Industrial Development (Amendment) Bill 2018: Second Stage

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

I am pleased to have the opportunity to commence Second Stage. I look forward to engaging with Senators on the substance of the Bill and I hope to secure the broad support of the House for this important legislation. The Bill was not amended in any way during its passage through the Dáil and that, in itself, is clearly indicative and reflective of the broad support it has attracted on all Stages thus far. I would, therefore, like to express my gratitude to my colleagues in the Dáil for their support and positive engagement. In particular, I thank the Select Committee on Business, Enterprise and Innovation for its timely consideration of the legislation.

This is a short but technical Bill that addresses the implications of a 2015 Supreme Court judgment and aims to ensure that the IDA can continue to purchase property for the purposes of industrial development. I would like to be crystal clear at the outset that the purpose of this Bill is not to change how the IDA carries out its property functions; it is to ensure the IDA can carry on doing what it has done successfully for many years. The ability to provide property solutions to its clients is an essential tool that the agency uses to attract foreign direct investment, FDI, to Ireland. It is particularly important in order to attract FDI to the regions, which is an issue close to many Senators' hearts. It is, therefore, important that we enable the IDA to continue to do this in to facilitate the authority in its work and generate jobs in all regions.

I would like to explain the need for this legislation. In 2011, the IDA sought to acquire land in County Kildare by compulsory purchase order, CPO, for industrial development purposes. It is important to note that this was the first and only time the IDA had ever sought to purchase property compulsorily and, in doing so, the agency relied on the existing compulsory purchase powers set out in the Industrial Development Acts. However, the landowner concerned successfully challenged the CPO after the Supreme Court found in his favour.

In setting aside the order, the court's judgment highlighted two key findings. First, the court found that the IDA had acted ultra vires as section 16 of the Industrial Development Act 1986, on which the IDA relied, did not allow the agency to acquire property for future, as opposed to immediate, use. Equally, the court ruled that the IDA did not identify a specific company for which the property was being acquired and this was again outside the terms of the legislation. The court also made clear that both of those determinations would apply when property was being acquired by agreement. Therefore, the court’s judgment had wider implications for the IDA’s purchasing powers.

Second, the judgment was clear that an independent body such as An Bord Pleanála should be designated in legislation to either confirm a proposed CPO or to adjudicate on any objections to such an order.

I want to clarify again that the sole aim of this Bill is to address in full the issues raised in the Supreme Court judgment. The Bill does not equip the IDA with strengthened or additional powers. The aim is simply to put in place an updated and modernised process, incorporating a full role for An Bord Pleanála, so that the IDA retains its current industrial development property purchasing powers. The Bill does not represent a policy shift in the IDA’s approach to purchasing property and there is no intention to increase the authority’s use of compulsory purchases on foot of this legislation.

I will give a brief overview of the content and structure of the Bill itself. Its aim is to address the Court’s judgment in the 2015 case. With that in mind, the draft Bill ensures the IDA will continue to have the capacity to compulsorily acquire property on an exceptional basis, in limited circumstances and subject to strict requirements. I stress that any future compulsory purchases will be subject to tighter controls and more rigorous requirements than are set out in current legislation. The amended legislation is clear that the land must be for immediate industrial development use and that the IDA will need to have a specific client in mind for the property.

In addition, as per the terms of the Supreme Court judgment, the Bill provides that An Bord Pleanála will undertake a full adjudicatory role in the process, a role that is very much aligned to its existing role in compulsory purchases carried out by other State bodies. Second, the Bill will ensure the IDA can continue purchasing property by agreement and with the full consent of the vendor, even when it is for future use and a specific company has not been identified as the beneficiary. In more detailed terms, the Bill amends section 16 and the Second Schedule to the 1986 Industrial Development Act and also applies certain provisions of the Housing Act 1966 in relation to compulsory purchases, and certain provisions of the Planning and Development Act 2000 in respect of the role of An Bord Pleanála.

Sections 3 and 4 amend section 16 of the Industrial Development Act 1986 and make it clear that the IDA can continue to acquire property by agreement in circumstances where the property is not for immediate use, and whether a specific industrial undertaking has been identified in advance. This is how the agency has always operated when purchasing land by agreement with landowners, so this does not represent a new approach or a policy change.

Sections 5 and 6 provide that the IDA will be permitted to purchase land compulsorily only in circumstances where it is required for immediate, as opposed to future use, and a specific undertaking has been identified. They also provide that the compulsory purchase powers are to be used in accordance with the existing and well-established compulsory purchase processes set out in the Housing Act 1966. Under this legislation, compulsorily acquired land can only be leased, as opposed to sold, by the IDA to an industrial undertaking. This important safeguard serves to ensure that land that has been compulsorily purchased is put to immediate industrial development use, but remain in State ownership.

Section 7 applies certain existing provisions of the Planning and Development Act 2000 to provide for a full role for An Bord Pleanála as an independent body to affirm any CPOs made by the IDA. In addition, the Bill provides for An Bord Pleanála to take on an adjudication role with regard to objections to a compulsory acquisition. I reiterate that the role assigned to An Bord Pleanála in future IDA compulsory purchase closely mirrors its existing role in compulsory purchases carried out by a wide range of other State bodies.

I draw the attention of the House again to the fact that the Bill was not amended during its passage through the Dáil and it remains as originally published. This reflects the broad support that it has attracted thus far, for which I am grateful. During the debate in the Dáil and in the Select Committee on Business, Enterprise and Innovation, it was suggested that, in the case of a compulsory purchase, the IDA should be required to demonstrate that no other viable alternative sites could be acquired by agreement. This consideration of alternatives, however, forms a core part of An Bord Pleanála’s deliberations when adjudicating on an objection to a compulsory purchase. It is also the case that a compulsory purchase should only be envisaged as a last resort in a truly exceptional circumstance where all other viable options have been exhausted. After all, it is abundantly clear that a compulsory purchase would not be pursued unless it was necessary, and clearly that would not be the case if there was a suitable alternative.

It was also suggested that the Bill should include a buy-back provision, whereby any land purchased compulsorily should be offered for sale back to the original landowner in the event that the planned investment does not proceed for whatever reason. We have considered this issue, but it is not a matter for this legislation on the basis that such a situation is not expected to arise. As has been explained on various Stages in the Dáil, it is only intended to resort to a compulsory purchase as a truly exceptional measure, once all other viable options have been exhausted.

The Bill also makes it explicitly clear, even in the very unlikely event of a compulsory purchase in the future, that land cannot be sold by the IDA to an investor and can only be leased to a company. The availability of suitable property solutions is proven as a key driver in attracting FDI and winning job-rich investment for the regions. It is a core element of Ireland’s value proposition presented to prospective IDA clients. With that in mind, I think we would all agree that the IDA carries out critically important work trying to support regional development and attract as many jobs as possible to regional locations. It is essential, therefore that no legal uncertainty, no matter how small, attaches to its property purchasing powers. Otherwise, we risk diminishing the IDA's capacity to attract further foreign direct investment and generate new employment opportunities across the country.

A vital aspect of the IDA’s work remains, as has been the case for many years, connecting those firms with property solutions. To do that effectively, the IDA needs continued capacity to purchase properties so that they can be offered to potential investors. This means that the IDA must have the capacity to buy property for the purposes of industrial development in situations where it may not be required for immediate use and where a specific company has not yet been identified as the ultimate beneficiary. I am sure we are all aware of how important this is to support the IDA’s work to increase foreign direct investment in rural and regional locations, given that the vast majority of IDA property purchases are outside main urban areas.

I would like to be very clear again that while the IDA very rarely employs its compulsory acquisition powers - it has only ever done so once - it is important that it retains its statutory power to do so. Without compulsory purchase powers, the IDA could potentially miss out in the future on extremely significant investment opportunities that could have a transformative impact or effect on a local community by bringing job-rich investment. I reiterate something I mentioned, namely, that this is a short and technical Bill.

Echoing some of my earlier comments on the Bill, I reassure Members that there is no intention here to change how the IDA goes about its property functions or to increase its use of CPOs. The IDA does not rely on compulsory purchases as a means of acquiring land and the Kildare case was the first and only time the agency had attempted to use its current powers. In fact, I would not expect any change in practice in how the IDA fulfils its property functions on foot of this legislation. The aim of this Bill is to ensure that the IDA can carry on doing what it has been doing so successfully for many years - attracting job-rich investment right across the country. That is the purpose of the Bill and that is why I am asking for Senators' support. I commend the Bill to the House.

Similar to the last Bill, we are happy to support this Bill again today. As the Minister stated, it came about due to the ominous court case which highlighted a lack of power to purchase sites. I have one query about the large IDA park in Mullingar. It is a specific question and I know the Minister has heard much about it from my colleagues in Westmeath. I am curious as to whether she has any update or news on it? We are happy to support both of these Bills today.

I will vary the order and call on Senator Mac Lochlainn and I will keep Senator James Reilly until the end.

That is no bother at all.

It is not necessarily good wine until last or anything like that.

I am sure Senator Reilly might want to respond to that all right. We are happy to support this Bill. The solid work of the IDA in many places across the State should be acknowledged, as this Bill is primarily about its functions and powers. I hope that performance can continue and that this Bill will help to provide the tools to achieve that. If it does, that is a good thing. My party has continually highlighted the need for efforts to locate FDI companies and jobs in rural areas and regional Ireland. I know the Minister represents a Border and rural community herself.

It is also important to get more jobs to the regions, especially FDI jobs. Our analysis indicates that some areas are still faring very poorly on this front. The ratio of local FDI jobs to population is, not surprisingly, best in Dublin with one IDA-backed job for every 15 citizens. In my home county of Donegal there has been some progress in recent years. We have discussed this before in this Chamber and, as I said, the Minister represents a Border county so she understands the issues well and the particular impact of partition on our communities around the Border area. We have to challenge the IDA and Enterprise Ireland to do more.

In Donegal, we have been fortunate in that we have successful companies like Pramerica and Optum. They have created two thirds of the existing FDI jobs in Donegal and huge numbers between the two of them. I will, however, take the Minister back to 20 years ago. It is important that we put things in context. We had a Donegal employment initiative 20 years ago and it reflected the collapse of the textile industry in our region at that time. We had a task force chaired by Mr. Michael McLoone, a former chief executive of Beaumont Hospital, but more importantly, from a Donegal perspective, he was the county manager. He was a very capable public servant who is now retired. That task force at that time put in place job creation targets of about 5,000 over the next seven years. It reflected the post Good Friday Agreement and what was seen as a period of hope, so that was a reasonable target.

The reason those targets were set is important. It was to allow Donegal to catch up with FDI levels across the State. As we sit here today, 20 years later, we have gained 500 jobs in net terms. Over that same period there has been an increase in jobs in IDA supported companies of about 50%. That is a solid performance and the IDA does a good job for our country overall. However, in Donegal it is about 18% growth, due mainly to Pramerica and Optum. While I think the IDA has done a good job supporting those companies, which are great, and it works very well with Letterkenny Institute of Technology, LYIT, it is not enough.

There needs to be a special focus on Donegal and particularly now with the threat of Brexit. We are very concerned. It is a mixed bag and I have to report that to the Minister. I would not be doing my constituents any favours if I came in here and gave the Minister a false impression of the situation in the county. I appreciate her sincerity and also her understanding of the issues as she comes from a Border county herself. We have a good chance with her being in that portfolio and she has my goodwill and support but more needs to done to bring new companies.

Last year there were only two site visits in Donegal. This year there have been none so far. My concern is that we are not following up on Pramerica and Optum and saying that Donegal is a place to do business. Pramerica is a great story. About 20 years ago, it had about 18 or 19, mostly local, people. Working with partners in the United States, it has developed today to have about 1,800 people of all nationalities. It is a really superb company, a great story and a great way to market Donegal as a place to do business. I hold it up and offer it to the Minister as an example.

Regarding the specifics of the Bill, section 4 sets out that an immediate use and existing tenant is not required for the IDA to purchase land. This is fair as the decision by companies who locate here can be sudden and they require lands immediately, so only permitting the purchase and development of land when a company is waiting to locate here would not be feasible due to delays and could jeopardise the investment.

Section 5 sets out that lands acquired compulsorily may only be leased and not sold. This is appropriate given how the lands would have been obtained by a CPO.

Section 6 sets out in detail the new compulsory purchasing power to be exercised only by the IDA and outlines that such powers may only be used to compulsorily purchase land where an industrial undertaking has been identified. This section also adapts and applies provisions of the Housing Act 1966 to give the IDA compulsory acquisition powers on par with those of a housing authority.

Section 7 gives An Bord Pleanála powers to assess and, if necessary, confirm compulsory purchases by the IDA. This is also a good check on the new powers to be bestowed on the IDA to ensure they are exercised as envisaged. However, we only want a CPO to be used by the IDA in exceptional circumstances when no other options are available and as a last resort. There is a balance here between private landowners' rights and the public good. A fine balance must be achieved to ensure land and property-owners are not adversely affected in the pursuit of suitable sites for multinational companies.

The Minister of State, Deputy Breen, on Committee Stage of the Bill in the Dáil said he would consider the points my party raised about what would happen if land was subject to a CPO but for some reason the use for the land fell through. Would there be an option for the land to be sold back to the landowner for the same value? That is something for the Minister to respond to. I will take the opportunity to acknowledge the important work of the IDA, which has been successful throughout the State in attracting jobs. It has done a good job overall for the State in attracting jobs. We need to focus on getting more of these jobs to the regions, which will require a greater investment in infrastructure by Government, including in my county of Donegal. Otherwise we are happy to support the Bill. I thank the Minister again for her time.

Cuirim fáilte roimh an Aire agus cuirim fáilte roimh an mBille seo. I am delighted to welcome this very good Bill. As the Minister said, it is technical, short and to the point. It comes about as a result of a court case. The IDA does not just do a good job; it does a great job. It is a jewel in the crown of the country and the envy of many other nations in its success rate in attracting FDI and many jobs to the country. It is also important to remember that SMEs, which we mentioned only a while ago while discussing another Bill, are the backbone of our economy and very much the backbone of economies in rural areas. Whilst many of us have left the land, most of us are only a generation away from it and understand the emotional attachment to land. I commend the farmer from Kildare - his name eludes me, although I remember the case well - on fighting his case and fighting for his right to stay in his family home. This Bill has addressed one of the core issues, which is a CPO for which there is no designated purpose and no specific company awaiting its use but rather implemented as a strategic decision. We commend the IDA on its strategic decisions and those purchases will continue. I welcome that in the Bill. I also welcome that an appeal can be made to An Bord Pleanála and that the rights of people will be respected. There will be a direct and real need for a specific site if it is to be the subject of a CPO and families will be compensated. It is difficult for people in these circumstances and it is harrowing for the families. I know of one case where eight years later there is still no settlement in respect of a CPO. However, it has nothing to do with the IDA.

I commend the Minister and the IDA, which does such sterling work for us throughout the world. I also commend the Bill to the House.

I thank everyone for their engagement, comments and observations on the Bill. I look forward to working positively with Senators as the Bill moves through the House. I will respond to some of the issues that were raised.

Senator Davitt mentioned the IDA park in Mullingar. I do not have the information but I will provide him with an update on it. One of the first events I attended when I was appointed Minister was at the new advanced manufacturing plant there in Mullingar, which is a wonderful facility. It is an example of what can happen when universities, agencies and local businesses come together. It was an old cigarette factory. What is being done in that plant is wonderful. I have used it as an example that could be replicated in other areas of the country.

Senator Mac Lochlainn raised the issue of IDA investment. The IDA is very much focused on regional development, as is the Government. It is one of my key priorities. Coming from a rural constituency, I understand the need for regional development and to ensure every part of the country is supported. I am particularly aware of the issues along the Border. For that reason, I brought in the CEOs of the Border counties. I met them all and I spoke to them in the presence of IDA and Enterprise Ireland officials. I asked them to come up with ideas on how they can work more collaboratively to put forward proposals, particularly relating to the regional enterprise development fund which is being rolled out through Enterprise Ireland. It is a €60 million fund and €30 million of it has been allocated. We just closed for applications for the remaining €30 million. I talked to them about how they could identify opportunities within the regions and work collaboratively with other counties, business and agencies to put forward proposals that would draw down funding to help them improve the offering they have in the Border region to allow people access to facilities but also to support businesses there. It is something I am very conscious of. Numerous additional jobs created by IDA-supported companies are generated by existing companies. That has been the case with Pramerica and Optimum. They are both successful companies and they continue to work closely with the IDA.

We are very fortunate to have the IDA. I have been on a number of trade missions. The IDA is a professional body, which operates in a highly competitive global market. It is out there competing with other countries. I was with IDA officials when they were speaking to a company that was making a decision about whether to move to Ireland, a European country or an Asian country. That is the level of competition. When the IDA is pitching and outlining why a company should come to Ireland, it says the regions are an attractive option but ultimately it is the company's decision. We are glad to have them here and they contribute hugely to our economy so at the end of the day the company will finally make the decision on that. Nevertheless, I assure the Senator the IDA is doing everything it can to promote regional investment. On the specific issue he raised regarding the buy-back provision in the Bill, I have considered the issue but it is not a matter for this legislation on the basis that such a situation is not expected to arise. It is only intended that a compulsory purchase will be used as a last resort and an exceptional measure once all other viable options have been exhausted. The Bill also makes it explicit that even in the unlikely event of a compulsory purchase in the future, the land cannot be sold by the IDA to an investor and can only be leased to a company, so it will always remain in the ownership of the authority.

I hope I have addressed all the issues, and I look forward to the support of Members.

Question put and agreed to.

When is it proposed to take Committee Stage?

Committee Stage ordered for Tuesday, 17 July 2018.
The Seanad adjourned at 2.10 p.m. until 11 a.m. on Tuesday, 17 July 2018.