Select Committee on Finance and General Affairs debate -
Wednesday, 10 May 1995

SECTION 35.

Mr. McCreevy

I move amendment No. 38:

In page 61, subsection (1) (a), line 28, after "39" to insert "and shall in particular be deemed to include any office space constructed in an enterprise area provided such office space is available to potential qualifying companies as proposed in the Finance Act, 1995 and such space is available for a minimum of twelve months, and in the event of there not being sufficient qualifying companies to take up the space, then any subsequent first time lessee taking space for occupation thereafter will be deemed to be a qualifying company”.

Mr. E. Ryan

The financial commitment to build in some of these will be considerable. Because some are secondary locations and the qualifying users will not be known in two or three years time, the amendment ensures that if companies do not qualify to take up the space, others could do so and those developing it will not be left with enormous costs hanging over them. Some of these site will have to be built at the same rather than at different times.

Mr. Penrose

I compliment the Minister for taking the initiative to amend the urban renewal scheme, especially as regards designated areas as brought forward in 1994. The amendment of this scheme is required throughout the country, particularly in relation to office accommodation, which was severely restricted. Many newly designated areas, including Mullingar, found themselves in a straitjacket in that residential accommodation was the primary criteria to be followed. Many of the designated areas would not have been able to strictly comply with this.

Obviously, the occupier and residential mix is important, but the amendment to section 35 as regards office accommodation is worthwhile. I thank the Minister for doing this because it will allow major commercial developments to take place in areas which are not suitable for residential accommodation and there was one such area in Mullingar. However, this has allowed positive planning to take place which will have knock-on effect on employment. Some 150 jobs in construction will be created over a two to three year period.

Chairman

Will the Minister elaborate on the concept of enterprise areas?

Mr. Quinn

It derives from my experience in the Department of Enterprise and Employment. Many of the industries attracted by the IDA to this country moved from traditional industrial type factory accommodation employment to a white collar mix of office and light engineering and processing accommodation. Perhaps the best example is the Motorola company in Swords where half the building is effectively an office and the other half is in near laboratory type conditions. The workforce which it would attract in many cases would be people who would want to be city centre located in the first instance.

In addition to that, a company called Sun Micro Systems got temporary accommodation in a city office, but had reluctantly to move out. Its workforce would have been better housed or accommodated in a city centre location. These companies wanted to be located in Dublin, primarily because of the pool of skilled labour. However, the IDA did not have land in the locations where some, not all, of these companies wanted to locate. It was against that background that the idea of enterprise areas was generated and matched to parts of the city which would not otherwise take off unless they got such an incentive. I discussed this idea with the then Minister for Finance and it was agreed that we would locate in a number of regions in the country — Cork, Galway and Dublin — in areas which would be, as Deputy Eoin Ryan said, marginal in the normal course of events. Forfás, which is the holding company for IDA Ireland and Forbairt but which retains the property function of the old IDA, has a certifying role so that net additional companies would come in rather than allowing companies to move from one location to another.

The present office market is heavily over-supplied and it would be crazy in economic terms to provide incentives for domestic office accommodation when there is still vacant office space. Some of this is substandard because it does not have suitable floor to ceiling height for the new levels of servicing required. Around the city 1960s and 1970s office buildings are being rebuilt because they no longer comply with the type of high level cabling and trunking required for computers. That is the concept behind the enterprise areas. However, we are not sure how the scheme will work.

This amendment would create difficulties for people relocating from office accommodation in one part of the city to another and it would defeat the purpose of the section. While I understand why a developer with committed capital would want this comfort, it could be more readily found in the interpretations which the Minister for Enterprise and Employment and Forfás put on qualifying companies rather than in this section.

Mr. E. Ryan

As the Minister said, he does not know how this will work. That is the problem because neither do many of the people who wish to undertake projects. That is why they are looking for this.

Chairman

Would these be specific areas?

Mr. Quinn

Development in a large section of the East Wall in the Dublin area is proceeding and the enterprise area developed on the south side of the river is in the immediate vicinity of the Grand Canal Harbour basin on lands still owned by Bord Gáis Éireann.

Chairman

They are not to be confused with community enterprise partnerships?

Mr. Quinn

No.

Mr. McCreevy

As regards urban renewal and designated areas, I am confused about the different schemes. I accept what the Chairman and others said in this regard. Inner city renewal started a few years ago and was encouraged by members of my party, particularly the former Taoiseach, Mr. Charles Haughey. It is a good idea which has worked well.

We talked earlier about simplifying the tax code and members of this committee mentioned how simple the UK's legislation is. We must try to do this. This area is confusing except to the experts. A small group specialises in giving advice in this area because it studied it from the start and has been able to develop the expertise. Successive Finance Acts have made the situation worse, as far as most people are concerned. It is not just the Finance Acts which made it work. It was successive politicians who saw the opportunity for enterprise. We have the Customs House Docks and the Temple Bar area. We have urban designation, seaside resorts and enterprise areas operating under the same principle, which is to give people tax breaks to encourage them to engage in activities in places which are run down, in a state of dereliction or in need of special development. The Minister will know that when I was Minister for Tourism and Trade, I came up with this idea but events overtook us in November and December 1994 and I was no longer Minister when the idea came to fruition.

I would like the Minister to encourage some of his colleagues to bring all this legislation together and use one name for these schemes. The Department of Finance may be able to take the lead in this. All the schemes could come under the term "designation". We do not have to come up with all these fancy names over a period of years. I can think of many examples over a whole range of governmental activities where various names have been given to different things which operated under the same principle. Many of us are lost because new names are being introduced. We know what all these schemes are intended to do but it would be easier if they were put under one umbrella.

Mr. Quinn

They have different foci of concentration. The seaside resorts scheme was conceived during the Deputy's time as Minister for Tourism and Trade. It addresses very specific problems in relation to resort towns which would not be found in city centre areas where there is dereliction of a different kind. The Temple Bar area was unique because of the cultural connotations, the difficulties of construction and the desire to avoid the demolition and new building which was the feature of the original urban designation experience.

The idea originated in the School of Architecture in UCD in 1985. There was a seminar on both sides of the quays of the River Liffey because of the dereliction, or urban blight to give it is more exact phrase, which was by and large caused by the road engineers of Dublin Corporation, who had a road reservation on which one could land a 747 on either side of the quays.

Chairman

Clanbrassil Street, York Street and so on.

Mr. Quinn

From that came the urban designation concept, which was a Dublin problem but clearly had echoes in most other urban centres, and the first scheme was introduced. The Customs House Docks development proposal originated from local action in relation to what the then Dublin Port and Docks Board was trying to do. It was acquired by the State and the original Customs House Docks Authority was established. Because the big bang in internationally traded services was anticipated in 1989, it was overlaid with the International Financial Services Centre.

These are examples of how schemes originated for different reasons. It would be a mistake to simplify them and put them into a single Bill or to harmonise them because they require different types of interventions. It is the intention of the Revenue Commissioners to introduce and publish in a single booklet a lay person's guide to all these reliefs. The standard of their publications and communications in recent years has improved beyond all recognition.

Mr. D. Wallace

There is no doubt that the urban renewal scheme has been a tremendous success. The recent inclusion of areas such as parts of Blackpool, Shandon Street and South Main Street in Cork to get accommodation above enterprise areas and shops is also of tremendous benefit.

One area in Blackpool which was part of the previous designated area could not proceed because of indecision regarding where the road would be located. Some of the small industries there were removed from the most recent scheme and they are quite annoyed about it. It was not their fault. They had been in communication with the corporation repeatedly in order to clarify whether their premises would be left standing or demolished as a result of the road. They feel hard done by. I do not know if this problem is the responsibility of the Minister for Finance or the Minister for the Environment. However, I ask this Minister to examine it. The problems that arose were not the fault of the people directly concerned.

Mr. McCreevy

I welcome the Minister's statement that the Revenue Commissioners will put the information in booklet form. That is what I had in mind. The Finance Act consists of different chapters.

Mr. Quinn

The Deputy wants all the legislation together as well as the explanatory information in chapters?

Mr. McCreevy

That is exactly what I had in mind. If the Revenue Commissioners proceed with the booklet it will be a great step forward.

Chairman

As both the Department of the Environment and the Department of Finance report to this committee, I suggest that the Revenue Commissioners come to the committee with a draft so that we will have an opportunity to make comments on the drafting. Is that agreed? Agreed.

Mr. McCreevy

I welcome what is being done.

Mr. M. McDowell

Another aspect of this occurred to me as I listened to Deputy Wallace and the Chairman's reference to land owned by Bord Gáis on Hanover Quay. I was contacted by a group of businessmen- I presume they contacted the Minister also- who had land directly adjacent to that site. Effectively, they missed the boat in being added to that designated area. If one were to draw a map there is no logical reason for them being excluded.

It worries me that the process of designation is not transparent; there is no preliminary announcement. No advertisement is put in the paper, for example, declaring that the Department is thinking of designating a certain area and giving people the opportunity of saying that they should or should not be included in it or that the line should be drawn in a particular way. It is a somewhat secret process.

I do not wish to get controversial but in certain rural towns the areas that did and did not fall inside the lines gave rise to dissatisfaction. The same applies in Dublin. It must be possible to have a system whereby a Green Paper style advertisement of an intention to designate appears in the newspaper after which people can make representations before it is too late.

Mr. Quinn

I will respond to Deputy Wallace's observation first. The original designation was in 1986. There was a subsequent enlargement of the designated areas in 1988, if memory serves me correct. In Dublin — I am more familiar with the Dublin area than Cork — the area was over extended and did not have the desired effect. It was like watering the jam. It was cast too large. There was also an internal market mechanism operating. The north side of the city, for example, moved more slowly than the south side. It was conceded by most people that too large an area was designated in a number of cities. In order to get the concentration effect and to enhance the value of designation it was necessary to shrink the area over which it applied.

The process of shrinking was not carried out unilaterally by the Department of Finance. In the first instance local authorities were informed, perhaps not in as transparent and public a manner as recommended by Deputy McDowell and I sympathise with what he said. Under the designation process announced at the end of July last year local authorities were asked to submit areas recommended. Many local authority members and, it is fair to say, members of Dublin Corporation, would have been aware that this was going on and would have been able to make recommendations to the relevant officials and planning departments in their areas. It was then sent to the Department of the Environment which acted as an arbitrator regarding the total extent of the area.

I was not in the Department of Finance last July, but I am of the view that the Department of Finance pretty well accepted what was recommended by the Department of the Environment. It was not our function in the Department of Finance, to act as second guess planners. There is some merit in having a once off tidying up of areas that have not moved, for whatever reason. In the case of the example just quoted, where the blight was caused because of a lack of a decision with regard to roads, the people involved could not develop the area. Ideally local authorities should advise the Department of Environment that in order, for example, to complete a specific square or to remove one gaping hole or an eye sore, they require an extension of designation for that. Let us then bring it forward from the local authorities and undertake it as a once off to complete, so that a good terrace is not otherwise ruined because there is a hole in the middle of it.

Chairman

This is a subject which we could consider at length, and, indeed, we did have a lengthy discussion on it before.

Mr. Quinn

I am not accepting the amendment.

Mr. E. Ryan

Will the Minister write to me, explaining the points he has made?

Mr. Quinn

I will. We will keep the matter under review. The indications are that there is fairly good demand surfacing in respect of this issue and if the absence of this kind of amendment is a manifest impediment to development then we will certainly consider it. However, the mechanism could already be in place through Forfás.

Chairman

An area of urban renewal which has not been considered is suburban renewal where suburbs — for example, Clondalkin and Inchicore — have been destroyed by traffic and other factors.

Amendment, by leave, withdrawn.

Section 35 agreed to.