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Dáil Éireann debate -
Tuesday, 3 Dec 1985

Vol. 362 No. 5

Free Ports Bill, 1985: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

In my opening remarks in reply to the debate I adverted to the bipartisan calls for the designation of areas at many ports around the country as free ports. I said that it would be counter-productive if there were to be a proliferation of free ports and I am sure that there is general consensus on that point.

In opening the debate I referred in general terms to the regime to be applied here and I dealt with the free port situation in the UK. These points were also touched upon by many Deputies in the course of their contributions to the debate and I do not intend to deal with this matter at length.

There are, however, two points which I wish to make. Six free ports have been or are being established in the UK, including three airports and three ports. In Ireland, by comparison, we have one free airport and will shortly have one free port. Having regard to the comparative size of the two economies I feel that we will have an adequate number here for the present and, as I have said, we should hasten slowly and learn along the way.

I want to echo what a number of Deputies have said. The free port regime here must conform to EC rules, and free ports in the EC simply cannot be compared with those in less developed countries such as Taiwan where cheap labour is available and concessions in other respects go far beyond what we can or would wish to provide here. I agree that the free port should be operated in as liberal a fashion as possible and that customs documentation and control should be as simple as possible. The customs regime, however, must be consistent with EC requirements and must ensure that irregularities will not arise.

I noted that there was a general appreciation among Deputies on the point I made earlier that the purpose of a free port must be to generate additional economic activity, and not simply to divert activity from elsewhere in the State. There would be little merit in improving the fortunes of one area if that were to be done at the expense of another area which, perhaps, itself was experiencing its own share of economic hardship. I agree with Deputy Wilson that the emphasis in the free port should be on manufacturing industry, although I would be favourably disposed to any project which generated additional employment. I think that Deputy Doyle's warning against free ports as glorified bonded warehouses is apposite in this regard.

A number of Deputies expressed the view that the VAT regime to be applied at Ringaskiddy should be as liberal as possible. As I explained earlier, the VAT regime is not provided for in the Bill but rather will be applied by regulations to be made by the Revenue Commissioners under the VAT Act. This is in keeping with the enabling nature of the Bill before the House. I will bring the views which Deputies have expressed on this to the attention of the Minister for Finance, but I feel that the approach advocated by some Deputies runs counter to the basic objective of generating additional activity and jobs rather than diverting normal trade from elsewhere.

As regards the manner in which the Ringaskiddy free port is to be developed and operated, I indicated in opening the debate that I had a fairly open mind on these matters. I referred to a number of options which could be considered and, in particular, to the possibility of a joint venture between Cork Harbour Commissioners and private sector partners which will shortly be investigated by the commissioners. I think it entirely right that the possibility for private sources of funding should be explored as one option for financing the development of the free port.

I note that this concept was welcomed by Deputy Wyse. This is not being ideological, as Deputy Wilson seemed to imply, but simply practical. Deputy Lyons spoke in favour of Cork County Council being involved in the operation of the Ringaskiddy free port. I would have no objection to considering the county council or any other local body for participation in a Ringaskiddy free port company if such a concept is decided upon as the appropriate mechanism through which to control and manage the free port. If I understood Deputy Wilson correctly, he suggested that there might be some implications of that nature in it. We are simply being practical. There is no question of being ideological in this respect.

I was pointing out that in Scotland public authorities have taken part in a free port development.

Deputy Lyons spoke in favour of Cork County Council being involved in the operation of Ringaskiddy. I would have no objection to considering the county council or any other local body for participation in the free port should such a concept be decided on and involve the appropriate mechanisms to control and manage the free port.

Deputy Wilson indicated that he would be raising some specific points on Committee Stage for which he would be tabling amendments. Other Deputies have made points about specific sections of the Bill. I will be glad to respond on Committee Stage to any detailed points and to consider amendments Deputies may wish to propose. I would not consider this legislation to be in any way a party matter. All of us have a great interest in putting into existence the free port and in doing so by the best system possible. This is enabling legislation but any idea that will be put forward will be examined and accommodated should it be considered to be of benefit to the Bill. That is the spirit in which the Bill is being presented to the House. It is the spirit also in which it is being tackled by the Opposition and by other Deputies.

I can clarify for Deputy Wilson that a similar provision to section 11 applies in relation to the customs free airport at Shannon and to the land frontier. Section 11 empowers an officer of the Customs and Excise to search any means of transport within 32 kilometres of a free port and to question the person in charge of such transport. Throughout the State the general position is that an officer of the Customs and Excise has power to stop a vehicle provided he has due cause to consider that an offence has been or is being committed. One may say that the difference in this case is small but it is tougher, as it were, than the existing provision.

In other words, in this case he can stop the vehicle without having any cause for doing so.

It would be a vehicle that was near the free port area.

I shall be talking about that and about interference with the freedom of movement of individuals.

It is not the intention to provide for the setting up of a duty free shop at the free port. This matter was referred to by Deputy Lyons and by a number of other Deputies. However, the supply of stores and goods for duty free sale on board ship are the subject of existing separate legislation. Assessment of duty is subject to EC directives. There is provision under existing law for what is termed "processing under customs control" which gives a certain degree of flexibility regarding assessment of duty, for instance, whether duty should be assessed on the raw materials or on the finished product.

Deputies will be aware that the Bill does not address the question of the rate of corporation tax. This is a separate issue and I will bring the various points raised to the attention of the Minister for Finance. Of its nature, there is a good deal in this debate that is of concern to that Minister.

Deputy Coveney and several other Deputies referred to the possibility of sub zones. These can be created either by extending the scope of the designated area or by designating separate areas as seems appropriate and in the light of the needs and the evolution of the free port concept. It is very liberal in that regard.

Local authorities have discretion on the question of rates in designated areas and Ringaskiddy is one such area. It would be up to statutory authorities to consider allowing reductions in the rate of charges for services provided in a free port. I would point out, however, that it might be too much to expect other areas to subsidise the cost of providing services in a free port.

Some Deputies spoke about the deep water berth and the provision of funds for the project. I am pleased to point out that this Government were responsible for granting Cork Harbour Commissioners permission to place a contract for the construction of the berth in respect of which a full cost State grant is being provided. I was present at the signing of the relevant contract. There was a great deal of satisfaction in the area on that occasion.

I advocated that in May 1982.

Deputy Ahern has a query in relation to the treatment for customs duty purposes of goods leaving a free port for non-European Community countries. The position is that goods re-exported to non-Community countries after processing in a free port will not be subject to payment of any customs duty.

As to the timescale for Ringaskiddy itself, there are a number of aspects of the free port operation which have to be finalised before the free port actually gets under way. I have referred to these in my earlier remarks. They are, for example, the precise area to be designated, the arrangements for development and day-to-day management of the free port, the VAT regulations and the Revenue Commissioners' procedures for necessary customs control. I cannot be precise, as Deputies will appreciate, as to when these matters will be finalised. Passage of the legislation is the first essential step and all the other matters are in hand. Many of these are going ahead while this legislation is being processed. I will ensure that there is no unreasonable delay in setting up the Ringaskiddy free port.

Deputy Coveney put it well when he said that the acid test for the Ringaskiddy free port would be whether the area initially designated would require to be extended in a few year's time to cope with the scale of activity. Having regard to the extent and scale of the State-financed facilities and assistance for new industry in the Ringaskiddy area, I am optimistic that the free port will indeed pass this test.

The Green Paper on Transport Policy has been published since I began my reply to the debate on 27 November. As well as referring to the Bill under debate, the Green Paper touches on a number of issues raised by Deputies, namely, the constitution of Cork Harbour Commissioners referred to by Deputy Lyons, and the Shannon Ports Authority referred to by Deputy Collins. A harbours Bill is being drafted at present which will provide for the setting up of the Shannon Ports Authority and the reconstitution of the port authorities at Dublin, Cork and Waterford. In that connection regard is being had to the question of representation of Cork County Council on Cork Harbour Commissioners. This was a point raised by several of the Cork Deputies.

Deputy Collins and other Deputies mentioned the infrastructure available in the Shannon estuary as justification for a free port in the estuary. The existence of infrastructure does not of itself justify the creation of a free port. I recognise that the ESB jetty at Moneypoint can accommodate larger vessels than those which can be accommodated at the new berth at Ringaskiddy but the Moneypoint facility exists to handle coal in bulk and is in the ownership of the ESB. The deep water berth, on the other hand, is a multi-purpose common user berth.

I do not wish to be drawn into any controversy or rivalry, whether real or apparent, that may exist between the Shannon estuary and Cork regions and which emerged during the debate. Shannon has a customs free airport. That facility was provided there because the Government of the day wished to have available at Shannon the best possible facilities for international airlines with the minimum of formalities and impediments. As I said in introducing the debate, the decision to create a free port at Ringaskiddy stemmed from the recommendations of the Task Force on Employment in the Cork area. I reject allegations that Ringaskiddy was chosen on political grounds. It was chosen for economic and social policy considerations and having regard to the significant State investment in the Ringaskiddy area. The free ports idea is a good one. We must start somewhere. Perhaps we could have begun such development earlier but we hope that Ringaskiddy will prove to be a considerable success.

Deputy Kirk asked that consideration be given to the setting up of a special development authority for the Border counties. That matter is outside the scope of this Bill. It would be more appropriate for the Deputy to raise the matter with the Minister for Industry, Trade, Commerce and Tourism.

The Deputy was thinking of Greenore.

He proceeded to refer to that port. Though Greenore is different in authority from other ports, the same considerations would apply to that port as would apply to Shannon or to the other areas mentioned earlier, for instance, Rosslare.

Would the case for Greenore not be a little different having regard to the special difficulties involved?

I have no doubt that that point will be made strongly again, it was made during the debate by Deputy McGahon also. No one is claiming that what we are doing by way of this legislation will provide the answer to all the problems, whether in Cork or elsewhere, but it is an imaginative step and one that has very considerable potential. Obviously we will learn a lot from what happens at Ringaskiddy, as we are learning right now from the experience in the United Kingdom.

Several Deputies pointed out, Deputy Collins in particular, that a free port must have some natural or other advantages because a free port as such is no use unless it is capable of attracting business. This is enabling legislation making it possible to have a free port anywhere in the country. What we will have at Ringaskiddy is a beginning. Naturally we all look forward to it being a success — and we hope it will be a dramatic success. Experience in the United Kingdom would advocate caution but, on the other hand, we know of other free ports which were major successes.

There is much optimism behind this venture in Cork, and I hope it will be a dramatic success, but we will have to take into consideration the caution expressed throughout this debate by many Deputies that there is no automatic path to success or no automatic answer to all the problems. I am extremely grateful for what has been a very good debate and I am delighted to have had the privilege of introducing this Bill. I thank all Deputies who contributed to the debate and I am glad of the general welcome it was given. While there may have been differences on various points, there was general welcome for the concept. This Bill has been introduced in the spirit of getting the best legislation on the Statute Book and we will be interested in any amendments put forward.

Question put and agreed to.

When is it proposed to take Committee Stage?

Next Tuesday, with the agreement of the Whips.

Committee Stage ordered for Tuesday, 10 December 1985.