Billy Kelleher (Cork North Central, Fianna Fail)
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6. To ask the Minister for Jobs, Enterprise and Innovation if Industrial Development Agency Ireland will be restricted in its ability to provide grant support for job creation to major companies as a result of a recent decision of the European Commission; and if he will make a statement on the matter. [33561/13]

Richard Bruton (Dublin North Central, Fine Gael)
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Regional aid, also known as investment aid, is paid in the form of grants by the industrial development agencies to businesses in order to support new investment and new employment in productive projects in Europe's most disadvantaged regions. Such aid must be in accordance with each country’s regional aid map, as approved by the European Commission, which has responsibility for the regional aid guidelines.

The guidelines for the period 2014 to 2020 are being revised as part of the state aid modernisation reform package. The final iteration of the guidelines was adopted by the College of Commissioners on 19 June 2013. The guidelines will enter into force on 1 July 2014. The Commission initially proposed a complete ban on aid for investments made by large enterprises in the more developed assisted areas, known as C areas. This would have meant that such aid would not be permitted in Ireland. The proposal presented significant challenges for Ireland and the implications could have been very serious in terms of our enterprise agencies being able to attract investment into disadvantaged regions in Ireland.

Following significant engagement by Ireland, at both official and political levels, the final proposal represents considerable progress from the initial Commission proposal in December 2012. The compromise agreed with the Commission will allow member states to provide investment aid to large enterprises for new economic activities and diversification of existing enterprises into new products or new process innovation.

With regard to population coverage, Ireland secured entitlement to maintain regional aid qualification for areas accounting for 50% of the country’s population for the period 2007-13. For 2014-20, that will increase to 51.28%. It was threatened with reduction by half.

It should be noted that the Commission has announced a transition period of six months for the new guidelines. Therefore, the new rules will not take effect until 1 July 2014. All of the country, including those areas not entitled to regional aid, can qualify for other forms of aid such as research, development and innovation aid, SME investment aid, training aid and aid for environmental protection.

Dara Calleary (Mayo, Fianna Fail)
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It is only fair to acknowledge the huge effort put in by the Minister and the Department in respect of what Commissioner Almunia first proposed, which would have been detrimental to Ireland. We now have the opportunity to focus on a number of issues. The 50-50 split in job announcements, between the old southern and eastern region and the BMW region is not happening. Is that still a commitment of the IDA and the Department or has it been abandoned in the context of the new rules?

Can the Minister specifically define how these changes affect the IDA way of doing business? We have had much controversy and discourse about taxation levels. The change in respect of aid of foreign direct investment has potentially more impact and a more serious impact. Does diversifying activities mean companies involved in new product development and that may be working with SFI can continue to do so? Are we still in a position to support them if they move new product development into job creation?

What does the Minister mean by fresh investments? Does this involve new plants producing the same product or expanding the product line in response to market demand? Will we be allowed to support that? Has the IDA given a formal response to the new proposal on the table?

Richard Bruton (Dublin North Central, Fine Gael)
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Our negotiating position was closely co-ordinated with the IDA and Enterprise Ireland as we developed these proposals in order to make sure we protected the capacity of the IDA to promote regional development. The categories for large enterprises include new economic activity, new products and new process innovation. It is a broad range of areas where we can continue to support large companies. We have always had considerable support for small and medium-sized enterprises in those regions, which are at higher rates of 20% and 30%. The rates are unchanged.

With regard to the IDA targets, it is part of the five-year plan of the IDA. This is a difficult target in light of the projects we are winning. We are seeking to diversify the instruments the IDA uses, which is why we have been keen to promote ConnectIreland, which is a new instrument seeking to use connectors. It has a better regional spread. We are also looking to encourage emerging companies that may not have the same----

Seán Kenny (Dublin North East, Labour)
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The Minister is over time.

Peadar Tóibín (Meath West, Sinn Fein)
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How do the new regulations affect our competitiveness in attracting foreign direct investment and supporting our own businesses in comparison to other EU countries? How does it affect our capacity to compete with other locations for foreign direct investment, such as Singapore?

Some counties within existing regions do not experience the same level of investment. For example, Meath does not experience the same level of investment as the mid-east region. It suffers greatly with regard to level of investment in Kildare, Wicklow, Dublin and Louth, even though Louth was formerly in the BMW region. What elements of change in the new regulation will allow those sectors of those regions to have a rebalancing of their opportunity to attract foreign direct investment?

Richard Bruton (Dublin North Central, Fine Gael)
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In terms of competitiveness with other countries, we have 51% of the country's population in the C regions. Overall, a lower percentage than that in all of Europe is covered by C regions. We have proportionately more C regions than the EU as a whole. We have much more than some very developed markets and much less than some of the emerging markets. I do not have the exact population percentage coverage to hand but I can get it for the Deputy. The issue of regional development is central. With regard to our agencies dealing with export-oriented companies, last year some 43% of new jobs, 9,500, were in Dublin. I do not have the exact figure for Cork. Overall, export-oriented jobs were reasonably spread. There are concentrations around cities. There is a reasonable spread and our challenge in regional development is to build it stronger. It is not just about foreign direct investment, which is important, but the key is indigenous growth. Given the Deputy's background in supporting indigenous companies, he will agree with that. In C regions, we have 30% capacity for small, 20% for medium and 10% for large. That is graded in order to allow the emergence of smaller indigenous companies that have greater difficulty in travelling the path. We must seek to build on regional competitive advantage, which must be part of the strategy as well as encouraging a regional spread of foreign investment.

Dara Calleary (Mayo, Fianna Fail)
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I am concerned. I accept that we must support and build our indigenous economy but we have traditionally depended on a strong presence of foreign direct investment, which assists the indigenous economy.

Many of our more successful indigenous companies grew from initially servicing foreign direct investment companies in the State. I am somewhat concerned about the vagueness surrounding this issue. We must do more than diversify the instruments. If large-scale projects are no longer to be located in the regions, there must be more urgency in developing an alternative strategy. Will the Minister outline what will be different now? What will IDA Ireland no longer be able to do after July 2014?

Richard Bruton (Dublin North Central, Fine Gael)
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Those are the categories, which means that this is not entirely open-ended. To qualify for regional aid, it is necessary to demonstrate that a new investment represents a new economic activity by a company and involves a new process or innovation. Companies must show that they are modernising their production and developing new products or ways of doing things. There must be a step-up in technology or diversification. That is the test. It is a very broad mandate compared to the suggestion there be no aid for large companies. If a company is simply replicating the same technology, that is restricted for companies which already employ 250 staff. There is broad scope. Having discussed matters with IDA Ireland, we are satisfied that the measures cover the typical expansion. There is always an upgrade in research and development and the value chain is always being climbed to bring in new technologies. This is a broad, workable mandate.