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 Header Item Written Answers Nos. 44-51
 Header Item Illegal Moneylenders
 Header Item Competition Authority Staff
 Header Item Credit Availability
 Header Item Job Creation
 Header Item Job Creation Data
 Header Item Company Closures
 Header Item Business Costs

Wednesday, 22 May 2013

Dáil Éireann Debate
Vol. 804 No. 2

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Written Answers Nos. 44-51

Illegal Moneylenders

 44. Deputy Tony McLoughlin Information on Tony McLoughlin Zoom on Tony McLoughlin asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton if his attention has been drawn to concerns that many citizens have with illegal money lenders who operate in local communities and are alleged to charge interest rates of up to 400%; and if he is considering any legislative changes to address these issues relating to the regulation of money lending as currently provided for in the Consumer Credit Act 1995. [24135/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton Moneylending is regulated by the provisions of Part VIII of the Consumer Credit Act 1995, which includes specific prohibitions on engaging in the business of moneylending without holding the required licence granted for that purpose. The Central Bank and Financial Services Authority of Ireland Act 2003 designated responsibility for the provisions of Part VIII of the 1995 Act, including responsibility in relation to granting moneylending licences, to the Central Bank. Accordingly I have no direct function in relation to these matters.

Competition Authority Staff

 45. 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 staffing improvements that have been implemented in the Competition Authority to ensure that it has the capacity to investigate anti competitive behaviour in the economy; and if he will make a statement on the matter. [24349/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton On foot of a review of resources in the Competition Authority in 2012 I approved an additional ten posts in the Authority for enforcement purposes. To date 8 of these positions have been filled by a combination of redeployment, staff returning from career break and open recruitment and I expect the final 2 posts to be filled in the coming weeks.

Credit Availability

 46. Deputy Mick Wallace Information on Mick Wallace Zoom on Mick Wallace asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton his plans to alleviate the problems of small and medium-sized businesses that are not involved in the export market and still face great difficulty in accessing credit; and if he will make a statement on the matter. [24438/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton My Department has introduced two targeted initiatives to support an additional flow of credit into the economy by filling gaps where specific market failures exist and are not directly involved in the export market – the Credit Guarantee Scheme (CGS) and the Microenterprise Loan Fund.

The CGS has been live since 24 October 2012 and is intended to address market failure affecting commercially viable businesses. It 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 cannot 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 second initiative is the Microenterprise Loan Fund which was established by Government, and began operating on 1 October 2012, to improve access to credit for entrepreneurs and micro-enterprises and to facilitate the growth and expansion of viable businesses from all industry sectors which have been refused access to credit by banks.

  The Fund will provide support in the form of loans of up to €25,000, available to start-up, newly established, or growing microenterprises employing less than 10 people, with commercially viable proposals that do not meet the conventional risk criteria applied 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 Government has also set the pillar bank lending targets so that they rise incrementally with expected demand, with targets of €4bn in 2013, increased from €3.5bn in 2012. Both banks met the targets for 2012. To ensure information on the demand side is accurate and up to date, the Department of Finance continues to conduct bi-annual surveys of SMEs to assess credit demand and loan approval rates.

  Quarterly progress reports on the CGS are published on my Department’s website (www.enterprise.gov.ie). The new 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. Also, a full progress report on the operation of Microfinance Ireland from 1 October 2012 to 31 March 2013 can be found on my Department’s website (www.enterprise.gov.ie) and the Microfinance Ireland website (www.microfinanceireland.ie).

Job Creation

 47. Deputy Sandra McLellan Information on Sandra McLellan Zoom on Sandra McLellan asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton his views on the relationship between the increase in the value of enterprises exporting goods and services and the impact on job creation. [24450/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton In a small open economy such as Ireland, exports sustain and create jobs. Enterprise Ireland's (EI) objective is to grow jobs in Irish companies by increasing their trade in overseas markets, which in turn will support existing jobs and job creation here. EI works in partnership with Irish enterprises, providing a cohesive set of supports to help them win export sales on global markets.

EI client companies achieved a record €16.2 billion exports in 2012, up from €15.2 billion in 2011. The greatest export gains came from sectors such as Engineering, Software, Internationally-Traded Services and Medical Devices, while the outstanding geographical performance was to the USA, Asia Pacific and Latin America. Exports accounted for 54% of EI clients' total sales in 2012, which are now in excess of €30 billion.

Across the wider economy, exports of goods and services from Ireland are now well above pre-crisis levels. The total value of exports from Ireland increased by 5% in 2011 and reached €173 billion. A further 5.5% increase in 2012 saw a new record for Irish exports of €182 billion. We still have one of the most flexible economies in the world and continue to have one of the world’s most highly skilled, highly educated and productive workforces.

The positive impact of increased exports on employment in the Irish economy is beginning to be seen in the job creation figures of EI and IDA. In 2012, EI client companies created a net new 3,338 jobs. This was the Agency’s strongest performance in 6 years. IDA client companies created 6,570 net new jobs representing the best performance in a decade for the Agency.

At the end of 2012, EI companies employed 145,460 people directly on a full-time basis and supported a similar number of indirect jobs in the economy. IDA client companies employed 136,505 people directly in 2012, with a similar impact on supporting jobs in the wider economy.

We will continue to work, through the Enterprise Development Agencies, to increase the growth in overseas markets of goods and services produced in Ireland with a view to improving employment opportunities in Irish based companies.

  Question No. 48 answered with Question No. 41.

Job Creation Data

 49. Deputy Micheál Martin Information on Micheál Martin Zoom on Micheál Martin asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton the number of jobs created and lost in the private sector in the past two years; and if he will make a statement on the matter. [22129/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton My Department compiles data on employment in companies supported by the enterprise development agencies: Enterprise Ireland, IDA Ireland, Shannon Development and the County and City Enterprise Boards.

  Table 1 below sets out the overall figures for full-time jobs created and lost in client companies of the agencies in 2011 and 2012. Overall, the agency-supported companies created 16,652 net full-time jobs between them over the last two years.

  2012 was a particularly good year for job creation by the agencies’ clients, with IDA companies creating a total of 5,638 net new full time jobs and a further 932 part time jobs last year. The IDA client base in Ireland now employs 136,505 people on a full time basis, a level not seen since before the global financial crisis began in 2008.

  Clients of Enterprise Ireland created 3,338 net new full time jobs in 2012. Enterprise Ireland companies now employ 145,460 people on a full time basis, along with approximately 24,000 part-time jobs.

  Between them, IDA and Enterprise Ireland client companies have been creating in the region of 1,000 additional jobs per month since the Government came into office.    This is in stark contrast to the 45,000 jobs which were lost over the period 2008-2010 inclusive in the agencies’ client base.

  Shannon Development client companies support approximately 6,500 full and part-time jobs. The County and City Enterprise Boards support companies that employ in the region of 33,400 jobs. The agency-supported companies also indirectly support a significant level of further employment throughout the economy.

  In the wider economy, we have seen a stabilisation in jobs numbers in the last six months of 2012. The Quarterly National Household Survey (QNHS) for Quarter 4 of 2012 showed the first annual increase in employment since the middle of 2008.

  While we are not complacent about this improvement, it demonstrates that the path the Government is following of re-building an economy based on enterprise, innovation and exports is paying off.

  Table 1 - Full-Time Job Gains and Losses in enterprise agencies supported companies

- 2011 2012 Total
Job Gains 31,769 30,008 61,777
Job Losses -24,381 -20,744 -45,125
Net change 7,388 9,264 16,652
 

Company Closures

 50. Deputy Andrew Doyle Information on Andrew Doyle Zoom on Andrew Doyle asked the Minister for Jobs, Enterprise and Innovation Information on Richard Bruton Zoom on Richard Bruton the steps he and his Department have taken to date in order to secure the long term future and to find a new employer for the Merck site in Rathdrum, County Wicklow, where 280 people are currently employed; if he has engaged the key stakeholders to collectively seek a solution for a buyer to come in and take over this site; the role of the Industrial Development Agency in this process; the progress that has made to date since the announcement regarding the site closure in 2015; and if he will make a statement on the matter. [24140/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton Both I and IDA Ireland fully recognise the seriousness of the situation as announced in March last, that this company intends to cease operations at its facility in Rathdrum, Co. Wicklow, which will result in all 280 positions at that site being lost.

Layoffs will start around the end of 2014 and the facility will close in 2015. Some production will transfer to other Merck facilities and to contract manufacturers. The proposed action is an outcome of the company's on-going review of its worldwide manufacturing capabilities that has, unfortunately, resulted in sites being sold, closed or consolidated in all regions of the world.

IDA Ireland is actively engaged with local company management and with the relevant company officials at corporate HQ level, to seek to find a buyer for the Rathdrum site and is currently in the process of contacting a number of companies around the world to pursue this option. To date there are no developments on a new buyer, but it is still very early in the process.

It is worth noting that Merck has a substantial and strategic presence in Ireland, having invested over €2.2 billion in this country. There are currently 7 facilities with 1,957 permanent jobs supported by IDA That Agency is working closely with Merck’s corporate executive leadership and their Irish management on future investments, including R&D, IT/business services and transformation projects. The goal is to secure the majority of those 1,957 existing jobs in Ireland and to embed them further in Merck’s future manufacturing network and research infrastructure.

Business Costs

 51. 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 the costs that undermine business growth and employment creation; and his views on whether property rental costs are not an issue for business. [24441/13]

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton The recently published Forfás report "Costs of Doing Business in Ireland 2012" 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 dramatic reductions in property related costs (in terms of purchase and rent levels) and falling prices across a range of professional and business services. We have also seen relative improvements in labour costs in Ireland which fell 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 the Forfás report highlights that Ireland is still out of line with our key competitors for a range of business inputs. Labour costs, despite the reductions achieved to date, 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. Also the report 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 report indicates that certain property costs in Ireland have reduced significantly in recent years. Construction costs and rental costs for both office and industrial space have fallen dramatically for new businesses since the collapse of the property market. Rental costs for new leases of office space in Dublin, for example, have decreased by 45 per cent between 2007 and 2011. Of course, I recognise that many existing businesses are tied into higher property costs, having purchased property or entered leases with upward only rent review clauses prior to February 2010.

The Government has taken steps to address the issue of upward only rent reviews where possible. In the Action Plan for Jobs 2012, the Government undertook to place downward pressure on commercial rents where the National Asset Management Agency (NAMA) had acquired the loan on the underlying property.

Other property related costs, such as stamp duty on transactions, have recently been reduced. Local Authority rates have fallen marginally in the past three years and the Government will continue to encourage Local Authorities to exercise restraint in setting commercial rates and, where possible, to reduce rates.

The 2013 Action Plan for Jobs also includes a number of specific actions to support a sustainable commercial property market. These include:

- Ensuring that the commercial leases database is established and fully operational in 2013.

- The completion of a review of the Rent Review Arbitration Code to consider the effectiveness of the Code in resolving disputes over rent reviews, and the degree to which stakeholders are making use of the Code

- Enacting and implementing the Valuations Bill in order to accelerate the revaluation of properties for commercial rates purposes.


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