Fortnight Publications Ltd.

After All That...Author(s): Paul SweeneySource: Fortnight, No. 318 (Jun., 1993), pp. 22-23Published by: Fortnight Publications Ltd.Stable URL: http://www.jstor.org/stable/25554068 .

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I CURRENT AFFAIRS |

After all that...

Last month, the

republic's government produced a long

anticipated statement on industrial policy.

PAUL SWEENEY says it wasn't worth the wait.

Feather-bedded??CIE is the only semi-state body directly subsidised

When the Culliton report on industrial policy was

published in January 1992, it was welcomed (Fort

night 303) by virtually everyone concerned with job

creation. A 'task force' was set up, chaired by Paddy

Moriarty, on its implementation. Yet the govern

ment's response last month, Fmployment Through

Fnterprise, indicates there will be no real change.

Culliton has effectively been buried.

Eleven years ago, there was an excellent report on

industrial policy by the Telesis consultancy, most of

whose findings Culliton reiterated. The key recom

mendation was to focus on indigenous industry, with

reduced grants to foreign multinationals. While

Telesis was strongly opposed by the Industrial Devel

opment Authority and many key decision-makers, its

findings were so obviously sound that eventually

many of its recommendations were implemented, to

the benefit of Irish industry.

Culliton refined Telesis, broadening it to embrace

taxation, education policy and so on. A major weak

ness was that it did not address industrial policy in a

European Community context. The bidding by the

republic's government against the Scots to maintain

the Digital plant in Calway illustrated how multina

tionals can play nation-states off against one another

(Fortnight 316). The other major criticism of Culliton was that

while it called for tax reform, it focused only on

personal tax reliefs, neglecting the staggering tax

breaks for industry. Most of the latter are highly

...... E :: :

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ineffective?a blunderbuss rather than a scalpel. If

Culliton showed that a huge ?1.6 billion in grants

was given to industry in the 80s, it failed to point out

that ?1.4 billion now goes to industry every year u\ tax

breaks.

A mendicant mentality has been created amongst

supposed entrepreneurs?an argument that also

applies north of the border (Fortnight 317)?and it

has been stunningly unsuccessful. The net result of

billions of taxpayers' money?provided directly

through grants or indirectly through tax breaks?

brought a net increase of only 7,000jobs in the 80s,

according to Culliton. A dramatic shift is needed,

from subsidising industry to injecting equity and

offering soft loans. The private sector needs to be

privatised.

Culliton had recommended, in line with Telesis,

that the government should move away from doling

out grants to taking shares in companies. But while

Moriarty said it endorsed the "decisive shift from

grants to equity and other forms of finance", it made

this "subject to the state not becoming a significant

shareholder in assisted firms". This was in fact an

utter rejection of Culliton, which had said the IDA

should "become much more aggressive venture capi

talist and be prepared to take higher percentage

stakes?up to as much as 50-60 per cent if necessary".

In spite of the massive amount poured into private

industry, indigenous and foreign, by Irish taxpayers,

the government does not want a hands-on approach.

The experiences of eastern Europe?and indeed of

nationalised industries in the UK, the republic and

elsewhere in the 70s?do warn against heavy

handedness. Yet lashing money out at entrepre

neurs in the hope of jobs, without seriously

monitoring the efficacy of such interventionism, is

just as reprehensible.

On commercial state companies, Fmployment

Through Fnterprise says these will "as a rule be incor

porated as limited companies rather than as statu

tory bodies". This has been welcomed by right-wing

commentators: it means they can be privatised with

out debate in the Oireachtas. Privatisation of public

enterprises will further grease the hands of the

'golden circle'?whose members are not notable for

either the 'competition' or 'free enterprise' with

which privatisation is supposed to be associated.

Moriarty had said it agreed with Culliton's conclu

sion that commercial public enterprises could make

a significant contribution to the economy, provided

"they are allowed to operate on a fully commercial

manner". But the task force?which, unlike Culliton,

did not have a trade union representative and was

22 Fortnight june 1993

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I CURRENT AFFAIRS |

dominated by civil servants?said that "subsidy should

not be introduced to cover the cost of non-commer

cial activities carried out for social reasons". Yet how

are commercial public enterprises to be commer

cial, while having to execute social and regional

public responsibilities without subsidy?

Apart from the transport company CIE, no

semi-state body gets direct subsidies from the state

today. There are cross-subsidies from other govern

ment enterprises, but the maintenance of employ ment has made these acceptable?until now. Yet

Fmployment Through Enterprise has no comment on

Moriarty's anti-social, 'free-market' ideas on com

mercial public enterprises, except to say it accepts

the recommendations.

Indeed, if implemented, the recommendations of

Employment Through Enterpriseon state energy compa

nies and cross-subsidisation will lead to many job

losses. These will arise through closure of the Irish

National Petroleum Corporation, reductions in peat

prices for Bord na Mona from the Electricity Supply

Board, possible closure of Nitrigin Eireann Teoranta,

increased prices for gas, and privatisation through

competition with Bord Gais Eireann and ESB. Plans

for Telecom Eireann and An Post will also result in

loss of jobs.

There are some positive statements in the docu

ment. Unlike Culliton, it recognises, in a limited way,

the importance of the European dimension. And

the government is correct in looking for EC aid for

"mobile assets" (Euro-speak for ferries and airplanes).

Many people have seen the training agency FAS as an

agency for training for unemployment, so the crea

tion of a division concentrating on training those

at work should sharpen the focus and enhance

effectiveness.

The recommendations on the ports?to be estab

lished as 12 commercial state enterprises?are also

useful. Moreover, the government is committed to

investing in the rail network, and the commercialisa

tion of the school curriculum will be welcome to

some. Its aspirations to removing restrictions on

competition in professions and businesses are help

ful too?though real competition in the law, ac

countancy and so on is difficult to achieve.

But it is disappointing that many of Culliton's

recommendations are not to be implemented. It is

particularly surprising that this unimaginative and

conservative response to the task force report has

been articulated by a socialist minister for enterprise and employment, Ruairi Quinn. The general thrust

is in favour of subsidised competition for the private

sector, with little quid pro quo in equity or jobs. It is

short on specifics and, like the recent Budget and

Finance Bill, avoids the crucial issue of tax reform.

Employment Through Enterprise offers little hope to

the 300,000 unemployed. Those who voted for

change will have to wait. 4

fgj) Cork University Press

(?jjy Clo Ollscoile Chorcai <lg=T^P University College Cork, Tel 021 276871, Fax 275948

Forthcoming Titles B UNDERCURRENTS

Series Editor: J.J. Lee, Professor of Modern History, University College, Cork

Ireland is changing rapidly. Many important issues face

the country - issues which because of their nature

require a sophisticated response from the public as well

as governments. Undercurrents is a new series from Cork

University Press which aims to inform that response. The contributors which include policymakers, cultural

commentators and academics will offer accessible

overviews and thought-provoking solutions which will

demystify often complex arguments. The Undercurrents pamphlets will be required reading for anyone hoping to contribute to the debate

themselves. ISBN 0 902561 67 7

135 x1l0mm64pp Facing the UNEMPLOYMENT CRISIS IN IRELAND

Due May 1993 Kieran Kennedy, Director ESRI, Dublin

ISBN 0 902561 70 7 MANAGING EC STRUCTURAL FUNDS

135 x 210mm 60pp Alan Matthews, Associate Professor of Economics, Due May 1993 Trinity College, Dublin

ISBN 0 902561 69 3 DIVORCE IN IRELAND:

i ,c?3?,5nPaperlnck Who should bare the cost? 135 x 210mm 60pp _ Due May 1993 Peter Ward, Faculty of Law, University College, Cork

Annual General Meeting

Poverty and Citizenship

in Northern Ireland

17th June - Dunadry Hotel, Antrim

Speakers: Paul Sweeney NIVT InezMcCormick NUPE

Carey Oppenheim CPAG

Conference Fee: ?10.00 For Booking Tel: Belfast 231120

June 1993 Fortnight 23

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