The principal purpose of the Bill is to provide for the further financing of the Shannon Free Airport Development Company Limited by extending the industrial assistance limits in current legislation to provide for the continuation of SFADCo's industrial and tourism/ traffic development roles.
Specifically, the Bill provides for an increase from £120 million to £130 million in the aggregate of the amounts which the Minister for Finance may subscribe in taking up shares in the company; and an increase from £60 million to £105 million in the aggregate amount of grant-in-aid, voted annually, which may be made to the company.
Share capital subscribed to the company is used for capital expenditure on the industrial estate at Shannon and in the mid-west region and west and south Offaly. The main headings of expenditure are land acquisition, construction of factories and ancillary works. A small proportion is expended on tourism projects of a capital nature such as up-grading of the Bunratty Folk Park.
The grant-in-aid moneys are applied towards meeting the company's running expenses and providing financial assistance to companies on the Shannon Industrial Estate. The financial assistance relates to grants for plant and machinery, training schemes, acquisition of buildings, rent reductions, technology transfer and research and development. A substantial part of the company's running expenses relates to the administration of their small indigenous industry programme in the mid-west region where, however, grants for various programmes come from the IDA under full delegated grant giving authority to Shannon Development. I should add here that the major proportion of administration of costs are generated by the company from own resources primarily from rent on factory space.
In relation to running expenses, it is also relevant to point out that the significant element of these arising from the company's tourism activities used to be met by a special grant-in-aid for which the Minister for Tourism was specifically accountable notwithstanding the fact that the amount comes within the overall limit being amended by section 3 of this Bill. Following reassignment of ministerial portfolios earlier this year, responsibility for this expenditure now belongs with the Minister for Industry and Commerce, which change will I hope facilitate a more coherent and integrated approach by the Department to their role in relation to the company.
Accumulated expenditure by Shannon Development under the share capital and grant-in-aid headings as at 31 May 1986 amounted to £91.6 million and £60 million respectively. In fact the grant-in-aid limit has been reached and the company have been relying in the meantime on a combination of own resources income and bank borrowings to meet their obligations. It is therefore a matter of urgency that these limits now be increased. It is estimated that the increases proposed will suffice until 1990. I should stress in this regard that the Bill is merely an enabling measure which increases the funds which the Dáil may annually vote for the company.
Shannon Development's objectives are succinctly described in their annual report as follows: to ensure the growth of Shannon Airport in trade, passengers and services; to ensure the realisation of the potential for economic development inherent in Shannon as a location for industry; to develop and test concepts and systems which will lead to a dramatic growth of small indigenous industry in the mid-west region and west and south west Offaly, and to do so in a manner which will pioneer future national policies; within this function to conduct a standard-setting pilot programme for food processing.
It is appropriate here to report on progress under these headings, particularly since the last legislation increasing the company's financial limits was passed in 1983. First, it is encouraging to note that overall traffic in 1985 has again reached the level attained in the 1977-79 period, and has been showing a steady increase since 1983. Within that trend, terminal traffic of 665,000 in 1985 was the highest figure ever recorded at Shannon and while international developments are not conducive to new records being set in 1986, the decisions of Pan American Airways and Delta Airlines to begin scheduled service into Shannon from the US in 1986 are most welcome. The company's success, in conjunction with Bord Fáilte, in attracting these airlines highlights, however, the continuing over-dependence of Shannon Airport on its west bound connections, and it is to be hoped that they can emulate this success in continuing to increase their UK and continental traffic.
In relation to the development of the Shannon Industrial Estate, while it is true that employment on the zone is less than the peak figure attained in 1981, the decline has not been great and it is again encouraging to note the upward trend in employment since 1983 to its current level of 4,400. Concomitant with this has been a continued strong growth in exports from the zone, and more importantly, a continued widening of the positive trade balance.
Developments in relation to small indigenous industry are possibly most encouraging of all. When the company undertook this role in the region in 1978 there were 3,000 people employed in some 350 small firms, of which 20 were exporting. There are now 5,300 people employed in 700 firms of which 100 are exporting, and within that overall increase of some 75 per cent there has been an increase of 190 per cent in employment in firms assisted by the company. A very positive aspect of this part of the company's operations is of course the virtually uninterrupted growth of employment in this sector, which is of course vitally important to the future economic wellbeing of this country. It was the obvious success of this programme that led to the nationwide regionalisation of the IDA's small industry programme. This was completed in 1985 and means that the administration of the programme, including decisionmaking on grant applications, now rests with the regional small industry boards supported by 130 IDA staff at regional level.
Apart from the intensive promotion of small indigenous industry, which is the most significant example of SFADCo work being adopted nationally, other examples of initiatives which have led to the growth of this sector in the mid-west being adopted on a national basis are the workspace concept, the matchmaker programme, now nationally embodied in the linkage programme, and start your own business courses.
While these initiatives relate specifically to the small indigenous industry role it is interesting in passing to note some of the other important developments pioneered by SFADCo since they have been set up. These include the development of mediaeval banquets, Rent an Irish Cottage, development of Ireland's first new town, establishment of the innovation and micro-electronics application centres and the world's first duty free airport industrial estate.
I mentioned that the company also have the role, assigned to them in the White Paper on Industrial Policy, of conducting a standard-setting pilot programme in food processing. Already a detailed report on progress to date has been submitted by the company to the Department of Industry and Commerce and consideration is being given to how this progress can be accelerated. Work so far has concentrated on promotion of the food processing business, identification of new products and development of food enterprises and food buildings. An example of this is the experimental food kitchen in Raheen, Limerick which, in conjunction with the IIRS, will ensure that first-rate technical facilities will be available with units constructed to the highest food regulatory standards of prospective markets.
Also of relevance in this context is the appointment of a Minister of State for Food based jointly in the Departments of Agriculture and Industry and Commerce, followed by the establishment of a permanent food committee which has, inter alia, the mandate of assessing the feasibility of the recommendations in the various recent reports and studies on the food industry.
A major development affecting SFADCo since passage of the 1983 legislation has been the publication of the Industrial Policy White Paper already referred to. As the major provisions of this were incorporated in the Industrial Development Act, 1986, Senators will be aware of the detailed changes being made therein. Suffice it to say in this context that Shannon Development will be implementing the new policy directions in their industrial development work relating to greater selectivity in industrial incentives, a shift from fixed asset investment to technology acquisition, marketing and research and development, and a greater concentration on internationally traded manufacturing and service activities.
The Dáil's Public Expenditure Committee report on Shannon Development was both timely and informative in the context of our current deliberations. This will, of course, be the subject of detailed debate in the Dáil, and its specific recommendations on various aspects of the company's operations will require careful scrutiny. It is, however, relevant at this stage to note the conclusion that the company have been highly successful at their appointed tasks of promoting traffic through the airport and encouraging small industry throughout the mid-west region. Indeed, the value of the company's work has also been acknowledged in most positive terms in the OECD's report "Innovation in Irish Industry".
In this brief review of the activities of Shannon Development I have demonstrated that the company are doing everything within their power to successfully carry out their multi-role mandate. The moneys provided for in this Bill will enable them to continue to do so for the next three to four years and deserves our support.
I, therefore, commend this Bill to the House.