not necessarily go or where we are not having the desired impact from it, and that it is done in a way that we get good value for money for it.
Mr. John Hughes:
I would make two points from my perspective in the Department. The first is that the IDA would always operate to value-for-money principles in terms of ensuring that for all the grants, each grant agreement has performance targets, performance metrics and deadlines by which they are to be reached. Failure to do that is a contractual breach with all of the consequences that one can take from that. Second, in the annual Estimates process, when we give the IDA its capital allocation, voted through by the Oireachtas, that is subdivided across the various areas, such as grants for industry and support for the ecosystem, such as the likes of NIBRT, Digital Manufacturing Ireland, Tyndall and so on in the semiconductor sector. We know what the allocation is looking to achieve under the various headings, and that would include consultancy.
Currently, if we analyse the IDA grants, subject to my colleagues correcting me, I think nearly three quarters of them are for research, development and innovation investments, and the next significant one would be for training and talent development. We would see that continuing.
Rose Conway-Walsh (Mayo, Sinn Fein)
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I must conclude as my time is up.
James O'Connor (Cork East, Fianna Fail)
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To be fair to Deputy Conway-Walsh, I was going to raise that point as it is a valid question. I call Senator Crowe.
Ollie Crowe (Fianna Fail)
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With regard to the amendment aimed at enabling enterprise agencies to offer financial support for clients to hire external consultants on the green and digital transitions, will the witnesses from the Department tell us more about this? For example, what sort of financial support are we talking about in terms of the range of expected fees? What level of demand is there for this currently?
Mr. John Hughes:
What I can refer to very specifically is that we have recently been working with the IDA in terms of the capacity for digitalisation grants. We were looking to perhaps have arrangements where we would put at its disposal up to €10 million for companies in the digitalisation space. However, it would be a fraction of that - in the tens or perhaps low hundreds of thousand - that goes to consultancy. Some 90% of the grants would be on implementation of the findings from the consultancy, whether it is fixed asset acquisition, technology acquisition or new process development. The actual consultancy proportion would be in the low single-digit percentage of the overall package that, hopefully, the consultancy would leverage in terms of support and investment by the company itself in the area. We would expect something similar to obtain with regard to sustainability, namely, the substantial grants would be company investment supported by maybe a fixed asset or a technology acquisition grant, but the consultancy that identified the particular journey that needed to be undertaken by the company would be of a modest sum.
Mr. John Hughes:
My colleagues may wish to comment. The IDA has just over 1,800 client companies and for the vast majority, their domestic footprint in Ireland would be an SME even if, under EU rules, it would not qualify as an SME. There is a significant demand across the 1,800 client base because we need them to be competitive within EU competitor jurisdictions, never mind globally. There would be a significant percentage of that client base that still needs to progress that journey.
Ollie Crowe (Fianna Fail)
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Does Mr. Hughes think it is entirely necessary or are the companies currently managing the transitions without access to consultants?
Mr. John Hughes:
This is an enabling provision that does not guarantee any company a grant. The company would still have to make a strong business case that would be assessed by the IDA assessment committee and then the IDA board, and metrics would have to be agreed. There is no guarantee. What we are doing here is enabling the IDA, in cases that make economic sense, to give those grants whereas, currently, it is prohibited because it does not have the legislative capacity to make those grants available.
Ollie Crowe (Fianna Fail)
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I note that the opening remarks stated that this would especially benefit SMEs, which do not typically employ experts in digitalisation or decarbonisation. Would we be better off with enterprise agencies providing financial supports for such a staff position even within the SMEs or is it expected that financial support for consultancy will be considerably more efficient?
Mr. John Hughes:
My colleagues would have more experience on the ground within individual companies. It is not an either-or. It would seem to me and to the Department that it depends on what is the appropriate need of an individual client company at a moment in time, whether that is to employ somebody full-time on contract or to have consultancy. All of these will now be options that are available whereas, at the moment, consultancy is not an option even when the most appropriate thing may be to have a fixed-term consultancy arrangement that would then give the company the pathway it needs to travel to achieve the decarbonisation that we are all committed to.
Ms Breda O'Sullivan:
The purpose of this is to help companies to develop their plans. We see this consultancy as a way of developing a plan for them. It is almost like an investment plan. The consultant will help them to understand what they need on their site or in their factory so they can then have a full digitalisation project, a full energy efficiency project or a full capital deployment. It is just to make sure they have the expertise they need to put the plan in place. In that case, having someone permanently is not necessarily the right thing. They might have to hire people permanently when they are actually moving to the action phase but this is really just to help them to get there.
We do not know the numbers right now. This is an area that we are really pushing in our strategy to get companies to be involved in again. To underpin their investment in Ireland, they need to work on things like digitalisation and energy efficiency. It is to really make the Irish plant, the Irish factory or the Irish office as efficient as it can be and to keep companies here for as long as we can. That is the purpose. This is not an ongoing support so they will have a consultant working for them forever and a day. It is to put a specific thing together. One thing that will be in the grant agreement with them is the output or what is going to happen with this consultancy. For example, is it a digital plan, is it an energy efficiency plan and what is going to be the output? The payment will be dependent on that as well.
Ollie Crowe (Fianna Fail)
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In terms of environmental aid, the opening remarks mentioned that the creation of a new category of grant will allow the agencies to access such grant applications solely on suitable environmental criteria. Is there any risk that as the grant decisions are being made solely on environmental criteria, they will potentially be made for companies that face considerable other challenges and may have trouble in the future? For example, if a company is in serious financial difficulty, will there still be some mechanism for that to be taken into account or will it be picked up?
Ms Síle Murray:
With all of our grants and any proposals that come before our investments committee or our board, they have to go through a due diligence process and, subject to that approval, would enter into a grant agreement that has the necessary performance clauses, which would need to be complied with in order for payment to be made. With any contract, if it were to breach any of those requirements, there would be the ability to recover from that company. There are those measures and guardrails in place through the grant agreement process.
Paul Gogarty (Dublin Mid West, Independent)
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I will continue with the consultancy issue seeing as we are on that thread. The Arts Council had a botched IT project that involved consultants and wasted at least €5.3 million. Anecdotally, we have a lot of examples where public sector companies spend a lot of money on consultants and it is usually not very efficient - it is usually a case of “How long is a piece of string?”
In the context of subsidising specified sectors with a specified target, there is always the risk that consultants have a little surcharge and tell you what you might already be able to get if you did the research properly. There might be specific niche areas where consultants may be required. Why do the IDA and Enterprise Ireland not have a one-stop shop where people can get that type of consultancy knowledge? This would be for SMEs, for example. Why fund outside consultants to which the Department would pay a premium when it could, given the number of companies under the Department's remit, employ experts who could focus on whether additional consultancy services are required and cover much of that advice? That is my first question.
Mr. John Hughes:
I thank the Deputy. Some of my colleagues from Enterprise Ireland and the IDA employ business advisers who engage directly with companies. There are limits to the expertise we can employ within the individual agencies. This is an additional tool but the agency would still engage with the company. It would be a contract for a specific time with specific objectives for a contracted and specific sum of money. It would not be open-ended or have a certain amount. There is a certain amount available for an individual grant, and that is tied to performance criteria and achievable outcomes.
Paul Gogarty (Dublin Mid West, Independent)
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For those performance criteria, could the Department give me examples of targets that companies must reach within a two- to five-year period with the types of grants that already exist, as opposed to under the new legislation which makes it easier?
Mr. John Hughes:
My colleagues might like to comment on this but generally, the conditionality is usually attached. If, theoretically, there was an unsustainability on the environmental front, a certain percentage reduction would be achieved by a given date which could be the end of the second quarter of 2026. This would be the equivalent of the employment targets set year-on-year for companies when they commit to coming to Ireland and creating 500 jobs over three years. There would be milestones along the way where they are assessed. Only when the milestones are achieved can the grant be released. It would be a similar pathway which would operate for these grants. My colleagues might want to add to this but that would be the framework.
Ms Breda O'Sullivan:
I would like to add two parts to that. Again, we are looking forward because we do not have the enabling powers on this yet. Something like a site-specific climate action plan for the company could be one of the outputs it needs to get from this consultancy. There could be a site-specific digital action plan for the company. Outputs like that are what we would be looking for from the consultancy.
On the internal advice piece, as part of this strategy we have set up a transformation team in the IDA which looks at things like sustainability, training and digital upskilling. Their expertise goes to a certain level. Specific areas are looked at where something additional is needed by the company. Many companies are able to do this themselves. This is designed for companies that cannot do so and need additional help.
Paul Gogarty (Dublin Mid West, Independent)
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Great, thank you. Looking at the limited timeslot, I want to move on to something else.
Many questions have been raised about data storage companies coming into Ireland and the amount of energy they use, etc. My personal view is that unless they can produce a comparative amount of renewable energy, they should not be allowed into the country. In that context and in light of the EU's general block exemption regulation, is there scope in the future to give grant aid to AI data-heavy and power-heavy companies to set up renewable energy with battery storage or would this be totally left up to the companies coming in?
Mr. John Hughes:
I thank the Deputy. Environmental aid grant will be available to all current and potential IDA client companies. There could be grant aid assistance but, as we described previously, it would go through the various due diligence processes before any grant can be triggered. At present, we cannot have a specific environmental aid grant. This must come under some of the other headings so we are looking to incentivise and accelerate both the pipeline of companies for the IDA which could be coming in from the AI space and others as well as the existing client space. This will give us an extra tool to have in the green and sustainable sector rather than traditional fossil fuel energy sources.
Paul Gogarty (Dublin Mid West, Independent)
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In essence, the Department is not ruling out Ireland being marketed in the future as an ideal location for data storage that will say "by the way lads, we have grants available for you to do this." I am asking a judgment-neutral question here.
Paul Gogarty (Dublin Mid West, Independent)
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Very briefly, in five seconds, would a company investing in wave technology, for example, be able to get grants to further develop that technology through this system?
James O'Connor (Cork East, Fianna Fail)
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I will ask a question as a follow-up to Deputy Gogarty's questions. What is the threshold for a company to be considered by IDA Ireland as a foreign direct investment employer coming into the country and where is the cut-off? Is it the case that it has an excess of a certain number of employees or is it their market threshold? What is the definition of that?
James O'Connor (Cork East, Fianna Fail)
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I do not mean to be flippant but you cannot necessarily say that if a farmer in England wants to buy a farm in Ireland, that constitutes foreign direct investment. Where is the cut-off from the Department's point of view? Is it the case that the firm must be of a certain scale, a certain level or a certain financial value before the IDA deals with it? Do any of the witnesses know roughly - I do not want to put anyone on the spot - what that is?
Ms Breda O'Sullivan:
It must be in manufacturing or an internationally traded services company. For us to count it as part of our project numbers at the end of the year when we announce we have had a certain number of new names, there must be a minimum of 20 jobs in the project. That is the absolute minimum for a new name.
James O'Connor (Cork East, Fianna Fail)
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The general scheme of thought - this has been raised by quite a few members - is that providing grant aid to people who already have significant financial resources is inflationary or a poor use of taxpayers' money. As a summary, these are a couple of the items raised by members.
We will proceed now with our next speaker on the rota, Deputy McCormack.
Tony McCormack (Offaly, Fianna Fail)
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The Cathaoirleach can pass me if he does not mind.
James O'Connor (Cork East, Fianna Fail)
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That is no problem. For the second round of speakers, Deputy Conway-Walsh has indicated next.
Rose Conway-Walsh (Mayo, Sinn Fein)
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I thank the Cathaoirleach. I want to ask the witnesses about the EU omnibus simplification rules. This will remove requirements to act on climate plans and would appear to be a diversion from the aspirations of this Bill. Could the witnesses comment on that?
Rose Conway-Walsh (Mayo, Sinn Fein)
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If the Department could do so, that would be great because it is important. Obviously, competitiveness is to the fore in all our activities but we must ensure we do not reduce regulations. Everybody wants to have less red tape and to streamline things to make it easier for businesses to operate. I would not like to see this space being used as an opportunity by vested interests to unravel the good work being done. I am also mindful of the good companies that are ahead of the curve in what needs to be done to tackle climate change. I feel we could be doing what is currently happening at EU level regarding those vested interests.
While the Department is trying to do really good work with this Bill and address climate change, it could be doing the very opposite of it.
Mr. John Hughes:
What I can say to the Deputy is that from an inward investment policy perspective, we would look to see regulation that is balanced and proportionate and ensures Europe remains competitive vis-à-vis global competition, not just across the EU. Of course, we are looking for the Single Market to be deepened further in terms of both goods and service. Equally, the Department accepts that some of the new regulation simply reflects the maturing of some of the sectors that are more recent arrivals. As I said, we look at it through a lens of making sure it is proportionate and balanced and that it can be implemented fairly across the European Union and, ideally, globally.
Those are the benchmarks against which all the regulatory work in the Department is viewed. I will certainly be happy to get a note specifically on the omnibus simplification.
Rose Conway-Walsh (Mayo, Sinn Fein)
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That would be really useful because we have been examining it here in the committee. On the designated activity companies, none of the third parties will be private entities. Is that what Mr. Hughes is saying? Who owns the buildings or the land at the end of the day? Do tenants pay for that or how much do they pay for it? Would these designated activity companies be able to apply for State funding?
Mr. John Hughes:
In a moment, my colleague might want to come in but in principle, what we have in mind is the capacity to partner with ISIF. Then, we will look at local authorities and utilities. However, to be transparent with the committee, there is a possibility of having a private sector partner but there is not an active negotiation. The terms of each DAC will set out who the shareholders are, what the ownership is, how dividends should operate and how the wind-up of the DAC would include disposal of the assets the DAC has. All of that would have to be set out within the terms, not of the legislation but of the operation of that provision. In each case, the respective Ministers - the Minister for enterprise and the Minister for public expenditure - would have to approve the memorandum and articles of association for each individual DAC.
Rose Conway-Walsh (Mayo, Sinn Fein)
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That will be key and it is very important to follow on from this legislation. To be able to do that is a big piece of work in itself. I thank the witnesses.
James O'Connor (Cork East, Fianna Fail)
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I will be brief and ask this before we proceed to Deputy Hayes. We have much of the skill set in the room here from IDA Ireland on this particular matter. I am conscious IDA Ireland's clustering of different industries has been a huge success. In life sciences, for example, there have been enormous IDA success stories with Carrigtwohill and Little Island in my own constituency. I am always conscious that some peripheral towns like Youghal or other locations, without getting too parochial on this, have benefited from IDA advanced facilities and they have been enormously successful in bringing industry and employment into areas. There seems to be a bit of a drift from that policy. I know Ireland has to cater for large-scale, multinational firms, which have brought enormous levels of investment, corporation tax and economic success to the country, but there is an obligation on the Government to bring employment to regions that need it.
My home town was a hugely successful location for textiles. Kodak flash cameras were made there. Power Products made manufacturing products and around the turn of the millennium, more than 3,000 jobs were wiped out in Youghal. Since then, we have never had the IDA successfully return. I met with Martin Shanahan on this matter when he was chief executive and shortly before he took up his new role. I would love to see a return to that. On a policy level, while we have the manager of strategy and policy and the head of the strategic property department in the IDA, I would love to get a little insight on that particular topic.
I know the IDA is looking at three or four major sites nationally. How is that going? There is a huge importance for the country in that it works with local authorities. We had the board of directors of Cork Chamber of Commerce here recently and what the future of the Little Islands and Carrigtwohills would look like for the IDA was of great interest to them. It is the same for any region really, but is the IDA finalising the identification of future major-scale development locations?
Ms Sarah O'Connell:
On the first point, there is a very strong, well-established base of FDI client companies, particularly around the places the Deputy mentioned such as Carrigtwohill, Little Island and across the entire south-west region. Obviously, our focus is on strengthening that regional investment and footprint. As a consequence, we have realised 235 client companies across the region, employing more than 51,000 people. We do not see those 51,000 people as based within the Carrigtwohill area. It has quite a broad stretch across the entirety of the region. Our focus is on that cluster and ensuring we can leverage the companies that are pre-existing through transformation and new incentives. Of course, we will seek to attract new client wins within each region. It is important that we look at it from the regional context as well as the national context so we can ensure the ecosystem has the right supports in place to support that existing footprint and the clients of the future.
On the next generation strategic sites, we absolutely are looking at an initiative in that space. It is a very ambitious activity around identifying locations that have the potential to have a significant footprint based on them, and the search continues.
James O'Connor (Cork East, Fianna Fail)
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It is interesting to get insight into that. Does Mr. Hughes have any comments on that?
Mr. John Hughes:
Certainly. On the next gen sites, we are currently negotiating the revisions to the national development plan. Clearly, a quantum of resources will be required for the next generation sites, which might involve three large-scale sites that will be much bigger than the Intel campus we are all familiar with. There will be significant planning, utility and infrastructure requirements so that is all being negotiated with the revision of the NDP.
On the question on clustering, two things occurred to me. We have funding in the Department this year for a national cluster policy. We are looking to develop and, in quarter 3, launch three particular clusters at a national level as a pathway to further clustering. In the context of Irish companies in regional and rural locations, when the Minister, Deputy Burke, launched Silicon Island, the national semiconductor strategy in May, we had four companies represented in the discussion on the strategy. Two of them are Irish-owned companies, one of which has grown to more than 100 employees in a short period. They are both in the west of Ireland, in Galway. We hope to see more happening in the regions. The previous IDA annual report showed that 59% of its investments were in regional locations. We are looking to see that encompass supports for rural locations, directly or indirectly.
James O'Connor (Cork East, Fianna Fail)
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I have enormous respect for the separation of the roles that the Department and the agencies have to do. It is important not to forget Enterprise Ireland, which is here with us too. We can see the difference between a town that has had success with bringing in an IDA client and one that has not. For example, Panadol is manufactured in Dungarvan and we have seen the spin-offs from that. Nurofen's laboratories are going in as well and there are so many companies that co-locate. A 20-minute drive up the road, Youghal is a town that had a huge, historic role to play in industrial manufacturing but those roles, unfortunately, became redundant because of the passage of time and a change of demand. Youghal and Dungarvan are like Charles Dickens's A Tale of Two Cities economically.
On top of the clustering of the three new facilities, which is extremely important for the State, there should be an obligation in the Department's communication with the IDA to give attention to towns that feel in some sense forgotten. There is an economic reality to this and I do not want to take away from that but I have been frustrated with IDA Ireland. I met with it but I never got a formal reply from the meeting I had with the previous chief executive on that matter. I wanted to take that opportunity to raise it again.
I commend the representatives of IDA Ireland on what they are doing in Cork. There have been some phenomenal success stories and growth.
I call Deputy McCormack for his first round.
Tony McCormack (Offaly, Fianna Fail)
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I apologise for being late. I was at a funeral earlier. I do not want to ask questions asked already. My question is specifically for the guests from IDA Ireland but those from the Department may respond also if they so wish.
I compliment IDA Ireland on the work it does. It is the best in the world at what it does and is copied by many countries. It is responsible for the successful introduction of so many foreign direct investors to the country.
Following on from what the Cathaoirleach said about balanced growth right across the country, probably 1,200 houses will be built in the next two years in the area of the midlands I come from. We will have population growth of about 3,600. People working in Dublin will be moving down to Tullamore and the surrounding area to live, and we would like to see more jobs created for them locally. Unfortunately and fortunately, our IDA Ireland park is full. One unit there will become available but I expect it will be filled fairly quickly because it is in a good place. We need another IDA Ireland park in the area for us to be attractive to foreign direct investors. There are companies in the area that have a track record, companies doing some fantastic things and also companies that will attract other companies. Among these is STERIS, a leader in the sterilisation of medical devices. It does business not only with businesses in Ireland but also with companies on the east coast of the US. It is a big player in sterilisation and could be an attraction to other medical devices companies. I am very thankful for the jobs that have already been created in Tullamore by companies that have worked very closely with IDA Ireland.
My question is on IDA Ireland parks. I am aware that there is a witness present from the properties section. What is the state of play? How much property is IDA Ireland hoping to purchase in the coming years? It is all about retention now because of the global headwinds we are facing into with regard to tariffs. What are we doing to retain jobs? What suite of supports is IDA Ireland or the Department of enterprise offering companies to keep their business here so we can look after employees and keep them working? I can imagine the pipeline is quite tough at the moment because many businesses are in a holding pattern because of what is going on with regard to tariffs and other developments in the US. What is the pipeline like for Ireland Inc. in trying to attract companies to do business here?
Mr. John Hughes:
For a number of years, the first issue raised with Ministers on global trade missions has been housing. This is followed by the issue of the energy grid and so on. Housing is a key draw for companies that come to regional locations. In the new IDA Ireland strategy, there are plans to work on further land and building projects, particularly through working with the local authorities to develop several advanced planning permits so all the planning will be in place in collaboration with IDA Ireland and the local authorities. I am aware there are nine proposed under the new IDA Ireland strategy, and these pertain to Letterkenny, Mayo, Tullamore, Mullingar, Kilkenny, Navan, Portlaoise, Tralee and Roscommon. These are nine partnerships between IDA Ireland and the local authorities to get to the level where planning permits are in place. When in place, the appropriate buildings, depending on the occupier, can be built and fitted out in quick order. I do not know whether colleagues from IDA Ireland would like to add anything.
Ms Sarah O'Connell:
I can come in on that. I thank the Deputy for the question. He is absolutely right that our property portfolio is one of the key parts of our value proposition when engaging with clients, particularly through our global market teams. The availability of the sites and buildings is imperative to us in making sure we can demonstrate a client can establish its operation within the regions. We work with all the stakeholders in each region to ensure we have appropriate solutions in place, and part of that is the continual search for parks and lands in appropriate locations. The advanced planning permits Mr. Hughes has referred to are a key part of that. We are very much engaging with the local authorities in this regard.
Mr. John Hughes:
Deputy McCormack mentioned the tariffs issue. The Tánaiste has announced that the trade forum will have a further meeting next week ahead of the US deadline of 9 July regarding the implementation of the terms. The enterprise development agencies are working closely with their client companies, as is the Department with all the representatives groups, to establish the implications. Many of these concern their supply chains as distinct from those we can all readily identify at the front line. There is a lot of due diligence work ongoing dynamically regarding that, and it is all feeding into the trade forum.
The majority of the IDA Ireland supports are for existing companies in the jurisdiction in respect of third- and fourth-generation research and development and innovation investments, but equally they prioritise training and talent so we have the most skilled workforce. One of Ireland's main attractions is the quality of its workforce, and that continues to be one of the areas IDA Ireland is significantly reinforcing in its strategy and investing in through its grants to retain the existing companies, which may be operating on tight margins. Often, the skill and talent available in a company make the difference in weathering a storm such as that posed by the current geopolitical difficulties.
Tony McCormack (Offaly, Fianna Fail)
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I asked about the pipeline and competitiveness, to which Mr. Hughes referred. In this regard, how is foreign direct investment affected? Ireland might not be the cheapest place but we are trying to improve the skill set of employees to make it attractive. Competitiveness is obviously a major factor. A company that was lost to Tullamore looked very much like it was closed not because of the skill set but the fact that Ireland was too expensive for it. Products manufactured here can be manufactured at a cheaper rate in Costa Rica and other parts of the world.
Ms Breda O'Sullivan:
I will respond to that. We can never be complacent about the investment we have here. A major focus of the new strategy is placing clients at the centre and working on strengthening investments already made here. This becomes more important in turbulent times, with the current tariffs and all the rest of it, but it has to happen all the time. It relates to what Mr. Hughes said about training and upskilling in research and development, and also to some of what we were talking about today in terms of environmental aid and increasing energy efficiency. A company cannot take a lot of cost out. There can also be help with competitiveness in the area of digitalisation. We just have to keep working with companies all the time. I am aware that there are huge moves at governmental level nationally to ensure we are always focused on competitiveness, because complacency in this area is very dangerous.
Our CEO is issuing half-year results for the year to date on 2 July. The numbers are not finalised yet but it looks like they will be more or less similar to those of last year.
Ollie Crowe (Fianna Fail)
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Mr. Hughes referred to a couple of hundred IDA Ireland jobs in Galway. Could he expand further on those?
James O'Connor (Cork East, Fianna Fail)
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The Senator is going back to Galway very happy tonight. We will go to Deputy Clendennen for his first round and then Deputy Hayes.
John Clendennen (Offaly, Fine Gael)
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I apologise for missing part of the session. What has been put forward is very much welcome. Anything we can do to improve our competitiveness and sustainability in terms of growth is important, but I note that the focus is on the IDA and Enterprise Ireland, in particular, when it comes to grant assistance. Does that then drive a wedge as regards SMEs? When we see how a lot of these smaller companies are contributing to the success of IDA and Enterprise Ireland companies, through providing whatever auxiliary service, will it increase the level of compliance for them? What supports will subsequently be there as a result of that?
On increasing the term of appointment to the IDA board from three to five years, how are diversity, gender balance and so on managed? Is there a policy for that right now to ensure we have a diversity of wealth in talent and experience? It is also about ensuring, when we are at the cutting edge of the likes of artificial intelligence, there is a newer-type profile of member representation at all levels of governance within our enterprise sector to ensure the best of expertise in artificial intelligence, and everything in relation to innovation, are adequately represented.
Mr. John Hughes:
I thank the Deputy for those questions. On the SME aspect, I emphasise that the additional opportunities for grant aid proposed in the legislation will apply to both the IDA and Enterprise Ireland. The Enterprise Ireland client base of indigenous companies is also comprehended by the changes we are proposing, particularly on sustainability.
John Clendennen (Offaly, Fine Gael)
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I will stop Mr. Hughes for one second. What if I am a new starter and I am not eligible? If I come under the local enterprise office, I do not qualify for Enterprise Ireland because I am in the tier below that. If tier 1 is the IDA, tier 2 is Enterprise Ireland and I am in tier 3, what is the support for me? Where do I fit into the equation?
Mr. John Hughes:
The Minister has just launched a dedicated SME unit within the Department, which is driving the SME and LEO agenda. That is not comprehended by this legislation but is covered by the work of the SME unit and various initiatives, through LEOs and other supports, including the work on the cost of doing business that the Department is promoting. It is not comprehended by this legislation but initiatives in the Department in that area are being driven by the Minister.
On the IDA client base, it is worth recording that an Indecon study showed that for every ten FDI direct employment jobs, there are a further eight indirect employment jobs in the economy. With a little more than 300,000 jobs in the IDA client base, that is another 240,000 jobs in indirect employment. Many of those are in sub-supply chains and are SMEs. We have seen that over the decades in spin-outs and sub-supply from some of the large blue chip companies that are well known. It is not directly but there can be indirect benefits. Equally, there are initiatives to support the SMEs and LEOS. They are just not covered by this legislation.
John Clendennen (Offaly, Fine Gael)
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Perfect. I emphasise the point that an imbalance should not be created as a result of this legislation. That is the point.
John Clendennen (Offaly, Fine Gael)
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What about governance and-----
Mr. John Hughes:
My colleague is on the board of the Health and Safety Authority. She will address that. Generally, the IDA, for which I have the lead responsibility in the Department, changes two of its 12-member board every year. As part of that process, the chair assesses the diversity, including gender, skills and sector knowledge, on the board at a particular moment in time. He engages with the Public Appointments Service and the State board appointments process to ensure, when there is that opportunity every year to refresh two posts on the board, the IDA is as up-to-date on the different skills portfolio as is required. The company secretary happens to be in the room but I think that might address it writ large.
Ms Fiona Kilcullen:
The Health and Safety Authority has a tripartite board. There are representatives from the employer and employee sectors. The Irish Congress of Trade Unions makes nominees, as do the employer groups. There are also government appointments to public boards through the Public Appointments Service. It is a very diverse board as regards gender, disability, background and skills. That is kept under review.
Eoin Hayes (Dublin Bay South, Social Democrats)
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I have two small questions and I will then raise a big area of investigation under heading 7. On the budget split between the IDA and Enterprise Ireland, I ask for a sense of the budget allocation at the highest level. We are getting into budget season and I am curious about that. What is typically the ratio in respect of some of these grant allocations? How does it fall between the IDA and Enterprise Ireland?
Mr. John Hughes:
My colleague from Enterprise Ireland may have the figures at his disposal. I only know the IDA figures. That is my responsibility. The IDA budget is approximately €283 million. The capital element of that is approximately €180 million. Well over €100 million - I think it is €116 million - is expended on grants to industry. That includes supports for the likes of the National Institute for Bioprocessing Research and Training, NIBRT, Digital Manufacturing Ireland and so on, which I mentioned. A sum of €75 million is on the regional property programme. These are approximate figures for the IDA off the top of my head.
Eoin Hayes (Dublin Bay South, Social Democrats)
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The €180 million is for capital. Of that, €75 million is in property with the remainder being in grants to companies. Is that right? There is then €100 million for operating expenses.
Eoin Hayes (Dublin Bay South, Social Democrats)
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That is fine.
Mr. John Hughes:
Of the total of €280 million, approximately €120 million is for grants to industry, €75 million is for the regional property programme and approximately €70 million is split roughly 50:50 between staffing costs, promotion and advertising, the overseas property footprint, marketing and so on, which is clearly a significant cost at a global level, as it involves purchasing ads on social media, Bloomberg and the like.
Eoin Hayes (Dublin Bay South, Social Democrats)
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That makes sense. Is there any chance the representatives of Enterprise Ireland might have the Enterprise Ireland figures off the top of their heads?
Mr. Donal Leahy:
I have some figures. I do not have the overhead figures for 2024, but the moneys paid out to companies in 2024 included infrastructural payments in the order of €46 million and non-infrastructural payments of €155 million, giving a total of approximately €201 million. The total for 2023 was €210 million.
While I have the floor, I will very briefly give Senator Crowe some extra good news. I know he has left but it might be passed on. Mbryonics is a local, Irish-owned company and not an IDA company, so he can be extra proud of that company.
John Clendennen (Offaly, Fine Gael)
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Does Mr. Leahy have anything for Offaly?
Eoin Hayes (Dublin Bay South, Social Democrats)
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On infrastructure versus non-infrastructure, I know there are equity investments. Is that separate? How is that categorised?
Eoin Hayes (Dublin Bay South, Social Democrats)
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Okay, perfect. How does this grant allocation typically split between the IDA and Enterprise Ireland? Is there any philosophy for how these kinds of grants should be supporting these different types of sectors? Is that decided internally by the Department or by the Minister?
Mr. John Hughes:
The two agencies have just agreed independent five-year strategies. The grant allocations will follow the priorities set out in those strategies. For IDA, that is on the four sectors I mentioned previously: AI and digital; sustainability; health or life sciences; and semiconductors. However, these are not exclusive. The IDA is also prioritising the existing base, which includes pharma, med-tech and so on. Equally, the strategy will be adjusted as the programme for Government and other issues might require. The priority within that is to support research, development and innovation, which is allocated approximately three-quarters of grants, talent and upskilling of workers in the workforce, as well as supports for the ecosystem. The fourth strand is the significant spend on the regional property programme in terms of buildings, strategic sites and, coming down the line, the next generation sites.
Eoin Hayes (Dublin Bay South, Social Democrats)
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What is a technology acquisition grant? How would Mr. Hughes define it? What is the purpose of that grant?
Eoin Hayes (Dublin Bay South, Social Democrats)
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Is this a procurement idea? Is the company acquiring the technology for use versus ownership?
Eoin Hayes (Dublin Bay South, Social Democrats)
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Perfect. Does Ms Murray have anything to else to add?
Ms Síle Murray:
To add to Mr. Hughes's comments, as is provided in section 30 of the Industrial Development Act 1986, it relates to acquiring licences or knowledge of a product or method of production and the payment of fees relating to technical advisers consulted in connection with the acquisition of the technology, and the salaries and wages paid to and travel subsistence expenses of persons engaged in the acquisition of the technology. We are somewhat constrained by what is provided in the legislation but that is essentially what the expenditure relates to.
Eoin Hayes (Dublin Bay South, Social Democrats)
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That is helpful. I will look into that.
Paul Gogarty (Dublin Mid West, Independent)
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It is good to be able to broaden things away from the legislation. However, it is an opportunity to ask questions when the witnesses are here. I would like to talk a little about industrial policy. I note that the chairperson of the IDA is on the task force on infrastructure the Minister set up. A lot of that infrastructure relates to transport, the national grid and energy but crucially it is mainly about housing supply. I heard anecdotally that in a new development in my area, and this is me being very presumptuous, approximately 90% of the names of the people in a group within that development sound as if they came from outside Ireland. That is important in this context: there was a quote on the IDA website from John Ross, vice president of product, messaging at Zendesk:
Dublin is such a hub for big tech companies that you might think ‘if we come to Dublin, we’re going to be competing with all of them, we won't be able to get good staff’. But I think the opposite is true. Because we’ve got such a base of well recognised brands in Dublin, that actually brings qualified people from all over Europe here.
Regarding policy on, for example, software-localisation, these are all high-paying jobs. They are all in Dublin. If you are a nurse or a bus driver, whether you were born in Ireland or have come from overseas, you cannot compete with that level of earning power when it comes to property prices in the greater Dublin area. Does the industrial policy need to change? Going back to the days of T. K. Whitaker when we were trying to bring in people because we had a very knowledgeable base for manufacturing. We have already talked about the service industry and how that is creating jobs for people, which is well and good, but increasingly we are creating jobs we have to outsource for software-localisation. While this is welcome in terms of diversity and our overall wealth, it is placing huge pressure on the housing market. When it comes to being strategic in regard to housing, is there any thought in terms of policy on reinvigorating the old Quaker-style methodology where they built houses for staff, or looking at planning regulations that would allow the likes of Google to have a complex where people could live and work because they may be transient for two or three years before they look for housing?
Regarding the regions, with the expansion of the broadband network, if we are bringing a software company in, perhaps we need to look at targeting specific towns where we need to have people to invest in local services, and keep post offices and schools open. If we are going to have companies that will have a large input of people coming from overseas, as well as the jobs they are creating for workers already based in Ireland, maybe we need to focus them in areas where we need that population so as not to over-pressure the greater Dublin area where house prices are going up. Has that been thought about or will it feed into the task force? Have these type of social policy question been fed into IDA industrial policy?
Mr. John Hughes:
The IDA's strategy is aligned with the White Paper on Enterprise which is the Government's overall strategy since December 2022. That is being revised in light of geo-political developments and the other challenges, several of which Deputy Gogarty identified, including housing. The current policy the agency is following at the behest of the Department endeavours to favour the regions. For example, there are no employment grants available in Dublin from the agencies. Equally, the agency works with the regional enterprise plan teams in each of the regions, as well as the local universities and colleges with a view to grow infrastructure to make the regions more attractive, particularly in the context of housing as it is driving up the cost of business as well as the societal issues the Deputy referenced. All of those are key considerations in the current IDA strategy and its desire to bring as many companies to the regional locations as it can. Last year, 59% of all investments were in the regions. The agency is looking to do that and is working across Government to achieve those objectives. On housing, it works with the Land Development Agency to make sure there is compatibility between the efforts of those responsible for housing policy and those of us responsible for the enterprise policy. They do talk. Ultimately the companies decide where to locate but we are trying to make it as attractive as possible to go to the regional locations where the cost base and the place-making is much more attractive than in highly expensive urban locations.
Paul Gogarty (Dublin Mid West, Independent)
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They do want to go to Dublin. That is the challenge. Is there a way of disincentivising Dublin, as well as incentivising regions?
Ms Breda O'Sullivan:
I do not think we can underline enough how focused the IDA is on the regions. We are aiming to get 55% of all projects to the regions. We are very much in line with the national development plan with what we are doing with the building programme, the advance planning permissions and so on. We have an office in every region and they work with the local stakeholders to attract as much as we can into the regional locations. Over many years, all of our systems have been tipped towards the regions. Even in our economic model, companies get less benefit from the State if they locate in Dublin.
If they do research and development, things like congestion charges are included in the model. If they are doing it in Dublin versus the regions, the regional aid rate is obviously higher in the regions. You cannot give employment grants in Dublin. Right across the system, there is a rebalancing in all sorts of layers to encourage companies to go to regional locations but there will always be projects that will only locate in Dublin and if they do not come into Dublin, they will not come into the country. That is the other piece.
Paul Gogarty (Dublin Mid West, Independent)
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Elon Musk is trying to get everyone back working in offices and there is a benefit to that but is it part of IDA policy to ensure people can work from home part of the time, both in the regions and in Dublin, to reduce the pressure on things?
Ms Sarah O'Connell:
I think that has been a successful piece around trying to have second sites or sites in the regions. Our regional team and the offices across the country are working with local hubs where they can access those services so they can work remotely from the existing headquarters. As Ms O’Sullivan has pointed out, nearly 850 of our client companies are based in the regions outside of Dublin. The key focus in our strategy is around strengthening that investment and leverage the existing footprint to try to achieve more investments within that.
James O'Connor (Cork East, Fianna Fail)
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I thank the witnesses for their time today. While Enterprise Ireland and IDA Ireland in the room, it would be brilliant for the committee to have the opportunity to do onsite visits to the respective agencies. We will be engaging with the Department and the Minister soon. It is very helpful. The witnesses are most welcome and I know the members here appreciate it.
I have a bit of housekeeping here.
John Clendennen (Offaly, Fine Gael)
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Just as a follow-up to Deputy Gogarty’s comment-----
James O'Connor (Cork East, Fianna Fail)
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Very quickly, if that is all right.
John Clendennen (Offaly, Fine Gael)
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I did not mean to get into this today but I will since the topic has arisen. On jobs and visits, taking Offaly on its own or Laois-Offaly, this year Offaly did not get one visit from a potential IDA client for the county. Laois, a neighbouring county, had one yet Galway, as mentioned, had the highest number. We have a situation where the jobs are following the jobs. This year there have already been seven or eight visits to Galway, where there are 24,000 jobs. In Offaly, which had zero visits, we have 1,400 jobs and in Laois, which had one visit, there are 145 jobs. The counties with the least number of visits are getting the least number of jobs. There is a direct correlation there. A question I have, which I do not expect the witnesses to answer today, is: what will they do to try to address that imbalance to ensure there is not only that regional development piece but there is also that county development piece to ensure it is balanced too?
Ms Sarah O'Connell:
The number of site visits is just one part of the picture with respect to how we seek to identify investments for regional locations. It is important we focus on our national remit and on the whole region. Within the midlands, there are over 8,500 employees across 52 client companies, of which there are 1,420 based in the county of Offaly. It is probably unfair to say those site visits are representative of the number of investment wins but they are just one part of the picture with respect of that journey of identifying investments for each of the regions.
John Clendennen (Offaly, Fine Gael)
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Where I come from on this is that when you see job losses - I am sure Deputy McCormack has spoken about this too in relation to Cardinal Health - is about instilling confidence in the likes of me as a public representatives and in the broader enterprise community at home to make sure there is an action plan to ensure that void will be filled. When I see there were no visits, where can I get that confidence from? What can the witnesses tell me so that I can go back to people who have serious questions about what is going on in terms of the IDA developing and delivering for Offaly, as a county, with that reassurance?
Ms Sarah O'Connell:
Our colleagues in regions and myself on the property side would instigate what we call a job-loss protocol when the unfortunate event arises where we have a closure within a region. That has a number of strands and goes across many activities with many different stakeholders from looking to upskill the existing employees and support them on their journey and the next steps to marketing the facilities across our global teams to make sure that the wider ecosystem is aware of the availability of that infrastructure and facility within that county or town. It also includes upskilling and engagement with the local authority around how we can set out the stall with respect of the location and all the things it offers. We are very proactive in that space in making sure we put together the right stakeholders to try to remedy or resolve an issue that has arisen or where there is a job closure or a company closure in a region.
James O'Connor (Cork East, Fianna Fail)
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I thank our witnesses for their contributions to today’s meeting, which will be useful when we come to consider whether the committee wishes to carry out pre-legislative scrutiny of the general scheme of the industrial development (miscellaneous provisions) Bill 2025.
We will now suspend before we resume in private session.