Brendan Howlin (Wexford, Labour)

I thank the Ceann Comhairle for allowing me the opportunity to raise what is a critical issue for Ireland's economic progress. I hope to get a comprehensive response from the Minister.

The decision of the Government, in the face of reported opposition from the European Commission, not to proceed with plans to provide grant aid for the planned extension of the Intel plant at Leixlip, County Kildare, raises a series of important questions that need to be addressed by the Government. This is an important issue for the people of Leixlip and surrounding areas who were looking forward to the 400 additional jobs at the expanded Intel plant. It is equally important for other parts of the country where people are concerned that their hopes of attracting foreign manufacturing industry might be dashed by any wider decision of the European Commission to prohibit grant aid on the basis that it might constitute an illegal state aid.

Intel is a major employer and a flagship project for Ireland's high technology sector. Some people might argue, with some validity, that a huge and very profitable multinational company like Intel does not need grants from the State, and that is probably true. However, this is now the basis on which decisions on the location of multinational companies are made. If we are not able to compete with other international locations outside the EU for grant aid, then there is clearly a danger that we may lose out.

The situation is made all the more uncertain by the fact that no determination has been made by the European Commission on the matter. We do not know whether the grant aid proposal would have been approved by the Commission because the Government took the extraordinary step of withdrawing the application. Government sources are quoted as saying that there were clear indications from the Commission that it was preparing to rule against financial assistance, but surely there was a case for allowing a decision to be made so that everyone would be clear about where the Commission stood. This is especially the case since we understand that the Intel development is going ahead in any event. There must have been a strong case to be made that the proposal did not constitute an illegal state aid, especially since it is quite clear that there was no prospect of Intel locating this project anywhere else in the EU. If it was not coming to Ireland, it was clearly going to go elsewhere in the world.

As a matter of urgency, the Minister must clarify why this package has fallen through and specifically why the Government decided to withdraw it before a final decision was made by the Commission. He should also explain why his Department and IDA Ireland came to hold a view on this aid package which was so at variance with the European Commission that the package was withdrawn. We need a detailed explanation from the Minister on why the proposal was so vigorously opposed by the Commission. He should also indicate what implications this has for other projects in the pipeline, particularly in the vital high technology sector.

It is important that we know whether this is likely to be a once-off occurrence or whether there are ongoing implications for the IDA Ireland strategy of developing the high-technology sector. Foreign investment has been a great source of jobs over the past four decades. It is essential for our economic future that we should be able to continue to source jobs in this way. However, the experience with this project, as well as the warning from some that the era of large-scale state aid for industry is nearing an end, provide a timely warning against placing all our eggs in the one industrial basket. While continuing to seek investment from abroad, we also need to make more effort than we have done in recent years to promote the development of the indigenous high technology sector and manufacturing industry. A clear enunciation of Government strategy is now urgently required.

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