I welcome Deputy Gerry O'Sullivan, Minister of State at the Department of the Marine, to the House. I wish him well and congratulate him on his appointment.
Adjournment Matters. - Cork Freeport.
I also welcome the Minister a former colleague on Cork City Council. We can speak as two Corkmen; we went into the city council together in 1979; we come from the same parish, and my mother was born on the same street as him. I wish him well. I think he is going to do very well because he is a realist. I hope he gets the opportunity to show his ability because he is a sincere person. The people of Cork have recognised that not alone in the last election, but in previous elections.
In the Seanad between 1983 and 1987 as a member of the Government parties, I pushed strongly with other Members from Cork for an emphasis on our lower harbour. As we all know it is a place that any person who comes to Ireland likes to visit. It is a very beautiful place. The facilities there provided by previous Governments over the years have cost in excess of £150 million.
The Minister is aware of the sad times we had in the early 1980s with the closing of many plants in Cork, one of which he worked in, Dunlops. Other Senators worked in these plants. We know what these losses meant to Cork at that time.
A task force was set up by the Government in 1984 to look at facilities to see what could be done to improve the situation in Cork. I pushed strongly for a freeport facility. I am delighted to say that in 1986 a Bill was put through this House — it was one of those initiated in this House between 1983 and 1987 — and it was agreed in 1987.
The freeport was not a novel idea; free ports existed in Europe, particularly in Rotterdam but there was no freeport in Britain when I pushed for this facility in 1983. Since 1984 Liverpool has been a freeport, with a turnover to date of over £1 billion. It was established on 600 acres and in 1993 another 800 acres was made a free zone. It has 80,000 square metres of covered accommodation with another 17,500 being built at the moment. That is the idea I had for Cork freeport.
Sadly, the 1983-87 Government was not prepared to give all the tax facilities needed to get this going. The task force report said we should be prepared to give incentives. The excuse given by relevant Ministers of all Governments was that an EC regulation would not allow it. I fought hard and we got VAT at point of entry eliminated; that was a help, at no extra cost to the State.
Look at the Dublin region and the International Financial Services Centre built in 1987. I was told by the Taoiseach of the day and by Members of the Government that under no circumstances would the 10 per cent corporation tax be extended to the services area. I assumed that because of an EC regulation it could not be done. Yet, as early as January 1987 the commitment was given to Dublin for the Financial Services Centre. Just as the 10 per cent corporation tax operates in Shannon because of its airport, Cork could be covered by the 10 per cent corporation tax because of the importance of the shipping industry there. There will be no cost to the State. Why should Cork not benefit from this?
As a representative of Cork I emphasise that the facilities are there, and many people now use this port. In the summer of this year the biggest ever ferry in Europe will be using the port of Cork. The benefits of this would be even greater if we had a freeport where people could get the facilities available in Liverpool and Rotherdam. Why was that argument not made? A recommendation was made in 1979 to the relevant Minister asking that the 10 per cent corporation tax be given for all services in the free zone area. Some 1,080 acres were zoned. All of Cork might as well have been included because it does not mean anything. In theory it sounds well but in practice it does not work. Why has the 10 per cent corporation tax not been given in this case? The IDA say that it would have enormous benefits for the region and I emphasise the region.
I am the person who encouraged the concept of a freeport status for Cork. Legislation was passed to provide for this but unfortunately, it was not followed through. That was despicable, particularly when I was told by the relevant Minister that under no circumstances could a 10 per cent corporation tax be granted anywhere on the island of Ireland. Yet, three months later it was granted in the Dublin region. I do not wish to knock other places. I like to see things moving in any part of Ireland.
The Minister is aware that 75,000 tonne ships can now berth in the port of Cork. It is a trans-shipment area for mainland Europe. This facility has greatly increased traffic from the American coast, from Europe and from the rest of the world for trans-shipment to the mainland of Europe. Giving us the freeport facility would not cost the Government any money but it would give people the incentive to exploit opportunities. For example, 25 million gallons of water are available every 24 hours in Cork harbour for trans-shipment, but is the opportunity there for the people to come in and set up the necessary structures? Is the opportunity there for trans-shipment of cars from Ireland to places in Europe? Many cars have been shipped through the Cork area in the past 12 months because of an ongoing dispute in the Dublin region. We have proved we can handle the traffic. The opportunities are there for people with the initiative, particularly in the services area. I emphasise the services area because whether we like it or not our main industries are service industries. We do not have a solid manufacturing base at this time. I ask the Minister to give consideration to granting the free zone area of Cork a 10 per cent corporation tax rate.
A Chathaoirligh, I think you for your kind remarks and your warm welcome to me on my visit to the Seanad. I also thank Senator Cregan for his kind remarks. We both come from the same parish and have the interests of Cork foremost in our minds.
The appointments of a manager and of a Freeport Advisory Committee were announced early in 1989. Following its establishment the committee commissioned from the IDA a study to develop a marketing strategy to maximise the development of the freeport and from a UK media consultant a study to identify the investments needed to establish the freeport in the US, European and Far East markets.
The IDA study concluded that a vibrant and attractive freeport regime could be a key marketing focus in helping to attract enterprises and investment to Ringaskiddy but that this could only happen if there was an attractive financial package available to industry locating in the freeport. It also concluded that unless an attractive incentive package could be put in place the freeport concept, as applied to Ringaskiddy, would fail to realise the potential to attract development to Ireland and to Cork.
The media study concluded that significant investment in media coverage was required if the freeport was to be successfully promoted and establised in the marketplace. However, such investment would not be productive unless and until the incentive package was sufficiently attractive.
In light of these studies, the Freeport Advisory Committee recommended that: (a) warehousing, servicing and trans-shipment activities at Ringaskiddy should qualify for 10 per cent corporation profits tax as is available at Shannon; (b) adequate resources should be made available for the marketing and development of the freeport by the committee or the IDA or both; and (c) Ringaskiddy should be a designated area under the Underdeveloped Areas Act to allow for higher levels of grant assistance and qualification for rates remission for some activities locating within the freeport.
On the question of the extension of the 10 per cent rate of corporation tax the Minister for Finance was unable to accede to this due to the general policy of non-extension of VAT zero-rating. He also stated that any analogy with Shannon was not sustainable as Shannon has existed as an integrated entity since the 1940s and has had special tax treatment since 1958.
The second recommendation was that adequate resources be made available for the marketing and development of the freeport either through the freeport manager or the IDA or both. The marketing and development of the freeport and Cork Harbour Commissioners in general is the responsibility of the IDA and Cork Harbour Commissioners. The commissioners market the portal facilities for the normal trade and traffic activities of the ferry and deep water terminals and the IDA have primary responsibility for the attraction of port-related industries. The freeport, as well as conferring specific tax advantages on qualifying companies within the area, also has many marketable attractions, for example, State infrastructural services, including water, effluent and drainage systems, natural gas, electricity, roads, airport and telecommunications, skilled labour and social and recreational amenities.
The third recommendation does not fall within my area of responsibility but I understand that the Freeport Advisory Committee have been in contact with the relevant Minister on this issue.
In August 1989 the freeport area was extended by 131 acres to include lands occupied by the existing industries of Angus Fine Chemicals Limited, Mech Con. Limited, since liquidated, Moog Limited, Pfizer Chemical Corporation and Pfizer Sales Company Limited. One new company has set up business in the freeport, i.e. Archer Daniels Midland (ADM), the American owned agri-chemical conglomerate which took over the Citric Acid Division of Pfizer; another, Sandoz Ringaskiddy Limited is due to commence operations there by the end of this year. In addition a Taiwanese consortium has bought a 50 acre site from the IDA, they have an option on a further 150 acres and have plans to construct a multi-million pound industrial park in the Ringaskiddy Freeport area.
As I mentioned earlier, attracting industry to locate in the Ringaskiddy Freeport and Cork Harbour in general is the responsibility of the IDA, the Freeport Advisory Committee and Cork Harbour Commissioners. I have full confidence in the efforts of the agencies concerned.
The developments in Cork Harbour are not solely dependent on the Freeport concept but with the advent of the Single Market the advantages of Freeports are much reduced. I am glad to be able to say that Cork Harbour was a major beneficiary of the first Operational Programme on Peripherality, 1989-1993. This week I announced that Cork Harbour would be a major beneficiary of Cohesion Funds in 1993 (£1.85 million). The Government is committed to the development of our key commercial seaports, and I am committed on a national and regional basis to the development of Cork Harbour.
The advent of the low river crossing will make the lower harbour at Ringaskiddy a more attractive site for development. I am committed to the development of Ringaskiddy and at present negotiations are taking place with another important industry which may locate there. I thank the Senator for his comments — he can be assured of my support at all times.
I thank the Minister for his considerations. I know he is committed to Ringaskiddy. I am delighted to hear that discussions are taking place with another industry which may locate in the Ringaskiddy area. However, the impression that the freeport concept is now losing its advantage is not true. If the 10 per cent corporation tax is not the responsibility of the Minister's Department I ask him to make the argument to the Minister for Finance, for the retention of that tax.
I will make that argument to the relevant Minister, but I made it several times while in Opposition.
You are in Government now.
I understood — and obviously it slipped Senator Cregan's mind — that he was to share time with me.
I beg your pardon.
I welcome the Minister to the House. He is an old and valued colleague and friend and will do a terrific job in his Department. Senator Cregan deserves credit for having pushed the idea of a freeport in Cork for many years. I accepted a nomination to the freeport by the then Fianna Fáil Government as a Labour Party member as did former Deputy Coveney of Fine Gael. I am still committed to the idea of a freeport and I hope, with the assistance of the Minister, to help create the sort of activity that Senator Cregan has described so eloquently.