COMMITTEE OF PUBLIC ACCOUNTS díospóireacht

2004 Annual Report of the Comptroller and Auditor General and Appropriation Accounts: Vote 34 — Enterprise, Trade and Employment.

Mr. S. Gorman (Secretary General, Department of Enterprise, Trade and Employment), Mr. S. Dorgan (Chief Executive, Industrial Development Agency Ireland), Mr. F. Ryan (Chief Executive Officer, Enterprise Ireland) and Mr. K. Thompstone (Chief Executive, Shannon Development) called and examined.

Chairman

Witnesses should be aware that they do not enjoy absolute privilege before the committee. Members' and witnesses' attention is drawn to the fact that, as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons who are identified in the course of the committee's proceedings. These rights include the right to give evidence, produce or send documents to the committee, appear before the committee either in person or through a representative, make a written and oral submission, request the committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses. For the most part these rights may be exercised only with the consent of the committee. Persons invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may need to be made aware of them and be provided with a transcript of the relevant part of the committee's proceedings if the committee considers this appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions under Standing Order 156 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

I ask Mr. Gorman introduce his officials.

I am from the Department of Finance's public expenditure division. With me is Ms Mairead Emerson, who is also from the Department of Finance.

Chairman

I ask Mr. Purcell to introduce Vote 34, IDA Ireland 2004 accounts, Enterprise Ireland 2004 accounts and value for money report No. 49.

Mr. John Purcell

I am sorry to have to start by correcting the Chairman but the report is value for money report No. 50. I will start with that report.

The report records the results of an examination of Shannon Development's sale of a site at Ennis Road, Limerick, in 1998 after the site was deemed surplus to the company's requirements. We examined whether the best price for the site was obtained and whether the sale was conducted in a manner that was in accordance with good practice in the public sector. Although the sale of the 3.5 acre site, which realised €254,000, was modest in scale, it raised serious questions in my mind about the operation of the company's property management function. In trying to establish whether procedures had improved since that sale, we also looked at the present position by examining the handling of a proposed sale of premises and land at Gillogue that proved to be contentious.

The Ennis Road site was transferred to Shannon Development from the IDA in 1988 but Shannon Development did not become aware of its holding until nine years later when third parties made inquiries about the site. A complicating factor was that although the land had been transferred, there had been a failure to register the site in Shannon Development's name. The failure to protect the title to the site resulted in encroachment and a building company began dumping spoil on the site.

In March 1998 steps were taken to sell the site to a company that was in the process of buying the adjoining factory premises of three acres. The sale at a price of €254,000 was agreed on the basis of a valuation provided by a local estate agent and without reference to others who had earlier expressed an interest in the site. In my opinion, on grounds of equity and as a means of maximising the price, the disposal should have been made by way of competition. Although it is arguable whether a better price would have been obtained, it is clear that a higher return would have been achieved if title to the site had been properly protected.

If the stop-go nature of the Gillogue transaction is representative of the current way in which prospective property sales are managed, serious issues remain to be addressed. The disposal of the industrial premises and the adjoining approximately 116 acres appears to have given rise to tensions between the board and the executive. Nevertheless, a decision was taken to sell the entire property at Gillogue to a local business consortium for €3.3 million on the basis of a valuation. Fortunately for the taxpayer, the sale fell through because of additional conditions ordered by the board. When the industrial premises that occupy approximately 27 acres of the site were put on the market last June, the highest bid received was substantially in excess of the €3.3 million agreed earlier for the entire property.

The general concern of the board about the property management is perhaps reflected in its decision in April 2005 to commission consultants to prepare a detailed report on the property portfolio and the structures necessary to manage it. The consultants' report is very critical of the property management function. That said, I should point out that Shannon Development's property department regards the report as fundamentally flawed and has produced a detailed response that takes issue with the report's findings. Needless to say, it is difficult to ensure value for money in property management in such an operating environment.

Continuing on that property management theme, I point out in the 2004 accounts for IDA Ireland that the €30.9 million profit on the sale of fixed assets that is given in the operating account is stated net of a €4 million provision for reduction in profits arising from a disposal of a property in an earlier year. The financial settlement details for that were not agreed until late in 2005. As questions relating to IDA Ireland's accountability for any loss to the taxpayer may arise, I am inquiring into the matter in the context of my audit of the 2005 accounts. For the sake of completeness, I should mention I will also be reviewing as part of my 2005 audit any loss arising from the purchase of a premises from the IDA which took advantage of the now closed loophole in the Landlord and Tenant (Ground Rents) Acts. Otherwise I have nothing to add on the 2004 accounts and was able to give the IDA a clear audit report. Similarly, the 2004 accounts of Enterprise Ireland received a clear audit report. As members are aware, Enterprise Ireland has been earmarked for decentralisation to Shannon. Together with the advent of the Shannon Airport Authority, this may have repercussions for Shannon Development's operational mandate.

I gave a clear audit report on the Vote for 2004 but draw the committee's attention to the final paragraph on page 309 of the volume in Note 18 to the appropriation account which refers to the Department's internal audit unit uncovering serious system failures in the procurement of goods and services for buildings occupied by the Department. It involved the supply of furniture and other related services such as painting to the value of about €2.7 million by one firm during 2003 and 2004, mostly without recourse to tendering. Although authorisation limits were circumvented and poor value was obtained in some instances, the Department was satisfied that there was no fraud involved. As the accounting officer states in Note 18, new structures have been put in place to prevent a recurrence.

Mr. Gorman

The committee is aware that a wide range of activities are funded through my Department's Vote. The Department is assisted in delivering its objectives and policies by a number of agencies and offices.

Gross expenditure on the Department's Vote in 2004 amounted to €1.146 billion. The most significant spending areas included investment in labour force development, the figure for which amounted to over €557 million in 2004, and enterprise development through lDA Ireland, Enterprise Ireland, Shannon Development and the city and county enterprise boards. Total expenditure by these agencies in 2004 amounted to €251.5 million, including their operating costs. Expenditure on science and technology programmes in 2004 amounted to €194.8 million in 2004.

2004 was the first year of operation of the new five year capital investment framework. The total amount allocated to my Department's Vote for capital expenditure in 2004 was just over €342 million. A sum of €34.237 million, representing 10% of the 2004 allocation, was carried forward to 2005 as a deferred surrender amount and was spent in 2005. Overall, almost 95% of the total allocation provided for my Department's Vote was utilised in 2004. Allowing for the carryover into 2005 of unused capital funding, the surplus surrendered on my Department's Vote represented just 4.5% of the total allocation.

Investment in the development of the labour force constituted a major part of my Department's expenditure in 2004. The presence of a well educated and highly skilled labour force has been recognised by many commentators as a significant contributory factor to Ireland's recent economic success. Many commentators have also identified the need to continuously up-skill the labour force as a prerequisite to maintaining our economic success.

The year 2004 was a good one for employment growth in Ireland when employment grew by3%. By the end of the year there were almost 1.9 million people in employment. The unemployment rate stood at 4.4%, with the long-term unemployment rate at 1.5%. The latest labour market data from the Central Statistics Office, CSO, show that employment has continued to grow significantly, with a 5% increase on a year-on-year basis to the third quarter of 2005. There are currently close to 2 million in employment. The unemployment rate remains fairly constant at 4.6%, with the long term unemployment rate at 1.4%. Ireland's employment growth and employment rates continue to outstrip the average figures for the EU 15. I understand the CSO's latest quarterly national household survey, published today, which gives the most up-to-date unemployment figures, indicates a current unemployment rate of 1.4%.

FÁS plays a major part in preparing people for employment through apprenticeships, training courses and employment programmes, and provides placement services for employers and prospective employees. Through the training of those already in employment and lifelong learning initiatives, it is promoting ongoing development of the labour force. Total expenditure by FÁS in 2004 from my Department's Vote amounted to €551 million. In addition, it received €300 million from the national training fund.

The enterprise development agencies which are funded from my Department's Vote also play a key role in stimulating economic activity and supporting the creation of jobs. This support is provided through a range of grants, equity investment, advice and other supports. As I mentioned, total expenditure by the agencies in 2004 amounted to €251.5 million, including their operating costs.

In 2004 Enterprise Ireland continued to work with its clients to accelerate the development of world class Irish companies to compete successfully in the global market. Through a range of measures, the agency assisted 65 new start-ups and helped 154 companies to establish a new market presence in overseas locations. Its client companies also achieved impressive growth in export sales of 5.6% from 2003 to breach the €l0 billion threshold.

To cater for the specialised needs of the biotechnology and ICT sectors, IDA Ireland commenced an initiative to establish a number of region based strategic sites to assist Ireland in competing for large-scale biopharma and ICT projects.

The publication of the enterprise strategy group report in 2004 was a significant development for my Department and the enterprise development agencies. The group presented a vision for the development of the economy based on winning greater market share in fast growth sectors through innovative products and services. To capitalise on these opportunities, businesses will require a new orientation, to build expertise in marketing, market diversification and knowledge based skills. They will also need to focus on technological and research and development capability. The enterprise strategy group report contained over 50 recommendations directed at a range of Departments and agencies. The approach to their implementation was examined by a high level group which reported to the Government in January 2005. My Department, together with representatives from business, is monitoring implementation of the recommendations.

Enterprises need to focus on increasing productivity, building added value through research and development and growing exports. The supports provided by my Department's agencies are increasingly being targeted at firms which demonstrate commitment to innovation in products and services, driven by an in-depth knowledge of customers and markets. The regional strategies of the enterprise development agencies will also be reviewed to ensure they remain relevant and take account of changing EU regional policy and the development of the national spatial strategy gateways.

Science Foundation Ireland, Enterprise Ireland and IDA Ireland are continuing to ramp up their work with industry and third level institutions to enhance investment in research and development. Their activities form part of a range of science and technology programmes funded under subhead F of my Department's Vote. Total expenditure under the subhead in 2004 amounted to €194.8 million. The Government's goal is that by 2013 Ireland will be internationally renowned for the excellence of its research and at the forefront in generating and using new knowledge for economic and social progress, within an innovation-driven culture. The ongoing commitment to investing heavily in science and technology will further Ireland's reputation as an ideal location for research and development, particularly for industry which relies on R and D.

To help progress this objective, new structures for the co-ordination and governance of science, technology and innovation were put in place by the Government in 2004. These structures include a dedicated Cabinet sub-committee chaired by the Minister for Enterprise, Trade and Employment, supported by a high level interdepartmental committee. The Cabinet sub-committee mandated the interdepartmental committee to develop a national strategy on science, technology and innovation. The initial work on this strategy commenced in 2004. The strategy is nearing finalisation and will be presented to the Government shortly. It is being prepared on a whole of Government basis with a long-term perspective to 2013.

While public expenditure on research and development has increased significantly in recent years, private funding has also grown, but at a slower pace. In 2004 a 20% tax credit was introduced for incremental expenditure by companies on research and development. This measure will provide an incentive for companies to increase their investment in research and development and help boost employment.

As the number of people employed continues to grow, my Department has an important role to play in protecting workers' rights. The Department's employment rights compliance section comprises three units, employment rights information, the labour inspectorate, and the prosecution and enforcement unit. The costs associated with those units are met from the Department's administration budget. During 2004, staff in the employment rights information unit dealt with more than 148,000 inquiries by telephone, e-mail, letter and from personal callers to the office. The labour inspectorate carried out 5,160 inspections and visits. An additional ten inspectors were appointed in 2005, bringing the total number to 31, compared with the ten we had in 2000.

There is a particular focus in the Department on the enforcement of employment rights for migrant workers. The extra resources allocated to the labour inspectorate, which has now effectively doubled in size, has enabled us to respond better to allegations of exploitation and undertake programmed inspections with a special focus on migrant workers. Overall, the prosecution and enforcement unit referred 54 cases of employment rights breaches to the Office of the Chief State Solicitor for prosecution in 2004. Over the years, 17 cases were successfully concluded, leading to 20 convictions and fines. A further 35 were referred to the Office of the Chief State Solicitor for enforcement through the courts of awards determined by the Labour Court and the Employment Appeals Tribunal.

In the latter half of 2004, several labour inspectors were engaged in a project to review the mandate and resourcing of the inspectorate. A discussion document arising from it was circulated to the social partners in January 2005 and has been debated for further consideration by the employment rights compliance group which is made up of representatives of the social partners, the Department of the Taoiseach, the Department of Finance and my Department. That group's work will inform debate in the current social partnership talks.

I have set out the key activities in the significant spending areas of the Department's Vote in 2004 and I will be happy to answer any questions the committee may have regarding the 2004 accounts.

Chairman

May we publish Mr. Gorman's statement?

Mr. Gorman

Yes.

Mr. Dorgan

I speak regarding the IDA Ireland annual accounts for 2004. As members may be aware, the Oireachtas makes funding available to IDA Ireland under three headings. Subhead C.1 deals with the grant for administration and general expenses, approximately €34.2 million. Subhead C.2 sets out the grants to industry of almost €46 million. Subhead C.3, the grant for building operations, was €3.1 million. That funding is augmented through the generation of income by IDA Ireland for administration and general expenses of approximately €3.9 million, for grants to industry of approximately €27 million, and for building operations of approximately €25.4 million. The level of funding achieved for administration and general expenses enabled IDA Ireland to spend almost €36.4 million on remuneration, marketing and overhead costs and to make a contribution of approximately €1.6 million of surplus funds to the Exchequer.

Grants to industry in 2004 were €65.5 million, with a contribution of €7.6 million of surplus funds to the Exchequer. I am satisfied that IDA Ireland had sufficient funding available to discharge all grant payment claims made by clients in the year. It is very difficult to predict precisely what funding will be required for grant payments in any year given that they result from claims submitted by client companies. However, IDA Ireland works closely with the Department of Enterprise, Trade and Employment and the Department of Finance to ensure that the cash flow is managed as efficiently as possible. It is also worth noting that there was an increase in research and development grant approvals in 2004 and again in 2005. It is expected that the trend will continue.

Total funding for the building operations function was €28.5 million. That money was used to provide property solutions throughout the country for IDA and Enterprise Ireland client companies. Among the key elements for global companies making decisions on where to locate investments is the availability of suitable property solutions, and IDA Ireland strives to ensure that world-class facilities are available in our business and technology parks. IDA Ireland's primary role is in the acquisition and development of lands to provide the required infrastructure. When selling land, IDA Ireland achieves market prices, something evidenced by profits on the disposal of assets of almost €30.9 million in the year. Regarding the provision of buildings, IDA Ireland works with private developers on a competitive basis to ensure that attractive solutions are available.

Chairman

May we publish Mr. Dorgan's statement?

Mr. Dorgan

Yes.

Mr. Ryan

I thank the Chairman and members of the Committee of Public Accounts for inviting me to present an overview of Enterprise Ireland's annual report for 2004 and to convey to them some of the significant developments that have occurred since, especially the publication of its strategy for 2005-07, Transforming Irish Industry, which was launched in May 2005 by the Minister for Enterprise, Trade and Employment, Deputy Martin.

I would also like to introduce my Enterprise Ireland colleagues present with me: Mr. Paddy Hopkins, whom members have already met, Mr. Colm Hackett, manager of our regions and entrepreneurship division, Mr. Gerry O'Brien, economist in the policy division, Ms Mary Gallagher, secretary to the board, and Mr. Paschal McGuire, in our public relations department.

The Enterprise Ireland annual report and accounts for 2004 were published on 24 June and outlined its activities during the year, together with the overall performance of client companies. It also provides an update of the various ways in which Enterprise Ireland has worked in partnership with them and other stakeholders in addressing companies' changing needs. Enterprise Ireland's mission is to accelerate the development of world-class Irish companies to achieve strong positions in global markets, resulting in increases in national and regional prosperity. In making that commitment, our efforts centre on several key areas, namely, identifying and facilitating high potential start-up companies, supporting the creation of innovative products and services by investing in industry-driven research and innovation, driving company competitiveness through productivity improvements and maximising export opportunities for our client companies.

I will now address the economic context in which clients operated in 2004. Irish companies showed resilience and determination to succeed and expand in the global marketplace, especially in the face of increasingly challenging external economic factors. These included increasing competitive pressures, especially from low-cost economies in central and eastern Europe, as well as the rapidly growing Chinese economy. The strong euro placed added pressure on Irish exports which were further affected by the weaker trading performance of the dollar throughout 2004. Rising oil prices also had a noticeable effect on Irish companies as energy prices continued to rise. This also placed additional pressure on companies in an already highly competitive global economy.

Regarding export performance by market, in 2004 client companies achieved €10.167 billion in export sales, an increase of 5.6% on 2003. Northern Europe was the strongest export market, with €6 billion in export sales and net growth of 7.2%. The UK part of the northern European territory continued to be the strongest export market, worth €4.63 billion. Exports to the Americas increased by 1%, to €1.1 billion, a commendable total given the strength of the euro against the dollar. A good performance was also seen in southern Europe, the Middle East and Africa, with exports reaching almost €1 billion, up 7.7%. Asia showed the largest percentage growth in exports — 19.6% — bringing total exports to the region to €505.5 million. The German, central and eastern European and Balkan markets had a difficult year, with exports falling by 3.7%, to €705.6 million.

I will now address export performance by sector. The largest export sector was food and consumer retail, which totalled €6.78 billion, up4.1%. The dairy and drinks subsector contributed the most, with €3.56 billion in exports, a rise of 2%. The fastest growing sector was software, services and emergent sectors, with an increase of 10.4% to €1.2 billion. Industrial markets grew 3.8% to €1.9 billion, with the construction and timber subsector performing particularly well, accounting for €713 million with growth of 11.1%.

In 2004, client companies also participated in 77 trade fairs and trade missions. The Irish trade mission to China, led by the Taoiseach, Deputy Bertie Ahern, visited Beijing, Shanghai and Hong Kong and was the largest in the history of the State, involving 121 Irish companies and educational institutions primarily involved in the information and communications technology, educational services, environmental and engineering services, medical devices, and food and drink sectors. Contracts entered into between Irish suppliers and Chinese customers totalled approximately €125.8 million. In addition, four Irish companies announced the acquisition or establishment of ventures in China totalling €42 million. The Irish participants held more than 1,800 meetings with potential and existing customers. A significant level of positive feedback, from both client companies and representative bodies, has been received by Enterprise Ireland and I believe this mission will contribute to increased levels of trade over the coming months and years.

Sustainable business growth and economic development are driven by innovation and the consistent delivery of new, sophisticated products and services to customers around the globe. Encouraging such pioneering activities continued to be a central part of Enterprise Ireland's support to client companies throughout 2004.

During 2004 approximately €50 million was invested in companies to support in-company research and development activities. Some €20 million was approved to support 54 projects in Enterprise Ireland client companies through the research and development initiative scheme, formerly known as the research and development capability scheme. In addition, the research, technology and innovation, RTI, scheme approved more than €30 million in funding to 154 research and development projects within companies in Ireland. As for applied research, Enterprise Ireland provided €14.6 million in funding through its commercialisation fund to commercialise the research output from third level colleges.

In 2004 Enterprise Ireland conducted a review of all start-up companies supported since 1989. This showed that, of the 470 companies supported, 76% were still trading, 4% had been taken over and only 20% had been closed. The surviving companies have sales of about €1 billion and employ more than 7,000. The results show a high survival rate for Enterprise Ireland supported start-ups. They support Enterprise Ireland's approach to delivering customised initiatives for start-ups, such as assistance with achieving first reference sales.

During 2004, Enterprise Ireland supported what was then a record 65 new high potential start-up companies. These will create approximately 1,900 new jobs in their first three years across all sectors, with particular buoyancy in information and communications technology, health care and life sciences. They also represent a good regional spread, with 43% based in regions outside Dublin and 26%, equivalent to 17 start-ups, located in the Border, midlands and west, BMW, region.

A key objective in Enterprise Ireland's strategic plan is the development of companies of scale. It has embarked on an initiative to accelerate the growth and development of companies which have the potential to grow to significant scale and established a scaling division to work with an identified group of small to medium-sized enterprises, SMEs, to assist their growth into large international companies.

On the employment and regional development front, client companies created 11,898 jobs in 2004 according to the Forfás employment survey for 2005 which is now being completed and is in the process of being analysed. It will be published in the coming months. Early indications, which are subject to change, are that 67.8% of all job gains were created in companies located outside Dublin and 36% of job gains were companies located in the BMW region community enterprise centres, CECs.

Enterprise Ireland continues to encourage entrepreneurship at grassroots level through its support for the community enterprise centres. The CEC programme aims to enhance the development of an enterprise climate in areas where it may be lacking or under-developed. To date, Enterprise Ireland has approved more than €34 million and paid out more than €22 million for some 137 CEC projects, including 107 new centres and 30 expansions to existing programmes. Of the 137 projects, 20 are at various stages of planning or construction, 112 are located outside Dublin city and eight were completed in the regions in 2004. Seven new CECs were completed that year in Macroom, Carlow, Lismore, Easkey, Ballyshannon, Moville and Emyvale and the centre in Ballina was expanded. The CEC initiative continues to be rolled out with 12 under construction, of which three were completed in 2005.

During 2004 Enterprise Ireland was engaged in a comprehensive review of its strategic direction. The strategy was devised in parallel with the deliberations of the enterprise strategy group. On 24 February 2005 the Minister for Enterprise, Trade and Employment, Deputy Martin, launched the enterprise action plan, following Government approval for its recommendations. The plan outlines how the enterprise strategy group's report will be acted upon.

Enterprise Ireland's strategy was officially launched in May 2005 by the Minister. The plan, entitled Transforming Irish Industry — Enterprise Ireland Strategy 2005-07, is designed to ensure that the opportunities for growth are maximised throughout all sectors and regions and that relevant support is provided for the agency's client companies to meet the increasing challenges faced in the global market.

The strategy repositions the agency better to serve the changing needs of its client companies. Central to the strategy is a sharp focus on growth opportunities, both for individual clients and for targeted new sectors. Delivering on this strategy requires an optimum combination of one-to-one company activity together with sectoral and group initiatives.

Enterprise Ireland's activities are aimed at assisting its client companies to compete and grow by working in partnership to develop their key capabilities in internationalisation, export growth, research, innovation, technology, competitiveness, productivity and management. The key objectives of the agency's interactions with clients are to develop quality, sustainable and scalable start-ups, assist companies in achieving international scale, promote industry-led research and development and grow exports strongly.

As for progress to date in 2005-06, the Forfás employment survey for 2005 is being completed and is in the process of being analysed. It will be published in the coming months. Early indications, which are subject to change, are that 12,212 new jobs were created in client companies, of which 8,680 were first-time job gains. When set against losses of 12,430, the net decline in employment in 2005 appears, on the basis of the preliminary analysis, to be 218, an 83% improvement on the 2004 outturn.

On the export front, comparable figures for 2005 will not be available until April 2006 when the ABR survey is completed. However, the indications are that strong export growth has taken place in 2005 across a number of key industry sectors, including software and financial services, life sciences and food, with construction and engineering sectors maintaining their performance levels.

Chairman

I thank Mr. Ryan. May the committee publish his opening statement?

Mr. Ryan

Yes, it may.

Mr. Thompstone

I thank the Chairman and members of the Committee of Public Accounts for providing us with the opportunity to make a statement on the Comptroller and Auditor General's value for money report No. 50. In addition to the Shannon Development chairman, Mr. McElligott, I am accompanied by my colleague Mr. Sean Fitzgibbon, company secretary and director of corporate development, and Mr. Michael Conacur, the property administration manager.

For the members of the committee who might not be familiar with Shannon Development, I shall begin by giving a brief outline of the company and its property activities. Shannon Development was established in 1959 to promote Shannon International Airport in the post-jet era. Over time it evolved to become Ireland's only dedicated regional development company. Its brief is to generate economic development in the wider Shannon region. This covers an area of 10,000 sq. km. spanning counties Clare, Limerick, north Tipperary, south Offaly and north Kerry which collectively have a population of more than 407,000.

The mission of Shannon Development is pioneering regional development for the knowledge age and over the past 45 years the company has worked singly and with many different partners from the statutory, community and private sector to develop the region to its full potential. The company's primary focus is to identify the critical needs or obstacles to development in the region and to lead and encourage the identification and delivery of solutions. It plays a leadership role in the region in important regional development issues such as airport access, transport infrastructure and broadband connectivity.

The key priority in 2006 and beyond is delivering on a mandate given to the company by Government during 2005. A significant goal arising from that mandate is to ensure that we develop a strong focus on vibrant economic development in the Shannon region as part of a wider counterpole to the east region. This goal will be achieved in three ways: by realising the potential of the less developed areas of the Shannon region, by ensuring that the more developed areas of the region reach their full potential, and by helping to stimulate international demand for Shannon International Airport.

The company's asset base provides the means to turn strategy into action and is made up of a property portfolio with the following parameters. It consists of 3.7 million sq. ft. of industrial buildings and 1,910 acres of a development land bank. The asset base generates €16 million in rental income per annum. The property portfolio is valued at an historic €200 million. Over 20,000 people are employed in FDI and indigenous industries located in Shannon Development business parks in the region, where a total of 90% of the largest industrial employers in the region, both foreign and indigenous, are located. The Shannon Development property portfolio is a key enabler of economic development in the Shannon region. It is an integral part of Shannon Development's regional economic development strategy and utilised as a development and promotional vehicle in facilitating the company's response to the region's development needs. It is a critical tool in supporting the corporate objective of pioneering regional development, acting as a catalyst for industrial promotion, providing the industrial infrastructure for foreign direct investment and indigenous industries in the region, and equipping the company with the funds required to underpin this policy. Management of the company's property portfolio is also critical in the implementation of projects with partners throughout the region, where the maintenance and development of property assets can facilitate collaborative development.

The key objectives and strategies employed to successfully provide this support for economic development can be summarised as follows: we identify and purchase land banks in key strategic locations throughout the region; manage site development, construction activities and maintenance of services at minimum cost and within budget; manage an annual capital investment programme in economic infrastructure; review investment opportunities in company property and, where possible, create financial packages to leverage private sector investment to deliver the company's development plans; dispose of assets in respect of which there is low expectancy of occupancy or industrial development, and reinvest in new high potential properties that meet modern needs. A more detailed briefing note on our property management activities is included in the appendices submitted to the committee.

The Comptroller and Auditor General has given a detailed account of the sale of the company's property at Ennis Road, Limerick. I do not propose to repeat the details of the transaction which have been fully covered in his report. Shannon Development acknowledges the main points of the report on the conduct of the sale of the property. We note that the Comptroller and Auditor General states that the proceeds of the sale were probably broadly in line with what was obtainable in the circumstances. We have assured him that the company has strengthened its property procedures, and we now give these assurances to the Committee.

In 2004 Shannon Development prepared a detailed property procedures manual, the aim of which is to provide for consistent and transparent processes which minimise risk and facilitate stakeholder satisfaction in the company's property activities. The manual was prepared by company executives, working closely with the company's internal auditors, to ensure it was benchmarked against best practice, public procurement guidelines, board approved procedures and internal audit recommendations. Its preparation predated the formal audit by the Comptroller and Auditor General of the Ennis Road transaction. However, executives were aware of the matter from an earlier FOI request. The matters arising were incorporated into the asset disposal procedures when preparing the manual.

The new approved process followed by Shannon Development in transacting asset disposals is framed by the company's compliance with the requirements of the code of practice for the governance of State bodies. Accordingly, the current approved process for disposal depends on the dynamics underpinning the decision to dispose. These dynamics can be summarised as follows. Disposal to a non-industrial undertaking is by way of offering the opportunity to the open market. Disposal to an industrial undertaking is by way of open market value as determined by an independent valuer. Disposals are by way of leasehold sale, with a suitable restrictive user clause included in lease documents. Compliance is monitored in a proactive manner, in that an internal process monitor signs off on compliance at various key control point stages and also on all property proposals before submission to the company's executive committee for approval. Furthermore, all property transactions requiring board approval are subject to prior independent review for compliance with the company's property procedures.

The former Burlington plant at Gillogue, County Clare, was transferred to Shannon Development in 1998 by IDA Ireland. In 2001 Shannon Development leased part of the facility to a packaging manufacturing company which traded from the facility until it went into liquidation in February 2004. Shannon Development wrote to all the parties which had expressed an interest in the facility, setting out terms under which the property would be made available, one of which was the receipt of a satisfactory business plan. It offered the facility for sale to a consortium for the proposed development of a corrugated packaging business. However, following a review of the entire project and having regard to all the information available, it decided in January 2005 not to proceed with the proposed sale. This decision was made by the company. A number of parties had expressed an interest in the property during the course of the transaction and it was decided to place the building and the land on the open market. In taking the decision not to proceed with the sale, Shannon Development took into account its economic development role to promote industry and employment in the region, the use of its property portfolio as a resource in achieving these objectives, as well as its duty as a public sector agency to preserve and protect State assets.

In May 2005 property agents were engaged to handle the disposal of the Gillogue building. The property was placed on the open market and a comprehensive marketing campaign undertaken in the national media. A significant number of inquiries for the property were received and in October 2005 interested parties were asked to submit best and final offers. The current position is that heads of terms have been issued to the highest bidder and solicitors for the vendor and purchaser are working through the documentation. Subject to final board approval — the document recommending approval will be considered by the board at its February meeting next week — the company expects the property to be sold by the middle of this year. The price secured for the property is commercially sensitive until the transaction has been closed but it is in excess of the guide price set by the property agents.

I emphasise again that the activities of Shannon Development in property management are directly and specifically linked to its overall regional economic development mandate. Management of the company's property portfolio is a critical tool in supporting the corporate objective of pioneering regional development, acting as a catalyst for industrial promotion, providing the necessary industrial infrastructure for foreign direct investment and indigenous industries in the region and equipping the company with the funds required to underpin this policy. Shannon Development is mindful of its duties and responsibilities in the management of public sector assets. Our objective is to ensure our property management activities are carried out to the highest professional standards. Management of the largest industrial property portfolio in the region is a complex task. We take full account of the need to balance the use of the company's property portfolio as a strategic tool in delivering on our regional economic development mandate with our responsibilities as a public sector agency to safeguard public assets. We are also conscious of public procurement requirements. In this context, we have taken and will continue to take difficult and sometimes unpopular decisions to protect the interests of the State.

I thank the Chairman and members of the committee for giving me this opportunity to make a statement. I will be happy to answer any questions they may have on the property sale at Ennis Road in Limerick or any of Shannon Development's activities.

Chairman

May we publish Mr. Thompstone's statement?

Mr. Thompstone

Yes.

The committee would like to have it, although I would not expect Mr. Gorman to have it with him today.

I appreciate that. This represents good value for money, given that the Enterprise Ireland figure is slightly higher. I will ask Mr. Dorgan about the comparative figure for the IDA presently.

Notwithstanding EU enlargement, the Department issued 34,000 permits in the year under review. It had estimated an income of €9 million from work permits but achieved a figure of €12.8 million. It seems far more work permits were issued than anticipated. Why was the Department's estimate so vastly understated, by some 40%? What was the figure in 2005?

Mr. Gorman

The estimate we provided for income from work permits for 2004 was predicated on the opening of the labour market to citizens of the ten EU accession states. The policy approach we followed and still follow is to try to fill the bulk of our labour requirements from overseas from the totality of the European Union, including the ten accession states. The estimate at the beginning of the year was that the level of work permits would drop significantly. This proved to be the case but not to the extent we had anticipated. Factors included the level of economic activity and the extent to which the level of applications for work permit renewals held up. When we came to consider our approach in the context of EU enlargement, we decided not to inform workers from third countries that, while it was nice having them, they were no longer needed because workers were available in the ten accession states. We took a policy decision in the context of employers reapplying to roll over the permits for the people concerned, mainly on compassionate grounds, and in acknowledgement of the extent of jobs availability.

The figures can be divided into two blocks, the first comprising first-time permits and the second relating to renewals. New permits hit a high of some 29,000 in 2001 but this was down to 10,000 in 2004. The renewal rate in 2004 was 23,000. In 2003 we issued 21,930 first-time permits but only 10,000 the following year. In effect, therefore, the number of first-time permits was halved in one year. The rate of renewals, however, remained high.

Deputy Fleming

Does Mr. Gorman have figures for 2005?

Mr. Gorman

I have the figures to hand. Some 7,345 new permits and 18,959 renewals were issued.

Deputy Fleming

I appreciate the information Mr. Gorman has provided.

I welcome Mr. Dorgan from the IDA. There are some 129,000 people in IDA-supported employment, comprising approximately 6.5% of the workforce. This is less than it was four or five years ago; it seems that, while the workforce is increasing, the IDA numbers are decreasing somewhat. Approximately half of these 129,000 employees are in the Dublin region. Mr. Dorgan will not be surprised that I am concerned about the low numbers in the midlands region. Is it possible for him to supply the committee with county-by-county employment figures and the numbers of supported companies in each county? Information on the regions does not mean much to us in determining data on a county-by-county basis.

What is the average cost per job? I expect it is higher than the corresponding figure for the county enterprise boards because the IDA is concerned with attracting foreign companies. Does Objective One status have any significant effect on a region? I am living in an Objective One region in County Laois but there is no evidence that this status has helped in attracting new companies there.

The IDA estimates some €2.7 billion is paid by its client companies in corporation tax. What will be the impact of the change in the taxation regime for non-Irish workers? Such workers were formerly taxed on a remittance basis but will now be taxed on their total income. I understand this will be a significant disincentive for some executives in deciding to come here. How is the IDA dealing with this issue?

Mr. Dorgan

We no longer consider job numbers the best measure of success. I do not say this merely because our proportion in the total workforce is dropping. It is because we now have a low unemployment rate and our success should be judged not on how many additional jobs are created but rather on the quality of those jobs. Our concern is how well Ireland is moving to the leading edge of activities in innovation and high value activity, and how well we deliver regionally and achieve a good regional balance.

I can supply information to the Deputy on job numbers throughout the country. However, I am concerned about considering jobs purely in county or town terms. It is not towns and counties that compete for investment but rather Ireland first and then the regions within it. In vying for the high value investments we now require we are competing against city regions elsewhere in the world. Positioning a town or county against a city region does not amount to a fair competition.

The average cost per job for jobs sustained in the 1998-2004 period was €14,700. This takes account of jobs falling out. As with counting job numbers, I stress that figures for cost per job are not a good measure. It is not job numbers with which we are concerned. Many grant offerings are dropping but as we move towards investing more in research and development, that figure will be higher on a cost per job basis but the value should also be very much higher.

In 2003 the total value of research and development grants paid was in the order of €19 million. In 2004 the figure came to €40 million and will rise to €80 million for 2005. Hence, a significant progression in support for research and development is discernible over time.

The establishment of and consequent focus on the Objective One region certainly made a difference. In 2000 the IDA managed to direct approximately 25% of all new greenfield jobs created to the Border, midlands and western region. The equivalent figure today is more than 40%, as against a very ambitious target of achieving a rate of 50% in the Border, midlands and western region which we set for ourselves six years ago. While this is a good performance, I frankly admit that it is not yet spread evenly. If one considers this purely on a county basis, it may not be spread evenly because strong urban centres attract the best investment. From the perspective of achieving investment, it is important that strong urban centres are built in the regions.

We are satisfied with the proposals. At its February meeting Enterprise Ireland's board cleared the corporate governance issues in that regard. We anticipate placing a document before the board in April which will clear the functions to be transferred to us. This process is advancing rapidly.

Deputy Boyle

Given the incestuous nature of industrial development agencies in Ireland, my questions will involve much cross-questioning. I will begin with the value for money report in respect of Shannon Development.

I was surprised that the chief executive's presentation set much store by the existence of a manual. As Department of Finance guidelines on the disposal of State assets have been in place since 1994, surely they are sufficient for the company to follow as its benchmark in this respect. When the factory element of the property in question was sold in 1996, the company used or conformed to these guidelines. One of the more obvious questions arising from the value for money report is why, two years later, it chose to dispose of the unbuilt property element without referring, as it should have, to the guidelines on foot of national policy in this regard.

I also have a question about the valuation which Shannon Development sought from a single valuer for the factory and the parcel of land when it became available for sale. It appears that contact with this valuer was made on a completely informal basis without the existence of written documentation between Shannon Development and the valuer who undervalued the factory element of the sale by €500,000, as well as the unbuilt property element some years later. Does Shannon Development still make use of valuers on this basis? Does it use a single valuer? Has it changed its procedures to any degree?

Chairman

The witnesses should deal with these questions first.

Mr. Thompstone

Before I reply to Deputy Boyle's questions, I wish to return to Deputy Fleming's earlier question about the cost of the consultants as I now have the accurate figure to hand, namely, €35,000, exclusive of VAT. While my earlier reply was in the right order of magnitude, this is the correct figure.

Mr. Thompstone has undermined my faith in the media. In his opening comments the Comptroller and Auditor General stated he intended to carry out further investigations into the closure of the loophole in respect of the purchase of the fee simple and outline the effect of this loophole. I have been involved in Dáil debates on the issue and understand the loophole was identified by several Departments. Two pieces of emergency legislation were introduced in 2005. One was an amending Bill introduced by the Department of Community, Rural and Gaeltacht Affairs that addressed the potential for using the loophole in respect of cross-Border bodies. Within a fortnight the Minister for Enterprise, Trade and Employment introduced a second piece of emergency legislation because the loophole had been exploited. A company based in Clonshaugh Industrial Estate which has yet to be publicly identified had managed to use it. Even after the latter Bill was passed, a third instance where the loophole had been used was uncovered in respect of the former Irish Glass Bottles Limited site in Ringsend which required an amendment to marine legislation. This begs the question as to whether Departments communicate with each other.

A judgment delivered in a court case last week upheld the constitutionality of the original Landlord and Tenant (Ground Rents) Bill. Has any consideration been given to the effect of this decision on legislation passed subsequently and whether the amended legislation approved by the Dáil and brought forward by the Minister for Enterprise, Trade and Employment is constitutional on foot of it? Does the Department of Finance believe there are loopholes with regard to other State agencies which let property on a similar basis?

Mr. Gorman

On the issue surrounding IDA property and the difficulty which arose in the context of the landlord and tenant legislation, at the time it arose we were facing an immediate problem in the courts, as was the IDA. Effectively, we were forced to concede the case in respect of the property in Clonshaugh. We were facing a situation where, on the basis of a court hearing on 17 May 2005, a precedent would have been created. The IDA has approximately 700 leases in its portfolio and we were faced with the immediate prospect that the genie would be let out of the bottle. Therefore, we moved immediately to close the loophole to protect the IDA property portfolio. On 19 May 2005 an amendment to the legislation was signed into law by the President. On the day the legislation came into force I wrote to every Secretary General alerting him or her to the problem and suggesting he or she examine whether he or she was facing a similar problem.

I understand the issue is being examined by the Office of the Attorney General in the broader context of the landlord and tenant revision work which is ongoing in the Department of Justice, Equality and Law Reform. From our perspective, we were forced to move as we could not afford to ask many questions and engage in widespread consultation. We were faced with a real-time problem which we had to address. I am not familiar with the details of the court judgment referred to by the Deputy. The judgment will be examined to see if it has any implications for what we have done and might do with the landlord and tenant legislation.

Chairman

Does Mr. Thompson have anything to add?

Mr. Thompson

In general, we keep an eye on matters of this kind arising in Irish law and, increasingly, European law. We normally circularise Departments to alert them to such developments. We also alert them to European cases in which we intervene on behalf of Ireland. As the central co-ordinating Department, we attempt to ensure nobody is taken by surprise. Deputy Boyle refers to Departments communicating with each other. That is what we are attempting to bring about. As far as possible, we try to ensure everyone is informed of relevant developments and that unpleasant surprises are avoided.

Deputy Boyle

In his presentation Mr. Gorman mentioned the increased budget for research and development, particularly scientific research and development. Does the fact that this funding passes through several channels present a difficulty? Is Mr. Gorman confident there is no cross-use of the funding, that the different agencies involved might do similar work and the funding might not be used to best effect? Is the Secretary General satisfied the three industrial development agencies lead to efficiency?

Mr. Gorman

The research and development funding is dispersed through many avenues. The IDA, Enterprise Ireland, the Department, universities and businesses are involved. We address the research and development deficit as we see it at various levels. We address the issue of having universities work with businesses and we address the issue of a lack of researchers in universities. We are working with the Department of Education and Science to enhance resources in universities and third level colleges. In this context, we are focusing on intellectual property and helping companies to focus on and commercialise it.

There are several strands to this spend area going out through several avenues, some directly spent by the Department, some through agencies and some by other means. We are co-ordinating that exercise in the Department. We are about to bring to Government a strategic implementation plan for moving the research and development agenda forward in the period ending 2013. A part of this plan will involve governance issues regarding how to co-ordinate and get coherence in terms of that spend between the various actors and beneficiaries. In the context of the strategic implementation plan we are specifically drawing up indicators to measure value for money so that we can report back to our Ministers, this committee and the Oireachtas on the outcome rather than on just where the money has been spent. This challenge is being addressed.

Deputy Boyle

Is Mr. Gorman satisfied with the efficiency of having three agencies?

Mr. Gorman

A very deliberate decision was taken in policy terms to have a dedicated agency to focus on the attraction of foreign direct investment, FDI. This situation has prevailed for some years. It is not a new decision. It is a good approach that has served us well. It has allowed the IDA to develop an expertise and commit its resources in a focused and dedicated way to pursuing the FDI agenda.

There is a parallel need for the State to assist in the development of indigenous enterprise, an exercise undertaken by Enterprise Ireland. We are satisfied there are specific issues and challenges in the indigenous sector that merit a dedicated focus from an agency with an expertise and capacity to help.

There have been some changes in respect of Shannon Development and its mandate to address its role in the attraction and promotion of the region for foreign direct investment and assisting indigenous enterprises. The changes in the mandate announced by the Minister in the middle of last year involve the IDA taking responsibility for the promotion of the Shannon zone for FDI purposes and Enterprise Ireland working on the ground with indigenous enterprise clients. We are getting the synergy suggested by the Deputy. Shannon Development will address regional development, using its property asset as a catalyst to do what it and we believe it does best, that is generating and co-ordinating development in the region on a broader basis than the narrow FDI or indigenous company support basis.

Deputy J. Higgins

Mr. Gorman

It is certainly something about which we would rather not hear. The Department has a role through the Labour Court and we support its role by making labour inspectors available to interview companies, inspect records and make factual information available to the court as it deals with complaints.

The Labour Court's role is to deal with complaints about non-compliance with the construction sector's pension scheme. Where complaints are upheld, the Labour Court has the power to make an order requiring the company to pay arrears to the scheme. The matter is referred to the Circuit Court if the payment is not made. In supporting this, the labour inspectors are available to the court to use powers under the Industrial Relations Act 1969 for the purposes of obtaining names and details of employees and circumstances. This can be passed on to the Labour Court for its deliberation on the problem.

Deputy J. Higgins

I noticed a complete lack of urgency on the part of the Taoiseach and Tánaiste, for which I do not hold Mr. Gorman responsible. Would he not agree, however, that 130,000 workers being criminally denied pension entitlements is a crisis? The Pensions Ombudsman states that such construction companies could be subject to fines and-or imprisonment.

Three bricklayers are in Mountjoy Prison for seeking certain rights on a building site in Ballybrack. The subcontractors on the site are in flagrant breach of the pension scheme but what will Mr. Gorman bet that the three bricklayers will be rubbing shoulders with the directors of the subcontracting firm before the end of the week? Bland answers from leading politicians are not enough to address this situation in which workers may die in accidents and their families would be left with nothing because the employers were criminally negligent. Thousands of other workers are left without a decent pension. Is this not outrageous and does it not need urgent attack?

Mr. Gorman

The Department has a specific role and can respond through the Labour Court to instances of complaint where workers are not being properly treated regarding the pension scheme. This is provided for in the registered employment agreement.

Deputy Joe Higgins referred to two subcontractors as current instances and if a complaint is made to the Labour Court, it will be followed up. The broader issue of pensions and subcontracting in the constructing industry is beyond the resolution of the narrow focus approach of the Labour Court in enforcing the registered employment agreement. This wider challenge, including subcontracting, compliance and taxation, is being articulated at the national partnership talks.

Deputy J. Higgins

If one or two construction bosses found themselves on the wrong side of the walls of Mountjoy Prison, it might focus minds.

Mr. Gorman

Perhaps.

Deputy Burton

I wish to ask Mr. Gorman about the numbers of people at work. Does Mr. Gorman have statistics and European comparisons for labour force participation between Ireland and Scandinavian countries? Ireland has a sizeable cohort of young people who leave school with few if any qualifications, specifically young men who attend schools in local authority housing areas. Thereafter, they have sporadic employment. What is the view of Mr. Gorman's Department?

My view is that our labour force participation rates are significantly below countries we aspire to be like, such as Scandinavian countries. One factor is this cohort of young men who do not have much chance in the Celtic Tiger era. Could Mr. Gorman provide information and geographical distribution on this matter?

Mr. Gorman

I do not have information on comparative labour participation rates from member states throughout the European Union but can get it for the committee. I can, however, give it some broad indicators based on an average set of figures. The employment rate target for 2010 is 70% overall for the European Union. Within this, the female employment rate target is 60%. The target for older workers is 50%. Ireland's current rates are 68.8% overall, 59.3% for female participation and 50.7% for older workers. The last figure is not surprising as our traditional retirement age is somewhat higher than in other countries, particularly the older member states of the European Union.

Mr. Gorman

Our experience of Gama and others has influenced the changes to the Finance Bill's provision on remittance basis. We continually improve our liaison arrangements with the Revenue Commissioners and the Departments of Social and Family Affairs and Justice, Equality and Law Reform in terms of how we grant work permits to companies. The general expectation is that when people come here to work, they are employed in the ordinary way, that is, they are paid and taxed here.

The Gama situation, if not unique, was unusual in terms of the numbers involved and the extent to which the company was able to avail of exemptions. We continue to work with the Departments of Social and Family Affairs and Finance to ensure that clarity exists with regard to the identity of employers. One of the complicating factors in the Gama case was that it was difficult to identify the actual employer because it was not an Irish company. In our further discussions with Gama in respect of its continued presence here and the extent to which it will require work permits, we will focus on determining the identity of the employer. Our ambition in the case of any company applying for a work permit is to ensure that it is an Irish company which employs people subject to normal terms and conditions in terms of PRSI and tax and that workers are covered by the full suite of employment rights and protections.

Deputy Burton

Subsequent to issuing work permits, does the Department check the PRSI status of the relevant workers?

Mr. Gorman

We do not, as a matter of routine, follow up with specific checks on status. Our involvement ends when we establish the bona fides of the applicant and the status of the employer as a properly registered company. Therefore, the subsequent monitoring of tax or welfare compliance falls outside our remit. However, we have a database from which we share with various Departments the details, in real time, of the work permits issued. Other bodies, including the immigration unit and the Garda, have immediate access to that information.

Deputy M. Smith

Ireland is taking the route of developing new added value products and services. In terms of the budget for research, what proportion goes to foreign companies and what goes to indigenous interests? How much do indigenous companies invest in research relative to international standards?

In terms of not wasting the valuable financial assets invested in programmes on advanced technology, how successful are the efforts to develop more collaborative research efforts by linking with universities? Can we be sure that the funds allocated to the university sector and other research institutes are dedicated to producing the best results for the country as a whole?

Mr. Gorman

With regard to the distribution of the funding, in 2004, the breakdown of the main schemes supported under the science and technology research and development programme was as follows: a total of €33 million was invested in industry for research and development capability; €37 million was allocated for collaboration between industries and universities; basic research grant schemes came to €15.5 million; and miscellaneous investments, including incubation centres, totalled €1.9 million.

I do not have detailed enough figures before me to provide the precise split between the sums allocated to industry, including indigenous industry, as compared to universities. My agency colleagues may have the relevant figures but, if not, I will revert to the Deputy on the matter.

Ensuring value for money in the area of science is a particular challenge, both because of the amount of money involved and also as a result of the way it is spread across a range of programmes, including those relating to advanced technology. We have monitoring arrangements in place to measure value for money in terms of the level of complementarity among programmes and the good use of money by recipients.

Mr. Dorgan

To add to that, enormous investments have been made in universities and public research efforts. The challenge for IDA Ireland and Enterprise Ireland is to encourage companies to respond to those investments. For IDA Ireland, it is a question of persuading companies based outside Ireland or already here to use the benefits of our investments in research. While we can set targets for spending on indigenous or overseas industries, universities and the public sector, the difference will be made if real companies are made interested in what we are now doing through public spending.

Approximately 30 years ago there were between 18,000 or 19,000 students in four universities and there are now in the region of 135,000 students in what we call the conventional new universities, institutes of technology and colleges. In terms of entrepreneurial skills and the number of people who want to establish businesses, how are the latter developing within the educational sector in terms of outlining the direction that Ireland will take in the future? Are dramatic changes being seen?

Mr. Ryan

We have had a very broad canvas today, involving four Accounting Officers. The site in Gillogue has been haunting more people than most during the years. I believe it was bought by Forfás for £5 million in 1994.

We referred to some of this material before in that an earlier value for money report in 1998 considered the provision and management of industrial property by all of the industrial development agencies. In that report we referred to the need to get a better return from property. At the time the IDA had undertaken a programme of selling excess property. The report found that the agencies involved the IDA, Shannon Development and Údarás na Gaeltachta, were holding onto property for too long, certainly in places where there was no real prospect of industrial development.

Getting back to the Gillogue site, Forfás paid the equivalent of over €6 million for it in 1994 and it was to be sold for €3.3 million ten years later. Intuitively, one feels there is something wrong with this. I do not understand why the market value of the surplus 69 acres involved was in the region of €295,000. It seems extraordinary that it was valued at only a little over €4,000 per acre. Perhaps some property expert can tell me why this is the case. There are certain difficulties with the site but, in the light of current developments, the valuation seems extraordinary. However, it must be said it was carried out in line with the Red Book which is the standard for valuing land set by the Society of Chartered Surveyors. Reference was made to betting. I would like to bet on getting a market value of more than €295,000 for 69 acres. That is just a layman's observation.

Chairman

Is it agreed to dispose of Vote 34, the IDA Ireland Accounts 2004 and Enterprise Ireland Accounts 2004? Agreed. Is it agreed to note and dispose of value for money report No. 50? Agreed.

Our agenda for Thursday, 23 February is the 2004 annual report of the Comptroller and Auditor General and Appropriation Accounts, Vote 30 — Department of Communications, Marine and Natural Resources, chapter 11.2 — fishery harbour centres, and chapter 11.3 — foreshore leases and licences.

The witnesses withdrew.

The committee adjourned at 2.35 p.m. until11 a.m. on Thursday, 23 February 2006.

COMMITTEE OF PUBLIC ACCOUNTS díospóireacht - Thursday, 16 Feb 2006

2004 Annual Report of the Comptroller and Auditor General and Appropriation Accounts: Vote 34 — Enterprise, Trade and Employment.

Mr. Sean Gorman

Mr. Sean Dorgan

Mr. Frank Ryan

Mr. Kevin Thompstone

Mr. John Thompson

Mr. John Purcell

Mr. Gorman

Mr. Gorman

Mr. Dorgan

Mr. Dorgan

Mr. Ryan

Mr. Ryan

Mr. Thompstone

Mr. Thompstone

Mr. Thompstone

Mr. Liam McElligott

Mr. McElligott

Mr. McElligott

Mr. McElligott

Mr. McElligott

Mr. McElligott

Mr. McElligott

Mr. Thompstone

Mr. Thompstone

Mr. Thompstone

Mr. Thompstone

Mr. Thompstone

Mr. McElligott

Mr. McElligott

Mr. McElligott

Mr. McElligott

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Dorgan

Mr. Dorgan

Mr. Ryan

Mr. Ryan

Mr. Thompstone

Mr. Thompstone

Mr. Thompstone

Mr. Dorgan

Mr. Ryan

Mr. Thompstone

Mr. Thompstone

Mr. Thompstone

Mr. Thompstone

Mr. Gorman

Mr. Thompson

Mr. Gorman

Mr. Gorman

Mr. Ryan

Mr. Ryan

Mr. Gorman

Mr. Ryan

Mr. Ryan

Mr. Dorgan

Mr. Dorgan

Mr. Dorgan

Mr. Dorgan

Mr. Dorgan

Mr. Dorgan

Mr. Dorgan

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

Mr. Gorman

COMMITTEE OF PUBLIC ACCOUNTS díospóireacht -
Thursday, 16 Feb 2006