Provision and Management of Industrial Property

Thursday, 29 April 1999

Committee of Public Accounts Debate

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Chairman: Information on Jim Mitchell Zoom on Jim Mitchell No. 7 on the agenda relates to the report on the value for money examination of the Comptroller and Auditor General on the provision and management of industrial property, laid before the House by the Department of Enterprise, Trade and Employment. We are joined by officials from IDA Ireland, Údarás na Gaeltachta, Shannon Development, Enterprise Ireland - formerly Forbairt, Forfás, the Departments of Enterprise, Trade and Employment, Tourism, Sport and Recreation and Arts, Heritage, Gaeltacht and the Islands. As the chief executive officers of IDA Ireland and Údarás na Gaeltachta are not present, it will not be possible for the committee to conclude examination of the financial statements on those two bodies today. Examination of those will be resumed at a later date. The financial statements of the other agencies will conclude today.

Witnesses should be made aware that they do not enjoy absolute privilege and should be apprised as follows: Attention is drawn to the fact that as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997 grants certain rights to persons identified in the course of the committee’s proceedings. These rights include the right to give evidence, the right to produce or send documents to the committee, the right to appear before the committee either in person or through a representative, the right to make a written and oral submission, the right to request the committee to direct the attendance of witnesses and production of documents and the right to cross examine witnesses. For the most part, these rights may only be exercised with the consent of the committee. Persons being invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of these rights and provided with a transcript of the relevant part of the committee’s proceedings if the committee considers it appropriate in the interests of justice.

We are joined by the Assistant Secretary of the Department of Enterprise, Trade and Employment, Mr. Ronald Long. Perhaps he would introduce his accompanying officials.

Mr. Long: I am accompanied by Mr. Seán Gorman and Mr. Bill Brandon.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell We are joined by Mr. Oliver Power, Principal Officer of the Department of Tourism, Sport and Recreation.

Mr. Power: Information on Seán Power Zoom on Seán Power I am accompanied by Mr. Peter Smyth.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell We are joined by Mr. TadhgÓ hÉalaithe, Secretary General of the Department of Arts, Heritage, Gaeltacht and the Islands.

Mr. Ó hÉalaithe: I am joined by Mr. Aonghus Ó hAonghusa.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell We are joined by Mr. Paul Sheane, Chief Executive of Shannon Development.

Mr. Sheane: I am accompanied by Mr. John McDonnell, financial controller and Mr. Michael McNamara, property manager.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell We are joined by Mr. Dan Flinter, Chief Executive of Enterprise Ireland.

Mr. Flinter: I am accompanied by Mr. Paddy Hopkins.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell We are joined by Mr. John Travers, Chief Executive of Forfás.

Mr. Travers: I am accompanied by Mr. Terry Levin, chief accountant.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell We are joined by Mr. Martin Burbridge, chief accountant of IDA Ireland.

Mr. Burbridge: I am accompanied by Mr. Conal Harvey, manager of our property division, Mr. Farranan Tannam and Ms Maria Ginnity.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell We are joined by Mr. Antoin Ó hIoruaidh from Údarás na Gaeltachta.

Mr. Ó hIoruaidh: Is mise Antóin Ó hIoruaidh, Leas Príomh Fheidmeannach. I am accompanied by Mr. John Lowery, Leas Príomh Fheidmeannach with responsibility for industrial development, Mr. Aonghus Mac Cana, manager of our engineering division with responsibility for building and Mr. Tomás Ó Ceallaigh, property manager.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Go raibh maith agat. The Department of Finance is represented by Mr. Dermot Quigley. I now call on Mr. Colm Dunne from the Office of the Comptroller and Auditor General to introduce the value for money report.

Mr. Dunne: All three of the industrial development agencies manage substantial portfolios of industrial property assets. This represents a major investment of taxpayers’ money. The agencies became involved in industrial property provision primarily because the private sector was unwilling to provide sufficient industrial property in certain locations, thereby inhibiting balanced industrial development. In their property operations, the agencies must balance two essentially conflicting objectives. First, they must try to ensure that sufficient property is provided to ensure development is spread as evenly as possible and is not held back by any lack of provision of property. At the same time, they must ensure that good value for money is obtained from the resources tied up in property.

In carrying out this examination, the aim was to look across the agencies to see what similarities and differences exist in the way property is managed. Further, since both private and public sector organisations manage property portfolios, the examination considered whether private sector practices could be adopted by the agencies to help them improve their own portfolio management. One should be careful in making such comparisons. While there is a strong case for the public sector adopting a commercial approach to property management, it will be unlikely to achieve the level of performance achieved by private sector property managers. This is because of the extra responsibilities which rest on the agencies, such as the duty to promote industrial or regional development.

In commercial situations, obtaining best value for money invested in property is usually achieved by acquiring assets at the lowest possible cost, getting the best possible price when the assets are sold and maximising benefits from the use of assets either through occupying them or generating a rental income while they are held. The level of performance achieved in each of these areas feeds into the overall rate of return on the money invested in the property portfolio.

The examination found that the agencies generally performed well when buying or selling land or buildings for industrial purposes in the period 1995-6. Both the prices they paid for assets and the prices they achieved on sales of industrial property appear reasonable when compared to prices prevailing in the market generally.

The purchase and sale of assets is on a small scale relative to the amount of land and buildings held by the agencies. As a result, the level of value for money achieved is determined more by how the assets held are used by the agencies. Comparisons with private sector norms suggest that all the agencies are less economic and efficient than commercial operators across a range of indicators. For example, the examination found that the agencies held many times more land than they use up on an annual basis. A significant amount of the land held was unsuitable for promotion because industry’s requirements or the agencies’ development strategies had changed. More of the agencies’ factory space was vacant than would be expected in a private sector portfolio and the unit costs of holding a square metre of factory space was higher for the agencies than would be typical of the private sector. Many of these findings are to be expected to some extent, precisely because the agencies have a remit to attract inward investment and provide industrial property where the private sector is unwilling to do so. The challenge for the agencies in managing their portfolios is to make the gap as small as possible while still meeting industry’s needs. To manage this task well, they need to set appropriate performance targets and monitor out-turns on a regular basis.

The examination found that none of the agencies had a comprehensive performance management system for their property functions. What is included in such systems will be a matter for the agencies to decide in consultation with their parent Departments. I hope the set of performance measures presented in this report and the discussion around them will provide a good starting point for that work.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Mr. Long, would you like to comment?

Mr. Long: We found the report of the Comptroller and Auditor General very useful. It has been helpful to us in the ongoing evolution of policy and practice in this difficult area. It has been recognised that there are two conflicting directions in property management. We are in agreement with the thrust of the report and have pursued it with IDA Ireland and Shannon Development - the agencies with which we are involved. We have pursued it particularly with a view to arriving at agreed measures for assessing the performance of the property portfolio management function in the agencies. Both agencies have taken very prompt action to improve their property management information systems. The IDA appointed consultants to advise it on the development and introduction of appropriate measures and systems in its property organisation. A final report from the consultants is due in the next week or two.

Shannon Development has also acknowledged the need for improvement in the current property information system. Work is under way in Shannon Development at the moment. It has undertaken this as part of an ongoing review of its information systems to deal with the year 2000 and so on. It is expected that its revised system will be up and running in November 1999.

The agencies are involved in the provision of industrial property for the purpose of achieving economic growth nationally and regionally in peripheral or remote areas. A lack of land for industrial purposes would inhibit entirely that function. Consequently, the agencies buy and develop land to ensure there is an adequate supply to meet emerging demand.

The agencies’ involvement in the provision of industrial property arises from the fact that there is a market failure. They are in the market to deal with this and to achieve their core objective of creating economic activity and the resulting jobs. Their involvement in property and building development is quite strategic in its nature. While their portfolios must be managed as efficiently, effectively and economically as possible, it is important to recognise that they are not in the property market on a purely speculative basis. They are not like a property developer one might find in the commercial arena. A commercial developer would never buy land or have premises built in the sort of places the industrial agencies go to. No commercial developer would have the sort of geographic spread of the agencies which impacts on all the measures we must look at.

The Government has placed great emphasis on achieving better distribution of investments, particularly overseas investments since they are the most mobile, in the regions. The agencies are actively pursuing this and property remains an important instrument for achieving regional dispersal of investment. While the agencies’ programmes for property development are geared towards facilitating the attraction of overseas industries and developing indigenous industries, property solutions alone will not provide the answer and they cannot be seen on their own. We depend on the co-operative approach involving local authorities, the providers of infrastructure and services and the education infrastructure. The property portfolio, particularly the regional property portfolio, of the agencies has to be seen in the light of the infrastructure and support services available which affects value and performance.

The report brings into focus the size of the property portfolios. When the report was drawn up, the value of the property portfolios was £274 million, the size of the land holding was 2,200 hectares and the factory space held was 1.2 million sq. metres. We are pleased about the outcome of the study because it gives us guidelines and levers which we can apply to ensure it is efficiently and effectively managed.

In response to the Comptroller and Auditor General’s report, it has been decided that as part of our Department’s goal in monitoring the performance of enterprise support agencies, both IDA Ireland and Shannon Development will in future provide us with dedicated annual reports on the management of these assets and the agencies will report under the various headings in the Comptroller and Auditor General’s value for money report, as appropriate. This approach to the development of industrial property helps the more effective developments, particularly in the regions, and helps to keep Ireland to the forefront of competitiveness in industrial development. It provides the private sector with investment opportunities, while at the same time delivering quality buildings at competitive rates.

There are a few items in the report I might mention. If it is appropriate, the spokesmen for the agencies might refer to them also. On holding costs in relation to the property portfolio, it is useful to have the sort of commercial benchmarks that have been highlighted in the report. We will find them useful and we will try to achieve economy and efficiency by striving towards these benchmarks. It is recognised by the Comptroller and Auditor General that given the spread of our property, the age of our property portfolios and the very high standards which for promotional purposes we must maintain to be an attractive place for inward investment, we will not behave exactly like a commercial property developer. While we will use these benchmarks, I do not think it will be possible to achieve the same results.

On occupancy rates, the commercial sector achieves 90 per cent. The achievement of the agencies is close to this benchmark. Given the different and non-profit maximising role to get projects into the regions, we will probably never hit it, but we will use it as a benchmark and critical tool for assessing where we are in regard to the achievement of maximum efficiency and maximum economy.

I would like the IDA to address the land holding ratio. The Comptroller and Auditor General took up a point in the report regarding consultants retained in 1995. The consultants advised that a ratio of ten times annual demand would be appropriate. This was based on historical performance, whereas the IDA, Shannon Development and Údarás na Gaeltachta must be more strategic in their approach to land holding. They must look at their target market and what they hope to attract into Ireland and they must plan their land holding requirements accordingly. I would like them to address this issue. The IDA board has had a debate on this issue and they would find a ratio of ten times the annual demand is not the most appropriate. They believe 16 times the annual demand would be the correct ratio given the way in which they intend to go in the future. I do not think there is great disagreement between the Comptroller and Auditor General and us on that. It is important to think it through and know what is appropriate and where we are going.

There is a slight disagreement in one area, that is, the reference to “an implicit subsidy to tenants”. In rural and remote areas the value of a building works out at less than the cost of putting it there. The same applies to rents. That arises because there is no market in those places and one cannot achieve full economic value. That is recognised by the Comptroller and Auditor General’s report: we do not differ on that point. The difference between us is that he suggests that that cost to the Exchequer gives a subsidy to the tenant. We maintain that it is a social overhead cost for which we have to account. It is not a subsidy enjoyed by the tenant provided the tenant pays the market rent on the property. It is an issue of some detail. It is a point of principle on which we have to be quite clear. We probably will not disagree on that point at the end of the day. It is important that we account for the difference and we have taken that on board.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Did you wish to comment, Mr. Flinter?

Mr. Flinter: No, Forbairt and Enterprise Ireland had no role in holding industrial property during this period.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell What about now?

Mr. Flinter: Nor, do we hold such property now with the exception that we supporting local communities to develop locally based enterprise centres. We have had no role in the past nor do we have one currently in holding or managing industrial property.

Mr. Harvey: I am acting on behalf of Mr. Sean Dorgan, Chief Executive, who has asked me to apologise for his inability to attend today. He has a longstanding engagement outside the country with some German investors.

The IDA welcomes the Comptroller and Auditor General’s value for money report and acknowledges the quality of the assessment carried out. We are in agreement with the broad thrust of the report and note that it recognises that in the main, IDA has purchased, developed and sold sites at market rates. These indicators are fundamental to assessing property performance and IDA continues to perform well against these indicators.

We are also pleased to note that the Comptroller and Auditor General recognises the special circumstances of IDA’s property involvement which does not directly compare with the private sector. The IDA is a development agency with the objective of attracting foreign investment to Ireland and creating sustainable employment. Appropriate and attractive property solutions are an essential part of our ability to compete internationally. The IDA needs to have good quality industrial estates and business parks located throughout the country to achieve these objectives.

In reviewing its strategy over the past 12 months IDA has placed greater emphasis on its commitment to development in the regions. We have made significant advances in pioneering the new public private partnership approach to the provision of buildings. Our buildings are provided by the private sector while we concentrate on the provision of sites and industrial parks to make available the land necessary for this programme. Without our participation, we simply would not have the availability of appropriate sites and business parks to achieve our objectives in the regions.

IDA accepts the Comptroller and Auditor General’s recommendations in performance measures and has commissioned KPMG consultants to review his findings and to recommend key measures of efficiency and effectiveness. We acknowledge that we need improvements to our existing systems to provide the required information for such measures as return on investment. The KPMG study will recommend the necessary improvements. Our current systems are highly effective for operation control and property management function but they do not provide the right kind of information for performance measures to which the Comptroller and Auditor General has adverted. The report will be completed in May.

The IDA welcomes the Comptroller and Auditor General’s report and has taken a pro-active approach in response. Action is being taken to address the issues raised and we are confident the steps taken will satisfy the Comptroller and Auditor General’s recommendations. We continue to consider property as a valuable tool in attracting overseas investment in an internationally competitive environment. We are taking all the necessary steps to align our portfolio to the organisation strategy.

Perhaps I should now deal with some of the questions raised by Mr. Long. On how we determine our land holding requirements, a report by JLW in 1995 recommended a multiple of demand. We have considered this in the context of IDA’s developing strategy in relation to increased emphasis on the regions. Our board, following a very exhaustive study, has concluded that this is not necessarily the best measure. We are in the business of creating demand in the regions by having property rather than taking a position on how much property we should have by virtue of that demand. The board has concluded that our land holding requirement should be strategy-driven. We have completed a very exhaustive exercise of our requirements to achieve our objectives in the regions. It is this strategy-driven approach which the board recommends for assessment of our land holding requirement. It is fair to say that even under the measure that JLW has outlined the multiple we have of demand now is significantly lower. Fundamentally, our requirement should be driven by our strategy for regional development.

It is the IDA’s position that we should at all times operate our property based on market rates. Sometimes the market rate does not equate to an economic return but that reflects the realities of the market for particular properties or locations. We hold the view that if we operate to market rates there is no implied subsidy to the company while there may be a cost to the State. There are, however, some hidden subsidies which were reported by the Comptroller and Auditor General which we acknowledge. For example, we did not charge out the costs of maintenance of our industrial estates. The IDA has always taken the view that we needed to keep these to a very high standard. However, it is fair to say we could recoup the cost under our leases from our tenants. We are now embarking on a course to recoup those costs. It is certain that we will meet quite a bit of resistance so it will take some time to achieve our full objectives. We are set on that course now.

The KPMG study is addressing the issue of holding costs and we acknowledge that it is a cost which has to be taken into account. It will have to be taken into account in the context that the IDA has to hold a wide range of sites in locations which perhaps would not be chosen for commercial reasons. This differentiates us from private developers who confine themselves to a small number of locations where they would have strong actively traded markets and would be sure of an adequate return.

We are well into a programme to dispose of our holding of buildings. We do not see it as strategically advantageous for us to continue to be a landlord. We want to be providers of property in conjunction with the private sector. We do not wish to continue to hold investments. We will have reduced our holding from five million square feet to about two million square feet by the end of this year. This puts the occupancy issue in perspective. We now target a level of available factories provided by the private sector each year. While our occupancy rate is 87 per cent it is not something which will come significantly into focus in the future. I think those are the main points raised by Mr. Long.

Deputy Dennehy: Information on John Dennehy Zoom on John Dennehy This is an extremely valuable examination. We have complained about the holdings of State and semi-State bodies and other agencies. We are speaking about public lands. In this case we are referring to three agencies withholding a book value of £274 million. I am familiar with the workings of the IDA for obvious reasons and I compliment it on its achievements to date. I appreciate that the IDA has difficulties and property management is not one of its core functions. I would not like us to use that as an excuse for not managing all the lands to the best possible standards.

Mr. Long explained why we could not compete with the private sector. The average holding costs were 50 to 60 per cent higher than the private sector in almost all cases. Why is there such a large differential, even taking into account that property is cheaper in isolated areas?

Mr. Harvey: There are a few reasons. There are significant costs on management of industrial estates which do not have a high turnover, having regard to the need to have a regional spread. If we recoup that cost one will find that our holding costs will be reduced significantly and might come close to the holding costs of the private sector. As has been adverted to in the report, there are other factors, such as, the occupancy rate is not as high as in the private sector, but it must be noted that IDA’s focus would not have been primarily on high occupancy, rather it would have been on availability of property.

We consider vacant property as an asset in our endeavours to attract industry whereas the private sector would see it as a liability. There are cases where the IDA takes a view on who should occupy the premises. Perhaps the private sector would not take that client if it considers him not to be a good covenant. In the event of someone vacating a property which had to be refurbished the IDA was unable to recoup those costs.

Deputy Dennehy: Information on John Dennehy Zoom on John Dennehy In that context I refer to the comment of the Comptroller and Auditor General that management information to support the analysis of the performance was limited because we might look for excuses as to why certain things are not done. I do not think there are excuses for suggesting that management analysis, financial data and costs did not exist. That should be par for the course. Will the three agencies explain how that could have happened and what steps can be taken to improve the situation?

Mr. Harvey: We acknowledge that. Perhaps there should be better information on the economic measures. IDA’s focus was to use property in attracting investment. We have moved on considerably from that in our policy in that we have now reduced our holding. Many of these questions relate to our holding of buildings. We are now moving towards a situation where we will not own buildings. Many of these ills relate to decisions taken in the 1980s when a somewhat softer approach was taken to the IDA’s management of property. We are in the process of eliminating such issues. For example, we have now sold off a number of our enterprise and community enterprise centres which would have been a significant drain on the IDA’s finances. It would have added significantly to holding costs and so on because we did not even get a market return let alone an economic one.

We are well down the road with a programme to dispose of these holdings and we will then be able to focus properly on what we identify as our core business in property in the provision of sites and business parks throughout the country to a standard and scale which will attract investment. I use both those words advisedly because we need good sites in regions given that we are competing internationally.

Deputy Dennehy: Information on John Dennehy Zoom on John Dennehy One of the Comptroller and Auditor General’s damning comments was that much of the property was in the wrong location. What is the reason for that? Is there inflexibility? I accept that one may intend to develop in a specific place and it becomes the wrong location. That might apply to all three agencies.

Mr. Harvey: This is not something which has happened over night. It would be a carry-over from the 1980s when the IDA had a policy of having small holdings of land in many locations. As the IDA target client is becoming increasingly sophisticated it is also becoming more discerning as to where it would locate. When an evaluation was done on our property holding in 1996, we identified that there was approximately 600 acres of land which was no longer considered to be attractive to the overseas investor. We set about a programme of disposing of land, two thirds of which has been disposed of to date. We are rebalancing our land holding to reflect present needs.

Deputy Dennehy: Information on John Dennehy Zoom on John Dennehy As land is becoming a most valuable asset will Mr. Long clarify if there is any attempt at co-ordinating the effort on the production of the holding and management of lands between the State agencies? There appears to be a fragmentation of effort. Is there any thinking along the idea of having a State body to manage all State-owned property, which would include lands that were previously part of railway stations etc. There are hundreds of acres of derelict land, and trains dating back to 1901 are parked on extremely valuable lands. The IDA should be encouraged to move into these areas. Is there any suggestions for a State co-ordinated effort in that regard, whether it be health board property etc?

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell I was going to ask that question. Did it ever happen that different State agencies, whether at local or national level, competed with each other for the same land?

Mr. Harvey: We act co-operatively to a very significant extent with all local authorities. They have been helpful in identifying appropriate land in many cases. We work with them in a planning process in a number of cases where we rebalance our portfolio. This has been done in co-operation with the local authorities where they took some of our sites because they would be of value to them and we were able to assemble a more appropriate site.

We have contact with health boards and we purchased a site in Ballinasloe from them. We are also in discussions with the health boards in some other locations.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Do we ever have the IDA bidding for land for which a local authority or State company such as CIÉ is bidding?

Mr. Harvey: No.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell How do you avoid that?

Mr. Harvey: For example, a portion of land owned by the Department of Defence is for sale in Fermoy at present. We, in co-operation with Cork County Council, have an interest in it. We have allowed the county council to take the lead role in bidding for it. We will form a joint venture with them for the development of the site if we secure it at an acceptable price. We do not enter into competition with local authorities or public bodies for land.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Could that arise if an agent operated on behalf of one State company?

Mr. Long: I do not think so in practice. Ireland is small enough for people to know what is happening and we can manage effectively. My Department liaises directly with Shannon Development and the IDA on property issues. It is clear that between them there is no overlap. There is no risk of an overlap with Údarás na Gaeltachta because there is a geographic area, but we do not liaise with it as that is somebody else’s concern.

At one stage the property portfolio was held by Forfás, not the IDA but everyone, including Forfás, the IDA and Enterprise Ireland agreed that it was not a great idea. This is a good system of management which works effectively. The responsibility for managing the land portfolio and seeing that building operations go ahead in a planned and effective way lies with the people who have most strategic interest in the development of industrial sites.

Dividing responsibility for the provision of land from responsibility for the use of it could result in a mismatch between provision and requirement. This is the best way we could do it. There are all sorts of ways to manage land portfolios. However, this system works very well because it is targeted. Every organisation needs a clear mission to deliver effectively. This is a very clear mission. These people are about generating jobs in industry and internationally traded services. They are responsible for their land and property portfolios - the same applies in other agencies. If there is an overhang from the 1980s it is because the mission was perhaps not clear enough. It has been clarified now and is being addressed in the most effective manner.

Deputy Dennehy: Information on John Dennehy Zoom on John Dennehy Mr. Long stated that all the agencies have a clear mission and I accepted that viewpoint when I commented earlier. However, we should accept that their mission is not managing land. If it were, it would have efficient management accounts. They would know the value of land, its management details and the cost involved. I accept certain shortcomings on the basis that it is not their mission. We need to understand that point, otherwise we will be simply making allowances for them.

I refer to more than the three agencies. There is a great deal of State land and it is a valuable asset. We look at the overall management of it in the interests of the State and the public. I am not talking about turf wars between the IDA and other agencies. I am talking about utilising and managing land. For example, we have hundreds of acres adjacent to railway stations which in any other European country would in the first place be snapped up by industrial development authorities. They would construct warehouses, factories or whatever, but we use them for storing obsolete materials. That is a waste of public money. Is there a departmental approach to examine the agencies you have direct responsibility for, the availability of land, its utilisation in order to ensure it is used for the benefit of the public?

Mr. Long: Yes. To provide prime sites for investors land is carefully selected to make sure it fits into that approach. All available sites would be viewed and assessed in that way. This has to be pretty hard nosed stuff. You have to know your business and that is getting investors. You have to know how to choose the plots and business sites to have a product that will satisfy the ultimate customer. It has to be focused and spread out so that the person who buys for health boards and the person who will buy for industry may not achieve the same result.

To a large extent the State’s portfolio - I am not able to speak with authority on it - is concentrated in the Office of Public Works which has the biggest property portfolio in the State and represents other State bodies. This is a very particular mission. You need to know your business if you want to buy land that will interest companies like Intel, Hewlett Packard, etc. You need to be expert in that type of work and know how to satisfy that type of customer. I think we have got it right for inward investment.

Deputy Dennehy: Information on John Dennehy Zoom on John Dennehy I must record my doubts about that. I was chairman of the Southern Health Board at a time when we sold a huge tract of land. The advice was that there would not be planning on that land and it could not be used for anything. Our technical staff commented that we were not in the business of land sales or planning and we sold the land for a song. Since then the value of that land has increased twentyfold. The land was on the edge of the city where we needed it most. We have proven since then that it could have been developed. It has been developed by private enterprise. I am extremely worried because I view the health board as a State institution. We should not land this issue on the Department of Enterprise and Employment. We need a national debate on utilising public land.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell There is an obvious weakness in property management and a lack of co-ordination across the State sector. I am even confused by the number of State bodies represented here today.

Deputy Dennehy: Information on John Dennehy Zoom on John Dennehy As a result of this we mentioned that private practice methods were recommended. Can the Comptroller and Auditor General tell me if those recommendations have been implemented? Is he happy that some of those recommendations are being picked up? Has he noted any changes?

Mr. Dunne: We must wait for the results of the KPMG report. That it is focused on performance measures and the development of systems which would be more akin to how the private sector would approach reporting on property management is probably a good sign.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan I agree with the thrust of Deputy Dennehy’s comments on the disposal of lands. We need to be careful about the way we do it. We must ensure that we do not leave ourselves in a worse situation in future. Some year ago CIE disposed of all lands in my region which they thought were surplus to requirement. Now we do not have parking spaces and we have to walk to railway stations. We also have overcrowded roads. We have an obvious need for alternative means of transport. European directives are encouraging and enforcing the utilisation of alternative means of transport. We will have to buy back the land we sold in the past. Therefore, we must be careful that we do not dispose of land prematurely. We should manage the property but we should not dispose of it because it will retain its value for a long time.

With regard to the properties held by the various agencies, have they regularly undertaken a review of the length of time those properties are on their hands with a view to identifying and encouraging investment in areas that are not very attractive to private investors? If an agency has a property or building on its hands for ten years, why has it not been used in that time? Investment must be encouraged. If there is a need for investment in that area, it should be encouraged. I cite the very place where Intel is located in my area. That was an area about which much debate took place. Many people sought to dispose of the property prematurely and to fragment it. All kinds of theories were put forward as to how to use it more effectively, but they were all wrong and have since been proven to be wrong.

To what extent do you look at your property portfolio to find out the areas which have been a long time unoccupied and what is happening with them? There have been huge changes in the IDA and other agencies which are more effective now than they were ten years ago. I remember visiting Germany ten or 15 years ago and we did not even have a brochure to explain to the people there what was available here. The marketing strategy was all wrong. It was done on a national basis as opposed to a blanket basis. It was totally ineffective.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Perhaps we should bring in Údarás na Gaeltachta and Shannon Development.

Deputy McCormack: Information on Pádraic McCormack Zoom on Pádraic McCormack Is there a time limit on how long an unused property is kept? Would someone look at property or land in an isolated area which was bought five, ten or 15 years ago but where nothing was done? Should there be a time limit on revisiting such property?

On selling property prematurely, I heard Deputy Sheehan complaining at a committee meeting yesterday that the west Cork railroad was sold and taken up and is now working very well in Africa. He says it is the best railway they have while there is now no railway in his area. That is a lesson for this committee.

Mr. Ó hIoruaidh: Normally, because of our statutory brief, we would prefer that a hearing of this nature be in Irish. I understand the difficulties involved in that there are other organisations present today and we will be happy to take questions in English. I apologise for the absence of our chief executive and take this opportunity to thank the Ard Reachtaire’s office for publishing the synopsis of the report in Irish. That is appreciated.

I am aware that there are Deputies here who understand and are familiar with the Gaeltacht and the operations of Údarás na Gaeltachta. For the benefit of those who might not be so closely associated, the Údarás, apart from its responsibility in relation to industrial development, has a linguistic, cultural, social and physical responsibility.

We operate in seven different regions, which are totally rural, marginal and under-developed. There are less than ten miles of primary road in the Gaeltacht. Railways were mentioned. We do not have a railway or a DART service and I cannot see Luas coming to the Gaeltacht.

The Gaeltacht is very dispersed from the point of view of population. Our largest centre of population has 1,500 people. You will appreciate that there are differences between the areas in which the Údarás operates and other areas. Údarás must take strategic options and, in considering them, must look at the position. We might consider low economic returns in an area where there is high social or cultural value.

Property is not the core business of the agency. In the comparisons in the report of the auditor, use was made of the private sector measures. I would be concerned about this. That would raise expectations unreasonably, even though it was stated in the report that these were being used as targets. It is not suggested in the report that these might be taken on board by the agencies. Because of the areas in which we operate, 95 per cent of what we do would not be touched by the private developer. It is, however, possible to look at targets and adopt systems of measurement but it should be done in the context of the core operations rather than purely in terms of property.

Our land holding consists of 268.5 acres, largely bog. Of that, 79 per cent is used for industrial sites. We got 62 acres of the undeveloped portion of industrial sites for nothing. The local communities gave us 132 acres for nothing. Within our undeveloped land is the residue of that 132 acres - 62 acres. Our portfolio of land would be cheap enough. The overall 268 acres would have a cost value of £450,000. It is cheap land. Most of it is associated with industrial development sites where, even though we have a regional remit, we would tend to develop in clusters to achieve economies of scale.

Deputy McCormack: Information on Pádraic McCormack Zoom on Pádraic McCormack Do you keep land in an undeveloped state for ever or is there a time limit on the length of time it is kept?

Mr. Ó hIoruaidh: We would not put a time limit on it. The report states that it would be about 38 years on the basis on which we use land, but 79 per cent of our holding relates to existing industrial estates and it would be very hard to dispose of land in those areas.

Deputy McCormack: Information on Pádraic McCormack Zoom on Pádraic McCormack I am not talking about that type of land, I am talking about the other type.

Mr. Ó hIoruaidh: We have 55 acres of the other land. It would be valued agriculturally so it is debatable whether it would be worthwhile to dispose of it.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan The question I asked originally has not been answered. Some of us from the east coast have roots along the west coast so I am familiar with the Údarás operation. I will ask the question again. In relation to the property held, buildings and lands, to what extent do you continue to evaluate its use? To what extent do you push them into the marketplace to encourage people who may think they have no desire to invest, given that there is pressure for investment space at present?

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell To which agency is the Deputy referring?

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan Any of them. I did not get an answer from Údarás.

Mr. Harvey: On the IDA property portfolio, we address the issue of what buildings are available and the period for which they may be available every year. There was a programme of attracting investment to properties throughout the State for which there was difficulty securing occupancy. All of them have now gone. That was done on the basis of very attractive deals. It would have been a factor reflected in lower returns but it reflected the realities of the market. These properties were lying for too long and no one was showing interest in them. They are now occupied and generating jobs, which is a good result.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan Has the IDA dealt with other properties to supplement its land or property bank?

Mr. Harvey: In terms of buildings, we are not doing it in the IDA’s name. This year we will concentrate on nearly 20 buildings in conjunction with the private sector. The private sector will finance them and provide them for leasing or for purchase option. We sell them the land and enter into a contract with them whereby they provide buildings and make them available for IDA projects.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan What is the procedure for disposing of property in a situation like that? Does the IDA advertise publicly?

Mr. Harvey: Disposal is normally to IDA or Enterprise Ireland clients. We review the market value of our property every three months and sell at market rates. In the case of disposal of land which is deemed not useful, we normally offer it first to the local authorities or try to sell it for industrial use. Ultimately some properties will be sold, not necessarily for industry, if they are deemed not to be useful to us. That is part of the problem of rebalancing. Against that, we are buying land and developing sites which are more appropriate.

It has been noted in the report of the Comptroller and Auditor General that we have performed well in relation to buying, developing and selling land. We will have clearer performance measures now following the KPMG study, but it is worth noting that we have been performing well in that area.

Deputy McCormack: Information on Pádraic McCormack Zoom on Pádraic McCormack Is it not a good time to do that? Everybody is performing well now.

Mr. Harvey: This was so even in the past. This report was done for 1995-96 when things were not quite as good as they are now. These are better times, but also it is a much more difficult time to buy. We are having quite a difficulty buying land at a price such that we can sell it on at a realistic market rate in order to attract investment.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan Is the IDA buying strategically now?

Mr. Harvey: Yes, we are, after very considered study of our requirements and objectives which are submitted to the IDA board which then sets a plan of acquisition.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan What is the position in relation to Údarás na Gaeltachta in the same context?

Mr. Ó hIoruaidh: Our policy is similar, except that the market in the Gaeltacht is fairly limited. If there were external investors, we would be quite prepared to make the land available to public tender.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan I am not so sure that the potential is limited. There is an increased desire in some quarters to locate in places that are considered to provide a high quality of life for the people who work there. Thousands of emigrants are inquiring about returning home to areas where there is no housing problem and no overpopulation. To what extent is Údarás na Gaeltachta focusing on that and attempting to capitalise on the existence of that trend in the context of buildings and possible acquisition of locations and suitable sites in areas that badly need investment?

Mr. Ó hIoruaidh: The question is on industrial development in general. Perhaps John Lowery could say something about that.

Mr. Lowery: If industry is to be developed within the Gaeltacht, property is a prerequisite. To that extent we look at areas to see what is required and if we can afford it we build advance factories. We are probably the only agency that is doing that at the moment. To that extent we try to look strategically at a region. If we make a building available in a region, we will be able to attract investment to that region. None of the other agencies is spending money directly on building.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan To what extent does Údarás na Gaeltachta try to advance testing of the market in the region? Is it doing that constantly or does it wait for an inquiry? Does it go into the marketplace and create the ambience?

Mr. Lowery: To the extent that our budget allows, we are doing it. It is probably too late when the inquiry comes. It is necessary to have the building available, ready and up to a standard. That will generate the inquiry.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan Why is it too late when the inquiry comes?

Mr. Lowery: If the building is not available when the inquiry comes, the opportunity will pass us by.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan Given that Údarás na Gaeltachta is in the marketplace and is conscious of emerging needs - exactly the situation that prevailed in the IDA some years ago - to what extent is it geared to being in a position to respond and to be ahead of the market requirement rather than responding after the event?

Mr. Lowery: To the extent that our budget allows and to the extent that most of our budget is dedicated to existing specific building requirements for approved projects, very little of our money is available to make strategic investments in locations where no projects are ready to move in. To the extent that our budget allows, we do it. This year we will spend only about £1 million on advance building.

Mr. Ó hIoruaidh: Most of the advance units that we build on that basis would be fairly small. We would do nothing major unless it was in relation to a specific project.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan How aggressive is Údarás na Gaeltachta in attacking the needs of its particular area of responsibility?

Mr. Ó hIoruaidh: John is very aggressive. I do not know whether I understand the question.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan I will explain it.

Mr. Ó hIoruaidh: Does the Deputy want to know how efficient we are?

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan No. In travelling around the country I come across locations where particular industrial promotional agencies have responsibility. I look at the site and ask myself what I would do if I were an investor, how attractive that location would be to me, whether I would like to invest in the place, given its particular presentation and so on. That is the nub of the question. To what extent is Údarás na Gaeltachta aggressively marketing its potential in the wider community?

Mr. Lowery: We are doing it to the extent of our ability. To take areas where we have been successful, such as Gweedore in west Donegal, which is about as remote as one can get, we have an industrial estate in Gweedore, with buildings available. There are 1,200 or 1,300 people on that estate at the moment. That could not have been done without marketing that area aggressively.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan I am familiar with it.

Mr. Lowery: In the regions in which we operate the position is similar, so the area must be aggressively marketed and the incentive package must be right. To that extent, within the constraints that are on us, we are marketing aggressively.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan Is there scope for improvement?

Mr. Lowery: Absolutely.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Perhaps we should address the same questions to Shannon Development. Mr. Sheane, would you like to comment on the series of questions Deputy Durkan put?

Mr. Sheane: Certainly, and I will try to pick up a number of the issues that have arisen. First, Shannon Development found the report very beneficial and of very practical use. It came about at a time when we were carrying out an overall review of our property management functions, so the report of the Comptroller and Auditor General has complemented some other external consultancy reports we had in at the time. Many of the recommendations within the value-for-money report have already been put in place in the company or are in the process of being put in place.

To give practical examples, a couple of the major points came up. First was the need to improve our management information systems. Mr. Long has already advised the committee as to where we are on that. We are undergoing a major revamping exercise on that.

Another part of the report related to the current value of the agency’s property to current market value. We took that on board and, since then, we have employed one of the national property companies to carry out a direct consultancy for us and examine the current market value of a range of our benchmark properties. It is interesting to note that, contrary to the expected view that such a valuation might lead to the suggestion that we should devalue properties carried on our books, the outcome was the opposite. At the lowest level, property values on our books are being maintained but in many cases the current market value is coming out a little higher.

Since the report, which is a little historic now, there have been a number of changes, one of which is the involvement of the private sector. Suffice to say that in our area the involvement of the private sector with us in directly providing the sort of facility we need for enterprise has increased to the level where, over the next 12 to 18 months, we expect and have agreements in place with the private sector to invest approximately £30 million in industrial buildings in our area. That gives an indication of some of the things that have gone on.

There has been much talk about the strategic nature of the agencies’ holdings, and I can give the committee a practical example of that. First, our business is economic development in our region and while property may not be our core function - overall economic development is our core function - property management and the development of same is an integral part of our whole approach. To put it simply, we use property on two levels, first, to encourage and facilitate the establishment and development of specific enterprises - there has been much talk about that - and, second, to establish major new regional infrastructure. I will give a practical example of that.

A little more than ten years ago, Shannon Development was involved in establishing what was to become the National Technological Park in Limerick. We did that at a time when, to take a point that arose earlier, there was zero interest on the part of the private sector in making investment in that area. To bring it up to date, that park is now home to over 80 enterprises and directly employs more than 4,500 people but by any standards the park is recognised as a focal point for investment in our region of the west.

We are currently applying that sort of property-led approach and integrating it with all our development programmes to establish a number of other centres in the region. In partnership with a number of others we are currently developing a new technology park in Tralee. Not only is it physically next door to the institute of technology there but, along with the institute, we are developing an integrated education and industrial location. The same is being done throughout the region.

I want to deal with another point raised by Deputy Dennehy. One of the other areas in which we are leading a similar initiative is the town of Ennis. To answer the query about possible overlap, in terms of the industrial agencies, that cannot happen in our region because there is a geographical boundary. IDA Ireland does not, as a matter of policy, hold land in our area. Traditionally it would have done that but a number of years ago the land which forms part of what we currently hold there was transferred to us by IDA Ireland on the basis that we could better monitor and manage the whole thing.

The point I want to make about Ennis is that I believe we have managed to co-operate very effectively with the other State authorities. A good example of that is that the Mid-Western Health Board no longer had a need for what had been a major site and a hospital in Ennis. At the same time, we needed a location which we could develop and dedicate to knowledge-based industry. We not only talked to the health board, and eventually purchased that from the health board, we also liaised with the local authority. Having bought the overall site, building and land area, we have sold the building on to the local authority because it was in need of a new county council headquarters. That is a good example of all the State operations coming together.

Deputy Durkan queried targets for rollover property, particularly land. I can give a specific answer to that. Our objective would be to roll over our property assets approximately every ten years. Our capital investment programme is running at approximately £13 million per annum against an overall property holding of just over £100 million. We are talking about a ten year turnover.

While our primary focus is enterprise development and economic development, we are mindful of the need to do that in a financially effective way. Indeed, that is evidenced in the returns we were achieving at that time which, in the original report of the Comptroller and Auditor General, showed an ROI of approximately 4.7 per cent. I am happy to say that since then that number has changed. The next year it increased to 5.4 per cent and the figure for 1998 would be about 6.2 per cent, at a time when interest rates were falling. We now have an Exchequer borrowing rate of approximately 3.5 per cent so that ROI represents nearly two times the current borrowing rate.

To take that a little further, while we would accept ROI is a good indication of value for money, an internal rate of return figure probably better explains what is going on in that it takes into account not just the ongoing revenue stream but also what is happening to the underlying capital value. We have set specific targets for ourselves. In examining every capital investment project we are looking, in terms of specific projects, for a 10 per cent internal rate of return. We would hope that, taken together with all the other assets we already hold, that would lead to an overall average ROI figure of about 7 per cent. We are very conscious that we want to use the property to achieve economic development but we are mindful of the need to keep an eye on the financial side also.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan In relation to both IDA Ireland and Shannon Development, the report of the Comptroller and Auditor General states that in 1996 almost one-third of the land area held by both was unlikely to be used in the foreseeable future because it was in the wrong place. To what extent has the phrase “the wrong place” been analysed to determine how land and properties can be acquired that are not in the wrong place? What efforts are being made to ensure that such lands are being promoted as attractive and in the right place and identify the parameters within which to operate in order to achieve that?

Mr. Sheane: We have land holdings in about 60 locations around the region. In line with what IDA Ireland told us earlier, many of those holdings relate to historical national policy, which at one time was to hold land in more or less every part of the region.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Even in marginal constituencies?

Mr. Sheane: When it comes to matters like this all constituencies may appear to be marginal. As a regional development agency, we are extremely conscious of the need to disperse activity throughout the region, but there must be a limit on the extent to which that can be done. In rebalancing our portfolio, we have identified some areas where despite providing everything around them, it is unlikely they will have a productive economic use in the short-term. We are selling those for the best value we can get and using that money to reinvest in further land assets in areas where we can move it much more quickly.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan How does one make the wrong place the right place?

Mr. Sheane: We must tie in our holdings and locations to areas where we can achieve economic activity. Taking on board all the supports we can put around those areas, we must be practical and accept that economic activity will not be generated in some areas. In line with some of the comments made, we do not believe we should continue to hold land ad infinitum in areas where we must firmly conclude things will not happen.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan I accept that.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell This is the third time the Deputy has spoken.

Deputy Durkan: Information on Bernard Durkan Zoom on Bernard Durkan It is all about the same question. If a property is in the wrong place, by whose definition is it in the wrong place? Is it in the wrong place because of the market reaction to it and, if so, how long has such property been held? When was it acquired? If it was acquired in the past three or four years it should not be in the wrong place because we should have been up to speed on what the market requirements were at that stage. Property being in the wrong place can have a great deal of relevance. I am not talking about property that was held historically but property that may be held now.

I would have assumed one would have tested the market at the same time one made inquiries about acquiring a property for industrial development. We should have been ahead of the market in determining what the customer was seeking at a particular time and was likely to seek over the foreseeable future. That is not impossible to determine. That information is readily available. All major companies throughout the world have marketing programmes and portfolios on what their activities are likely to be over the fore-seeable future. This country is an attractive location for most of those overseas companies at this time.

Mr. Sheane: I will deal with the Deputy’s last point first. I agree with his suggestion that we should match our acquisitions to what the market is seeking. I assure the Deputy every investment we make now is on the basis that it is market-led. For example, 12 months ago we saw a strategic need for a large parcel of land outside Limerick. We acquired land there and three months later it facilitated a major expansion of one of the biggest computer companies in the country.

On the point of holding land in the wrong location, from our viewpoint there is such a thing as a wrong location. There may be a location to which we cannot attract activity. In such a case, we would roll over the property on the basis that we do not feel it is justified to hold land ad infinitum. If we can replace it with land in another centre where we can make something happen, we will consider the net bottom line is positive.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell The zoning of land is relevant to the question of the cost of land. To what extent is there discussion in advance with local authorities on zoning and planning issues? Do local authorities take account of the economic needs of their areas when making decisions on zoning land?

Mr. Harvey: As Deputy Durkan indicated, we take a strategic approach to the acquisition of land. In all cases we would carry out an evaluation in advance of where the relevant zonings are and whether they are adequate. We would feed into the development plans for the region, which are reviewed every five years or whatever. We would normally buy land which is zoned for industry or land not zoned but which, based on our communications with the councils, we are satisfied will be rezoned. That is a fairly standard practice. In some cases we are better off where land is designated for industry but not yet zoned because we can buy somewhat better than if zoning has already taken place.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Do you have similar difficulties with this matter in the Gaeltacht or in the mid-west?

Mr. Ó hIoruaidh: We have a similar experience. We work fairly closely with the county councils. I take this opportunity to mention that the practice of the county councils in requesting capital contributions from the agencies can be quite a costly experience. For example, none of the areas in which we work would have basic sewerage systems or proper water systems. In a situation in which we are involved at present the county council is seeking a contribution of £500,000 towards a sewerage system. That is £500,000 out of £13 million expenditure for the year, which is quite considerable.

Mr. Sheane: Our experience would be very similar to what IDA Ireland reported. On most of our developments, particularly infrastructural type developments, we are working in partnership with the local authority. We have a very good working relationship with it. I agree with the comment by Údarás that we have on occasion had to finance major services infrastructure, which makes it more difficult to justify some of these locations.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Regarding the acquisition and disposal of lands, are there any guiding principles or rules to ensure that these things are done transparently without pressure or influence or to benefit anybody in particular? Given all the scandals we have had in recent years, are there safeguards and procedures to ensure all these acquisitions or disposals of land are not tainted in any way?

Mr. Harvey: About 15 months ago IDA Ireland set up a property committee of the board, which comprises of five IDA board members. That board meets every month and it regulates all activities in the acquisition and disposal of property. It has established a procedure whereby we update our valuations every three months for disposal purposes because in some cases values of property are rising rapidly. This is carefully monitored. It is almost scrupulous about operating on a market basis in the disposal of property. Even if we were to come under pressure from various camps, not least from our colleagues in other divisions, we have no discretion to sell land at anything other than the market rate, which is set by the board.

Mr. Long: If it were the case that IDA Ireland or Shannon Development were to seek to sell land for other than industrial development purposes, they would need the permission of my Minister to do that. There are constraints built in.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Does that include permission to sell to a particular person?

Mr. Long: If it is not for the industrial development purpose mandate of the body and they are disposing of it to someone outside that, they must get permission.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Does the permission just cover the right to sell or does it regulate the manner in which it is sold and to whom it is sold?

Mr. Long: Our experience has been that it is just permission to sell. It is not a vetting of the purchaser.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Are guidelines laid down by any of the agencies?

Mr. Sheane: In the case of Shannon Development, clear procedures are set down and our board takes an active interest in it. Not only do we have main board and approval procedures, but we also have two board sub-committees involved. The first is a specific property sub-committee because we have a large property portfolio and it is something the board feels is worthy of a sub-committee. We also have another sub-committee, the audit sub-committee, which takes views on it. We not only have guidelines but specific written procedures.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell I would like to hear more about that from the Department of Enterprise, Trade and Employment which is the main Department in this case. What guidelines exist to ensure there are no scandals in the future and that clear rules are laid out in the acquisition and disposal of property?

Mr. Ó hÉalaithe: As regards Údarás, after some scandals in the early 1980s, Ministers at the time decided that all property acquisitions, even a quarter of an acre, would have to have ministerial approval. That remained the case for ten or 15 years. That has been relaxed in recent years which is welcome. We do not want to second guess. The safeguards are there in terms of board members. Any of us who are board members have commitments under the ethics legislation. The Deputy’s question may be prompted by the recent sale of lands in Wicklow. The committee will have heard already that Údarás is not buying or selling any substantial amount of land, but if it was selling, it would be encouraged to sell it on the open market.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Perhaps the Department of Enterprise, Trade and Employment would give us a note on the guidelines within a month.

We note the accounts of Shannon Development, Enterprise Ireland and Forfás. We have already noted the accounts of the Department of Arts, Heritage, Gaeltacht and the Islands. We will hear from the other agencies at a later date.

The meeting next Thursday will deal with Vote 17 - Office of the Ombudsman, Department of Agriculture and Food (Resumed) and the Irish Intervention Agency. The meeting next Tuesday will deal with the Office of Public Works flood relief (Resumed).

The Committee adjourned at 12.25 p.m. until Tuesday, 4 May 1999.

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