Dáil Éireann debate -
Wednesday, 15 Feb 1995

Vol. 449 No. 2

Written Answers. - Granting of Designated Status.

Trevor Sargent

Question:

61 Mr. Sargent asked the Minister for Enterprise and Employment the plans, if any, he has to grant designated status as an area of high unemployment to Balbriggan, County Dublin, in view of its tradition of industrial activity; and if he will make a statement on the matter. [1367/95]

Minister for Enterprise and Employment (Mr. R. Bruton)

The Industrial Development Act, 1986 provides for a range of industrial incentives including capital grants. The normal maximum level of capital grant provided for by the Act is 45 per cent. However, the Act also provides that in certain designated areas, the industrial development agencies may offer capital grants of up to 60 per cent. Industries located in the designated areas may also qualify for two thirds rates remission for ten years. The granting of such remission is at the discretion of the relevant local authority.

It is important to stress, however, that location in a designated area does not automatically provide that grants of the maximum 60 per cent level will apply, nor does it guarantee rates remission. In fact, the importance and impact of designation in industrial promotion has lessened considerably in recent years. In order to ensure value for money for the taxpayer, and to ensure that the maximum number of projects are supported from within a limited budget, the industrial development agencies are under constant pressure to maintain strict limits on the percentage levels of grant support for individual projects. As a result and in conjuction with overall budgetary pressures, the maximum rates of capital grants are seldom given.

It is widely accepted that the development of industry in Ireland involves much more than support for the acquisition of fixed assets. As a result, far greater attention is being paid to areas such as research and development, marketing, and skills development generally.Improved competencies in these areas are fundamental to the long term competitive advantage of our industry. In addition, the increasing use of employment grants generally and the growing importance of the services sector further reinforces the shift in focus away from capital grants.

I share the Deputy's concern about unemployment. The ultimate objective of industrial development policy is to create the conditions in which firms will grow and increase their employment. However, I do not believe that the level of unemployment which is unacceptably high throughout the country will be dealt with by increased capital grants, whether for particular parts of the country, or generally. That approach has signally failed in the past to tackle the more fundamental problems of competitiveness in areas such as management, technology, and equity funding — problems which are now being addressed by the industrial development agencies.

For these reasons, I do not feel designated area status would address the unemployment situation in Balbriggan and I have no plans to pursue it.