asked the Minister for Industry and Commerce if he will give consideration to the introduction of a third tier of electricity tariffs in order to assist the development specifically of small industry; if he will consider other strategies in this regard, including the encouragement of personal savings for investment into industry loans and a selective review of industrial rates; and if he will outline his policy in relation to small industry generally.
Written Answers. - Electricity Tariffs.
16.
In relation to the introduction of a third tier of electricity tariffs to assist small industry, I understand that in accordance with section 93 of the Electricity (Supply) Act, 1927 the ESB are required to ensure that their rates are not preferential or discriminatory. This precludes the ESB from setting tariffs which are more favourable to a particular sector of industry. In any event, I consider the overall reduction of 5 per cent in electricity charges for industry generally, announced in the recent budget, to be a more appropriate way of adjusting industry costs. The ESB have indicated their firm intention to keep their charges at or below the new reduced levels for the next three years.
In relation to the encouragement of loans to small industry, I believe that one of the existing weaknesses of this sector is its undue reliance on loan finance, the cost of which can impact adversely on viability and growth prospects. One of the remedies for this problem is the promotion of equity investment in industry, and the existence of the business expansion scheme is a major positive feature in this regard and one which I support fully.
With regard to a selective review of industrial rates, the levying and collection of rates on commercial-industrial valuations is a matter strictly for the local rating authority. However, rating authorities have power under the Underdeveloped Areas Acts to remit two thirds of the rates on new industrial undertakings for a period of ten years in areas designated under the Industrial Development Acts. Under section 5 of the Gaeltacht Industries (Amendment) Act, 1971 local authorities may also grant a similar remission of rates on premises erected with financial assistance from Údarás na Gaeltachta. The "Gaeltacht" remissions may also apply in the case of improvements or extensions to existing premises. While both categories of rates remission are provided at the discretion of local authorities and there is no provision for recouping the loss of rates income arising, they are generally granted.
There is also provision for remission of commercial rates in inner city areas designated under the Urban Renewal Act, 1986 and in the Custom House Docks area. In general these remission schemes provide for full remission of rates for a period of ten years on the valuation of new development in the designated areas and on any increase in valuation arising from improvement and/or development of existing property.
As to my policy in relation to small industry generally, this was outlined in my address to the annual conference of the Small Firms Association last November. In brief, it is to ensure that in these times of scarce budgetary resources, account is taken of the fact that only a proportion of new small industry projects will have significant growth and export potential. Such projects will receive the full range of incentives currently available. They may also avail of the recently announced special trading houses scheme, whereby small firms will have the facility to supply their products to special trading houses as a means of getting such products on to world markets. Other projects with less potential but providing viable jobs at reasonable payback to the Exchequer will receive a package of employment, management and product development grants, but at a lower overall cost to the Exchequer.