Leo Varadkar (Dublin West, Fine Gael)

First, on behalf of the Fine Gael Party I would like to confirm that we will be supporting the Bill. Obviously, we understand the necessity for the Bill to be concluded by the middle to end of April. The Minister of State can be assured of our co-operation in dealing with this Bill in the Chamber and on Committee Stage which I understand is scheduled for 1 April 2009.

The Minister of State mentioned in his contribution that the Bill includes a number of different sections and is, in many ways, a composite Bill dealing with various issues. I have just realised a further section was inserted in the Seanad. I was not aware of that until now. Section 2 deals with the transfer of shares from Enterprise Ireland to Shannon Development. This reflects the changing role of Shannon Development and the manner in which the enterprise functions of same have been passed over to Enterprise Ireland. Obviously, it makes sense that those shares be transferred from Shannon Development to Enterprise Ireland. However, this raises questions as to the Government's intentions for Shannon Development as its enterprise and other functions are removed.

Section 3 relates to the raising of limits on grants from €5 million to €7.5 million without Government approval. As time goes on it will be necessary to raise thresholds. Even in a period of deflation it may be necessary to raise thresholds. It seems a little unusual that this Bill proposes to raise to €7.5 million the threshold above which Government approval is needed for a grant. It seems that thresholds are being lowered in all other areas of government, in light of the current budgetary situation. The level of expenditure that can be approved by a local authority has decreased significantly. My own local authority has been told it cannot approve projects of between €50,000 and €500,000 under the parks improvement or capital works programmes without Government approval. At the same time, this House is being asked to pass legislation in another area that will raise a threshold from €5 million to €7.5 million.

When a few years have passed, and we learn more about the grants that will have been awarded by State agencies without Government oversight, I hope we will not regret the decision to raise this threshold. When that time comes, I am sure Ministers will use the excuse that the awarding of the grant was an operational matter for the agency in question. They will say they could not have made an input into the process because the amount of the grant was below the threshold set out in the relevant legislation. If a lower threshold — perhaps €1 million — had applied to FÁS, millions of euro would not have been spent as they were on Jobs Ireland and Opportunities Ireland. At the very least, Ministers should have had to take responsibility for how millions of euro in taxes were spent in their own Departments.

The section of the Bill dealing with designated areas seems to recognise the existence of the BMW region in a coherent manner. It is obvious that the Industrial Development Act 1986 predated the development of the regional structure. This legislation refers to the entire BMW region as a single designated area, which makes sense to me.

This legislation provides for an increase from €3.4 billion to €7 billion in the amount the Minister can allocate to certain agencies. I am not sure that it is necessary to have an overall limit of that nature. We do not set overall limits in other areas. For example, we do not limit overall health spending or overall spending under the capital transport budget. Expenditure in certain areas can continue to increase as the years go by without recourse to this Chamber. Legislation of this kind would not be needed to spend a further €40 billion on social welfare or a further €12 billion on roads. I suppose it is appropriate for the Dáil, from time to time, to consider how money is being spent. The amount of money paid in grants should not be allowed to increase without some form of parliamentary review. I suppose the flaw in our system is that it does not facilitate proper oversight of the manner in which grants are paid.

The Oireachtas committee system has been much maligned, largely because of the payments that are made to Chairmen and Vice Chairmen, etc. While such criticism is legitimate, there is a definite role for Oireachtas committees. They do not have enough power to scrutinise the overall and day to day operation of State agencies. Parliament would work much better if it could examine how grants are paid to businesses and how they are spent. For example, we should take an interest in the manner in which equity investments are taken up by Enterprise Ireland and, in particular, the success of such investments. We get annual reports from the agency. In most years, representatives of the agency attend a meeting of the Joint Committee on Enterprise, Trade and Employment. As a Parliament, however, we have not forensically scrutinised the manner in which the €3.4 billion fund has been spent over the years. We do not know whether it has been spent wisely and fully in the interests of the public. That is not a criticism of the Government as much as a criticism of our political system.

It is appropriate to refer to the role of the State agencies in promoting industry. As I have said, the future role of Shannon Development is increasingly unclear to me. What are the Government's intentions in respect of Shannon Development? I would be interested to hear a little more about that later in the debate on this Bill.

The role of Enterprise Ireland has largely been to promote high potential start-up companies and export companies with significant potential. When it comes to supporting businesses, there is a definite gap between the work of the country enterprise boards and the work of Enterprise Ireland. A question can reasonably be asked about the return we get from the money that is invested in Enterprise Ireland. The return we get from the money we invest in IDA Ireland, as an agency, is clear. I have yet to see a clear summary of the benefits to the taxpayer, and to the economy as a whole, of the operation of Enterprise Ireland. Of course there are some examples of successful companies that have been supported by Enterprise Ireland. I have not seen a convincing academic analysis to the effect that such companies would not have succeeded anyway. Can we be sure that the €150 million that is spent on Enterprise Ireland every year produces public goods worth €150 million for our people? Members will be aware that just €50 million of Enterprise Ireland's €150 million budget is spent on business supports. The remaining €100 million is spent on the agency itself, for example on its training activities. I have yet to see a convincing peer-reviewed academic analysis of the value of Enterprise Ireland's work, much of which is duplicated by a plethora of other agencies that offer similar supports.

Yesterday, I worked out how much it would cost to support all new Irish start-up companies, regardless of whether they are export businesses or high-potential companies, by exempting them from rates for three years and giving them half-price electricity, water and utilities. I was working on the basis that at a time like this, when many people have no option other than to set up their own businesses, we should give support of this nature to all start-up companies across the board. I estimate that it would cost between €25 million and €30 million per annum, or one fifth of Enterprise Ireland's budget, to provide such support. I wonder whether it is time for some new thinking in this regard. Rather than being fixated with high potential start-up companies, export potential and the knowledge economy, perhaps we should consider what the Government can do to support all businesses, from start-up newsagents to companies manufacturing medical devices.

Fine Gael has been considering the future of the county enterprise boards as it reflects on where the economy is going. Our new policy on the future of semi-State companies is being launched in the Merrion Hotel as we speak. When my party was in power in the early years of the State, one of the first things it did was to understand that the State has a role in providing an impetus for growth. We established a number of State companies, including the ESB and Bord na Móna, which became agents for growth and development. Many of the semi-State companies in question have outlived their usefulness. Fine Gael is proposing today that the existing cohort of State-sponsored bodies be reinvented and that a new group of such bodies be established. We are proposing that Bord na Móna and Coillte be merged and that the new company be transformed into a bioenergy company, essentially to grow bio-fuel on the bogs. We are suggesting that the turf power stations in the midlands could be transformed into biomass power stations. We are essentially advocating the transformation of the old semi-State companies into companies that are more appropriate for modern times.

Fine Gael is also proposing the establishment of a new Irish broadband company, essentially to take over the role that has been abdicated by Eircom. Such a company could be funded in many ways. It could be partially funded from the National Pensions Reserve Fund, but also from the privatisation of some of the older companies that no longer necessarily need to be in State ownership. The most obvious example of such a company is ESB International — the State gains no particular benefit from its ownership of a company that does not even operate in Ireland. Bord Gáis Éireann is another company that could be considered in this context. My party's idea is to transform some of the old semi-State companies, which have served a role in the past, into new State companies that can provide the kind of industrial infrastructure we need for the future. I refer to infrastructure like alternative energy facilities and a next-generation broadband network. This visionary idea will stimulate a great deal of debate. I hope the press conference is going well. I should be there, but I am not.

I would like to speak about competitiveness. The State's entire industrial policy is designed to promote enterprise, industry and competitiveness. The State agencies have an important role in attracting investment into the State, in the case of IDA Ireland; developing new Irish companies with export potential, in the case of Enterprise Ireland; and improving skills and providing training, in the case of FÁS and Skillnets. We should consider how the State can do more to assist industry and business. State supports, whether provided by IDA Ireland, Enterprise Ireland, the country enterprise boards, FÁS or Skillnets, do not in themselves foster a pro-business and pro-enterprise environment. To develop such an environment, one has to get the fundamentals right. I have yet to see any sign that the Government plans to get the fundamentals of this economy right. While it seems that the Government is starting to take action in respect of the public finances, at long last, action is also needed to make Ireland competitive again.

One can provide as many subsidies to businesses as one likes. It is easy to forget that State agencies like Bord Bia and Bord Fáilte are in the business of providing State subsidies. These are all State subsidies. This is public money being given to the enterprise and business sector. Of course, it is appropriate to do that, but none of that will work if one does not have a fundamentally pro-enterprise and pro-business environment in the country in the first place. What is missing from the Government is a much more comprehensive strategy as to how it will restore competitiveness and make Ireland competitive again. The Government will not get value for that money if the fundamentals of the economy are not right and the country is not competitive. Part of that, of course, is a matter of bringing our infrastructure up to 21st century standard and the Fine Gael Party has proposed ways to do that. The second part is bringing down costs. These are matters from which we cannot run away anymore.

The National Competitiveness Council identified the three key costs concerns as being property, utility and services. Property costs are certainly coming down — there is no question about that — but they need to come down further. We also need to take a tougher line, particularly on rents and the provision in contracts that allow for only upward rent reviews, which in my view should be outlawed. Utility costs are not coming down and that is largely due to a failure of the Government's regulatory system. ESB prices have come down 10%, but they went up 30% as well. The same applies with gas. There has been a real failure of Government and regulation in that regard.

One obvious step would be to essentially throw out the regulatory system and set a new benchmark. The Minister should state that within two years we will bring down gas and electricity prices to the EU average and, essentially, demand of ESB and Bord Gáis, both of which are State assets, that they bring down their prices to those levels. Of course, these companies will argue that it will bankrupt them but it will not — they will just have to reform and modernise.

Another area is Government charges which continue to rise. Rates continue to rise. Water charges continue to rise. A much heavier burden of regulation on smaller businesses continues even though there has been a failure to regulate large ones such as the banks.

The final area is labour costs. We are starting to see labour costs come under control across the economy, but there is no clear plan to do that. One option that could be useful in the talks which will resume with the social partners is, on the private sector side, to replace the concept for the time being of pay increases based merely on a percentage of salary and move towards a system of pay increases that are essentially profit sharing or employee dividends. This would involve saying to private sector companies which are making a profit and could afford to give their employees more money, that they should do so under a profit-sharing system, for example, a person could receive a pay increase of between 3% and 5% depending on the profits of the company. That is a matter that should be considered in the talks.

As I stated, Fine Gael is happy to support the Bill and I look forward to its speedy passage.

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