I have notice from Senator Denis Cregan that he wishes to raise the following Adjournment Matter: the bringing into operation of the Cork free port regulations by the Minister for Industry and Commerce. I call Senator Cregan and I remind him that he has 20 minutes and the Minister has ten minutes to reply.
Adjournment Matter. - Cork Free Port Regulations.
An Leas-Chathaoirleach
I would like to thank the Cathaoirleach for giving me an opportunity to bring this matter before the House. I first brought it before the House last June and at that time the Minister for the Marine informed the House that the regulations which would set up the free port in Cork would be in operation some time between October and November. Since then a lot has been said about the free port and a lot of words have been pushed around in regard to the benefit it would be to the Cork-Kerry region. This proposal was first mooted in 1983 but we found it hard to get the previous Government to implement the regulations.
What would this mean for the Cork-Kerry region and for the designated free zoned area of Cork which has been legislated for? The impression might be given that the Government are considering the idea of including other areas in the Cork port area as free zoned areas. The 1986 Bill provides that any area within the port of Cork can be designated a free port area. This argument is being strongly pushed by the Government and I fail to understand why that argument cannot stand up when the legislation says any part of the port of Cork can be designated as a free port area.
The impression is being given that a free port may not be as trustworthy or solid as we make it out to be. Since we proposed the idea of a free port, our neighbours across the water in Britain have implemented free port areas in six different regions and these have been working for the past 18 months. The port in Liverpool, which is no more than 60 miles from this country, as the crow flies, is proof of what a free port area can do. Over £1 million a week has been turned over in that area during the past 15 months. Unfortunately we have a despondent attitude towards getting work moving and in believing that we can do it. We are the first port of call for those people from the western world who export to Europe as a whole.
Over the past ten to 12 years, over £120 million has been spent by various Governments on the infrastructure in the Ringaskiddy area. It has a deep water berth, for which there were strong arguments over the past three or four years, which was built at a cost of £10.5 million. Another £2 million will be spent shortly on the purchase of heavy cranes to assist with unloading. The water structure in the Ringaskiddy area can supply over 25 million gallons of water every day. We are constantly arguing and debating as to who should be working the free port area and whether it should exist at all. In actual fact, we can see that the proof of the pudding is in the eating when we look at what is happening in Liverpool. The Government in Britain had no intention of establishing any free zoned areas until the idea was proposed by the Irish Government. The very same has happened in relation to the national lottery. The previous Government here pushed the idea of the national lottery and now the Government in Britain are looking at it too because they know a good thing when they see it. The proof that the free port is a good idea can be seen from what is happening in Liverpool where after only 15 months over £1 million per week is being turned over in that area.
We have had on-going arguments with the previous Government and with this Government as to what kind of facilities and benefits should be allowed in the free zoned area of Cork. There is a free zoned area in Shannon and the Dublin Port and Docks Bill, which was pushed through at a very fast pace, will allow financial institutions to set up on the Dublin Customs House Docks site. Benefits, which I do not object to, were given in the Dublin Port and Docks Bill to the financial institutions who will set up in the Dublin region. The benefit they got in relation to corporation tax for work done on computers or machines means that they will pay 10 per cent only on their corporate gains.
We sought benefit for the Cork region but in no circumstances would it be considered. Even the former Government would not, in any circumstances, give this 10 per cent benefit in corporation tax to the Cork region which applies to flights into Shannon and to financial institutions in Dublin. If the benefits are given to an airport structure in the Shannon region and to a financial structure in the Dublin region, there is no reason why the same benefits should not be given to a port and docks structure in the Cork region.
I know the Minister is aware that the Cork-Kerry region could do with some benefits and motivation. The argument made by the last Government was that in no circumstances could it be done because EC regulations said it could not be done. Yet, within the past 12 months a Bill was laid before both Houses which will give the people in the Dublin port and docks area the 10 per cent corporation tax benefit. Why can this same benefit not be given to the Cork-Kerry region, and to the Cork region in particular? We should allow people to set up their businesses in a port area like the one in Liverpool where all gains, whether they be in the service area or in the manufacturing area, would only be liable to 10 per cent tax, which applies in Shannon and Dublin. I know the Minister does not come from the Dublin region but I am sure he realises the amount of money that will be made by the financial institutions in the Dublin Ports and Docks area and that they will pay only 10 per cent corporation tax on this. Enormous profits will be made by those institutions. From a manpower point of view these benefits will not be as great as they would have been if they had been given to the Cork-Kerry region. I am talking about physical work and what going to work means to people. It would mean a lot to those people if they were told they would have to pay only 10 per cent tax on their corporate gains, whether they be in the services area or otherwise.
In the port of Cork we have built deep water berths at a cost of over £10.5 million which can cater for 70,000 tonne ships. That facility should be available to ships so that their goods can be unloaded in Cork rather than waste time going up the English Channel to try to get into the main ports of Europe. This can mean long delays for heavy ships and they do not like this. They like to be on open seas getting work done rather than being delayed in port. Heavy ships can be unloaded at Cork and the cargo can be transhipped in smaller boats to other ports in Europe. That means there would be trans-shipment and double work going on and that is what I want to see. If they were given the 10 per cent benefit on corporation tax this would be an enormous benefit for them.
Why is this benefit not being given to the Cork area? Why is it given to Shannon and Dublin but in no circumstances, even with all the arguments I have made, will it be considered for the Cork area? The reason I am pushing this so strongly is that after long arguments with the previous Government and this Government, they now admit they are prepared to give this benefit to the Dublin region. I do not object to this because the amount of money that will be made there will be enormous in comparison to other regions.
I want to refer to the workings of the free port and the delays with the regulations. Discussions are going on between the Cork Harbour Commissioners and Government officials and I think the question must be asked: what motivation do the harbour commissioners have and what ability do they have to work this kind of facility? I admit that when the Bill was first moved the harbour commissioners were under orders from the Government of the day to advertise for people to get involved with them in the working of the free port facility.
I feel strongly that private and public sector people should be working together to get this free port moving. In other words, the private sector should get involved. The private sector within the Cork region who are already involved in customs clearance or in bonded facilities should get involved in the free port area. Certain acreage in the Cork region was designated for the working of the free port but unfortunately I get the impression from central Government and the harbour commissioners that no consideration was given to the idea of involving the private sector in this. I do not think that is wise. I do not have capitalist ideas nor do I think that the private sector should get all the money but in areas like this you need motivation and people who will put money up front and say: "We are going to run this properly, sell it properly and market it properly so that we can get our money back as fast as possible". I ask the Minister what consideration is being given to this or is it considered that the harbour commissioners only should work it? If that is so, I do not think it is wise. The harbour commissioners have been having discussions with Department officials for the past three years and I am well aware that up to now nothing constructive has happened. The main reason for this is that they will still get their cheques at the end of the month so they do not have to rush in coming to a decision.
We want people who have motivated ideas. We want people who say: "If we put £1 million into this we will make sure we get it back in ten years and we will sell it properly". I know that submissions were made by the private sector in Cork to central Government. These submissions contained excellent ideas and the people involved put a lot of consideration and investigation into the workings of free ports in other regions. I know that the submissions they gave to the harbour commissioners to give to central Government were excellent ones. I do not wish to knock any person or board but I am afraid the harbour commissioners will steal the thunder or knowledge of the private sector and use it to benefit themselves. Harbour authorities have a responsibility to say there are some things about which they know nothing. They may know something about tying up a ship, the tonnage of a ship and how to get the harbour dues from it, but I do not think the harbour commissioners should be working it on their own.
I want to emphasise that we have a free zoned area and not a free port in the Cork region. I ask the Minister to give us a solid and constructive reply and to say whether or not we are going backwards or forwards; whether they are considering it; or whether they are going to throw it out. Over £1 million a week is being turned over in the free port in Liverpool. They stole our thunder. Why were we not to the front in moving on this? Why is it that in relation to other good ideas the British Government have already moved but we have not yet moved? This is a disgrace and it is immoral. We have a responsibility to answer to somebody. Legislation on this was passed in 1986, two years ago, but still nothing has happened. I do not wish to get too uptight about this issue but I would appreciate it if the Minister could give a constructive reply to this issue, one way or the other.
It is just short of 12 months since Senator Cregan last raised this matter in the House. At that time I dealt in detail with the Free Ports Act, 1986, which he referred to, and the orders and regulations to be made thereunder before the free port could become operational. I believe that some repetition on this matter would be worth while.
The primary purpose of the Free Ports Act, 1986, which is an enabling Act, was to enable the establishment of a free port at Ringaskiddy. The principal features required under the Free Ports Act, 1986, to set up a free port at Ringaskiddy are that, first the Minister for the Marine must, with the consent of the Minister for Industry and Commerce and the Minister for Finance, by order establish the limits of the free port. Secondly, the Minister for the Marine, again with the consent of the Minister for Industry and Commerce and the Minister for Finance, must by order designate the person or persons to control and manage the free port which is a point I will refer to later. The Minister for the Marine may, after consultation with the Minister for Industry and Commerce and the Minister for Finance, grant licences authorising the carrying on of businesses within the free port.
The Minister for Finance has to make regulations providing for the necessary customs control in relation to the free port. The Revenue Commissioners must make regualtions under the VAT Acts with the approval of the Minister for Finance to give effect to the concessions as regards value-added tax for the free port. An order bringing the Act into operation on 1 July 1987 was made by the Minister for the Marine in June of last year shortly after the debate here in the House. I presume it was coincidental but, if Deputy Cregan feels it was as a result of his raising it here, I have no intention of taking that from him.
The regulations relating to customs control were made by the Minister for Finance in July 1987. The regulations relating to VAT concessions were made by the Revenue Commissioners, with the approval of the Minister for Finance, in October 1987. Before the order to establish the free port at Ringaskiddy can be made, it is necessary to decide the area to be included in the free port. This matter of deciding on the area to be included in the free port has been the subject of on-going and wide-ranging discussions with the Department of Industry and Commerce, the IDA, the Department of Finance, the Revenue Commissioners, Cork Harbour Commissioners and some existing industries in the Ringaskiddy area. While the Senator referred to the Minister pushing other areas, I would remind him that the Minister is not pushing other areas. It is the local interests who are proposing other areas. Being the Government that we are, we are interested in consultation all the time and, rather than taking decisions for the sake of taking decisions, we are prepared to consult at all times.
One must appreciate and I think nobody more than the Senator will appreciate that with the number of interests involved, it takes some time to get agreement. I do not believe we should take a decision for the sake of taking a decision without full consultation with the various interests that I have referred to. An area proposed for inclusion has to be inspected and agreed with the local customs people. Problems have already arisen particularly in relation to the fact that the Industrial Development Authority — we are proposing to include all of their lands—found it necessary to review their proposal and eventually to exclude a number of areas. Also at a late date existing industries at Ringaskiddy sought inclusion in the free port and this necessitated further consultation. Furthermore, the Community directive in relation to free zones is also at present under review and, under revised proposals, free zones will require to be fenced. Ireland is the only member state of the twelve that has maintained a reserve on this requirement. I believe we should maintain this reserve. One must appreciate the cost of fencing some 700 acres of free port area.
Are we going to designate the whole area then?
The cost of fencing a large area such as that proposed for Ringaskiddy, depending on the type of fencing finally required, could be prohibitive. For this reason we are endeavouring to have fencing restricted to occupied free zone areas. According as an industry is set up, it should be fenced on that basis, but this is not what the Community directive states. It states that under the present directive all of it should be fenced at the one time but hopefully there could be a derogation as far as that is concerned.
I am happy to say that agreement on the lands to be included is now in sight. I am not talking about June of next year. It is now in sight. The Minister should be in a position to make the order establishing Ringaskiddy free port in the near future. It is envisaged that this will encompass an area in excess of 700 acres. The Minister has examined a number of options as regards management of the free port and will be consulting his colleagues, the Ministers for Finance and Industry and Commerce, on this proposal very soon.
In relation to the management structure which the Senator referred to, several options regarding management are being considered including the involvement of the private sector or, indeed, a combination of public and private interests. I will give a categorical assurance to the Senator that his views on the private sector will be taken into account fully when a decision is being reached.
This is the first free sea port in the country. Many other parts of the country are looking with interest at developments there. While the Senator referred to Liverpool and while I have no wish to suggest that his information is anything but correct I would have to say that my information generally, not on a specific one, in relation to free ports in the UK is that they have not been the success that was expected. Of course, this will not deter this Government from forging ahead with the development of the free port at Ringaskiddy bearing in mind, as the Senator has pointed out, the serious unemployment problem which we have in the Cork-Kerry region. The Government are fully committed, despite what the Senator may have said, to the free port at Ringaskiddy.
The Senator referred to the 10 per cent in relation to services. We have had, as had the previous Government and the Minister responsible at that time, the Minister for Communications, discussions with the Department of Finance. Since the debate in this House I have had discussions with the Department of Finance. The position still stands, as far as they are concerned, that most of these lands at Ringaskiddy are owned by the IDA and should be on the basis that we are trying to attract industry into that region. I accept the parallels that are being drawn between this and Dublin. Incidentally it is not owned by the Dublin Port and Docks. It is not part of the Dublin Port and Docks now, it is the Custom House Docks. That 10 per cent is available there.
We will be extremely anxious and will be pursuing every avenue to entice industrialists into the Ringaskiddy area, an area where there is a deep water port which is very advantageous for those importing raw materials to process them and re-export them. In a situation like that, there will be no question of any VAT at all if they are being re-exported. If they are being exported out of there into another part of the State, VAT becomes a problem at that time only. That is information that is well known. Other areas of the country are looking very closely at Ringaskiddy. We are anxious to get Ringaskiddy operative as quickly as possible. I am confident that it will assist and reduce the serious unemployment problems in the south and particularly in the Cork-Kerry region.
I should like to point out to the House that positive steps have been taken. There have been a few hiccups but Senators can take it that my Minister and I have taken a personal interest in this since taking office in March 1987. I am looking forward to the setting up of this port in the reasonably near future. I am confident that Cork will have its free port in the near future. Once this free port has been established, the Government, through the IDA, will be promoting it very strongly in co-operation with local interests. It is within the brief of the Minister for the Marine to set this up.
Of course the Departments of Industry and Commerce and Finance are involved and the IDA will be promoting this, but our Department will certainly be promoting it as well. Cork would be an ideal location for marine-related activities where people could take their reefer boats, not with raw materials because we have our own indigenous raw materials here. I foresee, with the development of the fishing industry which we have in mind, that there are general options there. I can assure the Senator and the House that my Minister and I will be vigorously pursuing this and I hope that we will have progress to report in the not too distant future.
I would like to thank the Minister. He has been very constructive and fair and very much aware of what is happening in the Cork region. The argument being put to the Department of Finance regarding the 10 per cent is vital. If we are prepared to have it in Dublin and we have given it to Shannon, to give 10 per cent to the services area in Cork would be enormous. Imagine the trans-shipment of goods going to the mainland of Europe, coming to Cork at 10 per cent, setting up their warehousing in Cork rather than manufacturing. For instance, what if we had the distribution of televisions from Japan? If we could see 10 per cent being given in areas like this, it would be enormous. This is vital and it is one of the main points in selling Cork as a region. The Minister has been talking with the Department of Finance but an argument should be made regarding the 10 per cent there. Dublin is going to be very good. It will mean a lot to Dublin, especially when Hong Kong is going the other way. It would mean a lot to Cork from a shipping point of view. As regards the railing, if the Minister is considering the idea that 700 acres should be designated, it would be enormous. Indeed, the Minister is broadening his mind much more than I am as somebody who pushed it in the first place. I anticipated smaller regions and adding to them gradually. If the Minister is saying that the whole area should be designated and railed off that would incur an enormous cost. The idea of each area railing itself off when it is designated would be better and then you could have one compound gate.
The Cork Harbour Commissioners accepted the package at the time, which included 10 per cent for manufacturing industry and excluded 10 per cent for the services industries. The bulk of the land there would be owned by the IDA and they would be looking at it with a view to manufacturing industry. However, I want to be able to come back to this House in six or 12 months' time and debate this again without giving any commitment. At all times I take into consideration the views of Senators in this House and Deputies in the other House because I feel that locals will have a particular interest in it and they are familiar with the area. I would not mislead this House or use it as a cosmetic exercise. I take very seriously into consideration the points raised by the Senator and I will speak further with the Department of Finance. Again, next time around, I want to be able to look the Senator straight in the face without giving any commitment.
The Seanad adjourned at 8.45 p.m. until 10.30 a.m. on Thursday, 26 May 1988.