Wednesday, 14 September 2011
Innovation at the Heart of the Jobs Challenge: Statements
No. It is a pleasure to be in the Seanad to speak about this critically important issue. It is a long time since I was a Member of the Seanad, but I certainly learned here the importance of adopting a constructive approach to politics which, perhaps, has been lost a little in the Lower House in which the approach to issues tends to be more partisan or contentious and less constructive. I look forward to hearing the views of Senators. I need not tell any of them about the really difficult economic situation we face, but I want to point to a few dimensions that are important signals as regards where we need to go.
In the past three years we have lost almost 350,000 jobs. What is particularly depressing is that two thirds of these have been lost by persons under the age of 30 years and we are losing significant numbers of younger people to emigration as a result of the fallout. Last year approximately 30,000 Irish people emigrated. That is a level of attrition we cannot stick for the building blocks of a strong economy in the future. We need these younger people to work and find their future in Ireland. It is not simply for one Department or the Government alone. Society as a whole must consider the challenge of making jobs our most important priority and prioritise it in every way we can.
I will not give a political rundown of what went wrong but when we consider what happened in the past decade the legacy of the property boom has been very serious. While property boomed the things that really matter for employment in a small open economy decayed and we lost our competitiveness dramatically. Let us consider the world competitiveness ranking. We dropped from fourth to 24th place and we are down again this year according to recent figures. We lost our export market share dramatically for six years in a row. While the previous decade had been one of dramatic growth with up to 8.5% per annum growth in our market share it then swung into reverse. We lost approximately 30 percentage points on simple cost competitiveness against the likes of Germany with which we complete in key export markets. Our model which had been balanced became very distorted and instead of having exports balanced with growth in other sectors such as construction and so on, construction took over. Not only did this damage our competitiveness, it significantly damaged key elements of our system, most notably the banking system. We must address these significant issues and this is the legacy of that period.
Ireland has been in such a situation before and it is important to recall as much. The Whitaker-Lemass era was a similar period in which a Government and a public service with political drive on one side and public service innovation on the other addressed a series of failed policies and changed direction. We should think in such terms again. Ireland and the people must consider how we can create a different, stronger, sounder future for ourselves from what has passed in recent years. We must re-imagine our country's future and the type of economy we seek to create. This is why I spoke at the MacGill summer school about needing an innovation revolution and that was reflected in the title. We need to create an indigenous engine of growth in the country with enterprise as the driver. Innovation must become the norm not only in enterprises, which is crucial, but throughout the public service and the supports we have in place. This is the challenge the Government must address.
It will not simply be about enterprise strategy, it will also be about how we manage the support and activation of people who are out of work. How do we create an education system that is more geared to the challenges of a modern workplace? How do we create a public service that does not create regulatory burdens and drags on business and which recognises that one can have high standards without bureaucratic drag and creating cost? This requires innovation in thinking throughout the whole of Government and, most important, within business. One of the disappointing things I have found coming back to this Department after 14 years was to learn that exports were still dominated by foreign companies from which 90% of our exports continue to derive. Indigenous companies have only 10% and they have not been building market share for a considerable period. Questions must be asked about our enterprise development model. Why have we not created stronger companies within the indigenous sector? There are dynamic companies but many reach a certain level and then are sold or do not go to the next level. We need to consider seriously the strategies and policies that we pursue.
Also we must consider the multinational sector. Many countries would given their right arm to have the breadth of strength we have in the multinational sector. We have created a leading edge in information and communications technology, medical devices and pharmaceuticals and digital gaming. We have strong sectors but on examination their overall impact on the economy in terms of linkages and purchase of materials and services has been dwindling over the years. We must develop a new model to exploit the strengths of the multinational sectors and to turn them into clusters of growth that spawn indigenous companies which grow within the environment as well as strong export companies based largely on foreign research and development and marketing.
We have started to do this and we have laid down a bedrock of science and research capability in our universities. However, in many sectors we have failed to ignite a broader cluster of strength. The medical devices sectors is probably the exception. It is especially strong around Galway and the west and it appears to be spawning not only strong multinationals but strong indigenous companies which grow and flourish. We must examine our models for developing and promoting indigenous enterprise focused on the export market and we must examine how to deepen, strengthen and make the Irish-based multinationals more strategic within their own families so that we have the leaders within a multinational family.
These are great challenges for us but we have every reason to be ambitious and confident about our future. We have shown resilience through this period and we have successfully started to fix our banks. We now have proper, separated, pillar banks with the capacity to focus on the domestic economy. We are the location of choice for many of the most ambitious companies, especially in the USA. We have created real sectoral strengths and strengths within our colleges and universities. We must bring these together and we must be willing to transform the pieces of the jigsaw that are not working. Too often in Ireland when the issue of change comes up, whether change in wage setting mechanisms or the way we manage our public service, there is a tendency to see it as a zero sum game whereby for there to be an advance for one group there must be a retreat for the others. The truth is that in many of these areas there can be a gain for everyone if we start to transform the systems. It is not a question of penalising, victimising or pursuing one group in a penal way, it is a question of transforming a range of issues at the same time to create a more successful enterprise sector. We recognise that enterprise will be the driver of this transformation in the employment area which we need and it is a matter of examining what will help this process.
Some cross-cutting things will make a difference. We must drive down business costs and become more competitive. We lost ground and we must restore it. We must improve access to credit. Despite the work done by Government on getting the banks into healthier shape for many people they are not open for business in the way we would like. We must drive innovation in a new way. We must consider the resources and the substantial investment we put into research and development, whether we can sweat assets more effectively and whether we have best practice in terms of turning research into innovation and jobs. One person put it to me that research is about turning money into knowledge but that innovation is about turning knowledge into money. That is the major difference. We have been pretty good at turning the money into knowledge but the next level is how to turn that knowledge back into money, jobs and practical changes. We also need to look at the potential of businesses. As Senator Mary White will know, McKinsey undertook an analysis of Irish management which found there are capability gaps in management and concluded that if these were brought up to best practice, it would be worth €2 billion to the economy. We need to invest in our companies.
To develop those themes, the Government has been very focused on the theme of driving down business costs. As the House knows, the Minister cut PRSI and VAT and we have been reforming the wage setting mechanisms. We are now moving to reform the legal structures to make access to the legal system more cost effective and we are reviewing the upward-only rent regime, which is another important business cost. I have kick-started the whole issue of cutting regulatory burdens, and just one month ago I raised the audit threshold by 20% so that small companies would not have to get involved in the expense of an audit.
In my own area, I am seeking to reform the employment rights and industrial relations structure, which is at present very cumbersome and overemphasises bringing cases to expensive hearings that have become very legalistic. A good employment rights and industrial relations structure heads off all those problems at the pass whereas ours tends to rush them too quickly towards expensive dispute resolution. I believe we can make significant savings and give a better environment for workers in these areas if we introduce reform. There are many areas in which we can bring down business costs, and what I have outlined is by no means an exhaustive list.
We are also working on access to credit. I am sure Senators receive as often as I do details of the individual cases of people who are not getting the loans they sought from their bank. More people should use the complaint systems. The Credit Review Office recently published figures which show that only 300 cases were appealed to the banks and fewer than 100 were appealed from the banks to the Credit Review Office. In respect of cases on which the Credit Review Office made a decision, it overturned more than half. It is clear, therefore, there is a problem in the way banks are treating people seeking money but only a very small number are actually making it to that final level. There are all sorts of reasons for this, no doubt, but it is important and a signal that there are problems in the system. None the less, people need to give Government better sight of what is going wrong in order that the new powers the Minister for Finance is taking to have stronger oversight of the banks can work on hard information.
We recognise there are market failures, as economists would describe it. Some businesses would not get loans in the present environment because the banks are too risk averse. We are introducing a partial loan credit guarantee to fill that gap and we hope to have it developed before the end of the year. The first tranche is a temporary measure to find how this works and the target will be approximately €400 million in lending, which will fill an important gap. We are also developing the concept of microfinance to allow people who have no collateral whatsoever and are starting off for the first time. Again, this will be done in the context of the programme for Government.
We need to look at the support structure for microenterprise to make sure that structure is up to the highest standard and to find how best to support small start-up business. We also need to see more companies considering export. As I said at the outset, the level of export from our indigenous sector is too low at 38%, a figure which has not changed in a decade. Despite the opening up of huge markets on our doorstep, we have not, as a country, been exploiting this and increasing our sales abroad. This needs to be addressed and we need to consider whether there are obstacles to small companies putting their first foot on the exporting ladder, which I believe there are. Enterprise Ireland is setting up a new division to target exports, in particular first-time exporters.
We need to look at other areas that can deliver on the potential of business, such as access to public procurement. It is well known that a higher proportion of Irish public procurement goes overseas. While this is not always a bad thing, we need to make sure indigenous SMEs have a fair shot at it. The thresholds are sometimes too high or the pre-qualification conditions are too strict, so we need to examine how that can be improved, which is why a working group is working on that issue.
There are very positive signs for the future, meaning we can begin to have realistic grounds for optimism. Our export performance in the past three years has been exceptionally good, particularly in 2009 and 2010 and continuing on into 2011. We have reversed the trend of loss of market share and we are now building market share again. We will go into a trade surplus and a balance of payments surplus next year, so as a country we are actually paying down our debts and getting into a healthier position. The action on the public finances and of hitting our targets, which have continued throughout the year, are having positive effects. We are seeing bond yields coming down and greater confidence in the economy internationally, and we need to turn that confidence into domestic confidence as well. Many people are very nervous about spending and, obviously, the prospect of difficult budgets ahead is part of that. However, we have good grounds for confidence. For example, it is encouraging to see investment in plant and machinery picking up, which is an early indicator that confidence is returning.
As in the Whitaker-Lemass era, we need to set ambitious targets for ourselves. The Taoiseach has said that by 2016 he wants Ireland to be the best small country in which to do business, which is a realistic target. We need to drive our position back up in the competitiveness rankings. We need to set ambitious targets for the development of key sectors where we have strength. We have real opportunity in digital gaming, green economy-clean tech and other areas. What we need to do is decide whether there are obstacles in the way of those sectors and seek to systematically remove them.
I want to give a guarded sense of optimism about the jobs challenge. No one is understating the scale of the problem and the damage we have to overcome, and no one is saying this will be solved overnight. However, if we pursue consistent policies that are based on the needs of an enterprise-driven, export-oriented sector, we can regain the strength we had and create the opportunities for employment here. To achieve this, a huge amount of transformation is needed, not just in the narrow enterprise space but in many of the other dimensions of public service and our communities, which can make a difference.
Communities can really make a difference to the success of an enterprise. Whether a product gets onto a shelf in a local supermarket or in a supermarket chain, whether people are willing to value and spend on well-designed domestic products, whether mentors are available to support a start-up business which is going into what they call the valley of death, which is a difficult valley in which one is trying to make sure one does not fall into the potholes that await young entrepreneurs, all of these make a huge difference. There is much a community can do, whereas the State cannot do it all.
As part of this challenge, we will be looking to significant groups in the community to put their hands out to the needs of those starting businesses to see whether they can do that bit more and deliver more support. For example, the chamber of commerce in Galway is supporting people in that difficult period after they become unemployed and when they are starting to think about setting up a business, and this is done through mentoring, networks and so on.
Much can be done through communities, as well as through the enterprise support bodies. I look forward to hearing the views of Senators and hope to incorporate sensible and worthwhile ideas into our policy development work.
I am delighted to welcome the Minister. His heart and soul are in the portfolio he has been given and he will make dramatic changes. The public sector has to be as innovative and entrepreneurial as the people who are out fighting in the market for market share. From my experience, the Department of Jobs, Enterprise and Innovation needs to change its bureaucratic state of mind. There are good people in the Department who need to be motivated and not restricted by regulations. They need to be sensitive to what those in the marketplace are experiencing.
I refer to microenterprises. I support what the Minister said in this regard. The concept of supporting people who employ a small number of workers has to be addressed, as one can start a company with one, two or three employees. Many unemployed persons would be well geared to starting a business.
City and county enterprise boards have been in a vacuum for the past year or two. They do not know where they are going and what finance is available to them. This is a pity because we need them to operate at the core of communities. The current system does not have to be kept in place, but something has to be done by the Government to help small companies employing up to ten employees. It is critical that this issue is dealt with because the current system is not working.
The Minister mentioned public procurement. When one examines the figures, it is amazing to find how little Government business Irish companies receive compared with those in other countries in Europe such as France and Germany. We seem to be over-anxious about EU regulations, an approach which is preventing Irish companies from receiving more Government business. This issue has to be addressed. I asked the previous Minister to address it but nothing happened.
The Minister referred to getting products on shelves. Mr. Frank Ryan, chief executive officer of Enterprise Ireland, spoke to our group yesterday about the Diaspora, people who were educated in Ireland who now hold very senior positions and could facilitate Irish companies in other countries. It was a whole new idea of what the Diaspora could do. The father of Sir Terry Leahy who was chief executive officer of Tesco in the United Kingdom came from Sligo, while his mother was from south Armagh. When Tesco established in Ireland having bought Quinnsworth which, as we all know, was an English company owned by Associated British Foods, his personal and emotional connection with Ireland through his father and mother caused him to help indigenous food industries. Senator Fergal Quinn, as managing director of Superquinn, and Sir Terry Leahy made our company. The human element is interesting. Senator Feargal Quinn wanted to promote Irish products, while Sir Terry Leahy gave many Irish producers a chance to export their products. When Tesco took over from Quinnsworth, Lir Chocolates gained access to 700 retail outlets in the United Kingdom overnight. One would not be able to receive business if one could not rise to the occasion. The Irish connections are fascinating.
We must try to address the issue of domestic demand. Mr. Joe Durkan of the ESRI also spoke to us yesterday and said the Government should be devising a plan to tell the people what they could expect it to do in the next two or three years. He said they needed to hear about the cuts to be made rather than hearing about them on budget day because they had no confidence about what was going to happen next. He also said that if they were told what was going to happen next, they could save money for the education of their children. It is common sense for them to know how much money they have to spend.
When Mr. Tony Foley spoke-----
The Minister has to focus on indigenous companies and the contribution they can make. Irish people and politicians love to see multinationals establishing here, but they do not have much regard for indigenous companies. Enterprise Ireland is involved with such companies which employ 137,000 people, compared with foreign direct investment companies which employ 125,000. Indigenous companies spend €19 billion in the economy, compared with a figure of €21 billion for foreign direct investment companies. We have to be proud of what we are doing, as I know from experience in the company I started. We have to stand up and be counted and get Irish companies on the radar in communities. We need to send the message that there are very successful indigenous companies because it seems as though multinational companies are much sexier. The job of the Minister is to highlight them and encourage others to start up companies. The only way more people will be employed is by starting up companies and innovating in order that they will be able to compete in the market and develop new products that customers outside Ireland will want to buy. There is great ignorance in this regard. People do not know what the term, "we need more exports," means. Increasing our exports will mean more jobs and money in the economy.
We had a meeting yesterday in Tallaght during which we heard a presentation by the Tallaght Centre for the Unemployed. I told its representatives that I would raise the issue today. It acts as a voice for the unemployed, tackles issues affecting unemployed persons and tries to help them to better themselves. It provides educational and training facilities and wide-ranging information on welfare issues. Its projects include a jobs initiative scheme, Tops Mobile Jobs Club, a mobile crèche, a women's support group and computer system training. It has recently been crippled by a massive reduction in its funding from the Government. One worker said the heart of the community had been squashed.
As I have said many times in this Chamber, the long-term unemployed are the ones we have to help, as their numbers are increasing. When I started my company in East Wall there was a transformation in people when they got a job. Self-confidence, self-esteem and everything else is transformed when a person gets a job. I, more than most, appreciated the transformation in people's lives which I saw when my company started in the middle of the last recession in 1986. I ask the Minister to address the issues of the long-term unemployed, microenterprises and those in Tallaght. The people there were thrilled when I said I would have the opportunity to raise the issue of the centre with the Minister today. I wish the Minister best of luck and every success.
I am glad to have the opportunity to contribute to the debate. I welcome the Minister.
We are focusing on innovation which, as we all know, can be a very wide agenda, something mentioned by the Minister and Senator White. Innovation is not confined to the science lab, rather it concerns the economy, community and the public sector in particular in terms of how it can change and adapt to the changing world and ways of doing business.
The Minister, Deputy Howlin, is doing a lot of work in that area. Last year or the year before, the innovation task force produced a report. Its recommendations covered every Department, including the Department of Education and Skills and the then Department of Justice and Law Reform, in terms of bankruptcy and insolvency. The idea was to encourage an entrepreneurial spirit across the economy. We need to encourage that kind of thinking, particularly in the public sector.
As the Minister mentioned, we also need to address competitiveness and how companies fare which export abroad. The cost of doing business in this country is higher than others. It does not matter whether a company is exporting financial services or medical devices, it is competing abroad in international markets. Such companies carry additional weight associated with the cost of doing business in this country.
Last week the National Competitiveness Council produced its annual report, of which the Minister will be aware. It has been in operation since 1997 and examined the cost of doing business. While Ireland has improved in a lot of areas, the council pointed out that others are not sustainable. It referred to access to credit, which the Minister mentioned, taxation policy, education, energy and our telecommunications infrastructure. We need to improve in those areas if we are to ensure that indigenous and international companies succeed, continue to survive in the marketplace and create more jobs.
In terms of innovation, it is important to encourage start-up companies. The Minister has said on numerous occasions that he is listening to and has engaged in dialogue with these types of companies to determine their needs, concerns and what can be done to ensure they develop. Innovation is also about protecting existing jobs and ensuring skills are available and employees can be upskilled necessary. Others probably will refer to the situation regarding TalkTalk in Waterford. It puts a sharp focus on the skills that are needed, such as languages and information technology.
We recently received a submission from the Irish Internet Association outlining the lack of suitably qualified people for the ICT sector and gaming industry. The Minister mentioned the importance of the gaming industry and we have a real opportunity to perform. In Ireland, 75% of ICT employers have job vacancies and many are finding our young talent has gone abroad and is not available to them.
I do not want to have another debate on mathematics, but young people have not been attracted to technology and mathematically based studies. We are now finding there is a gap in terms of people who could be employed in these industries. Many issues are being progressed. The Minister, Deputy Quinn, is addressing the skills issue and is serious about ensuring we improve on the take-up of mathematics in schools and the courses young people take at third level.
The digital economy is also important. Real support has been given to small industries. The Digital Hub presented a submission to us recently on the need to encourage small businesses, in particular, to go online and become accessible. The figures submitted are striking. Last year 70% of the €3 billion spent by Irish consumers went to non-Irish businesses because people bought online, especially from the UK. There is a real need to ensure all small businesses have access to the Internet to advertise their wares, services and products.
The Minister mentioned transferring research and development into money. How will we do that? I would like to focus on the technology transfer centres in universities and third level institutions. I hope there is a future for them but I wonder what form they will take. They can play a very important role in transferring knowledge into money-making industries.
I welcome the Minister to the House and thank him for coming to Waterford last Monday. My city has by far the highest employment rate in the country, almost 20% at this point in time. The south east has an unemployment rate of 17.9%, again the highest in the State. Since November 2007 I estimate 3,100 headline job losses have occurred in companies in Waterford in companies such as Cappoquin Chickens, GlaxoSmithKline, Waterford Crystal, Kingspan Century, Honeywell, ABB Transformers, Teva Pharmaceuticals, Baush & Lomb and, most recently, 575 jobs in TalkTalk. It is a litany I am not proud to speak about. There are more I have missed out on. The figure includes hundreds of construction workers who are out of work and the large number of small businesses and retail units that have closed as a result of those job losses.
The situation at TalkTalk is deplorable and there is no question about it. The actions of the company and the manner in which it treated its excellent skilled staff is a disgrace. I hope the Government will take steps to ensure this type of behaviour will not be tolerated in future from any company. The Minister was correct to say IDA Ireland in Waterford bears no responsibility for the loss of jobs in TalkTalk. Responsibility rests totally with the company itself. However, there is a need for the decision makers, including people with clout from IDA Ireland and Enterprise Ireland, to be based in Waterford.
Since 1996 when IDA Ireland reduced its number of regional headquarters from eight to four, Waterford and the south east has suffered badly. As mayor of Waterford in 1996 I lobbied the Minister strongly to prevent this so-called rationalisation. At the time I feared there would be severe repercussions for the future of my region and city. The Minister gave assurances at that time which he honoured until he left office in 1997.
The 14 years of Fianna Fáil led Government has brought the region on to a standstill and stunted the effectiveness of State agencies in promoting and actively assisting companies to set up in our region. I welcome the Minister's announcement that he is conducting a report to be completed within weeks on the strengths, weaknesses and needs of our city and the region with a view to an action plan to address the problems and prioritise job creation in Waterford. We had a similar plan and report, entitled Strategy Waterford, in 2001 into which IDA Ireland also had a great input, but that was all talk and no action. I trust the Minister will act to restore Waterford as a strong and vibrant gateway city with opportunities for all our people. I accept the Government does not create jobs, but it must cut out the bureaucracy and obstacles and create an environment to attract jobs and protect and assist existing companies, especially in indigenous industries, to ensure they have a level playing field when it comes to job creation and are not placed at a disadvantage.
The workers at TalkTalk need to know their entitlements and opportunities for training and education. I hope the Department of Social Protection, FÁS and all other State agencies will be on site to give advice to each individual. These people are at their lowest ebb with worries about mortgages, how they will feed and educate their children and what the future will hold for them. One must go through this process to know exactly what the workers feel. I know as I went through that myself, and it is certainly not a pleasant place to be.
Innovation, research and development are the only show in town to kick-start our economy. Fast-tracking a technological university can be the catalyst to start the comeback for Waterford and the south east. A strong Waterford city is vital to the future well-being of workers south Tipperary, south Wexford and south Kilkenny in particular. The small-minded attitude of some in the region that a weaker Waterford would bring greater prosperity to other towns in the region has been shown to be a false message that has brought misery to workers in south Tipperary, south Wexford, south Kilkenny and, of course, Waterford city. I wish the Minister well and I hope he will be the bearer of good news on the jobs front for the people of Waterford in the short to medium term.
I thank the Minister for joining us today. He might be wondering what I, as a children's rights advocate, have to say about jobs. For more than 15 years I worked for a small and medium-sized enterprise, through the good times and bad times. As I dealt with making staff redundant and dealt with transfer of undertakings to a UK entity, I understand the sleepless nights that people are going through. I very much welcome the commitments the Minister made today about driving down costs for businesses, increasing the access to credit and the need for regulatory reform. I also appreciate his understanding of the situation for young people because according to the National Youth Council of Ireland, Ireland has the second highest rate of youth unemployment in western Europe, with one in three young men unemployed, which represents a trebling of the figure since 2008.
Senator Cummins asked us to keep our comments for today short. I have one question and one proposal for the Minister. My question is very topical as it relates to the junior certificate examination results. I know there has been a focus on mathematics, and in doing so I take the opportunity to congratulate my nephew who got an A in his honours mathematics paper and who single-handedly may have contributed to the upward trend. However, people have not focused on foreign languages. Some 12% failed ordinary level French, 8% failed ordinary level Spanish and 7.5% failed ordinary level German. Poor foreign language capacity will hinder job creation, especially in the emerging export-led markets and with the changing demand for the global economy, the focus having shifted towards Asia and the consequent need for graduates with, for example, Mandarin. Only one secondary school in Ireland teaches Mandarin as a foreign language subject. I ask the Minister to clarify the role he will play regarding education and whether we will actually join the dots.
I was very encouraged by what the Minister had to say about us needing to add to our exports and we need to put a foot on that export ladder. In preparation for today's debate I talked to representatives of a number of companies and I will now make what I believe to be an innovative proposal. I will give credit for this to a home-grown entrepreneur, Colm Lyons, of Realex Payments. Irish businesses need to get established in overseas markets, which can sometimes be achieved online, but more often it requires staff to relocate to set up offices. This can often take from 18 to 36 months. During this time local staff are typically recruiting others to train, after which they go back to the head office. Realex has asked several staff to move and while some have moved, many are concerned about the general state of things here and want to remain in their job in Ireland. The proposal is to have a scheme for Irish staff working abroad whereby if a staff member is assigned to grow the business in an overseas market, the company could accrue a bonus for the staff member that is paid tax free when the assignment is completed. It could be controlled, for example, by Enterprise Ireland, which would approve the company, the role and the individual against certain criteria. I believe this scheme would act as a great incentive for staff to be based abroad for a certain period of time and thus accelerate the growth of Irish businesses overseas. I ask the Minister to give the proposal serious consideration.
I conclude by going back to my children's rights background. Research in the UK and US has found a negative impact of parental unemployment on children and young people. For example, young people living in a workless household are more likely to have poor educational outcomes, including increased incidence of truancy and early school leaving. Therefore I believe the Minister's brief includes children's rights and I will be doing what I can to support his work.
I welcome the Minister, who I believe has the most important job in the Cabinet to regenerate the country and get people working again. If we were to compare Ireland to a car, it would probably be a good strong Volvo or Saab which has good infrastructure and is well built but we do not have the petrol to run it, which is how I regard credit. If credit is not available, regardless of how good our products and infrastructure might be, if people are not spending money then businesses cannot prosper.
I have read the fourth report of the Credit Review Office by Mr. John Trethowen. One item stands out where it states that the demand for SME credit remains unmeasured. It is of concern that we cannot measure it, unlike the UK which has a better measure of demand. We cannot trust what the banks are telling us because anecdotal evidence is that banks are offering, for example, €50,000 to a business that needs €100,000, which is of no use. That is an issue the Credit Review Office under Mr. Trethowen can pursue. The office comes in at the end of the cycle. In some cases a fledgling business might approach the Credit Review Office to get its views before going to the bank. The Credit Review Office might advise either that the business is wasting its time or that the bank should look at it and the business could come back to the Credit Review Office if it has a difficulty. From my experience of being self-employed and having a business of my own, I know the last thing someone wants to do is go to the bank. On many occasions the company's accountant does it or the business owner does it with his or her accountant. However, the Credit Review Office might have the expertise to review a business proposal and advise whether it thinks credit might be offered. The business owner could then go the bank with confidence because the Credit Review Office believed he was in the market for funding.
Senator Clune mentioned jobs in the digital sector. The report presented to us by the Digital Hub company stated £1 in every £5 spent by the British consumer was spent online and that there was a massive market for Irish business. I do not know what the top line of consumer spending in Britain is, but 20% of consumer business is a massive amount. As we speak the same language and have the same culture as the British, this offers an opportunity for Irish business to tap into that market which is embracing online marketing and purchasing more than we are. The Digital Hub company stated there was an opportunity to promote online business.
We have an opportunity to get the car back on the road with help from all relevant Departments. People must start to spend money they obviously have, but they need an incentive to spend. I wish the Minister luck in his portfolio.
I welcome the Minister. The enterprise boards and the new development companies in local communities are drivers of new business. I understand the Minister for the Environment, Community and Local Government is awaiting reports from all Departments on various functions that could be devolved to local government. Currently, while enterprise boards and development companies do excellent work, there is very little local accountability or visibility for the work they do. In the report to the Minister for the Environment, Community and Local Government I hope the Minister for Jobs, Enterprise and Innovation will include these as functions that could be devolved to local government to provide for democratic accountability and involve communities on a wider scale in the development of local businesses.
Senator Cummins referred to TalkTalk in Waterford. I heard some of the debate in the Dáil earlier and assure the House my contribution will be much calmer, but I am concerned about this issue. I am from Carrick-on-Suir, only 16 miles from Waterford. Around 130 people from south Tipperary are employed in TalkTalk. I heard the Minister speak about the matter on a number of occasions. He regretted the fact the company was leaving Ireland and only giving 30 days notice. There is a requirement to address the way companies can withdraw within 30 days, particularly those which were funded by IDA Ireland, as this company was. It was also in negotiations to receive further funding.
I would like a commitment from the Minister that he will pursue the matter of the upgrade of Waterford Institute of Technology. The Minister for Education and Skills, Deputy Quinn, has already given that commitment and it is included in the programme for Government, but because of the crisis in the south east, the word "pursue" must be replaced by "complete".
I am also concerned about the globalisation fund and the drawing down of funding for Waterford. Have we learned from the experience with Dell, when €22 million was allocated and only €16 million drawn down before the deadline? I would like to hear the Minister's thoughts on how that fund might be used locally in Waterford.
I welcome the Minister and share his sentiments. Most of what he said concerned what we needed to do, but by now it is what we must do. Everyone knows we need to do something. I will pass on to the Minister another book my brother wrote, "How? When You Don't Know How". If the Minister does not know how, he might if he reads this book.
We met the Minister's officials at a committee this morning and I agree with Senator White; the Department has a greater role to play. If we asked 100 people on the street what Department of Jobs, Enterprise and Innovation officials did, they would not be able to say. There is a host of agencies, but no one knows where to go. Everything is media driven and all people are reading in the newspapers is that there is no hope. The Department must get into people's faces and let them know what is available, driving them back to work. There must be greater use of back-to-work schemes.
It was said to the Minister's assistant secretary that a money advice and budgeting service for small businesses would be a good idea. She said the idea had been floated in the Department, but these ideas are left floating for years. It is critical this one be dealt with immediately because small businesses are going out of business every day. An hotel in my local town that employed 40 people had to close because it was not able to pay local authority and water rates. They were small amounts, but they were big enough to shut down the business. The cost to the taxpayer of 40 people going on the dole at the same time is €840,000 per year. If there was a money advice and budgeting service for small business, it could discuss business plans with banks, local authorities and other agencies to keep people at work. If a business can continue to trade without paying its rates, we should take this into consideration.
I welcome the Minister. I was at the meeting of the Joint Committee on Jobs, Social Protection and Education and the senior civil servants made some strong points, particularly that it was not the Government's job to create jobs, rather it was its duty to create the environment in which jobs could be created. These are the messages I welcome because that is what we must do. We heard ideas being introduced by some Senators today, including Senator Mary White, a real example of someone who grabbed the opportunities and said if she could be released from the constraints, she would create jobs. Private enterprise creates jobs.
I had a very interesting night. RTE is sponsoring a programme in which Drogheda is being used as a setting. At a meeting of 200 people, an ideas summit took place. The question was what could be done in Drogheda to ensure it would be the town others looked to as an example. I am bringing up that matter because the innovation and enthusiasm shown by those 200 people, seated at round tables of ten, demonstrate how things will happen. The Minister can encourage such inspiration.
When I was in Drogheda some time ago, I talked to a man who had been unemployed for eight months. He had applied for a job the previous November but did not get a reply. He asked what else he could do. His belief was that was all he should do, apply for a job and rely on someone else to create it. We must instil a sense of innovation in people in Ireland. On my return from Drogheda I found two students at my door to tell me they had invested in equipment to clean cars and that they wanted to clean mine. They did a great job, for which they were well able to charge, but they refused to sit back and do nothing.
Some years ago I was in Russia, in Ekaterinburg, a very interesting place, a place where one can stand with one foot in Europe and the other in Asia and have a photograph taken. There was snow on the ground and my feet were dirty. When I returned to the hotel, a young woman asked whether she could clean my shoes for me. I replied that I had just arrived that day and did not have any Russian money. She said there was no charge. I had my shoes cleaned by this young woman and got talking to her. She said her father said she had to learn capitalism, enterprise and how to work. She had to learn English as well and that is what she was doing there. She had come into the hotel and received permission to clean shoes. She was looking for any sort of work to do. That is the kind of innovation we are going to encourage, as we are asking too much of the Government in solving these problems. The most the Government can do, as Senator Kelly and others have said, is to reduce costs and make sure we are more competitive.
I looked at some figures. This summer the European Commission published an innovation Union competitiveness report covering all 27 member states and six associated countries. The report found that, in general, Ireland performed well in most indicators, reaching similar values to the EU average and that of the group of countries sharing similar research and innovation characteristics. However, there are other areas in which we need to pay more attention. Let us look at the level of inventiveness in the economy as measured by the number of patents which falls short in comparison with other countries in the European Union or other similar systems. Given that our number of patents is so low, can the Minister explain what steps he is going to take to encourage innovators to file patents here? There is an opportunity to do this, particularly in the food industry.
With regard to small and medium enterprises, we should be looking towards our strengths such as the food industry. Let us look, for instance, at the food innovation showcase which will be happening this month in New Zealand. It aims to welcome visitors from all over the world to see and explore New Zealand's leading edge food technologies, their companies and products. Let me cite one example of the innovation that will be on display. I had never heard of Flyhidrate. It is the world's first scientifically formulated three beverage system designed to counter the major stresses of long-haul flying and will be launched at the event. This is an, as yet, unseen product that will be a global first in the marketplace and will benefit both airline crews and passengers. The drink is the culmination of 18 months of research collaboration between teams from the University of Otago's school of physical education and department of food science. They worked together with leading nutritionists. The New Zealand Ministry of Science and Innovation which invests in businesses is growing New Zealand's economy through science and innovation. It has co-funded this drink's research and development. We can do so much in this area.
I had a very interesting lunch today with an American and some Irish colleagues in his company. I should declare an interest. My son is involved with the company, IdentiGEN, which developed a process at Trinity College, Dublin, for the traceability of beef and other animals. I worked on this issue ten years ago in our own company. The process has been initiated in the United States. The opportunities for such scientific technology are huge and we must find a way of developing it. The process is based on DNA traceability and does not involve paperwork. The work is done on computers and cannot be fooled with.
I have referred to the opportunities New Zealand and other countries have taken. This month TheIrish Times highlighted the success of the Cheestring, one of the Irish food industry's greatest success stories. It has had worldwide success to the tune of €80 million and keeps a factory in County Cork running 24 hours a day, five days a week. Kerry Foods cheese marketing director, Mr. Denis O'Riordan, gambled €4 million on the product - or perhaps £4 million at the time -and it paid off. Unfortunately, too few people are taking these gambles. We must encourage people to take chances and do what they can. Kerry Co-op became a global company when it realised some of its supposed waste products which it had to pay to dispose of could be transformed into valuable products. Other companies can gain inspiration in this regard.
Scotland is also putting innovation in its food industry at the very heart of economic recovery. The Scottish Government recently provided £30 million in awards through its food processing, marketing and co-operation grants scheme. It is actively supporting innovation in the food industry. One of our problems is that we imposed a deterrent - one could almost say a ban - on genetically modified products. We should be willing to see that there are opportunities in this area and that we cannot stay behind. The world's population is growing dramatically and other countries are using more modern scientific technology. We have almost said we will have nothing to do with this. We must encourage Europe to change its attitude, but we must also change ours.
Innovation is available to us, but it is up to us to do it. The Minister must loosen the strings and give us the opportunity to do so. I know his heart is in the right place. We must make sure we encourage innovators to adopt the most modern technology and achieve what they can achieve.
I welcome the Minister. I join Senator Cummins in supporting the 575 people in Waterford who have lost their jobs in TalkTalk. I attended a meeting with the Minister earlier this week when we had a discussion with public representatives on ways to support the workers, Waterford city and the south-east region. I also express my disdain for the way in which the company treated the workers. I do not believe the Government was responsible for the job losses. I will give an example to show how badly the company treated its staff. It was negotiating with them on improvements in pay and bonuses which were to be introduced in October in full knowledge that they were to be let go at that time. This is an example of the contempt the company had for the workers. It is absolutely shocking.
There was much concern about the 30 days notice given to the employees. That is the minimum requirement. I ask the Minister to examine this issue with a view to putting new legislation in place to compel companies to give 60 or 90 days notice in order that a similar situation does not arise. We must not simply cry crocodile tears about the workers at TalkTalk. We must ensure this does not happen again.
Senator Cummins has spoken very well about the jobs that have been lost in Waterford and the south east during the last ten years. The south east has taken very heavy hits and lost many jobs. I link this issue with innovation. Waterford and the south east are a perfect example of an area that was overly dependent on foreign direct investment and manufacturing. This has meant we have not had a sufficient level of interest in innovation and entrepreneurship which has left the region exposed. The loss of jobs in manufacturing has left a huge vacuum and a crisis, with too many people out of work.
I ask the Minister to consider what can we do. We all accept that there is a difficulty in supporting small and medium enterprises in the export sector. We all know that we need to move away from dependence on foreign direct investment, that for whatever reason the south east is not getting its fair share of employment, and that companies are not locating there. It is interesting to note that when the Minister went to Waterford, he spoke about the need for a strengths and weaknesses analysis of why this was happening and for agencies to come up with proposals to counter some of these problems. A similar problem arose in 2001. Senator Cummins spoke about Strategy Waterford. At the time the Minister for Enterprise, Trade and Employment, Ms Mary Harney, also spoke about the need for a strengths and weaknesses analysis and to direct enterprise agencies to examine the reasons companies were not locating in Waterford, yet we are here ten years on and the problem is worse for the people of Waterford. We need to foster a culture of innovation in order that people can create the jobs that they want to create. I will provide a few examples in this regard.
The digital media hub in Dublin is very good. I chair a working group of the city development board in Waterford, the "Doing it for yourself" working group. It was set up by the city manager to look at bringing people together such as entrepreneurs, those involved in the third and fourth level sector as well as the community sector to see what jobs we could create, the things we could do for ourselves and bring to an end the dependence on the Government. One of the things we looked at was the need for a digital hub in Waterford to bring together people who have skills in gaming, animation, programming, design and so on. They would have a place to work in together to sow the seeds of future employment. These are the innovative proposals needed. Every time something like this comes up, the issue of finance and support from the enterprise agencies presents a problem. The Government could improve the position by bringing some of the enterprise agencies within the remit of local government. I know that this is something the Minister is examining. However, if we look at city enterprise boards and the enterprise departments of many local authorities, they simply do not have the power or the teeth to do enough. I have always said local people are best placed to solve the problems.
We have had numerous discussions in Waterford in the last few years about how we can kick-start the local economy, how we can change things and how we can get people back to work. We have suffered job losses at Waterford Crystal, Bausch & Lomb, GlaxoSmithKline and all the other companies mentioned by Senator Cummins. Many spoke about the dependence on manufacturing which meant that people went from secondary school into these jobs. This meant that the drive for entrepreneurship was absent. That is possibly one of the reasons we do not have such skills in Waterford and this kind of opportunity is not available. One of the ways we can deal with this is to have proper enterprise modules in secondary education. We have to foster among young people the need to be creative, to think outside the box, to know that they can make it, that they can establish businesses and receive support. The Government should support young people especially and give them opportunities, the tools and the power they need to create the jobs of tomorrow.
I spoke about graduates. We have a wonderful facility in Waterford, the Waterford Institute of Technology. We also have the TSSG which does huge amounts of work. We have people coming out of it who are experts in programming, animation, gaming and so on. However, do they have the entrepreneurial skills required? Do they have the business skills needed to be able to set up businesses? Are there links between graduates and business people? Are we marrying all of this to make sure that can create the indigenous industries that we want to create? Instead, in recent years, many of those talented people have moved into the multinationals and there has been an internal brain drain. What we need to do is to empower many of the peoplej concerned to create the jobs of tomorrow.
I cannot let the Minister go without mentioning the need for a university in Waterford. This issue was also raised by a previous speaker. We cannot accept second tier status or a name change. We need Waterford and the south-east region to be in the top tier of third and fourth level education. A technological university, which would simply involve a name change, would not be enough to deal with the disadvantage from which Waterford and the south-east region have suffered for far too long. What does Waterford and the south-east region have to do to get what we deserve as of right, a university for the people and the business community to ensure there will be a level playing field? What are the criteria to be used? What does Waterford Institute of Technology need to do to become a university? No one is telling us. We are talking about a process, at which experts are looking. Will somebody, please, tell us what more we can do? Huge investment has been made in Waterford Institute of Technology, yet, for some reason, political or otherwise, the required decisions are not being made. The people of Waterford and the south-east region will not rest until they get what they deserve, a university for the south east. I call on the Minister to put the focus on Waterford and the south-east region and make sure we act this time, rather than leave reports lying on shelves, as occurred in the past.
As this is one of the new format sessions which I thank the Leader for introducing in the Seanad, I ask the Minister if he wants to reply briefly to some of the questions raised. We will then have a question and answer session during which each Member will be limited to asking questions for one minute. We do not want statements but questions to the Minister, to which he will reply.
A number of points were made about the Department, that it needed to be more motivated and out selling. We are developing our new strategy. There is a requirement to develop it in the six months of the life of the Government. There is a recognition internally that the Department has not been boxing above its weight and that it needs to do so.
I agree with Senators on most of the issues raised. I should devote some time to dealing with the situation in Waterford. We have discussed the issues raised by Senators Cummins and Cullinane. The idea of upping the 30-day notice requirement with a new regulation has been mooted, but that is not really the way IDA Ireland has dealt with overseas companies. It has not been built on the setting of many regulations with which companies need to comply, rather it has been done by developing a relationship whereby there is normally a long advance notice requirement and a proper planning process. IDA Ireland is given a chance to give its best shot if a commercial decision is taken to find alternative buyers. On the back of experience, bad and all as it has been, I would not recommend that we walk away from this model which has stood IDA Ireland in good stead. It is regarded as being very professional. People do not co-operate with it because of some list of obligations set out in grant conditions, but rather because that is the way they do business. I do not want to get into adopting a different approach.
I acknowledge what the two Senators said about Strategy Waterford and that it has not delivered. I have included specifically a reassessment of what has happened with the strategy as part of this process. There are many things previous Governments did not do. We have to build on what we can do, having looked at the tangible initiatives we can take. I thank people for their contributions.
The need for a university or a technological university has been raised. The programme for Government is very clear on the issue. We want to explore the notion of establishing a technological university which it is believed would add significantly if developed. I do not have the criteria to hand, but I understand they have been developed and that there is a consultative process ongoing. From an IDA Ireland or Enterprise Ireland perspective, we are talking about having the right skills and the right research clusters in place. To be fair to WIT, it has been doing this. It is upping its software engineering courses. It has significant clusters of strengths in the areas of advanced materials, telecommunications, pharmaceuticals and so on. It is doing the right things, but perhaps more needs to be done, or we need to market them more effectively to companies which can match them.
There is another process dealing with the education element but not in my Department. I want to work with the elements to be found in my area. We will be sitting down with WIT and Waterford City Council to see what is being offered.
Is it being effectively marketed? Are there weaknesses in it and how do we address them?
I would be interested in an ideas summit, an issue raised by Senator Quinn, and have heard that such a programme is being developed. We need to encourage such local inspiration. I will, on foot of the Senator's comments, examine whether we can lend support to any such initiative.
A couple of Senators asked whether local authorities should have more control of enterprise agencies. It is important to have a clear enterprise strategy driven from the Department. I want to ensure there is a local point of contact and coherent access to whatever level of support or ambition enterprises may have. Criticism has been made that companies which hit a ceiling with the county enterprise boards are finding that the bottom rung of the Enterprise Ireland ladder is out of reach. I do not want to see such a gap. While local accountability is good and I am fully in favour of State agencies being accountable at local level, creating new structures or replicating bureaucratic structures across every local authority would not be a good route to take.
Senator van Turnhout specifically suggested providing a form of tax incentive for companies which place Irish people overseas. I presume this would take place in the context of an export drive. Enterprise Ireland supports graduate placement overseas and matches graduates with companies, although this is a direct rather than tax driven support. While there may be scope for movement in this area, I am not sure about taking the tax route. Tax breaks are correctly viewed as being a less visible way of giving a subsidy. Some of the tax breaks we provided for worthy things ended up being exploited for unintended purposes. I am, therefore, a little wary of tax breaks and believe we should, as they say, do this above the line. If there is a worthy marketing effort, we should seek to support it. However, I am not ruling out the Senator's proposal.
Senator Harte raised the issue of credit and asked whether the Credit Review Office, CRO, could start the review process before a business submitted an application to a bank. This is not a credible proposal as the office is not a large bureaucracy but a one man band which contracts a series of individuals, on an hourly basis, to deal with cases. I do not know how many thousands of people Bank of Ireland and Allied Irish Banks employ. The head of the Credit Review Office is trying to create standards and establish protocols and ways of doing things, which is also what the Department of Finance wants to do. The CRO website includes advice on how to submit a bank application to ensure the relevant bank is forced to respond in a manner that can be appealed. This the route to take.
Senator Harte also correctly noted that demand for credit was not measured. The Minister for Finance, Deputy Noonan, is doing an exercise in respect of Allied Irish Banks to obtain a broader measure of the number of requests being submitted. This figure is not trapped statistically at present. The Senator will, I am sure, be interested in the outcome of this exercise.
I am not doing justice to Senators, but I will try to respond to any further queries they may have.
The provision of jobs is the most important issue facing the country. The Minister referred to support structures for microenterprise in the same breath as start-up companies. If a company has been in existence for more than five years, it is precluded from applying to Enterprise Ireland for anything. As a result, companies with five employees which seek to expand are debarred by Enterprise Ireland from securing a further leg up on the ladder. Such companies are too large for the county enterprise board and too small for Enterprise Ireland. The latter will not take an interest in them and its facilities do not cater for them. What will the Minister do to assist microenterprises which may have been operating for five to six years and may have fewer than ten employees, the cut-off figure for Enterprise Ireland assistance?
Businesses with five or six employees which have expanded into Britain, our nearest neighbour, do not receive much assistance. A group of UCD alumni brings together businesses and is meeting this week in the House of Lords. Could we start up clusters for companies which expand into England?
It has been brought to Senators' attention by the National Recruitment Federation that the implementation of what it describes as the gold plated directive on agency workers would result in the loss of 8,000 jobs. Will the Minister examine this issue?
On the subject of universities, Waterford should be careful about what it wishes for because changing the name of Waterford Institute of Technology to Waterford University could become a joke. As the Minister outlined, the city would be better off working with what it has and trying to improve it. I would, therefore, be careful in that regard.
The Government's jobs initiative has one serious flaw and it is the issue that concerns me with regard to any plan to sell off State assets. The flaw is its lack of a business plan to show how the initiative will work, including the number of jobs to be created in each sector and how it will be transformative. I will support any initiative to create jobs. Several years ago I privately advocated to the former Minister for Finance, the late Brian Lenihan, the sale of the national lottery to generate funding to build schools. This is an excellent suggestion as there is no reason the State should run a lottery. However, one cannot start selling off State assets and then start pumping out grants and funding in the hope jobs will be created. One needs a detailed business plan indicating what sectors should receive money and setting out the reasons for providing funding. This is not the case with the jobs initiative. For example, the VAT reduction in certain sectors has not been passed on in all cases. Moreover, pensioners who used to work in Tara Mines in my county protested outside the Houses yesterday about a 10% cut in their payments. The initiative has not produced any benefits in terms of jobs. I hope there will be benefits, but it lacks a business plan setting out in detail how the initiative will work.
Having not yet had an opportunity to do so, I congratulate the Minister on his appointment. I have no doubt he will do well in his new position.
Given that we all agree that the horticulture and food sector is an important driver of economic recovery, why is the Government permitting Teagasc to close its horticultural research institute in Kinsealy, the only one of its kind in Ireland?
Why did the Government not publish the advice it had received prior to the introduction of the levy on private pensions? Why were members of other political parties required to seek information on this advice through freedom of information requests?
As some of the questions asked are well beyond my remit, I am not in a position to answer them.
I acknowledge Senator Keane's point that there is a gap in enterprise support. One of our ambitions is to have a more seamless system. We cannot support every company in the light of resource implications. However, companies with potential for expansion should not be debarred from receiving support simply because they do not pass some pre-qualification test. To be fair, the threshold of ten employees to which the Senator referred is not being applied to companies with export potential. Enterprise Ireland is taking a more flexible approach to the efforts of smaller companies which have export ambition.
The transfer of agency workers Bill will transpose an EU directive. It is unusual in that it gives the opportunity for the social partners to agree among themselves on certain terms, derogations or flexibilities. The State is obliged to introduce the terms of the directive but the social partners can negotiate certain flexibilities. I have convened the social partners to determine how that can be done. Obviously, there are different views on this on both sides of social partnership, so it will be difficult. This is an EU directive which has a transposition date, and Ireland is obliged to introduce it. There are flexibilities in it. We must be conscious of our employment situation in applying the rules under it and give ourselves some scope.
It is correct that there must be a business plan to underpin the sale of State assets. In addition, as Senators probably know, there is an obligation under the EU-IMF programme to generate revenue from the sale of assets. The Government is considering the development of certain options and analysing other options for fulfilling that obligation. Some of these options are the subject of discussion in the other House. Clearly, each of these must be explored in detail, but the Ministers concerned believe that the options that have been spelled out are the best way, and sound business analysis has been done on why these are being put forward. Obviously, Senators need to take this up with a Minister who will give them chapter and verse.
I was asked whether a cost-benefit analysis was done on the jobs initiative. To an extent, there was. If we cut employer's PRSI, the ESRI can provide an analysis of the likely impact in the short and longer term, and we can rely on that. Part of the jobs initiative was also to advertise the fact that Ireland is open for business and that we want to reduce the cost to employers of taking people on. It is about building confidence. There was sufficient cost-benefit analysis to say that a cut in the lower rate of employer's PRSI was a worthwhile thing to do. We will never be able to say with any degree of accuracy that X thousand jobs were created by it. What I am hearing is that it has been significant, particularly in sectors related to tourism, which was what it was geared at, and that it has helped companies that were otherwise under severe pressure to develop new offerings.
One can analyse oneself into paralysis. There is an element of risk taking involved in governing, when we must choose which of a menu of options to implement. An initiative such as JobBridge, which puts young people into internships, is a win-win situation. I do not know what analysis one could apply, but I would be happy to do it on the back of an envelope to show that it is a good thing. Politically as well as economically, it makes sense to take people who have no experience and give them some. The typical catch-22 situation is that one is looking for a job with no experience, but one cannot get a job without experience. This initiative gives people nine months' experience. It puts them in the shop window. In many cases, with the companies I know that have come forward to participate in the scheme, they will take the interns on if it works out. There has been sufficient cost-benefit analysis to show that these are sound judgments. That is what the Government is for. We employ analysts, but then we must make decisions. I stand over those decisions.
The issue of the pension levy has been dealt with often by the Minister for Finance, Deputy Noonan, in the House. There is no tax that people like. It was a former ESRI man who said something to me that I will always remember: "To love and be wise, as to tax and be loved, is not given to many." It is very true. There is no tax one could introduce that would make people jump up and down and say: "More of that, please." However, we need tax to fund initiatives to kick-start enterprise.
I am aware of the issue of horticulture in Kinsealy, but it is not part of my remit and I am not in a position to-----
I will keep it brief. I welcome the Minister, who is off to a great start. We all want to see him take more risks, because the crisis we are facing is of such enormous proportions.
The county enterprise boards in most counties - certainly in my own county of Galway - have made a valuable contribution to job creation and getting people started in business over the years. There are lots of fine young people who are unemployed but have lots of skills, and who certainly could create jobs for themselves and maybe for one or two others. There is a concern that the county enterprise boards are underresourced at the moment and that staffing is an issue. What are the Minister's plans in this regard? Does he intend to provide resources to the county enterprise boards either in their present format or under some other body? We need to be pumping money in there.
My second question is about access to finance, which came up this morning at the all-party committee. Every small business trying to access finance is facing difficulty, yet at the same time we hear that there has never been so much money lying in the banks in the form of savings. Is the Minister considering ways of encouraging people to invest some of their savings in job creation projects? I know the business expansion scheme is available. We need to encourage people, in our hour of need, to start thinking about our country and invest their money in job creation projects.
It would be fatal to put the county enterprise boards under the aegis of the local authorities. I do not see why Enterprise Ireland cannot deal with companies with fewer than ten people. It has worldwide experience. That would be the right decision to make.
In the context of our attempts to develop an entrepreneurial culture, it is a serious issue that the owners of companies that go out of business are not entitled to social welfare benefits. It is a complete contradiction to try to develop an entrepreneurial culture with no welfare benefits for people whose companies go out of business.
On the issue of personal guarantees, the banks are devious in their behaviour with regard to giving money to companies.
They are asking for personal guarantees. They are leading people up the garden path and when they get to a certain point, they want personal guarantees. The Minister will have to deal with that.
The previous Government, which included my own party, failed to deal with Waterford. I pleaded with it to grant technological status to Waterford Institute of Technology. It is no big deal. We will give it the title and build it up over time. Galway city never had a recession, either in the 1980s or now, because of the university there. Dr. Ed Walsh built up the University of Limerick and there are tremendous opportunities for people there. Waterford is in dire need of a technological university. I am pleading for it. I must criticise my own party also for its failure to save Waterford Crystal. It was pathetic that it failed on both those issues.
We need a joined-up approach and seamless working between the local authorities and enterprise boards. We do not have that at present. If we look at the development boards across local authorities, we see that all the players and stakeholders are there, but what is missing is the desire for local authorities to be able to deal with enterprise. It would be a good thing for the local enterprise boards - not Enterprise Ireland, but the boards - to come under local government.
I have four quick questions for the Minister. He said IDA Ireland is considering new strategies to support the SME sector, especially in exporting. Will he give us a flavour of what is being considered? There is potential in digital media, including animation and gaming. The digital media hub in Dublin has encouraged the Government to put in place strategies to encourage business to go online and use online services more. That has the potential to create jobs in itself, but there is also potential in animation, gaming, e-commerce and e-health. What strategies are being put in place for those areas?
On youth unemployment, far too many young people are out of work and people are emigrating. We need specific, targeted policies for getting young people work, because they make up the bulk of the people who are out of employment. Graduates coming out of our universities do not have employment. What strategies are the Minister and the Government considering to target youth unemployment?
How can the education sector encourage innovation by young people? Can more be done in second level education? Can more be done in the transition year to encourage more young people to think outside the box and be more creative? The young scientist of the year competition is good, and it could and should be replicated in the enterprise sector. I ask the Minister to consider that, because there is scope to encourage more young people to see entrepreneurship as an option and an avenue for them.
On the budget restriction on county enterprise boards, to be fair, the boards know their budget for the year and they have to stick within it. There has been a tendency for some of them to spend their allocation in the first quarter of the year, and that is not an ideal way in which to proceed. There was an issue with some money towards the end of last year, which might have resulted in front loading. I will certainly review the funding, but we are all under strict budget restrictions. If there is scope for releasing money for good projects we will try to do that, but it would only be later in the year when we have seen how the funding is working out. As members know, we have to hit stringent budgetary targets.
The initiatives on access to finance are about encouraging banks to lend. They include partial loan guarantees and the development of alternative lending mechanisms such as microfinance. On tax incentives for savers to invest in business projects, the previous Government redeveloped the business expansion scheme. It still awaits sign-off by the European Commission on state aid rules, but it is there. We can consider the matter in relation to the forthcoming budget if there are issues, but the fact that it has not got out of the traps yet may mean that there are some difficulties in resolving issues in the area.
There was a perfect contrast between Senator White's comment that it would be lethal to bring county enterprise boards under local authorities and Senator Cullinane's comment that it would be excellent to do that.
The solution is not to put responsibility for enterprise support into local authorities, but more what Senator Cummins mentioned - to have a significant one-stop shop where people can go to access not only the enterprise network, whatever that is, but other functions. I understand that business development units in local authorities help to steer people through the planning and licensing processes they operate. That is a useful service. I do not see the need for an institutional merger. If the services are located in offices that are not too far away from one another, we do not need to create a merged structure to get people to talk to one another. My ambition is for a good, coherent microenterprise service to be delivered nationally - it should not be different in each place - that works to a high standard in mentoring, training and whatever other services it delivers, and that has proper connections to what is being done in the localities.
To be fair to Senator Cullinane, there seems to be a breakdown in collaboration or communication between some of the local authorities and some of the agencies in the Waterford area, and we will certainly look at that.
It is an area of weakness. There are different ways in which to support small companies on export. Mentoring by experienced people is a worthwhile exercise. Enterprise Ireland has graduate placement programmes in which it puts people into markets such as China or wherever and there are companies to which they are aligned. There are also trade missions. There are various tools that we can use. However, I seek for Enterprise Ireland to develop that work, because it is not good enough for only 38% of indigenous output to be exported. We need to increase that percentage, which has been static, and penetrate new markets. The growth markets are not in the UK but elsewhere, and we need to see how we can get a foothold there. There is much work to be done in that area.
I like Senator Cullinane's idea of a youth enterprise competition to mirror the young scientist of the year competition. We need that. He also mentioned the lack of entrepreneurship in schools, and it is clear that there is a gap.
The point made about the owners of companies being excluded from welfare is true. The social insurance contribution of a self-employed person is not the same as the combined employer and employee contribution. An employer and employee pay 15% whereas a self-employed person pays 4%. The 4% does not buy the same rights as the 15%. The Minister for Social Protection is considering the issue in the context of the commission she has established on welfare and tax interaction, so-----
Part of the issue is funding. Perhaps we should consider a halfway house to give people who start up at least the security of a certain number of years of cover to help them on the difficult journey they are on. Personal guarantee demands can be appealed to the Credit Review Office. There is a pattern, but they can be appealed if they are thought to be unfair.
I do not want to speak out of turn on the Hunt report and Waterford, because the area needs to be developed by the Minister who is responsible, but WIT is doing worthwhile things and there is scope to develop some of them. Like Senator O'Brien, I would like to see that happen. Let us develop what is working. I am not saying that the issue is not important. It is obviously important, and every Senator who spoke mentioned it. Deepening innovation is clearly important, but we need to consider practical steps. We can get into institutional engineering as the be-all and end-all, but organisations can become obsessed with the restructuring process and do nothing while it is going on. It is about policy and getting the system to work in delivering it. If it is more sensible at local level to have Leader programmes, development boards, business development units and county planning teams to work together, it is a task for the local authorities to get right. I want to get right the high quality support to microenterprise while collaborating in a sensible way with local government to assist with that role.
I thank the Minister and I thank my fellow Senators for working with me in this debate on innovation at the heart of the jobs challenge. We have explored some important issues and I noticed the Minister took copious notes. I hope we have aided him in his work.
When it is proposed to sit again?