Continuing what I said before the cessation of business at 5.30 p.m., could I just be a little positive for a change in welcoming some of the points that the Minister has mentioned?
Free Ports Bill, 1985: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
On a point of order, could the Leas-Chathaoirleach advise me as to what is the rule of the House with regard to the locking of the doors after the bell stops ringing? Senator Lynch and myself presented ourselves just as the bell stopped ringing and we were locked out. We were about other parliamentary duties. We understood that when the bell stopped ringing a respectable period of time was allowed to elapse before the doors were closed. In fairness to Senator Lynch he was actually there before me.
I wish to confirm what Senator O'Leary has said. I would like to have registered my vote publicly against the motion. I just had my hand on the door as the bell stopped. I am not blaming anybody but the door was locked.
An Leas-Chathaoirleach
The only thing I can do is to bring the matter up at a meeting of the Committee on Procedure and Privileges.
Would you do that?
An Leas-Chathaoirleach
Certainly I will.
I understood that the position was that when the bell stopped ringing, a period of time was taken for any people that might be just outside the door to allow them in.
An Leas-Chathaoirleach
I thought there was a break. I got the impression here that there were no other Senators coming.
Will you bring it up at the Committee of Procedures and Privileges? I would be very happy to get a ruling on the matter. I am not being critical of any official.
The bell had stopped ringing. It resumed again and I stopped to talk to somebody for one minute. When I got to the door the lock was turned.
An Leas-Chathaoirleach
Senator Lynch, I would ask you to copy Senator O'Leary, and I will take it up with the Committee on Procedures and Privileges because it is fairly serious.
To return to the Bill, I would like to compliment the Minister on his few words before we discussed the Bill on the question of options, and the question of particular areas as regards a free zone. I am glad that he is at least recognising that within the Ringaskiddy, or for that matter the ports area of Cork, there is an opportunity to create a sub-area for a free zone. In other words, we should not be seen to be saying that just because we are recognising there may be a 30 acre site considered in the Ringaskiddy area, we should not consider an option of having a sub-area as a free zone within another area of the harbour. We have an upper harbour in Cork, that is the Tivoli area. We should consider the authority who are involved and the recommendations that were put before us by the Task Force Report who are asking that we should consider the idea of a sub-area within the Tivoli area. I do not think the Minister is being negative. He is being very helpful as regards this idea. We can create a compound area which can be sealed off and recognised as a free zone sub-area of the upper area, that would give the option of the free zone facility to people who are already using the port.
Section 12 enables the Minister to make regulations providing for the necessary customs, controls and procedures to apply to a free port. We had this before the break and I emphasised quite strongly that I do not think we are being free enough. Like other Senators who have already spoken I do not like the idea of getting so many people in so many Departments involved. The Minister agreed with the point that we do not want to take business that is already there from other ports. What we are trying to do is to create new business. In the procedures that are coming before us within the Bill, I do not think we are going to do that, unless we recognise that we must be seen to be more broadminded in our attitude to the Bill. I would ask the Departments and the Minister involved to note the amount of tonnage that is passing Ireland on its way to Europe from the United States or Japan. How do we create the opportunities to take some of that tonnage? As I mentioned before the break, even if we were to take 5 per cent of the tonnage from Rotterdam, 2 per cent from Hamburg and a certain percentage from other ports, the opportunities to the Ringaskiddy free zone would be enormous.
The regulations are not before us. The Bill only explains in detail what a free port means but at the same time the regulations must be very far reaching. They have to give opportunities to the people and the authority involved. The Minister spoke about the particular authority which I would be hoping would form the Cork Harbour Board. I know the Minister requested that if we had anybody in particular in mind, to mention them. I do not want to be seen to be pushing for one particular group or the other but there are people who are a long time involved in bondage clearance in the Cork area who, I hope, would be given the opportunity. I understand they have already made submissions to relevant Departments about getting involved. We have been speaking to these people on and off about the free port. They recognise the potential and the opportunities that are there for the Cork area and the country generally.
Over £100 million has been spent on the infrastructure. Not all the money came from Irish pockets. We got moneys from the EC because of the capital investment. From the other side of the city into the Ringaskiddy area we have water flowing at the rate of about 20 million gallons a day. We invested about £74 million in the Ringaskiddy area to provide the water for the facilities in that area. There is the idea of a tunnel being considered to come from one side of the water to the other. Perhaps we should have the tunnel or something else to carry us from one side of the water to the other. I am not saying that we should have done this but we should have done something. We invested so much and now come up with a Bill which does not reflect the total investment that has already gone into the Ringaskiddy or the Cork ports area. Cork has lost 10,000 to 12,000 jobs indirectly because of cuts in services being made in our dockyards, Fords, Dunlop and Irish Steel. We should not be giving the impression that the Bill is not going to create many jobs when, in actual fact, free port zones in other countries have created enormous potential. I have already mentioned Hamburg.
Suppose we get oil off our coasts and it is due to be brought in, the facilities that will be needed on the eastern side of this island to service these rigs can create a situation like that in Hamburg where there is one factory—Swarfega—a hand cleaning unit supplying the whole world from a free zone from a raw material of oil. I do not envisage anything as big as the plant in Hamburg. It is a quarter of a mile long and 300 yards wide.
Swarfega have a reasonable plant in Ireland.
The raw material in Hamburg supplies the whole world.
It is a trade name. I would suggest that it employs a lot of people in Ireland.
An Leas-Chathaoirleach
I do not think the Senators can have a discussion across the floor.
Swarfega is a trade name and they do employ a lot of people in Ireland.
The raw material which Swarfega is made from comes from an oil product. This is all I am interested in. If we have a situation off our coast which can provide more employment to the people of the country, I am all in favour of it. I am not saying that everything will happen in the Ringaskiddy area. We should give the initiative but the Bill is not doing this. The Bill is too narrow and negative and involves more than one Department. There is no reason why one Minister cannot have total control. The Minister involved has indicated by his brief, the opportunities that are there and those that can be created for other areas.
There are some sections which will need amendment. This is the first Free Port Bill that we are putting before the country. It is a golden opportunity for us as a people to say that we are prepared to broaden. We are not prepared to say that we must get everything coming into the country. If the Bill is going to provide something for us and give us more jobs, we are prepared to say "go ahead". I am not saying that we should give a totally free hand. This will not happen. We will have control. At the same time, let us not stifle an opportunity that we had not seen before.
I come to the initiatives that have been created in other countries, for instance, the question of exports from the mainland. If we have people setting up business or some type of industry within the free zone and getting the raw material from Ireland they should get the same benefits as we give to those who are exporting to other countries. The person who purchases the raw material should purchase at the export rate because a situation is being created that has not been there before. For instance, timber is going out of the country. We are selling food to other countries but I see no reason why we cannot set up a food processing industry in the free zone and give every benefit possible to the person who wants to process it.
Income tax exemption is mentioned here. Areas in other countries are giving that exemption. The people who are employed in the free zones should get income tax exemption. It does not mean that they will get more wages. It means that they do not pay tax in this country. The one thing that it does is to bring these people into work and we do not have to pay social welfare or dole. At the moment, we are spending £7 million a day on social welfare.
There are a few points I welcome in the Bill. The harbour board in Cork have brought about swift rationalisation in the docks. They have brought about a situation in which the tonnage in Cork has increased enormously over the last three or four years. I would like to congratulate them on it. At the same time, they have brought about a situation in which fewer people are working. I have to readily admit that in present circumstances we have to recognise that there is a question of rationalisation in the technology involved in loading and unloading. At the same time Cork is ready for the opportunity to avail of the Free Port Bill.
The people of Cork put much work into the Task Force Report and the recognition of the free zone. They should now get the opportunity of saying: "this is what we want to do about it". Under the Bill could the local authority schemes be implemented? I see no reason why the Minister could not enable the local harbour board and other people in the private sector to work together. We could have a broadminded attitude and have a local board running the free zone. There could be a ministerial representative on it. I am always in favour of that. I see no reason why they, like other semi-State bodies cannot conduct their own business. Why should they, at every hand's turn, be coming back to the Minister for a decision? If there is an area in Cork, the Minister will have his "hawks" representing him at local level.
What will a free port cost? The infrastructure is already provided. The amount of money that is being spent in that area means that it is going to cost much more to implement the full scheme, once the Bill is passed.
The most important part of the scheme is to sell the notion of a free port. We will not sell it with a Bill like this before us because it is too stringent. Straightaway if you go to market that, and bring people to a zoned area, such as Ringaskiddy, to see the conditions obtaining there, they will not be interested, not in comparison with other countries. Other countries give exemption of profits from income tax and corporation taxes. Are we prepared to consider that? The free zones origin profits of these entities, operating within the free zone are not subject to either income or corporation taxes and duties, nor will their accounts within the free zone be merged for tax or any other purposes with their accounts within the country.
There may be people who want to come in here and say, "We do not want any questions". I am certainly not totally right wing but I do see prevailing in our country now the urgency of providing jobs, the urgency of giving the impression to the people that we are prepared to broaden out to provide work. That is my top priority. Nothing else counts for me. I could not care less if I never get a penny from the people within the zoned area as long as I get people working and being paid a fair wage. We had an opportunity of achieving that. I really would like to give that opportunity and I do not see it within the Bill. We had not decided what VAT to charge, if there is any VAT charge. The Minister is not saying there will be a VAT charge, but he is not saying that there will not. For the Department of Finance to say there will be discussions between the Departments of Communications, Industry and Finance to set up a zone in the low harbour in Cork, or for that matter, in any other area, whether it be an airport or the other side of the country, is just not good enough in my view. We must be more broadminded and say we have to create the opportunities. I have mentioned the question of tonnage that is passing Ireland to go to other countries. For the first time ever we can take heavy tonnage ships that we were not able to take before. We have not really recognised the amount of tonnage that has gone to other European ports. Let me just give one example again. For the first time ever, next July or August there will be in the low harbour in Cork an opportunity for ships to the amount of nearly 70,000 tonnes to come into the low harbour to unload. Has the House any idea of the amount of work that is involved in that or of the opportunities provided by the free zone? We have to be seen to be selling.
There is no way that I will allow a Bill to go through this House, to be passed and then to be put on a shelf or given to some authority to do what they like at a nice easy pace for the next ten years. It is not on. There are opportunities and I will be pushing the people involved in the harbour board and other people involved in the marketing board of the local region in the Cork area to make sure that we market this right. This is an opportunity of opportunities. We are not to let it go.
For instance, consider the number of cars that come from Japan into our ports. There are ships coming in with about 600 or 700 cars at a time. Could we envisage ships coming in with 5,000 cars? Could we envisage ships coming in to re-export to other countries, to Britain, if we are good enough? If we are good enough as a people, we should be able to say we are quite prepared to store and we are quite prepared to trans-ship to other countries in Europe. Then the heavy tonnage ships that are coming into the low harbour with plenty of depth and with up to 70,000 tonnes, could turn around at a very fast pace. A 70,000 ton ship going into Rotterdam is delayed for probably two weeks or longer, passing the first island, Ireland, to get to Europe. She can pull into Ireland. She can unload and she can get back again. We can trans-ship with smaller ships from our island. We should be making no apologies to anybody for that because it is work. That is the main point. We should provide the facility and we are doing that. We have put over £110 million into this dock and it is now suggested that it will be a bird sanctuary. I will not allow it to be created into a bird sanctuary. The opportunities available, if the Bill is broadened, are golden but the marketing of it is important. Unfortunately, if you were looking for a local pass for a person aged over 65 years of age, Central Government has to hear about it. Slowly but surely all that should be changed. We are changing but not fast enough.
The proposed VAT reliefs are not provided for in the Bill. They will be the subject of separate regulations to be made by the Revenue Commissioners under the VAT Act. This is just an example. It is referred to in the Minister's statement. If we have not made up our minds as a Government and as a country to say that we have a free port facility, then we might as well forget it. I envisaged when I pushed this first, giving every opportunity possible to people coming into this zoned area to do what they like, when they like, as long as they are providing work, as long as they provide facilities that we did not have before. I do not want it to be seen as taking from other ports. There are opportunities. I cannot sufficiently emphasise the importance of broadmindedness. The Bill does not show that and I am annoyed. I am surprised that in the Lower House that was not emphasised. I am surprised that in the Lower House there were no amendments. This House is debating the Bill more fully and is much more cautious in regard to it because it provides an opportunity that was not available previously.
It is all very well to talk about the Community Market. I read in the Community Market:
In the case of customs duty the Bill provides that non-European Community goods imported into a free port will only become liable to customs duty if and when they are subsequently placed on the Community market — the effects of Section 10 of the Bill.
The Bill tells us that we must build regulations into the Bill because they are the regulations of the EC generally. That is all very fine in theory. Might I say in passing that Britain has created six free ports and there was certainly no mention of free ports in Britain before 1983. There could be clarification of that but I am almost certain that they were not thinking of the question of a free port before 1983. They did have free ports set up in early 1985. This free port was recommended as early as 1983 and it is now 1986, three years later. That is typical of the way we work in this country. We do not avail of opportunity or advantage. We are slow and naive. We do not work fast enough and Britain has now created, mainly on the west coast, free port facilities. There is one in Liverpool which I understand is doing quite well, and there is one in Belfast. The reason for that as anybody with commonsense will realise is that they see the opportunity of heavy tonnage coming from the west and going through the Irish Sea to get into Europe. That is what I am talking about. They see the advantages of it and they are trying to create the opportunity to avail of it, but we are before them, we are given a golden opportunity and we should make no apologies to the EC, and certainly not to Britain or to anybody else. Is Hamburg apologising to anybody? They are within the EC regulations. They had their free ports well before we went into the EC. Could you imagine going to the people of Hamburg now saying "You cannot do this and you cannot do that"? What answer would you get? We have a very high unemployment rate and we have an opportunity of taking advantage of something without injuring anybody else, the opportunity to have heavy tonnage coming into Ireland to unload and redistribute. That is what we should consider.
I have mentioned the question of servicing oil and gas rigs. A situation was created over the last three or four years where nothing was landed as regards oil rigs or the servicing of them because of VAT at point of entry. People who were working out of the mainland of Ireland were servicing oil rigs from ships coming direct from Aberdeen. The tonnage is enormous, but it was more profitable to have ships going to Aberdeen to load and unload and to come back to the oil rigs because of VAT at point of entry. The free port at Cork should eliminate that. Where people are now getting an opportunity of using very heavy tonnage in a free zone area in Cork, I do not want the Minister for Finance or the Minister for Communications or the Minister for Industry saying to them, "You cannot do this or you cannot do that". Imagine the volume of work that can be created in servicing and installing oil rigs off the east coast. If we did strike oil, imagine the benefits of a free zone area in Cork, where by people could operate here exempt from taxes and duties. I see opportunities for people who want to set up industry in Cork or other free zones. I welcome free zone. If industry is to be served within the free zone every opportunity and facility must be provided. I would even go so far as to say, as other people are saying, that the employers should be told they need not collect income tax from their employees. That is done indirectly in social employment schemes. A person gets so much but we create a situation where as little as possible is taken from him in order to encourage initiative. Every facility must be provided for people involved in a free zone.
On the question of free trade zones, let us get a comparison as against other areas which are not within the EC. At the investment stage there is exemption from taxes, duties and tolls; investors may bring into the free zones any inputs they require from foreign locations without being subject to taxes, duties or tolls. In a case where investors elect to obtain necessary inputs from a host country, they will be able to obtain such inputs at attractive prices due to the fact that such goods entering the free zone will be treated as exports from that relevant country. The opportunity to bring about the same situation here is provided by the Bill. The Bill does not provide the opportunities that are provided in other countries, where by raw material that is purchased in the country can be purchased at attractive prices due to the fact that such goods entering the free zone will be treated as exports from the country. Investors will also be able to benefit from any additional incentives that Ministers may deem to be appropriate. In other words, if these people are prepared to make a suggestion to the Minister and if he deems it appropriate, he is prepared to adopt it. That is not in our Bill.
I readily admit that because I am from the Cork area and motivated the Bill in 1983 I might be emotional about it. At the same time, I say there is an opportunity to create something that we do not have already. Cork has lost a great deal. Cork is always willing and was always willing to try to do better. It is doing that in steel; it is doing that in computerisation and high technology. Over the last three or four years Cork has lost many jobs. I admit that other areas have lost jobs. Consider the undermining of the work force in Cork. It is a good work force. There are work forces and there are good work forces but this is a work force that never knew what it was to be without a week's wages. I meet a lot of people whom I never thought to see walking around from Monday until the next Sunday.
I will continue on the line I was taking as regards the undermining of old industries in Cork and why I feel this Bill is very appropriate to Cork and to the region generally. People have said that they see it as having relevance, but not great relevance. I see it differently. I hope I am not wrong. If we are not seen in this House to give the motivation and incentive, other people will not be interested. The job loss in Cork is in the region of 10,000 to 12,000 with in the last three years. There are other areas that are at the same level of unemployment—20 to 22 per cent, but these are farming areas. Cork was a very heavy industrial area.
Consider what it is like to have a dockyard that four years ago employed about 1,400 people now lying completely idle. The wages of the 1,400 directly involved benefited 4,000 people. The engineering, electrical and other sectors providing services to the dockyard represented enormous financial benefit to the area. The transport sector has been lost. We did not rationalise fast enough or did not do the right thing at the right time. There was need for far more rationalisation.
That is why I am cautious and why I am so confident that because of what happened in Cork over the last few years people will not be slap-happy or half-committed or take a devil-may-care attitude towards this free zone. The opposite prevails at this time. In the public or private sector in the Cork region there is a commitment to work it in a proper constructive and rationalised way. Cork has learned as a work force and as a people the greatest lesson of all time. We lost a heavy industry in Fords that we thought we would never lose. Little did we think that we would see people coming into Cork spending £25½ million to eliminate 800 workers. It happened. I would have preferred that they would have rationalised down to 500 or 400 and spent £10 million on the other 400. Cost proportions, energy costs, maybe labour costs and indeed, management had to be questioned.
The proof is in the pudding. It is now a bird sanctuary. Next door there is a factory that was making up to 25,000 tyres a week and, indeed, what they were asked to make they made. The work force gave a commitment, up to 30,000 tyres a week, and still lost the plant. It is not nice. It is not easy. I certainly did not like the idea. Between the two of them over £33 million was spent to eliminate work forces. I would have preferred to have £20 million to £25 million put into productive lines and the rest spent on rationalisation of the work force.
Because of our cost proportions and energy charges there is no way that we could build a ship in competition with other countries. Whether it was worth it or not worth it is another question. It is a fact of life in the Cork area. We lost it. I do not care who is to blame. I do not want to see that happen again. In Irish Steel a workforce of 900 workers fell to 500. A few months ago it nearly closed because of £1.2 million. The Government came up with £1.2 million for a rationalisation programme. They spent £1.2 million in eliminating 115 workers, going from 615 to 500 workers. That is what they wanted to do, at a cost of £1.2 million on a rationalisation programme on a voluntary basis.
Unions and management had big arguments. Personal and, indeed, very abusive remarks were made of Ministers, Deputies and Senators, particularly by people in trade unions and by people in the workforce. That was in the October-November period. The workforce got something like £500,000 from the EC. On average they got £15,000 each — not a great amount of money. I would prefer to have them working. Within a very short period of eliminating 115 workers the same plant employed an extra 40 people in October-November. A commitment was given for another £24 million by central Government. The 115 workers went at a cost of £1.7 million between EC and Irish money. Not more than ten to 12 weeks after these people walked out the door another 40 were employed. I venture to say that while some were walking out others were coming in for interview. That is not good management.
How can anybody suggest that I should not question taxpayers' money being spent in the month of October for the elimination of 115 workers while early in January 40 extra workers are brought in? None of the 115 that went out came back. None of them was in any hurry back. How can management explain that to me? The reply that I got was that there was an extra order.
The last time we discussed the question of steel in this House was last April and the Minister, Deputy John Bruton, at the time got a commitment from the EC of an extra 0.2 per cent of extra tonnage for Irish Steel. I understand that that is the extra order. Is it to be suggested that nobody heard of Irish Steel before last November or October? I do not envisage this continuing. I do not believe that we should eliminate 115 at a cost of £1.7 million to bring in another 40. That is not my thinking. It is certainly not the impression that people should be given if we are to create a new situation within the free zone.
I welcome the Bill with deep reservations. I will be questioning sections and I would hope that within the next two days, in discussing the Bill, we will be less negative and more broadminded. If that impression is not given here it will not be given outside the House. A great deal is expected of this House and the other House. We are supposed to provide the initiative and the motivation. Let us cut out the dilly-dallying between one Department and another because it will not pay. We will be passed by.
May I say in passing, before I say what I have to say, that listening to Senator Cregan lament the restrictions European Community membership is imposing on us, I only wish he had joined with us in the days of 1973 when many of us felt that we were taking the wrong decision. I have good reason to suspect ever since that the greater part of the real benefits of EC membership could have accrued to us, as distinct from the passing benefit to agriculture which is rapidly being withdrawn, by staying out enabling us to follow different strategies. Perhaps I would not agree with him, but the freedom to follow different strategies would have been far greater.
I probably am fortunate, being Cork based, that I can say this without any immediate threat to my political future. I see no benefit in the whole idea of a free port. I see no benefit in the strategy. The idea of moving towards zones of lower and lower taxation, of lower and lower regulation, of lower and lower control is a step by us out of the community of the industrialised world and back into the community of the Third World, the Third World which is forced into positions of concession after concession to attract increasingly avaricious international investment which requires less and less taxation and less and less regulation. What will happen, for instance, in our free port if in ten or 20 years' time the equivalent of our current day Fords and Dunlops say they cannot afford to stay here anymore because some other country can do it cheaper? What regulations will then be asked to be removed?
The same as now.
We will have further regulations. We will have the environmental regulations being questioned because other countries are prepared to put up with dirty water. We will have safety regulations being questioned. There are people already writing learned articles in journals like Business and Finance on the questionable nature of safety, environmental and other regulations, the implication being that in other countries these regulations have produced greater growth and investment. I happen to believe that there is absolutely no conflict between high levels of industrial growth and high levels of environmental protection. There are many countries in Europe who have demonstrated it, but they have not done it by relying on taxation as an incentive to attract foreign investment.
What we need in this country has been prescribed. I am going to refer not to some sort of radical left wing document but to the Newsletter of the Confederation of Irish Industry for a strategy. We need a strategy for wealth creation and for wealth that is retained within this country. I have my own view about that strategy. My view would be that of a socialist relying on a central role for the State and the State to be a vehicle for innovation. I will leave that aside because I do not want to get involved in an ideological argy-bargy about this. I want to contrast what was recommended to us in the area of industrial development, because at the core of industrial development is our capacity to innovate, to identify and to develop new products which are relevant to the markets of the late 20th century. Our capacity for innovation will not be related to the number of free port areas we develop which attract in passing foreign enterprise because it happens to be temporarily more attractive to be here than elsewhere. It will rely on a number of other things. It will rely on our acceptance of the fact that by the standards of the Western world we have a particularly poor record in the area of innovation, even in the areas where we have some expertise.
I will quote from the Newsletter of the Confederation of Irish Industry. They say it is an accurate summary. If it is not, I am sure any inaccuracies contained in it will not be leaning in my ideological direction. We can reliably accept that it is not inaccurate in the sense of being too left wing a summary. It states:
In terms of innovative orientation Ireland is currently ranked in the bottom quartile of industrialised countries.
That is the core of our problem. The bedrock of the problem of industrial development in this country is the fact that we are poorly rated and are poor in the most fundamental of all areas, the area of innovation. What factors did the OECD identify as causing that? Firstly:
A lack of specific technological skills and of a general awareness of new technologies in Irish firms.
Nothing to do with levels of taxation, nothing to do with levels of incentives, nothing to do with deregulation, but a lack of a basic awareness of new technologies. It goes on, and this is not something most Irish industrialists like to hear:
The production of undifferentiated, low technology products sold at a low price, instead of products based on quality, new technology and exclusive design...
There is nothing in a strategy of low taxation, free ports etc. which will encourage companies to get involved in high technology and highly innovative industrial development.
Thirdly:
Exclusive orientation to relatively small, unsophisticated Irish and/or traditional British markets.
Fourthly:
The absence of larger progressive indigenous firms which would provide a strong technological and industrial background for smaller companies.
Fifthly:
Problems of communication and lack of acceptance of the need for technological change by management and workers.
Sixthly, and I quote it, whatever my own views, as it is part of the package of commentary:
Lack of opportunity for private individuals to make profit partly because of heavy personal and capital gains taxes, and therefore lack of development and venture capital, a general lack of understanding of innovation and entrepreneurship, of a strong innovative culture within firms and in Irish society generally.
That is not my prescription or analysis of why this country lacks the tradition of innovation and entrepreneurial innovation. It is the prescription of the Organisation of Economic Co-operation and Development. That seems to contain the strands of a strategy for real industrial development as distinct from a spurious industrial development based on attracting in that part of a passing world trade which our capacity to underprice other people will enable us to do.
I must say, speaking as a Cork resident, that I find the decision by the Government to reduce grant aid to the National Micro Electronics Application Centre far more threatening to the future of industrial development in this country because of the philosophy it reflects rather than any argument about the degree of freedom from taxation that will be available within the free port it is intended to set up in Cork. The fact that one of the major centres for innovation is having some of its funds withdrawn is a far more serious matter than whether or not we have sufficient freedom in an area like the free port in Ringaskiddy.
Why I object to this free port concept is because what has been done over a considerable number of years in Cork harbour is that the State — the community and the taxpayer — have assembled large areas of land, have invested heavily in the infrastructure and have developed a port facility. Now we propose to put that on the market effectively at minimum benefit to the State in order to entice in a limited number of jobs which will be arguably of low skill and low learning quality. The absence or presence of VAT and the absence or presence of a limited degree of customs charges on crude raw materials would not be a disincentive where you have high added value in the final product. We are effectively going to be doing the sort of thing Senator Cregan suggested, which is enticing in people like Japanese car manufacturers to offload cars from large vessels in Cork and then transhipped by smaller vessels to the European market. That, by definition, is low skill, low quality activity and not the strategy to develop an industrial infrastructure and industrial base. At the core of an industrial strategy is not the creation of jobs and the creation of work, but the creation of wealth.
The difference I identify between Left and Right is (a) about how you create wealth and (b) about who controls that wealth and what priorities are there for the use of the wealth that is so created. You cannot create wealth in a community if all of the corporate and industrial structures which are set up are to be exempted from all forms of taxation and are therefore going to be in a position to move freely into and out of the country with the only benefit being a limited number of jobs, in the sort of strategy that is envisaged in free port ideas of low skill jobs. I do not see it as a strategy for development.
I want to elaborate on what would be a strategy for development and identify how much the OECD's strategy for innovation, which is the core of development, is in contrast with the free port concept. I would say this, because it is part of the package. One of the fundamental things the OECD identifies is a considerable withdrawal of the State from the area of entreprenurial activity. I do not like that, but they do say it. Within a strategy of a mixed economy there are a number of other things they mention. They emphasise the need for supportive investment in brains rather than in fixed assets. I quote from the Confederation of Irish Industry Newsletter, volume 44, No. 7, December 1985. This quotation is at variance with one of the most loudly preached messages in Irish politics and Irish economics:
Modern development relies more and more on investment in ‘brains'. Price is no longer a dominant factor in international markets. Advanced firms in the high technology area invest in research and development, marketing, training and software as much as in buildings, equipment and machinery.
Ireland should, as a key element in its development strategy, move towards knowledge intensive industries while focussing on the factors most relevant to her needs and capabilities. The Irish innovation strategy should concentrate on: applying new technology; developing market intelligence; continually upgrading the labour force; enriching management capabilities and emphasising product and service quality improvement.
That is the sort of strategy that I would envisage to develop large scale, indigenous, high technology industries. I see no great role for free ports in that sort of a strategy. A free port is effectively a free port where there are concessions in areas of customs duty and VAT etc. and is an investment in equipment and in things, whereas the identified stragety I would support is an investment in brains. That means an investment in ideas and encouraging research and development, product modification, product improvement, marketing strategies, market research etc., all of which are effectively investment in brains. What we are doing in Cork harbour is taking one major area which could be a centre for innovation and high technology and effectively auctioning it off in a less than critical way to industries which will ultimately be selected more on the fact that they are prepared to use the facility than on what they would contribute towards a strategy for improving the quality of innovation and hence the quality of industrial production.
We have to get away from the idea that there is a fund of industrial investment out there in the big world that we can manage to attract in simply by competing at lower prices with other countries. We are not going to be able to do it in terms of labour costs and we are not going to be able to do it in terms of what other people can do in other indirect costs. The sort of country Senator Cregan was quoting had until recently the very useful additional attraction for investors that trade unions had very little in the area of rights. By and large, if you tried to organise a trade union, if you were lucky, you only ended up in jail. If you were unlucky, you disappeared and never surfaced again.
President Marcos was very much into the idea of enterprise and free zones. As well as having tax free environments, you also had trade union free environments, no nasty State safety regulations and very little in the area of regulation of working hours. We can move in either of two directions in our industrial development strategy. We can move towards high technology and innovation in a way identified not by me or by other unrepresentative persons of the Left but by the Organisation for Economic Co-operation and Development; or else we can begin, sadly, to move backwards and identify a Third World strategy based on low cost and low taxation. I do not believe that would work. I do not believe it has achieved industrialisation anywhere else in Western Europe and it is a step backwards.
The resources in Cork Harbour could be used in a far more creative and constructive way by developing a policy of innovation and encouraging small Irish firms to expand by sharing the risks with small Irish firms through a more creative role by the Irish banks and by various State agencies. In that way, encouraging small Irish firms to become large indigenous Irish firms by making the wealth thus created available within this country to stimulate further investment, further employment and to create real large scale modern Irish indigenous industries is what we need. I am not going to push this to a vote but I want to put on record that I see no future in free ports strategies and I would be opposed to it.
I welcome the opportunity at this late stage of the evening to comment briefly on this Bill. I was unaware that it was going to be reached tonight but I want to avail of the opportunity nonetheless to make a few general comments on its contents. I am stimulated in my thought patterns by the previous contribution from Senator Ryan, who touched the kernel of the whole issue. The kernel of the issue is not a question of maritime policy but rather a strategy for industrial promotion and development. This Bill is a product not of any careful analysis of maritime strategy or of a carefully outlined ports policy, but rather it is the product of a task force on unemployment which was a political response to a dire need from one section of the country. When that governmental task force camped itself in the southern capital and addressed itself to the real needs and difficulties that city was experiencing at that time, there is no doubt that they looked for some mechanism to respond to those needs.
One of the measures decided upon was to look at the idea of creating a free port. In its formulation I have difficulties with the way this Bill emerged. The concept of a free port is a good one. It has huge potential to develop and to make a very significant contribution to the industrial development of our country. But I am concerned at the way this Bill came about in response to a particular geographical need at a particular point in time instead of an overall strategy for the development of the ports of Ireland. I would rather that a very detailed critique had taken place on a merit basis of all the ports with possibilities and that the designation would be made on that basis. No doubt the Minister will respond that that can still take place, that this is enabling legislation and, if the need arises for further free ports to be designated in the years to come, that that can be addressed through the processes of this Bill.
I was sorry that careful analysis encompassing the geographical and natural resources of a particular area, the merits and demerits of an area and encompassing the much broader and greater industrial analysis put forward by Senator Brendan Ryan earlier had not taken place prior to this Bill's emergence. I want to address myself to the general strategy of industrial promotion that Senator Ryan commented on in his contribution. He talked in terms of the establishment of free ports which somehow parallelled a Third World type of industrial strategy whereby hugh multinationals, which were itinerant vehicles looking around the world for a place to set up some sort of semi-permanent roots subject to the vagaries of an alternative call, would be the core and substance of our economic and industrial strategy.
I agree that it will be totally impossible for us to set our face against the tremendous advances we have made as a people in protecting workers, in establishing workers' rights, legal safety requirements and environmental protection. I reject the notion that the high levels of industrial growth are not compatible with the very stringent and high standards for environmental protection and with the safety regulations for workers.
Much of the contribution Senator Ryan made centred on an alternative strategy, one of innovation, that Ireland should be innovative, geared into the new technologies, able to grab ideas, to nurture brains and to create jobs. That is a very valid strategy but it does not exclude the sort of concept that is encompassed in the establishment of free ports. They are certainly not exclusive. I totally support the idea of State initiative. We all have participated in recent times in the passage of a Bill to enable this to take place for the first time in a very constructive and organised way through the National Development Corporation Bill. In the medium and long term the NDC will be a vehicle for the sort of State development and the nurturing of innovation that Senator Ryan talked about.
This Bill will enable a parallel and equally valid type of industrial development to take place. We are a trading country. We depend on trade for our life blood. We are in a very healthy trading position at this point in time. We cannot close ourselves off from the developments that are happening in our trading partners. The whole idea of free ports has expanded across the world. It is not a new idea. Senators in previous contributions referred back to medieval examples of free ports. But the type of modern free port envisaged in this Bill, and which has begun to take form in other developed Western countries, is new. It is something worthy of consideration and merit. My fear is that the in-depth analysis of the real needs of this economy and of the industrial development of our country have not taken place in the formulation of this Bill.
I am concerned that the emphasis will be put upon Ringaskiddy because that area had at that time major industrial difficulties. The correct analysis had not taken place to look at the overall needs of the country. That was a mistake. I know that as far back as the middle of the last decade the European Community designated another port, Rosslare Harbour, as the development port for Ireland. Through political manoeuvrings and pressure that development has not taken place. I do not want to be too parochial in outlining one region because it is a factor that could apply to others. However, I will say in defence and in promotion of the port of Rosslare that it has, without any great supportive structures in recent years, emerged as one of the success stories in Irish maritime policy. It is a success story despite the State's reaction to it rather than because of it. It is a great cause of regret that when the South Eastern Region Developmental Organisation set about identifying ports in the south-east region which would possibly merit inclusion in any list of free ports in the country Rosslare did not get adequate consideration by An Foras Forbartha at the time due in no small measure to the attitude of the port authority, CIE.
The Minister would accept that there has been somewhat of a change in the port authority's attitude to development of the harbour in recent times, possibly because of the inclusion of a possible change of structure in a Government White Paper. Whatever the reason, we have seen a de facto change in attitude by the management of that harbour. We have seen concrete development. They have produced a £5 million plan which will provide the passengers who are already picking the port by choice, despite the inadequate facilities, and provide the shipping companies who are already picking the port by choice, despite the inadequate facilities, the facilities to match the demand that is there. The position in other areas in the country is that fabulous facilities are being provided in advance of demand to attract demand. The story of Rosslare has been that the demand is there for a number of reasons — the location, the efficiency of the workforce, and the communication links that are provided. Rosslare, on its own merits, deserves careful consideration for inclusion among the free ports. New Ross is another harbour that the Foras Forbartha report designated would be worthy of consideration.
The type of in-depth analysis that is required in advance of the launching of this type of development has not taken place. It is quite clear that, to many people, a free port is just a concept and something positive. "We must have one. let us scream and shout about it." Anyone who has looked at the idea of a free port will recognise that it will be a useless concept unless it is capable of attracting business through either its own natural advantages or through the structures that are put into it. It must be in a position to attract business from other competing areas and develop and nurture business that would not be in this country at all.
It is appropriate for me to outline and underline the real potential of Rosslare Harbour as a free port. Because of its geographical location, it is already the choice of port users. It is a success story, despite the impediments put upon it by the port authority and the State agencies responsible. It is appropriate for me to outline the economic situation in the county of Wexford at large. Unfortunately, it gives me no great comfort to have to state in this House again that, in the Wexford district, which includes the Rosslare Harbour region, the unemployment rate is now 25 per cent. In real terms there are only two counties with a higher unemployment rate than my own, and both of those have peculiar characteristics which, in effect, mean that the Wexford situation is unique as a black spot. That in itself would merit the detailed consideration that the task force on unemployment gave to Cork. Wexford would deserve the same sort of sympathetic and real consideration.
I do not ask for favours in that regard. I have no doubt in the world that the merits of Rosslare Harbour will stand up in economic, geographical and performance terms historically. It does not need anybody to paint a rosy picture of its potential. Its record and performance to date have proven that again and again. What I ask for is simply a reasonable, balanced consideration to be given to it as well as to other areas. I hope that that will not be taken by my Cork colleagues as a sort of begrudging mentality. The development of our country is contingent on the proper utilisation of all its natural resources. It is in everybody's interest that a natural asset, like Rosslare Harbour, would be used to its best possible advantage for the benefit of the country. Rosslare Harbour applied, as long ago as 1981, for consideration. A comprehensive development plan was laid before the Government at that time by the Rosslare Harbour Development Association, who commissioned a very comprehensive report and paid for it from their own resources. It was paid for by interested bodies, individuals and business people in the area. They put forward a very comprehensive and worthwhile plan.
I believe that the idea of a free port is a tremendously positive one. The potential has not been spelled out in the Bill before us but will emerge in the years to come. I would hope that our attitude to industrial development and to the exploitation of our natural resources, be it ports or anything else, would not be contingent on the immediate emergence of a disaster situation. There should be a proper analysis of the best development of the infrastructures of our country.
Senator Cregan in his earlier contribution talked about the benefits of oil and the possibility of utilising a free port structure based on Cork for the servicing of offshore rigs and, ultimately, for the exploitation and bringing ashore of the raw material. It remains to be seen, of course, where the actual resources are to be found. Hopefully, they will be in abundance all along our south coast. There is great potential there for an ordered State-controlled investment in a free port area.
I welcome the Bill. I hope that the concepts envisaged in it will bear fruit for the benefit of the State as a whole. I am cautious that it would be seen by some as a stop rather than a serious important element in the industrial strategy to tackle the problem of mass unemployment. If it is a genuine part of a thoughtout, concerted State strategy, that will have many arms encompassing the ideas of innovation, which Senator Ryan mentioned, then this concept will be a welcome one and will bear fruit for us all. It is something, I hope, we will see expanding to other areas of the country.
Píosa an-ghairid atá le rá agam anois. Ar an dtaobh seo den Tí cuirimid fáilte roimh An mBille Saorphort, 1985, cé go bhfuil cúpla athruithe ag teastáil uainn. Tá súil agam go bhfuilimid ag dul sa treo ceart leis an chéim seo agus b'fhéidir go n-éireoidh linn obair a fháil do dhaoine. Ceapaim gur tosach maith é agus mar a deir an seanfhocal, "Tosach maith leath na hoibre".
My contribution will be very brief. We give this Bill a guarded welcome. It is understandable that Senator Cregan, who comes from an area which will benefit directly as a result of this Bill, has reservations about it.
During the course of the debate in both Houses we heard details of the history of free ports. Apparently they extend much longer into the past than I have realised. Of course, the very successful ones were dealt with in some detail, ports such as Miami and others. We had the experience of Shannon in our own country since 1947. Unfortunately, it appears that we do not have the same scope now for success as we had in those earlier years. To some degree it is an imitation of developments in the UK. This Bill was activated and the attempts to have a free port brought here were activated at the same time as there was some demand over in England. We have an enlarged Community. There are 12 countries and there are no tarriffs or customs barriers.
I agree that Cork seems to have suffered more than any other part of this country. We heard of Ford, Dunlop and the Verolme Dockyard closing. There are other areas which would be very anxious to get the same opportunity. Senator Howlin made an appeal for Rosslare. I am sure it is very deserving. I hope, if this is a success, that before long all these other areas will be given an opportunity as well.
It is an enabling measure. The Minister has told us that he does not deal with any specific location. The initial attempt will be made in Ringaskiddy. The origins of the Bill go back to the deliberations of the task force and recommendations which were made in 1984. Despite the fact that some people have been critical of the delay in bringing the Bill before the House, it seems to me that, with that background and the time required for researching this concept, we should not be too critical of the time involved.
The Government are attempting to provide legislation which will generate additional economic activity. This is most important because additional activity is necessary. This is primarily the reason why we welcome the Bill. If it does not do that, the whole operation is a failure.
The Minister also mentioned that there were a number of mechanisms already in existence through which firms can suspend payments of customs duties. He is proceeding with this enabling measure now while the arrangements as regards the development and management of the Ringaskiddy Free Port are being investigated. This is something with which we would agree, because, as well as giving them an opportunity to investigate and explore the possibilities in this area, it is also lending that impetus to the investigations.
The Minister mentioned the facility which is available in the form of a new deep-water berth in Ringaskiddy. It has cost the State about £10 million in grants. When the berth is completed next year it will accommodate vessels of up to 60,000 tonnes dead weight. It will be the biggest berth of this kind in the State.
There are other areas I would like to go into, but at this late hour I do not think it is necessary. One point which was mentioned in the other House regarding the geographical location was the importance of the transport and communication facilities which are available. Communications by way of telephone, road, rail and air are important. There has been a big growth in free port traffic in recent years. It is estimated that 20 per cent of the world trade takes place through free ports. Of course, we have to distinguish between this facility in the less developed countries. We cannot expect the same success here. I simply rose to welcome this measure in so far as it is an attempt to deal with many of our problems. I am sure there will be difficulties in many areas. With regard to the claims of other locations I feel sure these will be taken into account if this is a success in Ringaskiddy. For that reason every effort should be made to ensure that this operation would be a total success and in so far as it attempts to deal with the problems that I have mentioned, I welcome it.
I welcome this Bill to the House. It is a very futuristic Bill. I wish the Minister success in its implementation. At the same time I hope that he will not rely over-heavily on the existing State and semi-State organisations for the establishment and development of free ports. Many countries, both in the Community and, indeed, in the states associated with the European Community, have developed free ports over a considerable number of years. I presume that the Minister, or some of his senior officials, have visited and looked with keen interest at the developments and the practices that have evolved in those varying countries. It is significant. I hope that the Minister is in a position to take the better ideas and adapt them to suit the particular situation in our country.
I would like the Minister to deal with his present policy on the actual free ports themselves. Are we talking about the upgrading or the special legislation for one free port, namely, Ringaskiddy? I would hope not. The development in the port of Cork has been significant. It is unfortunate that just as it was ready, there were some problems with ferries and perhaps a loss of a certain amount of business to that marvellous infrastructure. On the free port, the Minister has not spelt it out sufficiently in his Second Reading speech here. I was rather taken aback by that. I would like to know what the Irish free ports are going to be. Is it going to be a sort of a maritime addition of the Shannon Free Airport? The SFADCo, which evolved from Shannon has, in its own sphere, been eminently successful. I suppose there are many things to be taken from that. This is 1986, and the State has a considerable amount of experience going back to 1948 or 1949 in the administration of incentives for industrial development and incentives for the development of facilities such as were afforded in the Shannon Free Airport area. Those incentives, by and large, cost the Irish taxpayer a considerable amount of money. I hope, being a great optimist, that all of that money was very well spent. I would like the Government to indicate their policy on the spending of such money and to show how much of it is risk capital and what percentage of a chance we should take.
I have come to the conclusion over the last few years that there should be a greater percentage of chance or risk capital offered by the Small Industry Section of the IDA to small firms, such as family enterprises who start up to pursue some sort of a craft industry or small family-based industry. When we come to the free ports, I wonder is the Minister thinking — and we must remember that there are three Ministers involved in this legislation or at least in the envisaged administration of it — of very small enterprises within the free port complex? The one thing that annoys me a little, having regard to the tremendous rip-offs in the last 25 years in this House that I have witnessed in the State and semi-State companies, is that the penalties in section 6 for contravening the regulations are £500 and then £1,000. Sections 9, 10 and 12 all mention fines of £500. Is the Minister providing for huckster shops solely? He is proposing in a free port, a free tax area, a prohibitive fine and a deterrent of £500. An ordinary farmer driving down the road with a car valued at £500, £1,000, or even a new one with red diesel in it would incur a fine on the first offence of £1,000; on the second offence, the car, whether it is valuable or not, is confiscated. Here we are going into a free port which will certainly attract a percentage of chancers and fly-by-nights. We must accept that. There is not a perfect society here and I see no sign of one emerging either. We are in an era of rip-offs.
I was looking at the programme "Today Tonight" on the mining situation. The amounts of allocations alleged from the State agencies was in six or eight figures. Perhaps you cannot believe everything you read in the papers or see on the television. Is the Minister really serious when he is proposing £500 penalties for breaches of the regulations in a free port, tax-free, duty-free area? Unless they are going to have, or envisage, very small enterprises, indeed, I would have thought there would have been greater horizons. My conception of a free port is that we are going to provide the facilities for multi-national organisations to establish in designated free port areas, with heavy infrastructural development. The by-product for the taxpayer in Ireland would be that we would have greater opportunities for industrial work which we would not otherwise be able to provide in this country. Any legislation that the Government introduce that encourages or provides more employment has to be welcomed. We have the opportunity now in 1986 of seeing the way the free ports have operated in a dozen countries, with which I am sure the Government and the Minister are familiar and which could be compared to the situation here.
I would see the development of the free ports in two or three stages. The first stage would be the investment stage. I notice that in section 4 of the Bill provision is being made for more than manufacturing enterprises, and I quote:
The Minister may after consultation with the Minister for Finance and the Minister for Industry and Commerce grant or refuse to grant to any person a licence authorising the carrying on within a free port of any trade, business or manufacture.
From that I take it that in the free port we are going to have more than manufacturing businesses. I would envisage, perhaps, some of the international big banks moving in. How restricted will they be? Will they supply a service? Taking the interest rates in continental Europe, you will see that in Luxembourg, where there are perhaps 120 international banks you can borrow at 3 or 4 per cent. If some of those big banks establish in the free port is that kind of business envisaged there? Will it be entirely to service the new industries and the new enterprises there, or will we be able to visit it as if we were going to another jurisdiction and, perhaps, be able to get an attractive deal there as well? For instance, does the Minister intend to grant a licence to international insurance companies to establish and open for business? That is just two of the non-manufacturing areas. Nevertheless, there is a facility in the Bill but the Minister has not given us an idea of what kind of employment he envisages in the new free ports. I think that is a pity. This is an opportunity for us to pick the brains of those managing successfully the free ports across Europe. I suppose some of the enterprises have not been as successful as others but if we are going to have a marshalling yard for people to get around international regulations by importing and exporting just to save tax, then I do not think it is worth the effort or the bother. People will use it just as a port or flag of convenience to save themselves from, perhaps, some other national taxation.
I take it that there will be exemptions from taxes, duties and tolls. If so, in what way does the Minister envisage raising the finance to keep this development afloat? In some of the free ports in Europe there are exemptions from export formalities. Yet in one of the sections here I notice that the customs people will not only be active within the free port but will be operating any place within 32 kilometres of the actual gates of the free port. Once the place is established I presume there will be exemptions from taxes and duties and tolls as well.
I would also like to ask the Minister will there be income tax exemption for some or all of the workers who may be living within the boundaries of the free port. If we are to go by the tax holidays that were extended in the Shannon Free Airport Development Act in the Fifties, where the companies got a 20-year tax holiday from corporation profit tax, is it the Minister's intention to have that kind of an incentive for foreign manufacturers to come and get established here so that we will have the benefit of job creation? I would expect that there would be an exemption from corporation tax on profits. If so, how does the Minister get around the fair competition restrictions that we come across in the Treaty of Rome? It would be an attractive incentive if, coupled into all those exemptions, the Minister was to write in a benefit for people once they were established to win new incentives that might be introduced at a later stage in the envolvement of the free port.
Will the non-manufacturing enterprises, that is, just the business and commercial enterprises, benefit from tax concessions? Will they also be exempt from Irish company law? Will things like bank licences be issued in a special fashion? What will the situation be on customs exemptions? Will there be special provisions for goods exported from the duty-free port out of the jurisdiction? Will they be different from the conditions relating to goods which are imported into the country from the free port as well?
I think this is an opportunity to look at the progress that successive Governments have made through CCT, the IDA and through SFADCo and through those agencies that have worked so hard and so successfully over the last quarter of a century. I would hope, with the introduction of the new free port legislation, that we could perhaps try out some forward labour incentives. Could we not tie in with the tax honeymoon, perhaps, a ten-year strike-free period? Could we not possibly introduce an order to ensure index-linked wages for the workers? Could we not have special regulations regarding social security? It would be a pity if this new incentive was only aimed at the balance of payments and that there would not be specific provisions within it for the ordinary people who are expected to work there as well.
I would hope in policy and planning that not only would significant structures be provided but that regional planning and administration would be invoked as well. In conclusion, could I ask the Minister if his Department would consider the establishment of a fund to set up this new concept of industrial development? Would he think of objectives to establish and help finance the foundation and the continued development of the free port? The special authority should be able to hold on to all the work. They will be responsible not only for the establishment of the infrastructures but for maintenance and repair. I also think they should have complete control over the training of workers and the special incentives to encourage new entrants and projects into the complex. I would look forward also to a section within that authority that would ensure the modernisation and research needed for proper continuity, complete co-ordination within the proposed authority, branches of AnCO and the various other semi-State organisations.
I welcome the free port legislation. I look forward to the Minister being able to reply to some of the points I have raised, as the Bill is one that I should like to see amended. It is a pity that, even in this era of politicians being constantly reminded of junkets and what have you, the Members should have been encouraged to look at some of the existing free ports not too far away to see exactly the kind of development we want here and to pick the best of what is available. At least the Minister should have said that his officials have looked at a number of free ports. We should not just be spending money.
An Leas-Chathaoirleach
Would the Leader of the House, Senator Ferris indicate what it is proposed to do now as it is 10 o'clock.
There is one further brief contribution before the Minister winds up the Second Stage Debate. If the House agrees we will go on for a few minutes.
Agreed.
First of all, I should like to congratulate the Minister on bringing forward this Bill, and also to congratulate the special task force that was set up in Cork to bring about this very important legislation. I have no reason to begrudge the people of Cork the establishment of a free port at Ringaskiddy; nevertheless, there are many other suitable locations in the country that could claim as well to be considered for these very special concessions and advantages.
I would like to refer to my own area along the Shannon Estuary from Tarbert to Ballylongford. I know the case will be made that there is already a free airport in Shannon. The advantages of the Shannon Estuary for deepwater port locations have been very well documented over the years and I would like to refer to the 1983 Foras Forbartha report which decided on certain locations along the Shannon Estuary that had prime advantages for the location of industry in the future, especially heavy industry. In this report the area from Tarbert to Ballylongford was singled out as being one of the prime locations for future deep port development. For that reason I feel that I am justified in bringing this argument before the Minister here tonight. I have said this on numerous occasions, whether it is because I am new to politics or not, that we along the Shannon Estuary have lost out over the years because of lack of real political clout and because of political commitment and leadership. The fact that Ringaskiddy has been singled out bears testimony to the fact that local political leadership can be a major contributory factor in deciding on locations for special consideration. That is the reason why an area such as the Shannon Estuary with its considerable natural advantages has been neglected and will continue to be neglected in the future unless there are some initiatives taken in the very near future. I would like to welcome the proposed setting up of the estuarial authority. It will have to be announced and formulated in the very near future. Such an authority could be very supportive in having the area referred to designated as a free port area and it could promote the area abroad especially in Europe and America. The Shannon Estuary has been associated with the Clyde in Scotland and Rotterdam as being one of the finest natural harbours and estuaries in Europe. There is definitely no argument to discount this.
I would like to ask the Minister to take this into consideration when replying. The infrastructure that existed in the Cork area especially in Ringaskiddy had already existed and will help in the success of Ringaskiddy as a free port. Nevertheless if the location referred to has any hope in the future of becoming a free port or indeed enjoying the advantages that it should there should be some move regarding the development of the area, especially in relation to the infrastructure. For example, at the moment the amount of clean water that is available is restricted and the Department of the Environment have plans for a major dam works in North Kerry on the Smearlagh river and I would like this to be given prime consideration because if the area is to develop it will need this type of supply of water, and besides there has been a suggestion that the gas pipeline would be extended to this region. There are very many justifiable arguments to support this as well.
I would like to repeat the great natural advantages that this area has besides its very suitable terrain and the fact that we have a major unemployment problem in North Kerry. We have one of the greatest rates of emigration at present to both America and England. The area cannot continue to be neglected and ignored by successive Governments. When one considers that Alcan decided on its location in Aughinish Island and the ESB decided on the location at Moneypoint for the coal burning station then I feel that the area along the Shannon, which already has an ESB station, from Tarbert to Ballylongford cannot be ignored for future industrial expansion, and again I would like the Minister to consider what I have said.
First of all, may I thank the Senators for the contributions and indeed the general welcome given to this Bill with possibly one exception. One Senator had severe reservations, to put it mildly. As I said earlier, this is enabling legislation and once it has gone through this House and gone on to the Statute Book, it is possible to set up free ports at a sea port or inland or wherever. Senator Howlin has been talking about Rosslare and Senator Deenihan spoke about his area and the great natural advantages along the entry to the Shannon Estuary. Once it is on the Statute Book it will be up to any area to put forward the merits of its particular location.
As far as Ringaskiddy is concerned, this free port idea emerged from the work of the Cork task force. I understand that one of the motivating people in putting forward the idea at the initial stages was a Senator who made his contribution this evening. The word "Ringaskiddy" is not mentioned in the Bill. There should be no jealousy from any other part of the country. The potential is there and we are starting with Ringaskiddy. It is wise and prudent to wait and see what happens in Ringaskiddy because some Senators mentioned that, as far as the United Kingdom experience is concerned, it has not been all that exciting. There has been no great success. With the possible exceptions of Liverpool and Southampton, the others have had moderate success, if any success at all. We can learn from Ringaskiddy and then proceed slowly to other areas if it is thought advisable. This is taking a positive step. It is a new initiative and one of considerable potential.
I want to assure the Senators that there is no intention of being negative. The point was made throughout the debate that perhaps we were being too circumspect in what we were doing, but why should we be on this? We will be as liberal as we possibly can. It is up to the ingenuity, imagination and enterprise of the various operators to get action on the ground.
Senator Cregan said we must be broadminded about it. Certainly I will do that. The important thing to remember is that we have to conform to the EC ground rules that exist. These rules are very clear, very tight, very specific and leave little area for fudging and discretion. They are laid down in an extremely tight form and we have to conform to them. We have a customs area in the entire EC and these are regulations for particular specific developments withing that. We heard from Senator Killilea about the situation in North Cyprus and from Senator Cregan about the operations in Turkey, where there is a far more liberal regime and far greater enticements and inducements to operate in a free port zone than we are offering in this Bill.
Senator Cregan pointed out that people working within the free port area paid no income tax at all and that this was in the brochure. The only people who enjoy that advantage in Ireland are creative artists, and rightly so. There is no question of similar facilities being provided here because we have to operate absolutely and totally within the EC regulations. Just as we operate in the agricultural area, in the industrial area, in the financial area, we have to conform to the rules and there is no way of breaking them. Naturally, we have to exercise our enterprise and ingenuity to see how far we can go within the rules. But, once the rules are there, we have to conform to them; but we will be broadminded and say we will be liberal. I am sure that when the Cork people produce their brochure there will be plenty of allure and attraction from the financial point of view and all other attractions to come to Cork and perhaps the one from Turkey, although it is produced nicely, may fade into insignificance when the imagination of the Cork people gets going.
We have been accused of vesting too much power in the Minister and also associated with this are the Minister for Communications, the Minister for Finance and the Minister for Industry and Commerce. In view of the implications for the Exchequer we must have the involvement of all those Ministers. Once the licences are issued and the people are there in situ, then it is up to the operator, whether it is a person or a corporate body of some sort. In that respect there should not be this great fear that this Bill does not give the local input. For instance, if the Cork Harbour Commissioners are the people who turn out to be successful for Ringaskiddy and if they, in turn, bring in other people, as they are seeking to do, then you will have a corporate body who will in most cases have a very big if not total local interest involved. I do not think there is any great fear on that issue. I would like to re-assure the Senators on that.
It is necessary to have control by the Minister for Communications in consultation with the other Ministers because what we want to do in this area above all else is to generate extra new economic activity. There is no use in Ringaskiddy in Cork attracting something down from the west or attracting something from Rosslare and so on by simply having better facilities there. The Minister in giving the licences must have the regulatory power in that respect. What we want is new generated activity, not a substitution for something that is already happening somewhere else. While increasing the wealth or the growth of job creation in one area you are impoverishing another area, which nobody wants and neither does Ringaskiddy. Regulatory control is needed and once it is in operation the real activities will belong the the operator. From the way in which it is shaping up in Cork it looks as if some Cork body will be very involved, although the Minister said he is willing to look at the submissions that come from anyone. Any person who feels they should belong should be making submissions to the Minister.
The Cork Harbour Commissioners are seeking local partners. This is not to suggest that other proposals should not be made or be considered by the Minister. The chances that a person or persons designated under this section will have a significant local involvement are very great. Senator Ryan said that we should be in the business of the high-tech area, but of course we are in that business. There is nothing exclusive about it. That does not mean we are abrogating our ideas to go into the high-tech business by the fact that we are introducing a free port area and neither does it mean that we cannot continue precisely as we are. We have plenty of space for all of these activities. If there are any other good industries in the high-tech area that come to Cork we are not stopping them by this in any way. In fact the ancillary activities may greatly encourage them or encourage them to set up in the free port area.
Senator Howlin talked about the lack of overall strategy, that this was enabling legislation and that it should not be derived from the start of the task force in Cork but that it should have been researched and worked on well. As Senator Fitzsimons said, tosach maith, leath na hoibre. At least, this is a beginning. We could have waited until we had everything on the ground perfectly in shape; but I am a great believer in getting it there and subsequently improving on it, if we can improve on it. My experience in the relatively short period in which I have been Minister of State is that, unless one decides on action and presses for action all the time, one's great ideas will simply float around with no practical result on the ground. It was very wise in this case to make a start. If we make mistakes in Ringaskiddy then perhaps other parts of the country will benefit from it if they subsequently go into the free port area. Rosslare have put forward their claim, as has Greenore in the other House, and a number of other areas. It has also been suggested that the Connacht Regional Airport could be a suitable area for a free port zone.
Senator MacDonald mentioned fines, but these are fines on top of any other fine, plus forfeiture of goods, which can be a very important aspect as far as penalties are concerned. I remember, from my early reporting days along the Border, when smuggling was at its height along the Louth-Armagh and Louth-Down borders, forfeiture of the goods was by far the greatest penalty that could be encountered by the people involved.
Many of the points Senator McDonald raised could best be answered on Committee Stage. It is very much up to the operators themselves to generate activities. There will always be the usual facilities available to the people taking part in the activities and there will be the usual incentives for industry as such. We are making a start here. As everyone knows, the first beneficiaries of the legislation will be Ringaskiddy. If it is successful obviously other areas will seek to come in and put forward their advantages. There is no point in proliferating free port areas all over the country because one would be negativing the benefit of the other. It has to be controlled and regulated in an orderly fashion. I believe what is here is a good idea. It has been proved successful in other areas. I believe that we have the imagination and the ingenuity to do it ourselves. As far as the facilities and the incentives are available, we have to conform to the regulations within that context, otherwise we would be as liberal and as generous and, to use the words of Senator Cregan, as broadminded as we possibly can within that framework.
I again thank the Senators for the manner in which the Bill has been received. I always believed that once legislation came to either the Dáil or the Seanad there was no further improvement on it. This may have resulted from my long period reporting the affairs rather than actually participating in them. I now find that all legislation — particularly that which is inaugurated in this House, and I had the opportunity to do that with a number of Bills — is at a more leisurely pace, and a less controversial attitude always results in an improvement of the Bill. I believe that always happens. I think that some of the various points raised here will certainly guide the Minister very strongly in his attitudes when this legislation is being put into force.
Question put and agreed to.
Committee Stage ordered for Wednesday, 19 March 1986.