M J Nolan (Carlow-Kilkenny, Fianna Fail)

I welcome the opportunity to speak on the Investment Funds, Companies and Miscellaneous Provisions Bill. I commend the Minister of State on introducing the legislation.

We are reminded from time to time of the success of the International Financial Services Centre, an initiative that was launched in 1987. The Government of that time received a great deal of criticism because it was felt that the centre would be a white elephant. It was claimed that we would all regret the folly of constructing such a monstrosity on the banks of the River Liffey where it would be in full view of foreign visitors. Within a few years of the construction of the IFSC, it was clear to all concerned, including some Departments which might not have been too enthusiastic in their support for the project, that it would be successful. Most importantly, it was clear to those involved in the financial, banking and insurance sectors that the Government which was in power in 1987 had made a progressive and enlightened decision.

A great deal of legislation has been necessary since 1987 to cater for the unique nature of the IFSC development and to accommodate the changing needs of the financial services sector. The authorities in this country — I refer in particular to Dublin — have been applauded for the initiative that was taken in 1987. The IFSC template used in this jurisdiction at that time has been copied by a number of countries and cities where similar centres have been constructed. The Department of Finance is regularly asked by ministries in other countries to explain the reasons for the success of the IFSC initiative.

The Bill before the House is part of a raft of up-to-date legislation that is needed on an ongoing basis if we are to compete successfully with other countries. Ireland faces serious competition from other players in the financial services sector. Apart from the changes to the laws relating to investment funds, a number of other changes to general company law are proposed in the Bill, many of which will directly or indirectly impact on at least some aspects of the operations of companies used as investment companies.

Some of the detail is rather technical but I understand from the Minister's opening statement that the Bill has been introduced to keep Ireland competitive and at the forefront of international finance. It is fair to state that Irish banking and Irish banks are competitive and profitable, as is suggested by recent reports on the two main Irish banks. It is important that the banks remain profitable. The last thing we want is a situation similar to what arose in Japan last year, when a number of high profile banks collapsed or had to be bailed out by the Japanese Government. It does nothing for the confidence of the general public or the commercial sector, local or international, in a country's banking system to see intervention by departments and governments to help out large financial institutions, banks in particular. While some sectors criticise the vast profits made by our indigenous banks, their profitability demonstrates a healthy state of affairs and shows that the economy, as run by the Government, is healthy and continues to grow. Growth rates of 5% per annum are not to be sneezed at and many fellow EU member states would be more than pleased to claim such growth rates.

The current position is in marked contrast to that of 15 years ago, when there was poor growth and a poor outlook, as well as unemployment rates of up to 18%. There has been a sea change in many aspects of Irish life since then — long may that continue. However, the area of regulation is of concern to some organisations. There is a school of thought that we have become over-regulated and the Government should consider this area. A raft of legislation seems to come from the European Union, which puts a great deal of pressure on companies to comply with regulations.

I question the wisdom of some of the regulations being introduced to Ireland. At some stage, we might be forced to turn away foreign direct investment due to the level of regulation with which companies and others must comply. While we have not reached that stage yet, public representatives and Oireachtas Members are fully aware of all the legislation with which they must comply. The Minister for Enterprise, Trade and Employment must bear this in mind. I am sure he is listening to similar concerns about the level of regulation being expressed by companies that wish to set up in Ireland, particularly foreign companies.

I am concerned by the slowdown in the number of companies looking at Ireland as a good base to set up operations. My home town of Carlow has an industrial and technology park that has lain vacant and unused for the past two years. IDA Ireland has invested more than €11.5 million in this facility but to date there is little interest among overseas companies in locating there.

Due to the success of the economy, we have moved from having a low wage, low skilled workforce to having a high skilled, well educated workforce, which demonstrates the progress we have made. The focus for jobs must be in the high skill area.

Last year the Department of Enterprise, Trade and Employment stated that Ireland had experienced net immigration of workers of approximately 55,000 to 60,000 workers, and that this would continue into 2005 and beyond, which is positive. For the economy to continue to prosper and grow, we need a high level of foreign labour. In some sectors of industry, employers find it increasingly difficult to attract suitable employees. This is reflected in higher prices, in companies having to cut down on overheads and make savings, and, in some cases, in the restriction of the expansion of indigenous industries. The service sector, where there has been huge change, probably has most experience of this. Anybody who visits a restaurant or bar will know of the change in the nationality of many of the staff providing services, be they counter staff or waiting staff. It is something we will have to get used to because it will be part and parcel of Irish life and society in years to come.

The success is based on a number of factors. However, a point we often lose sight of, and which is relevant in the context of a Bill that deals with investment funds and international financial companies, is that such companies would not have set up in Ireland but for its first-rate telecommunications systems. Many Members will remember the situation in the late 1980s when one of the most important issues on politicians' desks related to the difficulty for individuals in acquiring a telephone line. Young entrepreneurs of today would laugh if some of the issues common at that time were highlighted.

Major investment took place in the late 1980s under the then Minister for Post and Telegraphs, Mr. Albert Reynolds. There was criticism even at that stage of the level of investment in telecommunications infrastructure. Thankfully, the investment went ahead and, following from that, we succeeded in attracting a number of well known international companies, which set up backroom telemarketing operations here. At a time when a large number of young people were on the unemployment register, such developments were welcome and took up much of the slack when little other employment was available.

The Bill should ensure that the employment content of the international financial services centre will continue to be of significance. The sector is a significant employer, with a total of more than 51,000 employees, of whom more than 17,000 are engaged in the provision of wholesale or international services. Ireland has been very successful in this area. We must continue to update our legislation, the way we deal with international companies and the way we interface with the European Union if we are to stay competitive in a very competitive market.

A recent IDA Ireland report, commissioned by the Department, identified a number of opportunities regarding Ireland becoming the major European centre for specialised debt and financing products. Ireland was also identified as a world-class location for marketing global and regional banking products. There is a general acceptance in the financial sector that Ireland is a good place to come and work. While it is increasingly more difficult to commute in and out of Dublin and throughout the city, it still attracts our European neighbours. The people I have met in the financial services sector enjoy their work in Ireland and the evidence of this is that so many have remained, settled down and become part and parcel of our society.

In a recent statement, the Minister for Enterprise, Trade and Employment referred to the success of social partnership and industrial stability. We often forget how stable are our workforce and industrial practices. Last year was a record year in that strike statistics were the lowest in terms of days lost since 1923. That is an incredible feat when one remembers the events of the past 20 years when we seemed to go from one crisis and strike to the next. In addition, 2004 had the lowest number of disputes — nine — since 1923, which is also a noteworthy record.

A number of factors have influenced the trend of relative stability in industrial relations, including the implementation of the provisions of the national partnership agreement, Sustaining Progress. There has been some criticism of the programme, but in time it will be regarded as another successful strategy on the part of this Government. The Sustaining Progress agreement provides an enhanced role for the Department's dispute resolution agencies, the Labour Relations Commission and Labour Court, when dealing with disputes regarding compliance with the terms of the pay agreement and rights to bargain. Both agencies have a good track record with more than 80% of cases settled at conciliation stage by the Labour Relations Commission and the vast majority of Labour Court recommendations are accepted by the parties.

This Government set up the Personal Injuries Assessment Board and while it is still in its infancy it has had a sobering effect on insurance claims and litigation. The PIAB was established as a direct response to consumer needs with regard to insurance costs. The cost of insurance escalated over the past three years and something had to be done. I commend the former Minister, Deputy Harney, for the initiative and on her single-minded determination to establish the board. Since July 2004 all motor, public, employer liability and personal injury claims must be referred to the PIAB before legal proceedings may be issued. The legal profession is anything but happy about this development. However, if it succeeds in reducing the cost of insurance to the general public, industry and the commercial sector it is a worthwhile project and will be regarded as such in time.

The establishment of the PIAB was one of the key initiatives in reforming the process of the delivery of compensation in personal injury claims. Using the Book of Quantum as an aid, the amount of compensation received by claimants will continue at a level equal to that awarded before the establishment of the board while delivery costs and time frames will be greatly reduced. This will benefit the consumer, claimant and public in general. The PIAB has made its first awards within the nine-month period required by legislation. This is a major improvement for accident victims who previously waited years for compensation. We have all heard of claims that went on for three, four or five years. Some of the claimants were dead before the case eventually came to court.

While compensation levels have remained constant, the cost of delivering the awards and the time lapse involved have been significantly reduced, by years in some cases. The awards were made within nine months of the claims being made to the board. Excessive litigation has been removed as the processing costs for claims are, on average, €1,250 in the PIAB process. Claimants may choose to be legally represented at their own cost, which is important to note. The injured party receives fair and prompt compensation. The fact that 80% of awards have been accepted illustrates a high level of satisfaction with the process. The more we put into this the more the public will see the benefit of using the system.

I commend the Minister for bringing this legislation before the House and I hope its passage is speedy.

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