Thursday, 3 October 2013
County Enterprise Boards (Dissolution) Bill 2013: Second Stage (Resumed)
In my contribution yesterday, I outlined the importance of the county enterprise board structure, the model, the work the boards have done since their establishment in 1993 and the opportunity that could be lost. Akin to what is happening in respect of this House, we should be looking at reforming, re-invigorating and re-energising the county enterprise board structure instead of abolishing it. The model has been proved to have worked and it is a mistake to go the down the road of abolishing the county enterprise boards.
I outlined yesterday that board members come from a wide array of bodies, including local authorities, trade unions, employer organisations, State agencies and local businesses. They gave their time on a voluntary basis and that will now be lost as a result of this Bill. It is also an attack on the competence and professionalism of the county enterprise boards staff around the country who have been unfairly treated in this process. I will return to this point when we come to section 12. It is undermining the competence of people who have a proven track record and ability. Many county enterprise boards share IT and payroll functions with local authorities and savings can be made through that process if it is a question of savings.
As I mentioned yesterday, the county manager in Donegal had been chairperson of the Donegal county enterprise board since its establishment in 1993. There is a new county manager there now and that person is chairperson of the board.
A major area of concern is that the plans envisage the local authority providing matching funding to any funds allocated by central government to the new local enterprise office, LEO. We are all aware of the financial constraints of local authorities. If they are expected to part-fund the functions of the LEO, it will place a further financial strain on them, given that the county enterprise board model has been funded exclusively to date since 1993 from central government funds. How will this difficulty be addressed? What discussions have taken place with local authorities or with the Department of the Environment, Community and Local Government? From where will the shortfall in funding come? Some local authorities are not merely struggling but approaching bankruptcy. The idea that the local property tax would replace such funding is a non-runner because the model has an 80% return based on what is collected. That will not fill this gap, as I am aware from having discussed the matter with the staff in County Donegal that money has already been budgeted for by directors of service and country managers. That is a grave mistake and it will have drastic consequences. I hope there is an explanation for that.
As I mentioned the staff of the county enterprise boards have been dealt with quite inappropriately. Section 12 provides for Forfás, Enterprise Ireland or a local authority to accept staff into their employment that were previously employed by a county enterprise board. What discussions have taken place with county enterprise board staff to date?
We are talking about business and creating jobs and many things need to be done to sustain our employment base in country, particularly the domestic employment base. We need a system where grants can be made available by the Government through agencies because the banks are lending. Zero-interest loans should be made available to those who create employment in our economy. It is the only way forward, the pathway towards the recovery. Leaving lending to the banks amounts to negligence because that will not work and it has been proven not to work up to now. Despite the falsified figures banks are providing, they are simply not lending.
Another issue is commercial rates, which needs to addressed. If local authorities are expected, on the one hand, to collect commercial rates from prospective employers and, on the other, to be seen to be funding business, there is a conflict of interest there, and I believe that is a wrong move.
I will speak briefly to the Bill which I welcome. As one who was a member of an enterprise board in Waterford for a number of years, I recognise the work enterprise boards have done not alone in my city but throughout the country. They have been quite successful. I compliment the staff, past and present, the board members and the evaluation committees who did such tremendous work down the years. I hope that as a result of setting up these LEOs we will not lose all the expertise that was available to enterprise boards. When entrepreneurs were going about their business, they were helped by enterprise boards but what they wanted was a one-stop-shop for local entrepreneurs. They wanted information on State supports and developments of services. While the enterprise board could give them quite an amount of that information, bringing these offices in under the umbrella of the local authority - the vast majority of the members of board were local authority members who gave tremendous service to the boards - is a change in local government. It gives more power back to local government in that it is involved in enterprise. This should be welcomed by officials and members of local authorities. There is nobody better placed in the community than the local authority to have a one-stop-shop, bringing together these bodies. We all know that micro-enterprise and the small business sector are the backbone and the lifeblood of the community and that they provide many jobs.
I welcome that while the LEOs are coming under Enterprise Ireland and will be in the local authorities, they will be supported by a centre of excellence, by Enterprise Ireland. The addition of the functions of that centre will include promoting innovation and best practice and approach to supporting start-up and entrepreneurship, working with the LEOs to design and deliver appropriate national training and management development programmes at local level, and developing a common approach to mentoring and mentor management. That is to be welcomed. These are types of supports that people starting off in business want. They want and need to be mentored. I am delighted to say that many of the small businesses that started up through enterprise boards have gone to on to be under the umbrella of Enterprise Ireland when they created ten or more jobs. It is a follow-on brining all these bodies together under Enterprise Ireland and it is to be welcomed. It is part of the jobs action programme. These LEOs will play a important role in creating jobs. If we could get micro, small and medium-sized enterprises to create only one job in each of them, we would probably solve our unemployment problem. That is the importance of that sector. The Government is and will continue to support this sector at every possible opportunity. Regarding loans for businesses, I am sure the Minister of State will outline the number of areas where businesses can get help from the State sector other than going to the banks.
I welcome the Minister of State to the House. I also welcome the Bill before us. I hope that the LEO sector will prosper and provide the necessary jobs which we need for our young people in particular.
I welcome the Minister of State, Deputy Perry, to the House again. Sadly, our side of the House has already indicated that we will be opposing the dissolution of the county enterprise boards and the subsuming of their role into the local authorities. We believe that this is part of a pattern of Government decisions which have more to do with creating an illusion of reform than delivering real results, the detail of which I will go into later. There is a strong case for retaining and streamlining the existing structure with greater co-operation across county enterprise boards to share best practice ideas while retaining the ability to respond to specific local needs.
The enterprise boards were established "to fill the gap in the support services for local enterprises" and "to develop indigenous potential and stimulate economic activity at local level primarily through the provision of financial and technical support for the development of small enterprises". Significantly each board is made up of voluntary members representing the local authority, local or national agencies and local community interests. The boards employ a small number of staff who deliver board supports in the locality. As the Americans would say: "If it ain't broke, don't fix it." We already have a representative group of people who embody both those who are elected representatives as well as those from the voluntary and civic society who deliver a service already. To put it in context, the county enterprise boards have supported the establishment of more than 13,500 businesses; assisted approximately 20,000 businesses to increase their sales, employment and exports; helped in funding business which created just under 35,000 jobs; led the promotion of an enterprise culture in schools and colleges, with more than 10,000 students per annum participating in county enterprise board programmes; provided training for more than 72,000 entrepreneurs and employees; and provided value for money job creation at an average cost of €5,500 per job.
In that context I cannot see the reason for the rush to dissolve the CEBs and subsume them into the local authority structure. It seems to smack of reform for the sake of reform. It is comparable to the proposals for the Seanad and for Dáil reform. That is what they will remain. It is a great pity that the wool is being pulled over the eyes of the people in that regard. This is another example of it.
The CEBs have proven themselves to be one of the most effective supports provided to small local business. Already many CEBs share IT and payroll functions with the local authority. The savings to be made from this change are likely to be negligible. The local authority providing matching funds to the funds allocated by central government to the new enterprise office is a matter of major concern. To date, the enterprise boards were funded entirely from government, with part from the Exchequer, and in part from the regional development fund through the regional assemblies, the Department of Enterprise, Trade and Employment, which all came under the national development plan. It is a major cause of concern as to how they will be funded. The new proposals will require county councils to provide matching funding. All councils are already hard pressed given the demands on services and dwindling resources. We know the local authority's budgets have been reduced significantly in the past number of years and now they must take on a new role and subsume an effective organisation, without funding coming from Europe because of the changed nature of our economic situation. Where will the money come from?
Recent independent evaluation undertaken by Fitzpatrick Associates, on behalf of Forfás, Ireland's national policy and advisory board for enterprise, trade, science, technology and innovation, highlighted the central role the county and city enterprise boards have played in the development of local economies through enterprise. The case for the retention of these bodies is very strong. I am not suggesting that local authorities should not have an expanded role. We have been crying about local authorities having an expanded role. Is this a case of reform for the sake of reform? There seems to be no logical reason that the existing structure will be subsumed into the local authority. The added question mark hanging over the future funding of county and city enterprise boards certainly raises very serious issues and for that reason our party could not support this Bill.
I welcome the Minister to the House. My colleague Senator John Kelly has spoken on behalf of my party and I will add some comments.
The county and city enterprise boards have done an excellent job during the past 21 years. They were set up in 1992 and I was a member of the first South Tipperary county enterprise board. It was one of the most worthwhile committees that I served on during my time in local government. The CEBs provide hope to communities by providing a kick-start when people set up a business and help them by providing mentoring. Society is facing change. This area is no different. I am a former councillor and with many others in this Chamber I have called for reform of local government and for more power to be devolved to local authority members. I am glad to say this is an example of that happening.
I believe that all work relating to job creation should emanate from the local authority and should be administered under the local authority system. There needs to be accountability in terms of finance and decision making. Each county enterprise board has an individual mission statement specific to its geographic area. Nobody is better placed to put that mission statement and business plan in place than those who are elected by the people who understand their own areas. When this change is implemented, we will see greater levels of job creation emanating from the new structure. It is critical that the power and decision making with regard to job creation across the country has an input at local level. Nobody knows better than the elected members of a local authority the opportunities for job creation on the ground in their area.
We have complained about centralisation of decision making, that local authority elected members were not having a say. I served with very good people from the various pillars of business, community, agriculture and so on in my time on South Tipperary Enterprise Board. At the end of the day, we were answerable to the organisation we represented. The elected members of the local authorities are answerable to the people. That is the key difference. I look forward to the new process whereby greater involvement and input can occur through the services that will be provided. Recovery of the economy has started but there is a long way to go. I am very proud of the fact that 33,000 jobs were created in the past year, that unemployment figures are reducing but I am not blinded by the fact that in excess of 400,000 people are unemployed. It is incumbent on us to ensure that the structures that have served us well for more than 20 years can be improved and will be improved by this legislation.
The Minister will be well aware that the county councils in Tipperary north and south riding will be amalgamating. Does the Minister know what impact that will have on staffing numbers and the role of the new structure in County Tipperary? I would appreciate if that specific question was answered.
I welcome the Bill and I look forward to its passage through the House.
I join in welcoming the Minister this afternoon. I acknowledge that nobody understands the difficulties that small business are experiencing right now than he does. I compliment him on his work since taking office.
I record my appreciation of the great work done by the county and city enterprise boards during the past 20 years. I acknowledge that many of the very successful businesses in County Galway today got a start from the assistance of the county and city enterprise board. I had the pleasure of serving on the board for a period. I appreciate and wish to record my thanks to the very many successful business people who gave of their time and talents together with the elected representatives to ensure that worthy projects were awarded funding for a successful start.
I am surprised that our colleagues on the other side of the Chamber have so little faith in the local authority structure and are opposing the Bill on this occasion. This new development will give the system a shake-up and provide a one-stop advice centre for start-up businesses.
The Bill is designed to create a centre of excellence in Enterprise Ireland and develop new thinking and best practices for supports provided for small and micro businesses. Local enterprise offices will provide a one-stop-shop service for small and micro businesses and be very responsive to the needs of start-up businesses.
Yesterday the Minister mentioned that the measures are designed to help new start-ups survive the first five years and to increase the number of start-ups by women. We all encourage those goals. We all know many successful women entrepreneurs in our counties. We have quite a number of very successful women entrepreneurs in the House but there are far too few in the country.
We must improve the record of job creation and innovation in the small business sector. We all know that job creation is the greatest challenge facing the Government. We came to office with record numbers of unemployed and the number has escalated at an alarming rate. To date, unemployment has increased by more than 34,000 per annum. Job creation is not fast enough because, as previous speakers have said, there are still more than 400,000 people unemployed. The Government's job creation policies are heading in the right direction but we must do everything possible to increase the level of activity. Every Department has been challenged to play a job creation role. The Taoiseach clearly set out that aim two years ago when Action Plan for Jobs was launched. I look forward to having a further debate and discussion with the Minister, Deputy Bruton, in the House when we review the plan's progress. I am sure every Senator will want to have an input into how we can escalate the pace of job creation.
Yesterday, some Members expressed concern, during their contributions, about the culture of enterprise in county councils. I think the new style of management in local authorities is more enterprise and cost-oriented. I have every confidence in the new system of replacing county enterprise boards. I am sure it will be effective and have the desired effect.
We all know that the creation of employment in small numbers and in small enterprises will help breathe life back into the rural areas. However, the IDA's commitment to smaller towns is not what we would like to see. Major job creation projects go to the larger cities of Dublin, Cork and Galway. My town of Ballinasloe lost 1,000 industrial jobs over the past decade. Smaller towns are finding it very difficult to attract the sort of job replacement numbers that are required. All small businesses in small towns and villages are under severe pressure. The centre of Ballinasloe is under pressure due to out of town developments. We need to review planning and address the existing imbalance. The lifeblood is being sucked out of the town centres which have paid parking. In contrast, large multinationals have their profits repatriated outside of the country and provide customers with free parking and facilities. As a result, the multinationals enjoy a greater footfall. Local authorities need to examine ways to address the imbalance. The multinationals should pay for their out of town facilities.
Yesterday, Senator Quinn mentioned that job creation projects could be funded by releasing funds from pension schemes and welcomed the fact that 30% of an AVC can now be released. I would like the scheme further expanded because it will stimulate the economy by encouraging people to spend their money and put badly needed cash in circulation.
I encourage the Minister to ensure the new structure is effective and closely monitored. Expertise will be transferred from the county development boards but I want it supplemented by additional resources and funding from local authorities. We need to create jobs at a much faster pace to overcome our economic difficulties. I worked in industry for many years and would like to see a greater concentration of investment in manufacturing, particularly small enterprises. We must encourage young people with skills to get involved in manufacturing. We must create many more apprenticeships in the trades which will be of great benefit in the future. Those skills are in scarce supply and skilled personnel are necessary to boost the manufacturing industry.
I wish the Minister of State well and thank him for being here today. I hope the new structures will be effective. I look forward to his return in 12 months time to debate progress made under the new structures.
I welcome the Minister of State and support the legislation. It is important we do not lose sight of the fact that county enterprise boards were established to help get small businesses up and running. Let us not lose sight of that goal. Smaller companies employ a large number of people. The boards arose due to an over-reliance on the IDA which focused greatly on the larger companies. The county enterprise boards did a great amount of work to level the playing field. They ensured that people who wanted to establish or grow their business could access the relevant information.
There is a need to co-ordinate the support groups provided by the local authority or educational institutions for small enterprise. I was involved in a project where it was discovered that departments in a local authority were not co-ordinating. That was unfortunate and the project was delayed for quite a long period. I hope the amalgamation of services in the local authority will eliminate any difficulties experienced by small enterprise. It was a planning issue that delayed the project that I referred to, but problems could range from a minor planning issue to compliance with health and safety regulations, etc. I hope services can be streamlined and obstacles removed. Obviously, there must be full compliance with regulations and legislation.
During the period 1994 to 1997, when Deputy Richard Bruton was the Minister, we created 1,000 jobs per week. We are moving towards that level again, and I hope that 1,000 jobs marker is not far away. At present, an additional 3,000 people have been returning to work every month over recent months, and I hope the figure continues to grow.
There is a need to focus on areas located outside of Dublin because we have already seen problems.
I know that, when trying to create jobs, one cannot pick and choose where companies locate. However, we are already seeing the knock-on benefits in the Dublin area where there is an increased demand for accommodation for people and commercial premises. It is therefore important that we work closely with and encourage new businesses to establish outside Dublin, whether that is in cities such as Cork, Galway, Limerick or Waterford or in smaller towns.
It is difficult when a company is about to invest large sums of money in creating jobs - one has to walk on eggshells and must not be seen to be setting down too many restrictions relating to establishment on them. We need to keep that in mind, especially where we have third level institutions that can give a lot of back-up support to companies. In particular, the institutes of technology do a superb job in preparing people for work. It is also important the institutes of technology, the third level institutions and our schools look at where the jobs will be. A mistake that was made over the past ten to 15 years was the lack of focus on the changing job market. As I said in the House earlier this week, I had the privilege of speaking to a person who has a good qualification. Even though it was not a third level qualification, he was offered jobs in three different countries at the same time. He had a difficult choice to make and it was interesting talking to him about that. It would be great if we had many more people who had such choice, and that is something that we need to work towards.
I welcome the legislation. It is about co-ordination of services, making sure that all the obstacles are removed and encouraging people to take a risk. People take a financial risk when they set up a business; there is also a risk about the hours that must be put in. No one who sets up a business works 25, 30 or 35 hours a week. I assure Members that as someone who has been self-employed for the past 30 years, I found - others Members will have found this in their own businesses and the Minister will find it in carrying out his role - I put in on average 60 to 80 hours a week, which is needed in order for businesses to survive. The private sector has given that level of commitment over the years. It is therefore important that, when we get that commitment from people who are prepared to put their hands in their pockets and take the risk, then we, too, should take the risk by ensuring they get all the possible support available and the playing pitch is levelled for them, so that they can move forward and create jobs.
Like many Members, I came to the House from a local authority background. I speak as a former member of the Wexford County Enterprise Board. I compliment everyone who was involved in that board, from the chairman to the staff, as well as those who participated voluntarily, either as board members or in a mentoring capacity. Their efforts should not be forgotten at a time when we are looking to change the structures of county enterprise boards. However, they are boards of their time - how they were established was part of the legacy that was - so we should not be afraid to make changes and put in place a different structure that is suitable for the second decade of this century.
I am glad that some of the functions of the boards are to fall under the auspices of local authorities. Given local authorities are losing certain services, with water going to Irish Water and more and more motor taxation matters are being centralised with online applications, it gives them the opportunity to focus on generating jobs and work within their county boundaries. Local authorities probably were not doing enough of that, so it is good that the work will become part of their core remit and some of the best people in the local authority will be in charge of the new structure.
I am critical of IDA Ireland and Enterprise Ireland because they are committed exclusively to larger towns and cities and not small, rural towns. That is a mistake. For example, in my own town of Gorey, IDA Ireland owned a portion of land there, but it sold it - it could not move the land fast enough, which shows its levels of commitment. I would not have minded had it sold it when prices peaked, but they sold it almost at the trough, which was a mistake.
A local employment office would bring a knowledge that Enterprise Ireland or IDA Ireland do not have. I do not think that county enterprise boards had sufficient clout to bring their knowledge to the powers that be in the attempt to focus on getting jobs and business into each community. An example is Glanbia's site at Inch, which is close to where I live north of Gorey town. Glanbia closed down its operation. The Yoplait franchise was repurchased from Glanbia by Yoplait. The entire facility was closed down, much to my dissatisfaction and displeasure. It was very much a commercial decision made by Glanbia. However, there is now a valuable site available for someone else who wants to come in. Through the work that I and others, including Enterprise Ireland and Glanbia are doing, we are hopeful that the site can be traded in the short to medium term and facilitate the reintroduction of employment in the area, which is important.
I want the legislation - perhaps we can discuss this in more detail on Committee Stage - to give local authorities and employment offices the flexibility to facilitate business to flourish. Most businesses struggle in their early stages. It should be possible to do a deal at local employment level rather than having to deal with national legislation on, in particular, rates, and for a small company that might have ambitious plans to be given the opportunity for a waiver to be facilitated in the county structure, rather than having to go to other agencies or departments to look for consent on that.
I also want to discuss the commuter zone. I have no wish to talk down any other area, but 1.25 million people live in County Dublin, which is more than 25% of the nation's population. We must realise that there is a large commuter zone that crosses county boundaries. It practically starts at Dundalk in the north and goes perhaps as far as Portlaoise all the way to my town in Gorey in an arc from north to west to south. We need a strategy for the commuter zone. There are businesses that would take the opportunity to establish in the commuter zone where the motorway structure - the M50, along with the M1 north, the M4 west, M11 south and other motorways - facilitates the transfer of workers in the opposite direction rather than everything being based in Dublin. A commuter establishment - indeed, every company that could establish in areas outside greater Dublin, whether in Gorey or the other towns I mentioned - has the opportunity to have a lower cost base. I am not trying to make a political point, but the previous Government did not give the matter any consideration and I do not know that this Government is giving it enough consideration either.