Dáil debates

Thursday, 27 February 2014

County Enterprise Boards (Dissolution) Bill 2013: Report and Final Stages

 

12:45 pm

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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I move amendment No. 1:

In page 5, between lines 3 and 4, to insert the following:

"(c) A local authority will only provide financial support by way of loan or grant aid to a company that is compliant with all employment law and labour court judgements.".
We had a discussion on Committee Stage on the importance of ensuring that where possible workers' rights are maintained within all legislation enacted by Government, in other words, to workers' rights proof all Government legislation. The Minister, Deputy Bruton, said he was opposed to this. I am not convinced by his response that this cannot be done. In all sectors of enterprise, as in the world at large, there are unscrupulous individuals who will work for their own benefit against the common good, often breaking the law to do so. All the regulation in the world is not worth a blade of grass if the legislation in place is not enforced. Much of the time in this country enforcement is considered in the context of cost, which is usually a factor in it not being provided for by the State. However, we are sometimes lucky enough to come across an area in which there is no cost in terms of enforcement. This is one such area.

Legislation to strengthen subcontractors' rights was recently enacted. However, I have been speaking to subcontractors who have told me that enforcement of those rights is still not good enough and as a result some of them are being forced out of business and wages are not being paid. We need only look to the US, which has a system whereby the State pays subcontractors directly if needs be, which shows how enforcement can be efficient and cost-free. In this country, the Government takes tax law very seriously. Non-compliance with tax law will force a person out of business.

We have seen what happens to individuals. There was a man on hunger strike outside the gates of the Oireachtas previously who was not in compliance with the household charge. He was not given a tax certificate and therefore could not operate his business. Now, we have an opportunity to strengthen significantly workers' rights. The amendment simply seeks to put in place a provision whereby if a company breaks employment law then it is not afforded the funds or finances of the taxpayer. There are clear parallels between this and tax regulation in the State. Is a breach of employment law any less significant to Fine Gael or the Labour Party than a breach of tax law? Why can we not put something in the legislation to solve that problem?

12:55 pm

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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I thank Deputy Tóibín for his input to the Bill. This is a technical tranche of legislation, the purpose of which is to implement the 2012 Government decision to dissolve the county enterprise boards, transfer their functions, assets and liabilities to Enterprise Ireland and to allow for the transfer of the existing staff.

I note Deputy Tóibín's concern in respect of State-funded companies and compliance with labour laws. I agree that companies should adhere to all national law, including employment rights. It is clearly our intention that assurances of compliance with labour law by an employer will be a requirement prior to the issuing of grants. However, we also do not wish to create excessively onerous compliance statements or impose a heavy administrative burden on new and existing small or micro-enterprises.

I am in total agreement that measures can put in place to safeguard against flouting labour law. Therefore, as the operational procedures for the new local enterprise offices are currently being reviewed, the inclusion of compliance with labour law as a requirement for payment of a grant will be included in the procedure. Currently, all grant recipients are obliged to comply with other national laws, for example, taxation.

One role of the local enterprise offices is as a first-stop-shop to ensure that micro-enterprises and small businesses in particular are aware of their obligations under various statutes. The LEOs will promote an expectation of compliance with all legal obligations.

Reference was made to the enforcement of labour laws. We already have legislation in force in respect of conditions of employment with associated enforcement mechanisms in respect of the breaches of the law. I do not believe that we should charge another body, whose job is to support the growth of enterprise, with a policing role on employers who renege on their responsibilities. The provisions for enforcement are included in the relevant employment rights legislation and are enforced by the relevant bodies, for example, the National Employment Rights Authority. For this reason, I cannot accept the amendment as put down.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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Some points follow from this. Enforcement of employment law is far from adequate in the State. Anyone who believes that enforcement of labour law is adequate is not living in the real world and has not spoken to the people at the coal-face.

When did employment law become too onerous for the Government to seek to enforce in this way? When did a person's right to work for proper pay and conditions become too onerous an issue to decide on whether to give a company in breach of employment law grants? Surely any body in breach of any law in the State should simply not be afforded taxpayers' money until they make themselves compliant. Employment law is one of the most important elements of an individual's experience. It relates to his ability to feed himself and his family etc. I call on the Minister of State to answer these two questions. Is the Minister of State satisfied with regard to enforcement? Does he believe it is adequate? Why is employment law considered onerous but tax law is not?

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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The Bill is about enterprise, job creation and the establishment of a one-stop-shop for business. We have a compliance agency for labour law, namely, NERA. It has a staff of 60 inspectors to ensure compliance with the law and they are fully trained for that purpose. The staff of LEOs are not best placed to deal with the employment law problems in respect of which Deputy Tóibín may have concerns. That is the job of that agency. However, these bodies will be a first-stop-shop for business. We will have the facilitation of job creation for small and start-up companies. We are also dealing with the micro-finance fund. There will be a first point of contact where people can make loan applications and this will encourage enterprise.

We have a compliance agency for labour law and that is its job. There is no point in having duplication. I have stated clearly that we are looking at adherence to the law. All micro or start-up companies start with the intention of creating jobs in the economy. If there are breaches then I am certain NERA can deal with them.

Amendment put and declared lost.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I move amendment No. 2:

In page 5, between lines 9 and 10, to insert the following:

“7. Each local enterprise office shall establish a consultative committee which shall provide advice on local economic development to relevant interested parties, such committee shall operate on a voluntary basis, the membership of which shall include—(a) members of the relevant local authority, and

(b) representatives of local business.”.
The Minister of State will not be surprised that I have tabled this amendment. It was ruled out of order on Committee Stage but we rephrased it in order that there would be no charge on the State. The basis and success of the county enterprise boards has been the formal local involvement of elected members and business people, who have brought their practical experience to the running of the operation. While the notion of a LEO is welcome and the way they are being established, especially in my county, is rather innovative and exciting, the fact is that we are proceeding to ignore formally the input of local elected representatives and the local business community in terms of the day-to-day management and operation of the LEOs.

Let us consider the service level agreement. Section 2.5 states:

The County / City Council is a Local Authority (LA) in accordance with the provisions of the Local Government Act 2001. Each Council has a remit to provide a wide range of services in its functional area...LEOs will be established in LA offices to deliver the services as referenced...The decision to establish LEOs acknowledges the support that LAs are providing to businesses, and seeks to facilitate the sharing of best practice and active benchmarking of these types of support across the Local Authority system.
That is fine although there may be considerable doubt in the business community about the support provided from local authorities to business, but we will allow that to change.

Now, let us consider the operational arrangements under the service level agreement. Section 4.1.3 states:

The incoming CEO shall be the Head of the LEO and there will be a direct reporting relationship between the Head of the LEO and the County or City Manager. The management relationship for Heads of LEOs appointed subsequent to the establishment of the LEOs will be subject to any future local arrangements the County or City Manager may wish to provide.
That is fine where there is a good and innovative county manager committed to the LEO ethos and the agenda of local enterprise. However, if we do not have that, then where is the control? Where are the controls to ensure the enterprise ethos is within the LEOs?

Section 7.1 of the agreement relates to information sharing and states: "To facilitate active engagement between LEO staff, with the EI Centre of Excellence, and the City and County Managers Association (CCMA), a system of regular formal liaison meetings between the LEOs, EI and the CCMA, including at least one annual meeting, will be established." There is no mention of elected representatives or local business organisations.

Then, section 7.2 refers to serving the political system. It makes reference to parliamentary questions, ministerial representation, Adjournment Debates, Topical Issue Matters, Oireachtas committee appearances and ministerial speeches. This is followed by the only mention of local authority members: "In accordance with normal requirements, the activities of the LEOs will be reported on to the elected representatives of the Councils." They are so far down the food chain in the running of local enterprise offices that they only get a one-line mention in a detailed document of 34 pages.

The Minister for the Environment, Community and Local Government, Deputy Hogan, goes around beating his chest about Putting People First, which is about as relevant a title to a document as I do not know what, because there is nothing about people in it. This service level agreement document carries that ethos through. The role of the elected representative is reduced to a one-line mention in the service level agreement. There are formal reporting relationships within the service level agreement for the County and City Managers Association and Enterprise Ireland. Furthermore, the local business input from the local chambers of commerce and local Small Firms Association branches is gone from the LEOs as well. They have gone into some sort of fluffy local community development thing.

This amendment seeks to ensure that there is some sort of formal recognition for elected members of county councils. In his time as a local representative, the Minister of State was a member of Sligo County Enterprise Board. He brought day-to-day experience to the running of that board, including the awarding of grants, a function which will now be withdrawn from elected members of county councils. If he had not been able to do that and was an ordinary council member subject to the reporting requirements - so the county manager would have given him a nod towards the CEB whenever it suited him - his input would have been drastically reduced.

This amendment therefore proposes a method of having day-to-day input from elected representatives and local business people.

1:05 pm

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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I wish to thank Deputy Calleary for his huge input into this Bill. I much appreciate all of the ideas he has proposed. I must emphasise that this is a technical Bill to dissolve the existing support structure for micro-enterprises and transfer the functions to Enterprise Ireland to be delivered on Enterprise Ireland's behalf by local authorities. There will, however, be local county development committees in every county, so the Deputy should study that structure closely. This is a massive transformation of local government. In Sligo, it will give a lot of autonomy and a fantastic role for local councillors through the local community development committees.

The local service level agreement is a clear document. It is the first time that, in the context of Enterprise Ireland, a circle of companies will have a high potential to export and grow. That difference in its charter is important. When enacted, the Bill will dissolve the existing support structure for micro-enterprises and transfer the functions to Enterprise Ireland to be delivered on Enterprise Ireland's behalf by local authorities. That sums up what is happening in this legislative context.

Looking at the Deputy's proposed amendment, it is necessary to distinguish between the economic policy development role of local authorities and the enterprise support role of local enterprise offices or LEOs.

It is not necessary to include Deputy Calleary's amendment for the following reasons:

1. the amendment, as written, would effectively be recreating the board structure that this Bill is dissolving;

2. an evaluation and approvals committee will be established in each LEO. This committee will consist of:(i) a chair, either the city or county manager or another senior local authority official not from the LEO, delegated by the city or county manager;

(ii) a representative of Enterprise Ireland;

(iii) five individuals with specific areas of business expertise, i.e. record of entrepreneurship, accountancy experience, knowledge of markets/sectors/technology, and banking/financial expertise;

(iv) a public call for expressions of interest from individuals, to serve pro bono on the evaluation and approvals committee, is currently being made by each local authority city or county manager. A panel will be formed from which first-filling and subsequent vacancies will be filled. The appointment of the business sector representatives will be made by the city or county manager, in consultation with the head of the LEO. Particular account will be taken of the individual's relevant experience and expertise; and3. The Local Government Reform Act 2014, which only recently passed through the Houses, provides for the establishment of a strategic policy committee, SPC, for economic development and enterprise support in each county and city council. The relevant section is section 48(1A) of the Local Government Act 2001, as inserted by section 41(a) of the Local Government Reform Act 2014.
The requirement of each county and city council to establish the SPC for economic development and enterprise, reflects the increased importance placed by Government on the economic development and enterprise support function of the local authority.

Each SPC will be made up of elected members of the local authority and relevant stakeholders, including representatives of the local business community. The SPC for economic development and enterprise will have a key role in the development of the economic elements of local economic and community plans that local authorities will be required to make. Therefore, every councillor will have autonomy and a huge role in this. The SPC must be agreed by the elected members. In addition, business people will be on the business committee, which will complement the structure in certain cases. In many ways, the system can be too political whereas what we want are good business decisions being made by people with expertise.

Each SPC will be empowered to request the attendance of public authorities at its meetings to assist it in developing policy. Therefore, there is adequate legislative provision to enable local authorities not only to provide advice on local economic development to relevant interested parties, but also to formulate, develop, adopt, monitor and review its policies in relation to economic development.

This is a more comprehensive approach to ensuring the economic and enterprise support elements of the local authority role are fully reflected across the range of functions that local authorities are responsible for, and will ensure a more integrated approach than the amendment proposed in this Bill. Deputies should remember that each county manager is now a CEO so it is a different structure and the service level agreement will be closely monitored

The economic development and enterprise SPCs will not have a role in deciding grants and supports by the LEO, which will be allocated in accordance with national enterprise policy set by the Minister for Jobs, Enterprise and Innovation. Local enterprise offices will be executive offices within local authorities and will perform functions on behalf of Enterprise Ireland under the cover of service level agreements. Such agreements will be up for review in Dáil Éireann, so I am certain that we will have some major feedback on this matter. Unlike county enterprise boards with a board structure, LEOs will not have a committee with members, but will be serviced by the LEO staff.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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The economic development and enterprise SPC is welcome but there is no mention of it in the SLA. The SLA states that the evaluation and approvals committee will have a chair, officials and a representative of Enterprise Ireland. Those five individuals will be appointed by the city or county manager in consultation of the head of the LEO. There will therefore be no direct input from the elected members who are responsible to the people.

The LEOs will be asked to nominate a chair of an evaluation and approvals committee to sit on the Enterprise Ireland jobs expansion fund committee. It sounds good. This position will be rotated every six to 12 months in consultation with the City and County Managers' Association. So they will have the power. There is no role in the SLA for the proposed SPC, so the LEO could go off and do its own thing because there is no formal reporting role for it.

I welcome the SPC which I think is a good idea. However, the power we are giving through this legislation to unelected officials is, once again, undermining the role of local elected members. We will spend from now to 23 May trying to convince people to participate in local government, yet in this Bill the role is being undermined and diminished. It will establish another quango which is only informally answerable to the directly elected members.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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This is a no-brainer, in fact. The obvious thing to do is have people with the relevant experience at the coalface of enterprise in specific positions within the development of these new LEOs. At the start of this legislative process, there was no input from enterprise. It was only when we on the opposition benches kicked up such a fuss that an infrastructure was put in place to allow businesses to have an input into the development of LEOs. That was after the Government decided what route the infrastructure would take. Under pressure the Government put in window dressing to make it appear that enterprise would have an input.

Many councils just tolerate councillors. Hundreds of motions are passed at councils around the country which are ignored by council officials. This legislation represents a step back and a disempowerment of local enterprise and business. At the same time, however, the Minister for the Environment, Community and Local Government, Deputy Hogan, claims to be introducing the most radical reform of local government that will be more responsive and accountable than ever. Why is it that Fine Gael and Labour want to separate enterprise from enterprise delivery services?

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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I must state that there was a huge dialogue with enterprise.

This is a transformational change in every sense. Service level agreements, SLAs, are operational agreements between local authorities and Enterprise Ireland. Such agreements never previously obtained at this level. There is no intention to take away from the current oversight relationship that exists between elected councillors and county managers.

I reiterate that what is envisaged here is already catered for under the strategic policy committees, SPCs. It is important to emphasise that point. Councillors will be represented on SPCs.

1:15 pm

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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What will be the role of SPCs in the context of SLAs?

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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That will be monitored across the board. When one considers the level of enterprise across the counties, one will see that this will in no way diminish the role of councillors. The Minister for the Environment, Community and Local Government, Deputy Hogan, has introduced transformational change and given autonomy to local councillors for the first time ever. Councillors will be represented on the SPCs and the LEOs will undoubtedly make a contribution to the process in this regard. There is no need to duplicate arrangements or to create LEO consultative committees that would include councillors among their membership. If there were different councillors on both entities, there could be conflicting opinions with regard to what LEOs should or should not be doing.

What we are doing here relates to creating jobs. Local government plays a critical role in the job creation economy of every county. Councillors can agree to provide derogations in respect of vacant units or to encourage enterprise in towns and villages. What is envisaged is about giving power back to the people in the area of job creation. At present, enterprise boards are completely autonomous but that will not be the case with LEOs. The service level agreements relating to them will be operated by the regional director of Enterprise Ireland. When one considers the jobs plan that was announced earlier, one can see that huge emphasis that is being placed on start-up companies. One of the major engines of growth in this country at present is composed of the 200,000 new start-up companies operating here. Companies which commenced business in the past five years were responsible for 50% of the employment created during that period.

Deputy Tóibín stated that what is being done in this instance does not take account of the role of enterprise. Great consideration was given to this matter across local government and the enterprise sector. From now on, county managers will be chief executives and there will be a great deal of consultation with elected members. We want business people to be included on the evaluation committees. It would be easy for LEOs, which will have relatively small staffing complements, to be distracted and become involved with wider economic policy making and reporting. The latter will be dealt with by the SPCs. There would be no point in having the two entities doing the same job.

We are talking here about committees which will place an emphasis on business. Chambers Ireland and others can become involved, as can the community-owned economic development companies that are operating in, for example, Mayo and Sligo. Several of the latter companies will have a role to play in the context of the SPCs.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I should have informed the Minister of State that his contribution is limited to two minutes. He has already well exceeded that.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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My strong view is that SPCs should develop views on economic policy locally and that LEOS should concentrate on providing direct support to companies, creating jobs and working with all the relevant players, including Enterprise Ireland. Ultimately, oversight in respect of LEOS will rest with my Department. In that sense, policy will be laid down and funding will be provided by the Minister, Deputy Bruton. The performance of LEOs will be monitored through Enterprise Ireland. We are giving a very clear commitment in this regard. We know only too well that the domestic economy is the most important priority at present. My Department will monitor the new system that is being put in place in order to ensure that it will be effective in every county.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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We are not going to agreed on this matter. Was consideration given to including an elected member on the evaluation committee? Membership of the latter will include five business people to be chosen by the county manager. Surely there is room for two elected members.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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This is the point at which the Deputy is supposed to reply to what the Minister of State said.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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In a sense, I did reply to him.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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The Minister far exceeded the two minutes allocated for his previous contribution. I should not allow him to do so but he may offer a brief reply to the Deputy.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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What we are doing relates to providing support to business people so that they might create jobs and making grants available. What we want is to have on the committees experienced business people who can give mentoring support and advice to individuals. If we can replicate the success of Mr. Hynes and his team in Mayo in every other county, I would be very optimistic-----

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I keep telling the Minister of State that.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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-----with regard to the future of LEOs. I am of the view that they will provide the engine of growth for start-up companies and that they will deliver on the objectives of the Government by supporting those companies.

Amendment put:

The Dáil divided: Tá, 37; Níl, 69.

Tellers: Tá, Deputies Seán Ó Fearghaíl and Aengus Ó Snodaigh; Níl, Deputies Joe Carey and Emmet Stagg.

Níl

Amendment declared lost.

Bill received for final consideration.

Question proposed: "That the Bill do now pass."

1:30 pm

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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I take this opportunity to thank everybody who assisted in the progression of the Bill through the House. It is very important legislation and I am delighted to see it passed by the Dáil. This reforming initiative reflects a commitment in the programme for Government and is a core element of the Action Plan for Jobs. I thank the Ceann Comhairle, the Leas-Cheann Comhairle and all the staff of the House for facilitating the orderly passage of the Bill. I thank my officials for their outstanding work in getting all of the necessary agreements in place. I also thank Members, particularly Deputies Dara Calleary and Peadar Tóibín, for their valuable contributions on each Stage of the debate.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I join the Minister of State in thanking the staff of the Houses and the Department for their work on this legislation. The county enterprise boards have done very good work since 1993. The notion that the new regime will offer some type of all-singing, all-dancing show serves only to undermine that legacy. In fact, the local enterprise offices will essentially be building on the very good track record the county enterprise boards have left behind.

It is important that we get started without delay. The establishment of the LEOs has been announced more often than I have had hot dinners. We had yet another announcement this morning in the context of the so-called Action Plan for Jobs. It is time now to get things moving. In terms of the service level agreement, I realise that the Minister of State has a major interest in this area. The SLA must have some role in future for elected members if we are to be true to the ethos of putting people first in terms of local government.

I congratulate the Minister of State on his achievement in progressing the Bill. He has put an enormous effort into it. Let us proceed now with rolling out the initiative.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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For the past three years, the Government's economic policy has favoured all sectors of job creation other than local indigenous business, even though the latter is the most productive and sustainable sector in the long run. We certainly welcome foreign direct investment, but an over-reliance on FDI is dangerous in the longer term.

In its press statement today regarding the Action Plan for Jobs, I noted with an ominous sense of déjà vu that the Government is focusing on jobs in the construction sector. We have called for more investment in housing construction to meet the need that is there. We acknowledge that ensuring adequate supply is very important. However, current Government tax policy is resulting in speculators piling into the housing market in a number of narrow pockets throughout the State, elbowing potential home owners out of their way. This has a second negative impact, other than the implications for potential home owners, in so far as enterprise is essentially competing with property for funds. Indeed, the current capital gains tax regime is in danger of soaking up all available funds to the detriment of local indigenous business. Moreover, the vast majority of FDI is going into Dublin and to a far lesser extent Cork, to the detriment of the rest of the country. This is resulting in a two-tier economy.

Focusing on indigenous business is the way to create a regional balance in the development of enterprise, and the county enterprise board has heretofore been the tool to do that. I take this opportunity to acknowledge the many people who have worked on the boards over the years. They have not always been right in what they have done, but it is also the case that they have not always been provided with the necessary funding to do what they wanted to do. Since 2008 or so, when Batt O'Keeffe was Minister, they have not had any direction. Instead, they have had a sword hanging over the heads. Yet they continued to transfer funds and knowledge to start-up businesses and micro-enterprises at a time when such were badly needed. In some ways, the skills and knowledge residing in the country enterprise boards will be diluted as a consequence of this legislation. My concern is that the culture of the local authority will become the culture of what was formerly the country enterprise board, and not vice versa.

I urge the Government to ensure that the new structures are properly funded and supported into the future. We must create a balance within our enterprise mix which places local manufacturing and internationally tradeable services at the centre of a sustainable growth path.

Question put and agreed to.