Dáil Éireann debate -
Thursday, 11 Feb 1993

Vol. 425 No. 8

Ceisteanna— Questions. Oral Answers. - International Financial Services Centre.

Proinsias De Rossa

Question:

12 Proinsias De Rossa asked the Minister for Finance the number of companies approved for International Financial Services Centre status; if it is a condition of their licences that these companies must locate in the centre; the action, if any, he intends to take in this matter; if he intends to withdraw the licences of those who do not locate in the centre; the number of companies which have so far located there; the number of persons employed in such companies; and if he will make a statement on the matter.

Mr. B. Ahern

Some 230 projects have been approved for the International Financial Services Centre to date. These projects involve about 170 companies and 26 of these companies are currently located in the Custom House Docks area. A further 19 companies have entered into specific commitments to take up accommodation in the area and additional companies have made substantial progress towards agreement on relocation. These companies are among the most significant of the IFSC-approved companies both in terms of their size and office space requirements.

It is not possible for all approved companies to locate in the Custom House Docks area at present, as four of the five current buildings in the area are fully let, and the fifth is in process of being let. Because development of the site is still ongoing, many of the companies have had to enter into short leases for accommodation outside the area. In recognition of this position, a condition is included in the tax certificates issued to companies requiring them to locate in the area as soon as suitable space becomes available.

It is hoped to commence construction of a further building in the area shortly, much of which is already pre-let. I intend to maintain pressure on companies to honour the commitment in their tax certificates to relocate to the docks area in so far as it is possible for them to do at present. I am confident that this will result in the completion of the letting of the final block and in the completion of the pre-letting programme for the Harbour Master 3 building.

The projects approved for the International Financial Services Centre are committed to creating over 3,200 new jobs on a phased basis. About 1,300 jobs have already been filled, which is in accordance with the projects' agreed phasing programmes. Some 415 of these jobs arise in the 26 companies which have so far located in the centre.

Mr. Rabbitte

May I ask the Minister if he considers that sufficient progress has been made in this area since last August, when he estimated that of the 138 approved, only something like 21 had taken up location there? May I ask him if the special tax rate of 10 per cent applies even in circumstances where a company has refused to take up location there? In respect of the Minister's comment on job creation, may I ask him how many of net new jobs, as distinct from jobs transferred from the high street have been created? Finally, may I ask the Minister, having regard to the fact that the Germans are the main investors there, whether he has any view about the impact of devaluation on the future of the services centre?

Mr. B. Ahern

The Deputy is correct in that last year we had considerable difficulty trying to get companies to relocate to the area. It was unacceptably low, as I said in the House at that time. I have just outlined that there has been a considerable improvement in the situation since late 1992. We put considerable pressure on companies. I have personally written a number of times to about 60 of the bigger companies that we targeted who will have the benefit of the 10 per cent tax and who did not appear to be making much effort to move in. We had, at that stage, at least two of the buildings completely vacant and a good part of a third building. We have reversed that position totally in the last number of months. There is still some space in the last of the five buildings. There are 19 companies negotiating with the owners of those buildings at the moment. It looks as if they will all be filled. The new master plan for the area is to be launched in about a month, for the continuation of the development, Harbour Master 3. One block in that is to start during 1993. It has been delayed somewhat. It was meant to start at the beginning of 1993. That is almost totally pre-let because it was ridiculous to have companies who had no accommodation having to wait. The Dublin Docks Development Company and the developer have provided for leisure and residential facilities in the plan. I have no reason to believe that any of the German companies have any difficulties. It was not so much devaluation which caused them a problem but rather the double taxation agreements. Those difficultues have been sorted out since last autumn.

Mr. Rabbitte

Will the Minister respond to my question about net new jobs? May I ask the Minister if he does not think it anomalous that companies who did not locate in the centre and who are benefiting from the tax designation, especially if the situation is that companies who have been approved and for whom there is not room at the centre, are still benefiting from the special tax rate?

Mr. B. Ahern

The reason they are benefiting is that they are new jobs. I do not have a figure for how many may have moved in. The criteria used in the certificates is based on new jobs. I assume, by and large, they are new jobs. If there is any change in that, that agreement is made at the time they discuss the certificates. Sometimes what happens is that one company would manage a number of the certificates on behalf of individuals or the special investment products down there, and they are generally new jobs. I agree with the Deputy. What was happening initially was that a number of the companies came into the city, took up office accommodation and made no attempt to move into the area designated. Last autumn when I said we would have to move on the legislative powers we have to rescind those licences, which I will honour if they do not move in, has changed the position greatly.

Mr. Cox

Would the Minister comment on whether he believes there may be some relationship between the failure of companies to move into the centre and the very high price per square metre to find letting space within it? Would he comment on whether he believes it makes sense to have in such a centre a pricing policy for space which runs at about three times the average price available for office space in Dublin?

Mr. B. Ahern

Whatever about existing space that argument will not arise in relation to the new space. The original quoted figures have now been reduced several times. Perhaps the prices that we quoted last spring were not realistic. The market took care of that also. Those prices have been substantially reduced in individual agreements. For the new accommodation they have used a different pricing structure and have pre-let the sites even before the building commences. That is the sensible thing to do.