Wednesday, 9 October 2013
County Enterprise Boards (Dissolution) Bill 2013: Committee Stage
Government amendment No. 1: In page 4, before section 5, to insert the following new section:5.--(1) Each county enterprise board shall stand dissolved on and from the dissolution day. (2) The Minister shall, as soon as practicable after the dissolution day, notify in writing the Registrar of Companies that, by virtue of this section, each county enterprise board stands dissolved. (3) The Registrar of Companies shall, on receipt of the notification under subsection (2), register the notification under the Companies Acts in respect of each county enterprise board.”.
Following advice from the Parliamentary Counsel it was decided to redraft this section to ensure that the Companies Registration Office is properly notified of the dissolution. The purpose of this amendment is to allow the Minister to comply with the winding-up obligations of limited companies - in this case the county enterprise boards - under the Companies Act by virtue of a written notification to the Registrar of Companies that each county enterprise board has been dissolved. It also provides that the Registrar of Companies shall register such notification in respect of each county enterprise board.
I move amendment No. 3:
In my experience of dealing with small companies that have dealings with the county and city enterprise boards, companies that provide employment, such as small retailers, hairdressers and companies in the services area, are not entitled to any financial assistance because they do not have the potential to export. These small companies might be employing six to ten people. They are giving employment in their local area. If they are not eligible for financial support, I sincerely believe they need a mentoring service. I am dealing with a case in Swords at present on behalf of my colleague, Senator Darragh O'Brien. This lady is doing very well in a hairdressing business but she desperately needs to talk over her business issues.
In page 5, subsection (3), between lines 3 and 4, to insert the following:“(d) Any arrangement under this section will be cost neutral to the local authority and will be funded by a dedicated operational budget provided by Enterprise Ireland for Local Enterprise Offices.”.
The situation appears to be very unbalanced. I realise the money must go to companies that have the potential to export, but I believe we should expand the mandate of the enterprise board. That is not allowed at present, unless on an ad hoc basis. I know there is pressure on resources and on the availability of money for the enterprise boards. That will be a very serious issue for the new local enterprise offices, LEOs, if they are to have money to run their businesses. I am speaking on behalf of small employers whose businesses are in the services sector and who could really increase the size of their businesses if they had mentoring. In the Fianna Fáil policy paper on promoting women entrepreneurs I pushed very ardently for encouraging two or three people to start a business together, rather than one. It is torturous starting and running a business if one is on one's own.
My heart went out to the lady I met in Swords last week. I rang Oisin Geoghegan, the chief executive of the Fingal Enterprise Board, and he very courteously came out and spoke to her. He said he would do his best personally to help the lady. It is a lovely salon that employs young people. The lady wants to set up a hairdressing academy, which would provide more skills and create employment, so he decided that he would give her a mentoring service himself. I am calling for this to be provided. I am sure the Minister of State agrees that it makes sense. There is an issue with the fact that we cannot fund companies unless they are exporting. People talk about achieving growth in the economy and we all know the only way we can do that is by having more companies that will export.
I wholeheartedly agree with Senator White, the Fianna Fáil spokesperson on enterprise in the Seanad. She has proven expertise in advancing business and creating jobs in the Irish economy down the years. We have to take that expertise and the qualities Senator White brings to this debate into account with regard to this section. This gets to the core of the Bill's objective. The Fianna Fáil amendment refers to mentoring-----
We can talk about it when discussing the section later.
With regard to amendment No. 3, I seek clarification from the Minister. I am told by county enterprise boards that with the transfer of powers there are additional financial responsibilities for local authorities. The county enterprise board structure is currently 100% funded by the Government but powers will be transferred from the county enterprise boards to the local enterprise offices under Enterprise Ireland and the dual functioning responsibilities of local authorities.
The authorities will be responsible for part of the financing that will be at the disposal of the LEOs. Is that correct? If so, how does the Minister of State see local authorities being in a position to fund such activities given that many of them, including the one in my county, Donegal, are struggling financially to deal even with their current responsibilities under the 2001 Local Government Act? I refer to planning, housing, environmental issues and so on. They are strapped for cash. I do not believe that putting another layer, albeit a new one, of responsibility on local authorities in regard to job-creating responsibilities, an area where local authorities have no defined function under the 2001 legislation, can work. The answer will determine whether we press this amendment. Can the Minister of State clarify whether it is stated anywhere in the legislation that this will be cost neutral to local authorities and will not cost them an additional penny? Will there be a budget of at least €40 million dedicated and available to the LEOs nationally? That is what the CEOs of the county enterprise boards have sought from the Department of Jobs, Enterprise and Innovation down the years. They require that sort of budget to fulfil their role effectively and efficiently.
I do not lay the blame on the Minister of State's desk but down through the years when the budget was available early in the year, very often when it came to October, November or December, additional moneys were made available because of the lack of spending in certain areas and these were given to the county enterprise boards. They had to approve the grant aid within six weeks and draw down also had to be made in that time. It was neither workable nor practicable. Perhaps the Minister of State might clarify this point. We will reserve judgment on whether to press the amendment. We cannot have a situation where county councils and councillors are expected to come up with a budget they do not have, for functions they do not have under the local government legislation. It would be grossly unfair to councillors and councils throughout the country to be expected to find such money.
I will clarify this issue for the Senator. The new local enterprise offices - in 31 locations around the country - will comprise the existing staff resources of the county enterprise boards and those of the business development units of the local authorities. These combined resources will deliver an enhanced service via a very effective service level agreement, which I will circulate. It clearly indicates the new role and is well worth studying. I refer to Senator White's point which we will discuss later. It is not in any way excluded and if anything will be enhanced. The combined resources will deliver an enhanced and integrated support service involving business people through a first-stop shop, under a service level agreement to micro and small businesses.
This is breaking ground in respect of enterprise in every county. There will be a great level of autonomy in respect of the involvement of local authority and Enterprise Ireland staff, currently under the remit of the Department of Jobs, Enterprise and Innovation. The Exchequer allocation, as secured by the Department, will continue to be the primary source of funding for the provision by the LEOs of grant-aid support to the micro and small business sector. Individual LEO budgets will be allocated by Enterprise Ireland as a separate, ring-fenced subhead. It is entirely assured, without any dilution. It is ring-fenced funding that will be benchmarked. It is anticipated that local authorities will provide funding to LEOs for activities and projects, particularly in regard to enterprise promotion, through their normal budgetary processes. As I stated, local authorities have already committed staff resources on a county-by-county basis. To include in legislation the provision mentioned by the Senator would prohibit local authorities from supporting enterprise development in their local areas and, in my view, would directly contravene last year's decision by Government to restructure the existing model, creating an enhanced national enterprise support model to be delivered through the local authorities.
What is contained in the legislation is an enhancement of the service, providing a one-stop shop and enhanced role of services. I will circulate the service level agreement. Any questions Senators may have about availability, county by county, and the due diligence to be carried out is clearly set out in that document.
Gabhaim buíochas leis an Aire Stáit. Tá lúcháir orm go bhfuil an soiléiriú sin ar fáil. We would very much welcome reading the service level agreement ahead of Report Stage of the Bill in order to reflect on it.
I do not question in any way either the sincerity of the Minister of State's standpoint or the view he has expressed as to the benefit of the change. My worst fears, however, have been confirmed after hearing the Minister of State read that script. I refer to the statement that while the primary source of funding for LEOs will come from the State, local authorities are also expected to provide funding - funding they do not have. At present county councils throughout the country are not engaged in job creation. Through the planning and economic development units of county councils and the county development plan they have certain functions and a statutory obligation to assist in this area where they play a pivotal role. That applies to county enterprise boards all over but nowhere is it more evident than in County Donegal where the county manager since 1993 has been the chairman of the county enterprise board. Councillors who have sat on these boards are now being dismissed under the new structures.
To date, job-creating responsibilities have been performed by Enterprise Ireland, IDA Ireland and the county enterprise boards but all funding came from central government sources. It would be grossly unfair now if councils are to be asked to provide even a small amount of the required moneys. When the Minister of State mentions the primary source of funding is to come from the Exchequer, what does "primary source" mean? Is it 50%, 80% or 95%? What is the expectation of matching funding under this proposed legislation for local authorities? I am told different things, depending on who I speak to and have been given different levels of matching funding but these are only anecdotal. I can only go on the information provided to me but I understand there will be a matching funding requirement for local councils. This is funding they do not have and will compete with other commitments they have.
I accept the transfer of functions, as agreed in the legislation, will take care of the staffing complement but it is the hard core money that bothers me. Ultimately, this is about creating jobs and this costs money. The role of county enterprise boards, while providing mentoring and assistance, was to provide grant aid and seed capital to new companies starting up. To do that money is needed. On a cost per job basis, let us take, for example, a new enterprise that would create five jobs. Suppose the cost per job is €5,000 or €10,000 in grants, and the company receives a grant of €50,000 for setting up X number of jobs. Where is the €50,000 to come from now? Will it come solely from central government sources? Will this continue in regard to any form of venture capital, whether seed capital or interest-free loans? The county enterprise board model of interest-free loans has been exceptionally well received in business circles. Will it continue and, if not, from where will loans be funded? That is the crux here. Where is the money coming from for the funding for business start-ups that used to come from county enterprise boards? This is a long way of trying to find out the answer.
I note the Minister of State's responses. This is all about bringing the expertise of Enterprise Ireland and the county enterprise boards into the local authorities.
My experience is that the proposal has been welcomed across the board as a much more efficient way of delivering a very valuable service to local enterprises and individuals wishing to set up businesses. They will now be able to access all the information and supports they need in a one-stop-shop format from the local authority rather than having to go all around the houses. As the Minister of State pointed out, the money that was previously allocated to the county enterprise boards is being ring-fenced for the same purpose under the local authorities. Businesses will now have easier access to the experience and expertise of Enterprise Ireland through the provision of its micro-enterprise support services and so on. The local enterprise offices will report directly to the city or county managers, which is an important provision.
As I said, the local authority members and officials to whom I have spoken welcome these changes as an opportunity for them to get involved in the types of local job creation measure they have been seeking. Given their existing functions in the areas of planning, economic monitoring and corporate services, for example, they are well placed to deal with this new challenge and are, moreover, looking forward to it.
I apologise to the Minister of State for my late arrival. I got here as soon as I could from another meeting but am disappointed to have missed the debate on the earlier amendments. We received the clár for this week very late and there were a couple of errors in tabled amendments. We did not get ours in on time and will, therefore, be tabling several proposals on Report Stage.
The Minister of State knows we broadly support the provisions in the Bill, including the introduction of local enterprise offices, although our Report Stage amendments will address some specific issues. However, we also have a more general concern. We have been contacted by trade union representatives who are concerned that grant aid might be made available to companies that are not in compliance with labour law and, in some cases, are in serious breach of that law. Our amendments will seek to tie support for grant aid with compliance with labour law.
To clarify the issue raised by Senator Brian Ó Domhnaill, the primary allocation under this scheme will equal the moneys allocated under existing grants. Exchequer funding currently secured by the Minister will continue to be allocated under a separate subheading on a collective basis to Enterprise Ireland, and responsibility for the distribution of these funds to and between the county and city councils will be transferred to Enterprise Ireland in accordance with legislation and appropriate schemes. Budgets will be allocated on an annual basis but, in the interim, will come under the existing administration of pay and non-pay headings. It has been agreed that the budget allocation methodology will initially remain unchanged as regards measure one and that local authorities may provide additional funds for activities, projects and supports. In short, there will be no requirement for local authorities to match the funds coming from Enterprise Ireland. I have spoken to several local authorities and their main concerns include the stacked-up costs of doing business, vacant units, ailing town centres and so on. There is already a whole range of expertise in those areas within the local authorities, which the manager might decide to deploy. None of this will dilute any of the funding. The moneys allocated by the Department for enterprise through the enterprise boards will remain unchanged and there will be no matching stipulation. However, if local authorities wish to focus on supporting enterprise, rejuvenating a town centre or giving a derogation, for instance, they will have a huge level of autonomy in regard to their budget. Such decisions will be at their discretion. We are putting in place a comprehensive service level agreement which will clearly establish the capabilities and functions of business people, elected members and the fantastic staff who work in local government. I assure the Senator that when he reads the service level agreement, which I will circulate presently, he will see it all there in black and white. The funding allocations and how it will all be managed are set out clearly. The new arrangement with Enterprise Ireland will ensure there is access to expertise. Where before we had 31 autonomous enterprise boards, this new policy direction will ensure there is a more cohesive provision of support services to high-potential start-up companies and companies seeking to expand. There is also scope for the institutes of technology to get involved, if they so wish. It is a positive development.
I will withdraw the amendment on the basis that we may choose to resubmit it on Report Stage. I am willing to accede to the Minister of State at this stage and take the opportunity to examine the service level agreement. However, I have major concerns in the wake of the publication of an internal Enterprise Ireland report, which I intend to go through in detail with the Minister.