Limerick East): I move “That the Bill be now read a Second Time.”
The principle purpose of the Bill is to provide for the further financing of the Shannon Free Airport Development Company Limited by extending the limits in current legislation.
Specifically, the Bill provides for
(1) an increase from £120 million to £130 million in the aggregate of the amounts which the Minister for Finance may subscribe in taking up shares in the company, and
(2) an increase from £60 million to £105 million in the aggregate amount of grant-in-aid, voted annually, which may be made to the company.
It also provides that the level of remuneration, allowances and conditions of the officers and servants of the company shall be subject to my approval given with the consent of the Minister for the Public Service.
Share capital subscribed to the company is used for capital expenditure on the Industrial Estate at Shannon and in the mid-west region and west and south west Offaly. The main headings of expenditure are land acquisition, construction of factories and ancillary works. A small proportion is expended on tourism projects of a capital nature.
The grant-in-aid moneys are applied towards meeting the company's running expenses and providing financial assistance to companies on the Shannon Industrial Estate. A substantial part of the company's running expenses relates to the administration of its small indigenous industry programme in the mid-west region where, however, grants for plant and equipment, training, R & D and other programmes come from the IDA under full delegated grant giving authority to Shannon Development. I should add here that the major proportion — 70 per cent — of their administration costs are generated by the company primarily from the rent on factory space.
In relation to running expenses, it is also relevant to point out that the significant element of these arising from the company's tourism activities used to be met by a special grant-in-aid for which the Minister for Tourism was specifically accountable, notwithstanding the fact that the amount comes within the overall limit being amended by section 3 of this Bill. Following reassignment of ministerial portfolios earlier this year, responsibility for this expenditure now belongs with the Minister for Industry and Commerce, which change will I hope facilitate a more coherent and integrated approach by my Department to their role in relation to the company.
Accumulated expenditure by Shannon Development under the share capital and grant-in-aid headings as at 31 May 1986 amounted to £91.6 million and £60 million respectively. In fact, the grant-in-aid limit has been reached and the company has been relying, in the meantime, on a combination of own resources income and bank borrowings to meet its obligations. It is, therefore, a matter of urgency that these limits now be increased. It is estimated that the increases proposed will suffice until 1990.
The type of control proposed in section 4 in relation to remuneration and conditions of the staff of the company is now being inserted in relevant statues governing the different State companies as the opportunity arises.
The last occasion on which legislation increasing the company's financial limits was enacted was May 1983 and while the company, as has the rest of the country, found the intervening period to be difficult, I am pleased to be able to report steady progress in all of the company's activities, in particular in the nationally important activity of employment creation with a total net growth of 400 in employment on the Shannon free zone and in small indigenous industry in the mid-west region. Today, employment on the free zone stands at 4,400 while small industry employment is now 5,300 in 700 firms. It is worth noting that in 1978 when the programme commenced, there were 350 small industry firms employing 3,000 people in the region. The increases since 1983 may seem small but must be looked at in the context of the declining trend for manufacturing employment on a national basis. An even more significant indication of the impact of Shannon Development initiatives is that the number of small firm exporters in now over 100 compared to approximately 20 in 1978.
One of the major developments affecting SFADCo which occurred since passage of the 1983 legislation has of course been the publication of the Government's White Paper on Industrial Policy in July 1984, the major provisions of which have been incorporated in the Industrial Development Act recently passed by the Oireachtas. This has direct relevance for the company both in relation to the promotion of industry on the free zone and to its small indigenous industry programme under the terms of its delegated authority from the IDA.
The objective of the new industrial policy will be to develop a strong and internationally competitive industrial sector made up of both Irish and foreign owned firms, creating and maintaining the maximum number of sustainable jobs, maximising value-added in Ireland, promoting more rapid development of our natural resource-based industries and promoting the integration of foreign owned industry into the Irish economy through greater linkages.
Shannon Development will be implementing the new policies and in particular will be applying the new selectivity criteria in vetting projects both in terms of focusing on the need to develop and increase linkages between overseas and indigenous industry and in particular to the development of import substitution and export markets. Employment creation, viability and technological content, will of course continue to be major factors in the assessment of projects.
As I have said, the development of our natural resource-based sector is a major plank of the new industrial policy. The Government have assigned to SFADCo the very important role of conducting a pilot project on the development of the food processing sector. The priority areas for action by the company include:
—increasing the number of highcalibre entrepreneurs operating well structured firms in the food processing industry;
—stimulating the development of quality new products;
—developing and testing initiatives and programmes which, if successful, will be applied on a national basis.
The company's new food processing centre at the Raheen Industrial Estate, Limerick, which I recently had the pleasure of opening is a practical example of what is needed in terms of the physical ambience and support infrastructure for this sector and as the 43,000 sq. ft. centre is already fully occupied construction of a further 20,000 sq. ft. will start before the year end.
The food processing and agri-business sector is one of the country's largest employers with approximately 20 per cent of the total workforce. The industry is well diversified in processing techniques and products. Additionally, it is well dispersed throughout the country giving it economic and social importance of national dimension. However, compared to other food processing countries our efforts are mainly concentrated in commodity products. As a consequence we miss out on price, profit and employment opportunities. I strongly believe that to advance we need to produce high value-added process products for specific market niches. To achieve this we need a major expansion of the population of creative food firms producing quality products for carefully researched markets both at home and abroad, but particularly abroad.
The pilot task given to SFADCo is to find the ways to achieve this goal. I should emphasise, however, my own belief in the dramatic potential which this sector has and my own impatience to see greater results. I am currently having discussions with the company to see how these greater results can be achieved through an intensification of SFADCo's present activities.
Another major development affecting SFADCo in recent times has been the exhaustive scrutiny of their affairs by the Dáil Committee on Public Expenditure which culminated in the recent comprehensive report on the company. The Dáil will, of course, have another opportunity to discuss the contents of that report in detail, but I would like to take this opportunity to make a few brief comments. First of all I think it appropriate to thank the members of the committee and indeed the staff of the company whose willing co-operation was acknowledged in the report for their efforts in producing an informative document on the company's affairs.
It is, of course, possible to take issue with some of the committee's specific recommendations but I feel this should only be done after mature reflection. What I think is relevant to our debate today is the primary conclusion that the company has been highly successful at its appointed tasks — in my view an accolade well deserved. Moreover, it is a success story that is recognised internationally. The Shannon free zone is the acknowledged prototype for similar developments elsewhere and the company's advice is eagerly sought by developing countries and by the major multilateral aid agencies. Indeed, so convinced are the committee of the validity of this conclusion that they feel the time has come to reorientate the company's work, in particular away from its traffic development and tourism roles.
I want to state that I have no intention of recommending to the Government the committee's suggestion that the company's traffic development function would be assigned to Aer Rianta or to anybody else. I feel in any event that this misapprehends the essential nature of the company, whose primary role is in fact to ensure the maintenance and development of the airport. The fact that it has successfully taken on additional industrial development functions must be seen in this context, and it is important to emphasise, as I have already pointed out, that statutorily the company only acts on behalf of the IDA in the small indigenous industry sector.
Possibly more important, certainly in the short term, in commenting on the suggestion that SFADCo's traffic development role be reassigned is the impact which recent international events have had on American foreign travel. Any decline in such traffic will obviously have a significant impact on an airport which is dependent for more than 50 per cent of its terminal traffic on North Atlantic travel and I think Shannon would suffer badly if SFADCo were not able to assist with the type of work which has been decisions by Pan American Airways and Delta Airlines to begin scheduled service into Shannon from the US in 1986. Indeed, it is to be hoped that these developments will help to insulate Shannon from the worst of the downturn being felt by European countries in this respect.
In commenting on this overall conclusion of the report, I must emphasise that I personally endorse the long established national policy, confirmed by successive Governments, that Shannon be developed as the national transatlantic airport, and that SFADCo have responsibility as the primary body for implementing that policy. That responsibility involves developing trade, passenger and services activities in the Shannon region and incorporates by definition such diverse functions as tourism, working with airlines, promotion of business conferences, urban development and industrial use of the airport.
In questioning the validity of SFADCo's involvement in some of these areas, the report is ignoring the major national benefits that have accrued from the company's ability to pioneer new developments, going as far back as the early sixties. Examples are the concept of the industrial estates, advance factories, industrial training, charter programmes, specific projects like the historic castles, and the first package holidays into Ireland.
Precisely because of its multi-functional role, Shannon Development is greater than the sum of its parts. It brings industry, aviation, tourism and other aspects of development together under one co-ordinated programme, adding a new dimension to the development process which encourages enterprise and innovation. Indeed, the benefits resulting from this were acknowledged in most positive terms in the OECD report "Innovation in Irish Industry".
Reference to positive remarks about SFADCo's role in innovation reminds me to welcome the positive conclusion reached by the committee in relation to the activities of the Innovation Centre and the Micro-electronics Applications Centre. This conclusion accords with my own view and that of my Department. As the report of the Committee outlines, certain structured changes have recently been made in the Micro-electronics Applications Centre with the objective of making it financially self-supporting by 1987. I am hopeful that this objective can be realised. The innovation centre is currently examining its future structure and funding and full account will be taken of the committee's recommendations in this examination.
Much of what I have been saying is sufficient justification for advocating the increases in financial limits being provided for in this legislation. This Bill is, in any event, merely an enabling measure which increases the funds which the Dáil may annually provide to the company, and Deputies would obviously have other opportunities in the context of Estimates debates to examine any activities of the company which they feel may not be producing worthwhile results. I would further emphasise that Shannon Development is but one element of an industrial policy which was the subject of thorough and lengthy reviews by both Telesis and the National Economic and Social Council, leading to adoption of the White Paper to which I have already referred. Not only did this overall review accept the validity of SFADCo's continued existence, it resulted as I have explained, in SFADCo's role in the food area being extended. Given that we have the good fortune to be discussing this matter so soon after the Public Expenditure committee have also carried out a very specific review of the company's affairs and endorsed its overall results, I have no hesitation in commending this Bill to the House.