Dáil debates

Wednesday, 12 May 2010

Priority Questions

Enterprise Stabilisation Fund

1:00 pm

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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Question 40: To ask the Minister for Enterprise; Trade and Innovation the reason funding for the Enterprise Stabilisation Fund was cut without an announcement; the amount by which it was cut; the number of companies that were eligible for funding who will not receive support as a result of this decision; the amount paid in total in 2009 and the amount budgeted for in 2010; and if he will make a statement on the matter. [19232/10]

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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Question 43: To ask the Minister for Enterprise; Trade and Innovation the number of companies that have applied to date for assistance under the €100 million Enterprise Stabilisation Fund; the number of applications accepted; the amount paid out to date; the reason the fund was cut by €22 million; the further reason the cut was not publicly disclosed; and if he will make a statement on the matter. [19459/10]

Photo of Batt O'KeeffeBatt O'Keeffe (Minister, Department of Enterprise, Trade and Employment; Cork North West, Fianna Fail)
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I propose to answer Questions Nos. 40 and 43 together.

The enterprise stabilisation fund, ESF, was established by Government in 2009 as a two-year scheme to support viable but vulnerable exporting companies experiencing difficulties because of the current economic climate. Some €78 million is currently being provided under the ESF for 2009 and 2010. At 30 April 2010, a total of 227 applications had been reviewed and 197 projects from 193 companies had been approved for €72 million under the ESF, of which €64 million has been paid out to date.

As with any budget process, the 2010 budget exercise necessitated taking account of emerging priorities as regards enterprise support. In this context, priority is being given to a wide range of financial supports for SMEs, including research and development grants, supporting companies which are resuming a growth path and providing assistance in developing lean manufacturing processes. Prioritisation is always necessary and in this instance it was clearly appropriate.

The Irish economy is now entering a recovery phase and we must take this into account in the allocation of funding across the range of Enterprise Ireland programmes. The companies Enterprise Ireland is now assisting include those that are still vulnerable, but just as importantly those that have shown their potential for high growth and increased export sales. This balance between supporting those companies which are still vulnerable and those which are ready to grow is the key to stabilising the position of some companies while facilitating others to take advantage of the opportunities presented by the recovery in global markets.

The overall funding allocated to Enterprise Ireland for company supports in 2010 amounts to €278 million, which represents a 26% increase on the outturn for 2009. This increase is a reflection of the Government's commitment to supporting enterprise in whatever form is necessary as our priorities shift over the coming year. Allocations to particular schemes are kept under constant review and adjusted to meet our economic needs at any given point in time.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I was very concerned when I read the story in the newspaper about the reduction in the budget for the enterprise stabilisation fund, because the fund is one of the more effective measures introduced by the Government to stabilise viable companies during the recessionary period. Does the Minister agree that the Government has a budget strategy - with which I largely agree - and a banking strategy - with which I profoundly disagree - but has no strategy when it comes to jobs and competitiveness? It seems that every time the Government announces measures, they do not address the scale of the unemployment problem and when introduced are only introduced half-heartedly or late. We had such a situation with the work placement programme, which had few participants and few beneficiaries, the enterprise stabilisation fund, which we discussed already today, and the temporary employment scheme.

One scheme about which I would particularly like to ask, and on which the Minister may wish to comment, is the commitment to introduce a PRSI holiday for employers who take on new employees. I was the first to propose this almost two years ago and it is also supported by the Labour Party. It was announced in the budget, five months ago, that the Government would introduce this scheme to give employers a two-year holiday from PRSI payments for new employees. However, five months after the budget it has not been introduced. Will the Minister explain why?

Photo of Batt O'KeeffeBatt O'Keeffe (Minister, Department of Enterprise, Trade and Employment; Cork North West, Fianna Fail)
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I take issue with the Deputy with regard to the Government not having a jobs strategy. Governments do not create jobs, but create the environment in which jobs can be put in place. I am satisfied the Government has a strategy that will create jobs. Take for example the IDA Ireland programme, Horizon 2020, which will create a number of jobs through a programme that will run from 2010 to 2014. It is specific with regard to the number of jobs and projects it will create. More than 67,000 jobs will be created over this short period of time, but the agency is confident it can meet its targets and is going about its business in a professional manner. Enterprise Ireland also has a strategy to create jobs leading to 2014. Therefore, we have synergised the foreign direct investment and the growth and promotion of the indigenous sector.

We have also introduced the stabilisation fund and the employment subsidy scheme. All of these measures have had a massive impact during what has been an extremely trying period. If the Deputy looks at the indications-----

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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There will be supplementary questions. I call Deputy Penrose.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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With respect, I asked the Minister a specific question about the Government promise to introduce a PRSI holiday -----

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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As the Deputy knows, I have no control over the reply. However, I will allow Deputy Varadkar to put his supplementary question now.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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My supplementary question is the same as the question I asked. The Government announced in the budget more than five months ago that it would introduce a PRSI holiday for employers who took on new employees, so that taking on a new employee would cost 10% less than previously, which would tip the balance in favour of job creation. This was my idea and was supported by the Labour Party.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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This is an extension of the specific question, which is about the enterprise stabilisation fund.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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The Government subsequently adopted the idea. Why, five months later, has it not been introduced?

Photo of Batt O'KeeffeBatt O'Keeffe (Minister, Department of Enterprise, Trade and Employment; Cork North West, Fianna Fail)
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This is a question appropriate to the Department of Finance. Obviously, this has been put in place. If the Deputy puts down a question to the Minister for Finance, I am sure he will get the appropriate answer.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I have asked the Minister to answer it.

Photo of Batt O'KeeffeBatt O'Keeffe (Minister, Department of Enterprise, Trade and Employment; Cork North West, Fianna Fail)
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I have no problem giving the exact details of it, but it is not specific to this question. I do not have the relevant data, but I know they are available and I would have no difficulty in getting the information from the Minister for Finance and making it available to the Deputy.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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I want to allow Deputy Penrose put his question as he has also tabled a priority question on this matter.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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Is it correct that €22 million has been cut from this fund? The Minister said he is reviewing the situation and that like all expenditure allocated in his Department, the fund must be subject to review. The €58 million spent up to end 2009 supported approximately 7,500 jobs. Up to the beginning of March this year, some 26 applications had been received, from which nine companies were approved, supporting 200 jobs. If there is a cut of €22 million, some 50 companies - based on the average of €415,000 support for each company - will apply but will not get job support. This cut is just being flagged now. There was no announcement about it, which makes it a stealth cut. Is the Minister not concerned that if there is a cut, this will have serious consequences for these companies? In the context where these export-led companies are vulnerable but could return to profitability, is it not the position that our way out of the recession is through export-led growth? We must get away from dependence on property bubbles etc.

Most of the aid has been given in terms of redeemable shares and repayable grants. Why, therefore, would the Government contemplate cutting or reviewing something that is making a significant contribution to sustaining companies, particularly in the export sector which is important for maintaining employment? How many companies have applied for assistance to date and how many of these will now find their applications for financial support rejected if there is a further review or cut in the enterprise stabilisation fund?

Photo of Batt O'KeeffeBatt O'Keeffe (Minister, Department of Enterprise, Trade and Employment; Cork North West, Fianna Fail)
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It is important to give the Deputy the facts and details before me. There was additional demand and some €58 million was paid in 2009 to 180 projects, which supported approximately 7,500 jobs. The remaining €20 million has been allocated to the fund for 2010. Therefore, from the launch of the scheme in 2009 to date, some 197 projects from 193 companies have been approved for funding. No company to date which has qualified and met the criteria has been left without a grant. Those companies that were rejected did not meet the criteria. We estimate in the Department that we have approximately 30 applications waiting to be assessed and we have approximately €6 million still in the fund. The 30 applications are now being evaluated and will be dealt with over the next couple of months.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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There is €6 million left. If these companies receive the average support given to the other companies, approximately €450,000 or €420,000, they will require approximately €13 million. The Minister will be short of money, assuming they all qualify. Why would any curtailment be put on this sector, in particular? It is export led, there is growth in that area and it is sustaining employment, with the potential for future employment. Is there any restriction in this context? The stabilisation fund and the employment subsidy were announced as a package. I hope there is no review of the employment subsidy taking place along similar lines to the review that is taking place in this case. Surely the one sector that should not be curtailed is one that sustains, maintains and promotes employment opportunities. I remind the Minister that only for the emigrant aeroplanes and ships there would be 75,000 more people on the live register today. Let us not discount that.

Photo of Batt O'KeeffeBatt O'Keeffe (Minister, Department of Enterprise, Trade and Employment; Cork North West, Fianna Fail)
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I also said there was €278 million available to Enterprise Ireland, which is a 26% increase in the overall funding to enterprise. The mechanisms in place in Enterprise Ireland are diverse and varied to suit various applications. If a company does not meet the criteria for the stabilisation fund, it is possible that it could be supported under a further mechanism under the aegis of Enterprise Ireland. That is what happens. The Deputy mentioned €30 million as the cost for 30 projects. That is wide of the mark.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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No, it is €13 million.

Photo of Batt O'KeeffeBatt O'Keeffe (Minister, Department of Enterprise, Trade and Employment; Cork North West, Fianna Fail)
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We will not get an absolute evaluation of that until we have examined all the projects and seen their size. They could all be quite small projects which might not demand as much money as previous projects. Supports are available in diverse areas of expertise from Enterprise Ireland. If a company does not get support under the stabilisation fund, it is possible that it could get support under a different mechanism.