John Deasy (Waterford, Fine Gael)
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I have raised this issue because of comments made by the chief executive of IDA Ireland, Mr. Barry O'Leary, last week. He said that even with regional incentives, it was becoming increasingly difficult to convince companies to invest outside of Dublin or Cork. He was speaking on an occasion when he was announcing a net 6,570 jobs resulting from 145 investments by multinationals. Where those developments went was not surprising. In fact, where such developments go has become entirely predictable. Of the 167 job announcements made by the IDA in 2011-12, 79 were centred in Dublin, 24 in Galway and 20 in Cork. We are getting used to that trend. Based on recent research, it seems that as much of 82% of jobs created by overseas firms in the past six years have been centred in those three urban areas. This trend has hardened since Mr. O'Leary took on his position in the IDA in early 2008. I would go so far as to say I do not believe there is a serious policy in the IDA for attracting foreign direct investment into the regions. My constituency of Waterford city and county has become an afterthought for the IDA and is effectively a foreign investment free zone.

This brings us to the issue of regional or investment aid and the incentives that are intended to incentivise foreign companies to move outside of the three urban areas which have been getting the bulk of foreign direct investment. The objective of the regional aid scheme is to provide support to enterprises that seek financial assistance to establish an initial investment and-or job creation link to an initial investment project in Ireland. It lists the categories which can get a grant, salary costs, second-hand equipment, lease land and buildings, etc.

The regional aid incentives are not working and have not worked for some time. As far as I understand, the existing framework for regional aid and the regional aid map cover the years 2007-2013. I understand also that the Department of Jobs, Enterprise and Innovation is putting together new guidelines, in conjunction with the European Commission, for the post-2013 period. How is the Minister going to incentivise foreign companies to invest in areas under the new regional aid guidelines he is drawing up with the European Union? Under the current regional aid map, the highest rates are afforded to the Border, midlands and west, BMW, region. For the period 2007 to the end of 2010, the region qualified for a rate of 30% for large firms, and 40% and 50% for medium and small firms, respectively. In accordance with the guidelines, a reduced rate of aid for the BMW region came into being in 2011, reducing to 15% for large companies, and 25% and 35% for medium and small firms, respectively. The maximum current aid rates for parts of the south and east region remains at the lower level of 10% for large companies and 20% and 30% for medium and small companies, respectively.

It is worth pointing out that the CSO recently reported that unemployment was highest in the south east, at 18.7%. The south east does not qualify for the highest levels of regional aid. The Minister should amend the regional aid guidelines immediately, as has been done previously, to reflect the current economic landscape in the different parts of the country. If the Minister accepts that these incentives are not working - it would be hard not to - what plans does he have to incentivise foreign firms to develop in the regions outside of Dublin, Cork and Galway?

John Perry (Sligo-North Leitrim, Fine Gael)
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I appreciate what Deputy Deasy has said on investment and thank him for raising this issue. State aid regulation is a matter of major concern for Ireland and the operation of a level playing field across the European Union is critical to the pursuit of industrial development. Large enterprises have an important impact on regional economies. They stimulate competitiveness and productivity, upgrade the industrial base, facilitate SME growth, increase the level of competition in local markets and improve labour and management skills for the economy in general. In order to improve European competitiveness, create jobs and emerge from the current economic situation, it is essential that EU member states have sufficient flexibility to assist the regions make the required adjustments.

This is particularly relevant in Ireland, given the ongoing need to upgrade the industrial base and the fact that the economic crisis has had a severe impact on a number of Irish regions. The Government believes that the current economic crisis and resulting balance of payments imbalance provide a significant challenge to the European Union as a whole. This is particularly important given that international competition for investment is intensifying outside the Union. Regional aid is an important lever of European economic development and international competitiveness, and we are extremely concerned that a number of measures proposed by the Commission will inhibit potential investment in Europe's disadvantaged regions.

I understand clearly what Deputy Deasy has said in this regard and with regard to development taking place in Dublin, Cork and Galway. The European Union as a block must often compete with third countries for mobile foreign direct investment. Recognition should be given to the positive benefits for the EU economy and society of facilitating FDI, particularly in high-tech areas. State aid is also being provided for third countries to undertake measures we believe will benefit from some consideration by the Commission.

I assure the Deputy the Government is keenly aware of the impact of the proposed changes in the regional aid guidelines for the country and will strongly defend our interests in the multilateral discussions about to commence.

It is important for us to have a clear position. Despite the benefits of the aid that is currently provided, it is difficult to get industry into the BMW region. That difficulty would be far greater if that aid were to be diminished in any way. Our needs and interests will be highlighted and alliances will be forged to effect the best defence possible. I have been to Waterford. I have met the regional director of the south-east region. In light of the level of unemployment in the region, it is important for IDA Ireland to give every consideration to it when decisions on foreign direct investment are being made. I will speak to Barry O'Leary to ensure that the regions beyond the places mentioned by Deputy Deasy are considered. Ireland is striving to address a real economic crisis and to avoid a depletion of its historical national and regional economic development. If Ireland is to retain the flexibility afforded by the use of regional aid, as it needs to do, we must make our case strongly with the other EU member states in the coming weeks and months. Deputy Deasy has made an important point. I do not doubt that the Minister, Deputy Bruton, will fight in a determined manner to ensure we retain our regional benefits. We must make every effort to argue for foreign direct investment to be brought to regions where such industrial activity has not taken place before now.

John Deasy (Waterford, Fine Gael)
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I thank the Minister of State for his response. I think we are talking about two different things. The Minister of State spoke about defending the concept of regional aid at European level. The point that Barry O'Leary and I are making is that the existing regional aid guidelines are not working. It is a question of their effectiveness and utility. The guidelines that are being used to incentivise companies to come to Ireland are not working. The Cabinet is having a special meeting this afternoon to deal with jobs. That is why the Minister, Deputy Bruton, is not here. When I looked at the press release, I read the usual lingo about Ministers being asked to report back with regard to the number of jobs that might be created. The Taoiseach and his Ministers need to start thinking about where these jobs are being created or not being created. I say that because a massive imbalance or disparity between the regions has opened up in this country. I have come to the conclusion that nothing much is being done about it. Very little thought is being given to the issue. I believe IDA Ireland has become quite content to announce every year the jobs it has created for Ireland Incorporated and leave it at that. That is not good enough. It needs to be dealt with. That disparity and imbalance is getting wider.

I conclude by putting some obvious questions to the Department. Who are the stakeholders the Minister consults when he makes these submissions to the EU? Can the Minister give the Members of this House details of the involvement or input they will have when the regional aid map, and the financial incentives involved, is redrawn? Will he increase the amount of regional investment aid that is given to those parts of the country that are experiencing massive levels of unemployment? It is clear that the regional aid guidelines are not working. I would like to know why they have not been amended to date.

John Perry (Sligo-North Leitrim, Fine Gael)
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I appreciate the concerns of Deputy Deasy. I will bring them directly to the Minister, Deputy Bruton. As Barry O'Leary could testify, it is very hard to influence foreign companies that have the potential to invest in Ireland. They tend to be driven by their own factors when they decide to go to Dublin, Galway or Cork. Although we can avail of major benefits in the BMW region, we are encountering the same difficulties as the south-east region, which have been highlighted by Deputy Deasy. Although the substantial benefits that are available in the BMW region are not available in Dublin or Cork, companies are continuing to choose to go to those cities. That is a fact. They are still going to Dublin or Cork even though they are not getting the same benefits, in terms of employee entitlements, that they would get if they went to the BMW region. The point is well made. We are fortunate that IDA Ireland has had a very successful period with regard to foreign direct investment. Obviously, we all wish there was a greater regional spread. As a representative of a Border constituency, I appreciate what Deputy Deasy is saying. I am sure the Minister, Deputy Bruton, will take on board the Deputy's concerns and fight to ensure the regions become more attractive to foreign direct investment. I remind the House that some very good investments in the south-east region have been made by indigenous Irish companies with support from Enterprise Ireland. We are all focusing on the creation of jobs. The jobs plan that will be announced in the coming weeks will have a clear focus on what we can do to facilitate the creation of jobs in the economy.