Seanad debates

Wednesday, 2 June 2004

Adjournment Matters.

Shannon Development.

7:00 am

Kathleen O'Meara (Labour)
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I thank the Minister of State for taking this important matter, the proposal, as reported in recent times, by the Tánaiste and Minister for Enterprise, Trade and Employment and by the Government — it also involves the Minister for Transport — to transfer the most significant part of the assets of Shannon Development to a new Shannon Airport authority to rid it of its debt of €5 million in the context of the development of an independent airport authority at Shannon.

While the people of the region want to see the airport develop, there is great concern, particularly among the business community in the Shannon area, that this proposal is a short-term measure and very much a quick fix solution to the issue of the debt a new authority would bear in its early life. The impact, particularly economically, of this proposal on the region would be devastating. In that regard, it is vital that the Government ensures that this does not happen.

I received correspondence from Limerick Chamber of Commerce and I have read comments in the media from players such as Fitzpatricks Hotel in Bunratty, Dell, one of the biggest employers in the region, and other significant figures from the University of Limerick who say this proposal would have severe economic consequences and is simply not the way forward. The impact of it would be to strip Shannon Development of its assets, particularly in the Shannon free zone. The Minister of State is aware that the creation of a free zone around the airport to attract industry was an innovative development. The project has been very successful. Shannon Development has had significant success in attracting industry to the region. I stress Shannon Development's role in supporting and nurturing new industry in the region.

The role of the airport authority is to act as such. An airport authority cannot be a development authority. It cannot play the role currently played by Shannon Development, especially in developing relationships with employers.

It is worth noting that 7,300 people are employed in the Shannon free zone. Some 120 companies are located in the zone, including Intel, Lufthansa Technik, Halifax, Tyco Raychem, DeBeers and Thompson Financial. The zone has the largest cluster of north American investment in Ireland. The proposal under discussion puts the investment, the jobs and future development in jeopardy.

As a public representative in the area, I am in regular contact with Shannon Development. I am briefed regularly on the initiatives being taken by the company and on its future. Shannon Development is examining the development around the airport. It is considering the introduction to the area around the airport of a new type of industry. It is studying the possibility of developing distribution networks at the airport, using the attractive facility that is in place.

Shannon Development is also a tourism body. It is responsible for the development and encouragement of tourism in the area. If it is stripped of its assets, it will not be able to carry out its tourism functions to the extent that it does at present. The tourism industry in the Shannon area, which has already been hit by the potential weakness of Shannon Airport — I refer to the American market — would not receive the significant level of support it receives at present. There would be certain implications in that regard. The proposal under discussion cannot work. If it is pursued, it will have negative economic consequences not only for the Shannon area, but also for the entire mid-west region.

Photo of Michael AhernMichael Ahern (Minister of State, Department of Enterprise, Trade and Employment; Cork East, Fianna Fail)
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I thank Senator O'Meara for raising this matter. The Tánaiste, who is engaged in Presidency duties this evening, regrets that she cannot be here to take part in the debate on this important issue.

I wish to place this debate in its proper context, which will underline the commitment of the Government to the mid-west region, particularly Shannon. The House is aware that a numberof recent developments, including the Government's decisions on decentralisation and the need for an autonomous airport at Shannon, will impact on the region and the State agencies located there.

The first of the developments was the decision announced by my colleague, the Minister for Finance, in his Budget Statement of December 2003 to decentralise the headquarters of Enterprise Ireland to Shannon. Some 300 of the agency's Dublin-based staff will be relocated at Shannon and 100 staff from the Irish Aviation Authority will also transfer there. The decentralisation programme envisages the transfer of 1,210 staff from Departments and State agencies in Dublin to the mid-west region. This hardly indicates that the Government has lessened its commitment to the region's economic development.

The Tánaiste has contributed to the process by agreeing to the transfer to the region of 300 staff from Enterprise Ireland and 250 staff from FÁS. The transfer of the agencies, both of which are under her Department's remit, provides firm evidence of her commitment.

Shannon Development performs a range of functions for Enterprise Ireland on a delegated authority basis. In light of the decentralisation decision, it has been decided that the functions will revert to Enterprise Ireland. It is an entirely practical development as it would make little sense for two agencies in the same location to perform the same functions. The decision, which is fully supported by the board of Shannon Development, will result in the transfer of the Shannon Development staff engaged in the functions to Enterprise Ireland.

It has been agreed that the management of Shannon town should be transferred from Shannon Development and vested in Clare County Council. The decision has been made on practical grounds and Shannon Development and Clare County Council are in agreement with it.

A further development of considerable importance to the region is the decision, which is supported by the board of Shannon Development, to establish an independent Shannon airport authority. The promulgation of legislation for the new authority is a matter for the Minister for Transport, Deputy Brennan. The Tánaiste considers that ensuring the independence and viability of Shannon Airport is absolutely critical to the future development of the mid-west region. All commentators agree that the task of maintaining and developing the vibrancy of the region and guaranteeing its continued attractiveness as a tourist destination and a location for investment would be made considerably more difficult if the airport were not there.

One of the options being considered by the Government is the transfer of the Shannon free zone's assets to the new airport authority. While no decision has been taken, the transfer of the assets would not involve a change in the status of the zone or its attractiveness as an investment location. The question that is ultimately at issue is the management of the zone. In the context of the establishment of the new airport authority, the Tánaiste wants to ensure that the best use is made of the State asset to benefit the region as a whole.

In the light of the changed circumstances, the Tánaiste met the chairman and some members of the board of Shannon Development in March. She subsequently met the chairman and chief executive of the company at the end of April to explain and expand on the matters under consideration. She asked the board to bring forward detailed proposals about the role Shannon Development can play in the region's future development. This discussion is ongoing.

The Tánaiste is keen to stress that she is committed to the future of Shannon and the mid-west region as a whole. The Government's concern is to ensure that it puts in place the most sensible and efficient structures and manages the region's most valuable and strategic assets to optimise their benefit for the entire region.

Kathleen O'Meara (Labour)
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I thank the Minister of State for his reply. Will legislation be required for the transfer of the assets?

Photo of Michael AhernMichael Ahern (Minister of State, Department of Enterprise, Trade and Employment; Cork East, Fianna Fail)
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That is a matter for the Minister for Transport, who is examining it.

Kathleen O'Meara (Labour)
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Would legislation be needed, in theory, to make that happen?

Photo of Michael AhernMichael Ahern (Minister of State, Department of Enterprise, Trade and Employment; Cork East, Fianna Fail)
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The promulgation of legislation for the new airport authority is a matter for the Minister for Transport.

Kathleen O'Meara (Labour)
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What about the transfer of the assets?

Photo of Michael AhernMichael Ahern (Minister of State, Department of Enterprise, Trade and Employment; Cork East, Fianna Fail)
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That matter is under discussion.

Kathleen O'Meara (Labour)
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I thank the Minister of State.