Vol. 470 No. 4
7 Mrs. O'Rourke asked the Minister for Enterprise and Employment his views on the Forfás report on the sale of industrial land; the implications, if any, of the report on locations outside large urban areas; and if he will make a statement on the matter. [19156/96]
The report shows that the overall cost of the property portfolio has not been monitored in a systematic way and that there were weaknesses in the structures for the implementation of policy. Compared to a commercially run operation there has been a negative return on the portfolio over the past 30 years of £56 million accounted for in explicit subsidy and £377 million in a short fall in receipts compared to that necessary to yield a commercial return.
Reasons include low occupancy, low rental income, high maintenance and a broad geographic spread throughout the regions. Some of the costs involved are a direct consequence of the development role that the property portfolio is designed to achieve in terms of employment generation and regional dispersion. However, the report demonstrates that the incurring of these costs was not sufficiently linked to policy objectives. To put it in context the scale of the negative return over 30 years represents 10 per cent of the accumulated grant payments at current prices by the industrial agencies. However, grant supported manufacturing and international services employment now stands at 257,000, generating £16.4 billion annual spending in the economy. This puts the figures in context.
The Forfás report provides a very valuable basis for setting new policy directions. I have made the following decisions to sharpen the focus in this area. IDA Ireland is responsible for the property portfolio since January, 1996; the private sector will, from now on, have a lead role for the future in the provision of industrial buildings; existing properties will be offered for sale, using commercial criteria, to sitting tenants; if sitting tenants are not in a position to purchase in the short to medium term then the property will be offered for sale to third party investors, individually or as part of a portfolio; for vacant properties, where there is a low expectation of occupancy by incoming investment, IDA Ireland will examine other potential employment uses of such buildings, up to and including sale.
This new approach will release taxpayers' resources currently tied up in buildings for other, more productive uses. Furthermore, it has the advantage of strengthening industrial development through companies putting down deeper roots in the Irish economy.
Property will remain an important instrument in competing for foreign direct investment and in regional development. Our industrial property needs can best be provided by partnerships between the IDA, the private sector and local authorities. The more tightly run property management function now being put in place will ensure that this policy instrument is most efficiently used for development purposes.
The main feature of the report relates to the identification of current best practice in supplying and managing industrial property vis-á-vis our competitor countries. There are no specific implications from it for locations outside large urban areas.
In this context, I have asked IDA Ireland to work in partnership with local authorities and the private sector to ensure the provision of suitable sites across the country for industrial development. The primary objective is to ensure that serviced sites are available so that we continue to be highly competitive in the attraction of foreign investment and to achieve a balanced regional spread, thereby providing local employment opportunities.
I will ensure that such sites are aggressively marketed to provide locally based employment opportunities and contribute to the Government's objective of achieving balanced regional development.
On a point of information, does the Minister refer to sites only or sites with buildings?
We are dealing primarily with buildings but each case will be decided on its merits. The IDA could retain some of the ground rights and sell the building. If the site is part of an industrial estate the IDA, in managing the overall estate, will obviously maintain certain interests even if it decides to sell individual lots. This is an issue for the IDA to decide as it executes its broad policy directions.
Perhaps I did not make myself clear. Will the IDA sell its portfolio of land as distinct from its portfolio of land with buildings?
In the case of buildings with sitting tenants, it is proposed to invite the sitting tenants to purchase the property they occupy. If they decline the IDA will consider selling it to those interested in managing it. In such cases the IDA will decide whether to sell the building only or the entire site. A specific model is not being advocated by the IDA and each case will be decided on its merits.
The central thrust is that the IDA, as a huge landlord for sitting tenants, does not serve a great interest in industrial development. It is, therefore, better for it to withdraw, so to speak, from being a landlord and to concentrate on the more important role of identifying those areas where property will be needed in the future to meet growing needs and on how it can promote regional development by using its resources and how, in conjunction with local authorities and private investors, it can develop the necessary plants and advance factories.
I am concerned about the cyclical nature of this issue. During the bad old days there was not a shortage of advance factories, many of which fell into partial ruin or were vandalised, thereby causing further headaches. We do not want to return to those days but in many areas outside Dublin, Cork and Limerick there is a shortage of IDA owned serviced sites which can be offered as a carrot to foreign industrialists to set up here. Whereas there was an oversupply of sites 20 years ago there is a shortage of decent serviced sites in the ownership of the IDA which could be offered to incoming industrialists and which would enhance regional development, which is the remit of the IDA, as distinct from urban development. Smaller rural towns, particularly in the west, midlands and south, will lose out if the IDA does not maintain a supply of decent serviced sites. It is up to the Minister to make a positive rather than a negative statement on this matter. Will the Minister consider making a positive statement in this regard, thereby giving the green light to more widely dispersed urban and rural industrial development?
The promotion of regional development is very much part of the IDA's remit and it uses its portfolio sites as part of this. The report found the IDA had a good supply of sites but pointed out that it must always be attentive to new opportunities. I know from comments made by her outside the House, the Deputy is genuinely concerned rural areas might lose out. However, I am satisfied this will not be the case and there are many examples to back this up. These include the SRAM factory in Carrick-on-Suir which was developed by a private developer and the developments in Letterkenny, Mitchelstown, Waterford and Carlow. These developments are increasingly backed by the BES concession available for advance factories outside Dublin. I am satisfied the partnership between the IDA, local authorities which have a very important role to play in ensuring site availability, and private developers is a good mix which will ensure the even spread the Deputy is eager to see.
