Opening Address by Mary Harney, T.D., Tanaiste and Minister for Enterprise, Trade and Employment At The Examination of the Supplementary Estimate for the Vote for the Department of Enterprise, Trade and Employment By The Oireachtas Joint Committee on Enterprise and Small Business On Wednesday, 8th December, 1999

I would like to take this opportunity to thank the Committee for giving me this opportunity to address them in relation to the proposed Supplementary Estimate required by my Department this year.

I am introducing this estimate at a time when the economy is continuing to experience substantial growth. Unemployment continues to decline and the latest Live Register figures for November indicate that the rate is now down to 5.1%. The number of persons on the live register is 171,785. This represents a decrease of 17.1% on the same period last year and the lowest figure in seventeen years. The additional financial commitments for 1999 arise from the continuing need to provide for the physical and human infrastructure to meet the demands of our current level of economic activity.

A token Supplementary Estimate of £1,000 only is proposed to allow payment by IDA Ireland of £6,113,497 to Global Crossing on foot of the State's contractual commitment to invest in a large bandwidth capacity cable connecting Ireland to global telecommunications networks. This Estimate is also being sought to cover a shortfall in EU funding to FÁS, details of which I will give later. A token Supplementary only is required because there are sufficient savings on my Department's overall Vote to meet these financial commitments in 1999.

The global communications revolution is changing the shape of the global economy. Dramatic advances in technology and the developments of the internet as a platform for electronic commerce are at the heart of this revolution. Within 2/3 years the internet will have created a single market of over 300 million computer-based consumers world-wide. The scale of growth forecast for electronic commerce is simply staggering. Already, e-commerce transactions are estimated to be worth over $100 billion per annum.

Electronic commerce will be attracted to those countries with low cost, high quality telecommunications and internet services, good business and legal environments for electronic commerce and a highly skilled work force.

Ireland is the world's second largest exporter of software supplying some 60% of the European software market and is host to some 40% of US pan-European call centres and technical support operations. This is a compelling indicator of what can be achieved through effective national strategic positioning.

If we are to continue to attract the top global players in telecommunications and internet services we must have access to a global telecommunications infrastructure. It was against this backdrop that the Government decided in November 1998 to authorise negotiations with prospective suppliers of global connectivity. Ireland's existing internal fibre network will distribute widely the benefits that this enhanced connectivity project will bring.

It is difficult, at this stage, to forecast the level of the receipts from the project. An amount of £17m has been included in the recent Estimates for 2000. Any receipts received will be returned to the Exchequer.

The proposed Supplementary Estimate of £1,000 is also required to allow payment to FÁS of £19m approx. due to a shortfall in EU receipts.

My Department is the national authority for the European Social Fund (ESF) in Ireland and the lead Department for the main ESF Operational Programme, known as the Human Resources Development Operational Programme. It covers a range of co-funded measures which are designed to meet the training and educational needs of many different groups within Irish society and ultimately contribute to enhanced economic development.

FÁS is responsible for implementing measures such as Apprenticeship, Industry Training for the Unemployed, Local Enterprise, Measures to assist Early School Leavers, Re-Integration and Community Training, the Training Support Scheme and Training Services to Industry.

In 1999 FÁS received EU payments in respect of the above measures totalling £56m. However, the European Commission notified my Department in mid-November, that due to a shortage of payment credits, they will not be able to make any further payments in respect of the Human Resources Development Operational Programme or indeed any other ESF Operational Programme in any other Member State for the rest of 1999, hence the need for the Supplementary Estimate for FÁS.

My Department have taken up the matter at senior level with the Commission and are taking every opportunity to press for quick payment of the outstanding amounts. In spite of this the Commission consider it almost certain that it will be January 2000 at the earliest before the outstanding payments can be made. I want to assure the Committee that my Department will pursue this matter with the Commission so as to ensure the recovery of the total amounts due.

A saving of £22.5m is expected to be realised on IDA Ireland's Grants to Industry Budget due to the demand for grant payments being lower than anticipated in early 1999.

The Grants to Industry are given in the form of employment grants, training grants, grants for new skills and technologies and fixed assets.

In the original Estimate for 1999, IDA Ireland was approved grants of £140m towards its Grants to Industry Budget. In addition, IDA Ireland has own resources at its disposal to the tune of £13m (£8m - European Social Fund and £5m - Repayment of Capital Grants). The approved expenditure level for the Grants to Industry Budget for 1999 is £153m.

The capital grants budget requirement is largely a product of approvals in previous years. The 1999 Grants to Industry Budget estimate was prepared by IDA Ireland in 1998. The budget is estimated using lead time drawdowns from past approvals. In the past few months it became clear to the Agency that there would be an underdraw of approximately £22.5m in 1999. This will not result in an increase in the requirement for Exchequer Grant in 2000.

In addition a saving of £3.376m is expected to be realised as a result of delayed construction work, including in respect of repairs and renovations to premises, under the FÁS capital expenditure programme.