John Bruton
Question:4 Mr. J. Bruton asked the Taoiseach if he will make a statement on the role of his Department in setting up Digital Media Development Limited; the members of the board; and its terms of reference. [19238/00]
Ceisteanna–Questions. - Digital Media Development Limited.
The Government announced its plans for MediaLab Europe and a multimedia village in Dublin last December, with the new institute at its heart. The digital media district will be developed as a creative centre for digital industries such as multimedia, Internet and electronic commerce content and applications.
Earlier this year the Government established a new body, Digital Media Development Limited, to manage the development of the digital media district and co-ordinate with MediaLab Europe on behalf of the Government. Because of the range of issues and Departments with an interest in this development, it was appropriate that my Department should play a co-ordinating role and oversee the start-up phase of this exciting development.
The following have been appointed as members of the board on an interim basis: Paddy Teahon, former Secretary General of my Department, Don Thornhill, chairman of the HEA, Dan Flinter, chief executive officer of Enterprise Ireland, John Fitzgerald, Dublin city manager, Paul McGuinness, Paul Kavanagh, Peter Cassells, Forfás and general secretary of the ICTU, and Jackie Harrison, enterprise director, IBEC. The board contains the necessary broad and dynamic mix of people with relevant backgrounds and will enable us to make rapid progress on these exciting, new and very forward-looking ventures.
Is it true that £200 million is to be invested in this by the State? If so, is it expected that dividends will be paid on that?
The State's investment in the initial stages is £31 million. However, those matters will have to be teased out by the board in negotiations. There have been two meetings so far, but it will be some time next year before the full financial commitment is decided. The board is in negotiations regarding an area in the public domain as a suitable property, but that has not been finalised. The board must also get a project team of full-time people to work on this. I hope not too much time is lost because the response through the IDA and Enterprise Ireland has been enormous. I hope the team to work on this and carry it forward can be organised. It will probably be necessary to involve a Department, IDA Ireland or Enterprise Ireland in this as it is that expertise which will be needed to drive it forward. I briefed a committee of the House on this some months ago in some detail and there are many companies, organisations and universities interested in it. If Opposition parties would like a briefing on this I will arrange it as it is very important to the country.
Can I take it then that The Irish Times was not accurate when it said in its report on 4 August 2000 that £200 million had been approved as an initial injection? Is it not the case that a comparatively low VAT rate is critical to the success of this venture and that the Irish VAT rate on electronic transactions is higher than that in most other countries? Is the VAT rate not a big problem for this enterprise?
That issue has been raised and other countries have a lower VAT rate, but there are other issues also. It is not just the Internet that is involved, though VAT applies to that and to the e-commerce element, but the multimedia area interrelates with leisure, modern communications, music, science and other sectors – there are approximately 200 different aspects to this which have been identified. Members may have read the report published this summer on the matter or they may have visited the exhibitions and they will have seen the range of people involved, such as the large number of Massachusetts Institute of Technology students working on projects.
Regarding the amount of money involved, it is either £21 million or £31 million – I will have to check in the Estimates, though I recall answering questions on that in the committee which dealt with the Estimates. There will be many private sector interests and State agencies involved. Resources will not be a problem here. The capacity to take on board the enormous range of people and companies that are interested will be the issue. There is interest from America and all over Europe and that is why I want to involve the IDA and Enterprise Ireland. I started this project with one person in the Department of the Taoiseach and it is not realistic to operate on that basis, as quite a large number of staff will be required – not from my Department, as they would not have the expertise, but IDA Ireland and Enterprise Ireland which are well suited to this.
My understanding is that the total commitment expected of the State, when this is finished, will be approximately £50 million. Will the Taoiseach indicate whether the State will have any claims on the intellectual property rights of any of the products that will arise from what is a broad-based think tank and innovative centre? I welcome this in principle, but if we are to invest taxpayers' money without equity – because it is not that kind of project – the only other way taxpayers' money is likely to be safeguarded is by having some percentage of the intellectual property rights of a commercially successful product. Will the Taoiseach confirm that it is the State's intention to make as a condition of any investment – if it has not done so already – part ownership of intellectual property rights by the State?
Those discussions have taken place and there is some provision for that in the original agreement, but as Deputy Quinn correctly pointed out, a dividend or share of the ownership is taken by the IDA or Enterprise Ireland when grant-aiding a start-up company and the same could apply.
Is the Taoiseach saying there will be equity?
It is not negotiated at this stage because the contracts are not finalised, but in the agreement with MediaLab of Massachusetts it is happy to operate on that basis.
The value is in the product.
It does not expect the State to put money into this for it all to be risked. The organisation had great success earlier this year with controlling sound – that is worth billions to the organisation. When developing a children's toy, two young graduates invented a system to control sound without microphones. This invention will be worth billions. The individuals in question informed me that they could not expect anyone to invest in their project unless there was an opportunity to profit from it. They are anxious to do that, presumably because they want the money to aid their research. I do not believe there will be any difficulties in that regard.
I do not know whether the Taoiseach has answered my question. Is the State negotiating a percentage of intellectual property rights in relation to any commercially successful invention that emerges from the laboratory in question?
Yes, but it is not included in the original agreement with MIT.
Why is this laboratory being located in Thomas Street in the centre of the city, an area with the highest possible traffic volume to which those who work there will presumably add? Would it not have been more sensible to locate it on the edge of the city in a custom built facility, where there is a contra-flow traffic system which would lead to fewer traffic difficulties?
As already stated, final negotiations have not taken place in respect of that matter. The current site is being used on a temporary basis because a large amount of space is available there. The space to which I refer can be readily transferred to the company for its use and agreement may be reached regarding its permanent use. The company concerned is prepared to negotiate very favourable arrangements to facilitate the commencement of operations. The site is also located close to a number of third level institutions. Primarily, however, it is being used because the space is readily available at cheap rates.
Given that Guinness, the company selling the site at a cheap price, has proceeded to wind down its operations and make people in Dundalk redundant, does the Taoiseach not agree that those people are justified in believing that their town should receive something in return?
I hoped the company had backed off on that decision. However, the company must commence operations at some location because developments in this area are proceeding at a rapid rate. There was little interest in this area up to a few months ago, but now we have a good opportunity to move ahead. What will be the final outcome is a question for another day. However, the space provided to allow it to develop this summer has been useful and cheap.