There is a general welcome in the House for this Bill and, of course, a particular welcome for it by Members from Cork city and county. That is only natural because they have been privileged through the nomination of Ringaskiddy for development as a free port. Other Members, including me, give a welcome to the Bill which we would have wished to be broader and wider in its application so that other suitable locations would have been looked at for nomination as free ports. We have been told that other locations may follow in due course, that this is an enabling Bill. That shows that the Government are embarking on this without a proper detailed study of other locations throughout the country which might be more suitable than Ringaskiddy, about whose nomination I remain to be convinced. Members of Fine Gael, particularly Deputy Avril Doyle, expressed the same feeling.
The idea of a free port is not a new one, and we know that even in mediaeval Europe, in the Hanseatic League, free ports were established for entrepôt trade in northern Europe.
It is a proud boast of the Fianna Fáil Party that the first customs free port in the world was established by a Fianna Fáil Minister, the late Seán Lemass, at Shannon Airport on the banks of the Shannon estuary. The debate on the Second Stage of the Customs Free Airport Bill of 1947 still makes extremely interesting reading. Indeed the prophets of the day, including the former Leader of the Fine Gael Party, James Dillion, must surely regret his contribution to that debate, i.e., he foretold then that Rineanna, as Shannon was known at the time, would have nothing but rabbits running wild there. Regrettably, he did not see the possibility of the development which has taken place there since, and no doubt the further development which can still take place.
There are more than 400 free ports throughout the world at present, and it is believed that about 20 per cent of world trade takes place through them. Most of this growth in trade through free ports is taking place in less developed and developing economies where they have been a spectacular success. There are free ports in Taiwan which provide more than 70,000 jobs; there are three in Malaysia with 22,000 jobs, two in South Korea with 120,000 jobs; and one in Mexico with 70,000 jobs.
I recently visited Taiwan and there I met the Vice-Minister for Trade who told me he got the concept of the free port in Taiwan at Shannon Airport while having discussions with Brendan O'Regan and his colleagues of the Shannon Free Airport Development Company in 1963, and now 23 years later we are thinking of embarking on similar activities ourselves.
It can be said that the most successful free port in the world is in Miami in the United States which is the biggest privately owned venture in the world. The most important aspect is, of course, its location because it can deal with the United States, Central and Southern America and Europe. It is in a unique position, geographically speaking, for this kind of development and it has the added attraction of a very large cargo airport beside the port, the port itself being the third largest container terminal on the east coast of the United States. It is, of course, an extremely powerful international financial centre and is acknowledged as the most successful free port in the world. There are lessons to be learned from it. The decision to site the free port there was based on strictly commercial and not political considerations.
We have a lot to learn on how to establish successful free ports here by examining the operation in Miami and some of the more successful free ports in other parts of the world. I understand our neighbours, the Scots, brought a director of Miami free port to advise them on how to develop a free port in Prestwick in Scotland. This should not go unnoticed. We should be prepared to contact as many people as we possibly can who are extremely knowledgable in this area to advise us.
At the outset, we should be clear in our minds that the purpose of a free port is to stimulate economic activity and add employment in the region. The very fact that a port is established in a particular area means that a range of benefits is conferred on businesses setting up in such ports.
The financial benefits will derive from deferred liabilities for customs duties and VAT. In the case of customs duties the Bill provides that the non-European Community goods imported into a free port will become liable for customs duty only if and when they are subsequently placed on the Community market. Goods originating in the European Community, of course, are in free circulation and are not subject to customs duties on arrival in the State in any event. The benefit of this concession to the cash flow of a business will depend, of course, on the nature and extent of that business. An indication of the degree of potential benefit is that the average rate of custom duty is of the order of 10 per cent.
The Minister of State, in his introductory remarks, did advise that there are no proposals in this Bill for VAT reliefs but that they would be the subject of separate regulations to be made by the Revenue Commissioners under the VAT pact. I understand that the main thrust of the regulations will be as follows: first, a business operating within a free port would be able to import, without payment of VAT, materials, machinery and so on for use in the free port in connection with processing or manufacturing there. Secondly, VAT would be charged at the zero rate on goods supplied within the free port. Thirdly, goods entering the rest of the State from the free port would come under the internal VAT system if the subject of a sale, which would normally be the case, and would not then incur import VAT.
I understand that under these arrangements finished consumer goods would not quality for relief from VAT on importation into a free port nor in general would any other goods imported for re-sale. Relief would apply to all materials components, plant or machinery imported for use by a manufacturing or processing concern within a free port.
We are advised that this is the correct approach, since as I have said already the purpose of the concessions is to stimulate economic activity and therefore employment within the free port and not simply to divert normal trade from elsewhere in the State.
It is well to remember that a free port will also afford some less tangible but nonetheless real and valuable advantages apart from the financial benefits I have already mentioned. Advantages such as a concentration of facilities and infrastructure leading to economies of scale, a more secure environment, simplification of customs procedures and documentation, which of course would be extremely attractive to small firms and firms which might not otherwise become involved in re-export trade.
It is well that we remember at this stage that we have economic stagnation in many parts of the State. There is a very great obligation on the Government and all State agencies to ensure that this new venture of free ports succeeds.
We have the highest unemployment ever and all efforts to defeat that problem to date have failed. Time is running out on us and we have an opportunity, however limited, under the Free Ports Bill, to try to make another effort and perhaps more serious this time, if we are to provide for the unemployed.
Free ports can be successful but we must have the right mix. We must provide first class world standard services and we must remember that anything but first class services will not succeed.
The United Kingdom has already designated six areas where they hope to establish successful free ports. These are: Belfast, Birmingham, Liverpool, Cardiff, Prestwick and Southampton. The British Government, while giving every encouragement for their success, have given also an ultimatum that the ports should develop within a five year period. Reports to date indicate that Liverpool and, in particular, Southampton, are the most successful. There is of course a lesson to be learned from this too in that, from the start it is obvious that Southampton and Liverpool enjoyed natural advantages over the other centres. This is a most important point and one that should be at the forefront of all our thinking in this area.
Naturally, political decisions play a major part in designating areas for development as free ports but I warn the House that we cannot afford to ignore the basic essentials which are required for the success of a free port.
It has been reported that the development of the free ports in the UK has been slow. There have been criticisms of the customs regime to the effect that it is too rigid. From the beginning we should remember that all free ports are subject to the criteria set out in the EC directives. We must remember that to a large extent a free port is a free zone within a larger customs zone, in this case, the EC.
Again I strongly advise that we must be prepared to learn from the experience of the UK and that we should not think that simply by designating Ringaskiddy or the Shannon estuary or anywhere else as a location for a free port, the venture will be an instant success. That is something we should remember also from the beginning. A free port can succeed only if the right mix is present, if it is attractive to the investor and if there is proper, effective and vigorous marketing by the operators of the ports.
In his opening address the Minister of State said that he was introducing this enabling legislation at this time while the options for arrangements regarding development and management of the only designated area so far are being investigated. The Minister assured the House that he would proceed with the enactment of a Bill to make as quickly as possible the necessary orders and regulations to bring into being a free port at Ringaskiddy. There is a great need for a free port there. There is colossal unemployment in the area but that is the case, too, in many other areas. A new deep water berth is being provided at Ringaskiddy at a cost of almost £10 million. The cost is being met by way of a State grant. When that berth is completed — I understand it will be completed next year — it will be capable of accommodating vessels of up to 60,000 tons dead weight. It is obvious, therefore, that we will not have any worthwhile development in a free port area at Ringaskiddy for a considerable time. Undoubtedly, Ringaskiddy would be in a position to compete with Southampton, Liverpool and other places but in the meantime all commercial interests anxious to become involved in free port operations will go to places other than Ringaskiddy because the port there will not be ready.
I suggest to the Government that there should be undertaken as a matter of urgency a comprehensive study of all the locations within the State where it might be possible to provide free port facilities. This should have been done before now. The result of such studies should be made public with public discussion on them taking place as a matter of urgency. If moneys from the Exchequer are to be spent on such developments, the public and their representatives must have all the facts before them before these decisions are made.
The Shannon estuary with its 96 kilometres of sheltered waters and a deep water channel for vessels up to 200,000 tons dead weight is a must for immediate development as a free port. There would be no need to spend millions of pounds there to provide berthing facilities for ships. The facilities are there already unlike the case of Ringaskiddy.
The Shannon estuary has outstanding advantages, not alone from a national point of view but from a European context as well. The estuary's unique maritime capability provides opportunities almost without equal in Europe and it has the capacity, with minimal dredging to handle bulk cargo vessels of 400,000 ton dead weight. I understand there are only three other sheltered harbours in Europe which can accommodate vessels of this size — Rotterdam, Le Havre and the Clyde. The Shannon estuary has the advantage in that it is not affected by congested or shallow approaches as most of the major traditional ports of north-west Europe are. There is no shortage of land and labour on both sides of the estuary from Loop Head and Kerry Head inland.
The European Economic Community recently sponsored a study for the regional development organisation in the area and that study shows that there are three industrial sites at Moyne Point, Colman's Point, Renaland Point on the Clare side of the estuary and on the County Kerry side prime industrial sites for immediate development between Tarbert-Ardmore Point, Asdee, Ballylongford and Dale and of course in County Limerick, all the requirements for a successful free port can be found in the Foynes/Foynes Island, Aughinish and Deele estuary areas. It should be remembered that planning approval has already been given for an oil refinery near Tarbert Ballylongford where carriers of up to 400,000 tonnes dead weight could be accommodated.
It is well to remember that water supply and energy are two important factors to be considered in the establishment of a free port and up to 90,000 cubic metres, 20 million gallons of water per day, can be made available at present to meet this demand. There is a 610 mega watt of electrical generating capacity in the Shannon Estuary at Tarbert Island and this capacity will be increased to 1,500 mega watts when Moneypoint power station is fully on stream, which I understand, will be in a relatively short time.
I feel it necessary to say, not just for the sake of the record but to advise the Government, that infrastructure development is planned to keep pace with industrial growth. Detailed planning studies are available on industrial location, dredging, water resources, assimilative capacity for effluent, power supplies, road networks, housing, environmental and socioeconomic aspects. All the key information is at hand to enable interested industrialists to arrive at speedy conclusions. The Shannon Estuary has witnessed considerable trade expansion in recent times and since 1984 the volume of goods moved through the estuary has increased from 1.5 million tonnes to over 3 million tonnes.
Foynes Island jetty can accommodate tankers of 600,000 tonnes deadweight for the importation of fuel oil. Foynes Harbour, a natural harbour with three berths, having depths alongside at low water of 11.3 metres, can accommodate vessels of 35,000 tonnes deadweight and, of course, has all the advantages of a harbour which is highly developed. This harbour has a rail head with a rail spur and at present more than 700 people are employed there. This is the biggest and deepest harbour on the west coast. It has all the advantages of a highly developed harbour and is a worthwhile attraction.
We have a jetty at Moneypoint, County Clare, which can provide accommodation, as it did recently, for ships up to 150,000 tonnes deadweight. This natural facility already exists. A ship of 150,000 tonnes deadweight can berth within 20 feet of the shore. A number of Members of this Parliament saw that only a couple of weeks ago when they visited Moneypoint. These natural advantages are already there and yet this Government are spending £10 million providing a jetty at Ringaskiddy which will only accommodate ships half that size. Good luck to Ringaskiddy. May they get their free port and may it be a success, but I want to point out that we have this natural facility with twice that capacity staring the Government in the face and yet they are not prepared to do anything about it.
I mention these points to assure the Government that all the requirements for a proper healthy mix for the development of a successful free port are immediately available on the Shannon Estuary and, of course, in addition we have Shannon International Airport sitting on the northern shore of the estuary. The Manpower offices in the environs of the estuary, which has a population of approximately 370,000 people, say that many young, skilled and well educated workers are available.
Before lunch Deputy Coveney mentioned that Cork was a disaster area from an employment point of view. That is a fair admission from a senior Government backbencher, but there are many other such disaster areas throughout the country. In reply to a recent parliamentary question to the Taoiseach I was told that, in my own city and county of Limerick, there are 13,500 people out of work. I understand that in County Clare there are about 6,000 people out of work; in North Tipperary about 3,500 people out of work; in south-east and south Tipperary about 4,611 people out of work; and in County Kerry about 10,000 or 11,000 out of work. What could be more disastrous than that?
I tell the Minister to go ahead with the establishment of a free port in Ringaskiddy because obviously he has strong political backing for it, and it is being designated under this enabling Bill. I will support the establishment of a free port in Ringaskiddy but the Minister should not throw the Shannon Estuary to the winds simply because he does not have the political muscle to do anything about it. We have the proper mix in the Shannon Estuary for the development of a successful free port. I say to the Minister: "Do not turn your back on it. Let the Shannon Estuary be developed in the same way as Ringaskiddy because experience shows that free port developments which did not have the right mix did not succeed."