Enterprise Ireland should sell off some of its shareholdings in Irish industry and plough the money back into new businesses, according to the Irish Business and Employers' Confederation (IBEC).
The new state agency, Enterprise Ireland, which incorporates the functions of Forbairt, the Irish Trade Board and part of FAS, has shares in 457 different companies, including Iona Technologies. Its portfolio, inherited from Forbairt, was worth some £91 million last year.
But IBEC believes the development agency should not be a longterm stockholder and calls for greater recycling of the funds with the proceeds being used to set up a seed capital fund for small business, possibly in association with the private sector.
IBEC director Mr Brian Callanan said the jury was still out on Enterprise Ireland. He said it was important the new organisation retained the Trade Board's focus on exports. IBEC is also keen that Enterprise Ireland should have a customer charter so client companies are clear about their rights and obligations when seeking State financing.
"We don't want a super-bureaucracy. The danger is that it becomes too big, too inflexible and too unwieldy," Mr Callanan said.
In a review of industrial policy published yesterday, the employers' organisation said the catch-up phase in Irish economic development had been completed and another more difficult phase was about to begin.
Among the challenges facing Irish industry is a scaling back of the state aids which Government can offer. Under new regional aid guidelines published by the European Commission, the Government will have to decide whether to opt for a single, flat aid ceiling of 20 per cent across the State or to adopt a regional approach which would allow firms in areas where Gross Domestic Product (GDP) is below the European Union average a higher level of grants. This could, however, lead to grants to firms in certain parts of the country being substantially cut back, particularly around the Dublin region where average GDP could be above the EU average.
IBEC favours a regional approach because it believes this offers the greatest flexibility. A national ceiling could also seriously disadvantage the border counties which could lose out to Northern Ireland. Although the employers' group welcomed the recent agreement between the Government and the European Commission on the phasing in of the 12.5 per cent corporation tax regime, it remains concerned at Government indications that additional taxes are to be levied on business to help pay for the change.
It also says personal taxation remains the main challenge for Government on the tax front as it is still too high, discouraging employees from doing overtime for example. Among other issues, IBEC calls for an immediate refocusing of resources to address persistent skill shortages, better linkages between overseas firms and Irish suppliers and greater participation by the private sector in the funding and management of programmes traditionally managed exclusively by the public sector.
