Address by Mr Noel Treacy TD Minister for Science, Technology and Commerce, at the New Millennium Reception of the Galway Chamber of Commerce and the Signing of the Contract for the Extension of Galway Technology Centre, on Monday, 10 January, 2000 at 5.30 p.m. in Galway Airport.

I am delighted to have the opportunity this evening, to address the Galway Chamber of Commerce and Industry, at its new Millennium reception and to witness the signing of the formal contract for the extension of Galway Technology Centre. These are significant events in the continuous development of both Galway City and County. I sincerely congratulate the Galway Chamber of Commerce for all of the great work, which it has done over the years, especially your initiatives in developing the Galway Technology Centre, along with the development of Galway Regional Airport.

Galway Technology Centre I am particularly pleased to be present here with you all, to witness the formal signing of a contract for the extension to the Galway Technology Centre, which was one of the initiatives of the Galway Task Force, some years back. The Centre is set to triple in size under the current proposals. I understand that plans are also in hand, to quadruple the size of the Centre later this year. Galway Technology Centre, which is wholly owned by the City Chamber, has proved a catalyst for success for start-up companies in the Galway area in recent years and this extension will greatly increase the facilities available.

In common with many other areas of the country, it is becoming increasingly recognised that the ability of an area to attract and maintain high tech industry depends greatly on the ability to provide high specification technological services and infrastructure. I am delighted to see that Galway Chamber has been to the forefront in developing these facilities here in Galway and I wholeheartedly commend the Chamber, on its excellent initiative here today.

Importance of R&D in Regional Development As the Minister with responsibility for Science, Technology and Commerce, I am particularly anxious that research technology and innovation should be sufficiently encouraged and supported so as to act as a focus for greater industrial development and increased prosperity, in all of the regions of this State. I believe that the foundation of our current economic success is based not only on prudent fiscal policies, but equally on the ability of Irish companies to achieve and maintain international competitiveness. We are all familiar with the success of Irish software companies, many of which have competed successfully on the international stage. However, the ability of these companies to maintain their position at the cutting edge of industry, depends in large measure on their willingness to continue to invest in research, technology and innovation.

There is a real buzz in the Ireland of today. Our national economy has changed totally. The days of the very limited job market and emigration are now gone. Large numbers of Irish people who had left our country to find employment are now returning to well paid jobs and exciting careers, back home in Ireland.

However, despite this economic success, a number of major challenges still face Ireland today. These challenges are - sustaining existing employment by raising skills levels; the development of a base of genuinely world class Irish owned companies; the embedding of foreign companies in the Irish economy and the absolute necessity for all Irish businesses, to move up the value chain as our cost structure moves closer to the European average and parts of our economy become uncompetitive; balanced regional development and the sharing of growth; exploiting the information society and globalised trade and competition. All of these challenges can be addressed through wise investment in Research, Technology and Innovation (RTI) as an intrinsic element of the range of actions necessary.

As highlighted in the Technology Foresight Ireland Report, firms in the modern high-tech sectors of business in Ireland, including IT, chemicals and pharmaceuticals are currently more production-oriented than R&D oriented and therefore more vulnerable to global market changes. As the global economy becomes more "knowledge-based" (i.e. driven by research and technology), the key therefore, to Ireland's continued success is to re-position Irish industry, higher up the economic value chain and this is at the core of the new strategies of IDA Ireland and Enterprise Ireland on behalf of this Government, in fulfilling our policy goals of accelerated economic growth.

The recently published National Development Plan 2000-2006, includes funding of some £1.95 bn for RTI activities across all Government Departments and Agencies. As Minister for Science, Technology and Commerce, I am particularly pleased that a sum of £1.2 bn is being provided for RTI activities linked to industrial development, under the Productive Sector Operational Programme. A three-pronged approach to investing in RTI covering

(a) RTI for Industry; (b) RTI Collaboration between companies and between third level researchers and industry, and (c) developing the RTI infrastructure in Ireland

is set out in detail in the Productive Sector OP, within our National Department Plan. These inter-related headings have the aim of re-positioning Irish industry higher up the economic value chain, thereby improving overall competitiveness in the context of globalised markets.

With the objective of repositioning Irish industry higher up the economic value chain and prioritising Ireland's R&D spend into areas, with the greatest potential, the Irish Council for Science, Technology and Innovation (ICSTI) earlier this year, completed the first ever Technology Foresight exercise for Ireland. The Technology Foresight Ireland Report makes a number of specific recommendations in relation to Ireland's future RTI infrastructure. In this connection, future investment in the RTI infrastructure will cover firstly, Technology Foresight and secondly, Regional Innovation Systems.,p> Technology Foresight Fund It is proposed to establish a Technology Foresight Fund totalling £560m over the next seven years, to support R&D projects in key technologies, which are strategic to sectoral and national development. The objectives of these projects will be to provide internationally competitive world class R&D, and to signal Ireland, as a very attractive location to major companies and organisations in which to perform R&D.

I am currently examining the best mechanisms to implement this proposal and will be making a submission to Government fairly soon.

Regional Innovation Systems encourages all Regions to bring together elements of the innovation system into its Region (industry, colleges, institutes, agencies, financial institutions etc.) in order to build strategies, related to local industrial or research strengths. Funding will be made available for both the preparation and the implementation of Regional Innovation Plans. Proposals could incorporate Regional Technology Parks, or other forms of Networks. While much great work has already been done by the forward-looking players in the S&T/RTI community, i.e. people from industry, third level colleges, State Agencies and last but not least, the financial institutions; we should not sit on our laurels. We must build on this work to date, so that we can secure the long-term economic development of the Western Region. I urge all of the players involved in the S&T/RTI Community of this Region, to continue to work in partnership, as we go forward into the new Millennium and to avail of the various schemes outlined already, where these are relevant to their many activities.

National Development Plan As many of you will be aware, the new National Development Plan, sets out a blueprint for regional development in respect of the period 2,000-2,006. It will be recalled that, when the previous National Plan was being drafted in 1993/94, the major consideration at that time was the generation of greater employment. Today, while employment growth is still very important; the key areas which now require to be addressed are the rapid provision of modern infrastructure and increased investment in the human resource assets in our society. Together with a new focus on regional development, success in these areas will make a major contribution to other important objectives, such as greater social justice and shared prosperity for all.

The National Development Plan will involve an investment £40.588 Billion of Public, EU, and Private funds in this country. It is designed to underpin the development of a dynamic and competitive national economy. It aims to build on the unprecedented economic progress of recent years and to strengthen the foundation for further strong and sustainable progress in the years ahead. Since the last Plan, the national economy has grown by 50%, which is 4 times the EU average, and employment has grown by more than 20%. Ireland's unemployment rate is currently 5.1%, which is 5% below the EU average.

The new National Development Plan represents the first really focused attempt at genuine, balanced regional development, in the history of this State. One of its key priorities is to ensure that the growth and prosperity of the recent past is experienced in all regions and by all elements in society. The State Development Agencies have made a very strong push to encourage industry to locate to areas outside of the greater Dublin region, in the last two years. This effort has yielded a considerable measure of success. The Plan contains a target of ensuring that at least 50% of all new jobs, from future greenfield projects are delivered into the Border, Midland and Western region.

Objectives of the Plan for the Region The major objectives of the National Development Plan for the Border, Midlands, West Region (BMW) are:

- to increase the presence of the key drivers of sustainable economic growth; to improve the quality of its economic and social infrastructure and human resources skillsbase

- to build on its natural resource base, especially in the areas of agriculture, tourism, fisheries, aquaculture and rural enterprise, and

- to promote rural and urban social inclusion.

Operational Programme for the Region The Regional Operational Programme is designed to complement the three inter-regional programmes by focusing primarily on local investment instruments which, in addition to their benefits locally, will help ensure that assistance under the Inter-regional Operational Programmes delivers maximum impact. Therefore, investment in local infrastructure can complement efforts to attract more industry under the inter-regional productive sector operational programme.

This Operational Programme is divided into three Sub-Programmes, which outline Plans in respect of local infrastructure, productive investment and social inclusion.

The Local Infrastructure Sub-Programme will consist of measures in respect of non-national roads, rural water, waste management, urban and village renewal, e-commerce, seaports, regional airports and culture, recreation and sports.

Road Development A safe, efficient road network, is a key ingredient for economic success. While some progress has been made in upgrading the road network, in recent years through, projects such as the by-passes of Athlone, Longford and Mullingar, it is clear that much more remains to be done, if we are to have a road network appropriate to the transport needs of the new Millennium. This Government is responding to the challenge and in the Plan, we have provided for investment in our transport infrastructure, on a scale never before seen.

Planned Investment in the national roads network, over the period 2,000-2,006 is £4.4 billion. This level of investment, which is more than 3 times the 1994-1999 level, will support a focused and concentrated development strategy, to bring key national primary routes, up to a high standard - in the case of the Western Region, this includes the development of the Galway/Dublin, including the Loughrea by-pass, route to motorway, or high quality dual carriageway standard, by 2,006; and improvements on other national primary routes and secondary routes to and within the region, including the western corridor from Sligo, through Tuam, Oranmore, Gort and Limerick, on to Rosslare and the N59 (Galway/Clifden/Westport) along with the N5 and N26, linking Ballina/Castlebar and Longford.

In addition, the improvements achieved in recent years on non-national roads will be built on, with further significant Investment of £1.6 Billion, over the 2,000-2,006 period.

Planned expenditure on local roads in our region is £702m, of which £535m relates to improvements and £167 million to maintenance. The key objectives of this expenditure are to complete the restoration programme, which aims to restore all local roads in county council areas, by the end of 2,005 and to assist all road authorities in this region, through grants, under various categories.

This will improve the non-national network, to enable it to support the economic and social development of our region.

Regional Airports In the BMW Region, total planned expenditure on regional airports is £8 million. Ease of access to scheduled air services can play a very significant role in attracting foreign direct investment to our locality. The major airline traffic into and out of Ireland, goes through the national airports of Dublin, Cork and Shannon. It is vital, therefore, that the transport links, especially road links to these airports, are improved and this will be a focus of investment under the economic and social infrastructure operational programme.

Regional airports play a vital role in improving access to more remote areas of the country particularly, for business and tourism interests. Within the BMW Region, the contribution of the four regional airports (Galway, Donegal, Knock and Sligo) to improving tourism and business access to this region, can be enhanced by upgrading the existing Infrastructure. I would like to take this opportunity again, to commend Galway Chamber of Commerce and industry, on your initiative, in bringing to fruition the £5 million development project here at Galway Regional Airport. For the future of our city and county, it is vital that full jet aircraft have landing facilities here, sooner rather than later.

E-Commerce As Minister for Science and Technology, I particularly welcome the electronic commerce and communications measure, in the National Development Plan, where £84 million, is being provided in this Region. This amounts to two-thirds of the national allocation under this measure. Available access to advanced information and communications infrastructure, means that physical location no longer needs, to be a determining factor, in relation to access to work and employment. Investment in this infrastructure, can yield benefits for our region; in particular, for the more remote areas and rural communities. E-Commerce is driving fundamental changes in business and will be a significant and strategic Area of industrial development opportunities, in the years immediately ahead.

Productive Investment Sub-Programme I have already referred to the investment in research and development, which is a major component of the Productive Investment Sub-Programme. Other areas covered, under the Productive Investment Sub-Programme are:

foreign direct investment, indigenous industry, micro-enterprises, tourism, rural development, forestry and fisheries, aquaculture and harbours.

Foreign Direct Investment Over the last year IDA Ireland, which has responsibility for attracting overseas industry to Ireland, has expended considerable effort, on reviewing its role and on planning its future strategy to ensure, that it continues to meet national needs in the years 2,000 and following. The main elements of this strategy are as follows:-

Regional Development The very positive growth in overseas owned manufacturing and internationally traded services employment, since 1993 has not been evenly distributed. Much of this investment has come from very large projects and these tend to favour urban locations strongly. Approximately 50% of this growth has been in the Dublin region alone.

IDA Ireland has intensified its efforts to provide employment throughout the country and its programme for regional development, is geared towards a Partnership approach, between the Agencies, the Local Authorities and infrastructure/service providers, including those of skills training. This is facilitating the attraction of overseas companies to regional locations. This approach includes the following:

- Stimulating and supporting a Programme of modern Advance Factory Construction at key Locations, with the involvement of the Private Sector;

- Working closely with Local Authorities to have quality sites available at priority locations for new industrial investment;

- Offering attractive grant differentials in favour of projects, locating in less developed areas; 40% in the West, 20% in the South and 10% in Dublin;

- Working closely with FÁS, Universities, and local Institutes of Technology, to identify specific skills, which are available in this region.

The approach being pursued by IDA Ireland is having a positive impact on Regional Development and good progress has been made here in Galway, Ballina, Castlebar, Claremorris, Athlone, Letterkenny, Mullingar and many other locations. New industries locating in towns/cities benefit the surrounding rural areas.

During the past year, IDA Ireland has restructured its Regional Offices in order to intensify the emphasis on securing sustainable growth and employment, in the regions. The IDA aims, over the period 2,000-2,002, to deliver over 50% of the Jobs created from New Greenfield Projects, to our Objective 1 Region, which compares to 25%, at the present time.

Foreign Direct Investment (FDI) - National Plan Priority Due to the disproportionate share of these FDI Projects, in the southern and eastern regions and in the main urban centres, the strategy underpinning the National Development Plan investment will be driven by a strong emphasis on attracting high value-added FDI projects, to the border, midlands, west region and the weaker areas, in the southern and eastern region, in line with Government policy of balanced regional development. In parallel with this specific policy, the strategy will aim to

- increase the value and sustainability of overseas companies, in Ireland and secure their future here in Ireland, and

- identify and develop activities and sectors, that will attract high quality inward investment.

An amount of £930m has been allocated towards FDI in the new National Plan, with 44% of this seven-year allocation, being directed to our region here. This percentage is well in excess of the population share of 27% and towards the second half of the period of the NDP, resources directed to this region, will actually exceed those, in the southern and eastern regions, as suitable regional locations, will by then have benefited from sufficient infrastructural investment, at this stage.

Indigenous Industry A total of £973 million has been allocated in the National Plan for measures aimed at assisting Indigenous Industry. The Strategy underpinning NDP investment in indigenous industry will be aimed at addressing the following:

Limited export growth, outside of the UK market; Continued reliance on many traditional products; Proliferation of small-scale operations; Insufficient spending on human resources; Insufficient investment in RTDI; an uneven spatial spread of industrial activity.

Regional Networks Improving the access infrastructure, developing enterprise support systems and building regional networks are all key elements to achieving balanced regional development. Enterprise support will involve the development of a network of centres in partnership with companies, colleges and communities, to ensure that start-up companies have access to incubator space. An allocation of £85m has been provided in the Plan for these badly needed facilities and services.

Additional Programmes within this Programme, will include projects in the food sector, the fish processing sector and for Gaeltacht areas, in co-operation with Udarás na Gaeltachta..

Tourism has the potential to deliver further significant benefits to our region. While Galway City and Connemara constantly benefit from tourism, other areas have yet to realise fully the potential of their scenic attractions. This region presents significant opportunities for development as a tourist destination. A sum of £45 million will be expended to further develop tourism, in co-operation with the local authorities, the regional tourism authorities and various other agencies.

The County and City Enterprise Boards, which are responsible for the promotion of local development, provide a pivotal role in assisting start-up businesses and in the development of micro-enterprises. The micro enterprise measure is particularly relevant to this region, where enterprise tends to be on a smaller scale and where there is a requirement for support, for the development of local services. The local base of the County and City Enterprise Boards, which will be responsible for the delivery of this measure, also means that the projects supported, tend to be more appropriate and relevant to their social and economic environment, which is a key consideration in the drive for sustainable economic development, in this region. The total planned expenditure on micro-enterprises is £54 million, within the Plan, for our region.

In conclusion, I would like to state that I am very confident, that the implementation of this Plan, will remedy many of the Infrastructure and business environment deficiencies throughout the west. I have no doubt that the response of western communities, will be to meet the many challenges of development, in the years immediately ahead.Thank You.