Seanad debates

Wednesday, 2 October 2013

County Enterprise Boards (Dissolution) Bill 2013: Second Stage


1:10 pm

Photo of Sean BarrettSean Barrett (Independent) | Oireachtas source

I welcome the Minister. I always enjoy meeting the Minister around the House and I know that his heart is in the right place on this Bill. The Minister mentioned that there will a network of 31 LEOs across the country, so there will be a busy role for the Minister for Transport, Tourism and Sport, Deputy Varadkar and I hope that he has 30 other fellows ready to assist in that task.

I sat on the Culliton review of industrial policy. Our worry at the time was that there were too many agencies and bureaucrats involved, which is a fear that others have expressed in regard to the Bill. After we finished the report I was asked what was in it and I responded by saying that among other things, the report recommended a reduction in the number of agencies. There has been confusion between the agencies and the entrepreneurs. As Senator Quinn mentioned, the number of start-ups is down by 21% in 2012 compared to 2011. There is too much managerial jargon and talk. The agencies spend too much time talking about themselves, and they would not know an entrepreneur if they came up and bit them. We found that tendency in the Culliton review. We must get the entrepreneurs first and let the agencies take a back seat. Perhaps they should have smaller public relations departments.

I am sure that the Minister will agree that when we use construction as the instrument of development we are crowding out industry. Industrial employment was static or even in slight decline in the first seven or eight years of the previous decade, which has been pointed out by people such as Chris Horn. The fastest growing economy was shrinking its industrial sector - the sector the country relies on for exports. We must see that the road to economic growth is not through larger public or construction sectors because we have tried that; neither is it through the banking system that we have. I sat on the Committee on Finance, Public Expenditure and Reform when the bankers came in. I have no doubt that they would do the same all over again. They are not interested in start-up enterprises. They were simply bubble housing lenders. The Governor of the Central Bank said that he is powerless to prevent reckless banking. Item 27 on the Order Paper, which is the Financial Stability and Reform Bill 2013, is to try and separate utility banking from casino banking. The matter has gone to Europe, but the Department of Finance does not seem to have the banking expertise - I think that there have been staff changes - to send a document on the topic. We will get nowhere with the present banking system - it just wants another property bubble.

The Ulster Bank chief executive was the most forthcoming witness at the committee meeting. He admitted that an industrial bank in the north of Ireland had been transformed into a property bubble bank in the Republic. The banks' corporate culture will not allow them to get back to being interested in small and medium enterprises and start ups. Without a functioning banking system, I do not know what we can do. In addition to the capital rules in the Bill, as the property bubble threatens again in some places, we must have much stricter rules on loan to value and for the percentage ration to be brought down to below 80%. Some countries have gone down to 70% where they have seen a property bubble developing. We must also have debt to income rules in the property sector enforced. AIB provided an example in which somebody owed it €340,000 but whose income was €34,000. We asked whether the person who gave the loan still works in the bank and whether they could be removed as a danger to society.

We need a new banking system. I do not whether there remains an industrial credit company, which is how governments in the past have tried to get banks to focus on industry as the Minister would want them to, and to get away from the property bubble and the fixation on property. When the Minister for Finance, Deputy Noonan was here he spoke about having negotiations between the Department of Finance and banks from outside the country that would know something about industry and might channel some funds in that direction.

Sheltered sector services have always been a problem. We pay too much for electricity and gas, and legal services in particular. That distortion in the economy means that people want to go into those sectors and not into the sectors that the Government is assiduously promoting. We need to look at tax and welfare rules, the Sunday payments that Senator Quinn mentioned and the need for fewer regulations. It is not just subsidies and hand outs that make a business - there must be market expertise.

As a result of the difficulties with our public finances, we have shrunk consumer expenditure by about a quarter since 2008, which is, as the Minister knows, part of the reason why there are so many boarded up shops around the country.

The Fine Gael press office issued criticisms - I exclude the Minister from this matter - of Senators Crown and Quinn. Senator Quinn will be back this afternoon to debate upward only rent reviews and making a positive contribution, as he has always done. I deplore some of the statements that the Minister for Jobs, Enterprise and Innovation, Deputy Bruton has made on the issue. Senator Quinn is a genuine man who will help the Minister and the rest of us to develop this economy. The conduct of some of the Ministers and the Fine Gael press office is contemptible. We try t make a contribution in this House. I am trying to get a better banking system and a more sensible mortgage system. We have proposed legislation - I believe we are ahead of many Departments in doing so - because we all want an environment in which new enterprises can operate. That is what the Minister wants and we commend him on that approach.

One of our best entrepreneurs - I heard Senator Ó Murchú refer to the Collisons - is Michael O'Leary.

When Mr. O'Leary joined Ryanair, it was carrying 1 million passengers per year. This year it will carry 85 million. Ryanair's operation in the British market is twice as big as that of British Airways and only 8% of its business now relates to Ireland. The airline is bigger than counterparts such as Iberia in Spain and Alitalia in Italy. The attitude towards Mr. O'Leary is not that he is a great entrepreneur and let us try to learn from his example. Rather, and with the exception of the 85 million who travel with his airline, the most prevalent attitude towards him is one of begrudgery. We should leave personality out of it. This is a guy from Mullingar who did not invent aircraft, small airports or the Internet but who combined the three to build the most profitable and biggest airline in the world. I celebrate his entrepreneurship and the kind to which Senator Mary Ann O'Brien referred.

Sometimes when we discuss this matter, one would think that jobs are created by committees and stakeholders - I hate that word - but in reality they are created by entrepreneurs. The latter may be awkward characters whom people do not like but they make things happen. I am concerned with regard to the massive emigration of young people out of the country. Some 63% of emigrants are graduates and they are using their entrepreneurial skills in Canada, New Zealand, the United Kingdom and Australia rather than here. This constitutes a huge loss of talent.

The banking system is probably worse now than was the case five years ago. It was bailed out but it has not oriented itself towards the goals the Minister of State and I share. The banks do not have the necessary expertise at their disposal and they certainly are bereft of economic expertise. They are dilly-dallying and annoying the Governor of the Central Bank who is trying to regulate the sector in the interests of ensuring an efficient economy. Without a home market and good banks, small and medium enterprises face an uphill struggle. As is always the case, we in this House will support the Minister of State because he is a constructive and creative individual. However, far more radical reform is required in the banking sector, within the Department of Finance and in the area of banking regulation. In light of all that happened in 2008, it is bizarre that the Government views the abolition of this House as a priority. There is a need to refocus and we will be with the Minister of State all the way in that regard.


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