Committee Reports > List of Committees > Dáil > 1986 > Committee on Public Expenditure > Report - Review of Shannon Free Airport Development Company Limited

DÁIL ÉIREANN

ORDERS OF REFERENCE

21 June, 1983:- Ordered

(1) That a Select Committee (which shall be called the Committee on Public Expenditure) consisting of 17 members be appointed to review the justification for and effectiveness of ongoing expenditure of Government Departments and Offices and of State-sponsored Bodies not included in the Schedule to the Order establishing the Joint Committee on Commercial State-sponsored Bodies in such areas as it may select and to report thereon to the House recommending cost effective alternatives and/or the elimination of wasteful or obsolete programmes, where desirable.

(2) That the Committee have power to appoint such sub-committees and to refer to such sub-committees any matter comprehended by Paragraph (1) of this Order.

(3) That the Committee and any of its sub-committees shall, unless they decide otherwise, hold their meetings in public under the conditions specified in Standing Order No. 74.

(4) That the Committee or any of its sub-committees have the power to send for persons, papers and records and, subject to the consent of the Minister for the public Service, the Committee have power to engage the services of persons with specialist or technical knowledge to assist it or its sub-committees.

(5) That every report which the Committee proposes to make shall, on adoption by the Committee, be laid before the House forthwith whereupon the Committee shall be empowered to print and publish such report together with such related documents as it thinks fit.

(6) That the Committee or its sub-committees, shall refrain from publishing confidential information regarding the activities and plans of a Government Department or Office, if so requested by a Member of the Government, or of a State-sponsored Body, if so requested either by a Member of the Government or by the State-sponsored Body concerned.

(7) That the Committee present to Dáil Éireann an Annual Progress Report on its activities and plans.

(8) That Members of the Government and Ministers of State be notified of meetings and be allowed to attend and to take part in the proceedings without having a right to vote.

(9) That the quorum of the Committee shall be 5 and that the quorum of each sub-committee shall be 3.

MEMBERS OF THE COMMITTEE ON PUBLIC EXPENDITURE

ABBREVIATIONS

PREFACE

The Shannon Free Airport Development Company was set up in 1959 to help save employment in Shannon Airport which was then threatened by overflying by newly introduced jet aircraft. In the past quarter of a century it has grown and diversified. Today it is involved in industrial promotion, tourism promotion, urban development, the promotion of science and technology and a variety of other lesser activities supportive of its main role. The Company employs 242 persons at home and abroad and disposes of an annual budget of about £21 million. The total book value of its investment amounts to £108 million.

In attaining this size and diversity the Company has been highly successful at its appointed tasks which are principally to promote traffic through Shannon Airport and to encourage small industry throughout the mid-west region in an intensive and innovative way in order to help shape national policies. However, as a multi-role, geographically based organisation of a sort almost unique in Ireland, the Company has attracted its share of criticism.

Although some of this criticism focusses on questions about the Company’s costs of operation, much of it centres around the question as to whether Shannon Airport continues to warrant special promotion and whether the benefits of the Company’s small industry role should continue to be felt mainly in a comparatively well-developed region like the mid-west. The Company would claim with some justification that the reason the region is comparatively well off is because of SFADCO’s activities. However, that does not alter the validity of the question. This raises the question of justification of programmes within the remit of this Committee.

The Committee is satisfied that as a result of the Government imposed stop overs on transatlantic air traffic at Shannon Airpor and the substantial work already undertaken by SFADCo the Shannon Region can no longer justify special treatment over other regions at an annual additional cost to the Exchequer of up to £21m.

The Committee is also satisfied that with the new emphasis on small indigenous industry in industrial promotion policy, SFADCo is ideally poised to pilot new approaches to industrial promotion and development with a view to providing the model for other Regional development agencies in time. It is on this basis that the Committee considers it necessary that SFADCo’s mandate be redefined and some of its functions, staff and assets reassigned as appropriate.

This report deals at some length with the question of the measurement and cost of job creation. This is central to SFADCo’s performance and of course it has widespread ramifications throughout the whole field of industrial policy. There is considerable uncertainty about how the cost of job creation should be counted. This Report, which is aimed at comprehending all of the relevant costs, shows that the costs are high in relation to the potential benefits - especially when redundancy and other factors are taken into account. But the whole question deserves further study both with respect to the methodology and with respect to the actual results. The six year rolling average system developed by the Department’s Management Committee on Industrial Policy provides a reasonable basis on which grant effectiveness can be measured in terms of job creation and should be used in determining upper limits for grant levels. It does not, of course, measure the cost of industrial promotion and other associated costs which are often larger than grant costs. Hence the need for further study and the recommendation of this Committee that all the costs of industrial promotion be set against the additional added value arising.