Seanad Éireann debate -
Wednesday, 6 Dec 2006

Vol. 185 No. 12

Industrial Development Bill 2006: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Enterprise, Trade and Employment (Mr. Martin)

I am delighted to be in the House for the Second Reading of the Bill.

In accordance with the recommendations of the Enterprise Strategy Group and the new mandate for Shannon Development, the indigenous industry support functions carried out by Shannon Development, under delegated authority from Enterprise Ireland, will revert to Enterprise Ireland on 1 January 2007. The reversion of these functions will also involve the transfer of about 40 staff from Shannon Development to Enterprise Ireland.

The purpose of this Bill is to provide the legislative basis to designate the transfer of the individual staff members concerned and provide a statutory guarantee to the staff who are so designated that their pay, conditions of service and pension arrangements shall not be diminished by virtue of the transfer.

The context for the new arrangements for indigenous enterprise is that by the start of 2005 a range of developments had occurred which necessitated a review of the role of Shannon Development. These included the Enterprise Strategy Group recommendation, accepted by Government, that Shannon Development's enterprise development functions should be brought within the remit of the national enterprise development agencies; the establishment of an independent Shannon Airport Authority; the proposed relocation of the headquarters of Enterprise Ireland to Shannon as part of the Government's decentralisation programme; the transfer of responsibility for Shannon town from Shannon Development to Clare County Council; and the abolition of the licensing requirement for companies setting up in the Shannon Free Zone.

Against the background of these developments, I asked Shannon Development to submit proposals to me for a new strategy for the company. These proposals, which included exiting the role of support for indigenous enterprises, are reflected in the new mandate I have authorised for the company.

Shannon Development will now have a more focused strategic role on the broader regional economic development of the Shannon region. The company will work in partnership with other public and private organisations in the region to identify and bring forward new initiatives, projects and programmes to maximise the development potential of the region and help create a viable counter-pole to the more developed eastern region. In this context I have specifically instructed the company to give priority to addressing the needs of the less developed parts of the region.

Shannon Development will use its extensive property portfolio, located throughout the region, as a lever to drive the delivery of the economic development infrastructure that is essential for regional development. The company will also continue to work closely with Enterprise Ireland and IDA Ireland in identifying and addressing the property needs of both indigenous and foreign direct investment companies and in promoting the Shannon Free Zone as a location for foreign direct investment. The company's activities as the regional tourism authority for the Shannon region will also continue to have a key role to play in the economic development of the region.

I have recently approved a new three year corporate plan for the company which reflects the terms of the new mandate. The specific activities that Shannon Development will undertake will be selected on the basis of its potential to generate significant economic impact locally, regionally and nationally. For example, included in the plan are projects such as the eTowns initiative, designed to build the knowledge economy of the Shannon region, the development of the Kerry deepwater zone and the regeneration of the Shannon Free Zone as a location for high value added knowledge age investment.

The reversion of responsibility for indigenous enterprises support to Enterprise Ireland would provide a more logical delineation of responsibilities between the two development agencies in the mid-west region. As the support programmes currently provided by Shannon Development to enterprise clients are operated on behalf of Enterprise Ireland, they already reflect the supports available nationally. Provision has also been made for Shannon Development staff to transfer with the functions. It is anticipated therefore that the transition to the new arrangements will be seamless from the perspective of the company's clients.

As Enterprise Ireland is a significantly larger organisation than Shannon Development, the staff who will transfer from Shannon Development will consequently have access to more career development opportunities.

Shannon Development is uniquely placed to meet the challenge of regional economic development and specifically to maximise the development potential of the Shannon region in line with the objectives of the national spatial strategy. For more than four decades, initiatives developed and delivered by the company have been adopted and reproduced successfully in Ireland and internationally. With the more focused remit that it now has the company will be in a position to meet the new challenges that the region faces.

I will now briefly outline the main provisions of the Bill which are set out in a new section 21A to the Industrial Development Act 1993. These provisions are based on numerous precedents for transferring staff between statutory bodies.

Subsection (1) of the new section contains a number of definitions. Subsection (2) is an enabling provision. It provides legislative authority to designate the transfer of staff from Shannon Development to Forfás. Forfás is the legal employer of the staff in the three agencies established under the Industrial Development Acts — IDA Ireland, Enterprise Ireland and Science Foundation Ireland.

Subsection (3) provides that staff designated for transfer by the Minister will be appointed to the staff of Forfás. Section 3 of the Bill subsequently amends the Second Schedule to the 1993 Act to include staff transferred from Shannon Development in the categories of staff that Forfás may second to the agencies.

Subsections (4) and (5) of the new section contain the terms of the guarantee that is being provided to the Shannon Development staff who will be designated for transfer. Specifically, it provides that staff who are designated for transfer may not receive a lesser scale of pay or be subject to any less favourable conditions of service than they were entitled to in Shannon Development. The superannuation benefits of the staff concerned may not be less favourable than those to which they were entitled in Shannon Development.

It has been normal practice to include the type of provisions contained in this Bill in legislation providing for the reorganisation of State agencies. In this instance, however, no new body is being established and both Enterprise Ireland and Shannon Development will continue to operate as separate agencies, each with its own distinct remit.

Shannon Development and Enterprise Ireland are well advanced in identifying the number of posts to be transferred. Shannon Development staff and their representatives are engaging positively with the process and I understand a strong level of interest is being expressed by staff in transferring to Enterprise Ireland.

Enterprise Ireland has also recently announced that it intends to move both its regional development headquarters and the newly established city and county enterprise boards unit to Shannon. Enterprise Ireland plans to have interim office accommodation in Shannon to accommodate both the Shannon Development staff and the regional headquarters staff by mid-2007. It is anticipated that approximately 70 Enterprise Ireland staff will transfer into this new accommodation as soon as it is available.

Mr. Coghlan

I welcome the Minister to the House. We support this Bill, which is technical in nature. I wish the staff well and welcome the guarantees provided for them which, as the Minister outlined, is quite a normal feature.

In accordance with the new mandate for Shannon Development announced by the Minister for Enterprise, Trade and Employment in July 2005, the indigenous industry functions carried out by Shannon Development under delegated authority from Enterprise Ireland will revert to Enterprise Ireland in the new year. The purpose of the Bill, as the Minister outlined, is to provide legislative authority for the Minister to designate the transfer of staff from Shannon Development to Forfás and to provide a statutory guarantee to the staff that their pay, conditions of service and pension arrangements shall be in no way be diminished by virtue of the transfer. That is to be welcomed.

Nobody could doubt the importance of Shannon Development. Traditionally, it has had functions throughout the mid-west stretching to parts of Offaly and covering Clare, north Tipperary, Limerick and north Kerry. I was delighted to hear from the Minister of the development of the Kerry deepwater zone and other developments. I hope these initiatives live up to the promise the Minister outlined.

It is unfortunate that much time has passed since the Minister originally announced almost a year and a half ago that he was stripping Shannon Development of these traditional enterprise creation functions. It was a decision many condemned at the time, not only because of the manner in which it was announced — the crucial decision was buried in a press release, as my colleague in the Dáil, Deputy Pat Breen, pointed out — but because it was done in the middle of the summer. However, earlier this year the Minister flip-flopped and opted to allow Shannon Development to retain its enterprise functions within the Shannon Free Zone.

Shannon Development should be rightly proud of its recent announcement that Digital River will provide 350 jobs over the next five years in the Shannon Free Zone. Shannon Development is to be complimented on that because Mr. Kevin Thompstone and his team have gone to great lengths throughout Europe and elsewhere in the world to find industry suitable to the region and Digital River will be a welcome asset. In the intervening period between the original decision and its reversal the relevant agencies were left in limbo about who was responsible for what.

I welcome the fact that the core expertise of Shannon Development is being retained at the Shannon Free Zone. There must be a renewed focus on enterprise creation in the remainder of the county. As Deputy Breen recently pointed out to the Oireachtas Joint Committee on Enterprise and Small Business, Ennis is in danger of becoming a dormitory town while the outlying towns of north, west and east Clare could all do with an employment boost. One good employer in Ennistymon is doing well. It is a digital company that exports signs throughout Europe and elsewhere in the world. Ennis in particular is suffering from a stream of job losses and I would welcome renewed efforts from the IDA and Enterprise Ireland to reverse some of the job losses we have seen in recent years.

Nationally, in the past five years more than 33,000 manufacturing jobs have relocated from Ireland to more competitive economies and more than twice that number of jobs that would have been created by companies locating here have not come to pass. Notwithstanding last week's roll-back, the Government's recent approval of large price hikes in gas and electricity in the absence of a proactive jobs policy is, at best, misguided and foolhardy and, at worst, irresponsible.

The Government is making our economy less competitive and driving manufacturing industry out of the country into more competitive countries. The recently announced price increases will also hit the already hard-pressed domestic consumer on top of the existing burden of high mortgages, long commute times and high child care costs, all of which will fully impact only in mid-2007. We cannot allow the destruction of our manufacturing industry here in the same way the Government has allowed the destruction of the sugar beet industry. Ireland has gone from being ranked fourth in 2000 to being ranked 21st this year in the World Economic Forum's Global Competitiveness Report due mainly to the Government's failure to control prices.

Mr. Leyden

Has the Senator any good news? His contribution is all doom and gloom.

Mr. Coghlan

I will leave that to the Senator when he will shortly have an opportunity to contribute. I am doing my best to get through this script.

Mr. Leyden

The Senator should skip it; he should send it back to his party's press office.

An Leas-Chathaoirleach

Allow Senator Coghlan to continue without interruption.

Mr. Coghlan

I do not want to be distracted but in introducing this Bill on budget day it is as if the Minister is trying to bring in something under radar.

The National Competitiveness Council advises that Irish prices rose 22% more than those in other EU countries in the years 1999 to 2003. Ireland is ranked 20th in the World Economic Forum's Global Information Technology Report that measures the technological readiness of countries. We are behind our major trading partners such as the US, the UK and other EU counties such as the Netherlands, Sweden, Germany and Austria. Let us not forget that in February 2006 because of the failure of Government to properly deregulate the electricity market, Airtricity announced that it was pulling out of the Irish market.

I urge the enactment of this legislation before the end of the year to facilitate the transfer of staff from Shannon to Enterprise Ireland, as the Minister outlined. At the same time responsibility for indigenous industry support functions will transfer from Shannon Development to Enterprise Ireland on 1 January.

We support and welcome this Bill. The legislative provisions are based on numerous precedents for transferring staff between public bodies and I welcome that a statutory guarantee has been provided that there will be no diminution in the pay or service conditions of Shannon Development staff when they transfer to Forfás. I hope the Bill will be enacted quickly. I also hope the mistakes by the Government on Shannon Development will be rectified giving the IDA a proper job creation role in the mid west to give a boost to the economy in this fine region. Shannon Airport, located in the middle of the region, is an engine for growing jobs there. I hope Shannon Development will be successful in the near future. I wish the Bill a speedy passage.

Mr. Leyden

I welcome the Minister and his officials to the House. I congratulate the Minister as a member of Cabinet on the introduction of an excellent budget. In regard to the promotion of enterprise, the Minister has achieved a tremendous effect in terms of the provisions of the budget, which will ensure that we will remain competitive, particularly for the 800,000 people working in the small enterprise sector. The Minister set up the enterprise unit, which made recommendations, the results of which are provided in the budget. He can take great credit for this work. The BSE scheme extended for a seven year period. Other initiatives, of which the Minister will make great play, include the Small Business Forum which he established. All the recommendations of that forum were adopted by the Government and Cabinet, which the Minister steered through the Cabinet.

I understand that with the agreement of Senator Coghlan, it has been proposed to take all Stages of the Bill tonight. It is important that we agree to take the Second, Committee, Report and Final Stages with the agreement of the House.

An Leas-Chathaoirleach

It that agreed? Agreed.

Mr. Coghlan

Yes, I have already indicated that.

Mr. Leyden

I thank the Senator. He has been most co-operative.

Mr. Coghlan

As per usual.

Mr. Leyden

Yes, but I wish he would not use the script from the Fine Gael press office.

Mr. Coghlan

We all have a job to do.

Mr. Leyden

I withdraw that comment. I acknowledge that the Senator has a personal opinion on this matter.

I welcome the Minister to the House and I am grateful for this opportunity to speak on the Bill. The new mandate for Shannon Development means that the indigenous industry support functions carried out by Shannon Development will revert to Enterprise Ireland on 1 January 2007, necessitating the transfer of approximately 40 staff from Shannon Development to Enterprise Ireland.

I welcome the Bill, as it provides a statutory guarantee to the staff who are being transferred that their conditions of service and pension arrangements shall not be diminished by virtue of the transfer. I anticipate that the relocation of Enterprise Ireland to Shannon as part of the Government's decentralisation programme will lead to a renewed focus on the development of industry in the west and I very much look forward to this development. I also welcome the fact that Enterprise Ireland has a base in Athlone close to my country and the decentralisation of those services is welcome.

I am pleased that the changes proposed in the Bill will enable Shannon Development to have a more focused, strategic role on the broader regional economic development of the Shannon region. Shannon Development has the resources and expertise to successfully promote growth and innovation in the Shannon region.

The Shannon Free Zone is a most attractive location for foreign direct investment. The company's activities as the regional tourism authority for the Shannon region will also continue to play a key role in the economic development of the region. It makes sense that the staff of Shannon Development, who are currently engaged in development activities with business in the region, are to be transferred to Enterprise Ireland as this ensures continuity for their clients, as well as providing them with opportunities for career advancement.

I commend the work of Enterprise Ireland and Shannon Development in the region, and I wish the staff the very best in their new role. Shannon Development has played a vitally important role in the development of the mid-west region. I note its innovation in tourism and in other areas, using a sensible approach which has secured its future and the future of the region. The two bodies have worked together using a united approach and I commend the Bill to the House.

Mr. Hanafin

I wish to share my time with Senator Daly.

An Leas-Chathaoirleach

Is that agreed? Agreed.

Mr. Hanafin

I welcome the Minister to the House. This is a technical Bill and I support the recommendation of the enterprise strategy group and the new mandate for Shannon Development. The indigenous industry support functions carried out by Shannon Development under delegated authority from Enterprise Ireland will revert to Enterprise Ireland on 1 January 2007. The reversion of these functions will also involve the transfer of about 40 staff from Shannon Development to Enterprise Ireland.

This Bill provides me with an opportunity to commend Shannon Development for a success that has been emulated by many other countries since 1959, when it was first established. In 1960, the Shannon free zone established the duty free area, which was carried from Abu Dhabi to Moscow as a success story. Successive Fianna Fáil Governments can be commended for duty free and tax free initiatives. In a recent report in The Economist, it was stated that at present, the GDP per person in Ireland is far ahead of our neighbours. This is a continuing success story and even when we take purchasing power parity into account, there has been enormous success. The Minister and the Government can take the credit for this.

I hope this success continues with today's budget. We have come a long way since 1959 and the original Barrington report in the 1960s, which showed that Ireland had severe economic difficulties, with many people emigrating, many not getting married and many with no opportunity. That has all changed. People are not only talking about jobs and career paths, but also about taking a few years' out to travel the world. Long may it last.

In 1963, the major tourism initiative began at Bunratty Castle. In 1964, the first international consultancy assignments were undertaken. In 1968, Shannon got responsibility for all regional inward industrial investment. In 1972, the foundation of what is now the University of Limerick occurred. In 1978, the first small and medium enterprise pilot programme was launched. In 1980, an innovation centre for indigenous high technology firms was opened. In 1984, the national technology park commenced operations. In 1986, Shannon Development established Shannon Heritage Limited and the Limerick food centre opened. In 1990, the Shannon world aviation park opened.

In 1994, the pilot programme of Shannon venture capital was initiated. In 1997, direct marketing centres were successfully launched. In 1999, Kerry Technology Park was launched. In 2001, the Limerick navigation system and marina was opened. In 2002, Doonbeg Golf Club was opened. In 2003, Shannon broadband was launched and Birr Technology Centre was opened in 2003.

Mr. Coghlan

Sweet Doonbeg is a pleasant spot.

Mr. Hanafin

In 2004, e-towns were launched and Limerick broadband networks were completed. Technology was boosted in different areas and heritage attractions have been developed at Bunratty Folk Park. The living past centre has been developed at Craggaunowen, which opened in 1970. It has been a marvellous success story. I wish the Minister well. He will continue the good work. Transferring staff to Enterprise Ireland is a good idea because they are all under one roof. I wish continuing success to Shannon Development.

Mr. Daly

I thank Senator Hanafin for giving me the opportunity to comment briefly on the Bill and I welcome the Minister to the House. We were apprehensive about this when it was initially announced, but after some discussion with the Minister and with Shannon Development we are very satisfied that a resolution has been found to allay the fears that some staff had about the transfer. In making this arrangement, it consolidates the organisation of the industry in a way which will be better for the region in the long term. It will also be better for Shannon Development and Enterprise Ireland.

I am glad that Enterprise Ireland has taken the decision to decentralise to Shannon and that it has placed its new offices for the enterprise boards in the Shannon area. This will be very important for the long-term interests of the enterprise boards. This Bill makes a firm decision on long-terms prospects and that is good for the region. There has been much anxiety in the region, due to changes at Shannon Airport and the development of the new airport authorities.

The Minister for Arts, Sport and Tourism recently endorsed Shannon Development's role in the tourism industry, which is also very important. Some local input into the work of Shannon Development in tourism would be a good thing. Many people in the region hold the view that while the board has done a very good job and highly skilled personnel are involved in that area, there is a necessity for some local input and some involvement by local authorities. An example is Shannonside, which was abolished in 1989 when much re-organisation took place to get better value for money.

I hope that the personnel in Enterprise Ireland will take a more positive view of relocating to Shannon. Shannon has been a success story for relocation long before this recent announcement was made. The vehicle registration unit of the Department of the Environment, Heritage and Local Government relocated to Shannon, which has been a great success. The people in that office had the opportunity to avail of a better lifestyle, with far less traffic problems than in this city. Personnel at Enterprise Ireland should look favourably at moving to our region, one of the most attractive in Ireland. I am sorry to say this in the presence of Senator Coghlan from Killarney, but we do not give away any jewels on the tourism crown of the west coast of Clare.

Mr. Coghlan

I am glad that the justifiable fears of the good people of Clare have been allayed.

Mr. Daly

We are satisfied that this move will be successful. I wish the Minister well in getting it expedited. He will have my support in getting it through the House.

Mr. Kitt

I welcome the Minister to the House and I also welcome the Bill. There are numerous precedents to bringing one agency under another. There were some worries about this case, but those worries have since been eased and I wish the people of Shannon Development the best of luck. Coming from Galway, I often looked on in envy at Shannon because we did not have the same development until the city and county development boards were created. They are now doing tremendous work and I am glad to see that the city and county development boards in the mid west will also have their offices in Shannon.

has been the creation of enterprise centres. They are the new advance factories, because that concept is probably gone. The enterprise centres set up by Enterprise Ireland have been very successful and today's budget will be of great benefit in setting up more of those centres.

I congratulate the Minister and the Government on the budget. It was very much pro-industry and small business in particular. I want to see more involvement in those centres.

One query I have about this issue is that Enterprise Ireland does not sufficiently investigate where it can get sites or buildings for these small industries. I chair a committee of Deputies and Senators from the west. In conjunction with the Council of the West, we have met on a number of occasions and we are very glad Enterprise Ireland is to meet us. I welcome that initiative as well because it is very important. There is no excuse for agencies such as this not visiting different centres, given the early flights available between Dublin and Galway and Shannon. There are many opportunities to hold such meetings and they can all be accommodated in one day, the intention being to discuss how best industry may be promoted in our area. That is one of the developments I gladly welcome.

I recall that we spent 26 years on a committee trying to get a rail corridor which, thankfully, is now being begun to be built between Ennis and Athenry. Fr. Mícheál MacGréil would often say it was a pity Iarnród Éireann would not meet us. We tried for a long time and, eventually, its representatives flew into Knock Airport, we had some great discussions and this helped in getting the ultimate Government decision to open the western rail corridor.

I would like to see the same thing happening with these bodies. I hope the good work done by Shannon Development is recognised. It is possible to have a satisfactory transition as happened when other bodies were subsumed into larger agencies or Departments. If the work Shannon Development has done can be done by Enterprise Ireland, so much the better and I welcome the Minister's continual interest in setting up more enterprise centres.

Minister for Enterprise, Trade and Employment (Mr. Martin)

I thank all the Senators for their contributions. I appreciate very much the very positive support the Bill has received in the Seanad.

We consulted widely across the area. Trade unions representing workers were anxious to discuss matters with us. We facilitated such discussion and it is good to see we have achieved a significant degree of consensus on the way forward in terms of the indigenous sector. Given the significant restructuring that has taken place within Enterprise Ireland, it is important to have a national remit and that the people and companies in the mid-west can benefit from this and from the enhancement of skills that will be on offer. For example, Enterprise Ireland has a strong capacity in terms of research and development technology supports for small enterprises. In the years to come it will be in a stronger position to deploy these advantages to the companies in the mid-west.

Likewise, the international agenda through sales and marketing has been highlighted in a variety of forums including the enterprise strategy group. It is important that companies in the mid-west have better access to the resources Enterprise Ireland has internationally in 34 locations across the globe. They can participate in the new divisions of Enterprise Ireland, be part of the productivity funding and have access to a variety of other advantages. There was significant access through Shannon Development, as well.

Shannon Development, as we know from the infrastructure within the mid-west, has achieved an enormous amount for the region in more than 40 years. Given the changing nature of industry, globalisation etc., the time was right, however, for moves towards innovation and research. The types of supports Enterprise Ireland has in house, especially in technology supports, research and development and in terms of international sales and marketing skills will have a full national remit and companies in the mid-west will have unrestricted and comprehensive access. Employment of companies in the mid-west will benefit as a result of this move.

Mr. Coghlan

We hope the Minister is right.

Mr. Martin

Senator Daly touched on a very important point in terms of the new mandate I have given Shannon Development, and not just in the context of this Bill. Certainty and opportunity have been achieved for the workers. A national organisation for workers who may be interested in new opportunities is on offer. There is far more opportunity in the immediate future in the context of the Enterprise Ireland structure than may have been available under Shannon Development, and that is important. I take on board what Senator Daly said about the attractions of the Shannon and mid-west region, which I do not doubt.

Mr. Coghlan

I do not doubt them either, but I believe he knew that anyway.

Mr. Martin

I have asked Shannon Development to look at other areas within its region. Parts of Clare, perhaps, that might not have developed as well as the Shannon area might be focused on, as well as north Tipperary, parts of Offaly and west Limerick. These are important areas that need particular attention because in some of them, traditional indigenous manufacturing has declined. In that regard we need to concentrate on the small business opportunities for such areas. I know Shannon Development is keen on that, through major projects such as Digital River, the major deep water facility and the proposed FEG initiative there. In my recent discussions with Shannon Development I was assured this was ongoing and I am quite satisfied with the progress that has been made. Senator Coghlan referred to that in the course of his address.

Senator Leyden made a broader point in the context of today's budget, which is very topical and appropriate to this debate. The range of measures announced today for the small and medium enterprises sector represents more than 100% of the recommendations of the small business forum, SBF. The SBF comprises representatives of small businesses as well as the agencies and that sets a good context and backdrop for the new structures we are putting in place which should facilitate the regions.

Senator Hanafin eloquently went through the history of Shannon Development and dealt with its contribution across different areas, from tourism to heritage and industry, and that point has been well made.

I accept what Senator Kitt had to say and Enterprise Ireland will be glad to meet him and his group. In fact, along with Enterprise Ireland, I addressed a large group of indigenous interests last year in Galway city. We also met small employer forums from Mayo and Galway to hear at first hand about the challenges they faced in setting up and running businesses in that region. We had frank exchanges with them which were facilitated by Enterprise Ireland and I look forward to continuing this type of approach of listening to what people at the coalface of business have to say. Senator Coghlan is no stranger to that, either, to be fair. I thank all the Senators for their co-operation.

Acting Chairman (Mr. Daly)

I thank the Minister for his reply to Second Stage of the Bill.

Question put and agreed to.

Committee Stage ordered for today.