Grant aid to firms ‘may be waste of cash’

ENTERPRISE Ireland, Shannon Development and IDA Ireland could be wasting billions of taxpayers’ money paying grant assistance to companies, research carried out for the Economic and Social Research Institute suggests.

The research carried out by Dr Helena Lenihan of the University of Limerick and others questions this form of payment.

In the past 20 years €5.5 billion has been paid in direct financial assistance to firms in Ireland and there is little to show that we are getting value for money, Dr Lenihan said. Her research raises fundamental questions about the way the State backs companies whether Irish- or foreign-owned.

Companies grant aided in the Shannon region by Shannon Development in 1995 were surveyed in face-to-face interviews with company managing directors by Dr Lenihan. She concludes that nearly 80% of the jobs generated would have happened even if no aid was forthcoming.

“Most of the companies said they had other sources of investment available to them” she said.

Research into Enterprise Ireland’s financial aid between 2000 and 2002 suggests that up to 58% of firms would have gone on to create the jobs without state aid, she said. In another study into the bus sector, economic consultant Jerome Casey concluded the Irish bus maker is functioning a lot better than many might think.

Fare levels are not high in European terms and Ireland has experienced one of the fastest growing rates in bus competition in recent years.

Fares have been kept in line with inflation, said Mr Casey. He also warned that looking at Britain for inspiration about shifting people from cars to busses is not the way to go.

“Bus deregulation in Britain has been a transport disaster, with falling patronage and very high fares.”