Maurice Quinlivan (Limerick City, Sinn Fein)
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I remind all those present in the committee room to exercise personal responsibility to protect themselves and others from the risk of contracting Covid-19. Members participating in the meeting remotely must do so from within the Leinster House complex, as they know. Apologies have been received from Senator Sherlock.

Today we will consider the White Paper on enterprise strategy from 2022-30. Formulating a robust policy, coherent strategy and engaging initiatives is crucial to developing enterprise so that it can thrive in a competitive environment. For example, this week is local enterprise week 2023, with events aimed at boosting local enterprise being organised by local enterprise offices throughout the country. In December 2022, the Department of Enterprise, Trade and Employment launched the White Paper on Enterprise 2022-30. It provides an overview of the international economic context, examines the competitive enterprise environment, explores future policy direction and provides a framework for implementation of enterprise policy. I am pleased the committee has the opportunity today to consider these matters further with representatives of the Department. I welcome Mr. David Hegarty, assistant secretary for enterprise strategy, competitiveness and evaluation, Ms Caoimhe Gavin, principal officer at the enterprise strategy unit, Mr. Brendan Kilpatrick, assistant principal at the enterprise strategy unit, and Ms Karen Hynes, principal officer at the entrepreneurship and small business unit.

Before we start, I wish to explain some limitations to parliamentary privilege and the practices of the Houses as regards references witnesses may make to another person in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that may be regarded as damaging to the good name of a person or entity. Therefore, if witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks and it is imperative that they comply with any such direction.

The opening statement has been circulated to members. To commence consideration of the matter, I invite Mr. Hegarty to make his opening remarks on behalf of the Department.

Mr. David Hegarty:

I thank the Cathaoirleach and the committee for the opportunity to discuss the White Paper on enterprise.

By way of background, in March of last year, the Government approved a proposal by the Department and the Minister for Enterprise, Trade and Employment to undertake a review of enterprise policy, and this culminated in the publication of the White Paper in December of last year.

The context for the review was one where the enterprise sector and the wider economy was performing well, having recovered strongly from the Covid-19 pandemic. By way of example, the Government’s economic recovery plan, published in mid-2021, set a target to exceed pre-crisis employment levels by having 2.5 million people in work by 2024. In the event, this target was met in the fourth quarter of 2021, three years ahead of schedule.

While the economic backdrop to the decision to review enterprise policy was a positive one, the Department was cognisant of a number of external risks and domestic vulnerabilities that needed to be considered. These included geopolitical developments and a degree of fragmentation in globalisation which might present risks to the open, export-oriented economic model of small, advanced economies like Ireland; a sense that changes in technology and business models could be disruptive, particularly those arising from digitalisation and the net-zero transition, both of which presented opportunities but which could entail significant adjustment costs; and finally, the need to address lagging productivity levels in parts of the indigenous sector of the economy, allied with concerns around concentration risks in the multinational sector.

Against this backdrop, the review facilitated a timely assessment of our approach to industrial or enterprise policy. It enabled consideration of the fundamental changes under way across multiple dimensions – economic, geopolitical and environmental - with the clear objective of ensuring that our enterprise sector was appropriately positioned to tackle the challenges and avail of future opportunities.

The development of the White Paper was an open process, informed by external stakeholder perspectives, and by international best practice. This collaborative approach was supported through a series of key engagements during the consultation process. I will mention a few of these, including: bilateral meetings with various stakeholders, including the engagement of various standing groups such as the Labour Employer Economic Forum, LEEF, the Enterprise Forum and the SME task force; discussions and debate at the national economic dialogue, as well as a dedicated national symposium held in October of last year, where domestic and international experts and stakeholders exchanged views on enterprise challenges; an open public consultation process, which generated more than 120 submissions from a range of individuals and organisations; a review of enterprise or industrial policy direction and thinking in other small advanced economies, commissioned by the Department; and an international advisory panel which we convened, made up of a number of international experts, established to ensure that fresh thinking and international perspectives on policy direction and priorities was brought to bear. We also engaged with our counterparts in the Small Advanced Economies Initiative. This is a network of senior officials from countries with a similar economic profile to Ireland, including Singapore, New Zealand and Finland.

The White Paper represents the outcome of this deliberative process. It sets out the Government’s medium- to long-term ambitions for a vibrant, resilient, regionally balanced and sustainable economy made up of a diversified mix of leading global companies, internationally competitive Irish enterprises and thriving local businesses. Its vision is to ensure that Irish-based enterprise succeeds through competitive advantage founded on sustainability, innovation and productivity, delivering rewarding jobs and livelihoods. To deliver on this vision, the Government agreed on seven priority enterprise policy objectives set out in the White Paper, and I will run through these very briefly.

The first priority is integrating decarbonisation and net-zero commitments. The White Paper argues that decarbonisation should not be seen as a threat to our competitiveness; rather, it highlights the risk in not acting quickly to embed it in our enterprise policy. Policy will be oriented to help existing firms meet the costs of decarbonisation and position them to exploit the opportunities of a low-carbon economy. Offshore wind is called out as a major future industrial development opportunity, and investments will be made to facilitate the green transition and support emerging sectors.

The second priority is to place digital transformation at the heart of enterprise policy. The White Paper reaffirms the Government’s commitment to the Dgital Ireland Framework strategy, and we will take action to sustain Ireland’s attractiveness as a location of choice for cutting edge global technology businesses, as well as driving a step change in digital adoption across enterprise and nurturing digital start-ups. Digitalisation can be a key enabler of productivity growth and the decoupling of economic growth from resource consumption.

The third priority is advancing Ireland’s foreign direct investment, FDI, and trade value proposition. The White Paper affirms the Government’s view that FDI will remain critical to our economic model and economic strategy. However, the approach to FDI attraction will need to evolve to reflect net-zero objectives and have regard to the carrying capacity of economy. Greater domestic value capture will also be achieved through stronger linkages and spillovers between multinationals and domestic firms.

The fourth priority is to strengthen the Irish-owned exporting sector. The White Paper calls out the need to enable the Irish-owned exporting sector to fulfil its potential and to build a strong domestic growth engine of Irish companies of scale. Policy action will seek to increase the number of exporters, particularly from the existing large cohort of non-exporting small and medium enterprises.

The fifth priority is to enable locally traded sectors to thrive. The enhanced focus enterprise policy has had in recent years on the locally traded sectors is reflected in the White Paper. This includes the expansion of the role of the local enterprise offices, LEOs, enabling them to broaden the cohort of firms to which they can provide training, consultancy and mentoring services. The LEOs will continue to enhance their advisory services for locally trading firms to improve productivity, particularly around digitalisation and the reduction of energy use and carbon emissions.

The sixth priority is to step up enterprise innovation. The White Paper recognises that for an advanced economy like Ireland, innovation is the best way to generate sustainable, long-term productivity growth. In line with the ambition set out in the Government’s research and development strategy, Impact 2030, Government will consolidate and build on the progress that has been made, and redouble efforts to broaden and deepen innovation capability across the enterprise sector, in particular the innovation performance of our small and medium enterprises.

The seventh priority is to build on our strengths and opportunities. This includes the introduction of a centrally co-ordinated, cross-government approach to driving firm productivity through clustering, accelerating our decarbonisation objectives, and enhancing the overall capacity of firms and sectors to respond to new opportunities and challenges.

In addition to these seven policy priority areas, the White Paper highlights the importance of key competitive framework conditions that impact enterprise. A key consideration here is the carrying capacity of the State and the economy more generally. This concept covers not just the adequacy of physical infrastructure such as transport, housing and energy, but also essential social services and an efficient and responsive system of regulation. These framework conditions are the focus of other Government strategies and initiatives such as the national development plan.

Finally, a set of 15 targets are included in the White Paper. These capture ambitions of maintaining full employment, and each of the seven priority enterprise policy objectives which I have gone through. These will form the basis for how progress on the White Paper is measured between now and 2030.

Regarding implementation, as set out in the White Paper, the Department is leading the development of consecutive two-year implementation plans of cross-government activity to enable the commitments set out in the White Paper. The first implementation plan, covering the period to the end of 2024, is currently under development by the Department. This is expected to be finalised by the end of March and will be published shortly thereafter.

Progress will be reported on then every six months to the Cabinet committee on economic recovery and investment, with the first progress report being prepared by the Department in quarter 3 of this year. These biannual reports will include updates on progress towards the 15 targets that I have mentioned, with new data under each of the measures included as it becomes available from the relevant sources.

Close monitoring of performance and target delivery will enable a dynamic approach to the implementation of the White Paper, having regard to external developments as they unfold over the lifetime of the White Paper.

My colleagues and I look forward to assisting the committee with its deliberations.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. Hegarty. I will invite members to speak as they indicate. Those who are participating remotely can use the raise a hand function and, more importantly, when they have finished speaking, they can take it down. The first speaker in the Sinn Féin slot is Deputy Louise O'Reilly who has 14 minutes.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank our witnesses for coming in this morning, and for all of their work. I would like to ask about concerns regarding the concentration risks in the multinational sector. This is a bit of an economic anomaly, and it is something we in Sinn Féin have highlighted for a number of years. The current volatility - I am going to use that word - in the tech sector is a worrying example of that concentration I referred to in action.

According to the annual taxation report for 2022, almost one third of our income tax receipts are linked to employees in a handful of foreign-owned multinational corporations. Just ten large multinational corporations account for 53% of our corporate tax receipts. What are the policies and supports that are needed to grow indigenous SMEs and microbusinesses in order to allow them to seize new opportunities in respect of high-wage, high-growth and high-productivity sectors and help them link with multinational corporations upstream, establish firm footings and become strong exporters, which we want to see happening? Only the growth of our domestic SME sector and microbusinesses will deliver the necessary economic diversification that will protect us from external macroeconomic shocks. Quite a few microbusinesses and SMEs look at the multinational corporations and see that they cannot break into that area. That is my first question.

Mr. David Hegarty:

On the consultation issue, the Deputy quoted a number of statistics that demonstrate our reliance on the multinational sector for corporation tax and income tax revenues. That is recognised in the White Paper and called out in chapter 2, in which we provide our diagnosis of the issues facing the enterprise sector.

In terms of a policy response, I will mention a couple of points. One of the priorities that I mentioned earlier is that the White Paper recognises the need to develop a strong cohort of Irish-owned SME exporting firms. We have set a number of targets in order to increase the number of firms that export to external markets. That is one plank of our approach, and it will obviously require a range of policy interventions in the context of providing supports to SMEs, helping them to break into export markets and so on.

The other key priority area I would highlight in this regard relates to priority 7 in the White Paper, which is about building on strengths and opportunities. One of the things we have done is to call out the need for a more structured approach to clustering. This is about trying to build stronger linkages and spillovers between multinational firms and the SME sector and the research and higher education sector. We are working on this. We already have some clustering initiatives funded by Enterprise Ireland, but we envisage that this new clustering programme will be on a larger scale and will be targeted at recognised areas of opportunity in the Irish economy, perhaps, for example, the area of offshore wind, which we mention in the White Paper. There is already a nascent cluster in that area. We think these clusters need to be on a bigger scale and probably better supported and funded, and we would see them as a mechanism for developing links between multinationals and SMEs. Hopefully, that is clear.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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It is. Mr. Hegarty raised the issue of clustering. Clusters are brilliant where they work. Mr. Hegarty also mentioned wind energy. His comments are very welcome. Indeed, the Chairperson launched our report this morning on that exact topic, so it is good to see everyone pointing in the one direction when it comes to renewables. In terms of clustering, are there are examples where it is working? How is it being supported and how is it operating? We are all convinced it is a good idea and some of it is happening, but where is it happening that it is working very well? Are there examples of that? How are we going to be able to scale that up or expand it?

Mr. David Hegarty:

I will hand over to one of my colleagues shortly. As part of the process of developing the White Paper, we did some separate work on clustering. We looked very closely at how clustering is used in countries like Denmark and Finland and in places like Catalonia and the Basque region in Spain. Those countries take a more, I would call it, deliberative process on clustering, and they decide at national or regional level what types of areas and what sectors of opportunity clustering organisations need to be in. It is probably more top-down in nature than our approach. We were struck by those examples and, basically, we feel - and the White Paper articulates this - that clustering needs to play a stronger role as one of our enterprise policy toolkits going forward.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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In the absence of the top-down approach, and I am not saying one approach is right or wrong, what is driving it? Is it happening organically? If it is, should we say that this is excellent or can more be done? We are all agreed it is a good idea. Can more be done to drive the establishment of clusters and their expansion? I am not necessarily wedded to one model or another. In the Basque country, Catalonia, Denmark and other places, they are driving it from the administrative level and from the top down, but we appear to be allowing it to happen organically. If it stops organically, what will we do?

Mr. David Hegarty:

There is no problem with an organic, bottom-up approach either, but our sense is that in those countries and regions we looked at, the approach is more driven by an understanding of national or regional constraints, opportunities and weaknesses. Our approach up to now has probably been more that we put out calls and invitations through Enterprise Ireland for proposals to come forward. That is fine, and the White Paper does not suggest that we would abandon what we are doing. However, it needs to be complemented by a programme that would fund cluster organisations that are on a bigger scale than those we have now. That could include, for example, things like offshore wind and perhaps certain technologies, including artificial intelligence. None of that has been decided yet and we are working on a programme in that area now. Perhaps Ms Gavin would like to comment.

Ms Caoimhe Gavin:

One of the things we would see as part of the national clustering programme, as we developed it, is a national co-ordination mechanism. The Deputy mentioned that a lot is happening organically, which is great and shows there is a demand among those sectors. However, what we would like to do through the national clustering programme is to provide a national clustering co-ordination mechanism that builds the capacity within those cluster organisations through training, through technical advice and through developing cluster managers. Part of the top-down approach would be putting a structure in place to help build those and to build capacity at national level.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Thank you. With regard to the early stages when Irish businesses export, and they have to export, the White Paper indicates a focus on strengthening the Irish-owned exporting sector, particularly from the existing large cohort of non-exporting SMEs. Given that Irish companies have to export at an earlier stage in their life cycle than those in other European countries, can the witnesses outline the challenges this poses for companies and what can be done to help them, given there is a unique challenge on this island?

Mr. David Hegarty:

The challenges are probably related to things like an understanding of the issues that arise if a company is trying to break into export markets. There are a range of programmes run by Enterprise Ireland that will assist companies in entering export markets. One point which struck us in carrying out the analysis for the White Paper is that if we compare Ireland with Denmark, it is clear that a much higher proportion of SMEs in Denmark export goods than their counterparts in Ireland, which is a surprising finding in many ways. Just 6% of Irish SMEs are engaged in exporting, although that is counting all businesses so it may not be entirely accurate.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Some would never be exporting.

Mr. David Hegarty:

Yes. The purpose of some firms is to compete on the domestic market, and that is fine. Ms Hynes might want to add to how she sees the challenges in that area.

Ms Karen Hynes:

Part of the mandate of the local enterprise offices is to work with entrepreneurs in early-stage companies and to identify those with the potential or the capacity to export. A lot of their supports focus on building that capacity first, so they would give direct financial aid to companies to help them to achieve goals around competitiveness, management development and looking at their products, particularly in the context of innovation and services.

They fund companies to do this. They work very closely with Enterprise Ireland. There is good co-operation and collaboration between the local enterprise offices and Enterprise Ireland. When the local enterprise offices identify companies that have reached the stage of being ready to export they will work with Enterprise Ireland. These clients will transfer to Enterprise Ireland to access further supports and, in particular, international connections and the network of overseas offices. The local enterprise offices work the early stage of the pipeline trying to develop and identify early exporters. They will contribute to the target with an additional 2,000 exporters.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I apologise for jumping around the place, but a number of questions arise. With regard to the green transition, specifically green energy, is the Department confident that we will reach our potential in terms of renewables? What opportunities does it see in terms of jobs in the domestic economy for developing and building technology and equipment relating to offshore wind energy? We all support the green transition. Everybody says it and very few people oppose it. If there are opportunities we need to be able to grab them, especially in the areas of jobs, research and development. Given where we are, and our potential for offshore wind energy, it would be unthinkable that other states and countries would be able to get ahead of us. We are uniquely placed. I am wondering about the opportunities for jobs and reaching our potential.

Mr. David Hegarty:

I thank Deputy O'Reilly. I probably should not comment on the target for our offshore renewables. We have targeted that 80% of our electricity will be generated from renewable resources. The Government has set a separate target of 5 GW of electricity from offshore wind by 2030 and a further 2 GW from hydrogen. These are the Government's targets. The Department of Environment, Climate and Communications has established a task force, comprising the relevant Departments and agencies, in the area of offshore wind energy . The Department heads up a work stream in this looking at supply chain issues. It has just been established. In a sense, this work stream, which the Department shares and Enterprise Ireland is also on it, is essentially to maximise the supply chain benefits for Ireland from the development of the offshore wind sector. This is what we have to try to do.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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When was that task force established? Was it recently?

Mr. David Hegarty:

It was recently; towards the end of last year.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Are there any milestones in terms of reports, interim reports, goals or actions?

Mr. David Hegarty:

I understand a first report went to the Government this week.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Okay.

Mr. David Hegarty:

The Department of Environment, Climate and Communications has commissioned consultants who have developed a project management plan. This is what we are working to. We have had one meeting of our work stream and we will be having more as the process unfolds over the rest of the year. There are definitely opportunities in terms of what the Department has done or is doing. I have mentioned that Enterprise Ireland has a nascent cluster in this area. I think it is called gale force but I may be wrong. It brings together 70 companies that have an interest in this area.

Separately, the Department has done other work. We provide the secretariat for the expert group on future skills needs. We have done some work looking at the likely demand for jobs for the green transition generally. It does not just cover renewable energy. It also covers areas such as retrofitting and electric vehicles. This was a partial exercise. Our initial estimate was that there will be a requirement for 30,000 jobs over the next couple of years. These would be specialised occupations such as engineers and retrofit specialists. We would not regard this as a full analysis of the economic potential of the sector. I absolutely take Deputy O'Reilly's point that this is one area. The White Paper generally does not name sectors or states it will target this or that sector for growth. Offshore wind is the one exception to this.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Absolutely. As I said, the Chair launched our report this morning. We are all pointing in the one direction.

Richard Bruton (Dublin Bay North, Fine Gael)
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I thank the witnesses for their presentation. I have several questions. The White Paper does not contain any jobs target. It is the possibly the first time that a policy paper coming from the Department does not set a jobs target. Is this a reflection of a new perception of Ireland's capacity? Why is this the case? Is the mood of the moment to have a period of consolidation around stronger enterprises on the same jobs footprint? In this context representatives of the small business sector came before the committee last week, including exporters, chambers of commerce and ISME. They certainly underlined the problem of scaling and the need for much stronger management development programmes. While they were full of admiration for what Enterprise Ireland does, there was some questioning of the capacity of the local enterprise offices to do likewise for the companies that will fall within their remit. There is an issue with how we will build the capacity of the local enterprise offices and whether their structures will change.

We recently passed a circular economy Act that commits the Government to having sectoral circular economy strategies. I do not see any mention of these in the White Paper. It seems a fairly glaring omission against the background that on a production basis our emissions are nearly double those of the rest of Europe. However, if we look at what we consume and whose footprint falls in other countries, our impact is 75% higher than is recorded in our official target figures. We have real problem with our capacity to recycle, reuse, repair, restore, avoid demolition and choose wisely in our construction materials. There are serious problems in these areas. We really need to see the Department of Enterprise, Trade and Employment step up and develop such strategies.

My next question is on our ambitions for the digital transformation. There is conventional wisdom around the Houses that data centres are at the root of all our problems. I would be interested to hear the perspective of the Department on what is the role of data centres. What are the appropriate restrictions and constraints on their growth in the short term? What is their a role in the longer term as we develop this once-in-a-century renewable asset - or whatever way it was described - that we have? In normal terms it would become a magnet for data centres. People go to the most efficient country to manage their data. Ireland stands to be just such a country in the longer term. This is my view. I would like to hear the perspective of the Department.

Mr. David Hegarty:

I thank Deputy Bruton. On his comment about there not being a jobs target, there is one in that we commit to the maintenance of full employment.

Richard Bruton (Dublin Bay North, Fine Gael)
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It is not a jobs target, it is an unemployment target.

Mr. David Hegarty:

It could be looked at it like that. We had one previously under the economic recovery plan and it was attained. I mentioned this in my opening remarks. We felt that maintenance of full employment over a timeframe to 2030 was the appropriate target.

As to Deputy Bruton's questions on the rationale for this, it was felt by the Government that maintaining full employment was an appropriate target. It also reflects the view that in some ways the issues are more about productivity and raising productivity levels, particularly in the indigenous sector of the economy. We have two productivity metrics among the 15 in the White Paper. I will ask my colleague Ms Hynes to answer the question on the capacity of the local enterprise offices in the area of managing development.

Under the Circular Economy and Miscellaneous Provisions Act, which is led by the Department of the Environment, Climate and Communications, its officials have to develop a circular economy strategy this year. We will work with them on that. That is where that stands.

Richard Bruton (Dublin Bay North, Fine Gael)
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The Department of Enterprise, Trade and Employment is waiting for them to tell it what to do. Is it not central to the green deal? It is at the heart of all European thinking. However, we are behind the curve.

Mr. David Hegarty:

We will definitely contribute and engage fully with the Department of the Environment, Climate and Communications on that. We do not, as of now, have our own circular economy strategy as a Department. It is mentioned in the White Paper and we are working on a number of areas on the circular economy. Particularly, we have responsibility for the eco-design regulation. There is a broader variant of that now being proposed by the Commission. We are leading on the negotiations on that, which would extend it to a wider range of products. We are leading on the negotiations on that at EU level.

We also have some initiatives within our Department in the area of the circular economy, particularly the Irish Manufacturing Research centre, which is a technology centre under Enterprise Ireland. It has a CIRCULÉIRE programme, which essentially brings companies together in a network design to encourage adoption of circular economy practices.

We will not be found wanting in this. We absolutely see its centrality to the green deal agenda, as the Deputy called out, and to the decarbonisation agenda generally. We will work closely with the Department of the Environment, Climate and Communications on that. We will continue to implement the programmes we already have.

On data centres, Government policy on data centres was set out in a policy statement released in July of last year. Essentially, it acknowledged that there cannot be a digital economy presence without having data centres; they are the factories of the digital economy. Ireland has a strong presence in high technology sectors. We have to be open to having data centres to support those firms. However, it is clear that in the short term, given the constraints on our electricity grid, that the scope for expansion of data centres is very limited. The policy statement set out six criteria that essentially would act as a prioritisation mechanism for deciding which data centres could be considered over the next three or four years. I take the Deputy’s point that beyond that, once we start to see supply of electricity emerge from renewable sources-----

Richard Bruton (Dublin Bay North, Fine Gael)
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How is that policy working? Is Mr. Hegarty happy that the constraints are working effectively and not, on the one hand, killing off the goose in the long term, and on the other hand, not overstraining? Every day there is new data centre connecting there is a hue and cry saying it is lamentable. However, if it is within the policy, then it is okay. Is the policy effective in this area to get that balance? That is what I am keen to understand.

Mr. David Hegarty:

I think it is. It attempts to strike a balance between the need to support the technology sector, which is important for the economy, while recognising the very real constraints on our electricity grid and infrastructure at the moment. Over time, hopefully, these will be alleviated. On how this is being rolled out, that is a matter for the Commission for Regulation of Utilities, CRU, and EirGrid. We are working closely with them and engaging with some of the larger technology firms to try to get across an appreciation for what the data policy centre statement states and pursue that balanced approach over the next couple of years while the constraints are very real.

Turning to the Deputy’s question on the role of the capacity of local enterprise offices, LEOs, in the management development area, would Ms Hynes like to comment on that?

Ms Karen Hynes:

As the Deputy knows, the local enterprise offices are business units within the local authorities. They carry out the enterprise development functions on behalf of Enterprise Ireland. Enterprise Ireland would develop the guidelines and eligibility for all of the national schemes that the LEOs would run. On training management development, the LEOs have a range of supports for all businesses, not just those that are exporting. The mentorship programme is particularly popular. For many smaller companies, management is time poor, so they find the mentoring, the one-to-one learning, training and development useful. The LEOs provide that to all businesses.

They also focus on areas such as digitalisation and the green economy. They have the trading online vouchers, which again, helps all micro-firms to benefit from a consultant who will help them with their trading strategy. They also have the green for micro programme now, which helps-----

Richard Bruton (Dublin Bay North, Fine Gael)
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I think the concern is that if there is one for every county, so to speak, will those bigger capabilities be accessible? One can imagine it would be in Dublin, however, would a person in Leitrim in need of access to a certain range of skills and mentoring be able to access that? That is where the concern may be, that there needs to be some restructuring of service delivery to strengthen what is available to a company, no matter where it is based.

Ms Karen Hynes:

The LEOs recruit for the mentoring panels. They make sure that there is sufficient expertise on the mentoring panels for the different training requirements and the needs of the local businesses. They can look to bring external consultants and mentors onto the panels. There is an opportunity for them to identify what is needed locally, recruit and then get that. The benefit of the LEOs being embedded in the local authorities is they are very connected and embedded in the communities. They are able to respond to the local needs and support local enterprise and economic development.

Richard Bruton (Dublin Bay North, Fine Gael)
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In a nutshell, is there now a capability programme to ensure that the entire network, which now will be dealing with companies with up to 50 employees, has the capacity? The underlying fear is that you are asking people to do a big step up in what they were doing and whether there a matching development programme of the reach, scope and range of service they can offer.

Ms Karen Hynes:

The centre of excellence in Enterprise Ireland is rolling out a training programme for all of the LEO staff and all of the new products. The regional Enterprise Ireland executives and development advisers, DAs, will be involved as well with the LEOs in working with companies that have grown to more than ten. They will work closely with them to see which agency is the most appropriate for support.

We are also investing in sort of a digital transformation of the LEO network to try to introduce and enhance the systems that the LEOs use and connect them nationally. This will help with efficiencies within the local office and give more time to staff in the LEO to engage with clients.

Richard Bruton (Dublin Bay North, Fine Gael)
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Sorry, we ran on a bit. Poor aul Deputy Stanton is squeezed out.

Maurice Quinlivan (Limerick City, Sinn Fein)
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We will bring him back in again shortly anyway. If Deputy Bruton want to finish his slot now, we can bring Deputy Stanton back in after.

David Stanton (Cork East, Fine Gael)
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Work away.

Richard Bruton (Dublin Bay North, Fine Gael)
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Last week, the issue of skills shortages came up. The Department has sort of a split responsibility here. It has responsibility in respect of work permits and that regime and it is the key to the take up of apprenticeships, even though it is not delivering them. I would be interested to hear the Department’s strategy. The big cry from small business was that they cannot get the skills. They could grow much more rapidly but there is a constraint. I think there was a call for a more integrated approach to this than we have, even though there is a huge range of new options out there.

Mr. David Hegarty:

On work permits, before I get to the detail, the Deputy knows how our skills architecture is organised. The Expert Group on Future Skills Needs operates under the aegis of our Department. It regularly does exercises projecting future skills needs in particular areas of the economy. I mentioned earlier the work we did in the area of looking at the skills requirements of the green transition. We are currently working on financial services and the biotechnology sector. That is complemented by work that is done by SOLAS under the aegis of the Department of Further and Higher Education, Research, Innovation and Science.

On work permits, as the Deputy knows, we operate a system of critical occupations lists and an ineligible list. The work permit system came under much pressure, particularly last year, where we saw a huge increase in the number of applications for work permits. We put more resources into that area and the waiting times are now down to about a week or so for the critical list.

Apprenticeship policy is really a matter for the Department of Further and Higher Education, Research, Innovation and Science. We see it as very important, but the programmes in that area are all run by SOLAS.

Richard Bruton (Dublin Bay North, Fine Gael)
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The multinationals traditionally have not been great patrons of the apprenticeship programmes. The change in these programmes is designed to bring them in. To judge from the numbers, there has not been a major increase in this regard. There is the danger that people will see the work permit as an easier route than investing in the longer term. For the bigger strategy of full employment and high incomes, we need this longer-term element. Again, a bit like the circular economy concept, the Department, in its enterprise strategy, may need to take more of an interest in this regard. I am sorry; I have overstayed my welcome.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Deputy Bruton. The next member who has indicated to speak is Deputy Matt Shanahan. Unfortunately, we cannot hear him online. He is on mute. We will try to sort out this issue and come back to the Deputy. I call Deputy Louise O'Reilly.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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MS Teams can be a nuisance. Turning to investment in research and development, the White Paper tells us innovation is the best way to generate "sustainable long-term" productivity growth. Who is going to argue with that? I agree with that of course. I think we all would. Analysis of European and global indicators, however, shows that Ireland is drifting in the wrong direction on innovation scorecards on international competitiveness in the area of research and development. We have moved in the right direction on the European innovation scorecard. We are classed as a strong innovator, which is good. We are not yet, however, an innovation leader, unlike countries such as Belgium, Denmark, Finland, the Netherlands and Sweden. Indeed, the European scorecard indicates that our performance is at 108.9% of the EU average, but our lead is becoming smaller. We are doing well but perhaps slipping back. That is probably the best way to describe it. On the global innovation index, we have drifted from 12th to 19th. On the international Institute for Management Development world competitiveness indicator, we have drifted from seventh to 13th.

Significant attention was devoted in the White Paper to the need to improve these scores and to make us an innovation leader. The area of research and development does not necessarily fall within the remit of the Department, but last year its budget for research and development was €255,075. Can I get an outline of what needs to be done to ensure we break into that top echelon and become leaders in this area? We are going in the wrong direction, albeit we are not in a bad place. We should, however, be moving forward and not backwards. Comments from the witnesses on this topic would be very welcome.

Mr. David Hegarty:

I thank the Deputy for her question. As she said, we all agree this must be a core part of our enterprise direction and economic policy in future. The Deputy mentioned some of the metrics. We are doing pretty well according to some indicators, while we are falling somewhat behind on others. Essentially, the White Paper states what we need to in this regard and the Government agreed a separate strategy on this area late last year. This is Impact 2030 - Ireland's Research and Innovation Strategy, which was developed by the Department of Further and Higher Education, Research, Innovation and Science. In this area, we are essentially saying that we need to get on and implement this strategy. This includes targets around increasing the share of metrics such as gross national product, GNP, gross domestic product, GDP, gross expenditure on research and development, GERD, and business enterprise expenditure on research and development, BERD. In some areas this is a matter of increased public resourcing, but equally there is a need for firms to see the importance of this agenda and invest more themselves.

The Deputy mentioned a figure of €255,000. I do not think that is correct, but we will check the figures. We run a number of significant research and development programmes in our Department, including the digital technology and innovation fund, DTIF. Enterprise Ireland also has several research and development programmes. Off the top of my head, in the context of the budget for those endeavours, the DTIF itself is worth €500 million over several years. It is a multiannual programme.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Okay.

Mr. David Hegarty:

About 25% to 40% of the IDA's budget is also in the area of research and development. Increasingly over time, therefore, more and more of our Department's budget is being allocated towards research and development, which we see as key to improving the innovation and productivity performance of MNCs and SMEs. Obviously, though, the programmes funded under the Department of Further and Higher Education, Research, Innovation and Science would be significantly bigger.

Additionally, we have the research and development tax credit, which is an important intervention in this area. Each year, our Department prepares a submission for the Department of Finance on taxation issues. One of the areas we have focused on in recent years has been the research and development tax credit. Essentially, we have been trying to make this scheme more accessible to SMEs. Most of the take-up is by the multinational sector, and we see a need to try to make this scheme easier for SMEs to access. Some commentators would argue that sometimes these kinds of tax incentives are easier for firms to access in terms of the take-up of research and development. I do not know if any of my colleagues wish to comment as well.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Regarding targets, Mr. Hegarty was previously asked about jobs and employment targets. I could make a very political point about the Government setting targets and failing to meet them, but I will not. I will refer to the situation of targets not being set. As I said, we are drifting. We have gone from 12th to 19th in the international Institute for Management Development competitiveness indicator, a name which just rolls off the tongue. We have moved to 19th. Are we aiming to get to 17th? Is there any ongoing measurement in this regard? Are we using these international indicators and are they causing concern? Is the message going out that we need to move from 19th and start to do better?

Mr. David Hegarty:

We have not set a target in the White Paper concerning those metrics, but we do monitor them on an ongoing basis, including through the work of the National Competitiveness and Productivity Council, NCPC, for which we provide a secretariat. A whole range of indicators is contained in the Impact 2030 strategy. In the White Paper, we focus on the GERD and the BERD indicators, but essentially there we are following what is set out in Impact 2030. This was agreed by the Government just last year. The White Paper simply reaffirms that strategy and sets out its importance in the context of enterprise policy.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank Mr. Hegarty. I have one remaining very brief question.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Very briefly.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Regarding the expansion of SMEs, will Mr. Hegarty chat to us briefly about what can be done to deliver improvements in terms of what needs to be undertaken to address the situation where we have SMEs that sell up rather than scale up? This is a problem. It is something I have been doing a fair amount of work on. What can be done by the State to encourage our SMEs to scale up and not just to sell up? They reach a certain point where they hit a ceiling, and then they sell up rather than expand. This seems to be happening quite a lot. I would welcome Mr. Hegarty's views on this aspect as well.

Mr. David Hegarty:

The area of scaling is addressed in the White Paper and it is seen as a very important one. We are doing some work on this topic now. We have a working group established and we are working with the Department of Finance, as well as with other Departments and actors, to try to see what kinds of interventions in the area of equity, and finance in particular, might be needed so we can keep these firms in the Irish economy longer. We are, therefore, working on this aspect. We recognise its importance.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Has the Department any timelines for that work? It is incredibly important and I would be concerned that this might drift. I fully appreciate that everyone is busy. I have outlined about 90 priorities this morning and I know everything cannot be a priority. In terms of this element, though, what stage is the working group at and how is this going to work?

Mr. David Hegarty:

The target is that this report will be finished in the first half of this year. We will then consider it and take the-----

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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That is by the end of June.

Mr. David Hegarty:

Yes.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Deputy O'Reilly. I call Deputy Matt Shanahan and I apologise to him for what happened earlier. The issue has now been fixed.

Matt Shanahan (Waterford, Independent)
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I thank our guests for coming in this morning. We may perhaps need to get our digital strategy better progressed. Regarding the key areas that Mr. Hegarty outlined in the context of the White Paper, I will run through those heads and make a few points. Under the first heading is decarbonisation and offshore wind has been highlighted.

No mention was made of a hydrogen strategy, which I thought would be key to an offshore wind strategy. I know it is not quite this Department's responsibility but I have been raising some concerns about the community dividend. It is totally inadequate to what is being proposed in terms of licensing. I ask the Department to have a look at that before we issue licences later this year. On the south coast a number of large wind farms are being targeted and they are talking about a community dividend of perhaps between €1 million and €1.5 million per year for 15 years on investments of well over €1 billion, which does not seem quite right. There also needs to be an opportunity for people to invest in offshore wind. We need to have a hydrogen strategy. I thought it would be allied to a wind strategy here.

Regarding digitisation, which was also highlighted, very little has been done in terms of referencing. I know artificial intelligence was referenced in the commentary. This is a major issue in terms of digitalisation. We have seen some of the headings around how this is going to disrupt conventional businesses in this country, in particular law. I would have thought there would have been something around that.

Ireland's FDI component was advanced. We all know how important it is. That is largely tax-based. Perhaps the witnesses might comment on that because the main reason we have FDI's here in the first instance is that technically we are very good at manufacturing. Taxation is a huge incentive to come to Ireland for the FDI sector.

Regarding the scaling and strengthening of the Irish-owned exporting section, colleagues mentioned this and we have had various representations. It is incredibly difficult for small indigenous companies to access export markets. The reason companies sail instead of scale is because of the difficulties and it is hard to do without international partners getting access into markets. We are overstating the ability of Government to try to help. What is really needed is the expertise of international players trying to co-ordinate with local business.

In the SME sector, we have two agencies that deal with our companies. We have the IDA that deals exclusively with bringing in foreign direct investment and we have Enterprise Ireland that is totally focused on trying to get companies to scale. We have no umbrella group, a regulatory agency, to look after our SMEs. We need to get a third way if we want to develop the indigenous SME community in Ireland. We need to have an agency specifically dedicated to that.

The ability of foreign direct and domestic companies to do more business is also incredibly challenging. I have spent time in the sector and is very difficult to get Irish indigenous companies on the procurement list for FDI companies because of the specialisms of what they buy and the regulatory standards, etc.

The most glaring point to me, which Deputy Bruton mentioned, is that recycling and reuse needs to be addressed. I would be looking for the jobs target and a hydrogen strategy because talking about wind without talking about developing hydrogen means we are not looking at where other countries are trying to go.

Mr. David Hegarty:

I will take those questions in turn. I will ask one of my colleagues to come on the issue of difficulties for SMEs to access exports markets. A hydrogen strategy is being developed but that is being led by the Department of the Environment, Climate and Communications. It is working on that at the moment as I understand it. I agree that it is highly relevant to the offshore wind agenda because if we get a sufficient supply of offshore wind on stream, it opens up the possibilities of using some of that surplus energy for the production of hydrogen. This has all sorts of important uses including in the decarbonisation of some difficult to decarbonise industrial sectors. I think it is mentioned in passing in the White Paper but we do acknowledge its importance and it is something that is being worked on across Government at the moment.

I cannot really comment on the question about the community dividend. The licensing process is rolled out through the Department of the Environment, Climate and Communications.

In 2021 our Department was responsible for the development of the Government's artificial intelligence, AI, strategy. The Deputy is right that AI will have disruptive effects but we have to get ahead of that. The AI strategy sets out an approach that we try to maximise the benefits for Ireland Inc. and from our enterprise sector from artificial intelligence. There are a lot of predictions made as to the impacts of AI on the labour market. Different experts will say different things. The view is that we need to manage it properly and use it appropriately with the appropriate regulation which is being developed at EU level. The title of our strategy is AI-Here for Good so it is about trying to harness the positive benefits of the technology.

I refer to the Deputy's comment on FDI being largely tax-based. The analysis in the White Paper is very much that our offering is based on a range of factors. Tax is one of them and that is going to change with the OECD BEPS process. There are a range of other factors that make Ireland attractive for FDI. These include our skills capacity and membership of the European Union and the Single Market. There is also a kind of demonstration effect that multinationals have been very successful in the Irish economy. Success breeds success and reinforces itself. The expert analysis in the White Paper would be that tax is just one element of a package that makes Ireland attractive for FDI.

Matt Shanahan (Waterford, Independent)
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I agree. I am just highlighting that is a very singular piece and very important.

Mr. David Hegarty:

The effects of the changes in the international tax environment means that our ability to use tax as a competitive lever will be more restricted in the future. We will be more circumscribed in what we can do in the area of corporation tax rates and the regime. We have to look at the other factors that are identified in the White Paper around our business environment, skills, and all of the issues we discussed.

I agree that generating spillovers between the multinational and SME sectors is challenging. It is not as if we have not tried to do this up to now. I would hope that the clustering programme we are working on at the moment will, to some extent, remedy that problem.

My colleague, Ms Hynes, will comment on the Deputy's questions on SMEs, access to export markets and the idea of a separate agency.

Ms Karen Hynes:

On the scaling and accessing of overseas markets, Enterprise Ireland has a particular focus on scaling. It supports firms through its overseas office network as well. Access to finance is one of the issues as are management development and leadership development, building ambition within companies, and competitiveness. It has a range of programmes to help. The local enterprise offices are now working with firms with more than ten employees to help them on their export journey as well.

On the issue of a third agency, we would understand the local enterprise offices to be the third agency. They work with micro-enterprises and now with small businesses with up to 50 employees. They also work with a broad range of sectors and they provide advisory and consultancy supports to all sectors. We would see that being fulfilled by the local enterprise office around the country.

David Stanton (Cork East, Fine Gael)
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I thank the witnesses for coming in and for the presentation. I notice seven priority enterprise policy objectives listed. The White Paper talks about how digital helps productivity and yet the number of firms that are prepared and have a digital plan is very low. To increase productivity by 2.5%, we need to have a lot of firms involved in digital.

We need to have a lot of firms involved in digital. I think there is a target of 90% of Irish SMEs needing to be digital by 2030. A huge number of firms, especially the smaller firms, do not have that on their radar at all. Please comment on that. How important is digitalisation? What can be done to remedy the situation? What is the Department doing?

Mr. David Hegarty:

The issue is acknowledged in the White Paper. The fact that digitalisation is the second of our seven priorities speaks to its importance. Digitalisation is not an end in itself. We see it as very important as a way of boosting the productivity performance of all firms, particularly SMEs. There is a lot of international evidence that the adoption of digital technologies can help in that regard.

Deputy Stanton called out the position in terms of some of the indicators that relate to the digital capacity of SMEs. What we are doing about that is under the EU funded national recovery and resilience plan. Our Department has two programmes under that EU facility. We have one programme in the area of decarbonisation and another in the area of digitalisation. Under that programme, we will invest, mainly through Enterprise Ireland, EI, some €85 million over the period between now and 2025. EI will roll out a range of programmes essentially with the aim of helping SMEs understand their digital capacity and readiness, and then to take action to address those. That would be one of our main interventions in that area.

David Stanton (Cork East, Fine Gael)
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What is even more worrying is, and again I think it is on the same page, is page 26. I refer to the graph that refers to the business climate action plan by firm size and shows that 82.67% of micro-sized enterprises have no business plan, 12% have a business plan, some do not know. For small businesses, 72% have no climate action plan, 61% of medium-sized enterprises have no climate action plan. We know that this issue is coming at us very fast. The costs associated with this will be enormous. Representatives of businesses have been in contact with me and told me that they are erecting solar panels and they are trying to get paid for the electricity but are finding it very difficult to engage with the electric companies to get paid and so on. Surely it is a massive challenge to make companies aware of the climate action plan and get a plan in place. What assistance does the Department give companies to do this?

Mr. David Hegarty:

The figures that the Deputy mentioned are quite stark. In terms of what we are doing, I shall mention a couple of things. First, we have developed a tool called the climate toolkit for business, which is openly available on our website. The toolkit was developed jointly by my Department and the Department of the Environment, Climate and Communications. It was designed to help firms to start their decarbonisation journey. All a firm must do is type in key information on the level of its energy bills, travel costs, mileage and things like that. The toolkit simply calculates following the input of key information and the toolkit will point firms to a range of supports that might available to them in order for them to take action, on foot of the diagnosis.

A range of supports are available and some by the Sustainable Energy Authority of Ireland. My Department, as part of the national recovery and resilience plan, has a green transition fund that is backed by €55 million of EU funding.

David Stanton (Cork East, Fine Gael)
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I appreciate all that has been said. I think the issue is the lack of awareness by firms about what is available, how to get it and perhaps there is a fear and concern about the costs involved. What is happening to raise awareness? Is anyone knocking on the doors of these companies and small businesses and saying, "I am from the Government, and I am here to help"? It was the late Ronald Reagan who said that the most fearful words in the English language were, "I am from the Government, and I am here to help."

Mr. David Hegarty:

I shall mention something that we are doing right now. In fact, the Minister for Enterprise, Trade and Employment, Deputy Simon Coveney, has arranged a series of nine regional conferences or workshops to build on the White Paper. My Department and other Departments will be represented at these events. We will focus on the first two key priorities of the White Paper, which are decarbonisation and digitalisation. These events will showcase examples of firms that have successfully started, at least, on this journey to decarbonisation or successfully are using digital technologies. The trick is not so much about giving grants but demonstrating to firms that this is what their competitors or peers have done. Obviously, as part of that, we will showcase the climate toolkit, which I mentioned earlier. Some of this is about soft supports to help firms get on their journey.

David Stanton (Cork East, Fine Gael)
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I thank Mr. Hegarty and I might come back in again later.

Matt Shanahan (Waterford, Independent)
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I wish to return to the issues that I raised about this idea of a third way and a regulatory agency. I accept what Mr. Hegarty said about LEOs existing to help the SME community.

The LEOs do an excellent job. I have great awareness of the work that they do and their approach but I do not think that the SME community, as a group, is properly represented. Certainly, in terms of collective bargaining and all that, SMEs are outside the loop. I have previously asked for ISME to be brought on to the LEEF but there is resistance to doing so by the Department of Enterprise, Trade and Employment. I am not quite sure why the Department keeps going back to the Small Firms Association but it is a subset of IBEC. I think that it is very difficult to see how you can have an organisation that deals with the largest multinationals in the country and is also supposed to be dealing for the mom and pop shop. Again, I put this issue to the Minister, Deputy Coveney, at the last committee meeting that he attended and he said that it was something that would be looked at. I think that it needs to be looked at because we need a better framework for all of the SME community. There is between 20,000 and 25,000 SME businesses that fall between stools in terms of EI, IDA Ireland and LEOs.

I wish to discuss clustering. One of the ways that clustering can be well achieved is through the technology gateways that we have in the third level academic space. Waterford has three of the top 15 scientific gateways and, essentially, they are the south east applied materials scene, which is probably well known by the Department. I refer to the PMBRC, which deals with molecular technology. We also have the Walton Institute. These entities are leading scientific development in this country yet, in terms of funding, I have been totally frustrated in terms of trying to see Science Foundation Ireland grant aid going into those organisations.

Under the new framework of the South East Technological University, we have a very proactive new president appointed who wants to get deeper relationships going between local industry and the third level sector. One of the issues is that the funding is not catching up to provide the research capital and frameworks to develop that. Therefore, we need a strategy for this aspect. We need to recognise that we have these really high functioning, strategic and innovative centres that can coalesce and co-ordinate with the foreign direct investment, FDI, sector, of which we have a decent footprint in the south east but they need to be given the ability to do the job that they can do. I ask that the Department liaises with the SFI and looks at this matter because funding is not coming through. Since 2018, I have advocated for funding for a specific CT X-ray system of metal analysis for the South Eastern Applied Materials Research Centre, SEAM, gateway. That was only announced less than two months ago, four years after it was approved. The funding is not that large at a couple of million euro in the overall scheme and the money that we are spending in this sector. I ask Mr. Hegarty to examine the matter.

That is where there is great scope to develop closer, deeper integration, innovation and scientific research, and then try to see, through the LEOs, what other smaller companies might be there that could supply some products to those larger FDI concerns.

Mr. David Hegarty:

On the Deputy's points about SME representation, he mentioned he raised the issue of ISME's membership of the LEEF with the Minister. I do not have an update on that. SMEs participate fully in a number of forums organised by our Department. The enterprise forum will meet this afternoon. I will ask Ms Hynes to say something about the SME task force, which is a bespoke forum for the SME sector.

On the Deputy's comments regarding technology gateways, SFI is no longer an agency under our Department but I hear his point. We will certainly raise that with the Department of Further and Higher Education, Research, Innovation and Science. We will draw that to its attention. Ms Hynes will comment on the SME task force.

Ms Karen Hynes:

The Minister chairs the SME entrepreneurship task force that is overseeing the implementation of the SME entrepreneurship growth plan, which is a roadmap for the SME sector in Ireland. It has ten priorities. Membership of the group is made up of representatives of the SME sector, including all the relevant bodies and individual founders of companies. One of the measures the Government has introduced is the SME test, which is where we ask people developing new legislation, as part of the regulatory impact assessment, to look specifically at the impact on smaller companies and SMEs to see whether it is appropriate for any mitigation to be taken. That SME test is now being applied to legislation in our Department and five other Departments across government. That was one of the things that also emerged from the SME growth plan.

Matt Shanahan (Waterford, Independent)
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I have to speak in the Dáil but I might try to liaise with the Department at a future point, if that is okay. I thank the Chair.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Senator Garvey is next. I apologise for what happened earlier.

Róisín Garvey (Green Party)
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I thank the officials for coming in. I will focus on a couple of specific areas. The climate action and energy policy unit fed into this White Paper. Did it give the Department targets? How much of that was taken on board? I am thinking specifically of the constant challenge of economic growth, the climate emergency and reducing our carbon emissions. Let us call a spade a spade - that is a huge challenge. Seeing how fickle the multinationals have become of late, especially with Meta and all the others dropping jobs like flies in Ireland, it is time for us to take the SME sector much more seriously. To date, there has been a major emphasis on the multinationals, which is understandable, but that does not make us resilient and they are not sustainable.

I have huge concerns about the LEOs. They are great in theory and there are some great LEOs but, and I got this from the horse's mouth from people running LEOs, there is no expertise in climate or energy reduction. Mentors are going in for green measures, although uptake has been slow, but they themselves admit they do not have the expertise. I brought this to the attention of then Minister, Deputy Varadkar, two years ago and he put some funding in the budget for it, but you cannot teach people how to care if those teaching do not themselves understand why it is important they should care, or what they can do to make a difference to people's bills. That is the way. Teachers cannot teach something unless they know it themselves. We need to upskill people in LEOs, specifically around climate, energy reduction and, I will add, biodiversity, which nobody has mentioned yet. I did a lot of voluntary work with large companies - I will not name them but they were significant employers - to help them reduce their waste around single-use cups. I designed things for them free of charge. I noticed these vast areas of lovely cut lawns at these companies. Is biodiversity coming to the Department too? We have an emergency in respect of that.

It is a huge Department and probably the single most influential Department in the country, in some ways, because it covers everything. Enterprise, energy and use of space come into it and, although this sounds very small compared with a big White Paper, farmers' markets, which are struggling. It is always a battle to set them up. If we are serious about resilience, local economies and local jobs, we should put farmers' markets on a pedestal and make it easy for them. So many farmers' markets are battling with local authorities and battling for space, with zero supports. You would be surprised how many jobs farmers' markets keep going. It is amazing. The ones in the villages and towns that have them are so good in so many ways, not just as regards jobs but community resilience, not to mention the social and mental glue they are for people. Are there specific targets in the White Paper around fossil fuel reduction or increasing biodiversity?

I know this is not really to do with the Department - it is more under the Department of Higher and Further Education, Research, Innovation and Science - but I struggle to find proper information on it. Guidance counsellor associations are looking for and struggling to find proper information on apprenticeships, which we need if we are serious about employment in green jobs and green economies. Guidance counsellors are looking for that information. I know many of them personally and am meeting the head of their association next week. They keep hearing about these new apprenticeships, and green economy apprenticeships and jobs, and would like much more information and knowledge on that. Maybe something the Department could do with the guidance counsellors' association is to let counsellors know how to steer students into the areas where we will need them, past 2030 and into 2040.

I worry about the fact it does not seem to be anybody's job in the local authorities to develop jobs in the county. If you go to the director of services for economic affairs, he says it is the LEOs. The LEOs say it is not them because they have to focus on developing companies that are preparing to export. I am not sure where to send people, or what we are doing to support indigenous industries that are small and want to stay in the Irish market. They might expand but that is not their mission in life. Their mission in life is to survive and supply jobs.

Many small businesses do not need any more mentoring by LEOs; they need financial supports. People in business for 20 years do not need to be told what to do. They probably should be paid to be mentors because they know what to do. Many of them get annoyed with all these offerings and more and more mentoring. These people are experts and the ones with the high knowledge of how to keep a small company going in a fluctuating economy. The LEOs need to look at that. They should offer mentoring to new businesses of course, but not to people who have been doing it for 20 years.

Mr. David Hegarty:

On the Senator's questions and comments on climate action targets, we have two targets in the White Paper. These are, in some senses, legal targets. Under the climate action Bill we, and the Minister, have responsibility for a carbon emissions ceiling for the enterprise sector. We have to reduce emissions in the enterprise sector, which is essentially the manufacturing sector, by 35% between now and 2030. We have responsibility for commercial buildings; emissions there have to be reduced by 45% between now and 2030. Those targets are replicated in the White Paper but they are targets under the climate Bill. Decarbonisation is our number one priority in the White Paper. Enterprise policy has to work within the context of having to reduce emissions, by more than one third in the case of the manufacturing sector, over the next number of years. We have to do a range of things to achieve that, which are set out in the White Paper.

I do not agree that multinational corporations, MNCs, are fickle.

Róisín Garvey (Green Party)
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I meant in the digital sector.

Mr. David Hegarty:

There have been some job losses in the technology sector recently but that has been fairly muted overall. Ireland is probably fortunate in that it has a presence in a number of high-tech sectors, such as ICT and life sciences, which have come through a number of disturbances in the international economy and performed very well. Some correction and some job losses are now going on in the ICT sector but not yet on a very significant scale.

I will take note of the Senator's comments on apprenticeships in green jobs. Apprenticeship policy is not with our Department but we obviously have an interest in it. We will take note of that. I agree with the Senator on the broad remit of the Department. We have a lot of-----

Róisín Garvey (Green Party)
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I do not envy the officials.

Mr. David Hegarty:

We have a lot on our plate. I will ask my colleague, Ms Hynes, to come in on the Senator's comments on the LEOs, their expertise in the climate change area, and mentoring supports.

Ms Karen Hynes:

I will address the area of climate change.

The centre of excellence based in Enterprise Ireland provides training and support to all of the local enterprise office staff on the new supports available with regard to climate change. The scheme we have available at present for small enterprises is the green for micro scheme. Through this scheme, a consultant works with the business directly to develop an action plan.

Róisín Garvey (Green Party)
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For two days. I know it.

Ms Karen Hynes:

There is that support. The LEO teams must be informed to be able to talk about the green for micro scheme but it is the consultants who work with the company on it. We are developing a new scheme that will help to subsidise the capital costs of implementing any action that arises from the green for micro scheme. This is something for which we secured funding in the budget. We hope to roll it out in the first quarter for small businesses. This will also help them.

Róisín Garvey (Green Party)
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That was in my budget submission to the then Minister, the Taoiseach Deputy Varadkar. There is no point in having a green for micro programme if the companies do not know how to follow through.

Ms Karen Hynes:

Absolutely and it is about the implementation. We take the point on mentoring. This is where the teams in the LEOs really try to work with the clients to guide them towards the most suitable support and the best support. The LEOs have a national employment target every year, as do the other agencies. They work towards this. The financial grant aid for growth is for companies that can grow overseas and grow in market. Grants for employment for locally trading firms could lead to a lot of displacement of other economic activity locally. There is a concern that by giving grants to firms just to grow employment, we could reduce economic activity in another company or elsewhere.

Róisín Garvey (Green Party)
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I did not mean to grow employment. I meant to reduce their energy bills.

Ms Karen Hynes:

There will be something forthcoming towards the end of the first quarter on this.

Róisín Garvey (Green Party)
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It is great that we have consultants whom we can pay to do a lot of things but there needs to be deeper understanding within the LEOs on why it is important and the targets. I do not feel this is there. I cannot judge all of them but before I had the budget meeting with the Taoiseach when he was the Minister I did a lot of research on this. The LEOs admitted they did not have the expertise and they did not want to be relying on consultants. I am sure the consultants could give some workshops to the LEOs themselves instead of pawning it all off. It is difficult for them if it they do not understand what is needed to get the right consultant.

Ms Karen Hynes:

This is something the centre of excellence has developed this year. There is a lot of training for the LEO staff. They are within the local authorities and there is a lot of movement and mobility within the LEO offices. It is a constant challenge to keep delivering that training to staff. There is a particular focus on green this year with regard to training staff and having them up to speed on this agenda. We will take these points back.

Mr. David Hegarty:

Broadly, there is an issue with regard to expertise in the area of climate change throughout the system generally. Under the climate action plan, the Department of the Environment, Climate and Communications has asked the Institute of Public Administration, IPA, to look at this issue. It is not just at the level of the LEOs; it is Departments.

Róisín Garvey (Green Party)
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It is everywhere.

Mr. David Hegarty:

Yes. It is something that is being looked at.

Róisín Garvey (Green Party)
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Does the Department have experts on science or energy working for it? My fear is that every Department will spend millions on paying consultants because we do not have expertise within the Departments. It would make much more economic sense for every Department to look to employ people who have the expertise we need. A reduction of 35% is a massive challenge, when many people are content to continue business as usual, unless it will economically benefit them. This would be the ideal because it makes economic sense to be more ecologically minded. I see everything going to consultants but the people at the front line are not being educated. It would be good to see the Department trying to have energy experts and climate experts working in it. It would make a big difference. I have not heard anything on the biodiversity side of things. The Department might think this is completely off the wall but I must bring it up as a spokesperson for enterprise, trade and employment. Biodiversity can make a huge difference.

Mr. David Hegarty:

Absolutely and point taken. On the expertise issue, recently the Department of the Environment, Climate and Communications advertised for administrative officers, which is a graduate entry grade in the Civil Service, and there is now a bespoke stream on climate change. I take this as a promising sign.

Róisín Garvey (Green Party)
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Is that in the local authorities or the Departments?

Mr. David Hegarty:

This is for Departments.

Róisín Garvey (Green Party)
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All Departments.

Mr. David Hegarty:

The competition was advertised by the Public Appointments Service for the Department of the Environment, Climate and Communications but my understanding from discussions with that Department is that it will be open to Departments such as us to take people from it.

Róisín Garvey (Green Party)
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I hope the Department will do so.

Mr. David Hegarty:

We certainly will be looking at it.

Róisín Garvey (Green Party)
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It would be nice if it was mandatory that they have the qualification. There is a word used to mean it is not necessary and it is the second level down. It does not have to be mandatory.

Mr. David Hegarty:

Desirable.

Róisín Garvey (Green Party)
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Yes. It is way past desirable now. We need informed people to help us get there. We will not get there otherwise.

David Stanton (Cork East, Fine Gael)
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Will the witnesses comment on the current situation regarding trade with the UK in respect of Brexit? I understand there have been some big changes. How do these impact on our enterprise policy? Page 34 of the White Paper mentions competition in banking and insurance. Today we have seen another increase in interest rates in some of our banks. The European Central Bank is expected to increase rates shortly. Will the witnesses comment on the impact of this on business and policy here? What is the likely impact?

I have not seen any mention of lean management or lean thinking in the White Paper. Perhaps the witnesses will comment on what the Department is doing in this respect to encourage it.

I also ask them to comment on remote working and its impact on the policy. A small but growing number of people are working remotely outside the jurisdiction. Is this something that has come onto the radar of the Department? One of the big issues we come across again and again is getting workers and employees. Almost every company we meet tells us that filling vacancies is a big issue.

Will the witnesses comment on sites for industry? There is a change happening. With more people working from home, offices are becoming vacant. At the same time I am told there is a shortage of sites for foreign direct investment. If a large multinational wants to come into Cork, for instance, there is one site available, which is the Amgen site in Ballyadam. It is locked up because the road infrastructure is not up to standard. If foreign direct investment companies want to come in, are we satisfied we have the sites available for them, including for them to build if it is for something specialised? There is great work going on with IDA Ireland throughout the country and I acknowledge this but I am told there is a squeeze with respect to sites.

Will the witnesses comment on employment black spots? There are many towns, such as Youghal in my constituency, where people leave every morning because there is no employment and they travel long distances to work. Have we given any thought to enabling people who could work remotely to do so and stay closer to their homes? This would cut down on emissions from having to travel. It would improve their quality of life and well-being. This is probably something we should consider.

Recently the committee received a very good submission on people with disabilities working. I am involved in the open door initiative, which does good work in this respect. It looks at people on the margins and brings them into work. These are people with disabilities, migrants, people from other jurisdictions and people whom the education system failed. Will the Department work on this cohort of people who are in our 4% or 5% unemployment rate?

A number of years ago, work was done on small business and casual trading. Senator Garvey reminded me of it. A review of the casual and occasional trading licensing legislation commenced. How has this progressed? I asked a parliamentary question on it in 2021 and I was told it was put in abeyance. A lot of people with micro-businesses depend on it. The witnesses may not have the answers to all of these questions but they might be able to send them in writing afterwards. I am told the Casual Trading Act 1995 is operated by the local authorities. It needs to be updated and I would like to know where it is at. I have asked a lot of questions.

Mr. David Hegarty:

I thank Deputy Stanton. We will do our best to address his questions.

I will first deal with our trade with the UK. Notwithstanding the pressures of Brexit, our trade with the UK continues to increase. In fact, our trade in goods with the UK last year reached a value of €51.5 billion, with goods exports increasing by 22% to reach a value of €22.1 billion. Imports from the UK increased by 51% over 2021, reaching a value of €29.4 billion. Notwithstanding the pressures of Brexit, trade with the UK continues to perform strongly, certainly based on the figures for 2022.

The Deputy raised several issues concerning the cost of doing business, including interest rate increases. Many of these issues are not within the control of our Department. The purpose of the section in the White Paper that the Deputy referred to is to highlight the critical factors for business. We need to get these right. The Department works with other Departments on this agenda, including through the work of the National Competitiveness and Productivity Council, whose secretariat is provided by my Department.

The Deputy mentioned lean thinking. He is quite correct that it is not specifically mentioned in the White Paper, but Enterprise Ireland runs several programmes in this area that are important if we are to reach our decarbonisation targets and meet the requirements of the productivity agenda. This is essentially about firms becoming more lean and efficient in their use of resources.

On remote working, there have been some reports of people working outside the jurisdiction. Our Department developed the Government’s strategy Making Remote Work some years ago. Obviously, there are some downsides but overall we believe remote work can be a positive factor, including in areas whose towns may not have much employment. Remote working is another way of tackling such problems. We do not have a policy per seon employment blackspots. Regarding the activation agenda, we would look to other Government strategies, such as Pathways to Work, which is managed by the Department of Social Protection. There is also an employment strategy for people with a disability. We regard the White Paper as complementing the other strategies.

On the question on sites for industry, IDA Ireland has a regional property programme. It is a significant element of IDA Ireland’s budget. I cannot comment on the situation in Cork. Maybe we could come back to the Deputy on that. Over the past ten years, IDA Ireland has spent almost €97 million on its regional property programme. Therefore, it is a significant programme in the Department’s budget.

We will have to look into the Deputy’s question on casual trading licences. We will check with the relevant people and revert to him. I hope I have covered the questions.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. Hegarty for that. I want to make a quick comment myself. Deputy Bruton asked about statistics on job creation. Mr. Hegarty was talking about full employment. Deputy Stanton asked a question about blackspots or regional blackspots. It is a particular issue for me because the city of Limerick, where I come from, has eight of the top ten blackspots. We are waiting on the CSO figures to see whether there has been any movement on this. I understand completely that Pathways to Work and activation schemes are matters for the Department of Social Protection, but has there been any discussion related to the White Paper on how to entice to work those who have not worked and whose families might not have worked for generations? An incredible amount of work has been done in the Limerick area in the past year or so through the Limerick regeneration programme, local schools and businesses to alert those in some of the more deprived areas about jobs available and to help them get over the barriers in returning to the workforce or, as for many, entering it for the first time. What discussions have taken place in that regard?

Mr. David Hegarty:

Maybe I should have mentioned before what I am about to say. The White Paper, which contains the national enterprise policy, is complemented by several regional enterprise action plans. I will ask my colleague, Ms Hynes, to comment on them in a minute. They try to replicate national enterprise policy at regional level, including for the mid-west. We very much look to Pathways to Work to try to increase participation. I absolutely accept this is important but the policy in this area really lies with the Department of Social Protection. Obviously, there are also issues associated with the tax system that must be considered.

It is worth reminding ourselves that there has been a strong increase in participation, particularly by women and younger people, in the labour market after the pandemic. Unlike some countries, Ireland has a labour market that has performed very strongly. In particular, participation has increased among the groups I have mentioned. This may be partly to do with remote work, which Deputy Stanton was asking about. Ms Hynes will say something about the regional action plans.

Ms Karen Hynes:

There are nine regional enterprise action plans. They are overseen by the Department, which provides the secretariat, but they are really collaborative initiatives at regional level that bring together all the stakeholders, including enterprise agencies, local authorities, education institutes and training boards. They come up with actions to create employment and support enterprise development in each region. Funding is made available through competitive calls. Projects identified by the regional enterprise plans can compete for funding. There will be a further funding call later on this quarter for those types of actions. We can send a full briefing note on that.

David Stanton (Cork East, Fine Gael)
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I have one more question. On remote working and digitalisation, I agree with Mr. Hegarty that remote working is important and has great potential. However, the issue is that in some regional towns, from which people drive by car every morning to a nearby city, there is no hub. There is some work being done by some Departments on setting up small hubs but it is not scaled up. The hubs are not big enough. There are also issues with regard to security, confidentiality and so forth. If workers must commute to a multinational in a city from a regional town, which entails sitting in a car in traffic for an hour and burning all the diesel that Senator Garvey rightly does not like, and rightly so, it is desirable to have remote working hubs built to scale. Other jurisdictions are doing this. It would mean people would not have to leave the regional towns and that quality of life would improve. It would have an impact on emissions targets. It could be a win–win. I am not sure whether that is on the agenda of any Department but maybe we could consider it and do a pilot somewhere. It could help the regional towns because people could stay in them, shop in them and restore town life, rather than leaving them in the morning and coming back in the evening, probably having shopped elsewhere. Is there a box to be ticked in this regard?

Mr. David Hegarty:

I absolutely take the Deputy’s point. The main intervention on hubs is through the Department of Rural and Community Development.

David Stanton (Cork East, Fine Gael)
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On a small scale.

Mr. David Hegarty:

Like all of us, I am sure it could do with more money. We have some smaller-scale interventions under Enterprise Ireland, on which Ms Hynes might comment.

Ms Karen Hynes:

Some hubs have been funded under the regional enterprise plans. There is an effort across both Departments to work together to create a network of hubs around the country. Again, we can provide a fuller briefing note with the detail.

Róisín Garvey (Green Party)
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There are 12 digital hubs in Clare. They are excellent and I have used them. The pods were fully confidential and soundproof. I used one in Ennistymon yesterday and felt there were no GDPR issues. There are good examples of hubs but it is probably not enough to leave the responsibility to the Department of Rural and Community Development alone, because remote working will be a major aspect of employment if we are to reduce carbon emissions.

Let me return to the 35%. That is the big thing. I know from having worked with schools for years under the Green Schools programme that a target is set.

The first thing you have to realise is where it is all coming from. I would love to hear about the main causes. I presume it is construction and concrete. If you are looking at 35% reduction then what are the biggest emitters that could be the biggest focus? It is probably not small businesses although they need support as well. If we are going to reach 35% then you have to have an environmental review. I presume the Department has done all this. Was it done by outside experts or how does the Department figure it out? Usually you do an environmental review of what is causing all the carbon emissions; then you set up an action plan based on that review and then you review that to see if it is working or not to get to the 35% in the short seven-year period. It is great that Mr. Hegarty said that the Department of the Environment, Climate and Communications is offering roles in all Departments. What pay grade are they? I wonder if it is only administrative officer, AO, or something. Sometimes you see with local authorities how the most important jobs might not be at the highest grade. I would think they should be more valued. I have ecologist friends who said for years that they want people with doctorates to work for €28,000 a year. I am hoping that has changed in the last couple of years but I would be interested to see if that is the case because if we are serious about hitting targets, the Department will need some serious help. That is not only climate experts or ecologists but maybe experts who have done this in other countries where we have seen huge success. What do we need to help the Department get that 35% target and what are the biggest challenges and wins? That is a big question.

Mr. David Hegarty:

We have done some analysis on where the emissions arise. In the manufacturing sector, they are actually quite concentrated. The cement sector would account for about 40% of emissions in the manufacturing sector. There would also be high levels of emissions in sectors such as food and drink and also parts of the chemical sector. We have done some analysis of that.

What we have to do, and we are working on this, is prioritise the sectors with the highest level of emissions. Obviously, that makes sense because we have limited resources. For example, we are doing some work in the area of cement. We have a working group which is looking at that. We bring together all the relevant Department - the Department of Housing, Local Government and Heritage, the Department of the Environment, Climate and Communications and our own and our own agencies and look at public procurement. Obviously the State is a big purchaser of construction materials and construction sector output and we are looking to set a standard there that would have to be used in the case of public projects. We are doing some work on that. I have to admit that we do need some consultancy support on that as well.

On the administrative officer competition I mentioned earlier, to be clear, it was advertised by the Department of the environment but in discussions we understand it is open to other Departments taking administrative officers from it. That is something that we are going to explore ourselves.

Róisín Garvey (Green Party)
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Yes, I should hope that would be a top priority. The Department should ask for as many as it can. If you do not ask you do not get. I would not be waiting for them.

Mr. David Hegarty:

I understand our HR section has raised it with theirs.

Róisín Garvey (Green Party)
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Okay. That is good.

Mr. David Hegarty:

We are following up on that.

Róisín Garvey (Green Party)
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There was no mention at all of biodiversity. Is that something that has not crossed the Department’s desk? Increased biodiversity can also help with carbon emissions.

Mr. David Hegarty:

No. I absolutely understand the Senator’s point. It is mentioned in the White Paper but very much in the context of decarbonisation. Aside from some of the programmes I mentioned earlier when I was responding to Deputy Bruton’s questions, such as the circle air initiative, we do not have any specific programmes on biodiversity. We see it as part of the wider climate change and decarbonisation work. I absolutely understand the point.

Róisín Garvey (Green Party)
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I am just thinking if you do have to get big business to try and reduce their carbon emissions, many of them have a lot of green spaces. Much of it is car parks too but you will see less car parking spaces and more small buses and hopefully there will be increased infrastructure for walking and cycling so there might be more space to turn into green areas and you could be increasing biodiversity and thus helping with carbon reduction as well. You cannot just offset everything by planting a few trees.

Mr. David Hegarty:

What is very encouraging is that I think firms are starting to see for themselves they need to improve their performance in the area of climate change as it is becoming a factor where investors want to see that a firm is serious about the environment. I saw in the paper this morning that Kingspan is setting an internal carbon budget for its own operations. Slowly but surely, firms are starting to realise that this is something that is important to them for their future competitiveness that they need to engage with this agenda. So we have to build on that.

Róisín Garvey (Green Party)
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There are some experts in the private sector. I have seen some amazing big companies which have been led by experts from abroad and they have done phenomenal work that the public sector is way behind on. I totally agree on that.

The Department has a big challenge. I thank everyone for coming in. It is great to hear they are trying.

Maurice Quinlivan (Limerick City, Sinn Fein)
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That concludes the consideration of the matter for today. I thank the representatives for assisting the committee in its consideration of this important matter today. We will consider this as soon as possible. The report of the joint committee on offshore renewable energy has been finalised and was launched this morning. Hard copies of the report are available in the committee room. The report will also be circulated electronically to members today. I thank all the members for their collaborative work in finalising the report.