Thursday, 10 July 2014
Ceisteanna - Questions - Priority Questions
Foreign Direct Investment
6. To ask the Minister for Jobs, Enterprise and Innovation the new direction he will give to the new chief executive officer of the Industrial Development Agency to improve the geographical distribution of foreign direct investment here. [29881/14]
A two-tier economy is developing, with people in the Border, midlands and west region much more likely to experience poverty and unemployment or have a family member emigrate. The most recent census found a general increase in the population of the State and a decrease in population in many rural areas. This trend can be ameliorated through good Government policy, especially on enterprise. The majority of new jobs announced by the Industrial Development Agency in the past five years have been located in Dublin and Cork, with a small minority located elsewhere. The question asks whether the position will change under the new regime in place in the IDA.
In 2013, for the first time in many years, every region experienced employment expansion. It is noteworthy that this included the south east and Border, midlands and west regions.
This year, 2014, is the fifth and final year in IDA Ireland's Horizon 2020 strategy, which has been in place since 2010. One of the high level targets of the strategy was that 50% of all investment would be located outside of Dublin and Cork. Although IDA Ireland did not achieve this target, there were nevertheless a number of substantial investments in regional locations during the period. Between 2010 and 2013, some 35% of all foreign direct investment, FDI, announcements related to locations outside of Dublin and Cork, while 40% of all IDA Ireland sponsored site visits by potential investors were to locations outside of Dublin and Cork. Overall, 72,500 people or roughly 44% of the total employment in IDA Ireland's base of companies, including those that were former clients of Shannon Development, are located outside of Dublin and Cork.
I am determined to optimise the potential contribution of foreign direct investment to regional economic development as part of a cohesive regional strategy. To this end, I was pleased to secure agreement on new European Union state aid rules, under which we have secured regional aid status for the south east, County Kerry and the Border, midlands and west region and the capacity to provide aid to large enterprises in these areas. In addition, Kells, Athy and Arklow have been designated under the new regional aid map.
Work is now nearing completion on a new foreign direct investment policy statement, as committed to in the Action Plan for Jobs 2014. This follows an in-depth analysis by Forfás of Ireland’s foreign direct investment strategy in light of a changing global environment to take account of factors such as key trends emerging in FDI best practice internationally, Ireland's strengths in attracting FDI and the new state aid rules, which came into effect on 1 July 2014.
In addition, the 2014 Action Plan for Jobs includes a commitment to develop a framework for a regional enterprise strategy to better integrate the plans of the enterprise development agencies and enlist the support of regional stakeholders in supporting the development of the competitive strengths and opportunities of the regions. My intention is that the framework will be rolled out on a progressive basis, starting with one or two regions and focusing, in particular, on co-ordinating the efforts of the agencies under the remit of my Department, namely, Enterprise Ireland, IDA Ireland and the new local enterprise offices. The overarching objective of the framework is to ensure the agencies work together on a common strategy to support their client companies and work with other key stakeholders to maximise the potential for job creation in the regions. My Department is developing this framework in collaboration with Enterprise Ireland, IDA Ireland and Forfás. This policy framework will guide the new chief executive of the IDA as the agency develops its new strategy from 2015 onwards.
I am glad there will be a new emphasis in IDA Ireland's strategy because, while its job creation efforts have been positive and successful in recent years, the regionalisation aspect of its strategy has been a disaster. The figures speak for themselves. In 2010, some 37% of inward investment was located outside Cork and the greater Dublin area. This figure fell to 27% in 2011 an declined further to 23% in 2012. I understand it increased to approximately 30% in 2013. This imbalance has a significant impact on rural communities. According to Irish Rural Link, for example, nine out of ten of the young people it deals with are considering emigration. It also has the effect of emptying rural areas, by which I do not mean the countryside but small and medium sized provincial towns where services such as post offices, schools and Garda stations are closing. This trend creates further pressures on cities. Will the Government ensure that the new emphasis becomes part of the IDA's strategy from 2015 onwards?
I am pleased to note the Deputy is changing his view of the role of foreign direct investment in the economy because he suggested, in an earlier question, that FDI was somehow undesirable and unsustainable. Foreign direct investment is an important element in the economy. There are, however, limits to what one can do in terms of regional location. IDA Ireland does not choose what areas of investment are mobile - certain sectors are clearly more mobile than others - nor does it decide where companies choose to locate. A range of measures is required to build up the competitive offering of different regions, to play to their strengths and to use these strengths as a magnet for attracting foreign direct investment.
While IDA Ireland plays an important role in regional development, as the Minister of State, Deputy Sean Sherlock, pointed out, 91% of all employment is in non-IDA areas of activity. We must work on these areas as well as on those where IDA Ireland attracts investment. It is for this reason I have located this focus in a broader regional enterprise strategy, rather than in one agency.
The Minister may have been concentrating on more important matters when I asked my earlier question on foreign direct investment. My first point was that foreign direct investment is positive and necessary and we must fight for more of it. I pointed out, however, that the imbalance in our exports on the FDI side is dangerous and implored the Minister to seek to rebalance the position.
For two years, the Government's Action Plan for Jobs included a target of having 50% of all investment located outside of Dublin and Cork. Having failed to achieve this target in the first two years, it dropped it in the third year of the action plan. My objective is to ensure the Government refocuses on achieving this target, which must be its paramount objective. The imbalance in investment is having serious effects on the west where and entire GAA generation is being lost. It is also causing significant problems on the east coast.
The Deputy is trying to have it both ways. Speaking out of one side of his mouth, he pretends that we have an excessive reliance on US companies and foreign direct investment and, speaking out of the other side of his mouth, he craves more foreign investment in particular regions.
We need to win all the mobile foreign investment we can because emigration and unemployment are high. This investment strengthens certain sectors of the economy and builds clusters. We also need to develop a credible regional strategy within which IDA Ireland investment is only one part. We must have a credible and wide regional strategy that builds up the competitive advantage of regions, identifies the sectors in which they have an edge and builds on their strengths. Many of these will be in life sciences, tourism and food and not always in the sectors where there are flows of foreign direct investment from time to time.
We need to have a balanced debate on this issue and ensure all of our agencies, not only IDA Ireland, focus on maximising the regional spread of development. That is the approach I will take in respect of this matter.