I move:
"That the Bill be now read a Second Time."
The principal purpose of the Bill is to provide for the further financing of the Shannon Free Airport Development Company Limited by extending the limits contained in the current legislation.
Specifically, the Bill provides for: (1) an increase from £25 million to £45 million in the aggregate of the amounts which the Minister for Finance may subscribe in taking up shares of the company; (2) an increase from £17 million to £22 million in the limit on the issue of repayable advances by the Minister for Finance for the provision of housing and community services at Shannon; and (3) an increase from £17 million to £22 million in the aggregate amount of grant-in-aid, voted annually, which may be made to the company.
The Bill also provides that the level of remuneration and allowances of the chief officer of the company shall be subject to my approval given with the consent of the Minister for the Public Service.
Share capital subscribed to the company is used for capital expenditure on the Industrial Estate at Shannon and in the mid-west region. The main headings of expenditure are land acquisition, construction of factories and ancillary works. A small proportion of share capital is expended on tourism projects of a capital nature. Repayable advances are used for capital expenditure on housing and community services at Shannon. The houses are provided by the company to rent or to purchase and developed sites are also made available for private house-building. The grant-in-aid moneys are applied towards meeting the company's running expenses and providing financial assistance to industries at Shannon. A substantial part of the company's running expenses relate to tourism promotion. Expenditure in this area is met by a special grant-in-aid for which the Minister for Tourism and Transport is accountable but which, nevertheless, comes within the overall limit now being amended by section 3 of this Bill.
Expenditure by the company under these three headings at 31 December 1977 was as follows: Share capital. £25,000,000; Repayable advances, £15,281,500; Grant-in-aid, £13,841,150.
The existing limit for share capital has already been reached and there are no funds available under this heading to meet current requirements and to enable the company to continue with their capital programme. It is, therefore, a matter of urgency that the statutory limits be now increased. On the basis of estimates of expenditure available the proposed new limits will be reached by about the end of 1980.
The type of control proposed in section 5 in relation to the remuneration of the chief executive of the company is now being inserted in relevant statutes governing the different State companies as the opportunity arises. The power to control the chief executive's salary is already contained in the memorandum and articles of association of the company; so in fact the new provision will not affect the control operating at present but will merely give it statutory backing.
The last occasion on which legislation increasing the company's expenditure limits was enacted was in July, 1974. As in the case of the rest of the country the past three-and-a-half years have been difficult ones for both Shannon and the mid-west region. Employment in the Shannon Industrial Estate declined by about 300 during 1975. The level of employment recovered, however, during 1976 and 1977 and now stands at 4,362, an increase of over 500 on the 1975 level. Shannon's export surplus has increased consistently during the period under review. The estimated surplus for 1977 is £50 million or over twice the 1974 figure.
The population of Shannon town has grown steadily over the period and now stands at 8,023. I note with satisfaction that there is a continuing increase in the number of Shannon residents who are opting to purchase their houses under the company's housing mortgage scheme. This trend enhances the stability of the town and provides a firm base for further progress.
Airport traffic developed satisfactorily over the period. A record level of passenger traffic through Shannon was achieved last year. Total passenger traffic in 1977 exceeded 1,170,000 of whom over 550,000 were terminal passengers. The tourism activities of the company also recorded satisfactory progress during the past three years.
Although the original establishment of the company arose from the need to secure the future of Shannon Airport, the company have had, since 1968, the function of promoting the industrial development of the mid-west region in association with the IDA. The international recession of 1974-75 cost the region about 2,200 industrial jobs, mainly in the Limerick/Shannon area. The region would have recovered those jobs fully by the end of 1977 but for the closure of the Ferenka factory. Ferenka's closure resulted in a net loss of about 450 jobs in 1977 for the region as a whole. The company are, however, confident that 1978 will see a return to steady industrial growth because of (a) the number of job approvals— 3,900—in 1977 which will start to come on stream in 1978-79; and (b) the number of jobs—3,350—which remain to be established from industrial projects approved prior to 1977. In addition, new industry inquiries are encouraging, running at about 25 per cent above last year's levels. Based on these considerations the company expect that there will be a net increase in industrial jobs in the region of about 1,500 in 1978.
The news of the Ferenka closure over-shadowed the announcement of three major new industrial developments of Limerick and the region— Alcan, Beechams and Le Jouet Francais, involving a total job potential of 1,450 and planned fixed asset investment of about £270 million. The unprecedented level of job loss resulting from the Ferenka closure and the serious impact that it is having on the Limerick area is the reason why the Government decided to designate Limerick city and some adjoining areas for higher maximum levels of industrial grants. The IDA and SFADCo are exploring all possibilities in regard to getting a replacement firm for Ferenka but it is too early to indicate what the outcome of these efforts will be.
Alcan's decision to proceed with the establishment of an alumina plant at Aughinish has demonstrated the industrial potential of the Shannon estuary. SFADCo and IDA will continue to promote estuary locations for suitable new industry.
At this stage, I think it is appropriate that I should refer to the recent retirement from the chairmanship— but happily not from the board—of SFADCo of Mr. Brendan O'Regan. Mr. O'Regan's outstanding record of public service spans a period of 30 years. More than anyone he is closely identified with SFADCo, of which he had been chairman from its establishment in 1959. My regret that Mr. O'Regan found it necessary to relinquish the chairmanship is eased by the fact that his guidance will remain available to the board who are now about to embark upon new tasks.
I would like to tell the House that I am at present in consultation with the board of SFADCo with a view to reorienting and giving a new dimension and thrust to their work, particularly in relation to industrial development. My approach to this has been from two standpoints. First, I considered that the company have to a considerable extent achieved their original objective—to secure the future of Shannon Airport—and that accordingly the considerable flair for innovation and development work that they have shown on a number of fronts since 1959 might be turned in a new direction. Secondly, it has long been one of my concerns that the tone and balance of our industrial structure, and social and demographic reasons likewise, required that we should seek to strengthen greatly the position of indigenous Irish industry, especially small industry. We must, of course, continue and indeed intensify for many years to come our efforts to attract here new manufacturing industry that is externally financed and controlled. Industry of this kind is very welcome and, indeed, one of our problems is that we cannot get enough of it but the very success that we have in attracting such industry means that unless we take concurrent steps to develop domestic industry to a greater extent, our industrial structure will get out of balance and in the long term this could pose difficulties for us. The need to strengthen indigenous Irish industry, especially small domestic industry, was one of the recurrent themes in the recent debates in the Dáil and the Seanad leading to the enactment of the Industrial Development Act, 1977.
With these considerations in mind I have suggested to the board of SFADCo that the company should assume responsibility for the development of small indigenous industry in the mid-west region in a special and intensive way not hitherto attempted in this country. I see this as a pilot exercise, the results of which would be evaluated at the end of 18 months or two years when decisions would be taken about the extension of such an intensive drive to other regions. The board of SFADCo have confirmed their readiness to proceed in the direction I have indicated but the detailed planning remains to be done. This will involve among other things further consultations between my Department and the Department of Economic Planning and Development, and between SFADCo and the IDA. At this stage it would be premature for me to attempt to go into detail, but, for example, it is envisaged that the county development officers in the mid-west region would be actively involved in the new arrangements relating to small industry.
In order that SFADCo will be free to concentrate all their energies on this new task in relation to indigenous small industry, I am arranging that the IDA will resume full responsibility for industry other than small industry in the mid-west region. I recommend the Bill for the approval of the House.