John Deasy (Waterford, Fine Gael) | Oireachtas source

I am here not to talk about the Government's priorities for the year ahead but rather to discuss what should be a Government priority but is not. I refer to jobs and investment in parts of the country which have seen no economic lift to date. There are significant areas which are almost untouched by the fragile recovery we have seen in some of the larger urban areas like Cork and Dublin. In cities like Waterford, economic measures demonstrate that a downward trend is still being experienced. After three years in office, the Government's investment strategy has not worked. The question for the Government and its development agencies, including the IDA, is how they will incentivise jobs and investment in parts of the country which still have an unemployment rate of 20% or higher.

I read the contribution to this debate given last week by the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton. The only reference he made to regional development was one line to the effect that all regions had experienced job growth over the past 12 months. It does not appear to be a priority for the Government that the disparity in foreign direct investment figures for different parts of the country is both large and growing. I have concluded that as long as the headline figures for the country as a whole are positive, the virtual non-existence of regional investment is considered irrelevant. My theory is borne out by documents like the 2014 Action Plan for Jobs. The only tangible investment for the regions cited in that document relates to advanced manufacturing facilities - one in Waterford and one in Athlone - and some office space in Letterkenny. The rest of the document is repetitive. I have heard it all before. There is very little in the plan on the devising of a strategy to balance foreign direct investment across the country. There is almost a sense of resignation about the fact that so much investment - 82% - goes to Cork, Dublin and Galway and so little goes elsewhere.

This brings one to the question of what to do about it. I have two specific suggestions, the first of which relates to the €6.8 billion which will comprise the strategic investment fund. It is intended that the fund will match up with private sector investment and it is hoped the overall amount invested will be €12 to €15 billion. This is the only show in town. It is the only stimulus package the country will see for the next five or six years. The key principles of the fund are the pursuit of commercial return, which must be at the very least greater than the cost to the State of borrowing money, while targeting investments that support economic growth and jobs. It will also seek to involve private sector co-investment and recycling of capital to allow new investments to maximise the effect on the economy. Hopefully, private sector co-investment will include those SMEs mentioned by Professor Morgan Kelly recently. I wonder.

It was announced that a key aspect of the fund will be isolating it from political interference. That is fair enough and something I understand. We must guard against base political tendencies influencing how the stimulus package is divided up. The relevant legislation must be clear about what the fund is intended to achieve. Definitive policy will be necessary when it comes to devising the legislation which will determine in broad terms how and when the money is spent. There must be heightened sensitivity to the prospect of undue political influence. The key point is that this strategic investment fund of €6.8 billion must be predominantly and proportionately invested in those parts of the country which have seen the least investment over the last ten to 15 years. While that is a reasonable logic, it will not make sense to some politicians who see an election on the horizon and a potential lump of money for their own constituencies. It may not even make sense to some in the private sector who do not understand the nature of our two-tier economy and evolving two-tier recovery. It should make sense, however, to any government which is interested in balanced regional development. For that reason, it should be a priority for the year ahead for the Government.

Someone might ask what is my model or framework for this. The answer is simple. Regional aid guidelines will be published in July by the European Commission and will take into account unemployment rates and factors such as the potential for growth. There is already a national and European acceptance that the regions are unequal and some need more financial support than others. There is already an incentive system based on economic facts and figures. The head of the IDA has said that regional aid guidelines and incentives have not worked in the past and are not working now. One is left to conclude that balanced foreign direct investment into all of the regions has not happened. The regional aid incentives have not worked. It is therefore logical to adopt a policy to weigh the amount of strategic investment funding in favour of those parts of the country with the highest unemployment and lowest growth levels. The level of investment should be based on the European Commission's own regional aid guidelines rather than on the subjective opinions of people in the House who may have their own political considerations. When the legislation is published and comes before the House, if the issues I have set out are not considered, I will attempt to amend the Bill at the very least to highlight the scenario I have just painted.

A second solution to the lack of investment in the regions involves the IDA specifically and a recent announcement that funding for 35 additional staff had been authorised. Countless small businesses in Waterford city in my constituency have closed in the last year, including flagship shops, long-established pubs and major industrial employers. They have included Diageo, Honeywell, Citibank, Centra, Intacta Print and B&Q. In January, the IDA's job creation figures for 2013 showed Cork was up 1,441 jobs, Galway was up 705 jobs, Limerick was up 289 and Dundalk was up 504. Waterford was a notable exception. One observer of the economic situation locally in Waterford has estimated that approximately 200 IDA jobs were lost on a net basis in the city in 2013 and that 2,441 jobs were lost between 2008 and 2012, a period in which only 581 jobs were created. Improvements in the live register figures must be considered in the context of the huge number of jobs Waterford has haemorrhaged over the past six years.

I have looked at the locations of the IDA's existing staff. There are 36 in Athlone, two in Dundalk, one in Cavan, six in Cork, three in Galway, one in Letterkenny, five in Limerick, nine in Sligo, five in Waterford and 148 in Dublin. If the Government is to make regional development a priority this year, a good start will be to deploy the 35 new staff in the IDA in the regions which have seen the least amount of foreign direct investment over the last ten to 15 years. There are people at the most senior level in the IDA who believe the policy designed to attract foreign direct investment evenly across the State has failed miserably and must be re-engineered immediately. If the Government deployed the 35 staff into those places worst affected by the recession and least affected by foreign direct investment, it would send a significant message to the regions.

I sound a warning on the strategic investment fund of €6.8 billion. It cannot end up being a political pie, gobbled up by insecure politicians with one eye on a general election. For many regions, it is the only chance they have of a stimulus over the next five or six years. It must be targeted and it must be focused on the areas in which it is needed most. It is most needed in those areas in which the economic indicators of decline are at their highest levels.

That is a reasonable priority for any Government.

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