Tuesday, 11 October 2011
Investment in Science, Technology and Innovation: Statements
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.
I thank the Minister of State for a most comprehensive address. Before I call on the various spokespersons, I am keen to clarify how the Minister of State wishes to take questions. Does he wish to reply to all of the questions posed at the end? We are keen for the spokespersons to ask their questions during their contributions. We can get the Minister of State to answer the questions posed after each spokesperson has contributed or at the end.
I thank the Minister of State for his comprehensive address. There is no doubt that investing in science, technology and innovation will be an essential part of restoring growth and job creation in the coming years. However, when it comes to continuing to attract multi-million euro investments to Ireland and, as the Minister of State, making us world class in this respect, the quality of ideas and the people will give us the cutting edge. Fianna Fáil believes Ireland can be a global innovation hub. It is achievable with the right policies and this, in turn, will deliver high quality employment which will be sustainable and competitive.
I agree with the Minister of State that successive Governments have prioritised this agenda, that it is a cross-party priority. The previous Government invested heavily in research and development. It included the first real, dedicated tranche of funding for third level research which is helping third level institutions to pair up with businesses and undertake research on a scale that has never before been possible in the country. We have also managed to develop one of the best concentrations of high technology multinationals in Ireland and incentivise them to invest further in high value research and development and the convergence of technologies that will lead to the provision of well paid jobs which will stay in Ireland. It is important that we retain and enhance the significant initiatives introduced in the past two years. While other areas were being cut, we continued to give priority to research and development, which is important.
We must do more in providing support for businesses in undertaking research and development, especially in small companies. A great deal of work has been done to assist larger companies. Some initiatives were started for small and medium-sized businesses in recent years, but we should put a greater focus on helping smaller businesses to engage in innovation. There has been a discussion on innovation credits and so on and perhaps this suggestion might be taken up.
Another aspect prioritised by the previous Government and which the Minister of State mentioned was the introduction of Project Maths. The previous Government also introduced new technology subjects and launched other initiatives which are helping to modernise the education system and produce students with a more general competence in mathematics and science.
Science and technology is an area in which the economy has considerable strengths. When considering the challenges we face it is sometimes worthwhile to reflect on those areas in which we are doing well. For example, Ireland has the highest proportion of graduates in the European Union in the 25 to 34 years age group. In addition, our exports performed better than ever last year and the positive trend is continuing. United States investment in Ireland is greater than its investment in Brazil, Russia, India and China combined and Ireland's stock of direct inward investment is five times greater than the OECD average. Notwithstanding the good work being done, we must continue to move forward because innovation, by its nature, does not stop. One cannot introduce a set of measures and assume they will work. Our competitors will innovate and invest and we need to be ahead of the curve.
As the Minister of State noted, the previous Government developed the strategy for science, technology and innovation. It managed to roll out some of the initiatives recommended in the strategy while others provide a map for the new Government which sets out what can be achieved in the years ahead. The innovation task force, which reported in late 2010, also made a number of recommendations which I hope the Government will advance. They include proposals on taxation, incentivising research and development and attracting highly mobile enterprises that are intellectual property rich. The latter area is one in which Ireland could find a niche. In the area of entrepreneurship, the task force recommended that the level of seed capital available to start-up enterprises be increased and tax incentives introduced to encourage entrepreneurs.
The Fianna Fáil Party supports the Government in rolling out measures included in the plans we developed in government in the strategy for science, technology and innovation and the innovation task force. We are concerned, however, about the lack of emphasis on science and technology in the most recent jobs plan, which was clearly somewhat rushed. My party criticised the plan's lack of targets for job creation, although the Minister recently indicated that a further plan will be introduced in January 2012. Perhaps it will be more developed in terms of targets and the need to maximise the employment potential of science and technology. I hope the Minister of State will be involved in developing the forthcoming jobs plan.
The Minister of State referred to mathematics. I have concerns regarding the Government's strategy for dealing with mathematics and have raised these with the Minister. Will a specific programme be developed for schools with the lowest mathematics results? The Minister's scatter-gun approach under which he has asked all 750 secondary schools to inform him of the qualifications of teachers is not a sophisticated or effective means of addressing the problem of underperformance in mathematics. He needs to obtain detailed data on the lowest performing 100 schools to identify the problems. Is it the case, for instance, that a low performing school serves a disadvantaged area and has poor results across the board, whether in English, other arts subjects or science subjects, or is the problem of underperformance confined to mathematics? Is there a problem in all leaving certificate mathematics classes or is it confined to only one class in a single school? For example, in the case of a school with three leaving certificate mathematics classes, is one class performing poorly while the remaining two are performing fine? Armed with this information, one could then examine the qualifications of teachers in the classroom and seek to identify what makes teaching and learning successful in the classroom. Someone could have a PhD or first class honours degree in pure mathematics and still be a dreadful teacher whose students are struggling. On the other hand, a highly capable mathematics teacher whose students are doing well could have taken maths as part of an engineering degree and acquired the additional skills required to be an effective teacher through continuous professional development. The Minister is taking a tokenistic approach to a very important issue, one which is crucial to the agenda of the Minister of State. It is all very well to speak of attracting students to third level studies in mathematics and technology but it is far too late by that stage.
It is vital that broadband is rolled out to schools. The previous Government invested in this area and introduced specific strategies agreed between the then Ministers for Communications, Energy and Natural Resources and Education and Science to roll out high speed broadband to all schools and colleges. What progress has been made in achieving this objective?
Will funding for the job creation and innovation agencies be protected in the budget? My colleague in the Dáil, Deputy Willie O'Dea, recently put the same question to the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and was concerned by the Minister's failure to rule out cuts in these areas. I appreciate the Government must make cuts across the board but, as the Minister of State's contribution highlighted, investment in specific areas will help finance the State in future. We need to be careful when considering reducing funding that provides jobs both in the short and long term.
I thank the Fine Gael Party and other colleagues for allowing me to break traditional order to speak. It was through no fault of anyone else that I failed to realise the Minister of State was coming before the House. It is important that I should be present and take this opportunity to have a chat with him. By coincidence, the conflicting demand on my time was the visit to the House this evening by the wonderful cancer researchers in the Gallery to discuss some new research projects with me.
I thank the Minister of State for his attention and welcome him to his new role. While he has been given a major task in what is clearly a very challenging time for the Government and State, he has also been given a great opportunity to the extent that if there is one bright spot on the horizon, one little glimmer of light in what sometimes appears to be a bleak future, it is research and development, technology, biomedicine, pharmaceuticals and the entire research and knowledge based sector. While a great deal of rather unknowledgeable cant is sometimes spoken about the knowledge economy, there are some real aspects of true knowledge on which the Minister of State will be able to capitalise.
Having thrown together a few points when I realised I would have the privilege of having a chat with the Minister of State, I ask him to forgive me if I ramble a little. I will focus on making a couple of core points, the first of which is the need for the Minister of State to realise, as he commences his job, that research and development is not some vanity project but is critical to the future of this country. Ireland exports €20 billion worth of pharmaceuticals and bio-pharmaceuticals per annum. To put this figure in some context and provide some perspective, we hear endless speeches from Ministers for Health and others about the need to curtail our expenditure on pharmaceuticals. The spend is €2 billion which is one tenth of the value of our pharmaceutical exports. Clearly there is an extraordinary balance of trade surplus. This is only one of many parts of our real economy that is thriving but which, sadly and for reasons which will be apparent to many, has been handicapped by having the millstone of a virtual financial economy based on bank debt cast around its neck. The real economy is not doing too badly and if we focus on the core areas of science, technology and manufacturing, we may be able to make up for mistakes we made when we thought we could get rich by selling each other houses. As a political entity which sponsors the science community, how are we responding to the situation? We should be very alarmed by figures which emerged in recent weeks showing that all our univeritsities have slipped in the world ranking tables. I regard this as being a very worrying trend which sends out a terrible signal at a time when we are trying to reinvigorate the country by reinvigorating the so-called knowledge economy.
I do not wish to be excessively sectarian by speaking only about medical and bio-medical research but these are areas in which I have some expertise. Many of the lessons to be learned from them are broadly applicable. We have six medical schools, which is more per head of population than any country in the world. My colleagues are probably bored listening to me make this point. Whereas we have one medical school per 750,000 population, the European average is one per 1.5 million of population and the North American average is one per 2.5 million of population.
There is something wrong there. Between them these six medical schools have fewer than 120 full-time consultant-level faculty members - I am trying to pin down the aggregate number. To put a perspective on this, many of us had the privilege of visiting the Harvard Cancer Centre in Boston last year where I rather provocatively asked how many full-time faculty members the centre had. The answer is 1,500, or one medical school with ten to 12 times as many as we have in our aggregate of six medical schools.
There is another set of problems in regard to medical practitioner numbers which needs to be addressed. However, in addressing the core problems of our health service and those in the Minister of State's remit which deal with research, we need to look at the structure of our universities, in particular that of our medical schools. I will try to put some perspective on what can be done. When I came back to this country in 1993, I was one of four medical oncologists in the country. I like to joke I was often in the elevator in Sloan-Kettering Hospital in New York with more Irish oncologists than there were in Ireland at the time. I was certainly often in Eamonn Doran's bar on Second Avenue with more Irish oncologists than there were in Ireland at the time. I came back with the ambition and desire to try to set up clinical research, namely, research that involved patients and gave them access to new cancer drugs, something which had very heroically but sporadically been done by leaders such as Ian Temperley and Shaun McCann in St. James's Hospital and by Professor Tom Hennessy in Trinity College and Professor Jim Fennelly in Temple Street. However, there was no national cohesive structure and most patients with the common cancers were not getting the opportunity to take part in research.
I will outline some of the spin-offs of research. Research does not only give good knowledge - it is good medicine and good science and gives better care to patients. People who undergo clinical trials have reproducibly better outcomes than patients who get the same treatment off trials because of the increased vigour and discipline associated with the oversight of their trials by an increased number of medical professionals. In addition, research can bring huge amounts of free medication and drugs into a health system. Although there were only four of us, we decided 12 years ago we would set up the Irish Co-operative Oncology Research Group. I am happy that Mr. Brian Moulton, currently the chief executive of the organisation, is present in the Chamber today. He made a big investment of his then still young future in coming on board with us.
I will give the Minister of State some facts I believe to be relevant. This organisation, in a country that has never had a national cancer clinical trials group, recently put its 7,000th patient on a trial. We recently conducted our 200th clinical trial. We are getting 1,250 queries per month on our website from patients asking whether there is a trial open for their cancer. We have the allegiance and membership of every cancer-treating physician in the country. Recently we did a little audit on how we have done in terms of publications. The leading medical journal in the world, the New England Journal of Medicine, this month published two papers that carry the Irish Co-operative Oncology Research Group name. This is invaluable branding and is a great tribute to the country and its reputation in the largest circulation medical journal in the world. We have extensive connections with the industry. We reckon we have brought in €16 million worth of free drugs to the cancer services of this country in the past four years alone, moneys which otherwise would have had to be spent buying the drugs. In addition, many drugs became available to Irish cancer patients before they were available internationally. ICORG is seen as a beacon of a small country punching way above its weight.
The US National Cancer Institute has as its long-term goal that 3% of American cancer patients will be offered clinical trials. We are heading towards 10%. There were occasions some years when 40% of breast cancer patients in this country were on clinical trials. No other country can do that. We have every clinician on board and we have a new system through the leadership of my colleague, Professor Arnold Hill from the Royal College of Surgeons of Ireland, in co-operation with ICORG. We are putting in place a system which will collect a specimen of cancer tissue from every breast cancer patient in this country. It is a treasure trove for scientists and researchers to have the tissue and the clinical follow-up on the patients who are treated in a finite number of centres, in many cases on clinical trials. This is a competitive advantage we can offer which nobody else can. That advantage is needed because already, if I may paraphrase Ross Perot, in some parts of the world the sucking sound is being heard, not of industries fleeing south of the American-Mexican border but of clinical research fleeing east to Asia and Russia, to countries that are setting themselves up as able to do this work cheaper than the US and most western European countries. However, we can do things they cannot because of our concentration, the high penetration we have into the community and because we are collecting tissue from every patient.
We have too many universities - I say this provocatively - none of which I believe has reached the standards of excellence we would like them to achieve in spite of the presence of many excellent individual laboratories. We have set up Molecular Therapeutics for Cancer Ireland. This has brought together UCD, TCD, DCU and the RCSI, while we are making overtures to the universities in Cork, Galway and Limerick to come on board and have a truly national laboratory-based focus.
There are some problems the Minister of State needs to examine. Some parts of the bureaucracy in the interface between the Government and the research system work very well but some parts do not. I wish to single out Science Foundation Ireland for particular praise. The fact that it has a history of being led by science professionals, people who actually understand the problem, has been extremely important. It has made the foundation innovative and bold and has given it a number of wonderful advantages.
There is a halo effect. When that company in New Jersey is wondering where it will build its plant, I do not believe that the fact that others in the company are reading research reports that have a heavy Irish input is unimportant. In the case of at least one drug, for which I had the privilege of making the presentation to the FDA, a particular drug licence was granted. That drug turned into a multi-million dollar drug for the company. I cannot believe that sort of thing does not have an influence when a company is deciding where to put the factory. There are real tangible benefits from the halo effect of good research. I know the Minister of State will take my advice to heart if I tell him the right way for Government to deal with the research world is to lead, follow or get out of the way. I strongly believe that, as I believe the Minister of State will be a leader. We are very anxious to work with him in an attempt to develop this for the benefit of all our citizens. I thank him for his attention and am grateful to my colleagues for allowing me to speak out of turn.
I welcome the Minister of State to the Chamber. It is a very significant move on the part of the Government to appoint a Minister of State with responsibility for this area and I can think of no better qualified person.
We hear a great deal of talk about the smart economy and innovation and this sector has a significant role to play in our economic recovery. This matter has come up repeatedly and seems to have gained a level of dominance in both political and public discourse. The key to the realisation of this potential is how we can support innovative Irish companies, help them get off the ground and get from the idea to the working prototype and thence to the market. How do we support an innovator as she moves from one stage to the next? This is the challenge we must overcome if we are to deliver results for the substantial level of public investment.
I am delighted the Minister of State mentioned his interest in intellectual property rights. We must ask one question, whose answer will determine whether we are serious when we speak about innovation, namely, whether there an appetite in this country for risk. The basis for the knowledge economy rests in this area. Traditionally in Ireland, especially in recent years, most investment has been in property, pensions and shares in large companies and this has stifled much of the activity in the real economy. We have voiced our ambition to become a knowledge economy but the biggest problem we face is changing our mindset about the way we have traditionally invested in this country. In the knowledge economy there are few tangible assets. We cannot touch or see them in the same way that we can see bricks and mortar or shares and therefore the traditional investment community is slow to invest in this area. The nature of the knowledge economy is such that it requires us to change our investment culture. This is about ideas. We cannot put ideas on a balance sheet and this is an uncomfortable thought for those who manage traditional investment funds in Ireland.
The business cycle in the knowledge economy consists, first, of a business idea. The next phase is to build a prototype to make real that idea. Then the prototype must be taken to market to see whether people will buy it and a team must be put in place to manufacture and sell it. Finally, it makes lots of money and creates employment - or else it does not. I am reminded of what Henry Ford said when he was asked how much research he had put into the Model T. He replied that if he had asked people what they wanted they would have said, "Build a faster horse". That is the idea behind the entire knowledge economy - thinking of ideas before other people do. Of course, this is risky. The idea is to be out there and win on the law of averages. It is about backing perhaps 1,000 companies a year instead of the 75 or 100 we do at present. Approximately one third of such companies fail and lose money. We would do well if we were to win in respect of 20% of them. It is on the back of that 20% that real jobs would be created and real money made.
There are good international examples, not just in Silicon Valley but also in Israel. The one action these successful regions and countries have taken is to invest in start-up businesses. I accept that there are spectacular failures, but there are also spectacular successes. For example, Google failed to obtain funding from Stanford University. When various fund managers had tut-tutted and sniffed at their idea, the young men behind Google went out into the market in search of money. Consider where the company is today. There is no need to travel to Silicon Valley or consider the position of Google to find examples of what can be done. There is one such example in Ireland, namely, the Collison brothers from Limerick who famously failed to receive funding from any of the agencies or institutions here and instead attracted investment from abroad. In 2008 they sold their successful company, Shuppa, to a Canadian company and became millionaires overnight. That was great news for them, but it was not good for Ireland because intellectual property rights, jobs, future income and downstream activity transferred abroad. This is similar to what we did in the 1970s when we exported cattle on the hoof. If investment opportunities had been taken, we could, perhaps, be contemplating an Irish-owned and based multinational company which would be creating employment and attracting foreign income.
How many more such companies are slipping through our fingers? What we are not short of is people with ideas, brainpower and entrepreneurial skills. However, we are short of a risk culture and, consequently, risk capital also. We should ask whether there are too few channels for start-ups in respect of early stage companies and the answer is probably yes. It will be difficult to decide how we can solve this problem. However, we must reach a point where we can consider optimising scenarios. If this means re-examining how we do business, so be it. All of the State's seed capital is managed and distributed by a limited number of privately managed funds. There are serious questions to be answered as to whether this is the best way to distribute scarce resources. There is a belief among some in certain sectors of the early stage business community to whom I have spoken that there is the equivalent of a cartel among those who operate the seed capital management companies. Once a person applies to one company for funding, it appears the information seeps out to all of the others. This means that there is no competition for seed capital and, as a result, it is an investors' market.
What is required is genuine competition among funds in the context of investing in high potential start-ups. This is happening in other countries that are serious about developing their knowledge economies. If the State is giving up to 41% tax relief to investors in business expansion schemes, for example, the least we should expect is that they would invest in risk. That was the intention behind the schemes in the first instance. I ask the Minister of State to engage in a serious review of the investment landscape for start-up companies and move outside the circle of the usual suspects when seeking advice. He should speak to entrepreneurs who have the ability to turn the economy around and are free from the traditional mindset which dominates the sphere of investment.
Intellectual property is the basis of the knowledge economy. In general, this cannot be touched, felt or weighed, nor can it be included in a balance sheet. However, it is no less valuable for this. We need to be bold without being reckless. As stated, our target should be up to 1,000 start-ups per year - instead of 75 or 100 - in order that we might win out in respect of the law of averages. To do this, we must fundamentally reconsider how we do business. Until we change the culture within the investment community, any talk about the knowledge economy will remain just that.
I welcome the Minister of State and thank him for his contribution. I wish him well in his area of responsibility which is vast and extremely important.
There are many positive actions which could be taken. The Government and that which preceded it gave a commitment to support innovation and invest in research and development. In recognising that this is so important, we must do things differently than we did in the past. Heretofore, emphasis has not been placed on research. As a previous speaker indicated, we were dependent on realising returns from investment in property. We must change our thinking in this regard.
The Minister of State referred to the innovation task force which, I am sure, is to the fore in his thinking. The task force provided a roadmap for everything that had to be done in respect of this matter, including everything from investment in preschool education to reform of the bankruptcy laws. Education is very much part of the ecosystem to which the Minister of State referred and extremely important. There will always be entrepreneurs and people who ask questions, who can think and develop their own ideas. However, we need to encourage the development of an entrepreneurial spirit within the education system and place emphasis on mathematics and the science subjects. The statistics for the latter are on the increase and I welcome the roll-out of the project maths programme. All students who enrolled at second level in 2010 will be sitting examinations in project maths in the junior certificate. Project maths focuses on encouraging students to question, challenge and understand mathematical problems and systems rather than obliging them to engage in the rote learning which has dominated the education system and been so criticised.
I recently had a discussion with a person whose five year old son came home with a lollipop at the end of his first week in school. That was great, but he was given it for being the quietest boy in the class. This sums up where we stand in many aspects of the education system. There is a need to encourage children to be more outgoing and they should be given lollipops for asking questions and participating in class.
The success of the education system in Finland has been touted in this House and at various joint committees. The Finns focused on improving the quality of mathematics and science teachers. I accept that a premium payment was probably included in their salaries. The Finns really concentrated on encouraging students to enter the teaching profession and this has paid dividends. We need to emulate this and buy into the fact that research and development and a strong emphasis on the STEM subjects - science, technology, engineering and mathematics - must be given priority within the education system.
We are engaging in a conversation to change people's mindsets. I recall attending parent-teacher meetings and realising that the emphasis was being placed on commerce or certain other subjects rather than on mathematics and the sciences which were not considered to be important. I still attend parent-teacher meetings and chemistry, physics and mathematics are being afforded much more priority. As stated, the figures reflect this.
Last year's PISA survey showed that Ireland had dropped down the world rankings in the results obtained in mathematics and literacy and it set alarm bells ringing. We were already aware that the position on mathematics was slipping. However, the fact that the results relating to literacy were also down really made people wake up to what was occurring. Ireland has one of the best education systems in the world, but the results obtained by students within it do not match up to international standards. The Minister for Education and Skills is doing a great deal of work on this matter. We have discussed that work with him both in the House and at the Joint Committee on Jobs, Social Protection and Education and I wish him well in it. I will certainly support him in whatever way I possibly can.
The McCarthy report refers to investment in Teagasc, Science Foundation Ireland, the Environmental Protection Agency, EPA, and medical research. Has there been any progress in streamlining the position in this regard and are we obtaining value for money? I am aware that there may be duplication in some areas. It is important, therefore, not so much to obtain a commercial return but to ensure there is no overlap and that money is not being spent unnecessarily.
The Minister of State mentioned research and development tax credits, a subject to which the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, has also referred. What is the position on such credits? When will an announcement be made on the matter?
I welcome the proposal on the establishment of Ireland as a location for global intellectual property management and licensing and it was probably mentioned by the innovation task force on intellectual property. This was raised before and we have an ideal location for it, particularly within the financial services sector. We already have a good reputation in that area and one of our biggest competitors would be the UK. In his election campaign the current British Prime Minister, Mr. David Cameron, was very strong on the issue of the "patent box", and we should be conscious of that. There will be competition everywhere but we have invested strongly in research and development, and our commitment to the area would give us a strong advantage in setting up that sector.
On research prioritisation, the committee headed by Jim O'Hara is very welcome. It is important questions are asked such as whether we are spending in the right area or if there are areas in which Ireland can have an advantage or develop an existing advantage. We look forward to the presentation of the steering group report because we need some input in that regard. Science Foundation Ireland has always worked really well for this country and had its 10th anniversary recently. It has been instrumental in ensuring Ireland's international reputation in research.
Representatives from Science Foundation Ireland have been before the committees and I have had the opportunity to listen to and question them. They focus on excellence and I am sure not every project coming before them gets funding. They give confidence in the area and the foundation has stood up well to external investigations. It will continue to play a very important role in developing science and excellence in research. Some bodies stand out and we can be very proud of them.
There is the issue of the technology transfer offices in third level education, which are very important in the bridge between industry and research. It is important to recognise that blue sky research should always exist but we must also bridge the gap between industry and third level sectors. I hope there will be a commitment to continue with these offices as they provide an important link.
One issue concerns me, although I will not take too much time with it. I hate saying it but there seems to be a commitment to mediocrity in the university sector. As to the fall in ranking of some of the major institutions, we are taking it lying down. The Minister of State has indicated that he is happy with The Times Higher Education performance tables, which place Ireland firmly in the top 20. We had Trinity College and UCD seeing significant drops and although Government funding is an issue, it would be possible for the Government to think outside the box. As Professor Crown indicated we must look at mergers of universities and faculties. Both DCU and Maynooth fell in the ranking but have much potential and drive their local economies. How much more powerful could they be if they were joined? Although Senator Barrett may not agree, the same would apply to Trinity and UCD.
We must have flagships in the country and we should not be afraid of elite education. It can bring people from nothing and make them great. It can make this country great and create shining lights to attract industries. The Government indicates it is happy with ranking when the major universities see major drops but I am not and neither should the Government be happy; it should urgently consider the position and not just accept what university heads say at every juncture, as Senator Barrett would advise. The Government should listen to all the stakeholders, including businesses and educational consumers around the world, as people travel the world for their education. Such people will see less attraction to Ireland as a result of the precipitous fall in ranking for individual colleges.
I apologise for not being present to hear the long speech but I am seriously concerned that there is no appetite in the Government to address the issue seriously or even see it as a problem. The Government seems to be happy enough, although the Government should be deeply unhappy about the precipitous fall in ranking. It should act urgently as there will be a reputational effect. Otherwise, I am glad to see that this Government is continuing - in this area at least - the successful policies of the previous Government.
There is much to be encouraged by in the Minister of State's comments. When I meet somebody who has a great idea, who has won awards and has a large company to back him but is nevertheless on his knees looking for money, I wonder what is going on. Will the Minister of State give us some insight on why it seems that the only real access to finance seems to be through venture capital funds, which are more appropriate for larger companies that are perhaps at a more advanced stage? With start-up companies, a great deal of work is put in by people and they may have to give almost everything away because the value of the company could be so low. Is there some way in which somebody like the person I described could have access to a bank loan? That returns us to the same old problem.
We are talking about people with ideas, like the one I described and others across the country, emanating from real science and innovation, with a good prospect for employment. These people are on their knees looking for investment, and the only place they are being sent is to the venture capitalists, which is not appropriate.
Has the Department examined the idea of training or putting in place a cohort of solicitors and accountants acting as a panel across the regions to assist start-up companies with flat-rate fees appropriate to the type of business? In these cases there would be some expertise but much of it would be quite standard. Companies are being forced to go to larger accountancy and legal practices, where fees are greater, and many of them cannot afford it. A panel of flat-fee accountants is available in other countries so the idea is not new. Will the Government consider the suggestion?
We have a fine list of incubation and business centres and we would like to see more of these. As far as I can understand it, these are currently coupled to third level institutions in such a way as to make some of their operations quite difficult and lengthy in the way business is done. Has the Department considered decoupling them from the institutions in the way that businesses are run for incubation purposes? Small businesses often need some hand-holding but the way many of these are currently set up does not allow for direct help; instead, they must engage in institutional processes that take time.
My colleague, Senator Gilroy, spoke about the need to take risks and above all we are interested in job creation. If people like the one I described are on their knees, they will leave and take their idea somewhere with a better understanding of incubation of direct and practical support for small businesses. We can be starry-eyed about how great we are in sciences and technology, which is good, but we can lose sight of the blood and sweat required to run a business. The issue goes back to this whether a person is selling bones for dogs or high-tech equipment. We do not seem to have in place sufficient supports at that level.
I welcome the Minister of State and recall having a great debate with him in Fermoy several years ago on the future of the economy. I am sceptical about virtually everything the Minister of State said. I wish he had not taken on baord the policies of the previous Government. An awful lot of money has been wasted in this area since 1998. It is unsuccessful in employment terms. This June, there were 53,000 fewer people working in industry than in 2005 and grant-aided firms lost 48,000 jobs between 2000 and 2009. The Minister of State, although moreso his Department, because he is new in it, must face up to the criticisms of these policies by an bord snip nua, Chris Horn, Colm McCarthy and Damien Kiberd. We spend a considerable amount of money accomplishing very little. The hi-tech sector provides approximately 3% to 5% of total employment in Ireland.
Enterprise Ireland spends more running itself than it gives in grants to firms. Forfás and the IDA do the same. Employment in these companies is falling and the IDA PR machine should tell the truth sometimes. This is a huge subsidy guzzling exercise about which I and Patrick Honohan warned when we served on the Culliton committee, that is, that the competitive edge of Irish industry has been blunted by people seeking subsidies. What we recommended in Culliton was fewer subsidies and more market-based activity.
We have built up a massive €300 million per year budget on research with no evaluations of what is accomplished. Colm McCarthy has the door worn out going to Science Foundation Ireland, which he calls science fiction Ireland. It will not tell him what the outputs are. Of course, the scientists think more subsidies are wonderful. I publish internationally, and I will be at a conference in Washington next month, but I do not require any grants to do so.
We have confused research with subsidies. Irish scientists have turned out to be replicas of Irish farmers. They are more interested in getting subsidies. We should not count that as a benefit. We must analyse what they are doing with the money because they will continue to queue up as long as the subsidies are there and that is a serious problem. McCarthy's criticism of the innovation task force was that "not even a tentative quantification of the benefits from this prodigious spending programme was offered". That was €50 million investment in research and development. They must really prove it and I hope Mr. Chopra, who I hope to meet in Kenmare at the weekend, looks into this. We spend a vast amount of money but industrial employment is in decline.
I question the agencies. Wilton Place, where Enterprise Ireland, the IDA and so on are located, is a very large PR outfit and there is not much economic reality there. They must be confronted about that, either by the Minister for Public Expenditure and Reform, Deputy Howlin, or by the Minister of State, Deputy Sherlock. The Department has allowed too much power to go to the quangos. They will continue to boast that they can spend even more money and that is what they are at. That must be confronted because the results are most disappointing.
Research and development was kicking in hope. An bord snip nua stated that: "The largest verifiable output to date appears to be the publication of articles as opposed to more concrete measures of economic return". The group is strongly of the view that substantial reductions in funding are warranted given the significant amounts invested to date, the lack of verifiable economic benefits resulting from these investments and the inflationary impact of funding on research, administration and salaries and that there is insufficient evidence of the positive economic impact of the programme to date. The Minister of State's Department must confront the legitimate criticisms on behalf of the Minister for Finance and stop saying this is apple pie and that everybody should bow down in its favour.
The other aspect to which the Minister of State referred was mathematics. That was a cop out, although I know he is coming to talk to us about it. The heads of the Irish universities did not want to do anything about mathematics, such as improve the teaching. Some 80% of children are taught mathematics by people who have no qualifications in the subject, so bonus points were given to the 20% who had a proper mathematics teacher or who could afford grinds. They chose the option which involved them doing the least amount of work, such as reforming their mathematics departments and linking the higher diploma in education department with the mathematics department. I do not accept that as an example of anything that is desirable.
This sector is dominated by hyperbole and spin doctors and it is not helping us in our recovery. The beneficiaries will queue up looking for subsidies and invent more reasons that they should not pay corporation tax here because they want the 12.5% rate reduced. One must go through the an bord snip nua report to check out the results of these expenditures. Knowledge economy departments probably account for 5% of the knowledge in any university. The stem subjects use the research money to extend their budgets and we have downgraded languages - we are seriously short of people with languages - and economics departments. My department has been approximately halved. The lack of basic economics in the Department of Finance and in the banks caused the country to crash. I am not making a sectoral point on behalf of economics but other subjects in universities have been ground down to promote this massive juggernaut called Irish science, technology and innovation. I find the emperors concerned are particularly bereft in the way of clothing.
I call for a more questioning attitude. We spent a considerable amount of money but the results are most unimpressive. It is more PR than reality. Industrial employment in Ireland in the period concerned fell by 53,000 and total employment fell by 120,000. We know the construction industry is in decline but the manufacturing industry is not thriving despite the hyperbole in the PR handouts from the Wilton Place agencies. They must be questioned-----
-----and the Minister of State's Department should do that along with the Department of Finance and the Department of Public Expenditure and Reform. If we are to get the public finances back in order, this is an area in which we must question much of what happened over the past decade.
I refer briefly to the recent university rankings. Did the quality of lecturing go down? Did the quality of the articles produced go down? The answer to those questions is "No." What happened was that fewer staff taught more students. The Times Higher Education table did not like that but other people call it productivity.
There are 50 higher educations institutions in Boston but no one ever suggested mergers. That is a bureaucrat's solution. Too much of Irish universities' budgets go on bureaucrats who talk to other bureaucrats and too little is spent in the classroom, which is the emphasis we need to get back to. Then we will be a real knowledge economy and not a subsidy guzzling economy like that advocated by Science Foundation Ireland, the IDA and Enterprise Ireland. I thank everyone for their forbearance.
I will meander through the contributions in no particular order. I will start with Senator Thomas Byrne. I am supposing he has not read the qualitative criteria laid down by the The Times Higher Education review in how it quantifies university rankings.
Senator Barrett hit the nail on the head in regard to the rankings. Nobody in this Government is committing himself or herself to mediocrity. We must be honest about these things and the ECF has had a bearing on the pupil-teacher ratios and that has had a bearing on the quantitative criteria laid down in regard to rankings and hence the headlines.
I take the point Senator Barrett made in regard to the scientific agenda. I do not believe we are swallowing hook, line and sinker everything said to us by the agencies. That is not the case. I assure Senator Barrett that we are critically assessing everything that is coming across our desks because it is not a case of continuing on as before.
I recognised and acknowledged the role of previous Governments in regard to the science, technology and innovation agenda because it is dominated and informed by industry, academia and by previous Governments. While I would not go as far as following the McCarthy report, because I contend that it too had its own agenda, there is a sense that we must critically assess everything coming across our desks. That is why we brought in somebody like Jim O'Hara on the research prioritisation exercise because the clear emphasis of that exercise will be towards gaining more economic outputs. That will run parallel with the legislation underpinning Science Foundation Ireland whereby one can extend the remit towards more applied research and the economic agenda we want to fulfil. I agree that we need to slaughter some sacred cows within academia. Certain institutions are able to attract massive amounts of money and issues arise in terms of the duplication of research. We have to grapple with these issues in the forthcoming period, but my starting point will be the research prioritisation exercise. I want to ensure we gain access to the metrics arising from this. A process is under way within the Department in extrapolating information from various agencies, including SFI, the research councils and Enterprise Ireland. This will also form part of the expenditure review of these agencies' budgets. We will hear more about this at budget time.
I assure those Senators who expressed criticisms of the policy that we are mindful of the issues arising, although I continue to believe we need a strong base for basic and applied research. If we lose that base, we will compromise our ability to attract foreign direct investment. A significant number of existing jobs are underpinned by increasing collaboration across industry and between industry and academia, which is a positive development.
Senator Clune referred to the economic outputs which are our current focus. We can no longer sustain a position where people make calls for proposals within the research community in the absence of at least some qualitative criteria to ensure there are outputs for the research. We are conscious of the need to ensure value for money.
On Senator Barrett's point, I share the instinctive view that the entities could be further consolidated. Perhaps that reflects the opinion of an agnostic; like the good Senator, I also have an economics background. One thinks in a certain way about the possibility of slaughtering some of the sacred cows within our hallowed institutions. That would be an easy thing to do, but I am not sure if it would achieve much. I am often told that Stanford University has the same number of undergraduates as the island of Ireland, although I am not sure if that is true. My instinct suggests we should be striving towards the centres of excellence to which Senator Byrne referred. The question arises as to whether a Government could force the consolidation of entities, but there is far greater collaboration between entities on research and innovation than heretofore. There is also closer collaboration between the universities and the institutes of technology than I have seen previously. This is a welcome development. One gets from institutes such as Crann and the Tyndall Institute a strong sense of collaboration with industry in order to achieve outputs. Theirs is output focused and results driven research. Cork Institute of Technology and the Telecommunications Software and Systems Group in Waterford are also using their funding to collaborate with industry in achieving the necessary economic outputs.
On the issue of broadband in schools, there is ongoing engagement between the Departments of Communications, Energy and Natural Resources and Education and Skills. However, the question arises whether it is necessary for every school to have 100 MB. I do not believe it is. We have sufficient capacity to provide between 10 MB and 15 MB and if schools need greater bandwidth, they can draw from this resource. The issue is being discussed and the two Ministers are aware of the need to address this agenda.
I apologise if I am unable to answer every question posed today. I will, however, address the issues arising with the Members concerned if they so agree. Senators O'Keeffe and Crown raised specific issues. My door is open and I am happy to help Members to address these and other specific issues. I thank Senators for giving me the opportunity to address them.