The natural advantages of the Shannon Estuary with its deep and wide waters, abundant green field sites and ability to cater for a broad mix of industrial opportunities has long been recognised by a number of experts. However, despite these natural advantages and numerous studies, reports and statements of interest, the Shannon Estuary has remained seriously underdeveloped over the past three decades.
The pre-budget submission prepared by KPMG on behalf of Shannon Development and its subsidiary management company, Shannon Estuary Development Limited, was presented to the Department of Finance in November. The submission outlined the basis for a tax pilot scheme which would enable Shannon Development to leverage its underdeveloped industrial land banks to raise private sector capital. This private capital would be used to fund site preparation and key infrastructure necessary to attract foreign industrial investment to the region. The process would be piloted at its largest green field site at Ballylongford, County Kerry, which is referred to locally as the Tarbert-Ballylongford land bank. The scheme would be directly regulated by Shannon Development and only State owned assets would be targeted.
Apart from the tax incentives sought, no Exchequer funding is required. The new pilot tax model is creative and minimises State outlay. The proposed scheme would be controlled and regulated by Shannon Development on behalf of the State. The proposed tax incentives will only be targeted at corporate investors and are, therefore, limited and containable. The revenue foregone to the State is minimal, particularly when compared to the potential economic benefit to the State.
The capital raised from the private sector, with the assistance of special tax incentives, would be used to develop essential site infrastructures, such as roads, water, sewerage, electricity and general lay-out. Normally, tax incentives are provided to the private sector for building and construction works or above ground works, but in this case, incentives are provided for key site infrastructure or below ground works only.
The pilot tax model is specifically designed to leverage the under-utilised Ballylongford-Tarbert State landbank to prime industrial development. In effect, this landbank has remained undeveloped at significant sunk-cost, and is likely to remain undeveloped unless a priming mechanism, in the form of the proposed investment status relief, is provided to the private sector.
In tandem with tax designation, it is proposed to advance fast-track planning as a model for reducing time-to-delivery, as adopted successfully in the UK, particularly Scotland. To be more competitive at attracting foreign inward investment, it is necessary to minimise delays in the preparation of site layout and planning and environmental aspects. It is also proposed to put in place a focused and targeted international marketing programme via the IDA.
Tax designation is of great benefit as a priming initiative, but on its own will not cause greenfield sites to be developed. It is necessary to provide an additional investment status tax relief which will allow a development company, controlled by Shannon Development, to acquire the designated site and raise private sector capital funding, which is tax deductible. This funding will be in the form of share or loan capital and will be used to finance infrastructure development. The funding will be raised from corporate sources only — no individuals may participate — and will be capped at £10 million. However, only £5 million will initially be raised as part of the pilot scheme.
The Tarbert-Ballylongford landbank has remained in an underdeveloped state since the purchase of the first tranche of land in the 1960s from a local farmer. That this has been allowed to happen, despite its recognised natural asset s is disgraceful. It is now an opportune time to address the economic and social imperative of attracting foreign investment to the Shannon Estuary to counter the evident out-migration, falling population and high unemployment levels in the north Kerry area. As the final stages of the Finance Bill will be before the Seanad tomorrow the Minister still has an opportunity to make provision for this very innovative and well thought out proposal from Shannon Development to ensure that at least this unique site is given the opportunity to realise its true potential.
I appeal to the Minister of State to convey my presentation to the Minister so that he will consider it on the final Stages of the Finance Bill in the Seanad. I have already mentioned this matter to him and Shannon Development got a very positive response from officials in the Department of Finance. There is no reason this well thought out proposal should be shot down at this stage.
