Vol. 361 No. 7
I move: "That the Bill be now read a Second Time."
This is an enabling measure which, when enacted, will permit the establishment of free ports generally in the State. While the Bill does not, therefore, deal with any specific location, its primary purpose is to permit the establishment of a free port at Ringaskiddy, County Cork. There are no plans to establish any other free port for the moment.
Why not?
The principal provisions of the Bill are——
This is enabling legislation and a free port can be set up anywhere under it.
This Bill is specifically designed to deal with one area only. Why not include other areas——
This is extraordinary behaviour.
As the Deputy will discover——
Withdraw the Bill and——
Will the Deputy listen to my speech? This is enabling legislation and has nothing specifically to do with Cork. It is usual to hear what is in a speech before a Deputy makes a comment on it. The principal provisions of the Bill are:
—section 2, which enables the Minister for Communications by order to establish or vary the limits of a free port; section 3, which enables the Minister by order to designate persons to control and manage a free port——
Order, order.
This behaviour is most unacceptable to the Chair. The Minister is making an opening speech on the introduction of a Bill and he should be allowed to make that speech without interruption.
Order, order.
——section 4, which enables the Minister to grant licences authorising the carrying on of businesses within a free port; section 10, which adapts the law relating to customs duties in its application to a free port; and section 12, which enables the Minister for Finance to make regulations providing, inter alia, for the necessary customs controls and procedures to apply to a free port.
The origins of this Bill lie in the deliberations of the task force on employment in the Cork area, which made a number of recommendations in 1984 designed to stimulate economic activity and employment in the Cork region. Among the recommendations was that a free port be established at Ringaskiddy. I will return presently to the arrangements that might be applied to that location but first I want to indicate the nature and extent of the benefits which it is proposed would be conferred on businesses setting up in a free port.
The financial benefits will derive from deferred liability for customs duties and VAT. In the case of customs duties, the Bill provides that non-European Community goods imported into a free port will become liable for customs duties only if and when they are subsequently placed on the Community market. This is the effect of section 10. Goods originating in the European Community, of course, are in free circulation and are not subject to customs duties on arrival in the State in any event. The benefit of this concession to the cash flow of a particular business will depend, of course, on the nature and extent of that business. An indication of the degree of potential benefit is that the average rate of customs duty is of the order of 10 per cent.
The proposed VAT reliefs are not provided for in the Bill. They will be the subject of separate regulations to be made by the Revenue Commissioners under the VAT Act. The main thrust of the regulations will be as follows. Firstly, a business operating within a free port would be able to import, without payment of VAT, materials, machinery, and so on, for use in the free port in connection with processing or manufacturing there. Secondly, VAT would be charged at the zero rate on goods supplied within the free port itself. Thirdly, goods entering the rest of the State from the free port would come under the internal VAT system if the subject of a sale, which would normally be the case, and would not then incur import VAT.
Under these arrangements, finished consumer goods would not qualify for relief from VAT on importation into a free port nor in general would any other goods imported for re-sale. Relief would apply to all materials, components plant or machinery imported for use by a manufacturing or processing concern within a free port. This is the correct approach, since the purpose of the concessions is to stimulate economic activity and therefore employment within the free port and not simply to divert normal trade from elsewhere in the State.
Apart from these financial benefits, a free port will also afford some less tangible but nonetheless real and valuable advantages, namely, a concentration of facilities and infrastructure leading to economies of scale, a more secure environment and simplification of customs procedures and documentation. These I expect to be attractive to small firms and to firms which might not otherwise become involved in re-export trade.
I envisage that the initial area to be designated as a free port at Ringaskiddy will be comparatively small. Cork Harbour Commissioners have proposed the designation of a 30-acre site of theirs at Ringaskiddy which is beside the car ferry terminal and near the deepwater berth which will be completed next year. The commissioners have proposed that they should develop this site in conjunction with private interests. Another possibility would be the provision and development of a site elsewhere in the area by private interests. The designated areas can be extended by order made under section 2 of the Bill, when enacted, as the need arises. I envisage the provision of infrastructure being phased in line with the development of activity in the free port.
As regards the day-to-day management and control of the Ringaskiddy free port, I am still considering a number of options. One of these would involve a joint venture between Cork Harbour Commissioners and private sector partners and this would tie in with use of the commissioners' site to which I have already referred. Private investors, of course, would expect to earn a return on their capital through the sale or letting of accommodation in the free port to businesses establishing operations there. With my permission, Cork Harbour Commissioners will shortly test the market, as it were, by inviting potential investors in the free port to submit proposals on the basis of the joint venture approach. This exercise is being conducted without any commitment since there are other options to consider.
I would also be willing to consider proposals from the private sector to operate and manage the free port on sites other than that owned by Cork Harbour Commissioners. I have a fairly open mind on these questions at present and the feedback from the commissioners' invitation will assist me in taking decisions on these matters.
I am aware that free ports in the UK have been slow to develop and that there have been criticisms that the customs regime is too rigid. Here, as in the UK, the free port will be subject to the criteria laid down in EC directives. We must remember that, to a large extent, a free port here is a free zone within a larger customs zone — the European Community. The regime in Ireland must, by virtue of our membership of the EC, be much the same as that applying to the free ports in the UK. Like the free ports in the UK I do not expect the free port at Ringaskiddy to become an overnight success. With vigorous marketing by the operator I am confident that firms will be attracted to set up in the free port over the next few years.
I would like to stress that the Government's concern in legislating to provide free ports here is to generate additional economic activity. If the free port simply diverts economic activity from elsewhere in the State the concept will have failed. I would also like to point out that the Government have no desire that a free port should be used as a warehousing centre in which imports can be stored pending release for consumption on the home market. If that were to be the case, the free port benefit would merely serve to subsidise the importation of goods and the end result would be to increase the competitive position of imports vis-à-vis goods produced at home. What we wish to achieve is additional economic activity. It is in the light of these factors that applications for licences to carry on activity within the free port will be considered.
It is worth mentioning that there exists already a number of mechanisms through which firms can suspend payment of customs duties. The inward processing regime exists for non-Community goods. Firms who export a substantial part of their production outside the European Economic Community usually qualify for this regime. A firm who do not at present qualify for inward processing could, if they set up in the free port, qualify for an inward processing type regime and thereby achieve deferment of payment of customs duty.
I am proceeding with this enabling measure now while the options for the arrangements as regards development and management of the Ringaskiddy free port are being investigated, precisely so as to lend impetus to that investigation. The Minister for Finance, the Revenue Commissioners and I will proceed, on enactment of the Bill, to make the necessary orders and regulations as quickly as possible to bring the Ringaskiddy free port into being. Work on the necessary orders and regulations will proceed while the Bill is being processed through the Oireachtas.
In the course of my earlier remarks I mentioned the new deepwater berth being provided at Ringaskiddy. The cost of the berth is being met from a State grant of almost £10 million. When the berth is completed next year, it will be capable of accommodating vessels of up to 60,000 tons deadweight. It will, therefore, be the largest common user berth in the State.
As Deputies will be aware, the IDA have a fully serviced 1,000-acre portside estate at Ringaskiddy. This site and the port at Ringaskiddy together with industrial estates at Churchfield, Hollyhill and Togher in Cork have been designated by the Minister for Industry, Trade, Commerce and Tourism as areas which qualify for higher IDA grants than are generally made available. The Government have funded the cost of new infrastructure in the area. This includes substantial process water supplies, effluent disposal and road improvements. With the completion of the deepwater berth and the setting up of the free port the Ringaskiddy area will, I trust, prove to be a major centre for industrial activity in the Cork area.
I commend this Bill to the House.
In the last sentence of his speech the Minister of State said he trusts that the free port in the Ringaskiddy area, together with the IDA site, will prove to be a major centre for industrial activity in the Cork area. That seems to long finger the very severe economic difficulties that obtain in Cork city and region now. Earlier in his speech he said he did not expect that this free port area would bring immediate substantial improvement in economic activity in the area. I do not have to remind the House how badly needed a stimulus to economic activity is at present in Cork city and area.
First, I would like to do a brief Cook's Tour through the Minister's speech. It is an enabling Bill and no doubt, as happened in the House of Commons on the occasion when free ports were introduced in the UK, other Members of this House will be on their feet commending the free port type facility for their own areas. The Minister of State said in his speech that the origins of this Bill lie in the deliberations of the task force on employment in the Cork area. I am sorry that Deputy John Kelly is not in the House because Deputy Kelly often criticises the administration here for following in the footsteps of the UK Parliament in bringing legislation here and establishing customs and even order in the House, because this idea of a free port surfaced at the same time as it was a live political question in the House of Commons and in Government in England. His acerbic tongue might be applied to this imitation technique that the Government are following.
The Minister of State says that the financial benefits will derive from deferred liability for customs duties and VAT. The House should take note that the concessions in this regard are not great considering what it means to a member of the EC which from 1 January 1986 will be a 12 country Community where we have, technically at least, a customs equalising zone. One of the points that surfaced when this was being discussed in Britain was that there were very limited advantages in the establishment of a free port. If and when a company is established to deal with positive promotion of manufacturing industry in particular in the area, it may bring the necessary stimulus to economic activity in Cork which, on the face of it, this Bill will not do.
The Minister of State mentions the Ringaskiddy area and says that the area to be designated will be comparatively small. He goes on to mention that the Cork Harbour Commissioners have proposed a designation of a 30 acre site at Ringaskiddy near the car ferry terminal and near the deep water mark. He goes on to say that they have proposed that they should develop this site in conjunction with private interests but he does not say whether he is accepting their position or that that will be the site.
I ask the Minister in his reply to state what is the Government's view as to the location of the site. He says that it will be comparatively small, but he does not say straight out what the Government's decision on it will be. He tells us that he still has an open mind about a number of options for day-to-day management and control. I will be going through some of the points that surfaced when this debate was taking place in Britain. One of the ideological points made in that debate was that the Government would give no aid whatsoever to the free ports in Britain. Would the Minister like to indicate in his reply what kind of aid he envisages for the activity, industrial and commercial, which the free port, it is hoped, will attract?
One point the Minister of State makes which is important is not quite as relevant in the case of Cork as it might have been some years ago. It is the question of relocation. Because of disastrous economic policies, in Cork city there is very little major industry to relocate in any place because under this regime we have had the most prominent large industrial concerns closing down. Examples are Fords, Dunlops, and Verolme Cork Dockyard. They will not relocate on the new free port territory because they have been effectively killed. The danger of relocation in Cork anyway from the immediate vicinity seems to be one that the Minister should not worry too much about.
The Minister of State mentions the new deep water berth. I had the privilege of allocating money for the development of that deep water berth and of inspecting the area and the large IDA site near at hand. This Government's action was, of course, to withdraw the Government grant for the development of a deep sea port in Ringaskiddy and due to pressure from Fianna Fáil groups, national and local, the Government were forced, because of the disastrous position of Cork, to resume and develop the deep water berth. So much for the Minister's thin speech.
I will take a general look at the whole idea of free ports. It is a proud boast of the Fianna Fáil Party that the first customs free port in the world was established by a Fianna Fáil Minister, the late Deputy Seán Lemass. I took the trouble to study his speech in the debate on the Second Stage of the Customs Free Airport Bill, 1947. We all know that he was a very practical man and his speech shows that practical bent. It is interesting to read some of the prophesies made by people who were opposing the idea at the time. In the debate on 28 January 1947 Deputy Seán Lemass said that as regards the developing of any processings business he would keep that in mind and that that was the way his thoughts were tending. That was the famous occasion when Deputy Dillon — this has never been forgotten — talked about rabbits at Rineanna. Deputy Dillon said:
I do not think that rational people have any doubt that, in ten years' time, no transatlantic passenger plane bound for the Continent of Europe or Great Britain will stop at Rineanna, and if there was nothing but passenger traffic scheduled for Rineanna in ten years time we would have nothing in Rineanna but rabbits.
He suggested to the Minister:
...if we are to salvage anything out of Rineanna — and it is very problematical whether we will or not; it is more than likely that Rineanna will be a deserted wilderness in ten years' time and any aerial traffic we have will be handled at Collinstown or some station near Dublin — we must at once provide certain facilities and tell those we expect to use them what those facilities are.
I give those quotations to warn people about prophesying.
Deputy Dillon was a shrewd and able man who was perhaps inclined to let flamboyant language carry him away but, shrewd as he was — he was a business man also — he did not see the possibility of development at Shannon and he has lived, I am happy to say, to see a substantial industrial town at Shannon Airport and the airport being heavily used, in particular by the USSR Aeroflot operations. Shannon is on the way up again.
In the Seanad debate at the time Senator Douglas said Shannon was an inappropriate name, that Rineanna was the correct name and that people might get the idea from a name like Shannon that they were landing in the middle of the largest river in Ireland.
The most ideal position for a free port.
I thought the Deputy might pick that one up. The idea of a free port is not a new one and we know that even in medieval Europe, in the Hanseatic League, free ports were established for entrepôt trade in Northern Europe. When the idea got under way recently in Britain a study was made of Hamburg, Shannon and Miami. The comments of some of the people who were opposed to the whole idea but studied those ports are interesting.
In Britain there were 45 applications. I do not think there will be that number in Ireland. I am aware that, as the Minister said, this is enabling legislation, but I am sure there will be pressure from a number of areas. Deputy Collins has already put in his claim and Deputy Hugh Byrne mentioned to me that Rosslare would be talking. Deputy Kirk from Louth said that Greenore would be interested. Of the 45 applications in the United Kingdom six were accepted. It is important to establish the free port at Cork as quickly as possible and to proceed to consideration of the others because Southampton was one of the ones chosen for a free port facility in England. As far as I know, with one possible exception, the companies chosen to run the free ports in the UK are not public companies. That is important because the Tory Government have a kind of fixation about State investment. What suits them would not necessarily suit us, but I want to point out to the House that Associated British Ports has been chosen to run Southamptom. Cardiff has also been chosen as a free port and Pearce (Wales) Consortium will run it. Liverpool will be a free port and will be run by the Mersey Docks and Harbour Company. In the Midlands, Birmingham has been chosen with West Midlands Free Port Limited to run it. Prestwick is the exception because Kyle and Carrick District Council and the British Airports Authority will be in charge of the development there. A parallel could be the Cork Harbour Board, Cork Corporation, Cork County Council or any of the local authorities.
Fianna Fáil policy has been enunciated in relation to local government and, in accordance with Lemass philosophy, the suggestion is that local authorities should develop as agencies for industrial and commercial development. In other words, that each county council or corporation could develop as industrial promoters. The other one chosen is in Ireland but, unfortunately, as of now — we are waiting for the Taoiseach's development — is not under the Dublin Government. A decision was taken to develop Belfast as a free port. Development there was listed for 1985, with Northern Ireland Airports Limited being the company charged with the responsibility for developing the port there.
It is interesting that one of the representatives, called Dr. Paisley, indicated that he thought the airport should be combined with Belfast harbour on a joint basis for the free port. Later when I deal with Miami, the most successful free port in the world, I will indicate what the prerequisites are. Cork is lucky in that it has a harbour and a deep sea facility, thanks to a decision taken by a Government of which I was glad to be a member, and that it also has an airport capable and in need of development. Those facilities are there as basic ingredients for the development of the Cork area. The other areas mentioned, Shannon Estuary, Rosslare and Greenore, have their own strengths even if they are standing, perhaps, on one leg only, a sea leg which is always supposed to be a good one. Shannon Airport is near to the estuary for that development.
One of the points made in the House of Commons debate was the one to which I have already referred and which the Minister mentioned, namely the danger of relocation. There is not much danger of that in Cork. Green field development seems to be the only possible way ahead for Cork. One of the big advantages claimed for the free port idea is the cash flow. There may be a certain discrimination in favour of the free port in that there would be a hold-up of the customs duty and VAT in the constricted terms the Minister has explained.
I want to call attention to an article in The Economist of February 1983 where they tell of the dilemma of a Mr. Jock Bruce-Gardyne who was asked to inquire into the possibility and the customs and excise officials said that the thing was not worthwhile. Many of the towns mentioned in the original proposition did not achieve free port status. Felixtowe did not achieve it but others did. It is important to realise that the customs people were totally opposed to it in Britain when it was first mooted and indicated that on account of the existence of the EC there was very little that would be available in a free port which would not be available outside it, with a certain amount of administrative co-operation.
A critical article in the New Statesman dealt with a number of points which may not be of great relevance to the free port at Cork. The idea came originally from a labour ideologist and he pushed very hard for the establishment of free ports in order to re-animate inner cities, including Liverpool. He said they were most successful where wage rates were low. He was thinking mainly of the Far East in this regard. That will not obtain as far as free ports in Ireland are concerned. It was an odd ideological mix because Peter Hall, a Labour ideologue, was the first to moot the idea in 1977 but a very right wing economic institute, the Adam Smith Institute with bases in London and Washington, supported it. It is from that source that the refusal to support with State finance comes in the scheme that has been developed in Britain and Ireland, since they decided to make a free port at the airport in the Six Counties.
The most successful example is Miami, the biggest privately-owned venture in the world. It is well to look at it, although there may not be very much profit to be derived from a study of it. The most important aspect is its location because it can deal with the United States, Latin America and Europe. Miami had become even a holiday centre for Europeans until the dollar went through the roof and killed that business. Miami is in a unique position, geographically speaking, for this kind of development. It has a very large cargo airport besides the port, and the latter is the third largest on the Eastern coast of the US. It is also interesting that a director of Miami was invited by the Scots to look at Prestwick and advise them on how to develop. I am sure the Minister of State will not fail to get useful advice about the development of free ports in Ireland.
One significant point is that there are only two customs officers covering this huge venture at Miami. They are technically very well equipped. An article in The Times on 11 May 1983 stated:
Customs services in the Miami zone are provided by just two officers using extensive data processing equipment. The problem is that while they have the absolute right to open anything and everything, that sort of thorough search is physically impossible. And this means worries about contraband.
Drugs are a particular concern in the Miami area. They have sniffer dogs but they have never discovered any drugs. The article continues:
Security is provided by television and microwave systems while stock control is provided by the same computerised systems used by customs to ensure that what goes in is known to have gone out.
Those problems will all surface in whatever free ports are established. The Minister specifically mentioned Cork.
If we are to have a big development, first-class world standard services must be provided. There is the entrepôt aspect of the free port and I do think that is what this country envisages. We are more interested in manufacturing industry, hopefully with native capital so that we will not have a larger black hole in the economy than we have as of now. Recently there have been worried statements about this year as well as last year.
It is interesting to read the comment of the Minister about Shannon. I am quoting now from The London Times of 25 January, 1984:
So off we went to look at three prime examples already operating under EC rules: Rotterdam, Hamburg and Shannon.
Let us not forget that he was against it from the word go or was conditioned, being the Minister in charge of that sector of customs and excise.
The quotation continues:
Rotterdam turned out not to be a free port by Community definition at all, while Hamburg was sui generis
— which is not an argument at all —
—having most to do with the ancient Hanseatic tradition of entrepôt business with eastern Europe.
Shannon was the real McCoy, but unfortunately its raison d'être had largely disappeared with Eire's entry into the EC. Originally set up to rescue Shannon airport when the transatlantic airlines no longer had to stop there to refuel, it had become an industrial estate with special fiscal privileges; while Shannon airport was saved — just about —
— and here we have the patronising remark —
by vigorous promotion among the Irish American community of visits to the leprechauns.
That, of course, is typical of that kind of smart aleck comment. The quotation continues:
We finally concluded that Customs was right to argue that free ports in Britian would have no tangible advantages....
If you accept the ideology, he said that he had decided to go on ahead — and this was pork-barrel politics before the general election in Britain—
Subject to one proviso: that any sites selected for experiment must stand or fall on straight commercial criteria — no subsidies or special privileges.
I presume — and I would ask the Minister to confirm this — that we have no particular ideological hang-up about that matter. We introduced some time ago, before the British, VAT at point of entry. The British have since then, as this House knows, introduced it. This being so, an early boost was expected from the budget changes in Britain in value added tax rules for importers which came into effect from October 1, 1984. Instead of postponing that payment for up to 11 weeks, importers would have to pay VAT immediately on the goods arrival, but in the free port area they would not have to do that and consequently there was an advantage there.
The Minister for Finance will be bringing in legislation as the Minister of State has already mentioned. When we are dealing with that, we will have another opportunity to discuss the advantages and disadvantages in that regard.
I shall now make some comments on the Bill. I do not wish to delay the House too long because I know that there are very eager people, particularly from the Cork and the Munster area generally, who are anxious to make a comment.
And Limerick.
I referred to the Munster area generally, thinking it was safer to say that as Deputy Collins was sitting beside me. I will not go into specific details — that would be a Committee Stage task — but I shall have some amendments. I want to put in context where there should be amendments.
Section 3 (1) states:
Each free port established under this Act shall be under the control and management of such person or persons as may be designated by order by the Minister with the consent of the Minister for Finance and the Minister for Industry, Trade, Commerce and Tourism.
It is our opinion that the powers given to the Minister there are unlimited powers and we shall be having a look at that section later on. Section 4 states — 4and I want the House to take note that we intend to deal with this on Committee Stage also —
The Minister may, after consultation with the Minister for Finance and the Minister for Industry, Trade, Commerce and Tourism, grant or refuse to grant to any person a licence authorising the carrying on within a free port of any trade, business or manufacture.
Speaking in general terms about that section, I want to say that we on this side of the House regard the power of the Minister there as too absolute and think there should be some, so to speak, court of appeal. There should be some way of dealing with an applicant who has been turned down by the Minister.
Section 6 (2) states:
A licensee who does not comply with a condition attached to the licence shall, in addition to any other penalty to which he may be liable, be guilty of an offence under this section and shall be liable on summary conviction to a fine not exceeding £500.
This also needs looking into. I presume that there is a right of appeal there in the courts, when summary conviction is mentioned. I should like the Minister when replying to clarify that.
Section 7 (1) (a) states:
The Minister may, at his discretion, revoke a licence if—
(a) he is satisfied that there has been a breach of a condition attached to the licence, or
Would the Minister like to say if he can make provision for an appeal procedure there? It seems that there are arbitrary powers available to the Minister in that section. Would the Minister comment on that?
Section 10 (4) also needs clarification, section 10 (4) (a) in particular, but probably we shall be able to tease that out on Committee Stage.
Section 11 (1) puzzles me altogether. It states:
The person driving or in control of, a vehicle in motion within 32 kilometres of a free port shall stop the vehicle on being required to do so by an officer of customs and excise.
Would the Minister expand a little on that when replying? Have not the customs and excise officers that kind of power anyway? Is it necessary to state that within 20 miles of the free port in Cork this can be done? I was under the impression, judging by events which took place in my own constituency when people were travelling late at night for various purposes, that the customs and excise people have that authority anyway. If they have, I do not see why we should duplicate the powers or specify powers which already exist in a general way. There is an old philosophical concept of not multiplying beyond what is necessary. I should like to have the Minister's views on that. It is a paradox that this is to be a free port but we have to have regulations which make it something less than free.
We welcome the Bill in so far as it goes. Other Deputies will have more to say about it. We welcome the Bill but we do not think it will be a panacea for all the economic ills of Cork city which have been allowed to fester and which have affected that lovely vibrant city on the Lee.
During the last two periods of Fianna Fáil administration we saw the fruits of the attention which the economic development of that city had got from Fianna Fáil and it saddens us to see those advances being allowed to evaporate. I visited Cork last weekend and it is a sad place to be because of lack of employment.
I hope that as well as the free port development in Cork we will have development in manufacturing industry which will provide employment so badly needed in that city. We do not want relocated industries from elsewhere. We hope the development will get adequate support from the promotional authorities. I had hoped that the IDA site at Ringaskiddy would be taken into the free port area, but from the Minister's speech that does not seem to be envisaged, though the Minister did not come down on one side or another in regard to the specific area to be designated.
It is a dangerous business to try to be a prophet, like the distinguished James Dillon tried to be when making a point against the Seán Lemass development at Shannon. I hope the vision of the future will be of a vigorous industrial development backed by the deep sea facility and further expansion of Cork Airport.
I hope the Minister will give us the benefit of his thoughts about other areas where they are anxious to have this facility afforded to them. At the beginning of his speech he said it is not envisaged to apply it anywhere else for the moment. We must remember that in another part of the country the British authorities are developing a free port. Southampton is being developed. It has a short sea run to Europe and that is an argument for further development in other areas here. I am sure Members who have a direct interest will be specific when they speak.
The big problem with free ports and free zones is that too many people believe the very idea of a free trade area will make it work. Any enabling legislation is meaningless if the zone or port is not backed by the right geographical location, transport and communications. It needs financial services, Government co-operation and the enthusiasm of companies, especially international ones.
Before we consider Ringaskiddy, Rosslare or any other possible free port in the south east or elsewhere, let us look at other countries who have free ports and free zones. Free ports in the US go back to 1934 and there are 85 free trade areas, most of them formed since 1970. Most of them do not work, being little more than glorified bonded warehouses. Of the free zones that have worked Miami is the biggest. It did not spring up overnight as an answer to the need to revitalise a depressed area where traditional industry had died. It was not the answer to vociferous lobbyists who saw a free port as a status symbol for a problem area. Miami has become one of the most successful free trade zones in the world because it is a strong, international financial centre, linking Europe, North America, Latin America and Asia. It is next door to a large cargo airport and a stone's throw from Miami port, the third largest container terminal on the US east coast.
The advantages of any proposed free port site must be strictly commercial and not political. It must be more than a tax haven. It must have distribution, customs, broking, freight forwarding and administration services, showroom space and, preferably, an industrial zone.
In March 1984, enabling legislation was introduced in the British Parliament for free ports. They had six in mind, Belfast, Birmingham, Cardiff, Liverpool, Southampton and Prestwick. They were given five years to prove that they could deliver. To date only Liverpool and Southampton are measuring up, though it is early yet to judge the performances of the others.
Britain, like ourselves, appears to have accepted the concept somewhat reluctantly. Today's free ports — there are more than 400 throughout the world — go back 100 years to Hamburg. However, the Phoenicians started the idea about 2,000 BC, and merchants grew rich carving free ports out of the feudal hinterlands in the Middle Ages. Southampton, of the six English free ports, was a perfect commercial choice, being a prosperous expanding port. The others were the result of political decisions. They were less natural and owe their existence to vigorous lobbying from areas needing jobs. Is there a lesson for us in that?
There has been a very big growth in free port traffic in recent years — it is estimated that 20 per cent of world trade takes place through them. Most of this growth has taken place in less developed and developing economies where there has been spectacular success. We must distinguish, however, between those and free port development in the EC context where much more stringent rules apply if we are not to over-estimate the value of free ports.
There are free ports in Taiwan which give 70,000 jobs, three in Malaysia with 22,000 jobs, two in South Korea with 120,000 jobs, one in Mexico with 70,000 jobs. The People's Republic of China have four experiments under way, the largest bordering Hong Kong. These developing bonfire economies jettison all restrictions, derogate company law and planning permissions, etc. They have cheap labour forces on top of advantageous customs and tax positions. Here in Europe, free zones are much more restrictive to prevent excessive distortion of competition by free port concessions. For us this exercise today will be entirely wasted if the net effect is merely to relocate economic activity rather than generate new and vigorous trade in any new free port in this country.
In his remarks the Minister outlined the advantages we will be claiming for our new free port, bearing in mind that Shannon still has space for new industries and companies to benefit from SFADCo's generous concessions, albeit less generous since our admission to the EC. As Deputy Wilson has pointed out, Shannon was a forerunner of free ports in this part of the world. It was the first free port to be established in the modern era. Directly or indirectly 28,000 jobs are related to its establishment.
The advantages which will apply initially to a free port at Ringaskiddy include deferred liability for customs duty and VAT. As the Minister pointed out, the VAT regulations will be dealt with another day under the VAT Act. The most pertinent few lines of the Minister's speech were those which read as follows:
The proposed VAT reliefs are not provided for in the Bill. They will be the subject of separate regulations to be made by the Revenue Commissioners under the VAT Act.
The key to the success or failure of what we are discussing today lies in those two sentences. Let us appeal to the Minister for Finance, to the Revenue Commissioners, to adopt and interpret EC legislation in relation to free ports in the most liberal manner possible so that we here can benefit as best possible. At the same time to be fair to those people in Cork, indeed to my constituents in Wexford and to our people generally, we must not over-emphasise the benefits that may accrue from a free port in any location. Apart from the general benefits on the VAT side and the other issues outlined by the Minister, there will be economies of scale which will help business and industry tremendously in any free port or zone area. There will be a secure environment, simplification of customs procedures and documentation. Would that we could bonfire all the red tape and bureaucracy altogether as they can do in most developing economies.
It is reasonable to address ourselves to the question as to why Ringaskiddy and not another port location in our country was chosen. I wish Ringaskiddy well. Cork has had more than its share of economic disasters, unemployment and its consequence social problems. It cannot but benefit from this move. As Deputy Wilson warned us, I shall not prophesy to what extent it may or may not benefit, or what may or may not be the pitfalls. There I accept his wisdom. However, was Ringaskiddy, from a national point of view, the ideal location bearing in mind that a proliferation of free ports on our small island has to be ruled out? How can the Government know in advance of the much-heralded national ports policy what may be the ideal location? Has Ringaskiddy been chosen — and I paraphrase my earlier words — in response to a vigorous lobby from an area needing jobs?
Sure.
Was the choice of Ringaskiddy political rather than commercial——
Of course.
——and, if so doomed — as in the other economies to be a non-starter?
While this Government are there, yes.
Will it be anything more than a glorified bonded warehouse or a status symbol for a problem area? Worse again, as its origins lie in the deliberations of the task force on unemployment in the Cork area, as the Minister told us in his remarks, is it an attempt to allow the Government to be seen to be delivering? After all, if one sets up a task force, they must have something to show to justify their existence, something to recommend. Ringaskiddy will have its industrial zone but it has no natural, commercial activity and efforts to generate these have failed. An existing, thriving port with natural commercial and geographical advantages would appear to be a prerequisite for a successful free port according to all the experience of our competitors, experience that goes back over many years.
I repeat: a free port as an answer to revitalising a depressed area where traditional industry has died has never yet been a success. We have the examples of 400 existing ones to look to. None chosen on political rather than strict commercial criteria has yet worked. I hope for Cork and for all our sakes that Ringaskiddy can be the first to break this rule. I hope especially for Ringaskiddy's sake that it will not follow the same line, because I understand that the rest of the country's ports claim to free port status will be measured on the success of the Ringaskiddy experiment. In Britain they gave them five years to measure up. What will we give Ringaskiddy here to measure up before the rest of the country can be considered?
There were complaints made about those five years there, that they were not sufficient.
I accept that but initially the idea was that they would have five years to measure up the experiment.
What is our Government's attitude? Is it Ringaskiddy regardless? Has any other area a claim for free port status? Will it be considered? I am assured that the Government considered Rosslare. I do not know in what depth or at what length I can only accept that they considered it but that word "considered" can mean a lot or a little. In regard to the remainder of the ports and there are many apart from Rosslare, New Ross, Waterford, Drogheda, Greenore and Limerick which have all been mentioned, how will their claim to status be investigated? On what basis will it be judged?
I understand that the national ports policy will be included in a Green Paper on transport due out in a few weeks. I must reflect again on the wisdom of coming down in favour of any one port, Ringaskiddy, Rosslare or anywhere else, in advance of the national ports policy. The south east region would appear to be the most suitable area geographically for any free port we might be establishing. There are many ports in the south-east with a claim to being suitable for consideration. SERDO, the South East Region Development Organisation, recently commissioned a report from An Foras Forbartha on the feasibility of free port development in the south east. Rosslare, New Ross and Waterford all have applied to the Government for free port status from this region.
Rosslare was the first port to apply for free port status in 1981. CIE are the port authority in Rosslare. I am afraid that their response to a request for a submission by An Foras Forbartha for their consideration was less than enthusiastic, like that of the other port authorities in the south-east. A short two weeks ago at a public meeting in Rosslare, CIE indicated that reclamation of land to the north west of the existing piers in Rosslare would not necessarily be a major financial consideration. This would now appear to remove what heretofore was a major drawback to this port's claim of free port status, namely, an inadequate land bank.
Over the next two years CIE are embarking on a £5 million development plan for Rosslare harbour port. I understand that only today the car-coach customs clearance terminal building is due to start —"at last", we all echo. This programme will modernise the port, one which now ranks second behind Dublin only in trade value terms. The latest figures available show that in 1984 11½ per cent of trade value throughput in our ports was in Rosslare. This was an increase for 1980 of almost 3½ per cent, unlike Dublin, the leading port, which decreased over the same period from 36½ per cent of the trade value to 29½ per cent, a seven per cent decrease. I accept that much can be made of statistics but Rosslare has made strong advances and is safely second to Dublin, the only two ports with double figure shares of trade values. Waterford ranks next, in third place, with 7.6 per cent share of trade value. New Ross is in ninth place with approximately .9 of 1 per cent of trade value or port throughput.
As I pointed out, established commercial criteria have been the main yardstick of successful free ports in other countries. We cannot afford to ignore the statistics before us and the Government cannot afford to ignore them either. The bias of trade and the increasing exports to mainland Europe with a decrease in trade value to the UK are pointed out by the combined performance of the south-east region ports, Waterford, Rosslare and New Ross, which in 1984 accounted for 26.1 per cent of the Republic's exports, or 39 per cent by value of exports via sea ports alone. Need I say that Rosslare headed the list with 15½ per cent? Even if we were to accept that the Government are now in a position to state categorically the ideal location for our next free port — possibly the last free port which will be established given the size of the country — and even if statistics proved otherwise and pointed to political decisions rather than to sound commercial ones being a sound basis for choice, Rosslare's case for free port status must still head the list.
The unemployment statistics for Wexford town and district hit a tragic 25 per cent in March 1985. In Wexford we have the lowest percentage of adults employed in the whole country except, perhaps, in Donegal the figures for which are suspect on the grounds that many on the register are smallholders and technically not available for employment anyway. Therefore, I put those figures aside and reiterate that Wexford has the lowest percentage of adult population at work in the entire country. Our difference from the Cork area is that our decline was slow and insidious and not dramatic and sudden enough to be studied by a task force. Granted, we have a smaller population than Cork but our percentage employed is and has been for years above that of Cork. These are tragic figures. However, I should prefer that a free port location was chosen on sound commercial grounds when a full review of the national situation was to hand.
On commercial considerations Rosslare cannot and will not be passed over. It is a specialist ferry port, non-tidal, the nearest port to Europe, has a swift roll-on roll-off service appealing especially to high value freight and a superb infrastructural service thanks to the ongoing commitment of Wexford County Council. There is also a rail link, a large labour force and, most important, a strong history of profit. From 1983 to 1984 profits doubled to over £1 million. I think I am right in saying that Rosslare was the only profitable venture of CIE during this period. It is with some interest that I note the increase in activity and concern by CIE towards Rosslare harbour. Thankfully it is happening, albeit late, but the cynic in me wonders if it has anything to do with the two sentences in the National, Social and Economic Plan suggesting a new port authority for the area. That was in September 1984 and Deputy Browne will have to agree that we have had far more co-operation from CIE during the last 12 months than we have had in the years of my lifetime in Wexford.
I always agree with the Deputy.
Thank you, I hope we will agree on other matters too. As I said, profits doubled in one year in Rosslare and we know how difficult business generally was in the year. They doubled despite the lack of commitment by all concerned. Over one million passengers will have gone through Rosslare by December 1985. There was an increase of over 6,500 coaches, with a corresponding increase annually over the years in the roll-on roll-off units and freight cars. I wish Ringaskiddy every success and I mean that sincerely because I feel that our chance and the other ports' chance of consideration for free port status will depend on whether Ringaskiddy stands or falls. I hope the Government have chosen Ringaskiddy for the right, sound reasons and I sincerely hope that they will not be raising the expectations of people in the Cork area unduly. It is in all our interests that Ringaskiddy succeeds. The success of any free port enabling legislation rests in the hands of the Revenue Commissioners in relation to VAT regulations. I appeal to them to be as liberal as possible and to ensure that the free port in Ringaskiddy and any subsequent free ports are a success.
I dtosach ní mór dom, tréaslú leis an Aire as ucht an Bille a thabhairt os comhair an Tí. Nílim sásta in aon chor leis an am atá tógtha ag an Rialtas agus an Aire an Bille seo a thabhairt os ár gcomhair.
In welcoming the Bill I am, however, dissatisfied with some of its aspects. It is not strong enough, it does not go far enough and it does not comply with the wishes of the task force set up by the Government to examine the frightful state of affairs in Cork, particularly under the Coalition Government. I also condemn the late arrival of the Bill when we realise that the Minister for Industry, Trade, Commerce and Tourism indicated as far back as May 1984 that the Government has accepted at least that element of the task force report and said that they would introduce a free port Bill based on their recommendations. Of course, in mentioning the task force, I should say that their report never came before this House and I have always had the feeling that there is so much condemnation of the Government in it that that is why it has never seen the light of day.
It has been asked during the course of this debate why Ringaskiddy was chosen. This Bill is an enabling one and if other areas can prove that there is a need for a free port which would be commercially viable they will be given consideration. I take Deputy Doyle's point that her county is worse off, as far as unemployed in concerned, than Cork. It is a fair admission from a member of a Government party. If such is the case because of the inactivity and dithering of this Government, I can assure the Deputy I will give my support to the granting of free port status for her area.
Cork city and county have a number of natural characteristics that we realised would be of benefit to the region after our entry to the EC. People may wonder why Cork has been selected to benefit from the legislation now before us. We have the second largest concentration of population, we have a deep shelter harbour facility, the port is suitable for the establishment of heavy industries involving products and raw materials more easily moved by sea, and traditionally the lower harbour has been used by transatlantic liners. This is adequate proof of its ability to receive large ships.
In the sixties there were the first signs of moves by industry to take advantage of these facilities. Another advantage was the proximity of Cork harbour to the Continent and its suitability for transatlantic trade. Cork as the major port on the south coast should have been able to attract the bulk of trade between Ireland and the Continent. Realising this, the local authority in the Cork area encouraged the IDA to acquire more than 1,000 acres of land. Cork County Council saw the need to supply the area with an adequate water supply in order to encourage heavy industries to the harbour and they set up what became known as the Cork City and Harbour Water Scheme. To this end Cork County Council invested a sum of £47 million, but the only assistance given to them was a concession by the IDA with regard to 50 per cent of loan charges. There was no other contribution to that scheme from any other source.
We have spent millions of pounds on the road network in conjunction with the harbour board. I am talking now about the sixties and the period up to 1973. The schemes to develop the harbour and to provide a deep water berth were approved by the Government at the time. I will give the House some figures in respect of the tonnage of vessels entering Cork harbour. In 1952 tonnage in respect of vessels from ports in England, Northern Ireland and the Republic amounted to 609,565 tons and in 1961 it had risen to 977,883. In 1961 tonnage into the harbour from ports other than Great Britain and Ireland was 1,014,376 tons. Clearly Cork harbour was rapidly developing trade with countries other than Great Britain, even before the prospect of our entry to the EC.
Complementing the location of Cork as a port and its suitability for industrial development was a large agricultural hinterland. From the scale of the dairy products industries in Cork and the pigs and bacon industry in the larger area of Munster, it was possible to envisage how stronger trade links with the Continent could have given new opportunities for agricultural processing industries and the export of agricultural goods from Cork.
During the seventies we made attempts to develop the deep water berth but it is an established fact that on two occasions the previous Coalition Government abandoned the development of this facility and at one stage stopped the work for the sake of £2 million. We are all well aware of the commitment of Deputy Barry, the present Minister for Foreign Affairs. It was mentioned today that perhaps this free port area is being set up because of political pressure. Undoubtedly there has been such pressure from the Cork area but it was warranted. Much of it was combined political activity by all parties but it must be acknowledged that this side of the House also applied pressure. On a previous occasion when Deputy Barry commented on the shelving of the development of the deep water berth, he said that the £2 million would be spent when there was a firm commitment from industry to establish at Ringaskiddy. I am very clear about that. However, because of political pressure we got the Coalition Government to realise the need to continue this development and ultimately they relented. They allowed the deep water berth to develop on the lines planned years before they came to office.
Neither the Minister nor the previous speaker need worry that the setting up of the free port area in Cork will shift economic development from other areas. It is my hope that this legislation will reactivate what existed already in Cork until the Coalition Government came to power, namely, industrial and economic activity and jobs for the people in the Cork area. Even though I said at the beginning that this legislation is not strong enough, I am of the opinion it will give some hope to the depressed people in the south-west and that it will have a beneficial effect on the economic and industrial life of the Cork area. I hope it will generate economic development rather than transfer it. In any event, because of the inactivity of this Government, economic activity is so limited that it would be almost impossible to shift it from one place to another. We have had nothing but closures and liquidations during the term of this Government. Our economic development is too depressed to attract investment.
Fianna Fáil did not take any action to set up free ports.
We will set them up when the opportunity presents itself to us. Our economy has been retarded by successive Coalition Governments. In the past 12 years Cork, more than any other area perhaps, has suffered because of the lack of activity of the Coalitions who have been in power during that time, though I was reminded this morning that Wexford are joining the queue also.
We were there before under Fianna Fáil regimes.
I understand that the employment problem in Wexford is becoming increasingly worse. That does not say much for the Government's activity so far as Wexford is concerned. Since 1973 we have had eight years of Coalition Government. We can only hope that the Government will acknowledge the need that has been identified clearly by the local authorities involved and that instead of shelving £2 million for the development of the harbour will provide a roll on-roll off service.
Somebody said that one can do anything with figures, but the record of Coalition Governments cannot be denied. It is because of that record that our economy is in such a depressed state. There is no encouragement for the people to invest in the economy. Coalitions have always blamed their failures on some extraneous events. For example, in the 1948-51 period the then Coalition blamed the Korean War for their failures while in the 1951-54 period the scapegoat was the Suez Canal problem.
What relevance has this to the Bill? The Deputy is wasting the time of the House.
I am being very relevant but the truth is bitter for the people opposite. In the 1973-77 period, the then Coalition blamed the Arabs for all our problems but who will they blame this time?
The election campaign has begun two years in advance.
There will be no scapegoat for the Government in the next general election.
The Deputy is supposed to be talking about free ports.
He should listen to his leader.
Of course I listen to him. Never before has our leader spent so much time in the Cork area in an effort to lift the morale of the people and give them some encouragement. The people of Cork have been downtrodden and browbeaten by the Coalition.
Dublin North-West): Order, please.
What the Deputy is saying has no relevance to the Bill.
I am outlining the need for this Bill. While I welcome the Bill I condemn the delay in introducing it. In May 1984 the Minister for Industry, Trade, Commerce and Tourism announced that Ringaskiddy port and industrial estate would be designated and operated as a free port.
I am not satisfied that the Bill goes far enough nor that it is strong enough in terms of what we have sought for the area. I fear that the legislation will not be sufficient to encourage that sort of activity that would be warranted in terms of the preparations, infrastructural and so on, that have been made by the local authorities. What is lacking is a commitment from the Government but that has been a feature of successive Coalitions. I acknowledge that at times all of us who represent the Cork area spoke collectively for the area but I would remind the Minister that we have introduced motions here relating to various matters — unemployment and so on — in the Cork region.
All these efforts had the distinct objective of urging the Government into taking the action that was necessary. But these kinds of delays are hallmarks of Coalition Governments. Why has it taken from May 1984 to November 1985 to have the debate on the legislation begun? The necessity for the free port was recognised in May 1984. The consensus of opinion was that the change would help the Cork area in terms of industrial development and in terms of the creation of the employment that is so badly needed there. Instead of asking why Ringaskiddy should be chosen, I will be expecting Government speakers to ask why such a long time has elapsed in dealing with the legislation. I do not consider the Bill adequate to deal with the industrial area as well as with the port area. There are limitations in the Bill but I hope these will be removed by the time we reach the Committee and other stages.
There is reference in the Bill to the operator of the area. Are we to witness another piece of political patronage in regard to the appointment of an operator and of the people concerned?
The Deputy will recognise that.
We have had much of that kind of patronage from this Government but in the best interests of Cork one can only express the hope that they will not embark on a political patronage gravy train on this occasion. The harbour board are to be commended for their submission to the Minister. I am pleased that the Minister adopted some of the board's suggestions and proposals. He is to be commended for that. In setting up the operator appointment, the Minister should take account of the fact that the local authority in whose jurisdiction all the activity is to take place are Cork County Council. Despite repeated requests to the Government for a representative from the county council to be appointed to the harbour board, we are still awaiting a response.
I trust that the opportunity presented in the setting up of the operator position will not be lost in terms of a county council representative being appointed to the board. In addition to the task force from which the proposal in regard to the free port emanated in the first instance, a working group comprising representatives of the harbour board, Cork County Council, Cork Corporation and the IDA were set up. That group made recommendations regarding the establishment of a free port at Ringaskiddy. They completed their findings in 1984.
The report said that the free port would be initially located on a 30 acre site on the Harbour Commissioners reclaimed land at Ringaskiddy and that the provision of future expansion of the free port be made on either the Harbour Commissioners' or the IDA's land, or privately owned land. I hope the free port area will take in the massive land bank acquired by the IDA for industrial development for which Cork County Council are developing an infrastructure to serve the area. I would also like to see a free port company operate manage, develop and market the free port on a commercial basis in conjunction with the Cork Harbour Commissioners. That might eliminate some of the possible political patronage to which I referred but then I presume that there would be some political patronage from this Government among the appointments to the free port company.
The experimental free ports in Britain have been in existence for over 12 months and the consensus of opinion is that the concept is being held back by inflexible attitudes and regulations. The regulations have not been introduced with this enabling Bill. They will be the key to the success or otherwise of the free port areas. I must emphasise that. We can talk about setting up a free port in Ringaskiddy, who will be involved in it and the possibilities of other free ports being set up throughout the country, but that is only part of the problem.
It would be appropriate for the Minister to hear of the experience of the free port managers in Britain. They say the rules are being interpreted too harshly and that a relaxation of attitudes would go a long way towards creating more confidence in this concept. I strongly urge that the regulations be given the power they deserve to ensure that the setting up of the free port area in Ringaskiddy, and in other places later, will not be constrained or restricted and that the maximum value will be obtained for the free port area.
There is no doubt in my mind that the setting up of a free port area in Ringaskiddy has been very largely motivated by the downturn in industrial and economic development in the Cork area. We have the commitment and the will to rise from the ashes and to overcome all kinds of adversities, including a Coalition Government. It was their lack of conviction and commitment to the Cork area that contributed to the present situation. I do not want to go into detail about any particular closure, but we have had many of them which were not listed or did not reach the national media. Everybody in and outside Cork has heard about Dunlops, Fords and the dockyard but when these firms closed they took hundreds of small businesses with them.
What happened to the famous statement by Government Ministers globetrotting to Detroit and other places that Fords would not be allowed to walk away from Cork?
The Deputy is getting away from the Bill.
I am making a passing reference.
He is whingeing again.
Order. Let the Deputy continue.
In discussing the proposed designation of Ringaskiddy as a free port area and the regulations to be introduced, it is necessary to make a passing reference to the reasons why the Government decided to make this move — political and economic pressure and high unemployment in the Cork area.
The Minister for Industry, Trade, Commerce and Tourism is mentioned in this Bill. He has to approve the licence. We were pleased to have him in Cork this week to announce a few very welcome jobs — he hopes 200 over a period of two years — and then he announced the jobs for Donegal and other areas. I think it is significant that he came to Cork to make that announcement. Obviously he did this because he was getting a feedback from his backbenchers who were telling him what the people in Cork feel about this Government and their treatment of Cork.
I am glad this Bill is before the House because it affords us an opportunity to talk about the Cork area and Cork harbour. What of our fishing in that harbour? What effort is being made by this Government to harness that resource?
Deputy Lyons does not know the name of the Bill before us.
Sit down.
He does not know what it is about.
I would just remind the Deputy that he is straying from the Bill.
I am not. I am talking about Cork harbour and the Bill is about Cork harbour.
It is about free ports.
It is not about fishing in Cork harbour.
Deputy Carey, please.
It refers to Cork harbour and industrial development arising from this Bill.
The Deputy is getting good mileage out of it.
I outlined why Cork harbour should be the first designated free port area. This occasion should not pass without mentioning Verolme dockyard. We should not shy away from this because the Coalition Government, having a 48 per cent stake in the company, allowed it to close and put all the workers on the dole queues. Talking about a possible free port area in Cork gives us an excellent opportunity to refer to Verolme dockyard. We are still awaiting the Government to encourage or generate some activity in the Verolme dockyard. The Minister will have an input here as he will issue licences to people. What about his commitment to me and others from Cork about Verolme dockyard? It is ridiculous that a harbour as developed as Cork should be allowed by the Government to grind to a halt, like the dockyard. What is more necessary in a maritime nation than to have a shipbuilding and ship repairing service? Since Verolme closed the Government have done nothing to re-establish an element of ship repairing and ship building to complement the setting up of the free port area.
My contribution has annoyed Government Deputies because I have outlined the facts which cannot be distorted despite all the propaganda. In eight years out of 12 of Coalition Government there has been a depressed economy nationwide, and a loss of hope in Cork. This is attributable to the lack of leadership in the Government, the lack of commitment by Ministers and the dithering about decisions which should have been taken to stem the rate of unemployment. This Government stand indicted on their lack of performance in the crucial area of employment. I hope that the setting up of the free port area in Cork, although the legislation is not strong enough, will encourage the people of Cork. A free port area is badly needed in Cork in order to boost the morale of the people.
Because of the introduction of this legislation Members from other constituencies will rise to support their areas and that is the freedom of democracy. I have no doubt they will make good strong cases. The case put forward for Cork in the request through the task force to Government for the setting up of a free port area in Cork is very strong.
Many incentives are needed to ensure the success of this project. The Minister referred to the non-payment of customs duties including VAT on goods entering the free port. These incentives are necessary for the success of the port. Trading with the free port is to be exempt from VAT, including goods consumed in the port. There should be permission to bring into the free port goods for duty free retail sales either for shipment as ship or aircraft stores or to persons leaving the State. Where and when it applies duty should be assessed at the rate applicable either to the raw material entering the free port or the finished product at the time of leaving, whichever is the lower. That is a reasonable incentive that could be included. These sorts of incentives will be essential to the success of the operation. Therefore, the small print in this Bill will be very important. All operations within the free port area should be deemed exempted trading operations for the purpose of the Finance (Miscellaneous Provisions) Act, 1958 or at the least, the maximum 10 per cent corporate tax rate should be extended to cover both manufacturing and non-manufacturing activities in the free port. The purchase of plant and machinery for use in connection with the free port should be exempted from all duties and tax. This would give some teeth to the setting up of the free port area. I hope the regulations will contain some of these incentives and that there will be flexibility in their application. We should give the free port area an Authority with the necessary machinery to be a successful operation.
It should be possible to include sub-zones within the harbour area of the free port akin to those in the Gaeltacht and breac-Ghaeltacht. The free port area would have neighbouring zones. The area as announced today is on the limited side and this incentive could be used to create more activity in the harbour area.
I suggest that, similar to other areas and at the discretion of the local authority, rates should be reduced in the first ten years after the construction of the free port. That incentive should be examined carefully. It was the subject of a recent court decision and we will not go into that now. There will be another Bill on that before the House. Other statutory authorities providing a service to the free port should be permitted, at their discretion to provide similar reductions in the cost of services. That incentive would also be conducive to the success of the free ports area.
Goods entering the free port from the remaining section of the port of Cork and also from the airports at Cork, Shannon and Dublin and inland clearance depots and foreign parcel post should be allowed to do so without delay by means of a simplified customs document. We are all aware of the famous, infamous or otherwise, customs document that is giving so much bother even nowadays. I hope small print will be included to clear the coast — or the harbour — of that sort of hold-up.
The regulations should specify the circumstances in which goods within the free port are to be treated for the purpose of the Act and regulations as not being free port goods. They should also specify the circumstances in which goods which are not within the free port are to be treated for those purposes as being within the free port area. I know that we are not talking about regulations today. We are talking about the Bill, but the regulations will follow on the Bill and I am availing of the opportunity of this Second Stage debate to include some incentives that I consider worthy of inclusion in the regulations when they are introduced. The regulations when so introduced should be flexible enough to accommodate new and existing businesses wishing to set up within the free port area. Barbed wire fences of red tape and bureaucratic legislation will be a discouragement rather than an encouragement to the satisfactory setting up and development of projects such as this free port area.
In order that other speakers have the opportunity to contribute to this debate I will conclude more or less as I began by saying that I welcome the Bill at this stage, belated as it is. I hope it will receive a free passage through the House and más maith is mithid, it should go through quickly and, given the necessary teeth for effectiveness its passage and support by the Government and the regulations that follow will help in some way to raise hopes, to turn the tide, to see at long last the oft mentioned light at the end of the tunnel about which we have heard from the Taoiseach and so forth. This free port will become an effective reality for the betterment of the economic and industrial life of the Cork area in the first instance, then the whole south west area and, as a spin-off, the entire country.
The Minister of State said at the beginning of his speech that the Free Ports Bill, 1985 was:
an enabling measure, which when enacted will permit the establishment of free ports generally in the State. While the Bill does not, therefore, deal with any specific location, its primary purpose is to permit of the establishment of a free port at Ringaskiddy, County Cork. There are no plans to establish any other free ports for the moment.
When the Minister decided to introduce this Bill he introduced it at an opportune moment when the economic conditions in this country had changed. As a result of Government policy there has been a dramatic decrease in inflation and a further incentive to industrialists to invest in areas of attraction. Deputy Lyons made the point that the reason that Cork is such an attractive area is that there is high unemployment there. He said that they need the work. I agree with Deputy Lyons that areas of high unemployment should get help such as the assistance of a free ports Bill
Deputy Lyons is more familiar than I am with the area and the location at Ringaskiddy, but he was very critical of Government performance. He made political claims about the failures of various Governments. He said that the Government have failed in the case of Fords, Dunlop and Verolme but, if what I hear from stalwart Cork Deputies is true, not all would agree with the performance of Deputy Lyons here this morning. He cringed and whinged on behalf of Cork. The people who represent Cork are strong and well able to put their point.
Deputy Wilson made a good speech about the Free Ports Bill here this morning. He analysed details of the Bill and made a case for and against. He was pragmatic in dealing with it, but Deputy Lyons came in in a whirlwind of whingeing. He is the archdeacon of whingeing. I do not know that a blaze of this nature in this House will do any good for Cork or for the country, especially concerning a Bill to promote industrial development. All Deputy Lyons could do was whinge and cringe and he made not one valid point in all his argument.
The free port idea has emerged mainly out of the success of Shannon which Deputy Wilson outlined. He said that the free port in Shannon was established by the former Taoiseach, Deputy Seán Lemass, and he quoted from a speech of 1947 when the Shannon free port was set up. However, the real benefits in Shannon did not begin to emerge until 1960, some 13 years later, when the Bill to set up SFADCo was brought in here. That company utilised the power given in a Bill introduced by a Coalition Government to encourage industrial development introduced by former Minister, Deputy Norton.
The Deputy is forgetting the Bill introduced by Deputy Childers.
Quite wisely Deputy Lemass utilised all the benefits to encourage industry to set up here and I commend him for that. I commend all the Ministers whose ideas were put to work to make Shannon the success it is. At present 8,000 people are directly employed there and a further 20,000 indirectly. All Governments have contributed to that success. One would swear, listening to Deputy Lyons, that everything in the country is negative when we are in Government and that when Fianna Fáil are returned to power everything will be right, that they are the miracle workers. Deputy Lyons seems to have a special wand to enable him to resolve the deeper problems in Cork.
The biggest cheer heard in Cork, although Deputy Lyons will not admit it, was when the former managing director of Fords, Paddy Hayes, announced to the workers involved that he was closing the place and making them all redundant. The cheer that greeted that announcement was louder than any cheer at an All-Ireland. That is a sad relection on the attitude of the people, but Deputy Lyons is fomenting the idea that there is some great benefit in getting major redundancy payments.
The poor people in Cork realise now that the acceptance of large sums of redundancy money is not the be all and end all of everything. I hope that, when the free port is established at Ringaskiddy, there will be a more responsible attitude to work practices. The responsibility between management and worker is equal and that should be debated in Cork for some time. Dunlop and Verolme went, but if those companies were competitive and if the work practices were not such that they impeded cost-effective ventures, they would have been better. I do not see why the Bill should apply to Ringaskiddy if Deputy Lyons wants a continuation of the progress he is so proud of.
Deputy Wilson examined all free ports in the world. It is interesting to read an article in The Times of 25 January 1984 written by Jock Bruce-Gardyne. In the course of it he stated that a commission had examined three ports, Rotterdam, Hamburg and Shannon and said:
Shannon was the real McCoy, but unfortunately its raison d'être had largely disappeared with Eire's entry into the EEC. Originally set up to rescue Shannon airport when the transatlantic airlines no longer had to stop there to refuel, it had become an industrial estate with special fiscal privileges; while Shannon airport was saved — just about — by vigorous promotion among the Irish American community of visits to the leprechauns.
Cheap.
That was a cheap snide comment. However, I should like to pay tribute to those involved in SFADCo and the Aer Rianta staff who have promoted the airport successfully. I am glad the Government have decided to invest a further £1 million in a new fuel facility for the airport which will enable airlines to buy spot fuel thus helping the airport to become more competitive internationally than it has been before. I am glad the Government are proceeding with this because it is of interest to the people of the area. The Coalition are doing something for Shannon. Deputies, particularly those from the Cork area who might be taken in by the glory seeking of Deputy Lyons, should be more pragmatic instead of whingeing.
I would not mind having a few leprechauns up my way if I could get visitors to come. I would manufacture them very quickly if I thought that would happen.
Mr. Bruce-Gardyne in his article continued:
We finally concluded that Customs was right to argue that freeports in Britain would have no tangible advantages, but that nevertheless we ought to have a bash. Subject to one proviso: that any sites selected for experiment must stand or fall on straight commercial criteria — no subsidies or special privileges.
The Minister has told us that the Cork area has special privileges in that special IDA grants have already been given to it. He told us that those grants will apply to the free port area as well as to the other two estates, Togher and Hollyhill.
The conditions governing the admission and control of the type of business envisaged for free ports such as licences, customs procedures and other regulations are closely modelled on what has applied at the Shannon Customs Free Zone for more than 25 years. The systems and procedures in use there have worked out very well in practice in that the movement of goods and business in general operate smoothly. At the same time the powers of the relevant Ministers, customs officials and the administrating body at Shannon, the Shannon Free Airport Development Company, are sufficient to correct any irregularities or abuses. Things have worked out well, not because of the type and extent of regulatory controls, but because of the manner in which they have been implemented at all times in a most helpful non-compromising way, particularly by the customs officials. An example of this is the fact that goods arriving at Shannon are cleared very quickly by customs officials and released to the businesses operating there with the minimum of delay.
The Bill proposes to strengthen the hand of the regulatory bodies such as the Revenue Commissioners, the Minister for Finance, the Minister for Communications and so on, and gives them fairly extensive powers. In that respect the Bill is more detailed and specific than the legislation governing Shannon. I am glad that the Minister has specifically excluded Shannon. The reason legislation governing Shannon should be different is that the area caters specifically for aviation related activities.
I note also that the primary responsibility for the vetting of projects and the issuing of licences rests with the Minister for Communications in this instance rather than with the Minister for Industry, Trade, Commerce and Tourism as in the case of the Shannon free zone. There are consultative arrangements in both instances between the Departments but, considering the objectives of the exercise, to bring economic activity by promoting employment-creating projects, surely the Shannon licensing arrangement is preferable. That is a minor defect in the arrangements. There is an element of duplication between Departments which may give rise to a risk of inconsistency in treatment. I should like to ask the Minister to examine that aspect.
I commend the Minister on his work in connection with the preparation of the Bill which was introduced speedily. Contrary to the impression Deputy Lyons is trying to convey, I would like to see genuine growth in industry in Cork and an upsurge in employment, but that means all heads getting together and using them properly to see that efforts like free ports succeed. There should not be any hold back by the Revenue Commissioners, or any other agencies, in coming forward with schemes which will control estates such as that proposed for Ringaskiddy.
I am glad to have the opportunity to say a few words on this Bill which has been awaited in Cork for the last couple of years. We are all aware that unemployment struck Cork very severely over the past three years, especially with the closure of such firms as Fords, Dunlops, Youghal Carpets and Verolme Dockyard. These companies employed an average 1,000 people each and when they went to the wall that affected the inter-related service industries, small fabrication industries, and so on. This resulted in tremendous human tragedy in the Cork area which is being felt even more now, due to redundancies and unemployment benefits having been reduced over the time.
What happened to Cork was an example of how a community can work together. A task force representing the Harbour Commissioners, Cork County Council, Cork Corporation and the IDA came up with the very good idea of a free port. We can see what has happened throughout the world, with tax havens which benefit companies that are in there to make money for themselves, and the proper aim of any business is to make a profit. We must encourage people from outside, or our own people, to set up businesses which will be profitable and create sustainable employment. I have no hang-up about whether they are home produced or foreign based and with foreign ideas. We must give the foreign based companies support to ensure that they will stay on a long term basis. I am afraid that in the past we have attracted some businesses which were not sustainable long-term industries. In Shannon we have an example of a free port area which has had tremendous success and it is important that we examine what has happened there. It is regarded by all as a most successful venture which should be extended to other parts of the country.
The task force reported to the Government in April, 1984 — a year and a half ago — and now we have a Bill before us to set up a free port area. There are regulations to be set out and various Government Departments are involved, such as the Department of Finance. We have not heard much on that subject, but I presume the Minister will tell us what is happening there — whether the Departments are progressing in the preparation of the regulations and the legislation necessary to bring the free port into action. The Government were remiss in allowing a delay of a year and a half before bringing forward this Bill and I question the reason for that. I believe that they knew what they should do and I accuse them of holding the Bill in abeyance until the time was right for their own political ends.
The Bill generally enables the Minister to establish limits on the free port. His speech mentioned an area of 1,000 acres for Ringaskiddy under the aegis of the IDA and the Harbour Commissioners have proposed the designation of a 30 acre site for a free port. Ringaskiddy is ideal for the setting up of the free port in Cork. A tremendous investment has been put into the IDA scheme there over the past number of years and Cork County Council have spent £47 million. Many thousands of people living in the large county of Cork might feel that such money should have been spent on the roads of the county, which are deteriorating to an extraordinary extent. That £47 million has been spent on bringing Ringaskiddy up to the standards necessary for the anticipated traffic into and out of the area.
There have been many rumours circulating around Cork about industries willing and ready, straining at the leash, to move into the free port area. So many have been mentioned — not by members of my party but of the two parties in Government — that a 30 acre site would not be sufficient. I am sure the Minister will take cognisance of these rumours and will increase the size of the site, if necessary.
Section 3 enables the Minister, by order, to designate people to control and manage the free port. I am sure he will not allow his political persuasion to overrule his better commercial judgment in picking the proper persons to control the free port. The people controlling this area should be commercially minded, good business people who have a good track record and will ensure that in the final analysis the decisions to be taken will be based on what is best for the commercial viability and the future of the port and for the betterment of the people of the area.
Section 10 provides for financial inducements. In it we see where the cash flow of businesses is helped and that is a good provision. In times of tight credit and tough business conditions, cash flow is of vital importance. Any provision is good which allows businesses a good cash flow to get in materials for the manufacture and production of goods and to pay for them when these goods are sold. The Minister for Finance should take note of this when bringing in his next budget because we have VAT at point of entry hindering many industries trying to survive in today's tough economic climate. Removal of VAT at the point of entry should be extended to other goods. I should like to ask the Minister if import duties are chargeable on diversions of goods which have been created in the free port area to non-Community countries.
The Minister of State said that in regard to the day-to-day management and control of the Ringaskiddy free port he was still considering a number of options. All decisions should be made by now. The Minister has had sufficient time to come to a decision. He also said that he had an open mind in regard to considering proposals from the private sector to operate and manage the free port. There have been some problems in regard to free ports in the UK and they have not developed as fast as had been expected. When the Minister publishes the regulations it is important that the progress of the port is not impeded by red tape. He mentioned the rigidity in relation to ports in the UK but he said that vigorous marketing by the operator would attract firms to the free port here over the next few years.
Marketing is a vital aspect in the growth of our economy and not just in relation to free ports. If our marketing in every area is not improved we will not be successful. For instance, our agricutural produce is not marketed to the extent that it should. Yesterday, BIM had a fish evening and it is the first time, to my knowledge, that there was an attempt by them to market fish. Every morning at 7.40 on the radio, which is too early for such an important industry to advertise their wares, they give recipes.
If the free port simply diverts economic activity, the concept will have failed. If possible, the whole country should be a free port area. I know there are problems in that regard but we are too small to be subject to the same constraints as industrialised countries like Britain and Germany. Of course we are constrained by the EC but something on a larger scale is called for rather than the provisions in the Bill. I welcome the Bill in so far as it goes but I look forward to seeing more detailed regulations which, I hope, will make this a success.
This is an enabling Bill and while some of us hoped that everything would be contained in one Bill we can still welcome this legislation in the sense that it gives very wide powers. Fears that the legislation might be drawn too tightly are not evident in the enabling legislation and that is welcome. The Minister stated unequivocally that the primary purpose of this legislation is to permit the establishment of a free port at Ringaskiddy. A Cork Deputy does not need to ask why Ringaskiddy was chosen. Nevertheless, the concept of a free port in Ringaskiddy needs to be seen in its proper context, nationally rather then parochially. The facilities in Ringaskiddy do not exist anywhere else in the country and for that reason they do not belong to any area or region, they belong to the country as a major national asset. Ringaskiddy has been the subject of enormous investment from the inception of the Cork harbour development plan during the reign of previous Coalition Government and it was carried on by subsequent Fianna Fáil and Coalition Governments. Despite statements by Deputy Lyons there has never been any lack of commitment from either side of the House to the development of existing potential which, unfortunately, because of international economic circumstances, has not been fully realised. This is part of an ongoing development programme of this huge port related industrial complex at Ringaskiddy.
The land bank in the possession of the State through the IDA amounts to about 1,000 acres and there are options for further land acquisition there also. The largest quantity of processed water provided anywhere in the country and comparable to that provided in many larger countries is also laid on. Effluent disposal facilities exist and a deep water berth which will be capable of accommodating 60,000 tonnes deadweight bulk carriers is in course of construction. It is necessary therefore that we would complement the facilities which exist there by a free port. That should not be seen as some sort of a sop to Cork as opposed to other areas. Ringaskiddy is a natural location for the first free port in Ireland and the benefit will be the stimulus it will give to employment in the Cork region, which so badly needs it.
The Minister spoke of the fairly wide powers in the Bill. Section 2 gives him power to establish or vary the limits of the free port. Initially, the recommended area is 30 acres. I hope the success of this free port will prove that this area is inadequate. I understand that 30 acres is about what the Cork Harbour Commissioners and others interested recommended, and of course the acid test in three or four years will be a request to increase those limits. The Bill provides for that. Section 3 enables the Minister to designate persons to manage and control the free port. There is provision to grant licences for the carrying on of business in the free port. The Minister is given discretion in section 10, and section 12 introduces the Minister for Finance who will make regulations in regard to customs controls, etc. The Bill seems to give all the powers needed to make this thing work.
What are the benefits of a free port? It needs to be said that though a free port has become a kind of slogan in Cork and elsewhere, it should be seen in its proper context. It is not a panacea for all the woes of an area which is in need of rapid development. If handled in the proper way it can be a substantial stimulus to development in the area. The Minister referred to the advantages when he referred to customs duties and VAT. It is not always appreciated that customs duties do not exist within the EC as customs duties, and therefore the benefits of being able to defer or avoid customs in some way applies only to non-European Community goods. That is a qualification which limits the value of being able to defer or avoid customs duties. Some companies would see benefits in this depending on the sources of the goods they import.
On VAT the reliefs are more general and broader. The Minister said:
A business operating within a free port would be able to import, without payment of VAT, materials, machinery, etc., for use in the free port in connection with processing or manufacturing there. Secondly, VAT would be charged at the zero rate on goods supplied within the free port itself. Thirdly, goods entering the rest of the State from the free port would come under the internal VAT system if the subject of a sale, which would normally be the case, and would not then incur import VAT.
Another advantage would be that the overall customs procedures will be simplified, particularly in regard to small companies who cannot afford the sophistication or the staff required to operate the customs duties procedures fully. Because of the enormous amount of documentation required it is very difficult for a small company to be involved with full customs procedures. This will be simpler for them in the free port area and therefore it will be an attraction for business.
The Minister said that the purpose of the concessions is to stimulate economic activity and therefore employment within the free port and not simply to divert normal trade from elsewhere in the State. That means that one business would not get advantage over another. The purpose is to stimulate and attract to Ireland companies who would set up the kind of activities they might not otherwise set up. The Minister referred to the extra confidence the free port will bring to the area and the stimulus it will give to industrial expansion there.
We should look at experience of free port operations elsewhere in the world, and one is inevitably inclined to look at the UK if only for the reason that they operate in the same EC environment as we do. It is noticeable that one free port area in Britain more than the others, Liverpool, happens to be attracting activity and has been a better magnet for activity than the others. Their customs regime is less rigid than in the other ports. I think we should learn from that. There are severe restrictions in EC legislation which limit flexibility in regard to customs and it is important that we should look at the Liverpool experience. I suppose that is one of the advantages of coming into this later than other countries.
