Seanad Éireann - Volume 112 - 01 May, 1986

Industrial Development Bill, 1985: Committee Stage.

Section 1 agreed to.


Question proposed: “That section 2 stand part of the Bill.”

Mr. Fitzsimons: With regard to section 2 and the definition for “industrial estate” where it is stated that it “means an area of land used mainly for industrial purposes and purposes ancillary and incidental thereto and having on it at least two factory buildings”. In my own native town of Kells we have an industrial estate which has one industrial building. I would like to ask the Minister in that situation would the industry suffer under the terms of section 2?

Minister of State at the Department of Industry and Commerce (Mr. E. Collins): No, it would not.

Mr. Fitzsimons: It is stated here that the definition of an industrial estate is [553] one where there must be at least two factory buildings. I take the situation of industrial estates which have only one factory building at present.

Mr. E. Collins: Can you specify one for me?

Mr. Fitzsimons: In Kells we have an industrial estate of 25 acres which was developed by the IDA. Hopefully, we will get more factories in the near future. At present there is only one factory in the estate.

Mr. E. Collins: You can take it that it would be the intention of the IDA to build further factories in accordance with demand.

Question put and agreed to.

Section 3 agreed to.


Question proposed: “That section 4 stand part of the Bill.”

Mr. Fitzsimons: Under subsection (3), the Minister “may, with the consent of the Minister for Finance, by order terminate the designation of any area, or part thereof, as a designated area.” The designated areas are entitled to bigger grants. Could it happen under this subsection that an area which would initially qualify for the higher rate of grant could, because of this subsection and because of an order made by a Minister, get a reduced grant?

Mr. E. Collins: Yes. As I said in my opening remarks, we had the Department examine the situation with a view to having a more flexible attitude to the question of designation and to that end we requested an independent report. We asked the Economic and Social Research Institute to prepare an independent and objective review of the use of designation as a flexible policy instrument. We have received their report and it is presently under consideration. The NESC report was the basis on which the [554] Economic and Social Research Council submitted a report to my Department. That is presently under consideration in my Department. As you can see from the thrust of industrial policy, it is important that we use weapons in a flexible manner. Great care would be taken in regard to the designation or redesignation of any area, whether it is a designation to establish the higher rate of grant or a redesignation which would mean that the area would be entitled to a lower level of grant.

Mr. Lynch: That is precisely the question I was going to ask. How flexible can any Minister be under this section? This is the one contentious area I see in this Bill. I feel it is something that could be used as a political sop to people living in an area. I live in north Meath, which is bordering the disadvantaged area of Cavan. Over the years we have suffered due to the fact that high grant assistance was available to County Cavan. Road developments which have taken place have been a tremendous boost to this area, but we find we cannot get the buckets of tar to fill the potholes in north Meath. However, that is not what this Bill is about.

Many requests have been made at EC level by Governments down the years to have north Meath declared a disadvantaged area, but the requests have failed. The EC examined detailed submissions made by the IFA, local authorities and the Government. They gave small grants towards drainage and so on, but the land in north Meath is similar to the land in Cavan, especially the Oldcastle area, Crossakeel and so on. Having failed to get north Meath as a disadvantaged area, would the Government feel like designating part of north Meath under the terms of this Bill?

Mr. E. Collins: The position at the moment is that this Bill proposes to continue all the Minister's existing functions in relation to designated areas and to continue the existing grant differential. It goes further in that it allows the Minister, [555] with the consent of the Minister for Finance, by order to terminate designation of an area or part of an area. As I said, we have a report from the NESC, who make an objective assessment of how best to assess which parts of our country are the least well off economically, or with regard to the labour market. The principles of that report were accepted by the Minister and he asked the National Economic and Social Research Institute to appraise that report. That report of the ESRI is presently being considerd in my Department. Obviously, no decision regarding changes in the designations of the area will be taken before this examination is completed and the matter is considered by Government. Any Government would be very slow to move in this area. I want to give an assurance of that to the House. It will be some time before this matter is fully processed. The Senator should appreciate the reasons why, and the reasons are that we want to use the designation method perhaps more selectively, to use it as a weapon in our armoury where and when it is necessary to ensure that a geographical area of the country which has suffered a disastrous consequence over a period in relation to industrial employment can be assisted. It is a benign reason. There are no serpents lurking underneath to go around de-designating places. It is strengthening the Minister's hand and making the designation weapon more flexible if the need arises.

Mr. Lynch: The fact that County Cavan was declared a disadvantaged area under EC terms left north Meath in a more disadvantaged situation. Many industries that would have been provided in the north Meath area — from Kells to Oldcastle — were not provided there because there was higher grant assistance being made available in Cavan. Cavan has had a multiplicity of factories built over the years. We became more disadvantaged in north Meath because Cavan was declared a disadvantaged area. I cannot understand that designation is arrived at on borderline. Government is [556] about people; it is not about borders. I fail to understand why a certain area can be declared disadvantaged and the field next door not termed disadvantaged. I could understand it on a phased basis up to a point. The terrain in County Cavan is akin to that in Country Leitrim.

Mr. Fitzsimons: I feel like Senator Lynch that the terms “disadvantaged” and “designated” areas could be synonymous. Small sections of north Meath that were added in a restrictive sense to the disadvantaged areas should have been included and specifically spelled out in this legislation. I accept the Minister's approach to this. Flexibility is required and the Government would be very slow to move. Could I ask him if the termination of the designated area coincides with the end of the financial year, because otherwise problems might arise with regard to grants which could be overcome if the termination of the designation of an area coincided with the end of the financial year.

Mr. E. Collins: To go back a bit and look at the designation policy, the Undeveloped Areas Act, 1952, first introduced the concept of undeveloped areas and provided incentives to industrial promoters to establish industries in those areas in order to compensate for infrastructural deficiencies. They were the old congested areas. Times have changed and there have been marginal changes made. For instance, the Ferenka factory in Limerick was designated for a period. In Cork we designated part of Ringaskiddy for small industries for a period. Designation for industrial purposes is different from that for agricultural purposes which is used in the EC and not necessarily related.

Mr. Fitzsimons: It is the people who are disadvantaged in those areas.

Mr. E. Collins: I accept the concept of designation because it allows a higher grant to be given. I have said on a number of occasions in the Dáil in Question Time that designation per se is not the be-all [557] and end-all of attracting industry. I have asked on many occasions why an industrialist has decided to locate in a certain area. I have got the following reasons on a number of occasions: because he liked the golf club; because he liked the view; because there was proximity to facilities for his children at first, second or third level education; because there was a good pool of labour resources; because he liked the seaside. I have not got the answer nor has the IDA to why a promoter locates in one specific place. There are a myriad of reasons. The higher level of grants is not necessarily the golden cup that it is held out to be. There are many other factors in a very complex matrix of factors that makes up a promoter's mind. The Government have tried to get an objective assessment of how to designate an area. We are currently looking at a report from the ESRI on this. We are trying to make Government policy more flexible. We are allowing a weapon in the hands of the Government of the day to have this flexibility that will allow it to be used in areas where an order must be put before the Houses of the Oireachtas, to allow it to designate an area or de-designate an area if it has gone particularly well. I do not think that that is a retrograde step. It adds to the weapon of Government in their industrial policy.

Mr. Lynch: May I ask the Minister, when the ESRI report is completed, if he would have another look at the matters raised here? I know that an official appointed to a health board will go to an area where there are the facilities for golf, facilities for their children and access to larger towns. The industrialists think in the same vein. The fact that one has only to move a mile down the road to get the higher grant will not remove one from these facilities. The fact is that that move has been made to a different county. The employment potential for people in Meath is not great. We have suffered closure after closure of Meath factories over the last few years. Most of the industries in my area are concerned with sand, gravel and bedding which are family businesses that were started years ago, many [558] of them without any grant assistance. They are there through hard work, sweat, endeavour and courage, qualities that are very much needed today to survive.

Those who started up without grant assistance and built up their own businesses through hard work are the great survivors. Money should not be the incentive. The incentives should be for entrepreneurship, dedication and hard work. At the same time while the grant assistance is there — we feel very sore about this point — a mile down the road you can get a 60 per cent grant. People have moved away from our area due to this fact. The point I am making is that if there was phased grant system an in-between grant, 10 per cent lower than the disadvantaged area grant, available in the north Meath area, then we would feel that we had got some recognition. The fact that somebody made the decision to declare Cavan, Monaghan, Leitrim and all these counties disadvantaged areas just by looking at a border line is unfair and unjust. It is there; but if we could do anything to remove it or remedy the situation, or if the Minister could help us, we would appreciate it very much

An Cathaoirleach: You are on the wrong side there.

Mr. E. Collins: The problem is that the same can be said for all the areas adjacent to designated areas. The only alternative I have is to abolish the designated areas altogether and give one grant over the whole country.

Mr. Lynch: Good idea.

Mr. E. Collins: It would cause quite an amount of protest. It would cause quite an outcry from people living in the west. We are trying to recognise what is essentially an infrastructure difficulty because of geographical location. The philosophy of designation is a valid one because it takes into account the geographical distance from the main markets in Europe and the main transport centres and shipping centres, in particular on the east [559] coast. It takes account of the infrastructural situation generally. For that reason the designation policy has been used. We are trying to make it a bit more flexible. We are doing no more, no less.

I sympathise with Senator Lynch. I have heard the same argument in Cork and in particular in Offaly where part of the county is designated and other parts are not. There is a whole litany of this all along the areas bordering on the designated areas. We must also accept it as a fact of life in modern industry that the question of commuting is a real one. People here in Dublin commute up to 20 miles every day to go to work. I would not do it. I do not think I would be able for sitting in a car for one hour. Frankly, I am not used to it. I drive up from Waterford — it is two and a half hours — once or twice or sometimes three times a week. But, as a general rule, we have to accept commuting as a way of life. To have to go one mile to get to work is a fair quality of life, generally speaking. I have heard the same criticisms right along the borders of the designated areas. What we are doing in this section is to make the designation weapon slightly more flexible.

Mr. Lynch: I made a point yesterday that as well as the advantages of the extra grant assistance, services are provided from the Social Fund of the EC. Right across from me, where I mentioned about the bad roads, the potholes, we drive on to a place called Maghera. It was not even a village some years ago. I am sure a Chathaoirligh, you often drive through it. Now it has a lighting system that you would not get anywhere, even in Dublin. It has a road through it that makes our main roads look like boreens. The services have been provided. The point I am making is that certainly — I know these people: I know them very well and they are hard-working people — they can be happy with their designation, but we are very unhappy with our discrimination.

Mr. O'Leary: I think, of course that [560] we must have some sympathy with the Minister with regard to the question of the dividing line between a designated. area and an area which is not designated. Obviously, no matter where you draw the line you are going to have difficulty. That is the problem really. It is one problem that Solomon himself could not solve. As long as you have areas which are designated and areas which are not designated, you are going to have that problem.

I would like to bring to the Minister's attention an additional problem that has arisen with regard to the increasing practice of designating very small areas, and the problems that has given rise to. I want to say in that regard that I have some small financial interest in a piece of land in Cork which was affected by one of these decisions. I want my comments to be read in that context. The Minister will be aware—and it is included in the Third Schedule, which we will be dealing with later—that designation has taken place, as he has mentioned himself, in places like the Ferenka situation, in Churchville, Hollyhill and Togher and Ringaskiddy industrial estates in Cork. The result of that is that land in the remainder of the borough area is unsaleable for industrial purposes. That is what it is.

By designating land most of which is owned by the Industrial Development Authority, you have made the land in the remainder of the area unsaleable. That is one of the effects of designating a small area, a small little island within an area which is not designated. That is a separate and distinct problem from the problem raised by Senator Lynch. That is most unfair, particularly as it appears that the designation which takes place is a designation by and large of Industrial Development Authority land. What you are effectively saying is that if you have a difficulty with regard to the Industrial Development Authority having acquired a substantial amount of land, the way you get over the problem is that you designate it and force all the development in that area into that confined area.

I know that there is more than just Industrial Development Authority land [561] involved, but by and large what I am saying is overwhelmingly true. What is certainly true and cannot be contradicted is the fact that by doing that, and I am not objecting to any area in Cork being made a designated area—but maybe I am—you should not be able to pick out four fields and say: “That is a designated area”. The rest of the surrounding area is not designated at all. That is effectively what is being done. That is quite separate and distinct from whether you should have a designated area in Cork area or not. That is a separate thing. What you are effectively doing is designating this field and that field, and as a result of that you will increase the value of that property and reduce the value of the property around it. That was what was done with Ferenka, too. You did not create any new industrial employment: you just developed industrial employment that was already going to come to an area into one small little section and got somebody out of financial difficulty. That is not industrial policy on a national basis. That is merely tinkering with the local market.

I recognise the difficulty the Minister has with regard to problems created by the borders between the designated and undesignated area. I accept that. There have been problems like that in County Cork too, but I am not referring to those problems. I am saying that to pick a few fields in an urban area or an area adjacent to an urban area and say that they are going to be designated and everything else is not is to force industry by economic rationality, into developing in that area and to make it impossible for anyone else who might want to develop industry in the remainder of the area to sell their land for industrial purposes. That has been a major problem in the Cork area. I am very marginally affected by it. I can assure you it is not relevant one way or another, but I feel I had to put it on the record of the House that I was in some way affected.

I feel that, if designation was necessary in the Cork area, the Cork area per se should have been designated and not just individual estates in individual sections, [562] which are distorting the local property market and distorting the development of the area.

Mr. E. Collins: I think I have dealt with the question of designation in general. In relation to what Senator O'Leary has said, the Government of the time moved there because there was major structural damage done to industry and we were trying to re-establish it. In relation to Cork we all accept that there was major structural upheaval in the industrial fabric of Cork — one mentioned Dunlops and Fords. That went hand-in-hand with other positive industrial locations. What was done was that Ringaskiddy was designated for a three-year period for large industry. The other industrial estates, apart from the Togher estate which is owned by Cork County council, are owned by the IDA.

I would like to refer briefly to the NESC report entitled Designation of Areas: Industrial Policy, page 50, chapter 7, paragraph 7.5, it states:

Ideally designation should be focused on as small an area as possible.

That is their attitude, that efforts should be concentrated in building up a small area intensively as an industrial base. This is what is being done in IDA-owned estates and in the Togher estate and in Ringaskiddy. We are anxious to get Ringaskiddy up and running as a major industrial focal point in Cork. I would defend what we have done in Cork. It was done on the foot of a task force report. The task force was composed of local authority people who recommended this. We were trying to take initiatives in Cork to assist in industrial development. I do not believe that it will make other land unsaleable.

Mr. O'Leary: The Minister can believe it. I know it is a fact.

Mr. E. Collins: What I am saying is Government policy. Government policy is to make Ringaskiddy attractive to [563] major industry and to make other industrial estates in Cork attractive for immediate development. We are putting a three years time limit on its designation. It is a spearhead effort to attract industry into Cork to make up for what has been accepted as serious industrial dislocation in Cork. It is not going to detract from the general overall value of land in the long term. We are using State resources to bring industry to Cork. I make no apology for that.

Mr. O'Leary: That is typical of the Minister's bluster. Why does the Minister not answer my question? The question I asked was: how can he defend a situation where land primarily owned by the Industrial Development Authority is designated and land surrounded is not designated? I put it to the Minister that when the report from which he quotes says that as small an area as possible should be designated, it is not talking about a few fields; it is talking about a whole county or part of a county, not just an island in the middle of a big area.

Mr. E. Collins: I object to the comment that I am blustering. I am trying to show the Senator that the efforts the Government are making in Cork are made in consideration of a task force report in relation to a crisis situation which was perceived to exist in Cork. We took positive action on a short term basis to attract industry to the Ringaskiddy estate, to the IDA estates and to the county council estate. We did so after considering a task force report. I am not blustering here. I am saying what positive action the Government have taken in relation to the Cork city area and surrounding area in a short, sharp period in which we hope to attract industry at a special designation rate. I make no apology for that. I am surprised that Senator O'Leary is raising this matter in this manner.

Mr. Lynch: On subsection (3), could the Minister override the local authority under this section? I am talking about where a county development plan has [564] been approved by a local authority and a special area is zoned for residential development.

Mr. E. Collins: This is only designation for the purposes of the level of grant aid. It does not designate it for the purpose of industry or amenity or housing. It is merely putting an umbrella over an area and saying that that area will get a higher grant level.

Mr. Lynch: You might put an umbrella over north Meath also.

Mr. E. Collins: I am looking for one for Waterford.

Mr. Fitzsimons: I accept the case made by the Minister about the necessity for the designated areas. More people will probably be disappointed rather than pleased. I would ask those considerations be on the caring side. In relation to what Senator Lynch said about specific areas, by and large Members of all parties would agree with regard to those areas that they are disadvantaged. There is one final point I would like to make with regard to the Schedule attached to the Bill and related to section 4. I welcome the designation of the Gaeltacht areas in County Meath. Something extra should be done for all Gaeltacht areas.

Mr. E. Collins: The fíor Ghaeltacht.

Mr. Fitzsimons: Yes, all the Gaeltacht areas. When we talk about the fíor Ghaeltacht perhaps it might have been a mistake to disperse those Gaelic speakers. But, having done that, in this situation where Irish is the spoken language in Baile Gib and Ráth Cairn — these are the areas I am concerned with — apart from the return we get in employment and industry, we have the cultural return. If we are to be sincere at a time when the Oireachtas Joint Committee is working on that area, a good case could be made for a 100 per cent grant in Gaeltacht areas.

Mr. E. Collins: To my knowledge, all [565] Gaeltacht areas are entitled to the higher grant aid. If I am to be corrected on that, I shall inform the Senator.

Question put and agreed to.


Question proposed: “That section 5 stand part of the Bill.”

Mr. Fitzsimons: Section 5 deals with the remission of rates. A local authority may remit for nine years two-thirds of the rates if they think fit. This seems to give discretion to a local authority. With financial constraints a problem could arise here, a reluctance to “think fit”. There should be a constraint on the local authority to remit the rates. Also subsection (3) says:

If, in any local financial year, the Authority certifies that the undertaking has failed to observe the terms upon which the premises were provided, the remission shall not have effect in respect of the local financial year.

That gives a lot of power to the authority. Subsection (4) states:

A remission shall not be granted more than once in respect of the same premises.

For example, what would happen in a situation where a company became nonviable and closed down and a new company set up, would the Minister not think that the new company shall be entitled to a remission of rates as well?

Mr. E. Collins: This is, of course, primarily a matter of revenue loss to the local authority. It is they who are going to lose revenue out of it. The purpose of section 5 is to ensure that the remission takes effect from the year in which the remission is allowed. Under existing legislation there is the possibility that the remission would only become effective the year after, so that in fact, payment is made the first year. Section 5 ensures that the remission takes place in the year in [566] which it is made. It is a technical change. It is a reserved function. Subsection (6) states that it is a reserved function for the exclusive decision by the elected members of local authorities. It is members of local authorities who make the decisions. I cannot envisage a situation where members of a local authority would not be disposed to granting a remission of rates to industrial undertakings. It is a local authority matter and it is proper that a decision be taken by them, because it is the local authority who would lose revenue by way of remission of rates. That is the reason why it now stands as it is.

Mr. Lynch: It is difficult to know who is making the decisions, I think the manager has power to make all the decisions in the local authority.

Mr. E. Collins: I had the pleasure of serving on a local authority for 20 years. It depends on how strong the members are.

Mr. Fitzsimons: Seeing that so much power has been eroded with regard to elected members I must welcome the power in this Act. This is a reserved function and I do accept the Minister's point in that regard.

Subsection (7) applies as follows to premises which

(a) are certified by the Authority to have been provided for an industrial undertaking either by the Authority or by means of a grant made by the Authority, and

(b) are situate in an area which at the time of provision of premises was a designated area under a repealed enactment or is a designated area under this Act.

The two conditions would apply. What would the situation be, say, where an undertaking did not qualify for a grant but was a viable undertaking? Would it not be entitled to that remission?

[567] Mr. E. Collins: No. There are two sections. This subsection provides that in order to qualify for rates remission the Industrial Development Authority must certify that the premises concerned (a) were provided by the IDA or by means of IDA grants. The premises were either provided by the IDA or the undertaking was grant-aided and are situated in a designated area under existing legislation or in a designated area under this Act.

The clause “are situate in an area which at the time the provision of the premises was a designated area under a repealed enactment” is necessary to make certain legally that premises in receipt of rates remission under temporary designation orders under repealed enactments will continue to enjoy such benefits. The two central criteria are (a) premises must be provided by the authority of (b) the undertaking must be grant-aided.

Mr. Ftizsimons: The question I have for the Minister is whether premises which would not qualify under those two headings, for example, not provided by the Authority or did not qualify for a grant apart from being within the designated area, would such an undertaking not qualify or be entitled to grant aid? Would the Minister not think that incentive should be there for that kind of undertaking.

Mr. E. Collins: I am restricted in the area I can deal with. I am talking primarily about manufacturing industries and service industries which are grant-aided by the IDA. There are many other commercial undertakings. It would be a matter for the local authority in those cases to make a decision. This Bill primarily deals with IDA-aided undertakings whether they are manufacturing or services industries. I am not going outside that scope. I am not saying that local authorities cannot but I cannot at this point within this Bill.

Question put and agreed to.


[568] Question proposed: “That section 6 stand part of the Bill.”

Mr. Ftizsimons: The section states:

The Minister shall, in the year 1986 and every third year thereafter, prepare a review of national industrial performance in respect of the previous three years and shall cause the review and the conclusions arising from such review, to be laid before each House of the Oireachtas.

Each company will prepare an annual report. It seems logical to submit the annual report or review every year. Every third year is an arbitrary choice. I am not sure what made the Minister decide three years as against four or five years. In a sense, this review hopefully will be once in the lifetime of any Government. It would be better if this review were submitted on a yearly basis. If there were any problems to be sorted out, it would be much easier to deal with them if Members of the Oireachtas had an opportunity of going through a review every year.

Mr. E. Collins: I would beg to differ with the Senator. The idea of a three-year review is to allow trends that are evolving to be properly evaluated. It would not merely be a statistical profile of developments in industry over three years. It would also evaluate industrial performance and set out conclusions on which action would be taken. It is a policy triennial report. There are many annual reports which Members can debate in the House. There is the Estimate for Industry and Commerce, the annual reports of the IDA and CTT which are laid before the Houses and give a mechanism for an annual discussion on trends in industry in general. There is the budget debate. What we are trying to do is to put in a major three-year look at industrial development from which we can draw some conclusions of a policy nature which might indicate a different direction in policy. It is that kind of report we are looking for. We have plenty of annual reports.

Question put and agreed to.

[569] SECTION 7.

Question proposed: “That section 7 stand part of the Bill.”

Mr. Fitzsimons: With regard to section 7 (2) an order made under the section “shall as soon as may be after it is made be laid before each House of the Oireachtas”. Later on there is another reference to an Order under section 13, to be laid before each House of the Oireachtas within 21 days after it has been so given. This applies generally. “As soon as may be” is a rather vague term——

Sitting suspended at 11.30 a.m. and resumed at 11.40 a.m.

Mr. Fitzsimons: I was making the point that the term in section 7, regarding bringing an order before each House of the Oireachtas, “as soon as may be after it is made” is a very vague term. Section 13 states that it be laid before the Houses of the Oireachtas within 21 days. It would be preferable if some reasonable time scale were given. Twenty one days is reasonable. I would like to ask the Minister why a definite period is not included here and why it is left so loose ended as that.

Mr. E. Collins: That is a normal parliamentary phrase used in regard to such a decision. The Order has to be made, signed by the Minister and prepared for the Houses. The Act as phrased would not allow any undue delay. It is simply a parliamentary phrase.

Question put and agreed to.

Section 8 to 10, inclusive, agreed to.


Question proposed: “That section 11 stand part of the Bill.”

Mr. Lynch: This section sets out the functions of the Industrial Development [570] Authority. One of the greatest things that ever happened in this country was the establishment of the IDA. I want to put on record my appreciation of the great work they have done, are doing and will continue to do.

I have a problem in seeing eye to eye with some of the decisions taken by the IDA. For example, a business or industry might be termed over-developed and the IDA may feel that there are enough people producing a certain type of product. An entrepreneur who has the business capacity to market a particular product will not in some cases be allowed grant assistance from the IDA because the product will not in some cases be allowed grant assistance from the IDA because the product will be termed over-developed or the industry might seem to be overloaded. By not allowing this entrepreneur with the potential to develop to start his business we are in fact protecting a section of the business sector who are not performing as well as they should be, who are probably not producing the type of goods to meet market requirements, and have not got the market expertise.

When an entrepreneur decides to go into business, produce a top quality product and market it cheaper than one which is already being produced and has the business ability to expand and export that product, he should not be hindered. I would like the Minister to ask the IDA to re-examine the criteria on which they base their decisions either to award or not award a grant. I would also like to know what real function the IDA have in trying to save a firm which might be going into voluntary liquidation. Over the last few years we have seen a fourfold increase in the number of annual recorded liquidations and receiverships. I hoped this Bill would produce the right business climate to reverse that trend.

Many firms have failed in situations where the banks and other establishments have decided that the proceeds from receivership would not even cover the receiver's expenses. I am referring to firms which have been grant aided by the IDA. What authority have the IDA in [571] matters like this? Can they come in with a rescue package?

Mr. E. Collins: In relation to Senator Lynch's contribution there are a number of issues which I would like to comment on. I will take the last one first. In rescue cases there has been a clear delineation between the functions of the IDA and those of Fóir Teoranta. The Fóir Teoranta functions are primarily those of rescue and restructuring of companies who are in difficulties. Therefore, it is outside the scope of this Bill and I cannot comment on it.

In relation to the possibility of bringing two companies together or introducing companies the IDA take an active role. In relation to certain sectors of industry, which in the opinion of the IDA are in over-capacity, they have to take a decision to grant aid a company within an industry in over-capacity. This would not be logical. I know of a company in my constituency which recently met that criterion. The IDA do not stop people from going into industry. They grant aid them generally but they do not grant-aid industries where there is over-capacity.

The general bakery industry is not being grant-aided currently. The general carpentry-joinery business is not being grant aided and general printing is not being grant-aided to my knowledge because in the opinion of the IDA there is over-capacity in those industries. To grant aid a company in that sector is simply diverting business from one company to another because the industry is in over-capacity. Similarly in the meat trade the primary slaughtering in the beef sector is not being grant-aided because the IDA consider the beef industry to be in over-capacity. However, grants for value-added projects are being grant-aided because the IDA and the White Paper find that this is the area we should be moving into.

In relation to the section in general, it is a modernising and an innovative section. The primacy for industrial policy rests with the Minister and that is quite clearly spelt out in subsection 1 (a). However, it [572] can be seen from the section in general that the greatest flexibility is being given to the IDA in matters of industrial development. That is as it should be and the relationship between the Minister and the IDA is quite clearly set out. This is a modernising section which brings up to date the role and responsibility of the IDA and the policy powers of the Minister.

Mr. O'Leary: Would the Minister explain subsection (2) to us. It deals with paragraphs (b) and (d) of subsection (1) which states that the giving of grants and the developing of industrial estates shall not apply to the Shannon Customs Free Airport. I understand that. That does not require any further explanation. I am anxious to know if there is a statutory definition somewhere of the Shannon Customs Free Airport. Am I right in thinking that that is a very much smaller area than the area covered by SFADCo, that the SFADCo area is much bigger than the Shannon Customs Free Airport? Then in respect of the remainder of the SFADCo area are the IDA and SFADCo both capable of giving grants?

Mr. E. Collins: Yes. The Shannon Customs Free Airport is designated by order quite specifically and, of course, SFADCo have their own legislation and the designated areas are designated also under the Act.

Mr. O'Leary: We will talk about the actual definition of the airport later. Just one thing at a time. Am I right in saying that, for example, certain areas of County Clare that are not within the Shannon Customs Free Airport area are within the SFADCo area and that these areas are capable of being awarded grants by both bodies?

Mr. E. Collins: Yes. The distinction is that SFADCo have grant giving powers for small industries at the higher level.

Mr. O'Leary: The Minister might like to consider this. I believe the effect of this is that within the customs free area [573] of the airport, the small area, only SFADCo can give grants as far as I can see.

Mr. E. Collins: That is correct.

Mr. O'Leary: In the wider area covered by SFADCo it appears to me that both can give grants. SFADCo can give grants and these people can give grants, too. Is that correct?

Mr. E. Collins: Shannon operates under delegated authority from the IDA in relation to large industries. That is the important distinction. SFADCo have full authority in relation to small industries.

Mr. O'Leary: I understand what the Minister is saying, that with regard to larger industries the IDA appoint SFADCo as their agent in certain areas, if you like. With regard to small industries within the SFADCo area — I am not talking about within the customs free area — around County Clare in general is it true that both SFADCo and the IDA have the capacity to give a grant to one company under the legislation?

Mr. E. Collins: Two grants cannot be given to one company, only one grant.

Mr. O'Leary: You could get it from A or from B, either of them. I think you can get it from both.

Mr. E. Collins: Yes, SFADCO operate on behalf of the IDA in the mid-west region of industry and the IDA are the large industry grant-giving authority. The delegation to SFADCo is in relation to small industry in the wider area.

Mr. O'Leary: That distinction is not terribly clear in the Bill and the Minister might like to have a look at it. I am not making any suggestion as to exactly how he should change it.

Mr. E. Collins: It involves other legislation.

Mr. O'Leary: I appreciate that. The [574] Minister might have a look at that point. It would be worth looking at it to get the thing crystal clear. Getting back to the narrower point of the Shannon Customs Free Airport, which is the one referred to in subsection (2), is the Minister aware of where that is actually defined? It is not defined in this Act. If you read something like Shannon Customs Free Airport, the normal thing to do is to go to the start and say what exactly do they mean by that and you go to the definition section or interpretation section and it is not in it. Where is “The Shannon Customs Free Airport” defined?

Mr. E. Collins: It is defined in an order certificate.

Mr. O'Leary: Does the Minister know what that order is made under?

Mr. E. Collins: It could be made under the Shannon Free Airport Development Company Limited (Amendment) Act. I am fairly certain. There may have been other orders necessary in relation to the financial aspect of it as opposed to the grant giving aspect. That is why it is outside of my Department. We have also clarified section 12 (3).

Mr. O'Leary: It states that the terms and conditions of every delegation made by the Authority under subsection (2) of section 4 of the Shannon Free Airport Development Company shall be subject to the approval of the Minister. I understand that. Would it be better from a clarity point of view to consider the question of whether the Shannon Customs Free Airport should be put into the definition section? If we look at the interpretation section under “local authority” it says that “local authority” has the same meaning as in section 2 of the Local Government Act, 1941. I would expect that somewhere in the Act the Shannon Customs Free Airport shall have the same meaning as in whatever its source is. It appears to me that that would tie down exactly what is meant. I am not objecting to the Shannon Customs Free Airport being included there. But it is [575] not very tidily done from a legislative point of view.

Mr. E. Collins: The legislation before us is clear. The provisions of subsection (1) paragraphs (b) and (d), relate to grants and other financial facilities for industry as may be authorised by the Oireachtas and the Minister and indeed it says it shall not apply to the Shannon Customs Free area because that is dealt with under order and does not need to be covered by this section.

Mr. O'Leary: I understand that.

Mr. E. Collins: There is no need for clarity in it.

Mr. O'Leary: I know there is no clarity with regard to what the powers are. The lack of clarity which may exist is that nowhere in this legislation are you referred back to what is meant by the Shannon Customs Free Airport. Nowhere is that defined. This is the point I am making. The term “Shannon Customs Free Airport” is not defined. I am not objecting to what the Minister is proposing to do, the exclusion of (b) and (d). The Minister is just introducing into this Bill a concept which he is not referring back to anything which can be measured. We are taking about something called the Shannon Customs Free Airport. We are not saying the Shannon Customs Free Airport as outlined by a delegation made under subsection (2) of section 4 of the Shannon Free Airport Development Company legislation. That would be one way of doing it. I do not know how this concept exists.

Mr. E. Collins: There is no need to specify the legislation because we are not amending it or repealing it.

Mr. O'Leary: I understand that.

Mr. E. Collins: It is an order that exists; and, since we are not tampering with it but merely referring to it there is no need [576] to put it in a Schedule stating it. That is the principal reason.

Mr. O'Leary: It is not a major point, but I just want to give the Minister an example of the kind of problem you could have if you did not define it. Presumably there is somewhere at the moment a definition of what is meant by “Shannon Customs Free Airport”. Somewhere there is an entity that somebody in 1986 can identify as being “Shannon Customs Free Airport”.

If it were decided next year to expand or to contract the area, or to add another 50 acres or 100 acres to it, you would have what might be called a new Shannon Customs Free Airport. Would that fall within the definition of this Bill or not? I would say that it could only fall within the definition of the Bill if the definition of “Shannon Customs Free Airport” is included, which would specify that not only does it include the present Shannon Customs Free Airport but any amendment or extension to it.

Mr. E. Collins: If we had to amend it, it would be done by order and the order would refer back to this Act in due course. That would be the measure that could be taken legislatively.

Mr. O'Leary: The Minister has taken his advice. I can only give the benefit of my advice.

Mr. E. Collins: I take the Senator's point. There was no intention to deceive. It just was not mentioned as being amended or repealed or changed and because there was no amendment or repeal it simply was not put into any appendix that exists. There is an instrument in existence to which people can refer and identify the Shannon Customs Free Airport.

Mr. O'Leary: The Minister will realise, of course, that in respect of this particular point I am not making any reference to either the policy involved in it or to his own presentation of it. I am merely [577] saying that, if you start using an expression in legislation which is not self-defined, if you talk about a local authority, for example, obviously you must say what you mean by a local authority and that is what they have done at the start of this Bill. If you use the word “local authority”, “local authority” has a special meaning. If you use an expression like “Shannon Customs Free Airport” that must also have a special meaning. I do not suggest that the Minister personally should do it, because I know that this Minister does not draft the Bill himself, but a properly drafted Bill would include a definition of “Shannon Customs Free Airport”. I am not going to make any further point about it. I do not really mind whether he does it or not.

Mr. E. Collins: It is defined in legislation and that is why there is no need to define it here.

Mr. Fitzsimons: This is one of the most important sections in the Bill, setting out as it does all the functions of the Authority. These are comprehensive and I welcome that. I accept the Minister's statement that the Minister will be in control at all times having regard to subsection (1) (a). I am not sure how this can be reconciled with paragraph (c) where the Authority may initiate ideas and make submissions to the Minister. Could we have that clarified, whether the initiative comes from the Minister or from the Authority with regard to new schemes? I also welcome paragraph (h), which imposes a legislative responsibility on the Authority to provide on request advice and guidance to persons contemplating starting a new industry or expanding existing industry. This is very important.

Finally, with regard to subsection (4), the Authority “may in the exercise of its functions have regard to the extent to which an industrial undertaking will serve to promote national objectives for regional development”. That is very weak, that there is a choice left to the Authority. Perhaps “shall” should be [578] used there. That the Authority “shall” in the exercise of its functions.

Mr. E. Collins: If the Senator looks at paragraph (e), the Authority shall be the autonomous body with the following functions, “to foster the national objective of regional industrial development”. The word there is “shall”. So it is covered already.

Mr. Fitzsimons: It seems to me that in that sense subsection (4) could be omitted because it does not do anything for the Authority.

Mr. E. Collins: It gives them the flexibility to look at a special responsibility for regional development in relation to an industrial undertaking and they may, as part of their consideration of a project, look at the regional aspects of that undertaking. The other one would be a global general policy, that it shall have regard to regional policy.

Mr. Fitzsimons: I am not too clear about that.

Mr. E. Collins: It makes doubly sure that they would have to take account of regional development.

Mr. Fitzsimons: There is this responsibility with regard to paragraph (e) to take into consideration regional development. That responsibility is imposed on the Authority under that paragraph. Then, subsection (4) states that it “may in the exercise of its functions have regard...” It seems to me that in some sense there is a contradiction in terms here. Under the earlier subsection it must have regard to the regional development plans and under subsection (4) it may have regard. I take that to mean, essentially, that it may have regard to regional development. It seems to me that there is a watering down of the situation. They are either constrained by the terms of regional development or they are not, or they are constrained and there are exceptions. Is the Minister saying that in this situation the general policy is that [579] there would be this constraint, but this subsection gives them an opportunity to opt out in certain circumstances?

Mr. E. Collins: No, on the contrary, section 11 is quite explicit. As I have said, the Authority shall be the autonomous body with the function of fostering the national objective of regional industrial development. That is general policy. But in relation to any particular undertaking the Authority may in the exercise of its functions have regard to the regional aspects of that undertaking. In other words, in considering an application the Authority may take into account its effect on a regional basis. That allows them to look at an individual project in addition to the general overall powers it would have in relation to regional development.

Mr. Fitzsimons: In deciding a particular case?

Mr. E. Collins: Yes.

Question put and agreed to.

Section 12 agreed to.


Question proposed: “That section 13 stand part of the Bill.”

Mr. Fitzsimons: The Minister may give the Authority such general policy directives as he considers appropriate having regard to the provision of this Act and such an order would have to come before both Houses of the Oireachtas within a period of 21 days. Subsection (2) states that:

A directive under subsection (1) shall not apply to any individual industrial undertaking or to giving preference to one area over others in regard to the location of an industrial undertaking otherwise than as part of a general review of industrial policy for the country as a whole indicated in the directive.

[580] I take that to mean that the Minister will have no power with regard to a decision of the Authority, that the Authority will be the final arbiter in deciding where an undertaking will be established. In a general sense I would agree with this entirely, but perhaps there might be an occasion when it might be necessary to have some discretion on the part of the Minister. It seems to me that in this section the Minister loses out in that power, that while we dealt with section 11 and it stated that the Minister was in total control, here we have a situation, not an undesirable situation, where the Minister does not have power in relation to where undertakings are established.

Mr. E. Collins: I usually find Members seeking to ensure that the Minister has no powers at all and that powers would be taken from him. What is quite clear here is that this section allows the Minister to give general policy directives to the Industrial Development Authority. I think that is fair enough. It is matters of policy which are the Minister's responsibility. It also obliges the Authority to comply with and to set out a report of its activities on foot of the directives in their annual report. In other words, they would have to account for their actions on foot of a Minister's general policy directive.

A limitation is put on the Minister's power to issue directives in that they shall not apply to an individual industrial undertaking or to giving preference to one area over another in terms of industrial location policy other than as part of a general review of industrial policy for the country as a whole. It also proposes that both Houses of the Oireachtas shall be kept informed of policy directives given by the Minister under this subsection. It allows quite an amount of transparency for Members of the Oireachtas even in relation to general policies in that the IDA must respond in their annual reports as to how they reacted. The Minister shall not give a specific directive in relation to an individual industrial undertaking nor shall he direct that it goes to a certain place. There may be a [581] general policy decision which affects the whole country and that would be transparent. We could not be more open or transparent or visible in what we are allowing the Minister to do and in what the powers of the authority are and the fact that both Houses of the Oireachtas are being informed.

Mr. Lynch: Under this section the Minister would be allowed to specify or redefine what I spoke about, what we would term over-capacity on such matters, and review the whole structure of the administration of the system. We are living in changing times. Navan was the boom town of the midlands with regard to clothing and furniture. In the past five years that industry has melted down. There is a lot of unemployment in this area. We could claim that County Meath should be a designated area. When a certain industry collapses in Ireland, such as the building industry, it affects all the spin-off industries that are attached to it such as the furniture industry, window glazing, carpeting and so on. We found our major dependency in County Meath was the furniture industry in Navan. Am I correct in stating that under this section the Minister could ask for a review of this area and perhaps issue a directive to investigate the possibility of putting in another type of industry?

Mr. E. Collins: I do not wish to be unhelpful to the Senator. They must be general policy directives. There is full information flowing between the Minister and the IDA. With regard to Navan, it is not intended that the Minister would use this as a day-to-day weapon in industrial policy. This is where it is a matter of general policy directives. It does not have any regional or sharp impact like, say, designation or the power to designate.

Mr. Fitzsimons: I would like to ask the Minister not to forget Kells when he is dealing with policy. Senator Lynch mentioned Navan. I agree, of course, with Senator Lynch but Kells is in a very bad [582] way at present. With regard to the general policy, I appreciate what the Minister has said. My understanding of the section is that the broad parameters of policy would be set out by the Minister and within that constraint the authority will have autonomy and the Minister will not be able to interfere in any individual case with regard to the selection of a company or with regard to the location. In general everybody would have to agree with that but the general policy outlines must be long-term. Situations might arise where there would be some important change which might necessitate a change in the general policy. In a situation of that kind a case could be made where the Minister could intervene not necessarily to issue new general policy outlines but as an interim measure to take into consideration factors which would be possibly out of date by the time a general policy change could be implemented. In that situation could a case not be made for governmental or ministerial intervention?

Mr. E. Collins: In general we are anxious that the Industrial Development Authority acts as we have given the power autonomously in relation to regional development policies. I do not think either Houses of the Oireachtas would wish the Minister to be involved in areas. I think you would see the political dangers there. That is why we have balanced this section very tightly in relation to the powers of the Minister to issue general policy directives and to exclude him from issuing powers in relation to an individual undertaking or in relation to locating a specific industry geographically. We are talking about general policy directives. It is not envisaged that they would be used frequently but rather at infrequent times for general policy purposes.

Question put and agreed to.


Question proposed: “That section 14 stand part of the Bill.”

Mr. Fitzsimons: I am not too clear on [583] this, I would like the Minister to expand on this provision of £700 million with a possibility of £125 million more. As I understand it from the Minister this is not going to cost the State anything extra. I cannot envisage that the situation would be improved when money is not being invested. While it is costing no more to the State, we are paying out this kind of money at present. I understand that it is necessary to change the emphasis of thrust and that considerable improvement will be made in that regard. Nevertheless the conclusion is that the money is being badly spent at present. It is a bookkeeping exercise. I would ask the Minister to explain how this bookkeeping exercise will bring about the improvement that he envisages.

Mr. E. Collins: This is an ongoing enabling section which allows the ceilings of the IDA in relation to expenditures to be established. Capital expenditure during 1985 amounted to £1,433 million. With the enactment of this Bill it is considered appropriate to institute a new limit which would allow for a three to four year period of review. That power is specifically taken because it will allow an amending Bill to come before the House for discussion. It will give Members an opportunity to discuss the functions of the IDA. This is a continuation of the enabling procedures which are similar to those imposed by section 17 of the Industrial Development Act, 1969, as amended. It is not a new procedure.

Mr. Fitzsimons: As I understand it, anyone looking at this Bill would say that it must have great beneficial effects because £700 million is being invested with the possibility of £125 million. In reality, this extra money is not being invested. It is a figure that is plucked out of the sky, so to speak. Could we not have £1,000 million, and it would have no implications as far as the Bill is concerned — or an infinite amount of money? My view about this whole area is that investment is needed. Without that investment, we cannot properly deal with [584] the unemployment situation. We have a figure mentioned which is meaningless. In spite of the Minister's reply, I still cannot understand how the figure of £700 million was determined or what significance that figure has.

Mr. E. Collins: Both the figures of £700 million and £125 million are in respect of loan guarantees and are not plucked out of the air. They are figures which we are advised by the IDA will be needed over the next three years or so. We have pitched the ceiling to allow for a review at the end of a period which would need amending legislation to come before this House to further increase it. It provides an opportunity for us to give sufficient funds to the IDA for a period of say, three years and to come back with an amending Bill to enable the House to discuss the IDA's performance in the three years.

Mr. Fitzsimons: I cannot understand how the figure is determined as it is not going to cost the State any extra money. It is reasonable to conclude that it is only a bookkeeping exercise. The thrust of what has been said already is that it is not going to cost the State anything. It comes dangerously close to the magic wand idea. I cannot see how this benefit will be reaped when no extra investment will be made.

Mr. E. Collins: The Senator may be confused regarding extra costs. What we say is that if we were to divert the figures from different headings it would not cost any extra but this is the global figure that is necessary, and whether it is spent under capital grants, guarantees or whatever, the money is required. In 1984, the total amount spent in equity shareholding loan guarantees amounted to £147 million. That is an annual sum. So you can see that the figure we are looking for will roughly cover the company for the next three years or so.

Question put and agreed to.

Section 15 agreed to.

[585] SECTION 16.

Question proposed: “That section 16 stand part of the Bill.”

Mr. Fitzsimons: With regard to the provision of sites and services by the authority is there any change from the established position at present?

Mr. E. Collins: No. These are the same as in the existing powers of the IDA under section 5 of the Under-developed Areas Act, 1952, section 2 of the Industrial Grants Act, 1959, as amended by section 9 of the Industrial Grants Act, 1963, and section 15 of the Industrial Development Act, 1969. The section provides the IDA with a comprehensive range of powers which will enable then to engage in all aspects of property development consistent with their functions to develop industry.

Question put and agreed to.


Question proposed: “That section 17 stand part of the Bill.”

Mr. Fitzsimons: I understand the position at present is that no stamp duty is payable. There is no change in this.

Mr. E. Collins: Yes. That is correct. It is a continuation of the exemption. The reason why some things appear to jump up and be correctly questioned is that we are trying to consolidate as much as possible in this Bill. This is a Consolidation Bill although it is not so called.

Question put and agreed to.


Question proposed: “That section 18 stand part of the Bill.”

Mr. Fitzsimons: The Authority may accept a gift of money or kind and it may refuse to accept a gift if conditions are attached which would not be acceptable. I cannot envisage gifts to an authority of that kind. This provision would appear [586] to be superfluous. Has it ever happened that gifts have been bequeathed to the Authority?

Mr. E. Collins: I gather that subsection (2) is a standard provision which allows bodies not to accept gifts and donations which are not in keeping with the powers under which they operate. This is a standard provision which allows them not to accept something they do not want or that they cannot use under the Acts under which they operate.

Mr. Fitzsimons: I am sure they are not in the habit of getting gifts.

Mr. E. Collins: It is not a bad idea. I would encourage people to bestow gifts on the IDA for industrial development purposes.

Question put and agreed to.


Question proposed: “That section 19 stand part of the Bill.”

Mr. Fitzsimons: With regard to the borrowing under section 19 could this be cumulative or would the amount borrowed have to be repaid at the end of each year? It could be quite large. Could a situation arise where there could be an accumulation of debt from one year to another?

Mr. E. Collins: No. This is not so. Subsection (8) says merely “to enable them to borrow temporarily”. The word “temporarily” is the operative word, in the bridging sense, if there was a small requirement to bridge. It has no major significance.

Question put and agreed to.


Question proposed: “That section 20 stand part of the Bill.”

Mr. Fitzsimons: The engagement of [587] consultants is most important where industry is concerned. It seems from this section, and I hope it is, that consultants may be engaged without ministerial approval.

Mr. E. Collins: That is so. The word “engage” is significant because the word “employ” would exclude Members of the Oireachtas from being employed by the Authority under Standing Orders. The word “engage” now allows expertise to be drawn if such expertise exists in either House of the Oireachtas. It is a widening of the scope to allow this expertise be drawn. For example, the House would consider the late Senator Alexis FitzGerald to have been an expert on international contract law and not to have his services available because he was a Member of the Seanad would be unfortunate. This simply allows that Members of the Oireachtas can be engaged. Under Standing Orders, they cannot be employed.

Question put and agreed to.


Question proposed: “That section 21 stand part of the Bill.”

Mr. Fitzsimons: Section 21 refers to fixed assets. I thought from the general tone of the debate that there was a move away from financial help towards fixed assets, but it seems that this is not so. I would ask the Minister to expand on this.

Under subsection (2), the amount of a grant under subsection (1) shall not exceed 60 per cent of the cost of the fixed assets, in the case of an industrial undertaking in a designated area, and 45 per cent elsewhere. Could it not be envisaged that in exceptional circumstances it might be necessary, and it might be good policy, to exceed this limit? Would the Minister consider inserting at any time, the adverb “normally” there? If that had been done, the Minister would have discretion in very exceptional circumstances to exceed the grant.

[588] Mr. E. Collins: This section is in fact the kernel of the IDA's grant giving powers. It would not be possible to put in the words “normally exceed”, nor indeed would it be possible to exceed the 60 per cent level for undertakings in designated areas or 45 per cent for the rest of the country. We are subject to the aids code regimes within the EC and we cannot exceed the limits imposed on us by the aids code. Indeed, we have been treated well under the aids code.

In relation to what the Senator said about moving away from fixed assets, we are not changing the maximum grants payable. An application for grants to the IDA is usually a package involving direct fixed assets grants, possibly guarantees, seldom equity participation, also manpower training and marketing. There may be a jumbleage of grants. The flexibility being adopted will see the mix evolve. It is intended to ensure that a proper mix exists in relation to R and D grants and technology acquisition grants. We are going to see a jumbleage of grants. But we are retaining the limits for the purpose of this Act.

Mr. Fitzsimons: This section applies to an industrial undertaking in respect of which the Authority are satisfied that it will produce products for sale primarily on the world markets. Everybody would agree with this. The export market is the important market. I could also see a situation where the manufacture of articles for home use would result in savings as regards imports — in other words, items which are presently being imported could be manufactured here. That seems to be excluded under this section, help with regard to articles manufactured for home use.

Mr. E. Collins: Subsection (3) (c) indicates that it “will produce products for sectors of the Irish market which are subject to international competition...”. That meets the need mentioned by the Senator. We are an open economy, of course. We have to abide by international competitive rules, and indeed the rules of the EC. We are quite will aware of the [589] development needs of Irish industry in all its aspects.

Mr. Fitzsimons: I accept what the Minister says and I welcome it — in other words, where there is competition through imports, the help would be available in that area.

The industrial undertaking should also satisfy the Authority regarding a number of conditions. Subsection (4) (c) states it has an adequate equity base. I feel there are many instances where this would be the big problem, that there would not be an adequate equity base. There might be individuals or small firms where that would be the basic problem.

Also, with regard to subsection (4) (d), suitable development plans might be difficult to prepare in some instances, particularly with very small firms. Under (e), it might be very difficult to prove, at least in the early years, that it would give that extra employment. Many small firms might lose out in this area. Is there any special concession in that regard?

Mr. E. Collins: No. I think it is at the discretion of the IDA to determine what is a sufficient equity base, but many projects failed frankly because they do not have a sufficient equity base. It has been quite well established that quite a number of firms are over-relying on borrowings. It is not unreasonable, where the taxpayers money is concerned, to seek a good balance and a fair equity base, whether it is a large or small company. However, I do not think the IDA would be unduly stringent in that regard. They do, in my opinion, have a fair responsibility to ensure that adequate equity is injected into the company. I have seen a good few companies go under because of the lack of an equity base.

Mr. Fitzsimons: I accept that. However, could the Minister not envisage a situation where somebody with an excellent idea would not comply with that condition of having an equity base? It seems that in that situation an individual who would not have finance, but who would have some patent, plan or idea and [590] could prove on paper that it would be viable, would not be catered for under this section or, indeed, in the Bill as a whole.

Mr. E. Collins: Well, there are other possibilities. There are business development schemes, enterprise allowance schemes, for various small business people. There is also the possibility of venture capital. We have to insist on this, not in any harsh manner, but we will have to look after the taxpayers' money as well. I do not think the IDA have ever been accused in any serious way of refusing to deal with good ideas. They have been most helpful to many small business people. Indeed, the regionalisation of small industry and the one-stop shops will go quite some way to advising people who have good ideas about how they can get grants and what is the best avenue.

Mr. Lynch: I welcome the inclusion of subsection (d). The Joint Committee on Small Businesses' report on regional and distribution stated that the greatest potential for employment is in the service industries. We must be more vigilant with regard to guaranteed Irish goods. There is a scandalous abuse of guaranteed Irish products. I bought a suit last Christmas twelve months which was supposed to be Irish made. Hairs started to come out of it and I sent it back to the retailer. The suit had to be sent back to Germany. It was labelled as guaranteed Irish. Companies who have got IDA grant assistance abuse the system to such an extent that they will put a guaranteed Irish label on a suit which was made in Germany. I would ask the Minister to reassure the House that every step possible, will be taken to eradicate abuses of the guaranteed Irish label.

Mr. E. Collins: As you are aware a court case was involved in this matter which prohibits the State from financing the promotion of the buy Irish campaign. This matter has now been privatised and it is in the hands of the CII. They are doing a good job in this area. But they [591] cannot get the Government's financial support, but my goodwill.

Question put and agreed to.

Sections 22 to 28, inclusive, agreed to.


Question proposed: “That section 29 stand part of the Bill.”

Mr. Fitzsimons: I mentioned yesterday in relation to some projects in the energy conservation area, wave power, solar energy, etc. We might have a situation where an individual would be involved who would not be able to pay the 50 per cent as the 50 per cent grant would not be sufficient. They would be thinking in very insignificant terms compared with the maximum provided here of £250,000. I would ask the Minister if there is any help envisaged for projects of that kind?

Mr. E. Collins: How do you mean?

Mr. Fitzsimons: We are talking here of research grants.

Mr. E. Collins: It must be commercially and industrially orientated. That would be for the Authority to decide.

Mr. Fitzsimons: The situation with regard to those might be that the individual involved in the research would not envisage starting the industry. He would be a well qualified individual who would see the necessity in that area of energy conservation. All of us have received representations from people involved in that area.

Mr. E. Collins: I can sympathise with the Senator. I am wearing two hats, one energy which includes alternative energy, wind power, wave power, solar energy, geothermal energy. We are dealing with research grants of an industrial and commercial nature. We are talking in relation to pre-production research. It is a difficult area. In many cases it is only at experimental stage. I accept the need for them but we cannot take on board in this Bill [592] all of the world of research which is being conducted at universities throughout the world. The Industrial Development Authority will have to have a common sense, commercial and industrial approach to the research grants they are going to grant aid. The areas of geothermal, wave power, would not come within the remit of the IDA grants.

Mr. Fitzsimons: I accept that the Minister is in control of his brief in that area. He put his finger on it when he said that we are at the experimental stage. This is precisely why I mentioned this. As an island we are surrounded by the sea and we are not able to harness wave energy. By and large we have made very little headway with regard to solar energy. With regard to wind power which the Minister mentioned, we seem to be going backwards. During the last war there were many houses and premises which were serviced by wind chargers.

Mr. E. Collins: We are back on tracks on the wind power.

Mr. Fitzsimons: To a slight degree. As regards the implementation of that machinery I do not see many wind chargers around the country whereas during the last war they were quite a regular feature. There is tremendous potential there. The demand would be there for it, if we had sustainable projects. I am asking the Minister — he is answering in the negative, unfortunately — if there is any specific provision with regard to research of that kind which must be related to the industrial area?

Mr. E. Collins: The R and D programme has not been linked to the new selectivity criteria in section 21. The programme has and will be used primarily as a promotion to accelerate the rate of R and D activity in this country which is very low. It will have to be left to the Authority to decide what is going to be grant aided.

Question put and agreed to.

Section 30 agreed to.

[593] SECTION 31.

Question proposed: “That section 31 stand part of the Bill.”

Mr. Lynch: Section 31, power to purchase shares, is this a new departure? It may help to dissolve many of the problems that I have mentioned.

Mr. E. Collins: No, this section which deals with the IDA's power to purchase shares in industrial undertakings repeats section 44 of the Industrial Development Act, 1969, as amended by section 9 of the Industrial Act, 1977, subject to some amendments. The Authority's powers to take shares are being confined to industrial undertakings which conform to the new selectivity grant criteria at section 21 (3) and (4). Secondly, no shares shall be taken or purchased by the Authority except after consultation with any State-sponsored body as specified by the Minister by order, nor where the Authority and any such State-sponsored body or bodies would as a result have a controlling interest in the undertaking, unless with the prior approval of the Minister. By and large, we are repeating.

Question put and agreed to.

Sections 32 to 42, inclusive, agreed to.


Question proposed: “That section 43 stand part of the Bill”.

Mr. Fitzsimons: I have one question with regard to the fine of £800 under sucsection (2). A person who contravenes subsection (1), that is with regard to confidential information, shall be guilty of an offence and shall be liable on a summary conviction to a fine not exceeding £800. Would the Minister agree that this is a very unrealistic figure having regard to the fact that in some instances it might be very remunerative for an individual to disclose confidential information? If this is a one-off fine of £800, it seems to me that in the circumstances it would be totally inadequate.

[594] Mr. E. Collins: Unfortunately, on a summary conviction, £800 is the maximum fine we can impose and this is outside our control. We most certainly would like to see a higher fine for serious misinformation being given to the Authority.

Mr. Fitzsimons: Does that mean that, because of that legal fact, we are constrained in that situation and the fine cannot exceed £800?

Mr. E. Collins: I suppose my answer to that would be that, through the grapevine, a man's credibility with other authorities would be seriously damaged if he was guilty of such an offence. In fact, the fine might be the least part of his worries, because an entrepreneur, once having been convicted, would find it very difficult to get the goodwill of State-sponsored bodies after that.

Mr. Fitzsimons: Perhaps I misunderstood the Minister. The situation, as I envisaged it, was that somebody in a position to have important confidential information that another firm might want could disclose that information for quite a large sum of money and it could very well be worth his while to do that. Is that not the situation that is envisaged?

Mr. E. Collins: You mean an official of the Authority?

Mr. Fitzsimons: The person referred to here.

Mr. E. Collins: That is the case, I am afraid. The moral suasion of the situation is of far greater importance. He might do it once but, if found out, I doubt if he would ever be seen in a State body again. I suppose we are entitled to moral standards in our country and we are entitled to look with disdain on amoral or immoral standards.

Mr. Lynch: To my knowledge, I do not think that this section will ever have to be invoked. The fact of the matter is that a fine of £800 is the maximum that can be imposed. I agree with the Minister [595] that a person's moral standard in society or in any company would be totally eroded if he were found guilty of such an offence. This fact still does not justify, in my opinion, that we cannot impose a maximum fine greater than £800. Would the Minister refer back to the Minister for Justice to review it?

Mr. E. Collins: It is outside my control. Perhaps in some amending Bill in the future it would be possible. A person who would be brought to court under this section and fined would have a far higher price to pay than the fine of £800.

Question put and agreed to.

First Schedule agreed to.

Second Schedule agreed to.

Third Schedule agreed to.

Fourth Schedule agreed to.

Title agreed to.

Bill reported without amendment, received for final consideration and passed.

Mr. E. Collins: May I express my appreciation at the contributions made by Senators in the House. They were extremely helpful. I am very grateful in particular to Members of the Opposition, Senators Lynch and Fitzsimons, who gave the Bill a fair going over on Committee Stage this morning. That is as it should be. I hope that this piece of legislation, which is extremely comprehensive and modernising, will serve industrial progress in this country.