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 Header Item Written Answers Nos. 36 - 43
 Header Item Foreign Direct Investment
 Header Item Small and Medium Enterprises Supports
 Header Item Joint Labour Committees Reviews
 Header Item Commercial Rates Valuation Process
 Header Item Credit Availability
 Header Item Economic Competitiveness
 Header Item Employment Statistics
 Header Item Social Insurance

Wednesday, 22 May 2013

Dáil Éireann Debate
Vol. 804 No. 2

First Page Previous Page Page of 95 Next Page Last Page

Written Answers Nos. 36 - 43

Foreign Direct Investment

 36. Deputy Thomas Pringle Information on Thomas Pringle Zoom on Thomas Pringle asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton the efforts made to secure foreign direct investment in the north west region; the number of new jobs that have been announced in 2012; and if he will make a statement on the matter. [24348/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton IDA’s North West Region comprises the counties of Donegal, Sligo and Leitrim. There are 38 IDA client companies in the Region employing 5,199 people in full and part time employment.

IDA Ireland has indicated that, in seeking to win FDI, the concept of scale is crucial. Leading global corporations require a significant population pool, access to qualified talent, world standard physical and digital infrastructure coupled with the availability of sophisticated professional and business support services. In order to achieve balanced regional economic development, the Agency prioritises the marketing of urban locations as the areas of critical mass. In the case of the North West region IDA prioritises the promotion of Letterkenny and Sligo and also promotes other locations in the region as part of its marketing efforts and in response to specific client requirements.

In line with the transformation agenda outlined in Horizon 2020, IDA works with corporate and local management in existing client companies helping them to engage in transformation programmes to improve competitiveness and efficiencies, enhance their use of technology, up-skill employees, engage in RD&I and develop their business processes so as to ensure the maintenance of the existing jobs provided by these companies in Ireland.

This strategy was particularly successful in 2012, with three notable FDI announcements being made in the region:

In February 2012 Abbot in Sligo announced an €85m investment which will result in the creation of 175 jobs.

In October 2012 KeyedIn Solutions announced its plans to establish a software development centre in Letterkenny with the creation of 20 highly skilledjobs over three years.

Also, in October, GSK reversed its decision to close the Stiefel plant in Sligo and announced an investment of €10m in the plant.

Notwithstanding this success, I am mindful that, in order to ensure that Ireland can continue to compete globally for FDI projects, it will be necessary to undertake an in depth analysis of our FDI strategy with a view to informing the formulation of an appropriate strategy for the period post 2014. This analysis, which will be undertaken later this year, will take account of factors such as key trends emerging in FDI best practice internationally, Ireland’s strengths in attracting FDI, any changes to the EU’s State Aid rules that may be introduced in the near future and our agreed approach to regional development.

In the interim, IDA Ireland has assured me that it will continue to win FDI projects for the region. While the global outlook for FDI continues to be challenging, the Agency has assured me that it will continue to work towards achieving its target of creating a further 13,000 gross jobs this year as set out in the Action Plan for Jobs 2013.

Small and Medium Enterprises Supports

 37. Deputy Luke 'Ming' Flanagan Information on Luke 'Ming' Flanagan Zoom on Luke 'Ming' Flanagan asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton the expected cost savings to be achieved by the new structure; the expected cost of the transition for 2013; if he will confirm that these funds are not reducing funds available to start up enterprises and the initiatives necessary to support job creation for 2013; and if he will make a statement on the matter. [24362/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton Significant progress to implement the Government Decision on the reform of the supports to the micro and small sector has been made. A new Micro and Small Business Division has been established in Enterprise Ireland which, through its Centre of Excellence, will lead, develop and manage the enhancement of support services, delivered through the LEOs, that generates innovative, small and micro-enterprises capable of increasing, employment, exports and value added to the Irish economy.

Also, on Monday last, along with my colleagues the Minister for Environment, Community and Local Government Phil Hogan and the Minister for Small Business John Perry, I published the Framework Service Level Agreement (SLA) and launched the Branding/Logo for the LEOs. The Framework SLA is an important step in the overall project since it sets out clearly budgets and project evaluation methods as well as a series of demanding metrics and targets for the delivery of services by the LEOs, including the numbers of jobs and businesses to be supported. An Enterprise Development Plan for each LEO will be devised annually by the LA/LEO, agreed by EI and appended to the SLA to take account of local circumstances in that the plan will address agreed metrics and include targets for each LEO. A key element of this new structure will be the consistent application of policy across all LEOs from the evaluation of applications to the spending of budgets allocated.

The Capital allocation of €15m for 2013 is exclusively for the allocation of financial grant aid to eligible businesses and the delivery of soft supports.

Whilst there will be administrative efficiencies achieved by the dissolution of 35 separate legal entities, initial direct savings will be modest. However, over time there will be savings in a number of areas such as for example the removal of costs associated with the individual company status of each CEB, the closure of some CEB offices, and the introduction of more streamlined and centralised reporting processes and payroll mechanisms. It is anticipated that any costs associated with the transition will be minimal. Over time, the funding allocation and the allocation methodology will be reviewed by my Department and EI to ensure that opportunities for business development are maximised and that value for money is being secured across the LEOs.

Joint Labour Committees Reviews

 38. Deputy Brian Stanley Information on Brian Stanley Zoom on Brian Stanley asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton when he will respond to the Labour Court recommendations on the review of the JLCs. [24462/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton The new Section 41A of Industrial Relations Act 1946 (inserted by Section 11 of the Industrial Relations (Amendment) Act 2012) provides that reviews of each Joint Labour Committee (JLC) will be carried out by the Labour Court, as soon as practicable after the commencement of the Act, and at least once every 5 years thereafter.

  In this context, the Labour Court appointed Ms Janet Hughes to undertake the review of the 10 existing JLCs on its behalf. The Review was completed on April 12th  last.

  The review assisted the Labour Court’s deliberations as to whether any JLC should be abolished, maintained in its current form, amalgamated with another JLC or its establishment order amended and the Labour Court is required to make recommendations to me to this effect.

The Labour Court submitted its report of the review and recommendations in relation to the 10 existing JLCs to me on 22nd April last. The report is detailed, comprehensive and complex and will require careful examination and consideration.

  Since its receipt, the Supreme Court, on 9 May last, issued its decision in relation to the constitutionality of Registered Employment Agreements (McGowan and others v The Labour Court, Ireland and the Attorney General). I am concerned that this decision may have implications for Joint Labour Committees and Employment Regulation Orders. While I am anxious to progress the matter, it is my intention to ensure that whatever action I propose to take on foot of the Report is undertaken within a robust legal framework. I have sought specific legal advice on this point and will respond in accordance with that advice.

Commercial Rates Valuation Process

 39. Deputy Sean Fleming Information on Seán Fleming Zoom on Seán Fleming asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton his views on whether a formalised appeals mechanism in relation to commercial rates would assist businesses in financial difficulty; and if he will make a statement on the matter. [24426/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton Local Authorities are under a statutory obligation to levy rates on any property used for commercial purposes in accordance with the details entered in the valuation lists prepared by the independent Commissioner of Valuation under the Valuation Act 2001.

The levying and collection of rates are matters for each individual Local Authority. The annual rate on valuation (ARV), which is applied to the valuation of each property as determined by the Valuation Office to obtain the amount payable in rates, is decided by the elected members of each Local Authority in the annual budget and its determination is a reserved function of the Authorities.

The valuation placed on a property by the Commissioner of Valuation can be appealed to the Valuation Tribunal. Both the Valuation Office and the Valuation Tribunal come under the aegis of my colleague, the Minister for Public Expenditure and Reform, Brendan Howlin TD.

I understand that some Local Authorities have arrangements in place to allow businesses to pay their rates in monthly instalments rather than in two annual payments, which is likely to assist cash-flow for businesses. The Minister for the Environment, Community and Local Government has committed to continuing to impress on Local Authorities the need to maintain and enhance efficiency measures with a view to minimising rates and other charges to business. Local Authorities have responded positively to the request to continue to exercise restraint in setting commercial rates for 2013. 87 out of the 88 rating authorities have either reduced their ARV or kept it the same as in 2012 (with that one increase arising due to a technical adjustment and legal requirement following the extension of a town boundary). The average nationwide decrease is 0.34%, following similar decreases in previous years of 0.31% in 2012, 0.64% in 2011 and 0.62% in 2010.

Credit Availability

 40. Deputy Pearse Doherty Information on Pearse Doherty Zoom on Pearse Doherty asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton the impact of the high cost of credit on enterprises and job creation; and his views on the take up rates of Government created credit schemes as a percentage of the overall credit available under each scheme. [24444/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton As the Deputy is aware, all cost elements are critically important to the efficient running of a business and the level of employment. The cost of credit is just one of a number of very important cost factors for business and this Government takes this issue very seriously. SMEs are the engine room for jobs and growth in Ireland and the Action Plan for Jobs 2013 contains a specific section designed to deliver access to finance for this key group. This section and its actions are being driven by the SME State Bodies Group, chaired by the Department of Finance and on which my Department sits. The Group also supports the work of the Cabinet Committee on Mortgage Arrears and Credit Availability, which is chaired by the Taoiseach and which closely monitors developments in respect of finance for business.

  In the context of addressing the needs of the key SME sector the Deputy will be aware, that I established 2 targeted initiatives to support an additional flow of credit into the economy by filling gaps where specific market failures in the supply of credit to SMEs exists, namely: the Microenterprise Loan Fund and the Credit Guarantee Scheme.

  The Microenterprise Loan Fund Scheme opened for business on 1 October 2012, to provide support in the form of loans of up to €25,000. It was established to improve access to credit for entrepreneurs and microenterprises and to facilitate the growth and expansion of viable businesses from all industry sectors which have been refused access to credit by banks. To be eligible for a loan, persons must possess a business plan, must have a commercially viable proposal, must confirm that they have been refused credit from a bank, and must have the capacity to repay the loan. The potential viability of the business proposal will be the dominant factor in all credit decisions.

  The Scheme is demand led and was designed to initially facilitate €40 million in additional lending over the first five years and would allow MFI to make loans to over 500 microenterprises, creating over 700 jobs.

  A full progress report on the operation of the scheme from 1 October 2012 to 31 March 2013 can be found on my Department’s website (www.enterprise.gov.ie) and the Microfinance Ireland (MFI) website (www.microfinanceireland.ie). It is intended that the next progress report to end June 2013 will be published in July 2013, but I can advise the Deputy that since then, up to 6 May 2013 MFI had received 173 applications, of which 60 loans were approved (valued at €1,005,092 and supporting approximately 150 jobs), 82 applications declined, 17 withdrawn or appealed and 14 applications still work in progress. I am keeping all aspects of this Scheme under on-going assessment.

The second initiative is the Credit Guarantee Scheme (CGS), which began operating on 24 October 2012. As at 10 May 2013 thirty six (36) live CGS facilities have been put in place resulting in €3,661,100 being sanctioned through the scheme by participating lenders and it is expected that 190 new jobs will be created and 115 jobs maintained under these facilities. Quarterly progress reports are published on my Department’s website (www.enterprise.gov.ie). The latest progress report detailing the analysis and performance of the CGS for the quarterly period ending end 31 March 2013 is now available on my Department’s website.

  The Credit Guarantee Scheme provides a 75% State guarantee to banks against losses on qualifying loans to firms with growth and job creation potential. Target groups are commercially viable SMEs, i.e. well performing companies that have a solid business plan and a defined market for their products or services, thereby demonstrating their ability to repay the loan, but that do not secure credit facilities due to the following two market failures:

1. Insufficient collateral for the additional facilities, or,

2. Growth/expansionary SMEs which due to their sectors, markets or business model are perceived as a higher risk under current credit risk evaluation practices.

  To be eligible for the guarantee, the business must have applied for credit, and must have been refused for either of these two reasons. Ulster Bank, AIB and Bank of Ireland are participating in the Scheme.

  The Scheme is designed to facilitate up to €150 million of additional lending to eligible SMEs per annum. The Scheme is demand led and the uptake may be lower than €150 million in any given year, depending on company needs. Take- up of the Scheme is being closely monitored by Capita, the Operator of the Scheme, and my Department. I committed to review the Scheme after 12 months of operation.

Economic Competitiveness

 41. Deputy Peadar Tóibín Information on Peadar Tóibín Zoom on Peadar Tóibín asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton his views on the Forfás report on competitiveness.  [24440/13]

 48. Deputy Willie O'Dea Information on Willie O'Dea Zoom on Willie O'Dea asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton his views on whether Ireland's competitiveness is improving; the way it can be further enhanced; and if he will make a statement on the matter. [24421/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton I propose to take Questions Nos. 41 and 48 together.

The recently published Forfás report “Costs of Doing Business in Ireland 2012” is an important report in the context of our need to continue to build an export led recovery. It looks at the relative importance of different areas of cost for different sectors.

The report indicates that business costs have reduced significantly in recent years with overall price levels in the economy falling back to levels last experienced in 2002. The improvement in business cost competitiveness has been driven by significant reductions in property related costs (in terms of purchase and rent levels) and falling prices across a range of professional and business services. There have also been relative improvements in labour costs in Ireland which fell on average by 0.9% per annum in the period 2008-2011, while labour costs increased in the euro area by 4.6% per annum on average in the same period.

However, while these improvements are very welcome and indicate that the economy is moving in the right direction, we must continue to focus on actions to promote further cost reductions across the economy. The Forfás report advises that over half of recent cost competitiveness gains are attributable to favourable exchange rate movements. The report also indicates that upward price pressure is beginning to emerge in some areas, while rigidities continue to persist within the economy.

Despite the reductions achieved to date, labour costs, remain relatively high (over 6% above euro area averages). Energy costs remain a cause for concern, particularly for the SME sector, while legal service prices are 11% above 2006 levels despite the recession. The report also shows that Irish consumer prices are 12% above the euro area average. This is a significant indirect cost for business as it puts upward pressure on wage expectations.

The Forfás report makes a number of recommendations aimed at further improving our cost competitiveness position in relation to labour, property, transport, utility and professional services costs. Part of the objective of the Action Plan for Jobs has been the development of proposals each year that can improve our competitiveness. The 2013 Action Plan includes a number of specific actions in this regard which address some of the areas highlighted in the Forfás report. The implementation of these actions, combined with the Government’s broader agenda to enhance productivity, will play a key role in improving our competitiveness and realising our ambition of making Ireland the best small country in the world to do business.

Employment Statistics

 42. Deputy Gerry Adams Information on Gerry Adams Zoom on Gerry Adams asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton the number of young persons employed in March 2011; the number currently in employment; and the success of initiatives to create and retain jobs for young people. [24443/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton The Quarterly National Household Survey (QNHS) is the official source of estimates of employment in the State. According to the QNHS figure for Q1 2011, the number of people employed aged 15 to 24 years classified by broad ILO economic status was some 171,800 persons. According to the most recent QNHS data available (Q4 2012), the number of people in employment within this cohort was approximately 154,400. As a result of both natural decrease and net outward migration, the population of persons in younger age groups has fallen and this should be borne in mind when considering the data.

  The aim of the Government’s Action Plan for Jobs  is to create a supportive environment for enterprise to create and sustain jobs. All of the measures in the Action Plan are designed to promote employment opportunities in different ways and many young people will benefit from the implementation of these measures.

  Pathways to Work, the Government’s labour market activation strategy, continues to provide opportunities for young people through further education and employment services. In particular, JobBridge, the national internship programme, is providing valuable work experience for many young people. A recent independent evaluation conducted by Indecon Economic Consultants found that 61% of interns progress to paid employment after completing their internships. The Indecon evaluation clearly demonstrates that JobBridge  is delivering for thousands of jobseekers by providing them with valuable opportunities to gain relevant work experience, knowledge and skills in a workplace environment. An increase in the number of places on the scheme, from 6,000 to 8,500, was announced in Budget 2013.

  The majority of participants on JobBridge  to date have been among 20 to 34 year olds. 20 to 24 year olds accounted for 27% of interns, while 25 to 34 year olds accounted for 45%.

  Further measures outlined in Ireland's National Reform Programme update for 2013, submitted by the Government to the European Commission in April 2013, include the following:

- The further implementation of the ICT Action Plan, including the provision of 760 additional places on the ICT graduate conversion programme. These programmes, which are designed and delivered in partnership with industry, are targeted at graduate jobseekers who wish to acquire honours degree level programming skills for employment opportunities in ICT.

- The Labour Market Education & Training Fund, known as Momentum, will provide a range of quality, relevant education and training interventions for up to 6,500 individuals who are long term unemployed, including young people. Four targeted sectoral themes have been set out for the provision of this funding, one of which is aimed at the specific needs of people under 25 who are unemployed, assisting them to access the labour market.

- A review of Irish apprenticeship training has been launched to identify reforms that will re-focus apprenticeship training as an alternative progression route to third-level education for school leavers. The review will identify reforms to ensure that newly qualified apprentices are well placed to secure paid employment after their training ends, with the system becoming more closely aligned with labour market needs.

  The Government’s primary strategy to support job creation of benefit to young people is to create the environment for a strong economic recovery by promoting competitiveness and productivity. Economic recovery will underpin jobs growth, most notably for young people. In the light of the recent adoption by the EU Council of Ministers of a Recommendation on an EU-wide Youth Guarantee, the Government will seek to improve its services to unemployed young people with a particular focus on optimising the benefits of the Youth Guarantee for Ireland.

Social Insurance

 43. Deputy Dessie Ellis Information on Dessie Ellis Zoom on Dessie Ellis asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton if he will detail any discussions that he has had in relation to making mandatory PRSI contributions for sole trades and small and medium enterprises at the joint employee and employer scale and an assessment of the impact of such a move on the SME sector. [24460/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton I have not had any discussions regarding making mandatory PRSI contributions for the self-employed at the joint employee and employer rate. There is a recent ECJ decision that will have implications for the technical detail of how Ireland categorises owner-directors as self-employed for PRSI purposes.


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