Bernard Allen (Cork North Central, Fine Gael)
Link to this: Individually | In context

Question 78: To ask the Minister for Enterprise, Trade and Employment the reason for the 8% cut in budget 2006 for Enterprise Ireland's grants to industry as contained in the 2006 Estimates. [37858/05]

Micheál Martin (Cork South Central, Fianna Fail)
Link to this: Individually | In context

The reduced Exchequer allocation to Enterprise Ireland under grants to industry does not represent a reduction in the agency's activities. The reduction was sought by my Department in light of various factors, in particular the agency's funding needs and its ability to generate its own income.

It should be noted that Enterprise Ireland expects to generate significant own resources in 2006 which will more than compensate for the reduction in the grants to industry Exchequer Estimates. Enterprise Ireland is expected to increase its expenditure on grants to industry in 2006. The increase in expenditure reflects the recent new activities undertaken by Enterprise Ireland including the productivity improvement fund and the pilot project to source and develop increased levels of sales and marketing talent in Ireland, which the agency initiated in conjunction with FÁS. Enterprise Ireland will continue to formulate new proposals for addressing the needs of its clients.

In regard to Enterprise Ireland's funding needs, the provision in the 2006 Estimates, while it is less than the 2005 provision, exceeds the likely 2005 outturn for Exchequer supported expenditure which is currently estimated at €45.8 million. The agency will not utilise its full 2005 budget due to a reduced demand by clients for equity investment as well as delays arising from infrastructural projects and investment into seed and venture capital funding. The delays arising from infrastructural projects and investment into seed and venture capital funding are temporary and funding has therefore been provided for these activities in the 2006 Estimate. The reduction in demand for equity may reflect a change of emphasis by client companies towards equity investment in support of research and development, which Enterprise Ireland reports as having a strong demand.

Enterprise Ireland also receives substantial funding from subhead F which provides funding for research, technology and innovation activities. The 2006 Estimates provides €100.9 million towards subhead F an increase of €9 million on the 2005 Exchequer expenditure Estimate.