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Dáil Éireann debate -
Tuesday, 17 May 1988

Vol. 380 No. 7

Forestry Bill, 1988: Second Stage.

I move: "That the Bill be now read a Second Time."

This Bill fulfils the promise made by Fianna Fáil to set up a new State sponsored company to operate forestry on a commercial basis. It reflects the great importance which the Government attached to forestry in their Programme for National Recovery. That programme specified a firm action plan for forestry development which is being successfully implemented.

The record national planting target of 11,000 hectares in 1987 has been achieved. The target has been further increased to 13,000 hectares in 1988 and this will also be achieved. In fact, I expect that total planting this year will reach 14,000 hectares, comprising 10,000 hectares of State planting and 4,000 hectares of private planting.

The programme also set a target of increasing wood production in 1987 by 50,000 cubic metres to 1.25 million cubic metres. In fact, the targeted increase was doubled and a total of 1.3 million cubic metres was produced. This generated receipts of £19 million, an increase of 11 per cent over projections and 16 per cent greater than receipts in 1986. This again is an all time record which I expect will be broken this year when timber sales are expected to exceed £20 million. Sales will continue to increase dramatically in future years, given the fact that output from State forests is expected to reach 2 million cubic metres in 1993 and 3 million cubic metres by the year 2,000.

The major drive which I initiated to increase the level of EC funding for forestry has already had an impact. In January last I announced that we had been granted a total of £8.1 million from the ERDF for road building in State forests. The grants are to finance about 55 per cent of the £15 million cost of constructing 358 km of new forest roads and the upgrading of 107 km in the three years 1986-1988. This is the first time that the ERDF has injected substantial resources to mainstream forestry activities.

I am particularly pleased that my efforts in this area have borne fruit so quickly. Prior to this, Irish forestry had received only some £4 million in EC grants since we joined the Community in 1973.

This achievement, together with my earlier announcement of European Investment Bank loans of £27.8 million, is a further indication of the Government's commitment to capitalise fully on potential EC funding for Irish forestry. It is clear that substantial injections of such funds will be necessary in the future.

As part of our drive to increase European awareness of the case for Irish forestry, I have invited Commissioner Andriessen to Ireland in July and I am delighted to say that he has accepted the invitation.

This year I have been able to launch three new initiatives on private forestry grants:

The western package scheme, formerly only aimed at the poorer areas in the west, has been extended to all disadvantaged areas in the country. EC funding has been increased from 50 per cent to 70 per cent.

A new farm forestry scheme has been launched, aimed at full time farmers, which increases the scope and level of grants available. The EC will reimburse the State 25 per cent of grant expenditure.

A new compensatory allowance, (headage payment), scheme will allow farmers, who are in receipt of headage payments in respect of livestock, to continue to receive those payments if they afforest part or all of their land. This scheme will be 50 per cent funded by the EC.

The programme for economic recovery was also very much concerned to achieve an upturn in the level of employment in the forestry sector.

The volumes of timber now coming on stream and the increased planting rates generated by recent initiatives have provided a springboard for new employment in forestry. A great deal of this new employment is, of course, in the private sector and in the establishment of new contracting firms engaged in planting, harvesting and, indeed, all aspects of forestry.

I have no doubt that the potential for future employment is great and it is worth nothing that forestry in particular is one area which literally plants the seeds of employment for the next generation. The record planting levels of today will provide many jobs over the next 40 years and beyond in forestry and in downstream industries.

Obviously, a significant point of our programme is the Bill before the House today which will bring about the transformation of the Forest Service into a new commercial company. This new enterprise is designed to meet the challenges of the future and to capitalise on the investment made by successive Governments since the establishment of the State.

The history of Irish forestry over that period was marked by the necessity for State intervention, in the absence of any significant private sector investment, to counter the destruction of previous eras and to provide for self-sufficiency in an essential national asset, the raw material of so many industries. Successive Governments throughout the period reaffirmed that goal and set national forestry targets. Regrettably, it has not always been possible to maintain aspirations in this area and, in more recent years, support for forestry has been somewhat intermittent. This recent period in its history has also been marked by successive revaluations of State forest policy and the organisational structure required for future forestry development. In addition, three has been increased emphasis on the promotion of private forestry, which has developed substantially in the past three years, on the basis of extremely generous grants from public funds.

So far as the structure of the Forest Service is concerned, I do not think it necessary to recite in detail the various arguments that have been adduced in recent years. It is now universally accepted that the full potential of forestry is constrained by its location within a Government Department and that, in order to operate successfully in a commercial environment, it is necessary to free it from existing rigidities while at the same time imposing clear cut obligations on it to operate on a profitable basis. The Government consider that the best option is to establish a new State-sponsored body in the form of a company registered under the Companies Acts with commercial goals and carrying on its operations in the same way as a private sector company. Members of the House will be aware that the Forestry Review Group which reported a few years ago recommended that the Forest Service should be transformed into a Commission somewhat on the lines of the Revenue Commissioners but I do not find convincing the arguments which lead to that conclusion. Considering the objects and purposes which we now have in mind for this enterprise I have no doubt that the best format to adopt is that of a company under the Companies Acts.

It has also been evident for some time that the internal structure of the Forest Service will require alteration to bring it more into line with the objectives of commercial operation. It must be said that this is not a problem unique to Ireland and that many similar State forest organisations in other countries have gone, or are going through, the same process of change. The decision on appropriate structures will be a matter for the new company and is likely to involve major organisational change. I will certainly be concerned to ensure that the company operates to maximum efficiency and that its structures and operational practices are consistent with that aim.

In this period of major change I want to pay a warm tribute to the staff for their efforts and achievements over the years which have led to the development of a forest estate which has expanded from practical extinction to its present size of nearly 350,000 hectares. In silvicultural terms, Ireland has been shown to have a particular advantage over our European neighbours in that our forests yield, on average, a third more timber than British forests and more than twice that of other European forests.

Our proximity to the large market in the United Kingdom, which imports more than 90 per cent of its timber requirements, is also a major advantage. The EC as a whole imports approximately 75 per cent of its requirements. I think it can be said that the stage has now been set for a major impact on this market by Irish forestry in the years ahead. The plentiful home produced timber resources will also provide the opportunity for downstream industries to capitalise on these near markets.

As of now about 50 per cent of Irish forests are producing saleable timber. In 1988 the Forest Service will market 1.5 million cubic metres of timber; by 1993, as I have already said, this will reach two million cubic metres and by the year 2000, three million cubic metres. These figures reflect firstly the long-term nature of the State's investment in forestry, and secondly, the structure of the State's forest estate and in particular the fact that a large percentage of that estate is under 20 years old at present. The investments of the forties, fifties and sixties are now beginning to come to fruition as, indeed, will the record current planting levels benefit generations to come. It can truly be said that Irish state forestry has reached a take off point.

I mentioned earlier that a major feature of Irish forestry in the past was the necessity for State initiatives to revitalise the forest industry. The net result of these initiatives is the predominant position of the State in forest ownership relative to other countries in Europe. I am pleased, however, to note that the promotions of the recent past in encouraging private planting have now begun to achieve success. To achieve further momentum on this front we have exerted a great deal of pressure in Brussels to have additional resources provided. The new schemes currently being introduced are aimed at encouraging those in marginal farming and in receipt of headage payments to convert their land to afforestation. The response to these new programmes, along with the existing grant scheme and the western package scheme, will provide a strong impetus for private afforestation throughout the country.

I have sought and received wholehearted support from a range of new forest companies, the farm organisations, co-operatives and ACOT in implementing a dynamic private forestry programme which will reach a record 4,000 hectares this year. My technical staff who, because of their vast experience in forest establishment are especially geared to this new momentum, will continue to provide free expert advice to farmers, individuals, companies and others establishing and tending new plantations. We may not see the final market results for a long time to come but if we are to reap in the future we must sow now. The policies and strategies of the Government, as reflected in this Bill, are: to establish a commercial company to implement the State's afforestation programme; to allow the company, freed from existing Civil Service constraints, to exploit all available opportunities, to conduct its business efficiently and economically, as if it were a private sector company; to provide it with the staff and resources necessary to achieve these aims; and to monitor its performance critically each year, having regard to the various targets set for it.

Ministerial responsibility in regard to the company will essentially be concerned with establishing policy and monitoring performance. Enormous amounts of public funds have been invested by successive generations of Irish taxpayers. We will be looking to the new company to maximise the value of these investments and provide a growing financial return to the State as soon as possible.

I now come to the Bill, which is divided into three parts. The first part, comprising sections 1 to 8, is concerned with general provisions and I see no need to refer to them further at this stage. The second part, comprising sections 9 to 38, deals with the establishment and administration of the company, and the third part, comprising sections 39 to 53, contains transitional provisions.

Part II, which comprises sections 9 to 38, deals with the establishment and administration of the company. Section 9 requires the Minister for Energy, whom hereafter I will refer to as the Minister, after consultation with the Minister for Finance, to register the company as a private company under the Companies Acts and to nominate a vesting day or start-up day. Section 9 further provides for the possible re-registering at some future date, if necessary, of the company as a public limited company, subject to the consent of the two Ministers.

Section 10 sets out the name of the new company — Coillte Teoranta or the Irish Forestry Board Ltd. — and provides for the authorised share capital of the company, at £1 billion. This figure is an inclusive one representing the aggregate of the value of the assets to be transferred to the company together with further share issues which may be approved.

Section 11 requires that the memorandum of association of the company must be consistent with the Bill when enacted, and be approved by the Minister and the Minister for Finance. These documents are at present being drafted and it is my intention that their completion will not delay the registration of the company.

Section 12 outlines the principal objects of the company to be included in its memorandum of association. These are: to carry on the business of forestry and related activities on a commercial basis and in accordance with efficient silvicultural practices; to establish and carry on woodland industries; to participate with others in forestry and related activities consistent with its objects, designed to enhance the effective and profitable operation of the company, and to utilise and manage the resources available to it in a manner consistent with the above objects.

Section 13 specifies the general duty of the company in relation to generation of revenues, conduct of its business and environmental and amenity matters. The objective is that the company will pay its way as soon as possible. Financial targets will be formulated, in consultation with the company and with the consent of the Minister for Finance, under section 38 of the Bill. It is my intention that these targets will not be mere formulations of words and numbers.

Section 14 provides that, in recognition of the fact that it holds a major national asset, the company must agree its annual programme of sales of land and timber with the Minister. These provisions should not be looked at as providing a mechanism for interfering with the business of the company. Their primary intention is to ensure that an adequate planting programme, commensurate with the endowment given to it by the State, is maintained by the company and that, furthermore, no tendency to flabby management is encouraged by allowing unacceptable asset disposals.

Section 15 provides that the articles of association of the company must be consistent with the Bill when enacted and must be approved by the Minister and the Minister for Finance. The articles must contain specified provisions about the number of directors, appointment and remuneration of directors, and the appointment of auditors. The section also requires the company to set up negotiating machinery with staff, and to seek the agreement of the relevant Ministers for the acquisition or establishment of a subsidiary and for investments over an aggregrate of £250,000 in other undertakings. Under section 16 no changes can be made in the memorandum or articles of association without the prior approval of the Ministers.

Section 17 requires the company to issue shares to the Minister for Finance in consideration of land and other property being transferred to it under sections 39 and 40.

Sections 18 to 23 contain provisions about shares in the company, and these are fairly commonplace. Under section 18, one share must issue to the Minister, and under section 19 one share must issue to each of the subscribers to the memorandum of the company, the cost to be borne by the Exchequer. Section 20 provides that the Minister for Finance may exercise the normal rights of a shareholder.

Section 21 contains a provision allowing the Minister for Finance, after consultation with the Minister, to sell his shares in the company. This is a feature of the legislation relating to other State companies. Under this section the Minister for Finance may also transfer one of his shares to any person to ensure there is always the required legal minimum number of members of the company.

Section 22 requires those persons who hold shares in the company — as subscribers to the Memorandum of Association under section 19 or to whom a share is transferred by the Minister for Finance under section 21(1) — to pay any dividends received to the Minister for Finance for the benefit of the Exchequer and to transfer the shares in accordance with his instructions.

Section 23 provides that dividends or other money received by the Minister or the Minister for Finance in respect of their shares, or repayment of or interest on advances received by the Minister for Finance from the company, will be paid into the Exchequer.

Sections 24 and 25 deal with borrowing by the company. Under section 24, the approval of the Minister and the Minister for Finance is required for borrowing for capital purposes. An overall limit of £80 million is proposed, which will cover the company and any subsidiaries it may have. Section 25 empowers the Minister for Finance to guarantee borrowings up to an overall limit of £80 million for the company and any subsidiaries.

Section 26 enables the Minister for Finance to provide an amount not exceeding £100 million for capital works either through share subscriptions, advance or a combination of both.

Section 27 enables the Minister for Finance to provide an amount not exceeding £3 million to the company for working capital in return for shares.

Section 28 contains a standard provision that moneys payable by the Minister for Finance under sections 25, 26 or 27 will be advanced from the Central Fund.

Section 29 enables the Minister for Finance to make a total of £30 million available to the company for current expenditure, the moneys to be provided by the Oireachtas.

Sections 30 and 31 deal with the furnishing by the company of audited accounts and annual reports, which the Minister must lay before the Oireachtas. Both sections also require the provision of any special accounts or information, for instance, on cost effectiveness, as the Minister may request.

Section 32 provides for the disclosure by directors of certain interests. Section 33 provides that unauthorised disclosure of confidential information by directors, staff or advisers of the company will be an offence. Section 34 contains the usual prohibition on a Member of either House of the Oireachtas or of the Assembly of the European Communities being a director of the company, and further provides that directors or persons employed in the company will be seconded without pay on election.

Section 35 provides for the appointment of the chief executive of the company: the first appointment will be by the Minister following a public competition but subsequent appointments will be made by the directors of the company.

Section 36 requires the company to have regard to Government or nationally agreed guidelines or Government policy on the matter of conditions of employment, pay and allowances of its staff.

Section 37 empowers the Minister to make bye-laws relating to access to or use of the company's land, contravention of which will be an offence.

Section 38 provides that the Minister, with the consent of the Minister for Finance, may require the company to comply with directions in relation to Government policy on forestry or related activities, the use or maintenance of its property for a particular purpose, or the provision of services or facilities. The intention is that such powers would be exercised in the public interest, for example, to require the company to maintain or provide amenity facilities. Provision is made for compensation to the company in appropriate circumstances. The section also empowers the Minister to formulate financial targets for the company, including the payment of dividends, with the consent of the Minister for Finance. Directions under this section will be issued by the Minister by way of order, if the company so requests.

Part III of the Bill, comprising sections 39 to 53, includes a number of transitional provisions applicable to the company.

Section 39 provides for the vesting in the company from vesting day of the forestry land and buildings vested in the Minister. Section 40 provides for the similar vesting of other property. All rights and liabilities of the Minister under any contracts or commitments made by him or by others on his behalf in relation to the functions being assigned to the company will be transferred to the company under section 41. Examples would be contracts for the purchase of equipment or commitments to sell timber. Section 42 provides that the vesting in the company of property in accordance with the Bill will be exempt from stamp duty.

Sections 43 and 44 provide for safeguards for the staff to be transferred to the company from the Forest Service in relation to pay, conditions of service and superannuation; these reflect standard practice on the transfer of functions from the Civil Service to a new State-sponsored body. Section 44 also requires the company to prepare superannuation schemes for the grant of pensions, gratuities and other allowances for staff, again a standard item in the case of pension schemes of State-sponsored bodies.

Section 45 empowers the Commissioners of Public Works to undertake work at the request of the company. The commissioners have traditionally undertaken work for the Civil Service, but while working for the company will not be regarded as a State authority for the purpose of the Planning Acts. Section 46 provides that rateable property vested in the company will be subject to rates from the next following financial year.

Section 47 provides that, as from vesting day, claims in respect of loss or injury, settlement of agreements or enforcement of judgments relating to functions transferred to the company will lie against the company and not against the Minister, any other State authority or the State. It further provides that claims by the Minister, any other State authority or the State relating to transferred functions will be proper to the company. Section 48 provides for the continuation in the name of the company, rather than the Minister, any other State authority or the State, of legal proceedings relating to transferred functions, from vesting day. Section 49 provides that, in the case of judgments given against the company which a person is unable to enforce, any amount not recovered can be entered as a debt due against the Minister for Finance, who will be entitled to recover the amount from the company.

Section 50 provides for the continuation in the company's name of notices, certificates etc., relating to transferred functions and still valid on vesting day. Section 51 similarly provides for the continuation in the company's name of licences and permissions granted by the Minister in relation to land or property transferred to the company.

Section 52 allows for the application to the company, in relation to buildings to be transferred to it, of the consultation procedure applicable under the Planning Acts.

Section 53 contains a number of transitional financial provisions which will arise from the fact that it will not be possible to make a clean break on vesting day; there will, for example, be money owing to the Minister which is received in arrears by the company, and money received in advance by the Minister for goods or services to be provided by the company.

That brings me to the end of the sections of the Bill, but there are also two schedules. The First Schedule contains particulars of repeals of parts of certain enactments and the Second Schedule contains particulars of amendments of parts of the Forestry Act, 1946, mostly relating to penalties for offences relating to tree felling.

Having summarised the contents of the Bill, I now wish to comment in some detail on the financial arrangements proposed for the company. Forestry is, by its very nature, a long term investment. The normal pattern of wood production from conifer plantations is for thinnings to commence when the stand is about 20 years old. Subsequent thinnings occur at about five year intervals until the plantation is clearfelled at 40 to 50 years and replanted. The clearfell timber is, of course, the more valuable crop.

As more and more of the State's forest estate reaches maturity, receipts from sales of timber are increasing: These are expected to exceed £20 million in 1988. However, the point has not yet been reached where receipts from timber sales and other miscellaneous activities will cover the cost of the Forest Service, at present £55.5 million. The new company, therefore, will not reach a break-even position for some time to come. It is important, therefore that, during the early years of its operation, they receive substantial State financing and that such financing be made available mainly through share subscriptions to avoid the company being lumbered with interest charges, which would have difficulty in servicing on loan financing. Nevertheless, the Government expect the company to reach, in these circumstances, a cash break-even position on its operations within a reasonable number of years and to generate substantial profits after that.

With this in mind, the Government have decided on the following financial arrangements. It is proposed to transfer to the company the State's assets in exchange for shares of an equivalent nominal value. The assets involved will be the land, whether planted or not, held by the Minister for forestry purposes and other property such as buildings, machinery, stock, etc. The value of these assets will be agreed with the Minister for Finance.

The company will be involved in significant capital investment in complying with annual State planting targets and in maintaining their existing estate. It will be difficult for the company to arrange financing for such a programme and for this reason the Bill contains enabling power to make available from the Exchequer not more than £100 million for capital development, either in exchange for shares in the company, or by way of loans, or both. The actual amount to be provided and the method of financing will be decided by the Government in the light of the development plans submitted by the company.

The receipts which the company will generate from the sale of timber will contribute to a large part of their current expenditure requirements. The company will be expected to further improve their position by more cost-effective operations, imaginative marketing and expansion of their profitable business. This will take time, and the Government has provided enabling powers for the Minister for Finance to make available grants of up to a total of £30 million to the company for current expenditure during their first four years. Again, the actual amounts provided in any year will be decided in the light of the company's development plans. It is further proposed to make an amount not exceeding £3 million available for working capital, in return for its equal value in shares.

To sum up, therefore, in setting up the company the Government are conscious that State forestry is not yet self-supporting, and are committed to providing a degree of financial assistance for some years.

It is my belief that these financial provisions are not ungenerous, especially bearing in mind the fact that the assets are being transferred to the company without any obligation to repay any part of the expenditures which were incurred in their creation. In availing of the powers sought in these provisions, it will therefore be my intention to adopt a vigorous attitude to any proposals submitted by the company. While we do not want to cripple them with excessive debt burdens, we must also guard against an even worse situation in which the company are, in effect, relieved of the obligation to conduct their affairs on the basis of maximum private sector efficiency, because we are too easy going in the provision of further State funds. As I have said previously, the taxpayer has already put enough into forestry and we now expect the new company to put their inherited house in order and pay dividends to the State on this investment. I will conclude on this point by saying that, although there is provision for it in the Bill, I will critically examine any proposals for the guaranteeing of the company's loans. If it is necessary, we will have to put up with it but I will be very anxious to avoid anything which might give the impression that the State has any responsibility for the financial outcome of the company's activities. The company must stand on their own feet, conduct their business in accordance with the requirements of the market place, and generate profits for their shareholders who have put so much into it.

The legislation we will be considering will change fundamentally the structure and future of forestry organisation. I expect the company to build on the strengths they are inheriting and, with the more favourable environment and greater freedom they will have, to achieve a more rapid development of forestry than was practicable within the confines of the Civil Service, which were often required to carry on their activities otherwise than on the basis of sound business principles. The company are being given a major national asset. The Government expect them to make the optimum use of that asset and to maximise the returns on forestry.

It is clear to me from my examination of forestry affairs, both at headquarters and in the field, that there is very considerable room for organisational reform, for the elimination of unwieldy and costly procedures, for the adoption of better practices in the forests, for the introduction of new arrangements which will reduce outgoings on purchases and increase income per unit of sales, and for the identification of the optimum utilisation of the land and other assets. There is a need, in general, for the creation of an entirely new culture in relation to forestry which will have much less to do with outdated procedures and much more to do with running an efficient operation and giving the people of Ireland a better deal for their money.

I am glad to note that the staff have given their support to these objectives and I look forward to their continuing commitment in this respect. Bearing in mind that due to traditional constraints it was not possible to give sufficient attention to these things for a long time past, I believe that it should be possible to achieve very significant improvements in the near future. I will, therefore, be throwing down the gaunlet to the chairman, the directors, the chief executive and the management team as a whole to deliver the goods in accordance with the charter I am asking the Oireachtas to provide for the company. I will not accept that this is just another semi-State body. I expect far more than that and if I do not get it I will give the board a very hard time. There are useful provisions in this Bill in regard to performance requirements and achievement of targets and it is the intention that the powers given in these respects to the Ministers for Energy and Finance will, in association with the financial provisions of the Bill, be used in such a fashion as to assist in bringing about the radical changes which are necessary.

I commend this Bill to the House but before concluding I would like to make clear that I will be glad to consider any proposals for its improvement which are put forward for consideration on Second Stage, or when we have the opportunity to look at the provisions in greater detail on Committee Stage.

I want to take this opportunity to welcome the appearance of this Bill before the House. Its purpose is to grant power to the Minister for Forestry to establish Coillte Teoranta. As such, the Forestry Bill is the culmination of many years of work and representation by a sector which has been long held as a major source of economic salvation. I join with the Minister in the tributes he paid to the staff of the Forestry Department for their years of work and dedication.

I do not propose to catalogue the benefits of wise sensitive development of forestry. The advantages which Ireland enjoys over Europe in terms of climate, soil type, technical expertise and available land are all well known. Providing the optimum conditions for the much needed rapid expansion in this sector has been a painfully slow process. In publishing this Bill the Minister has demonstrated his intention to redress the situation. However, there are serious shortcomings in this Bill which must be addressed to facilitate speedy and positive development of forestry. The Bill gives a general endorsement of the contents of the Forestry Review Group Report and many of the measures recommended by them are in the Forestry Bill, 1988. The review group placed great emphasis on the need to regard the national forests as an asset to be managed commercially for the benefit of the State, which in effect means for the taxpayer, whose money is being invested in forestry by the State. Such benefits should not exclude trading in existing plantations.

The first major concern to anyone assessing the provisions of the Bill relates to the staffing of Coillte Teoranta. One of the highlights of the review group report was the lack of commercial awareness and expertise at Department level. Here the new chief executive is expected to make good the Departmental deficit in this regard. How will he do it? The failure to implement the higher civil servants pay award plus the numerous inhibitions placed by the Gleeson report and the Devlin report will make it virtually impossible to attract and keep the kind of expertise and entrepreneurial spirit which can make a success of Coillte Teoranta.

The directors of the new body will be appointed directly by the Minister but there is no requirement that those nominated should have any expertise in forestry. The Minister could have said that one director should be experienced in accountancy and one might be experienced in the sales area, for instance. I wonder what criteria the Minister will use?


The Minister will hardly specify that the director should be from Nenagh or from somewhere in the Minister's constituency.

One can also find sensible people in Clare.

Given that mistakes have been made before, the Minister should specify some guidelines in the Bill. In the lifetime of the previous Government there was one incident when a director and a manager of a very substantial State company made forward contracts which eventually led to the dissolution of that company. The appointment of directors is very important. While I have great respect for the Minister's commitment to forestry, I question whether leaving this matter open will be of help to the future of Coillte Teoranta. The Minister should have outlined some commercial and technical criteria before proceeding to fill these posts.

This Bill is also seriously deficient in that it fails to address the contentious issue of the valuation of assets. Even independent experts have great difficulty in establishing with any degree of accuracy the value of existing stocks. If the value attached is too low, Coillte Teoranta and its chief executive will show very good results but at the price of virtually wiping out any meaningful private sector participation in forestry. If the estimate is too high, then an unacceptable burden is placed on the shoulders of this new body and its chief executive and both the chief executive and his staff will labour in vain to try to meet unrealistic and unachievable targets. The prognosis for such a situation must then include a total collapse of Coillte Teoranta. In the interests of establishing as secure a base as possible for State involvement in forestry, the Minister should include in this Bill a directive as to how acceptable valuation levels might be achieved. The review group on forestry gave a list of how a valuation of a State forest might be tackled and they gave examples and illustrations. The Minister and the Department might look at the prospect of including their proposals in directives.

It is suggested by some groups that a valuation based on current UK levels would be more suitable because there is established in the British economy a market for standing timber and for the private sector. Alternatively, the Minister could use an adjusting mechanism for a fixed period when revising the value of assets. If the Minister puts in a basic value and a provision for an adjustable, flexible reserve, the value would reflect the real position if arrived at over a period of four or five years. Whatever approach is taken, it is essential that some mechanism is introduced and that the Bill should allow for this.

There are a variety of other serious omissions in this Bill. There is no reference to inclusion of annual performance indicators. The Minister in his speech said that annual performance indicators were in the Bill so perhaps in his reply he will indicate exactly where as I seem to have missed it.

The Bill should have a provision which will allow Dáil Éireann to examine the performance of this body. A significant amount of taxpayers' money is being invested in Coille Teoranta and there should be an automatic means of reviewing the work of the company. Another omission from the Bill, which is very strange, is the absence of any specified planting target. In terms of the chief executive's role, this is disastrous. In administering the work of Coillte Teoranta the chief executive will be subject to all the vagaries and contingencies of Government budgetary strategy. If it is more politic to accommodate spending cuts by starving Coillte Teoranta rather than education or social welfare, the chief executive will not have any statutory basis on which to argue his case and protect the interests of Coillte Teoranta and his staff. The absence of a target for planting makes it impossible to have any genuine economic planning or forecasting.

The Minister in recent speeches placed great emphasis on the involvement of private companies, co-ops and farmers in tree planting. These people need to know exactly what this company is about and where it is going in terms of planting. People need to know if, for instance, they have a planting policy for X number of hectares per year or if they have a target set for a given year allowing 50 per cent of forests to be in private hands and 50 per cent to be in the hands of Coillte Teoranta. As it stands it would not be possible to state with certainty what reserves were held by Coillte Teoranta and what stocks were coming onstream for sale at semi-mature and mature stage. In practical terms this may very well tie the hands of the chief executive who would be required to comply with the terms of sections 14 and 44 of the Bill, both of which are severely restrictive on the chief executive's autonomy to do the job as he or she sees fit.

Let me now turn to deal with the question of financing. In its present form the Bill seems to envisage 1992 as a target for Coillte Teoranta becoming economically viable and independent. Given the discrepancies between the figures quoted in the Bill and those suggested by other groups in the forestry sector, it seems that Coillte Teoranta would have to make up the shortfall by way of sales from existing stock. I do not object to this practice in principle but I have profound difficulties in understanding how if the chief executive is to depend on his method of financing the work of Coillte Teoranta, while denied the security of definite minimum planting targets, he or she would be in a secure position to plan accurately and effectively the expansion of any semi-State forestry programme.

If there is any real intention to encourage growth in the forestry sector it is essential that Coillte Teoranta and its chief executive should be given under the terms of this Bill sufficient latitude to meet current capital liabilities. This means that sufficient funding should be made available to carry out a planting programme on, say, 10,000 hectares. I understood the Minister of State to say that he wanted 13,000 hectares——

We are giving 14,000 hectares this year.

From the State?

Ten thousand hectares from the State.

The question of planting targets is central to establishing a productive relationship, and this is very important, between the embryonic private sector and the more developed public sector in forestry. At the time of the Forestry Review Group report it became obvious that efforts would have to be made to lessen the gap between private and public planting and stocks generally. Any methods for contributing to this goal are to be welcomed but I fail to see in any of the provisions of this Bill any attempt to face up to this requirement.

Let me ask the Minister of State directly, why has no development policy been included in the Bill? Could he also tell us whether he has any intention of producing a White Paper either now or in the future dealing with its long term objectives in terms of expanding and developing the forestry sector? Surely this is the right time in which to produce such a White Paper which would help to allay people's fears and enable them to plan ahead. The private investor will take very cold comfort from the passing of this Bill in its present form. The Minister of State must be aware that the western package scheme will run out in 1991 and there seems to be no enthusiasm on the part of the Minister of State or his Department to explore other, perhaps more attractive, alternatives to this scheme. He said in his speech that he has paid attention to the EC but I was not aware——

The Deputy is not paying attention to what is going on.

I am, but I was not aware of the details of the new farm forestry scheme. On the whole question of grants to private investors which would stimulate a rapid take-up of land for forestry projects, there has been no initiative to overcome the issue of conflict of interest where arbitration on grant eligibility is carried out by officials who are predisposed to protect the interests of the semi-State rather than private programmes.

Recently I tabled a question to the Minister on the administration of grants which is a source of concern for those involved in the farming sector who want to know who is going to be responsible for their administration. I believe the Minister has lost an opportunity in not specifying in this Bill who is going to be responsible for the administration of grants. It would be very unfair if the officials of Coillte Teoranta were to administer the payment of grants. Has the Minister of State or his Department considered using the farm development services and ACOT who in recent times have played a valuable role in the expansion of the forestry programme, particularly the private forestry programme, in the administration of grants? As I have already stated in this House, I have great admiration for ACOT. The Minister of State has said that the EC has neglected this area and forestry was not included as an agricultural item when the Treaty of Rome was signed. As we are now talking of alternative uses of land, the time is opportune for the Minister to announce that an independent body such as Teagasc would be used in the administration of this grant scheme. I ask the Minister of State at this stage to indicate what measures he thinks are appropriate to deal with this serious impediment.

When the Bill was published many people expressed surprise that there was no reference to research and development in the list of duties to be undertaken by the company. The Department have been using the wood technology unit of EOLAS for 26 years now. What is to be the fate of this unit? Surely Coillte Teoranta need this expertise particularly to establish standards which will eliminate the importation of Canadian and Scandinavian timber. I understand that 55 per cent of all the timber now being used comes from those sources. Indeed, the docks at present are full of Canadian timber. EOLAS have carried out a survey on pine lodge and have published its results. I ask the Minister to outline the future of the wood technology unit. Are they to be cut off without a shilling — £300,000 was provided in the Estimates last year — and suffer the same fate as An Foras Forbartha and other institutions which had served this country well for many years? Is EOLAS to become yet another sacrificial lamb on the altar of the Minister for Finance's expediency?

Precedents have been established by other Departments in the drive to eliminate duplication. For example, the food study section and the ocean study section of EOLAS have been absorbed by Teagasc and the Department of the Marine respectively. The precedent has been established in other areas. I see no reason the Minister could not persuade the Minister for Finance to be a little more flexible in this instance. I ask the Minister to indicate his intentions in regard to this matter so as to avoid duplication of services and the waste of resources. What guidelines is he prepared to issue to the chief executive of Coillte Teoranta in this regard?

Research and development are contentious in relation to the co-existence of public and private forestry. For example, will the chief executive of Coillte Teoranta be empowered to make available to private investors, for a reasonable fee, the results of research and development studies on forestry carried out under the auspices of his organisation?

Underlying many of the reservations felt on this side of the House with regard to the Bill is a deep suspicion that it will constitute yet another monument to the lip service this Government pay to the notion of marketing. There has been ample evidence of the inadequacies of this Government in this area. The hamfisted and lack-lustre approach adopted by the Minister and his Department last summer when they attempted to dispose of stocks of semi-mature timber is but one example.

The Forestry Review Group report made crystal clear their concerns that insufficient attention has been paid to the business—and I stress that it is a business —of establishing a sound market in semi-mature timber sales. With the publication of this Bill we come face to face with the fact that the Government have not learned any valuable lesson in this regard. It appears to me that the Minister is over-reliant on attracting local investment only in foresty. The existence of a virtual cartel among institutional investors here makes it vital that steps be taken to render our forestry industry an attractive investment option for individuals and institutions in the United Kingdom and other countries. That is the case particularly with the approach of the year 1992 because, with the completion of the single internal market, many of the existing barriers to investment will be eliminated. Surely the Minister should be taking steps to promote conditions for a massive uptake in forestry investment with the inauguration of the single internal market? There is no evidence of such awareness on the part of the Minister under the provisions of this Bill. The least we might have expected was that the memorandum of association of Coillte Teoranta would have included a provision for the creation of a market-led forest industry.

All Members of this House are in favour of a massive and rapid development of forestry. However, even a casual reading of the Bill before us will demonstrate the heavy hand, even the cloven hoof, of the Civil Service in its provisions. For example, the provisions of section 14, in effect, constitute a set of handcuffs on the chief executive of Coillte Teoranta. Who, in their right mind, would be prepared to undertake the stewardship of Coillte Teoranta under the terms proposed in the Bill as drafted?

My party welcome the Bill. Its introduction demonstrates that some amount of thought has been given to the matter of forestry at ministerial and/or departmental level. However, there are many omissions and inadequacies. My party will be introducing many amendments on Committee Stage to rectify those deficiencies.

There are some references in the Bill I should like to query and have answered. For example, in section 12 there is reference to "efficient silvicultural practices". What exactly does that term mean, or what will it mean in practice? It may well mean different things to different people. In section 38 the Minister is empowering the company to undertake work on his behalf. If my reading of the provisions is correct, the Minister is more or less issuing the company a letter of comfort. I might pose the question: why does the Minister not empower the company to contract? It would appear to me that the Minister is asking his Department to incur somewhat greater liability than is required. Would it not be better that the Department would contract this work?

Provided the Bill incorporates suitable amendments its provisions should ensure that our forestry industry will develop for the betterment of the nation generally.

I commend the Minister on having heightened awareness of the relative importance of forestry to our economy and the inherent advantages and opportunities for us generally to develop that industry.

A few matters which have come to my notice in the short time I have been spokesman on forestry for my Party do not appear to have been addressed in the provisions of this Bill so I should like to avail of this opportunity of bringing them to the attention of the House. On account of the generous grants now available many private individuals are being enticed to convert land in disadvantaged areas and marginal land into afforestation. Frequently now there are many new companies being formed to avail of the market obtaining in the planting and development of forests. Many of those companies have no track record or expertise, nor is it required that they should have such expertise. In any integrated forestry enterprise the Government must examine the position obtaining with regard to the contracting of the planting and management of forests.

It is also my belief that the Government should not have an unfair advantage by way of the provisions of this Bill over legitimate commercial concerns in that, to a certain extent, the State would have its bad debts underwritten. It would appear that the State would be able to compete in the market place and be placed in a somewhat unfair advantageous position vis-à-vis others in the industry. It would not be a desirable objective that the provisions of the Bill would create such a monopoly in this area, as happened in the case of transport with Aer Lingus and CIE, leading to huge losses to the detriment of all at the end of the day.

I would contend that the provision to exempt transitions from the imposition of a 6 per cent stamp duty should apply to all transactions, thereby recognising the importance of the forestry crop.

It has come to my notice recently — this has not been addressed by the provisions of the Bill either — that there is now a practice in State-owned forests of part-time workers being recruited on a piece-work basis and that no statutory deductions are made from their remunerations. It is open to the Minister to deny it, but if this is so it is a retrograde step.

I hope that the new Bill will also prevent the type of panic measures which consigned much of our future saw log to two companies in the pulp and fibre business in the past couple of years which, by any standards, was the steal of the century. The purpose of the Bill is to divest the Government of direct responsibility and give it to a company obliged to exploit forestry on a commercial basis. On this basis we, in the Progressive Democrats, warmly welcome this Bill.

However, we feel that it is flawed in a number of key areas. If it is to achieve the legitimate targets the Minister has been very forthright in spelling out here today something will have to be done about this. I will name the four areas where changes should be made if the Bill is to exploit the forestry industry and, at the end of the day, create a profitmaking enterprise. The areas I refer to are as follows: the corporate objectives, the financing, the ministerial right of interference and the terms of transition.

In regard to the corporate objectives the Minister states that he is setting up a commercial company with the intention of going public. Why not comply with the PLC requirements now? Where is the statement of affairs, and what are the opening balances? If we are to be able to gauge the track record and the performance of such a company and have no opening balances on assets which are conservatively valued at £1,000 million and we hand them over to a company which it is the Government's intention to make public in the shortest possible time, the State's value on these forests must be realistic and it must be a bottomline statement for a new company coming in. Otherwise how can we gauge the development of this company, their ability to run their affairs at a profit and assess the commercial criteria the Minister has laid down for their operation? More important, there is no clear corporate purpose and commercial mandate or objective in the Bill. The Minister must make up his mind whether he wants a Government tool to be interfered with by political will from one Government to the next or an independent commercial entity under Government ownership.

In regard to finance there is a proposal of an equity of £3 million for working capital, shares to the value of land and property. I would say at this stage that there seems to be no value put on the land and property to which these shares are supposed to relate. There is to be £100 million from the State in loans and shares, £30 million in grants over four years coming to £120 million, and borrowings of £80 million guaranteed by the Government.

The Minister is now asking Dáil Éireann to expose the Exchequer to the extent of almost £400 million starting with an asset partially developed and valued at at least £1,000 million and maybe £1,500 million. Surely there is an opportunity here for the public to get involved in funding this company in a share flotation.

Let me now turn to the Minister's right of intervention as proposed in the Bill. The right to veto annual sales of land and timber gives this so-called private company virtually no room for commercial manoeuvre. It is like a farmer having to seek permission to sell a bullock. One either gives the company the teeth to compete commercially or fetters it in such a way that it cannot compete at all. Where the Minister retains the right to issue directions, if it is Government policy and where the policy is a directive of his Department, he retains the right to recoup the losses. Surely this is not in the interests of good commercial practice.

Finally I come to one of the old chestnuts of all attempts by all Governments to privatise Government bodies and that is the terms of transition. These terms are no different from previous terms in other Bills in other so-called Government privatisations. The provision that the Office of Public Works should be involved in certain developmental works completely ties the management's hands in its choice of contractors so that it cannot stand on its own feet as the Minister would desire. Also the new management are inheriting the management structures, the staff, the wage and salary structures and pension funding requirements. If the Minister is throwing down the gauntlet it will be a very heavy one to pick up. The new board and management will have their hands tied before they even start. In the scenario in which we might want to compete internationally by 1992 it is no harm to draw the Minister's attention to a company who have twice the planting capability and programme of the forestry and wildlife division in this country and has a complete managerial and administrative staff of 35. This is the scenario; this is the formidable task facing Coillte Teoranta. This is the mountain that the new chief executive will have to climb with one hand tied behind his back.

The Progressive Democrats will be tabling amendments for Committee Stage. Nevertheless the Bill, in its broad terms, is to be welcomed. We would support the Minister in any effort to make forestry the viable and economic industry it can be here.

I am calling on Deputy Liam Kavanagh. After the Labour spokesman I will be calling on a Government spokesman and then on a person from The Worker's Party.

I warmly welcome this Bill. The only carp I have is that the Minister could have done it a little earlier, but that is only a minor point.

It is something I considered necessary in this area when I was Minister for Forestry. I would like to think I had some hand in bringing about the decision which is now before the House to be taken over the next few weeks.

The setting up of a semi-State body to operate commercial services in the forestry area has been considered for some years now and some credit has to be given to the Minister's predecessors such as former Minister for Forestry, Mr. Paddy O'Toole, who set up the review body back in 1985 to look at the whole position of forestry as a commercial enterprise. This was presaged by the policy of the previous Coalition Government, Building on Reality, when it demanded that the forestry industry be looked at, its operation expanded and made more viable to achieve its potential.

It fell to the then Minister, Deputy O'Toole, to set up a review group. This Bill emanated from that review group. The terms of reference at that time are interesting to look back on. The terms of reference were to ensure that the country's afforestation programme, and in particular the substantial resources which it represented, was developed and exploited to the best natural advantage having due regard to the role and functions of the National Development Corporation where relevant, to examine the present structure of the organisation and operation of the Forest and Wildlife Service of the Department of Fisheries and Forestry, to consider what changes, if any, were necessary, to make specific recommendations on such changes and to submit a report to the Minister for Fisheries and Forestry by 1 June 1985. The review group did not reach that target. It reported in November 1985. Soon after, when I became Minister for Forestry, this document was on my table; I was also Minister for Tourism and Fisheries and a good deal of developmental work was going on in that Department. I was very happy to be associated with the decisions which were taken.

One of the problems which Fianna Fáil Ministers have is that they find it difficult to give credit to somebody else — who is not one of their own — when they produce something. In the Minister's speech on the Forestry Bill the first line reads: "This Bill fulfils the promise made by Fianna Fáil to set up a new State-sponsored body to operate..." I think it would not have been any harm to give some credit to the man who presented this report in 1985. When it was presented I had the choice of deciding whether it should be a semi-State company, a company within the existing Department — such as has been suggested in the conclusions and recommendations of the review group — or leave matters as they were and make no changes. There were a number of people at that time who wanted to do various things, some of whom wanted a new forest commercial semi-State body. Much influence rained down on me at that time as to the direction I should take. I am glad that the Minister has now followed on the decision which we made that there should be a separate semi-State body totally independent of the Department with the usual, obvious safeguards that apply to any semi-State body. I congratulate him on that. I welcome what he has done and I am delighted to say that the Bill, as presented here today, is almost completely what I would have hoped it would be. Therefore, I will have very few problems with it both now and on Committee Stage. That is not to say I have no problem with it. I will be making some suggestions particularly on Committee Stage, to the Minister. I will be asking for some explanations — which only he could have at this stage — because I would like him to expand on one or two points in the Bill but that is best done on Committee Stage.

In section 17 of the Bill of the Minister seems to be giving shares in the company to the Minister for Finance and only taking a minimum amount himself. I find that confusing. That is the opposite to what happened in the Postal and Telecommunications Services Act, 1983. Since both Bills are practically the same in their entirety — the Minister has followed faithfully on what was in the Bill which set up An Post and Telecom Éireann — I find that there is a variance in that the Minister, in his Bill, seems to be taking a minimum interest, as he is giving all the shares to the Minister for Finance. In the Postal and Telecommunications Services Act it was the opposite. Perhaps, the Minister would explain why he has to go in that direction. I am not a great fan of the Department of Finance. I do not like the dead hand of the Department of Finance. I would be perfectly happy to see that they had a minimum interest in the company and if their interest was confined to one share that would be plenty for me if the statutory requirements were met. I think the Minister will be willing to explain that to me. I like the manner in which Departments can develop their policy and not be sat upon by the Department of Finance. I am delighted that the Bill has been introduced and I am satisfied with how it is structured. The Minister in his brief has covered many of the points I wished to make.

There has been a significant shift in attitudes towards the forestry industry over recent years by all parties in this House. Undoubtedly, this relates to the recognition that forestry and its contribution to the wellbeing of the environment cannot be taken for granted. There has been a new awareness within the European Community also that trees, like oil, are a very precious natural resource. Ireland, with its rich damp soil provides a natural environment for tree planting and growing. We are lucky in this respect because certain varieties of trees particularly spruce and pines, reach maturity within 30 to 40 years in Ireland while on the mainland of Europe, and particularly in the northern parts of Europe where the same type and variety of trees are planted, they do not mature as quickly. Because of the long maturing time it takes in these countries we have a natural advantage. As well as that we are a member of the European Community and the European Community is only 50 per cent sufficient in timber, so Ireland's advantage in tree growing puts us in a good position to take initiatives in the industry. It also provides us with an opportunity to lead other member states in the timber export business. I think we have to recognise that fact and all parties are anxious to see that we exploit that to the maximum. Because of the various surpluses in agriculture the European Community are anxious that countries producing a surplus should change to an area of deficit; in the agricultural area it would seem logical that they would encourage that transition from traditional agricultural products — milk, beef and cereals — to forestry.

I think it would be unrealistic not to acknowledge that we have a long way to go before we can claim that we have a satisfactory position in the forestry area. This Bill is a major step in the right direction. I believe the workload that has to be done cannot be under-estimated. At present we have about a million acres of land under forestry and despite our ideal growing conditions this represents the smallest percentage of afforested land in Europe with the exception of Iceland. The vast amount of our forests — 85 per cent — are State planted, cultivated and State-owned and the remaining 15 per cent are privately owned. Attempts to attract farmers and private landowners to invest in the forestry industry have not been successful as the long term pay-out has been unattractive to private investors. Therefore, the State has for the most part pursued a consistent planting programme and has taken the financial risks involved in planting large forests.

The Forest and Wildlife Service have done tremendous work during the past decades in ensuring that forest lands provide a valuable crop of trees and, at the same time, offer a welcome amenity for the public for day trips and camping, as I am well aware in my constituency of Wicklow. The wildlife sector has been kept within the departmental area of operation. I am glad to see the interest being taken not only by the Minister but by his leader, the Taoiseach, when he was in Wicklow recently in getting large sections of the forest estate in Wicklow to remain within the Wildlife Service. It will be expanded into a fine park in the Glendalough area.

If I may go off on a tangent, let me say that now the Minister is setting up this company he should recognise that Wicklow is the cradle of the forest industry.

I know what the Deputy is coming up to.

How about Wexford?

When it was set up in 1904 it was established in Wicklow and the Minister has seen how it has advanced in that area. The largest afforested county in Ireland percentagewise is Wicklow. Therefore we naturally lay claim to the company being established in that county with so many obvious locations there.

Name one.

I will not put it quite beside a Deputy of the Minister's party but it is not too far away. Avondale seems to be an obvious place for a centre for it. The old school properties——

See what my difficulty is nationally when the Deputy will not mention one.

I have just mentioned one, Avondale, and if the Minister wants more I can give him many alternatives but let us fix on that as the most obvious one for him. I am sure it will please at least one of his Deputies from Wicklow, if not both of them. I suggest that seriously to the Minister. His Government have been involved in a certain decentralisation of Government Departments and State operations and they always seem to go beyond the counties near to Dublin. This is an obvious one and the Minister should be generous in not going to seek it perhaps for his area or anybody else's. Wicklow commands the best argument for the company to be established there.

The primary purpose of the Bill is to establish a commercial company to which all the State forests will be transferred. We must ensure that the company is best placed to see that the industry develops to its best potential. The forestry industry is on the eve of realising financial gains for which the public have paid over the past 60 years. Therefore its growth should be reflected in a vast increase in exports, a flow of investment back to the industry and employment and jobs within the forests themselves and the downstream industries.

The NESC in a major study of forestry issued a report in 1979 which projected that there would be in the region of 20,000 jobs over 20 years or so from that date. I do not think the Minister in presenting the Bill here today indicated whether these jobs will be realised or if his Department could put a figure on the potential number of jobs envisaged in the next five years. The NESC report detailed what is envisaged to be the overall responsibility of a forestry authority. These functions were divided into three distinct areas: a forest product development board who would have responsibility for developing a dynamic processing industry, a tree farming development board with responsibility for assuring continuity of supply to the processing sector and, of course, the Forest and Wildlife Service which would have responsibility for the protection and provision of land related to wildlife reserves and amenities. This plan for the forestry industry was reiterated in a more recent study and proposal for a plan in 1984 and 1987 by the same group. The plan acknowledged that there was considerable merit in exploiting the potential of the nation's forest products along the lines outlined in the earlier report, and suggested that a new State-sponsored body might be set up for this purpose. The plan went further and suggested that Bord na Móna might assume responsibility for the responsibilities since they had the technological expertise which might be employed to develop the competitive harvesting techniques required in the upland areas as well as having the requisite marketing skills. I am happy that the Minister did not accept that recommendation, which was made very strongly, because the one area that perhaps the new forestry company will be deficient in is the marketing side of the operation. If it is necessary to get the expertise from some State company like Bord na Móna these skills can be got. It must be accepted that compared to a body like Bord na Móna, the Department's assets are huge and the numbers employed with expertise in tree planting and husbandry are there. So only in the area of marketing will the Minister have to see that the new semi-State body will be strengthened and will have to have that commercial edge to their activities. All the rest is there; the expertise is there. Let me do what the Minister did and pay tribute to the staff of the forestry section of the Department. I was greatly impressed with their knowledge and ability. The only problem they seemed to have was that they were curtailed because of the structure in which they found themselves as civil servants in a Department. I am well aware that many people there have the necessary skills to become very active in a totally commercial sense. Indeed when the opportunity came for some of them to take some release time from the Department many of them went into commercial activity in forestry and demonstrated that the expertise is there to do a good job in that area.

The Bill provides a welcome opportunity for State involvement in the commercial end of the industry. The significance of this may be seen from the lucrative position which exists within the EC. The Community imports about £15 billion worth of timber products and the UK alone imports £4.5 billion worth. In fact the UK imports over 80 per cent of its timber needs and this represents a very favourable market very close to us here. The exporting opportunities are challenging and State involvement will ensure a return to the Exchequer and in turn to the public. In addition the home industry should benefit from the timber harvest. At the moment we import about £400 million worth of timber and timber products many of which can be substituted by home grown products. It would take an experienced and innovative marketing agency to ensure that the substitution happens. I realise there have been developments in the area in the last seven or eight years with our share of the home market rising to about 50 per cent but there is still considerable room for improvement, particularly within the construction industry. The Minister, my predecessor and I were involved in seeing that that change was taking place and the Minister has been endeavouring to accelerate it with substitution particularly in the construction industry.

I have dealt with the potential of the industry in some detail because it is important to spell out its value to the nation in terms of both potential revenue and jobs. Once we establish its value we can go on to discuss how it should be developed and talk about the chief beneficiaries. In this regard I would like to move on to a number of the sections which, as I have said, caused me some concern. I should like the Minister to refer to them in his summing up.

Deputy Carey mentioned section 14 and I am also concerned about it. The Bill states that the company shall submit and agree with the Minister each year a programme for the sale of land and timber. The reference to the sale of land brings us back to the issue of privatisation. The forest lands belong to the State; they are a public resource and to invest a Minister with the power to sell State lands is to open the door to privatisation of State forests. The reference to the sale of timber is perfectly legitimate but perhaps the Minister will explain why he included the clause on the sale of land? Does he intend to sell the plot of land with the infelled trees? This was a measure I resisted in my time in office. I was perfectly happy to sell semi-mature timber but not to give away the land with it. I hope the Minister will explain this.

When I was in the Department there was a proposal that we should sell semi-mature trees but not the land on which they were growing. The Fianna Fáil group in the Seanad put down a motion on 14 May 1986 calling on the Government to prepare and implement a plan for the maximum exploitation of our forestry resources and rejected any attempt by the Government to dispose of State forestry to private banking or financial institutions. The Minister can read the debate but I should like to remind him that some of his colleagues are on the same wavelength as I am in this regard and would not like to see that section used for the privatisation of the forest resource.

The section is particularly worrying because it appears to be a subtle attempt to undermine the whole ethos of the Bill which purports to take over the management of State forests. If this section is passed without amendment, there could be a complete diminution of the State forests within five to ten years. Over the past two years there has been considerable speculation about the sale of mature and near mature forests. Interest has been expressed by banks and other financial agencies involved in pension funds. These financial institutions are not interested in investing in marginal or unused land. They set their sights on the State lands, especially on forests which have been carefully cultivated over the past 40 years. These forests have a highly developed road network, a carefully managed wildlife habitat and have been professionally thinned, pruned and inspected. They represent the most valuable forest land in the State and would be a lucrative investment for any financial institution. They would be an almost totally risk-free investment because all the work has been done and it only remains for the trees to mature. It would be a big rip-off, as far as the State is concerned, to sell the land on which the trees grow. It would not make sense in view of the long term development of the forestry industry and certainly could not be priced in terms of past State investment and future potential.

Research into private forests has shown that investment of this nature is more sporadic, less planned and less inclined to environmental protection than State run forests. If State lands are sold the overall picture would be bleak. It is important for the Minister to elaborate on this section and tell the House how he envisages a new State company progressing if land is sold.

Section 15 of the Bill deals with the articles of association. The Minister has not made any provision for worker directors on the board. In view of the new Worker Participation (State Enterprises) Bill, 1987, which is currently before the House, perhaps the Minister will raise this matter with the Minister for Labour so that the new forestry company will be included in that Bill? There is already provision for worker directors in Bord na Móna and the extension of the concept to the forestry end of the industry would seem a logical and progressive move. A precedent has already been set with the inclusion of An Post and Bord Telecom Éireann in the Bill. Perhaps the Minister will comment in this regard.

In section 27, which deals with capital to the company, a figure of £3 million is mentioned which seems to be a minimal amount for a new company, particularly when the emphasis is on exporting and manufacturing. I know that section 26 provides a sum of £100 million for capital works. Sections 24 and 25 mention the sum of £80 million for borrowings. The figure of £3 million for the ongoing operational costs of the company is a little small. Indeed, sections 24 and 25 are at variance with section 26 in relation to borrowings and moneys for capital works. I am reminded of the position in B & I which is being looked at by the Oireachtas Joint Committee on Commercial Semi-State Bodies. The company were dragged down by the amount of borrowings they had to make over the years and the level of interest payments.

I would not like to see us starting on the wrong road by undercapitalising Coillte Teoranta. The main factor in the case of the B & I was the very heavy level of borrowings over the years and not their commercial operation. Many thousands of people have lost their jobs as a result of their policy. I hope the Minister will look at that section and assure us that the new company will not be saddled with huge borrowings from commercial banks after a very short time in operation.

On 16 June 1987, speaking to the Confederation of Irish Industry, the Minister for Energy said that the emphasis for the new company will be on performance and results. He said they would be expected to achieve profitability at the earliest possible date. In view of this ambitious target the Minister should consider greater funding for the new company, at least in the early days. Will he consider doubling the amount of working capital to the company?

I was pleased to see that the Minister in section 43 introduced provisions in regard to staff remuneration and conditions similar to those negotiated for staff of Telecom Éireann. It is natural that I should be concerned about this matter. From my reading of that section it appears that the Minister has followed faithfully the lines of the terms and conditions contained in the Postal and Telecommunications Services Act, 1983 which set up Telecom Éireann. As a result of that I do not expect many difficulties to arise with the new company. My colleague, Deputy O'Sullivan, when the Telecom Éireann Bill was going through the House spent a lot of time negotiating with the unions in an effort to ensure that the historic rights which the staff enjoyed would follow them when they transferred to the new company. I congratulate the Minister on adopting those provisions which will mean that Members will not have as much to worry about when dealing with the Bill.

We are all aware that there are established and non-established civil servants and I hope the Minister, when replying, will reassure us that those grades will not suffer in the change. Such an assurance would be welcomed by the staff faced with the prospect of a transfer to the new company. Forestry is different from Bord Telecom or An Post and, for that reason, it is necessary to give the staff the assurance I have sought. I should like to assure the Minister that Members of the Labour Party are happy with the contents of the Bill. I have outlined some of the areas that are causing us concern. I hope the Minister can allay our fears when he is replying to the debate. I am concerned, like others, about the possibility of privatisation. These lands must be held in trust for the public and we should ensure that the new company provide more jobs and revenue for the State. I congratulate the Minister on introducing the Bill and look forward to a detailed debate on its provisions on Committee Stage.

I compliment the Minister on introducing the Bill. Since he was appointed Minister of State, Deputy Smith has shown a deep commitment and understanding of forestry. I should like to compliment him on his work. Deputy Kavanagh made a good case for making Wicklow the main centre of operation of the new company. As a Member who passes through the Garden County when going to and coming from this House I can say that he has a good case. The Deputy, when he was Minister, did good work for his county. Forestry was, and is, an underdeveloped resource. It is important that it be developed to its full potential because it has tremendous job creation potential. For many years forestry was neglected. The Fianna Fáil Party, before the last general election, committed themselves, if returned to office, to create the appopriate structures to ensure effective commercial exploitation of our forests and spearhead a vigorous drive to increase afforestation. A dynamic forestry policy will generate employment, will improve our balance of payments and redistribute incomes to the different regions.

The Minister of State has not wasted any time in implementing our policies. The Programme for National Recovery outlined a number of key Government objectives for forestry. In 1987 we set a record national planting target of 11,000 hectares and the target we have set for 1988 is 13,000 hectares. That represents an unprecedented level of planting. The Minister has ensured that there will be an increased level of funding from the EC for forestry development and we should compliment him on that. He has shown that forestry is top of the list for development.

There is no doubt that there is a great market for timber and timber products. Experts tell us that the demand will increase in the foreseeable future. We have the soil and the climate to grow trees faster than any country in Europe. This is an ideal opportunity for us to embark on a drive to develop our forests. Forecasts are that world wood consumption will soar to 5,000 million cubic meters by the year 2,000 with a considerable increase in paper and board consumption. Similar trends are forecast for Europe with an expected deficit in excess of 120 million cubic metres. The European Community annually import approximately £15 billion worth of timber and wood products while the UK import £4.5 billion worth of timber and wood products annually. That is an indication of the market that exists in Europe and the UK for timber and wood products and it is up to us to develop our industry to take advantage of it.

In Ireland timber and wood products to the value of £400 million are imported annually and a lot of those imports could be replaced by home grown timber. The Minister told us recently that the amount of home grown timber used on the home market has increased from 8 per cent to 50 per cent. That is an indication that there is a move towards the use of the home grown product. We must take advantage of the scope for our products on the British market. Irish building contractors operating in London, where there is a boom in the industry, say they find it difficult to get supplies of timber in the London area. That represents an opportunity for our timber merchants but to avail of it they must have the proper financial support. The new company should be to the forefront in encouraging the planting of trees and in developing our export markets.

The commercial approach is the correct one and there is a need for great initiative to exploit our forest resources and their future potential. The new body will have the function of planning afforestation programmes to ensure continuity of supplies of timber. It will also have the responsibility of dealing with the major challenge of guaranteeing a modern production industry with an adequate and accurately forecasted supply of timber. The ongoing re-equipment and modernisation of the saw milling industry is also an area for which they will have responsibility. Financial support is essential to upgrade facilities and enable this country to compete on the European and world stage. As the State forest sector begins in the next decade to generate increased activity and financial returns its magnificent structure will need to be geared to deal with new developments and changing circumstances. As output from the investment in forestry since the foundation of the State begins to come on stream it is essential to have a vigorous, commercially orientated body to exploit the available opportunities and plan for the future. The whole timber industry is under scrutiny and the Minister is playing his part to ensure that we will develop so as to take advantage of the available markets.

Some of those involved in the industry, particularly the smaller saw millers, say they are not getting a fair deal. They contend that the larger companies are gaining all the benefits. The smaller saw millers maintain that it is not in their interests to have a tender system. They feel there should be an option system for all timber put on the market. The smaller operators also maintain that the quota system is loaded against them. In some cases they may be left without timber because larger companies such as Woodfab get the first choice and the smaller companies are not looked after. I have nothing against the larger companies who are, of course, very important to our economy.

The Minister should consider the question of IDA involvement in the saw milling industry. Near my home is a small saw milling company which employs 15 or sometimes 20 people. Any time they seek assistance from the IDA they are refused on one ground or another. It was announced recently that extra jobs created would carry a £5,000 grant but when these small saw millers tried to avail of it they were unsuccessful. There is too much red tape in the job creation area. If a saw milling company create extra jobs they deserve the help and assistance of the IDA. Every job created is vital and I would ask the Minister to take a serious interest in making incentives available.

Concern has been expressed that people cannot get jobs in forestry because the major companies use contractors to take the timber from the forest. The contractor himself will probably have his PRSI documentation but 90 per cent of his employees will be working in the black economy and signing on for unemployment assistance. There is probably a problem for the Minister for Social Welfare. The two Ministers should co-operate to ensure that these employees have PRSI numbers. Members on all sides of this House want to get away from the black economy and create long-term sustainable jobs.

There seems to be a reluctance on the part of farmers to become involved in the forestry industry, on the basis that if they plant their lands they will not see any return for 20 or 25 years. I commend the Minister on launching three new initiatives designed to encourage private afforestation, the western package scheme, a new farm forestry scheme and a new compensatory allowance for headage payments which will allow farmers in receipt of headage payments in respect of livestock to continue to receive those payments if they afforest part or all of their land. The Minister has a major selling job in this area. Thousands of acres are suitable for the growing of trees but the farmers are reluctant. Every help and assistance should be made available to encourage them to plant. In the long term it would be in the best interest of the country. Large sums of money in pension funds and so on could also be used for the development of the forestry industry. The Minister is considering the whole question of the development of forestry by the private sector.

The protection of woodlands is essential. We had a case in Wicklow some time ago when very valuable timber was being cut down but because of the intervention of the then Minister and the Taoiseach action was taken to prevent it. It is important that there should be increased vigilance and monitoring in line with environmental policies to ensure the protection of our woodlands, which are so valuable for tourism and for people coming out of the towns and cities for weekend breaks and holidays. The development of these amenities improves the qualify of life for both urban and rural people, as well as attracting tourists. There is scope for the development of forests to facilitate recreational activities such as hiking, camping, orienteering, mountaineering, shooting and bird watching. These and other amenities could be self-financing within the overall tourism framework.

In general the Minister is doing a good job on which I compliment him. I ask him to ensure that initially this new company will be given every support, financially and in every other way, so that it will operate properly and in a constructive fashion for the development of the forestry industry in the immediate future and for the years ahead. There is tremendous potential for the creation of new job opportunities in planting and other downstream developments of this industry. In this country where there is a serious scarcity of jobs, it is up to all of us, all the Departments and those operating in the forestry industry, to ensure that at the end of the day jobs are created for our people. We have many well educated, highly talented people who could be used in the context of this new company to develop the industry in the way in which the Minister and all the political parties want it developed. At present there are highly intelligent graduates leaving the country whom we should be able to encourage to become involved in this industry. I compliment the Minister on setting up the new company and bringing in the new Bill. I wish him continued success in this area.

The Workers' Party welcome the general thrust of this Bill. We have always believed that the potential for forestry here has been seriously underdeveloped and that if it were to be properly exploited it would be necessary to move management of our State forests from direct Civil Service control into the semi-State area. Most people would agree that the decision to move the postal and telecommunications areas out of direct Civil Service control and keep them under public ownership in the form of two semi-State companies, Telecom Éireann and An Post, has been generally successful and has led to improved services and standards in these areas. We hope that the decision to establish a State company for forestry will prove similarly successful.

The failure of successive Governments to exploit the natural advantage this country enjoys with regard to forestry development should be a matter of great shame. At school we were taught during history lessons that one of the greatest crimes of English rule was the destruction of the great Irish forests for use in their industries. However, we have now had more than 65 years of self-government and progress towards reaf-forestation has been totally inadequate. We have nobody to blame but our Governments. Of European countries, Iceland only has a smaller proportion of land planted than Ireland. We have just 5 per cent of land planted, compared with 65 per cent in Sweden, 30 per cent in Norway and Germany and 25 per cent in France. Even Holland, where there is a great shortage of land, has a much higher area under forestry than we have.

Various programmes have been announced by different Governments over the years, aimed at expanding our forestry. Different targets have been set for planting rates, but these have rarely been achieved. In 1948, the Government produced a White Paper that provided for the establishment of 10,000 hectares of new plantation per annum over a 40-year period. The aim was to give us a total of productive State forests of 470,000 hectares by 1990, compared with 70,000 hectares in 1948. As we approach 1990, the actual area under forestry is less than half the target set in 1948 and the target rate of 10,000 hectares of new plantation has never been met. Although we came close to it in the years 1965, 1971 and 1972, in more recent years the planting rate has fallen again and in 1985 there were less than 5,000 hectares of new planting. I ask the Minister if Bord na Móna will be allowed to develop their cutaway bogs and avail of the available grants. I should like a reply on that matter.

It must be said that whatever limited progress has been made has been due to State involvement. State forestry has been built up from a very tiny base of 3,000 acres 50 years ago to a figure of about 800,000 acres now. Clearly, if we had been relying on private investment we would have almost no forestry at all because about 80 per cent of our forestry is under public ownership. Unlike most other European countries where there are substantial amounts of privately owned forestry, forestry here is just one further example of how private enterprise has failed to develop an important resource. The iron law of Irish private enterprise economics applies to forestry as to all other areas of the economy — unless there are super profits to be made rapidly, the resource will be under-utilised or, worse, unused altogether.

Over the past few years there have been a number of suggestions made that the State should consider selling off its forests once they begin to mature. The Workers' Party would be absolutely opposed to this. It makes no sense at all, on an economic basis or otherwise, to suggest selling off the forests now that they are coming to a maturity and the State stands poised to reap the benefits of 50 years of work and investment. To do so would be the same as a farmer planting a grain crop, putting months of work into it and then selling it off just before the harvest.

There is, of course, no reason private investors should not be involved in forestry development but, as with the State, from the very beginning there should be no shortcuts for private enterprise. Grants of up to 85 per cent of the approved cost of planting are already available for private enterprise in western areas, subject to a maximum of £800 per hectare. Despite this and the very generous tax concessions, private investors have shown little interest in the forestry area.

Forestry as a resource is as important as mineral deposits or oil reserves. It is far too important to leave to fly-by-night operators and "quick buck" merchants of Irish capitalism. Private investors can, by all means, become involved. Indeed, it is particularly suitable for institutional investments such as pension funds which require a safe, long-term investment, but the central role in forestry development must remain with the public sector. The expansion of our forestry and the development of a large-scale wood product industry must constitute a centrally important plan in any programme for industrial development.

Forests are an extremely valuable natural resource with the particular advantage of being renewable. Wood production presents tremendous downstream processing potential. One job in the forests is generally associated with four jobs off the plantations. Wood as a basic raw material, besides its highly attractive features, has the advantage of being a very versatile material. Wood can be used in a wide range of applications, in construction, furniture, paperboard, packaging, engineering, and a myriad of other possibilities such as toys, tools, household implements and so forth.

The expansion of domestic wood production is particularly advantageous to the development of a large-scale wood processing sector by virtue of the fact that timber is a very expensive raw material to import and the nearest large-scale forest area to Ireland is as far away as Scandinavia. Aside from the economic and social desirability of developing a big forest and wood product industry it is a fact that the soil and environmental conditions of this island are uniquely suitable for the growth of timber, particularly soft woods which account for 85 per cent of national timber imports.

In some rural areas there has been opposition to expanded forestry development but this is based more on emotion than logic, as the fact is that in many areas because of soil conditions forestry is far more likely to provide jobs and a decent standard of living than farming. If the public are to reap the full potential benefit from our forests it is essential that the new company be involved in all aspects of the industry.

In the Nordic countries and the US where the timber industries are highly efficient and capital-intensive, the production and processing of timber is in the main controlled by one management. In Ireland, the State owns and manages the forests, and private enterprise owns and manages or mismanages the wood processing industry. It is not clear from the Bill whether it is envisaged that the new company would be involved in the wood processing industry, but unless it is, we will not be in a position to develop the industry to its full potential. At present we have a relatively large number of sawmills but what we need is a small number of large capital-intensive sawmills with proper drying facilities.

In 1987 we spent £30 million on imports of conifer wood that we could have produced ourselves. Paper imports, a product which uses timber as a raw material, cost £298 million in 1987 which was an increase of £33 million over 1986. The more timber we can produce and the more spin-off products we can make from this timber the better it will be for the economy and the people. Trees are a valuable resource. Not only can they provide wealth and jobs but they can also improve the environment generally and are an important recreational amenity which can be enjoyed by the public. In this regard we welcome the provision in the Bill for increased penalties for the unlawful felling of trees.

There are a number of other points in relation to the Bill which I would like the Minister to answer when replying. Section 12 sets out the objectives of the company and is notable for the absence of any reference to the right of the company to acquire land compulsorily for forestry. Under existing legislation the Minister has the right to acquire land compulsorily for forestry and it is important that the company should have the same right. The power to acquire land compulsorily, with adequate compensation, of course, is vital if we are to bring our planting level to an acceptable standard.

It is most disappointing that provision has not been made in the Bill for the appointment of worker directors. This seems to be a company which would be particularly suitable for worker directors. Will the Minister explain why this has not been done?

We are also concerned about section 21 of the Bill which provides that the Minister for Finance may sell any or all of the shares of the company held by him, and may facilitate the privatisation of the company and its auxiliaries without any further reference to the Dáil. I understand also that the union representing most of the workers in forestry are concerned about the provisions of section 43 which allows the transfer of staff by the Minister from the Department of Energy to the new company and provides for conditions of service, remuneration and tenure of office of the staff. The union are concerned that only staff transferred from the Department to the company with effect from vesting day are covered by the guarantees. They believe that staff could be transferred before or after vesting day and that they will not be covered by the guarantees of good conditions and services. This section needs to be amended and we will table an amendment to it and to other sections on Committee Stage.

I welcome the opportunity to speak on this Bill which I am glad to say establishes a commercial forestry company. I congratulate the Minister of State, Deputy Smith, on the great work he has put into this Bill and on the many visits he made throughout the country speaking to people about their ideas for a forestry Bill. I welcome what the Minister said about the measures he has taken in relation to forestry, through EC funding. As a Deputy from the west I am aware of the efforts to get funds under the western package for the promotion of forestry. The western package scheme aimed originally at the poorer areas of the west has been extended to all disadvantaged areas and EC funding has been increased from 50 per cent to 70 per cent. This will have a major impact on the promotion of forestry. The Minister also has been successful in getting grants totalling over £8 million for road building in State forests. This is a great achievement having regard to problems of access to our forests. These measures together with the farm forestry scheme aimed at full-time farmers and the measures regarding headage payments will allow farmers who may have been reluctant in the past, to plant trees. This will help them to forest part of their lands in disadvantaged areas. The headage payment scheme negotiated by the Minister will be 50 per cent funded by the EC.

It is worth noting that a joint committee of this House which reported two years ago on forestry and forest-based industries made many useful suggestions for promoting forestry. The Minister of State was a member of that committee chaired by Deputy Collins, now Minister for Justice. The sub-committee was chaired by Deputy Joe Walsh, Minister of State at the Department of Agriculture and Food. That report pointed out clearly that there had been a disappointing response to the previous western package, and they recommended extending the scheme to the whole country. This was their response to the problem. It is worth noting now that under this Bill we are extending the scheme to all the disadvantaged areas.

The committee in their report also dealt with job creation and pointed out, taking the period 1977 to 1980, that 41,000 jobs were lost in the timber and timber products sector and that the number in papermills had reduced from 1,300 in 1974 to 903 in 1980. They also pointed out that in the wood processing area approximately 24,000 jobs had been lost between 1977 and 1980. This was a source of concern to them and in their report they indicated the percentage of land under forestry in Ireland as compared with other countries and as compared with the EC average. I understand that the percentage of land under forestry in Ireland was 6 per cent as compared with 9 per cent in Britain, 27 per cent in France and 29 per cent in Germany with the EC average at that time being 21 per cent.

We are debating this issue at a time when quotas have been introduced on milk, beef and cereals and at a time when, as the Minister of State has stated, there is a problem with acid rain in Europe and when it is important that we develop our forestry industry. Our climate is ideally suited to timber production. We have a fast growing conifer in the sitka spruce and taking yield class as being cubic metres per hectare we have the highest yield class in Europe with a figure of 14 as compared with 11 in Britain and an EC average of 3.5. I understand that County Leitrim has the highest yield class of any county in this country. I was glad to hear the Minister mention that because of the importance of forestry to the west and north west region he is considering setting up a processing factory in that region. It would be deplorable if such a factory was not provided in the area which has the highest yield class.

Among the submissions received by the joint committee was one from the co-operative movement, the ICOS, who referred in their submission to the fragmentation of farms in the west. In order to deal with this problem and to take advantage of the grants available under the western package they proposed the development of two pilot forestry cooperatives. I put it to the Minister of State that such an approach might prove very successful especially in view of the grants which are now available and might result in the bringing together in one viable block small areas of land. One of the difficulties facing smallholders is that they will have to wait a long time before they get a return on their investment and in this respect the Minister's proposal on providing headage payments is to be welcomed. The ICOS in their submission referred to forward selling of timber but I think the Minister's proposal is most welcome.

A submission was also received from the saw milling industry which referred to the way in which timber is sold to saw mills by the Forest and Wildlife Service. They also complained about the absence of accurate production forecasts from the Department which would have enabled them to plan ahead. I hope the new body, Coillte Teoranta, will be able to address these problems which the industry has highlighted on many occasions in the past.

I have already outlined the number of jobs which have been lost in this industry but I have every confidence that jobs will be created and that they will be created in the areas where the trees will be planted. We have seen jobs lost in the past because of the large imports of certain products. There have been large imports of timber and timber products and in reply to a question which was tabled to the Minister recently he quoted a figure of £206 million in imports of paper, paper board products and timber products in 1982. In 1983 that figure had gone up to £217 million. In a country which has a very good yield from its planting programme we should be in a position to supply our own needs and follow the example of other countries which have developed good forestry programmes in the past. One such country is Finland where in 1980 19.90 million hectares were under productive forest which amounted to 71 per cent of the land area. Yet, Finland has only a yield class of three cubic metres per hectare as compared with 16 for this country.

The Minister has certainly taken on board the recommendations of the joint committee and has met all interest groups in an endeavour to make improvements on the position which has obtained up to now. There has been much discussion in the media about the role of Bord na Móna in the development of our forestry sector. In 1987 Bord na Móna published a document entitled "A Plan for Forestry" which contained a proposal for a pulp and paper industry. They also proposed the setting up of an industry in my own constituency at Derryfada, near Ballyforan. I would welcome the setting up of an industry in that area because Bord na Móna have already undertaken some development there but regrettably that development has been suspended. The Government have decided that Bord na Móna should concentrate on their core business which is turf production and I understand they will be leasing cut-away bogs which are suitable for forestry development to the forestry service. I hope that, as our bogs become depleted, forestry will provide opportunities for job creation.

Having said that, I would not envisage Bord na Móna being in a position to take over our forestry industry. Bord na Móna have been involved in some experimentation on what is known as short rotation or biomass forestry which has not been successful. Unfortunately, also, they dug up many small trees in bogs because, as they said at the time, they needed extra boglands for peat or turf production. Having done so, it is now ironic that some people in Bord na Móna are anxious to become involved in the forestry industry.

The findings of a report commissioned by Bord na Móna last year caused some concern. I would not agree with many of the conclusions of that report. For example, it was forecast that henceforth very little investment would take place in forestry. I consider that forecast to be very pessimistic because there is now a great opportunity for people to become involved in forestry. The writers of that report also concluded that Bord na Móna could save themselves from extinction by taking over our State forests but only with continued State funding. In so saying they appeared to be thinking of their position only, not of the economy overall.

Certainly Bord na Móna voiced harsh criticism of the decline in tree planting by successive Governments since the mid-seventies. They appeared to me to be looking at biomass forestry in which they had had some involvement but without success. Henceforth I hope they will concentrate on their main area of responsibility, that of turf production.

If I may veer away somewhat from the provisions of this Bill, I might say that Bord na Móna appear to have ceased their involvement in turf and peat production in the west, appearing to withdraw economically from that area because of their financial problems. I hope that practice will be reversed in the future because their general development in the west is crucial to that area. Of course we also need the development of forestry in the west, the land there being suitable for that purpose. The figures I have given for the various counties, particularly Leitrim, will demonstrate how important is forestry to that region.

I might refer to the problem of pollution about which much has been said of late and which constitutes such a problem in our capital city and major towns.

I hope the Deputy also will demonstrate that it is a problem under this Bill.

I will endeavour to do so. A recent paper by Dr. Lunny on the future of timber for energy in Ireland stated clearly that there is an inherent environmental problem in that many imports, particularly coal, have a high sulphur content, emphasising that we have very little control over the content of such imports. He suggested that timber, a non-polluting fuel, could be used by small industries and households. I would suggest to the Minister of State present that this suggestion should be promoted among farmers owning land suitable for afforestation purposes because timber is a very good, non-polluting handy fuel. Coal could continue to be used by larger industries but, as we know, it is very costly for the smaller industries to instal the requisite apparatus to prevent the pollution that is occurring at present. I merely make that point about the usage of timber as an alternative source of energy in small industries and homes.

I am very pleased with the name of the new company — Coillte Teoranta — because there has been much contentious debate in this House recently about the names of companies or semi-State bodies. In the capable hands of the Minister of State who has responsibility for forestry I am sure there will never be the danger of deireadh na gcoillte ar lár.

I welcome this Bill. I compliment the Minister on its introduction and on his initiative in the whole area of forestry. He has portrayed himself as very positive in this respect and the industry overall will benefit from his stewardship.

However, I have some reservations about its provisions. For example, they fail to address the issue of the valuation of assets covered at some length by Deputy Carey. There is also an absence of any specified planting targets. Neither is there any reference to research and development in the functions of the new company. I am sure that such research and development are inherent and that any new company would be expected to place much emphasis on that aspect. There is no mention of any downstream industry, for example, that of sawmilling or the development of the pulpwood industry in general.

Perhaps the Minister would clarify the position henceforth of the wildlife service; for example, will the new company be responsible for it? I am sure these reservations will be discussed further on Committee Stage. My party will be tabling a number of amendments to address such matters.

I agree with the establishment of a dynamic State company to progressively develop our forestry industry on a strong commercial basis, advocated by the Forestry Review Group and a number of predecessors of the present Minister. That being said, this new company must accommodate the interests and requirements of the timber processing sector and forest owners, public or private. To date the relationship between people involved in the timber processing industry and forest owners, public or private, was not the best and probably hindered the overall development of the industry.

I contend that the new company must concern itself with the quality of our native timber — and perhaps the Minister will address this matter later — because we need more kiln-drying facilities in our sawmills. I understand that at present only three to four of our sawmills have kiln-drying facilities which must detract from the quality of our timber especially when one bears in mind that we must compete with the Scandinavians. At present Canadian timber is being dumped on the Irish market because of the attractiveness of the exchange rates. I am sure the IDA can play an important role in this area.

Debate adjourned.