I move: "That the Bill be now read a Second Time."
I am pleased to introduce the Digital Hub Development Agency Bill 2002. The main purposes of the Bill are: to establish Digital Media Development Limited, DMDL, the body established by the Government to oversee the development of the digital hub, on a statutory basis as the Digital Hub Development Agency; to provide for the necessary corporate and governance structures for such a State body; and to define the functions and role of the agency in relation to the development of the digital hub.
These include: to procure, promote and facilitate the development of the digital hub as a location for digital enterprises and related activities; to promote and facilitate the development of the physical and communications infrastructures for the digital hub; formulating strategies to promote the digital hub; preparing a development plan for the hub and estimates of the costs of its implementation; consulting with local community interests as part of the implementation of the development plan; and negotiating agreements, including funding arrangements, with interested parties in order to progress the development of the project. In addition, I am using the Bill to make minor amendments to the Communications Regulation Act 2002.
Before discussing the Bill in detail, I will outline the rationale for the project, its location, progress to date and significant developments going forward. The digital hub is the area in the Liberties-Coombe around Thomas Street, which has been designated as a centre for digital content enterprises and related activities. Digital content refers to the creation of content which can be manipulated, stored and exchanged electronically. Content includes sound, pictures, text and video available in digital format and embraces sectors such as education, information, entertainment and consumer orientated content.
Digital content has emerged as a key growth area from the ICT revolution over the past ten years. ICT has provided significant benefits for this country, in that we have attracted all the big multinational players and have developed a successful indigenous software sector. We now need to build on these successes by moving our economy up the technological value chain. This involves enhancing research and development capacity and ensuring that we create a critical mass of knowledge enterprises. The Government has recognised that investment in R&D is the key to creating the right conditions to foster innovation and intellectual capital which will be the lifeblood of knowledge enterprises. This is why R&D has been allocated a total of €2.47 billion over the lifetime of the national development plan, with €698 million of this going to improve the capacity of research in the higher education sector.
The capacity to successfully develop knowledge economy enterprises is also underpinned by a robust regulatory environment and high grade telecommunications infrastructure. A number of actions have already been taken on both fronts. The enactment of the Electronic Commerce Act 2000, which gives legal validity to electronic signatures and documents, and the Communications Regulation Act 2002, which provided, inter alia, for the establishment of the Commission for Communications Regulation are important regulatory developments. On the infrastructure side, an indicative amount of €200 million has been provided for the development of broadband infrastructure in Ireland for the lifetime of the NDP. In addition, my Department has also been involved in trials of alternative technologies, including wireless LAN and satellite communications.
On the broader jobs front, there have been a number of high profile job losses in the technology sector in recent times and there is no doubt that we are not immune to the international downturn in this area. Arising from this, it is reasonable to ask if the Government is placing too much faith in technology to deliver high quality sustainable jobs going forward. I believe the sector has the capacity to deliver significant growth and, therefore, it is important that we now invest in research and infrastructure so we are well positioned to reap the benefits when the international outlook improves.
Turning to digital content itself, I will now focus on our digital content blueprint, which is set out in a recently published Forfás report. The scale of the opportunity to be grasped is clear from the growth projections outlined for the industry. This report estimates that the digital content industry which was worth $178 billion in 2001 is expected to be worth $434 billion by 2006. Building on our previous successes in the technology sector, a significant opportunity now exists to build critical scale in the digital content sector before the industry enters a high growth phase. Our relative size means that it is not possible for us to compete in all market segments. However, a number of sectors have been identified, such as e-learning, where we already have a significant reputation, games and digital libraries. In the development of any new industry Government support is vital and the report recognises that Government commitment to this sector has been visibly demonstrated by its support for the digital hub and Media Lab Europe.
The key to the growth of the industry is the widespread use of electronic access devices such as mobile phones, PDAs and PCs. Deputies will be aware of the high penetration rate of mobile phones in this country with ownership running at approximately 80%, although Internet penetration is not as high. Indications are that 34% of the population use the Internet at home. A significant factor impeding increased Internet usage is the associated phone costs. In order to stimulate increased use of the Internet, the Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, has issued a policy direction to the new Commission for Communications Regulation, requesting the commission to use its powers to bring about the provision of flat-rate Internet access by market players. The Minister has asked the commission to report to him on progress on this matter.
I will now turn to the project itself, elaborate on the background and outline progress to date. The collaborative agreement between the Government and the Massachusetts Institute of Technology establishing Media Lab Europe as a third level research faculty in technology, represented the first phase of the project. The Liberties-Coombe area was chosen as the location for the hub, mainly because MIT was anxious to locate the Media Lab Europe facility in a down-town location, with residential, cultural and entertainment facilities nearby, so that students and faculty members would live, work and socialise in the locality.
In order to leverage the maximum benefit from the location of the Media Lab in Dublin, it was decided to cluster a digital media village – the original name for the hub – around Media Lab Europe. In addition, it has been demonstrated often that one of the critical success factors in the creation of a new industry segment is the clustering of similar enterprises together so that ideas and knowledge can be easily exchanged.
The competitive advantage which arises from the clustering effect must also be enhanced by the provision of necessary support services, such as training, telecommunications and marketing, so that high-potential start-ups can make the transformation to viable long-term enterprises. The Guinness complex of buildings around Thomas Street represents an attractive setting for the type of ambience the project is aiming to create.
The institutional framework for the project was put in place in April 2000 when the Government approved the establishment of Digital Media Development Ltd. to develop a digital media village around MLE. A funding package of €81 million was approved in April 2001, with the bulk of the funding ear-marked for property purchase for both Media Lab Europe and the hub, while the remainder was allocated to cover operational expenses for the development company to the end of this year. In addition, it was decided that refurbishment of property would be funded by the private sector.
On the property front, a number of buildings have been purchased, mainly from Guinness, and it has been decided that private sector investment will be leveraged using a PPP model. DMDL has started this process and has invited expressions of interest from interested consortia. After a short-listing process, four consortia have been selected from which a preferred bidder will be chosen. It is envisaged that the PPP will deliver 500,000 sq. ft. of space which will be used for residential, retail, educational and community uses. The scale of the development means that it will be some time before the PPP process delivers space which can be used.
To facilitate those enterprises that are anxious to move into the area as soon as possible two initiatives are under way. The first, which aims to provide short-term space for companies in the first quarter of this year, involves the refit of a building fronting on to Thomas Street. Six companies have already moved into the building and more are expected in the next few weeks. A more ambitious project involves the refurbishment of the Printworks building as a joint venture between DMDL, Enterprise Ireland and Dublin City Council, for high potential indigenous digital content firms. This building will be ready by the summer. The Printworks building is a good example of the partnership approach which has existed from the inception of the project. A project such as this which has so many strands cannot be undertaken by a single entity and this has always been recognised by DMDL. Partnerships have been established with Enterprise Ireland and the IDA as a mix of local and international projects is critical to the success of the project.
Another key element is a high-grade telecommunications infrastructure. My Department has provided more than €2 million for a broadband ring in the hub. Using this funding, Dublin City Council has built the required infrastructure and will be in a position to offer open access to telecommunications companies in the first quarter of this year. This will facilitate the delivery of competitively priced broadband services to enterprises in the area.
Urban regeneration is another significant area and the key partner here is also Dublin City Council. The Liberties-Coombe area has an impressive heritage of industrial buildings and the utilisation of these for enterprise and residential space will help to give the hub a distinctive character and can be used as a marketing tool in the attraction of international digital media enterprises. We are not alone in seeing the potential of digital content to create high quality sustainable employment and there are a number of similar projects around the world. Therefore, harnessing the unique aspects of our project such as the attractive physical environment and our strong cultural heritage in music and literature is important.
Ensuring that the people who live in the locality are key stake holders in the project is vital and a number of fora have been established to allow their views to be heard and taken on board. In addition, a number of initiatives have already started with a learning remit. Continuing the partnership approach, a number of State bodies have leveraged private sector investment to fund ICT initiatives. For example, the Liberties learning initiative is an education and community-based programme being run as part of the hub. The focus of the project is on digital literacy and empowering local people to acquire the skills and know-how to avail of future employment opportunities in the area. Part of the project involves the provision of a learning space where digital literacy courses aimed at, among others, teachers and community leaders are offered. Also on the education front, local schools have already been offered opportunities to improve computer literacy.
Another interesting community-based project is a joint initiative involving educational providers, local community groups and the private sector, which aims to develop a community-based IT service in the inner city. A number of local authority housing complexes will be supplied with state-of-the-art computer equipment, support services and training. One of the complexes to be included in the scheme is the Bridgefoot Street housing complex which is within the hub. Ultimately, the targeting of educational and training resources at local people will create a pool of workers who will be in a position to avail of the highly skilled jobs to be located in the area.
I will now outline the main provisions of the Bill. The Bill is separated into four Parts. Part 1 contains standard provisions covering the Short Title, interpretations and the laying of orders and regulations before both Houses. Part 2 deals with the establishment of the Digital Hub Development Agency. Part 3 deals with transitional provisions arising out of the transformation of Digital Media Development Ltd. into the Digital Hub Development Agency, and Part 4 sets out certain minor amendments to the Communications Regulations Act, which was enacted on 27 April 2002.
Part 1 contains standard provisions in relation to the short title of the Bill, the interpretation of words and phrases used, procedures for laying orders and regulations before the Houses of the Oireachtas, the establishment day, and the usual provision for expenses.
In Part 2, section 7 sets out standard provisions relating to the establishment of a State body. The functions and role of the agency are set out in sections 8 to 10. The functions of the agency reflect the three main strands of the project, that is, enterprise, community learning and urban regeneration. Reflecting the key inter-dependencies, the Bill specifically provides for consultation with key State agencies and with the local community. Since the Bill was first published, the Minister has decided to strengthen the functions of the agency in so far as they relate to the role of the private sector in property refurbishment in order to reflect the importance of the PPP process. These provisions also set out the mechanisms through which the agency will interact with my Department in carrying out its functions.
Sections 11 and 12 allow the Minister to confer additional functions on the agency and to issue policy directions to it. Sections 13 and 14, reflecting the commercial remit of the agency, allow it to form subsidiaries, make investments and enter into joint ventures for the purposes of fulfilling any of its functions. However, any such arrangements may only be entered into with the consent of the Minister and the Minister for Finance. The agency may also, with the consent of the Minister, make charges for the provision by it of services.
Sections 15 to 18 set out provisions on the composition of the agency, its chairperson and procedural matters concerning its meetings and committees. These provisions follow recently enacted legislation establishing similar bodies. The appointment and terms of office of the chief executive, which include ex officio membership of the board for the duration of their appointment are detailed in section 19.
Staffing provisions are covered in sections 20 and 21. The agency is allowed to appoint staff and make schemes for superannuation. The requirement to draw up a code of conduct for staff is set out in section 23. Procedures to be followed in the event that a member of the agency, the chief executive or a member of staff becomes a member of either House of the Oireachtas or the European Parliament, are set out in section 22. Again, sections 20 to 23 are standard provisions and are in line with enacted legislation establishing similar bodies.
As is usual for State bodies, provisions on the declaration and disclosure of interests, and the disclosure of confidential information, by both members of the agency and members of staff, are dealt with in sections 24 to 27.
The conditions whereby the agency may accept gifts of money, property and so on, are set out in section 28. It also stipulates that the particulars of any gift accepted should be included in the annual report to the Minister. The Minister is empowered to make advances to the agency, with the consent of the Minister for Finance, to cover expenditure by the agency incurred in the performance of its functions in section 29.
During the passage of the Bill through the Seanad, the Minister brought forward an amendment to the Bill to allow the agency borrowing powers up to a limit of €l0 million. This function is set out in section 30. Arising from the power to borrow, the functions of the agency in section 8 were amended to reflect the fact that, in certain instances, it may be appropriate for the agency to borrow to undertake construction or maintenance works directly.
Section 31 deals with the accounts of the agency. Procedures for keeping accounts and providing financial information to the Minister are covered, as is the requirement that accounts of the agency be submitted for audit to the Comptroller and Auditor General. The Minister has provided in sections 32 and 33 for the accountability of the chief executive to the Committee of Public Accounts and other Oireachtas Committees. As is usual in legislation of this type, section 34 provides for the submission of an annual report to the Minister and establishes the format and procedures to be followed in the submission of this report.
Section 35 allows the agency to engage consultants and advisers as it considers necessary and provides that payment for such services would be met from the agency's budget. The seal of the agency is dealt with in section 36. This is a standard provision and is in line with current legislation for State bodies. Standard provisions which deal with indemnification of certain people carrying out their duties in pursuance of the agency's functions, and the immunity of the agency in respect of damages are contained in sections 37 and 38.
Turning to Part 3, the sections here are standard transitional provisions to transfer functions to a new body. Section 39 provides for the dissolution of DMDL. This is a necessary legal step in transforming it into the agency. Section 40 provides that any references in legislation will automatically be taken to refer to the agency on the enactment of this Bill. It is also necessary to provide for drawing up the final accounts of the company and section 44 sets out the legislative basis for this.
Transfer of the assets and liabilities of the former company is provided for in section 41. To reflect the fact that properties purchased in the hub were vested in the Commissioners of Public Works until the establishment of the agency, this section provides that the property acquired on behalf of DMDL, by the Office of Public Works, is transferred to the new agency on enactment of the legislation. Members will note, however, that the property purchased by Office of Public Works for Media Lab Europe will remain vested in Office of Public Works as MLE is a separate legal entity to DMDL. Sections 42 and 43 are also standard provisions dealing with the transfer of contracts and any legal proceedings from the company to the agency.
The purpose of Part 4 is to give effect to certain minor amendments to the Communications Regulation Act 2002, including the amendment of the long title of the Bill to reflect the amendments to the Communications Regulation Act. A number of the proposed amendments are of a technical nature relating to the drafting of the Act, while the remaining amendments relate to the transfer of certain minor functions from the Director of Telecommunications Regulation to the new Commission for Communications Regulation, which were inadvertently omitted from the original text. The Schedule to the Bill defines the geographical area of the digital hub, and so defines the area within which DMDL and, therefore, the agency has its remit.
A project of this type which represents significant State investment in a new industry is not without risk. The same could be said of other initiatives such as the IFSC and the indigenous software industry when they were in their infancy. The lesson to be learned from the success of these projects, it that it is important to have a clear well thought out development strategy in place and to implement the strategy in a coherent fashion. We have done this with progress on the Bill placing the development company on a statutory footing, a significant investment in property, the provision of telecoms infrastructure and the involvement from the start of the project of key stake holders.
I am confident the digital hub will become a world renowned centre for the digital content industry, thereby enhancing our innovation and intellectual capital capacity and, in time, will make an important contribution to the Government's knowledge economy strategy. I commend this Bill to the House.