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 aggregate amount of grant-in-aid, voted annually, which may be made to the company; (3) 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.
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 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 factory construction 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 statutory expenditure limits was enacted was in July 1974. As in the case of the rest of the country, the three-and-a-half years since then have been difficult ones for both Shannon and the mid-west region. Employment in the Shannon Industrial Estate declined by over 700 during the period March 1974 to December 1975. The level of employment recovered during 1976 and 1977 and by December 1977 it had reached 4,362—an increase of over 500 on the end-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 at the end of 1977 it had reached 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. There was a considerable improvement in 1976-77 and 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 of about 1,500 industrial jobs in the region in 1978.
The news of the Ferenka closure overshadowed the announcement of three major new industrial developments for 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 are the reasons why the Government decided to designate Limerick city and some adjoining areas for higher maximum levels of industrial grants. All possibilities are being explored 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. The promotion of estuary locations for suitable new industry will remain an important part of industrial development strategy in the mid-west region.
When speaking on this Bill in the other House I referred to the recent retirement of Mr. Brendan O'Regan from the chairmanship—but happily not from the board—of SFADCo and I think it is appropriate that I should do likewise now. Mr. O'Regan's outstanding record of public service spans a period of 30 years. More than anyone he is closely indentified with SFADCo of which he had been chairman since their 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 should now like to deal with a matter which does not arise out of this Bill but which I regard as being of considerable significance—in the most positive sense—to the future economic and social development of the mid-west region and I believe eventually—by example and extension —to the rest of the country. This is the proposal which I mentioned at the corresponding stage in the other House, whereby SFADCo are to concentrate on the development of small industry in the mid-west region in an intensive way not previously attempted in this country. This is a pilot scheme, the results of which will be evaluated at the end of 18 months or two years when decisions will be taken about extending the scheme to the rest of the country. As I told the other House, I see this new role as giving a new dimension and a new thrust to SFADCo's work particularly in relation to industrial development. The company have, to a considerable extent, achieved their original objective, namely, to secure the future of Shannon Airport. Accordingly, the considerable flair for innovation and development work that they have shown on a number of fronts since 1959 should now be turned in a new direction.
It has long been one of my concerns 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. It has in recent years come to be increasingly recognised not only in Ireland but in the EEC—and experience in the US also bears this out—that economic growth depends very much on a greatly increased "birth rate" of small firms. Very great emphasis was placed on the importance of small industry and the need to give greater attention to its development in the debates in the Dáil and the Seanad towards the end of 1977 on the Industrial Development Bill, 1977.
The board of SFADCo have confirmed their readiness to take on this new and nationally important role. Detailed planning is now in hand and I look forward to positive action on the ground within the region in a very short time. The main burden of the detailed planning immediately rests between SFADCo and the IDA but further consultations between my Department and the Department of Economic Planning and Development will also be necessary. In particular I am anxious that local resources and skills be deployed to maximum advantage in support of the new role and here I am thinking particularly of the special contribution which county development officers in the region can make.
As I mentioned in the other House, in order to free SFADCo to concentrate all their energies and resources on the new task I am arranging that the IDA will resume full responsibility for the promotion and development of industry other than small industry within the mid-west region. Possibly because of this aspect of the proposal, a certain amount of opposition to and criticism of the new arrangements has been engendered—or perhaps I should say whipped up—at local level. This opposition and criticism is based on the notion that, by returning to the IDA the formal responsibility which prior to 1968 they exercised in respect of medium- and large-sized industry one is downgrading SFADCo and weakening regional development. This line of argument is a totally spurious one. We want, as I say, to give SFADCo a new and special role with a special regional significance. In discharging their new responsibility they will, through new arrangements being worked out now with the IDA for the delegation of grant giving powers, be able for the first time to give grants to industry within the region. And they will be able to do this in a speedy and flexible manner.
As to involvement with medium-and large-sized industry within the region the development company to discharge properly their new responsibility will have to involve themselves with such firms. What they will not have is responsibility for promotion in the region—apart from the industrial estate—of medium- and large-sized industry. Since this activity directly involves, as I understand it, only some 2 per cent of SFADCo's total staff of about 200 and since the IDA have in any case always been involved almost exclusively in the promotion of new large enterprises in the region—for example, Alcan—the change does not represent a downgrading in any way of the role of the development company and it is wrong to think that it does.
I hope that those who may have had genuine misapprehensions in this matter now have a better appreciation of what is involved in the new role. What it entails is a change of direction, a change of emphasis in the industrial promotion work of SFADCo and with that change of emphasis I expect a greatly increased volume of industrial development work—of a new kind —by the company involving perhaps the diversion to this work of promotional skills now being deployed elsewhere in the company.
I hope that what I have just said will enable the House to have a better understanding of the new industrial and economic role now being planned for the company. On their past record I have every confidence that the company will respond to the challenge posed by their role with the same energy and determination as they have shown in the various other development activities that they have undertaken since its foundation. I recommend the Bill for the approval of the House.