Wednesday, 30 Nov 1983
Export Promotion (Amendment) Bill, 1983: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
Mr. Taylor
Before we adjourned for lunch I was dealing with the question of the necessity for manufacturing industry to be maintained in a fully competitive way so that it would be enabled to compete with manufactured products from other countries. I referred to the fact that if that competitive edge was not there, all the promotional work undertaken by CTT would be to no avail. The Government recognised the need for our industry to have that competitive edge because in their statement issued from the Government Information Services on 16 June 1983, a statement on the NESC Report No. 67 on an analysis of job losses in Irish manufacturing industry, they said: "The Government's view is that competitiveness in the widest sense is the key prerequisite for the expansion of manufacturing industry." What have the Government done?
They have taken that key prerequisite factor in the costing of manufacturing goods, namely, the cost of energy, and they have made that the highest in Europe and the highest among all our competitors in manufacturing industry. In January of this year the cost of energy to industry was already 25 per cent higher than that pertaining to our competitors. Yet, in the budget in the middle of the year, solely as a result of impositions voluntarily imposed by the Government and the ESB, the cost of energy to manufacturers was increased by a further 10 per cent. There is little point in the Government making a statement pointing out how vital a prerequisite is the competitiveness of our manufacturing industry when, by their own act, they take a very serious step to render it uncompetitive. If that course continues, the money expended on CTT is money wasted.
CTT do a magnificent job but they will be unable to promote our products abroad unless the price is right. The price cannot be right unless the ingredients that go to make up that price, a key factor of which is energy costs, are at least comparable with those of our manufacturing competitors in the EEC and elsewhere.
Earlier today I made reference to the fact that in the past over-reliance has been placed on the multinationals. The Telesis Report indicated there should be a change of emphasis in the manufacturing context to smaller indigenous firms and the Government undertook to accept the report and implement a switch in emphasis to smaller indigenous firms. I wish they would indicate when they propose to do that. It is most important that they do it if we are to make any dent at all in the horror of the unemployment figures we have and those in prospect. The need for Córas Tráchtála to place particular importance on the smaller indigenous firms is vital. The multinationals have their own marketing arrangements. They have their markets readymade and they use the facilities provided for them here — massive grants from the IDA, tax concessions and so on — as a vehicle for their profit expansion and they duly export those massive profits when they earn them.
I want now to turn to another aspect of the work of Córas Tráchtála and I must express some surprise at finding there is no reference to it in the Minister's opening statement. One of the key problems surely that Córas Tráchtála must be faced with in trying to promote goods of Irish manufacture abroad is the wall of protectionism thrown up in Europe and elsewhere against our products. The growth of this development must be very seriously hampering the development of our industry, causing us many thousands of jobs and serious losses in earning resources which we would enjoy were these walls of protection not there.
The extent of the problem was examined in a report of the Council of Europe, Document No. 5052, published on 19 April 1983, an excellent report put together after extensive examination of the situation by teams of experts under the auspices of the Council of Europe Executive in Strasbourg. The report notes that the volume of international trade levelled off in 1981 and went down in 1982. Its resolution noted also that in its view additional non-tariff barriers to trade were largely responsible for this situation and, despite appeals by OECD and GATT, the international trading system is becoming less liberal and more protectionist.
Again, at page 19 of the report, after an exhaustive review of the extent of the protective measures thrown up in the field of international trade, the report came to this remarkable conclusion: in world terms between 51 and 55 per cent of total imports are subject to restrictions. That will give some indication of one key problem facing our exporters and facing the work of Córas Tráchtála. What are these measures that are thrown up? They list some of them at page 20 of the report. They talk about administrative harassment, health regulations, industrial standards, legal obstacles, economic and commercial sanctions, and they go on to say that in a recent survey the GATT secretariat identified more than 600 non-tariff measures.
The Minister did not refer to this problem in his opening statement but Córas Tráchtála published an article on this subject in their magazine "Export Review" in volume 2, No. 2 of June 1983. They pointed out at page five that the momentum towards further trade liberalisation appears to have been dissipated with the conclusion of the prolonged and exhaustive Tokyo round of GATT negotiations, 1973-1983. Their assessment of the extent was that protective action relating to more than one-fifth of world trade manufacturers have been taken since the conclusion of the Tokyo round. They said that, despite the Tokyo agreement, there is increasing resort to non-tariff barriers to provide protection for home industry. They are particularly important in the EEC context where tariff and quantitative restrictions are generally prohibited by the Treaty of Rome. They refer to bureaucratic delays and bottlenecks and customs documentation and give as a simple example the shortlived French requirement that Japanese videos should be processed through the little known customs post of Poitiers. They refer also to the requirement to use indigenous language and packaging as being another favourite ploy.
There are ploys in plenty and they are no joke. They are not funny where our industries are concerned, where our employment is concerned and where our prospects for the future are concerned. They point out that even West Germany is not above giving under-the-counter protection to its home industries particularly through the extensive network of technical standards administered by laboratories controlled by the German industry in question.
Here then is the problem with which Córas Tráchtála are faced in promoting our industries abroad. The reports indicate how widespread this is and it must surely be taking a drastic and very serious toll of our potential to manufacture and export. Where are the indications of our response to that situation? Where is the indication in the Minister's opening statement and Government statements generally of the urgent and vital action that must be taken if we are to have our industry, burdened as it is by over-high energy costs, survive faced with the unfair competition to the extent I have outlined? I have seen statements from time to time that representations are being made at various levels. The Taoiseach and the junior Minister in Foreign Affairs raised it at a conference in, I think, Munich, but there is no indication that there is any let-up in this wall of protection facing our exporters with which Córas Tráchtála has to contend, with which Irish industry has to contend burdened as it is by the weight of excessive energy costs, excessive postal and communications charges. The burden is too great. Is it any wonder our industries are falling by the wayside like skittles. Not a week passes but one, two or three industries fall, factories close, more go on the dole, more prospects are gone, more homes are broken up.
It is time that the Government and CTT indicated to those EEC countries and others who put up these protections that enough is enough, that a halt is now being called, that two can play at that game, that for too long we in this country have been the good boys of Europe in the field of trade, that unless there is some indication of faith on their part and a genuine liberalisation of the movement of goods and free trade we will be left with no choice but to examine ways and means of ensuring some measure of protection for our own weak industries. Let us not under-estimate the purchasing power at home. It is substantial in many fields but in some areas we have no capacity to manufacture goods we urgently need such as paper, for example, although I hope that situation will be remedied before too long.
These are reasons which are contributing to the 200,000 people on the dole queues. That is the task facing Córas Tráchtála. Now is the time for action. Let us bring our industry up to a competitive level as a prerequisite and let us bring our energy charges at least to a state of parity with those of our competitors. When this matter is raised the Government say that reliance is placed on the ESB as a revenue raiser but this is a grave and serious mistake which is counter-productive and does not achieve that object. The effect is to reduce the competitiveness of our manufacturing industry. Some companies are unable to compete and many go to the wall. The additional revenue temporarily raised by the increased cost of energy is immediately lost in redundancy and social welfare payments. The maintaining of the competitive edge of our industry produces wealth through exports as a result of which employment is maintained and tax is collected from the workers and from the companies. The net effect of high energy charges is a loss of revenue, not a gain.
Immediate and urgent action is required to break down the wall of protection against our industries and if these matters are not tackled we will remain at the top of the unemployment league. It can be said that top of unemployment league equals highest energy costs equals protection against us.
Mr. Coveney
I welcome the opportunity provided by this Bill to say something about our exports. At a time when the country has been experiencing so many difficulties the overall performance of our export industries has been against all the trends and has provided a life-line to an otherwise ailing economy. Any study of the export figures conveys a pattern of striking achievement and for that we have good reason to be grateful to the exporters themselves and to the supporting State agencies, particularly the IDA and CTT.
Although this background of achievement is impressive and provides a firm base for future development, it should not be regarded as more than a kind of launching paid from which to go forward rapidly. There are still enormous and largely untapped resources in our export drive. Unlike some other countries, exports are not for us a luxury or a means of disposing of surplus production but an absolute imperative, central to our whole future economically. While our home market is relevant, we cannot ever hope to absorb anything like our potential production. Our manufacturing and service industries cannot grow and provide increased employment unless to they can sell more and more of their products abroad. That is what the Bill is designed to assist and as such I welcome it.
Export growth and job creation are synonymous and there is no alternative which provides the remotest prospect of offering a gainful and fulfilling future to the legions of the unemployed and the rapidly expanding young work force. We either export or die. That is the challenge and how we meet it will affect the future of every family. Our standard of living depends on the level of exports and this is not always understood. What are we going to do about it? There are two matters to which I will address myself. One is the question of getting our house in order at home. If we are to use and improve the marketing skills of CTT we must be sure that we have a product which is acceptable and saleable in world markets. Irrespective of ideologies there is no escaping the view that there are some basic imperatives.
A number of speakers have referred to competitiveness. What does that mean? It means some unpalatable choices and some decisions to which we have not been accustomed. It means moderate inflation and high productivity. We must give a continuing and higher priority to education and training. Education is always a soft target during a recession but I hope that the area of education for employment will be seen as untouchable in regard to expenditure cuts. It is an absolute prerequisite for the new type of industrial development. We must go for the best and latest technology and not be afraid of it. We must get over the notion that technology is to be feared because of the immediate job losses it sometimes gives rise to. That has always been the case since the time the plough was invented and it has always been wrong. We must have enlightened, firm and fair management that commands respect and is seen to get results. We must have better industrial relations and eliminate restrictive practices particularly where they lead to cost increases.
We must do something better about our design. We need better design comparable to the best in world markets and we need impeccable quality. It is important that we try to equate Irishness with quality and excellence. The Government, and some of their agencies, must be got off the back of industry, as mentioned by Deputy Taylor. In that regard I should like to refer to the crippling effects of personal taxation at all levels. It is killing incentive and the reasons why people take risks and work hard. The cost of energy, and some other State services, is placing exporters at an impossible disadvantage vis-à-vis their competitors. The Government must address themselves to those matters.
We are expecting the Government to produce an industrial policy shortly and I hope it looks carefully at the impact of the present levels of taxation and the on-costs that have been piled on to industry for energy, postal services and a range of other services. If the plan does not deal with those we will be blowing against the wind and spending money through CTT and other agencies when we cannot succeed. We must get the product right and competitive. We need to rediscover the work ethic and get again some sense of the dignity of work. We must develop some sort of national consensus and a sense of purpose on what we are about. That is the key to everything else and is a challenge to leadership, politicians and others.
The matters I have outlined may seem to represent an impossible dream but I have not mentioned anything that has not been done by another island nation at the other end of the world, the Japanese. They succeeded in more trying circumstances. We are not looking to the nation to do something that is not on. We are looking to it to do something that others have done. In our predicament we have to do those things.
Parallel with those moves we need to give a higher priority to the place of marketing in our export effort. We need to have a whole new approach to marketing, giving it a greater priority at Government and company levels. Despite the impressive record of many Irish export companies in recent years we have largely failed to create any broad international awareness of Irish products. I accept that there are notable exceptions to that general statement but they could be counted on the fingers of one hand. We must ask ourselves why. My view is that we have given insufficient priority to the subject of marketing and, as a consequence, there has been a lack of investment in it and in the incentive to so invest. We need to alter those priorities to give marketing of our exports a higher rating. It follows that marketing will have to get a greater allocation of available funds from the State and individual companies.
Where is the money for such high risk to come from? Marketing is implicitly a high risk business because if the strategy fails the total marketing investment is always lost. We are talking about very sizeable figures. I should like to quote an example which was referred to by the most successful Irish marketing wizard of all, Dr. Tony O'Reilly. In the course of a speech in Dublin recently he said that no product, concept, country or service could achieve national consumer recognition in the United States without an expenditure on marketing totalling approximately $100 million over a five to seven year period. That puts the whole matter into perspective. It goes without saying that only the large multinational companies here could contemplate expenditure of that order.
How do we deal with this? Small countries have a problem in international market places and big countries have an enormous advantage in that they have huge home markets, big company structures and large marketing budgets. We have a relatively tiny home market and we must export to survive. It is because we are at that disadvantage that we must look at this as a national question. However, we can do certain things. We spend in total, between the IDA, AnCO and CTT, sizeable sums of money and it should be possible, if national priorities were reordered somewhat as they should be, to give greater emphasis to grant aid for marketing and less in grants for fixed assets such as buildings and machinery. That ought to be considered in the new industrial policy and debated in the House. It is not too difficult for potential industrialists to borrow against fixed assets. Any lender, given a reasonable proposal, would be happy to lend against the security of buildings and machinery but few of them would be willing to lend money against a marketing programme because the repayments of any money lent would depend solely on the success of the marketing project.
Even in present financial circumstances we should consider injecting greater funds into this sector even at the expense of other desirable State objectives. In addition to straight financial aid the State should also consider loan guarantees and interest subsidies to companies borrowing for approved marketing schemes. If a marketing scheme is successful a problem does not arise and there is no good reason why the State should be expected to cough up the greater part of the cost. However, the State should consider giving a proportion of the cost and, in addition, give some loan guarantees against loss in the event of a marketing strategy failing. I am referring to a professionally prepared, well researched and agreed strategy. If that went wrong it is reasonable that the Government, instead of giving larger grants, should consider providing loan guarantees and interest subsidies. That idea was referred to recently also by Seán Condon of CTT in a paper which he read at UCC and is worth considering.
The question of tax arises again, the need for greater tax incentives both in respect of marketing schemes for companies and at the level of personal taxation with regard to marketing personnel. In the latter case consideration might well be given to offering some tax exemption, or reduction, to individuals related to the number of days spent abroad each year marketing Irish products. If we expect people to travel abroad, go away from their families, live out of suitcases, stay in different types of accommodation, rush from plane to plane and be subject to such pressured conditions — it is not a glamorous business; it might be for the first month but people soon tire of it — it is reasonable that they and their efforts be recognised within our tax system. They are doing a job certainly for themselves but a massive one for the whole of the country if they do it well.
I should like to refer now to some ideas the Taoiseach himself mentioned on a number of occasions in the past and to reactivate them. He spoke a few times about national economic planning, the need to make it a really meaningful rather than an academic exercise. I agree with that sentiment. He went on and talked about setting up what he referred to as sectoral committees to be placed under the direction of a Minister of State in each case with the object of ascertaining directly what people in the field are thinking and what they want by way of support of their own and State effort. In the field of marketing I suggest that that process should begin sooner rather than later, that the economic Departments of Government, together with the other relevant semi-State agencies, should be sitting down now with exporters to agree and co-ordinate a new upgraded marketing strategy for our exports. We always seem in this country to be one plan away from action. There is no need for any more planning. We know what is needed. We need highly sophisticated, upgraded international marketing strategy to assist companies in the most constructive way possible. The best way is to sit down and talk to them about it, then develop our strategy and get on with it. Irrespective of what proves to be our policy or economic planning in the years ahead, everybody is aware that we must continue to radically and rapidly expand our exports. Therefore, we should get on with that. It should be remembered that marketing exports is an expensive and high risk activity. The stakes are high in every sense but so also is the prize. In simple terms that prize is this: success in this field offers the only real prospect of breaking the vicious unemployment spiral and of providing a prosperous and stable economy in the years ahead. That is the measure of the challenge: to rapidly and radically develop what I believe to be the enormous and, as yet, untapped potential of exports.
Mr. Enright
This Bill is one worthy of considerable thought and is certainly one in which people throughout the country will be interested. It increases the statutory limit on funds to CTT for the purpose of enabling them perform their export promotion functions. Córas Tráchtála are performing a very difficult job selling our products throughout the world. Unless we as a nation are fit to export our products then we shall be unable to survive economically.
Many fields have been opened up to us since our entry into the EEC. We have made some significant inroads in some new markets available to us. But we must examine closely whether or not we have utilised fully the opportunities for exporting that have been presented to us. I have no doubt but that we have not achieved some of the enormous potential benefits obtaining. In this respect I am not blaming this or any other Government. As a nation, over the past five or eight years we have allowed ourselves lose our competitiveness vis-à-vis neighbouring countries. That fact has become obvious to most people. Our cost price factors are such that it is very difficult for our industrialists to survive the cold winds of competition.
The provisions of this Bill should prove of some help and benefit to Córas Tráchtála. I applaud their efforts in the difficult task of obtaining markets and selling our products throughout the world generally. However, improvements could be effected at the CTT level. But the basic fact of life is that we as a nation must endeavour to render ourselves positively competitive. This can come about only through determined effort by the Government, employers, trade unionists and all involved. In many respects our costs are higher than in many of our neighbouring competitor countries and this is hampering our exports.
Therefore, I hope for a very determined effort by all involved to try to reduce our costs. We have very little room for manoeuvre unless we do this. As a small nation on the fringes of Europe we have certain attractions to offer to outside industrialists to come here to manufacture and to export their products. However, we should constantly be looking at markets for our own produce which, as I said, are being hampered by our costs. We must face up to the fact that we are not competitive vis-á-vis our competing countries in regard to similar goods.
Many of our industrialists, particularly those in the textile trade, engage in importing goods for processing and reexporting. They face enormous customs clearance problems and delays not only in respect of goods clearance but in the matter of taxing. There is too much red tape and bureaucracy involved, with consequent lengthy delays. Indeed sometimes such exporters get the impression that instead of working with and for them, the State bodies concerned are against them. We all know that is not so but people are so frustrated by this that they are suggesting a big effort should be made to cut down on bureaucracy.
I have done some limited travelling overseas. Some years ago in Europe and in other parts of the world one came across such products as Kerrygold butter, Irish cheese and other dairy produce in shops, hotels and restaurants. In those years I felt certain we would succeed in finding many markets abroad for these products. Bord Bainne had laid the basis for expansion. In the meantime we have not continued to find new markets. We have not exploited the potential markets available to us. Therefore, there must be more determined efforts to spearhead a new campaign of sales for our dairy produce because we have not availed of opportunities open to us to sell abroad our excellent produce which looks so attractive in overseas supermarkets where they are sold at the moment.
We will be lost if we do not succeed in selling our produce in the major European capitals for a start. CTT have been making significant efforts but they have much leeway to make up. I compliment the Minister for Agriculture in this respect but much more needs to be done in the exports sphere.
On the other hand it is most discouragain to visit our supermarkets here and see on their shelves imported dairy products from Britain and other European countries. We see imported biscuits and many other imported household items. It is frustrating when one thinks of our excellent products for which we are not finding markets abroad. We should be large exporters of these products instead of importers. There is something seriously wrong and we must examine our consciences. As I have said, we have not availed of or exploited foreign markets, particularly in relation to beef, lamb and pork.
We must get our farming organisations, our trade unions and different Government bodies together to take a major initiative in the matter of finding foreign markets for our produce. The opportunities are there if we exploit them. If we continue to import items which could be produced at home there is little hope for our export campaign. We must get our act together; we must try to create the climate for exports.
Another field crying out for attention in the matter of exports is Irish whiskey. There are also the Guinness products, plus Irish gin and other spirits, and there are potential markets available for them. We have not succeeded in benefiting from the market for so many items that are available to us in the exports of Irish whiskey, Irish creams and gin. Some years ago, these items were more freely on sale in Britain and Europe than they are now. I do not know if we are even retaining the existing market but, from visiting different countries, I feel we are slipping in this respect. There is scope for enlarging our exports of items produced by Irish Distillers, Guinness and others.
There have been some commendable efforts. Bailey's cream has got a major hold on the European and American markets. Irish Mist has also made an impact in these markets. However, these are the exceptions rather than the rule and there is potential there if the proper marketing effort is made. Córas Tráchtála can improve their efficiency and export promotion efforts in that field.
We should put a stop to the smuggling of spirits, beer, bottled stout, ale and so on. These items are coming in by the lorry load and, on occasion, by the boat load. They are harming our markets and causing a problem for people who do not wish to buy products that are brought in illegally. We have many difficult problems facing us at present. The efforts made in the area of exports promotion are welcome and must be assisted in every respect if a greater effort is to be made to sell our products overseas. There have been significant improvements in our balance of payments in regard to imports and exports over a number of months and it is important that these figures are maintained. We must provide the necessary capital to enable CTT to continue their work for the development of our export markets.
I wish the Minister for Trade, Commerce and Tourism and the Minister for Industry and Energy well in the difficult task they are facing. The two Ministers concerned are facing many difficulties now but they and their Ministers of State have initiative, enterprise and foresight. They have overall responsibility for the policies and duties of these export promotion bodies and I am sure they can get us out of the difficulties which we are now facing and restore a proper balance in which we will have a major increase in our exports over the next couple of years. I wish them well in their efforts and I welcome the Bill.
Minister of State at the Department of the Taoiseach (Mr. Barrett,
Dún Laoghaire): I welcome the opportunity of making a few comments on this important Bill for two reasons. First, it gives us the opportunity of pointing out the good work being done by Córas Tráchtála and it gives me the opportunity of pointing out a few factors which will help to lift some of the doom and gloom hanging over us at present and which some people seem to have a vested interest in seeing continues to hang over us.
We have made tremendous strides over the last couple of years through the good work of CTT and the IDA. The fruits of that work are now seen in the recent figures produced by the Central Statistics Office. Last month exports amounted to £660.5 million compared to £520.3 million in 1982. For the 12-month period ending in October 1983, our exports amounted to £6,619.9 million compared to £5,542.7 million last year. We are up £1,077.2 million in exports this year. This shows tremendous hope for the future and we are capable of producing items that we can export and which can compete in the world markets despite the many criticisms that are levelled at Irish industry. It also highlights the wise policy adopted by the IDA over the past couple of years. They have attracted industries here which are now beginning to produce goods which can be exported and which can be of benefit to the nation. However, I do not think we should be complacent because we are passing this Bill giving more assistance to CTT to continue the work of promoting, assisting and developing Irish industries——
Mr. Flynn
This Bill does not give them a bob extra.
Mr. Barrett
(Dún Laoghaire): I should like to say to the Deputy that I do not regard this as a party issue and I think he had some positive things to say. We should all boost our country at a time when people are on their knees. It is not good enough to get your books right; it is important to motivate people and to give them some hope. We tend to ignore the good things that are happening, which will eventually bring back the level of decent employment to a stage where the vast majority, if not all, people will be doing a day's work. I do not think we can take these matters in isolation. There is a long way to go and the Government have a duty and responsibility in explaining to the public what our economic policies really mean. It is not just a question of balancing books. It is a question of cutting out waste and cutting back on expenditure which we cannot afford. In doing so, we will bring back some incentive through our tax system; we can reduce the level of personal taxation so that people will have an incentive to work if work is available in the form of overtime or weekend work. Our taxation system must be equitable and all people must pay their fair share so that the PAYE sector will not carry the full burden. All this is relevant to the Bill we are debating because we cannot expect Córas Tráchtála and the IDA to perform miracles. If we are not competitive we cannot export because we cannot produce the items we can sell abroad.
In regard to our education system we must ensure that the necessary changes are made to gear people to the modern world and to give them the skills that are necessary to manufacture those goods we can sell abroad. Marketing is one area in which we have made some effort, albeit belatedly, to improve our education system but if we are to compete in the wide world outside we must also have regard to the quality of the items we produce. We must ask ourselves if we are paying sufficient attention to quality whether in the area of foodstuffs or in any other area. We must ask ourselves whether we are giving value for money. Too often I have known of industries where there was a tendency in good times to increase profit margins instead of maintaining a level of viability and of profit that would make the goods produced attractive in terms of price either on the home market or abroad. We have an educational problem in that area and this has manifested itself not only in the building industry but in many other industries where the situation of supply and demand dictated the prices that were charged for the products. Sometimes this resulted in exorbitant profits because for short periods the demand was such as to enable various industries to sell their products easily.
This Government will approach all these aspects in the coming years in a positive and constructive way. It is essential that in putting forward our economic policies we explain them and the reason for them to the public so that they will be aware that there is some positive end to the road we are taking. We must ensure that the goods we produce are competitive and that there is the incentive for people to produce such goods. This is the kernel of the problem facing us now and the major factor in that problem is the level of taxation. Down through the years we took the short cut instead of having the guts to cut expenditure and to become more efficient. We tended to make up the balance by increasing taxation instead of taking the harsh decisions that were necessary in regard to the level of expenditure. We should have cut out much of the waste that took place down through the years, thereby ensuring that we were getting better value for the money we were spending. I am confident that in the coming months the Government will bring forward an educational policy designed to gear us not only to the latter part of this century but to the early part of the next century. We must have an education policy which will ensure that people are geared to the jobs that will be available instead of providing an education which leads to a situation of increasing numbers of educated unemployed.
All of these aspects are tied in with the Bill before us because CTT are playing their part. But we have a part to play too, in ensuring that there are produced quality goods which we can sell with confidence abroad. We must also ensure that there is value for money in terms of the goods which we sell on the home market because in that way we can reduce imports. As Deputy Enright said, there is no reason for our having to engage in such high levels of imports in the area of foodstuffs. Before the summer recess I answered a question in relation to the value of potato imports. The figure I gave in this regard was of the order of £25 million. It is absurd that we should be importing such large quantities of potatoes when we are capable of producing good quality potatoes at home. That is only one example of the level of imports of foodstuffs.
We must congratulate the Department of Trade, Commerce and Tourism and the Minister for the steps taken earlier in the year in bringing forward the Export Promotion (Amendment) Act which broadened CTT's area of responsibility to include the promotion and development of a wide range of services exports. This is an area in which there are tremendous prospects, but one that we have ignored for too long. We have a young and well-educated population and, as the Minister said, we are capable of exporting services to the middle-eastern countries. A good deal of revenue could accrue to our economy by way of the export of services. In this respect we can compete with the best in the world. We have the best qualified engineers in the world as the ESB have proved by the contracts they have won abroad in the area of services for hospitals and so on.
The main reason for my speaking to this Bill is that I regard it as a sign of hope for the future. This is the type of thing that we should spend more time debating, thereby giving hope to people instead of burdening them with facts and figures. When something is done well, we should not be afraid to congratulate those who on our behalf have been responsible for the achievement. The figures I have quoted in respect of exports are something for all sides of the House to be proud of. The fact that exports are up by more than £1,000 million on the corresponding figure for this time last year is an achievement which must bring further employment and greater opportunities for everyone.
I join with other speakers in wishing the Minister well in his responsibility, especially in the area of exports. I congratulate him on the work he has done so far — on this Bill and on the Export Promotion (Amendment) Act and also on the Insurance Act which permits the provision of export control insurance facilities in support of the activities of people involved in exports. I hope that all of this heralds the beginning of the constructive aspects of Dáil Éireann whereby people can come in here and not be afraid to point out some positive happenings in the country, whereby we can be seen to act as a Parliament though we may have differences between one side of the House and the other. There are other matters, too, in respect of which we can work together in helping our agencies who are doing such great work for us abroad, I hope that all of these efforts will lead to greater prosperity.
Mr. McCartin
I welcome the opportunity of making a brief contribution to this very important Bill. I accept what Deputy Flynn has said about our not exactly handing this amount of money to CTT to help them with their export promotion business. I understand that CTT are in the process of preparing their budgetary allocations for the different regions and that that budget will in turn be presented to the Minister who will have the responsibility of seeking at the Cabinet table the amount of money that he thinks the organisation will require to enable them to discharge their functions effectively in the coming year. All of us here should give the Minister every encouragement in that task.
It is very simple for all of us as politicians to come in here and promote every good cause, all legislation for the benefit of every sector regardless of the sum of our advocacy. When the Minister has looked at the budget they presented to him and has examined the workings of the organisation to ensure that he is satisfied about their efficiency and what they are doing, I will support him if he says that this is the price we must pay for financing an organisation to sell our goods abroad and this is where we must make cuts in order to provide the money for this expense. It is a vital area of operation. If we are to succeed in creating higher standards of living and giving work to those who have not got it, this is the area where we must look for the expansion of the prosperity that we have here at present.
The whole question of how we can expand our economy arises. We can do that by expanding the home market by consumer growth. This has been done in the past. For all the reasons which have been stated by the previous speaker and others, that option is not open to us at the moment. We have not the resources. We can neither borrow nor raise through taxation the money to pump into the economy in order to create a greater consumer demand. Experience in the past has been that if we did that we might just succeed in creating those jobs in the more competitive economies who produce consumer goods seemingly more efficiently than we can do so here in Ireland.
We can talk about the old hobby-horse that most of us ride from time to time of cutting down on imports and replacing them and this is a very obvious way to create more employment, but it is a different subject. Today we are talking about exporting. When we talk about exporting we must take into consideration the sort of protectionism and markets in which we operate and the way those markets are controlled within the EEC and further afield.
In the EEC at the moment we are said to have a free trade area. Many people in Ireland say that this creation of a free trade EEC and our participation in it has created for us some of the problems that we have today. I do not accept this. To begin with, we had embarked on a free trade agreement with the British before we became a member of the EEC when probably Britain were the strongest industrial economy in Europe. At that time our leaders, wisely foreseeing that we would have to go out into the world, grow up and learn to compete with industrialised nations if we were ever to achieve their standards of living, took that courageous step. There is no point in saying that because we extended that into a European Economic Community and got in return more advantages from it than we did from our free trade agreement with Britain — we got the CAP, the Regional and Social Funds, interest subsidies and all the other aids — nevertheless we went into that Community on the complete understanding that this was a free trade area. We went out and sold the Irish environment as a location for investment by foreign industrialists on the basis that that free trade area was and would be open to them for the sale of the goods manufactured in Ireland. We have an obligation as a member of the EEC to ensure that we do everything possible for an Irish Government to ensure that that area will be a complete free trade area.
Of the many instances of protectionism the most blatant is that of the French setting up the customs office in Poitiers. That was against the Japanese rather than against Irish or other European manufacturers, nevertheless the prompt action by the European Parliament, Council and Court of Justice has shown that national governments who engage in this sort of protectionism can be brought to heel. The people of Ireland complain, rightly, about the amount of protectionism that is creeping in and the deterrent that this will be to the establishment of foreign industry in Ireland and we have already suffered considerably. After I first came into this House two years ago I told how I had been approached by the president of a multinational organisation in Strasbourg who, knowing that I was from Ireland and having an interest in a company operating here, had said that this protectionism was at that time already costing us the prospect of future jobs. If you have protectionism in Europe the smaller economies will suffer. The bigger economies such as France, Germany, Britain and Italy can protect their own markets against exports from small countries like ours, and if there is a fear of protectionism against our goods in Germany or France it is quite natural that the multinational company looking at the situation will establish in a country which will have a big domestic market rather than in a country with a small one.
We should make more definite progress towards the opening up of European borders to complete free trade. It has been estimated by a committee of the European Parliament that a hidden barrier to trade within this Community cost manufacturers and industrialists in the ten states of the EEC £12 billion last year. That is almost as much as the entire cost of the European budget which is thought to be the financial implement by which the convergence of economies, the CAP and the Social and Regional Funds can be financed. Therefore, the cost to European industrialists of the non-tariff barriers that exist within the EEC is considerable and immense savings and an immense increase in the standard of living for the peoples of Europe can result from a dismantling of these barriers. We say that we are the good people of the Community at the moment. Unfortunately, we cannot afford to be anything but good in this situation because we are the most vulnerable. I say to everybody concerned, industrialists, sales organisations, CTT and politicians, that wherever we find these barriers and wherever practices which are against the free movement of goods within the EEC come to our notice, we should not just throw up our hands and say that nothing can be done about it. We have a Commission whose duty is to guard the Treaty and we have a court of justice whose rulings have never yet been defined by any member state. Admittedly, these processes are slow, but they cannot be brought to a conclusion unless they are initiated. We should be extremely vigilant and prepared to use the system against any country or organisation that we find adopting practices contrary to free trade.
This debate has gone on for so long that most of the points have already been raised. One which comes to my mind is an instance in which perhaps our internal policies can operate against our own manufacturers. It is well known that because of our system of income tax and the high cost of energy in Ireland arising out of that system of taxation, wages in labour-intensive industries and overheads, interest rates and so on, mean that our costs are higher by comparison with some other countries, particularly non-European countries. I do not want to generate again an old debate on the whole question of tax or VAT on clothing but — the Minister may have adequate answers to this — I see an area there which could perhaps be looked at. We allow people to export their goods into this country and they are sold in our shops without the imposition of VAT. If through a better form of taxation we could reduce the overheads on our own labour-intensive industries and give some relief there and collect the equivalent amount of money in VAT, we would not increase the cost of those goods to the consumer but would put the goods imported into this country at a comparitive disadvantage.
I should like the Minister to consider that situation. In the past we tended to shy away from labour-intensive industries and to regard them as industries in which there was considerable exploitation of labour. It is true that some industries have exploited labour in underdeveloped parts of the Community and in this country. Nevertheless, labour-intensive industries can serve a useful role in creating opportunities for unemployed young people. I know some young people who ten years ago would not have considered taking a job in a clothing or footwear factory but who would be prepared to take that kind of work today. If we carried out some readjustments to our taxation policy we might be able to create more jobs in labour-intensive industries and to give them some advantages against imported manufactured goods from cheap labour areas. I should like the Minister to consider that aspect.
At the moment we spend considerable sums of money on training schemes. There are vast numbers unemployed in the building construction industry but yet there are courses in progress teaching young men block-building, construction work and so on. Similarly, in other areas for which there are no immediate prospects of employment we have training schemes in operation. While it is better to have people in training schemes rather than doing nothing, I suggest that we may be putting the emphasis on training at the wrong end. Perhaps more money could be diverted towards research and development to help us to develop our technology, or to the sales area to teach people languages. Perhaps money could be allocated for crash language courses for business people to help them to sell their goods abroad or for training courses for university graduates who might wish to move into the area of export promotion, whether for CTT or private companies. I should like the Minister to have more money to spend in those areas because that is where the opportunities exist.
A comparison has been made between the number of Japanese sales people in Europe and the results they get and the number of European sales people in Japan. We could make a comparison so far as training, research and development is concerned. The countries that invest most in research and development succeed in getting and holding their export markets. There is a tendency to blame technology for many of our unemployment problems. However, the United States and Japan have had a more rapid technological advance than countries in Europe but their unemployment figures have not risen to the same extent and they are not forecast to rise to the same extent in the year ahead. The best hope of expanding the European and Irish economies lies in the development of new products and obtaining markets for them.
Someone said that we need to encourage the young people. I travel to European cities fairly regularly and sometimes in the evening I look at the shop windows. I compare the prices of goods, such as a suit of clothes or shoes, with the prices in Dublin or other provincial towns and I always get the impression that prices are considerably higher in Europe for quality goods than they are here. There must be enormous opportunities there for our consumer goods. If the ordinary producer of goods in Ireland knew the prices consumers in Europe pay it would be an encouragement to him to look very carefully at the European market. It is possible for us to compete there.
It is probably wrong to say that the increasing cost of labour here has affected severely our competitiveness. Our wage costs are still quite reasonable although they may have risen fairly rapidly in recent years. We must stabilise wages. At the moment we cannot expect the kind of increases we got before. Where we will make real gains is in improving efficiency, recognising that high standards must be attained and that a certain unit of production must be got from a day's work with the benefit of modern technology. We cannot blame our workforce and say they are taking too much money. If anything, our standards have not always been what they should have been. Anyone who tries to do business with continental buyers or with American buyers must realise that delivery dates must be kept. This is most important and considerable credit is given by European importers to the manufacturer who delivers on the due date.
The dairy industry is most important to this country. Of late we have been selling considerable amounts of dairy products into intervention. This is disappointing because some seven or eight years ago, when there was a butter mountain in Europe, we were able to say we did not contribute to it. We could say we were selling our products straight from the manufacturer, that we were finding markets for them and were not burdening the EEC with intervention. At the moment we are selling into intervention and that is a pity. The reason is that we have not diversified sufficiently.
Very generous grants have been available from the EEC through FEOGA funds in order to develop facilities to process and sell our goods. It is disappointing that so much of the money that has been allocated to Ireland has not been collected. The relevant figures were published recently. We have not been collecting the money for many reasons, among them high interest rates and the fact that manufacturers, processors and co-operatives are over-stretched at the moment. We should use the assistance that is available to make our dairy sector more competitive. As Deputy Enright said, it is very disappointing to go into attractively stocked delicatessen shops in France, Germany and elsewhere and not to find Irish goods. Whisky from Scotland, patés and cheeses and other processed foods from England are available — all of these goods from a country that is not yet self-sufficient in food. On the other hand, the Irish economy is so dependent on agricultural products and is producing a surplus amount but we are failing to get into these markets with our own brands.
We must be conscious of our obligations to industry not alone to buy Irish but to help to protect the good name of Irish goods. Recently I was disappointed to see across the front pages of all our newspapers a story about antibiotics in Irish dairy products. There are problems. There will always be problems as science and technology develop. It is always possible some new compound or drug will come on the market and create a difficulty. Within our own system, however, we have a sufficient number of personnel plus all the machinery necessary to prevent any abuse in the use of drugs, antibiotics, or whatever. There is no reason why any health hazard should occur in food production and processing. We do not add anything to the protection of health by scare headlines which will we read abroad and can result in giving a bad name to Irish products. We have an obligation to ensure our products are produced in a responsible manner. We have an obligation to ensure that drugs and antibiotics are handled very carefully. But we also have an obligation of loyalty to our own industry particularly at a time when it runs the risk of being restricted by European legislation. We should be kinder to our industry than we have been.
We have a very good example of an industry which has succeeded in producing competitively. Irish dairy products are produced competitively. Irish farmers get the lowest price for their milk of any country in Europe. They have increased production more rapidly than any country in Europe. If we have failed to be more competitive on European markets it is because of the European system and the MCA in addition to our own taxation system. A very thorough study has been done recently by the Irish Agricultural Institute which clearly indicates that within our taxation system the efficiency of the food processing industry and a combination of MCA plus the advantages which the Irish farmer gives to the factory of the Danish pig in the form of a cheap product has not succeeded in creating a competitive product on international markets. That is one area where we can say the primary product is being produced more competitively.
I said I would support the Minister in whatever money he seeks for the promotion of exports and the financing of Córas Tráchtála provided he is satisfied it is working efficiently. I will assist him to make whatever cuts are necessary since I know we cannot have increased taxation in areas that are less important so that this money can be made available. Someone in manufacturing industry coming back from abroad recently after trying to sell goods said that the market is more important than he thought. He said a good marketing system is like a good drawing chimney. If the chimney is right the draught will keep the fire alight. If our marketing and our sales efforts abroad are right, that will result in helping to create the jobs we need. I congratulate Irish workers, the economy and everybody concerned in the 25 per cent growth we achieved last year in exports. I think the real figure is 9 per cent. In manufacturing goods we increased by 9 per cent last year. That is probably without parallel. It was one of the factors which prompted a national financial journal recently to comment that the Irish economy was the most rapidly improving economy in the world. This gives hope to all who are unemployed because this is one area in which we can succeed in creating jobs in the future.
Minister for Trade, Commerce and Tourism (Mr. Cluskey)
I would like to thank Deputies on all sides for the very constructive and positive debate. I have followed with much interest the various points made and, overall, what has impressed me most was the clear recognition displayed of the important role which exports have to play in our economic recovery and the critical role which CTT have to play in this process.
Deputies are quite right in saying that our export growth rate has been exceptional — it has been well in advance of the EEC average and of the showings by other major economies.
It is also true that our global export figures — highly impressive as they are — are buoyed up by very good showings from new technology firms which have set up here in recent years. I suppose it is not too surprising that firms attracted to Ireland in recent years are, pound for pound, contributing more to our exports drive. After all they were selected on the basis of what they could contribute to economic development and one of the considerations must have been their impact on local industry. To the extent that they were export-orientated, these newer firms did not have implications for native Irish firms and were all the more welcome on that account.
In the same way official IDA policy was to concentrate on attracting new firms from abroad. I have no doubt that this was a correct policy to pursue during the period in question. But just as all policies must adapt to changing circumstances, so too have the IDA widened their focus of attention to include Irish entrepreneurs setting up and developing local opportunities. I have no doubt but that in due course these small, newly emerging native enterprises will prosper and will make their own important contribution to our export drive.
Deputies also touched on the question of co-ordination of effort between such bodies as CTT, the IDA, the Irish Goods Council, Kilkenny Design Workshops and others. They also talked about rationalisation of the activities of various export promotion agencies such as CTT, CBF, BIM. The question of expanding CTT's role to give it a function in relation to the sale of goods within the country was also mentioned. I would agree that all of these points are highly pertinent. It is essential that Ireland puts its best foot forward when we are out in foreign markets selling our goods and services. We must have the best possible support and services consistent with the economic constraints we all have to contend with. There is already a high degree of co-ordination and consultation between the various State agencies concerned but I am also convinced that this can be improved upon. Indeed these are some of the matters which are being considered and which will be resolved in the context of the forthcoming White Paper. There is an absolute need to avoid overlap or duplication of the efforts of the various State agencies. I believe the country is too small to be able to afford the luxury of triplicating the expertise, the network of offices and the other infrastructure necessary to promote sales of Irish goods abroad and that this question must be squarely faced up to.
I also agree with the general sentiments that we cannot sell from behind our desks at home here and that increasingly exporters must get out into those market-places where their goods are being sold and maintain a permanent presence there. But as one speaker said in the course of the debate we are talking about highly skilled and highly sought after specialists to bring their considerable experience and expertise to bear on local market situations. I would have considerable misgivings about the suggestion that this process could be materially assisted by having Irish embassies abroad act as post boxes in relation to detailed selling operations. Face to face dealings and point to point contacts are what make deals. There are already enough middlemen and we should not do anything to extend the communications chain. Foreign buyers who know precisely what they wish to buy want to have dealings directly with the people supplying the goods and the more middlemen and generalists we have between the buyer and the seller the greater the risk of the potential buyer being put off and valuable contracts put in jeopardy.
I was heartened to hear reference to the downstream benefits which can accrue to Irish manufacturers from the consultancy work done abroad by Irish firms. This is something we have recognised for some time and this is why I brought in amending legislation earlier this year to allow CTT to become involved to a much greater extent in promoting services overseas. I made an order under this amending legislation extending the legislation to agricultural development and processing resources, construction-related services, medical services, training services covering all activities, technical and general consulting services, including commercial laboratory services and research and development services, international financial services, public administration services and media recording and publishing services. There is no doubt but that there is a huge area to be tapped by our consultancy services sector and I know that CTT, with my encouragement, are putting staff and resources into this area to open it up and develop it as quickly as possible.
I fully agree with Deputy Flynn that we must recognise, and realise as far as possible, the opportunities which lie at our feet in the form of the natural resources we have at our disposal. Our tourism endeavour, our beef and dairy industry, food processing and fishing are all examples of areas where the potential is there waiting to be fully harnessed. We must not knock ourselves too much however. Sometimes I think we can go too far with self-criticism. It is fine if it is constructive and designed to get things going, but sometimes it is so negative that it can sap the will of workers and management trying to cope with the problems of the day and the net result is that matters are just worse, not better.
However, as Deputy Flynn said, competitiveness is so essential to the success of our efforts in selling our goods and services abroad. As one deputy said, foreign importers do not owe us a living. We must win business by our own efforts and put our products before their eyes. What matters in many of these deals is design, price, delivery and aftersales service which best meet their requirements.
I also agree with the Deputy who said we have an adaptable workforce. Despite the stories which sometimes grab the headlines, our workers have been one of our greatest assests down the years in attracting foreign industry. In an era where work practices and procedures are changing all the time and indeed where old industries are running down and new ones taking their place, either producing the same goods with more modern process or engaging in entirely different activities, Irish workers have shown a resilience in being able to adapt to change.
I am pleased to see a much greater awarness developing of the need for more marketing executives to get out into the markets where the business is lost or won. Exporters must learn at first hand to develop a proper sense of what the customer needs. In this respect I am also pleased to see a trend developing, with official encouragement, for smaller companies in the same product area coming together on a co-operative basis to share the overheads of maintaining a presence in our overseas markets.
It is incorrect to say that the employment support scheme was suspended last May. The reality is that CTT, with my full encouragement, have been so successful in getting across the message to exporters that they need to maintain a presence overseas, that CTT had used up their full allocation for the year by the end of May. There is always a critical decision to be made on how best to deploy funds as between different competing demands. CTT judged that a better return would be secured by maintaining funds in the other areas to which they had been allocated and I respected CTT's decision.
I agree with Deputy Yates that our export performance has been quite outstanding and, while CTT have played a crucial role in bringing this about, I think it would be unfair to attribute the success exclusively to them. The other factors which the Deputy instanced all played their part. Indeed I think it would be an unhealthy sign if all credit was due to CTT because it would suggest an over-reliance by Irish exporting firms on the board. Irish export firms are displaying the self-starter qualities which are necessary for firms competing on the international scene with the best that other countries can provide. I believe the CTT success story has been in providing a solid core of basic help and assistance which Irish firms can use as a launching pad for getting into their market places. They complement the efforts of the established firms by making contacts, opening doors, providing market intelligence, etc., and in the case of industries coming on to the market for the first time they offer necessary reassurance and support in the critical early periods.
I do not think anybody would want a situation where Irish industry was totally dependent on CTT to provide all its marketing and to do all its selling for it. That is not the function of CTT. Their essential role is to enable Irish industry to realise its own potential in the export field and the degree of assistance and support given in particular instances will vary from sector to sector, from market to market, and from product to product.
Deputies were very complimentary of the efforts of CTT staff in bringing about the fine record of achievement in exports. I would like to join with Deputies in congratulating staff. One of my functions as Minister for Trade, Commerce and Tourism is to meet the staff and managers of the overseas offices at the beginning of each year and it is one of the pleasures of my office to be able to meet these staff and to tell them of the Government's and the country's appreciation of their efforts and to urge them on to greater achievement. But I would also like to thank every other individual engaged in exporting, from the marketing manager down to the dispatcher, for their efforts on behalf of Irish exports. I would also like to pay tribute to the staff in the International Trade Division of my Department for their efforts in this area of export drive.
It has been long-standing Government policy to get statutory control of pay and conditions of staff in non-commercial State bodies whenever the legislative opportunity has presented itself. The non-existence of statutory controls makes CTT virtually unique among such State bodies. Provisions inserted are standard control provisions for such bodies.
I would assure Deputy Ray Burke that I do not have any fears that any undue interference in the internal running of CTT affairs will result. Because of the high level of co-operation which exists between CTT and my Department already, I do not see this clause as presenting any difficulties.
Many areas of our exporting endeavours were raised by Deputies. I thank those who contributed for a very constructive and enlightening debate on what I regard as a major success story in the Irish economy. It was not achieved without a great deal of thought and effort by many people and the support, assistance, and encouragement which the staff of CTT have given to Irish exporters. One has to witness Irish exporters in the international field to appreciate the efforts they are making. They do not sit back and say we are experiencing hard economic times. They put every conceivable effort into marketing, maintaining their existing contacts and markets and developing new ones where the opportunities present themselves. I have had the opportunity of being with them on some trade missions and assisting in some measure in their efforts. I was full of admiration for the way they tackled their job.
Unfortunately, the fact remains that while some undoubtedly have realised the importance of marketing expertise the message has not got across to all firms engaged in or contemplating getting involved in the export market. There must be a recognition of the supreme importance of marketing if we are to be successful in our export endeavours. CTT have preached this over the years and some firms got the message. The success of those firms can be seen in the increase in the volume of our exports. I hope other firms will take this message to heart. It may be possible to survive and make some showing in international markets when the economic climate is good but it is not possible to do so in an economic climate such as exists today. That fact must be recognised by all Irish firms wishing to engage in the export market.
I should like to thank Deputies for their constructive approach to the debate. I should like to thank all those concerned with export promotions for their endeavours which have proved so successful. They have managed to create one bright spot in an otherwise fairly gloomy economic climate.
Acting Chairman (Mr. Prendergast)
When is it proposed to take Committee Stage?
Mr. Cluskey
On Tuesday next, subject to agreement between the Whips.
Committee Stage ordered for Tuesday, 6 December 1983.
Ceisteanna—Questions. Oral Answers. - Regional Hospital Consultants.
Criminal Justice Bill, 1983: Second Stage (Resumed).