I have notice from Senator Denis Cregan that, on the motion for the Adjournment of the House today, he proposes to raise the following matter: The progress made to date on the bringing into operation of the Cork Free Port since this matter was raised on 25 May 1988. Perhaps the Senator would like to wait for the arrival of the Minister.
Adjournment Matter. - Cork Free Port Regulations.
An Leas-Chathaoirleach
May I start by saying that legislation was passed in 1985 by the previous Government to provide for the setting up of a free zoned area for Ringaskiddy in Cork or for Cork port. There have been delays in the setting up of the regulations for the free zoned area. The Minister, Deputy Daly, made an announcement approximately six weeks ago that he was considering the idea of designating a zoned area in the Cork region. Since then I raised it and I got a commitment from the Minister, Deputy Gallagher, in this House in May 1988 that he would be pushing it and that regulations would be set up certainly some time in October. Another two months have gone and we still see no regulations.
What do the regulations mean and what is the running of a free port and what kind of composition of people do you need? It needs a mixture of the public and private sector working to get this moving. It means a lot to the Cork region in my view. Unfortunately I get the impression that the same view is not coming across from the Government. In the case of the Dublin region earlier this year a commitment was given by the then Minister for the Environment, Deputy Flynn. There is work already going on in the port area of Dublin as regards the financial institutions. That is something similar, but it is a different type of system from the free zoned area for Cork.
We have a free zoned area in Shannon. We now have a corporation tax commitment of only 10 per cent for all workings in the Dublin Port and Docks Bill which is needed for the free port area of Cork but which is not forthcoming from the Government. No commitment has been given that they are prepared to say that only 10 per cent corporation tax should be paid on all workings within the free zone area.
I welcome the statement made by the Minister, Deputy Daly, some weeks ago that the total area of IDA land bought in Cork will be allocated as a free zoned area. That is good thinking. At that time he said that within a very short period of time he would be setting up the body to run the free port. It still has not come. I do not see anything happening and I get the impression that there is no great push or no great commitment to it. Who do I see running it? What do I think should be happening? When I spoke on the free port, I put before the Ministers of the last Government and the Ministers of this Government the type of people who should be running it.
I am aware that there are people in the private sector who have put a lot of money and a lot of commitment into going to other areas to have a look at what a free zoned area means and are quite committed to getting involved with the public sector as regards running the free port. I push this very hard and the reason I push it is that when you have private people working and investing money in a free zoned area to get the regulations moving and when they see that they have to pay back interest on it, it is not like the public sector. It is a different situation. These are people who will be motivated and will push and say: "We need to sell this thing properly".
We have other problems as regards transport in the Cork-Kerry region and this is why I emphasise very strongly how the free zoned area can help the business in that region and in particular our shipping problem. The Minister is aware that at this time we have a ship coming into the port and the question is whether it can stay because of a subsidy of only £500,000 and it needs a little more. The regulations, if they were set up, would be a help to this ferry. They could create a feeling that it is good to come into the Cork-Kerry region. That is just one side of it.
From an industrial point of view, the advantages and the convenience of putting so much money into the Ringaskiddy area are great. We do not deny that this Government — I know there have been cutbacks in the past two years — are committed to seeing that money is provided to upgrade the infrastructure in that region. Over £120 million has been spent already between providing water services, deep water berths and the road structure. For instance, we spent £77 million in getting water to that port. We can provide up to 25 million gallons of water every 24 hours. That is an advantage we should be availing of and it is not being availed of.
Islands off the mainland of Europe are being granted allocations of money from the EC for fuel. I see no reason why the same thing cannot be availed of in the free zoned area. In other words, if you do not have VAT on point of entry and if you do not have excise duties and you do not have VAT charges, that is an advantage in Cork in getting the ferry service moving.
I do not want to push this too strongly but it needs to be pushed. Now we have Irish Steel again being questioned. We must show that we want to see things moving in the Cork region. We do not want a despondent attitude. We need to motivate people. I do not see this forthcoming as regards the free zoned area. I know there are problems with the Cork Harbour Commissioners as to whether they can get involved in the workings of the regulations. The question is: can you create other bodies or can you allow other people from the public sector to get involved in the workings of the regulations? Is it not about time we really got moving on it?
If it can work in the Shannon region and in the Dublin region, let us get it moving in the Cork region. There is total despondency there. We are talking about the Cork-Swansea ferry about which there is despondency at this time. We are now talking about the question of Irish Steel coming before us again. We do not want to kill the area completely. As regards the corporation profits tax of 10 per cent I understand two years ago it could not be granted and since then someone said there is no reason why it should not be happening in other areas. It is happening in the Dublin region in relation to the Dublin Port and Docks Bill — 10 per cent corporation tax for people who are only pressing buttons to transfer money from one country to another. They pay corporation tax of 10 per cent only. There is no reason why it cannot be put into the Cork region, into the free zone area. If we look at it realistically and logically we know that the advantages of 10 per cent corporation tax would be enormous to get things moving in that region.
I agree with the Senator that every time he has been on the Adjournment debate I have been here. I am, as are the Department and the Government, fully committed to this free port. I do not want to cover the ground that has already been covered on other occasions about the various regulations.
When this matter was raised in the Seanad on 25 May last, I dealt in detail with the issues involved and I know it is not necessary for me to cover all of this ground again on this occasion. At that time, the position was that the order bringing the free port into operation and the regulations relating to customs control and VAT concessions were made and the following legal measures were still required to set up the free port of Ringaskiddy. 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. The Minister for the Marine must, with the consent of the Minister for Industry and Commerce and the Minister for Finance, by order designate a person or persons to control and manage the free port.
Having listened to Senator Cregan, the most pertinent question was who should manage the free port. My Minister, with the consent of the Minister for Industry and Commerce and the Minister for Finance, must designate a person or persons to control it. Part of the reason for the delay is that we want to be absolutely sure that we come up with the right answer. We are not just going to take a decision for the sake of doing so. 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 business within the free port.
Since the debate on 25 May in the Seanad I can report the following progress. An order entitled "Ringaskiddy Free Port (Establishment) Order, 1988" providing for the establishment of a free port at Ringaskiddy was made by the Minister, Deputy Daly, on 1 June 1988. This order came into operation on 16 June 1988. It delineates the free port area which comprises some 776 acres — 659 acres of IDA land and 117 acres of land owned by the Cork Harbour Commissioners — and reclaimed foreshore. This is all in the general vicinity of the deep water berth at Ringaskiddy.
The question of fencing free zones which arose in connection with the review of the European Community Directive in relation to free zones has been taken up at Brussels and I am pleased to state that agreement has been reached that only occupied areas of free zones need be fenced. Prior to this, the directive stated that all of the free zone should be fenced. This could vary from some £600,000 possibly up to £2 million depending on the quality of the fence and I have no doubt that the directive would also have insisted on the highest quality. This would have been a tremendous drain on any resource but, fortunately, we succeeded in reaching agreement. We can now say that only the occupied areas of the free zones need be fenced.
Consultations have taken place with existing companies in the Ringaskiddy area which indicated in interest in being included in the free port area. Arising from these consultations, four applications for operating licences have been received. These are at present being processed with the Departments of Industry and Commerce and Finance and it is hoped to issue licences in the new year at the same time as an order extending the free port area to accommodate accepted companies is made.
A final decision on the free port management is now about to be made. The main function of the manager will relate to promoting the free port area with subsidiary functions relating to day-to-day administration. Since the order establishing the free port was made, the IDA which, as we are all aware, is the agency charged with the development of industry and job creation throughout most of the country, and of course the Cork Harbour Commissioners who are responsible for the management of the commercial port of Cork, have already been actively promoting their lands in the free port area. During the debate in May I gave the Senator a categorical assurance that his views on the private sector would be taken account fully when a decision was being reached. Hopefully, we will reach a decision in the near future. I can say to the Senator that his very constructive contributions here at all times have been taken into consideration, as have his views in relation to the private sector.
A number of options are under consideration before a final decision is taken. Legal and other matters arose which necessitated further clarification. In reference to the legal matters, this involves such questions as the legal capacity of certain public agencies to become involved in such companies. That is a matter for the Cork Harbour Commission, the IDA, Cork County Council and Cork Corporation.
The Minister visited Cork some weeks ago and had discussions on these matters with the Cork County Manager, the City Manager and the Chief Executive of the Cork Harbour Commissioners. He also discussed the matter with the regional director of the IDA. A decision will be taken soon when all necessary inquiries are completed. The Senators will be aware of the importance of this development as I am and of the need to very carefully evaluate all the options before making a final decision.
The Senator will agree that the pertinent question was who should manage the free port. We are exploring all avenues to ensure that when a decision is taken in relation to who should manage the port a proper decision is taken. I said in the House before that I am only too well aware, as are the Government, of the necessity to provide employment and to create the right atmosphere. We have created the right economic atmosphere to entice industrialists here. We have a rate of interest some 5 per cent below the rate across the water. We have the right economic conditions to entice people here but we cannot do that in the Ringaskiddy area until we take these decisions. I assure Senator Cregan that when the decision is taken we believe it will be the right mix.
EC funds for cranes at the Ringaskiddy deepwater berth have been secured and all efforts are being made to speed up the matter. To indicate the commitment that is there, the Minister for Finance in a reply on 25 October announced that the Commission of the European Communities had approved a commitment of £1.38 million in Regional Fund aid towards the acquisition by Cork Harbour Commissioners of two cranes and attendant hoppers for the deepwater berth at Ringaskiddy costing some £2.5 million.
And made in Ireland.
If the Senator wants to pursue any detail of this I will certainly discuss it with him at any time. If I am to follow through the logic of what I have just said, then we should be looking at obtaining as much as we can within the country.
I am very well aware of the importance of harbours. We must remember that 81 per cent of our external trade, by volume, is handled by ports. Ports are becoming more and more important particularly in the context of 1992.
We must consider the effects the Channel Tunnel will have for this country. Of the 12 countries in the Community we will be the only one on the periphery, the only country that will have no direct contact by land with the rest of the Community. That is vitally important to the country.
I believe the success in obtaining ERDF funds for Dublin and Cork is a testimony to our commitment and efforts in this area. In anticipation of agreement being reached my Department have already carried out preliminary work on the memorandum and articles of association of such a company. This will ensure that there will be no unavoidable delay as soon as a decision is made. Cork is the third largest port in the country and has lift-on lift-off facilities. A lot of our trade is leaving the country from the south and north-west through the ports of Cork and Waterford because of their proximity to mainland Europe.
We are concerned that this free port should be up and running as soon as possible. If there are delays, they are not deliberate. It is not an indication of lack of urgency or commitment by the various Departments or by the Government. We want to make absolutely certain that the right management structure is put in place so that the Ringaskiddy free port will be the success that Senator Cregan, and others like him and myself, expect it to be.
I thank the Minister for his contribution. He is way ahead of me and is well aware of what the situation is not alone in Cork but throughout the country. There is one vital question which is very relevant to the Cork region, to the free port in particular and to making sure that we make a proper success of the free zone area. It relates to the 10 per cent corporation tax on service areas. It is given in the Dublin and Shannon regions. I have had arguments with the Minister of State before and I know it is a financial area. If we do not have a 10 per cent corporation tax we will not get the right atmosphere. At present 75,000 tonne ships can now berth at that deepwater berth. It is vital that the corporation tax should be 10 per cent in the free zone area. I am not saying it should be that everywhere.
In relation to the fencing of the zoned area, I am glad to hear that compounds can be built. I have seen this work in other countries. The 10 per cent corporation tax is vital and the Minister of State should make that argument to the Minister.
In referring to tax generally, it is important to point out that in a free port there is absolutely no VAT involved at point of entry. When the raw material or the semi-processed goods are being processed and exported, VAT does not come into consideration. VAT only comes into consideration when the goods are being sold within the State. I know the Senator is not referring to VAT but it is important to make that point. This is a tremendous advantage and it entices one to set up within a free port area. I come from the far west and I know the difficulties we have when the raw material has to be transported from places like Waterford, Cork, Larne, Belfast and Dublin, and VAT paid on it at the point of entry. It creates problems for us. There is a big attraction there.
As regards VAT on services, we discussed this at length before. The intention, if my memory serves me right, was to try to attract industry. I do not want to give the wrong impression but I will speak to the Minister for Finance about it. However, I would not like it to go out from here or to give Senator Cregan who has raised this on numerous occasions — I know his commitment to it — the impression that by doing that I could change it. I certainly will speak with the Minister for the Marine and the Minister for Finance to see if something can be done but I will not give any commitment as such.
The Seanad adjourned at 4.15 p.m. until 2.30 p.m. on Wednesday, 14 December 1988.