THE Minister for Enterprise, Mr Bruton, said yesterday he would sell off as much State owned industrial property as possible, after a report strongly critical of the management of the portfolio over the years was published.
The report said that, when compared to a commercially run operation, there had been a negative return on the portfolio over the past 30 years of £56 million in explicit subsidy and £377 million in a shortfall in receipts. This works out as a cost to the taxpayer of an average of £14 million a year since 1966.
Speaking after the release of the Forfas review on industrial property, the Minister said he would give the private sector a leading role in providing buildings in future. Forfas is the State body responsible for advising on industrial policy.
According to the report, which was written by property specialists Jones Lang Wootton and Indecon economic consultants, the reasons that industrial property owned by the State has performed so badly include low occupancy, low rental income and high maintenance costs.
"There is a benign approach to debt collection relative to commercial organisations largely based on a policy of protection of employment," the report says. "There is almost complete separation of the property management and accounts functions. This would be considered unusual in commercial practices, where there is continuous knowledge of tenants' payment records by all concerned with the properties."
Mr Bruton said that the overall cost of the property portfolio had not been monitored in a systematic way, and that there were weaknesses in the structures for implementation of policy.
The scale of the negative return over 30 years represented 10 per cent of the accumulated grant payments at current prices by the industrial agencies, he added.
The report provided a basis for new policy directions, the Minister said, and he had made several decisions. These included making IDA Ireland responsible for the property portfolio since January 1996, giving the private sector a leading role in the future provision of industrial buildings and the selling off of existing properties.
"If sitting tenants are not in a position to purchase in the short to medium term," the Minister added, "then the property will be offered for sale to third party investors individually or as part of a portfolio.
Where there was little or no prospect of a vacant building being occupied by incoming investment, IDA Ireland should examine other uses for the building, including selling it, Mr Bruton added.
The Minister said the Forfas study showed that the availability and competitive costs of land and factory premises remained a significant factor in firms choice of Ireland as an investment location. A more tightly run property management function was now being put in place, he added, which would focus on partnerships between IDA Ireland, the private sector and local authorities.
The report recommends greater openness in tendering and in the appointment of consultants, and proposes that the incentives which exist for the industrial development agencies to retain properties be removed.
A spokesman for the Department of Enterprise and Employment said last night that the total book value for State owned industrial property was £110 million.
"Any revenue realised from sales will revert to the Exchequer," he added.
