Seanad debates

Wednesday, 4 June 2014

Adjournment Matters

Regional Development

8:35 pm

Photo of Hildegarde NaughtonHildegarde Naughton (Fine Gael)
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I welcome the Minister and thank him for addressing this important issue.

The most recent figures available from the Department of Jobs, Enterprise and Innovation indicate that IDA Ireland has not achieved its 50% investment target in areas outside Dublin and Cork. In fact, investments outside these two areas in the period 2010 to 2013 accounted for only 35% of all foreign direct investment announcements. The IDA Ireland strategy for the period 2010 to 2014, Horizon 2020, set a regional economic development target of 50% of investments in regions outside Dublin and Cork. In fact, this figure was vastly undershot. Only 35% of all investments in the three year period to 2013 were in areas outside Dublin and Cork. The actual monetary amounts in grant aid reveal the disparity in starker detail. In the three years to the end of 2012 IDA Ireland made grant payments to its client companies in Dublin totalling €111,620,999, with companies in Cork receiving €49,520,980, while companies in Galway lagged well behind, receiving €35,808,683. Companies in Limerick received even less.

I understand that under an Action Plan for Jobs 2014 IDA Ireland and Enterprise Ireland are working with the Department of Jobs, Enterprise and Innovation to develop a framework for a regional enterprise strategy to better integrate the work of the various state agencies involved, in conjunction with an analysis by Forfás of the foreign direct investment strategy. What is the position on the development of these projects? Rather than simply taking pot shots, we should be honest: by and large, technology workers wish to locate in cosmopolitan areas. Our manufacturing base is changing and it is increasingly difficult to attract jobs in what was the traditional industrial production sector, into which China, India and the East are fast expanding. The days when the local Deputy was able to organise a factory to open in the local town or village are long gone and anyone who suggests otherwise is merely playing politics. The new areas of excellence are due to our young workforce being able to compete in knowledge terms in the areas of research, finance, technology and related services.

While I acknowledge the attractions of Dublin and Cork as locations for investment, other areas have a considerable amount to offer. Dublin and Cork are not the only areas in Ireland which offer cosmopolitan living.

The recent sod turning for the remaining motorway between Galway and Gort will bring a major international airport within an hour's drive of Galway and also make the commute between Galway and Limerick very easy. We also have Knock international airport on the doorstep, as well as a first class motorway to Dublin from both Galway and Limerick. Galway is a hub for the medical devices industry, with Ireland fast becoming increasingly recognised as a major player in that sector. Galway is also well known for its cultural attractions and many festivals.

While I welcome IDA Ireland resuming building in regional locations, particularly the recent announcements of the construction of advanced technology buildings in the midlands and the south east, are there plans for similar developments along the western seaboard? There is an enormous imbalance in the current system and a need for much greater concentration on regional development in the foreign direct investment strategy.

8:45 pm

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I thank the Senator for raising this important issue. She has underlined to a degree some of the difficulties facing IDA Ireland in securing a regional spread. Much of the mobile investment in recent years has been high tech, high skill, research-related investment which has, to a large degree, been focused on cities that offer that environment. The figures show that Galway is not doing particularly badly. It has had major employment expansion under IDA Ireland in each of the last three years; therefore, it is a very competitive urban environment in that context.

The Senator raised the wider issue of the ambition IDA Ireland had set in its original strategy of 50% of new investments in regions outside Dublin and Cork. It has been unable to achieve that target. The result for 2013, at 30%, was ahead of the outcome of 25% in 2012. Clearly, we would like to do better in this regard. To that end, we are considering a broad-based regional enterprise strategy. In looking at regional enterprise strategies we must also have a realistic view of the role of foreign investment. Foreign investment overall in Ireland represents approximately 8% of employment; 92% of employment is represented by other areas. Too often the debate on the need to develop successful regions tends to revolve around securing IDA Ireland companies. It is certainly my ambition to win IDA Ireland companies, but it is also my ambition to develop a strong indigenous engine of growth. In that context, the west has been particularly successful in identifying medical devices as a sector. Not only has it attracted some of the big international players with which we are familiar, it has also developed a very strong indigenous sub-sector. In many ways, it is one of the best examples of a thruster, where there are both international and domestic players. We must look at sectors in which regions have a competitive advantage. That means examining traditional areas of strength such as food production and tourism, as well as new areas of strength such as medical devices and ICT and seeking to identify where regions have a competitive advantage and building on it.

As the Senator correctly pointed out, we have reviewed the foreign directive investment strategy. Forfás has done work in that area which is close to completion. I hope it will help us to identify mobile investments that we could win and that would fit the competitive advantage of different regions. To promote that thinking we have got IDA Ireland to focus on emerging companies that are making their first move outside their home base in the United States, typically, or Europe. We have sought to identify these as companies that would probably be willing to look at regional locations more favourably than others. We have also developed ConnectIreland as a way of using the regional contacts people have as part of the instruments for attracting foreign investment.

We fought off efforts at EU level to narrow the amount of regional aid we can give. The European Union's initial proposal was that just 25% of the country be eligible for regional aid. We succeeded in reversing that figure to 51%. This year, therefore, we have been able to include County Kerry, for example, and three individual locations in Arklow, Kells and Athy, which allows us to give regional aid in these areas. That is an important tool for both Enterprise Ireland and IDA Ireland in seeking to develop a better regional spread. We also fought off efforts at EU level to withdraw all aid to larger companies in the regions, which was the European Union's initial proposal. We have protected that tool.

As public representatives, we must look more at entrepreneurship and its development within areas and regions. The local enterprise offices have been put in place and are a very good model. They are rooted in a service level agreement with Enterprise Ireland which is the centre of excellence in developing new policy and have a local presence with the local authorities in order that they bring the might of the local authorities to bear on creating an environment that supports start-ups. While I acknowledge that we would like to do better in IDA Ireland area and that we will continue to seek to develop ways of doing this, we also seek a broader discussion of the challenges in developing a strong enterprise sector in the regions based on their competitive advantages. We must broaden that debate from just seeking to win a mobile investment. A far deeper debate is required. I hope that by establishing a regional enterprise framework we will be able to meet stakeholders in each region and have that broader debate which, of course, is also essential in winning additional foreign investment. We must put our best foot forward in each region.

Photo of Hildegarde NaughtonHildegarde Naughton (Fine Gael)
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I thank the Minister. I accept and agree with the emphasis on the indigenous sector and entrepreneurship. That is key and I welcome the efforts the Minister has made in the past three years in this area. He has worked very hard in that regard. Perhaps he might return to the Seanad in the future to update us on the development of the regional enterprise framework and regional development in respect of foreign direct investment.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I would be happy to do so. We are focusing on it and I hope we will be in a position to update the Seanad later in the year.