Votes 44 and 45 are being taken together.
Estimates, 1988. - Vote 44: Energy.
I move:
That a sum not exceeding £8,813,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1988, for the salaries and expenses of the Office of the Minister for Energy, including certain services administered by that Office, and for payment of certain loans, subsidies, grants and a grant-in-aid.
Because of the time limit I will restrict my comments to Energy and leave my colleague, Deputy Smith, to deal with Forestry. May I take this opportunity of paying a very special tribute to the work my Minister of State, Deputy Smith, has done in the last 12 months and, in a very special way, for the introduction of the forestry legislation? May I also thank the secretary and staff of the Department of Energy — taking in the Forestry staff — for their loyalty, support and courtesy during the year?
Gross expenditure in the Energy Vote for this year shows a 4 per cent drop on the outturn for 1987. Expenditure on this Vote now is practically the same as it was in 1980 when the Department of Energy were first established. In real terms it is, of course, very substantially less. The Vote itself is small in relation to the total Estimate for the Public Service — the expenditure is put into context when it is considered that it represents less than 1 per cent of the total Public Service Estimate.
However, it bears no relation to the extent of the Department's actvities. This point is highlighted by one simple statistic. Between 1984 and 1987, Exchequer expenditure on the Energy Vote was of the order of £44 million but in that same period the activities for which my Department exercise responsibility generated income of nearly £260 million for the Exchequer. Unfortunately some elements of that revenue, primarily BGE transfers to the Exchequer, will not recur in the short term, but on a general level I do not consider it imperative that Departments, particularly in the current budgetary climate, should maximise revenue and I am quite satisfied that my Department have done their fair share in that regard.
The Estimates for 1988 are further evidence of the Government's commitment to controlling public expenditure and placing the economy on a sound footing from which it can grow. The Estimates procedure, the individual Votes and the total Estimate for the Public Service are being increasingly fine-tuned to ensure a more rational use of available resources and to ensure that taxpayers get the best value for their money. Good management of the public finances has ensured that we achieved the stringent targets which we set ourselves last year and we intend to achieve our targets again in 1988. Indeed, the process for 1989 is already well under way.
The credibility which we have re-established by meeting budget targets has demonstrated our determination to take the necessary decisions and follow them through and has generated respect and renewed confidence. We are already seeing signs of success in terms of reduced interest rates and continuing stable low inflation. The economic environment being created by our policies has put hope back into the system. Our committed approach to identifying and stimulating growth sectors of the economy including, for example, tourism, forestry and the Financial Services Centre, to name but a few, gives me the confidence to be optimistic about employment prospects.
The year 1992, the Single European Act and all that this implies are now looming large on our horizon. The actions which we are taking on the economy will have the additional benefit of producing a fit body to play in this tougher game. The economy must be fit, industry must be fit and the public sector must be fit. The energy sector must play its part in making the economy competitive and all of our actions must bear this in mind. I see it as an increasingly important part of my responsibility to ensure that the areas of the economy under my aegis should optimise their contribution to the national challenge to meet the opportunities presented by the Single European Act fully and successfully.
In returning to details of my own particular responsibilities, I want to reiterate that hydrocarbons exploration and development is one area to which I attach considerable importance in terms of our future national economic development. In moving the Estimate for my Department in 1987, I stated that it was my intention to take the necessary steps to ensure that our licensing terms for oil and gas were clearly seen to compete favourably with regimes elsewhere. I have since taken those steps and I am happy to say that the introduction of the new terms in September 1987 has resulted in a positive response from the oil industry.
My aim as Minister for Energy is to have the investigation of the potential of our offshore completed and to achieve commercial developments. The revision of terms was a necessary and vital step towards this goal. The omens for exploration a year ago were far from favourable. Interest in our offshore was falling away and several companies were proposing to depart our waters. There was a distinct possibility that exploration might simply dwindle to zero over a short period. It would have been far more difficult, if not impossible, to win back the exploration companies if they had left the Irish scene. My actions in revising the licensing terms were urgently required and the case for doing what I did was compelling.
The new terms have indeed given a much needed impetus to exploration and a number of new drilling commitments have been entered into as a direct result. Of the three wells currently under way at this present moment, two would not have been commenced if the terms had not been revised.
However, there is a substantial part of the Irish offshore already under lease which is considered to be prospective and in which no attempt has been made to carry out further drilling. This situation is not acceptable to the Government who are conscious of their duty to protect the national interest in matters of this kind.
At the present time, we have only one hydrocarbon producing field, namely the Kinsale Head gas field. The beneficial contribution which this resource is making to the economy demonstrates in a most emphatic way the importance of developing our natural resources.
Natural gas now accounts for about 14 per cent of our primary energy requirement and is available as an energy choice to 300,000 homes (about 30 per cent of the total). The use of Kinsale gas contributed over £100 million in savings on our oil import bill in 1987.
Present indications are for continued steady growth in sales of natural gas particularly in the premium sector in Dublin. About £15 million of BGE's £33 million capital programme for 1988 will be expended on the distribution systems of Dublin and other areas. In 1988 the target length for mains/service replacement and network renewal in Dublin is three times as great as it was in 1987 and greater in one year than the total for the past 20 years.
New gas legislation which I introduced during 1987 cleared the way for BGE to commence operating for the first time as a gas distributor in their own right and in November last BGE concluded the contract for the acquisition of the assets of Dublin Gas. I expect BGE to create and maintain a viable and expanding gas distribution business in Dubliin capable of paying its own way and adequately remunerating the capital invested in it.
This House will be well aware of the concern which I have for safety issues, not just of nuclear safety on which I will speak later, but also in relation to gas. I am pleased to say that all of the gas recommendations of the Cremer and Warner report have been implemented and that the implementation of the gas-related recommendations of the other safety reports is progressing very well and is within the recommended timescale for completion. In addition, I announced in October last a portfolio of 34 new gas standards produced by the National Standards Authority of Ireland.
A major project extending the gas network northwards from Dublin to the towns of Drogheda and Dundalk is currently underway. Spur lines are also planned to get within reach of population centres and the horticultural industry in north County Dublin. Access to secure, clean, efficient energy along this route will, no doubt, contribute to the economic stability and development of the region and it is scheduled to have gas flowing by the end of this year. This major project is creating an average of 200 jobs and is costing in the region of £30 million of which £12 million has been approved from the EC Regional Fund.
Deputies will be aware that some time ago I set up a working group to examine the questions of interconnection of gas and electricity with the UK or mainland Europe. I have just received the report of this group and it is appropriate that I indicate briefly its conclusions. Before doing so, I want to say that the report contains sensitive commercial information supplied by the State companies concerned and also a certain amount of strategically sensitive material. I do not, therefore, propose that it be published.
The report concludes that decisions on gas and electricity interconnectors are independent of each other and can be considered on their individual merits.
In the case of electricity the report concludes that 1995 is the earliest date by which the ESB are likely to require new plant and, depending on growth rates in electricity demand, it could be as late as 2001. It appears at this stage that the most attractive available option would be a 600 megawatt high voltage DC cable to the UK. There is also a strong economic case for restoration of the link to Northern Ireland, if and when this becomes feasible. The question of proceeding with pre-contract phase studies and discussion merits early consideration because the lead time for any such project is several years. The report concludes that there is no economic justification for an electricity link with France.
In relation to the long-term future for gas, clearly further indigenous supplies would be the best solution. If these do not materialise, any gas import project would need to be onstream by 1997. A decision on gas imports is not required until 1991 or 1992 and the matter should be reviewed in detail again in three years time. A decision as between piped imports and liquified natural gas is also premature at this stage. The report examines the gas market and possible importation projects in considerable detail. It concludes that a gas industry based on imported gas could be viable under certain conditions. The price of imported gas, the maintenance of adequate margins on sales and the volume of gas sold to the premium market sector are the most relevant factors. The sales targets which BGE need to achieve have been identified and can, therefore, be monitored.
I want to take this opportunity to thank the chairman, Professor Conniffe, and the members of the working group for their efforts and for their fine report.
The House should not be in any doubt about the concern which this Government have on nuclear matters. This concern is reflected in the commitment we have given to our campaign of initiatives designed to ensure that nuclear installations in other countries do not pose a threat to the health, safety and environment of the Irish people. International and bilateral initiatives I have been taking are proving very encouraging and I believe that real progress is being made in heightening the general level of awareness about the dangers of radiation in general and Ireland's concerns in particular. The Government will continue with their campaign for the closure of the Sellafield reprocessing plant, the old magnox nuclear power stations in the UK and the cancellation, not merely the postponement, of the planned experiment at Trawsfynydd.
This Government are committed to the protection of the Irish people from the hazards of radiation, and have approved the heads of a Bill to set up the national radiological protection institute. Unlike the NEB, it will not have any function in relation to the development and regulation of nuclear power, but it will take over the responsibilities of the NEB in relation to the control of radioactive substances and will have the capacity and expertise to advise the Government on nuclear developments which could have implications for Ireland. I will be putting the legislation before the House during the next session. It is now with the parliamentary draftsman.
I have included a sum of £250,000 in this year's Estimate for the first phase of the nuclear accident emergency plan. This is another important part of the Government's commitment to protect the public from the effects of nuclear accidents abroad. Some elements of the plan have been put into place already such as extra office and laboratory resources for the Nuclear Energy Board, monitoring equipment for the Civil Defence, communications links with the International Atomic Energy agency and arrangements for the urgent calling together of key personnel.
The plan has been approved by the Government. The question of whether it should be published will be decided after a test of the plan which is scheduled to take place later this month.
Turning to the minerals prospecting and mining sector, 221 new minerals prospecting licences have been issued by my Department since January 1987 giving a total of over 500 licences currently valid. I have also approved the grant of some 250 other licences and these are in process towards issue. A projected figure of over 700 licences in place in 1988 compares very favourably with the figure of 341 valid licences in January 1987. While the speed with which licences can be issued does not depend exclusively on matters within the domain of the Department, I have done everything possible to ensure that minimum delays occur on our side in processing applications.
The House will be aware that encouraging results have been obtained by a number of companies exploring for gold. While I am sure we hope that all their efforts will be crowned with ultimate success, nonetheless we must bear in mind that minerals exploration is a very high risk unpredictable business.
The naturally high profile given to gold exploration must not, of course, divert our attention from the fact that Ireland is a proven base metals province and that we have a number of encouraging prospects in this area. If we keep up the momentum of exploration — and prices are now looking better — we will hasten the day when we may have another commercial find.
Bord na Móna have made a substantial contribution to the economic life of this State since the late forties. In order to sustain their national responsibility in the period ahead and recoup their financial losses incurred because of the two bad production seasons in 1985 and 1986, the board must seek a maximum return from the utilisation of their remaining peat resources. This will require more effective operation of their existing activities on both home and export markets and the identification of new profitable produts and services. For this reason I am in the process of commissioning a study to be undertaken by consultants into the entire operations of the organisation. The study will focus particularly on the latest peat development technology in Ireland and elsewhere, management structures, financing, planning, research, marketing and any other areas of the organisation where change is deemed necessary to achieve optimum return from the exploitation of this vital national resource. The need for this hard look at their operations is recognised at all levels in Bord na Móna.
In relation to electricity, the price reductions implemented in recent years have been very welcome to consumers and will greatly facilitate an increase in the competitiveness of Irish Industry. Irish electricity prices have fallen from a position of being among the most expensive in Europe to one in which they are now well in line with the EC average. The ESB are committed to hold electricity prices at their present level for the next two to three years. I am keeping the possibility for futher price reductions under continuing review and any opportunities for a reduction that may arise will be availed of.
The Electricity (Supply) (Amendment) Bill, 1987, was recently passed by the Dáil. The main purpose of this Bill is to enable the ESB to set up subsidiary companies for suitable developments, one being to engage in importation and wholesale coal trading from Moneypoint and to remove doubts which arose in relation to rates. The enactment of this Bill will create considerable opportunities for expansion by the ESB of their external activities such as foreign consultancy and fisheries as outlined in the Programme for National Recovery. Already the ESB plan to provide employment for 500 people through their overseas consultancy operations by 1992 and employment of 100 through their fishery operations in the same period.
In so far as oil supply is concerned, 1987 saw a partial recovery in oil prices worldwide following the collapse in 1986. Despite some erratic private movement, most commentators expect 1988 prices to be relatively stable. As Ireland continues to depend on oil for just under 50 per cent of its energy requirements, price movements internationally impact greatly on domestic energy costs.
In July 1987 my colleague, the Minister for Industry and Commerce, reintroduced price control on road fuels. This action was particularly timely in that it ensured that consumers received benefit from the international price reductions which had taken place. Further developments internationally have enabled prices to fall even further since last July. We would be failing in our duty if we did not ensure that our domestic consumers and our commercial and industrial enterprises can participate to the full in any beneficial changes which take place on the oil market.
At this stage, I am not in a position to add to my replies to recent parliamentary questions about a possible Nigerian project involving Whitegate and Whiddy. I expect to finalise this matter shortly.
I commend this Estimate to the House.
I must say I cannot share the Minister's pleasure at the performance of his Department during the past year. I think it has been, on balance, a disappointing year for the Department of Energy. We have had plenty of grandiose talk about Nigerian oil deals and about closing down Sellafield, but we have had little of real substance in the energy policy area.
The problems that beset the energy sector, a sector so crucial to a small trading country like our own, are still there. The cost handicap that was suffered in Ireland last year was estimated to be about £175 million which would have provided jobs for nearly 19,000 people if it could have been removed. We are still one of the most inefficient users of energy in Europe, 20 per cent more energy intensive in producing output than the rest of Europe. We have a large State sector in the energy area. Sixty per cent of the energy sector is controlled by the State but it has not been put into a shape where it is really creating new opportunities for our people here as an energy sector should do. There is £2,000 million worth of taxpayers' money and public capital tied up in these companies and yet they are companies who are imposing costs on the economy. They have had a record of disappointing investment. One need go no further than to look at the excess capacity in the ESB or to look at the poor early returns on the BGE investment. The Minister himself praises the extension to Dundalk but did not provide us at any stage in the House with the projected returns. It seems to me that on balance there is a real danger that very few of the extra gas sales on that investment will be above the basic sale price that could be got from selling, for instance, to the ESB and it is hard to see the economic return that is being achieved on these investments.
It is in these areas that we would like to see action and prove that the Minister is exacting from the State sector the sort of performance that we need here if we are to have a prosperous environment for the growth of jobs throughout the whole economy. Far from the Minister bringing in measures to improve the performance of these companies he has actually blocked moves that Fine Gael tried to introduce to improve the performance of State companies. We sought to have targets set for an improvement in price relative to the EC that could be monitored. We sought to see annual performance indicators reported upon by these State companies and although these proposals were backed by the independent national planning board this Government threw them out here in the House which is a disappointment. It is a disappointment to see in the budget that the ESB have been frustrated in their attempts to get down costs by the imposition of VAT and by the removal of £38 million of a low interest loan that they enjoyed. These are not measures designed to improve cost performance in the economy. Indeed they could be tolerated if we felt there was determined action by the Minister on some of the other problems of a company like the ESB, as highlighted in the Jacobsen report, but we have not had such evidence and that, again, is an area of disappointment.
As I said earlier, Ireland is one of the most inefficient users of energy in Europe, and despite that we have seen our research and development budget decimated in recent years and continuing to fall. It is now only one-seventh of the research effort that would be spent in other EC countries, and in many areas it has fallen below a viable level to sustain any sort of a research effort in an area that is going to be so strategically important to us in the coming years if we are to be an efficient energy producer. That, again, is a source of disappointment as this is the seed capital for results in a few years time.
In the area of conservation we have had a year of disappointment. Despite evidence that up to £400 million worth of savings per year could be achieved by efficient investments that show adequate return and use known technology, we have seen no effort in the conservation area from the Department. Indeed, the conservation programmes are grinding down to a derisory level at this stage. These are the areas we look to for inspiration from the Department if we are to get an energy sector that is creating job opportunities. The Minister has an awful lot more to do if he is to get such a sector.
He mentioned the generous oil concession he made during the course of the year since the last Estimates. Generous indeed it is, but it did not address Ireland's two key areas of real concern, and that is to become a producer country, in other words, to get oil ashore, and also to replace our gas source. He has not clarified the price at which a successful find of gas could be sold. It is very hard to expect people to undertake costly exploration for gas to provide a company that is already fully supplied up to the year 2000 and for whom there will be no other outlet for the gas if it were found. That is asking too much. The Minister should have taken the opportunity to clarify the terms in that area.
The Minister mentioned in passing his pleasure that the House accepted the ESB Bill, a good Bill indeed had the Minister provided adequate protection for the ESB consumer. All of us hope there will be no failure in these companies but, should it happen, it should not be the ESB consumer who picks up the tab. I was very disappointed the Minister accepted none of the amendments coming from this side of the House seeking to have a water-tight separation between the new companies that were being established and the electricity parent.
The coal business into which the ESB is entering is a risky one and the company engaged in that must stand alone; it cannot have the prop of subsidies and low interest loans or guarantees from the electricity consumer. That should have been put into the legislation. Many of us on this side of the House were gravely disappointed that the Minister appeared to have swallowed the ESB case without greater scrutinies. We can only hope we will not live to rue the day.
The Minister adverted to his commissioning of a report on Bord na Móna. It seems strange that after so long in Government, when he came into Government with a commitment to carve out a great new role for Bord na Móna, that it is only now we hear him commissioning a report. That indicates decisions still a long way down the road. It is always interesting to see independent people look at our State enterprises but somehow I feel that to be commissioning a report at this stage is a bit of a step back from the real decisions that need to be made. It was implied when the Minister came into Government that he had already done the thinking in this area. The evidence is that the Minister and his party have done very little thinking about energy.
We have seen no White Paper on energy policy. We have seen no coherent policy statements of any sort in the energy area and this country is crying out for it. It is a major sector; almost 20 per cent of our national income is devoted to energy. If it was any other policy there would have been reams of paper indicating precisely the sort of strategy that was needed, but that has not happened here and we are paying the price by having an inefficient sector, poor investment results from many areas and poor conservation, having ignored the environmental consequences of many decisions. This is the price we have paid for lack of proper thinking through in the energy area.
I would like to turn briefly to two issues that seem to have dominated the Minister's thinking during the past year, that is, the Nigerian deal and the whole nuclear area. Frankly, I am getting more and more frustrated with the continuing discussion about the Nigerian deal. We read in the newspapers conflicting reports about whether it has been dropped. Each time we read the inspired leaks there is something different in the content of the deal; it is watered down in scale, and despite all these leaks the Minister refuses point blank to allow a proper debate in this House on the merits of the case before a decision has been taken. He has also made no effort to have the INPC appear before the Oireachtas Committee on State-Sponsored Bodies. It is, as you well know, a Cheann Comhairle, purely a spurious reason that has been used by the INPC not to appear before that committee.
That is not the way to make a decision that is so crucial to this country. There are many worrying features about this deal that must have attention drawn to them. We have for almost a year now dealt exclusively with the middlemen representing just Nigeria. One country has had exclusive rights for almost a year, shutting out many other opportunities that could have been competitively cultivated alongside the Nigerian offer. Those opportunities have not been taken and I cannot understand why not. We see reports that the Government have not yet sat down with the Nigerian Government, whose guarantees will, at the end of the day, be the only thing that will determine whether it is in the Irish interest or not. For our Government not to have sat down with the Nigerian Government is a major disappointment. Indeed, if roles were reversed I do not think that this Government would be satisfied that the INPC were doing all the dealing and there was not straight across the table dealing with the Nigerian Government.
There are many worrying aspects in the deal itself, in so far as we can get any idea of what is on the table. It appears that there is a long-term commitment by Ireland to buy oil from Nigeria, without any corresponding firm commitments by Nigeria on the operation of Whitegate or on delivering the product at a price that is at a level comparable with world trading prices. If we have a long-term commitment to buy and do not have the commitments on the other side, this is a hazard for the Irish consumer, who is already paying far too much in this area.
There are far too many question marks about this proposal and far too much is at stake for the Minister to continue to refuse to have a proper debate in the Dáil and to insist on not notifying the Dáil until everything has been signed, sealed and delivered. That is a poor service to the public, whose resources are involved here and who will have to pay, in the form of oil prices, for the results of the deal.
The Deputy is assuming that it will be signed, sealed and delivered.
Is the Minister saying that it will not be?
I am not saying anything. Deputy Bruton's whole argument is on that basis.
I intervene to advise Deputy Bruton that he has some two and a half minutes left of the time allotted to him.
I should not have interrupted.
Could I be given injury time? I am not assuming anything but, one way or the other, it is on the cards that the Minister and the INPC are keen to see the involvement of some party overseas and if it is not the Nigerians, equally we need to have a clear statement of Government policy as to what it is that we want to get from such a deal. Even if the Minister decides to reject this deal, a debate in the Dáil during which he would spell out the parameters on which he is viewing such deals would be an enormous improvement on the present situation where we seem to be proceeding without a proper policy. This deal seems to have persisted so long because of the connection of some of the principals involved to putting it together. That is what frustrates me about it.
I shall turn briefly to the nuclear area. The Minister has banged the table here and has told us how he is insisting on the British doing this and that, how he is insisting on new motions at the Paris Convention. The position is that we still have got the support of only one country at the Paris Convention and even if we are successful there, those decisions cannot bind. The Minister has told us that he is taking legal action, but it transpires that that legal action concerns a French power station. For too long he has been hiding behind the coat tails of the Attorney General, who is supposed to be examining the merits of this case. It is time now to state clearly that he is or is not going to take an action against Britain. I believe that there are adequate grounds for taking a case. The British are clearly in breach of principles of international law in the way in which they are dumping carcinogenic waste into the Irish Sea and running reactors beyond their design life, with flawed safety controls and so forth. It is time for the Minister to give us a clear indication of what he intends.
Similarly, I have to express disappointment that, more than two years after Chernobyl, we still have no fundamental change in the system at work here for protecting the Irish public. We have seen promises of an emergency plan being put into a pilot operation, but no details. We have seen no radiological protection institute legislation — there is mention that the heads of the Bill have been passed. We have nothing solid enough to assure the public, who are concerned about nuclear safety, that we are better geared to meet the threat now than we were two years ago.
The Minister will have to accept that in Ireland we have very high energy costs which are certainly causing great problems in industry and are greatly affecting its competitiveness. Obviously, we must do very many things to ensure that we get our industrial costs down if we are to protect jobs here and be in a position to expand our industry.
On the job situation, since 1980 we have lost about 40,000 manufacturing jobs, which represents about 18 per cent of total industrial employment. These losses, to a very large extent, have been brought about by the uncompetitiveness of industry and, also to a very large extent, by the very high cost that we must pay for energy. This is a very crucial factor in the whole industrial sector and, indeed, in the whole area of developing job opportunities. A recent EC Bulletin on Energy Crisis shows that we pay here in Ireland in excess of £160 million, based on the equivalent consumption of oil, gas and electricity on an average basis in other EC member states each year. This is a tax exclusive figure, so the high cost here cannot be blamed on the rates of duties and taxes that we impose on primary energy and energy products. We depend on imports for approximately three-quarters of our primary energy needs and there is no doubt that we are vulnerable to price fluctuations on the world market. However, this applies also to many of our European partners and they have managed to keep their costs down significantly below ours.
The main energy cost factor here in Ireland relates undoubtedly to oil and oil products. We spend in the order of £130 million over the EC average on oil and oil products for similar volumes that we consume here each year. Again, this figure is a tax exclusive figure. It just highlights the fact that here in Ireland we land energy products, particularly oil, at very high initial cost. This cost handicap is unacceptable and must be reduced, particularly now in the lead-up to 1992, if we are to be able, as I said earlier, to protect existing jobs and have any hope of expanding our industrial base.
In this context, the role of State energy companies must be examined. The question must be asked: Are they helping the situation or actually imposing a cost burden on the economy? As oil is the main energy import and because we pay a very high price for it by comparison with other member states, it is very appropriate that we should look at the role of the Irish National Petroleum Corporation and examine how effective they have been in keeping costs down. The facts are that the 35 per cent off-take of refined products from Whitegate which are imposed on the major oil companies operating here, has resulted in oil-based fuels here being very costly. The INPC can set their prices without reference to the spot market price and the other oil companies can then peg their prices a little below the INPC price, irrespective of whether this is competitive with what prevails on the world market. In fact, it can be argued that this actually suits the oil companies, as they can claim that their price is below that of the INPC. Even though they still have to take 35 per cent from INPC, they are getting a higher price for their own oil.
I could ask the Minister if he considers that the INPC are actually helping the price structure here. I pose the question whether he would consider that we would be better off without having the INPC operate in the way they are doing at the moment. Certainly, we are not getting the benefit of reduced costs for oil on the Irish market.
If the INPC claim that they are almost competitive with imported prices, they must accept that imported prices for refined products already have a built-in profit margin. A more appropriate comparison would be the spot market prices. On average over the past five years, the INPC prices have been substantially dearer than spot market prices, on average about 12 per cent to 15 per cent dearer for oil products landed here. This is a very serious cost handicap imposed on Irish energy users by the State through one of its own agencies. I should like the Minister to address this and to tell me whether he considers the INPC function worthwhile.
One of the main reasons for the maintenance of the INPC is security of supply but that is a little disingenuous given that it is unlikely that crude oil would be readily available. Refined products are very scarce and that is the answer to the security of supply, a point often made in defence of the INPC.
I should also like to refer to the Nigerian oil deal and to bemoan the lack of information. I note that the Minister is unable to give us any particulars of this deal and that has been the position since this matter was first raised in the House. In principle, there are benefits and advantages to this country in entering into an arrangement with an oil producing country because it will have the effect of delivering oil to us more cheaply than we get it at present. There are, of course, advantages to the oil producing country concerned because they will have their refined product available more cheaply to them on the main European markets. As we discussed this matter on a few occasions, the Minister will be aware — from the point of view certainly of the Progressive Democrats and perhaps other parties in the House — that the whole question of security of supply is very important. I should like the Minister to outline what he considers is the important aspect of any deal done in relation to entering into such an arrangement with an oil producing country.
The Minister said in the House recently that he was now willing to consider offers from other countries. That is an improvement on his original position. He said he was prevented from doing that until the final terms had been submitted to him by the Nigerians. However, as Deputy Richard Bruton pointed out, it is very important to negotiate with all oil producing countries and not to confine ourselves to one country, particularly when dealing with a country which has deep financial problems and which may not be able to fulfil commitments into which it entered. In any such deal which the State enters into, it should have sufficient control to ensure that it has access to stored reserves and that it can opt to buy on the open market if there is a supply or price advantage in doing so. The State should also retain rights over the control of Whiddy and Whitegate facilities because they would be required in the event of a commercially viable offshore oil discovery, which as the Minister said, given the revised oil terms last September, is more likely now than before the terms were revised. If we do not have a refining and storage capacity, in the event of an offshore discovery I presume we would have to send our crude oil overseas to be refined and that would not necessarily be very advantageous to us.
Distribution costs of oil are very high in Ireland and I understand that the Nigerian proposal was that a pipeline would be built from Cork to Dublin to deliver refined products to Dublin. However, I am curious as to how you deliver and sell that product, given that the majority of retail outlets here are controlled by the oil majors and that the majority of the distributors are also tied to them. There are very few independent operators in the Irish market. What does the Minister suggest as a means of distribution in the event of an oil deal or a deal going through with some oil producing country?
I appeal to the Minister to tell us what he considers the important factors in the event of this country entering into some arragement with an oil producing country. I reiterate what Deputy Richard Bruton said — I have said it myself in the House in relation to this matter — that it is very important that all the facts are discussed in the Dáil in relation to any proposed deal. The Dáil should be given the opportunity to vote on it because it is a very important matter.
I should now like to turn to the question of radiation hazards associated with the British nuclear industry in general and the Sellafield reprocessing plant in particular. This subject, as the previous speaker said, has been discussed on many occasions in the House since this Government came to power. I raised it on many occasions and I have always been assured that the Government are taking all available steps to bring about the closure of this plant, to ensure that there is no further expansion of the British nuclear industry and that the old, obsolete magnox reactors which have outlived their design life would be closed down.
I accept that the Minister is keen to achieve results in this area but he must admit that all his efforts to date have failed. I totally disagree with his statement that significant progress has been made on those matters. No progress has been made, I would go so far as to say that, in relation to the Sellafield plant. The UK authorities have treated the representations of the Irish Government with contempt but it is the Government's duty to convince Britain that we have legitimate rights as far as their nuclear industry is concerned. We must take appropriate action to convince them of this. A motion was passed unanimously in this House in December 1986 calling for the closure of Sellafield but we are no nearer that objective now than we were when the motion was passed. This is due to an over-reliance by the Government on political lobbying and putting the matter on the agenda at various international conventions. The Paris Commission are meeting in Lisbon today and we have a motion down calling for the closure of Sellafield. I hope we got more support this year than last year when only one delegation out of ten supported us. I know that the Minister, prior to the meeting of the Paris Commission, had been lobbying for support and I hope we increase it. However, the main point is that we will not get 100 per cent support. That is obvious and, even if we did, it is not binding on anyone. We must realise that raising the matter at international conventions and the like is primarily useful only in terms of highlighting our legitimate concern about these plants but it will not necessarily do anything to bring about their closure, which is the main objective of the House as encapsulated in the motion in 1986.
The only realistic way — again I have said this on many occasions in the House — to bring about a result is to take legal action. I have been calling for that since I came into the Dáil. About five months ago, the Minister agreed that this was probably the right course of action and he confirmed he had referred the matter to the Attorney General for him to review the legal options available to him and to make recommendations to the Government. I understand that review has been completed. I would presume that the review highlights options that I had outlined in this House almost a year ago, and would include taking action under Articles 37 and 38 of the Euratom Treaty. I suggest we have the right to bring a case to the International Court of Justice in the Hague based on international legal precedents whereby one state is not allowed to cause damage to another state by actions taken within its jurisdiction. We have not pursued our case. The Minister keeps telling us that he has taken legal action, but in effect the Government have submitted their views on the Cattenon case to the court in Europe. We are not parties to that action. In my opinion the Cattenon case is less important in the sense that it poses less of a threat than the Sellafield plant. The Cattenon plant is not fully commissioned whereas Sellafield has been in existence and has been spewing radioactive waste into the Irish Sea for the past 30 years. It has made it the most radioactive sea in the entire world.
We should be making the running on this case. Even though the Cattenon case may establish some useful legal precedents, I think it is not good enough that we did not make the running. We should have made the running on a legal basis. I call on the Minister to stop expressing his wishes to see this plant closed down but to firmly get on and so something about it. In my opinion we should initiate legal proceedings at the earliest possible date.
The Deputy's time is up.
I will make the point briefly — Deputy Bruton has also referred to it. The Minister in his speech has said that the earliest we can expect the establishment of the national radiological protection institute will be next term. I think one of the first undertakings that the Minister gave this House was that he would establish this very necessary body to monitor and to lay down an emergency plan for any radiation hazards that might arise in the future as a result of an accident. I think it is very unsatisfactory that it has taken so long, and it is obviously going to take longer, to set up this body.
I had other points which I wanted to raise but I know I will not be allowed do that, so I will refer briefly to the electricity and gas interconnectors. I am glad that the question of interconnectors is being looked at in a fairly serious way. There are huge advantages if the electrical interconnector goes ahead. I know there is a long lead-in time and there is a lot of planning to be done before it might become a reality, but when the Minister said in his speech that it would be 1995 before the ESB would be likely to require additional plant, it seemed to me extraordinary that that would be the case, given that the ESB have 75 per cent greater generating capacity than the peak demand at present.
I welcome the opportunity of speaking on behalf of the Labour Party on the Estimates for the Department of Energy and Forestry. Whilst the financial parameters of the Department of Energy are small in numerical terms, nevertheless the Department of Energy is of major importance because of its broad range of responsibilities.
I think the role that the Department of Energy could play in the context of national recovery is not fully exploited, or indeed appreciated. Energy policy has a major relationships to an economic plan. I agree with Deputy Bruton when he bemoans the absence of any real energy policy.
First, I would like to comment on the low level of offshore oil exploration taking place. As the House is aware, the Labour Party objected very strenuously to the give-away policy on offshore exploration launched by the Minister last year. We predicted at the time that there would not be an upsurge in exploration because of the general worldwide climate in relation to exploration. Nevertheless, the Minister decided on a course of action which as far as we are concerned will cause major revenue losses to the State in the event of a commercial oil discovery. The limited interest in the Minister's speech today proves that very point. Major losses of revenue will occur in the years ahead as a result of that decision. I would also like to comment on the possibility of a major agreement being signed with a foreign government on the future use of the Whiddy and Whitegate oil refineries. The Labour Party welcome any initiative which would lead to a regular guaranteed source of crude oil for this country's needs and which would also lead to a reduction in the consumer oil price. While welcoming the benefits of any possible agreement, we would have to point out also the dangers that would be inherent in the type of agreement that has been rumoured and written about in the press in recent weeks.
If an agreement is to be concluded, I urge the Minister not to give the control of Whiddy and Whitegate to a foreign government. We would have no objection to a joint venture which would benefit the third party together with the Irish people, but it would be a sad day and a bad day, and in economic terms a very unwise move, to allow the controlling interest in the Irish oil industry to go out of Irish hands.
I trust that in due course the Minister will put the terms of the agreement before the House before he concludes an international agreement. I think it is extremely important that we are not presented with a fait accompli and that the terms of any such agreement should be discussed and agreed by this House.
I would like to comment briefly on the Minister's other responsibilities. I would like to comment briefly on Bord na Móna and the ESB. There is no doubt that Bord na Móna will face major problems in the coming years. The life of many of the bogs in the midlands is coming to an end. Obviously the company will have to diversify. Bord na Móna have served this country well for the past 40 years and at this juncture the Minister should be adopting a positive attitude to the company. He should be encouraging the company to diversify and to look for a new product lines. Unless the company are actively pursuing diversification, I believe their future will be put a shadow of their great and proud past. The Labour Party are very concerned about what will happen to the economic life of the midlands when the bogs are fully used up. Both Bord na Móna and the ESB are major employers in the area and are a major component of the economic life of the midlands. Obviously at the expiry of the bogs there will be a major question mark over the peat-fired power stations in the midlands. This can only lead to massive disemployment in the area, an area that has already been hard hit. The Government have recognised recently that this area is in need of economic activity and assistance.
I urge the Minister to set up without further delay an inter-departmental committee comprising the Department of Industry and Commerce, Energy, Agriculture and Food and Labour, who would consult with the county development officers of the local authorities in the area. They should look at the medium-term consequences of the downgrading of these plants in the midlands and set out a strategy that will guarantee that economic activity will continue in the area. I would like to spell out very clearly that otherwise in five to ten years it will be too late to do anything for the residents and workers of the midlands. We have been particularly bad at economic planning, at making alternative plans, when many of us have envisaged what will happen in the years ahead. I would urge the Minister to set up the inter-departmental committee for which I have called, to examine the problems that will occur, setting out a strategy to overcome them. However, we will not be able to devise that strategy overnight. If we wait until the Bord Na Móna plants and the peat-fired stations are closed down it will be too late, when there will be thousands of men and women in the revelant areas joining the dole queues or embarking on the emigrant ships.
I am aware that the Minister of State has yet to contribute to this debate. I am glad to note there has been some initiative to increase planting and to streamline the forestry industry generally. Comparing our forestry industry with that of countries such as Sweden, Norway, and in particular Finland, it will be seen that we have not yet developed a plan for the total utilisation of our resources. It is my belief that the position outlined by the Minister of State with responsibility for forestry has many inherent shortcomings. Perhaps the Minister will outline today how he envisges the long-term devlopment of our forestry taking place.
We must ensure maximum plantation, that management of our forestries is of the highest calibre so that we prepare the ground also for a mature, developed downstream industry. In the past we have not achieved anything like the added value we should in this industry. We should admit our mistakes openly and examine the experience and knowledge to be gained from the Nordic countries where there has been comprehensive economic planning in relation to the development of forestry and timber industries generally. We should ensure that we become not alone self-sufficient in timber requirements but that we also export many timber products. The world scene is very clear in relation to declining timber stocks. It is anticipted that in 20 years time there will be massive demand for good quality timber products which we should be capable of producing. The potential of the industry is enormous. We must ensure that we plan economically and have a strategy in relation to the industry generally. Otherwise we shall have missed the boat as we did in many other areas of economic activity in the past.
I am disappointed the Minister has not dealt in any detail with mineral development particularly in relation to the long outstanding problem of the development of the Leinster coalfields. I hope the Minister will comment on this when replying. I know he has met deputations from the various unions and others representing the miners in those areas who have explained to him the potential for economic activity and, above all, worthwhile employment. I am aware of the many problems encountered in this area in the past and of the many abortive attempts to have something done about them. The State must play a greater part in making the necessary wherewithal available to enable people at present in the dole queues who would be most anxious to work in the viable coalmines in these areas an opportunity to do so. Those people want to work and are confident they can produce coal at an economic cost. I would ask the Minister to actively pursue this matter. Resolution of the problem would take many hundreds of people off the dole queues in the areas of north Kilkenny, north Carlow and south Laois.
I might refer now to the nuclear threat and the dangers of radiation. We lag behind many other countries in taking action on this matter. The Minister has much to say about it, receiving much media publicity. However, the end result is that we are no better off or protected than we were some years ago. Indeed, I was the only Member of this House to raise questions on those dangers back in 1979 and 1980. As a Member of the European Parliament in 1982 I was the only Irish Member at the time who questioned the Commission and Council on the matter when there were snide remarks on the part of the British Members of the European Parliament, claiming that I was raising false alarms. At that time the media took no interest in the matter either. Indeed one tended to be regarded as some kind of crank. Neither those in power or the media paid any attention to the potential dangers. Sadly, events have overtaken us and proved me to have been right. Had those who raised questions in those days received more recognition we might not now be as close to potential disaster.
I would urge the Minister to maintain pressure in this regard because he has achieved nothing to date and must show some progress in the immediate future. In this respect any help my party can give him will be readily forthcoming, as it was nearly ten years go.
I should like to begin by thanking the Minister himself for his complimentary remarks. I should like to be associated with his remarks in relation to the staff in the Forestry Service who have pursued an expansionary programme in a full-blooded way despite the difficult financial constraints on them.
The establishment of a new forestry company which will be operational at an early date is the most exciting development in the forestry area this year. The new company will have great tasks and opportunities. Essentially, it will be responsible for operating the State forestry programme and, to this end, the State's forestry estate will be transferred to it. A lot of money and work has been invested in the development of this estate over the years. Thus, the company will have the opportunity of building further on the labour of past generations in order to fully exploit this asset in the interest of generations to come.
Coillte Teoranta will also face major tasks. Primarily it will have the task of conducting its business efficiently and effectively and in accordance with strict commercial criteria. It is only in this way that we can achieve an acceptable return on past forestry investment and generate substantial profitability in the future. We intend to monitor very carefully the performance of Coillte to ensure that it fulfils our high hopes of it.
Given the long term nature of forestry investment, and the present development of our forestry estate, it is clear that Coillte Teoranta will not immediately be in a break even position on its operations. However, a very hard look will be taken at Coillte Teoranta's financial performance. Although Exchequer funding will be required in the initial years, the company will be expected to make substantial radical changes to ensure that it stands on its own feet at the earliest possible date. To that end, we expect the company to operate at optimum efficiency, to maximise their resources, and to maintain operational costs at minimum appropriate levels. Like my colleague, the Minister for Energy, I am confident that Coillte Teoranta will respond to these tasks and will be an organisation of which we all can be proud.
Already the production from the Forest Service can sustain indigenous wood industries with potential and capacity for growth in jobs, import substitution and exports. Sales of roundwood in 1988 are expected to reach 1.4 million cubic metres and income from these sales in 1988 is projected to amount to £20 million. Although this compares favourably with the figure just five years ago of £9 million, there is still a gap of £31 million between total income and expenditure in 1988. The company will be expected to sustain and build on the growth in income which has been realised in the past and to eliminate the shortfall in the shortest possible period. In this regard output from State forests will continue to rise significantly in future years, reaching 2 million cubic metres by 1993 and 3 million cubic metres by end of the century.
The market price for this timber rose steadily in 1987 and this trend has been maintained in the early part of 1988. The price of imported sawnwood also increased during this period although occasionally consignments became available at keen prices. It must again be stressed that there is no economic or technical reason why well-sawn, dried, graded and finished Irish sawnwood should command a lower price than imported timber. This has increasingly been accepted by the domestic construction market in recent years, where Irish timber constitutes 50 per cent of the market compared with less than 15 per cent in 1980. Indeed it should be possible to supply the bulk of the industry's needs from domestic supplies within the next few years.
As I mentioned earlier, the new company, Coillte Teoranta will face major tasks in ensuring maximum returns from the State's investment in forestry but I must stress that the Forest Service has not been awaiting the establishment of the company to improve its effectiveness. Over the past few years a number of alternative sales and marketing strategies have been developed.
While the primary method of sale continues to be the sealed tender system, alternative methods which enable the Forest Service to adopt a more flexible approach have been developed. These include auctions, two of which have been successfully held in 1988 with another planned for later in the year; a quota scheme which guarantees a proportion of their supplies to eligible sawmills; and short term contracts for three years duration for specified volumes. Advance information on supplies of roundwood has also been improved and a forecast of production, nationally and by county, from 1988 to 1997 has recently been made available to the trade.
My objective in these various initiatives, and it will also be the objective of Coilte Teoranta, is to generate the maximum revenue from our sales so that the people of Ireland will soon get a financial return on the vast amounts of their money which we have invested in forestry.
The result of these initiatives and the efforts made by the Forest Service to encourage improved standards of efficiency and production in the industry through close contact with the major sawmills and pulpwood processors has been most encouraging, not just in terms of receipts but from the increased confidence which is evident throughout the industry. Having made very significant strides towards dominating the home market, Irish timber firms are now aiming at the European market.
While sales of sawlog and pulpwood continue to be the principal revenue earners, profitable outlets have also been developed for other produce such as transmission poles, decorative foliage, picnic furniture and firewood.
The advance sale of immature nonamenity forest crops was another new development introduced in 1987. Forest crops of varying characteristics covering species, location, elevation, productivity and age were offered for sale. The land was not included initially but was offered with the second round of sales. A target of £3 million was set but, for a number of reasons, a sufficient number of acceptable tenders were not received and those accepted amounted to just short of £400,000. As I said at the time, I am not prepared to sell these forests unless realistic prices, which reflect their true market value are received. Nevertheless the response was encouraging on the lots sold. Lots will again be offered this year and the Estimate includes £3 million appropriations-in-aid in respect of such sales.
The 1988 Estimate includes provision for continuing the research programme on Irish timber which the Forest Service has conducted directly and through EOLAS. The result of part of this research work was the making of an Irish Standard recommendaton SR 11-1988 on "Structural Timber for Domestic Construction" which introduces for the first time in this country a strength classification system, including permissible design stresses, for all structural softwood timbers. This new Irish standard recommendation now forms an integral part of the building regulations ensuring that only timber meeting this new standard may be used by the Irish construction industry.
Since taking office, the Government have actively promoted the expansion of forestry through increased planting in both the State and private sectors. Last year the State planted 8,000 hectares and this combined with private planting of 3,200 hectares gave a record national planting level of over 11,000 hectares, a level never previously achieved in the history of the State. An even more ambitious programme is expected to be achieved this year.
As you have heard, the target for 1988 for State planting was increased to 10,000 hectares and this has in effect been achieved at this stage with 9,500 hectares already planted by the end of May. Of the total area, 1,000 hectares will be planted on areas of cutaway bog leased from Bord na Móna. The planting programme has been increased by 42 per cent over the last two years and, at the same time, the direct cost of planting each hectare has been reduced by 10 per cent through greater productivity within the Forest Service.
The Forest Service has also planted over 500 acres of broadleaved species, mainly oak, ash and birch, during the year in areas where the land has been of sufficiently high quality. On the subject of broadleaves, I would like to mention that the Forest Service is maximising the availability of ash supplies for hurley manufacture. I was pleased to be associated with Dublin's Millennium celebrations through the supply of timber used in the construction of a full-sized replica of a Viking longship by the East Wall Community Development Co-operative.
While the Government are pressing ahead with the expansion of State forestry, they are also taking positive steps to secure a sizeable expansion of the private forestry sector. A key element of the Government's Programme for National Recovery is to encourage investment in private forestry and with this aim existing grants have been improved and new schemes introduced.
Last year the grants available under the State private planting grant scheme were increased to £500 per hectare for conifers and £800 per hectare for broadleaves. These grants continue to operate this year.
The western package forestry grants scheme is also undergoing change at present. The scheme covers an area of about 3.6 million hectares spread over 11 western counties and the western parts of Cork and Limerick. The scheme will be extended to all disadvantaged areas in the country when a revised programme, which has been drawn up following a recent Council of Ministers decision, has been approved by the European Commission. This extension will benefit an additional 500,000 hectares of land. The scope of the scheme is also being extended to include all agricultural lands. Up to now only marginal agricultural lands were eligible for grant assistance.
Under the western package scheme, farmers qualify for afforestation grants of 85 per cent of costs and non-farmers qualify for 70 per cent of costs subject to a limit of £800 per hectare. Grants of up to £12 per metre for the construction or reconstruction of forest roads are also available. In the past these grants were financed equally by the State and the EC. However, 70 per cent of the cost of these grants will be recouped from the EC with effect from 1 January 1988. This welcome development will reduce substantially the cost of the grants to the Exchequer and will enable the maintenance of a large private planting programme at a low cost to the State.
Two new EC-assisted forestry schemes for farmers were launched recently and these improve further the incentives available to encourage private forestry. One of these provides the following grants for full time farmers and farmer co-operatives: up to £550 per hectare for planting conifers; up to £850 per hectare for planting broadleaves; up to £8 per metre for forest roads; up to £35 per hectare for the provision of firebreaks and waterpoints in forests.
While farmers in the west of Ireland are encouraged to invest in forestry through the forestry elements of the western package, this new scheme will encourage the development of farm forestry in the rest of the country.
The second incentive launched recently will allow farmers, who are in receipt of headage payments in respect of livestock, to continue to receive those payments for 15 years if they afforest part or all of their land. The availability of compensatory payments during the first 15 years of a plantation's life — a period during which it is producing no income but is generating costs — should encourage more farmers to invest in forestry. With an annual income to look forward to, farmers will, hopefully, become much more interested in forestry as a farm enterprise. The allowances will be paid by the Department of Agriculture and Food and are provided for in that Department's Vote.
The amount provided for private afforestation purposes in the 1988 Estimates will cover the afforestation of some 3,350 hectares of land and the construction or reconstruction of about 5,500 metres of forest roads.
In addition to the grant schemes and in line with the commitment in the Programme for National Recovery, I initiated a major drive to increase substantially the level of EC funding for forestry. I have held discussions with the main EC institutions to explore the possibilities of increasing aid for Irish forestry. I visted Commissioners Andriesen, Sutherland and Schmid Huber and the European Investment Bank to put forward Ireland's case in the matter.
The concrete results to date of the initiative I have taken are more than satisfactory. They include: a major improvement in the level of EC funding for Irish forestry with the approval of £8.1 million in grants for forestry roads from the regional fund in January 1988; £27.8 million of loans for general forestry development approved by the European Investment Bank. It is my intention to maintain and strengthen the contacts with the EC that have proved so fruitful to date. In this regard Commissioner Andriesen has accepted my invitation to visit Ireland this July to discuss the development of Irish forestry in the EC context.
The decision to double the structural funds for less developed parts of Europe by 1992 also provides opportunities in this connection as it is clear that the advantage of forestry in its Irish and overall European dimensions should place it very high on the list of economic activities deserving of priority assistance from the enlarged funds. Europe's position in relation to timber supplies, the suitability of the Irish climate for the growing of trees, the close relationship between forestry and recent developments in the CAP, the economic returns to be procured from properly managed forestry in Ireland, its employment potential in the nurseries and forests and in downstream manufacturing activities, all of these factors will be emphasised by me in the various exchanges, internal and external, which are due to take place in the process of girding ourselves to make the maximum use of the increased Community funds.
I have a difficulty in reviewing the two Estimates before us, Forestry and Energy. My favourite would be forestry on which I have spoken on a number of occasions in the past. I have a great interest in forestry, particularly at this time, because as the Minister has said the development of the new company opens up great possibilities. I am glad the Minister has succeeded in getting out of the old constriction of the tender system and is using more flexible methods of sales. However, I would like to dwell on the issue of downstream industries in the processing area and the possibility of encouraging joint ventures to get into various hardwoods, plywoods and papermills so that the whole area of forestry will be used for job creation. I hope the Minister will try to encourage whatever joint ventures are necessary to ensure that these processing industries are available.
This evening I have elected to use my 15 minutes to deal with three items relevant to the Department of Energy: the oil deal, Bord na Móna and the scandal in the mining and minerals area, particularly Tara Mines. I agree with many of the points made by previous speakers regarding the little knowledge we have of the proposals on the oil deals which have been discussed over the past six months. I spoke on this matter last January and made the point — which I think the last two speakers agreed with — that whatever arrangements, deals or joint ventures are entered into, both the Whitegate refinery and the Whiddy Island storage terminal should be retained in State hands and should be under public ownership both for strategic and economic reasons. I do not know what stage the negotiations have reached at present. As far as I understood, the negotiations which were under way were in terms of giving away these two facilities. Under this deal the Whiddy Island storage terminal and the Whitegate refinery would go into the hands of the Nigerian Government. I was given to understand, some six months ago, that Ecuador had some deal, the extent or the meaning of which I do not know, but one of the points of their suggested arrangement was that both would remain under Irish public ownership.
We, in The Workers' Party, have consistently advocated the construction of a modern oil refinery which would use the most up-to-date steam cracking technology. It is obvious that we need to double our refining capacity for our own use because the shipping over long distances of crude oil can be done economically whereas the shipping of light oils such as petrol is much more costly. To ensure that we would have a refining capacity on our national territory for all our oil and, also for the reasons given by Deputy Pat O'Malley in the event of the possibility of offshore finds it is essential that we retain the refinery. The extent to which any possible deal with other countries would help us to move towards this objective would be a crucial factor in determining the viability of the deal.
The second point I want to deal with relates to Bord na Móna. Bord na Móna are reaching a crucial point at this stage. I know the Minister has the structure and the financial arrangements and everything in Bord na Móna under review. I hope he will not take the view that Bord na Móna are now running down in their potential capacity and that over the next ten, 15 or 20 years they will be running out of turf and that a winding down operation will be thought of to the extent that they will be wound up like Irish Shipping in ten or 15 years' time. I hope the Minister will look at Bord na Móna in a totally different fashion because of the amount of land which is becoming available to them as the peat development is completed. An area totalling the size of County Louth will be available by the end of the century or early in the new century. The potential of this for development and expansion should be looked at and the possibilities of use including horticulture, biomass, conventional forestry, grassland, amenity use and job creation in this area should be considered and the type of development that is necessary to retain the jobs of the Bord na Móna workers who are highly skilled and dedicated people and also of the ESB workers in the turf burning stations who depend on peat for their livelihood.
In that context it is vital that the Minister should make an early decision on who should have responsibility for the development of the cutaway bogs so that the necessary planning can begin. Bord na Móna have been doing many experiments and, to date, they do not know whether it will be taken from them. Already, this new company which the Minister of State has referred to in the forestry area has taken an area of land from Bord na Móna for forestry. Many farmers in the midlands in the IFA are looking for the land to be given back to the farmers by Bord na Móna. This would be a disastrous piecemeal breakup of Bord na Móna land because one factor in regard to it is that it is absolutely essential that this land have a centralised drainage system, otherwise the whole thing would revert to an unusable wet area. Therefore, it is essential that it is kept in centralised control and Bord na Móna should be told whether they are going to have control over the development of the cutaway bog so they can plan for the use to which they will put different parts of it and can project the employment potential in the various uses and the economics of the use. We are talking about 5,700 permanent employees in 1984-85 and 1,100 seasonal workers, a huge workforce. It is essential that the Minister deal with that.
I want to deal with what I call the scandal of Tara Mines. About £600 million worth of raw ore has been exported by Tara Mines in a nine year period and they never paid one penny in royalties and only a paltry couple of hundred thousand pounds in corporation tax in that period. I have raised this issue nine times since 1984 with the Ministers responsible and I am giving the Ministers' replies. On 12 June 1984, Minister for Energy Deputy Spring said: "... no royalty payments have been made as yet by the company." On 22 January 1985 the Minister Deputy Spring said:
... no royalty payments have been made as yet... Having regard to that situation, consideration is being given to the question of what action might be taken in regard to the possible liability of the company for royalty.
On 11 June 1985 the Minister of State Deputy Eddie Collins, said "The profits of the company for tax purposes since the commencement of trading have not yet been agreed ... and consequently no payment of royalty has been made." On 31 October 1985 the Minister of State said:
... in correspondence with the company ... a number of complex questions are being actively addressed, ... arbitration proceedings may prove necessary ... the State's rights in the matter will be fully enforced.
On 5 February 1986 the Minister of State, Deputy Eddie Collins, said: "The matters at issue involve a number of complex points and, whilst progress is being made towards their resolution, it is not possible to say precisely when they will be resolved."
On 26 November 1986 the Minister said:
These profits have not yet been agreed with the Revenue Commissioners ... my Department is not in a position to demand payment of royalties ... nor indeed to estimate with any accuracy the company's liability for royalty payments.
On 27 May 1987, in a new Government, a new Minister Deputy Ray Burke, said: "... procedures are now in train to refer the matter to an arbitrator." I thought that was wonderful and the new Minister was making progress, but on 3 March 1988, almost a year later, the Minister was saying:
The matter has not yet been referred to the arbitrator, however, because certain preparatory aspects require attention including finalisation of consultations with legal advisers. Agreement has been reached on the selection of an arbitrator.
On 1 June this year the Minister, Deputy Burke, was still saying "Agreement has been reached between my Department and Tara Mines Ltd. on the selection of an eminent senior counsel as arbitrator but the counsel in question has not yet been approached with a view to his appointment pending finalisation of the aspects to which I referred.""The aspects to which I referred" were precisely the same aspects as the Minister, Deputy Spring, referred to in 1984. No progress whatsoever has been made in the payment of royalties by this company who have paid only £300,000 in taxes in nine years, an average of £30,000 a year.
This is an absolute scandal when you consider the fact that they are exporting our raw ore to various smelters overseas and this vital part of our natural resources can be used for job creation by the building of a smelter here at home. This was considered some years back by the Government with reference to the job creation potential of such a smelter and the IDA drew up plans for a smelter in the mid-seventies. A feasibility study was done, land was purchased at Ballylongford and now, today, while we are still exporting 350,000 tonnes of raw ore every year and while new finds are being made, Bula has not yet even been touched and that land in Ballylongford is now being sold with the result that this Government are not even thinking in terms of the use of our natural resources for job creation. It is a scandal that lead and zinc could be used for the manufacture of parts for washing machines, cookers, refrigerators, cars and so on and create thousands of jobs here and the huge development of an engineering industry, instead of our ore being exported in the raw state and not even a penny in royalties being received. I ask the Minister to look at this company again. If we cannot get a penny in royalties out of Tara Mines in ten years why are we talking with the oil companies around our shores and making deals with them? They will not pay us a penny either. Why not give the lot away? That is the attitude being adopted with Tara Mines and if oil companies see us letting them away with that, they are not going to pay us a penny in royalties either.
I am glad of the opportunity to speak in this debate. Since the appointment of the Minister and the Minister of State this Department has been unduly active in the legislation field and has kept the Opposition on our toes with the production of legislation for RTE, the Radio Bill and forestry. I have to commend the Minister and the Minister of State for the work they have done in that area. I would like to join with the Minister in paying tribute to the Department of Forestry who have served the State well in their time, and generally are going to lose their greater clout now.
On the other hand, if the Minister were on this side of the House and he was debating an Estimate for Energy, Communications and Forestry, he would point out the deficiencies that had been experienced by this country in the administration over a period. When the Minister was on this side of the House he was most vocal about the nuclear threat and early warning systems and why the weak Minister on the other side could do nothing about the problems that were arising from Sellafield and other plants in the UK. He urged that we go into litigation against the British. Certainly the general public would be led to believe that when Fianna Fáil would come to power one of the first things they would do was take on the British about this nuclear threat from Sellafield and see about a satisfactory early warning system.
Since we arrived on this side of the House we have been continually asking the Minister what he is doing and every year he tells us he is going to the Paris Commission. I am not impressed by his trips to the Paris Commission because they have produced nothing. If the Minister is serious about Sellafield and the nuclear threat he must take Britain to court. It is no use being a sideline partner in a case on the Continent and then coming in here and telling us that he has taken a major step, that he is going to support evidence in a European court case. If there are more leaks from Sellafield, if there is a nuclear explosion, we will not have taken the necessary steps and the people in the UK will not be too concerned about what happens to us here.
I know the Minister fairly well and I wonder what is holding him back. I do not understand why he is not going in there and why he has not taken on the Attorney General. If the Taoiseach is holding him back why does he not tell the Taoiseach that this is a very important matter even for his constituency? After all, it is quite near to Sellafield; it is on the coast. A great deal of employment in that constituency is generated from the sea that flows by Sellafield. The Minister will get support from this side of the House if he decides to take legal action against the British Government over the continuous pollution of the Irish Sea. I accept that his task will be difficult but he should make a firm declaration that he intends taking such action. That would satisfy the people. It is time something was done about that menace.
The Minister will recall that it took some time to decide to establish a State company to take over responsibility for our forests. That did not happen overnight. The then Minister, former Deputy Paddy O'Toole established a review group, at the request of the unions to consider the future of our forests. That group, consisting of Department officials and the unions, produced an excellent report and as a result a decision was made to establish Coillte Teoranta. If plans can be prepared to eliminate difficulties in regard to forestry, I wonder why it is not possible to prepare plans to at long last take on the might of Britain over the nuclear hazard at Sellafield. We should do everything possible to eliminate it. The Minister is capable of tackling that problem but I want him to confirm he will be taking positive action.
In the course of his speech the Minister stressed the importance of the economy being fit, of industry being fit, of the public service being fit and of the Government being fit.
And of how important it was that the Opposition should be fit.
Yes, and I hope that during the long summer we will have an opportunity to get fitter. The Department of Energy play a major part in the economy. It is important that we should prepare for the internal market in 1992 and in that regard we should do something about the high charges for energy and communications imposed by State companies under the aegis of the Departments of Energy and Communications. Opposition Deputies have highlighted the need to reduce ESB and telephone charges. I was disappointed at the decision of the Minister to abolish the users' council and to reject a Bill tabled by Deputy Richard Bruton which sought to introduce consumer control.
The ESB produce glossy brochures about their services and tell their consumers how they have succeeded in reducing charges in recent years but that does not impress people. I do not think consumers read those brochures but they would respond if there was an announcement on RTE, or by the Minister in the House to the effect that the domestic charge for electricity was being reduced. If the company contend that prices have been reduced the Minister should make an announcement in the House to that effect so that Opposition Members could question such a statement.
Energy costs will have to be reduced if our industries are to be competitive. We are not preparing for the internal market in 1992. I hope the Minister, by rejecting Deputy Bruton's Bill and abolishing the users' council, is not permitting the ESB, and other State agencies, to retain existing charges. He should encourage them to reduce charges so that industries can compete in the internal market. The only way we can guarantee our jobs will be if our industries are competitive. We will have to reduce charges to industry if we are to hold existing jobs.
The Department of Energy may be energetic but they will have to deal with the problems that will arise in the labour intensive industries between now and 1992. Members will be aware that our textile industries failed because of the huge cost of energy. That labour intensive industry has been wiped out. I accept that cheap labour in Asia was another factor but those industries were not able to compete in the UK or on the Continent because of our energy costs.
I look forward to the Minister producing an enlightened programme to reduce energy and telecommunications costs. Now that the Department is being slimmed down due to the establishment of Coillte Teoranta, officials will have more time to deal with those charges. I was pleased to learn from the Minister of State that the amount of tree planting is increasing. That was the objective from the seventies onwards. I would have been happy if the Minister had acknowledged the input of the previous Government in regard to forestry. The plans to improve our forests were not prepared by the Fianna Fáil Government, they were prepared by the Coalition Government who also allocated grants.
It is important that we encourage the private sector to get involved in tree-planting. I hope the new company will confine their activities to taking up the slack in the area designated under the western package. I am conscious of the fact that that was a privilege given to the Department of Forestry and that it was not in keeping with EC rules. There should be greater emphasis on getting farmers to plant more trees. On 1 June last, in the course of a parliamentary question, I asked the Minister to outline the prospects for forestry. While there was a strong emphasis on the Government's Programme for National Recovery and the Forestry Bill, I was disappointed that no emphasis was placed on farmer involvement. These people should be encouraged to take up more grants. The Minister referred to grants amounting to 85 per cent of costs but I do not think it has been highlighted enough publicly. Perhaps the Department of Forestry could consider that matter.
I am sorry to interrupt the Deputy but the time has come to call on the Minister to reply.
I am almost finished. We should not concentrate on forestry in the western package area alone. I would ask the Minister to renew his contacts at the Council of Ministers so that other areas of the country which do not benefit from forestry grants under the Western Package will be included in any new policy document which the EC may produce. Agricultural Structures Regulations 797/85 should include grants for downstream industry so that timber would be treated in the same way as any other product. If meat companies can get Structural Fund grants why can the timber industry not get similar grants?