Seán Sherlock (Cork East, Labour)

I am happy to have the opportunity to speak in the Seanad about supporting, embedding and realising a return on investment in science, technology and innovation for national competitive advantage. It is at the heart of what we do. We do not invest for investment's sake but in order that Ireland can gain a competitive advantage and prosper economically. Investment must result in jobs. Senators will be aware the Government has set job creation and retention as one of its key priorities in the programme for Government. This is what drives the work of my Department and that of other key Departments as we seek to provide a better future for our young people and society in general.

For the first time in three years, Ireland is likely to experience growth this year. Although the growth will be modest, it charts the successful turnaround of the economy by the Government. Economic commentators generally agree that stronger growth is likely to follow for Ireland next year. The labour market is starting to show signs of stabilisation. We still have the long-standing Irish strengths that have served us well for many years, including a young and well educated workforce, growing levels of research and development activity, an attractive corporate tax regime that will be maintained, a hub of internationally trading businesses and a foreign direct investment record which is envied worldwide. A number of companies have recently shown that they are aware of these strengths by making new investments and expanding existing operations here. They include Coca-Cola which has expanded its operations in Wexford; arvato which is increasing its workforce by more than 10% in financial services; ClearStream Technologies which is creating over 70 new jobs in Enniscorthy and Combilift which is creating 25 new jobs in Monaghan.

In terms of others announced in the past few months: Bioware in Galway is recruiting another 200 employees in preparation for one of the biggest game launches of the year; MSD announced the creation of a further 50 jobs at the official opening of the new €100 million pharmaceutical research and development centre in Tipperary to add to the 70 additional jobs already planned at its site in Cork; Boston Scientific will invest €26 million in research and development at its facility in Clonmel; Paypal will recruit 200 more employees in customer services in Blanchardstown; Ericsson is building on its successful research and development operations in Athlone in taking on an additional 100 software engineers at its research and development centre to support local and regional remits; Intel has announced another 200 jobs in Kildare; DELL expects to employ an additional 150 workers between its operations in Dublin and Limerick; VM Ware, the global leader in virtualisation and cloud infrastructure, has announced plans to create 250 new jobs in Cork over three years; while SAP announced plans to expand its workforce by 100 in Citywest, Dublin.

These companies are all showing their belief in the economy and the Irish labour market. For those who are still out of work, however, our objective in government is to encourage the creation of new jobs by putting supportive enterprise policies in place and aligning all of our investments for a return in the form of sustainable jobs.

The improvement in our conditions is being led by the exporting sectors of the economy. Increased exports will lead to a multiplier effect and feed through to the domestic economy as exporting companies grow and increase their dependence on suppliers.

The Government is continuing to implement the trade strategy, Trading and Investing in a Smart Economy,which is aimed at helping Irish businesses to compete in global markets. It is heartening to know that despite the turbulent international markets into which we are exporting, our exports are continuing to perform to an extremely high level. Merchandise exports are performing strongly - up 6% in the first half of the year, with the highest monthly trade surplus for ten years being seen in June. Meanwhile, Ireland's services exports for the second quarter of the year reached a new quarterly record of nearly €20 billion, representing an increase of 7.3% on the same quarter in 2010.

Investment in science, technology and innovation has played a large part. It is no accident that companies undertaking research and development have shown a level of growth in trade and exports during the downturn that demonstrates the value of productive, high calibre research and innovation activity. Less than ten years ago, in 2004, just 10% of the FDI project wins achieved by IDA Ireland were research and development based and valued at €120 million. Subsequent years have seen a continuing upward trajectory in the research and development component of IDA Ireland wins, where in 2009 the level based in research, development and innovation was 49% of overall IDA Ireland new client business and valued at a very impressive €500 million.

My responsibilities as Minister of State entail close and co-ordinated engagement with the key enterprise agencies to deliver a real and positive impact on improving Ireland's competitiveness. Strategic investments in research and development have contributed significantly to the creation and application of new knowledge and technology across the enterprise spectrum, the competitiveness of indigenous enterprise and embedding the FDI base in Ireland. This work is also meeting the objective of improving Ireland's international reputation as a place in which to do business and a location for generating and using new technology and knowledge.

Science Foundation Ireland operates a range of programmes designed to deliver a world-class standard of research activity in third level institutions and linked with Irish enterprises. Through industry embedded research groups, it is helping to support the retention of employment in high value jobs in Ireland. It is funding 28 research centres - nine centres for science, engineering and technology, CSETs, and 19 strategic research clusters, SRCs, undertaking research activity allied with the needs of industry, involving in excess of 180 industry partners.

Enterprise Ireland is the agency responsible for the promotion of indigenous exporting companies, with the ultimate objective of increasing exports, employment and prosperity. Increasing the value of our indigenous exports will play a critical part in securing economic recovery, maintaining existing jobs and creating new ones. Enterprise Ireland operates a suite of programmes to expand research capacity in companies, increase collaboration between enterprise and the research sector and maximise the commercialisation of the State's research investment. The agency provides hands-on support, promotes awareness of the benefits of innovation in the context of a company's business plan, provides important funding support in the form of grants and equity and promotes awareness of incentives such as the tax incentives that are available. Foreign direct investment has been hugely important for the Irish economy and job creation over the past 30 years. Companies supported by IDA Ireland directly employ approximately 139,000 people and have a total impact on the Irish economy of 240,000 jobs. They account for over 75% of total Irish exports, worth some €110 billion, including goods and services. The companies in question contribute over €19 billion to the Irish economy.

Ireland's strengthened national research ecosystem has enhanced IDA Ireland's capacity to attract increased levels of high-value research and development projects. Investment in research, development and innovation continues to play a strategic role as part of Ireland's foreign direct investment landscape. It is a question of embedding existing employment and setting the ground work for further job creation. The work of the enterprise agencies is underpinned by the investments being made under the programme for research in third level institutions. These investments are aimed at strengthening national research capabilities in human and physical infrastructure. The programme has supported the development of research centres and facilities that underpin key national priorities and individual institutional strategic missions. It has enabled the establishment of national networks and consortia.

As Minister of State with responsibility for research and innovation, my immediate focus is on three key areas. I am supporting the research and development and innovation agendas and shaping them as a strong domestic engine of growth. I am prioritising public investment in research, development and innovation in a way that will allow us to get the biggest return on our investment in terms of jobs, intellectual property and leveraging of investment from enterprise. I am ensuring our emerging workforce learns science, technology, engineering and mathematics skills - the so-called STEM agenda - at second level, goes on to qualify in these disciplines at third and fourth levels and applies those sought-after skills in working life.

I wish to speak about the strategic direction for science, technology and innovation. I believe Ireland must develop a high productivity and high innovation economy. The guiding principle underpinning this overall objective is that the quality of our human capital in research and innovation is a key engine in accelerating Ireland's economic recovery and helping us back on the path of sustainable growth. In the past decade, we have trebled the level of investment in research and development, underpinned enterprise demand for it and invested in human capital, physical infrastructure and the commercialisation of research. This public investment is leveraging twice its value from business investment. It has contributed significantly to an increase in foreign direct investment, the competitiveness of indigenous enterprise and the creation and application of new knowledge and technologies.

If we are to grow an innovation system to build national competitive advantage, we will need to support and embed innovation across our economy and facilitate the commercialisation of research. We are taking action to achieve this. We are leading and co-ordinating a whole of Government approach to investment in science, technology and innovation, as underpinned by the 2006 strategy for science, technology and innovation, the 2010 report of the innovation task force and the programme for Government that will apply from 2011 to 2016. This will soon be informed and steered by the recommendations of the research prioritisation steering group. This distinguished group of people from academia and enterprise was constituted under the eminent chairmanship of Mr. Jim O'Hara to advise the Government on the most strategic make-up of public investment in science, technology and innovation. We are continuing to build world-class human capital in scientific research in Ireland and develop and sustain Ireland as a location of choice for researchers and firms seeking to conduct world-class scientific research. Through Enterprise Ireland, we are working to enhance the capacity of indigenous enterprise to develop innovative products and services for competitive advantage by building R&D capacity within companies, linkages with the third level research base and commercialisation support.

We are continuing to attract high-quality foreign direct investment, FDI, projects to Ireland and more firmly embed existing FDI companies in the Irish economy. For example, one of our foremost CSETs - centres for science, engineering and technology - is CRANN, the Centre for Research on Adaptive Nanostructures and Nanodevices, which includes Hewlett Packard, Intel and Boston Scientific as research partners. Members will know this is housed within the footprint of Trinity College.

We are promoting and supporting research collaborations for the competitive advantage of the island of Ireland through linking the research system to centres of excellence and fostering partnerships through involvement in EU and other international collaborative research programmes. An example of this can be seen in the EU joint programme on neurodegenerative disease research, focusing on diseases such Alzheimer's and Parkinson's. The Health Research Board and Science Foundation Ireland are working to lead effective Irish participation in this new EU R&D initiative between 23 EU member states. The programme aims to develop a European strategy to co-ordinate national efforts in neurodegenerative research across the biomedical, clinical and social spectra. It is also proposing innovative ways of pooling expertise and resources to address the fragmentation and duplication of current research efforts. The Health Research Board and Science Foundation Ireland are also leading the development of an Irish strategic research agenda in this area which will identify a common national vision on how to address the enormous social challenge of neurodegenerative diseases.

We are developing our intellectual property policy, legislation and procedures to meet our national requirements and international obligations, support enterprise and influence the outcome of international intellectual property initiatives in the best interests of Ireland. A key initiative in this regard is the development of an intellectual property protocol, the objective of which is to establish clear, straightforward ground rules around ownership of and access to all State-supported intellectual property, with a view to supporting commercial exploitation of the results of publicly-funded research. Clarity and certainty with regard to intellectual property can be another plus in choosing Ireland as a place to do business. Work is well under way on this initiative and we should see the results very soon.

Utilising my cross-governmental role, I am pursuing a suite of measures across the Department of Education and Skills and the Department of Jobs, Enterprise and Innovation to enhance science and maths literacy and to upskill our emerging workforce for the skills needs of the future. Key to our future success as a nation and an economy will be a sustained focusing on company capabilities in research, innovation and technology, and linking enterprise with research institutions and each other to deliver innovative market-led products. Leadership, management and market skills are critical requirements, along with ongoing competitiveness and productivity gains, to successfully and profitably export our goods and services. For our indigenous companies, this requires a mix of equity and grant investment, together with underpinning angel, seed and venture capital funds, all of which Enterprise Ireland is providing on a tailored case-by-case basis.

Ireland's National Recovery Plan 2011-14, as endorsed by the European Commission and the IMF, takes account of the fact that strategic science, technology and innovation, STI, investment is one of the Government's infrastructure investment priorities. In order to realise the return on investment in this area, issues we are addressing include start-up risk, embedding innovation across our economy, the need for collaboration between industry and research providers and the need to bring the outputs of research and innovation activity to the marketplace. The role of research and development and innovation has evolved to enable it to become a key driver of business success. In the past decade, since the establishment of Science Foundation Ireland, SFI, and the initiation of the programme for research in third level institutions, PRTLI, there has been a transformational change in Ireland's research landscape and the interactions between academia and industry. We have developed a truly credible scientific base with top-class research facilities and world-class researchers. In addition, with the maturing of SFI and other agency research investments, there has been a commensurate increase in the level of pre-commercial outputs from research investments, including patents, licences and spin-outs.

I have mentioned that the Government's objective is to maintain world-class research in Ireland, that is, the so-called excellence model which has been built up in the past decade to sustain Ireland as a location of choice for researchers and firms seeking to conduct world-class research, development and innovation. Science Foundation Ireland investments are based on the rationale that the long-term competitiveness of enterprise requires national excellence in research allied with enterprise needs. Ireland has moved from Third World status into the world's top 20 countries, based on the quality of research output. While SFI supports more than 2,500 research positions directly, much more important is the indirect job support provided by it. The SFI research community interacts with 534 companies, the majority of which are IDA Ireland or Enterprise Ireland clients based in Ireland which employ more than 90,000 people. Another substantial part of the value of the SFI investment is in attracting new foreign direct investment, FDI, previously beyond Ireland's reach and in underpinning existing jobs with world-rated research.

SFI is focused on strengthening connections between researchers and industry through its centres for science, engineering and technology, the so-called CSETs, as well as strategic research clusters, SRCs. CSETs or SRCs or both help link scientists and engineers in partnerships across academia and industry to address crucial energy research questions, foster the development of new and existing Irish-based technology companies and grow partnerships with industry that could make an important contribution to Ireland and its economy. SFI supports nine such CSETs and 19 strategic research clusters. In addition, it is the Government's intention to extend the remit of SFI to enable it to bring the research it funds closer to market and ensure SFI investments continue to drive Ireland's long-term strategic, economic and competitive development. The legislative heads to give effect to this are well advanced.

The Government also will oversee successful completion of the investments in PRTLI-funded projects which through cycle 5 will see a ramping up of a significant number of physical and human capital investments in areas of strategic need. Only yesterday I announced funding of €4.3 million for the clinical and translational research scholars programme, an exciting PhD programme developed by the partner institutes of Molecular Medicine Ireland to prepare science graduates for jobs in Ireland's knowledge economy. The programme will deliver more scientists in Ireland who will undertake innovative patient and disease-focused research and then, crucially, bring their findings from the bench to the clinic for the ultimate benefit of the population's health. This is further tangible evidence of how Ireland's higher education sector, in developing such a programme, is delivering for Ireland's enterprise needs.

Another key objective is to ensure continued growth in the capacity of Irish companies to develop innovative and cutting edge products, processes and services in order that both domestic activity and exports can grow with a consequence of creating wealth and increasing jobs in Ireland. This will be achieved by focusing on developing company capability in research, innovation and technology, by linking research-providing organisations with industry for the benefit of the latter and transforming the outputs of research into commercial activity.

Building on the investment in infrastructure, and human and intellectual capital, a number of strategic programmes are run by Enterprise Ireland with a view to commercialising research and development, exploiting market opportunities and driving innovation. These include transforming research and development activity in enterprise. This research and development initiative supports the significant building-up of a company's in-house research and development capabilities and infrastructure in the context of a development plan by the company for growing the business. This activity is tailored to achieve a well-targeted output, taking into account the economic and market context in which companies operate.

Regarding the high-potential start-up scheme, the provision of strong supports for start-up companies and entrepreneurs primarily through equity investment instruments, will help to secure a source of future employment and will ensure that Enterprise Ireland's client companies are in a strong position when markets begin to recover. This activity is targeted for priority funding under the current budget projections to increase output to 100 HPSUs per annum by 2013.

Regarding industry collaboration with the third level sector, technology centres and industry-led networks, the objective is to achieve competitive advantage for industry in Ireland through world-class collaborative research. The centres are industry-led and carry out market-focused strategic research and development by translating advanced research into technology capable of commercialisation. It is planned to expand the number of technology centres to 16 by 2015 under the existing budget projections.

Regarding the commercialisation of research through Enterprise Ireland, the commercialisation fund activities support academic researchers to undertake commercial, output-driven research and to bring that research to a point where it can be transferred into industry. The technology transfer system, supported by Enterprise Ireland, captures, identifies and protects intellectual property throughout the third level system.

I have already mentioned the importance of foreign direct investment in job creation over the past 30 years and IDA Ireland's role in that regard. IDA Ireland-supported FDI is a key stimulator and driver of the economy through its contribution to Exchequer finances, exports, and research and development. It generates more than 50% of corporation tax, which was €2.9 billion in 2009. It generates more than 70% of national exports representing €110 billion in 2009. Some 73% of business research and development spend comes from the FDI sector. It contributes 30% of Irish gross value-added expenditure of €19 billion in the economy.

IDA Ireland leverages significant investment in science, technology and innovation. In 2010 IDA Ireland won 37 high-value research, development and innovation projects for Ireland with more than €500 million in new research, development and innovation investment.

In accordance with its Horizon 2020 Strategy, published in 2010, IDA Ireland has set specific targets for job creation for the period 2010 to 2014 including: 105,000 new jobs and 640 investments; 50% of investments located outside Dublin and Cork city; 20% of greenfield investments originating from emerging markets by 2014; and an annual client spend of €1.7 billion in research, development and innovation by 2014.

IDA Ireland will focus on winning new investments, in particular in sectors such as life sciences which include pharmaceutical, biopharmaceutical and medical devices, ICT and financial services.

Our aim is that a growing proportion of FDI will come from high-growth markets new to Ireland - India, China, Russia and Brazil. FDI will also come increasingly from early-stage companies, which IDA can help attract to Ireland in part because so many established leading multinationals are already here. Research, development and innovation plays its strategic role as part of Ireland's FDI landscape embedding existing employment and setting the groundwork for increased future employment.

To address the need to maintain jobs in Ireland, IDA Ireland is actively encouraging its clients to strongly engage in transformation initiatives, and is assisting them in programmes to improve company-wide competitiveness, enhance the use of new technologies and grow the skills of the business.

In the context of this forward-looking agenda and in line with a commitment in the programme for Government, my Department is considering the possibilities around developing Ireland as a location for global intellectual property management, licensing and IP trading services. The objective would be to provide high quality, high added-value jobs in specialised niche areas which have a demand for dedicated legal and financial instruments and a range of ancillary services. We are currently tendering for a feasibility study to examine what structures and policies could be developed to make Ireland a world centre for managing and trading in intellectual property.

I will now deal with the issue of prioritising public investment in STI to maximise return on investment. This Government is committed to ensuring that we get the maximum return on public investment in science, technology and innovation. The Department of Jobs, Enterprise and Innovation, together with Forfás, is leading a whole of Government research prioritisation initiative to identify areas of opportunity with the greatest potential to deliver economic return, with a view to the Government prioritising public investment in science, technology and innovation to support the realisation of opportunities in those areas.

We are expecting a final report on this soon from the steering group under the chairmanship of Mr. Jim O'Hara. There may be a shift of emphasis towards realising more economic outputs for that prioritisation exercise. In addition, there is a strong sense that one must not compromise the educational value of basic research. There is a strong need for a balance between basic research, applied research and the necessity to commercialise outputs. The strategic development of research centres across the system will be informed by the research prioritisation findings.

I mentioned one other priority to which I would now like to return for a moment. That is, ensuring that graduates in science, technology, engineering and maths, STEM, have the relevant skills that are applicable in the current employment market. This is an issue which cuts across the two Departments in which I serve and both Departments are very engaged in initiatives to deliver on that priority.

My concern is twofold: first, to deliver quality jobs to our emerging workforce; and, second, to deliver qualified and quality personnel to take up jobs emerging in foreign direct investment enterprise and indigenous Irish enterprise. We are also pursuing the provision of highly skilled employment by repositioning Irish enterprise higher up the value chain.

The Irish higher education system has been successful in producing science graduates for the labour market. The latest OECD data shows that graduation rates for science graduates are higher, on average, in Ireland compared to other countries. Unfortunately, higher education has not been as successful with engineering as a result of lower student demand for these courses. However, there has been an increased demand for STEM courses in recent years. Although the overall number of applicants through the CAO has remained stable since 2010, there has been a significant redistribution of first preferences with science courses experiencing almost a 6% increase in first preference applications and a small increase in first preference applicants for engineering and technology courses.

Data on new entrants from the Higher Education Authority show that between 2007-08 and 2010-11 there has been a 37% increase in the number of new entrants entering science, maths and technology courses at all levels of undergraduate higher education. This points positively to a continuation of the upwards trend in recent years of acceptances on to STEM courses, particularly at honours degree level.

In 2010-11, some 28% of all new entrants to higher education institutions were enrolled in courses in the science, maths and technology areas. Building on this increased capacity in mainstream provision, a targeted approach is being taken to bridge the short-term skills gap in ICT graduates identified by the expert group on future skills needs in addition to addressing longer-term pipeline issues. The emerging action plan on ICT skills provides a good model of collaboration between agencies for the alignment of education programmes with the skills needs of the economy.

The action plan, a multi-level and multi-sectoral plan, aims to boost the supply of ICT skills in the short term through an increase in conversion and upskilling opportunities, and to boost the long-term supply of ICT graduates. These aims are complemented by initiatives to improve the mathematical proficiency of new entrants to higher education, as well as by measures to ensure the responsiveness of the higher education sector to the changing skills needs of industry. The action plan also seeks to maximise the uptake of ICT programmes offered through the Springboard initiative and of work placement opportunities offered through the national internship scheme.

The promotion of science awareness and careers in science is crucial if we are to be guaranteed a steady pipeline of young people who choose to study science, technology, engineering and mathematics, STEM, disciplines. This will be vital if we are to become a true knowledge economy. The Discover Science and Engineeringprogramme, which is administered by Forfás on behalf of the Department of Jobs, Enterprise and Innovation, promotes an awareness and understanding of the importance of STEM in a modern knowledge-based economy. Its raison d'être is to develop more effective ways of engaging students, teachers and the public in science, technology and innovation, thereby contributing to Ireland's growth and development as a knowledge-based economy, helping to keep Ireland among the world's most competitive economies.

Discover Science and Engineering runs a range of flexible initiatives at first and second levels, for both pupils and teachers, and it has a particular value as a change agent. It can initiate and try out programmes and activities with a view to wider application where the results would warrant that. Its overall objectives are to increase the numbers of students studying the physical sciences, to promote a positive attitude to careers in science, technology, engineering and mathematics and to foster a greater understanding of science and its value to Irish society.

The current renewed focus on job creation is particularly relevant to Discover Science and Engineering and its remit as it is designed to enable more Irish students have the necessary skills to participate in the knowledge society. Many areas of the Irish enterprise economy, including the pharmaceutical, medical devices and ICT sectors, are still suffering from a shortage of key skills despite economic recession. The flexible programmes of Discover Science and Engineering are designed to meet this demand in the medium term by enthusing young people at primary and second level with the career opportunities available in the enterprise economy and achieved through the study of the physical sciences. In addition to inculcating an entrepreneurial mindset among second level students, there is a concerted effort to support and encourage a broader interest in careers underpinned by STEM qualifications and capacities.

Senators will be aware of two key initiatives taken recently as part of the ongoing campaign to encourage young people to develop an interest in mathematics and in careers where a high level of competence in mathematics is required. First, a major reform programme, the so-called project maths initiative, is under way and was rolled out to all second level schools in September 2010. Results from the 2011 junior certificate show that those who took project maths fared better in their examination results in mathematics. Although it is very early in terms of the roll-out of project maths, these results are very encouraging and we are firmly committed to mainstreaming the approach in all schools.

Second, to encourage more students to study leaving certificate higher level mathematics, bonus points will be awarded for leaving certificate mathematics from the summer of 2012 for entry to higher education institutes. In addition, the programme for Government contains commitments to reform mathematics and science teaching at second level to make science a compulsory junior certificate subject by 2014 and to prioritise professional development for mathematics and science teachers.

Senators will be aware of recent comments regarding the global ranking of Irish universities. It is worth noting that while some higher education systems have invested heavily in elite institutions and adopted a policy of differentiated support for different tiers of institutions, our focus is on sustaining and advancing performance throughout the system. In this regard, we can draw encouragement from the overall performance of the Irish system in the latest Times Higher Education system performance tables which place Ireland firmly in the world's top 20. We are ranked 17th overall and sixth in the world relative to GDP.

I sincerely thank the Cathaoirleach and Senators for giving me the opportunity to discuss this topic. I hope Senators will be reassured by the Government's commitment to the science, technology and innovation agenda. My sense is that it transcends party political boundaries, that it is one which successive Governments, no matter their hue, have realised the potential within it, and that it will form the bedrock of our economic recovery. We must ensure there is collaboration among public representatives, including Senators, Deputies and Ministers. I am keen to ensure I hear from Senators on any views they have on this agenda to allow us to make it world class, as we are ambitious in our aims.