Thursday, 5 June 2008
I thank the Cathaoirleach for allowing me to raise on the Adjournment the issue of Cork docklands. I welcome the Minister of State, Deputy Killeen. Cork docklands are pivotal to the growth of Cork given the need for the city to develop and grow. They could have a profound impact on both the economic and physical force of Cork into the future. The docklands project in Cork concerns light rail, railways, homes, apartments and the completion of schools, hospitals and other social facilities.
It has been described as having the potential to be a vibrant urban quarter for Cork. The Government's inaction so far is a source of concern in respect of the regeneration of the Cork docklands area. Cork City Council and the people of Cork are looking for tax incentives. They were promised in the budget and the Finance Bill but we have seen nothing so far. I appreciate that Cork City Council is working with the Department of Finance in forwarding necessary documentation to the EU regarding state aid.
I have some questions for the Minister of State. Do all the tax incentives require EU permission and can any of them be given without EU permission? My next question concerns the gateway innovation fund which is necessary for the development of the two bridges. Where are we at this juncture and when will it be announced?
Cork City Council has heard nothing regarding tax incentives. If one looks at Dublin and other docklands projects in Ireland and England, one sees that they were kick started through tax incentives. Such tax incentives are not needed for the provision of hotels and apartments but for schools and other social facilities which are an important part of the Cork docklands regeneration.
The development of light rail and a link between Kent Station and the docklands is also an important part of this project. The Minister of State will agree that we must learn from the Dublin docklands development in the context of building first and putting in infrastructure later. Currently we have a brownfield site and four or five major developers with large land banks. Cork City Council requires two important elements — tax incentives, which will cost the Government nothing and infrastructural spending on the two bridges. I hope the infrastructure is put in place before anything else is done.
There was a suggestion by certain members of the Government parties that the EU is holding up the Cork docklands project but I believe that is a red herring and is nonsense. The project must be prioritised. The European Commission President, José Manuel Barroso, visited Cork recently and was impressed by the docklands project. Cork City Council has done all that is required so far. The economic study has been completed; planning applications have been put forward by one of the major developers, Howard Holdings, the north and south docklands local area plans are complete; and full consultation with the landowners has taken place. The authorities of the port of Cork, who had a major oral hearing with An Bord Pleanála, are in the process of trying to move the port downstream and Cork City Council is in advanced, regular contact with them.
I ask that the Government announces, without delay, the tax incentives for the docklands project, which is absolutely critical to Cork. The city is hemmed in by the county and there is no agreement between the city and county council regarding an extension to the boundary of the city. Therefore, the most natural way to go is to grow the city through the docklands and through the provision of various facilities, educational, medical, social and so forth. I hope the Government is favourably disposed and I ask that the Minister of State address the specific points I have raised in his reply.
I thank Senator Buttimer for raising this important matter. I am responding on behalf of the Minister for Finance.
The Cork docklands area is situated in a strategic location to the east of Cork city centre and covers an area of 166 hectares of land on both banks of the River Lee, with 4 km of waterfront. Its potential was recognised in the 1990s and consideration of how to realise it culminated in the publication of the Cork docklands development strategy in 2001. This document set out a vision for a new urban quarter for Cork characterised by high quality design with residential, employment and leisure opportunities; in short, a superb quality of life in a high-density urban setting. The Minister for Finance appreciates that due to its unique location and potential, the regeneration of the docklands is a priority for Cork City Council.
The Government formally established the Cork docklands development forum last November which is chaired by Professor Gerry Wrixon, former President of UCC. The objective of the forum is to oversee and drive the development of the Cork docklands area, by bringing together senior representatives of the key Departments with stakeholders from the local authorities and the community and business sectors. The work of the forum is ongoing and officials from the Departments of Finance, An Taoiseach, Enterprise, Trade and Employment and the Environment, Heritage and Local Government are represented on the forum to ensure a coherent cross-Departmental approach and focus and to expedite the work of the forum in partnership with the relevant local stakeholders. The forum has already met on a number of occasions and is due to report back to the Government by the end of this month on how the vision for the docklands can be realised.
The regeneration of Cork docklands was highlighted in the national development plan which recognised that the area has the capacity to accommodate an additional residential population of at least 15,000 people, in a mix of both social and affordable housing units. The regeneration of this area will also result in significant commercial activity with associated job creation opportunities.
The Government also recognised the case for the regeneration of Cork city docklands as early as 1999 when a significant area in the docklands was designated for tax reliefs under the 1999 urban renewal scheme, although it is accepted that unfortunately, for a variety of reasons, no significant development took place in the areas designated under the scheme.
Cork City Council made a formal submission in advance of this year's budget for tax incentives to encourage the redevelopment of Cork docklands. However, due to the wide scope of the proposal, it is understood that it is highly unlikely that the combined package of reliefs as proposed by the council would be approved by the European Commission under the relevant State aid guidelines. Officials from key Departments, including the Department of Finance, have engaged in discussions with the EU Commission on the production of a package of financial measures, including tax incentives, which can pass the State aid test. These discussions are ongoing and they are likely to be prolonged given the complexity of the issues under consideration.
While the Commission approved Cork docklands and some of the adjoining areas as being eligible for regional aid under the State aid map for the period 2007 to 2013, this does not mean that the area can qualify for all of the proposed tax incentives. It must be noted that the Commission's state aid map simply places an upper ceiling on the level of aid that can be awarded in a specific assisted area. It does not grant automatic approval to tax or any other financial incentives. These must be submitted for separate State aid approval.
It should also be noted that if a redevelopment project of magnitude was to benefit from tax incentives in its entirety this would involve massive and long-term Exchequer costs. This is a very important consideration, particularly in the current economic climate where there is already some pressure on tax revenues.
The Taoiseach, when he was introducing the second stage of the Finance Bill to the House in his role as the Minister for Finance, stated: "The Cork project is at the beginning of a process of evaluation and we need to assess how best to devise proposals that would meet with EU State aid requirements. It is an exciting project but at this stage it is still a work in progress". In that regard, the Taoiseach also indicated that an early announcement may not assist in clarifying some of the outstanding issues that have yet to be resolved between the various stakeholders. The Taoiseach also said that the Cork docklands forum is expected to report by the middle of this year and that he remained open to looking at ways in which the tax code can be used for the development of the area.
It is understood that the forum is currently completing its report for the Government which will be submitted by its target date of the end of this month. Once this has been received, the Minister for Finance will study the report and consider whether and how financial measures, including tax incentives, can be put in place to encourage investment and change behaviour in order to secure the regeneration of the Cork docklands.
I thank the Minister of State for the reply, although it is disappointing. When does the Minister of State envisage that a decision will be made on this project, given the budgetary changes in the national development plan announced by the Taoiseach last week? The Minister of State is well aware that this project is pivotal to Cork. When are we likely to see this being brought to a conclusion? The docklands in Cork is dependent on this project coming to pass.
Assuming the report is received by the Minister at the end of this month, as is expected, I would anticipate that the Department and the Minister would consider it over a period, while also continuing to work with European Union officials. I will raise the question with the Minister and ask him to respond to the Senator directly.